<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OMNICELL.COM
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3571 94-3166458
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or organization)
</TABLE>
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1101 EAST MEADOW DRIVE
PALO ALTO, CALIFORNIA 94303
(650) 251-6100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------
Sheldon D. Asher
President and Chief Executive Officer
1101 East Meadow Drive
Palo Alto, California 94303
(650) 251-6100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
Copies to:
<TABLE>
<S> <C>
James C. Gaither, Esq. Gary J. Kocher, Esq.
Robert J. Brigham, Esq. Christopher H. Cunningham, Esq.
COOLEY GODWARD LLP PRESTON GATES & ELLIS LLP
Five Palo Alto Square 701 Fifth Avenue, Suite 5000
3000 El Camino Real Seattle, Washington 98104-7078
Palo Alto, California 94306-2155 (206) 623-7580
(650) 843-5000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock................................................ $57,500,000 $15,180
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933, as amended.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 20, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THSE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
[OMNICELL.COM LOGO]
SHARES
COMMON STOCK
This is the initial public offering of Omnicell.com, and we are offering
shares of our common stock. We anticipate that the initial public offering price
will be between $ and $ per share.
We intend to apply to list our common stock on the Nasdaq National Market under
the symbol "OMCL."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS OMNICELL.COM
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>
We have granted the underwriters the right to purchase up to additional
shares to cover over-allotments.
DEUTSCHE BANC ALEX. BROWN
DONALDSON, LUFKIN & JENRETTE
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP PIPER JAFFRAY
The Date of this prospectus is , 2000
<PAGE>
INSIDE FRONT COVER
Supply Chain Management for Healthcare (header, centered)
Omnicell.com has a seven-year track record of helping healthcare facilities
gain control over their supply chains. We have installed automation systems at
over 1,300 customer facilities, have completed more than 1,250 interfaces with
back-end systems, and generated more than $50 million in revenue in 1999. In
addition, the Omnicell Commerce Network provides an e-commerce service that
incorporates and extends Commerce One's B2B e-commerce technology into
healthcare. (upper half)
- Person and two automated dispensing cabinets (images)
- Map of southern Canada and the United States (images), annotated with
number of automation system facilities per state and symbols representing
Omnicell Commerce Network participants currently transacting
- Omnicell Commerce Network Logo image (lower left)
- Powered by Commerce One Logo image (lower left)
- OmniBuyer application screen shot image (lower right)
- Omnicell.com Logo image (footer, centered)
INSIDE FOLDOUT PANELS 1 AND 2
Linking the Healthcare Supply Chain, Starting with the Buyer (top left)
The Omnicell Commerce Network
The Omnicell Commerce Network is an e-commerce service that consists of two
Web-based applications, OmniBuyer and OmniSupplier.
OmniBuyer provides buyers:
- online automation of front-end business rules
- online access to customized multi-supplier catalogs
- reduced processing costs and pricing disputes
- integration with back-end systems
- Web-enabled back-end systems
- access to low-cost information services
OmniSupplier provides suppliers:
- a single point of connection with all buyers
- reduced transaction costs
- reduced customer service costs
- access to new markets and customers (lower left)
Omnicell.com Logo image (lower left corner)
- Healthcare facility image, including images of generic people and
automation systems (center)
- OmniBuyer application screen shot image (left center)
- Person and a two-cell automated dispensing cabinet images (lower center)
Commerce One Global Trading Web text within image (top right)
<PAGE>
Manufacturers, distributors, GPOs, online marketplaces, auction sites text
within image (upper right)
Omnicell Commerce Network Logo image (upper right)
Two movable automated dispensing cabinets image (lower right)
Automated dispensing cabinet image (lower right)
Automation Systems
Our automation systems manage and dispense medical supplies and
pharmaceuticals directly to healthcare professionals at the point of use
throughout the healthcare facility, reducing waste and inefficiency. (lower
right)
INSIDE BACK COVER
Supply Chain Management for Healthcare (header, centered)
Automation Systems (centered)
- Seven automated dispensing cabinet images (upper half)
Omnicell Commerce Network Logo image (centered)
- Three OmniBuyer application screen shot images (lower half)
Omnicell.com Logo image (footer, centered)
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES NOT
CONTAIN ALL OF THE INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR
COMMON STOCK. TO UNDERSTAND THE RISKS INVOLVED, YOU SHOULD CAREFULLY READ THE
ENTIRE PROSPECTUS, INCLUDING THE "RISK FACTORS" SECTION AND THE FINANCIAL
STATEMENTS, BEFORE MAKING AN INVESTMENT DECISION.
OMNICELL.COM
We provide a comprehensive, buyer-focused, supply chain management solution
that addresses the limitations of the traditional healthcare supply chain. The
Omnicell Commerce Network and our supply and pharmacy automation systems
streamline procurement and inventory management processes for hospitals and
alternate care facilities. We integrate these functions with back-end systems to
provide coordinated decision making and purchasing of medical and non-medical
supplies. Our systems improve efficiencies and generate substantial cost savings
throughout the healthcare enterprise. In addition, our position as a neutral and
unbiased e-commerce facilitator enables healthcare buyers to connect directly to
suppliers without any channel management on our part. We also provide suppliers
(including manufacturers, distributors, group purchasing organizations (GPOs),
online marketplaces and online auction sites) an attractive means to reduce
their sales, marketing and customer support costs and potentially grow their
revenues.
The Omnicell Commerce Network consists of two Web-based applications,
OmniBuyer and OmniSupplier, that incorporate and extend Commerce One, Inc.'s
business-to-business e-commerce technology platform into healthcare. With these
two applications, we connect buyers and suppliers to create a network that
provides healthcare buyers with access to medical and non-medical products and
services. The Omnicell Commerce Network provides a single online point of entry
for the procurement needs of healthcare buyers. We have structured the network
based on an application service provider (ASP) business model.
Our automation systems manage and dispense medical supplies and
pharmaceuticals directly to healthcare professionals throughout a healthcare
facility at the point of use. These automation systems consist of modular,
secured and computerized cabinets that track transaction data, inventory levels,
expenses and patient billing. Since 1993, we have installed over 14,000 cabinets
in over 1,300 healthcare facilities. We estimate that approximately
$600 million in medical supplies flowed through our installed automation systems
in 1999.
OUR PRODUCTS
OMNIBUYER
OmniBuyer is a secure Web-based procurement application that automates and
integrates healthcare requisition and approval processes. OmniBuyer is based on
Commerce One's BuySite technology that we customize to meet the complex needs of
healthcare buyers. Our OmniBuyer service provides the following benefits to
healthcare buyers:
- online automation of front-end requisition and approval functions;
- online access to customized multi-supplier catalogs;
- reduced processing costs and pricing disputes;
- integration with back-end systems;
- Web-enabled back-end systems; and
- access to low-cost information services.
1
<PAGE>
OMNISUPPLIER
OmniSupplier is a secure Web-based application that enables suppliers to
connect and transact with our OmniBuyer customers. OmniSupplier is based on
Commerce One's MarketSite technology that we customize to meet the complex needs
of healthcare suppliers. Our OmniSupplier service offers the following benefits
to suppliers:
- single point of connection with all buyers;
- reduced transaction costs;
- reduced customer service costs; and
- access to new markets and customers.
AUTOMATION SYSTEMS
Our automation systems consist of modular, secured and computerized cabinets
and related software technology that manage and dispense medical supplies and
pharmaceuticals. We have one line of supply cabinets and two lines of pharmacy
cabinets, OmniCell pharmacy systems and Sure-Med cabinets, which we acquired
from Baxter Healthcare Corporation in January 1999. Our automation systems
provide the following benefits to healthcare facilities:
- reduced consumption and expenses;
- improved tracking and management of inventory;
- increased data capture;
- improved security and regulatory compliance; and
- standardized interfaces and a single database.
OUR STRATEGY
Our goal is to become the leading business-to-business e-commerce network
for the healthcare industry. Key elements of our strategy include:
- FACILITATE MANAGEMENT OF THE HEALTHCARE SUPPLY CHAIN. We intend to enable
better management of the healthcare supply chain by providing a single
online point of entry for the procurement needs of healthcare buyers that
incorporates and automates the buyer's existing requisition and approval
process.
- ACCELERATE ADOPTION AND USE OF THE OMNICELL COMMERCE NETWORK. We intend to
continue to leverage our extensive healthcare industry experience and
relationships as well as our installed base of automation systems
customers to rapidly increase adoption and use of the Omnicell Commerce
Network.
- LEVERAGE OUR TECHNICAL EXPERTISE. We are employing our interface expertise
and our understanding of healthcare facilities' operating processes to
integrate OmniBuyer with healthcare facilities' existing front-end and
back-end systems.
- DEVELOP STRATEGIC RELATIONSHIPS. We expect to continue to enter into
strategic relationships with medical and non-medical products distributors
and manufacturers, online marketplaces, online auction sites, GPOs,
service providers and technology vendors to enhance the Omnicell Commerce
Network's breadth and depth.
2
<PAGE>
- CAPITALIZE ON REVENUE OPPORTUNITIES GENERATED BY THE OMNICELL COMMERCE
NETWORK. We anticipate that as participation in the Omnicell Commerce
Network increases, a substantial portion of our revenue growth will be
generated by the services offered by the Omnicell Commerce Network.
Our principal executive offices are located at 1101 East Meadow Drive, Palo
Alto, California 94303, and our telephone number is (650) 251-6100. Our Web site
is located at www.omnicell.com. The information on our Web site is neither
incorporated by reference into nor a part of this prospectus. Our logo,
Omnicell.com-Registered Trademark-, OmniCenter-Registered Trademark-,
OmniReporter-Registered Trademark-, OmniRx-Registered Trademark-, See &
Touch-TM- and Sure-Med-Registered Trademark- are trademarks of Omnicell.com.
BuySite-TM- and MarketSite-TM- are trademarks of Commerce One. This prospectus
also includes trademarks of companies other than our own.
OUR HISTORY
We were incorporated in California in September 1992 under the name OmniCell
Technologies, Inc. In September 1999, we changed our name to Omnicell.com, and
we intend to reincorporate in Delaware in , 2000.
UNLESS OTHERWISE INDICATED, ALL SHARE AMOUNTS AND FINANCIAL INFORMATION
PRESENTED IN THIS PROSPECTUS:
- GIVE EFFECT TO THE CONVERSION OF ALL OF OUR REDEEMABLE CONVERTIBLE
PREFERRED STOCK, CONVERTIBLE PREFERRED STOCK AND CONVERTIBLE NOTE PAYABLE
INTO OUR COMMON STOCK, WHICH WILL OCCUR AUTOMATICALLY UPON COMPLETION OF
THIS OFFERING;
- ASSUME THE UNDERWRITER'S OVER-ALLOTMENT OPTION IS NOT EXERCISED; AND
- GIVE EFFECT TO OUR REINCORPORATION IN DELAWARE.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by us................... __________ shares
Common stock to be outstanding after the
offering................................... __________ shares
Use of proceeds.............................. To repay debt owed to Baxter Healthcare, to
expand sales, marketing and customer support
activities, to continue the development and
marketing of the Omnicell Commerce Network
and for working capital and other general
corporate purposes, including potential
acquisitions.
Proposed Nasdaq National Market symbol....... OMCL
</TABLE>
The number of shares of common stock to be outstanding after the offering is
based on 18,418,807 shares outstanding on March 31, 2000. This number assumes
the conversion into common stock of all of our redeemable convertible preferred
stock, convertible preferred stock and convertible note payable outstanding on
that date and excludes, as of March 31, 2000:
- 5,204,688 shares of common stock that may be issued upon exercise of
outstanding options;
- 106,749 shares of common stock that may be issued upon exercise of
outstanding warrants; and
- 2,591,016 shares of common stock reserved for future issuance under our
stock option and employee stock purchase plans.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
You should read the following summary consolidated financial data together
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes included
in this prospectus.
The pro forma net loss per share data and the pro forma as adjusted balance
sheet data give effect to the conversion of all of our redeemable convertible
preferred stock, convertible preferred stock and convertible note payable into
shares of our common stock, which will occur automatically upon the completion
of this offering. The pro forma as adjusted balance sheet data also give effect
to the sale of shares of common stock by us at an assumed initial public
offering price of $ per share and the application of the net proceeds from
this offering as discussed in "Use of Proceeds."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS AND OTHER DATA:
Revenues.................................................... $ 36,073 $48,212 $ 52,604
Cost of revenues............................................ 16,211 17,384 36,140
-------- ------- --------
Gross profit................................................ 19,862 30,828 16,464
Loss from operations........................................ (10,864) (218) (31,296)
Net income (loss)........................................... $(10,112) $ 636 $(33,213)
======== ======= ========
Net income (loss) per share:
Basic..................................................... $ (5.54) $ 0.29 $ (14.12)
======== ======= ========
Diluted................................................... $ (5.54) $ 0.04 $ (14.12)
======== ======= ========
Weighted average common shares outstanding:
Basic..................................................... 1,830 2,083 2,353
Diluted................................................... 1,830 17,621 2,353
Pro forma net loss per share:
Basic and diluted......................................... $ (2.10)
========
Pro forma weighted average common shares outstanding:
Basic and diluted......................................... 15,801
Cumulative number of sites of installed automation
systems................................................... 624 1,030 1,306
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 6,698
Total assets................................................ 36,449
Deferred gross profit....................................... 31,370
Long-term obligations, net of current portion............... 9,309
Redeemable convertible preferred stock...................... 15,166
Total stockholders' equity (net capital deficiency)......... (42,839)
</TABLE>
- ------------
- Cost of revenues for the year ended December 31, 1999 includes special
charges related to the writedown of Sure-Med inventory--$12.5 million;
additional costs recorded due to sale of Sure-Med inventory which was
recorded at fair value upon acquisition--$1.1 million; and writedown of
inventory designated for a marketing program--$1.5 million.
- Loss from operations for the year ended December 31, 1999 includes
integration expenses associated with acquisition of Sure-Med product
line--$0.8 million; write off of equity investment--$0.6 million; and
write off of leasehold improvements and other equipment--$0.9 million.
- Net loss and pro forma net loss per share for the year ended December 31,
1999, excluding non-recurring charges and charges associated with the
Sure-Med product line acquisition would have been $(15.8) million and
$(1.00), respectively.
- Deferred gross profit on the balance sheet represents gross margin on
sales of automation products that have been shipped to, accepted and in
most instances paid for by our customer but not yet installed at the
customer site. The revenues and cost of revenues for such items will be
recorded upon completion of installation.
- The amounts shown for the year ended December 31, 1999 include the results
of the Sure-Med product line acquisition from January 29, 1999 to the end
of 1999.
5
<PAGE>
RISK FACTORS
BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD CAREFULLY CONSIDER THE
RISKS DESCRIBED BELOW, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN
THIS PROSPECTUS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS,
FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED.
IN THIS CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT. ADDITIONAL RISKS AND UNCERTAINTIES THAT WE
DO NOT CURRENTLY KNOW ABOUT OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR
OUR BUSINESS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS."
RISKS RELATING TO OUR CURRENT BUSINESS
THE LAUNCH OF THE OMNICELL COMMERCE NETWORK WILL REQUIRE US TO DEVELOP
SIGNIFICANT NEW CAPABILITIES AND MAY NOT BE SUCCESSFUL.
Our business-to-business e-commerce model is based on the creation of a
Web-based procurement service for healthcare organizations for the purchase of
medical and non-medical products and services. Our business model is unproven
and depends on our ability to, among other things:
- accurately determine the features, functionality and services that our
customers require or desire in an e-commerce procurement solution;
- successfully design and implement a Web-based procurement system that
includes these features, functionality and services;
- install applications for and develop interfaces with healthcare
facilities' back-end systems;
- enter into agreements with suppliers (including manufacturers,
distributors, GPOs, online marketplaces and online auction sites) of
healthcare products and services;
- create a critical mass of healthcare buyers and suppliers that regularly
transact on the Omnicell Commerce Network; and
- generate significant revenues from the Omnicell Commerce Network.
The Omnicell Commerce Network will compete against traditional,
well-established methods of procuring healthcare products and services. It may
not achieve broad market acceptance for a variety of reasons, including but not
limited to:
- the reluctance of healthcare buyers to abandon current purchasing methods;
- the costs and resources required for healthcare buyers to switch
purchasing methods;
- the need for products and services not offered through the Omnicell
Commerce Network; and
- the partnerships between and among healthcare manufacturers, distributors,
GPOs, online marketplaces and online auction sites.
THE ADOPTION OF THE INTERNET BY HEALTHCARE ORGANIZATIONS AS A MEDIUM FOR
TRANSACTING BUSINESS IS NECESSARY FOR THE FUTURE GROWTH OF THE OMNICELL COMMERCE
NETWORK.
The market for healthcare business-to-business e-commerce products and
services is new and rapidly evolving. Our future revenues and any future profits
generated by the Omnicell Commerce Network depend not only upon the widespread
acceptance and use of the Internet for business-to-business commerce in general,
but also upon the acceptance and use of the
6
<PAGE>
Internet by healthcare organizations for the procurement of medical and
non-medical products and services. Historically, healthcare facilities have been
slow to adopt new technologies. The success of the Omnicell Commerce Network
depends on the willingness of healthcare organizations to abandon their current
purchasing methods and switch to a business-to-business e-commerce solution. We
cannot assure you that these organizations will find it either cost-effective or
worthwhile to implement our solution. Healthcare organizations that have signed
agreements subscribing to the OmniBuyer service are not obligated to adopt,
implement or use the service and may terminate the agreements on thirty days'
written notice. We do not collect subscription fees from OmniBuyer customers
until after they begin to transact business over the Omnicell Commerce Network.
There can be no assurance that these healthcare organizations will transact on
the Omnicell Commerce Network.
The acceptance and use of the Internet by healthcare organizations for
business-to-business e-commerce could be limited by a number of factors,
including:
- low adoption and utilization of the Internet by healthcare organizations
and suppliers in general;
- any real or perceived difficulty in conducting business over the Internet;
- any real or perceived limits to the efficiencies or advantages of
conducting business over the Internet;
- lack of integration with buyers' back-end systems, such as enterprise
resource planning (ERP), healthcare information, materials management and
purchasing systems;
- inadequate training of personnel in new technologies; and
- concerns about the security or taxation of transactions conducted over the
Internet.
Failure to gain a significant customer base or achieve market acceptance for
the Omnicell Commerce Network would harm our business.
THE VOLUME OF TRANSACTIONS FOR MEDICAL PRODUCTS, SERVICES AND EQUIPMENT OVER THE
INTERNET IS CURRENTLY SMALL.
Despite the recent publicity surrounding business-to-business e-commerce in
the healthcare industry, it is estimated that in 1999, the total value of
medical products, services and equipment purchased over the Internet was well
below one percent of the healthcare supply chain. This limited market adoption
can be attributed to a number of factors, including, but not limited to:
- conflict between the traditional healthcare supply chain and the new
Web-based healthcare marketplaces;
- lack of integration with buyers' back-end systems, such as ERP, healthcare
information, materials management and purchasing systems;
- limited buyer technical resources; and
- buyer perception of limited manufacturer and distributor choices.
OUR RELATIONSHIP WITH COMMERCE ONE IS ESSENTIAL TO THE FUTURE SUCCESS OF THE
OMNICELL COMMERCE NETWORK.
We have entered into a Vertical Hosted License Agreement with Commerce One,
a provider of business-to-business e-commerce solutions that link buyers and
suppliers of indirect goods and services to trading communities over the
Internet. Our agreement with
7
<PAGE>
Commerce One enables us to implement a customized version of Commerce One's
BuySite software at customer sites to provide a direct link to Commerce One's
MarketSite where our customers can interact with manufacturers, distributors and
suppliers. Until August 21, 2000, Commerce One is prohibited from soliciting or
entering into agreements with certain of our competitors to license its BuySite
technology. We cannot be sure that after August 21, 2000, Commerce One will not
license its BuySite technology to our competitors.
We rely on Commerce One to expand, manage, maintain and secure the computer
and communications equipment and software needed for the day-to-day operations
of the Omnicell Commerce Network. Commerce One provides us with services,
including management of our network Web server and maintenance of our
communications lines, and through its subcontractor, management of our network
data centers (the locations on our network where data is stored). We cannot
guarantee that Commerce One will be able to develop and introduce enhancements
to its products that keep pace with emerging technological developments and
emerging industry standards. The failure by Commerce One in any of these areas
could harm our business. Moreover, we cannot guarantee that the Commerce One
network will not experience performance problems or delays.
THE ADOPTION OF THE OMNICELL COMMERCE NETWORK DEPENDS ON OUR ABILITY TO DEVELOP
RELATIONSHIPS WITH SUPPLIERS OF HEALTHCARE PRODUCTS AND SERVICES.
We believe that the success of the Omnicell Commerce Network depends in
large part upon our ability to offer and deliver a substantial mix of healthcare
products and services. The task of bringing suppliers online can be both
difficult and time-consuming. If we cannot persuade a significant number of
suppliers to participate in the Omnicell Commerce Network, our solution will be
less attractive to our OmniBuyer customers.
We cannot assure you that we will be able to establish the necessary
relationships with suppliers to successfully implement our e-commerce business
model. Some suppliers may view us as a threat to their business models and their
ability to control access to customers. Some suppliers may sell their products
directly to customers at a cost lower than through the Omnicell Commerce
Network. We do not know what terms and conditions potential suppliers will
require from us in future contracts. We cannot assure you that any of these
suppliers will elect to use the Omnicell Commerce Network.
Even if we enter into supplier agreements in connection with the Omnicell
Commerce Network, these agreements are typically terminable on short notice and
we cannot assure you that they will be renewed beyond their initial term or that
they will be renewed on terms favorable to us. In addition, there are
significant costs, difficulties and risks associated with adding new product
offerings to our procurement service. Any limit in the variety and number of
products we are able to offer could result in decreased adoption and limited use
of the Omnicell Commerce Network, which would harm our business.
TO DATE, OUR REVENUE HAS DEPENDED UPON THE SUCCESS OF OUR AUTOMATION SYSTEMS.
Substantially all of our revenue to date has been attributable to sales of
automation systems and related services. We expect such sales to continue to
account for a majority of our revenue for at least the next few years. We cannot
assure you that we will continue to be successful in marketing our automation
systems or that the level of market acceptance of such systems will be
sufficient to generate operating income. As a result, any factors adversely
affecting the pricing or demand for our automation systems, such as competition
or technological change, would harm our business. In addition, a significant
amount of
8
<PAGE>
management effort and focus is being devoted to establishing the Omnicell
Commerce Network. This could harm our automation systems business by diminishing
management's attention to such business.
Our automation systems represent a relatively new approach to managing the
distribution of supplies and pharmaceuticals at healthcare facilities. Many
hospitals and other healthcare facilities still use traditional approaches that
do not include automated methods of supply and pharmacy distribution. As a
result, we must continuously educate existing and prospective customers about
the advantages of our products. Our automation systems typically represent a
sizeable initial capital expenditure for healthcare organizations. Changes in
the budgets of these organizations and the timing of spending under these
budgets can have a significant effect on the demand for our automation systems
and related services. In addition, these budgets are characterized by limited
resources and conflicting spending priorities among different departments. Any
decrease in expenditures by these healthcare facilities could harm our business.
Sun Healthcare Group, Inc., a customer that has accounted for a significant
percentage of our sales over the past five years, has filed for Chapter 11
bankruptcy protection. Accordingly, we do not expect any significant purchases
of our automation systems from Sun Healthcare in the future.
OUR ONLINE PROCUREMENT AND AUTOMATION SYSTEMS MARKETS ARE HIGHLY COMPETITIVE AND
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED
COMPANIES WITH GREATER RESOURCES.
The market for online procurement of medical and non-medical supplies for
the healthcare supply chain is new, rapidly evolving and competitive. While we
maintain an open stance regarding the connection of a wide range of suppliers to
the Omnicell Commerce Network, we face competition from online marketplaces such
as Medibuy.com and Neoforma.com. We expect competition to intensify as current
competitors establish strategic relationships and expand their product offerings
and new competitors enter the market. We anticipate competition from current
providers of e-commerce solutions and suppliers of healthcare products and
services. Our own customer base may compete against us as they search for and
develop their own solutions or decide they are unwilling to change existing
systems and processes. We cannot be certain that our strategy of establishing
the Omnicell Commerce Network will be successful, that it will be executed
effectively by us and Commerce One or that our service will be widely adopted by
healthcare buyers or suppliers of healthcare products and services.
Already there are a number of companies developing and marketing
business-to-business e-commerce solutions targeted at specific vertical markets.
Because there are relatively low barriers to entry in the online market,
competition from other established and emerging companies may develop in the
future. These competitors may include healthcare companies with established
customer bases that could integrate online procurement solutions into their
existing products or services. Many of our competitors have, and new potential
competitors may have, more experience developing Web-based software and
end-to-end purchasing solutions, larger technical staffs, larger customer bases,
more established distribution channels, greater brand recognition, access to
capital and greater financial, marketing and other resources. In addition,
competitors may be able to develop products and services that are superior to
our products and services, that achieve greater customer acceptance or that have
significantly improved functionality as compared to our existing and future
products and
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services. We cannot assure you that we will be able to compete successfully
against current and future competitors and expand our buyer and supplier base or
even retain our current buyer and supplier customers. The failure to do so would
harm our business.
We have experienced, and expect to continue to experience, increased
competition from current and potential automation systems competitors, many of
whom have significantly greater financial, technical, marketing and other
resources than do we. Our current direct competitors in the automation systems
market include Cardinal Healthcare (Pyxis), McKessonHBOC (AcuDose-Rx) and
Diebold (MedSelect).
The competitive challenges we face in our automation systems business
include, but are not limited to:
- our competitors may develop, license or incorporate new or emerging
technologies or devote greater resources to the development, promotion and
sale of their products and services;
- certain competitors have greater name recognition and a more extensive,
installed base of automation systems or other products and services, and
such advantages could be used to increase their market share;
- other established or emerging companies may enter the automation systems
market;
- current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third
parties, including larger, more established healthcare supply companies,
thereby increasing their ability to develop and offer products and
services to address the needs of our prospective customers; and
- our competitors may secure services and products from suppliers on more
favorable terms or secure exclusive arrangements with suppliers or buyers
that may impede the sales of our services.
Competitive pressures could result in price reductions of our products and
services, fewer customer orders and reduced gross margins, any of which could
harm our business.
IF WE ARE NOT ABLE TO SUCCESSFULLY INTEGRATE THE OMNICELL COMMERCE NETWORK WITH
THE EXISTING INFORMATION SYSTEMS OF OUR CUSTOMERS, THEY MAY CHOOSE NOT TO USE
OUR SERVICE.
In order for healthcare buyers and suppliers to fully benefit from our
e-commerce services, our system must integrate with their systems. This may
require substantial cooperation, investment and coordination on the part of our
customers to integrate their existing information systems. There is little
uniformity in the systems currently used by our customers, which complicates the
integration process. If these systems are not successfully integrated, our
customers could choose to not use or reduce their use of the Omnicell Commerce
Network, which would harm our business.
WE EXPECT TO INCUR NET LOSSES FOR THE FORESEEABLE FUTURE AND CANNOT BE CERTAIN
THAT WE WILL BE PROFITABLE.
For 1996 and 1997, we incurred net losses of approximately $10.5 million and
$10.1 million, respectively, and had net income of approximately $0.6 million in
1998 and a net loss of $33.2 million in 1999. As of December 31, 1999, we had an
accumulated deficit of approximately $79.0 million. We expect to have increasing
net losses in, and negative cash flows for, the foreseeable future as we
continue to develop the Omnicell Commerce Network. We cannot assure you that the
Omnicell Commerce Network will be successful or that we can achieve or sustain
revenue growth or generate profits. We expect that our operating expenses
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will increase significantly for the foreseeable future and it is possible that
we may never achieve profitability. Even if we do achieve profitability, we may
not sustain or increase profitability on a quarterly or annual basis in the
future. If we do not achieve or sustain profitability in the future, then we
will be unable to continue our operations or will need to raise additional
funding.
OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE GROWING AND CHANGING OPERATIONS.
We have recently experienced a period of significant expansion in the number
of our employees and the scope of our operating and financial systems. This
growth has resulted in new and increased responsibilities for management
personnel. To accommodate our recent growth, compete effectively and manage
potential future growth, we must continue to implement and improve our
information systems, procedures and controls, and we must hire competent and
qualified personnel. In addition, we must train, motivate and manage our
work-force to meet the increasing challenge of simultaneously developing the
Omnicell Commerce Network and expanding our automation systems business. These
demands will require the addition of new management personnel and the training
of existing management personnel, including information systems, sales,
technical, service and support personnel. We cannot assure you that our
personnel, systems, procedures and controls will be adequate to support our
future operations.
SECURITY CONCERNS AND PROBLEMS WITH THE INTERNET OR TRANSACTING BUSINESS OVER
THE INTERNET MAY INHIBIT THE GROWTH OF THE OMNICELL COMMERCE NETWORK.
The secured transmission of confidential information over the Internet is
essential to maintaining customer confidence in the Omnicell Commerce Network.
Customers generally are concerned with security and privacy on the Internet, and
any publicized security problems could inhibit the growth of e-commerce over the
Internet, and therefore negatively affect the acceptance of the Omnicell
Commerce Network as a means of conducting transactions. Any substantial security
breach of our system would significantly harm our reputation and the
attractiveness of our service. A party that is able to circumvent our security
systems could misappropriate proprietary information and expose us to a risk of
loss or litigation and potential liability. A security breach may also cause
interruptions in our operations. We will expend significant effort and incur
substantial expense to protect against security breaches and their consequences.
Despite our implementation of security measures, our networks may be vulnerable
to unauthorized and illegal access, computer viruses and other disruptive
problems. Eliminating computer viruses and alleviating other security problems
may require interruptions, delays or temporary cessation of service to customers
using our service. Damage to our reputation and the attractiveness of our
service from security concerns or problems could result in the loss of suppliers
and customers and could have a material adverse effect on our business.
Moreover, our current insurance policies may not be adequate to reimburse us for
losses caused by security breaches.
IF THE OMNICELL COMMERCE NETWORK BECOMES UNAVAILABLE FOR EXTENDED PERIODS OF
TIME OR IS NOT ABLE TO ADEQUATELY SERVICE INCREASING TRAFFIC LEVELS, OUR
REPUTATION AND BUSINESS MAY SUFFER.
The Omnicell Commerce Network must be able to service increasing traffic
while maintaining adequate customer service. Users will depend on Internet
service providers, telecommunications companies and their own computer networks
and equipment for accessing the Omnicell Commerce Network. Each of these could
experience outages, delays and other difficulties due to system failures
unrelated to our systems. Any performance
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problems or delays in response time could cause users to perceive problems with
the Omnicell Commerce Network causing them to switch to other procurement
methods. Any significant interruptions or delays in our system would reduce the
volume of transactions on the Omnicell Commerce Network and could harm our
reputation and business. Substantial increases in the volume of traffic or the
number of transactions taking place on the Omnicell Commerce Network may require
expansion and outsourcing of, and upgrades to, our technology infrastructure. We
cannot assure you that our systems will be able to accommodate increased traffic
in the future. Any failure of our systems could result in fewer transactions
and, if sustained or repeated, could impair our reputation and the
attractiveness of our services or prevent us from providing our services
entirely. Damage to our reputation from service disruptions could result in the
loss of customers and could harm our business. Moreover, our current insurance
policies may not be adequate to reimburse us for losses caused by service
disruptions.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE
FLUCTUATIONS MAY IMPACT OUR STOCK PRICE.
Our quarterly operating results have varied significantly in the past and
may vary significantly in the future depending on many factors that may include,
but are not limited to, the following:
- the success of the Omnicell Commerce Network;
- the timing of additional customers transacting on the Omnicell Commerce
Network;
- the size and timing of orders for our automation systems, and their
fulfillment and integration;
- changes in pricing policies by us or our competitors;
- the number, timing and significance of product enhancements and new
product announcements by us and our competitors;
- changes in the level of our operating expenses, particularly related to
the development of the Omnicell Commerce Network;
- our customers' budget cycles; and
- changes in our strategy, seasonal trends and general domestic and
international economic and political conditions.
Due to the foregoing factors, our quarterly revenues and operating results
are difficult to forecast. Revenues are also difficult to forecast because the
online procurement and automation systems markets are rapidly evolving.
The purchase of our automation systems is often part of a customer's larger
initiative to re-engineer their distribution and materials management systems.
As a result, purchase of our automation systems generally involves a significant
commitment of management attention and resources by prospective customers and
often require the input and approval of many decision makers, including nurse
managers, materials managers, pharmacy directors, financial managers,
information systems managers, administrators and boards of directors. For these
and other reasons, the sales cycle associated with the sale or lease of our
automation systems is often lengthy and subject to a number of delays that we
have little or no control over. We cannot assure you that we will not experience
delays in the future. A delay in, or loss of, the sale of our automation systems
could cause our operating results to vary significantly from quarter to quarter
and could harm our business. Accordingly, we believe that period-to-period
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comparisons of our operating results are not necessarily indicative of our
future performance. Although we have recently experienced revenue growth, this
growth should not be considered indicative of future revenue growth, if any, or
of future operating results.
WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE PERSONNEL WE NEED TO SUCCEED.
Our success is highly dependent upon the continuing contributions of our key
management, sales, technical and engineering staff. We believe that our future
success will depend in large part upon our ability to attract, train and retain
highly skilled and motivated personnel. In particular, we will need to hire a
number of information technology, research and development, programming and
engineering personnel to assist in the continued development of our business. As
our products are installed in more and more complex environments, greater
technical expertise will be required. As our installed base of customers
increases, we will also face additional demands on our customer service and
support personnel, requiring additional resources to meet these demands. We may
experience difficulty in recruiting qualified personnel. Competition for
qualified technical, engineering, managerial, sales, marketing and other
personnel is intense and we cannot assure you that we will be successful in
attracting and retaining qualified personnel. Competitors have in the past
attempted, and may in the future attempt, to recruit our employees. Failure to
attract and retain key personnel could harm our business, results of operations
and financial condition.
IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH GPOS OR OTHER SIMILAR
ORGANIZATIONS, WE MAY HAVE DIFFICULTY SELLING OUR PRODUCTS AND SERVICES.
We have agreements with various hospital purchasing organizations, such as
Premier Purchasing Partners, L.P., University Health System Consortium Services
Corporation and the Department of Veterans Affairs, that enable us to more
readily sell our products and services to customers represented by these
purchasing organizations. Our relationships with these purchasing organizations
are terminable at the convenience of either party. The loss of our relationship
with Premier, for example, could impact the breadth of our customer base and
could impair our ability to increase our revenues. In addition, the launch of
the Omnicell Commerce Network may harm our relationship with some or all of
these purchasing organizations. Although the Omnicell Commerce Network is not
structured to compete against these purchasing organizations, we cannot be
certain that they will not perceive our e-commerce business as a threat to their
short and long-term competitiveness. We cannot guarantee that these purchasing
organizations will renew our contracts on similar terms, if at all, and we
cannot guarantee that they will not terminate our contracts before they expire.
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR OUR AUTOMATION SYSTEMS AND WE MAY
NOT BE ABLE TO SHIP THESE SYSTEMS ON TIME IF WE ARE UNABLE TO OBTAIN AN ADEQUATE
SUPPLY OF COMPONENTS AND EQUIPMENT ON A TIMELY BASIS.
Our production strategy for our automation systems is to work closely with
several key subassembly manufacturers and utilize lower cost manufacturers
whenever possible. Although many of the components of our systems are
standardized and available from multiple sources, certain components or
subsystems are fabricated according to our specifications. At any given point in
time, we may only use a single source of supply for certain components. Our
failure to obtain alternative vendors, if required, for any of the numerous
components used to manufacture our products would limit our ability to
manufacture our products and could harm our business. In addition, any failure
of a maintenance contractor to perform adequately could harm our business.
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OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT
OUR ABILITY TO COMPETE.
We believe that our success will depend in part on our ability to obtain
patent protection for products and processes and our ability to preserve our
trademarks, copyrights and trade secrets. We have pursued patent protection in
the United States and foreign jurisdictions for technology that we believed to
be proprietary and for technology that offers us a potential competitive
advantage for our products and intend to do so in the future. We currently own
six United States patents. In addition, we currently have two United States
patents allowed and awaiting issue and four United States patents in
application. The issued patents relate to various features of our automation
systems. We also own four patents in Australia and three patents in Europe, each
of which are enforceable in Germany, France, Sweden and Great Britain. There are
other applications in process in Australia, Japan, Canada and European Community
countries based on issued and pending applications in the United States. There
can be no assurance that we will file any patent applications in the future,
that any of our patent applications will result in issued patents or that, if
issued, such patents will provide significant protection for our technology and
processes. Furthermore, there can be no assurance that others will not develop
technologies that are similar or superior to our own technology or that others
will not design around the patents we own. All Omnicell operating system
software is copyrighted and subject to the protection of applicable copyright
laws. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or obtain and use
information that we regard as proprietary.
INTELLECTUAL PROPERTY OR PRODUCT LIABILITY CLAIMS AGAINST US COULD CAUSE OUR
BUSINESS TO SUFFER.
We do not believe that any of our products infringe upon the proprietary
rights of third parties. We cannot assure you, however, that third parties will
not claim that we have infringed their intellectual property rights with respect
to current or future products. We expect that developers of automation systems
will be increasingly subject to infringement claims as the numbers of products
and competitors in our industry grows and the functionality of products in
different industry segments overlaps. Any infringement claims, with or without
merit, could be time-consuming to defend, result in costly litigation, divert
management's attention and resources, cause product shipment delays or require
us to enter into royalty or licensing agreements. These royalty or licensing
agreements, if required, may not be available on terms acceptable to us, or at
all, which could harm our business, results of operations and financial
condition.
Despite the presence of healthcare professionals as intermediaries between
our automation systems and patients, we may face exposure to product liability
claims brought by patients. Also, in the event that any of our products prove to
be defective, we may be required to recall or redesign such products. Although
we have not experienced any product liability claims to date, the sale and
support of our products may entail the risk of product liability claims, which
could be substantial in light of the use of our products in hospitals and other
medical environments. A successful claim brought against us, or any claim or
product recall that results in negative publicity about us, could harm our
business.
WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL
NEEDS.
We plan to continue to expend substantial funds for research and development
activities, product development, integration efforts and expansion of sales and
marketing activities. We may be required to expend greater than anticipated
funds if unforeseen difficulties arise in the
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course of completing the development and marketing of our products or services
or in other aspects of our business. Our future liquidity and capital
requirements will depend upon numerous factors, including:
- the success and adoption of the Omnicell Commerce Network;
- our ability to integrate buyers' front-end and back-end systems;
- the receipt of and timing of orders for our automation systems; and
- the cost of developing increased manufacturing and sales capacity.
As a result of the foregoing factors, it is possible that we will be
required to raise additional funds through public or private financing,
collaborative relationships or other arrangements. We cannot assure you that
this additional funding, if needed, will be available on terms attractive to us,
if at all. Furthermore, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants that could affect our ability to pay dividends or raise additional
capital. Collaborative arrangements, if necessary to raise additional funds, may
require us to relinquish our rights to certain of our technologies, products or
marketing territories. Our failure to raise capital when needed could harm our
business.
GOVERNMENT REGULATION COULD HARM OUR BUSINESS.
Our online services may be subject to regulation at federal, state and local
levels. The laws governing Internet transactions remain largely unsettled, even
in areas where there has been some legislative action, such as the federal
Internet Tax Freedom Act. The adoption or modification of laws or regulations
relating to the Internet or its related technologies could have a material
adverse effect on the Omnicell Commerce Network and also adversely affect our
business by increasing our costs and administrative burdens. It may take years
to determine whether and how existing laws such as those governing intellectual
property, privacy, libel, consumer protection and taxation apply to the
Internet. We cannot assure you that the recent privacy initiative of the Federal
Trade Commission will not negatively affect our business. Compliance with any
newly adopted laws may prove difficult for us and could harm our business.
While we have implemented a Privacy and Use of Information Policy and
strictly adhere to established privacy principles, use of customer information
guidelines and federal and state statutes and regulations regarding privacy and
confidentiality, we cannot assure you that we will be in compliance with the
Health Insurance Portability and Accountability Act of 1996 (HIPAA).
While the manufacture and sale of our current products are not regulated by
the United States Food and Drug Administration (FDA), we cannot assure you that
these products, or our future products, if any, will not be regulated in the
future. A requirement for FDA approval could have a material adverse effect on
our business. Pharmacies are regulated by individual state boards of pharmacy
that issue rules for pharmacy licensure in their jurisdiction. State boards of
pharmacy do not license or approve our automation systems; however, pharmacies
using our equipment are subject to state board approval. The failure of such
pharmacies to meet differing requirements from a significant number of state
pharmacy boards could harm our business, results of operations and financial
condition. Similarly, hospitals must be accredited by the Joint Commission on
Healthcare Accreditation Organization (JCAHO) in order to be eligible for
Medicaid and Medicare funds. JCAHO does not approve or accredit
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automation systems; however, disapproval of our customers' supply management
methods and their failure to meet JCAHO requirements could harm our business,
results of operations and financial condition.
RISKS RELATING TO THIS OFFERING
OUR STOCK PRICE MAY BE EXTREMELY VOLATILE AND YOU MAY NOT BE ABLE TO RESELL YOUR
SHARES AT OR ABOVE THE INITIAL PUBLIC OFFERING PRICE.
Prior to the offering, there has been no public market for our common stock.
The initial public offering price will be determined by negotiations between the
underwriters and us and may not be indicative of the market price for our common
stock after the offering. We do not know the extent to which investor interest
will lead to the development of an active public market. As a consequence, you
may not be able to sell the common stock you purchase at or above the initial
public offering price. In particular, the trading prices of many stocks of
Internet-related companies have experienced extreme price and volume
fluctuations. Because we are an Internet-related company, we expect our stock
price to be similarly volatile. These fluctuations often have been unrelated or
disproportionate to the operating performance of these companies. These
fluctuations may continue and could harm our stock price. Any negative change in
the public's perception of the prospects of Internet-related companies could
also depress our stock price, regardless of our results.
In the past, securities class action litigation has often been brought
against companies following periods of volatility in the market price of their
securities. If brought against us, regardless of the outcome, litigation could
result in substantial costs and a diversion of our management's attention and
resources and could harm our business.
IF WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECREASE SIGNIFICANTLY.
We may fail to meet the revenue and profitability expectations of public
market analysts and investors which could harm our stock price. In addition,
public market analysts and investors have not been able to develop consistent
financial models for the Internet market because of the unpredictable rate of
growth of Internet users, the rapidly changing models of doing business on the
Internet and the Internet's relatively low barriers to entry. As a result, and
because of the other risks discussed in this prospectus, our actual results may
not meet the expectations of public market analysts and investors in future
periods. If this occurs, the price of our common stock will likely fall.
AFTER THIS OFFERING, OUR OFFICERS AND DIRECTORS WILL OWN A LARGE PERCENTAGE OF
OUR COMMON STOCK AND WILL BE ABLE TO CONTROL THE OUTCOME OF MATTERS REQUIRING
STOCKHOLDER APPROVAL
Upon the completion of this offering, executive officers, directors and
current holders of five percent (5%) or more of our outstanding common stock
will, in the aggregate, beneficially own approximately % of our
outstanding common stock. As a result, these stockholders will be able to
effectively control all matters requiring approval of our stockholders,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may also delay, deter or prevent a
change in control and may make some transactions more difficult or impossible to
complete without the support of these stockholders, even if the transaction is
favorable to our stockholders. In addition, because of their ownership of our
common stock, these stockholders will be in a position to significantly affect
our corporate actions in a manner that could conflict with the interests of our
public stockholders.
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SUBSTANTIAL SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD CAUSE OUR
STOCK PRICE TO FALL.
The market price of our common stock could decline if our existing
stockholders sell substantial amounts of our common stock in the public market
after this offering. These sales also might make it more difficult for us to
sell equity securities in the future at a time and at a price that we deem
appropriate. Upon completion of this offering, assuming the number of
outstanding shares as of March 31, 2000, we will have outstanding
shares of common stock, shares if the underwriters exercise their
over-allotment option in full. Of these shares, shares, plus an
additional shares if the underwriters exercise their over-allotment
option in full, will be freely tradeable without restriction or further
registration under the Securities Act of 1933, as amended. Of the remaining
shares, a total of approximately shares held by our directors,
executive officers and our existing stockholders are subject to lock-up
agreements providing that these stockholders will not sell or otherwise dispose
of any of their shares for a period of 180 days following the date of the final
prospectus for this offering without the prior written consent of Deutsche Bank
Securities Inc. Deutsche Bank Securities Inc. can release these lock-up
agreements at any time. In addition, options to purchase 5,204,688 shares of our
common stock are outstanding as of March 31, 2000, under our 1992 Equity
Incentive Plan, our 1995 Management Stock Option Plan and our 1999 Equity
Incentive Plan. Following this offering, we expect to register the shares
underlying these options. Subject to the exercise of these options, shares
included in such registration will be available for sale in the open market
immediately after the 180-day lock-up period expires. See "Shares Eligible For
Future Sale" for a more detailed discussion.
After this offering, the holders of approximately shares of
common stock will be entitled to rights with respect to registration of such
shares under the Securities Act. If such holders, by exercising their
registration rights, cause a large number of securities to be registered and
sold in the public market, these sales could have an adverse effect on the
market price for our common stock. If we were to initiate a registration and
include shares held by these holders pursuant to the exercise of their
registration rights, these sales may impair our ability to raise capital.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD DELAY
OR PREVENT A CHANGE IN CONTROL.
Upon the completion of this offering, we will be subject to the Delaware
anti-takeover laws. These laws prevent us from engaging in a merger or sale of
more than 10% of our assets with any stockholder, including all affiliates and
associates of any stockholder, who owns 15% or more of our outstanding voting
stock, for three years following the date that such stockholder acquired 15% or
more of our assets unless:
- our Board of Directors approves the transaction where the stockholder
acquires 15% or more of our assets;
- after the transaction where the stockholder acquires 15% or more of our
assets, the stockholder owns at least 85% of our outstanding voting stock,
excluding shares owned by directors, officers and employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held under the plan will be tendered in a
tender or exchange offer; or
- on or after this date, the merger or sale is approved by the Board of
Directors and the holders of at least two-thirds of the outstanding voting
stock that is not owned by the stockholder.
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A Delaware corporation may opt out of the Delaware anti-takeover laws in its
original certificate of incorporation, amended certificate of incorporation or
bylaws. We have not opted out of the anti-takeover laws, which could prohibit or
delay mergers or other takeovers or changes of control and may discourage
attempts by other companies to acquire us.
In addition, our Certificate of Incorporation and Bylaws include a number of
provisions that may deter or impede hostile takeovers or changes of control or
management. These provisions include:
- a Board of Directors classified into three classes of directors with
staggered three-year terms;
- the authority of the Board of Directors to issue up to 5,000,000 shares of
preferred stock and to determine the price, rights, preferences and
privileges of these shares, without stockholder approval;
- all stockholder actions must be effected at a duly called meeting of
stockholders and not by written consent;
- the elimination of cumulative voting; and
- the indemnification of officers and directors against losses incurred
during investigations and legal proceedings resulting from their service
to us.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF YOUR SHARES.
The initial public offering price is substantially higher than the net
tangible book value of each outstanding share of our common stock. As a result,
investors participating in this offering will suffer immediate and substantial
dilution. The dilution will be $ per share in the net tangible
book value of the common stock from the initial public offering price (or
$ per share if the underwriters' option to purchase additional
shares is exercised in full). This dilution is described in greater detail under
"Dilution" in this prospectus. If outstanding options or warrants to purchase
shares of common stock are exercised, there will be further dilution.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate
to future events or our future financial performance. We have attempted to
identify forward-looking statements by terminology including "anticipates,"
"believes," "can," "continue," "could," "estimates," "expects," "intends,"
"may," "plans," "potential," "predicts," "should" or "will" or the negative of
these terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Risk Factors," that may cause our
or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.
Although we believe that our expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are not under any duty to update any
of the forward-looking statements after the date of this prospectus to conform
these statements to actual results, unless required by law.
USE OF PROCEEDS
We estimate that our net proceeds from the sale of the shares
of common stock we are offering at the initial public offering price of
$ , will approximate $ , or $ if
the underwriters' over-allotment option is exercised in full after deducting the
estimated underwriting discounts and commissions and estimated offering expenses
payable by us.
We intend to use approximately $8.1 million of the net proceeds to repay the
outstanding principal and interest related to the note held by Baxter Healthcare
incurred in connection with our acquisition of the Sure-Med product line in
January 1999. The Baxter Healthcare note accrues interest at a rate of 8.0% from
January 1999 through January 2001 and 13.0% for the succeeding three years. In
addition, the principal under the note is repayable in twelve equal quarterly
installments beginning in January 2001.
In addition, we expect to use a portion of the net proceeds for the
expansion of sales, marketing and customer support activities and to continue
the development and marketing of the Omnicell Commerce Network. We expect to use
the remainder of the net proceeds for working capital and other general
corporate purposes, including potential acquisitions. We currently have no
commitments or agreements and are not involved in any negotiations for
acquisitions of complementary products, technologies or businesses.
The amounts that we actually expend on these matters will vary
significantly, depending on a number of factors, including future revenue
growth, if any, and the amount of cash we generate from operations. As a result,
we will retain broad discretion in the allocation of the net proceeds of this
offering. Pending use of the net proceeds of this offering, we intend to invest
the net proceeds in interest bearing, investment-grade securities.
DIVIDEND POLICY
We currently intend to retain future earnings, if any, to finance the
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. The terms of our line of credit prohibit the payment of cash
dividends on our capital stock without the consent of our lender.
19
<PAGE>
CAPITALIZATION
The table below presents the following information:
- our actual capitalization as of December 31, 1999; and
- our pro forma as adjusted capitalization as of December 31, 1999 after
giving effect to the conversion of all outstanding shares of our
redeemable convertible preferred stock, convertible preferred stock and
convertible note payable into shares of our common stock upon completion
of this offering and to reflect the receipt of the net proceeds from our
sale of shares of common stock at an assumed initial public offering
price of $ per share in this offering, less underwriting
discounts and commissions and estimated offering expenses payable by us as
discussed in "Use of Proceeds."
You should read this table in conjunction with the Financial Statements and
the other financial information included in this prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments........... $ 6,698 $
======== ========
Long-term debt, net of current portion...................... $ 8,464 $
Redeemable convertible preferred stock, no par value;
3,604,000 shares authorized, 1,081,200 shares issued and
outstanding, actual; none, pro forma as adjusted.......... 15,166
Stockholders' equity (net capital deficiency):
Convertible preferred stock, no par value; 18,500,000
shares authorized (including 3,604,000 shares designated
as redeemable convertible preferred stock); 11,527,848
shares issued and outstanding, actual; 5,000,000 shares
authorized, no shares issued and outstanding, pro forma
as adjusted............................................. 33,854
Common stock, no par value, 35,000,000 shares authorized,
2,634,211 shares issued and outstanding, actual;
50,000,000 shares authorized, shares issued and
outstanding, pro forma as adjusted...................... 2,302
Accumulated deficit....................................... (78,995)
-------- --------
Total stockholders' equity (net capital deficiency)..... (42,839)
-------- --------
Total capitalization.................................. $(19,209)
======== ========
</TABLE>
This table excludes the following shares issued or issuable as of March 31,
2000:
- 5,204,688 shares of common stock that may be issued upon exercise of
options;
- 106,749 shares of common stock that may be issued upon exercise of
warrants;
- 2,591,016 shares of common stock reserved for future issuance under our
stock option and employee stock purchase plans; and
- 3,010,528 shares of common stock issuable upon conversion of the Series K
convertible preferred stock issued in the three months ended March 31,
2000.
20
<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999, was
approximately $(27.3) million, or $(1.76) per share. Pro forma net tangible book
value per share represents the amount of pro forma stockholders' equity,
assuming conversion of all of our redeemable convertible preferred stock and
convertible note payable into common stock, less intangible assets, divided by
the pro forma number of shares of common stock outstanding as of December 31,
1999. Dilution per share represents the difference between the amount per share
paid by purchasers of shares of common stock in this offering and the pro forma
net tangible book value per share of common stock immediately after completion
of this offering.
Pro forma net tangible book value as of December 31, 1999, after giving
effect to the sale of shares of common stock offered by us at an initial
public offering price of $ per share and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us, would
have been $ million, or $ per share. This represents an immediate
increase in pro forma net tangible book value of $ per share to
existing stockholders and an immediate dilution in pro forma net tangible book
value of $ per share to investors purchasing our common stock in this
offering, as illustrated in the following table:
<TABLE>
<CAPTION>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of
December 31, 1999....................................... $
Increase per share attributable to new investors..........
--------
Pro forma net tangible book value per share after this
offering..................................................
--------
Pro forma dilution per share to new investors............... $
========
</TABLE>
The table below summarizes, on a pro forma basis, the differences between
our existing stockholders and the new investors purchasing our common stock in
this offering with respect to the total number of shares purchased from us, the
total consideration paid and the average price per share paid, based upon an
initial public offering price of $ per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................... % $ % $
New investors............................
------ ------ ------- ------ -------
Total..................................
====== ====== ======= ====== =======
</TABLE>
The above discussion and tables assume no exercise of stock options after
December 31, 1999.
If the underwriters exercise their over-allotment in full, the following
will occur:
- the number of shares of common stock held by existing stockholders will
decrease to approximately % of the total number of shares of our common
stock outstanding; and
- the number of shares held by new investors will increase to shares,
or approximately % of the total number of our common stock outstanding
after this offering.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
To aid you in your analysis, we are providing the following information. We
derived the selected consolidated financial data as of December 31, 1998 and
1999 and for the years ended December 31, 1997, 1998 and 1999 from our audited
consolidated financial statements included elsewhere in this prospectus. The
selected consolidated financial data as of December 31, 1995, 1996 and 1997 and
for the year ended December 31, 1996 are derived from audited financial
statements (with adjustments made to reflect the requirements of Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements,"
issued by the Securities and Exchange Commission in December 1999) not included
in this prospectus. The selected consolidated financial data for the year ended
December 31, 1995 are derived from unaudited financial statements not included
in this prospectus. The pro forma net loss per share and shares used in
computing pro forma net loss per share are calculated as if all of our
redeemable convertible preferred stock, convertible preferred stock and
convertible notes payable were converted into shares of our common stock on the
date of their issuance. Other data has not been derived from our financial
statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues.......................................... $ 7,728 $ 21,554 $ 36,073 $48,212 $ 52,604
Cost of revenues.................................. 4,999 10,560 16,211 17,384 36,140
-------- -------- -------- ------- --------
Gross profit...................................... 2,729 10,994 19,862 30,828 16,464
Operating expenses:
Research and development........................ 3,353 4,052 5,921 5,986 8,977
Selling, general and administrative............. 11,681 18,096 24,805 25,060 37,998
Integration expenses............................ -- -- -- -- 785
-------- -------- -------- ------- --------
Total operating expenses...................... 15,034 22,148 30,726 31,046 47,760
-------- -------- -------- ------- --------
Loss from operations.............................. (12,305) (11,154) (10,864) (218) (31,296)
Interest income (expense), net.................... 38 694 953 1,039 (1,767)
-------- -------- -------- ------- --------
Income (loss) before income taxes................. (12,267) (10,460) (9,911) 821 (33,063)
Provision for income taxes........................ (1) -- 201 185 150
-------- -------- -------- ------- --------
Net income (loss)................................. $(12,268) $(10,460) $(10,112) $ 636 $(33,213)
Preferred stock accretion......................... -- (11) (22) (22) --
-------- -------- -------- ------- --------
Net income (loss) available to common
stockholders.................................... $(12,268) $(10,471) $(10,134) $ 614 $(33,213)
======== ======== ======== ======= ========
Net income (loss) per share:
Basic........................................... $ (8.75) $ (6.48) $ (5.54) $ 0.29 $ (14.12)
Diluted......................................... $ (8.75) $ (6.48) $ (5.54) $ 0.04 $ (14.12)
Weighted average common shares outstanding:
Basic........................................... 1,402 1,613 1,830 2,083 2,353
Diluted......................................... 1,402 1,613 1,830 17,621 2,353
Pro forma net loss per share:
Basic and diluted............................... $ (2.10)
========
Pro forma weighted average common shares
outstanding:
Basic and diluted............................... 15,801
OTHER DATA:
Cumulative number of sites of installed automation
systems......................................... 116 372 624 1,030 1,306
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments............................. $ 7,865 $20,821 $ 16,540 $ 22,072 $ 6,698
Total assets.............................. 15,274 37,246 43,149 46,361 36,449
Deferred gross profit..................... 2,425 7,883 17,390 20,227 31,370
Long-term obligations, net of current
portion................................. 826 160 117 67 9,309
Redeemable convertible preferred stock.... -- 25,238 25,260 25,282 15,166
Total stockholders' equity (net capital
deficiency)............................. 8,053 (2,295) (11,738) (10,519) (42,839)
</TABLE>
- ------------
- Cost of revenues for the year ended December 31, 1999 includes special
charges related to the writedown of Sure-Med inventory--$12.5 million;
additional costs recorded due to sale of Sure-Med inventory which was
recorded at fair value upon acquisition--$1.1 million and writedown of
inventory designated for a marketing program--$1.5 million.
- Loss from operations for the year ended December 31, 1999 includes
integration expenses associated with acquisition of Sure-Med product
line--$0.8 million; write off of equity investment--$0.6 million; and
write off of leasehold improvements and other equipment--$0.9 million.
- Net loss and pro forma net loss per share for the year ended December 31,
1999, excluding non-recurring charges and charges associated with the
Sure-Med product line acquisition would have been $(15.8) million and
$(1.00), respectively.
- Deferred gross profit on the balance sheet represents gross margin on
sales of automation products that have been shipped to, accepted and in
most instances paid for by our customer but not yet installed at the
customer site. The revenues and cost of revenues for such items will be
recorded upon completion of installation.
- The amounts shown for the year ended December 31, 1999 include the results
of the Sure-Med product line acquisition from January 29, 1999 to the end
of 1999. When you read this selected consolidated financial data, it is
important that you also read the historical consolidated financial
statements and related Notes included in this prospectus, as well as the
section of this prospectus entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YOU SHOULD READ THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES
TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION AND
ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK, UNCERTAINTIES
AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING BUT
NOT LIMITED TO THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS.
OVERVIEW
We provide a comprehensive, buyer-focused, supply chain management solution
that addresses the limitations of the traditional healthcare supply chain. The
Omnicell Commerce Network and our supply and pharmacy automation systems enable
customers to procure and manage a wide range of medical and non-medical supplies
and pharmaceuticals.
We were formed in 1992 and began offering our supply automation systems for
sale in 1993. In late 1996, we introduced our first pharmacy automation system.
In January 1999, we expanded our pharmacy product line and customer base with
the acquisition of the Sure-Med product line from Baxter Healthcare. In November
1999, we launched the Omnicell Commerce Network, an e-commerce service that
consists of two Web-based applications, OmniBuyer and OmniSupplier, that
incorporate and extend Commerce One's business-to-business e-commerce technology
platform into healthcare. We installed our first OmniBuyer site in November 1999
at Rush Presbyterian-St. Luke's Medical Center in Chicago, Illinois. Through
March 31, 2000, four additional buyers and three suppliers have begun
transacting on the Omnicell Commerce Network.
We have installed over 14,000 of our automation systems in over 1,300
hospitals and other healthcare facilities. Our automation systems are sold
primarily in the United States. We also sell such systems in Canada and Europe.
We manufacture the majority of our systems in our production facility in Palo
Alto, California. In addition, we maintain a refurbishment and spare parts
facility in Waukegan, Illinois. Our sales activities are conducted through a
dedicated direct sales and field operations organization located in the United
States, Canada and Europe. We also have an agreement with an international
distributor located in Australia. To date, sales through distributors have not
been significant.
REVENUES
Our revenues have increased significantly since our inception, and from 1996
to 1999, we experienced compound annual revenue growth of 35%. The increase in
our revenues has been due to several factors, including: the increased market
acceptance of our supply automation systems; the introduction and increased
market acceptance of our pharmacy automation systems; and the expansion of our
direct sales and field operations organization.
Sun Healthcare was our largest customer, representing 19.7% of our revenues
in 1997, 20.5% in 1998 and 9.7% in 1999. Sun Healthcare filed for Chapter 11
bankruptcy protection in 1999. Accordingly, we do not anticipate any significant
revenue from Sun Healthcare in future quarters.
Customers acquire our automation systems through either outright purchase
basis or non-cancelable long-term leases, which typically have terms of 60
months. We bill our customers upon delivery and acceptance of our automation
systems and recognize revenue
24
<PAGE>
when the systems are installed. Deferred gross profit on our balance sheet
represents automation systems that have been shipped to and, in most instances,
paid for by our customers but not yet installed at the customer site. We record
these shipments as deferred gross profit because title to the inventory has
passed to the customer. Generally, we try to install our automation systems
within six to nine months after shipment, but installation can take a year or
more. Some customers experience delays in installation due to construction and
delays in receiving interfaces from third parties. Deferred gross profit is not
equal to gross margin because it does not include installation costs, which are
incurred in the period when revenue is recognized.
Typically, we will sell our customer lease agreements to third-party leasing
companies. Lease revenue is recognized only to the extent of the amounts funded
by the leasing company. As part of the initial sale of our automation systems,
customers typically sign a one-year service agreement, and service revenues are
recognized over the term of these agreements. Service and other revenues include
month to month rentals, license fees and service and maintenance contract
revenue. On occasion, a customer will rent certain equipment on a month-to-month
basis. Fees from such rentals are recognized monthly. Service and other revenue
should continue to grow modestly as a percentage of total revenue consistent
with the growth of our installed base of automation systems.
Revenues from our automation business are difficult to forecast because the
sales cycle, from initial assessment to product installation involves a
significant commitment of capital and time, varies substantially from customer
to customer and can take more than one year. Specifically, the customer's order
approval process is subject to internal procedures associated with large capital
expenditures and the time associated with accepting new technologies that affect
mission critical operations. For these and other reasons, the sales cycle
associated with the purchase of our automation products is typically lengthy and
subject to a number of significant risks, including customers' budgetary
constraints and internal acceptance reviews over which we have little or no
control.
As of December 31, 1999, we had not generated any revenues from the Omnicell
Commerce Network. In the future, we expect to generate such revenue from
multiple sources, including OmniBuyer subscription fees from healthcare facility
customers and OmniSupplier connection and transaction fees from suppliers.
Revenue growth from the Omnicell Commerce Network will be dependent upon
realizing significant subscription, connection and transaction fees. We also
intend to pursue revenue opportunities from data collected on the Omnicell
Commerce Network and to generate fees from a percentage of transaction volume
with suppliers who want to co-market Internet services with us to Web-enable
their customers.
Revenues from the Omnicell Commerce Network are difficult to forecast due to
its early stage of implementation. Healthcare facilities have been slow to adopt
new technologies and historically have not allocated as large a percentage of
their budget on information technologies as corporations in other service
industries typically do. In addition, while we believe there are significant
benefits in adopting our Web-based procurement solution, demand from our
potential healthcare facility and supplier customers may not develop as rapidly
as we expect.
COSTS AND EXPENSES
Our expense levels are based, in part, on our expectations of future revenue
levels. If revenue levels are below expectations, operating results are likely
to be negatively impacted. In particular, operating results may be
disproportionately affected by a reduction in revenue.
25
<PAGE>
In addition, we have never achieved profitability on an operating basis, and our
current revenues and gross margin are not sufficient to cover our operating
expenses, especially in light of our ongoing investment in the Omnicell Commerce
Network. Based on the foregoing, we believe that period to period comparisons of
our results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance.
Cost of revenues consists primarily of direct materials, labor and overhead
required to manufacture automation systems. Cost of revenues includes costs
required to install our systems at the customer location, as well as costs of
service and spare parts required to maintain and support installed systems.
Direct materials and installation costs are mostly variable. Manufacturing labor
and overhead remain relatively fixed over ranges of production volume. The cost
of service and spare parts tends to increase as the size of the installed base
of customers increases. Cost of sales also includes the amortization of software
license fees.
Our research and development expenses include engineering and development
salaries, wages and benefits, prototyping and laboratory expenses, consulting
expenses and engineering-related facilities and overhead charges. Most of the
research and development expenses are personnel or facilities related and as
such are relatively fixed. Prototyping and consulting expenses will vary
depending on the stage of completion of various engineering and development
projects.
Selling, general and administrative expenses include costs to support the
sales, marketing, field operations and customer support and administration
organizations. Most of these costs are personnel or facilities-related and are
relatively fixed. Bonuses and sales commissions will typically change in
proportion to revenue or profitability. Other expenditures, such as advertising,
promotions and consulting, are neither fixed nor variable and will fluctuate
depending on product introductions, promotional programs and trade shows.
We anticipate incurring significant incremental development and selling,
general and administrative expenses as we launch, support and promote the
Omnicell Commerce Network. We expect these expenses to include such items as:
Commerce One support fees, project management services, catalog development and
management fees, hosting charges, recruiting and training costs, marketing,
advertising, promotion and selling initiatives.
26
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain items included in our results of
operations for the three years ended December 31, 1997, 1998 and 1999 expressed
as a percentage of our net revenue for these periods:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... 100.0% 100.0% 100.0%
Cost of revenues............................................ 44.9 36.1 68.7
----- ----- -----
Gross profit (loss)......................................... 55.1 63.9 31.3
Operating expenses:
Research and development.................................. 16.4 12.4 17.1
Selling, general and administrative....................... 68.8 52.0 72.2
Integration expenses...................................... 0.0 0.0 1.5
----- ----- -----
Total operating expenses.............................. 85.2 64.4 90.8
Loss from operations........................................ (30.1) (0.5) (59.5)
Interest income (expense), net.............................. 2.6 2.2 (3.4)
----- ----- -----
Income (loss) before provision for income taxes............. (27.5) 1.7 (62.9)
Provision for income taxes.................................. 0.6 0.4 0.3
----- ----- -----
Net income (loss)........................................... (28.0) 1.3 (63.1)
Preferred stock accretion................................... (0.1) 0.0 0.0
----- ----- -----
Net income (loss) available to common stockholders.......... (28.1) 1.3 (63.1)
===== ===== =====
</TABLE>
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
REVENUES. Revenues increased by 9.1% from $48.2 million in 1998 to $52.6
million in 1999, due primarily to a 3.5% increase in the number of automation
systems installed and a 5.4% increase in average selling prices. Our revenue
growth in 1999 was negatively impacted by a decline in purchases by our largest
customer, Sun Healthcare, due to its financial difficulties and by delays in
purchase decisions by other customers over concerns related to Year 2000. Many
healthcare facilities directed a significant portion of their internal
administrative and information technology resources toward correcting
deficiencies in their Year 2000 compliance programs and consequently, were not
receptive to implementing additional systems such as ours in the second half of
1999. The increase in average selling prices in 1999 as compared to 1998 is a
result of fewer promotional discounts, a general firming of competitive pricing
and a higher sales mix of pharmacy systems, which are priced higher than our
supply automation systems on a per unit basis.
Revenues increased by 33.7% from $36.1 million in 1997 to $48.2 million in
1998, due primarily to increases in unit volumes reflecting continued market
acceptance of our automation systems. Revenues also increased due to an increase
in selling prices resulting from a continued higher mix of our pharmacy systems
which have higher per unit prices than our supply systems.
COST OF REVENUES. Cost of revenues increased by 107.9% from $17.4 million
in 1998 to $36.1 million in 1999, due primarily to a $12.5 million writedown of
Sure-Med product line inventory to net realizable value in the fourth quarter of
1999 because of lower than anticipated demand for Sure-Med products following
the acquisition. An additional special
27
<PAGE>
charge included in cost of revenues in the fourth quarter of 1999 was a $1.5
million writedown of systems inventory committed to certain customers at no
charge under a marketing program. Cost of revenues also includes $1.1 million of
purchase accounting adjustment due to the sale of Sure-Med inventories that had
been written up to fair value.
Excluding the impact of the Sure-Med inventory and other writedowns, cost of
revenues increased by 20.7% from $17.4 million in 1998 to $21.0 million in 1999,
reflecting an increase in the number of systems installed partially offset by a
decrease in manufacturing costs per unit. As a percent of sales, cost of
revenues, excluding the impact of the Sure-Med inventory and other write offs,
increased from 36.1% to 39.9%.
Cost of revenues increased by 7.2% from $16.2 million in 1997 to $17.4
million in 1998. The increase in cost of revenues is due to the 34% increase in
sales that was partially offset by a reduction in materials costs per unit and
increases in manufacturing productivity.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by
50.0% from $6.0 million in 1998 to $9.0 million in 1999. The increase in
research and development expenses was primarily attributable to higher costs
associated with additional engineering personnel retained as part of the
acquisition of the Sure-Med product line from Baxter Healthcare. We anticipate
that we will continue to commit significant resources to research and
development in future periods to enhance and extend our automation systems and
to customize Commerce One's technology for Omnicell Commerce Network customers.
We expect that research and development expenses will increase in dollar terms
and as a percentage of sales from current levels, particularly as we add
engineering resources for integration, cataloging and modifying OmniBuyer and
OmniSupplier to meet the needs of our customers. To date, we have not
capitalized any software development costs.
Research and development expenses increased by 1.1% from $5.9 million in
1997 to $6.0 million in 1998. The increase in research and development expenses
reflects costs associated with the introduction of our Web-enabled DataCenter.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
costs increased by 51.6% from $25.1 million in 1998 to $38.0 million in 1999.
The increase in selling, general and administrative expenses is due to staffing
increases necessary to manage and support our growth in revenue, as well as
increased staffing as a result of the acquisition of the Sure-Med product line
from Baxter Healthcare. Also included in selling, general and administrative
costs are special charges of $0.9 million relating to the write off of leasehold
improvements and other equipment and $0.6 million relating to the write off of
an equity investment. We anticipate that we will continue to commit significant
resources to our sales, customer support, marketing, finance and administration
organizations, and have accelerated hiring to support the Omnicell Commerce
Network. We expect that selling, general and administrative expenses will
continue to increase in dollar terms.
Selling, general and administrative expenses increased by 1.0% from $24.8
million in 1997 to $25.1 million in 1998. Increased efficiency in the customer
support organization contributed to our ability to limit increases in selling,
general and administrative costs in 1998.
INTEGRATION EXPENSES. Integration expenses of $0.8 million in 1999 consists
of costs associated with the integration of Omnicell and Sure-Med engineering
efforts, product lines and marketing efforts.
INTEREST INCOME (EXPENSE). Net interest income was $1.0 million in 1998
compared to net interest expense of $1.8 million in 1999, reflecting a reduction
in interest income due to a
28
<PAGE>
decrease in cash, cash equivalents and short-term investments balances and an
increase in interest expense due to debt obligations incurred as part of the
Sure-Med acquisition, as well as interest paid to Sun Healthcare with redemption
of its redeemable preferred stock.
Net interest income was $1.0 million during both 1997 and 1998.
QUARTERLY RESULTS OF OPERATIONS
In any given quarter, it is common for a few customers to make up a
substantial percentage of our automation systems revenue, although the identity
of such customers generally varies from quarter to quarter. The timing of
purchase decisions by large hospital customers has a material impact on our
deferred gross profit position but a less significant impact on quarterly
results of operations which depend on our ability to install systems that have
already been shipped to customers.
Our quarterly operating results have varied significantly in the past and
may vary significantly in the future depending on many factors that may include,
but are not limited to, the following:
- the success of the Omnicell Commerce Network;
- timing of additional customers transacting on the Omnicell Commerce
Network;
- the size and timing of significant orders and their fulfillment and
integration;
- changes in pricing policies by us or our competitors;
- the number, timing and significance of product enhancements and new
product announcements by us and our competitors;
- changes in the level of our operating expenses, particularly related to
the development of the Omnicell Commerce Network;
- our customers' budgeting cycles; and
- changes in our strategy and general domestic and international economic
and political conditions.
29
<PAGE>
The following tables present certain unaudited statement of operations data
for each quarter of 1998 and 1999 and express this as a percentage of the
Company's revenues for the periods indicated. This data has been derived from
unaudited consolidated financial statements and has been prepared on the same
basis as the Company's audited consolidated financial statements which appear
elsewhere in this prospectus. In the opinion of our management, this data
includes all adjustments, consisting only of normal recurring adjustments and,
in the fourth quarter of 1999, special charges described below, necessary for a
fair presentation of such data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------
MAR 31, JUN 30, SEP 30, DEC 31,
1999 1999 1999 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $13,813 $11,451 $13,184 $ 14,155
Cost of revenues(1)......................................... 4,663 4,139 5,021 22,317
------- ------- ------- --------
Gross profit (loss)......................................... 9,150 7,312 8,163 (8,162)
Operating expenses:
Research and development.................................. 1,819 2,078 2,505 2,575
Selling, general and administrative(2).................... 8,084 8,925 10,022 10,968
Integration expenses...................................... 286 362 137 --
------- ------- ------- --------
Total operating expenses................................ 10,189 11,365 12,664 13,543
Loss from operations........................................ (1,039) (4,053) (4,501) (21,705)
Interest income (expense), net.............................. (374) (521) (569) (303)
------- ------- ------- --------
Loss before provision for income taxes...................... (1,413) (4,574) (5,070) (22,008)
Provision for income taxes.................................. 24 40 -- 85
------- ------- ------- --------
Net loss.................................................... $(1,437) $(4,614) $(5,070) $(22,093)
======= ======= ======= ========
AS A PERCENTAGE OF REVENUES:
Cost of revenues............................................ 33.7% 36.2% 38.1% 157.7%
Gross profit (loss)......................................... 66.3 63.8 61.9 (57.7)
Operating expenses:
Research and development.................................. 13.2 18.1 19.0 18.2
Selling, general and administrative....................... 58.5 77.9 76.0 77.5
Integration expenses...................................... 2.1 3.2 1.0 0.0
------- ------- ------- --------
Total operating expenses................................ 73.8 99.2 96.1 95.7
Loss from operations........................................ (7.5) (35.4) (34.2) (153.4)
Interest income (expense), net.............................. (2.7) (4.5) (4.3) (2.1)
------- ------- ------- --------
Loss before provision for income taxes...................... (10.2) (39.9) (38.5) (155.5)
Provision for income taxes.................................. 0.2 0.4 0.0 0.6
------- ------- ------- --------
Net loss.................................................... (10.4) (40.3) (38.5) (156.1)
======= ======= ======= ========
</TABLE>
- ------------
(1) Includes special charges in the fourth quarter of 1999 related to writedown
of Sure-Med inventory--$12.5 million; additional costs recorded due to sale
of Sure-Med inventory which was recorded at fair value upon acquisition--
$1.1 million and writedown of inventory designated for a marketing
program--$1.5 million.
(2) Includes special charge in the second quarter of 1999 related to write-off
of leasehold improvements and other equipment--$0.9 million and a special
charge in the fourth quarter of 1999 related to write-off of equity
investment--$0.6 million.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations since inception primarily through the
private placement of equity securities, as well as through equipment financing
and secured loan arrangements. Through December 31, 1999, we have raised
approximately $51.3 million from the private placement of equity securities, net
of redemptions.
As of December 31, 1999, our principal sources of liquidity included $6.7
million in cash, cash equivalents and short-term investments and an undrawn
$10.0 million revolving credit facility. Our funds are currently invested in
U.S. Treasury and government agency obligations, investment grade commercial
paper and short-term interest-bearing securities.
In connection with the acquisition of the Sure-Med product line, we incurred
a note payable to Baxter Healthcare of approximately $7.9 million. The note is
secured by
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substantially all of the assets supporting the Sure-Med product line. The note
is for a term of five years and is repayable in twelve equal quarterly
installments beginning in 2001. Interest payments are due quarterly at a rate of
8.0% for the first two years and 13.0% for the succeeding three years. We expect
to utilize a portion of the proceeds from this offering to repay the Baxter
Healthcare note in full.
In March 1999, in connection with the acquisition of the Sure-Med product
line, we established a revolving credit facility of $10.0 million that we have
not utilized. Any advances under the credit facility would be secured by
substantially all of our assets. Interest under the credit agreement is payable
at an annual rate equal to our lender's prime rate plus 1.5%. Our credit
agreement contains covenants that include limitations on indebtedness and liens,
in addition to thresholds relating to net capital deficiencies and ratios that
define borrowing availability and restrictions on the payment of dividends. As
of December 31, 1999, we were not in compliance with certain financial covenants
and no amounts were outstanding or available under the credit agreement. After
the consummation of this offering, we expect to be in compliance with such
covenants.
We used cash of $5.2 million in operating activities in 1999 compared to
$6.7 million provided by operating activities in 1998. The net loss of $33.2
million for 1999 was partially offset by non-cash charges for depreciation and
amortization of $2.0 million, Sure-Med product line inventory and related fixed
asset write offs of $14.5 million and an investment writedown of $0.5 million,
and an increase in deferred gross profit of $8.2 million.
We generated cash of $12,000 from investing activities in 1999 compared to
$7.3 million used in investing activities in 1998. Net maturities of short-term
investments were $6.4 million in 1999 compared to net purchases of $5.5 million
in 1998. Our 1999 expenditures for property and equipment of $6.0 million
exceeded the $1.8 million expended in 1998.
We used cash of $3.8 million in financing activities in 1999 compared to
$0.6 million provided by financing activities in 1998.
We redeemed 720,800 shares of Series J redeemable convertible preferred
stock from Sun Healthcare for $10.1 million plus interest of $1.6 million. This
redemption consisted of $6.0 million in cash and the balance was paid by
offsetting Sun Healthcare's outstanding accounts receivable balances.
SUBSEQUENT EVENTS
In the three months ended March 31, 2000, we raised an additional $28.6
million through the issuance of Series K preferred stock to qualified investors.
We also spent $2.5 million to redeem 180,200 shares of our Series J preferred
stock.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET AND INTEREST RATE RISK
The following discusses our exposure to market risk related to changes in
interest rates, foreign currency exchange rates and equity prices. We reduce the
sensitivity of our results of operations to these risks by maintaining an
investment portfolio which is comprised solely of highly rated, short-term
investments. We do not hold or issue derivative, derivative commodity
instruments or other financial instruments for trading purposes. We are exposed
to currency exchange fluctuations, as we sell our products internationally. We
manage the sensitivity of our international sales by denominating all
transactions in U.S. dollars.
We are exposed to interest rate risk, as we use additional debt financing
periodically to fund capital expenditures. The interest rate that we may be able
to obtain on debt financings will depend on market conditions at that time and
may differ from the rates we have secured in the past.
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BUSINESS
OVERVIEW
We provide a Web-based, end-to-end supply chain management solution
targeting hospitals and other healthcare facilities and their suppliers. The
Omnicell Commerce Network and our supply and pharmacy automation systems enable
customers to procure and manage a wide range of medical and non-medical supplies
and pharmaceuticals. Currently, many procurement and inventory management
processes at healthcare facilities, including ordering, record keeping and
billing procedures, are costly, highly inefficient and predominantly manual. The
Omnicell Commerce Network streamlines these processes, and our automation
systems significantly reduce waste and inefficiencies, thereby improving the
speed and cost-effectiveness of the overall healthcare supply chain.
Our end-to-end solution is designed to give customers broad access to both
vertical (medical and pharmaceutical) and horizontal (non-medical) online
marketplaces. We have experienced integration teams working directly with each
individual department within healthcare facilities (including hospitals and
alternate care facilities) to determine their internal ordering processes and
systems. We then customize and integrate our applications to enable proper
accounting and coordination of the procurement and inventory management process.
These applications automate the healthcare facilities' front-end operations,
such as the requisition and approval functions, and link them with their
existing back-end systems, such as the ERP, healthcare information, materials
management and purchasing systems.
The Omnicell Commerce Network is an e-commerce service that consists of two
Web-based applications, OmniBuyer and OmniSupplier, that incorporate and extend
Commerce One's business-to-business e-commerce technology platform into
healthcare. With these two applications, we connect buyers and suppliers to
create a network that provides healthcare buyers with broad access to medical
and non-medical products and services. The Omnicell Commerce Network is a secure
and integrated network that is buyer-focused and provides a single online point
of entry for the procurement needs of healthcare buyers. It establishes,
maintains and enhances buyer-supplier relationships. The network's hosted
Web-based procurement application provides healthcare buyers with the following
advantages:
- online automation of front-end requisition and approval functions;
- online access to customized multi-supplier catalogs;
- reduced processing costs and pricing disputes;
- integration with back-end systems;
- Web-enabled back-end systems; and
- access to low-cost information services.
Rush Presbyterian-St. Luke's Medical Center in Chicago, Illinois began
transacting on the Omnicell Commerce Network in November 1999 using a prior
version of OmniBuyer. The current version was made available on February 29,
2000, and through March 31, 2000, four additional buyers and three suppliers had
begun transacting on the Omnicell Commerce Network. We intend to continue to
aggressively add more buyers and suppliers to the Omnicell Commerce Network. We
have structured the network based on an ASP business model that provides clear
economic benefits for all participants. We intend to generate revenues through
subscription fees from buyers and connection and transaction fees from
suppliers. In addition, because we are not exclusively affiliated or aligned
with any medical
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supply or pharmaceutical manufacturer, distributor or GPO, we are able to serve
as a neutral and unbiased e-commerce facilitator, thereby enabling, rather than
constricting, the relationship between buyers and suppliers.
Our automation systems manage and dispense medical supplies and
pharmaceuticals directly to healthcare professionals throughout a healthcare
facility at the point of use. These automation systems consist of modular,
secured and computerized cabinets that collect and share data with healthcare
facilities' existing information systems. They allow our customers to track
transaction data, inventory levels, expenses and patient billing. Since 1993, we
have installed over 14,000 cabinets in over 1,300 healthcare facilities. We
estimate that approximately $600 million in medical supplies flowed through our
installed automation systems in 1999. We generated revenue of approximately
$52.6 million in 1999 from the sale and lease of our automation systems and
related services.
INDUSTRY BACKGROUND
THE HEALTHCARE SUPPLY CHAIN
The U.S. healthcare industry has been undergoing significant changes as
third-party payors, such as Medicare, Medicaid and insurers, increase their
efforts to control the cost of healthcare services and related reimbursements.
As a result, healthcare organizations are beginning to focus on improving
internal technologies and operations management, including procurement and
inventory management processes, as they seek to reduce costs. However, the high
degree of buyer and supplier fragmentation in the healthcare supply chain and
its associated inefficiencies present significant obstacles to achieving this
goal. The U.S. healthcare market alone includes approximately 6,000 hospitals,
17,000 alternate care facilities, 2,300 payors, 20,000 medical products
suppliers, 450 national distributors, 10,000 local distributors and 2,100 GPOs.
We estimate that total U.S. healthcare supply chain annual expenditures exceed
$200 billion, which includes medical and non-medical supplies, pharmaceuticals,
services and equipment. We also estimate that medical and non-medical supplies
and pharmaceuticals represent over 25% of a typical hospital's expenditures.
LIMITATIONS OF THE TRADITIONAL HEALTHCARE SUPPLY CHAIN
The traditional healthcare supply chain is highly fragmented and inefficient
and fails to adequately address the comprehensive needs of buyers and suppliers.
A study conducted by Computer Sciences Corporation for the Efficient Healthcare
Consumer Response, an association of healthcare manufacturers, distributors and
providers, estimated that in 1996 the total annual supply chain process costs in
the U.S. for consumable medical/surgical devices, non-retail pharmaceuticals and
non-capital diagnostics were $23 billion. The study estimated that $11 billion
could be eliminated through more efficient supply chain management.
Healthcare organizations typically must coordinate the purchase, delivery
and management of thousands of medical and non-medical products from hundreds of
suppliers on a regular basis. In addition, these organizations must track
inventory usage and cost. Their efforts are limited by a number of factors,
including:
- TIME-CONSUMING AND COMPLEX PROCUREMENT PROCESSES. A typical healthcare
facility's procurement process is built along departmental lines and
consists of a lengthy, paper-based requisition and approval sequence
involving many individuals at different levels of authority. This sequence
must be followed to maintain GPO compliance to ensure benefits from
contracted pricing, whether it be a first-time order or the re-ordering of
an existing product.
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- UNCOORDINATED PURCHASE DECISION MAKING. Funneling purchasing decisions to
a centralized authority often leads to a bottleneck as requisitions await
approval. To avoid delays, buyers often make purchases outside of this
centralized process. This makes it difficult to monitor and coordinate
purchases and often results in higher prices on purchases made without the
benefit of contracted prices.
- INEFFICIENT CONNECTIVITY TO SUPPLIERS. Healthcare buyers utilize a variety
of manual and automated processes for their procurement needs. Manual
processes, involving phone, fax and e-mail, are time-consuming, expensive
and prone to error. More automated processes, involving electronic data
interchange (EDI), are point-to-point connections with significant
up-front and on-going costs, limiting their adoption and the benefits of
automation. Accordingly, the lack of real-time connectivity results in
invoice discrepancies that require further reconciliation between buyers
and suppliers, often wasting time and money.
- LACK OF INTEGRATION BETWEEN THE PURCHASING FUNCTION AND THE ERP
SYSTEM. Healthcare buyers typically place orders based on usage reports
from materials management systems. These orders are often generated
independent of the buyer's ERP system and often lack current pricing
information. This can results in a mismatch between invoices received from
suppliers and purchase orders, leading to time-consuming and expensive
reconciliation of pricing disputes.
- LIMITED PRODUCT AND PRICING INFORMATION. Distributors have incentives to
sell their own products and those of certain manufacturers. They typically
exercise control over buyers' access to competing products, product
information and comparative pricing information. There are no
comprehensive product catalogs available to buyers for sourcing and
purchasing healthcare supplies, making it difficult to make value-based
purchasing decisions.
- INABILITY TO CAPTURE CHARGES AND TRACK USAGE AND INVENTORY. Because
supplies are retrieved and not used, or supplies are used but not recorded
properly, healthcare facilities are unable to accurately track usage and
inventory. This leads to product waste, imprecise capture of patient
billing data, stock-outs and the inability to efficiently manage inventory
levels.
GROWTH OF BUSINESS-TO-BUSINESS E-COMMERCE IN THE HEALTHCARE SUPPLY CHAIN
The inefficiencies associated with the healthcare supply chain have created
significant opportunities for business-to-business e-commerce. According to
Forrester Research, an industry research organization, U.S. pharmaceutical and
medical transaction volume processed through business-to-business e-commerce is
expected to increase from $1 billion in 1999 to $44 billion in 2003. We believe
that in order for e-commerce solutions to supplant the healthcare industry's
current methods of transacting business, seamless integration with buyers'
information systems and effective coordination of buyers' and suppliers' actions
will be required.
To date, horizontal and vertical online marketplaces that have been offered
as solutions have enjoyed limited adoption by healthcare buyers due to several
limitations. First, they have difficulty integrating with healthcare facilities'
existing ERP, healthcare information, materials management and purchasing
systems. Second, online marketplaces do not have automated rules engines that
incorporate users' procurement approval processes to facilitate approval and
ensure compliance with internal buying rules.
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THE OMNICELL.COM SOLUTION
The Omnicell Commerce Network and our automation systems provide a
comprehensive, buyer-focused, supply chain management solution that addresses
the limitations of the traditional healthcare supply chain. We streamline
procurement and inventory management processes and integrate these functions
with back-end systems to provide coordinated decision making and purchasing of
medical and non-medical supplies. We work with healthcare facilities and their
existing information systems to improve efficiencies and generate cost savings
throughout the healthcare enterprise. In addition, our position as a neutral and
unbiased e-commerce facilitator enables healthcare buyers to connect directly
with suppliers without any channel management on our part and provides suppliers
with an attractive means to reduce their sales, marketing and customer support
costs and potentially grow their revenues.
The Omnicell Commerce Network is an e-commerce service that consists of two
Web-based applications, OmniBuyer and OmniSupplier, that incorporate and extend
Commerce One's business-to-business e-commerce technology platform into
healthcare. Our network facilitates e-commerce between participants in the
healthcare supply chain, including healthcare facilities, manufacturers,
distributors, GPOs, online marketplaces and auction sites. Both OmniBuyer and
OmniSupplier employ an ASP business model with low up-front costs and minimal
hardware requirements. We believe that this facilitates better matching of costs
and benefits and should encourage adoption of the Omnicell Commerce Network.
Our automation systems consist of modular, secured and computerized cabinets
and related software technology that manage and dispense medical supplies and
pharmaceuticals. Our systems are designed to address many of the inefficiencies
and problems associated with traditional methods of pharmacy and medical supply
chain management. The systems allow our customers to track transaction data,
inventory levels, expenses and patient billing, as well as link this data to our
customers' existing information systems. We estimate that our automation systems
typically reduce annual supply consumption costs of our customers by
approximately 15% to 20%.
In addition to cost reduction, our automation systems have several features
that are important to our customers. Our systems are designed to integrate
easily with a healthcare facility's existing information systems. We have
written over 1,250 live, proprietary software interfaces to integrate our
automation systems with healthcare facilities' back-end systems. We were an
early adopter of the Windows NT platform, which facilitates integration between
our automation systems and our customers' legacy systems. Our automation systems
are available in modularized cabinets that are designed to fit in any area of
the hospital and are flexible in design, accommodating any type of supply or
pharmaceutical. In addition, our automation systems facilitate the management of
both medical supply and pharmacy distribution using a single database, allowing
for coordinated billing and reporting.
The Omnicell Commerce Network and our automation systems have been designed
to address the following limitations posed by the traditional healthcare supply
chain:
- TIME-CONSUMING AND COMPLEX PROCUREMENT PROCESS. Our rules-based front-end
streamlines the procurement process so that each user within a healthcare
facility can access only predetermined suppliers' products and pricing
information. For routinely ordered items, OmniBuyer is designed to enable
healthcare facilities to automatically reorder items once they reach a
pre-determined inventory level. This automation will eliminate the need
for manual orders. Based on established requisition rules, purchase orders
are electronically routed to the appropriate decision makers before they
are delivered to the supplier. By limiting access at the procurement
level, and automating
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the routing of the requisition, bottlenecks are alleviated. In addition,
the combination of limiting the product views of buyers to pre-determined
suppliers and simplifying the re-order process encourage greater levels of
contract compliance.
- UNCOORDINATED PURCHASE DECISION MAKING. We work with each individual
department of the healthcare facility to determine the purchasing and
approval flows, determine the desired supplier connections, create
individual catalogs for each user and interface the procurement
application to all relevant information systems.
- INEFFICIENT CONNECTIVITY TO SUPPLIERS. OmniBuyer provides a single online
point of entry to connect all of the suppliers on our network, eliminating
the need for phone, fax, e-mail and EDI connections to these suppliers.
Our Web-enabled front-end provides real-time connectivity to suppliers,
allowing the facility to access updated product pricing and availability.
- LACK OF INTEGRATION BETWEEN THE PURCHASING FUNCTION AND THE ERP
SYSTEM. The front-end and back-end applications of OmniBuyer work together
to generate accurate purchase orders. We enable the ERP system to create a
purchase order when pricing is confirmed over the Omnicell Commerce
Network with the supplier. By linking the purchasing and purchase order
creation functions, we eliminate time-consuming purchase order
reconciliation efforts. In addition, we reduce the need for manual entry
or intervention.
- LIMITED PRODUCT AND PRICING INFORMATION. As more suppliers connect to
OmniSupplier, we will be able to provide our customers with direct access
to an expanded range of products and pricing information. This information
will not be restricted in any way. Instead, customers will have the
ability to look at all the information that they choose. This enables
buyers to make value-based purchasing decisions with greater ease and in
less time than current systems allow.
- INABILITY TO CAPTURE CHARGES AND TRACK USAGE AND INVENTORY. Our automation
systems enable healthcare facilities to accurately capture and track their
transaction data, inventory levels, expenses and patient billing. Entering
the patient's name at the point of use and exchanging data through
interfaces between our central server and the facility's billing and
inventory systems allows the facility to trace supply from the warehouse
to the patient.
STRATEGY
Our goal is to become the leading business-to-business e-commerce network
for the healthcare industry. We intend to achieve this goal through the
following strategies:
- FACILITATE MANAGEMENT OF THE HEALTHCARE SUPPLY CHAIN. We intend to enable
better management of the healthcare supply chain by providing a single
online point of entry for healthcare procurement and to continue to
aggressively market our automation systems. We intend to accomplish this
by (1) providing a customized application that incorporates and automates
the buyer's existing requisition and approval process, (2) delivering a
hosted Web-based solution with a low-cost ASP business model, (3) not
restricting or dictating from whom buyers may purchase, (4) enabling
suppliers to provide a unique and confidential price list for each buyer,
(5) ensuring private and secure transactions, (6) continuing to improve
the capabilities of our automation systems and (7) expanding the Omnicell
Commerce Network's service offerings and capabilities to meet our
customers' needs. We believe that the combination of OmniBuyer and our
automation systems creates a valuable supply chain management solution
from the supplier all the way to the point of use.
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- ACCELERATE ADOPTION AND USE OF THE OMNICELL COMMERCE NETWORK. We intend to
continue to leverage our extensive healthcare industry experience and
relationships as well as our installed base of automation systems
customers to rapidly increase adoption and use of the Omnicell Commerce
Network. We will also continue to aggressively market OmniBuyer to
prospective new customers and believe that as market acceptance of
OmniBuyer accelerates, the number of suppliers using OmniSupplier will
increase.
- LEVERAGE OUR TECHNICAL EXPERTISE. We are employing our interface expertise
and our understanding of healthcare facilities' operating processes to
integrate OmniBuyer with healthcare facilities' existing front-end and
back-end systems. We intend to continue to incorporate and extend Commerce
One's business-to-business e-commerce technology platform into healthcare.
In addition, we will continue to draw on our healthcare experience to
optimize the Omnicell Commerce Network to provide additional features,
functionality and services to meet our customers' needs.
- DEVELOP STRATEGIC RELATIONSHIPS. We expect to continue to enter into
strategic relationships with medical and non-medical products distributors
and manufacturers, online marketplaces, online auction sites, GPOs,
service providers and technology vendors to enhance the Omnicell Commerce
Network's breadth and depth. We expect this will speed its market adoption
and increase transaction volumes flowing through our network. We currently
have a strategic relationship with Commerce One that allows for
co-marketing and co-development efforts and enables us to utilize their
e-commerce technology platform and access their Global Trading Web, an
international business-to-business trading community. We also have a
strategic relationship with PricewaterhouseCoopers in which it has agreed
to deploy its healthcare consulting practice to assist healthcare buyers
and suppliers with the implementation of the Omnicell Commerce Network.
- CAPITALIZE ON REVENUE OPPORTUNITIES GENERATED BY THE OMNICELL COMMERCE
NETWORK. We anticipate that as participation in the Omnicell Commerce
Network increases, a substantial portion of our revenue growth will be
generated by the services offered by the Omnicell Commerce Network. We
intend to achieve this revenue growth by collecting subscription fees from
buyers and connection and transaction fees from suppliers. We also intend
to pursue revenue opportunities from the data collected by the Omnicell
Commerce Network.
OMNICELL.COM SERVICES AND PRODUCTS
OMNICELL COMMERCE NETWORK
OMNIBUYER. OmniBuyer is a secure Web-based procurement application that
automates and integrates healthcare requisition and approval processes by
incorporating buyer-specific business rules, such as spending limits, negotiated
pricing, approval routing and customized access profiles on the front-end with
back-end systems integration. OmniBuyer is based on Commerce One's BuySite
technology that we continue to customize to meet the complex needs of healthcare
buyers. BuySite uses content management tools and extensible mark-up language
(XML) software technology designed to standardize e-commerce documentation.
OmniBuyer employs an ASP business model and is designed to become a single
online point of entry to meet the procurement needs of healthcare buyers. The
buyer's desktop can have access to any requested supplier, including many
suppliers connected to the
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combination of the Omnicell Commerce Network and, with the parties' agreement,
Commerce One's Global Trading Web. We charge our customers monthly user
subscription fees for the OmniBuyer service.
BENEFITS OF OMNIBUYER. The OmniBuyer application provides the following
benefits to healthcare buyers:
- ONLINE AUTOMATION OF FRONT-END REQUISITION AND APPROVAL FUNCTIONS. We work
directly with each individual department in healthcare facilities to build
systems that incorporate and automate their requisition and approval
process, and user-specific business rules such as spending limits.
- ONLINE ACCESS TO CUSTOMIZED MULTI-SUPPLIER CATALOGS. Healthcare buyers can
request access to any supplier connected to the Omnicell Commerce Network
and Commerce One's Global Trading Web. OmniBuyer also allows healthcare
facilities to customize individual access to different suppliers' products
and services. Access to specific suppliers allows for greater levels of
contract compliance.
- REDUCED PROCESSING COSTS AND PRICING DISPUTES. We automate the purchase
requisition, approval and order process and reduce errors caused by manual
processes, saving time and expense. By maintaining buyer-specific pricing
files and automating review of pricing, we reduce buyer-supplier pricing
discrepancies and invoice reconciliation disputes.
- INTEGRATION WITH BACK-END SYSTEMS. Our experienced and dedicated interface
teams utilize our 1,250 live, proprietary software interfaces built for
our automation systems to expedite the integration of healthcare
facilities' back-end systems. This allows for proper accounting,
coordination and management of the procurement process.
- WEB-ENABLED BACK-END SYSTEMS. Our OmniBuyer application is compatible with
healthcare facilities' existing back-end systems. By interfacing OmniBuyer
with these systems, we enable healthcare facilities to implement a
complete online procurement solution without having to invest in upgrades
to their back-end systems.
- ACCESS TO LOW-COST INFORMATION SERVICES. We expect to develop online data
analysis and reporting applications to help buyers monitor and review
purchasing activity, perform benchmarking analysis and develop improved
purchasing strategies.
OMNISUPPLIER. OmniSupplier is a secure Web-based application that enables
suppliers (including manufacturers, distributors, GPOs, online marketplaces and
online auction sites) to connect and transact with our OmniBuyer customers.
OmniSupplier is based on Commerce One's MarketSite technology that we continue
to customize to meet the complex needs of healthcare suppliers. MarketSite is
the enabling technology that facilitates the creation and management of open,
interactive marketplaces. We believe that MarketSite and OmniSupplier provide a
comprehensive supplier solution that should serve to accelerate the adoption of
the Omnicell Commerce Network.
OmniSupplier is designed to offer three different technologies that enable
real-time connection between suppliers and our OmniBuyer customers. Each of
these offerings will deliver the buyer's order directly into the back-end
systems of the supplier. The supplier's choice on how to best connect to
OmniSupplier will be based on its technological capabilities:
- MANAGED CONTENT. For suppliers that do not have e-commerce functionality,
OmniSupplier includes hosted services and integration that provide a
low-cost, low-risk online access to a population of buyers. At the
supplier's request, we will manage their content at OmniSupplier and the
supplier needs only a Web browser to receive orders
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from buyers. Suppliers with more advanced technological capabilities may
still choose to have their content hosted and managed at OmniSupplier,
connecting and receiving real-time orders from OmniSupplier.
- SUPPLIER-HOSTED CONTENT. For suppliers that have a commerce-enabled Web
site with specific features and functionality, we intend to offer Commerce
One's RoundTrip service that is currently being beta-tested. This service
is designed to take the OmniBuyer customer directly into the supplier's
Web site. The buyer receives the user experience of the supplier's Web
site while retaining the buyer's specific business rules, administrative
workflow and back-end integration.
- PORTAL CONTENT. For suppliers that have ERP systems that maintain detailed
customer price files and catalogs, but do not have commerce-enabled Web
sites, we plan to offer a solution from Commerce One that will allow the
supplier to host raw content and enable us to extract the relevant
information from the supplier's site. This technology will perform a
search, take the data to OmniSupplier, organize it and present it in a
common form to the buyer. This technology will allow us to fully leverage
the existing capabilities and initiatives of the suppliers, while
maintaining the buyer's rules engine and customized view.
Our goal is to connect all of our suppliers to OmniSupplier in a real-time
fashion that will maximize the benefit of the application to both buyers and
suppliers. We are adding functionality that will enable OmniSupplier to
integrate with suppliers' ERP systems to provide our buyers with real-time
inventory availability and shipping status. We believe this will reduce customer
inquiries and associated expenditures and improve customer service. In addition,
we will develop and incorporate online data analysis and reporting applications
to enable suppliers to more effectively monitor and analyze sales activity,
manage customer accounts and collect market intelligence. This information can
be used to improve pricing and discount strategies, product planning and product
development.
BENEFITS OF OMNISUPPLIER. The OmniSupplier application offers the following
benefits to suppliers:
- SINGLE POINT OF CONNECTION. OmniSupplier provides a single integration
point to all OmniBuyer customers, eliminating the need for suppliers to
maintain expensive direct and point to point connections across their
buyer network.
- REDUCED TRANSACTION COSTS. Purchase orders received through OmniSupplier
tend to be more accurate and less costly than orders transmitted by mail,
phone or fax. OmniSupplier may reduce the costs required for suppliers to
maintain their own fully functional e-commerce Web sites.
- REDUCED CUSTOMER SERVICE COSTS. We believe that our maintenance of
buyer-specific pricing files and automated review of pricing will reduce
customer service costs associated with resolving buyer-supplier pricing
disputes.
- ACCESS TO NEW MARKETS AND CUSTOMERS. OmniSupplier allows suppliers to
reach new buyers, while reducing the incremental sales, marketing and
customer support costs of traditional approaches. In addition,
OmniSupplier provides an efficient mechanism for product updates and
pricing changes, enabling suppliers to quickly and easily implement
changes in their respective product lines and respond to changing market
requirements.
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AUTOMATION SYSTEMS
Our automation systems consist of modular, secured and computerized cabinets
and related software technology that manage and dispense medical supplies and
pharmaceuticals. The information gathered by our automation systems is
downloaded by phone line or local area network to a central server. Our cabinets
are highly configurable and are designed to accommodate a wide variety of
dispensing modules, including drawers, shelves and racks. As a result, they are
easily configured to meet the particular needs of each patient care area.
SUPPLY CABINETS. Medical supplies are accessed from our supply cabinets
using our patented "See & Touch" technology. Users enter their identification
number on a console and select the appropriate patient name. Specific doors then
open based on the security level of the user. Locked transparent doors restrict
access to supplies contained in our cabinets. To record supply utilization, the
user visually identifies and selects the item by pushing a dedicated reorder
button on the shelf in front of each item's location.
The main supply cabinet is comprised of one, two or three vertical "cells",
each approximately two feet wide and six feet high. Each cabinet houses a
processor and user interface. Auxiliary cabinets can be attached to the main
cabinet to provide additional storage capacity. Various shelf, drawer and rack
modules facilitate a wide array of storage configurations.
PHARMACY CABINETS. We have two lines of pharmacy cabinets, the OmniCell
pharmacy systems and the Sure-Med cabinets, which we acquired from Baxter
Healthcare in January 1999. The OmniCell pharmacy systems are highly
configurable and are available with color-touch screens. In addition, the
OmniCell pharmacy systems have dispensing drawers that facilitate high, medium
and low security levels by utilizing single-dose lids, locking lids, sensing
lids and patented guiding lights. The OmniRx Table Top unit is a 12-inch high
main cabinet with three pharmacy drawers, typically used where relatively small
volumes of pharmaceuticals need to be stored in a secure manner.
The Sure-Med pharmacy cabinets incorporate a variety of storage compartments
and have software that is compatible with all of our automation systems. The
Sure-Med cabinets offer a wide range of dispensing technologies, including
unit-dose dispensers and multiple drawer sizes. The unit-dose module dispenses
only the requested medication dose and is best suited for medications where
regulatory guidelines mandate a highly controlled environment. Clinicians prefer
this technology in high-security situations because it automates much of the
logistical and documentation burden and responsibility associated with
dispensing and documenting controlled medications.
COMBINATION SYSTEMS. Combination cabinet systems allow healthcare
organizations to integrate medical supplies and pharmaceuticals into a single
cabinet. Our system architecture enables each operating department to manage its
products independently of other operating departments, yet allows healthcare
facilities to track transaction data, inventory levels, expenses and patient
billing through a single database.
BENEFITS OF AUTOMATION SYSTEMS. Our automation systems provide the
following benefits to healthcare facilities:
- REDUCED CONSUMPTION AND EXPENSES. Our automation systems house medical
supplies and pharmaceuticals in a closed environment. By requiring the
clinician to enter their identification code and the patient's name before
removing a supply or pharmaceutical,
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only the items needed for each particular procedure are removed and
properly billed to the patient. We estimate that our automation systems
typically reduce annual supply consumption costs of our customers by
approximately 15% to 20%.
- IMPROVED TRACKING AND MANAGEMENT OF INVENTORY. Our automation systems
capture data at the point of use and track transaction data, inventory
levels, expenses and patient billing, thus improving inventory management.
In addition, by receiving real-time information from our automation
systems, the purchasing department can avoid shortages and excess
inventory.
- INCREASED DATA CAPTURE. Our automation systems capture inventory usage
data by patient, physician, location and diagnostic code. These systems
interface with the facility's ERP, healthcare information and materials
management systems to initiate patient billing and inventory
replenishment. The data are immediately accessible to facility personnel,
facilitating real-time operations management.
- IMPROVED SECURITY AND REGULATORY COMPLIANCE. Our pharmacy cabinets offer
varying levels of security depending on the needs of the healthcare
facility. The reporting and security functions of our pharmacy cabinets
are designed to facilitate and document regulatory compliance for certain
pharmaceuticals.
- STANDARDIZED INTERFACES AND A SINGLE DATABASE. Our automation systems can
be customized to meet the needs of many specialized care departments
within healthcare facilities. The data captured from each cabinet enable
more efficient and centralized administration of procurement and inventory
management processes.
OTHER SOFTWARE AND RELATED SYSTEMS
OMNICENTER. The OmniCenter is the computerized central server that
processes the transaction data to and from our automation system cabinets,
recording each transaction by user, patient, item quantity, cost and time. The
OmniCenter enables the materials management department to run reports
periodically and on demand, indicating when to restock the cabinets and when to
reorder supplies. In addition to the wide range of standard reports provided by
the OmniCenter, a custom report writer also allows the user to add to their
suite of information. As a diagnostic service, we are able to remotely access
the OmniCenter from our help desk to monitor the status of each cabinet.
SYSTEM INTERFACES. Since 1993, we have been developing an interface engine
that is able to accommodate almost any interface record format and a variety of
communication protocols. These development tools also allow for rapid
development of interfaces for each customer site. We guarantee the delivery of
interfaces to the customer for on-site testing within 30 days of receiving the
interface specifications. To date, we have developed and implemented at customer
sites more than 1,250 interfaces for automation systems. In addition, we are a
member of Health Level Seven (HL7), the interfacing standards group for the
healthcare industry. We follow the HL7 standard for interfacing whenever it is
requested by the customer or another vendor, which is about 50% of the time.
The Partner PC is the host server for our interfaces, communicating with the
healthcare facility's information systems. This configuration allows the
OmniCenter to process transactions and be dedicated to communicating with our
automation systems. The Partner PC is where our proprietary interface software
resides, allowing the data captured at the point of use by the cabinets to flow
to the healthcare facilities' ERP, healthcare information,
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materials management and purchasing systems. In the same manner, information is
passed from the facility's ERP, healthcare information, materials management and
purchasing systems through the OmniCenter back to the cabinets.
INFORMATION MANAGEMENT. The DataCenter 5000 and DecisionCenter are
Web-enabled, decision support products and services that provide secured trend
analysis, decision support and regulatory compliance reports based on data from
our automation systems. They consolidate information from one or more
OmniCenters into one large database. The data are not only stored in a raw
format, but also aggregated for rapid response to queries. We have developed the
"My-Omni" Web page that allows users to configure frequently requested
information from a short menu. In addition, we offer sophisticated graphical
tools that allow users to make detailed queries across all data fields. These
systems are typically interfaced with the healthcare facility's medical records
system in order to augment the database with correctly associated diagnosis
codes by physician and by patient. Data can be viewed by authorized users and
personnel at any time, allowing for easy, yet comprehensive, analysis for
improved decision making.
MEDCENTERCITY.COM. We own and operate MedCenterCity.com, an online
healthcare community, which provides news, information and services for
healthcare professionals.
CUSTOMERS
OMNIBUYER
Our target customers for OmniBuyer are healthcare institutions, including
hospitals, physician clinics and alternate care facilities. As of March 31,
2000, over 200 healthcare organizations have signed agreements subscribing to
the OmniBuyer service, of which the following have commenced transacting on the
Omnicell Commerce Network:
<TABLE>
<S> <C>
- - Loyola University Health System Chicago, IL
- - MedCath, Inc. Charlotte, NC
- - Rush Presbyterian-St. Luke's Medical
Center Chicago, IL
- - Salina Regional Health Center Salina, KS
- - Veteran's Administration Mountain Home Johnson City, TN
</TABLE>
The subscription agreement provides the basic terms and conditions of the
OmniBuyer service and the respective obligations of Omnicell.com and the
OmniBuyer customer. Either party may terminate the subscription agreement on
thirty days' written notice.
We have implemented the first phase of our end-to-end procurement solution
in the cath lab of Rush Presbyterian-St. Luke's Medical Center in Chicago,
Illinois. In addition, Rush Presbyterian uses our automation systems throughout
its facility, including the cath lab. Within the cath lab, we have automated the
procurement process from the point of use to the supplier. The automation
process begins when a catheter is removed from our automation systems, with the
user pushing a button for each item removed. These usage data are captured at
our OmniCenter, which are interfaced with our OmniBuyer application. The manager
of the cath lab receives an e-mail, notifying him to log on to the OmniBuyer
application, where he views a requisition prepared by OmniBuyer detailing the
products to be reordered. The buyer is then able to edit and approve the
requisition. Once approved, OmniBuyer transmits the requisition to the supplier,
accessing current pricing information from the supplier, and sends the order to
the facility's ERP system in order to generate an accurate purchase order. If
the supplier is unable to fulfill the request, it is communicated back
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over our system, and the buyer can find alternative sources for the item.
Integrating OmniBuyer with the facility's information systems and our automation
systems has streamlined Rush Presbyterian's procurement process.
OMNISUPPLIER
Our target customers for OmniSupplier include manufacturers, distributors,
online marketplaces and online auction sites. Through the participation of
suppliers in OmniSupplier and the Global Trading Web maintained by Commerce One,
the Omnicell Commerce Network, as of March 31, 2000, offers healthcare buyers
access to approximately 30,000 medical products and over two million non-medical
products.
As of March 31, 2000, we had contracts with the following 13 healthcare
manufacturers and distributors to sell their products on the Omnicell Commerce
Network to OmniBuyer customers:
<TABLE>
<S> <C>
- - AliMed, Inc. - Maxxim Medical, Inc.
- - The Burrows Company - Metropolitan Medical, Inc.
- - C.R. Bard, Inc. - Statcorp, Inc.
- - Cush Medical Products - Terumo Corporation
- - DeRoyal, Inc. - Tri-anim Health Services, Inc.
- - Fisher Scientific International, Inc. - Tri-State Hospital Supply Corporation
- - Jant Pharmacal Corporation
</TABLE>
The following three suppliers are currently transacting on the Omnicell
Commerce Network: Fisher Scientific Company, LLC; C.R. Bard, Inc.; and U.S.
Office Products, Inc. In addition, the Omnicell Commerce Network includes over
25 healthcare suppliers and over 400 non-healthcare suppliers that participate
in Commerce One's Global Trading Web. All our OmniBuyer customers will have
access to these suppliers through the Global Trading Web, including the
following selected suppliers:
<TABLE>
<S> <C>
Healthcare Non-Healthcare
- --------------------------------------------- ---------------------------------------------
- - B. Braun - Boise Cascade Office Products Corporation
- - Dade Behring Inc. - BT Office Products International, Inc.
- - Mead Johnson Nutritionals - IKON Office Solutions, Inc.
- - Professional Hospital Supply - Lucent Technologies Inc.
- - VWR Scientific Products Corporation - Office Depot, Inc.
- - Xerox Medical Systems - Staples, Inc.
- W.W. Grainger, Inc.
</TABLE>
AUTOMATION SYSTEMS
Our target customers for automation systems are healthcare institutions,
including hospitals, clinics and alternate care facilities. As of March 31,
2000, over 1,300 hospitals and other healthcare facilities have purchased or
leased our automation systems.
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The following entities are representative of our largest hospital customers
based on supply and pharmacy automation products purchased or leased:
<TABLE>
<S> <C>
- - Bellevue Hospital Center New York, NY
- - Christ Hospital and Medical Center Oak Lawn, IL
- - Children's Medical Center of Dallas Dallas, TX
- - Good Samaritan Hospital Los Angeles, CA
- - Jackson Memorial Hospital Miami, FL
- - Massachusetts General Hospital Boston, MA
- - Northwestern Memorial Hospital Chicago, IL
- - Rush Presbyterian-St. Luke's Medical Center Chicago, IL
- - UCSF Stanford Healthcare San Francisco, CA
- - University of Iowa Hospitals and Clinics Iowa City, IA
- - University of Texas Medical Branch Galveston, TX
- - Walter Reed Army Medical Center Washington, D.C.
</TABLE>
STRATEGIC RELATIONSHIPS
We establish and maintain relationships with firms whose products, services,
technologies and/or market presence enhance our ability to deliver value to our
customers. We have entered into strategic relationships with a wide variety of
companies. Among the most significant relationships are the following:
COMMERCE ONE
Commerce One is a leading provider of e-commerce solutions that dynamically
link buying and supplying organizations to form real-time trading communities.
In August 1999, we entered into a Vertical Hosted License Agreement with
Commerce One and paid a license fee, pursuant to which we received a perpetual
license to Commerce One's Hosted BuySite and Branded MarketSite software for use
in developing OmniBuyer and OmniSupplier, respectively. The agreement also
provides for program management services and ongoing maintenance and support of
the software for additional fees. In addition, we have agreed to share a portion
of transaction fees collected from suppliers when purchases are made using the
Omnicell Commerce Network. The terms and conditions of the maintenance and
support, and of the revenue share terms, have been formally renewed and extended
by the parties until August 21, 2005. In addition, Commerce One, pursuant to our
agreement, may not solicit business from, or enter into agreements with,
selected companies in the healthcare market with respect to the hosted BuySite
and/or branded MarketSite software for a period ending on August 21, 2000. The
agreement continues perpetually unless otherwise terminated by either party
pursuant to the termination provisions of the agreement. In addition, our
strategic relationship with Commerce One allows for co-marketing and
co-development efforts and enables us to utilize their e-commerce technology
platform and access their Global Trading Web. In March 2000, Commerce One made
an equity investment in our company.
PRICEWATERHOUSECOOPERS
In April 2000, we entered into a Strategic Alliance Agreement with
PricewaterhouseCoopers LLP, the world's largest professional services
organization. This agreement engages PricewaterhouseCoopers' healthcare
consulting practice to help healthcare buyers and suppliers effectively
implement and participate in the Omnicell Commerce Network. Under the terms of
the three-year agreement, PricewaterhouseCoopers is the preferred global systems
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integrator for Omnicell.com, and Omnicell.com is a PricewaterhouseCoopers
preferred e-business healthcare alliance partner. We also plan to engage in
joint sales and marketing activities with PricewaterhouseCoopers.
OTHER STRATEGIC RELATIONSHIPS
We also have strategic relationships for our automation systems with Ariel
Distributing, Clinical Pharmacology and ScrubAvail. For MedCenterCity.com, we
have strategic relationships with barnesandnoble.com, CareerMosaic and Materials
Management in Health Care.
RESEARCH & DEVELOPMENT AND TECHNOLOGY
RESEARCH AND DEVELOPMENT
Since our inception, we have focused our research and development efforts on
developing new products and technologies and reducing the costs of manufacturing
our system components. We have 57 employees in research and development.
OMNICELL COMMERCE NETWORK. Our strategic relationship with Commerce One
allows us to incorporate and extend Commerce One's technology platforms,
applications, source code and documentation into healthcare. Their tools allow
us to modify the Commerce One BuySite and MarketSite software so that the effort
to port specific software changes to the latest Commerce One release is
minimized. These tools allow us to more easily adopt the latest Commerce One
releases as we add healthcare-specific features and functionality to optimize
the Omnicell Commerce Network to meet the needs of the healthcare market.
The Commerce One and Omnicell.com product development teams employ object-
oriented analysis and design principles to guide the development of an
object-oriented system of software code. Our methodology allows us to exploit
the capabilities of object-oriented programming languages like C++ and Java to
build reusable components and designs. This methodology also helps reduce the
risks inherent in developing complex systems and helps us design our solutions
to meet the needs of the participants in the Omnicell Commerce Network.
AUTOMATION SYSTEMS. The software architecture for our automation systems
business is based on database products and development tools centered around the
Microsoft Windows NT platform, the Internet Information Server and Web tools. We
develop application software that is generally applicable to all customers,
while retaining broad customization functionality. We maintain a release for
each major product, with each new release level including an increasing number
of configurable options as new features are added, but retaining previous
functionality for backward compatibility. Interfacing with the customer's other
computer systems often requires custom interface software. This is kept separate
from the main software release. Communication between the central server product
and cabinets, and any custom interface software, is through an application
programming interface (API), and each new release of server software maintains
backward compatibility with this API, so that previous versions of interfaces
and cabinets continue to operate when the main server software is upgraded. Our
products currently do not require rigorous approvals beyond standard
Underwriters Laboratories or Canadian Safety Association equivalent
certification.
SCALABLE ARCHITECTURE
We are a Microsoft Certified Solutions Provider and are able to leverage
Commerce One's Microsoft Windows distributed Internet applications framework
into a unified architecture enabling us to focus on creating additional business
functionality for OmniBuyer and
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OmniSupplier, rather than building and maintaining complex infrastructure code.
Additionally, Commerce One's solution has been designed so that we can grow our
infrastructure through the simple addition of low-cost systems that utilize
Intel microprocessors and the Microsoft Windows NT operating system. The
Commerce One framework allows us to leverage technologies such as message
queueing, security services, and coordination and distribution of transactions,
components and services.
SOFTWARE TECHNOLOGY PLATFORM
Commerce One's solution utilizes XML software technology platform servers to
generate and securely transmit XML documents over the Internet. Commerce One has
also created a common business library designed to enable a common
language-based framework for uniting disparate business document types. While we
believe that XML software technology is emerging as an industry standard for
business-to-business electronic commerce, we have also developed translation
technology which converts XML documents into other document formats, enabling us
to deliver purchase orders to suppliers in a wide variety of document formats,
including EDI, Open Buying on the Internet, ASCII flat file, e-mail, Microsoft
Excel and facsimile.
SECURITY & PRIVACY
Our OmniBuyer application uses 128-bit encryption, HTTPS-SSL and
password-protected user access. Our servers are located behind corporate
firewalls and access is multiple password-protected.
We recognize our obligations to safeguard patient information and other
customers' proprietary or confidential information to which we may have access
through the use of the Omnicell Commerce Network and our automation systems. We
have implemented a Privacy and Use of Information Policy and strictly adhere to
established privacy principles, use of customer information guidelines and
federal and state statutes and regulations regarding privacy and
confidentiality, including those measures and practices required under the
Health Insurance Portability and Accountability Act of 1996.
SALES, MARKETING AND CUSTOMER SUPPORT
We market and sell our products and services to a variety of healthcare
institutions, including hospitals and alternate care facilities. We have a
direct sales force organized into six regions, with dedicated teams for the
alternate care and European markets. Each of the members of our direct sales
force sells both our automation systems and our e-commerce service. Our sales
representatives have on average over eight years of sales experience in the
healthcare industry. We target hospitals with greater than 100 beds and
long-term care facilities and clinics. A regional vice president coordinates
both the sales and field service operations activities in each region.
Our marketing group is responsible for product marketing, marketing
communications, Web site development, public relations, sales support and
training. They generate leads through a variety of means, including advertising,
direct marketing and participation in trade shows and conferences covering such
areas as the Internet, electronic commerce, supply chain management, hospital
administration, pharmacy, nursing, materials management and alternate care.
We leverage our sales and field service organizations, along with our
technical support desk to sell, implement and service the OmniBuyer application.
In addition, we have added specialists who will work solely with healthcare
facilities to sell and implement OmniBuyer, and a separate team that recruits
and implements suppliers onto our OmniSupplier platform.
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We have initially focused on signing customers from our installed based of
automation systems to OmniBuyer. This has allowed us to rapidly gain 200
customers who have independently elected to implement our application. The
OmniBuyer implementation process is done in phases. We work with each individual
department of the health care facility to determine the purchasing and approval
flows, determine the desired supplier connections, create individual catalogs
for each user and interface the procurement application to all relevant
information systems.
The sales cycle for our automation systems has proven to be long in nature
and can take in excess of twelve months. This is due in part to the cost of our
systems and the number of people within a healthcare facility involved in the
purchasing decision. To initiate the selling process, the sales representative
generally targets the director of materials management or other decision makers
and is responsible for educating each group within the healthcare facility about
the benefits of automation. To assist hospitals in the acquisition of our
systems, we offer multi-year, non-cancelable leases, to reduce the up-front
costs. Typically, we sell our customers' lease agreements to a third-party
leasing company. We have contracts with several GPOs that enable us to sell our
automation systems to GPO-member healthcare facilities without going through a
lengthy request for proposal and bidding process. These GPO contracts are
typically for multiple years with options to renew or extend for up to two
years. Our current GPO contracts include Premier, Tenet Healthcare, University
Healthcare Consortium and the Department of Veterans Affairs.
Our field service operations representatives directly support the sales
force, provide operational and clinical expertise prior to the close of a sale
and install our automation systems. This group assists the customer with the
technical implementation of our automation systems, to configure our systems to
address the specific needs of each individual customer. After the systems are
installed, on-site support is provided by a combination of our field service
operations team, technical support and a third-party service company.
We offer technical support through our Technical Support Desk in Waukegan,
Illinois. Our team utilizes the Siebel software package, an industry standard
for call centers, to field calls from customers. We have found that two-thirds
of all service issues can be addressed with remote diagnostics. In addition, we
have developed remote dial-in software that monitors customer conditions on a
daily basis.
MANUFACTURING OF AUTOMATION SYSTEMS
Our automation systems manufacturing strategy is to produce custom
configured systems with fast order turnaround in a high-quality and
cost-effective manner. We currently conduct our manufacturing operation in a
23,000 square feet facility in Palo Alto, California operating on one shift. We
operate on a continuous flow, just-in-time basis to perform final assembly,
configuration and system test of all products. Our customer service personnel
work closely with the end user to determine specific customer requirements for
each installation. The detailed customer requirements are transmitted
electronically to our manufacturing facility where they are used to uniquely
custom configure each unit. Our operating software is installed as a part of the
assembly process. Once assembled, every unit undergoes mechanical and systems
testing in our Palo Alto, California facility prior to shipping.
Our production activities consist primarily of final assembly of mechanical
components and electronic sub-systems outsourced to key suppliers. While many
components of our systems are standardized and available from multiple sources,
certain components or subsystems are fabricated according to our specifications.
We endeavor to obtain multiple
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sources of supply for certain components. We believe we could obtain alternative
sources of supplies within two to four months if our current suppliers were
unable to provide us with adequate quantities of such components.
Our products are designed with a high degree of modularity that facilitates
manufacturing assembly and configuration and enables rapid deployment of new
products and product enhancements. We have automated much of the software
quality assurance process and have streamlined key steps in the mechanical
prototyping process in order to minimize the time from design prototype to
volume production. We work closely with several key fabricators and subassembly
manufacturers on new products and utilize lower-cost manufacturers whenever
possible while maintaining product quality and availability. We are continuously
re-engineering our products to reduce manufacturing costs while improving
product reliability and serviceability.
Our quality assurance team reports to our customer service group and works
directly with our manufacturing team. Team members inspect and create an
electronic record for every product before it is shipped using personal digital
assistants. This information is used to monitor workmanship by recording the
number of defects per thousand units. Each manufacturing employee is part of an
incentive program tied to reducing defects per thousand units. Quality issues
are gathered though weekly field updates and direct calls from our sales and
customer support groups. These issues are addressed in weekly reliability
meetings, which bring together our engineering, manufacturing and quality
assurance teams.
COMPETITION
E-COMMERCE
The market for online procurement of medical and non-medical supplies for
the healthcare supply chain is new, rapidly evolving and competitive. We believe
we face competition in three general market categories:
- TRADITIONAL HEALTHCARE SUPPLY CHAIN PARTICIPANTS. Traditional medical
supply manufacturers, distributors and GPOs such as GE Medical Systems,
McKessonHBOC and Columbia/HCA have well-established businesses, customer
relationships and infrastructures. A number of these companies have or may
in the future seek to establish their own e-commerce initiatives for the
purchase and sale of healthcare supplies or seek to contract or partner
with other providers for those services.
- ONLINE HEALTHCARE MARKETPLACES AND EXCHANGES. While we desire to attract
online healthcare marketplaces and exchanges to be participants on the
Omnicell Commerce Network, we face indirect competition from marketplaces
and exchanges such as Medibuy.com and Neoforma.com. However, many of these
competitors do not provide an end-to-end, fully integrated solution.
- OTHER COMPANIES PROVIDING WEB-BASED HEALTHCARE APPLICATIONS AND
CONNECTIVITY. Many companies such as Healtheon/WebMD have created
Web-based healthcare connectivity technology platforms which target the
service, information and transaction needs of healthcare professionals,
providing medical information, practice management applications,
electronic medical claims processing and online prescription capabilities.
Many of these companies are introducing e-commerce functions that may
compete with our services.
We believe that companies in the healthcare e-commerce market compete based
on:
- Breadth, depth and quality of product offerings;
- Ease of use and convenience;
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- Ability to incorporate the buying organization's requisition and approval
process;
- Ability to integrate their services with the buying organization's
existing systems and software;
- Quality and reliability of their services;
- Customer service;
- Number of buying organizations and transaction volume;
- Brand recognition; and
- Amount of fees charged to buyers and suppliers.
AUTOMATION SYSTEMS
The market for automation systems is competitive and characterized by
rapidly evolving technology, evolving industry standards, frequent new product
introductions and rapidly changing customer requirements. Many hospitals and
other healthcare facilities still use and may continue to use existing
approaches that utilize no automated methods of distribution or inventory
tracking. As a result, we must continuously educate existing and prospective
customers regarding the advantages of our products.
We expect continued and increased competition from current and future
competitors, many of whom have greater financial, technical, marketing and other
resources than us. Our current direct competitors in the automation systems
market include Cardinal Healthcare (Pyxis), McKessonHBOC (AcuDose-Rx) and
Diebold (MedSelect).
We believe that companies in the healthcare automation systems market
compete based on:
- Breadth and depth of product offerings;
- Ease of use and efficiency;
- Ability to integrate their services with the healthcare facility's
existing systems;
- Quality and reliability of product offerings;
- Customer service; and
- Price.
EMPLOYEES
As of March 31, 2000, we had a total of 323 employees, including 57 in
research and development, 65 in sales, 25 in marketing, 97 in customer support,
33 in administration and 46 in manufacturing. We also employ independent
contractors and temporary personnel to support our development, marketing,
customer support, field service and administration organizations. None of our
employees is represented by a collective bargaining agreement, nor have we
experienced any work stoppage. We consider our relations with our employees to
be good.
FACILITIES
We lease approximately 113,000 square feet of office, development and
manufacturing space in Palo Alto, California and Waukegan, Illinois. Our
principal administrative, marketing and research and development facilities are
located in approximately 34,000 square feet of leased office space in Palo Alto,
California under leases expiring in January 2002 and June 2004. Our principal
manufacturing facility is located in approximately 23,000 square feet of leased
space in Palo Alto, California under a lease expiring in June 2003, with an
option to
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renew for an additional five years. We also maintain an administrative,
marketing, development and customer service facility located in approximately
38,000 square feet of leased office space in Waukegan, Illinois under a lease
expiring in June 2006, with an option to renew for an additional five years.
GOVERNMENT REGULATION
The manufacture and sale of our current products are not regulated by the
FDA. There can be no assurance, however, that these products, or future
products, if any, will not be regulated in the future. A requirement for FDA
approval could harm our business, results of operations and financial condition.
The practice of pharmacy is governed by individual state boards of pharmacy that
issues rules for pharmacy licensure in their jurisdiction. State boards of
pharmacy do not license or approve our distribution systems. However, pharmacies
using our equipment are subject to state board approval. Similarly, hospitals
must be accredited by the JCAHO in order to be eligible for Medicaid and
Medicare funds. JCAHO does not approve or accredit distribution systems.
PROPRIETARY RIGHTS AND LICENSING
Our success depends in part upon a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect our proprietary rights. We pursue patent protection in the United States
and foreign jurisdictions for technology that we believe to be proprietary and
that offers a potential competitive advantage for our products. We currently own
six United States patents and we currently have two United States patents
allowed and awaiting issue and have filed four United States patent
applications. The issued patents relate to our "See & Touch" methodology used in
the OmniSupplier dispensing cabinets, the use of guiding lights in the open
matrix pharmacy drawers, the use of locking and sensing lids with pharmacy
drawers and the methods of restocking these drawers. The above referenced
patents also apply to our unit-dose mechanism and methods, the single-dose
dispensing mechanism and the methods for restocking the single-dose drawers
using exchange liners. We also own four patents in Australia and three patents
in Europe, each which apply to Germany, France, Sweden and Great Britain. There
are other applications in process in Australia, Japan, Canada and European
countries based on issued and pending applications in the United States. We are
not aware that any of our products infringes the proprietary rights of third
parties.
All of our operating system software is copyrighted and subject to the
protection of applicable copyright laws. We have also obtained registration of
our OmniCell logo, OmniCell, OmniCenter, OmniSupplier, OmniRx and Sure-Med
trademarks through the United States Patent and Trademark Office. We are in the
process of registering Omnicell.com and the Omnicell.com logo, as well as other
trademarks, in the United States and internationally. We seek to protect and
enforce our rights in our patents, copyrights, service marks, trademarks, trade
dress and trade secrets through a combination of laws and contractual
restrictions, such as confidentiality and licensing agreements.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
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MANAGEMENT
DIRECTORS AND OFFICERS
The following table sets forth certain information as of March 31, 2000,
about our officers and members of our board of directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------------------------------------------------
<S> <C> <C>
Randall A. Lipps.......................... 42 Founder, Chairman of the Board and Director
Sheldon D. Asher.......................... 46 President, Chief Executive Officer and Director
Robert Y. Newell, IV...................... 51 Vice President of Finance and Chief Financial
Officer
S. Michael Hanna.......................... 49 Vice President of Sales and Field Operations
John D. Higham............................ 57 Vice President of Engineering and Chief Technical
Officer
Jeffrey L. Arbuckle....................... 43 Vice President of e-Commerce Market Development
Herbert J. Bellucci....................... 50 Vice President of Manufacturing
Joseph E. Coyne........................... 37 Vice President of Customer Service
Kenneth E. Perez.......................... 39 Vice President of e-Strategies
Gary E. Wright............................ 46 Vice President of e-Commerce Supplier
Relationships
Gordon V. Clemons(1)...................... 46 Director
Frederick J. Dotzler(2)................... 54 Director
Christopher J. Dunn, M.D.(2).............. 48 Director
Randall A. Hack(1)........................ 52 Director
Benjamin A. Horowitz...................... 33 Director
Kevin L. Roberg........................... 49 Director
John D. Stobo, Jr.(1)..................... 34 Director
William H. Younger, Jr.(1)(2)............. 50 Director
</TABLE>
- ---------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
RANDALL A. LIPPS has served as Chairman of the Board and a Director of
Omnicell.com since founding Omnicell.com in September 1992. From 1989 to 1992,
Mr. Lipps served as the President of Moxie Technologies, Inc., a direct
marketing firm specializing in travel and long distance communications sales.
Mr. Lipps received both a B.S. in economics and a B.B.A. from Southern Methodist
University.
SHELDON D. ASHER has served as President and Chief Executive Officer and a
Director of Omnicell.com since December 1993. From May 1991 to August 1993, Mr.
Asher served as President and Chief Executive Officer of Option Care, Inc., a
home infusion therapy company. Mr. Asher received a B.S. in finance from the
University of Illinois.
ROBERT Y. NEWELL, IV has served as Vice President of Finance and Chief
Financial Officer of Omnicell.com since January 2000. From October 1997 to
January 2000, Mr. Newell was a partner in the Beta Group, a business development
firm. From August 1992 to August 1997, he was Vice President and Chief Financial
Officer of Cardiometrics, Inc., a medical device company. Mr. Newell received a
B.A. in mathematics from the College of William & Mary and an M.B.A. from
Harvard Business School.
S. MICHAEL HANNA has served as Vice President of Sales and Field Operations
of Omnicell.com since July 1998. From July 1996 to July 1998, Mr. Hanna served
as a Regional Vice President of Omnicell.com. From 1981 to July 1996, Mr. Hanna
was employed by Air
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Shields, Inc., a medical equipment manufacturer, in a variety of sales
positions, most recently as Director of North American Sales. Mr. Hanna received
a B.S. in business administration from Shepard College.
JOHN D. HIGHAM has served as Vice President of Engineering and Chief
Technical Officer of Omnicell.com since June 1993. From 1989 to 1993, Mr. Higham
served as Vice President of Engineering of Octel Communications, Inc., a
supplier of voice mail systems. Mr. Higham received engineering and industrial
management degrees from Cambridge University, England, and a master's degree in
electrical engineering from Columbia University.
JEFFREY L. ARBUCKLE has served as Vice President of e-Commerce Market
Development of Omnicell.com since June 1999. From July 1997 to June 1999, Mr.
Arbuckle served as Vice President of Marketing of Omnicell.com. From February
1994 to June 1997, Mr. Arbuckle served as a Regional Vice President of
Omnicell.com. From 1991 to 1994, Mr. Arbuckle served as Regional Manager of
Siemens Infusion, a marketer of drug delivery systems. Mr. Arbuckle received a
B.A. from Indiana University.
HERBERT J. BELLUCCI has served as Vice President of Manufacturing of
Omnicell.com since April 1994. From August 1993 to March 1994, Mr. Bellucci
served as Vice President of Operations of VidaMed, Inc., a medical device
company. Mr. Bellucci received a B.S. in engineering from Brown University and
an M.B.A. from the Stanford Graduate School of Business.
JOSEPH E. COYNE has served as Vice President of Customer Service of
Omnicell.com since August 1997. From May 1994 to August 1997, Mr. Coyne served
as Director of Interface Development of Omnicell.com. From 1984 to May 1994, Mr.
Coyne was employed by HBO & Company, a healthcare information systems company,
in various technical capacities, including Technical Manager and Software
Interface Team Manager. Mr. Coyne received a B.S. in chemical engineering from
Stanford University and an M.B.A. degree from the Anderson Graduate School of
Management at the University of California, Los Angeles.
KENNETH E. PEREZ has served as Vice President of e-Strategies of
Omnicell.com since September 1999. From November 1998 to August 1999, Mr. Perez
served as Senior Vice President of Marketing for CyberCash, Inc. From 1992 to
1998, Mr. Perez held a number of positions at Hewlett-Packard Company, including
Director of Business Development, Financial Operations Manager of the Channel
Products Support Division and the Finance Department Supervisor for the
Commercial Systems Division. Mr. Perez received a B.A. degree in international
relations from Stanford University and an M.B.A. degree from the Anderson
Graduate School of Management at the University of California, Los Angeles.
GARY E. WRIGHT has served as Vice President of e-Commerce Supplier
Relationships of Omnicell.com since September 1999. From July 1998 until August
1999, Mr. Wright served as Vice President of Business Development of
Omnicell.com and from June 1994 until June 1998 Mr. Wright served as Vice
President of Sales and Field Operations of Omnicell.com. From September 1993 to
July 1994, Mr. Wright served as a Vice President of PCS Health Systems, a
managed healthcare company. Mr. Wright received a B.S. from Northern Illinois
University.
GORDON V. CLEMONS has served as a Director of Omnicell.com since December
1995. He has been the President, Chief Executive Officer and Chairman of the
Board of CorVel Corp., a provider of managed healthcare services, since 1991.
Mr. Clemons received a B.S. in business and technology from Oregon State
University and an M.B.A. from the University of Oregon.
FREDERICK J. DOTZLER has served as a Director of Omnicell.com since December
1993. He has been a partner with Medicus Venture Partners, a venture capital
firm, since 1989. Mr.
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Dotzler received a B.S. in industrial engineering from Iowa State University, an
M.B.A. from the University of Chicago and an advanced degree in economics from
Louvain University, Belgium.
CHRISTOPHER J. DUNN, M.D. has served as a Director of Omnicell.com since
September 1992. Dr. Dunn has been in private medical practice since 1984. Dr.
Dunn received an M.D. and a master's degree in health service administration
from Stanford University. Dr. Dunn is also Director of the Respiratory Care Unit
at Care West Gateway, Director of Subacute Care at Care West Burlingame and
Medical Director of Critical Care Transport for American Medical
Response--Sacramento Valley. He is a fellow of the American College of Chest
Physicians and is an Associate Clinical Professor of Medicine at Stanford
University School of Medicine.
RANDALL A. HACK has served as a Director of Omnicell.com since September
1995. Mr. Hack has been a Partner of Nassau Capital L.L.C., a private investment
management firm, since January 1995. From 1990 to 1994, Mr. Hack served as
President and Chief Executive Officer of the Princeton University Investment
Company, Princeton's portfolio of public and private assets. Mr. Hack received a
B.A. from Princeton University and an M.B.A. from Harvard University. Mr. Hack
serves as a director of Cornerstone Properties Inc. and Cypress Communications,
Inc.
BENJAMIN A. HOROWITZ has served as a Director of Omnicell.com since
September 1999. Mr. Horowitz has been President and Chief Executive Officer of
Loudcloud, Inc., an Internet company, since September 1999. From March 1999 to
September 1999, he served as Vice President of AOL E-commerce Technology
Platform for America On-Line, an Internet service provider. From July 1995 to
March 1999, Mr. Horowitz was employed by Netscape Communications, an Internet
company, in various capacities, including Vice President of the directory and
security product line from 1997 to 1998. From 1994 to 1995, Mr. Horowitz was
employed by Lotus Development Corporation, a software company. Mr. Horowitz
received a B.S. degree from Columbia University and a M.S. in computer science
from the University of California, Los Angeles.
KEVIN L. ROBERG has served as a Director of Omnicell.com since June 1997.
From December 1995 to June 1998, Mr. Roberg served as Chief Executive Officer
and President of ValueRx, a Value Health Company. From April 1995 until it was
acquired by ValueRx in December 1995, Mr. Roberg served as President and Chief
Executive of Medintell Systems Corporation, a pharmaceutical information
management company. From June 1994 to April 1995, Mr. Roberg served as
President--Western Health Plans and President--PRIMExtra, Inc. for EBP Health
Plans, Inc., a third party administrator. Mr. Roberg is also a director of Duane
Reade, Inc., Accredo Health, Inc. and the American Society of Health System
Pharmacists Foundation. Mr. Roberg is also a director and the immediate past
chairman of Children's Hospitals and Clinics of Minneapolis/St. Paul.
Mr. Roberg received a B.S. from the University of Iowa.
JOHN D. STOBO, JR. has served as a Director of Omnicell.com since February
2000. Since November 1998, he has been a managing member of ABS Partners III,
LLC, which is the general partner of ABS Capital Partners III, L.P., a venture
capital firm. From December 1993 to November 1998, Mr. Stobo was a principal of
ABS Capital Partners and related entities. Prior to joining ABS Capital
Partners, Mr. Stobo worked in the healthcare investment banking group at Alex.
Brown & Sons Incorporated, an investment banking firm. Mr. Stobo received a B.A.
from the University of California, San Diego, and an M.B.A. from Cornell
University. Mr. Stobo is also a director of Pointshare Corporation.
WILLIAM H. YOUNGER, JR. has served as a Director of Omnicell.com since
September 1992. Mr. Younger is a managing director of the general partner of
Sutter Hill Ventures, a venture
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<PAGE>
capital firm, where he has been employed since 1981. Mr. Younger holds a B.S. in
electrical engineering from the University of Michigan and an M.B.A. from
Stanford University. Mr. Younger serves as a director of Vitria Technology, Inc.
There are no family relationships between any of the directors and officers
of Omnicell.com.
BOARD COMMITTEES
The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation for our officers and employees and
administers our stock option plans. The Audit Committee makes recommendations to
the Board of Directors regarding the selection of independent auditors, reviews
the results and scope of the audit and other services provided by our
independent auditors, and reviews and evaluates our audit and control functions.
Members of these committees will serve until their successors are appointed.
Members of the Compensation Committee are Mr. Dotzler, Dr. Dunn and Mr. Younger.
Members of the Audit Committee are Messrs. Clemons, Hack and Younger.
DIRECTOR COMPENSATION
The members of the Board of Directors do not currently receive compensation
for their services as directors, but are reimbursed for travel expenses in
connection with attendance at Board and committee meetings. We have typically
granted non-employee directors options to purchase 25,000 shares of common stock
at the then fair market value upon election to the Board of Directors. In
February 1998, Dr. Dunn received a non-qualified stock option to purchase 25,000
shares of common stock at an exercise price of $6.50 per share. In September
1999, Mr. Horowitz received a non-qualified stock option to purchase 25,000
shares of common stock at an exercise price of $6.50 per share. These options
vest over a five-year period. In addition, in September 1999, the Board granted
to each of Messrs. Younger, Hack and Dotzler options to purchase 15,000 shares
of common stock at an exercise price of $6.50 per share which vest over a
three-year period. In April 2000, Mr. Horowitz received a non-qualified stock
option to purchase 10,000 shares of common stock at an exercise price of $6.50
per share which vest over a thirty month period. Following this offering, each
member of our Board of Directors who are not employees will be eligible to
receive initial and annual stock option grants to purchase our common stock.
These grants are more fully described below.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to our Chief Executive Officer, our Chairman of the Board and our four next
most highly compensated officers whose annual compensation exceeded $100,000 for
the year ended December 31, 1999. These individuals are referred to as the named
executive officers in this prospectus.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
------------------------------------ ---------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS(2)
- --------------------------- --------- --------- ------------ ---------------------
<S> <C> <C> <C> <C>
Sheldon D. Asher ..................... $298,000 $129,619 $ 48,000(4) 214,320
President, Chief Executive
Officer and Director
Randall A. Lipps ..................... 298,000 79,619 -- 215,000
Chairman of the Board
and Director
John D. Higham ....................... 187,000 51,578 -- 35,000
Vice President of Engineering
and Chief Technical Officer
S. Michael Hanna ..................... 145,000 88,079 -- 35,000
Vice President of Sales and
Field Operations
Earl E. Fry(3) ....................... 188,000 47,440 10,611(4) 170,000
Vice President and
Chief Financial Officer
</TABLE>
- ---------
(1) In accordance with Securities and Exchange Commission rules, Other Annual
Compensation in the form of perquisites and other personal benefits has been
omitted where the aggregate amount of such perquisites and other personal
benefits constitutes less than the lesser of $50,000 or 10% of the total
annual salary and bonus for the named executive officer for the fiscal year.
(2) These shares are subject to exercise under stock options granted under our
stock option plans.
(3) Mr. Fry resigned in January 2000.
(4) Represents a loan forgiven by Omnicell.com.
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<PAGE>
STOCK OPTION GRANTS
The following table sets forth information regarding options granted to each
of the named executive officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
--------------------------------------------------- RATES OF
NUMBER OF PERCENTAGE STOCK PRICE
SECURITIES OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS OPTION TERM(1)
OPTIONS GRANTED IN EXERCISE EXPIRATION ---------------------
NAME GRANTED(2) FISCAL 1999(3) PRICE(4) DATE 5% 10%
- ---- ---------- -------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sheldon D. Asher.............. 94,320 5.23% $6.50 02/15/09
120,000 6.65 6.50 08/31/09
Randall A. Lipps.............. 95,000 5.27 6.50 02/15/09
120,000 6.65 6.50 08/31/09
John D. Higham................ 15,000 0.83 6.50 02/15/09
20,000 1.11 6.50 08/31/09
S. Michael Hanna.............. 15,000 0.83 6.50 02/15/09
20,000 1.11 6.50 08/31/09
Earl E. Fry(5)................ 20,000 1.11 6.50 02/15/09
150,000 8.31 6.50 08/31/09
</TABLE>
- ---------
(1) Potential realizable values are computed by multiplying the number of shares
of common stock subject to a given option by the initial public offering
price of $ per share, assuming that the aggregate stock value derived
from that calculation compounds at the annual 5% or 10% rate shown in the
table for the entire ten-year term of the option and subtracting from that
result the aggregate option exercise price. The 5% and 10% assumed annual
rates of stock appreciation are mandated by the rules of the SEC and do not
reflect our estimate or projection of future stock price growth.
(2) These options were issued under our 1995 Management Stock Option Plan and
our 1999 Equity Incentive Plan. Vesting and exercise terms are as follows:
(a) Options vest over a four year period as follows: 10% in equal monthly
installments during the first year, 20% in equal monthly installments during
the second year, 30% in equal monthly installments during the third year and
40% in equal monthly installments during the fourth year, so that the grant
is fully vested at the end of four years; and (b) Options vest over 30
months at a rate of 1/30 of the total amount vesting each month thereafter.
(3) Based on an aggregate of 1,804,208 shares subject to options granted to
employees (not counting grants to non-employees) of the Company in the year
ended December 31, 1999, including options granted to the named executive
officers.
(4) Options were granted at an exercise price equal to the fair market value of
our Common Stock, as determined by the Board of Directors at the date of the
grant.
(5) At the time of Mr. Fry's resignation, options to purchase 117,927 shares had
vested. Pursuant to the terms of a consulting agreement between Mr. Fry and
us, these options remain outstanding with the same expiration date they had
at the time of grant. The options that had not vested prior to Mr. Fry's
resignation have expired.
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<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth for each of the named executive officers the
shares acquired and the value realized on each exercise of stock options during
the year ended December 31, 1999 and number and value of securities underlying
unexercised options held by the named executive officers at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1999(1) DECEMBER 31, 1999(1)(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sheldon D. Asher.......... 200,000 $1,279,000 600,068(3) 376,138 $3,224,006 $209,864
Randall A. Lipps.......... 0 0 195,168 342,972 491,580 119,309
John D. Higham............ 0 0 38,455 83,445 105,435 67,865
S. Michael Hanna.......... 0 0 53,288 109,962 0 0
Earl E. Fry............... 0 0 86,746 204,649 361,042 146,309
</TABLE>
- ---------
(1) Some of the shares are immediately exercisable; however, the shares
purchasable under such options are subject to repurchase by the Company at
the original exercise price paid per share upon the optionee's cessation of
service prior to the vesting of such shares. The shares listed as
exercisable are those shares which are unexercised for which the Company no
longer has a right of repurchase if the option is exercised by the holder;
similarly, the shares listed as unexercisable include those shares over
which the Company has a right of repurchase if the option is exercised by
the holder.
(2) Based on the fair market value of our common stock at year ended December
31, 1999 ($6.50 per share, as determined by our Board of Directors), less
the exercise price payable for such shares.
(3) Dianne Snedden, Mr. Asher's ex-wife, has the right to receive 188,800 shares
upon the exercise of vested options pursuant to a divorce agreement and any
and all proceeds from the sale thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Dotzler, Dr. Dunn and Mr.
Younger. None of these individuals is or has been an officer or employee of
Omnicell.com. No member of the Compensation Committee of Omnicell.com serves as
a member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of the Omnicell.com Board
of Directors.
STOCK PLANS
1992 EQUITY INCENTIVE PLAN AND 1995 MANAGEMENT STOCK OPTION PLAN
Our 1992 Equity Incentive Plan and 1995 Management Stock Option Plan
(collectively, the Incentive Plans) were adopted by the Board of Directors in
October 1992 and December 1995, respectively. There are currently 5,410,000
shares of common stock authorized for issuance under the Incentive Plans.
The Incentive Plans provide for the grant of incentive stock options under
the Internal Revenue Code of 1986, as amended (the Code), to employees and
nonstatutory stock options, restricted stock purchase awards and stock bonuses
to employees, directors and consultants.
57
<PAGE>
The Incentive Plans are administered by the Board of Directors or a committee
appointed by the Board which determines recipients and types of awards to be
granted, including the exercise price, number of shares subject to the award and
the exercisability thereof.
The term of stock options granted under the Incentive Plans generally may
not exceed 10 years. The exercise price of options granted under the Incentive
Plans are determined by the Board of Directors, provided that the exercise price
for an incentive stock option cannot be less than 100% of the fair market value
of the common stock on the date of the option grant and the exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the common stock on the date of option grant. Options granted under the
Incentive Plans vest at the rate specified in the option agreement. No incentive
stock option may be transferred by the optionee other than by will, beneficiary
designation or the laws of descent or distribution or, in certain limited
instances, pursuant to a qualified domestic relations order. The Board of
Directors may grant a nonstatutory stock option that is transferable. An
optionee whose relationship with us or any related corporation ceases for any
reason, other than by death or permanent and total disability, may exercise
options in the three-month period following such cessation, unless such options
terminate or expire sooner or later by their terms. Options may be exercised for
up to twelve months after an optionee's relationship with us and our affiliates
ceases due to death or disability, unless such options expire sooner or later by
their terms.
No incentive stock option may be granted to any person who, at the time of
the grant, owns, or is deemed to own, stock possessing more than 10% of the
total combined voting power of Omnicell.com or any affiliate of Omnicell.com,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant and the term of the option
does not exceed five years from the date of grant. The aggregate fair market
value, determined at the time of grant, of the shares of common stock with
respect to which incentive stock options are exercisable for the first time by
an optionee and its affiliates during any calendar year under all of our plans
may not exceed $100,000.
Shares subject to options that have expired or otherwise terminated without
having been exercised in full, or vested in the case of restricted stock awards,
become available for the grant of awards under the Incentive Plans.
The Board of Directors has the authority to reprice outstanding options and
to offer optionees the opportunity to replace outstanding options with new
options for the same or a different number of shares.
We may grant restricted stock awards under the Incentive Plans that are
subject to a repurchase option by us in accordance with a vesting schedule and
at a price determined by the Board of Directors. Restricted stock purchases must
be at a price equal to at least 85% of the stock's fair market value on the
award date, but stock bonuses may be awarded in consideration of past services
without a purchase payment. Rights under a stock bonus or restricted stock
purchase agreement may not be transferred other than by will, the laws of
descent and distribution or a qualified domestic relations order while the stock
awarded pursuant to such an agreement remains subject to the agreement.
As of March 31, 2000, 1,073,132 shares of common stock had been issued upon
the exercise of options granted under the Incentive Plans, options to purchase
3,939,017 shares of common stock were outstanding at a weighted average exercise
price of $3.84 per share and 397,851 shares of common stock remained available
for future grant. The Incentive Plans will terminate in October 2002 and
December 2005, respectively, unless sooner terminated by the Board of Directors.
58
<PAGE>
1997 EMPLOYEE STOCK PURCHASE PLAN
In March 1997, our Board of Directors approved the 1997 Employee Stock
Purchase Plan which was later amended in September 1999. The 1997 plan is
intended to qualify as an employee stock purchase plan within the meaning of
Section 423 of the Code. Under the 1997 plan, the Board of Directors may
authorize participation by eligible employees, including officers, in periodic
offerings following the adoption of the 1997 plan. The offering period for any
offering will be no more than 27 months.
The 1997 plan, as amended in September 1999, authorizes the issuance of
750,000 shares of common stock under the 1997 plan which amount is increased
each January 1 by the lesser of 500,000 or 1.5% of the number of shares of
common stock outstanding each January 1. However, the Board of Directors has the
authority to designate a smaller number of shares by which the authorized number
of shares of common stock will be increased on each January 1.
Employees are eligible to participate if they are employed by Omnicell.com
or an affiliate of Omnicell.com designated by the Board of Directors and are
regularly employed at least 20 hours per week and five months per year.
Employees who participate in an offering can have up to 15% of their earnings
withheld pursuant to the 1997 plan and applied, on specified dates determined by
the Board of Directors, to the purchase of shares of common stock. The price of
common stock purchased under the 1997 plan will be equal to 85% of the lower of
the fair market value of the common stock on the commencement date of each
offering period or the relevant purchase date. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment with Omnicell.com.
In the event of certain changes of control of Omnicell.com, the Board of
Directors has discretion to provide that each right to purchase common stock
will be assumed or an equivalent right substituted by the successor corporation,
or the Board of Directors may shorten the offering period and provide for all
sums collected by payroll deductions to be applied to purchase stock immediately
prior to the change in control. The 1997 plan will terminate at the Board of
Directors' direction.
As of March 31, 2000, we had issued 253,799 shares of common stock under the
1997 plan.
1999 EQUITY INCENTIVE PLAN
Our 1999 Equity Incentive Plan was adopted by the Board of Directors in
September 1999 and amended in April 2000. The 1999 plan was established to
replace the Incentive Plans. The 1999 plan will terminate in September 2009,
unless sooner terminated by the Board of Directors.
The 1999 plan provides for the grant of incentive stock options under Code
Section 422 to employees, including officers and employee-directors, and
nonstatutory options, restricted stock purchase awards and stock bonuses to
employees, directors and consultants. The 1999 plan is administered by the Board
of Directors or a committee appointed by the Board which determines recipients
and the terms and types of awards to be granted, including the exercise price,
number of shares subject to the award and the exercisability thereof.
Stock option grants under the 1999 plan are made pursuant to an option
agreement. The term of stock options granted under the 1999 plan generally may
not exceed 10 years. The exercise price of options granted under the 1999 plan
is determined by the Board of Directors, provided that the exercise price for an
incentive stock option plan cannot be less than 100% of
59
<PAGE>
the fair market value of the common stock on the date of the option grant and
the exercise price for a nonstatutory stock option cannot be less than 85% of
the fair market value of the common stock on the date of the option grant.
Options granted under the 1999 plan vest at the rate specified in the option
agreement. No incentive stock options may be transferred by the optionee other
than by will, beneficiary designation or the laws of descent and distribution
or, in certain limited instances, pursuant to a qualified domestic relations
order. The Board of Directors may grant a nonstatutory stock option that is
transferable. An optionee whose relationship with Omnicell.com or any related
corporation ceases for any reason may exercise options in the three-month period
following such cessation, unless such options terminate or expire sooner or
later by their terms. Unless the options expire sooner or later by their terms,
options may be exercised for up to twelve months after an optionee's
relationship with Omnicell.com and our affiliates ceases due to disability and
for up to eighteen months after an optionee's relationship with Omnicell.com and
our affiliates ceases due to death.
No incentive stock options may be granted to any person who, at the time of
the grant, owns, or is deemed to own, stock possessing more than 10% of the
total combined voting power of Omnicell.com or any affiliate of Omnicell.com,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of the grant, and the term of the
option does not exceed five years from the date of the grant. The aggregate fair
market value, determined at the time of the grant, of the shares of common stock
with respect to which incentive stock options are exercisable for the first time
by an optionee during any calendar year, under all such plans of Omnicell.com
and its affiliates, may not exceed $100,000.
Five million shares of common stock are authorized for issuance under the
1999 plan. Effective January 1, 2001, the number of shares of common stock
authorized for issuance under the 1999 plan will be increased on each January 1
by the lesser of (i) 3,000,000 shares, or (ii) 5.0% of the number of shares of
common stock outstanding on that date. However, the Board of Directors has the
authority to designate a smaller number of shares by which the authorized number
of shares of common stock will be increased on each January 1.
Shares subject to stock awards that have expired or otherwise terminated
without having been exercised in full, or vested in the case of restricted stock
awards, shall again become available for the grant of awards under the 1999
plan. Shares subject to stock awards issued under the 1999 plan that have
expired or otherwise terminated without having been exercised in full, or vested
in the case of restricted stock awards, shall also become available for the
grant of awards under the 1999 plan. Shares issued under the 1999 plan may be
previously unissued shares or reacquired shares bought on the market or
otherwise.
Restricted stock purchase awards granted under the 1999 plan may be granted
pursuant to a repurchase option in favor of Omnicell.com in accordance with a
vesting schedule and at a price determined by the Board of Directors. Restricted
stock purchases must be at a price equal to 85% of the stock's fair market value
on the award date, but stock bonuses may be awarded in consideration of past
services without a purchase payment. Rights under a stock bonus or restricted
stock purchase agreement may not be transferred other than by will, the laws of
descent and distribution or a qualified domestic relations order while the stock
awarded pursuant to such an agreement remains subject to the agreement.
Under certain changes in control of Omnicell.com including (i) a
dissolution, liquidation or sale of substantially all of our assets, (ii) a
merger or consolidation in which Omnicell.com is not the surviving corporation,
or (iii) a reverse merger in which Omnicell.com is the surviving corporation but
the shares of common stock outstanding immediately preceding the merger
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are converted by virtue of the merger into other property, whether securities,
cash or otherwise, then to the extent permitted by applicable law, (i) any
surviving corporation will assume any stock awards, including stock options,
outstanding under the 1999 plan or substitute similar stock awards, or (ii) such
stock awards under the 1999 plan will continue in full force and effect. In the
event any surviving corporation refuses to assume or continue such stock awards,
or to substitute similar stock awards for those outstanding under the 1999 plan,
then the stock awards held by participants whose service with Omnicell.com or
surviving corporation has not terminated shall become fully vested and
exercisable prior to the change in control and any such Stock Award that are not
exercised prior to the change in control will terminate thereafter.
As of March 31, 2000, 37,365 shares of common stock had been issued upon
exercise of options granted under the 1999 plan. Options to purchase 1,265,671
shares of common stock were outstanding at a weighted average exercise price of
$6.50 per share and 1,696,964 shares of common stock remained available for
future grant. The 1999 plan will terminate in September 2009, unless sooner
terminated by the Board of Directors.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
The 1999 plan provides for automatic stock option grants to non-employee
directors on the Board. After the offering, each person who is not an employee
of the Company who is elected or appointed to the Board will be granted an
initial grant on the date of his or her election or appointment to purchase
40,000 shares of the common stock of the Company at the fair market value of the
common stock on that grant date. On the date of the offering, non-employee
directors of the Board who have not previously been granted options to purchase
the common stock of the Company will receive an initial stock option grant as if
he or she were first elected or appointed to the Board after the offering. The
non-employee directors become vested in each initial stock option grant 1/36
after each month of service on the Board from the stock option grant date so
that the directors will become vested fully after 36 months of service on the
Board after the grant.
After the offering, each person who is a non-employee director on the day
after each annual stockholders' meeting, shall, on that date, be granted an
annual stock option grant to purchase 10,000 shares of the common stock of the
Company at the fair market value of the common stock of the Company on that
grant date. The non-employee directors become vested in each annual stock option
grant 1/12 after each month of service on the Board from the stock option grant
date so that the directors will become vested fully after 12 months of service
on the Board after the grant.
The non-employee director stock options will have a maximum term of ten
years and generally must be exercised prior to the earliest of eighteen months
following the death of the non-employee directors, twelve months from the
termination of service on the Board by the non-employee director due to a
disability, three months from the termination of the service of non-employee
director for any other reason, or the expiration of the original term of the
stock options. The stock options shall not be transferable except as otherwise
provided in a stock option agreement to the extent permitted by federal
securities laws and regulations. If there is a change of control as described
above, the directors will become fully vested in their unvested portion of their
stock options and the options will be exercisable for a period of the shorter of
twelve months following the termination of their service on the Board or the
original term of the stock options.
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401(k) PLAN
In October, 1993, we adopted a tax-qualified employee savings plan under
Section 401(k) of the Code covering our employees. Pursuant to the 401(k) plan,
eligible employees may elect to reduce their current compensation by up to the
lesser of 15% of their annual compensation or the statutorily prescribed annual
limit and have the amount of such reduction contributed to the 401(k) plan. In
addition, eligible employees may make rollover contributions to the 401(k) plan
from a tax-qualified retirement plan. The 401(k) plan is intended to qualify
under Section 401(a) of the Code, so that contributions by employees or
Omnicell.com to the 401(k) plan, and income earned on the 401(k) plan
contributions, are not taxable to employees until withdrawn from the 401(k)
plan, and so that contributions by Omnicell.com, if any, will be deductible by
Omnicell.com when made. We do not presently intend to make any matching or
discretionary contributions.
EMPLOYMENT ARRANGEMENTS
In December 1993, Omnicell.com and Mr. Asher entered into an employment
agreement whereby Mr. Asher agreed to serve as President and Chief Executive
Officer. The agreement provides Mr. Asher with: (1) an annual base salary of at
least $200,000; (2) a performance bonus of at least $50,000; and (3) $1,000,000
of term life insurance, the owner and beneficiary of which are to be designated
by Mr. Asher. In the event of termination without cause, Mr. Asher will be
entitled to receive the base salary amount then in effect plus $50,000 for one
year following the date of termination.
In February 1998 and in February 2000, our Board of Directors approved the
acceleration, under certain circumstances, of all prior stock options granted to
each officer under our equity incentive plans. Under this arrangement, the
unvested portion of each officer's stock options under our equity incentive
plans becomes fully-vested and exercisable if Omnicell.com is acquired and the
officer is (1) terminated without cause; (2) the principal place of performance
of the officer's responsibilities and duties is changed; or (3) there is a
material reduction in the officer's responsibilities and duties.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant indemnity to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act.
As permitted by Delaware law, our Certificate of Incorporation, which will
become effective upon the closing of this offering, includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability:
- for any breach of the director's duty of loyalty to us or our
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware law regarding unlawful dividends and
stock purchases; or
- for any transaction from which the director derived an improper personal
benefit.
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As permitted by Delaware law, our Certificate of Incorporation and/or our
Bylaws, which will become effective upon the closing of this offering, provide
that:
- we are required to indemnify our directors and officers to the fullest
extent permitted by Delaware law, so long as such person acted in good
faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of Omnicell.com, and with respect to any
criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful.
- we are permitted to indemnify our other employees to the extent that we
indemnify our officers and directors, unless otherwise required by law,
our Certificate of Incorporation, our Bylaws or agreements;
- we are required to advance expenses, as incurred, to our directors and
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware law, subject to certain very limited exceptions; and
- the rights conferred in our Bylaws are not exclusive.
Prior to the closing of this offering, we intend to enter into indemnity
agreements with each of our current directors and officers to give such
directors and officers additional contractual assurances regarding the scope of
the indemnification set forth in our Certificate of Incorporation and our Bylaws
and to provide additional procedural protections. At present, there is no
pending litigation or proceeding involving any of our directors, officers or
employees regarding which indemnification is sought, nor are we aware of any
threatened litigation that may result in claims for indemnification.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Pursuant to his employment agreement, in December 1993, we loaned Sheldon
Asher an aggregate of $200,000 with an interest rate of 4% per year for the
purchase of 92,165 shares of Series D Preferred Stock, convertible into common
stock on a one-for-one basis. The purchase price of $2.17 per share was equal to
the fair market value of the shares at the time of the sale. Twenty percent of
this loan matured each year beginning on January 1, 1995 and was forgiven at
such time so long as Mr. Asher remained employed by us. This loan has been
completely forgiven.
Pursuant to the Series E Preferred Stock Purchase Agreements dated December
22, 1993, the purchasers therein agreed to vote their shares to elect to our
Board of Directors a designated representative of Medicus Venture Partners 1993.
This obligation expires as of the date of this offering. Frederick J. Dotzler
has been the designated representative thereunder.
Pursuant to the terms of the Series H Stock Purchase Agreement, dated
September 18, 1995, we agreed to nominate and use our best efforts to elect the
designated representatives of Nassau Capital, L.L.C. to our Board of Directors.
Randall A. Hack is the current designated representative of Nassau Capital.
We entered into a Stock Purchase Agreement with Sun Healthcare, dated June
7, 1996, for 1,802,000 shares of Series I Preferred Stock. In July 1996, the
non-voting Series I Preferred Stock was converted into voting Series J Preferred
Stock on a one for one basis.
In the years ended December 31, 1997, 1998 and 1999, we recorded revenues of
$7.1 million, $9.9 million and $5.1 million, from sales to Sun Healthcare,
representing approximately 19.7%, 20.5% and 9.7% of our revenues, respectively,
for the year. Sun Healthcare earned cash rebates of $0.7 million and $0.4
million for purchases made from us during the years ended December 31, 1997 and
1998, respectively.
In February 1999, Sun Healthcare exercised its right to redeem all of its
shares of Series J Preferred Stock on a quarterly basis, over the succeeding ten
quarters. For all of 1999 and the first quarter of 2000, Sun Healthcare redeemed
901,00 shares of Series J Preferred Stock at a price of $14.03 per share for an
aggregate redemption amount of approximately $12.6 million. In addition, we paid
Sun Healthcare accrued interest on the Series J Preferred Stock of approximately
$2.0 million. These redemptions and interest payments were paid for with cash of
$8.3 million and the balance was paid by offsetting Sun Healthcare's outstanding
accounts receivable balances of $6.3 million. Sun Healthcare's right to redeem
its remaining shares of Series J Preferred Stock shall terminate on the closing
of this offering.
In April 2000, our Board of Directors granted options to purchase an
aggregate of 535,000 shares of common stock to our officers. The exercise price
of these options is $6.50 per share which the Board determined to be the fair
market value of the common stock on the date of grant. These options vest
monthly over a 30 month period.
Pursuant to the terms of the Series K Stock Purchase Agreement, dated
January 20, 2000, we agreed to nominate and use our best efforts to elect the
designated representative of ABS Capital Partners to our Board of Directors.
John D. Stobo, Jr. is the current designated representative of ABS Capital
Partners.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our outstanding common stock as of March 31, 2000, and
as adjusted to reflect the sale of the shares of common stock offered hereby:
(1) by each person or entity who is known by us to own beneficially more than 5%
of the common stock; (2) by each of our directors; (3) by our Chief Executive
Officer, (4) our other named executive officers, and (5) by all of our directors
and executive officers as a group. The table assumes the conversion of all
outstanding Preferred Stock into common stock upon the completion of this
offering. Except as otherwise noted, the stockholders named in the table have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them, subject to applicable community property
laws. Unless otherwise indicated in the table, the address of each stockholder
identified in the table is 1101 East Meadow Drive, Palo Alto, California 94303.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
5% STOCKHOLDERS, EXECUTIVE OFFICERS, OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
DIRECTORS, AND DIRECTORS AND EXECUTIVE --------------------------- ---------------------------
OFFICERS AS A GROUP NUMBER PERCENTAGE(1) NUMBER PERCENTAGE(1)
- -------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Entities affiliated with Sutter Hill 3,827,425 20.8 3,827,425
Ventures(2) ...........................
755 Page Mill Road, Suite A-200
Palo Alto, CA 94306
Medicus Venture Partners(3) ............. 1,611,643 8.8 1,611,643
2180 Sand Hill Road, Suite 400
Menlo Park, CA 94025
ABS Capital Partners III, L.P.(4) ....... 1,578,947 8.6 1,578,947
101 California Street, 47(th) floor
San Francisco, CA 94111
Nassau Capital Partners L.P.(5) ......... 1,384,052 7.5 1,384,052
22 Chambers Street
Princeton, NJ 08542
Entities affiliated with Oak Investment
Partners(6)............................ 1,086,956 5.9 1,086,956
One Gorham Island
Westport, CT 06880
William H. Younger, Jr.(7)............... 3,827,425 20.8 3,827,425
Frederick J. Dotzler(8).................. 1,611,643 8.8 1,611,643
John D. Stobo, Jr. (9)................... 1,578,947 8.6 1,578,947
Randall A. Hack(10)...................... 1,384,052 7.5 1,384,052
Randall A. Lipps(11)..................... 1,233,934 6.6 1,233,934
Sheldon D. Asher(12)..................... 936,524 4.9 936,524
Christopher J. Dunn, M.D.(13)............ 68,850 * 68,850
Gordon V. Clemons(14).................... 22,083 * 22,083
Kevin L. Roberg(15)...................... 14,583 * 14,583
Benjamin A. Horowitz(16)................. 3,333 * 3,333
John D. Higham(17)....................... 292,582 1.6 292,582
S. Michael Hanna(18)..................... 79,573 * 79,573
All directors and executive officers as a
group (19 persons)(19)................. 11,824,114 59.3 11,824,114
</TABLE>
- ---------
* Represents beneficial ownership of less than 1.0%.
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(1) Applicable percentage ownership is based on 18,418,807 shares of common
stock outstanding as of March 31, 2000. Beneficial ownership is determined
in accordance with the rules of the Commission, based on factors including
voting and investment power with respect to shares, subject to the
applicable community property laws. Shares of common stock subject to
options or warrants currently exercisable, or exercisable within 60 days
after March 31, 2000, are deemed outstanding for the purpose of computing
the percentage ownership of the person holding such options or warrants,
but are not deemed outstanding for computing the percentage ownership of
any other person.
(2) Includes 1,747,688 shares of common stock owned by Sutter Hill Ventures, A
California Limited Partnership (Sutter Hill); 442,105 shares of common
stock owned by Mr. Younger, a member of our Board of Directors and a
managing director of Sutter Hill Ventures LLC, the general partner of
Sutter Hill; 1,061,136 shares owned by the four other managing directors
and one other director of Sutter Hill Ventures LLC, a retirement trust of
one of the managing directors of Sutter Hill LLC, and family partnerships
associated with the managing directors of Sutter Hill LLC; and 576,496
shares owned by other entities and invididuals associated with Sutter Hill
Ventures. Mr. Younger and the other managing directors of Sutter Hill
Ventures LLC disclaim beneficial ownership in the shares listed above
except as to their individual pecuniary interest therein.
(3) Consists of (1) 13,860 shares of common stock held by Mr. Dotzler, 3,333 of
which are subject to stock options exercisable in 60 days, (2) 909,092
shares of common stock held by Medicus Venture Partners 1993, L.P.; (3)
539,970 shares of common stock held by Medicus Venture Partners
1994, L.P.; and (4) 152,054 shares of common stock held by Medicus Venture
Partners 1995, L.P. (the Medicus Entities). Medicus Management Partners and
a limited partnership affiliated with The Hillman Company are the general
partners of each of the Medicus Entities. Mr. Dotzler, a member of our
Board of Directors, and John Reher are general partners of Medicus
Management Partners. The Hillman Company is controlled by Henry L. Hillman,
Elsie Hilliard Hillman and C. G. Grefenstette, Trustees of the Henry L.
Hillman Trust U/A dated November 18, 1985. The trustees share the power to
vote and dispose of shares representing a majority of the voting shares of
the Hillman Company. Mr. Dotzler disclaims beneficial ownership of such
shares held by the Medicus Entities, except to the extent of his pecuniary
interest therein.
(4) Consists of 1,578,947 shares of common stock held by ABS Capital Partners
III, L.P. Mr. Stobo, a member of our Board of Directors, is a managing
member of ABS Partners III, LLC, the general partner of ABS Capital
Partners III, L.P. Mr. Stobo disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest therein.
(5) Includes 1,372,663 shares of common stock held by Nassau Capital Partners
L.P., 8,058 shares of common stock held by NAS Partners L.L.C. and 3,333
shares subject to stock options exercisable in 60 days granted to
Mr. Hack. Mr. Hack, a member of our Board of Directors, is a member of NAS
Partners L.L.C. and a member of Nassau Capital L.L.C., the sole general
partner of Nassau Capital Partners L.P. The members of Nassau Capital
L.L.C., disclaim that they are beneficial owners of shares of Nassau
Capital Partners L.P. Mr. Hack disclaims beneficial ownership of the shares
held by such entities except to the extent of his proportionate interest
therein.
(6) Includes 1,062,173 shares of common stock held by Oak Investment Partners
VI, Limited Partnership and 24,783 shares of common stock held by Oak VI
Affiliates Fund, Limited Partnership.
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(7) Includes 1,747,688 shares of common stock owned by Sutter Hill Ventures, A
California Limited Partnership (Sutter Hill); 442,105 shares of common
stock owned by Mr. Younger, a member of our Board of Directors and a
managing director of Sutter Hill Ventures LLC, the general partner of
Sutter Hill; 1,061,136 shares owned by the four other managing directors
and one other director of Sutter Hill Ventures LLC, a retirement trust of
one of the managing directors of Sutter Hill LLC, and family partnerships
associated with the managing directors of Sutter Hill LLC; and 576,496
shares owned by other entities and invididuals associated with Sutter Hill
Ventures. Mr. Younger and the other managing directors of Sutter Hill
Ventures LLC disclaim beneficial ownership in the shares listed above
except as to their individual pecuniary interest therein.
(8) Consists of (1) 13,860 shares of common stock held by Mr. Dotzler, 3,333 of
which are subject to stock options exercisable in 60 days, (2) 909,092
shares of common stock held by Medicus Venture Partners 1993, L.P.; (3)
539,970 shares of common stock held by Medicus Venture Partners
1994, L.P.; and (4) 152,054 shares of common stock held by Medicus Venture
Partners 1995, L.P. (the Medicus Entities). Medicus Management Partners and
a limited partnership affiliated with The Hillman Company are the general
partners of each of the Medicus Entities. Mr. Dotzler, a member of our
Board of Directors, and John Reher are general partners of Medicus
Management Partners. The Hillman Company is controlled by Henry L. Hillman,
Elsie Hilliard Hillman and C. G. Grefenstette, Trustees of the Henry L.
Hillman Trust U/A dated November 18, 1985. The trustees share the power to
vote and dispose of shares representing a majority of the voting shares of
the Hillman Company. Mr. Dotzler disclaims beneficial ownership of such
shares held by the Medicus Entities, except to the extent of his pecuniary
interest therein.
(9) Consists of 1,578,947 shares of common stock held by ABS Capital Partners
III, L.P. Mr. Stobo, a member of our Board of Directors, is a managing
member of ABS Partners III, LLC, the general partner of ABS Capital
Partners III, L.P. Mr. Stobo disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest therein.
(10) Includes 1,372,663 shares of common stock held by Nassau Capital Partners
L.P., 8,058 shares of common stock held by NAS Partners L.L.C. and 3,333
shares subject to stock options exercisable in 60 days granted to
Mr. Hack. Mr. Hack, a member of our Board of Directors, is a member of NAS
Partners L.L.C. and a member of Nassau Capital L.L.C., the sole general
partner of Nassau Capital Partners L.P. The members of Nassau Capital
L.L.C., disclaim that they are beneficial owners of shares of Nassau
Capital Partners L.P. Mr. Hack disclaims beneficial ownership of the
shares held by such entities except to the extent of his proportionate
interest therein.
(11) Includes 248,934 shares subject to stock options exercisable within 60
days. Includes an aggregate of 152,000 shares held in trusts, of which
Mr. Lipps is a trustee, for the benefit of Mr. Lipps' minor children.
(12) Includes 190,911 shares held by the Sheldon D. Asher Trust, dated
August 31, 1998. Also includes 662,434 shares subject to stock options
exercisable within 60 days. Diane Snedden, Mr. Asher's ex-wife, has the
right to receive 188,800 shares upon the exercise of vested options
pursuant to a divorce agreement. Mr. Asher disclaims beneficial ownership
of these shares. Also includes (1) 40,000 shares held by the Asher Family
Special Trust, dated November 25, 1991, FBO Rachel A. Asher, Mr. Asher's
minor child; (2) 40,000 shares held by the Asher Family Special Trust,
dated November 25, 1991, FBO Emily R. Asher, Mr. Asher's minor child, for
both of which Diane Snedden is Trustee; (3) 1,100 shares held by Bernard
Asher, custodian for Emily Rose Asher under IL Uniform
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Trust to Minors Act; and (4) 1,100 shares held by Bernard Asher, custodian
for Rachel Ann Asher under IL Uniform Trust to Minors Act. Bernard Asher
is Mr. Asher's brother. Mr. Asher disclaims beneficial ownership of these
shares.
(13) Includes 7,083 shares subject to stock options exercisable within 60 days.
(14) Consists of 22,083 shares subject to stock options exercisable within 60
days.
(15) Consists of 14,583 shares subject to stock options exercisable within 60
days.
(16) Consists of 3,333 shares subject to stock options exercisable within 60
days.
(17) Includes (1) 56,243 shares subject to stock options exercisable within 60
days; (2) 221,792 shares held by the Higham-Bunker 1991 Family Trust, John
D. Higham or Carol L. Bunker, Trustees; and (3) 10,000 shares held by John
D. Higham or Carol L. Bunker, Guardians of Christina L. Higham.
(18) Includes 68,432 shares subject to stock options exercisable within 60
days.
(19) Includes an aggregate of 1,576,099 shares subject to stock options
exercisable within 60 days.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Upon the closing of this offering, we will be authorized to issue 50,000,000
shares of common stock, $.001 par value, and 5,000,000 shares of undesignated
preferred stock, $.001 par value. Immediately following the closing of this
offering, based on the number of shares outstanding as of March 31, 2000, there
were 18,418,807 shares of common stock outstanding held of record by
approximately 448 stockholders assuming the conversion of preferred stock.
COMMON STOCK
The issued and outstanding shares of common stock are, and the shares of
common stock being offered by us hereby will be upon payment therefor, validly
issued, fully paid and nonassessable. Subject to the prior rights of the holders
of any preferred stock, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board of Directors may from time to time
determine. The shares of common stock are neither redeemable nor convertible and
the holders thereof have no preemptive or subscription rights to purchase any of
our securities. Upon liquidation, dissolution or winding up of Omnicell.com, the
holders of common stock are entitled to receive pro rata our assets which are
legally available for distribution, after payment of all debts and other
liabilities and subject to the prior rights of any holders of any preferred
stock then outstanding. Each outstanding share of common stock is entitled to
one vote on all matters submitted to a vote of stockholders and has cumulative
voting rights with respect to the election of directors.
WARRANTS
As of March 31, 2000, there were outstanding warrants to purchase the
following: (1) an aggregate of 18,434 shares of common stock at an exercise
price of $1.09 per share, (2) an aggregate of 20,381 shares of common stock at
an exercise price of $6.15 per share and (3) an aggregate of 67,934 shares of
common stock at an exercise price of $3.68 per share. Warrants to purchase (1)
an aggregate of 95,367 shares of common stock expire three years from the
effective date of this offering and (2) an aggregate of 11,382 shares of common
stock expire on July 7, 2005.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of preferred stock
will be converted into shares of common stock. Effective upon the closing of
this offering, we will be authorized to issue 5,000,000 shares of undesignated
preferred stock. The Board of Directors will have the authority to issue the
preferred stock in one or more series and to fix the price, rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting a series or the
designation of such series, without any further vote or action by our
stockholders. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of Omnicell.com without further action by the stockholders and may
adversely affect the market price of the common stock and the voting and other
rights of the holders of common stock. We have no current plans to issue any
shares of preferred stock.
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REGISTRATION RIGHTS
The holders of approximately 15,647,705 shares of common stock, as of March
31, 2000, and their permitted transferees are entitled to certain rights with
respect to the registration of these shares under the Securities Act. Under the
terms of agreements between us and the holders, the holders of at least 40% of
these shares may require, on two occasions, that we use our best efforts to
register these shares for public resale. The holders of these shares may not
exercise this right until four months after the effective date of this offering.
In addition, if we propose to register any of our securities under the
Securities Act, either for our own account or for the account of other security
holders exercising registration rights, the holders are entitled to notice of
such registration and are entitled to include shares of such common stock
therein. The holders of these shares may also require us on no more than four
occasions to register all or a portion of these shares on Form S-3 under the
Securities Act when use of such form becomes available to us. All such
registration rights are subject to conditions and limitations, including the
right of the underwriters of an offering to limit the number of shares to be
included in such registration. If such holders, by exercising their demand
registration rights, cause a large number of securities to be registered and
sold in the public market, such sales could have an adverse effect on the market
price for our common stock. If we were to initiate a registration and include
shares held by such holders pursuant to the exercise of their piggyback
registration rights, such sales may have an adverse effect on our ability to
raise capital.
ANTI-TAKEOVER PROVISIONS
DELAWARE LAW
Upon the closing of this offering, we will be subject to the provisions of
Section 203 of the Delaware General Corporation Law (the Anti-Takeover Law)
regulating corporate takeovers. The Anti-Takeover Law prevents Delaware
corporations, including those that are listed on the Nasdaq National Market,
from engaging, under certain circumstances, in a "business combination," which
includes a merger or sale of more than 10% of the corporation's assets, with any
"interested stockholder," that is, a stockholder who owns 15% or more of the
corporation's outstanding voting stock, as well as affiliates and associates of
any such person, for three years following the date that such stockholder became
an "interested stockholder" unless:
- the transaction that resulted in the stockholder becoming an "interested
stockholder" was approved by the board of directors prior to the date the
"interested stockholder" attained such status;
- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding those shares owned by (i)
persons who are directors as well as officers and (ii) employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in
a tender or exchange offer; or
- on or subsequent to such date, the "business combination" is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the "interested
stockholder."
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A Delaware corporation may "opt out" of the Anti-Takeover Law with an
express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. We have not "opted out" of the provisions of the Anti-Takeover
Law. This statute could prohibit or delay mergers or other takeover or change-
of-control attempts with respect to Omnicell.com and, accordingly, may
discourage attempts to acquire us.
CHARTER AND BYLAW PROVISIONS
Our Certificate of Incorporation and Bylaws include a number of provisions
that may have the effect of deterring or impeding hostile takeovers or changes
of control or management. These provisions include:
- our Board of Directors is classified into three classes of directors with
staggered three-year terms;
- the authority of our Board of Directors to issue up to 5,000,000 shares of
preferred stock and to determine the price and the rights preferences and
privileges of these shares, without stockholder approval;
- all stockholder action must be effected at a duly called meeting of
stockholders and not by written consent; and
- the elimination of cumulative voting.
Such provisions may have the effect of delaying or preventing a change of
control.
Our Certificate of Incorporation and Bylaws provide that we will indemnify
officers and directors against losses that they may incur in investigations and
legal proceedings resulting from their services to us, which may include
services in connection with takeover defense measures. Such provisions may have
the effect of preventing changes in our management.
OPTION ACCELERATION
In February 1998 and February 2000, our Board of Directors approved
resolutions providing that the unvested portion of each officer's stock options
under our equity incentive plans becomes fully-vested and exercisable if we are
acquired and the officer is thereafter (1) terminated without cause; (2) forced
to change the principal place of performance of the officer's responsibilities
and duties; or (3) placed in a position with a material reduction in the
officer's responsibilities and duties.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is .
NATIONAL MARKET LISTING
We intend to apply for listing of our common stock on the Nasdaq Stock
Market's National Market under the symbol "OMCL."
71
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market could adversely affect prevailing market prices from time to time. For a
period of 180 days or more following this offering substantial amounts of our
common stock will not be freely tradable due to contractual and legal
restrictions as described below. Sales of substantial amounts of our common
stock in the public market after these restrictions lapse could depress the
prevailing market price and limit our ability to raise equity capital in the
future.
Upon the closing of this offering and based on shares outstanding as of
March 31, 2000, we will have an aggregate of shares of common stock
outstanding, assuming no exercise of the underwriters' over-allotment option and
no exercise of outstanding options or warrants. Of the outstanding shares, the
shares sold in this offering will be freely tradable, except that any shares
held by our "affiliates", as that term is defined in Rule 144 promulgated under
the Securities Act, may only be sold in compliance with the limitations
described below. The remaining shares of common stock held by existing
stockholders will be deemed restricted securities as defined under Rule 144.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act, which are summarized below. In accordance
with the lock-up agreements described below and subject to the provisions of
Rules 144, 144(k) and 701, additional shares will be available for sale in the
public market at the following times:
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ---------------- ------------------------------------------------------------
<S> <C>
After the date of this prospectus
90 days from the date of this prospectus
At various times after 180 days from the date of this
prospectus
</TABLE>
In general, under Rule 144, as currently in effect, a person, or persons
whose shares are aggregated, including an affiliate, who has beneficially owned
shares for at least one year is entitled to sell, within any three-month period
commencing 90 days after the date of this prospectus, a number of shares that
does not exceed the greater of 1% of the then outstanding shares of common
stock, which will equal approximately shares immediately after this
offering or the average weekly trading volume in the common stock during the
four calendar weeks preceding the date on which notice of such sale is filed,
subject to certain restrictions. In addition, a person who is not deemed to have
been an affiliate of ours at any time during the 90 days preceding a sale and
who has beneficially owned the shares proposed to be sold for at least two years
would be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate of ours, the person's holding period for the purpose of effecting a
sale under Rule 144 commences on the date of transfer from the affiliate.
Employees, officers, directors, advisors or consultants who purchased our
common stock pursuant to a written compensatory plan or contract are entitled to
rely on the resale provisions of Rule 701, which permits non-affiliates to sell
their Rule 701 shares without having to comply with the public information,
holding period, volume limitation or notice provisions of Rule 144 and permits
affiliates to sell their Rule 701 shares without having to comply with Rule
144's holding period restrictions, in each case commencing 90 days after we
become subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934.
72
<PAGE>
LOCK-UP AGREEMENTS. Our directors, officers and stockholders who hold
approximately shares in the aggregate, have agreed that they will
not offer, sell or agree to sell, directly or indirectly, or otherwise dispose
of any shares of common stock without the prior written consent of Deutsche Bank
Securities Inc. for a period of 180 days from the date of this prospectus.
Please see "Underwriting."
We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of the prospectus, except we
may issue, and grant options to purchase, shares of common stock under the 1999
Stock Option Plan. In addition, we may issue shares of common stock in
connection with any acquisition of another company if the terms of such issuance
provide that such common stock shall not be resold prior to the expiration of
the 180-day period referenced in the preceding sentence.
REGISTRATION RIGHTS. Following this offering, some of our stockholders will
have registration rights. Please see, "Description of Capital
Stock--Registration Rights."
STOCK OPTIONS AND WARRANTS. Options to purchase 5,204,688 shares of our
common stock are outstanding as of March 31, 2000 under our 1992 Equity
Incentive Plan, our 1995 Management Stock Option Plan and our 1999 Equity
Incentive Plan. Following this offering, we expect to register the shares
underlying these options. This registration statement will automatically become
effective upon filing. Accordingly, subject to the exercise of such options,
shares included in such registration statement will be available for sale in the
open market immediately after the 180-day lock-up period expires.
In addition, 106,749 shares of common stock issuable upon the exercise of
warrants will be eligible for sale as restricted securities set forth above, one
year after the exercise of these warrants.
73
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement dated
, 2000, the underwriters named below, who are represented by Deutsche Bank
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation, Banc of
America Securities LLC and U.S. Bancorp Piper Jaffray Inc. have severally and
not jointly agreed to purchase from us, the following respective number of
shares of our common stock at a public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS: SHARES
- ------------- -----------
<S> <C>
Deutsche Bank Securities Inc................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Banc of America Securities LLC..............................
U.S. Bancorp Piper Jaffray Inc..............................
----------
Total...............................................
==========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all
shares of the common stock offered hereby, other than those covered by the
over-allotment option described below, if any of these shares are purchased. In
addition, the underwriting agreement provides that, in the event of a default by
an underwriter, in certain circumstances the purchase commitments of
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated.
The underwriters propose to offer the shares of common stock to the public
at the public offering price set forth on the cover page of this prospectus and
to dealers at a price that represents a concession not in excess of $
per share under the public offering price. The underwriters may allow, and
these dealers may re-allow, a concession of not more than $ per
share to certain other dealers. After the initial public offering,
representatives of the underwriters may change the offering price and other
selling terms.
We have granted to the underwriters an option, exercisable not later than 30
days after the date of this prospectus, to purchase up to additional
shares of common stock at the public offering price, less the underwriting
discounts set forth on the cover page of this prospectus. The underwriters may
exercise such option solely to cover over-allotments, if any, made in connection
with this offering. To the extent that the underwriters exercise this option,
each underwriter will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to the total number of shares of common stock offered hereby. We will be
obligated, pursuant to the option, to sell these additional shares of common
stock to the underwriters to the extent the option is exercised. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the other shares are being
offered.
The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee
74
<PAGE>
is currently expected to be approximately % of the initial public offering
price. We have agreed to pay the underwriters the following fees, assuming
either no exercise or full exercise by the underwriters of the underwriters'
over-allotment option:
<TABLE>
<CAPTION>
TOTAL FEES
---------------------------------------------
WITHOUT EXERCISE OF WITH FULL EXERCISE OF
FEE PER SHARE OVER-ALLOTMENT OPTION OVER-ALLOTMENT OPTION
------------- --------------------- ---------------------
<S> <C> <C> <C>
Fees paid by Omnicell.com.............. $ $ $
</TABLE>
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
We have agreed to indemnify the underwriters against some specified types of
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.
Each of our officers and directors, and substantially all of our
stockholders and holders of options and warrants to purchase our stock, have
agreed not to offer, sell, contract to sell or otherwise dispose of, or enter
into any transaction that is designed to, or could be expected to, result in the
disposition of any shares of our common stock or other securities convertible
into or exchangeable or exercisable for shares of our common stock or
derivatives of our common stock owned by these persons prior to this offering or
common stock issuable upon exercise of options or warrants held by these persons
for a period of 180 days after the effective date of the registration statement
of which this prospectus is a part without the prior written consent of the
registration statement of which this prospectus is a part without the prior
written consent of Deutsche Bank Securities Inc. This consent may be given at
any time without public notice. We have entered into a similar agreement with
the representatives of the underwriters. There are no agreements between the
representatives and any of our stockholders or affiliates releasing them from
these lock-up agreements prior to the expiration of the 180-day period.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
In order to facilitate the offering of our common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of our common stock. Specifically, the underwriters may over-allot
shares of our common stock in connection with this offering, thus creating a
short position in our common stock for their own account. A short position
results when an underwriter sells more shares of common stock than that
underwriter is committed to purchase. Additionally, to cover these
over-allotments or to stabilize the market price of our common stock, the
underwriters may bid for, and purchase, shares of our common stock in the open
market. Finally, the representatives, on behalf of the underwriters, may also
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of our common
stock at a level above that which might otherwise prevail in the open market.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to shares or % of our common stock being sold
in this offering for our vendors, employees, family members of employees,
customers and other third parties. The number of shares of our common stock
available for sale to the general public will be reduced to the
75
<PAGE>
extent these reserved shares are purchased. Any reserved shares that are not
purchased by these persons will be offered by the underwriters to the general
public on the same basis as the other shares in this offering.
PRICING OF THE OFFERING
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock has
been determined by negotiations among us and the representatives of the
underwriters. Among the primary factors considered in determining the initial
public offering price were:
- prevailing market conditions;
- our results of operations in recent periods;
- the present stage of our development;
- the market capitalization and stage of development of the other companies
that we and the representatives of the underwriters believe to be
comparable to our business; and
- estimates of our business potential.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Cooley Godward LLP, Palo Alto, California. Certain legal matters
in connection with this offering will be passed upon for the underwriters by
Preston Gates & Ellis LLP, Seattle Washington. As of the date of this
prospectus, James C. Gaither, Secretary of Omnicell.com and a partner at Cooley
Godward LLP, owns an aggregate of 16,245 shares of our common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998 and 1999, and for each of the three
years in the period ended December 31, 1999, as set forth in their report. We
have included our financial statement in this prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in auditing and accounting.
76
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock.
For further information regarding us and our common stock, please refer to the
registration statement and exhibits and schedules filed as part of the
registration statement. Each statement in this prospectus referring to a
contract, agreement or other document filed as an exhibit to the registration
statement is qualified in all respects by the filed exhibit.
You may read and copy all or any portion of the registration statement or
any other information that we file at the Securities and Exchange Commission's
public reference room at 450 Fifth Street, N.W., Washington D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the SEC. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Our
Securities and Exchange Commission filings, including the registration
statement, are also available to you on the Securities and Exchange Commission's
Web site located at WWW.SEC.GOV.
Upon completion of this offering, we will become subject to the information
and reporting requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith, will file periodic reports, proxy statements and
other information with the SEC. Upon approval of the common stock for the
quotation on the Nasdaq National Market, such reports, proxy and information
statements and other information may also be inspected at the office of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.
We intend to provide our stockholders with annual reports containing
financial statements audited by an independent public accounting firm and to
make available to our stockholders quarterly reports containing unaudited
financial data for the first three quarters of each year.
77
<PAGE>
OMNICELL.COM
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statement of Redeemable Convertible Preferred
Stock and Stockholders' Equity (Net Capital Deficiency)
for the years ended December 31, 1997, 1998 and 1999...... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to Consolidated Financial Statements.................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Omnicell.com
We have audited the accompanying consolidated balance sheets of Omnicell.com
as of December 31, 1998 and 1999, and the related consolidated statements of
operations, redeemable convertible preferred stock and stockholders' equity (net
capital deficiency), and cash flows for each of the three years in the period
ended December 31, 1999. Our audits also included the financial statement
schedule listed in the index as item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Omnicell.com at
December 31, 1998 and 1999, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
San Jose, California
March 29, 2000,
except for Note 18, as to which the date is
April 19, 2000
F-2
<PAGE>
OMNICELL.COM
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA LIABILITIES,
REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND
STOCKHOLDERS' EQUITY AT
DECEMBER 31, (NET
DECEMBER 31, CAPITAL DEFICIENCY)
------------------- ------------------------
1998 1999 1999
-------- -------- ------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 11,569 $ 2,546
Short-term investments.................................... 10,503 4,152
Accounts receivable, net of allowance for doubtful
accounts of
$278 in 1998 and $338 in 1999........................... 14,290 9,685
Inventories............................................... 4,789 9,157
Prepaid expenses and other current assets................. 1,168 1,841
-------- --------
Total current assets.................................... 42,319 27,381
-------- --------
Property and equipment, net................................. 2,830 7,033
Other assets................................................ 1,212 2,035
-------- --------
Total assets.......................................... $ 46,361 $ 36,449
======== ========
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 626 $ 2,234 $ 2,234
Accrued liabilities....................................... 8,723 17,715 17,715
Deferred revenue.......................................... 1,955 3,494 3,494
Deferred gross profit..................................... 20,227 31,370 31,370
-------- -------- --------
Total current liabilities............................... 31,531 54,813 54,813
Notes payable............................................... -- 8,464 8,114
Other long-term liabilities................................. 67 845 845
Commitments and contingencies
Redeemable convertible preferred stock, no par value;
3,604,000 shares designated; 1,802,000 and 1,081,200
shares issued and outstanding in 1998 and 1999,
respectively, no shares pro forma (liquidation preference
of $15,166 in 1999)....................................... 25,282 15,166 --
Stockholders' equity (net capital deficiency):
Convertible preferred stock, no par value; 18,500,000
shares authorized (including 3,604,000 shares designated
as redeemable convertible preferred stock); 11,527,848
shares issued and outstanding in 1998 and 1999, no shares
pro forma (liquidation preference of $35,147 in 1999).... 33,854 33,854 --
Common stock, no par value; 35,000,000 shares authorized;
2,216,373 and 2,634,211 shares issued and outstanding in
1998 and 1999, respectively, 15,495,455 shares pro
forma.................................................... 1,424 2,302 51,672
Deferred compensation related to stock options............ (11) -- --
Accumulated deficit....................................... (45,784) (78,997) (78,997)
Accumulated other comprehensive income (loss)............. (2) 2 2
-------- -------- --------
Total stockholders' equity (net capital deficiency)..... (10,519) (42,839) (27,323)
-------- -------- --------
Total liabilities, redeemable convertible preferred
stock, and stockholders' equity (net capital
deficiency).......................................... $ 46,361 $ 36,449 $ 36,449
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
OMNICELL.COM
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues.................................................... $ 36,073 $ 48,212 $ 52,604
Cost of revenues............................................ 16,211 17,384 36,140
-------- -------- --------
Gross profit................................................ 19,862 30,828 16,464
Operating expenses:
Research and development.................................. 5,921 5,986 8,977
Selling, general, and administrative...................... 24,805 25,060 37,998
Integration expenses...................................... -- -- 785
-------- -------- --------
Total operating expenses................................ 30,726 31,046 47,760
-------- -------- --------
Loss from operations........................................ (10,864) (218) (31,296)
Interest income............................................. 953 1,039 704
Interest expense............................................ -- -- (2,471)
-------- -------- --------
Income (loss) before provision for income taxes............. (9,911) 821 (33,063)
Provision for income taxes.................................. 201 185 150
-------- -------- --------
Net income (loss)........................................... (10,112) 636 (33,213)
Preferred stock accretion................................... (22) (22) --
-------- -------- --------
Net income (loss) available to common stockholders.......... $(10,134) $ 614 $(33,213)
======== ======== ========
Net income (loss) per share:
Basic..................................................... $ (5.54) $ 0.29 $ (14.12)
Diluted................................................... $ (5.54) $ 0.04 $ (14.12)
Pro forma basic and diluted............................... $ (2.10)
Weighted average common shares outstanding:
Basic..................................................... 1,830 2,083 2,353
Diluted................................................... 1,830 17,621 2,353
Pro forma basic and diluted............................... 15,801
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
OMNICELL.COM
CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE CONVERTIBLE NOTE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK RECEIVABLE
----------------------- ----------------------- ---------------------- FROM
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT STOCKHOLDER
----------- --------- ------------ -------- ----------- -------- ------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996...................... 1,802,000 $ 25,238 11,527,848 $33,854 1,761,573 $ 287 $(120)
Net loss.................. -- -- -- -- -- -- --
Change in unrealized loss
on short-term
investments.............. -- -- -- -- -- -- --
Total comprehensive
loss.....................
Exercise of stock
options.................. -- -- -- -- 219,987 137 --
Employee stock purchase
plan..................... -- -- -- -- 69,327 383 --
Forgiveness of notes
receivable............... -- -- -- -- -- -- 120
Amortization of deferred
stock compensation....... -- -- -- -- -- -- --
Accretion of redeemable
convertible preferred
stock.................... -- 22 -- -- -- -- --
---------- -------- ----------- ------- ---------- ------ -----
Balance at December 31,
1997...................... 1,802,000 25,260 11,527,848 33,854 2,050,887 807 --
Net income................ -- -- -- -- -- -- --
Change in unrealized loss
on short-term
investments.............. -- -- -- -- -- -- --
Total comprehensive
income...................
Exercise of stock
options.................. -- -- -- -- 78,276 135 --
Employee stock purchase
plan..................... -- -- -- -- 87,210 482 --
Amortization of deferred
compensation............. -- -- -- -- -- -- --
Accretion of redeemable
convertible preferred
stock.................... -- 22 -- -- -- -- --
---------- -------- ----------- ------- ---------- ------ -----
Balance at December 31,
1998...................... 1,802,000 25,282 11,527,848 33,854 2,216,373 1,424 --
Net loss.................. -- -- -- -- -- -- --
Change in unrealized loss
on short-term
investments.............. -- -- -- -- -- -- --
Total comprehensive
income................... -- -- -- -- -- -- --
Exercise of stock
options.................. -- -- -- -- 320,576 341 --
Employee stock purchase
plan..................... -- -- -- -- 97,262 537 --
Amortization of deferred
compensation............. -- -- -- -- -- -- --
Redemption of redeemable
convertible preferred
stock.................... (720,800) (10,116) -- -- -- -- --
---------- -------- ----------- ------- ---------- ------ -----
Balance at December 31,
1999...................... 1,081,200 $ 15,166 11,527,848 $33,854 2,634,211 $2,302 $ --
========== ======== =========== ======= ========== ====== =====
<CAPTION>
TOTAL
DEFERRED ACCUMULATED STOCKHOLDERS'
COMPENSATION OTHER EQUITY
RELATED TO COMPREHENSIVE ACCUMULATED (NET CAPITAL
STOCK OPTIONS INCOME (LOSS) DEFICIT DEFICIENCY)
-------------- --------------- ------------- --------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Balance at December 31,
1996...................... $ (45) $ (17) $(36,264) $ (2,305)
Net loss.................. -- -- (10,112) (10,112)
Change in unrealized loss
on short-term
investments.............. -- 11 -- 11
--------
Total comprehensive
loss..................... (10,101)
--------
Exercise of stock
options.................. -- -- -- 137
Employee stock purchase
plan..................... -- -- -- 383
Forgiveness of notes
receivable............... -- -- -- 120
Amortization of deferred
stock compensation....... 17 -- -- 17
Accretion of redeemable
convertible preferred
stock.................... -- -- (22) (22)
----- ----- -------- --------
Balance at December 31,
1997...................... (28) (6) (46,398) (11,771)
Net income................ -- -- 636 636
Change in unrealized loss
on short-term
investments.............. -- 4 -- 4
--------
Total comprehensive
income................... 640
--------
Exercise of stock
options.................. -- -- -- 135
Employee stock purchase
plan..................... -- -- -- 482
Amortization of deferred
compensation............. 17 -- -- 17
Accretion of redeemable
convertible preferred
stock.................... -- -- (22) (22)
----- ----- -------- --------
Balance at December 31,
1998...................... (11) (2) (45,784) (10,519)
Net loss.................. -- -- (33,213) (33,213)
Change in unrealized loss
on short-term
investments.............. -- 4 -- 4
--------
Total comprehensive
income................... -- -- -- (33,209)
--------
Exercise of stock
options.................. -- -- -- 341
Employee stock purchase
plan..................... -- -- -- 537
Amortization of deferred
compensation............. 11 -- -- 11
Redemption of redeemable
convertible preferred
stock.................... -- -- -- --
----- ----- -------- --------
Balance at December 31,
1999...................... $ -- $ 2 $(78,997) $(42,839)
===== ===== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
OMNICELL.COM
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................................... $(10,112) $ 636 $(33,213)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation............................................ 1,741 1,375 1,984
Loss on disposal of capital equipment................... 547 45 4
Deferred rent........................................... (43) (50) (63)
Forgiveness of note receivable from stockholder......... 120 -- --
Amortization of deferred compensation................... 17 17 11
Write-off of Sure-Med inventory......................... -- -- 13,600
Write-off of ADDS investment............................ -- -- 550
Write-off of fixed assets............................... -- -- 886
Changes in assets and liabilities:
Accounts receivable................................... (7,433) 2,066 (453)
Inventories........................................... (1,092) (437) 2,465
Prepaid expenses and other current assets............. (3,957) (1,228) (673)
Other assets.......................................... (573) (405) 432
Accounts payable...................................... (352) (345) 1,608
Accrued liabilities................................... 6,317 (30) (963)
Deferred revenue...................................... (84) 747 (362)
Deferred gross profit................................. 11,837 4,309 8,204
Other liabilities....................................... -- -- 778
-------- -------- --------
Net cash provided by (used in) operating activities..... (3,067) 6,700 (5,205)
-------- -------- --------
INVESTING ACTIVITIES
Cash paid for Sure-Med acquisition, net of cash received.... -- -- (352)
Purchases of short-term investments......................... (6,047) (11,517) (4,153)
Maturities of short-term investments........................ 13,830 6,011 10,504
Capital expenditures........................................ (1,931) (1,785) (5,987)
-------- -------- --------
Net cash provided by (used in) investing activities..... 5,852 (7,291) 12
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock...................... 520 617 878
Redemption of redeemable convertible preferred stock........ -- -- (5,058)
Issuance of convertible promissory note..................... -- -- 350
-------- -------- --------
Net cash provided by (used in) financing activities..... 520 617 (3,830)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents........ 3,305 26 (9,023)
Cash and cash equivalents at beginning of year.............. 8,238 11,543 11,569
-------- -------- --------
Cash and cash equivalents at end of year.................... $ 11,543 $ 11,569 $ 2,546
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
OMNICELL.COM
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND INVESTING
ACTIVITIES
Issuance of note payable in Sure-Med acquisition............ $ -- $ -- $ 12,754
Sale of right to collect receivables to Baxter for note
reduction................................................. -- -- (4,840)
Change in unrealized loss on short-term investments......... (11) (4) (4)
Issuance of note payable for leasehold improvements to
landlord.................................................. -- -- 200
Accretion of redeemable convertible preferred stock......... 22 22 --
Redemption of preferred stock offset with receivables....... -- -- 5,058
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest...................................... $ -- $ -- $ 2,381
Cash paid for income taxes.................................. -- -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE COMPANY
Omnicell.com (or the Company) was incorporated in the state of California on
September 30, 1992. The Company develops, manufactures, and markets automation
systems for hospitals and other healthcare facilities. In late 1999, the Company
launched the Omnicell Commerce Network, an e-commerce service that consists of
two Web-based applications, OmniBuyer and OmniSupplier.
BASIS OF PRESENTATION
The consolidated financial statements include the Company and its wholly
owned subsidiaries, Omnicell HealthCare Canada, Inc. and Omnicell Europe SARL.
All significant intercompany accounts and transactions are eliminated in
consolidation.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Such management
estimates include the allowance for doubtful accounts receivable, valuation of
inventory, valuation allowance for deferred income taxes, and certain accrued
liabilities. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues are derived from sales of automation systems and subsequent service
agreements. The Company markets its systems for sale or for lease. System sales
are recognized upon customer acceptance at the point of delivery and completion
of installation; revenues from sales-type leases are recognized upon customer
acceptance at the point of delivery, completion of installation, and the
commencement of the noncancelable lease term. Revenues from service agreements
and other revenues on system sales and sales-type leases are recognized ratably
over the related contract period, and such amounts were approximately
$2.5 million, $4.1 million and $7.0 million in the years ended December 31,
1997, 1998 and 1999, respectively. No revenues have been generated from the
Omnicell Commerce Network through December 31, 1999. Deferred revenue represents
amounts received under service agreements for which the services have not yet
been performed. Deferred gross profit represents the profit to be earned by the
Company, exclusive of installation costs, on systems sales for which customer
acceptance has occurred but the Company's installation obligation has not yet
been fulfilled. Installation costs are recorded to costs of goods sold when
incurred.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the estimated fair value of financial
instruments. The amounts reported for cash and cash equivalents, accounts
receivable, accounts payable, notes
F-8
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
payable, and accrued expenses approximate fair value because of their short
maturities. Short-term investments are reported at their estimated fair value
based on quoted market prices of comparable instruments.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with original
maturities of 90 days or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents, investments, and
accounts receivable. Cash equivalents consist primarily of money market funds
and commercial debt securities and are held primarily with two financial
institutions. By policy, the Company limits the amounts invested in any type of
instrument for investments other than U.S. government treasury instruments. The
Company places its investments for safekeeping with an insured creditworthy
financial institution.
The Company leases and sells its products primarily to hospitals and other
health care facilities throughout the United States. The majority of leases
originated by the Company are sold to unaffiliated finance companies (see
Note 3). To date, the Company has had no significant credit losses.
One customer accounted for 19.7% and 20.5% of revenues in 1997 and 1998,
respectively. No one customer accounted for over 10.0% of revenues in 1999.
Three customers accounted for 15.4%, 12.9% and 10.6% of accounts receivable
at December 31, 1998. One customer accounted for 11.0% of accounts receivable in
1999.
SHORT-TERM INVESTMENTS
Short-term investments consist primarily of highly liquid debt instruments
purchased with original maturities of greater than 90 days and are stated at
fair value. The Company classifies these securities as available-for-sale. The
differences between amortized cost and fair value, representing unrealized
holding gains or losses, are recorded as a separate component of stockholders'
equity until realized. Any gains and losses on the sale of short-term
investments are determined on a specific identification method, and such gains
and losses are reflected as a component of net interest income (expense). The
Company has not experienced any significant gains or losses on its investments
to date.
INVENTORIES
Inventories are stated at the lower of cost (utilizing standard costs, which
approximate the first-in, first-out method) or market. The Company routinely
assesses its on-hand inventory for timely identification and measurement of
obsolete, slow-moving, or otherwise impaired inventory.
F-9
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the related assets, generally three to
five years. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful lives of the improvements, generally four to seven
years.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses are charged to operations as incurred. In
connection with the Company's automation systems product development efforts,
the Company develops software applications that are integral to the operation of
the product. The costs to develop such software applications have not been
capitalized, as the software development process is completed concurrently with
the establishment of technological feasibility and/or development of the related
hardware.
ADVERTISING EXPENSES
The Company expenses the costs of advertising as incurred. Advertising
expenses for the years ended December 31, 1997, 1998 and 1999 were approximately
$185,000, $11,000 and $628,000, respectively.
STOCK-BASED COMPENSATION
Under Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," the Company accounts for stock-based
awards to employees using the intrinsic value method established by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25). Thus, no compensation expense is recognized for options granted with
exercise prices equal to the fair value of the Company's common stock on the
date of grant.
INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." This statement prescribes the use of the
liability method whereby deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities, and are measured using enacted tax rates and laws that will be in
effect when the differences are expected to reverse.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, "Reporting Comprehensive Income," which establishes standards for
reporting and displaying comprehensive income and its components in financial
statements. The only items of other comprehensive income (loss) that the Company
currently reports are unrealized gains (losses)
F-10
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
on short-term investments, which are included in other accumulated comprehensive
income (loss) in the consolidated statements of redeemable convertible preferred
stock and stockholders' equity (net capital deficiency).
SEGMENT REPORTING
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 requires the use of a management
approach in identifying segments of an enterprise. The adoption of FAS 131 did
not affect consolidated results of operations or financial position. See Note
15.
NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing the net income
(loss) for the period by weighted average number of common shares outstanding
during the period, less shares subject to repurchase. Diluted net income (loss)
per share is computed by dividing the net income (loss) for the period by the
weighted average number of common and common equivalent shares outstanding
during the period. Potentially dilutive securities composed of incremental
common shares issuable upon the exercise of stock options and warrants, and
common shares issuable on conversion of preferred stock, were excluded from
historical diluted loss per share for the years ended December 31, 1997 and 1999
because of their anti-dilutive effect.
Under the provisions of SAB No. 98, common shares issued for nominal
consideration, if any, would be included in the per share calculations as if
they were outstanding for all periods presented. No common shares have been
issued for nominal consideration.
In accordance with SFAS No. 128, "Earnings Per Share," and Securities and
Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 98, pro forma net
loss per share has been computed as described above and also gives effect to
common equivalent shares arising from redeemable convertible preferred stock and
convertible preferred stock that will automatically convert upon the closing of
the initial public offering contemplated by this prospectus using the
if-converted method from the original date of issuance.
F-11
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The calculation of historical and pro forma basic and diluted net income
(loss) per share is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
HISTORICAL:
Basic:
Net income (loss)........................ $(10,112) $ 636 $(33,213)
Preferred stock accretion................ (22) (22) --
-------- ------- --------
Net income (loss) available to common
stockholders............................ $(10,134) $ 614 $(33,213)
======== ======= ========
Weighted average shares of common stock
outstanding............................. 1,882 2,108 2,363
Less: Weighted average shares subject to
repurchase.............................. 52 25 10
-------- ------- --------
Weighted average shares outstanding--
basic................................... 1,830 2,083 2,353
======== ======= ========
Net income (loss) per share.............. $ (5.54) $ 0.29 $ (14.12)
======== ======= ========
Diluted:
Net income (loss)........................ $(10,134) $ 636 $(33,213)
======== ======= ========
Weighted average shares outstanding--
basic................................... 1,830 2,083 2,353
Weighted average number of common shares
issuable upon the conversion of dilutive
preferred shares........................ -- 13,645 --
Effect of dilutive securities--stock
options................................. -- 1,893 --
-------- ------- --------
Diluted weighted average number of shares
outstanding............................. 1,830 17,621 2,353
======== ======= ========
Net income (loss) per share.............. $ (5.54) $ 0.04 $ (14.15)
======== ======= ========
PRO FORMA BASIC AND DILUTED:
Net loss................................... $(33,213)
========
Shares used above.......................... 2,348
Adjustment to reflect the weighted average
offset of the assumed conversion of the
convertible note payable, the redeemable
convertible preferred stock and
convertible preferred stock............... 13,448
--------
Weighted average shares used in computing
pro forma basic and diluted net loss per
share..................................... 15,801
========
Pro forma basic and diluted net loss per
share..................................... $ (2.10)
========
</TABLE>
F-12
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The total number of shares excluded from the calculations of diluted net
loss per share for the years ended December 31, 1997 and 1999, prior to
application of the treasury stock method for stock options, was 879,867 and
1,061,764, respectively. Such securities, had they been dilutive, would have
been included in the computation of diluted net loss per share.
UNAUDITED PRO FORMA LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
The unaudited pro forma liabilities, redeemable convertible preferred stock
and stockholders' equity information at December 31, 1999 reflects the assumed
conversion of the convertible note payable, the redeemable convertible preferred
stock and convertible preferred stock upon completion of the offering by this
prospectus.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS 137, which is effective
for years beginning after June 15, 2000. SFAS 133 will require the Company to
recognize all derivatives on the balance sheet at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. SFAS 133 will be effective for the Company's financial statements
for the year ended December 31, 2001. Management believes that this statement
will not have a significant effect on the Company's results of operations or
financial condition.
In December 1999, the Securities and Exchange Commission issued SAB No. 101,
"Revenue Recognition in Financial Statements." SAB 101 provides guidance on the
recognition, presentation and disclosure of revenue in financial statements.
In March 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires companies to capitalize
certain qualifying computer software costs that are incurred during the
application development stage and amortize them over the software's estimated
useful life. The Company adopted SOP 98-1 effective January 1, 1999. The
adoption of SOP 98-1 did not have a material effect on the Company's
consolidated financial position, results of operations, or cash flows.
In April 1998, the AICPA issued SOP 98-5, "Reporting the Costs of Start-Up
Activities" (SOP 98-5). SOP 98-5 is effective beginning on January 1, 1999 and
requires that start-up costs capitalized prior to January 1, 1999 be written off
and any future start-up costs be expensed as incurred. The adoption of SOP 98-5
did not have a material impact on the Company's financial position, results of
operations, or cash flows.
NOTE 2. SURE-MED ACQUISITION
Effective January 29, 1999, the Company acquired substantially all of the
assets together with certain specified liabilities and obligations of the
Sure-Med business activity (Sure-Med) of Baxter Healthcare Corporation (Baxter)
in a transaction accounted for as a purchase. Baxter
F-13
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SURE-MED ACQUISITION (CONTINUED)
designed, marketed and sold Sure-Med pharmacy automation systems to hospitals
and other health care facilities. The consolidated financial statements include
the operating results of Sure-Med from the date of acquisition.
Sure-Med constituted a small business activity in Baxter's worldwide
operations, which was neither a division nor subject to the maintenance of
discrete accounting records such that financial statements could be or are
determinable. However, the Company believes that this business activity
generated revenues for Baxter of approximately $19.7 million (unaudited) and
$29.5 million (unaudited) for the years ended December 31, 1997 and 1998,
respectively. The Company believes that profits, if any, generated from the
Sure-Med activity of Baxter for the above-mentioned periods were minimal, and it
may not have been profitable as a historical activity.
Pro forma results of operations, as if the transaction had occurred on
January 1, 1999, are not presented as they would not be materially different
than actual 1999 results.
The original purchase price of $15.1 million consisted of a cash payment of
$2.0 million to Baxter, a promissory note of $12.7 million, and $400,000 of
related acquisition expenses. In December 1999, the purchase price was adjusted
downward to $13.5 million to reflect the receipt of $1.6 million from Baxter in
connection with final agreement between the two parties. The Company is
obligated to repay the principal amount of the promissory note in 12 quarterly
installments, commencing on March 31, 2001. The promissory note bears interest
at a rate of 8.0% through January 31, 2001 and thereafter at a rate of 13.0%.
Interest is payable quarterly, commencing on March 31, 1999. Upon the sale or
issuance by Omnicell.com of any shares of capital stock, excluding sales or
issuances of common stock or options under the Company's stock option and stock
purchase plans and private placements in any single year not exceeding 10.0% of
its outstanding paid-in capital, the Company is required to prepay the
outstanding principal amount of the promissory note plus accrued interest to the
extent of 50.0% of the net proceeds of such equity issuance. There is an
exception that allows up to $30 million of financing raised during 2000 to be
excluded as long as 50% of the proceeds shall be applied to redeeming the Series
J preferred stock.
The purchase price consideration was allocated to the acquired assets and
assumed liabilities based on fair values as follows (in thousands):
<TABLE>
<S> <C>
Inventories................................................. $20,433
Property and equipment...................................... 886
Other assets, primarily residual value of leased systems.... 1,805
Liabilities................................................. (9,618)
-------
Total purchase consideration................................ $13,506
=======
</TABLE>
During 1999, the Company sold to Baxter the right to collect trade
receivables related to shipments of Sure-Med product made prior to the
January 29, 1999 acquisition date for $4.8 million. Payment on this transaction
was made via a reduction in the note payable to Baxter.
In the fourth quarter of 1999, the Company recorded a write off of $0.9
million for Sure-Med fixed assets due to abandonment of leasehold improvements
and other assets acquired
F-14
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SURE-MED ACQUISITION (CONTINUED)
as part of the product line acquisition. In the fourth quarter of 1999, after
sales of Sure-Med systems were determined to be substantially below original
forecasts, the Company recorded a $13.6 million charge to cost of revenues to
reflect a writedown of Sure-Med product line inventory to estimated net
realizable value. In 1999, the Company also recorded $785,000 of integration
expenses associated with the integration of the Company and Sure-Med engineering
efforts, product lines, and marketing efforts.
NOTE 3. LEASING ARRANGEMENTS
In addition to direct sales, the Company leases its systems to customers
under sales-type leases, which generally have terms of five years. The Company
has entered into agreements with four finance companies whereby, concurrent with
the customer lease transaction, lease receivables are sold to the finance
companies. Under these agreements, the Company is subject to recourse only in
the event of the Company's breach or nonperformance.
In 1997, 1998 and 1999, net sales-type lease receivables sold under these
agreements totaled approximately $13.1 million, $11.7 million and
$22.3 million, respectively. The Company records revenue at an amount equal to
the cash to be received from the leasing company, which is equivalent to the net
present value of the lease streams, utilizing the implicit interest rate under
its funding agreements. At December 31, 1998 and 1999, accounts receivable
included approximately $1.0 million and $2.7 million, respectively, due from the
finance companies for lease receivables sold.
NOTE 4. SHORT-TERM INVESTMENTS
Short-term investments consist of the following (in thousands):
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED GAIN
COST (LOSS) FAIR VALUE
--------- --------------- ----------
<S> <C> <C> <C>
December 31, 1998:
Certificates of deposits............... $ 7,000 $ -- $ 7,000
U.S. commercial debt securities........ 3,505 (2) 3,503
------- --------- -------
$10,505 $ (2) $10,503
======= ========= =======
December 31, 1999:
Certificates of deposits............... $ 2,000 $ -- $ 2,000
U.S. commercial debt securities........ 2,150 2 2,152
------- --------- -------
$ 4,150 $ 2 $ 4,152
======= ========= =======
</TABLE>
All short-term investments at December 31, 1999 mature in 2000.
F-15
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Raw materials.............................................. $2,354 $3,495
Work-in-process............................................ 435 565
Finished goods............................................. 2,000 5,097
------ ------
Total.................................................... $4,789 $9,157
====== ======
</TABLE>
NOTE 6. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Equipment................................................ $ 5,107 $ 7,382
Furniture and fixtures................................... 542 930
Leasehold improvements................................... 829 1,120
Purchased software....................................... -- 3,233
------- -------
6,478 12,665
Accumulated depreciation and amortization................ (3,648) (5,632)
------- -------
Property and equipment, net.............................. $ 2,830 $ 7,033
======= =======
</TABLE>
No equipment was leased under capital leases at December 31, 1998 and 1999.
In August 1999, the Company completed a software license transaction with a
leading provider of business-to-business e-commerce software solutions.
Purchased software consists primarily of this software licensed on a perpetual
basis to enable the use of the Omnicell Commerce Network. Maintenance and
support will be provided by the licensor at contractual annual rates. The
Company will share with the licensor a portion of the transaction fees
collected, if any, from product manufacturers when purchases are made from
healthcare suppliers on the Omnicell Commerce Network.
NOTE 7. OTHER ASSETS
Included in other assets at December 31, 1997 is a $500,000, 8.5% note
receivable from a corporation in the development stage, which is due in
September 2000. The note receivable was automatically convertible to equity of
the corporation upon the closing of that entity's next financing of at least
$1,000,000 or upon default of payment, based on the unpaid principal balance and
accrued interest divided by the fair value price per share. In December 1998,
upon the closing of a financing by the corporation, the note was converted into
13,052 shares of its Series D convertible preferred stock. At December 31, 1999,
the Company determined that there was a permanent decline in the fair value of
this asset and it wrote off the entire investment, including accrued interest,
amounting to $550,000.
F-16
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. ACCRUED LIABILITIES
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Accrued compensation and related benefits................. $1,989 $ 2,225
Accrued license fees...................................... -- 2,523
Accrued upgrade costs..................................... -- 3,960
Other accrued liabilities................................. 6,734 9,007
------ -------
$8,723 $17,715
====== =======
</TABLE>
NOTE 9. LONG TERM NOTES PAYABLE
In October 1999, the Company executed a convertible promissory note with a
private party for $350,000 with interest accruing at 6.02%. No interest payments
are due until October 1, 2004, the maturity date of the note. If the Company
closes an initial public offering of its common stock, the note shall
automatically convert to an equivalent number shares of the Company's common
stock.
In connection with the Company's facilities lease, the landlord has advanced
$200,000 to the Company for leasehold improvements. The Company has agreed to
repay this advance in monthly installments of $4,249. This borrowing arrangement
commenced on July 1, 1999, ends June 30, 2004, and bears interest at 10% per
annum.
Scheduled debt repayments under the convertible promissory note, facilities
lease advance and Baxter promissory note (Note 2) are as follows:
<TABLE>
<S> <C>
2000........................................................ $ 60
2001........................................................ 2,678
2002........................................................ 2,678
2003........................................................ 2,678
2004........................................................ 370
</TABLE>
NOTE 10. CREDIT FACILITY
In March 1999, the Company entered into a credit facility with a bank,
providing the Company with advances under a revolving loan in an aggregate
amount not to exceed the lesser of $10.0 million or 75.0% of eligible accounts
receivable, as defined. Amounts borrowed under the credit facility may be repaid
at any time with all outstanding advances due on September 26, 2000. Interest,
payable monthly, is at a rate equal to one and one-half percentage points above
the bank's prime rate (10.0% on December 31, 1999). At December 31, 1999, the
Company was not in compliance with certain financial covenants and no amounts
were outstanding or available under this credit facility.
F-17
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. LEASE COMMITMENTS
The Company leases its Palo Alto, California and Waukegan, Illinois offices
and manufacturing facilities under noncancelable operating leases. The leases
expire beginning January, 2002 through June, 2006. The Company has an option to
renew the Palo Alto facilities leases for an additional five years. Rent expense
for all operating leases was $631,000 (net of sublease income of $140,000),
$728,000 (net of sublease income of $64,000) and $1,629,000 for the years ended
December 31, 1997, 1998 and 1999, respectively.
At December 31, 1999, future minimum annual lease payments, net of aggregate
future minimum receipts from sublease, were as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
2000........................................................ $1,848
2001........................................................ 1,946
2002........................................................ 2,009
2003........................................................ 2,090
2004........................................................ 1,522
Thereafter.................................................. 451
------
Total minimum lease payments.............................. $9,866
======
</TABLE>
NOTE 12. REDEEMABLE CONVERTIBLE PREFERRED STOCK
In June 1996, the Company issued 1,802,000 shares of nonvoting Series I
redeemable convertible preferred stock for $25,227,000 (net of issuance costs of
approximately $60,000) and authorized an equal number of voting shares of Series
J redeemable convertible preferred stock. The Series I redeemable convertible
preferred stock was converted into Series J redeemable convertible preferred
stock on a one-for-one basis in 1996.
At any time after December 31, 1998, the holders of the Series J redeemable
convertible preferred stock were entitled to require the Company to redeem for
cash the outstanding shares over two- and-one-half years at a per share price
equal to the original issue price (subject to adjustment for events of dilution)
plus interest at 9.5% per annum (accruing beginning on March 8, 1999).
On January 7, 1999, the holder of all Series J shares notified the Company
of its intent to exercise its redemption right.
In March, June, and December 1999, the Company's Series J redeemable
convertible preferred stockholder redeemed a total of 720,800 shares of the
preferred stock for approximately $10.2 million. In lieu of cash payment to the
stockholder, the Company reduced approximately $5.1 million in trade receivables
owed to it by the stockholder. The Company also reduced its Series J stockholder
trade receivable by approximately $692,000 in lieu of cash payment for interest.
At December 31, 1999, the Company is obligated to redeem the remaining Series J
stock in six future installments over the next eighteen months.
F-18
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
Significant terms of the Series J redeemable convertible preferred stock are
as follows:
- Each share of Series J preferred stock is convertible into one share of
common stock (subject to adjustment for events of dilution). Each share
will automatically convert upon an underwritten public offering of common
stock meeting specified criteria.
- Series J preferred stock has voting rights equivalent to the number of
shares of common stock into which it is convertible.
- Dividends may be declared at the discretion of the Board of Directors and
are noncumulative. To the extent declared, dividends of $1.12 per share,
per annum for Series J preferred stock must be paid prior to any dividends
on any other preferred stock or common stock. No such dividends have been
declared or paid.
- In the event of liquidation, dissolution, or winding up of the Company,
prior to any other preferred stockholders, Series J stockholders shall
receive $14.03 per share plus all declared but unpaid dividends. Upon
completion of this distribution, the holders of the common stock will
receive a pro rata distribution of any remaining assets of the Company. At
December 31, 1999, the aggregate liquidation preference for redeemable
convertible preferred stock was $15,166,000.
NOTE 13. STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
At December 31, 1998 and 1999, convertible preferred stock consisted of the
following (in thousands, net of issuance costs):
<TABLE>
<CAPTION>
SHARES
DESIGNATED OUTSTANDING AMOUNT
---------- ----------- --------
<S> <C> <C> <C>
Series A................................... 480 480 $ 120
Series B................................... 321 321 120
Series C................................... 1,700 1,700 1,014
Series D................................... 1,328 1,310 1,412
Series E................................... 1,966 1,965 6,458
Series F................................... 2,000 1,948 11,527
Series G................................... 1,000 -- --
Series H................................... 4,000 3,804 13,203
------ ------ -------
Total.................................... 12,795 11,528 $33,854
====== ====== =======
</TABLE>
Significant terms of the convertible preferred stock are as follows:
- Each share of Series A, B, C, D, E, G, and H is convertible into one share
of common stock, and each share of Series F preferred stock is convertible
into 1.107 shares of common stock (subject to adjustment for events of
dilution). Each share will automatically convert upon an underwritten
public offering of common stock meeting specified criteria.
F-19
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. STOCKHOLDERS' EQUITY (CONTINUED)
- Each share of convertible preferred stock has voting rights equivalent to
the number of shares of common stock into which it is convertible. The
holders of Series E preferred stock, voting together as a class, are
entitled to elect one director of the Company. The holders of Series H
preferred stock, voting as a class, are also entitled to elect one
director of the Company.
- Dividends may be declared at the discretion of the Board of Directors and
are noncumulative. To the extent declared, dividends of $0.02, $0.03,
$0.048, $0.085, $0.265, $0.49, $0.49, and $0.29 per share, per annum for
Series A, B, C, D, E, F, G, and H preferred stock, respectively, must be
paid prior to any dividends on common stock. No such dividends have been
declared or paid.
- In the event of liquidation, dissolution, or winding up of the Company,
Series A, B, C, D, E, F, G, and H stockholders shall receive, after
required distributions to the redeemable convertible preferred
stockholders, $0.25, $0.375, $0.60, $1.085, $3.30, $6.15, $6.15, and $3.68
per share, respectively, plus all declared but unpaid dividends. Upon
completion of this distribution, the holders of the common stock will
receive a pro rata distribution of any remaining assets of the Company. At
December 31, 1999, the aggregate liquidation preference for preferred
stock was $35.1 million
CONVERTIBLE PREFERRED STOCK WARRANTS
In connection with a capital lease financing in 1994, the Company issued a
warrant to purchase 18,434 shares of Series D preferred stock at an exercise
price of $1.09 per share. The warrant expires the later of three years from the
effective date of an initial public offering of the Company's common stock or in
2000. The value of the warrant was immaterial.
In connection with capital lease financings in 1995, the Company issued
warrants to purchase 8,130, 11,382, and 67,934 shares of Series F, G, and H
preferred stock at $6.15, $6.15, and $3.68 per share, respectively. The Series F
and H warrants expire the later of three years from the effective date of an
initial public offering of the Company's common stock or in 2002. The Series G
warrant expires the later of five years from the effective date of an initial
public offering of the Company's common stock or in 2005. The estimated value of
these warrants remaining after amortization was expensed in June 1996 when the
repayments were made for the borrowings.
COMMON STOCK
At December 31, 1999, 10,000 shares of common stock are subject to
repurchase by the Company at the original issuance price. These repurchase
rights generally expire ratably over periods of three to five years.
STOCK OPTION PLANS
The Company has reserved 8,410,000 shares of common stock for issuance under
its 1992 Incentive Stock Plan, 1995 Management Option Plan, and 1999 Equity
Incentive Plan (the Plans). Under the Plans, incentive and nonqualified stock
options or rights to purchase common stock may be granted to employees,
directors, and consultants. Incentive options,
F-20
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. STOCKHOLDERS' EQUITY (CONTINUED)
nonqualified options, and stock purchase rights must be priced to be at least
100%, 85%, and 85%, respectively, of the common stock's fair value at the date
of grant as determined by the Board of Directors. Options shall become
exercisable as determined by the Board of Directors. Sales of stock under stock
purchase rights are made pursuant to restricted stock purchase agreements.
In September 1999, the Board of Directors adopted the 1999 Equity Incentive
Plan (Incentive Plan) for granting of incentive and nonqualified stock options
and rights to purchase common stock to employees, directors, and consultants.
Under the Incentive Plan, 3,000,000 shares of common stock are authorized for
issuance. Further, all unissued stock under the Company's 1992 Incentive Stock
Plan and 1995 Management Stock Option Plan are added to the 3,000,000 shares
reserved.
A summary of stock option activity under the Plans follows (shares in
thousands):
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at December 31, 1996................ 3,275 $1.80
Granted....................................... 660 6.50
Exercised..................................... (220) 0.62
Canceled...................................... (205) 3.26
-----
Outstanding at December 31, 1997................ 3,510 2.67
Granted....................................... 726 6.50
Exercised..................................... (78) 1.72
Canceled...................................... (177) 5.42
-----
Outstanding at December 31, 1998................ 3,981 3.27
Granted....................................... 1,925 6.50
Exercised..................................... (321) 0.70
Canceled...................................... (232) 6.18
-----
Outstanding at December 31, 1999................ 5,353 $4.44
=====
</TABLE>
Additional information regarding options outstanding as of December 31, 1999
is as follows (shares in thousands):
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
NUMBER CONTRACTUAL AVERAGE NUMBER AVERAGE
RANGE OF EXERCISE PRICE OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ----------------------- ----------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.03 - $0.50.................. 824 3.89 $0.15 824 $0.15
$0.75 - $2.00.................. 738 5.34 0.80 681 0.79
$4.00 - $4.00.................. 648 6.29 4.00 387 4.00
$6.50 - $6.50.................. 3,143 8.70 6.50 711 6.50
----- -----
5,353 2,603
===== =====
</TABLE>
F-21
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. STOCKHOLDERS' EQUITY (CONTINUED)
At December 31, 1999, there were 2,048,000 shares available for future grant
under the Plans, and options to purchase 2,603,000 shares were exercisable. Upon
the exercise of certain exercisable options, the Company would have the right to
repurchase 10,000 shares at the original issuance price. Such a right generally
expires over three to five years.
In connection with the grant of certain stock options in December 1995, the
Company recorded deferred compensation of $62,000 for the difference between the
deemed fair value for accounting purposes and the option price. At December 31,
1999, the deferred compensation has been fully amortized. Such deferred
compensation is presented as a reduction to stockholders' equity.
As discussed in Note 1, the Company continues to account for its stock-based
awards using the intrinsic value method in accordance with APB 25 and its
related interpretations. Accordingly, compensation expense has not been
recognized in the consolidated financial statements for employee stock
arrangements except for the difference between the deemed fair value for
accounting purposes and the exercise price of certain stock options as noted
above.
SFAS 123 requires the disclosure of pro forma net loss had the Company
adopted the fair value method as of the beginning of 1995. Under SFAS 123, the
fair value of stock-based awards to employees is calculated through the use of
option pricing models, even though such models were developed to estimate the
fair value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the Company's stock option awards.
These models also require subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affects the calculated
values. The Company's calculations were made using the Black-Scholes option
pricing model with risk-free interest rates of 6.17%, 5.42% and 5.38% in 1997,
1998 and 1999, respectively, and no dividends during the expected term. The
Company's calculations are based on a multiple-option valuation approach, and
forfeitures are recognized as they occur.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Pro forma net income (loss)..................... $(10,519) $ 99 $(34,021)
Pro forma net income (loss) per share:
Basic......................................... $ (5.74) $0.04 $ (14.49)
Diluted....................................... $ (5.75) $0.01 $ (14.49)
</TABLE>
The impact of outstanding nonvested stock options granted prior to 1995 has
been excluded from the pro forma calculations; accordingly, the 1999 and 1998
pro forma adjustments are not indicative of future period pro forma adjustments
when the calculation will apply to all applicable stock options.
F-22
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. STOCKHOLDERS' EQUITY (CONTINUED)
1997 EMPLOYEE STOCK PURCHASE PLAN
The Company has an Employee Stock Purchase Plan under which employees can
purchase shares of the Company's common stock based on a percentage of their
compensation, but not greater than 15% of their earnings, up to a maximum of
$25,000 of fair value per year. The purchase price per share must be equal to
the lower of 85% of the fair value of the common stock at the beginning or end
of the six-month offering period. A total of 750,000 shares of common stock are
reserved for issuance under the plan. As of December 31, 1999, 254,000 shares
had been issued under this plan.
On September 1, 1999, the Board of Directors amended the 1997 Employee Stock
Purchase Plan (Purchase Plan) to become effective simultaneously with the
effectiveness of the Company's initial public offering. Under the amended
Purchase Plan, 750,000 shares of common stock are authorized for issuance. As
amended, eligible employees may purchase stock at 85% of the lower of closing
prices for the common stock at the beginning of a twenty-four month offering
period or the end of each six-month purchase period.
At December 31, 1999, the Company has reserved shares of common stock for
issuance as follows (in thousands):
<TABLE>
<S> <C>
Conversion of outstanding convertible preferred stock....... 11,528
Issuance under the Plans.................................... 7,401
Employee stock purchase plan................................ 496
Convertible preferred stock warrants........................ 106
------
Total....................................................... 19,531
======
</TABLE>
NOTE 14. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Current provision:
Federal.............................................. $120 $105 $ --
State................................................ 66 50 150
Foreign.............................................. 15 30 --
---- ---- ----
Total current provision................................ $201 $185 $150
==== ==== ====
</TABLE>
F-23
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. INCOME TAXES (CONTINUED)
The difference between the provision for income taxes and the amount
computed by applying the Federal statutory income tax rate (35%) to income
before taxes is explained below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Tax provision (benefit) at federal statutory
rate.......................................... $(1,215) $ 1,563 $(9,501)
State income tax................................ 66 50 150
Federal alternative minimum taxes............... 120 105 --
Foreign taxes................................... 15 30 --
Unutilized (utilized) net operating losses...... 1,215 (1,563) 9,501
------- ------- -------
Total........................................... $ 201 $ 185 $ 150
======= ======= =======
</TABLE>
Significant components of the Company's deferred tax assets are as follows
at December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........... $ 7,500 $ 5,500 $ 6,000
Tax credit carryforwards................... 500 985 1,257
Inventory related items.................... -- -- 5,746
Reserves and accruals...................... 3,943 3,784 3,960
Deferred revenue........................... -- -- 2,357
Capitalized research and development
costs..................................... 320 220 476
Depreciation and amortization.............. 112 205 205
Other, net................................. 342 498 2,298
-------- -------- --------
Total deferred tax assets.................... 12,717 11,192 22,299
Valuation allowance.......................... (12,717) (11,192) (22,299)
-------- -------- --------
Net deferred tax assets...................... $ -- $ -- $ --
======== ======== ========
</TABLE>
The Company has established a valuation allowance equal to the net deferred
tax assets due to the uncertainties regarding the realization of deferred tax
assets based on the Company's lack of earnings history.
As of December 31, 1999, the Company had a federal net operating loss
carryforward of approximately $17,100,000. The federal net operating loss
carryforward will expire beginning in 2008. The Company also had federal and
state research and development tax credit carryforwards of approximately
$670,000 and $550,000, respectively. The federal and state research and
development tax credit carryforwards will expire at various dates beginning in
year 2007 through 2019, if not utilized.
Utilization of the net operating losses and tax credits may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and tax credits
before utilization.
F-24
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION
Management of the Company has determined the operating segments based upon
how the business is managed and operated. There are no significant intersegment
sales or transfers and substantially all of the Company's long-lived assets are
located in the United States.
During 1999, the Company had three operating segments. Operating segments
have been aggregated into one reportable segment, Automation Systems, based upon
the criteria in SFAS No. 131. The operating segment below the quantitative
threshold, the Omnicell Commerce Network group, is disclosed in the "all other"
category. The Company's chief operating decision maker reviews information
pertaining to reportable segments only to the gross profit level. Assets of the
operating segments are not segregated.
Information about reportable segment sales and gross profit areas follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
AUTOMATION SYSTEMS
Net sales...................................... $36,073 $48,212 $52,604
Gross profit (loss)............................ $19,862 $30,828 $16,734
ALL OTHER
Net sales...................................... $ -- $ -- $ --
Gross profit (loss)............................ $ -- $ -- $ (270)
NET SALES
North America.................................. $36,073 $47,757 $52,559
Other.......................................... -- 455 45
------- ------- -------
Consolidated net sales......................... $36,073 $48,212 $52,604
======= ======= =======
</TABLE>
NOTE 16. RELATED PARTY TRANSACTIONS
The Company recorded revenues of approximately $7.1 million, $9.9 million
and $5.1 million in 1997, 1998, and 1999, respectively, from a Series J
redeemable convertible preferred stockholder and member of the Company's Board
of Directors until August 11, 1999 (of which approximately $974,000 and $302,000
is included in accounts receivable at December 31, 1998 and 1999, respectively).
Payment terms are net 45 days. Under the terms of a distribution agreement, this
related party earned cash rebates of approximately $438,000 and $0 for purchases
made from the Company during the years ended December 31, 1998 and 1999,
respectively.
NOTE 17. EMPLOYEE BENEFIT PLAN
During 1994, the Company established a 401(k) tax-deferred savings plan,
whereby eligible employees may contribute a percentage of their eligible
compensation but not greater than 15.0% of their earnings. Company contributions
are discretionary; no such Company contributions have been made since inception
of the plan.
F-25
<PAGE>
OMNICELL.COM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 18. SUBSEQUENT EVENTS
On April 19, 2000, the Company's Board of Directors took the following
actions:
- authorized the filing of a registration statement with the Securities and
Exchange Commission to register shares of its common stock in connection
with the proposed initial public offering;
- authorized the change of the Company's state of incorporation to Delaware.
As part of the reincorporation, the Board of Directors authorized an
increase in the number of authorized shares of common stock to 50,000,000.
Upon the completion of this offering and after the conversion of all the
Company's outstanding preferred stock to common stock, the Board of
Directors authorized a decrease in the number of authorized shares of
preferred stock to 5,000,000;
- approved an amendment to the Company's 1999 Equity Incentive Plan to
increase the number of shares reserved for issuance under such plan by
2,000,000 shares, to a total of 5,000,000. The Board of Directors also
approved an automatic increase in the number of shares reserved under such
plan each January 1 (beginning January 1, 2001) by the lesser of 5% of the
total then outstanding shares of common stock or 3,000,000 shares, unless
the Board of Directors then designates a smaller increase in the number of
authorized shares; and
- approved an amendment to the Company's 1997 Employee Stock Purchase Plan
to provide for an automatic increase in the number of shares reserved
under such plan each January 1 (beginning January 1, 2001) by the lesser
of 1.5% of the total then outstanding shares of common stock or 750,000
shares, unless the Board of Directors then designates a smaller increase
in the number of authorized shares.
STOCK OPTION GRANTS
Subsequent to December 31, 1999, the Company approved grants to employees
for options to purchase 1,409,250 shares of its common stock at $6.50 per share.
SERIES K PREFERRED STOCK
During the first quarter of 2000, the Company designated and issued
3,010,528 shares of Series K convertible preferred stock at a price of $9.50 per
share. Net proceeds were approximately $28.6 million. The attributes of the
Series K convertible preferred stock are similar to the Company's other series
of outstanding convertible preferred stock.
F-26
<PAGE>
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THE
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR
SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 6
Special Note Regarding Forward-Looking
Statements............................... 19
Use of Proceeds............................ 19
Dividend Policy............................ 19
Capitalization............................. 20
Dilution................................... 21
Selected Consolidated Financial Data....... 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 24
Business................................... 32
Management................................. 51
Certain Relationships and Related Party
Transactions............................. 64
Principal Stockholders..................... 65
Description of Capital Stock............... 69
Shares Eligible for Future Sale............ 72
Underwriting............................... 74
Legal Matters.............................. 76
Experts.................................... 76
Where You Can Find More Information........ 77
Index to Financial Statements.............. F-1
</TABLE>
UNTIL 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. DEALERS ARE ALSO
OBLIGATED TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[OMNICELL.COM LOGO]
SHARES
COMMON STOCK
DEUTSCHE BANC ALEX. BROWN
DONALDSON, LUFKIN & JENRETTE
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP PIPER JAFFRAY
PROSPECTUS
, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by Omnicell.com in connection with the sale
of the common stock being registered. All the amounts shown are estimates except
for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $15,180
Nasdaq National Market listing fee.......................... *
NASD filing fee............................................. 6,250
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
-------
Total....................................................... $ *
=======
</TABLE>
- ------------------------
* To be completed by amendment.
We intend to pay all expenses of registration, issuance and distribution.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law (the DGCL) authorizes a
court to award, or a corporation's board of directors to grant indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities, including
reimbursement for expenses incurred, arising under the Securities Act.
As permitted by the DGCL, our Certificate of Incorporation, which will
become effective upon the closing of this offering, includes a provision that
eliminates the personal liability of our directors for monetary damages for
breach of fiduciary duty as a director, except for liability (1) for any breach
of the director's duty of loyalty to us or our stockholders; (2) for acts or
omissions not in good faith or that involve intentional misconduct or knowing
violation of law; (3) under Section 174 of the DGCL regarding unlawful dividends
and stock purchases; or (4) for any transaction from which the director derived
an improper personal benefit.
As permitted by the DGCL, our Certificate of Incorporation and/or our
Bylaws, which will become effective upon the closing of this offering, provide
that (1) we are required to indemnify our directors and officers to the fullest
extent permitted by the DGCL, subject to certain very limited exceptions;
(2) we are permitted to indemnify our other employees to the extent that we
indemnify our officers and directors, unless otherwise required by law, our
Certificate of Incorporation, our Bylaws or agreements; (3) we are required to
advance expenses, as incurred, to our directors and officers in connection with
a legal proceeding to the fullest extent permitted by the DGCL, subject to
certain very limited exceptions; and (4) the rights conferred in our Bylaws are
not exclusive.
Prior to the closing of this offering, we intend to enter into indemnity
agreements with each of our current directors and officers to give such
directors and officers additional contractual assurances regarding the scope of
the indemnification set forth in our Certificate of Incorporation and our Bylaws
and to provide additional procedural protections. At present, there is no
pending litigation or proceeding involving a director, officer or employee of
Omnicell.com regarding which indemnification is sought, nor are we aware or any
threatened litigation that may result in claims for indemnification.
II-1
<PAGE>
With approval by the board of directors, we expect to obtain directors' and
officers' liability insurance. Reference is made to the underwriting agreement
contained in Exhibit 1.1 hereto, which contains provisions indemnifying our
officers and directors against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
(a) The Company has issued or sold the following securities within the past
three years:
- an aggregate of 3,010,528 shares of Series K convertible preferred stock
at $9.50 per share in January and March 2000 to 25 accredited investors.
(b) As of March 31, 2000, the Company has issued:
- an aggregate of 1,058,752 shares of common stock upon exercise of options
under the 1992 Equity Incentive Plan;
- an aggregate of 15,000 shares of common stock upon exercise of options
under the 1995 Management Stock Option Plan;
- an aggregate of 253,799 shares of common stock upon exercise of options
under the 1997 Employee Stock Purchase Plan; and
- an aggregate of 36,083 shares of common stock upon exercise of options
under the 1999 Equity Incentive Plan.
(c) There were no underwritten offerings employed in connection with the
transaction set forth in Item 15(a).
The issuances described in Item 15(a) were deemed to be exempt from
registration under the Securities Act in reliance upon Section 4(2) thereof as
transactions by an issuer not involving any public offering. The issuances
described in Item 15(b) were deemed to be exempt from registration under the
Securities Act in reliance upon Rule 701 promulgated thereunder in that they
were offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by
Rule 701. In addition, such issuances were deemed to be exempt from registration
under Section 4(2) of the Securities Act as transactions by an issuer not
involving any public offering. The recipients of securities in each such
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends where affixed to the securities
issued in such transactions. All recipients had adequate access, through their
relationships with the Company, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Articles of Incorporation of
Omnicell.com.
3.2 Certificate of Amendment of Amended and Restated Articles of
Incorporation of Omnicell.com.
3.3 Certificate of Incorporation of Omnicell.com to be effective
upon reincorporation in Delaware.
3.4 Amended and Restated Certificate of Incorporation of
Omnicell.com to be filed following the closing of the
offering.
3.5 Bylaws of Omnicell.com.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
3.6 Bylaws of Omnicell.com to be effective upon reincorporation
in Delaware.
4.1* Form of Common Stock Certificate.
4.2 Amended and Restated Investor Rights Agreement, dated
January 20, 2000.
4.3 Warrant Agreement, dated September 30, 1993, between
Omnicell.com and Comdisco, Inc.
4.4 Warrant Agreement, dated January 23, 1995, between
Omnicell.com and Comdisco, Inc.
4.5 Warrant Agreement, dated July 7, 1995, between Omnicell.com
and Comdisco, Inc.
4.6 Warrant Agreement, dated September 29, 1995, between
Omnicell.com and Comdisco, Inc.
4.7 Convertible Promissory Note, dated October 1, 1999.
5.1* Opinion of Cooley Godward LLP, counsel to Omnicell.com.
10.1 Real Property Lease, dated September 24, 1999, between W.F.
Baton & Co., Inc. and Omnicell.com, as amended.
10.2 Real Property Lease, effective July 1, 1999, between
Omnicell.com and Amli Commercial Properties Limited
Partnership.
10.3 Real Property Lease, dated April 3, 1996, between O'Donnell
Palo Alto Associates and Omnicell.com.
10.4 Real Property Lease, dated March 25, 1994, between W.F.
Batton & Co., Inc. and Omnicell.com, as amended.
10.5 Master Assignment Agreement and Master Sales Agreement,
dated September 29, 1994, between Americorp Financial, Inc.
and Omnicell.com, as amended.
10.6 Group Purchasing Agreement, effective June 1, 1997, between
Premier Purchasing Partners, L.P., and Omnicell.com.
10.7 Letter Agreement, dated June 27, 1997, between the
University Health System Consortium Services Corporation and
Omnicell.com.
10.8 Federal Supply Schedule Contract No. V797P-3406k, effective
August 7, 1997, between the Department of Veterans Affairs
and Omnicell.com.
10.9 Asset Purchase Agreement dated December 18, 1998, between
Omnicell.com and Baxter Healthcare Corporation, as amended.
10.10 Loan and Security Agreement and Standby Facility Agreement,
dated January 27, 2000, between Silicon Valley bank and
Omnicell.com.
10.11** Vertical Hosted License Agreement, dated August 21, 1999,
between Omnicell.com and Commerce One, as amended.
10.12 Form of Director and Officer Indemnification Agreement.
10.13 1992 Equity Incentive Plan, as amended.
10.14 1995 Management Stock Option Plan.
10.15 1997 Employee Stock Purchase Plan, as amended.
10.16 1999 Equity Incentive Plan, as amended.
10.17 Program Agreement, dated June 7, 1999, between General
Electric Company and Omnicell.com.
10.18 Employment Agreement, dated December 13, 1993, between
Omnicell.com and Sheldon D. Asher.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
10.19** Strategic Alliance Agreement, dated April 17, 2000, between
Omnicell.com and PricewaterhouseCoopers LLP.
21.1 Subsidiaries of Omnicell.com
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1.
24.1 Powers of Attorney. Reference is made to Page II-5.
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Confidential treatment requested.
(b) Financial Statement Schedules.
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNT DEDUCTIONS PERIOD
- ----------- ------------ ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997 allowance
for doubtful accounts................. $159,783 $60,000 -- $1,415(1) $218,368
Year ended December 31, 1998 allowance
for doubtful accounts................. 218,368 60,000 -- -- 278,368
Year ended December 31, 1999 allowance
for doubtful accounts................. 278,368 60,000 -- -- 338,368
</TABLE>
- ------------------------
(1) Uncollectible accounts written off.
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A
II-4
<PAGE>
and contained in a form of Prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be a part of this Registration Statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto, State of
California, on the 19th day of April, 2000.
<TABLE>
<S> <C> <C>
OMNICELL.COM
By: /s/ SHELDON D. ASHER
-----------------------------------------
Sheldon D. Asher
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Sheldon
D. Asher and Robert Y. Newell, IV his true and lawful attorney-in-fact and
agent, each acting alone, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form S-1, and to any registration statement filed under Securities
and Exchange Commission Rule 462, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ SHELDON D. ASHER President and Chief Executive
------------------------------------ Officer and Director (PRINCIPAL April 19, 2000
Sheldon D. Asher EXECUTIVE OFFICER)
/s/ ROBERT Y. NEWELL, IV Vice President and Chief Financial
------------------------------------ Officer (PRINCIPAL FINANCIAL AND April 19, 2000
Robert Y. Newell, IV ACCOUNTING OFFICER)
/s/ RANDALL A. LIPPS
------------------------------------ Chairman of the Board and Director April 19, 2000
Randall A. Lipps
/s/ GORDON V. CLEMONS
------------------------------------ Director April 19, 2000
Gordon V. Clemons
/s/ CHRISTOPHER J. DUNN, M.D.
------------------------------------ Director April 19, 2000
Christopher J. Dunn, M.D.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ FREDERICK J. DOTZLER
------------------------------------ Director April 19, 2000
Frederick J. Dotzler
/s/ RANDALL A. HACK
------------------------------------ Director April 19, 2000
Randall A. Hack
/s/ BENJAMIN A. HOROWITZ
------------------------------------ Director April 19, 2000
Benjamin A. Horowitz
/s/ KEVIN L. ROBERG
------------------------------------ Director April 19, 2000
Kevin L. Roberg
/s/ JOHN D. STOBO, JR.
------------------------------------ Director April 19, 2000
John D. Stobo, Jr.
/s/ WILLIAM H. YOUNGER, JR.
------------------------------------ Director April 19, 2000
William H. Younger, Jr.
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Articles of Incorporation of
Omnicell.com.
3.2 Certificate of Amendment of Amended and Restated Articles of
Incorporation of Omnicell.com.
3.3 Certificate of Incorporation of Omnicell.com to be effective
upon reincorporation in Delaware.
3.4 Amended and Restated Certificate of Incorporation of
Omnicell.com to be filed following the closing of the
offering.
3.5 Bylaws of Omnicell.com.
3.6 Bylaws of Omnicell.com to be effective upon reincorporation
in Delaware.
4.1* Form of Common Stock Certificate.
4.2 Amended and Restated Investor Rights Agreement dated
January 20, 2000.
4.3 Warrant Agreement, dated September 30, 1993, between
Omnicell.com and Comdisco, Inc.
4.4 Warrant Agreement, dated January 23, 1995, between
Omnicell.com and Comdisco, Inc.
4.5 Warrant Agreement, dated July 7, 1995, between Omnicell.com
and Comdisco, Inc.
4.6 Warrant Agreement, dated September 29, 1995, between
Omnicell.com and Comdisco, Inc.
4.7 Convertible Promissory Note, dated October 1, 1999.
5.1* Opinion of Cooley Godward LLP, counsel to Omnicell.com.
10.1 Real Property Lease, dated September 24, 1999, between W.F.
Baton & Co., Inc. and Omnicell.com, as amended.
10.2 Real Property Lease, effective July 1, 1999, between
Omnicell.com and Amli Commercial Properties Limited
Partnership.
10.3 Real Property Lease, dated April 3, 1996, between O'Donnell
Palo Alto Associates and Omnicell.com.
10.4 Real Property Lease, dated March 25, 1994, between W.F.
Batton & Co., Inc. and Omnicell.com, as amended.
10.5 Master Assignment Agreement and Master Sales Agreement,
dated September 29, 1994, between Americorp Financial, Inc.
and Omnicell.com, as amended.
10.6 Group Purchasing Agreement, effective June 1, 1997, between
Premier Purchasing Partners, L.P., and Omnicell.com.
10.7 Letter Agreement, dated June 27, 1997, between the
University Health System Consortium Services Corporation and
Omnicell.com.
10.8 Federal Supply Schedule Contract No. V797P-3406k, effective
August 7, 1997, between the Department of Veterans Affairs
and Omnicell.com.
10.9 Asset Purchase Agreement dated December 18, 1998, between
Omnicell.com and Baxter Healthcare Corporation, as amended.
10.10 Loan and Security Agreement and Standby Facility Agreement,
dated January 27, 2000, between Silicon Valley bank and
Omnicell.com.
10.11** Vertical Hosted License Agreement, dated August 21, 1999,
between Omnicell.com and Commerce One, as amended.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------
<S> <C>
10.12 Form of Director and Officer Indemnification Agreement.
10.13 1992 Equity Incentive Plan, as amended.
10.14 1995 Management Stock Option Plan.
10.15 1997 Employee Stock Purchase Plan, as amended.
10.16 1999 Equity Incentive Plan, as amended.
10.17 Program Agreement, dated June 7, 1999, between General
Electric Company and Omnicell.com.
10.18 Employment Agreement, dated December 13, 1993, between
Omnicell.com and Sheldon D. Asher.
10.19** Strategic Alliance Agreement, dated April 17, 2000, between
Omnicell.com and PricewaterhouseCoopers LLP.
21.1 Subsidiaries of Omnicell.com
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1.
24.1 Powers of Attorney. Reference is made to Page II-5.
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Confidential treatment requested.
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OMNICELL.COM
Randall Lipps and Robert J. Brigham certify that:
1. They are the Chairman of the Board and Assistant Secretary,
respectively, of OmniCell.com, a California corporation.
2. The Articles of Incorporation of the Corporation are amended and
restated in full to read as follows:
"I
The name of the Corporation is OmniCell.com.
II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The Corporation is authorized to issue two classes of shares to be
designated respectively Common Stock and Preferred Stock. The total number of
shares of Common Stock the Corporation shall have authority to issue is
35,000,000 and the total number of shares of Preferred Stock the Corporation
shall have authority to issue is 18,500,000. The Preferred Stock may be issued
from time to time in one or more series. The Board of Directors is authorized to
fix the number of shares of any series of Preferred Stock and, subject to the
rights of existing shareholders set forth in Article IV, Section 6, to determine
or alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series of
Preferred Stock, to increase or decrease (but not below the number of shares of
any such series then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series (subject to the provisions of
Section 6 of Article IV hereof).
The Common Stock shall be divided into two series, to be designated,
respectively, Class A Voting Common Stock, consisting of 32,500,000 shares
("Class A Common"), and Class B Non-voting Common Stock, consisting of 2,500,000
shares ("Class B Common").
<PAGE>
The first series of Preferred Stock shall be designated Series A
Preferred Stock ("Series A Preferred") and shall consist of 480,000 shares. The
second series of Preferred Stock shall be designated Series B Preferred Stock
("Series B Preferred") and shall consist of 320,666 shares. The third series of
Preferred Stock shall be designated Series C Preferred Stock ("Series C
Preferred") and shall consist of 1,700,000 shares. The fourth series of
Preferred Stock shall be designated Series D Preferred Stock ("Series D
Preferred") and shall consist of 1,328,000 shares. The fifth series of Preferred
Stock shall be designated Series E Preferred Stock ("Series E Preferred") and
shall consist of 1,966,000 shares. The sixth series of Preferred Stock shall be
designated Series F Preferred Stock ("Series F Preferred") and shall consist of
2,000,000 shares. The seventh series of Preferred Stock shall be designated
Series G Preferred Stock ("Series G Preferred") and shall consist of 1,000,000
shares. The eighth series of Preferred Stock shall be designated Series H
Preferred Stock ("Series H Preferred") and shall consist of 4,000,000 shares.
The ninth series of Preferred Stock shall be designated Series J Preferred Stock
("Series J Preferred") and shall consist of 1,802,000 shares. The tenth series
of Preferred Stock shall be designated Series K Preferred Stock ("Series K
Preferred") and shall consist of 2,105,263 shares. The Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E
Preferred, the Series F Preferred, Series G Preferred, Series H Preferred,
Series J Preferred and Series K Preferred shall be referred to as the
"Preferred."
IV
The relative rights, preferences, privileges and restrictions granted
to or imposed on the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. DIVIDENDS.
(a) The holders of the Series J Preferred shall be entitled to
receive in any fiscal year, when and as declared by the Board of Directors, out
of any assets legally available therefore, dividends in cash at an annual rate
of $1.12 per share (as adjusted for any stock dividends, combinations,
consolidations or splits with respect to such shares). The right to such
dividends shall not be cumulative and no right shall accrue to holders of Series
J Preferred by reason of the fact that dividends on such shares were not
declared in any prior year, nor shall any undeclared dividends bear or accrue
interest. Such dividends shall be prior and in preference to any declaration or
payment of any dividend, (payable other than in common stock) on the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K
Preferred, or Common Stock. No dividend may be paid on the Series A Preferred,
the Series B Preferred, the Series C Preferred, the Series D Preferred, the
Series E Preferred, the Series F Preferred, the Series G Preferred, the Series H
Preferred, Series K Preferred or the Common Stock unless and until any and all
dividends have been paid to the Series J Preferred.
(b) After payment of all required dividends required to the
holders of Series J Preferred, the holders of outstanding Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred,
Series F Preferred, Series G Preferred, Series H Preferred, and Series K
Preferred shall be entitled to receive in any fiscal year, when and as
<PAGE>
declared by the Board of Directors, out of any assets at the time legally
available therefor, dividends in cash at an annual rate of $0.02 per share of
Series A Preferred, $0.03 per share of Series B Preferred, $0.048 per share of
Series C Preferred, $0.085 per share of Series D Preferred, $0.265 per share of
Series E Preferred, $0.49 per share of Series F Preferred, $0.49 per share of
Series G Preferred, $0.29 per share of Series H Preferred, and $0.76 per share
of Series K Preferred (as adjusted for any stock dividends, combinations,
consolidations or splits with respect to such shares). Such dividends may be
payable quarterly or otherwise as the Board of Directors may from time to time
determine. The right to such dividends shall not be cumulative and no right
shall accrue to holders of such Preferred by reason of the fact that dividends
on such shares were not declared in any prior year, nor shall any undeclared
dividends bear or accrue interest.
(c) Any partial payment of such dividends to the holders of
the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H
Preferred and Series K Preferred shall be made in proportion to the amount each
such holder would be entitled to receive as set forth above if such amounts were
paid in full. Dividends other than dividends payable solely in Common Stock may
be declared or paid upon shares of Common Stock in any fiscal year of the
Corporation only if dividends at the annual rates set forth above shall have
been paid or declared and set apart upon all shares of Preferred for such fiscal
year. No dividend shall be declared or paid with respect to the Common Stock
unless at the same time an equivalent dividend is declared or paid with respect
to the Preferred on an as-if-converted to Common Stock basis. Any declared but
unpaid dividends on the Preferred shall be paid upon the conversion of such
shares into Common Stock either (at the option of the Corporation) by payment of
cash or by the issuance of additional shares of Common Stock based upon the fair
market value of the Common Stock at the time of conversion, as determined by the
Board of Directors. No dividend payable in Common Stock shall be declared or
paid with respect to any series of Preferred unless at the same time a similar
dividend is declared or paid to all series of Preferred on an as-if-converted to
Common Stock basis, such that the holders of no series of Preferred shall hold a
greater proportion of the Corporation's Common Stock following such dividend (on
an as-if converted basis) than immediately prior to such dividend.
2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the shareholders of the Corporation shall be made in the
following manner:
(a) Holders of the Series J Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred,
Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred
or Common Stock by reason of their ownership thereof, the amount of $14.03274
per share (as adjusted for any stock dividends, combinations, consolidations or
splits with respect to such shares), plus all accrued or declared but unpaid
dividends on such share for each share of Series J Preferred then held by them.
If the assets and funds thus distributed among the holders of Series J Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
holders of Series J Preferred in proportion to the full preferential amount each
such holder is otherwise entitled to receive.
<PAGE>
(b) Subject to the payment in full of the liquidation
preferences with respect to the Series J Preferred as provided in Section 2(a)
above, the holders of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G
Preferred, Series H Preferred and Series K Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock by reason of
their ownership of such stock, the amount of $0.25 per share for each share of
Series A Preferred then held by them, $0.375 per share for each share of Series
B Preferred then held by them, $0.60 per share for each share of Series C
Preferred then held by them, $1.085 per share for each share of Series D
Preferred then held by them, $3.30 per share of Series E Preferred then held by
them, $6.15 per share of Series F Preferred then held by them, $6.15 per share
of Series G Preferred then held by them, $3.68 per share of Series H Preferred
then held by them, and, for the holders of Series K Preferred, the greater of
(i) $9.50 per share of Series K Preferred then held by them and (ii) the amount
per share of Series K Preferred they would have received if they had converted
their Series K Preferred into Common Stock immediately prior to the liquidation,
adjusted for any stock dividends, combinations, consolidations, or splits with
respect to such shares and, in addition, an amount equal to all declared but
unpaid dividends on the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G
Preferred, Series H Preferred and Series K Preferred. If the assets and funds
thus distributed among the holders of Preferred shall be insufficient to permit
the payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation remaining after payment in full of
the liquidation preference set forth in Section 2(a) and legally available for
distribution shall be distributed among the holders of Preferred in proportion
to the full preferential amount each such holder is otherwise entitled to
receive. After payment has been made to the holders of Preferred of the full
amounts to which they shall be entitled as aforesaid, the holders of the Common
Stock shall be entitled to receive ratably on a per-share basis all the
remaining assets.
(c) For purposes of this Section 2, a merger or consolidation
of the Corporation with or into any other corporation or corporations, or the
merger of any other corporation or corporations into the Corporation, in which
the shareholders of the Corporation receive distributions in cash or securities
of another corporation or corporations as a result of such consolidation or
merger, any transaction or series of related transactions to which the Company
is a party in which excess of fifty percent (50%) of the Company's voting power
is transferred, or a sale of all or substantially all of the assets of the
Corporation (collectively, a "Change in Control"), shall be treated as a
liquidation, dissolution or winding up of the Corporation.
Any securities to be delivered to the holders of the Preferred pursuant
to this subsection (c) shall be valued as follows:
(i) Securities not subject to investment letter or
other similar restrictions on free marketability:
<PAGE>
(A) If traded on a securities exchange or
the Nasdaq National Market System, the value shall be deemed to be the average
of the closing prices of the securities on such exchange or system over the
30-day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid prices over the
30-day period ending three (3) days prior to the closing; and
(C) If there is no active public market, the
value shall be the fair market value thereof, as determined in good faith by the
Board of Directors of the Corporation.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (i)(A),(B)
or (C) to reflect the approximate fair market value thereof, as determined in
good faith by the Board of Directors of the Corporation.
The Corporation shall give each holder of record of shares of Preferred
written notice of an impending transaction described in this subsection 2(c) not
later than twenty (20) days prior to the shareholders meeting called to approve
such transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this section 2(c) and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of shares of
Preferred Stock which is entitled to such notice rights or similar notice rights
and which represents at least a majority of the voting power of all then
outstanding shares of such shares of Preferred Stock.
(d) As authorized by Section 402.5(c) of the California
Corporations Code, the provisions of Sections 502 and 503 of the California
Corporations Code shall not apply with respect to repurchase by the Corporation
of shares of Common Stock issued to or held by employees or consultants of the
Corporation or its subsidiaries upon termination of their employment or services
pursuant to agreement providing for the right of said repurchase.
3. VOTING RIGHTS.
(a) Except as otherwise required by law or by Section 3(b)
hereof, the holder of each share of Common Stock issued and outstanding shall
have one vote and each holder of shares of Preferred shall be entitled to the
number of votes equal to the number of shares of Common Stock into which such
shares of Preferred could be converted at the record date for determination of
the shareholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited, such
<PAGE>
votes to be counted together with all other shares of stock of the Corporation
having general voting power and not separately as a class except as otherwise
provided herein or by law. Fractional votes by the holders of Preferred shall
not, however, be permitted and any fractional voting rights shall (after
aggregating all shares into which shares of the Preferred held by each holder
could be converted) be rounded to the nearest whole number. Holders of Common
Stock and the Preferred shall be entitled to notice of any shareholders' meeting
in accordance with the Bylaws of the Corporation.
(b) Notwithstanding Section 3(a) above, the Class B Common
shall not have any voting rights except as required by law.
(c) At each annual or special meeting called for the purpose
of electing directors, the holders of Series E Preferred, voting together as a
class, shall be entitled to elect one (1) director of the Corporation, the
holders of Series H Preferred, voting together as a class, shall be entitled to
elect one (1) director of the Corporation and the holders of Series K Preferred,
voting together as a class, shall be entitled to elect one (1) director of the
Corporation. Subject to the restrictions of Section 3(b) above, all remaining
directors shall be elected by the holders of the Common Stock and the Preferred
Stock (on an as-converted basis) voting together as a single class. In the case
of a vacancy in the office of director elected by the holders of (i) Series E
Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, a successor
shall be elected to hold office for the unexpired term of such director by the
affirmative vote of the majority of the shares of such holders of (i) Series E
Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, respectively.
In the case of any vacancies in the office of the remaining directors elected by
holders of the Common Stock and the Preferred Stock (on an as-converted basis),
voting together as a class, any successor shall be elected to hold office for
the unexpired term of such director by the affirmative vote of the majority of
the shares of such holders of Common and Preferred Stock. Subject to Section 303
of the California Corporations Code, any director who shall have been elected by
holders of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K
Preferred, or (iv) Common Stock and Preferred Stock, may be removed during the
aforesaid term of office, either for or without cause by, and only by, the
affirmative vote of the holders of a majority of (i) Series E Preferred, (ii)
Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred
Stock, respectively, given at a special meeting of the shareholders duly called
or by an action by written consent for that purpose, and any such vacancy
thereby created may be filled by the vote of the holders of a majority of (i)
Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv)
Common Stock and Preferred Stock, respectively, at such meeting or in such
consent.
4. CONVERSION. The holders of the Preferred have conversion rights as
follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A Preferred, Series
B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series
F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and
Series K Preferred shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Preferred, into such number of fully
paid and
<PAGE>
nonassessable shares of Class A Common as is determined by dividing the
Conversion Price for such series of Preferred (determined as hereinafter
provided) in effect at the time of the conversion into the "Conversion Value"
per share of such series of Preferred. The number of shares of Class A Common
into which each series of Preferred is convertible is hereinafter referred to as
the "Conversion Rate" for such series. The Conversion Price per share of (i)
Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375,
(iii) Series C Preferred shall be $0.60, (iv) Series D Preferred shall be
$1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall be
$5.555874, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred
shall be $3.68, (ix) Series J Preferred shall be $14.03274, and (x) Series K
Preferred shall be $9.50. The Conversion Value per share of (i) Series A
Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375, (iii) Series
C Preferred shall be $0.60, (iv) Series D Preferred shall be $1.085, (v) Series
E Preferred shall be $3.30, (vi) Series F Preferred shall be $6.15, (vii) Series
G Preferred shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix)
Series J Preferred shall be $14.03274, and (x) Series K Preferred shall be
$9.50. The Conversion Price for each series of Preferred shall be subject to
adjustment as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Preferred shall
automatically be converted into shares of Class A Common at the then effective
Conversion Price upon the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Corporation to the public (an "Initial Public Offering") at a
price per share (prior to deduction of underwriter commissions and offering
expenses) of not less than $7.36 per share (appropriately adjusted for any stock
dividends, stock splits, combinations, recapitalizations or similar events) and
an aggregate offering price to the public of not less than $10,000,000 (prior to
deduction of underwriter commissions and offering expenses).
(c) MECHANICS OF CONVERSION. No fractional shares of Common
Stock shall be issued upon conversion of shares of Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Preferred shall be entitled to
convert the same into full shares of Common Stock and to receive certificates
therefor, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Preferred, and shall give written notice to the Corporation at such office that
he elects to convert the same; provided, however, that in the event of an
automatic conversion pursuant to Section 4(b), the outstanding shares of
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent, and provided
further that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such automatic conversion
unless the certificates evidencing such shares of Preferred are either delivered
to the Corporation or its transfer agent as provided above, or the holder
notifies the Corporation or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement reasonably satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with the theft, loss or destruction of such certificates. The
Corporation shall, as soon as practicable after delivery of such certificates,
or such agreement and indemnification in the
<PAGE>
case of a lost certificate, issue and deliver at such office to such holder of
Preferred, a certificate or certificates for the number of shares of Common
Stock to which he shall be entitled as aforesaid and a check payable to the
holder in the amount of any cash amounts payable as the result of a conversion
into fractional shares of Common Stock. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Preferred to be converted, or in the case of
automatic conversion on the date of closing of the offering, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTIVE ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Section
4(d), the following definitions shall apply:
(1) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "ORIGINAL ISSUE DATE" shall mean June
11, 1996.
(3) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares (other than the Common Stock) or other
securities convertible into or exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to Section 4(d)(ii),
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable at any time:
(A) upon conversion of the shares
of Preferred authorized herein;
(B) (i) to officers, directors, and
employees of, and consultants to, the Corporation to be designated pursuant to
plans and arrangements approved by the Board of Directors; and (ii) to lending
or leasing institutions approved by the Board of Directors, provided that the
aggregate of (i) and (ii) do not exceed more that 4,058,821 shares (net of
shares repurchased and Options expiring unexercised), appropriately adjusted for
stock splits, combinations, stock dividends, recapitalizations, or similar
events (provided that any shares repurchased by the Corporation from employees,
officers, directors and consultants pursuant to the terms of stock repurchase
agreements approved by the Board of Directors, or Options which terminate
unexercised, shall not, unless reissued, be counted as issued for purposes of
this calculation);
(C) as a dividend or distribution
on Preferred or any event for which adjustment is made pursuant to Section 4(e)
hereof;
<PAGE>
(D) by way of dividend or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (A), (B), or (C).
(ii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto assuming the
satisfaction of any conditions to exercisability, including without limitation,
the passage of time and without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities and Options therefor,
the conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 4(d)(iv) hereof) of such Additional Shares of Common Stock
would be less than the Conversion Price for such series in effect on the date of
and immediately prior to such issue, or such record date, as the case may be,
and provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(1) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or in
the number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(3) upon the expiration of any such Options
or any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration, be
recomputed as if,
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock issued were shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
<PAGE>
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration actually received by the
Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Corporation for the Additional Shares of
Common Stock deemed to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation upon the issue of the Convertible Securities with respect to which
such Options were actually exercised;
(4) no readjustment pursuant to clause (2)
or (3) above shall have the effect of increasing the Conversion Price to an
amount which exceeds the lower of (i) the Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted from any
issuance of Additional Shares of Common Stock between the original adjustment
date and such readjustment date; and
(5) in the case of any Options which expire
by their terms not more than 90 days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration or
exercise of all such Options.
(iii) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE
OF ADDITIONAL SHARES OF COMMON STOCK.
(1) SERIES E PREFERRED, SERIES F
PREFERRED AND SERIES H PREFERRED, SERIES J PREFERRED AND SERIES K PREFERRED.
In the event the Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4(d)(ii)) after the Original Issue Date without consideration or for
consideration per share less than the Conversion Price for (i) the Series E
Preferred, (ii) the Series F Preferred, (iii) the Series H Preferred, (iv)
the Series J Preferred, and/or (v) Series K Preferred, in effect on the date
of and immediately prior to such issue, then and in such event, the
Conversion Price for the (i) Series E Preferred, (ii) Series F Preferred,
(iii) Series H Preferred, (iv) Series J Preferred, and/or (v) Series K
Preferred, if the applicable consideration per share is less than the
Conversion Price then in effect for such series of Series Preferred, shall be
reduced, concurrently with such issue, to a price determined by multiplying
such Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
(including all shares of Common Stock issuable upon conversion of the
outstanding shares of Preferred and all shares of Common Stock reserved for
future issuance by the Board of Directors of the Corporation) plus the number
of shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Conversion Price; and the denominator of which
shall be the number of shares of Common Stock outstanding immediately
<PAGE>
prior to such issue (including all shares of Common Stock issuable upon
conversion of the outstanding shares of Preferred and all shares of Common
Stock reserved for future issuance by the Board of Directors of the
Corporation) plus the number of such Additional Shares of Common Stock so
issued. In the event the Conversion Price for the Series K Preferred shall be
adjusted as a result of this Section 4(d)(iii), the Minimum Price (as defined
below) shall also be adjusted by the same fraction used to adjust the
Conversion Price for the Series K Preferred.
(2) SERIES G PREFERRED. In the event the
Corporation shall issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 4(d)(ii)) after
the Original Issue Date and on or prior to September 30, 1995 (the "Trigger
Date"), without consideration or for consideration per share less than the
Conversion Price for the Series G Preferred in effect on the date of and
immediately prior to such issue, then and in such event, the Conversion Price
for the Series G Preferred shall be reduced, concurrently with such issue, to a
price equal to the amount of consideration received by the Corporation per share
in such issuance. In the event this Corporation shall issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 4(d)(ii)) after the Trigger Date without consideration or
for consideration per share less than the Conversion Price of the Series G
Preferred in effect on the date of and immediately prior to such issue, then in
such event, the Conversion Price of Series G Preferred shall be reduced,
concurrently with such issue, to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue (including
all shares of Common Stock issuable upon conversion of the outstanding Preferred
Stock and all shares of Common Stock received for future issuance by the Board
of Directors of the Corporation) plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price; and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue (including all shares of
Common Stock issuable upon conversion of the outstanding Preferred Stock and all
shares of Common Stock reserved for future issuance by the Board of Directors of
the Corporation) plus the number of such Additional Shares of Common Stock so
issued.
(3) SERIES J PREFERRED. In the event the
Corporation shall undertake an Initial Public Offering at certain per share
prices set forth below (appropriately adjusted for any stock dividends, stock
splits, combinations, recapitalizations or similar events), the Series J
Preferred will undergo a Conversion Price adjustment. If the price per share to
the public in the Initial Public Offering is equal to or less than $11.22 and
higher than $9.82, the Conversion Price will be adjusted to $12.38345 per share.
If the price per share to the public in the Initial Public Offering is equal to
or less than $9.82 and higher than $8.42, the Conversion Price will be adjusted
to $11.69611 per share. If the price per share to the public in the Initial
Public Offering is equal to or less than $8.42 and higher than $7.02, the
Conversion Price will be adjusted to $11.07622 per share. If the price per share
to the public in the Initial Public Offering is equal to or less than $7.02, the
Conversion Price will be adjusted to $10.52310 per share.
<PAGE>
(4) SERIES K PREFERRED. In the event of (i)
an Initial Public Offering, (ii) a liquidation, dissolution, or winding up of
the Corporation, either voluntary or involuntary or (iii) a Change of Control
(collectively, a "Liquidity Event"), during the time periods and at the per
share prices set forth below (appropriately adjusted for any stock dividends,
stock splits, combinations, recapitalizations or similar events), the Series K
Preferred will undergo a Conversion Price adjustment. If the price per share (on
an if-as-converted to Common Stock basis) in the Liquidity Event (the "Liquidity
Price") is less than $21.11 per share, and the Liquidity Event occurs prior to
the first anniversary of the first issuance date of the Series K Preferred (the
"Series K Issuance Date"), the Conversion Price for the Series K Preferred will
be adjusted to forty-five percent (45%) of the Liquidity Price. If the Liquidity
Price is less than $27.14 per share and the Liquidity Event occurs after the
first anniversary and prior to the second anniversary of the Series K Issuance
Date, the Conversion Price will be adjusted to thirty-five percent (35%) of the
Liquidity Price. If the Liquidity Price is less than $38.00 per share and the
Liquidity Event occurs after the second anniversary of the Series K Issuance
Date, the Conversion Price will be adjusted to twenty-five percent (25%) of the
Liquidity Price. Notwithstanding the foregoing, in no event shall the minimum
Conversion price per share of the Series K Preferred be adjusted below $5.00 per
share (appropriately adjusted under Section 4(d)(iii)(1) and for any stock
dividends, stock splits, combinations, recapitalizations or similar events) (the
"Minimum Price").
(iv) DETERMINATION OF CONSIDERATION. For purposes of
this Section 4(d), the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration
shall:
(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board irrespective of any
accounting treatment; and
(C) in the event Additional Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the proportion
of such consideration so received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 4(d)(ii), relating
to Options and Convertible Securities, shall be determined by dividing
<PAGE>
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) ADJUSTMENTS TO CONVERSION PRICE.
(i) ADJUSTMENTS FOR STOCK DIVIDENDS,
SUBDIVISIONS, COMBINATIONS OR CONSOLIDATION OF COMMON STOCK. In the event the
outstanding shares of Common Stock shall be, after the Original Issue Date,
subdivided (by stock split or otherwise) into a greater number of shares of
Common Stock, or the Corporation shall declare or pay any dividend on the Common
Stock payable in Common Stock, the Conversion Price for each series then in
effect shall, concurrently with the effectiveness of such subdivision or stock
dividend, be proportionately decreased based on the ratio of (i) the number of
shares of Common Stock outstanding immediately prior to such subdivision or
stock dividend to (ii) the number of shares of Common Stock outstanding
immediately after such subdivision or stock dividend. In the event the
outstanding shares of Common Stock shall, after the Original Issue Date, be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Conversion Price for each series then in effect
shall, concurrently with the effectiveness of such combination or consolidation,
be proportionately increased on the same basis as set forth above.
(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. In
the event the Corporation at any time or from time to time, after the Original
Issue Date, makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive any distribution payable in securities of the
Corporation other than shares of Common Stock and other than as otherwise
adjusted in this Section 4 or as otherwise provided in Section 2, then and in
each such event provision shall be made so that the holders of Preferred shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Corporation which
they would have received had their shares of Preferred been converted into
Common Stock on the date of such event and had they thereafter, during the
period from the date of such event to and including the date of conversion,
retained such securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 4 with respect to the rights of the holders of the Preferred.
<PAGE>
(iii) ADJUSTMENTS FOR RECLASSIFICATION,
EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon conversion of
shares of Preferred shall, after the Original Issue Date, be changed into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for above), the Conversion Price
then in effect shall, concurrently with the effectiveness of such reorganization
or reclassification, be proportionately adjusted such that the shares of
Preferred shall be convertible into, in lieu of the number of shares of Common
Stock which the holders would otherwise have been entitled to receive, a number
of shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the holders
upon conversion of the Preferred immediately before that change.
(f) NO IMPAIRMENT. Except as permitted by Section 6,
the Corporation will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred against impairment, including
setting aside and reserving for future issuance upon conversion of the
outstanding shares of Preferred the number of shares of Common Stock issuable
upon such conversion.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Price for a
series of Preferred pursuant to this Section 4, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of such series of Preferred a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of such series of
Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
in effect at the time for such series, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of such series of Preferred.
(h) NOTICES OF RECORD DATE. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution
upon its Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to offer for subscription pro rata to
the holders of any class or series of its stock any additional shares of stock
of any class or series or any other similar rights;
<PAGE>
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding which results in a change in
the Common Stock; or
(iv) to merge or consolidate with or into
any other corporation, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
Then, in connection with each such event,
the Corporation shall send to the holders of the Preferred:
(1) at least 20 days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote on the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters
referred to in (iii) and (iv) above, at least 20 days' prior written notice of
the date when the same shall take place and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event or
the record date for the determination of such holders if such record date is
earlier.
Each such written notice shall be delivered personally or given by
first class mail, postage prepaid, addressed to the holders of the Preferred at
the address for each such holder as shown on the books of the Corporation.
5. REDEMPTION OF SERIES J PREFERRED.
(a) At the option of the holder thereof to be exercised not
less than sixty (60) days prior to the date of first redemption, the Corporation
shall redeem, from any source of funds legally available therefor, the Series J
Preferred in ten equal quarterly installments beginning not earlier than
December 31, 1998, and continuing thereafter on the same day of the month, on a
quarterly basis, (each a "Series J Redemption Date") until the remaining Series
J Preferred outstanding shall be redeemed. The Corporation shall effect such
redemptions on the applicable Series J Preferred Redemption by paying in cash in
exchange for the shares of Series J Preferred to be redeemed a sum equal to
$14.03274 per share of Series J Preferred (as adjusted for any stock dividends,
combinations or splits or other adjustments pursuant to Section 4 with respect
to such shares) plus all declared but unpaid dividends on such shares (the
"Series J Redemption Price").
(b) The Corporation shall also pay interest on the outstanding
balance due with respect to the Series J Redemption Price, to begin accruing on
the first Series J Redemption Date, at 9 1/2% per annum and to be payable with
each subsequent installment ("Series J Interest Payment"). The Series J Interest
Payment for each quarter shall be calculated as the number of Series J Preferred
then outstanding times the Series J Redemption Price times 1/4 times .095.
<PAGE>
(c) At least 10 but not more than 20 days prior to each Series
J Redemption Date written notice shall be mailed, first class postage prepaid,
to the holder of record (at the close of business on the business day next
preceding the day on which notice is given) of the Series J Preferred to be
redeemed, at the address last shown on the records of the Corporation for such
holder, notifying such holder of the redemption to be effected, specifying the
number of shares to be redeemed from such holder, the Series J Redemption Date,
the Series J Redemption Price, the place at which payment may be obtained and
calling upon such holder to surrender to the Corporation, in the manner and at
the place designated, his certificate or certificates representing the shares to
be redeemed (the "Redemption Notice"). On or after the Redemption Date, such
holder shall surrender to the Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Redemption Notice, and thereupon the Series J Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. In the event less than all the shares represented
by any such certificate are redeemed, a new certificate shall promptly be issued
representing the unredeemed shares.
(d) From and after the Series J Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holder of shares of Series J Preferred designated for redemption in the
Redemption Notice as holder of Series J Preferred shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Corporation legally available for redemption of shares of
Series J Preferred on any Redemption Date are insufficient to redeem the total
number of shares of Series J Preferred to be redeemed on such date and pay the
Series J Redemption Price, those funds which are legally available will be used
to redeem the maximum possible number of such shares to be redeemed. The shares
of Series J Preferred not redeemed shall remain outstanding and shall be
entitled to all the rights and preferences provided herein. The Series J
Redemption Prices to the extent not paid when due shall accrue interest in
accordance with the terms hereof every quarter until paid. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series J Preferred such funds will immediately be
used to redeem the balance of the shares which the Corporation has become
obliged to redeem on any Redemption Date, but which it has not redeemed, and pay
any amounts owed for Series J Redemption Prices and Interest Payments.
(e) On or prior to each Redemption Date, the Corporation shall
deposit the Series J Preferred Redemption Price of all shares of Series J
Preferred designated for redemption in the Redemption Notice and not yet
redeemed plus the Series J Interest Payment due with respect thereto or so much
thereof as is then legally available in accordance with Section 5(d), with a
bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the holder of the shares
designated for redemption and not yet redeemed, with irrevocable instructions
and authority to the bank or trust corporation to pay the Series J Redemption
Price for such shares to their respective holders on or after the Redemption
Date upon receipt of notification from the Corporation that such holder has
surrendered his share certificate to the Corporation pursuant to Section (c)
above. For each
<PAGE>
Series J Redemption Date, unless otherwise provided in Section 5(d) above, the
deposit shall constitute full payment of the shares to their holders, and from
and after Series J Redemption Date the shares so called for redemption shall be
redeemed and shall be deemed to be no longer outstanding, and the holder thereof
shall cease to be shareholder with respect thereto except the rights to receive
from the bank or trust corporation payment of the Series J Redemption Price of
the shares, without interest, upon surrender of their certificates therefor.
Such instructions shall also provide that any moneys deposited by the
Corporation pursuant to this Section 5(e) for the redemption of shares
thereafter converted into shares of the Corporation's Common Stock hereof prior
to the Redemption Date shall be returned to the Corporation forthwith upon such
conversion. The balance of any moneys deposited by the Corporation pursuant to
this Section 5(e) remaining unclaimed at the expiration of two (2) years
following each Series J Redemption Date shall thereafter be returned to the
Corporation upon its request expressed in a resolution of its Board of
Directors.
6. COVENANTS. In addition to any other rights provided by law, so long
as any shares of Preferred shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of the outstanding shares of a series of Preferred:
(a) amend or repeal any provision of, or add any provision to,
the Corporation's Articles of Incorporation if such action would materially and
adversely directly alter or change the preferences, rights, or privileges of
such series of Preferred;
(b) increase or decrease the authorized number of shares of
such series of Preferred;
(c) authorize, issue, or enter into any agreement providing
for the issuance of any capital stock or other equity security which is senior
to such series of Preferred with respect to the payment of dividends,
redemption, or distribution upon liquidation; or
(d) redeem, purchase, or otherwise acquire any of the
Corporation's capital stock or other equity securities other than (i) shares of
Common Stock repurchased at cost from terminated employees or consultants
pursuant to contractual arrangements, or (ii) shares of Preferred redeemed
pursuant to the terms of the Articles of Incorporation of the Corporation.
In addition to any other rights provided by law, so long as any shares
of Preferred shall be outstanding, the Corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of a majority
of the outstanding shares of Preferred, voting together as a single class
(including the Series J Preferred):
(a) sell or convey all or substantially all of its
property or business or merge into or consolidate with any other corporation if
immediately after such merger or consolidation the shareholders of the
Corporation shall hold less than 50% of the voting power of the surviving
corporation; or
<PAGE>
(b) liquidate, dissolve, or effect a recapitalization
or reorganization of the Corporation.
V
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law. The
Corporation is also authorized, to the fullest extent permissible under
California law, to indemnify its agents (as defined in Section 317 of the
California Corporations Code), whether by bylaw, agreement or otherwise, for
breach of duty to the Corporation and its shareholders in excess of that
expressly permitted by Section 317 and to advance defense expenses to its agents
in connection with such matters as they are incurred. If, after the effective
date of this Article, California law is amended in a manner which permits a
corporation to limit the monetary or other liability of its directors or to
authorize indemnification of, or advancement of such defense expenses to, its
directors or other persons, in any such case to a greater extent than is
permitted on such effective date, the references in this Article to "California
law" shall to that extent be deemed to refer to California law as so amended."
3. The foregoing Amendment and Restatement of Articles of Incorporation
has been duly approved by the Board of Directors.
4. The foregoing Amendment and Restatement of Articles of Incorporation
has been duly approved by the required vote of shareholders in accordance with
Section 902 and Section 903 of the Corporations Code.
5. The total number of outstanding shares of Common Stock of the
Corporation is 2,605,135, and the total number of outstanding shares of (i)
Series A Preferred is 480,000, (ii) Series B Preferred is 320,666, (iii) Series
C Preferred is 1,700,000, (iv) Series D Preferred is 1,309,484, (v) Series E
Preferred is 1,965,262, (vi) Series F Preferred is 1,948,090, (vii) Series G
Preferred is zero, (viii) Series H Preferred is 3,804,346 (ix) Series I
Preferred Stock is zero and (x) Series J Preferred is 1,081,200. The number of
shares voting in favor of Amendment and Restatement equaled or exceeded the vote
required. The percentage vote required was (i) more than 50% of the Common Stock
voting as a class and (ii) more than 50% of the Preferred Stock voting together
as a class."
<PAGE>
We further declare under penalty of perjury that the matters set forth
in the foregoing certificate are true and correct of our own knowledge.
Executed at Palo Alto, California, this 5th day of January 2000.
By: /s/ Randall Lipps
-------------------------------------
Randall Lipps
Chairman of the Board
By:
------------------------------------
Robert J. Brigham
Assistant Secretary
<PAGE>
We further declare under penalty of perjury that the matters set forth in the
foregoing certificate are true and correct of our own knowledge.
Executed at Palo Alto, California, this 5th day of January 2000.
By:
-------------------------------------
Randall Lipps
Chairman of the Board
By: /s/ Robert J. Brigham
-------------------------------------
Robert J. Brigham
Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
OMNICELL.COM
Randall Lipps and Robert J. Brigham certify that:
1. They are the Chairman of the Board and Assistant Secretary,
respectively, of OMNICELL.COM, a California corporation.
2. Article III of the Amended and Restated Articles of Incorporation of
this corporation is amended to read in full as follows:
"III
The Corporation is authorized to issue two classes of shares
to be designated respectively Common Stock and Preferred Stock. The
total number of shares of Common Stock the Corporation shall have
authority to issue is 35,000,000 and the total number of shares of
Preferred Stock the Corporation shall have authority to issue is
18,500,000. The Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is authorized to fix the number
of shares of any series of Preferred Stock and, subject to the rights
of existing shareholders set forth in Article IV, Section 6, to
determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing
the number of shares constituting any series of Preferred Stock, to
increase or decrease (but not below the number of shares of any such
series then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series (subject to the
provisions of Section 6 of Article IV hereof).
The Common Stock shall be divided into two series, to be
designated, respectively, Class A Voting Common Stock, consisting of
32,500,000 shares ("Class A Common"), and Class B Non-voting Common
Stock, consisting of 2,500,000 shares ("Class B Common").
The first series of Preferred Stock shall be designated Series
A Preferred Stock ("Series A Preferred") and shall consist of 480,000
shares. The second series of Preferred Stock shall be designated Series
B Preferred Stock ("Series B Preferred") and shall consist of 320,666
shares. The third series of Preferred Stock shall be designated Series
C Preferred Stock ("Series C Preferred") and shall consist of 1,700,000
shares. The fourth series of Preferred Stock shall be designated Series
D Preferred Stock ("Series D Preferred") and shall consist of 1,328,000
shares. The fifth series of Preferred Stock shall be designated Series
E Preferred Stock ("Series E Preferred") and shall consist of 1,966,000
shares. The sixth series of Preferred Stock shall be designated Series
F Preferred Stock
<PAGE>
("Series F Preferred") and shall consist of 2,000,000 shares. The
seventh series of Preferred Stock shall be designated Series G
Preferred Stock ("Series G Preferred") and shall consist of 1,000,000
shares. The eighth series of Preferred Stock shall be designated Series
H Preferred Stock ("Series H Preferred") and shall consist of 4,000,000
shares. The ninth series of Preferred Stock shall be designated Series
J Preferred Stock ("Series J Preferred") and shall consist of 1,802,000
shares. The tenth series of Preferred Stock shall be designated Series
K Preferred Stock ("Series K Preferred") and shall consist of 3,157,895
shares. The Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred, the Series E Preferred, the Series F
Preferred, Series G Preferred, Series H Preferred, Series J Preferred
and Series K Preferred shall be referred to as the "Preferred". "
3. The foregoing Amendment and Restatement of Articles of Incorporation
has been duly approved by the Board of Directors.
4. The foregoing Amendment and Restatement of Articles of Incorporation
has been duly approved by the required vote of shareholders in accordance with
Section 902 and Section 903 of the Corporations Code.
5. The total number of outstanding shares of Common Stock of the
Corporation is 2,605,135, and the total number of outstanding shares of (i)
Series A Preferred is 480,000, (ii) Series B Preferred is 320,666, (iii) Series
C Preferred is 1,700,000, (iv) Series D Preferred is 1,309,484, (v) Series E
Preferred is 1,965,262, (vi) Series F Preferred is 1,948,090, (vii) Series G
Preferred is zero, (viii) Series H Preferred is 3,804,346, (ix) Series I
Preferred Stock is zero, (x) Series J Preferred is 1,081,200 and (xi) Series K
Preferred is 2,105,263. The number of shares voting in favor of Amendment and
Restatement equaled or exceeded the vote required. The percentage vote required
was (i) more than 50% of the Common Stock voting as a class and (ii) more than
50% of the Preferred Stock voting together as a class."
<PAGE>
We further declare under penalty of perjury that the matters set forth in the
foregoing certificate are true and correct of our own knowledge.
Executed at Palo Alto, California, this 3 day of MARCH 2000.
By: /s/ Randall Lipps
---------------------------
Randall Lipps
Chairman of the Board
By: /s/ Robert J. Brigham
---------------------------
Robert J. Brigham
Assistant Secretary
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION OF
OMNICELL MERGER CORPORATION
The undersigned, a natural person (the "Sole Incorporator"), for the
purpose of organizing a corporation to conduct the business and promote the
purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Delaware hereby certifies that:
I.
The name of this corporation is Omnicell Merger Corporation.
II.
The address of the registered office of the corporation in the State
of Delaware is 1013 Centre Road, City of Wilmington, 19805, County of New
Castle and the name of the registered agent of the corporation in the State
of Delaware at such address is Corporation Service Company.
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporations Code.
IV.
The Corporation is authorized to issue two classes of shares to be
designated respectively Common Stock and Preferred Stock. The total number of
shares of Common Stock the Corporation shall have authority to issue is
50,000,000, each having a par value of one-tenth of one cent ($.001) and the
total number of shares of Preferred Stock the Corporation shall have
authority to issue is 18,500,000, each having a par value of one-tenth of one
cent ($.001).
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of
any series of Preferred Stock and, subject to the rights of existing
shareholders set forth in Article V, Section 6, to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon
any wholly unissued series of Preferred Stock and, within the limits and
restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series of
Preferred Stock, to increase or decrease (but not below the number of shares
of any such series then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series (subject to the provisions
of Section 6 of Article V hereof).
<PAGE>
The Common Stock shall be divided into two series, to be designated,
respectively, Class A Voting Common Stock, consisting of 47,500,000 shares
("Class A Common"), and Class B Non-voting Common Stock, consisting of
2,500,000 shares ("Class B Common").
The first series of Preferred Stock shall be designated Series A
Preferred Stock ("Series A Preferred") and shall consist of 480,000 shares.
The second series of Preferred Stock shall be designated Series B Preferred
Stock ("Series B Preferred") and shall consist of 320,666 shares. The third
series of Preferred Stock shall be designated Series C Preferred Stock
("Series C Preferred") and shall consist of 1,700,000 shares. The fourth
series of Preferred Stock shall be designated Series D Preferred Stock
("Series D Preferred") and shall consist of 1,328,000 shares. The fifth
series of Preferred Stock shall be designated Series E Preferred Stock
("Series E Preferred") and shall consist of 1,966,000 shares. The sixth
series of Preferred Stock shall be designated Series F Preferred Stock
("Series F Preferred") and shall consist of 2,000,000 shares. The seventh
series of Preferred Stock shall be designated Series G Preferred Stock
("Series G Preferred") and shall consist of 1,000,000 shares. The eighth
series of Preferred Stock shall be designated Series H Preferred Stock
("Series H Preferred") and shall consist of 4,000,000 shares. The ninth
series of Preferred Stock shall be designated Series J Preferred Stock
("Series J Preferred") and shall consist of 1,802,000 shares. The tenth
series of Preferred Stock shall be designated Series K Preferred Stock
("Series K Preferred") and shall consist of 3,157,895 shares. The eleventh
series of Preferred Stock shall be designated Series L Preferred Stock
("Series L Preferred") and shall consist of 526,316 shares. The remaining
219,123 shares of Preferred Stock are not yet designated. The Series A
Preferred, the Series B Preferred, the Series C Preferred, the Series D
Preferred, the Series E Preferred, the Series F Preferred, Series G
Preferred, Series H Preferred, Series J Preferred, Series K Preferred and
Series L Preferred shall be referred to as the "Preferred."
V.
The relative rights, preferences, privileges and restrictions granted to or
imposed on the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. DIVIDENDS.
(a) The holders of the Series J Preferred shall be entitled
to receive in any fiscal year, when and as declared by the Board of
Directors, out of any assets legally available therefore, dividends in cash
at an annual rate of $1.12 per share (as adjusted for any stock dividends,
combinations, consolidations or splits with respect to such shares). The
right to such dividends shall not be cumulative and no right shall accrue to
holders of Series J Preferred by reason of the fact that dividends on such
shares were not declared in any prior year, nor shall any undeclared
dividends bear or accrue interest. Such dividends shall be prior and in
preference to any declaration or payment of any dividend, (payable other than
in common stock) on the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series
G Preferred, Series H Preferred, Series K Preferred, Series L Preferred, or
Common Stock. No dividend may be paid on the Series A Preferred, the Series B
Preferred, the Series C Preferred, the Series D Preferred, the Series E
Preferred, the Series F Preferred, the Series G Preferred, the Series H
Preferred, the Series K Preferred, the Series L Preferred or the Common Stock
unless and until any and all dividends have been paid to the Series J
Preferred.
2
<PAGE>
(b) After payment of all required dividends required to the
holders of Series J Preferred, the holders of outstanding Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series
K Preferred, and Series L Preferred shall be entitled to receive in any
fiscal year, when and as declared by the Board of Directors, out of any
assets at the time legally available therefor, dividends in cash at an annual
rate of $0.02 per share of Series A Preferred, $0.03 per share of Series B
Preferred, $0.048 per share of Series C Preferred, $0.085 per share of Series
D Preferred, $0.265 per share of Series E Preferred, $0.49 per share of
Series F Preferred, $0.49 per share of Series G Preferred, $0.29 per share of
Series H Preferred, $0.76 per share of Series K Preferred, and $0.76 per
share of Series L Preferred (as adjusted for any stock dividends,
combinations, consolidations or splits with respect to such shares). Such
dividends may be payable quarterly or otherwise as the Board of Directors may
from time to time determine. The right to such dividends shall not be
cumulative and no right shall accrue to holders of such Preferred by reason
of the fact that dividends on such shares were not declared in any prior
year, nor shall any undeclared dividends bear or accrue interest.
(c) Any partial payment of such dividends to the holders of
the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series
H Preferred, Series K Preferred and Series L Preferred shall be made in
proportion to the amount each such holder would be entitled to receive as set
forth above if such amounts were paid in full. Dividends other than dividends
payable solely in Common Stock may be declared or paid upon shares of Common
Stock in any fiscal year of the Corporation only if dividends at the annual
rates set forth above shall have been paid or declared and set apart upon all
shares of Preferred for such fiscal year. No dividend shall be declared or
paid with respect to the Common Stock unless at the same time an equivalent
dividend is declared or paid with respect to the Preferred on an
as-if-converted to Common Stock basis. Any declared but unpaid dividends on
the Preferred shall be paid upon the conversion of such shares into Common
Stock either (at the option of the Corporation) by payment of cash or by the
issuance of additional shares of Common Stock based upon the fair market
value of the Common Stock at the time of conversion, as determined by the
Board of Directors. No dividend payable in Common Stock shall be declared or
paid with respect to any series of Preferred unless at the same time a
similar dividend is declared or paid to all series of Preferred on an
as-if-converted to Common Stock basis, such that the holders of no series of
Preferred shall hold a greater proportion of the Corporation's Common Stock
following such dividend (on an as-if converted basis) than immediately prior
to such dividend.
2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or
involuntary, distributions to the shareholders of the Corporation shall be
made in the following manner:
(a) Holders of the Series J Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series
K Preferred, Series L Preferred or Common Stock by reason of their ownership
thereof, the amount of $14.03274 per share (as adjusted for any stock
dividends, combinations, consolidations or splits with respect to such
shares), plus all accrued or declared but unpaid dividends on such share for
each share of Series J Preferred then held by them. If the assets and funds
thus distributed among the holders of Series J Preferred shall be
insufficient to permit the payment to such
3
<PAGE>
holders of the full aforesaid preferential amount, then the entire assets and
funds of the Corporation legally available for distribution shall be
distributed among the holders of Series J Preferred in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
(b) Subject to the payment in full of the liquidation
preferences with respect to the Series J Preferred as provided in Section
2(a) above, the holders of the Series A Preferred, Series B Preferred, Series
C Preferred, Series D Preferred, Series E Preferred, Series F Preferred,
Series G Preferred, Series H Preferred, Series K Preferred and Series L
Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock by reason of their ownership of such stock, the
amount of $0.25 per share for each share of Series A Preferred then held by
them, $0.375 per share for each share of Series B Preferred then held by
them, $0.60 per share for each share of Series C Preferred then held by them,
$1.085 per share for each share of Series D Preferred then held by them,
$3.30 per share of Series E Preferred then held by them, $6.15 per share of
Series F Preferred then held by them, $6.15 per share of Series G Preferred
then held by them, $3.68 per share of Series H Preferred then held by them,
for the holders of Series K Preferred, the greater of (i) $9.50 per share of
Series K Preferred, then held by such holder and (ii) the amount per share of
Series K Preferred, that such holder would have received if they had
converted their Series K Preferred shares into Common Stock immediately prior
to the liquidation, and for the holders of Series L Preferred, $9.50 per
share of Series L Preferred then held by them, adjusted for any stock
dividends, combinations, consolidations, or splits with respect to such
shares and, in addition, an amount equal to all declared but unpaid dividends
on the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series
H Preferred Series K Preferred and Series L Preferred. If the assets and
funds thus distributed among the holders of Preferred shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amount, then the entire assets and funds of the Corporation remaining after
payment in full of the liquidation preference set forth in Section 2(a) and
legally available for distribution shall be distributed among the holders of
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive. After payment has been made to the holders of
Preferred of the full amounts to which they shall be entitled as aforesaid,
the holders of the Common Stock shall be entitled to receive ratably on a
per-share basis all the remaining assets.
(c) For purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger
of any other corporation or corporations into the Corporation, in which the
shareholders of the Corporation receive distributions in cash or securities
of another corporation or corporations as a result of such consolidation or
merger, any transaction or series of related transactions to which the
Company is a party in which excess of fifty percent (50%) of the Company's
voting power is transferred, or a sale of all or substantially all of the
assets of the Corporation (collectively, a "Change in Control"), shall be
treated as a liquidation, dissolution or winding up of the Corporation.
Any securities to be delivered to the holders of the Preferred
pursuant to this subsection (c) shall be valued as follows:
(i) Securities not subject to investment letter or
other similar restrictions on free marketability:
4
<PAGE>
(A) If traded on a securities exchange or
the Nasdaq National Market System, the value shall be deemed to be the
average of the closing prices of the securities on such exchange or system
over the 30-day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter,
the value shall be deemed to be the average of the closing bid prices over
the 30-day period ending three (3) days prior to the closing; and
(C) If there is no active public market,
the value shall be the fair market value thereof, as determined in good faith
by the Board of Directors of the Corporation.
(ii) The method of valuation of securities subject
to investment letter or other restrictions on free marketability shall be to
make an appropriate discount from the market value determined as above in
(i)(A),(B) or (C) to reflect the approximate fair market value thereof, as
determined in good faith by the Board of Directors of the Corporation.
The Corporation shall give each holder of record of shares of
Preferred written notice of an impending transaction described in this
subsection 2(c) not later than twenty (20) days prior to the shareholders
meeting called to approve such transaction, or twenty (20) days prior to the
closing of such transaction, whichever is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of
such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this section 2(c) and the
Corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty (20)
days after the Corporation has given the first notice provided for herein or
sooner than ten (10) days after the corporation has given notice of any
material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of shares of
Preferred Stock which is entitled to such notice rights or similar notice
rights and which represents at least a majority of the voting power of all
then outstanding shares of such shares of Preferred Stock.
(d) As authorized by Section 402.5(c) of the
California Corporations Code, the provisions of Sections 502 and 503 of the
California Corporations Code shall not apply with respect to repurchase by
the Corporation of shares of Common Stock issued to or held by employees or
consultants of the Corporation or its subsidiaries upon termination of their
employment or services pursuant to agreement providing for the right of said
repurchase.
3. VOTING RIGHTS.
(a) Except as otherwise required by law or by Section 3(b)
hereof, the holder of each share of Common Stock issued and outstanding shall
have one vote and each holder of shares of Preferred shall be entitled to the
number of votes equal to the number of shares of Common Stock into which such
shares of Preferred could be converted at the record date for determination
of the shareholders entitled to vote on such matters, or, if no such record
date is established, at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class except as otherwise provided herein or by law.
5
<PAGE>
Fractional votes by the holders of Preferred shall not, however, be permitted
and any fractional voting rights shall (after aggregating all shares into
which shares of the Preferred held by each holder could be converted) be
rounded to the nearest whole number. Holders of Common Stock and the
Preferred shall be entitled to notice of any shareholders' meeting in
accordance with the Bylaws of the Corporation.
(b) Notwithstanding Section 3(a) above, the Class B Common
shall not have any voting rights except as required by law.
(c) At each annual or special meeting called for the
purpose of electing directors, the holders of Series E Preferred, voting
together as a class, shall be entitled to elect one (1) director of the
Corporation, the holders of Series H Preferred, voting together as a class,
shall be entitled to elect one (1) director of the Corporation and the
holders of Series K Preferred, voting together as a class, shall be entitled
to elect one (1) director of the Corporation. Subject to the restrictions of
Section 3(b) above, all remaining directors shall be elected by the holders
of the Common Stock and the Preferred Stock (on an as-converted basis) voting
together as a single class. In the case of a vacancy in the office of
director elected by the holders of (i) Series E Preferred, (ii) Series H
Preferred, or (iii) Series K Preferred, a successor shall be elected to hold
office for the unexpired term of such director by the affirmative vote of the
majority of the shares of such holders of (i) Series E Preferred, (ii) Series
H Preferred, or (iii) Series K Preferred, respectively. In the case of any
vacancies in the office of the remaining directors elected by holders of the
Common Stock and the Preferred Stock (on an as-converted basis), voting
together as a class, any successor shall be elected to hold office for the
unexpired term of such director by the affirmative vote of the majority of
the shares of such holders of Common and Preferred Stock. Subject to Section
303 of the California Corporations Code, any director who shall have been
elected by holders of (i) Series E Preferred, (ii) Series H Preferred, (iii)
Series K Preferred, or (iv) Common Stock and Preferred Stock, may be removed
during the aforesaid term of office, either for or without cause by, and only
by, the affirmative vote of the holders of a majority of (i) Series E
Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common
Stock and Preferred Stock, respectively, given at a special meeting of the
shareholders duly called or by an action by written consent for that purpose,
and any such vacancy thereby created may be filled by the vote of the holders
of a majority of (i) Series E Preferred, (ii) Series H Preferred, (iii)
Series K Preferred, or (iv) Common Stock and Preferred Stock, respectively,
at such meeting or in such consent.
4. CONVERSION. The holders of the Preferred have conversion rights
as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series
J Preferred, Series K Preferred and Series L Preferred shall be convertible,
at the option of the holder thereof, at any time after the date of issuance
of such share at the office of the Corporation or any transfer agent for the
Preferred, into such number of fully paid and nonassessable shares of Class A
Common as is determined by dividing the Conversion Price for such series of
Preferred (determined as hereinafter provided) in effect at the time of the
conversion into the "Conversion Value" per share of such series of Preferred.
The number of shares of Class A Common into which each series of Preferred is
convertible is
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hereinafter referred to as the "Conversion Rate" for such series. The
Conversion Price per share of (i) Series A Preferred shall be $0.25, (ii)
Series B Preferred shall be $0.375, (iii) Series C Preferred shall be $0.60,
(iv) Series D Preferred shall be $1.085, (v) Series E Preferred shall be
$3.30, (vi) Series F Preferred shall be $5.555874, (vii) Series G Preferred
shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix) Series J
Preferred shall be $14.03274, (x) Series K Preferred shall be $9.50, and (xi)
Series L Preferred shall be $9.50. The Conversion Value per share of (i)
Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375,
(iii) Series C Preferred shall be $0.60, (iv) Series D Preferred shall be
$1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall
be $6.15, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred
shall be $3.68, (ix) Series J Preferred shall be $14.03274, (x) Series K
Preferred shall be $9.50, and (xi) Series L Preferred shall be $9.50. The
Conversion Price for each series of Preferred shall be subject to adjustment
as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Preferred shall
automatically be converted into shares of Class A Common at the then
effective Conversion Price upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common
Stock for the account of the Corporation to the public (an "Initial Public
Offering") at a price per share (prior to deduction of underwriter
commissions and offering expenses) of not less than $7.36 per share
(appropriately adjusted for any stock dividends, stock splits, combinations,
recapitalizations or similar events) and an aggregate offering price to the
public of not less than $10,000,000 (prior to deduction of underwriter
commissions and offering expenses).
(c) MECHANICS OF CONVERSION. No fractional shares of Common
Stock shall be issued upon conversion of shares of Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Preferred shall be entitled
to convert the same into full shares of Common Stock and to receive
certificates therefor, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred, and shall give written notice to the Corporation at
such office that he elects to convert the same; provided, however, that in
the event of an automatic conversion pursuant to Section 4(b), the
outstanding shares of Preferred shall be converted automatically without any
further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or
its transfer agent, and provided further that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates evidencing
such shares of Preferred are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or
its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement reasonably satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with the
theft, loss or destruction of such certificates. The Corporation shall, as
soon as practicable after delivery of such certificates, or such agreement
and indemnification in the case of a lost certificate, issue and deliver at
such office to such holder of Preferred, a certificate or certificates for
the number of shares of Common Stock to which he shall be entitled as
aforesaid and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of Common Stock.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the
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shares of Preferred to be converted, or in the case of automatic conversion
on the date of closing of the offering, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTIVE ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this
Section 4(d), the following definitions shall apply:
(1) "OPTIONS" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities.
(2) "ORIGINAL ISSUE DATE" shall mean June
11, 1996.
(3) "CONVERTIBLE SECURITIES" shall mean
any evidences of indebtedness, shares (other than the Common Stock) or other
securities convertible into or exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to Section
4(d)(ii), deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable at any time:
(A) upon conversion of the
shares of Preferred authorized herein;
(B) (i) to officers, directors,
and employees of, and consultants to, the Corporation to be designated
pursuant to plans and arrangements approved by the Board of Directors; and
(ii) to lending or leasing institutions approved by the Board of Directors,
provided that the aggregate of (i) and (ii) do not exceed more that 4,058,821
shares (net of shares repurchased and Options expiring unexercised),
appropriately adjusted for stock splits, combinations, stock dividends,
recapitalizations, or similar events (provided that any shares repurchased by
the Corporation from employees, officers, directors and consultants pursuant
to the terms of stock repurchase agreements approved by the Board of
Directors, or Options which terminate unexercised, shall not, unless
reissued, be counted as issued for purposes of this calculation);
(C) as a dividend or
distribution on Preferred or any event for which adjustment is made pursuant
to Section 4(e) hereof;
(D) by way of dividend or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (A), (B), or (C).
(ii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible Securities or
shall fix a record date for the determination of holders
8.
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of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth in
the instrument relating thereto assuming the satisfaction of any conditions
to exercisability, including without limitation, the passage of time and
without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share (determined
pursuant to Section 4(d)(iv) hereof) of such Additional Shares of Common
Stock would be less than the Conversion Price for such series in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be, and provided further that in any such case in which Additional
Shares of Common Stock are deemed to be issued:
(1) no further adjustment in the
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or
in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(3) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if,
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock issued were shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration actually received by the
Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for the
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Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(4) no readjustment pursuant to clause
(2) or (3) above shall have the effect of increasing the Conversion Price to
an amount which exceeds the lower of (i) the Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted from
any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date; and
(5) in the case of any Options which
expire by their terms not more than 90 days after the date of issue thereof,
no adjustment of the Conversion Price shall be made until the expiration or
exercise of all such Options.
(iii) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE
OF ADDITIONAL SHARES OF COMMON STOCK.
(1) SERIES E PREFERRED, SERIES F
PREFERRED AND SERIES H PREFERRED, SERIES J PREFERRED SERIES K PREFERRED AND
SERIES L PREFERRED. In the event the Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to
be issued pursuant to Section 4(d)(ii)) after the Original Issue Date without
consideration or for consideration per share less than the Conversion Price
for (i) the Series E Preferred, (ii) the Series F Preferred, (iii) the Series
H Preferred, (iv) the Series J Preferred, (v) Series K Preferred, and/or (vi)
Series L Preferred in effect on the date of and immediately prior to such
issue, then and in such event, the Conversion Price for the (i) Series E
Preferred, (ii) Series F Preferred, (iii) Series H Preferred, (iv) Series J
Preferred, (v) Series K Preferred, and/or (vi) Series L Preferred if the
applicable consideration per share is less than the Conversion Price then in
effect for such series of Series Preferred, shall be reduced, concurrently
with such issue, to a price determined by multiplying such Conversion Price
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue (including all shares of
Common Stock issuable upon conversion of the outstanding shares of Preferred
and all shares of Common Stock reserved for future issuance by the Board of
Directors of the Corporation) plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number
of Additional Shares of Common Stock so issued would purchase at such
Conversion Price; and the denominator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issue (including all
shares of Common Stock issuable upon conversion of the outstanding shares of
Preferred and all shares of Common Stock reserved for future issuance by the
Board of Directors of the Corporation) plus the number of such Additional
Shares of Common Stock so issued. In the event the Conversion Price for the
Series K Preferred shall be adjusted as a result of this Section 4(d)(iii),
the Minimum Price (as defined below) shall also be adjusted by the same
fraction used to adjust the Conversion Price for the Series K Preferred.
(2) SERIES G PREFERRED. In the event the
Corporation shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
4(d)(ii)) after the Original Issue Date and on or prior to
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September 30, 1995 (the "Trigger Date"), without consideration or for
consideration per share less than the Conversion Price for the Series G
Preferred in effect on the date of and immediately prior to such issue, then
and in such event, the Conversion Price for the Series G Preferred shall be
reduced, concurrently with such issue, to a price equal to the amount of
consideration received by the Corporation per share in such issuance. In the
event this Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4(d)(ii)) after the Trigger Date without consideration or for
consideration per share less than the Conversion Price of the Series G
Preferred in effect on the date of and immediately prior to such issue, then
in such event, the Conversion Price of Series G Preferred shall be reduced,
concurrently with such issue, to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue (including
all shares of Common Stock issuable upon conversion of the outstanding
Preferred Stock and all shares of Common Stock received for future issuance
by the Board of Directors of the Corporation) plus the number of shares of
Common Stock which the aggregate consideration received by the Corporation
for the total number of Additional Shares of Common Stock so issued would
purchase at such Conversion Price; and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
(including all shares of Common Stock issuable upon conversion of the
outstanding Preferred Stock and all shares of Common Stock reserved for
future issuance by the Board of Directors of the Corporation) plus the number
of such Additional Shares of Common Stock so issued.
(3) SERIES J PREFERRED. In the event the
Corporation shall undertake an Initial Public Offering at certain per share
prices set forth below (appropriately adjusted for any stock dividends, stock
splits, combinations, recapitalizations or similar events), the Series J
Preferred will undergo a Conversion Price adjustment. If the price per share
to the public in the Initial Public Offering is equal to or less than $11.22
and higher than $9.82, the Conversion Price will be adjusted to $12.38345 per
share. If the price per share to the public in the Initial Public Offering is
equal to or less than $9.82 and higher than $8.42, the Conversion Price will
be adjusted to $11.69611 per share. If the price per share to the public in
the Initial Public Offering is equal to or less than $8.42 and higher than
$7.02, the Conversion Price will be adjusted to $11.07622 per share. If the
price per share to the public in the Initial Public Offering is equal to or
less than $7.02, the Conversion Price will be adjusted to $10.52310 per share.
(4) SERIES K PREFERRED. In the event of
(i) an Initial Public Offering, (ii) a liquidation, dissolution, or winding
up of the Corporation, either voluntary or involuntary or (iii) a Change of
Control (collectively, a "Liquidity Event"), during the time periods and at
the per share prices set forth below (appropriately adjusted for any stock
dividends, stock splits, combinations, recapitalizations or similar events),
the Series K Preferred will undergo a Conversion Price adjustment. If the
price per share (on an if-as-converted to Common Stock basis) in the
Liquidity Event (the "Liquidity Price") is less than $21.11 per share, and
the Liquidity Event occurs prior to the first anniversary of the first
issuance date of the Series K Preferred (the "Series K Issuance Date"), the
Conversion Price for the Series K Preferred will be adjusted to forty-five
percent (45%) of the Liquidity Price. If the Liquidity Price is less than
$27.14 per share and the Liquidity Event occurs after the first anniversary
and prior to the second anniversary of the Series K Issuance Date, the
Conversion Price will be adjusted to thirty-five percent (35%) of the
Liquidity Price. If the Liquidity Price is less than
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$38.00 per share and the Liquidity Event occurs after the second anniversary
of the Series K Issuance Date, the Conversion Price will be adjusted to
twenty-five percent (25%) of the Liquidity Price. Notwithstanding the
foregoing, in no event shall the minimum Conversion price per share of the
Series K Preferred be adjusted below $5.00 per share (appropriately adjusted
under Section 4(d)(iii)(1) and for any stock dividends, stock splits,
combinations, recapitalizations or similar events) (the "Minimum Price").
(iv) DETERMINATION OF CONSIDERATION. For purposes
of this Section 4(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration
shall:
(A) insofar as it consists of
cash, be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time
of such issue, as determined in good faith by the Board irrespective of any
accounting treatment; and
(C) in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES.
The consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 4(d)(ii),
relating to Options and Convertible Securities, shall be determined by
dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options
for Convertible Securities and the conversion or exchange of such Convertible
Securities by
(y) the maximum number of shares
of Common Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
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(e) ADJUSTMENTS TO CONVERSION PRICE.
(i) ADJUSTMENTS FOR STOCK DIVIDENDS,
SUBDIVISIONS, COMBINATIONS OR CONSOLIDATION OF COMMON STOCK. In the event the
outstanding shares of Common Stock shall be, after the Original Issue Date,
subdivided (by stock split or otherwise) into a greater number of shares of
Common Stock, or the Corporation shall declare or pay any dividend on the
Common Stock payable in Common Stock, the Conversion Price for each series
then in effect shall, concurrently with the effectiveness of such subdivision
or stock dividend, be proportionately decreased based on the ratio of (i) the
number of shares of Common Stock outstanding immediately prior to such
subdivision or stock dividend to (ii) the number of shares of Common Stock
outstanding immediately after such subdivision or stock dividend. In the
event the outstanding shares of Common Stock shall, after the Original Issue
Date, be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Conversion Price for each series
then in effect shall, concurrently with the effectiveness of such combination
or consolidation, be proportionately increased on the same basis as set forth
above.
(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS.
In the event the Corporation at any time or from time to time, after the
Original Issue Date, makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive any distribution payable in
securities of the Corporation other than shares of Common Stock and other
than as otherwise adjusted in this Section 4 or as otherwise provided in
Section 2, then and in each such event provision shall be made so that the
holders of Preferred shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation which they would have received had their shares
of Preferred been converted into Common Stock on the date of such event and
had they thereafter, during the period from the date of such event to and
including the date of conversion, retained such securities receivable by them
as aforesaid during such period, subject to all other adjustments called for
during such period under this Section 4 with respect to the rights of the
holders of the Preferred.
(iii) ADJUSTMENTS FOR RECLASSIFICATION,
EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon conversion of
shares of Preferred shall, after the Original Issue Date, be changed into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than
a subdivision or combination of shares provided for above), the Conversion
Price then in effect shall, concurrently with the effectiveness of such
reorganization or reclassification, be proportionately adjusted such that the
shares of Preferred shall be convertible into, in lieu of the number of
shares of Common Stock which the holders would otherwise have been entitled
to receive, a number of shares of such other class or classes of stock
equivalent to the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the Preferred
immediately before that change.
(f) NO IMPAIRMENT. Except as permitted by Section
6, the Corporation will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the
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terms to be observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Preferred against impairment, including setting aside and reserving for
future issuance upon conversion of the outstanding shares of Preferred the
number of shares of Common Stock issuable upon such conversion.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Price for a
series of Preferred pursuant to this Section 4, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of such series of Preferred
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of such
series of Preferred, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price in effect at the time for such series, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at
the time would be received upon the conversion of such series of Preferred.
(h) NOTICES OF RECORD DATE. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or
distribution upon its Common Stock, whether in cash, property, stock or other
securities, whether or not a regular cash dividend and whether or not out of
earnings or earned surplus;
(ii) to offer for subscription pro rata
to the holders of any class or series of its stock any additional shares of
stock of any class or series or any other similar rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding which results in a change in
the Common Stock; or
(iv) to merge or consolidate with or into
any other corporation, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
Then, in connection with each such event,
the Corporation shall send to the holders of the Preferred:
(1) at least 20 days' prior
written notice of the date on which a record shall be taken for such
dividend, distribution or subscription rights (and specifying the date on
which the holders of Common Stock shall be entitled thereto) or for
determining rights to vote on the matters referred to in (iii) and (iv)
above; and
(2) in the case of the matters
referred to in (iii) and (iv) above, at least 20 days' prior written notice
of the date when the same shall take place and specifying the date on which
the holders of Common Stock shall be entitled to exchange their
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Common Stock for securities or other property deliverable upon the occurrence
of such event or the record date for the determination of such holders if
such record date is earlier.
Each such written notice shall be delivered personally or given by
first class mail, postage prepaid, addressed to the holders of the Preferred
at the address for each such holder as shown on the books of the Corporation.
5. REDEMPTION OF SERIES J PREFERRED.
(a) At the option of the holder thereof to be exercised not
less than sixty (60) days prior to the date of first redemption, the
Corporation shall redeem, from any source of funds legally available
therefor, the Series J Preferred in ten equal quarterly installments
beginning not earlier than December 31, 1998, and continuing thereafter on
the same day of the month, on a quarterly basis, (each a "Series J Redemption
Date") until the remaining Series J Preferred outstanding shall be redeemed.
The Corporation shall effect such redemptions on the applicable Series J
Preferred Redemption by paying in cash in exchange for the shares of Series J
Preferred to be redeemed a sum equal to $14.03274 per share of Series J
Preferred (as adjusted for any stock dividends, combinations or splits or
other adjustments pursuant to Section 4 with respect to such shares) plus all
declared but unpaid dividends on such shares (the "Series J Redemption
Price").
(b) The Corporation shall also pay interest on the
outstanding balance due with respect to the Series J Redemption Price, to
begin accruing on the first Series J Redemption Date, at 9 1/2% per annUM and
to be payable with each subsequent installment ("Series J Interest Payment").
The Series J Interest Payment for each quarter shall be calculated as the
number of Series J Preferred then outstanding times the Series J Redemption
Price times 1/4 times .095.
(c) At least 10 but not more than 20 days prior to each
Series J Redemption Date written notice shall be mailed, first class postage
prepaid, to the holder of record (at the close of business on the business
day next preceding the day on which notice is given) of the Series J
Preferred to be redeemed, at the address last shown on the records of the
Corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder,
the Series J Redemption Date, the Series J Redemption Price, the place at
which payment may be obtained and calling upon such holder to surrender to
the Corporation, in the manner and at the place designated, his certificate
or certificates representing the shares to be redeemed (the "Redemption
Notice"). On or after the Redemption Date, such holder shall surrender to the
Corporation the certificate or certificates representing such shares, in the
manner and at the place designated in the Redemption Notice, and thereupon
the Series J Redemption Price of such shares shall be payable to the order of
the person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by any such certificate are
redeemed, a new certificate shall promptly be issued representing the
unredeemed shares.
(d) From and after the Series J Redemption Date, unless
there shall have been a default in payment of the Redemption Price, all
rights of the holder of shares of Series J Preferred designated for
redemption in the Redemption Notice as holder of Series J Preferred
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shall cease with respect to such shares, and such shares shall not thereafter
be transferred on the books of the Corporation or be deemed to be outstanding
for any purpose whatsoever. If the funds of the Corporation legally available
for redemption of shares of Series J Preferred on any Redemption Date are
insufficient to redeem the total number of shares of Series J Preferred to be
redeemed on such date and pay the Series J Redemption Price, those funds
which are legally available will be used to redeem the maximum possible
number of such shares to be redeemed. The shares of Series J Preferred not
redeemed shall remain outstanding and shall be entitled to all the rights and
preferences provided herein. The Series J Redemption Prices to the extent not
paid when due shall accrue interest in accordance with the terms hereof every
quarter until paid. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares of Series J
Preferred such funds will immediately be used to redeem the balance of the
shares which the Corporation has become obliged to redeem on any Redemption
Date, but which it has not redeemed, and pay any amounts owed for Series J
Redemption Prices and Interest Payments.
(e) On or prior to each Redemption Date, the Corporation
shall deposit the Series J Preferred Redemption Price of all shares of Series
J Preferred designated for redemption in the Redemption Notice and not yet
redeemed plus the Series J Interest Payment due with respect thereto or so
much thereof as is then legally available in accordance with Section 5(d),
with a bank or trust corporation having aggregate capital and surplus in
excess of $100,000,000 as a trust fund for the benefit of the holder of the
shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust corporation to pay the Series
J Redemption Price for such shares to their respective holders on or after
the Redemption Date upon receipt of notification from the Corporation that
such holder has surrendered his share certificate to the Corporation pursuant
to Section (c) above. For each Series J Redemption Date, unless otherwise
provided in Section 5(d) above, the deposit shall constitute full payment of
the shares to their holders, and from and after Series J Redemption Date the
shares so called for redemption shall be redeemed and shall be deemed to be
no longer outstanding, and the holder thereof shall cease to be shareholder
with respect thereto except the rights to receive from the bank or trust
corporation payment of the Series J Redemption Price of the shares, without
interest, upon surrender of their certificates therefor. Such instructions
shall also provide that any moneys deposited by the Corporation pursuant to
this Section 5(e) for the redemption of shares thereafter converted into
shares of the Corporation's Common Stock hereof prior to the Redemption Date
shall be returned to the Corporation forthwith upon such conversion. The
balance of any moneys deposited by the Corporation pursuant to this Section
5(e) remaining unclaimed at the expiration of two (2) years following each
Series J Redemption Date shall thereafter be returned to the Corporation upon
its request expressed in a resolution of its Board of Directors.
6. COVENANTS. In addition to any other rights provided by law, so
long as any shares of Preferred shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than a majority of the outstanding shares of a series of
Preferred:
(a) amend or repeal any provision of, or add any provision
to, the Corporation's Articles of Incorporation if such action would
materially and adversely directly alter or change the preferences, rights, or
privileges of such series of Preferred;
16.
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(b) increase or decrease the authorized number of shares of
such series of Preferred;
(c) authorize, issue, or enter into any agreement providing
for the issuance of any capital stock or other equity security which is
senior to such series of Preferred with respect to the payment of dividends,
redemption, or distribution upon liquidation; or
(d) redeem, purchase, or otherwise acquire any of the
Corporation's capital stock or other equity securities other than (i) shares
of Common Stock repurchased at cost from terminated employees or consultants
pursuant to contractual arrangements, or (ii) shares of Preferred redeemed
pursuant to the terms of the Articles of Incorporation of the Corporation.
In addition to any other rights provided by law, so long as any
shares of Preferred shall be outstanding, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of a
majority of the outstanding shares of Preferred, voting together as a single
class (including the Series J Preferred):
(a) sell or convey all or substantially all of its
property or business or merge into or consolidate with any other corporation
if immediately after such merger or consolidation the shareholders of the
Corporation shall hold less than 50% of the voting power of the surviving
corporation; or
(b) liquidate, dissolve, or effect a recapitalization
or reorganization of the Corporation.
VI.
For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation, of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that:
A.
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of Directors shall
be fixed exclusively by one or more resolutions adopted by the Board of
Directors.
2. BOARD OF DIRECTORS
a. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the initial public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "1933 Act"), covering the offer and sale of Common Stock to the
public (the "Initial Public Offering"), the directors shall be divided into
three classes designated as Class I, Class II and Class III, respectively.
Directors shall be assigned to each class in accordance with
17.
<PAGE>
a resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class I directors shall expire and Class
I directors shall be elected for a full term of three years. At the second
annual meeting of stockholders following the Initial Public Offering, the
term of office of the Class II directors shall expire and Class II directors
shall be elected for a full term of three years. At the third annual meeting
of stockholders following the Initial Public Offering, the term of office of
the Class III directors shall expire and Class III directors shall be elected
for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
During such time or times that the corporation is subject to Section 2115(b)
of the California General Corporation Law ("CGCL"), this Section A.2.a of
this Article VI shall become effective and be applicable only when the
corporation is a "listed" corporation within the meaning of Section 301.5 of
the CGCL.
b. In the event that the corporation is unable to
have a classified board under applicable law, Section 301.5 of the CGCL,
Section A. 2. a. of this Article VI shall not apply and all directors shall
be elected at each annual meeting of stockholders to hold office until the
next annual meeting.
c. No stockholder entitled to vote at an election
for directors may cumulate votes to which such stockholder is entitled,
unless, at the time of such election, the corporation (i) is subject to
Section 2115(b) of the CGCL AND (ii) is not or ceases to be a "listed"
corporation under Section 301.5 of the CGCL. During this time, every
stockholder entitled to vote at an election for directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
such stockholder's shares are otherwise entitled, or distribute the
stockholder's votes on the same principle among as many candidates as such
stockholder thinks fit. No stockholder, however, shall be entitled to so
cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any
stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. Under cumulative voting, the candidates receiving the highest
number of votes, up to the number of directors to be elected, are elected.
Notwithstanding the foregoing provisions of this section, each
director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
3. REMOVAL OF DIRECTORS
a. During such time or times that the corporation
is subject to Section 2115(b) of the CGCL, the Board of Directors or any
individual director may be removed from office at any time without cause by
the affirmative vote of the holders of at least a majority of the outstanding
shares entitled to vote on such removal; provided, however, that unless the
entire Board is removed, no individual director may be removed when the votes
cast against such
18.
<PAGE>
director's removal, or not consenting in writing to such removal, would be
sufficient to elect that director if voted cumulatively at an election which
the same total number of votes were cast (or, if such action is taken by
written consent, all shares entitled to vote were voted) and the entire
number of directors authorized at the time of such director's most recent
election were then being elected.
b. At any time or times that the corporation is
not subject to Section 2115(b) of the CGCL and subject to any limitations
imposed by law, Section A. 3. a. above shall no longer apply and removal
shall be as provided in Section 141(k) of the DGCL.
4. VACANCIES
a. Subject to the rights of the holders of any
series of Preferred Stock, any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal or other causes and any
newly created directorships resulting from any increase in the number of
directors, shall, unless the Board of Directors determines by resolution that
any such vacancies or newly created directorships shall be filled by the
stockholders, except as otherwise provided by law, be filled only by the
affirmative vote of a majority of the directors then in office, even though
less than a quorum of the Board of Directors, and not by the stockholders.
Any director elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the director for which the
vacancy was created or occurred and until such director's successor shall
have been elected and qualified.
b. If at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute
less than a majority of the whole board (as constituted immediately prior to
any such increase), the Delaware Court of Chancery may, upon application of
any stockholder or stockholders holding at least ten percent (10%) of the
total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen
by the directors then in offices as aforesaid, which election shall be
governed by Section 211 of the DGCL.
c. At any time or times that the corporation is
subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy
by the directors then in office who have been elected by stockholders shall
constitute less than a majority of the directors then in office, then
(i) Any holder or holders of an aggregate
of five percent (5%) or more of the total number of shares at the time
outstanding having the right to vote for those directors may call a special
meeting of stockholders; or
(ii) The Superior Court of the proper
county shall, upon application of such stockholder or stockholders, summarily
order a special meeting of stockholders, to be held to elect the entire
board, all in accordance with Section 305(c) of the CGCL. The term of office
of any director shall terminate upon that election of a successor.
19.
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B.
1. Subject to paragraph (h) of Section 43 of the Bylaws,
the Bylaws may be altered or amended or new Bylaws adopted by the affirmative
vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the
power to adopt, amend, or repeal Bylaws.
2. The directors of the corporation need not be elected by
written ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the
corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws or by written consent of stockholders in
accordance with the Bylaws prior to the closing of the Initial Public
Offering and following the closing of the Initial Public Offering no action
shall be taken by the stockholders by written consent.
4. Advance notice of stockholder nominations for the
election of directors and of business to be brought by stockholders before
any meeting of the stockholders of the corporation shall be given in the
manner provided in the Bylaws of the corporation.
VII.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. This corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the CGCL) for breach of duty to the
corporation and its shareholders through bylaw provisions or through
agreements with the agents, or through shareholder resolutions, or otherwise,
in excess of the indemnification otherwise permitted by Section 317 of the
CGCL, subject, at any time or times the corporation is subject to Section
2115(b) to the limits on such excess indemnification set forth in Section 204
of the CGCL.
C. Any repeal or modification of this Article VII shall be
prospective and shall not affect the rights under this Article VII in effect
at the time of the alleged occurrence of any act or omission to act giving
rise to liability or indemnification.
VIII.
A. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, except as provided in
paragraph B. of this Article VII, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
20.
<PAGE>
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of
any particular class or series of the Voting Stock required by law, this
Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
voting stock, voting together as a single class, shall be required to alter,
amend or repeal Articles VI, VII, and VIII.
IX.
The name and the mailing address of the Sole Incorporator is as
follows:
Sally A. Kay
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
IN WITNESS WHEREOF, this Certificate has been subscribed this 4th
day of April, 2000 by the undersigned who affirms that the statements made
herein are true and correct.
/s/ Sally A. Kay
-------------------------------
SALLY A. KAY
SOLE INCORPORATOR
21.
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OMNICELL.COM
I.
The name of this corporation is Omnicell.com.
II.
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, 19805, County of New Castle
and the name of the registered agent of the corporation in the State of
Delaware at such address is Corporation Service Company.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is sixty-eight
million five hundred thousand (68,500,000) shares. Fifty million (50,000,000)
shares shall be Common Stock, each having a par value of one-tenth of one
cent ($.001). Five million (5,000,000) shares shall be Preferred Stock, each
having a par value of one-tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate
(a "Preferred Stock Designation") pursuant to the Delaware General
Corporation Law ("DGCL"), to fix or alter from time to time the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions of any wholly unissued series of
Preferred Stock, and to establish from time to time the number of shares
constituting any such series or any of them; and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be decreased in accordance
with the foregoing sentence, the shares constituting such decrease shall
resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
<PAGE>
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed exclusively
by one or more resolutions adopted by the Board of Directors.
2. BOARD OF DIRECTORS
a. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"1933 Act"), covering the offer and sale of Common Stock to the public (the
"Initial Public Offering"), the directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors shall
be assigned to each class in accordance with a resolution or resolutions
adopted by the Board of Directors. At the first annual meeting of
stockholders following the closing of the Initial Public Offering, the term
of office of the Class I directors shall expire and Class I directors shall
be elected for a full term of three years. At the second annual meeting of
stockholders following the Initial Public Offering, the term of office of the
Class II directors shall expire and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders
following the Initial Public Offering, the term of office of the Class III
directors shall expire and Class III directors shall be elected for a full
term of three years. At each succeeding annual meeting of stockholders,
directors shall be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting. During such
time or times that the corporation is subject to Section 2115(b) of the
California General Corporation Law ("CGCL"), this Section A.2.a of this
Article V shall become effective and be applicable only when the corporation
is a "listed" corporation within the meaning of Section 301.5 of the CGCL.
b. In the event that the corporation is unable to have a
classified board under applicable law, Section 301.5 of the CGCL, Section A.
2. a. of this Article V shall not apply and all directors shall be elected at
each annual meeting of stockholders to hold office until the next annual
meeting.
c. No stockholder entitled to vote at an election for
directors may cumulate votes to which such stockholder is entitled, unless,
at the time of such election, the corporation (i) is subject to Section
2115(b) of the CGCL AND (ii) is not or ceases to be a "listed" corporation
under Section 301.5 of the CGCL. During this time, every stockholder entitled
to vote at an election for directors may cumulate such stockholder's votes
and give one candidate a number of votes equal to the number of directors to
be elected multiplied by the number of votes
<PAGE>
to which such stockholder's shares are otherwise entitled, or distribute the
stockholder's votes on the same principle among as many candidates as such
stockholder thinks fit. No stockholder, however, shall be entitled to so
cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any
stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. Under cumulative voting, the candidates receiving the highest
number of votes, up to the number of directors to be elected, are elected.
Notwithstanding the foregoing provisions of this section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
3. REMOVAL OF DIRECTORS
a. During such time or times that the corporation is subject
to Section 2115(b) of the CGCL, the Board of Directors or any individual
director may be removed from office at any time without cause by the
affirmative vote of the holders of at least a majority of the outstanding
shares entitled to vote on such removal; provided, however, that unless the
entire Board is removed, no individual director may be removed when the votes
cast against such director's removal, or not consenting in writing to such
removal, would be sufficient to elect that director if voted cumulatively at
an election which the same total number of votes were cast (or, if such
action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of such director's
most recent election were then being elected.
b. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section A. 3. a. above shall no longer apply and removal shall be as provided
in Section 141(k) of the DGCL.
4. VACANCIES
a. Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of directors,
shall, unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by the stockholders,
except as otherwise provided by law, be filled only by the affirmative vote
of a majority of the directors then in office, even though less than a quorum
of the Board of Directors, and not by the stockholders. Any director elected
in accordance with the preceding sentence shall hold office for the remainder
of the full term of the director for which the vacancy was created or
occurred and until such director's successor shall have been elected and
qualified.
b. If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a
majority of the whole board
<PAGE>
(as constituted immediately prior to any such increase), the Delaware Court
of Chancery may, upon application of any stockholder or stockholders holding
at least ten percent (10%) of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
c. At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy by the
directors then in office who have been elected by stockholders shall
constitute less than a majority of the directors then in office, then
(i) Any holder or holders of an aggregate of five percent
(5%) or more of the total number of shares at the time outstanding having the
right to vote for those directors may call a special meeting of stockholders;
or
(ii) The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in
accordance with Section 305(c) of the CGCL. The term of office of any
director shall terminate upon that election of a successor.
B.
1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all
of the then-outstanding shares of the voting stock of the corporation
entitled to vote. The Board of Directors shall also have the power to adopt,
amend, or repeal Bylaws.
2. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance
with the Bylaws.
4. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in
the Bylaws of the corporation.
<PAGE>
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the CGCL) for breach of duty to the corporation
and its shareholders through bylaw provisions or through agreements with the
agents, or through shareholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at
any time or times the corporation is subject to Section 2115(b) to the limits
on such excess indemnification set forth in Section 204 of the CGCL.
C. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time
of the alleged occurrence of any act or omission to act giving rise to
liability or indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, except as provided in paragraph B. of
this Article VII, and all rights conferred upon the stockholders herein are
granted subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of
any particular class or series of the Voting Stock required by law, this
Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
voting stock, voting together as a single class, shall be required to alter,
amend or repeal Articles V, VI, and VII.
<PAGE>
EXHIBIT 3.5
BYLAWS
OF
OMNICELL TECHNOLOGIES, INC.
ARTICLE 1
CORPORATE OFFICES
SECTION 1.1 PRINCIPAL OFFICE The board of directors shall fix the
location of the principal executive office of the corporation at any place
within or outside the State of California. If the principal executive office
is located outside such state and the corporation has one or more business
offices in such state, then the board of directors shall fix and designate a
principal business office in the State of California.
SECTION 1.2 OTHER OFFICES. The board of directors may at any time
establish branch or subordinate offices at any place or places where the
corporation is qualified to do business.
ARTICLE 2
MEETINGS OF SHAREHOLDERS
SECTION 2.1 PLACE OF MEETINGS. Meetings of shareholders shall be
held at any place within or outside the State of California designated by the
board of directors. In the absence of any such designation, shareholders'
meetings shall be held at the principal executive office of the corporation.
SECTION 2.2 ANNUAL MEETING. The annual meeting of shareholders shall
be held each year on a date and at a time designated by the board of
directors. In the absence of such designation, the annual meeting of
shareholders shall be held on the second Tuesday of May in each year at 10:00
a.m. However, if such day falls on a legal holiday, then the meeting shall be
held at the same time and place on the next succeeding full business day. At
the meeting, directors shall be elected, and any other proper business may be
transacted.
SECTION 2.3 SPECIAL MEETING. A special meeting of the shareholders
may be called at any time by the board of directors, or by the chairman of
the board, or by the
1.
<PAGE>
president, or by one or more shareholders holding shares in the aggregate
entitled to cast not less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than
the board of directors or the president or the chairman of the board, then
the request shall be in writing, specifying the time of such meeting and the
general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled
to vote, in accordance with the provisions of Sections 2.4 and 2.5 of these
bylaws, that a meeting will be held at the time requested by the person or
persons calling the meeting, so long as that time is not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after receipt of
the request, then the person or persons requesting the meeting may give the
notice. Nothing contained in this paragraph of this Section 2.3 shall be
construed as limiting, fixing or affecting the time when a meeting of
shareholders called by action of the board of directors may be held.
SECTION 2.4 NOTICE OF SHAREHOLDERS' MEETINGS. All notices of
meetings of shareholders shall be sent or otherwise given in accordance with
Section 2.5 of these bylaws not less than ten (10) (or, if sent by
third-class mail pursuant to Section 2.5 of these bylaws, thirty (30)) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii)
in the case of the annual meeting, those matters which the board of
directors, at the time of giving the notice, intends to present for action by
the shareholders (but subject to the provisions of the next paragraph of this
Section 2.4 , any proper matter may be presented at the meeting for such
action). The notice of any meeting at which directors are to be elected shall
include the name of any nominee or nominees who, at the time of the notice,
the board intends to present for election.
If action is proposed to be taken at any meeting for approval of (i)
a contract or transaction in which a director has a direct or indirect
financial interest, pursuant to Section 310 of the Corporations Code of
California (the "Code"), (ii) an amendment of the articles of incorporation,
pursuant to Section 902 of the Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of the Code, (iv) a voluntary
dissolution of the corporation, pursuant to Section 1900 of the Code, or (v)
a distribution in dissolution other than in accordance with the rights of
outstanding preferred shares, pursuant to Section 2007 of the Code, then the
notice shall also state the general nature of that proposal.
SECTION 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Written
notice of any meeting of shareholders shall be given either (i) personally or
(ii) by first-class mail or
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(iii) by third-class mail but only if the corporation has outstanding shares
held of record by five hundred (500) or more persons (determined as provided
in Section 605 of the Code) on the record date for the shareholders' meeting,
or (iv) by telegraphic or other written communication. Notices not personally
delivered shall be sent charges prepaid and shall be addressed to the
shareholder at the address of that shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice. If no such address appears on the corporation's books or is given,
notice shall be deemed to have been given if sent to that shareholder by mail
or telegraphic or other written communication to the corporation's principal
executive office, or if published at least once in a newspaper of general
circulation in the county where that office is located. Notice shall be
deemed to have been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the
shareholder at that address, then all future notices or reports shall be
deemed to have been duly given without further mailing if the same shall be
available to the shareholder on written demand of the shareholder at the
principal executive office of the corporation for a period of one (1) year
from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of
any shareholders' meeting, executed by the secretary, assistant secretary or
any transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
SECTION 2.6 QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote thereat constitutes a
quorum for the transaction of business at all meetings of shareholders. The
shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the
shares required to constitute a quorum.
SECTION 2.7 ADJOURNED MEETING; NOTICE. Any shareholders' meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of the majority of the shares represented at that
meeting, either in person or by proxy. In the absence of a quorum, no other
business may be transacted at that meeting except as provided in Section 2.6
of these bylaws.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date
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for the adjourned meeting is fixed or if the adjournment is for more than
forty-five (45) days from the date set for the original meeting, then notice
of the adjourned meeting shall be given. Notice of any such adjourned meeting
shall be given to each shareholder of record entitled to vote at the
adjourned meeting in accordance with the provisions of Sections 2.4 and 2.5
and of these bylaws. At any adjourned meeting the corporation may transact
any business which might have been transacted at the original meeting.
SECTION 2.8 VOTING. The shareholders entitled to vote at any meeting
of shareholders shall be determined in accordance with the provisions of
Section 2.11 of these bylaws, subject to the provisions of Sections 702
through 704 of the Code (relating to voting shares held by a fiduciary, in
the name of a corporation or in joint ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as
may be otherwise provided in the articles of incorporation, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote of the shareholders. Any shareholder entitled to vote on
any matter may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or, except when the matter is the election
of directors, may vote them against the proposal; but, if the shareholder
fails to specify the number of shares which the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares which the shareholder is
entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum)
shall be the act of the shareholders, unless the vote of a greater number or
a vote by classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate
a number of votes greater than the number of votes which such shareholder
normally is entitled to cast) if the candidates' names have been placed in
nomination prior to commencement of the voting and the shareholder has given
notice prior to commencement of the voting of the shareholder's intention to
cumulate votes. If any shareholder has given such a notice, then every
shareholder entitled to vote may cumulate votes for candidates in nomination
either (i) by giving one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which that
shareholder's shares are normally entitled or (ii) by distributing the
shareholder's votes on the same principle among any or all of the
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candidates, as the shareholder thinks fit. The candidates receiving the
highest number of affirmative votes, up to the number of directors to be
elected, shall be elected; votes against any candidate and votes withheld
shall have no legal effect.
SECTION 2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each person entitled to vote, who was not
present in person or by proxy, signs a written waiver of notice or a consent
to the holding of the meeting or an approval of the minutes thereof. The
waiver of notice or consent or approval need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section
2.4 of these bylaws, the waiver of notice or consent or approval shall state
the general nature of the proposal. All such waivers, consents, and approvals
shall be filed with the corporate records or made a part of the minutes of
the meeting.
Attendance by a person at a meeting shall also constitute a waiver
of notice of and presence at that meeting, except when the person objects at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Attendance at a meeting is not a
waiver of any right to object to the consideration of matters required by the
Code to be included in the notice of the meeting but not so included, if that
objection is expressly made at the meeting.
SECTION 2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take that action at a meeting
at which all shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be
effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors. However, a director may be elected at any
time to fill any vacancy on the board of directors, provided that it was not
created by removal of a director and that it has not been filled by the
directors, by the written consent of the holders of a majority of the
outstanding shares entitled to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or
a transferee of the shares, or
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a personal representative of the shareholder, or their respective proxy
holders, may revoke the consent by a writing received by the secretary of the
corporation before written consents of the number of shares required to
authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt
notice of the corporate action approved by the shareholders without a
meeting. Such notice shall be given to those shareholders entitled to vote
who have not consented in writing and shall be given in the manner specified
in Section of these bylaws. In the case of approval of (i) a contract or
transaction in which a director has a direct or indirect financial interest,
pursuant to Section 310 of the Code, (ii) indemnification of a corporate
"agent," pursuant to Section 317 of the Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of the Code, and (iv) a distribution in
dissolution other than in accordance with the rights of outstanding preferred
shares, pursuant to Section 2007 of the Code, the notice shall be given at
least ten (10) days before the consummation of any action authorized by that
approval.
SECTION 2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of
any meeting or to vote thereat or entitled to give consent to corporate
action without a meeting, the board of directors may fix, in advance, a
record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting nor more than sixty (60) days
before any such action without a meeting, and in such event only shareholders
of record on the date so fixed are entitled to notice and to vote or to give
consents, as the case may be, notwithstanding any transfer of any shares on
the books of the corporation after the record date, except as otherwise
provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held; and
(b) the record date for determining shareholders entitled
to give consent to corporate action in writing without a meeting, (i) when no
prior action by the board has been taken, shall be the day on which the first
written consent is given, or (ii) when prior action by the board has been
taken, shall be at the close of business on the day on which the board adopts
the resolution relating to that action, or the sixtieth (60th) day before the
date of such other action, whichever is later.
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The record date for any other purpose shall be as provided in
Article 8 of these bylaws.
SECTION 2.12 PROXIES. Every person entitled to vote for directors,
or on any other matter, shall have the right to do so either in person or by
one or more agents authorized by a written proxy signed by the person and
filed with the secretary of the corporation. A proxy shall be deemed signed
if the shareholder's name is placed on the proxy whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i) the
person who executed the proxy revokes it prior to the time of voting by
delivering a writing to the corporation stating that the proxy is revoked or
by executing a subsequent proxy and presenting it to the meeting or by voting
in person at the meeting, or (ii) written notice of the death or incapacity
of the maker of that proxy is received by the corporation before the vote
pursuant to that proxy is counted; provided, however, that no proxy shall be
valid after the expiration of eleven (11) months from the date of the proxy,
unless otherwise provided in the proxy. The dates contained on the forms of
proxy presumptively determine the order of execution, regardless of the
postmark dates on the envelopes in which they are mailed. The revocability of
a proxy that states on its face that it is irrevocable shall be governed by
the provisions of Sections 705(e) and 705(f) of the Code.
SECTION 2.13 INSPECTORS OF ELECTION. Before any meeting of
shareholders, the board of directors may appoint an inspector or inspectors
of election to act at the meeting or its adjournment. If no inspector of
election is so appointed, then the chairman of the meeting may, and on the
request of any shareholder or a shareholder's proxy shall, appoint an
inspector or inspectors of election to act at the meeting. The number of
inspectors shall be either one (1) or three (3). If inspectors are appointed
at a meeting pursuant to the request of one (1) or more shareholders or
proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (1) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, then the chairman of the meeting may, and upon the request of
any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the
voting power of each, the number of shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
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(c) hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE 3
DIRECTORS
SECTION 3.1 POWERS. Subject to the provisions of the Code and any
limitations in the articles of incorporation and these bylaws relating to
action required to be approved by the shareholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
SECTION 3.2 NUMBER OF DIRECTORS. The number of directors of the
corporation shall be not less than five (5) nor more than nine (9). The exact
number of directors shall be eight (8) until changed, within the limits
specified above, by a resolution amending this Section 3.2, duly adopted by
the board of directors or by the shareholders. The indefinite number of
directors may be changed, or a definite number may be fixed without provision
for an indefinite number, by a duly adopted amendment to the articles of
incorporation or by an amendment to this bylaw duly adopted by the vote or
written consent of holders of a majority of the outstanding shares entitled
to vote; provided, however, that an amendment reducing the fixed number or
the minimum number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares
not consenting in the case of an action by written consent, are equal to more
than sixteen and two-thirds percent (16-2/3%) of the outstanding shares
entitled to vote thereon. No amendment may change the stated maximum number
of authorized directors to a number greater than two (2) times the stated
minimum number of directors minus one (1).
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
SECTION 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors
shall be elected at each annual meeting of shareholders to hold office until
the next annual meeting. Each director, including a director elected to fill
a vacancy, shall hold office until the
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expiration of the term for which elected and until a successor has been
elected and qualified.
SECTION 3.4 RESIGNATION AND VACANCIES. Any director may resign
effective on giving written notice to the chairman of the board, the
president, the secretary or the board of directors, unless the notice
specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of
directors may elect a successor to take office when the resignation becomes
effective.
Vacancies in the board of directors may be filled by a majority of
the remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote
or written consent of the shareholders or by court order may be filled only
by the affirmative vote of a majority of the shares represented and voting at
a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute a majority of the required quorum), or by the
unanimous written consent of all shares entitled to vote thereon. Each
director so elected shall hold office until the next annual meeting of the
shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by an order of court or
convicted of a felony, (iii) if the authorized number of directors is
increased, or (iv) if the shareholders fail, at any meeting of shareholders
at which any director or directors are elected, to elect the number of
directors to be elected at that meeting.
The shareholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such
election other than to fill a vacancy created by removal, if by written
consent, shall require the consent of the holders of a majority of the
outstanding shares entitled to vote thereon.
SECTION 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. Regular
meetings of the board of directors may be held at any place within or outside
the State of California that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of California that has been designated in the notice of the meeting or,
if not stated in the notice or if there is no notice, at the principal
executive office of the corporation.
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Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all directors participating in
the meeting can hear one another; and all such directors shall be deemed to
be present in person at the meeting.
SECTION 3.6 REGULAR MEETINGS. Regular meetings of the board of
directors may be held without notice if the times of such meetings are fixed
by the board of directors.
SECTION 3.7 SPECIAL MEETINGS; NOTICE. Special meetings of the board
of directors for any purpose or purposes may be called at any time by the
chairman of the board, the president, any vice president, the secretary or
any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4)
days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone or telegram, it shall be delivered
personally or by telephone or to the telegraph company at least forty-eight
(48) hours before the time of the holding of the meeting. Any oral notice
given personally or by telephone may be communicated either to the director
or to a person at the office of the director who the person giving the notice
has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the
meeting is to be held at the principal executive office of the corporation.
SECTION 3.8 QUORUM. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to adjourn
as provided in Section 3.10 of these bylaws. Every act or decision done or
made by a majority of the directors present at a duly held meeting at which a
quorum is present shall be regarded as the act of the board of directors,
subject to the provisions of Section 310 of the Code (as to approval of
contracts or transactions in which a director has a direct or indirect
material financial interest), Section 311 of the Code (as to appointment of
committees), Section 317(e) of the Code (as to indemnification of directors),
the articles of incorporation, and other applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
SECTION 3.9 WAIVER OF NOTICE. Notice of a meeting need not be given to
any director (i) who signs a waiver of notice or a consent to holding the
meeting or an approval of the minutes thereof, whether before or after the
meeting, or (ii) who attends the meeting without protesting, prior thereto or at
its commencement, the lack of notice to such
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directors. All such waivers, consents, and approvals shall be filed with the
corporate records or made part of the minutes of the meeting. A waiver of
notice need not specify the purpose of any regular or special meeting of the
board of directors.
SECTION 3.10 ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to another time
and place.
SECTION 3.11 NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given unless the meeting is
adjourned for more than twenty-four (24) hours. If the meeting is adjourned
for more than twenty-four (24) hours, then notice of the time and place of
the adjourned meeting shall be given before the adjourned meeting takes
place, in the manner specified in Section 3.7 of these bylaws, to the
directors who were not present at the time of the adjournment.
SECTION 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action required or permitted to be taken by the board of directors may be
taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board
of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
SECTION 3.13 FEES AND COMPENSATION OF DIRECTORS. Directors and
members of committees may receive such compensation, if any, for their
services and such reimbursement of expenses as may be fixed or determined by
resolution of the board of directors. This Section 3.13 shall not be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving
compensation for those services.
SECTION 3.14 APPROVAL OF LOANS TO OFFICERS.** The corporation may,
upon the approval of the board of directors alone, make loans of money or
property to, or guarantee the obligations of, any officer of the corporation
or its parent or subsidiary, whether or not a director, or adopt an employee
benefit plan or plans authorizing such loans or guaranties provided that (i)
the board of directors determines that such a loan or guaranty or plan may
reasonably be expected to benefit the corporation, (ii) the corporation has
outstanding shares held of record by 100 or more persons (determined as
provided in Section 605 of the Code) on the date of approval by the board of
directors, and (iii) the approval of the board of directors is by a vote
sufficient without counting the vote of any interested director or directors.
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** This section is effective only if it has been approved by the shareholders
in accordance with Sections 315(b) and 152 of the Code.
ARTICLE 4
COMMITTEES
SECTION 4.1 COMMITTEES OF DIRECTORS. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one (1) or more committees, each consisting of two or more
directors, to serve at the pleasure of the board. The board may designate one
(1) or more directors as alternate members of any committee, who may replace
any absent member at any meeting of the committee. The appointment of members
or alternate members of a committee requires the vote of a majority of the
authorized number of directors. Any committee, to the extent provided in the
resolution of the board, shall have all the authority of the board, except
with respect to:
(a) the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or
in any committee;
(c) the fixing of compensation of the directors for serving
on the board or any committee;
(d) the amendment or repeal of these bylaws or the adoption
of new bylaws;
(e) the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range determined
by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of such committees.
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SECTION 4.2 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions
of committees shall be governed by, and held and taken in accordance with,
the provisions of Article 3 of these bylaws, Section 3.5 (place of meetings),
Section 3.6 (regular meetings), Section 3.7 (special meetings and notice),
Section 3.8 (quorum), Section 3.9 (waiver of notice), Section 3.10
(adjournment), Section 3.11 (notice of adjournment), and Section 3.12 (action
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular
meetings of committees may be determined either by resolution of the board of
directors or by resolution of the committee, that special meetings of
committees may also be called by resolution of the board of directors, and
that notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE 5
OFFICERS
SECTION 5.1 OFFICERS. The officers of the corporation shall be a
president, a secretary, and a chief financial officer. The corporation may
also have, at the discretion of the board of directors, a chairman of the
board, one or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section of these bylaws. Any number of
offices may be held by the same person.
SECTION 5.2 ELECTION OF OFFICERS. The officers of the corporation,
except such officers as may be appointed in accordance with the provisions of
Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board,
subject to the rights, if any, of an officer under any contract of employment.
SECTION 5.3 SUBORDINATE OFFICERS. The board of directors may
appoint, or may empower the president to appoint, such other officers as the
business of the corporation may require, each of whom shall hold office for
such period, have such authority, and perform such duties as are provided in
these bylaws or as the board of directors may from time to time determine.
SECTION 5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the
rights, if any, of an officer under any contract of employment, any officer
may be removed, either with or without cause, by the board of directors at
any regular or special meeting of the board or, except in case of an officer
chosen by the board of directors, by any officer upon whom such power of
removal may be conferred by the board of directors.
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Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall
not be necessary too make it effective. Any resignation is without prejudice
to the rights, if any, of the corporation under any contract to which the
officer is a party.
SECTION 5.5 VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be
filled in the manner prescribed in these bylaws for regular appointments to
that office.
SECTION 5.6 CHAIRMAN OF THE BOARD. The chairman of the board, if
such an officer be elected, shall, if present, preside at meetings of the
board of directors and exercise and perform such other powers and duties as
may from time to time be assigned to him by the board of directors or as may
be prescribed by these bylaws. If there is no president, then the chairman of
the board shall also be the chief executive officer of the corporation and
shall have the powers and duties prescribed in Section 5.7 of these bylaws.
SECTION 5.7 PRESIDENT. Subject to such supervisory powers, if any,
as may be given by the board of directors to the chairman of the board, if
there be such an officer, the president shall be the chief executive officer
of the corporation and shall, subject to the control of the board of
directors, have general supervision, direction, and control of the business
and the officers of the corporation. He shall preside at all meetings of the
shareholders and, in the absence or nonexistence of a chairman of the board,
at all meetings of the board of directors. He shall have the general powers
and duties of management usually vested in the office of president of a
corporation ration, and shall have such other powers and duties as may be
prescribed by the board of directors or these bylaws.
SECTION 5.8 VICE PRESIDENTS. In the absence or disability of the
president, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these bylaws, the president or the chairman of the board.
SECTION 5.9 SECRETARY. The secretary shall keep or cause to be kept,
at the principal executive office of the corporation or such other place as
the board of directors may direct, a book of minutes of all meetings and
actions of directors, committees of directors and shareholders. The minutes
shall show the time and place of each meeting, whether regular or special
(and, if special, how authorized and the notice given), the names
14.
<PAGE>
of those present at directors' meetings or committee meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all shareholders and their addresses, the number and classes of shares
held by each, the number and date of certificates evidencing such shares, and
the number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the board of directors required to be
given by law or by these bylaws. He shall keep the seal of the corporation,
if one be adopted, in safe custody and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or
by these bylaws.
SECTION 5.10 CHIEF FINANCIAL OFFICER. The chief financial officer
shall keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of accounts of the properties and business
transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained
earnings, and shares. The books of account shall at all reasonable times be
open to inspection by any director.
The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all of his transactions as chief financial officer and of
the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors
or these bylaws.
ARTICLE 6
INDEMNIFICATION OF DIRECTORS. OFFICERS. EMPLOYEES, AND OTHER AGENTS
SECTION 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
corporation shall, to the maximum extent and in the manner permitted by the
Code, indemnify each of its directors and officers against expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with any
proceeding (as defined in Section 317(a) of the Code), arising by reason of
the fact that such person is or was an agent of the corporation. For purposes
of
15.
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this Article 6, a "director" or "officer" of the corporation includes any
person (i) who is or was a director or officer of the corporation, (ii) who
is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was
a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
SECTION 6.2 INDEMNIFICATION OF OTHERS. The corporation shall have
the power, to the extent and in the manner permitted by the Code, to
indemnify each of its employees and agents (other than directors and
officers) against expenses (as defined in Section 317(a) of the Code),
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of
the Code), arising by reason of the fact that such person is or was an agent
of the corporation. For purposes of this Article 6, an "employee" or "agent"
of the corporation (other than a director or officer) includes any person (i)
who is or was an employee or agent of the corporation, (ii) who is or was
serving at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (iii)
who was an employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of
such predecessor corporation.
SECTION 6.3 PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in
defending any civil or criminal action or proceeding for which
indemnification is required pursuant to Section 6.1 or for which
indemnification is permitted pursuant to Section 6.2 following authorization
thereof by the Board of Directors shall be paid by the corporation in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled
to be indemnified as authorized in this Article 6.
SECTION 6.4 INDEMNITY NOT EXCLUSIVE. The indemnification provided by
this Article 6 shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in an official capacity and as to action in another capacity while
holding such office, to the extent that such additional rights to
indemnification are authorized in the Articles of Incorporation.
SECTION 6.5 INSURANCE INDEMNIFICATION. The corporation shall have
the power to purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation against any
liability asserted against or incurred by such person in such capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article 6.
16.
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SECTION 6.6 CONFLICTS. No indemnification or advance shall be made
under this Article 6, except where such indemnification or advance is
mandated by law or the order, judgment or decree of any court of competent
jurisdiction, in any circumstance where it appears:
(a) That it would be inconsistent with a provision of
the Articles of Incorporation, these bylaws, a resolution of the shareholders
or an agreement in effect at the time of the accrual of the alleged cause of
the action asserted in the proceeding in which the expenses were incurred or
other amounts were paid, which prohibits or otherwise limits indemnification;
or
(b) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
ARTICLE 7
RECORDS AND REPORTS
SECTION 7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER. The
corporation shall keep either at its principal executive office or at the
office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its
shareholders listing the names and addresses of all shareholders and the
number and class of shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and
has filed a Schedule 14B with the Securities and Exchange Commission relating
to the election of directors, may (i) inspect and copy the records of
shareholders' names, addresses, and shareholdings during usual business hours
on five (5) days' prior written demand on the corporation, (ii) obtain from
the transfer agent of the corporation, on written demand and on the tender of
such transfer agent's usual charges for such list, a list of the names and
addresses of the shareholders who are entitled to vote for the election of
directors, and their shareholdings, as of the most recent record date for
which that list has been compiled or as of a date specified by the
shareholder after the date of demand. Such list shall be made available to
any such shareholder by the transfer agent on or before the later of five (5)
days after the demand is received or five (5) days after the date specified
in the demand as the date as of which the list is to be compiled.
17.
<PAGE>
The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.
Any inspection and copying under this Section 7.1 may be made in
person or by an agent or attorney of the shareholder or holder of a voting
trust certificate making the demand.
SECTION 7.2 MAINTENANCE AND INSPECTION OF BYLAWS. The corporation
shall keep at its principal executive office or, if its principal executive
office is not in the State of California, at its principal business office in
California the original or a copy of these bylaws as amended to date, which
bylaws shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of
these bylaws as amended to date.
SECTION 7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees
of the board of directors shall be kept at such place or places as are
designated by the board of directors or, in absence of such designation, at
the principal executive office of the corporation. The minutes shall be kept
in written form, and the accounting books and records shall be kept either in
written form or in any other form capable of being converted into written
form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as
the holder of a voting trust certificate. The inspection may be made in
person or by an agent or attorney and shall include the right to copy and
make extracts. Such rights of inspection shall extend to the records of each
subsidiary corporation of the corporation.
SECTION 7.4 INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind as well as the physical properties of the corporation
and each of its subsidiary corporations. Such inspection by a director may be
made in person or by an agent or attorney. The right of inspection includes
the right to copy and make extracts of documents.
SECTION 7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER. The board of
directors shall cause an annual report to be sent to the shareholders not
later than one hundred twenty
18.
<PAGE>
(120) days after the close of the fiscal year adopted by the corporation.
Such report shall be sent at least fifteen (15) days (or, if sent by
third-class mail, thirty-five (35) days) before the annual meeting of
shareholders to be held during the next fiscal year and in the manner
specified in Section of these bylaws for giving notice to shareholders of the
corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit
from the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so
long as the shares of the corporation are held by fewer than one hundred
(100) holders of record.
SECTION 7.6 FINANCIAL STATEMENTS. If no annual report for the fiscal
year has been sent to shareholders, then the corporation shall, upon the
written request of any shareholder made more than one hundred twenty (120)
days after the close of such fiscal year, deliver or mail to the person
making the request, within thirty (30) days thereafter, a copy of a balance
sheet as of the end of such fiscal year and an income statement and statement
of changes in financial position for such fiscal year.
If a shareholder or shareholders holding at least five percent (5%)
of the outstanding shares of any class of stock of the corporation makes a
written request to the corporation for an income statement of the corporation
for the three-month, six-month or nine-month period of the then current
fiscal year ended more than thirty (30) days before the date of the request,
and for a balance sheet of the corporation as of the end of that period, then
the chief financial officer shall cause that statement to be prepared, if not
already prepared, and shall deliver personally or mail that statement or
statements to the person making the request within thirty (30) days after the
receipt of the request. If the corporation has not sent to the shareholders
its annual report for the last fiscal year, the statements referred to in the
first paragraph of this Section 7.6 shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared
without audit from the books and records of the corporation.
SECTION 7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
chairman of the board, the president, any vice president, the chief financial
officer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise
19.
<PAGE>
on behalf of this corporation all rights incident to any and all shares of
any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such
person directly or by any other person authorized to do so by proxy or power
of attorney duly executed by such person having the authority.
ARTICLE 8
GENERAL MATTERS
SECTION 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a
meeting), the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days before any such action. In that case,
only shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except
as otherwise provided in the Code.
If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable
resolution or the sixtieth (60th) day before the date of that action,
whichever is later.
SECTION 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. From time to
time, the board of directors shall determine by resolution which person or
persons may sign or endorse all checks, drafts, other orders for payment of
money, notes or other evidences of indebtedness that are issued in the name
of or payable to the corporation, and only the persons so authorized shall
sign or endorse those instruments.
SECTION 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. The
board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the
agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
SECTION 8.4 CERTIFICATES FOR SHARES. A certificate or certificates
for shares of the corporation shall be issued to each shareholder when any of
such shares are fully paid. The
20.
<PAGE>
board of directors may authorize the issuance of certificates for shares
partly paid provided that these certificates shall state the total amount of
the consideration to be paid for them and the amount actually paid. All
certificates shall be signed in the name of the corporation by the chairman
of the board or the vice chairman of the board or the president or a vice
president and by the chief financial officer or an assistant treasurer or the
secretary or an assistant secretary, certifying the number of shares and the
class or series of shares owned by the shareholder. Any or all of the
signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it
may be issued by the corporation with the same effect as if that person were
an officer, transfer agent or registrar at the date of issue.
SECTION 8.5 LOST CERTIFICATES. Except as provided in this Section
8.5, no new certificates for shares shall be issued to replace a previously
issued certificate unless the latter is surrendered to the corporation and
canceled at the same time. The board of directors may, in case any share
certificate or certificate for any other security is lost, stolen or
destroyed, authorize the issuance of replacement certificates on such terms
and conditions as the board may require; the board may require
indemnification of the corporation secured by a bond or other adequate
security sufficient to protect the corporation against any claim that may be
made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
SECTION 8.6 CONSTRUCTION; DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in
the Code shall govern the construction of these bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both a
corporation and a natural person.
21.
<PAGE>
ARTICLE 9
AMENDMENTS
SECTION 9.1 AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the articles of incorporation of the corporation set forth
the number of authorized directors of the corporation, then the authorized
number of directors may be changed only by an amendment of the articles of
incorporation.
SECTION 9.2 AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section 9.1 of these bylaws, bylaws, other than a
bylaw or an amendment of a bylaw changing the authorized number of directors
(except to fix the authorized number of directors pursuant to a bylaw
providing for a variable number of directors), may be adopted, amended or
repealed by the board of directors.
22.
<PAGE>
CERTIFICATE OF ADOPTION OF BYLAWS
OF
OMNICELL TECHNOLOGIES, INC.
CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of Omnicell Technologies, Inc. and that the
foregoing Bylaws, comprising twenty-five (25) pages, were submitted to the
shareholders by written consent dated May 10, 1993, and recorded in the
minutes thereof and were ratified by the vote of shareholders entitled to
exercise the majority of the voting power of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this _____ day of _________________1993.
------------------------------------------------
Michael J. O'Donnell, Secretary
<PAGE>
BYLAWS
OF
OMNICELL TECHNOLOGIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1. CORPORATE OFFICES..........................................................................1
Section 1.1 Principal Office......................................................................1
Section 1.2 Other Offices.........................................................................1
ARTICLE 2. MEETINGS OF SHAREHOLDERS...................................................................1
Section 2.1 Place of Meetings.....................................................................1
Section 2.2 Annual Meeting........................................................................1
Section 2.3 Special Meeting.......................................................................1
Section 2.4 Notice of Shareholders' Meetings......................................................2
Section 2.5 Manner of Giving Notice; Affidavit of Notice..........................................2
Section 2.6 Quorum................................................................................3
Section 2.7 Adjourned Meeting; Notice.............................................................3
Section 2.8 Voting................................................................................4
Section 2.9 Validation of Meetings; Waiver of Notice; Consent.....................................5
Section 2.10 Shareholder Action by Written Consent without a Meeting...............................5
Section 2.11 Record Date for Shareholder Notice; Voting; Giving Consents...........................6
Section 2.12 Proxies...............................................................................6
Section 2.13 Inspectors of Election................................................................7
ARTICLE 3. DIRECTORS..................................................................................8
Section 3.1 Powers................................................................................8
Section 3.2 Number of Directors...................................................................8
Section 3.3 Election and Term of Office of Directors..............................................8
Section 3.4 Resignation and Vacancies.............................................................8
Section 3.5 Place of Meetings; Meetings by Telephone..............................................9
Section 3.6 Regular Meetings......................................................................9
Section 3.7 Special Meetings; Notice.............................................................10
Section 3.8 Quorum...............................................................................10
Section 3.9 Waiver of Notice.....................................................................10
Section 3.10 Adjournment..........................................................................10
Section 3.11 Notice of Adjournment................................................................11
Section 3.12 Board Action by Written Consent without a Meeting....................................11
Section 3.13 Fees and Compensation of Directors...................................................11
Section 3.14 Approval of Loans to Officers.**.....................................................11
ARTICLE 4. COMMITTEES................................................................................12
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
Section 4.1 Committees of Directors..............................................................12
Section 4.2 Meetings And Action Of Committees....................................................12
ARTICLE 5. OFFICERS..................................................................................13
Section 5.1 Officers.............................................................................13
Section 5.2 Election of Officers.................................................................13
Section 5.3 Subordinate Officers.................................................................13
Section 5.4 Removal and Resignation of Officers..................................................13
Section 5.5 Vacancies in Offices.................................................................14
Section 5.6 Chairman of the Board................................................................14
Section 5.7 President............................................................................14
Section 5.8 Vice Presidents......................................................................14
Section 5.9 Secretary............................................................................14
Section 5.10 Chief Financial Officer..............................................................15
ARTICLE 6. INDEMNIFICATION OF DIRECTORS. OFFICERS. EMPLOYEES, AND OTHER AGENTS.....................15
Section 6.1 Indemnification of Directors and Officers............................................15
Section 6.2 Indemnification of Others............................................................16
Section 6.3 Payment of Expenses in Advance.......................................................16
Section 6.4 Indemnity Not Exclusive..............................................................16
Section 6.5 Insurance Indemnification............................................................16
Section 6.6 Conflicts............................................................................16
ARTICLE 7. RECORDS AND REPORTS.......................................................................17
Section 7.1 Maintenance and Inspection of Share Register.........................................17
Section 7.2 Maintenance and Inspection of Bylaws.................................................18
Section 7.3 Maintenance and Inspection of Other Corporate Records................................18
Section 7.4 Inspection by Directors..............................................................18
Section 7.5 Annual Report to Shareholders; Waiver................................................18
Section 7.6 Financial Statements.................................................................19
Section 7.7 Representation of Shares of Other Corporations.......................................19
ARTICLE 8. GENERAL MATTERS...........................................................................20
Section 8.1 Record Date for Purposes Other Than Notice and Voting................................20
Section 8.2 Checks; Drafts; Evidences of Indebtedness............................................20
Section 8.3 Corporate Contracts and Instruments: How Executed....................................20
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
Section 8.4 Certificates for Shares..............................................................20
Section 8.5 Lost Certificates....................................................................21
Section 8.6 Construction; Definitions............................................................21
ARTICLE 9. AMENDMENTS................................................................................21
Section 9.1 Amendment by Shareholders............................................................21
Section 9.2 Amendment by Directors...............................................................21
</TABLE>
iii.
<PAGE>
EXHIBIT 3.6
BYLAWS
OF
OMNICELL MERGER CORPORATION
(A DELAWARE CORPORATION)
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I OFFICES.....................................................................................1
Section 1. Registered Office......................................................................1
Section 2. Other Offices..........................................................................1
ARTICLE II CORPORATE SEAL..............................................................................1
Section 3. Corporate Seal.........................................................................1
ARTICLE III STOCKHOLDERS' MEETINGS......................................................................1
Section 4. Place of Meetings......................................................................1
Section 5. Annual Meetings........................................................................1
Section 6. Special Meetings.......................................................................3
Section 7. Notice of Meetings.....................................................................4
Section 8. Quorum.................................................................................5
Section 9. Adjournment and Notice of Adjourned Meetings...........................................5
Section 10. Voting Rights..........................................................................5
Section 11. Joint Owners of Stock..................................................................6
Section 12. List of Stockholders...................................................................6
Section 13. Action without Meeting.................................................................6
Section 14. Organization...........................................................................7
ARTICLE IV DIRECTORS...................................................................................8
Section 15. Number and Term of Office..............................................................8
Section 16. Powers.................................................................................8
Section 17. Classes of Directors...................................................................8
Section 18. Vacancies..............................................................................9
Section 19. Resignation...........................................................................10
Section 20. Removal...............................................................................10
Section 21. Meetings..............................................................................10
Section 22. Quorum and Voting.....................................................................11
Section 23. Action without Meeting................................................................12
Section 24. Fees and Compensation.................................................................12
Section 25. Committees............................................................................12
Section 26. Organization..........................................................................13
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V OFFICERS...................................................................................13
Section 27. Officers Designated...................................................................13
Section 28. Tenure and Duties of Officers.........................................................14
Section 29. Delegation of Authority...............................................................15
Section 30. Resignations..........................................................................15
Section 31. Removal...............................................................................15
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION................................................................................15
Section 32. Execution of Corporate Instruments....................................................15
Section 33. Voting of Securities Owned by the Corporation........................................16
ARTICLE VII SHARES OF STOCK............................................................................16
Section 34. Form and Execution of Certificates....................................................16
Section 35. Lost Certificates.....................................................................17
Section 36. Transfers.............................................................................17
Section 37. Fixing Record Dates...................................................................17
Section 38. Registered Stockholders...............................................................18
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION........................................................18
Section 39. Execution of Other Securities.........................................................18
ARTICLE IX DIVIDENDS..................................................................................19
Section 40. Declaration of Dividends..............................................................19
Section 41. Dividend Reserve......................................................................19
ARTICLE X FISCAL YEAR................................................................................19
Section 42. Fiscal Year...........................................................................19
ARTICLE XI INDEMNIFICATION............................................................................19
Section 43. Indemnification of Directors, Executive Officers, Other Officers, Employees
and Other Agents......................................................................19
ARTICLE XII NOTICES....................................................................................23
Section 44. Notices...............................................................................23
ARTICLE XIII AMENDMENTS.................................................................................24
Section 45. Amendments............................................................................24
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE XIV LOANS TO OFFICERS..........................................................................24
Section 46. Loans to Officers.....................................................................24
</TABLE>
iii.
<PAGE>
BYLAWS
OF
OMNICELL MERGER CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington,
County of New Castle.
SECTION 2. OTHER OFFICES. The corporation shall also have and
maintain an office or principal place of business at such place as may be
fixed by the Board of Directors, and may also have offices at such other
places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a
die bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State
of Delaware, as may be designated from time to time by the Board of
Directors, or, if not so designated, then at the office of the corporation
required to be maintained pursuant to Section 2 hereof.
SECTION 5. ANNUAL MEETINGS.
(a) The annual meeting of the stockholders of the
corporation, for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such date and at
such time as may be designated from time to time by the Board of Directors.
Nominations of persons for election to the Board of Directors of the
corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders: (i) pursuant to the
corporation's notice of meeting of stockholders; (ii) by or at the
1.
<PAGE>
direction of the Board of Directors; or (iii) by any stockholder of the
corporation who was a stockholder of record at the time of giving of notice
provided for in the following paragraph, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in Section 5.
(b) At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of Section 5(a) of
these Bylaws, (i) the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation, (ii) such other business must be
a proper matter for stockholder action under the Delaware General Corporation
Law ("DGCL"), (iii) if the stockholder, or the beneficial owner on whose
behalf any such proposal or nomination is made, has provided the corporation
with a Solicitation Notice (as defined in this Section 5(b)), such
stockholder or beneficial owner must, in the case of a proposal, have
delivered a proxy statement and form of proxy to holders of at least the
percentage of the corporation's voting shares required under applicable law
to carry any such proposal, or, in the case of a nomination or nominations,
have delivered a proxy statement and form of proxy to holders of a percentage
of the corporation's voting shares reasonably believed by such stockholder or
beneficial owner to be sufficient to elect the nominee or nominees proposed
to be nominated by such stockholder, and must, in either case, have included
in such materials the Solicitation Notice, and (iv) if no Solicitation Notice
relating thereto has been timely provided pursuant to this section, the
stockholder or beneficial owner proposing such business or nomination must
not have solicited a number of proxies sufficient to have required the
delivery of such a Solicitation Notice under this Section 5. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on
the ninetieth (90th) day nor earlier than the close of business on the one
hundred twentieth (120th) day prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of
the annual meeting is advanced more than thirty (30) days prior to or delayed
by more than thirty (30) days after the anniversary of the preceding year's
annual meeting, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the one hundred twentieth (120th)
day prior to such annual meeting and not later than the close of business on
the later of the ninetieth (90th) day prior to such annual meeting or the
tenth (10th) day following the day on which public announcement of the date
of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving
of a stockholder's notice as described above. Such stockholder's notice shall
set forth: (A) as to each person whom the stockholder proposed to nominate
for election or reelection as a director all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "1934 Act") and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (B) as to any other business that
the stockholder proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal
is made (i) the name and address of such stockholder, as they appear on the
corporation's books,
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and of such beneficial owner, (ii) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder
and such beneficial owner, and (iii) whether either such stockholder or
beneficial owner intends to deliver a proxy statement and form of proxy to
holders of, in the case of the proposal, at least the percentage of the
corporation's voting shares required under applicable law to carry the
proposal or, in the case of a nomination or nominations, a sufficient number
of holders of the corporation's voting shares to elect such nominee or
nominees (an affirmative statement of such intent, a "Solicitation Notice").
(c) Notwithstanding anything in the second sentence of
Section 5(b) of these Bylaws to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by
the corporation at least one hundred (100) days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's notice
required by this Section 5 shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it
shall be delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
corporation.
(d) Only such persons who are nominated in accordance with
the procedures set forth in this Section 5 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 5. Except as otherwise provided by
law, the Chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the
meeting was made, or proposed, as the case may be, in accordance with the
procedures set forth in these Bylaws and, if any proposed nomination or
business is not in compliance with these Bylaws, to declare that such
defective proposal or nomination shall not be presented for stockholder
action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this
Section 5, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholders'
meeting, stockholders must provide notice as required by the regulations
promulgated under the 1934 Act. Nothing in these Bylaws shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
corporation proxy statement pursuant to Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation
may be called, for any purpose or purposes, by (i) the Chairman of the Board
of Directors, (ii) the Chief Executive Officer, or (iii) the Board of
Directors pursuant to a resolution adopted by a majority of the total
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number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is
presented to the Board of Directors for adoption).
At any time or times that the corporation is subject to Section 2115(b) of
the California General Corporation Law ("CGCL"), stockholders holding five
percent (5%) or more of the outstanding shares shall have the right to call a
special meeting of stockholders only as set forth in Section 18(c) herein.
(b) If a special meeting is properly called by any person
or persons other than the Board of Directors, the request shall be in
writing, specifying the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or
by telegraphic or other facsimile transmission to the Chairman of the Board
of Directors, the Chief Executive Officer, or the Secretary of the
corporation. No business may be transacted at such special meeting otherwise
than specified in such notice. The Board of Directors shall determine the
time and place of such special meeting, which shall be held not less than
thirty-five (35) nor more than one hundred twenty (120) days after the date
of the receipt of the request. Upon determination of the time and place of
the meeting, the officer receiving the request shall cause notice to be given
to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws. If the notice is not given within one hundred
(100) days after the receipt of the request, the person or persons properly
requesting the meeting may set the time and place of the meeting and give the
notice. Nothing contained in this paragraph (b) shall be construed as
limiting, fixing, or affecting the time when a meeting of stockholders called
by action of the Board of Directors may be held.
(c) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the corporation's notice of meeting (i) by or
at the direction of the Board of Directors or (ii) by any stockholder of the
corporation who is a stockholder of record at the time of giving notice
provided for in these Bylaws who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this Section 6(c). In
the event the corporation calls a special meeting of stockholders for the
purpose of electing one or more directors to the Board of Directors, any such
stockholder may nominate a person or persons (as the case may be), for
election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by Section 5(b) of these Bylaws
shall be delivered to the Secretary at the principal executive offices of the
corporation not earlier than the close of business on the one hundred
twentieth (120th) day prior to such special meeting and not later than the
close of business on the later of the ninetieth (90th) day prior to such
meeting or the tenth (10th) day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In
no event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as
described above.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law
or the Certificate of Incorporation, written notice of each meeting of
stockholders shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder entitled to vote at
such meeting, such notice to specify the place, date and hour and purpose or
purposes of the meeting. Notice of the time, place and purpose of any meeting
of
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stockholders may be waived in writing, signed by the person entitled to
notice thereof, either before or after such meeting, and will be waived by
any stockholder by his attendance thereat in person or by proxy, except when
the stockholder attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Any stockholder so waiving notice
of such meeting shall be bound by the proceedings of any such meeting in all
respects as if due notice thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote
shall constitute a quorum for the transaction of business. In the absence of
a quorum, any meeting of stockholders may be adjourned, from time to time,
either by the chairman of the meeting or by vote of the holders of a majority
of the shares represented thereat, but no other business shall be transacted
at such meeting. The stockholders present at a duly called or convened
meeting, at which a quorum is present, may continue to transact business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Except as otherwise provided by statute, the
Certificate of Incorporation or these Bylaws, in all matters other than the
election of directors, the affirmative vote of the majority of shares present
in person or represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders. Except as otherwise
provided by statute, the Certificate of Incorporation or these Bylaws,
directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors. Where a separate vote by a class or classes or series
is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented
by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter and, except where otherwise provided by the statute
or by the Certificate of Incorporation or these Bylaws, the affirmative vote
of the majority (plurality, in the case of the election of directors) of the
votes cast by the holders of shares of such class or classes or series shall
be the act of such class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any
meeting of stockholders, whether annual or special, may be adjourned from
time to time either by the chairman of the meeting or by the vote of a
majority of the shares casting votes. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty (30) days or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the
stock records of the corporation on the record date, as provided in Section
12 of these Bylaws, shall be entitled to vote at any meeting of stockholders.
Every person entitled to vote shall have the right to do so either in person
or by an
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agent or agents authorized by a proxy granted in accordance with Delaware
law. An agent so appointed need not be a stockholder. No proxy shall be voted
after three (3) years from its date of creation unless the proxy provides for
a longer period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities
having voting power stand of record in the names of two (2) or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in
common, tenants by the entirety, or otherwise, or if two (2) or more persons
have the same fiduciary relationship respecting the same shares, unless the
Secretary is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect: (a) if only one (1) votes, his act binds all; (b) if more
than one (1) votes, the act of the majority so voting binds all; (c) if more
than one (1) votes, but the vote is evenly split on any particular matter,
each faction may vote the securities in question proportionally, or may apply
to the Delaware Court of Chancery for relief as provided in the DGCL, Section
217(b). If the instrument filed with the Secretary shows that any such
tenancy is held in unequal interests, a majority or even-split for the
purpose of subsection (c) shall be a majority or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of
Incorporation, any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
(b) Every written consent shall bear the date of signature
of each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within
sixty (60) days of the earliest dated consent delivered to the corporation in
the manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to
its registered office in the State of Delaware, its principal place of
business or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of stockholders are recorded.
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Delivery made to a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of stockholders to take action were
delivered to the corporation as provided in Section 228 (c) of the DGCL. If
the action which is consented to is such as would have required the filing of
a certificate under any section of the DGCL if such action had been voted on
by stockholders at a meeting thereof, then the certificate filed under such
section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written consent has been given in
accordance with Section 228 of the DGCL.
(d) Notwithstanding the foregoing, no such action by
written consent may be taken following the closing of the initial public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "1933 Act"), covering the offer and sale of
Common Stock of the corporation (the "Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the
Board of Directors, or, if a Chairman has not been appointed or is absent,
the President, or, if the President is absent, a chairman of the meeting
chosen by a majority in interest of the stockholders entitled to vote,
present in person or by proxy, shall act as chairman. The Secretary, or, in
his absence, an Assistant Secretary directed to do so by the President, shall
act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject
to such rules and regulations of the Board of Directors, if any, the chairman
of the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are necessary, appropriate or convenient for the proper
conduct of the meeting, including, without limitation, establishing an agenda
or order of business for the meeting, rules and procedures for maintaining
order at the meeting and the safety of those present, limitations on
participation in such meeting to stockholders of record of the corporation
and their duly authorized and constituted proxies and such other persons as
the chairman shall permit, restrictions on entry to the meeting after the
time fixed for the commencement thereof, limitations on the time allotted to
questions or comments by participants and regulation of the opening and
closing of the polls for balloting on matters which are to be voted on by
ballot. Unless and to the extent determined by the Board of Directors or the
chairman of the meeting, meetings of stockholders shall not be required to be
held in accordance with rules of parliamentary procedure.
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ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the
Certificate of Incorporation. Directors need not be stockholders unless so
required by the Certificate of Incorporation. If for any cause, the directors
shall not have been elected at an annual meeting, they may be elected as soon
thereafter as convenient at a special meeting of the stockholders called for
that purpose in the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be
exercised, its business conducted and its property controlled by the
Board of Directors, except as may be otherwise provided by statute or by
the Certificate of Incorporation.
SECTION 17. CLASSES OF DIRECTORS.
(a) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the Initial Public Offering, the directors shall be
divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class I directors shall expire and Class
I directors shall be elected for a full term of three years. At the second
annual meeting of stockholders following the Initial Public Offering, the
term of office of the Class II directors shall expire and Class II directors
shall be elected for a full term of three years. At the third annual meeting
of stockholders following the Initial Public Offering, the term of office of
the Class III directors shall expire and Class III directors shall be elected
for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
During such time or times that the corporation is subject to Section 2115(b)
of the CGCL, this Section 17(a) shall become effective and apply only when
the corporation is a "listed" corporation within the meaning of Section 301.5
of the CGCL.
(b) In the event that the corporation is unable to have a
classified Board of Directors under applicable law, Section 17(a) of these
Bylaws shall not apply and all directors shall be elected at each annual
meeting of stockholders to hold office until the next annual meeting.
(c) No stockholder entitled to vote at an election for
directors may cumulate votes to which such stockholder is entitled, unless,
at the time of the election, the corporation (i) is subject to Section
2115(b) of the CGCL AND (ii) is not or ceases to be a "listed" corporation
under Section 301.5 of the CGCL. During this time, every stockholder entitled
to vote at an election for directors may cumulate such stockholder's votes
and give one candidate a number of votes equal to the number of directors to
be elected multiplied by the number of votes to which such stockholder's
shares are otherwise entitled, or distribute the stockholder's votes on the
same principle among as many candidates as such stockholder thinks fit. No
stockholder, however,
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shall be entitled to so cumulate such stockholder's votes unless (i) the
names of such candidate or candidates have been placed in nomination prior to
the voting and (ii) the stockholder has given notice at the meeting, prior to
the voting, of such stockholder's intention to cumulate such stockholder's
votes. If any stockholder has given proper notice to cumulate votes, all
stockholders may cumulate their votes for any candidates who have been
properly placed in nomination. Under cumulative voting, the candidates
receiving the highest number of votes, up to the number of directors to be
elected, are elected.
Notwithstanding the foregoing provisions of this section, each
director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
SECTION 18. VACANCIES.
(a) Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by stockholders, be
filled only by the affirmative vote of a majority of the directors then in
office, even though less than a quorum of the Board of Directors. Any
director elected in accordance with the preceding sentence shall hold office
for the remainder of the full term of the director for which the vacancy was
created or occurred and until such director's successor shall have been
elected and qualified. A vacancy in the Board of Directors shall be deemed to
exist under this Section 18 in the case of the death, removal or resignation
of any director.
(b) If at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than
a majority of the whole board (as constituted immediately prior to any such
increase), the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent (10%) of the total
number of the shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen
by the directors then in offices as aforesaid, which election shall be
governed by Section 211 of the DGCL.
(c) At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy, the
directors then in office who have been elected by stockholders shall
constitute less than a majority of the directors then in office, then
(1) Any holder or holders of an aggregate of five
percent (5%) or more of the total number of shares at the time outstanding
having the right to vote for those directors may call a special meeting of
stockholders; or
(2) The Superior Court of the proper county shall,
upon application of such stockholder or stockholders, summarily order a
special meeting of stockholders, to be held
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to elect the entire board, all in accordance with Section 305(c) of the CGCL.
The term of office of any director shall terminate upon that election of a
successor.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to
specify whether it will be effective at a particular time, upon receipt by
the Secretary or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the
Board of Directors. When one or more directors shall resign from the Board of
Directors, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each Director so chosen shall
hold office for the unexpired portion of the term of the Director whose place
shall be vacated and until his successor shall have been duly elected and
qualified.
SECTION 20. REMOVAL.
(a) During such time or times that the corporation is
subject to Section 2115(b) of the CGCL, the Board of Directors or any
individual director may be removed from office at any time without cause by
the affirmative vote of the holders of at least a majority of the outstanding
shares entitled to vote on such removal; provided, however, that unless the
entire Board is removed, no individual director may be removed when the votes
cast against such director's removal, or not consenting in writing to such
removal, would be sufficient to elect that director if voted cumulatively at
an election which the same total number of votes were cast (or, if such
action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of such director's
most recent election were then being elected.
(b) Following any date on which the corporation is no
longer subject to Section 2115(b) of the CGCL and subject to any limitations
imposed by law, Section 20(a) above shall no longer apply and removal shall
be as provided in Section 141(k) of the DGCL.
SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately before or after the annual meeting of
stockholders and at the place where such meeting is held. No notice of an
annual meeting of the Board of Directors shall be necessary and such meeting
shall be held for the purpose of electing officers and transacting such other
business as may lawfully come before it.
(b) REGULAR MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may
be held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings
of the Board of Directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may
be held at any time and place
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within or without the State of Delaware whenever called by the Chairman of
the Board, the President or any two of the directors
(d) TELEPHONE MEETINGS. Any member of the Board of
Directors, or of any committee thereof, may participate in a meeting by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person
at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all
meetings of the Board of Directors shall be orally or in writing, by
telephone, including a voice messaging system or other system or technology
designed to record and communicate messages, facsimile, telegraph or telex,
or by electronic mail or other electronic means, during normal business
hours, at least twenty-four (24) hours before the date and time of the
meeting, or sent in writing to each director by first class mail, charges
prepaid, at least three (3) days before the date of the meeting. Notice of
any meeting may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
(f) WAIVER OF NOTICE. The transaction of all business at
any meeting of the Board of Directors, or any committee thereof, however
called or noticed, or wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present and
if, either before or after the meeting, each of the directors not present
shall sign a written waiver of notice. All such waivers shall be filed with
the corporate records or made a part of the minutes of the meeting.
SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a
greater number and except with respect to indemnification questions arising
under Section 43 hereof, for which a quorum shall be one-third of the exact
number of directors fixed from time to time in accordance with the
Certificate of Incorporation, a quorum of the Board of Directors shall
consist of a majority of the exact number of directors fixed from time to
time by the Board of Directors in accordance with the Certificate of
Incorporation; PROVIDED, HOWEVER, at any meeting whether a quorum be present
or otherwise, a majority of the directors present may adjourn from time to
time until the time fixed for the next regular meeting of the Board of
Directors, without notice other than by announcement at the meeting.
(b) At each meeting of the Board of Directors at which a
quorum is present, all questions and business shall be determined by the
affirmative vote of a majority of the directors present, unless a different
vote be required by law, the Certificate of Incorporation or these Bylaws.
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SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing,
and such writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to
such compensation for their services as may be approved by the Board of
Directors, including, if so approved, by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, for attendance at
each regular or special meeting of the Board of Directors and at any meeting
of a committee of the Board of Directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise and receiving
compensation therefor.
SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may appoint
an Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
provided in the resolution of the Board of Directors shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to (i)
approving or adopting, or recommending to the stockholders, any action or
matter expressly required by the DGCL to be submitted to stockholders for
approval, or (ii) adopting, amending or repealing any bylaw of the
corporation.
(b) OTHER COMMITTEES. The Board of Directors may, from time
to time, appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or
more members of the Board of Directors and shall have such powers and perform
such duties as may be prescribed by the resolution or resolutions creating
such committees, but in no event shall any such committee have the powers
denied to the Executive Committee in these Bylaws.
(c) TERM. Each member of a committee of the Board of
Directors shall serve a term on the committee coexistent with such member's
term on the Board of Directors. The Board of Directors, subject to any
requirements of any outstanding series of preferred Stock and the provisions
of subsections (a) or (b) of this Bylaw, may at any time increase or decrease
the number of members of a committee or terminate the existence of a
committee. The membership of a committee member shall terminate on the date
of his death or voluntary resignation from the committee or from the Board of
Directors. The Board of Directors may at any time for any reason remove any
individual committee member and the Board of Directors may fill any committee
vacancy created by death, resignation, removal or increase in the number of
members of the committee. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee, and, in addition, in
the absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from
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voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places
as are determined by the Board of Directors, or by any such committee, and
when notice thereof has been given to each member of such committee, no
further notice of such regular meetings need be given thereafter. Special
meetings of any such committee may be held at any place which has been
determined from time to time by such committee, and may be called by any
director who is a member of such committee, upon written notice to the
members of such committee of the time and place of such special meeting given
in the manner provided for the giving of written notice to members of the
Board of Directors of the time and place of special meetings of the Board of
Directors. Notice of any special meeting of any committee may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends such special
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. A majority of the authorized number of members
of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which
a quorum is present shall be the act of such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed
or is absent, the President (if a director), or if the President is absent,
the most senior Vice President (if a director), or, in the absence of any
such person, a chairman of the meeting chosen by a majority of the directors
present, shall preside over the meeting. The Secretary, or in his absence,
any Assistant Secretary directed to do so by the President, shall act as
secretary of the meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation
shall include, if and when designated by the Board of Directors, the Chairman
of the Board of Directors, the Chief Executive Officer, the President, one or
more Vice Presidents, the Secretary, the Chief Financial Officer, the
Treasurer and the Controller, all of whom shall be elected at the annual
organizational meeting of the Board of Directors. The Board of Directors may
also appoint one or more Assistant Secretaries, Assistant Treasurers,
Assistant Controllers and such other officers and agents with such powers and
duties as it shall deem necessary. The Board of Directors may assign such
additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation
at any one time unless specifically prohibited therefrom by law. The salaries
and other compensation of the officers of the corporation shall be fixed by
or in the manner designated by the Board of Directors.
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SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure
of the Board of Directors and until their successors shall have been duly
elected and qualified, unless sooner removed. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board
of Directors. If the office of any officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The
Chairman of the Board of Directors, when present, shall preside at all
meetings of the stockholders and the Board of Directors. The Chairman of the
Board of Directors shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers, as the
Board of Directors shall designate from time to time. If there is no
President, then the Chairman of the Board of Directors shall also serve as
the Chief Executive Officer of the corporation and shall have the powers and
duties prescribed in paragraph (c) of this Section 28.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is
present. Unless some other officer has been elected Chief Executive Officer
of the corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of
the corporation. The President shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers, as the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may
assume and perform the duties of the President in the absence or disability
of the President or whenever the office of President is vacant. The Vice
Presidents shall perform other duties commonly incident to their office and
shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and shall record
all acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings
of the stockholders and of all meetings of the Board of Directors and any
committee thereof requiring notice. The Secretary shall perform all other
duties given him in these Bylaws and other duties commonly incident to his
office and shall also perform such other duties and have such other powers,
as the Board of Directors shall designate from time to time. The President
may direct any Assistant Secretary to assume and perform the duties of the
Secretary in the absence or disability of the Secretary, and each Assistant
Secretary shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time.
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(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render statements of
the financial affairs of the corporation in such form and as often as
required by the Board of Directors or the President. The Chief Financial
Officer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Chief Financial
Officer shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors or the President shall designate from time to time. The President
may direct the Treasurer or any Assistant Treasurer, or the Controller or any
Assistant Controller to assume and perform the duties of the Chief Financial
Officer in the absence or disability of the Chief Financial Officer, and each
Treasurer and Assistant Treasurer and each Controller and Assistant
Controller shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time.
SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the
person or persons to whom such notice is given, unless a later time is
specified therein, in which event the resignation shall become effective at
such later time. Unless otherwise specified in such notice, the acceptance of
any such resignation shall not be necessary to make it effective. Any
resignation shall be without prejudice to the rights, if any, of the
corporation under any contract with the resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of
the directors in office at the time, or by the unanimous written consent of
the directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of
Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute on
behalf of the corporation any corporate instrument or document, or to sign on
behalf of the corporation the corporate name without limitation, or to enter
into contracts on behalf of the corporation, except where otherwise provided
by law or these Bylaws, and such execution or signature shall be binding upon
the corporation.
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All checks and drafts drawn on banks or other depositaries on funds
to the credit of the corporation or in special accounts of the corporation
shall be signed by such person or persons as the Board of Directors shall
authorize so to do.
Unless authorized or ratified by the Board of Directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All
stock and other securities of other corporations owned or held by the
corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person
authorized so to do by resolution of the Board of Directors, or, in the
absence of such authorization, by the Chairman of the Board of Directors, the
Chief Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for
the shares of stock of the corporation shall be in such form as is consistent
with the Certificate of Incorporation and applicable law. Every holder of
stock in the corporation shall be entitled to have a certificate signed by or
in the name of the corporation by the Chairman of the Board of Directors, or
the President or any Vice President and by the Treasurer or Assistant
Treasurer or the Secretary or Assistant Secretary, certifying the number of
shares owned by him in the corporation. Any or all of the signatures on the
certificate may be facsimiles. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued with the same
effect as if he were such officer, transfer agent, or registrar at the date
of issue. Each certificate shall state upon the face or back thereof, in full
or in summary, all of the powers, designations, preferences, and rights, and
the limitations or restrictions of the shares authorized to be issued or
shall, except as otherwise required by law, set forth on the face or back a
statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights. Within a reasonable time after the
issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section
or otherwise required by law or with respect to this section a statement that
the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Except as otherwise expressly provided by law, the rights and
obligations of the holders of certificates representing stock of the same
class and series shall be identical.
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SECTION 35. LOST CERTIFICATES. A new certificate or certificates
shall be issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed. The corporation may
require, as a condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to agree to indemnify the
corporation in such manner as it shall require or to give the corporation a
surety bond in such form and amount as it may direct as indemnity against any
claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the
corporation shall be made only upon its books by the holders thereof, in
person or by attorney duly authorized, and upon the surrender of a properly
endorsed certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and
perform any agreement with any number of stockholders of any one or more
classes of stock of the corporation to restrict the transfer of shares of
stock of the corporation of any one or more classes owned by such
stockholders in any manner not prohibited by the DGCL.
SECTION 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of Directors may fix, in advance, a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall, subject to applicable law, not be more than sixty
(60) nor less than ten (10) days before the date of such meeting. If no
record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
PROVIDED, HOWEVER, that the Board of Directors may fix a new record date for
the adjourned meeting.
(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder
of record seeking to have the stockholders authorize or take corporate action
by written consent shall, by written notice to the Secretary, request the
Board of Directors to fix a record date. The Board of Directors shall
promptly, but in all events within ten (10) days after the date on which such
a request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board of Directors within ten (10) days of
the date on which such a request is received, the record date for
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determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware,
its principal place of business or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Delivery made to the corporation's registered office shall be
by hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty (60) days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures
and other corporate securities of the corporation, other than stock
certificates (covered in Section 34), may be signed by the Chairman of the
Board of Directors, the President or any Vice President, or such other person
as may be authorized by the Board of Directors, and the corporate seal
impressed thereon or a facsimile of such seal imprinted thereon and attested
by the signature of the Secretary or an Assistant Secretary, or the Chief
Financial Officer or Treasurer or an Assistant Treasurer; PROVIDED, HOWEVER,
that where any such bond, debenture or other corporate security shall be
authenticated by the manual signature, or where permissible facsimile
signature, of a trustee under an indenture pursuant to which such bond,
debenture or other corporate security shall be issued, the signatures of the
persons signing and attesting the corporate seal on such bond, debenture or
other corporate security may be the imprinted facsimile of the signatures of
such persons. Interest coupons appertaining to any such bond, debenture or
other corporate security, authenticated by a trustee as aforesaid, shall be
signed by the Treasurer or an Assistant Treasurer of the corporation or such
other person as may be authorized by the Board of Directors, or bear
imprinted thereon the facsimile signature of such person. In case any officer
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who shall have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on any such
interest coupon, shall have ceased to be such officer before the bond,
debenture or other corporate security so signed or attested shall have been
delivered, such bond, debenture or other corporate security nevertheless may
be adopted by the corporation and issued and delivered as though the person
who signed the same or whose facsimile signature shall have been used thereon
had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital
stock of the corporation, subject to the provisions of the Certificate of
Incorporation and applicable law, if any, may be declared by the Board of
Directors pursuant to law at any regular or special meeting. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation and applicable law.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there
may be set aside out of any funds of the corporation available for dividends
such sum or sums as the Board of Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the Board of
Directors shall think conducive to the interests of the corporation, and the
Board of Directors may modify or abolish any such reserve in the manner in
which it was created.
ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall
be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers (for the purposes of this
Article XI, "executive officers" shall have the meaning defined in Rule 3b-7
promulgated under the 1934 Act) to the fullest extent not prohibited by the
DGCL or any other applicable law; PROVIDED, HOWEVER, that the corporation may
modify the extent of such indemnification by individual contracts with its
directors and executive officers; and, PROVIDED, FURTHER, that the
corporation shall not be required to indemnify any director or executive
officer in connection with any proceeding (or part thereof) initiated by such
person unless (i) such indemnification is expressly required to be made by
law, (ii) the
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proceeding was authorized by the Board of Directors of the corporation, (iii)
such indemnification is provided by the corporation, in its sole discretion,
pursuant to the powers vested in the corporation under the DGCL or any other
applicable law or (iv) such indemnification is required to be made under
subsection (d).
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The
corporation shall have power to indemnify its other officers, employees and
other agents as set forth in the DGCL or any other applicable law. The Board
of Directors shall have the power to delegate the determination of whether
indemnification shall be given to any such person except executive officers
to such officers or other persons as the Board of Directors shall determine.
(c) EXPENSES. The corporation shall advance to any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or executive officer, of the corporation, or is or was serving at
the request of the corporation as a director or executive officer of another
corporation, partnership, joint venture, trust or other enterprise, prior to
the final disposition of the proceeding, promptly following request therefor,
all expenses incurred by any director or executive officer in connection with
such proceeding upon receipt of an undertaking by or on behalf of such person
to repay said amounts if it should be determined ultimately that such person
is not entitled to be indemnified under this Section 43 or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant
to paragraph (e) of this Section 43, no advance shall be made by the
corporation to an executive officer of the corporation (except by reason of
the fact that such executive officer is or was a director of the corporation
in which event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, if a
determination is reasonably and promptly made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties
to the proceeding, or (ii) if such quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner
that such person did not believe to be in or not opposed to the best
interests of the corporation.
(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights
and be effective to the same extent and as if provided for in a contract
between the corporation and the director or executive officer. Any right to
indemnification or advances granted by this Section 43 to a director or
executive officer shall be enforceable by or on behalf of the person holding
such right in any court of competent jurisdiction if (i) the claim for
indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request
therefor. The claimant in such enforcement action, if successful in whole or
in part, shall be entitled to be paid also the expense of prosecuting his
claim. In connection with any claim for indemnification, the corporation
shall be entitled to raise as a defense to any such action that the claimant
has not met the standards of conduct that make it permissible under the DGCL
or any other applicable law for the corporation to indemnify the claimant for
the amount claimed. In connection with any
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claim by an executive officer of the corporation (except in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such executive officer is or was a director of the
corporation) for advances, the corporation shall be entitled to raise a
defense as to any such action clear and convincing evidence that such person
acted in bad faith or in a manner that such person did not believe to be in
or not opposed to the best interests of the corporation, or with respect to
any criminal action or proceeding that such person acted without reasonable
cause to believe that his conduct was lawful. Neither the failure of the
corporation (including its Board of Directors, independent legal counsel or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he has met the applicable standard of conduct set forth
in the DGCL or any other applicable law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
claimant has not met the applicable standard of conduct. In any suit brought
by a director or executive officer to enforce a right to indemnification or
to an advancement of expenses hereunder, the burden of proving that the
director or executive officer is not entitled to be indemnified, or to such
advancement of expenses, under this Section 43 or otherwise shall be on the
corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such
person may have or hereafter acquire under any applicable statute, provision
of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office. The
corporation is specifically authorized to enter into individual contracts
with any or all of its directors, officers, employees or agents respecting
indemnification and advances, to the fullest extent not prohibited by the
Delaware General Corporation Law, or by any other applicable law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person
by this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the DGCL
or any other applicable law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or
permitted to be indemnified pursuant to this Section 43.
(h) AMENDMENTS. Any repeal or modification of this Section
43 shall only be prospective and shall not affect the rights under this Bylaw
in effect at the time of the alleged occurrence of any action or omission to
act that is the cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the corporation shall nevertheless indemnify each director and executive
officer to the full extent not prohibited by any applicable portion of this
Section 43 that shall not have been invalidated, or by any other applicable
law. If this Section 43 shall be invalid due to the application of the
indemnification provisions of
21.
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another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw,
the following definitions shall apply:
(1) The term "proceeding" shall be broadly
construed and shall include, without limitation, the investigation,
preparation, prosecution, defense, settlement, arbitration and appeal of, and
the giving of testimony in, any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative.
(2) The term "expenses" shall be broadly construed
and shall include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other costs and
expenses of any nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Section 43 with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(4) References to a "director," "executive
officer," "officer," "employee," or "agent" of the corporation shall include,
without limitation, situations where such person is serving at the request of
the corporation as, respectively, a director, executive officer, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(5) References to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this Section 43.
22.
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ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to
any director may be given by the method stated in subsection (a), or by
overnight delivery service, facsimile, telex or telegram, except that such
notice other than one which is delivered personally shall be sent to such
address as such director shall have filed in writing with the Secretary, or,
in the absence of such filing, to the last known post office address of such
director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed
by a duly authorized and competent employee of the corporation or its
transfer agent appointed with respect to the class of stock affected,
specifying the name and address or the names and addresses of the stockholder
or stockholders, or director or directors, to whom any such notice or notices
was or were given, and the time and method of giving the same, shall in the
absence of fraud, be prima facie evidence of the facts therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail or
by overnight delivery service, as above provided, shall be deemed to have
been given as at the time of mailing, and all notices given by facsimile,
telex or telegram shall be deemed to have been given as of the sending time
recorded at time of transmission.
(e) METHODS OF NOTICE. It shall not be necessary that the
same method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any
other permissible method or methods may be employed in respect of any other
or others.
(f) FAILURE TO RECEIVE NOTICE. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy
any privilege or benefit, or be required to act, or within which any director
may exercise any power or right, or enjoy any privilege, pursuant to any
notice sent him in the manner above provided, shall not be affected or
extended in any manner by the failure of such stockholder or such director to
receive such notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person
shall not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such
person. Any action or meeting which shall be taken or held without notice to
any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given. In the event that the
action taken by the corporation is such as to require the filing of a
23.
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certificate under any provision of the DGCL, the certificate shall state, if
such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom
communication is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate
of Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such person
during the period between such two consecutive annual meetings, or (ii) all,
and at least two, payments (if sent by first class mail) of dividends or
interest on securities during a twelve-month period, have been mailed
addressed to such person at his address as shown on the records of the
corporation and have been returned undeliverable, the giving of such notice
to such person shall not be required. Any action or meeting which shall be
taken or held without notice to such person shall have the same force and
effect as if such notice had been duly given. If any such person shall
deliver to the corporation a written notice setting forth his then current
address, the requirement that notice be given to such person shall be
reinstated. In the event that the action taken by the corporation is such as
to require the filing of a certificate under any provision of the DGCL, the
certificate need not state that notice was not given to persons to whom
notice was not required to be given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of
the Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of
the voting power of all of the then-outstanding shares of the voting stock of
the corporation entitled to vote. The Board of Directors shall also have the
power to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to,
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its subsidiaries, including any officer or
employee who is a Director of the corporation or its subsidiaries, whenever,
in the judgment of the Board of Directors, such loan, guarantee or assistance
may reasonably be expected to benefit the corporation. The loan, guarantee or
other assistance may be with or without interest and may be unsecured, or
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation. Nothing
in these Bylaws shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the corporation at common law or under any statute.
24.
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OMNICELL.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
OMNICELL.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement")
is entered into as of the 20th day of January, 2000, by and among OMNICELL.COM,
a California corporation (the "Company") the holders of Series A through J
Preferred Stock set forth on Exhibit A (the "Prior Holders") and the purchasers
of Series K Preferred Stock (the "Purchasers") listed on Exhibit B hereto. The
Prior Holders and the Purchasers are collectively referred to hereinafter as the
"Investors" and each individually as an "Investor."
RECITALS
WHEREAS, the Company and the Prior Holders are parties to the Series A
Preferred Subscription Agreements entered into on or around October 1992, the
Series B Preferred Subscription Agreements entered into on or around May 1993,
the Series C Preferred Stock Purchase Agreement dated May 14, 1993, the Series D
Preferred Stock Purchase Agreement dated October 25, 1993, the Series E
Preferred Stock Purchase Agreement dated December 22, 1993, the Series F
Preferred Stock Purchase Agreement dated June 8, 1994, the Series G Preferred
issued in May through July 1995, and the Series H Preferred Stock Agreement
dated September 18, 1995 (collectively, the "Prior Agreements") pursuant to
which the Company granted the Prior Holders certain participation, registration
and information rights.
WHEREAS, the Purchasers are purchasing shares of the Company's Series K
Preferred Stock (the "Series K Preferred") pursuant to that certain Series K
Preferred Stock Purchase Agreement (the "Purchase Agreement") of even date
herewith; (the "Financing").
WHEREAS, the obligations in the Purchase Agreement are conditioned upon
the execution and delivery of this Agreement;
WHEREAS, the Company and the Prior Holders intend that this Agreement
shall supercede the portion of the Prior Agreements related to participation,
registration and information rights, all the Prior Holders shall be deemed to be
parties to this Agreement and that the Prior Agreements shall terminate upon the
Closing of the Financing; and
WHEREAS, in connection with the consummation of the Financing, the
parties desire to enter into this Agreement in order to grant registration,
information rights and other rights to the Holders and Investors as set forth
below.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree hereto as follows:
<PAGE>
SECTION 1. GENERAL.
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Stock issued or issuable
pursuant to conversion of the Company's outstanding Series A Preferred issued
pursuant to the Subscription Agreements on or around October 1992, Series B
Preferred issued pursuant to the Subscription Agreements on or around May 1993,
Series C Preferred issued pursuant to the Series C Preferred Stock Purchase
Agreement dated May 14, 1993, Series D Preferred issued pursuant to the Series D
Preferred Stock Purchase Agreement dated October 25, 1993, Series E Preferred
issued pursuant to the Series E Preferred Stock Purchase Agreement dated
December 22, 1993, the Series F Preferred issued pursuant to the Series F
Preferred Stock Purchase Agreement dated June 8, 1994, the Series G Preferred
issued in May through July 1995, the Series H Preferred issued pursuant to the
Series H Preferred Stock Agreement dated September 18, 1995, the Series J
Preferred issued upon the conversion of the Series I Preferred issued pursuant
to the Series I Preferred Stock Agreement dated June 7, 1996 and the Series K
Preferred issued pursuant to the Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor or similar registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
"Holder" means any Investor holding Registrable Securities and
purchasers of Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, or
Series H Preferred (who for purposes of Section 2 of this Agreement, shall be
included in the definition of "Investor") and any persons holding Registrable
Securities to whom the rights under Section 2 have been transferred in
accordance with Section 2.12 hereof.
"Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"Initiating Holders" shall mean any Holders who in the
aggregate are Holders of at least 40% of the Registrable Securities.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" means (a) Conversion Stock; and
(b) any Common Stock of the Company issued or issuable in respect of the
Conversion Stock or other securities issued
<PAGE>
or issuable pursuant to the conversion of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series
F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and
Series K Preferred upon any stock split, stock dividend, recapitalization, or
similar event, or any Common Stock otherwise issued or issuable with respect
to such securities; provided however, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (i) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction or (ii)
transferred without concurrent transfer of registration rights pursuant to
Section 2.12. "Registrable Securities then outstanding" shall be the number
of shares determined by calculating the total number of shares of the
Company's Common Stock that are Registrable Securities and either (a) are
then issued and outstanding or (b) are issuable pursuant to then exercisable
or convertible securities.
"Registration Expenses" shall mean all expenses incurred by
the Company in complying with Sections 2.4, 2.5 and 2.6 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, reasonable fees and disbursements
not to exceed twenty-five thousand dollars ($25,000) of a single special counsel
for the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
"Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 2.2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale.
"Shares" shall mean the Company's Preferred Stock held by the
Holders listed on Exhibit A hereto and their permitted assigns.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 RESTRICTIONS ON TRANSFERABILITY. The Shares and the Conversion
Stock shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Section 2, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Investor will cause
any proposed purchaser, assignee, transferee, or pledgee of the Shares or the
Conversion Stock held by an Investor to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 2.
2.2 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares,
(ii) the Conversion Stock and (iii) any other securities issued in respect of
the Shares or the Conversion Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 2.3 below) be stamped or
<PAGE>
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER COMPLIES
WITH THE PROVISIONS OF RULE 144 UNDER THE ACT IN THE OPINION OF
COUNSEL TO THE COMPANY OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Purchaser and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Shares or the
Common Stock in order to implement the restrictions on transfer established in
this Section 2.
Any legend endorsed on a certificate as described above shall be
removed and the Company shall issue a certificate without such legend to the
holder of such security if such security is registered under the Securities Act
or if a notification under Regulation A of the Securities Act is in effect with
respect thereto, or if such security may be sold under Rule 144(k) of the
Commission under the Securities Act.
2.3 NOTICE OF PROPOSED TRANSFERS. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 2.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the Holder thereof shall give written notice to the Company of such
Holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied (except in the case of (i) a transfer not involving a change in
beneficial ownership, (ii) a transfer which complies with the provisions of Rule
144 under the Securities Act in the opinion of counsel to the Company, (iii) a
transaction involving the distribution of Restricted Securities by any Holder to
any of its partners, retired partners, or to the estate of any of its partners
or retired partners, or to such Holder's spouse, siblings, spouse of such
siblings, ancestors and descendants and any trust established solely for such
Holder's benefit or for the benefit of such Holder's spouse, siblings, ancestors
and/or descendants, or to such Holder's "affiliates", as defined under the
Securities Act), at such Holder's expense, by either (i) a written opinion of
legal counsel who shall be, and whose legal opinion shall be, reasonably
satisfactory to the Company addressed to the Company, to the effect proposed
that
<PAGE>
the transfer of the Restricted Securities may be effected without registration
under the Securities Act or (ii) a "no action" letter from the Commission to the
effect that the transfer of such securities without registration will not result
in a recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the Holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the Holder to the Company. Each certificate evidencing
the Restricted Securities transferred as above provided shall bear, except if
such transfer is made pursuant to Rule 144, the appropriate restrictive legend
set forth in Section 2.2 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such Holder and the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act.
2.4 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to such Initiating
Holders' Registrable Securities where the reasonably anticipated aggregate
offering price to the public, net of underwriting discounts and commissions,
would exceed $5,000,000, the Company shall:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within twenty (20) days after receipt
of such written notice from the Company;
Provided, however, that the Company shall not be obligated to file a
registration statement to effect any such registration, qualification or
compliance pursuant to this Section 2.4:
(A) In any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Securities Act;
(B) Starting on a date sixty (60) days prior
to and ending on a date four months immediately following the effective date of
any registration statement pertaining to the securities of the Company (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective;
<PAGE>
(C) After (i) the Company has effected two
such registrations pursuant to this Section 8.5 (provided such Holders are able
to register at least 90% of the shares of Registrable Securities for which they
requested registration) and (ii) each such registration has been declared or
ordered effective; or
(D) If the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a registration statement to be filed in
the near future, then the Company's obligation to use its best efforts to
register, qualify or comply under this Section 2.4 shall be deferred for a
period not to exceed 120 days from the date of receipt of written request from
the Initiating Holders.
Subject to the foregoing clauses (A) through (D), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.
(b) UNDERWRITING. In the event that the Initiating Holders
specify that a registration pursuant to Section 2.4 is for a registered public
offering involving an underwriting, the Company shall so advise the Holders as
part of the notice given pursuant to Section 2.4(a)(i). In such event, the right
of any Holder to registration pursuant to Section 2.4 shall be conditioned upon
such Holder's participation in the underwriting arrangements required by this
Section 2.4, and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter of nationally recognized
standing selected for such underwriting by a majority in interest of the
Initiating Holders, but subject to the Company's reasonable approval.
Notwithstanding any other provision of this Section 2.4, if the managing
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all holders of Registrable Securities who have elected
to participate in such offering and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 120 days after the effective date
of such registration, or such other shorter period of time as the underwriters
may permit. If by the withdrawal of such Registrable Securities a greater number
of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation then imposed by the
underwriters), then the Company shall offer to all Holders, if any, whose shares
have been
<PAGE>
excluded from the registration by the terms of this paragraph, the right to
include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 2.4(b) up to the
limitation then imposed by the Underwriters.
2.5 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Commission Rule 145 transaction or (iii) a registration in
which the only Common Stock being registered is Common Stock issuable upon
conversion of convertible debt securities which are also being registered, the
Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 30 days after receipt of such written notice from the
Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.5(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other Holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. If the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all Registrable Securities
from such registration and underwriting and then the Company shall so advise all
Holders of Registrable Securities who have elected to participate in such
offering and the number of shares of Registrable Securities that may be included
in the registration and underwriting shall be allocated among all Holders
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement but the foregoing shall not be interpreted to require any
cutback in the number of shares to be sold by the Company in such an offering.
Notwithstanding the above, in the event of an offering other than the Company's
initial public offering, the number of Registrable Securities included in such
offering shall not be reduced to less than 20% of the shares to be offered in
such offering.
If any Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration. If by the
withdrawal of such Registrable Securities a greater number of
<PAGE>
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation then imposed by the
underwriters), then the Company shall offer to all Holders, if any, whose shares
have been excluded from the registration by the terms of this paragraph, the
right to include additional Registrable Securities in the same proportion used
in determining the underwriter limitation in this Section up to the limitation
then imposed by the Underwriters.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 2.5 prior to the effectiveness of such registration whether or not any
Holder elected to include securities in such registration.
2.6 REGISTRATION ON FORM S-3.
(a) If a Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than four registrations pursuant to this
Section 2.6. The substantive provisions of Section 2.4(b) shall be applicable to
each registration initiated under this Section 2.6. The Company shall give
notice to all Holders of Registrable Securities of the receipt of a request for
registration pursuant to this Section 2.6 and shall provide a reasonable
opportunity for other Holders to participate in the registration.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to file a registration statement pursuant to this Section 2.6:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) if the Company, within ten (10) days of the
receipt of the request of the initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within ninety (90) days of receipt of such request (other than with respect to a
registration statement relating to a Rule 145 transaction or an offering solely
to employees);
(iii) starting with a date sixty (60) days prior to,
and ending on a date four months immediately following, the effective date of
any registration statement pertaining to the securities of the Company (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective;
<PAGE>
(iv) if the shares held by such Holder can be sold
pursuant to Rule 144 within a three month period of the date of the request for
a registration under this Section 2.6 and the applicable Holder holds less than
two (2%) percent of the outstanding voting stock of the Company; or
(v) if the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed one hundred
twenty (120) days from the receipt of the request to file such registration by
such Holder.
2.7 EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with all
registrations pursuant to Sections 2.4, 2.5 and 2.6 shall be borne by the
Company. Unless otherwise stated, all Selling Expenses relating to securities
registered on behalf of the Holders shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered and sold.
2.8 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof, including any stop order or other proceeding initiated with respect to
such offering. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least two (2) years
or until the distribution described in the Registration Statement has been
completed, whichever first occurs; and
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such Holders may
reasonably request.
<PAGE>
2.9 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 2, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of the Securities Act or any
state securities law or any rule or regulation promulgated thereunder applicable
to the Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder, each of its
officers and directors, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by any Holder, controlling person or
underwriter and stated to be specifically for use therein; provided, however,
that the foregoing indemnity agreement is subject to the condition that, insofar
as it relates to any such untrue statement, alleged untrue statement, omission
or alleged omission made in a preliminary prospectus on file with the Commission
at the time the registration statement becomes effective or the amended
prospectus filed with the Commission pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter, if a copy of the Final Prospectus was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act and such failure to furnish such Final
Prospectus was the cause of such loss, liability, claim or damage.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons,
<PAGE>
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any untrue statement, alleged untrue statement, omission or alleged omission
made in a preliminary prospectus on file with the Commission at the time the
registration statement becomes effective or in the Final Prospectus, such
indemnity agreement shall not inure to the benefit of any underwriter or any
Holder, if there is no underwriter, if a copy of the Final Prospectus was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act and such failure
to furnish such Final Prospectus was the cause of such loss, liability, claim or
damage. Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the net proceeds received
for the shares sold by such Holder.
(c) Each party entitled to indemnification under this Section
2.9 (the "Indemnified Party") shall give written notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnifying Party shall have the option to assume the defense
of any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No claim may be settled without the consent of
the Indemnifying Party (which consent shall not be unreasonably withheld). No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
2.10 INFORMATION BY HOLDER. Each Holder holding Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Registrable Securities held by them and the distribution proposed
by such Holder as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 2.
<PAGE>
2.11 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the Initial Offering, as defined below;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Securities Exchange Act of 1934 (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Purchaser
to sell any such securities without registration.
2.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted Holders under Sections 2.4, 2.5 and 2.6 may be
assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Purchaser provided that: (i) such
transfer shall otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee acquires at least 100,000 shares
(adjusted for stock splits, reverse splits, reorganizations and the like) of
Registrable Securities, (iii) written notice is promptly given to the Company,
(iv) such transferee agrees to be bound by the provisions of this Section 2 and
(v) such Holder obtains the prior written consent of the Company, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, the rights to
cause the Company to register securities may be assigned to any constituent
partner or affiliate of a Holder or to such Holder's spouse, siblings, spouse of
such siblings, ancestors and descendants and any trust established solely for
such Holder's benefit or for the benefit of such Holder's spouse, siblings,
ancestors and/or descendants, without compliance with item (ii) above, provided
written notice thereof is promptly given to the Company.
2.13 LOCKUP AGREEMENT. Each holder of Registrable Securities and each
transferee pursuant to Section 2 hereof agrees, in connection with any
registration of the Company's securities, upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriter, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such
<PAGE>
registration as the Company or the underwriters may specify; provided that these
obligations shall apply only to the Initial Offering and not to any subsequent
registration of the Company's securities; and provided further that this Section
2.13 shall apply only if all officers and directors of the Company who hold
shares of stock or options to purchase common stock have signed agreements with
the underwriters containing similar restrictions. The holders of Registrable
Securities agree that the Company may instruct its transfer agent to place
stop-transfer notations in its records to enforce the provisions of this Section
2.13.
2.14 TERMINATION. The registration rights granted pursuant to this
Section 2 shall terminate on the fifth anniversary of the closing of the Initial
Offering.
SECTION 3. COVENANTS OF THE COMPANY.
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(a) The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year
of the Company, and in any event within one hundred twenty (120) days
thereafter, to the extent requested by an Investor the Company will furnish each
Investor a balance sheet of the Company, as at the end of such fiscal year, and
a statement of income and a statement of cash flows of the Company, for such
year, all prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail. Such financial
statements shall be accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Company's Board of
Directors.
(c) The Company will furnish each Investor, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, to the extent requested by such Investor a balance sheet
of the Company as of the end of each such quarterly period, and a statement of
income and a statement of cash flows of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.
3.2 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of
<PAGE>
evaluating its investment in the Company as long as such partner, subsidiary or
parent is advised of the confidentiality provisions of this Section 3.3.
3.3 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.4 APPOINTMENT OF AUDIT COMMITTEE MEMBER. The Company will take all
actions within its control to cause the appointment of the representative of the
Series K Preferred on the Company's Board of Directors as a member of the Audit
Committee of the Company's Board of Directors.
3.5 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor upon
the earlier of (i) the effective date of the registration statement pertaining
to the Initial Offering, which results in the Preferred Stock being converted
into Common Stock or (ii) upon (a) the sale, lease or other disposition of all
or substantially all of the assets of the Company or (b) an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company's outstanding voting stock
immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) of the voting power of the
corporation or other entity surviving such transaction, PROVIDED that this
Section 3.5 shall not apply to a merger effected exclusively for the purpose of
changing the domicile of the Company (a "Change in Control").
SECTION 4. RIGHTS OF FIRST REFUSAL.
The Company hereby grants to each Investor the right of first refusal
to purchase, pro rata, a portion of "New Securities" (as defined in this Section
4) that the Company may, from time to time, propose to sell and issue. Each
Investor's pro rata share, for purposes of this right of first refusal, is the
ratio (as of the record date set for determining which of the Company's
shareholders are entitled to such right of first refusal) of (X) the number of
shares of Common Stock owned or issuable (calculated after giving effect to any
anti-dilution adjustment as a result of such issuance) upon the conversion of
the Preferred Stock owned by such Investor to (Y) the total number of shares of
Common Stock outstanding or issuable (calculated after giving effect to any
anti-dilution adjustment as a result of such issuance) upon the conversion of
all outstanding Preferred Stock. This right of first refusal shall be subject to
the following provisions:
(a) "NEW SECURITIES" shall mean any Common Stock and Preferred
Stock of the Company whether or not authorized on the date hereof, and rights,
options, or warrants to purchase such Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include the following:
(i) all shares of Common Stock, or options to
purchase shares of Common Stock, issued or granted to officers, directors,
employees and consultants of the
<PAGE>
Company pursuant to stock and option plans or arrangements approved by the Board
of Directors;
(ii) shares of Common Stock issuable upon conversion
of any of the Company's Preferred Stock;
(iii) securities of the Company offered to the public
pursuant to a registration statement filed under the Securities Act;
(iv) securities of the Company issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such other
corporation;
(v) shares of Common Stock or Preferred Stock issued
in connection with any stock split, stock dividend, or recapitalization by the
Company; or
(vi) shares of Common Stock or Preferred Stock (or
options or warrants therefore) issued in connection with bona fide equipment,
accounts receivable, or other similar debt financing undertaken with a leasing
company, bank, or other financial institution regularly engaged in the business
of lending money.
(b) In the event that the Company proposes to undertake an
issuance of New Securities, it shall give each Investor written notice of its
intention, describing the number and type of New Securities, the price, the
general terms upon which the Company proposes to issue the same, and Investor's
pro rata share of the New Securities. Each Investor shall have ten (10) business
days from the date such notice is given to agree to purchase up to its pro rata
share of such New Securities at the price and upon the general terms specified
in the notice by giving written notice to the Company and stating therein the
quantity of New Securities to be purchased.
(c) The Company shall have ninety (90) days after giving the
notice referred to above to sell (or enter into an agreement pursuant to which
the sale of New Securities covered thereby shall be closed, if at all, within
thirty (30) days from the date of such agreement) with the New Securities
respecting which the Investor's rights were not exercised at a price and upon
general terms no more favorable to the purchasers thereof than specified in the
Company's notice. In the event the Company has not sold the New Securities
within such ninety (90) day period (or sold and issued New Securities in
accordance with the foregoing within thirty (30) days from the date of such
agreement), the Company shall not thereafter issue or sell any New Securities
without first offering such New Securities to the Purchasers in the manner
provided above.
(d) The right of first refusal granted under this Agreement
shall expire upon the date of the Initial Offering.
(e) This right of first refusal can be assigned, but only in
connection with an assignment of the Shares, and not to a party who is, or who
has an interest in, a competitor or potential competitor of the Company, as
determined by the Company's Board of Directors.
<PAGE>
(f) This right of first refusal shall not apply to Investors
who no longer own any Shares or Common Stock issuable upon conversion thereof as
of the date of the notice referred to above.
SECTION 5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
5.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Purchase Agreement and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein. Sections 8 and 9
of each of the Prior Agreements which relate to participation, registration and
information rights shall terminate and be superceded by this Agreement
5.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. 5.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may
be amended or modified only upon the written consent of the Company and the
holders of at least a majority of the Registrable Securities; PROVIDED, HOWEVER,
that this Agreement may not be amended or modified to adversely affect the
Series K Preferred differently than any other series of Preferred Stock without
the approval of at least a majority of the shares of Series K Preferred.
<PAGE>
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least a majority of the
Registrable Securities; PROVIDED, HOWEVER, that the obligations under this
Agreement may not be waived to adversely affect the Series K Preferred
differently than any other series of Preferred Stock without the approval of at
least a majority of the shares Series K Preferred.
(c) For the purposes of determining the number of Holder or
Investors entitled to vote or exercise any rights hereunder, the Company shall
be entitled to rely solely on the list of record holders of its stock as
maintained by or on behalf of the Company.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature
pages hereof or Exhibit A hereto or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
5.9 ATTORNEYS' FEES. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 ADDITIONAL INVESTORS.
(a) Notwithstanding anything to the contrary contained herein,
if the Company shall issue additional shares of its Preferred Stock pursuant to
the Purchase Agreement, any purchaser of such shares of Preferred Stock may
become a party to this
<PAGE>
Agreement by executing and delivering an additional counterpart signature page
to this Agreement and shall be deemed an "Investor" hereunder.
(b) Notwithstanding anything to the contrary contained herein,
if the Company shall issue Equity Securities in accordance with Section 4(iv) or
(vi) of this Agreement, any purchaser of such Equity Securities may become a
party to this Agreement by executing and delivering an additional counterpart
signature page to this Agreement and shall be deemed an "Investor" hereunder.
5.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: /s/ Earl E. Fry By:
------------------------------ ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Managing Member
Chief Financial Officer
PURCHASER:
--------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PRIOR HOLDERS:
SHAREHOLDER:
-----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By: /s/ John D. Stobo, Jr.
-------------------------------- ----------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Managing Member
Chief Financial Officer
PURCHASER:
--------------------------
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
PRIOR HOLDERS:
SHAREHOLDER:
-----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: SHELDON ASHER TRUST
By: /s/ Sheldon D. Asher
--------------------------------
Print Name: Sheldon D. Asher
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: HB ATKINSON CHARITABLE
TRUST
By: /s/ John C. Atkinson
--------------------------------
Print Name: John C. Atkinson
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: DELPHI VENTURES II, L.P.
BY: DELPHI MANAGEMENT PARTNERS II, L.P.
GENERAL PARTNER
By: /s/ Donald J. Lothrop
--------------------------------
Print Name: Donald J. Lothrop
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: DELPHI BIOINVESTMENTS II, L.P.
BY: DELPHI MANAGEMENT PARTNERS II, L.P.
GENERAL PARTNER
By: /s/ Donald J. Lothrop
--------------------------------
Print Name: Donald J. Lothrop
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: CHRISTOPHER J. DUNN
By: /s/ Christopher J. Dunn
--------------------------------
Print Name: Christopher J. Dunn, MD
------------------------
Title: MD
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: JAMES C. GAITHER
By: /s/ James C. Gaither
--------------------------------
Print Name: James C. Gaither
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: THE INDIVIDUALS VENTURE FUND (1994) LP
By: /s/ Roger Barry
--------------------------------
Print Name: Roger Barry
------------------------
Title: Managing Member
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: DELBERT A. LIPPS
By: /s/ Delbert A. Lipps
--------------------------------
Print Name: Delbert A. Lipps
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR DAVID A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR ELIZABETH A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR JOSHUA A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR MARY MARGARET A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR NATHAN A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR SARAH A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: RANDALL A. LIPPS
CUSTODIAN UNDER CUTMA FOR ZACHARY A. LIPPS
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Custodian/Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: BENJAMIN LIPPS IRREVOCABLE TRUST
By: /s/ Randall A. Lipps
--------------------------------
Print Name: Randall A. Lipps
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: MEDICUS VENTURE PARTNERS 1993, A CALIFORNIA LIMITED PARTNERSHIP
By: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER
By: /s/ Frederick J. Dotzler
--------------------------------
Print Name: Frederick J. Dotzler
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: MEDICUS VENTURE PARTNERS 1994, A CALIFORNIA LIMITED PARTNERSHIP
BY: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER
By: /s/ Frederick J. Dotzler
--------------------------------
Print Name: Frederick J. Dotzler
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: MEDICUS VENTURE PARTNERS 1995, A CALIFORNIA LIMITED PARTNERSHIP
BY: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER
By: /s/ Frederick J. Dotzler
--------------------------------
Print Name: Frederick J. Dotzler
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: NASSAU CAPITAL PARTNERS L.P.
BY: NASSAU CAPITAL LLC, ITS GENERAL PARTNER
By: /s/ Randall A. Hack
--------------------------------
Print Name: Randall A. Hack
------------------------
Title: Member
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: NAS PARTNERS I, LLC
By: /s/ Randall A. Hack
--------------------------------
Print Name: Randall A. Hack
------------------------
Title: Member
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: OAK VI AFFILIATES FUND
By: /s/ Edward F. Glassmeyer
--------------------------------
Print Name: Edward F. Glassmeyer
------------------------
Title:
-----------------------------
Managing Member of Oak VI Affiliates, LLC.
The General Partner of
Oak VI Affiliates Fund,
Limited Partnership
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: OAK INVESTMENT PARTNERS, VI, LIMITED PARTNERSHIP
By: /s/ Edward F. Glassmeyer
--------------------------------
Print Name: Edward F. Glassmeyer
------------------------
Title:
-----------------------------
Managing Member of Oak Associates VI, LLC.
The General Partner of
Oak Investment Partners VI,
Limited Partnership
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: PANTHEON INTERNATIONAL PARTICIPATIONS
By: /s/ R.M. Swire
--------------------------------
Print Name: R.M. Swire
------------------------
Title: Director
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995
By: /s/ Thomas F. Stephenson
--------------------------------
Print Name: Thomas F. Stephenson
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: TIMOTHY J. AND OVEL G. SHEEHAN
By: /s/ Timothy J. Sheehan
--------------------------------
Print Name: Timothy J. Sheehan
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: DENNIS J. SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: ERIC F. SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title: Custodian
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: BENJAMIN SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title: Custodian
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: SHARON A. SHEEHAN
By: /s/ Sharon A. Sheehan
--------------------------------
Print Name: Sharon A. Sheehan
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: SUTTER HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title: Managing Director of the General Partner
-----------------------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: TOW PARTNERS, L.P.
By: /s/ Paul M. Wythes
--------------------------------
Print Name: Paul M. Wythes
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: WILLIAM H. YOUNGER, JR.
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By: By:
-------------------------------- ---------------------------------
John D. Stobo, Jr.
Managing Member
PURCHASER:
--------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PRIOR HOLDERS:
SHAREHOLDER: THE YOUNGER LIVING TRUST
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
SUTTER HILL VENTURES,
A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ William H. Younger, Jr.
---------------------------------
Name: William H. Younger, Jr.
Managing Director of the
General Partner
PRIOR HOLDERS:
SHAREHOLDER:
-----------------------
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
SUTTER HILL ENTREPRENEURS FUND (AI),
L.P.
By: /s/ William H. Younger, Jr.
Name: William H. Younger, Jr.
Managing Director of the
General Partner
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
SUTTER HILL ENTREPRENEURS FUND (QP),
L.P.
By: /s/ William H. Younger, Jr.
Name: William H. Younger, Jr.
Managing Director of the
General Partner
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
THE ANDERSON LIVING TRUST, U/A/D
1/22/98
By: /s/ David L. Anderson
David L. Anderson, Trustee
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
ANVEST, L.P.
By: /s/ David L. Anderson
David L. Anderson,
General Partner
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
G. LEONARD BAKER, JR.
By: /s/ G. Leonard Baker Jr.
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
SAUNDERS HOLDINGS, L.P.
By: /s/ G. Leonard Baker, Jr.
G. Leonard Baker, Jr.,
General Partner
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
THE YOUNGER LIVING TRUST, U/A/D
1/20/95
By: /s/ William H. Younger, Jr.
William H. Younger, Jr.,
Trustee
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
TENCH COXE, TRUSTEE,
THE TAMERLANE CHARITABLE REMAINDER
UNITRUST
By: /s/ Tenche Coxe
Tenche Coxe, Trustee
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
PAUL M. & MARSHA R. WYTHES, TRUSTEES
THE WYTHES LIVING TRUST (7/21/87)
By: /s/ Sherryl W. Hossack
Sherryl W. Hossack under Power of
Attorney
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
TOW PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ Sherryl W. Hossack
Sherryl W. Hossack under Power of
Attorney
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
WYTHES 1999 GRANDCHILDREN'S TRUST
JENNIFER W. VETTEL, PAUL M. WYTHES,
LINDA W. KNOLL, TRUSTEES
By: /s/ Sherryl W. Hossack
Sherryl W. Hossack under Power of
Attorney
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
GREGORY P. SANDS
By: /s/ Gregory P. Sands
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
LAWRENCE EBRINGER
By: /s/ Lawrence Ebringer
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
JAMES C. GAITHER
By: /s/ Sherryl W. Hossack
Sherryl W. Hossack under Power of
Attorney
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
RONALD L. PERKINS
By: /s/ Sherryl W. Hossack
Sherryl W. Hossack under Power of
Attorney
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
WELLS FARGO BANK, TRUSTEE
SHV M/P/T FBO SHERRYL W. HOSSACK
By: /s/ Vicki M. Bandel
Vicki M. Bandel
Asst. V.P. and Trust Officer
By: /s/ S. Matson
S. Matson
Asst. V.P. and Trust Officer
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
WELLS FARGO BANK, TRUSTEE
SHV M/P/T FBO MICHELE Y. PHUA
By: /s/ Vicki M. Bandel
Vicki M. Bandel
Asst. V.P. and Trust Officer
By: /s/ S. Matson
S. Matson
Asst. V.P. and Trust Officer
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
GENSTAR INVESTMENT CORPORATION
By: /s/ Richard D. Paterson
Name: Richard D. Paterson
Title: Executive Vice President
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
NAS PARTNERS I
By: /s/ Randall A. Hack
Name: Randall A. Hack
Title: Member
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
NASSAU CAPITAL PARTNERS
By: /s/ Randall A. Hack
Name: Randall A. Hack
Title: Member
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
FRED A. DOTZLER
By: /s/ Fred Dotzler
Fred Dotzler
as an individual
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
COMMERCE ONCE, INC.
By: /s/ Robert M. Tarkoff
Name: Robert M. Tarkoff
Title: Senior VP & General Counsel
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph
hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L. P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature: By:
------------------------- ---------------------------------
Earl E. Fry John D. Stobo, Jr.
Vice President and Chief Managing Member
Financial Officer
FFT PARTNERS II, L.P.
By: FFT GP II, LLC
Its: General Partner
By: /s/ Carlos A. Ferrer
Carlos A. Ferrer
Member
PRIOR HOLDERS:
SHAREHOLDER:
----------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: PANTHEON INTERNATIONAL PARTICIPATIONS
By: /s/ R.M. Swire
--------------------------------
Print Name: R.M. Swire
------------------------
Title: Director
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995
By: /s/ Thomas F. Stephenson
--------------------------------
Print Name: Thomas F. Stephenson
------------------------
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: TIMOTHY J. AND OVEL G. SHEEHAN
By: /s/ Timothy J. Sheehan
--------------------------------
Print Name: Timothy J. Sheehan
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: Dennis J. Sheehan
By: /s/ Dennis J. Sheehan
- -----------------------------------
Print Name: Dennis J. Sheehan
- -----------------------------------
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: MATTHEW J. SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title: Custodian
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: DENNIS AND SHARON SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: ERIC F. SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title: Custodian
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: BENJAMIN SHEEHAN
By: /s/ Dennis J. Sheehan
--------------------------------
Print Name: Dennis J. Sheehan
------------------------
Title: Custodian
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: SHARON A. SHEEHAN
By: /s/ Sharon A. Sheehan
--------------------------------
Print Name: Sharon A. Sheehan
------------------------
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: SUTTER HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title: Managing Director Of The General Partner
-------------------------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: TOW PARTNERS, L.P.
By: /s/ Paul M. Wythes
--------------------------------
Print Name: Paul M. Wythes
------------------------
Title: General Partner
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: William H. Younger, Jr.
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
By:________________________________ By:________________________________
John D. Stobo, Jr.
Managing Member
PURCHASER:_________________________
By:________________________________
Name:______________________________
Title:_____________________________
PRIOR HOLDERS:
SHAREHOLDER: THE YOUNGER LIVING TRUST
By: /s/ William H. Younger, Jr.
--------------------------------
Print Name: William H. Younger, Jr.
------------------------
Title: Trustee
-----------------------------
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature:_________________________ By:________________________________
Earl E. Fry John D. Stobo, Jr.
Vice President and Managing Member
Chief Financial Officer
SUTTER HILL VENTURES,
A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ William H. Younger, Jr.
Name: William H. Younger, Jr.
Managing Director of
the General Partner
PRIOR HOLDERS:
SHAREHOLDER:_______________________
By:________________________________
Print Name:________________________
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature:_________________________ By:________________________________
Earl E. Fry John D. Stobo, Jr.
Vice President and Managing Member
Chief Financial Officer
SUTTER HILL ENTREPRENEURS FUND (AI), L.P.
By: /s/ William H. Younger, Jr.
Name: William H. Younger, Jr.
Managing Director of
the General Partner
PRIOR HOLDERS:
SHAREHOLDER:_______________________
By:________________________________
Print Name:________________________
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
OMNICELL.COM ABS CAPITAL PARTNERS III, L.P.
BY: ABS PARTNERS III, LLC
ITS: GENERAL PARTNER
Signature:_________________________ By:________________________________
Earl E. Fry John D. Stobo, Jr.
Vice President and Managing Member
Chief Financial Officer
SUTTER HILL ENTREPRENEURS FUND (QP), L.P.
By: /s/ William H. Younger, Jr.
Name: William H. Younger, Jr.
Managing Director of
the General Partner
PRIOR HOLDERS:
SHAREHOLDER:_______________________
By:________________________________
Print Name:________________________
Title:_____________________________
INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE
<PAGE>
EXHIBIT 4.3
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
WARRANT AGREEMENT
To Purchase Shares of the Series C Preferred Stock of
OmniCell Technologies, Inc.
Dated as of September 30, 1993
Whereas, OmniCell Technologies, Inc., a California corporation (the
"Company") has entered into a Master Lease Agreement dated as of September 30,
1993, Equipment Schedule No. VL-1, and related Summary Equipment Schedules (the
"Leases") with COMDISCO, Inc., a Delaware corporation (the "Warrantholder"); and
Whereas, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series C Preferred Stock;
Now, Therefore, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder certify and agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
For value received, the Company hereby grants to the Warrantholder, and the
Warrantholder is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase, from the Company 12,500
fully paid and non-assessable shares of the Company's Series C Preferred Stock
("Preferred Stock") The exercise price ("Exercise Price") shall be equal to
$1.60 per share. Notwithstanding the above, if the Company completes the Series
D Preferred Stock financing ("Next Round") by December 1, 1993, then this
Warrant shall be exercisable for 9,217 fully paid and assessable shares of the
Company's Series D Preferred Stock at the an Exercise Price equal to $2.17 per
share. The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the date of execution hereof and shall be exercisable for a period of (i) seven
(7) years after the date of execution hereof, or (ii) three (3) years from the
effective date of the Company's initial public offering (the "IPO") whichever is
longer.
Notwithstanding the term of this Warrant Agreement fixed pursuant to
Section 2 hereof, the right to purchase Preferred Stock as granted herein shall
expire, if not previously exercised
1.
<PAGE>
immediately upon the closing of a merger or consolidation of the Company with or
into another corporation when the Company is not the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets or
outstanding stock to any other person (the "Merger"), provided in which
Warrantholder realizes a value for its shares equal to or greater than $6.40 per
share.
Notwithstanding anything to the contrary in this Warrant Agreement, the
rights to purchase the Company's Preferred Stock shall not expire until the
Company complies with such notice provisions. Such notice shall also contain
such details of the proposed Merger as are reasonable in the circumstances. If
such closing does not take place, the Company shall promptly notify the
Warrantholder that such proposed transaction has been terminated, and the
Warrantholder may rescind any exercise of its purchase rights promptly after
such notice of termination of the proposed transaction. In the event of such
rescission, the Warrants will continue to be exercisable on the same terms and
conditions contained herein.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Upon
receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, the Company shall issue to the
Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the Notice of Exercise indicating the number of
shares which remain subject to future purchases, if any.
Notwithstanding anything to the contrary contained in Section 2 above or
this Section 3, the Warrantholder shall either (i) exercise all outstanding
warrants by paying to the Company, by cash or check, an amount equal to the
aggregate Warrant Price of the shares being purchased, or (ii) receive shares
equal to the value (as determined below) of this Warrant by surrender of the
Warrant at the principal office of the Company together with notice of such
election in which event the Company shall issue to the Warrantholder a number of
shares of Preferred computed using the following formula:
X = Y(A-B)
------
A
Where: X = The number of shares of Preferred to be issued to the Warrantholder.
Y = The number of shares of Preferred under this Warrant.
A = The fair market value of one share of Common.
B = The Exercise Price.
As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock the average of the closing prices of the
Company's Common Stock sold on all securities exchanges on which the Common
Stock may at the time be listed, or, if
2.
<PAGE>
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m.,
New York City time, or, if on any day the Common Stock is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked price on such day
in the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the current
fair market value of Common Stock is being determined and the 20 consecutive
business days prior to such day. If at any time the Common Stock is not listed
on any securities exchange or quoted in the NASDAQ System or the over-the-
counter market, the current fair market value of Preferred Stock shall be the
highest price per share which the Company could obtain from a willing buyer (not
a current employee or director) for shares of Preferred Stock sold by the
Company, from authorized but unissued shares, as determined in good faith by the
Board of Directors of the Company, unless (i) the Company shall become subject
to a merger, acquisition or other consolidation pursuant to which the Company is
not the surviving party, in which case the current fair market value of the
Stock shall be deemed to be the value received by the holders of the Company's
Stock for each share of Stock pursuant to the Company's acquisition; or (ii) the
Warrantholder shall purchase such shares in conjunction with the initial
underwritten public offering of the Company's Common Stock pursuant to a
registration statement filed under the Securities Act of 1933, in which case,
the fair market value of the shares of stock subject to this Warrant shall be
the price at which all registered shares are sold to the public in such
offering.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock required to
be reserved for purposes of exercise of the Warrant Agreement hereunder require
registration with or approval of any governmental authority under any Federal or
State law (other than any registration under the Securities Act of 1933, as then
in effect, or any similar Federal statute then enforced, or any state securities
law, required by reason of any transfer involved in such conversion), or listing
on any domestic securities exchange, before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered, listed or
approved for listing on such domestic securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrantholder's rights to purchase Preferred
Stock, but in lieu of such fractional shares the Company shall make a cash
payment therefor upon the basis of the Exercise Price then in effect.
3.
<PAGE>
6. NO RIGHTS AS SHAREHOLDERS.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrantholder's rights to purchase Preferred Stock as provided for herein.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share, the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation when the Company is not the surviving corporation, or the sale of
all or substantially all of the Company's properties and assets to any other
person, (other than a Merger) then, as a part of such reorganization, merger,
consolidation or sale, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive upon exercise of its rights to purchase
Preferred Stock, the number of shares of Preferred Stock or other securities of
the successor corporation resulting from such merger or consolidation, to which
a holder of the Preferred Stock deliverable upon exercise of the right to
purchase Preferred Stock hereunder would have been entitled in such capital
reorganization, merger, consolidation or sale if the right to purchase such
Preferred Stock hereunder had been exercised immediately prior to such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant Agreement
with respect to the rights and interest of the Warrantholder after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant Agreement (including adjustments of the Exercise Price and number
of shares of Preferred Stock purchasable pursuant to the terms and conditions of
this Warrant Agreement) shall be applicable after that event, as near as
reasonably may be, in relation to any shares deliverable after that event upon
the exercise of the Warrantholder's rights to purchase Preferred Stock pursuant
to this Warrant Agreement.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.
4.
<PAGE>
(c) Subdivision or Combination of Shares. If the Company at any time shall
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Right to Purchase Additional Stock. If, for any reason, the total
Warrantholder's cost of equipment leased pursuant to the Leases should exceed
$200,000.00, Warrantholder shall have the right to purchase from the Company, at
the Exercise Price per share specified in Section 1 (which price may be subject
to adjustment from time to time as provided for in this Section 8), an
additional number of shares of Series C Preferred Stock, which number shall be
determined by (i) multiplying the amount by which the Warrantholder's total
equipment cost exceeds $200,000.00 by 10% and (ii) dividing the product thereof
by the Exercise Price per share referenced above.
(e) Notice of Adjustments. In the event that: (i) the Company shall declare
any dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any capital
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the Company's assets; or (iv) there shall be any voluntary
or involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(i) At least 20 days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such capital reorganization, reclassification, consolidation, merger
or sale of all or substantially all of the Company's assets, dissolution,
liquidation or winding up; and
(ii) In the case of any such capital reorganization, reclassification
consolidation, merger or sale of all or substantially all of the Company's
assets, dissolution, liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place (and specifying the date on
which the holders of Preferred Stock shall be entitled to exchange their
Preferred Stock for securities or other property deliverable upon such capital
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the Company's assets, dissolution, liquidation or winding
up).
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
(f) Registration and Listing. The Company will take all such actions as may
be necessary to assure that all shares of Preferred Stock issuable pursuant to
this Warrant Agreement may be so issued without violation of any applicable law
or regulation or any requirements of any domestic stock exchange (except for
official notice of issuance, which will
5.
<PAGE>
be immediately transmitted by the Company upon issuance) upon which shares of
Preferred Stock or other shares of the same class may be listed. The Company
will not take any action which will result in any adjustment of the number of
shares of Preferred Stock issuable upon exercise of this Warrant Agreement if
the total number of shares of Preferred Stock issuable after such action upon
exercise of the Warrant Agreement then outstanding, together with the total
number of shares of Preferred Stock then outstanding, would exceed the total
number of shares of Preferred Stock then authorized and not reserved for any
purpose other than the purpose of issue upon exercise of the Warrant Agreement.
9. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Articles of Incorporation. The issuance of certificates for
shares of Preferred Stock upon exercise of the Warrant Agreement shall be made
without charge to the Warrantholder for any issuance tax in respect thereof, or
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Preferred Stock; provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved and the issuance and delivery of any certificate in a name other than
that of the Warrantholder. The Company will not close its books against the
transfer of the Warrant Agreement or of any share of Preferred Stock issued or
issuable upon exercise of the Warrant and any agreement in any manner which
interferes with the timely exercise of the Warrant.
(b) Due Authority. The execution and delivery by the Company of the Leases,
and this Warrant Agreement and the performance of all obligations of the Company
thereunder and hereunder, including the issuance to Warrantholder of the right
to acquire the shares of Preferred Stock set forth in Section 1 above (which
number of shares may be from time to time adjusted pursuant to the terms of
Section 8 above) have been duly authorized by all necessary corporate action on
the part of the Company, and the Leases and this Warrant Agreement are not
inconsistent with the Company's Certificate of Incorporation or By-Laws, do not
contravene any law or governmental rule, regulation or order applicable to it,
do not and will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a party or
by which it is bound, and the Leases and the Warrant Agreement constitute legal,
valid, and binding agreements of the Company, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency and other
laws affecting creditor rights and to general principles of equity.
(c) Consents and Approvals. No consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the Securities Exchange Act of 1933, as
6.
<PAGE>
amended, (the "1933 Act") and Section 25102(f) of the California Corporate
Securities Law, which filings will be effective by the time required thereby.
(d) Litigation. There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company in any court or before any governmental commission, board
or authority which, if adversely determined, will have a material adverse effect
on the ability of the Company to perform its obligations under the Leases and
this Warrant Agreement.
(e) Subsidiaries or Affiliates. The Company has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
(f) Issued Securities. All issued and outstanding shares of Common Stock,
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:
(i) The authorized capital of the Company consists of (A) 15,000,000
shares of Common Stock, of which 627,400 shares are issued and outstanding, and
(B) 5,000,000 shares of preferred stock, of which 300,000 shares are designated
Series A Preferred Stock and 300,000 are designated Series B Preferred Stock,
and 1,000,000 are designated Series C Preferred Stock. 240,000 shares of Series
A Preferred Stock are issued and outstanding and are convertible into 240,000
shares of Common Stock. 160,333 shares of Series B Preferred Stock are issued
and outstanding and are convertible into 160,333 shares of Common Stock. 850,000
shares of Series C Preferred Stock are issued and outstanding and are
convertible into 850,000 shares of Common Stock.
(ii) There are 460,000 shares of Common Stock authorized for issuance
pursuant to the Company's Incentive Stock Plan of which 218,000 shares have been
issued
(iii) There are no other options, warrants, conversion privileges or
other options or other rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the Company's capital stock or
other securities of the Company.
(iv) In accordance with the Company's Restated Articles of
Incorporation, no shareholder of the Company has preemptive rights to purchase
new issuances of the Company's capital stock.
(g) Financial Statements. The Company has delivered to the Warrantholder
its unaudited Consolidated Balance Sheet and Consolidated Statement of Income
for the period ending August 31, 1993 (the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. The condition
and operating results of the Company as of the dates and during the periods
indicated therein are true and correct in all material aspects, subject as to
the Consolidated Finance Sheet and Consolidated Statement of income for the
period then ending August 31, 1993 to normal
7.
<PAGE>
year-end audit adjustments. Since August 31, 1993 there has been no change in
the assets, liabilities, financial condition or operations of the Company from
that reflected in the Financial Statements other than changes in the ordinary
course of business which have not been, individually or in the aggregate,
materially adverse.
The Company shall deliver to the Warrantholder (i) within one hundred
twenty (120) days after the end of the Company's fiscal year, statements of
income for such fiscal year, a consolidated balance sheet of the Company as of
the end of such year and consolidated statement of the sources and application
of funds for such year, which year-end financial reports shall be in reasonable
detail and certified by independent public accountants of nationally recognized
standing selected by the Company, and (ii) within forty-five (45) days after the
end of each fiscal quarter other than the last fiscal quarter, unaudited
consolidated statements of income and sources and application of funds for such
quarter and a consolidated balance sheet as of the end of such quarter.
(h) Contingent and Absolute Liabilities. The Company has no material
liabilities or obligations, absolute or contingent except the liabilities and
obligations of the Company as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been materially adverse.
(i) Licenses, Patents and Copyrights. To the best of the Company's
knowledge, the Company owns, possesses, has access to, or can become licensed on
reasonable terms under, all patents, patent applications, trademarks, trade
names, inventions, franchises, licenses, permits, computer software and
copyrights necessary for the operation of its business as now conducted, with no
known infringement of, or conflict with, the rights of others.
(j) Employee Contracts. To the best of the Company's knowledge, no employee
of the Company is in violation of any material term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with the Company or any prior employer because
of the nature of the business conducted by the Company.
(k) Insurance. The Company has in full force and effect insurance policies,
with extended coverage, insuring the Company and its property and business
against such losses and risks, and in such amounts, as are customary for
corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(l) Other Commitments to Register Securities. Except as set forth in this
Warrant Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act, any of its presently outstanding securities or any of its securities
which may hereafter be issued other than the shares of the outstanding Preferred
Stock of the Company.
(m) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of the Warrantholder's right to purchase such Preferred Stock will
constitute transactions exempt from
8.
<PAGE>
(i) the registration requirements of Section 5 of the 1933 Act, in reliance upon
Section 4(2) thereof, and (ii) the qualification requirements of the California
Corporate Securities Law, in reliance upon Section 25102(f) thereof.
(n) Compliance with Rule 144. At the written request of the Warrantholder,
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the 1933 Act, the Company shall furnish to the Warrantholder,
within ten days after receipt of such request, a written statement confirming
the Company's compliance with the filing requirements of the Securities and
Exchange Commission as set forth in such Rule, than applicable to the Company,
as such Rule may be amended from time to time.
(o) Brokers' Fees. The Company has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Warrant Agreement or
any other transaction contemplated thereby.
(p) Untrue, Misleading Statements. No representation or warranty of the
Company contained in the Leases, and this Warrant Agreement or any certificate
or exhibit furnished or to be furnished to Warrantholder pursuant thereto or in
connection with the transactions contemplated thereby (when read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder, which by
its execution hereof the Warrantholder hereby confirms:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the Preferred
Stock issuable upon exercise of the Warrantholder's rights contained herein is
not registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant Agreement will
be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
9.
<PAGE>
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions or transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the " 1934 Act"), or if a registration
statement covering the securities under the 1933 Act is not in effect when it
desires to sell (i) the rights to purchase Preferred Stock pursuant to this
Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the
right to purchase, it may be required to hold such securities for an indefinite
period. The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof, this
Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder and any successor transferee, provided, however, that in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the
books of the Company upon receipt by the Company of a notice of transfer in the
form attached hereto as Exhibit 11 (the "Transfer Notice"), at its principal
offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer.
10.
<PAGE>
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall
be binding upon any successors or assigns of the Company.
(b) Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
California.
(d) Counterparts. This Warrant Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Titles and Subtitles. The titles of the paragraphs and subparagraphs of
this Warrant Agreement are for convenience and are not to be considered in
construing this Agreement.
(f) Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, addressed
(i) to the Warrantholder at 61___ North River Road, Rosemont, Illinois 60018,
attention: James Labe, President, Venture Leasing Division, cc: Legal
Department, and (ii) to the Company at 4640 Campbell Drive, Menlo Park,
California 94025 or at such other address as any such party may subsequently
designate by written notice to the other party.
(g) Specific Performance. The Company recognizes and agrees that the
Warrantholder will not have an adequate remedy if the Company fails to comply
with this Agreement and that damages will not be readily ascertainable, and the
Company expressly agrees that, in the event of such failure, it shall not oppose
an application by the Warrantholder or any other person entitled to the benefit
of this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.
(h) Survival. The representations, warranties, covenants and conditions of
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable
11.
<PAGE>
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision, which comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended by a
written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (f) and subparagraphs (1), (m) and (o) of Section 9
above and shall also supply such other documents as the Warrantholder may from
time to time reasonably request.
In Witness Whereof, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized.
Company:
OmniCell Technologies Inc.
Dated: October 22, 1993 By: /s/ William H. Younger, Jr.
-------------------------- --------------------------------
Title: Acting CFO
-----------------------------
Warrantholder:
COMDISCO, Inc.
By:________________________________
Title: President
-----------------------------
12.
<PAGE>
Exhibit I
NOTICE OF EXERCISE
To:___________________________
(1) The undersigned Warrantholder hereby elects to purchase ________ shares of
the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms
of the Warrant Agreement dated the 1st day of September 1993 (the "Warrant
Agreement") between OMNICELL TECHNOLOGIES, INC., and the Warrantholder, and
tenders herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Preferred Stock of OMNICELL
TECHNOLOGIES, INC., the undersigned hereby confirms and acknowledges the
investment representations and warranties made in Section 10 of the Warrant
Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as is
specified below.
_____________________________________
(Name)
_____________________________________
(Address)
Warrantholder: COMDISCO, INC.
By:__________________________________
Title:_______________________________
Date:________________________________
1.
<PAGE>
ACKNOWLEDGEMENT OF EXERCISE
The undersigned ____________________, hereby acknowledge receipt of the
"Notice of Exercise" from COMDISCO, INC., to purchase ___________ shares of the
Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the
Warrant Agreement, and further acknowledges that _______ shares remain subject
to purchase under the terms of the Warrant Agreement.
Company:
By:_____________________________
Title:__________________________
Date:___________________________
1.
<PAGE>
Exhibit II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form
and supply required information. Do not use this form to purchase shares.)
For Value Received, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to _______________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
Dated:_________________________________
Holder's Signature:____________________
Holder's Address:______________________
_______________________________________
Signature Guaranteed:__________________
NOTE: The signature to this Transfer Notice must correspond with the name
as it appears on the face of the Warrant Agreement, without
alteration or enlargement or any change whatever. Officers of
corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the
foregoing Warrant Agreement.
1.
<PAGE>
EXHIBIT 4.4
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933.
WARRANT AGREEMENT
To Purchase Shares of the Series F Preferred Stock of
OmniCell Technologies, Inc.
Dated as of January 23, 1995
WHEREAS, OmniCell Technologies, Inc., a California corporation (the
"Company") has entered into a Master Lease Agreement dated as of September 30,
1993, Equipment Schedule No. VL-2, and related Summary Equipment Schedules (the
"Leases") with COMDISCO, INC., a Delaware corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series F Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder certify and agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
-----------------------------------------------
For value received, the Company hereby grants to the Warrantholder, and the
Warrantholder is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase, from the Company 8,130
fully paid and non-assessable shares of the Company's Series F Preferred Stock
("Preferred Stock"). The exercise price ("Exercise Price") shall be equal to
$6.15 per share. The number and purchase price of such shares are subject to
adjustment as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
------------------------------
Except as otherwise provided for herein, the term of this Warrant Agreement
and the right to purchase Preferred Stock as granted herein shall commence on
the date of execution hereof and shall be exercisable for a period of (i) seven
(7) years after the date of execution hereof, or (ii) three (3) years from the
effective date of the Company's initial public offering (the "IPO") whichever is
longer.
Notwithstanding the term of this Warrant Agreement fixed pursuant to
Section 2 hereof, the right to purchase Preferred Stock as granted herein shall
expire, if not previously exercised
1.
<PAGE>
immediately upon the closing of a merger or consolidation of the Company with or
into another corporation when the Company is not the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets or
outstanding stock to any other person (the "Merger"), provided in which
Warrantholder realizes a value, for its shares equal to or greater than $6.40
per share.
The Company shall notify the Warrantholder if the Merger is proposed in
accordance with the terms of Subsection 8(g) hereof, and if the Company fails to
deliver such notice, then notwithstanding anything to the contrary in this
Warrant Agreement, the rights to purchase the Company's Preferred Stock shall
not expire until the Company complies with such notice provisions. Such notice
shall also contain such details of the proposed Merger as are reasonable in
circumstances. If such closing does not take place, the Company shall promptly
notify the Warrantholder that such proposed transaction has been terminated, and
the Warrantholder may rescind any exercise of its purchase rights promptly after
such notice of termination of the proposed transaction. In the event of such
rescission, the Warrants will continue to be exercisable on the same terms and
conditions contained herein.
3. EXERCISE OF THE PURCHASE RIGHTS.
-------------------------------
The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed. Upon
receipt of the Notice of Exercise and the payment of the purchase price in
accordance with the terms set forth below, the Company shall issue to the
Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the Notice of Exercise indicating the number of
shares which remain subject to future purchases, if any.
Notwithstanding anything to the contrary contained in Section 2 above or
this Section 3, the Warrantholder shall either (i) exercise all outstanding
warrants by paying to the Company, by cash or check, an amount equal to the
aggregate Warrant Price of the shares being purchased, or (ii) receive shares
equal to the value (as determined below) of this Warrant by surrender of the
Warrant at the principal office of the Company together with notice of such
election in which event the Company shall issue to the Warrantholder a number of
shares of Preferred computed using the following formula:
X = Y(A-B)
------
A
Where: X = The number of shares of Preferred to be issued to the
Warrantholder.
Y = The number of shares of Preferred under this Warrant.
A = The fair market value of one share of Common.
B = The Exercise Price.
2.
<PAGE>
As used herein, current fair market value of Common Stock shall mean with
respect to each share of Common Stock the average of the closing prices of the
Company's Common Stock sold on all securities exchanges on which the Common
Stock may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day the Common Stock is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 p.m., New York City time, or, if on any day the
Common Stock is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked price on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the current fair market value of Common Stock
is being determined and the 20 consecutive business days prior to such day. If
at any time the Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the current fair market
value of Preferred Stock shall be the highest price per share which the Company
could obtain from a willing buyer (not a current employee or director) for
shares of Preferred Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors of the Company,
unless (i) the Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, in which
case the current fair market value of the Stock shall be deemed to be the value
received by the holders of the Company's Stock for each share of Stock pursuant
to the Company's acquisition; or (ii) the Warrantholder shall purchase such
shares in conjunction with the initial underwritten public offering of the
Company's Common Stock pursuant to a registration statement filed under the
Securities Act of 1933, in which case, the fair market value of the shares of
stock subject to this Warrant shall be the price at which all registered shares
are sold to the public in such offering.
4. RESERVATION OF SHARES.
---------------------
(a) Authorization and Reservation of Shares. During the term of this
---------------------------------------
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock required to
-----------------------
be reserved for purposes of exercise of the Warrant Agreement hereunder require
registration with or approval of any governmental authority under any Federal or
State law (other than any registration under the Securities Act of 1933, as then
in effect, or any similar Federal statute then enforced, or any state securities
law, required by reason of any transfer involved in such conversion), or listing
on any domestic securities exchange, before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered, listed or
approved for listing on such domestic securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
-----------------------------
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrantholder's rights to purchase Preferred
Stock, but in lieu of such fractional
3.
<PAGE>
shares the Company shall make a cash payment therefor upon the basis of the
Exercise Price then in effect.
6. NO RIGHTS AS SHAREHOLDERS.
-------------------------
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrantholder's rights to purchase Preferred Stock as provided for herein.
7. WARRANTHOLDER REGISTRY.
----------------------
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
-----------------
The purchase price per share, the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment from time to time, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
-------------------------
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation when the Company is not the surviving corporation, or the sale of
all or substantially all of the Company's properties and assets to any other
person, (other than a Merger) then, as a part of such reorganization, merger,
consolidation or sale, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive upon exercise of its rights to purchase
Preferred Stock, the number of shares of Preferred Stock or other securities of
the successor corporation resulting from such merger or consolidation, to which
a holder of the Preferred Stock deliverable upon exercise of the right to
purchase Preferred Stock hereunder would have been entitled in such capital
reorganization, merger, consolidation or sale if the right to purchase such
Preferred Stock hereunder had been exercised immediately prior to such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant Agreement
with respect to the rights and interest of the Warrantholder after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant Agreement (including adjustments of the Exercise Price and number
of shares of Preferred Stock purchasable pursuant to the terms and conditions of
this Warrant Agreement) shall be applicable after that event, as near as
reasonably may be, in relation to any shares deliverable after that event upon
the exercise of the Warrantholder's rights to purchase Preferred Stock pursuant
to this Warrant Agreement.
(b) Reclassification of Shares. If the Company at any time shall, by
--------------------------
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights
4.
<PAGE>
under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time shall
------------------------------------
combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Right to Purchase Additional Stock. If, for any reason, the total
----------------------------------
Warrantholder's cost of equipment leased pursuant to the Leases should exceed
$500,000.00, Warrantholder shall have the right to purchase from the Company, at
the Exercise Price per share specified in Section 1 (which price may be subject
to adjustment from time to time as provided for in this Section 8), an
additional number of shares of Series F Preferred Stock, which number shall be
determined by (i) multiplying the amount by which the Warrantholder's total
equipment cost exceeds $500,000.00 by 10%, and (ii) dividing the product thereof
by the Exercise Price per share referenced above.
(e) Notice of Adiustments. In the event that: (i) the Company shall declare
---------------------
any dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any capital
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the Company's assets; or (iv) there shall be any voluntary
or involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(i) At least 20 days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Preferred Stock shall be entitled thereto) or for determining rights to vote in
respect of such capital reorganization, reclassification, consolidation, merger
or sale of all or substantially all of the Company's assets, dissolution,
liquidation or winding up; and
(ii) In the case, upon any such capital reorganization,
reclassification, consolidation, merger or sale of all or substantially all
of the Company's assets, dissolution, liquidation or winding up, at least
20 days' prior written notice of the date when the same shall take place
(and specifying the date on which the holders of Preferred Stock shall be
entitled to exchange their Preferred Stock for securities or other property
deliverable upon such capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the Company's
assets, dissolution, liquidation or winding up).
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
5.
<PAGE>
(f) Registration and Listing. The Company will take all such actions as may
------------------------
be necessary to assure that all shares of Preferred Stock issuable pursuant to
this Warrant Agreement may be so issued without violation of any applicable law
or regulation or any requirements of any domestic stock exchange (except for
official notice of issuance, which will be immediately transmitted by the
Company upon issuance) upon which shares of Preferred Stock or other shares of
the same class may be listed. The Company will not take any action which will
result in any adjustment of the number of shares of Preferred Stock issuable
upon exercise of this Warrant Agreement if the total number of shares of
Preferred Stock issuable after such action upon exercise of the Warrant
Agreement then outstanding, together with the total number of shares of
Preferred Stock then outstanding, would exceed the total number of shares of
Preferred Stock then authorized and not reserved for any purpose other than the
purpose of issue upon exercise of the Warrant Agreement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
--------------------------------------------------------
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
------------------------------
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Articles of Incorporation. The issuance of certificates for shares
of Preferred Stock upon exercise of the Warrant Agreement shall be-made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Preferred Stock; provided that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
and the issuance and delivery of any certificate in a name other than that of
the Warrantholder. The Company will not close its books against the transfer of
the Warrant Agreement or of any share of Preferred Stock issued or issuable upon
exercise of the Warrant and any agreement in any manner which interferes with
the timely exercise of the Warrant.
(b) Due Authority. The execution and delivery by the Company of the Leases,
-------------
and this Warrant Agreement and the performance of all obligations of the Company
thereunder and hereunder, including the issuance to Warrantholder of the right
to acquire the shares of Preferred Stock set forth in Section 1 above (which
number of shares may be from time to time adjusted pursuant to the terms of
Section 8 above) have been duly authorized by all necessary corporate action on
the part of the Company, and the Leases and this Warrant Agreement are not
inconsistent with the Company's Certificate of Incorporation or By-Laws, do not
contravene any law or governmental rule, regulation or order applicable to it,
do not and will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a party or
by which it is bound, and the Leases and this Warrant Agreement constitute
legal, valid and binding agreements of the Company, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency and
other laws affecting creditor rights and to general principles of equity.
6.
<PAGE>
(c) Consents and Approvals. No consent or approval of, giving of notice to,
----------------------
registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the Securities Exchange Act of 1933, as amended, (the "1933 Act") and
Section 25102(f) of the California Corporate Securities Law, which filings will
be effective by the time required thereby.
(d) Litigation. There are no actions, suits, audits, investigations or
----------
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company in any court or before any governmental commission, board
or authority which, if adversely determined, will have a material adverse effect
on the ability of the Company to perform its obligations under the Leases and
this Warrant Agreement.
(e) Subsidiaries or Affiliates. The Company has no subsidiaries or
--------------------------
affiliated companies and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
(f) Issued Securities. All issued and outstanding shares of Common Stock,
-----------------
Preferred Stock or any other securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All outstanding shares
of Common Stock, Preferred Stock and any other securities were issued in full
compliance with all Federal and state securities laws. In addition:
(i) The authorized capital of the Company consists of (a) 20,000,000
shares of Common Stock, of which 1,592,924 shares are issued and
outstanding, and (b) 7,000,000 shares of Preferred Stock of which 240,000
are designated Series A Preferred Stock, 160,333 are designated Series B
Preferred Stock, 850,000 are designated Series C Preferred Stock, 664,000
are designated Series D Preferred Stock, 983,000 are designated Series E
Preferred Stock and 2,000,000 are designated Series F Preferred Stock.
240,000 shares of Series A Preferred Stock are issued and outstanding and
convertible into 480,000 shares of Common Stock, 160,333 shares of Series B
Preferred Stock are issued and outstanding and convertible into 320,666
shares of Common Stock. 850,000 shares of Series C Preferred Stock are
issued and outstanding and convertible into 1,700,000 shares of Common
Stock. 654,742 shares of Series D Preferred are issued and outstanding and
convertible into 1,309,484 shares of Common Stock. 982,631 shares of Series
E Preferred Stock are issued and outstanding and convertible into 1,965,262
shares of Common Stock. 1,948,090 shares of Series F Preferred Stock are
issued and outstanding and convertible into 1,948,090 shares of Common
Stock.
(ii) There are 2,610,000 shares of Common Stock authorized for
issuance pursuant to the Company's Incentive Stock Plan of which 1,929,410
shares have been issued.
(iii) The Company has issued Comdiso, Inc. warrants exercisable for up
to 9,217 shares of Series D Preferred Stock.
7.
<PAGE>
(iv) The Company is planning to increase the authorized number of
shares of Series F Preferred Stock by 1,000,0000 shares to a new total of
3,000,000 shares.
In addition, the Company is planning to split the outstanding shares of
Series A Series B, Series C, Series D, and Series E Preferred Stock on a
two-for-one basis in order to match the prior two-for-one split the Common
Stock with a corresponding adjustment in the liquidation preference,
dividend rate, and conversion rate of such shares. Because such shares are
each presently convertible into two shares of Common Stock such action will
not affect the capitalization of the Company or the rights of such
shareholders.
(v) There are no other options, warrants, conversion privileges or
other options or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's
capital stock or other securities of the Company.
(vi) In accordance with the Company's Restated Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.
(g) Financial Statements. The Company has delivered to the Warrantholder
--------------------
its unaudited Consolidated Balance Sheet and Consolidated Statement of Income
for the period ending November 30, 1994 (the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. The condition
and operating results of the Company as of the dates and during the periods
indicated therein are true and correct in all material aspects, subject as to
the Consolidated Balance Sheet and Consolidated Statement of Income for the
period then ending November 30, 1994 to normal year-end audit adjustments. Since
November 30, 1994 there has been no change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements other than changes in the ordinary course of business which have not
been, individually or in the aggregate, materially adverse.
The Company shall deliver to the Warrantholder (i) within one hundred
twenty (120) days after the end of the Company's fiscal year, statements of
income for such fiscal year, a consolidated balance sheet of the Company as of
the end of such year and consolidated statement of the sources and application
of funds for such year, which year-end financial reports shall be in reasonable
detail and certified by independent public accountants of nationally recognized
standing selected by the Company, and (ii) within forty-five (45) days after the
end of each fiscal quarter other than the last fiscal quarter, unaudited
consolidated statements of income and sources and application of funds for such
quarter and a consolidated balance sheet as of the end of such quarter.
(h) Contingent and Absolute Liabilities. The Company has no material
-----------------------------------
liabilities or obligations, absolute or contingent except the liabilities and
obligations of the Company as set forth-in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been materially adverse.
8.
<PAGE>
(i) Licenses, Patents and Copyrights. To the best of the Company's
--------------------------------
knowledge, the Company owns, possesses, has access to, or can become licensed on
reasonable terms under, all patents, patent applications, trademarks, trade
names, inventions, franchises, licenses, permits, computer software and
copyrights necessary for the operation of its business as now conducted, with no
known infringement of, or conflict with, the rights of others.
(j) Employee Contracts. To the best of the Company's knowledge, no employee
------------------
of the Company is in violation of any material term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with the Company or any prior employer because
of the nature of the business conducted by the Company.
(k) Insurance. The Company has in full force and effect insurance policies,
---------
with extended coverage, insuring the Company and its property and business
against such losses and risks, and in such amounts, as are customary
corporations engaged in a similar business and similarly [_____] and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(l) Other Commitments to Register Securities. Except as set forth in this
----------------------------------------
Warrant Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act, any of its presently outstanding securities or any of its securities
which may hereafter be issued other than the shares of the outstanding Preferred
Stock of the Company.
(m) Exempt Transaction. Subject to the accuracy of the Warrantholder's
------------------
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of the Warrantholder's right to purchase such Preferred Stock will
constitute transactions exempt from (i) the registration requirements of Section
5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the
qualification requirements of the California Corporate Securities Law, in
reliance upon Section 25102(f) thereof.
(n) Compliance with Rule 144. At the written request of the Warrantholder,
------------------------
who proposes to sell Preferred Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission under the 1933 Act, the Company shall furnish to the Warrantholder,
within ten days after receipt of such request, a written statement confirming
the Company's compliance with the filing requirements of the Securities and
Exchange Commission as set forth in such Rule, than applicable to the Company,
as such Rule may be amended from time to time.
(o) Brokers' Fees. The Company has not incurred, and will not incur,
-------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Warrant Agreement or
any other transaction contemplated thereby.
(p) Untrue, Misleading Statements. No representation or warranty of the
-----------------------------
Company contained in the Leases, and this Warrant Agreement or any certificate
or exhibit furnished or to be furnished to Warrantholder pursuant thereto or in
connection with the transactions
9.
<PAGE>
contemplated thereby (when read together) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
--------------------------------------------------
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder, which by
its execution hereof the Warrantholder hereby confirms:
(a) Investment Purpose. The right to acquire Preferred Stock or the
------------------
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the Preferred
-------------
Stock issuable upon exercise of the Warrantholder's rights contained herein is
not registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant Agreement will
be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
-------------------------------------
Warrantholder make disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense
10.
<PAGE>
to such holder, one or more new certificates for the Warrant or for such shares
of Preferred Stock not bearing any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience in
--------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that if the
-----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
11. TRANSFERS.
---------
Subject to the terms and conditions contained in Section 10 hereof, this
Warrant Agreement and all rights hereunder are transferable in whole or in part
by the Warrantholder and any successor transferee, provided, however, that in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of transfer in the form
attached hereto as Exhibit II (the "Transfer Notice"), at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.
12. MISCELLANEOUS.
--------------
(a) Effective Date. The provisions of this Warrant Agreement shall be
--------------
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorneys' Fees. In any litigation, arbitration or court proceeding
---------------
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
-------------
construed for all purposes under and in accordance with the laws of the State of
California.
(d) Counterparts. This Warrant Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.
<PAGE>
(e) Titles and Subtitles. The titles of the paragraphs and subparagraphs of
--------------------
this Warrant Agreement are for convenience and are not to be considered in
construing this Agreement.
(f) Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, addressed
(i) to the Warrantholder at 6111 North River Road, Rosemont, Illinois 60018,
attention: James Labe, President, Venture Leasing Division, cc: Legal
Department, and (ii) to the Company at 4040 Campbell Drive, Menlo Park,
California 94025 or at such other address as any such party may subsequently
designate by written notice to the other party.
(g) Specific Performance. The Company recognizes and agrees that the
--------------------
Warrantholder will not have an adequate remedy if the Company fails to comply
with this Agreement and that damages will not be readily ascertainable, and the
Company expressly agrees that, in the event of such failure, it shall not oppose
an application by the Warrantholder or any other person entitled to the benefit
of this Agreement requiring specific performance of any or all provisions hereof
or enjoining the Company from continuing to commit any such breach of this
Agreement.
(h) Survival. The representations, warranties, covenants and conditions of
--------
the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this
------------
Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended by
----------
a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
--------------------
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (f) and subparagraphs (l), (m) and (o) of Section 9
above and shall also supply such other documents as the Warrantholder may from
time to time reasonably request.
12.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized.
Company:
OMNICELL TECHNOLOGIES, INC.
Dated February 16, 1995 By: /s/ Randall A. Lipps
--------------------------- -------------------------------------
Title: Chairman
----------------------------------
Warrantholder:
COMDISCO, INC.
By: /s/ James P. Labe
-------------------------------------
Title: President
----------------------------------
13.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
To:______________________
(1) The undersigned Warrantholder hereby elects to purchase _____ shares
of the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the
terms of the Warrant Agreement dated the 1st day of September 1993
(the "Warrant Agreement") between OMNICELL TECHNOLOGIES, INC., and the
Warrantholder, and tenders herewith payment of the purchase price for
such shares in full, together with all applicable transfer taxes, if
any.
(2) In exercising its rights to purchase the Preferred Stock of OMNICELL
TECHNOLOGIES, INC., the undersigned hereby confirms and acknowledges
the investment representations and warranties made in Section 10 of
the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name
as is specified below.
___________________________________
(Name)
___________________________________
(Address)
Warrantholder: COMDISCO, INC.
By:________________________________
Title:_____________________________
Date:______________________________
14.
<PAGE>
ACKNOWLEDGEMENT OF EXERCISE
The undersigned ____________________________, hereby acknowledge receipt of
the "Notice of Exercise" from COMDISCO, INC., to purchase _____ shares of the
Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the
Warrant Agreement, and further acknowledges that _______ shares remain subject
to purchase under the terms of the Warrant Agreement.
Company:
By:________________________________
Title:_____________________________
Date:______________________________
15.
<PAGE>
EXHIBIT II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form
and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are here by transferred and assigned to ______________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
Dated __________________________________
Holder's Signature _____________________
Holder's Address _______________________
________________________________________
Signature Guaranteed: __________________
NOTE: The signature to this Transfer Notice must correspond with the name
as it appears on the face of the Warrant Agreement, without
alteration or enlargement or any Change whatever. Officers of
corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the
foregoing Warrant Agreement.
16.
<PAGE>
EXHIBIT 4.5
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY
BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE SECURITIES LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Series G Preferred Stock of
OmniCell Technologies, Inc.
Dated as of July 7, 1995 (the "Effective Date")
WHEREAS, Omnicell Technologies, Inc., a California corporation (the
"Company") has entered into a Receivables Loan and Security Agreement dated as
of July 7, 1995, (the "Loan Agreement") and a Promissory Note dated July 7, 1995
(the "Note") with Comdicso, Inc., a Delaware corporation (the "Warrantholder");
and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Loan Agreement and Promissory Note, the right to purchase shares of its
Series Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loan Agreement and Promissory Note and in consideration of
mutual covenants and agreements contained herein, the Company and Warrantholder
agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase from the Company, 11,102 fully paid and non-assessable
shares of the Company's Series G Preferred Stock ("Preferred Stock") at a
purchase price of $6.15 per share (the "Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section 8
hereof.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Series G Preferred Stock as granted herein
shall commence on the Effective Date and shall be exercisable for a period of
(i) ten (10) years or (ii) five (5) years from the effective date of the
Company's initial public offering, whichever is longer.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Preferred Stock purchased and shall
execute the Notice of Exercise indicating the number of shares which remain
subject to future purchases, if any and an acknowledgment of exercise duly
completed and executed in the form attached hereto as Exhibit III.
1
<PAGE>
The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, (ii) by cancellation by Warrantholder or indebtedness of the
Company under the Loan Agreement and Note to Warrantholder, (iii) by surrender
of Warrants ("Net Issuance") as determined below, or (iv) by a combination of
(i), (ii), and (iii). If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Preferred Stock to be issued to the
Warrantholder.
Y = the number of shares of Preferred Stock requested to be exercised
under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred Stock (at the
date of calculation).
B = the Exercise Price (as adjusted to the date of calculation).
For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public offering,
and if the Company's Registration Statement relating to such
public offering has been declared effective by the SEC, then the
fair market value per share shall be the product of (x) the
"Initial Price to Public" specified in the final prospectus with
respect to the offering and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at
the time of such exercise:
(ii) If this Warrant is exercised after, and not in connection with the
Company's initial public offering, and:
(a) if traded on a securities exchange, the fair market value
shall be deemed to be the product of (x) the average of the
closing prices over a twenty-one (21) day period ending
three days before the day the current fair market value of
the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred
Stock is convertible at the time; or
(b) if actively traded over-the-counter, the fair market value
shall be deemed to be the produce of (x) the average of the
closing bid and asked prices quoted on the NASDAQ system
(or similar system) over the twenty-one (21) day period
ending three days before the day the current fair market
value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time of such
exercise;
(iii) if at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter
market, the current fair market value of Preferred Stock shall be
the product of (x) the highest price per share which the Company
could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by its
Board of Directors, and (y) the number of shares of Common Stock
into which each share of Preferred Stock is convertible at the
time of such exercise, unless the Company shall become subject to
a merger, acquisition or other consolidation pursuant to which the
Company is not the surviving party, in which case the fair market
value of Common Stock shall be deemed to be the value received by
the holders of the Company's Preferred Stock on a common
equivalent basis pursuant to such merger or acquisition.
Upon partial exercise by any method, the Company shall promptly issue an
amended Warrant Agreement representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such
2
<PAGE>
amended Warrant Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock
required to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or State law (other than any
registration under the 1933 Act, as then in effect, or any similar Federal
statute then enforced, or any state securities law, required by reason of any
transfer involved in such conversion), or listing on any domestic securities
exchange, before such shares may be issued upon conversion, the Company will, at
its expense and as expeditiously as possible, use its best efforts to cause such
shares to be duly registered, listed or approved for listing on such domestic
securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have
3
<PAGE>
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant Agreement immediately
prior to such combination, reclassification, exchange, subdivision or other
change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution.
The Warrantholder shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(e) Right to Purchase Additional Stock. If the principal under the
Note is not repaid in full on or before _______________________, then on the
first day of each month commencing on _________________, the Warrantholder shall
have the right to purchase from the Company, at the Exercise Price per share
specified in Section 1 (which price may be subject to adjustment from time to
time as provided for in this Section 8), an additional number of shares of
Preferred Stock, which number shall be determined by (i) multiplying the
Principal Amount of the Note outstanding on each such date by one percent (1%),
and (ii) dividing the product thereof by the Exercise Price per share referenced
above. The Warrantholder shall be entitled to receive additional shares subject
to Warrant pursuant to the above provision until such time as the principal is
repaid in full. The above grant of rights to purchase additional shares of
Preferred Stock does not, and is not intended to, replace or limit any other
rights or remedies the Warrantholder, Lender or their affiliates may have with
respect to the Company, under the Loan Agreement, the Note or otherwise.
(f) Antidilution Rights. Additional antidilution rights applicable to
the Preferred Stock purchasable hereunder are as set forth in the Company's
Articles of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit IV (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.
(g) Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be a public offering; or (v) there shall be any
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the
Warrantholder: (A) at least twenty (20) days' prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution, subscription rights (specifying the date on which
the holders of Preferred Stock shall be entitled thereto) or for determining
rights to vote in respect of such Merger Event, dissolution, liquidation or
winding up; (B) in the case of any such Merger Event, dissolution, liquidation
or winding up, at least twenty (20) days' prior written notice of the date when
the same shall take place (and specifying the date on which the holders of
Preferred Stock shall be entitled to exchange their Preferred Stock for
securities or other property deliverable upon such Merger Event, dissolution,
liquidation or winding up); and (C) in the case of a public offering, the
Company shall give Warrantholder at least twenty (20) days written notice prior
to the effective date thereof.
4
<PAGE>
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and
(v) the number of shares subject to purchase hereunder after giving effect to
such adjustment, and shall be given by first class mail, postage prepaid,
addressed to the Warrantholder, at the address as shown on the books of the
Company.
(h) Timely Notice. Failure to timely provide such notice required by
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.
9. REPRESENTAIONTS, WARRANTIES AND COVENANT S OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended, and minutes of the Board of
Directors (including all committees of the Board of Directors, if any) meeting
of April 4, 1995. The issuance of certificates for shares of Preferred Stock
upon exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Preferred Stock. The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved and the issuance and delivery of
any certificate in a name other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company of this
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Loan Agreement, Note and this Warrant
Agreement are not inconsistent with the Company's Charter or Bylaws, do not
contravene any law or governmental rule, regulation or order applicable to it,
do not and will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a party or
by which it is bound, and the Loan Agreement, Note and this Warrant Agreement
constitute legal, valid and binding agreements of the Company, enforceable in
accordance with their respective terms.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act, if any, and applicable state
securities law, which filings will be effective by the time required thereby.
(d) Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:
(i) The authorized capital of the Company consists of (A) 20,000,000
shares of Common Stock, of which 1,602,557 shares are issued and outstanding,
and (B) 7,000,000 shares of Preferred stock, of which 4,933,113 shares are
issued and outstanding, such Preferred stock consisting of (1) 240,000 shares of
Series A of which 240,000 are issued and outstanding; (2) 160,333 shares of
Series B of which 160,333 are issued and outstanding; (3) 850,000 shares of
Series C of which 850,000 are issued and outstanding; (4) 664,000 shares of
Series D of which 654,742 are issued and outstanding; (5) 983,000 shares of
series E of which 982,631 are issued and outstanding; (6) 2,000,000 shares of
Series F of which 1,948,090 are outstanding; and (7) 1,000,000 shares of Series
G of which 97,317 are issued and outstanding, and are convertible into 5,872,734
shares of Common Stock.
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(ii) The Company has reserved 2,610,000 shares of Common Stock for
issuance under its Incentive Stock Option Plan, under which 2,370,987 options
are outstanding at an average price of $.50-.75 per share. There are no other
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company.
(iii) In accordance with the Company's Charter, no shareholder of the
Company has preemptive rights to purchase new issuances of the Company's capital
stock.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as set forth in
this Warrant Agreement, the Company is not, pursuant to the terms of any other
agreement currently in existence, under any obligation to register under the
1933 Act any of its presently outstanding securities or any of its securities
which may hereafter be issued.
(g) Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the
Preferred Stock upon exercise of this Warrant will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the 1933 Act, in
reliance upon Section 4(2) thereof, and (ii) the qualification requirements of
the applicable state securities laws.
(h) Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish to the Warrantholder, within ten
days after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
10. REPRESENTATIONS AND COVENANT SOF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the
Preferred Stock issuable upon exercise of this Warrant is not registered under
the 1933 Act or qualified under applicable state securities laws on the ground
that the issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside of outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a
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letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
then outstnding as to which such restrictions have terminated shall be entitled
to receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Preferred Stock not bearing
any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.
(e) Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement, or (ii) the Preferred Stock issueable upon
exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale of
its rights of the Warrantholder to purchase Preferred Stock or Preferred Stock
which might be made by it in reliance upon Rule 144 under the 1933 Act may be
made only in accordance with the terms and conditions of that Rule.
(f) Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
11. TRANSFERS. Subject to the terms and conditions contained in Section 10
hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall
be binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.
(d) Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at Comdisco Ventures, 6111 North River Road, Rosemont, Illinois 6001_, cc:
Legal Department, attention: General Counsel (and/or, if by facsimile, (708)
510-5465 and (708) 51_-5088) and (ii) to the Company at 1101 East Meadow Drive,
Palo Alto, CA 94300, (and/or if by facsimile, (415)
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843-6294) or at such other address as any such party may subsequently designate
by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. The Company
shall also supply such other documents as the Warrantholder may from time to
time reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.
Company: OMNICELL TECHNOLGOIES, INC.
By: /s/ Chris Gardener
------------------------------------
Title: Corporate Controller
---------------------------------
Warrantholder: COMDISCO, INC.
By: /s/ James P. Labe
-------------------------------------
Title: President
----------------------------------
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EXHIBIT I
NOTICE OF EXERCISE
To: ______________________________
(1) The undersigned Warrantholder hereby elects to purchase ____ shares of
the Series G Preferred Stock of ___________________, pursuant to the
terms of the Warrant Agreement dated the ___ day of _______________, 19__
(the "Warrant Agreement") between ______________________________ and the
Warrantholder, and tenders herewith payment of the purchase price for
such shares in full, together with all applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Series G Preferred Stock of
____________________________________, the undersigned hereby confirms and
acknowledges the investment representations and warranties made in
Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Series G Preferred Stock in the name of the undersigned or in such other
name as is specified below.
________________________________
(Name)
________________________________
(Address)
Warrantholder: COMDISCO, INC.
By: ____________________________
Title: ___________________________
Date: ___________________________
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EXHIBIT II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form and
supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
_________________________________________________________
(Please Print)
whose address is ___________________________________________
_________________________________________________________
Dated _____________________________________________
Holder's Signature ___________________________________
Holder's Address ____________________________________
___________________________________________________
Signature Guaranteed: ________________________________________
NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or enlargement
or any change whatever. Officers of corporations and those acting in a
fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant Agreement.
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EXHIBIT III
ACKNOWLEGEMENT OF EXERCISE
The undersigned _____________________________, hereby acknowledge receipt
of the "Notice of Exercise" from Comdicso, Inc., to purchase ____ shares of the
Series G Preferred Stock of ________________, pursuant to the terms of the
Warrant Agreement, and further acknowledges that _____ shares remain subject to
purchase under the terms of the Warrant Agreement.
Company:
By: _____________________________________
Title: ____________________________________
Date: ____________________________________
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EXHIBIT 4.6
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Series H Preferred Stock of
OmniCell Technologies, Inc.
Dated as of September 29, 1995, (the "Effective Date")
WHEREAS, Omnicell Technologies, Inc., a California corporation (the
"Company") has entered into a Loan and Security Agreement dated as of August
2, 1995, (the "Loan Agreement") and a Promissory Note dated August 2, 1995
(the "Note") with Comdicso, Inc., a Delaware corporation (the
"Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Loan Agreement and Promissory Note, the right to purchase shares of
its Series H Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loan Agreement and Promissory Note and in consideration of
mutual covenants and agreements contained herein, the Company and
Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe to and purchase from the Company, 67,934 fully paid and
non-assessable shares of the Company's Series H Preferred Stock ("Preferred
Stock") at a purchase price of $3.68 per share (the "Exercise Price"). The
number and purchase price of such shares are subject to adjustment as
provided in Section 8 hereof. Notwithstanding anything herein to the
contrary, upon the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and the sale of the Company's Common
Stock (the "IPO Closing"), all rights to purchase Preferred Stock granted
herein, and all corresponding obligations the Company to reserve and issue
Preferred Stock assumed herein, shall become automatically rights to
purchase, and obligations to reserve and issue, only Common Stock. The
number of shares of Common Stock thereafter purchasable under this Warrant
Agreement shall be equal to the number of whole shares of Common Stock into
which all the shares of Preferred Stock issuable upon exercise of the Warrant
Agreement would have converted if this Warrant Agreement had been exercised
immediately prior to the IPO Closing.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Series H Preferred Stock as granted
herein shall commence on the Effective Date and shall be exercisable for a
period of (i) seven (7) years from the effective date or (ii) three (3) years
from the effective date of the Company's initial public offering, whichever
is longer.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable by
the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2 above, by tendering to the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the "Notice of Exercise"), duly completed and executed, and the
original of this Warrant Agreement for cancellation. Promptly
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upon receipt of the Notice of Exercise and the payment of the purchase price
in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder
a certificate for the number of shares of Preferred Stock purchased and shall
execute the Notice of Exercise indicating the number of shares which remain
subject to future purchases, if any and an acknowledgment of exercise duly
completed and executed in the form attached hereto as Exhibit III.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, (ii) by cancellation by Warrantholder or indebtedness
of the Company under the Loan Agreement and Note to Warrantholder, (iii) by
surrender of Warrants ("Net Issuance") as determined below, or (iv) by a
combination of (i), (ii), and (iii). If the Warrantholder elects the Net
Issuance method, the Company will issue Preferred Stock in accordance with
the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Preferred Stock to be issued to
the Warrantholder.
Y = the number of shares of Preferred Stock requested to be
exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred Stock
(at the date of calculation).
B = the Exercise Price (adjusted to the date of calculation).
The date of calculation shall be the date on which this Notice of
Exercise and original Warrant Agreement shall have been actually received by
the Company along with payment for such shares. For purposes of the above
calculation, current fair market value of Preferred Stock shall mean with
respect to each share of Preferred Stock:
(i) If the Company's Registration Statement relating to its initial
public offering has been declared effective by the SEC, then the
fair market value per share shall be the product of (x) the
"Initial Price to Public" specified in the final prospectus with
respect to the offering and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at
the time of such exercise;
(ii) if this Warrant is exercised after the Company's initial public
offering has closed, and:
(a) if traded on a securities exchange, the fair market value
shall be deemed to be the product of (x) the average of
the closing prices over a twenty-one (21) day period
ending three days before the day the current fair market
value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time; or
(b) if actively traded over-the-counter, the fair market value
shall be deemed to be the produce of (x) the average of
the closing bid and asked prices quoted on the NASDAQ
system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y)
the number of shares of Common Stock into which each share
of Preferred Stock is convertible at the time of such
exercise;
(iii) if at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter
market, the current fair market value of Preferred Stock shall be
the product of (x) the highest price per share which the Company
could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by
its Board of Directors, and (y) the number of shares of Common
Stock into which each share of Preferred Stock is convertible at
the time of such exercise, unless the Company is then subject to
a merger, acquisition or other consolidation pursuant to which
the Company is not the surviving party, in
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which case the fair market value of Common Stock shall be deemed
to be the value received by the holders of the Company's
Preferred Stock on a common equivalent basis pursuant to such
merger or acquisition.
Upon partial exercise by any method, the Company shall promptly issue an
amended Warrant Agreement representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such amended
Warrant agreement shall be identical to those contained herein, including,
but not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved
a sufficient number of shares of its Preferred Stock to provide for the
exercise of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock
required to be reserved hereunder require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the 1933 Act, as then in effect, or any similar Federal
statute then enforced, or any state securities law, required by reason of any
transfer involved in such conversion), or listing on any domestic securities
exchange, before such shares may be issued upon conversion, the Company will,
at its expense and as expeditiously as possible, use its best efforts to
cause such shares to be duly registered, listed or approved for listing on
such domestic securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional
shares the Company shall make a cash payment therefore upon the basis of
the Exercise Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise
of the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The Exercise Price and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or
into another corporation when the Company is not the surviving corporation,
or the sale of all or substantially all of the Company's properties and
assets to any other person (hereinafter referred to as a "Merger Event'),
then, as a part of such Merger Event, lawful provision shall be made to that
the Warrantholder shall thereafter be entitled to receive, upon exercise of
the Warrant, the number of shares of preferred stock or other securities or
other assets or property or cash of the successor corporation resulting from
such Merger Event, equivalent in value to that which would have been issuable
if Warrantholder had exercised this Warrant immediately prior to the Merger
Event. In any such case, appropriate adjustment (as determined in good faith
by the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant Agreement with respect to the rights and interest
of the Warrantholder after the
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Merger Event to the end that the provisions of this Warrant Agreement
(including adjustments of the Exercise Price and number of shares of
Preferred Stock purchasable) shall be applicable to the greatest extent
possible.
(b) Reclassification or Conversion of Shares. If the Company at any
time shall, by conversion, combination, reclassification, exchange or
subdivision of securities or otherwise, change any of the securities as to
which purchase rights under this Warrant Agreement exist into the same or a
different number of securities of any other class or classes, this Warrant
Agreement shall thereafter represent the right to acquire such number and
kind of securities as would have been issuable as the result of such change
with respect to the securities which were subject to the purchase rights
under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock), then the Exercise Price shall be adjusted, from and after
the record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record
date by a fraction (i) the numerator of which shall be the total number of
all shares of the Company's stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the
total number of all shares of the Company's stock outstanding immediately
after such dividend or distribution. The Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares of Preferred Stock (calculated to the nearest whole
share) obtained by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Preferred Stock issuable upon
the exercise hereof immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
(f) Antidilution Rights. Additional antidilution rights applicable
to the Preferred Stock purchasable hereunder are as set forth in the
Company's Articles of Incorporation, as amended through the Effective Date, a
true and complete copy of which is attached hereto as Exhibit IV (the
"Charter"). The Company shall promptly provide the Warrantholder with any
restatement, amendment, modification or waiver of the Charter. The Company
shall provide Warrantholder with prior written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant, which notice shall include (a) the price at which such stock or
security is to be sold, (b) the number of shares to be issued, and (c) such
other information as necessary for Warrantholder to determine if a dilutive
event has occurred.
(g) Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock without payment therefor, whether in
cash, property, stock or other securities; (ii) the Company shall offer for
subscription prorata to the holders of Preferred Stock any additional shares
of stock of any class of other rights; (iii) there shall be any Merger Event;
(iv) there shall be a public offering; or (v) there shall be any voluntary or
involuntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such
dividend, distribution, subscription rights (specifying the date on which the
holders of Preferred Stock shall be entitled thereto) or for determining
rights to vote in respect of such Merger Event, dissolution, liquidation or
winding up; (B) in the case of any such Merger Event, dissolution,
liquidation or winding up, at least twenty (20) days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Preferred Stock shall be entitled to exchange their Preferred
Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give Warrantholder at least twenty (20) days
written notice prior to the effective date thereof.
Each such written notice shall set forth, as applicable, in reasonable
detail, (i) the event requiring the adjustment, (ii) the amount of the
adjustment, (iii) the method by which such adjustment was calculated, (iv)
the Exercise Price, and (v) the number of shares subject to purchase
hereunder after giving effect to such adjustment,
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and shall be given by first class mail, postage prepaid, addressed to the
Warrantholder, at the address as shown on the books of the Company.
(h) Timely Notice. Failure to timely provide such notice required by
subsection (g) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained
in any insufficient notice received by Warrantholder. The notice period
shall begin on the date Warrantholder actually receives a written notice
containing all the information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable
upon exercise of the Warrantholder's rights has been duly and validly
reserved and, when issued in accordance with the provisions of this Warrant
Agreement, will be validly issued, fully paid and non-assessable, and will be
free of any taxes, liens, charges or encumbrances of any nature whatsoever;
provided, however, that the Preferred Stock issuable pursuant to this Warrant
Agreement may be subject to restrictions on transfer under state and/or
Federal securities laws. The Company has made available to the Warrantholder
true, correct and complete copies of its Charter and Bylaws, as amended, and
minutes of the Board of Directors (including all committees of the Board of
Directors, if any) meeting of April 4, 1995. The issuance of certificates
for shares of Preferred Stock upon exercise of the Warrant Agreement shall be
made without charge to the Warrantholder for any issuance tax in respect
thereof, or other cost incurred by the Company in connection with such
exercise and the related issuance of shares of Preferred Stock. The Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved and the issuance and delivery of any certificate in a name
other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company of this
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire
the shares of Preferred Stock, have been duly authorized by all necessary
corporate action on the part of the Company, and the Loan Agreement, Note and
this Warrant Agreement are not inconsistent with the Company's Charter or
Bylaws, do not contravene any law or governmental rule, regulation or order
applicable to it, do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound, and the Loan
Agreement, Note and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency and other laws
affecting creditor rights and to general principles of equity.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act, if any, and applicable state
securities law, which filings will be effective by the time required thereby.
(d) Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws.
In addition:
(i) The authorized capital of the Company consists of (A) 25,000,000
shares of Common Stock, of which 1,608,216 shares are issued and outstanding,
and (B) 15,000,000 shares of Preferred stock, of which 11,527,848 shares are
issued and outstanding, such Preferred stock consisting of (1) 480,000 shares
of Series A of which 480,000 are issued and outstanding; (2) 320,666 shares
of Series B of which 320,666 are issued and outstanding; (3) 1,700,000 shares
of Series C of which 1,700,000 are issued and outstanding; (4) 1,328,000
shares of Series D of which 1,309,484 are issued and outstanding; (5)
1,966,000 shares of series E of which 1,965,262 are issued and outstanding;
(6) 2,000,000 shares of Series F of which 1,948,090 are outstanding; and (7)
1,000,000 shares of Series G none of which are issued and outstanding; and
(9) 4,000,000 shares of Series H of which 3,804,346 are issued and
outstanding.
5
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(ii) The Company has reserved 2,910,000 shares of Common Stock for
issuance under its 1992 Incentive Stock Option Plan and 1995 Management Stock
Option Plan, under which 2,442,752 options are outstanding at an average
price of $.50-.75 per share. There are no other options, warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities of the Company, other than warrants issued to the
Warrantholder.
(iii) Other than those rights granted to the preferred stock holders,
no shareholder of the Company has rights of first refusal to purchase new
issuances of the Company's capital stock.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as set forth in
this and other Warrant Agreement, the Company is not, pursuant to the terms
of any other agreement currently in existence, under any obligation to
register under the 1933 Act any of its presently outstanding securities other
than registerable securities issuable upon conversion of the various series
of the Company's Preferred Stock.
(g) Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof both now and at the time
of each exercise of this Warrant Agreement, the issuance of the Preferred
Stock upon exercise of this Warrant will constitute a transaction exempt from
(i) the registration requirements of Section 5 of the 1933 Act, in reliance
upon Section 4(2) thereof, and (ii) the qualification requirements of the
applicable state securities laws.
(h) Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Preferred Stock issuable upon the
exercise of the Warrant in compliance with Rule 144 promulgated by the
Securities and Exchange Commission, the Company shall furnish to the
Warrantholder, within a reasonable period after receipt of such request, a
written statement confirming the Company's compliance with the filing
requirements of the Securities and Exchange Commission as set forth in such
Rule, as such Rule may be amended from time to time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder's rights
contained herein will be acquired for investment and not with a view to the
sale or distribution of any part thereof, and the Warrantholder has no
present intention of selling or engaging in any public distribution of the
same.
(b) Private Issue. The Warrantholder understands (i) that this
Warrant Agreement, the Preferred Stock issuable upon exercise of this
Warrant, and the Common Stock into which such Preferred Stock is convertible,
are not registered under the 1933 Act or qualified under applicable state
securities laws and (ii) that the Company's reliance on exemptions to
otherwise applicable registration requirements is predicated on the
representations set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred
Stock or Preferred Stock issuable upon exercise of such rights or the Common
Stock into which such Preferred Stock is convertible unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion
of counsel satisfactory to the Company and its counsel to the effect that (A)
appropriate action necessary for compliance with the 1933 Act has been taken,
or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from
6
<PAGE>
the beneficial owner of any of the aforementioned securities to its nominee
or from such nominee to its beneficial owner, and shall terminate as to any
particular share of Preferred Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the
staff of the Securities and Exchange Commission or a ruling shall have been
issued to the Warrantholder at its request by such Commission stating that no
action shall be recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration under the
1933 Act in accordance with the conditions set forth in such letter or ruling
and such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Warrantholder or holder of a share of
Preferred Stock then outstanding as o which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such
holder, one or more new certificates for the Warrant or for such shares of
Preferred Stock not bearing any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the
economic risks of its investment.
(e) Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon
exercise of the right to purchase, or (iii) the Common Stock into which such
Preferred Stock is convertible, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale
of its rights to purchase Preferred Stock or the Common Stock into which
might be made by it in reliance upon Rule 144 under the 1933 Act may be made
only in accordance with the terms and conditions of that Rule.
(f) Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D,
as presently in effect.
11. TRANSFERS. Subject to applicable federal and state securities laws, the
transfer restrictions set forth herein and the terms and conditions contained
in Section 10 hereof, this Warrant Agreement and all rights hereunder are
transferable in whole or in part by the Warrantholder and any successor
transferee, provided, however, in no event shall the number of transfers of
the rights and interests in all of the Warrants exceed three (3) transfers.
The transfer shall be recorded on the books of the Company upon receipt by
the Company of a notice of transfer in the form attached hereto as Exhibit II
(the "Transfer Notice"), at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall
be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant
Agreement shall be binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all
costs of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State
of Illinois.
(d) Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE>
(e) Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal
delivery, facsimile transmission (provided that the original is sent by
personal delivery or mail as hereinafter set forth) or seven (7) days after
deposit in the United States mail, by registered or certified mail, addressed
(i) to the Warrantholder at Comdisco Ventures, 6111 North River Road,
Rosemont, Illinois 60018, cc: Legal Department, attention: General Counsel
(and/or, if by facsimile, (847) 518-5465 and (847) 518-5088) and (ii) to the
Company at 1101 East Meadow Drive, Palo Alto, CA 94303, (and/or if by
facsimile, (415) 843-6294) or at such other address as any such party may
subsequently designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an
action for damages as a result of any such default, and/or an action for
specific performance for any default where Warrantholder will not have an
adequate remedy at law and where damages will not be readily ascertainable.
(g) No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance
or performance for any default of the material terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate in
order to protect the rights of the Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to
this Warrant Agreement shall survive the execution and delivery of this
Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision,
which comes closest to the intention of the parties underlying the invalid,
illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the
Warrantholder.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.
Company: OMNICELL TECHNOLGOIES, INC.
By: /s/ Earl E. Fry
---------------------------------
Title: CFO
---------------------------------
Warrantholder: COMDISCO, INC.
By: /s/ James P. Labe
---------------------------------
Title: President
---------------------------------
8
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EXHIBIT I
NOTICE OF EXERCISE
To: ______________________________
(1) The undersigned Warrantholder hereby elects to purchase ____ shares of
the Series H Preferred Stock of ___________________, pursuant to the
terms of the Warrant Agreement dated the ___ day of _______________,
19__ (the "Warrant Agreement") between ______________________________
and the Warrantholder, and tenders herewith payment of the purchase
price for _____ shares in full, together with all applicable transfer
taxes, if any and/or ___ hereby elects to convert _____ percent (___%)
of the value of the Warrant pursuant to the provisions of Section 3 of
the Warrant Agreement.
(2) In exercising its rights to purchase the Series H Preferred Stock of
____________________________________, the undersigned hereby confirms
and acknowledges the investment representations and warranties made in
Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Series H Preferred Stock in the name of the undersigned or in such other
name as is specified below.
________________________________
(Name)
________________________________
(Address)
Warrantholder: COMDISCO, INC.
By: ____________________________
Title: _________________________
Date: __________________________
9
<PAGE>
EXHIBIT II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form and
supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
___________________________________________________
(Please Print)
whose address is __________________________________
___________________________________________________
Dated ________________________________________
Holder's Signature ___________________________
Holder's Address______________________________
______________________________________________
Signature Guaranteed: _____________________________
NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or enlargement
or any change whatever. Officers of corporations and those acting in a
fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant Agreement.
10
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EXHIBIT III
ACKNOWLEDGEMENT OF EXERCISE
The undersigned _____________________________________, hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase _____
shares of the Series H Preferred Stock of ________________________, pursuant
to the terms of the Warrant Agreement, and further acknowledges that _____
shares remain subject to purchase under the terms of the Warrant Agreement.
Company:
By: _________________________________
Title: ______________________________
Date: _______________________________
11
<PAGE>
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE
COMPNY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
CONVERTIBLE PROMISSORY NOTE
$350,000 October 1, 1999
Palo Alto, California
For value received OMNICELL TECHNOLOGIES, INC., a California
corporation ("PAYOR") promises to pay to HAROLD BALZER AND DAVID BALZER, or its
assigns ("HOLDER") the principal sum of three hundred fifty thousand dollars
($350,000) with interest on the outstanding principal amount at the rate of
6.02% per annum. Interest shall commence thirty (30) days after date of the note
and shall continue on the outstanding principal until paid in full.
1. This note (the "NOTE") is issued in connection with that certain
loan transaction pursuant to which Holder has agreed to loan to Payor the
aggregate principal amount of $350,000.
2. All payments of interest and principal shall be in lawful money of
the United States of America. All payments shall be applied first to accrued
interest, and thereafter to principal.
3. Unless converted as provided in Section 4, this Note will
automatically mature and be due and payable on October 1, 2004 (the "MATURITY
DATE"). Subject to Section 4 below, interest shall accrue on this Note and shall
not be due and payable until the Maturity Date. Notwithstanding the foregoing,
the entire unpaid principal sum of this Note, together will accrued and unpaid
interest thereon, shall become immediately due and payable upon the insolvency
of the Company, the commission of any act of bankruptcy by the company, the
execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition
for relief under the federal bankruptcy act or the continuation of such petition
without dismissal for a period of ninety (90) days or more, or the appointment
of a receiver or trustee to take possession of the property or assets of the
Company.
1.
<PAGE>
4.
(a) At the closing of the Company's Initial Public Offering
(as defined below), the entire principal amount of and accrued interest on this
Note shall automatically be converted into fully-paid and non-assessable shares
of the Company's Common Stock (the "COMMON STOCK"). Such shares shall be
unregistered and shall not be issued pursuant to the Initial Public Offering. As
used herein, "INITIAL PUBLIC OFFERING" shall mean a firmly underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the Company. The number of shares of Common Stock to be issued upon
the conversion of this Note shall be equal to the quotient obtained by dividing
(i) the entire outstanding principal amount of this Note plus accrued interest
thereon by (ii) the price per share of the Common Stock, rounded to the nearest
whole share.
(b) No fractional shares of the Company's Common Stock will be
issued upon conversion of this Note. In lieu of any fractional share to which
the Holder would otherwise be entitled, the Company will pay to the Holder in
cash the amount of the unconverted principal and interest balance of this Note
that would otherwise be converted into such fractional share. Upon conversion of
this Note pursuant to this Section 2, the Holder shall surrender this Note, duly
endorsed, at the principal offices of the Company or any transfer agent of the
Company. At its expense, the Company will, as soon as practicable thereafter,
issue and deliver to such Holder, at such principal office, a certificate or
certificates for the number of shares to which such Holder is entitled upon such
conversion, together with any other securities and property to which the Holder
is entitled upon such conversion under the terms of this Note, including a check
payable to the Holder for any cash amounts payable as described herein. Upon
conversion of this Note, the Company will be forever released from all of its
obligations and liabilities under this Note with regard to that portion of the
principal amount and accrued interest being converted including without
limitation the obligation to pay such portion of the principal amount and
accrued interest.
5. Unless this Note has been converted in accordance with the terms of
Section 4 above, the entire outstanding principal balance and all unpaid accrued
interest shall become fully due and payable on the Maturity Date.
6. In the event of any default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.
7. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
8. The terms of this Note shall be construed in accordance with the
laws of the State of California, as applied to contracts entered into by
California residents within the State of California, which contracts are to be
performed entirely within the State of California.\
2.
<PAGE>
9. Any term of this Note may be amended or waived with the written
consent of Payor and Holder.
OMNICELL TECHNOLOGIES, INC.
By: /s/ Earl E. Fry
Name: Earl E. Fry
Title:Vice President, Chief Financial
Officer
3.
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AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes
only, September 24, 1999 is made by and between Marie A. Batton, Trustee of the
W. F. Batton and Marie A. Batton Trust UTA January 12, 1988, as amended
("Lessor") and Omnicell Technologies, Inc., a California corporation ("Lessee"),
(collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as 1085 EAST MEADOW CIRCLE, PALO ALTO, located In the County
of SANTA CLARA, State of CALIFORNIA and generally described as (describe briefly
the nature of the property and, If applicable, the "Project," if the property is
located within a Project) A FREE STANDING BUILDING CONSISTING OF APPROXIMATELY
18,360 RENTABLE SQUARE FEET. ("Premises"). (See also Paragraph 2).
1.3 TERM: FIVE (5) years and - 0 - months ("ORIGINAL TERM")
commencing DECEMBER 15, 1999, ("COMMENCEMENT DATE") and ending DECEMBER 14, 2004
("Expiration Date"). (See also Paragraph 3)
1.4 EARLY POSSESSION: DECEMBER 8, 1999 ("EARLY POSSESSION DATE").
(See also Paragraphs 3.2 and 3.3)
1.5 BASE RENT: $41,310.00 per month ("BASE RENT"), payable on the
FIFTEENTH (15TH) day of each month commencing DECEMBER 15, 1999 - JANUARY 14,
2000. (See also Paragraph 4)
/X/ If this box Is checked, there am provisions in this Lease for the Base Rent
to be adjusted and/or for common area maintenance charges.
1.6 BASE RENT PAID UPON EXECUTION: $41,310.00 as Base Rent for the
period DECEMBER 15, 1999 - JANUARY 14, 2000.
1.7 SECURITY DEPOSIT: $41,310.00 ("Security Deposit"). (See also
Paragraph 5)
1.8 AGREED USE: SOFTWARE RESEARCH AND DEVELOPMENT, ADMINISTRATIVE
OFFICES, AND STORAGE (See also Paragraph 6)
1.9 INSURING PARTY: Lessor is the "Insuring Party" unless
otherwise stated herein (See also Paragraph 8)
1.10 REAL ESTATE BROKERS: (See also Paragraph 15)
(a) REPRESENTATION: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist in this
transaction (check applicable boxes):
/ /___________________________represents Lessor exclusively ("Lessors Broker");
/ /___________________________represents Lessee exclusively ("Lessee's Broker");
or
/X/ CORNISH & CAREY COMMERCIAL represents both Lessor and Lessee
("Dual Agency").
(b) PAYMENT TO BROKERS: Upon execution and delivery of
this Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in
their separate written agreement (or if there is no such agreement, the sum of
______% of the total Base Rent for the Brokerage services rendered by said
Broker).
1.11 GUARANTOR. The obligations of the Lessee under this Lease are
to be guaranteed by N/A ("Guarantor). (See also Paragraph 37)
1.12 ADDENDA AND EXHIBITS. Attached hereto Is an Addendum or
Addenda consisting of Paragraphs 50 through 65 and Exhibits A , all of which
constitute a part of this Lease.
2. PREMISES.
2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth In this Lease. Unless otherwise
provided herein, any statement of size
<PAGE>
set forth in this Lease, or that may have been used in calculating rental, is an
approximation which the Parties agree is reasonable and the rental based thereon
is not subject to revision whether or not the actual size is more or less.
2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom
clean and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("START DATE"), and so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee within
thirty (30) days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date and that the structural elements of the
roof, bearing walls and foundation of any buildings on the Premises (the
"BUILDING") shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, Lessor shall, as Lessor's sole obligation
with respect to such matter, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessees expense.
2.3 COMPLIANCE. Lessor warrants that the improvements on the
Premise comply with all applicable laws, convenants or restrictions of record,
building codes, regulations and ordinances ("APPLICABLE REQUIREMENTS") in effect
on the Start Date. Said warranty does not apply to the use to which Lessee will
put the Premises or to any Alterations or Utility Installations (as defined in
Paragraph 7.3 (a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within six (6) months following the Start
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense. If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of any Hazardous Substance, or the reinforcement or other physical modification
of the Building ("CAPITAL EXPENDITURE"), Lessor and Lessee shall allocate the
cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however, that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to six (6)
months' Base Rent. If Lessee elects termination, Lessee shall immediately cease
the use of the Premises which requires such Capital Expenditure and deliver to
Lessor written notice specifying a termination date at least ninety (90) days
thereafter. Such termination date shall, however, in no event be earlier than
the last day that Lessee could legally utilize the Premises without commencing
such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(c);
provided, however, that if such Capital Expenditure is required during the last
two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to
terminate this Lease upon ninety (90) days prior written notice to Lessee unless
Lessee notifies Lessor, in writing, within ten (10) days after receipt of
Lessor's termination notice that Lessee will pay for such Capital Expenditure.
If Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest from Rent until Lessor's share of such costs have been fully paid. If
Lessee is unable to finance Lessor's share, or if the balance of the Rent due
and payable for the remainder of this Lease is not sufficient to fully reimburse
Lessee on an offset basis, Lessee shall have the right to terminate this Lease
upon thirty (30) days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.
2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee's intended use, (b)
Lessee has made such investigation as it deems necessary with reference to such
matters and assumes all responsibility therefor as the same relate to its
occupancy of the Premises, and (c) neither Lessor, Lessor's agents, nor any
Broker has made any oral or written representations or warranties with respect
to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (a) Broker has made no
<PAGE>
representations, promises or warranties concerning Lessee's ability to honor the
Lease or suitability to occupy the Premises, and (b) it is Lessor's sole
responsibility to investigate the financial capability and/or suitability of all
proposed tenants.
2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor
in Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Original Term
of this Lease are as specified in Paragraph 1.3.
3.2 EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
shall, however, be in effect during such period. Any such early possession shall
not affect the Expiration Date.
3.3 DELAY IN POSSESSION. Lessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises to Lessee
by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.
3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.
4. RENT.
4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to be
rent ("RENT").
4.2 PAYMENT. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one (1)
full calendar month shall be prorated based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee's faithful
performance of its obligations under this Lease. If Lessee fails to pay
Rent, or otherwise Defaults under this Lease, Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of
any amount due Lessor or to reimburse or compensate Lessor for any
liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said
Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. Should the
Agreed Use be amended to accommodate a material change in the business
of Lessee or to accommodate a sublessee or assignee, Lessor shall have
the right to increase the Security Deposit to the extent necessary, in
Lessor's reasonable judgment, to account for any increased wear and
tear that the Premises may suffer as a result thereof. If a change in
control of Lessee occurs during this Lease and following such change
the financial condition of Lessee is, in Lessor's reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with
Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial
<PAGE>
condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within fourteen (14) days after the
expiration or termination of this Lease, if Lessor elects to apply the
Security Deposit only to unpaid Rent, and otherwise within thirty (30)
days after the Premises have been vacated pursuant to Paragraph 7.4(c)
below, Lessor shall return that portion of the Security Deposit not
used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.
6. USE.
6.1 USE. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use,
6.2 HAZARDOUS SUBSTANCES. See Addendum Paragraph 54.
(a)
(b)
(c)
(d)
<PAGE>
(e)
(f)
(g)
6.3
6.4
7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. See Addendum Paragraph 559a)
(a) IN GENERAL. Subject to the provisions of Paragraph
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage and Destruction), and 14 (Condemnation), Lessee shall,
al Lessee's sole expense, keep the Premises, Utility Installations, and
Alterations in good order, condition and repair (whether or not the portion of
the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, heating, ventilating,
air-conditioning, electrical, lighting facilities, boilers, pressure vessels,
fire protection system, fixtures, walls (interior and exterior), ceilings,
floors, windows, doors, skylights, landscaping, driveways, parking lots, fences,
signs, sidewalks and parkways located in, on, or adjacent to the Premises.
Lessee is also responsible for keeping the roof and roof drainage clean and free
of debris. Lessor shall keep the surface and structural elements of the roof,
foundations, and bearing walls in good repair (see Paragraph 7.2). Lessee, in
keeping the Premises in good order, condition and repair shall exercise and
perform good maintenance practices. Lessee's obligations
<PAGE>
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition (including, e.g.,
graffiti removal) consistent with the exterior appearance of other similar
facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building.
(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole
expense, procure and maintain contracts, with copies to Lessor, in customary
form and substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements ("Basic Elements"), if
any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and
pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and irrigation systems, (v) driveways and
parking lots, (vi) clarifies, (vii) basic utility feed to the perimeter of the
Building, and (viii) any other equipment, if reasonably required by Lessor.
(c) REPLACEMENT. Subject to Lessee's indemnification of
Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee's failure to exercise and perform good
maintenance practices, if the Basic Elements described in Paragraph 7.1(b)
cannot be repaired other than at a cost which is in excess of 50% of the cost of
replacing such Basic Elements, then such Basic Elements shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one and the denominator of which is the number of months of the
useful life of such replacement as such useful life is specified pursuant to
Federal income tax regulations or guidelines for depreciation thereof (including
interest on the unamortized balance as is then commercially reasonable in the
judgment of Lessor's accountants), with Lessee reserving the right to prepay its
obligation at any time. See Addendum Paragraph 55(b).
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the
Parties hereto that Lessor have no obligation, in any manner whatsoever, to
repair and maintain the Premises, or the equipment therein, all of which
obligations are intended to be that of the Lessee, except for the surface and
structural elements of the roof, foundations and bearing wails, the repair of
which shall be the responsibility of Lessor upon receipt of written notice that
such a repair is necessary. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties-as to maintenance
and repair of the Premises, and they expressly waive the benefit of any statute
now or hereafter in effect to the extent it is inconsistent with the terms of
this Lease.
7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" refers to all floor and window coverings, air lines, power
panels, electrical distribution, security and fire protection systems and signs,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing
in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery
and equipment that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the improvements, other
than Utility Installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations or non-structural
alterations to the interior of the Premises (excluding the roof) without such
consent but upon notice to Lessor, as long as they are not visible from the
outside, do not involve puncturing, relocating or removing the roof or any
existing walls, and the cumulative cost thereof during this Lease as extended
does not exceed $50,000 in the aggregate or $10,000 in any one year.
(b) CONSENT. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor
shall be presented to Lessor in written form with detailed plans. Consent shall
be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental
permits, (ii) furnishing Lessor with copies of both the permits and the plans
and specifications prior to commencement of the work, and (iii) compliance with
all conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials, Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.
(c) INDEMNIFICATION. Lessee shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior to
the commencement of any work in, on or about the Premises, and Lessor shall have
the right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surely bond in an amount equal to one and one-half times the amount of such
contested lien, claim or
<PAGE>
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require
removal or elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Unless otherwise instructed per Paragraph 7.4(b) hereof,
all Lessee Owned Alterations and Utility Installations shall, at the expiration
or termination of this lease, become the property of Lessor and be surrendered
by Lessee with the Premises. See Addendum Paragraph 55(d).
(b) REMOVAL. By delivery to Lessee of written notice from
Lessor not earlier than ninety (90) and not later than thirty (30) days prior to
the end of the term of this Lease, Lessor may require that any or all Lessee
Owned Alterations or Utility Installations be removed by the expiration or
termination of this Lease. Lessor may require the removal at any time of all or
any part of any Lessee Owned Alterations or Utility Installations made without
the required consent.
(c) SURRENDER/RESTORATION. See Addendum Paragraph 55(e).
"Ordinary wear and tear" shall not include any damage or deterioration that
would have been prevented by good maintenance practice. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures,
Lessee Owned Alterations and/or Utility Installations, furnishings, and
equipment as well as the removal of any storage tank installed by or for Lessee,
and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT FOR INSURANCE. Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by lessee to Lessor within ten (10) days following
receipt of an invoice.
8.2 LIABILITY INSURANCE.
(a) CARRIED BY LESSEE. Lessee shall obtain and keep in
force a Commercial General Liability Policy of Insurance protecting Lessee and
Lessor against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF
PREMISES ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION
ENDORSEMENT" for damage caused by heat, smoke or fumes from a hostile fire. The
Policy shall not contain any intra-insured exclusions as between insured persons
or organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.
(b) CARRIED BY LESSOR. Lessor shall maintain liability
insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.
8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall
obtain and keep in force a policy or policies in the name of Lessor, with loss
payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lenders, but in no event more than the commercially
reasonable and available insurable value thereof. If Lessor is the Insuring
Party, however, Lessee Owned Alterations and Utility Installations Trade
Fixtures, and Lessee's personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available an(
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender or included in the Base Premium), including coverage
for debris removal and the enforcement of any Applicable Requirements requiring
the
<PAGE>
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $10,000 per
occurrence, and lessee shall be liable for such deductible amount in the event
of an Insured Loss.
(b) RENTAL VALUE. The Insuring Parties shall obtain and keep in
force a policy or policies in the name of Lessor, with loss payable to Lessor
and any Lender, insuring the loss of the full Rent for one (1) year. Said
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for one full year's loss of Rent from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next twelve (12) month
period. Lessee shall be liable for any deductible amount in the event of such
loss.
(c)
8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.
(a) PROPERTY DAMAGE. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such insurance shall be
full replacement cost coverage with a deductible of not to exceed $10,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with
written evidence that such insurance is in force.
(b) BUSINESS INTERRUPTION. Lessee shall obtain and
maintain loss of income and extra expense insurance in amounts as will reimburse
Lessee for direct or indirect loss of earnings attributable to all perils
commonly insured against by prudent lessees in the business of Lessee or
attributable to prevention of access to the Premises as a result of such perils.
(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes
no representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.5 INSURANCE POLICIES. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.
8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.7 INDEMNITY. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.
<PAGE>
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations, Utility Installations and Trade Fixtures, which can reasonably be
repaired in six (6) months or less from the date of the damage or destruction.
Lessor shall notify Lessee in writing within thirty (30) days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises.
9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If such funds or assurance are not received, Lessor
may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect; or (ii) have this Lease terminate thirty
(30) days thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
<PAGE>
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.
9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 DAMAGE NEAR END OF TERM. If at any time during the last six
(6) months of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate
this Lease effective sixty (60) days following the date of occurrence of such
damage by giving a written termination notice to Lessee within thirty (30) days
after the date of occurrence of such damage. Notwithstanding the foregoing, if
Lessee at that time has an exercisable option to extend this Lease or to
purchase the Premises, then Lessee may preserve this Lease by, (a) exercising
such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier
of (i) the date which is ten days after Lessee's receipt of Lessor's written
notice purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option expires. If Lessee duly exercises such option during such
period and provides Lessor with funds (or adequate assurance thereof) to cover
any shortage in insurance proceeds, Lessor shall, at Lessor's commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee's
option shall be extinguished.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) ABATEMENT. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) REMEDIES. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term
"Real Property Taxes" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "REAL PROPERTY TAXES" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including, but not limited to, a change in the ownership
of the Premises.
10.2 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property
Taxes applicable to the Premises provided during the term of this Lease. Subject
to paragraph 10.2(b), all such payments shall be made at least ten (10) days
prior to any delinquency date. Upon Lessor's request Lessee shall promptly
furnish Lessor with satisfactory evidence that such taxes have been paid. if any
such taxes shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee's share of such taxes shall be prorated bto
cover only that portion of the tax bill applicable to the period that this lease
is in effect, and Lessor shall reimburse lessee for any
<PAGE>
overpayment. If Lessee shall fail to pay any required Real Property taxes,
Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor
therefor upon demand.
(b)
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Tax Increase for all
of the land and improvements included within the tax parcel assessed, such
proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to
delinquency, all taxes assessed against and levied upon Lessee Owned
Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee. When possible, Lessee shall cause such property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are
not separately metered to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered.
12. ASSIGNMENT END SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. See Addendum paragraphs 51 and 57.
(a) Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or
sublet ail or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent.
(b) A change in the control of Lessee shall constitute
an assignment requiring consent. The transfer, on a cumulative basis, of
fifty-one percent (51%) or more of the voting control of Lessee without
Lessor's prior written consent shall constitute a change in control for this
purpose.
(c) The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, transfer, leverage buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than twenty-five percent (25%) of such Net Worth as it was represented
at the time o! the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "NET WORTH OF LESSEE" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.
(d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to one hundred ten percent (110%) of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by
.Lessor shall be limited to compensatory damages and/or injunctive relief.
<PAGE>
12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
(a) Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.
(c) Lessor's consent to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee,
Lessor may proceed directly against Lessee, any Guarantors or anyone else
responsible for the performance of Lessee's obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor.
(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of not to exceed $1,000 as consideration for Lessor's
considering and processing said request. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be reasonably
requested.
(f) Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment or entering into such sublease, be
deemed to have assumed and agreed to conform and comply with each and every
term, covenant, condition and obligation herein to be observed or performed by
Lessee during the term of said assignment or sublease, other than such
obligations as are contrary to or inconsistent with provisions of an assignment
or sublease to which Lessor has specifically consented to in writing.
12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent subject to Lessor's right to receive
bonus rent, if any, pursuant to Addendum Paragraphs.. Lessor shall not, by
reason of the foregoing or any assignment of such sublease, nor by reason of the
collection of Rent, be deemed liable to the sublessee for any failure of Lessee
to perform and comply with any of Lessee's obligations to such sublessee. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee's obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease. Sublessee shall rely upon any such notice from
Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from Lessee
to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at
its option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
(c) Any matter requiring the consent of the sublessor
under ,, sublease shall also require the consent of Lessor.
(d) See Addendum paragraph 57(a).
(e) Lessor shall deliver a copy of any notice of Default
or Breach by Lessee to the sublessee, who shall have the right to cure the
Default of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. DEFAULT; BREACH; REMEDIES.
<PAGE>
13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
rules under this Lease. A "BREACH" is defined as the occurrence of one or more
of the following Defaults, and the failure of Lessee to cure such Default within
any applicable grace period:
(a) The abandonment of the Premises; or the vacating of
the Premises without providing a commercially reasonable level of security,
and/or Security Deposit or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without
providing reasonable assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or
any Security Deposit required to be made by Lessee hereunder, whether to Lessor
or to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.
(c) The failure by Lessee to provide (i) reasonable
written evidence of compliance with Applicable Requirements, (ii) the service
contracts, (iii) the rescission of an unauthorized assignment or subletting,
(iv) Estoppel Certificate, (v) a requested subordination, where any such
failure continues for a period of ten (10) days following written notice to
Lessee.
(d) A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
40 hereof, other than those described in subparagraphs 13.1(a), (b) or (c),
above, where such Default continues for a period of thirty (30) days after
written notice; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach if Lessee commences such cure within said
thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
(e) The occurrence of any of the following events: (i)
the making of any general arrangement or assignment for the benefit of
creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. ss. 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within sixty (60) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where such seizure is not discharged within sixty (60) days; provided,
however, in the event that any provision of this subparagraph 13.1 (e) is
contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee
or of any Guarantor given to Lessor was materially false intentionally.
(g)
13.2 REMEDIES. In the event of the Breach of this Lease by Lessee,
Lessor may, at its option, perform such duty or obligation on Lessee's behalf,
including, but not limited to, the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which is drawn, Lessor, at its option, may
require all future payments to be made by Lessee to be by cashier's check, in
the event of a Breach, Lessor may, with or without further notice or demand, and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such Breach:
(a) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor. In such event Lessor
shall be entitled to recover from Lessee: (i) the unpaid Rent which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided; (iii) the worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss that the Lessee proves
could be reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee's failure to
perform its obligations under
<PAGE>
this Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, the cost of recovering possession of
the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, and that portion of any
leasing commission paid by Lessor in connection with this Lease applicable to
the unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the time of award
plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's
Breach of this Lease shall not waive Lessor's right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a
notice and grace period required under Paragraph 13.1 was not previously given,
a notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession
and recover the Rent as it becomes due, in which event Lessee may sublet or
assign, subject only to reasonable limitations. Acts of maintenance, efforts to
relet, and/or the appointment of a receiver to protect the Lessor's interests,
shall not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available
under the laws or judicial decisions of the state wherein the Premises are
located. The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof prior to such termination or by reason of Lessee's occupancy of
the Premises.
13.3
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. See Addendum Paragraph
58. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 INTEREST. Any monetary payment due Lessor hereunder, other
than late charges, not received by Lessor, when due as to scheduled payments
(such as Base Rent) or within thirty (30) days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due,
as to scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.
13.6 BREACH BY LESSOR.
(a) NOTICE OF BREACH. Lessor shall not be deemed in
breach of this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
<PAGE>
(b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. in the
event that neither Lessor nor Lender cures said breach within thirty (30) days
after receipt of said written notice, or if having commenced said cure they do
not diligently pursue it to completion, then Lessee may elect to cure said
breach at Lessee's expense and offset from Rent an amount equal to the greater
of one month's Base Rent or the Security Deposit, and to pay an excess of such
expense under protest, reserving Lessee's right to reimbursement from Lessor.
Lessee shall document the cost of said cure and supply said documentation to
Lessor.
14. CONDEMNATION. See Addendum Paragraph 59.
15. BROKERS' FEE.
15.1
15.2 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Each Broker shall be a third party beneficiary of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions pertaining to this Lease when due, then such amounts
shall accrue Interest. In addition, if Lessor fails to pay any amounts to
Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and
Lessee of such failure and if Lessor fails to pay such amounts within ten (10)
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker.
15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS.
Lessee and Lessor each represent and warrant to the other that it has had no
dealings with any person, firm, broker or finder (other than the Brokers, if
any) in connection with this Lease, and that no one other than said named
Brokers is entitled to any commission or finder's fee in connection herewith.
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold
the other harmless from and against liability for compensation or charges which
may be claimed by any such unnamed broker, finder or other similar party by
reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, and/or attorneys' fees reasonably incurred with respect
thereto.
16. ESTOPPEL CERTIFICATES.
(a) See Addendum Paragraph 60.
(b) If the Responding Party shall fail to execute or
deliver the Estoppel Certificate within such ten day period, the Requesting
Party may execute an Estoppel Certificate stating that: (i) the Lease is in full
force and effect without modification except as may be represented by the
Requesting Party; (ii) there are no uncured defaults in the Requesting Party's
performance; and (iii) if Lessor is the Requesting Party, not more than one
month's rent has been paid in advance. Prospective purchasers and encumbrancers
may rely upon the Requesting Party's Estoppel Certificate, and the Responding
Party shall be estopped from denying the truth of the facts contained in said
Certificate.
<PAGE>
(c) If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by Lessor such financial statements as
may be reasonably required by such lender or purchaser, including, but not
limited to, Lessee's financial statements for the past three (3) years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee's interest in the
prior lease. In the event of a transfer of Lessor's title or interest
in the Premises or this Lease, Lessor shall deliver to the transferee
or assignee (in cash or by credit) any unused Security Deposit held by
Lessor. Except as provided in Paragraph 15, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations
and/or covenants in this Lease to be performed by the Lessor shall be
binding only upon the Lessor as hereinabove defined. Notwithstanding
the above, and subject to the provisions of Paragraph 20 below, the
original Lessor under this Lease, and all subsequent holders of the
Lessor's interest in this Lease shall remain liable and responsible
with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6 above.
18. SEVERABILITY. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
19. DAYS. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor, the individual partners of Lessor or
its or their individual partners, directors, officers or shareholders,
and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to
this Lease, and shall not seek recourse against the individual partners
of Lessor, or its or their individual partners, directors, officers or
shareholders, or any of their personal assets for such satisfaction.
21. TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under
this Lease.
22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains
all agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or
understanding shall be effective.
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by courier)
or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 DATE OF NOTICE. Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon. If sent by regular mail the notice shall be deemed given forty-eight
(48) hours after the same is addressed as required herein and mailed with
postage prepaid. Notices delivered by United States Express Mail or overnight
courier that guarantee next day delivery shall be deemed given twenty-four (24)
hours after delivery of the same to the Postal Service or courier. Notices
transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday, Sunday or legal holiday,
it shall be deemed received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any
other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or of any
<PAGE>
other term, covenant or condition hereof. Lessor's consent to, or
approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or
similar act by Lessee, or be construed as the basis of an estoppel to
enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any
Default or Breach by Lessee. Any payment by Lessee may be accepted by
Lessor on account of monies or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force
or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum
of this Lease for recording purposes. The Party requesting recordation
shall be responsible for payment of any fees applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of
this Lease. In the event that Lessee holds over, then the Base Rent
shall be increased to one hundred fifty percent (150%) of the Base Rent
applicable during the month immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by
Lessor to any holding over by Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for
the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall
include the plural and vice versa. This Lease shall not be construed as
if prepared by one of the Parties, but rather according to its fair
meaning as a whole, as if both Parties had prepared it.
29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located.
Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. Subject to Paragraph 30.3 this Lease and
any Option granted hereby shall be subject and subordinate to any ground lease,
mortgage, deed of trust or other hypothecation or security device (collectively,
"Security Device"), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and
extensions thereof. Lessee agrees that the holders of any such Security Devices
(in this Lease together referred to as "Lessor's Lender") shall have no
liability or obligation to perform any of the obligations of Lessor under this
Lease. Any Lender may elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device by giving written notice thereof to
Lessee, whereupon this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (i)
be liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (ii) be subject to any offsets or
defenses which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into
by Lessor after the execution of this Lease, Lessee's subordination of this
Lease shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
<PAGE>
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered
in a separate suit, whether or not such action or proceeding is pursued
to decision or judgment. The term, "PREVAILING PARTY" shall include,
without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker
of its claim or defense. The attorneys' fees award shall not be
computed in accordance with any court fee schedule, but shall be such
as to fully reimburse all attorneys' fees reasonably incurred. In
addition, Lessor shall be entitled to attorneys' fees, costs and
expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal
action is subsequently commenced in connection with such Default or
resulting Breach.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. [See Addendum Paragraph 61]
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent.
Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.
34. SIGNS. See Addendum Paragraph 62.
35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the
mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease
or lesser estate in the Premises; provided, however, that Lessor may
elect to continue any one or all existing subtenancies. Lessor's
failure within ten (10) days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest,
shall constitute Lessor's election to have such event constitute the
termination of such interest.
36. CONSENTS. Except as otherwise provided herein, wherever in this Lease
the consent of a Party is required to an act by or for the other Party,
such consent shall not be unreasonably withheld or delayed. Lessor's
actual reasonable costs and expenses (including but not limited to
architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefor. Lessor's consent to any act,
assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such
consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at
the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as
are then reasonable with reference to the particular matter for which
consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests
the reasons for such determination, the determining party shall furnish
its reasons in writing and in reasonable detail within ten (10)
business days following such request.
37.
37.1
37.2
38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee
shall have quiet possession and quiet enjoyment of the Premises during
the term hereof. Any remedy for breach of this provision shall be
limited to damages or injunction and not Lease termination.
39. OPTIONS.
<PAGE>
39.1 DEFINITION. "Option" shall mean: (a) the right to extend the
term of or renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to
Lessee in this Lease is personal to the original Lessee, and cannot be assigned
or exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises and, if requested by
Lessor, with Lessee certifying that Lessee has no intention of thereafter
assigning or subletting.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option: (i)
during the period commencing with the giving of any notice of Default and
continuing until said Default is cured; (ii) during the period of time any Rent
is unpaid (without regard to whether notice thereof is given Lessee); (iii)
during the time Lessee is in Breach of this Lease.
(b) The period of time within which an Option may be
exercised shall not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force
or effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, if
Lessee commits a Breach of this Lease and Lessor terminates this Lease,
40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings
controlled by Lessor Lessee agrees that it will observe all reasonable
rules and regulations which Lessor may make from time to time for the
management, safety, and care of said properties, including the care and
cleanliness of the grounds and including the parking, loading and
unloading of vehicles, and that Lessee will pay its fair share of
common expenses incurred in connection therewith.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever
to provide same. Lessee assumes all responsibility for the protection
of the Premises, Lessee, its agents and invitees and their property
from the acts of third parties.
42. RESERVATIONS. Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements,
rights and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements,
rights, dedications maps and restrictions do not unreasonably interfere
with the use of the Premises by Lessee or increase Lessee's costs or
obligations hereunder. Lessee agrees to sign any documents reasonably
requested by Lessor to effectuate any such easement rights, dedication,
map or restrictions.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under
the provisions hereof, the Party against whom the obligation to pay the
money is asserted shall have the right to make payment "under protest"
and such payment shall not be regarded as a voluntary payment and there
shall survive the right on the part of said Party to institute suit for
recovery of such sum. If it shall be adjudged that there was no legal
obligation on the part of said Party to pay such sum or any part
thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.
44. AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual
executing this Lease on behalf of such entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on
its behalf. Each Party shall, within thirty (30) days after request,
deliver to the other party satisfactory evidence of such authority.
45. CONFLICT. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to
lease to the other Party. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.
<PAGE>
47. AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do
not materially change Lessee's obligations hereunder, Lessee agrees to
make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of
normal financing or refinancing of the Premises.
48. MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and
several responsibility to comply with the terms of this Lease.
49. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties
and/or Brokers arising out of this Lease / / is /X/ is not attached to
this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
<PAGE>
- --------------------------------------------------------------------------------
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
- --------------------------------------------------------------------------------
The Parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
<TABLE>
<CAPTION>
<S><C>
Executed at: Palo Alto , CA Executed at: Palo Alto, CA
on: October 14, 1999 on:
----------------
by LESSOR: by LESSEE:
MARIE A. BATTON, TRUSTEE OF THE OMNICELL TECHNOLOGIES, INC., a California
W.F. BATTON AND MARIE A. BATTON corporation
TRUST UTA DATED January 12, 1988,
As Amended
By: /s/ Marie Barton By: /s/ Earl E. Fry
Name Printed: Marie A. Batton Name Printed: Earl E. Frey
Title: Trustee Title:
-----------------------------------------
By: By:
-------------------------------------- --------------------------------------------
Name Printed: Name Printed:
---------------------------- ----------------------------------
TITLE: Title:
- ----------------------------------------- -----------------------------------------
Address: 1190 East Meadow Drive Address: Palo Alto, California 94303-4269
Telephone: (650) 494-7471 Telephone: ( )
------------------------------------
Facsimile: (650) 494-6904 Facsimile: ( )
------------------------------------
Federal ID No. Federal ID No.
--------------------------- ---------------------------------
</TABLE>
NOTE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So.
Flower Street, Suite 600, Los Angeles, California 90017. (213)
687-8777. Fax No. (213) 687-8616
<PAGE>
ADDENDUM TO LEASE
1085 East Meadow Circle
Palo Alto, California
This Addendum to Lease is entered into as of September 24, 1999, by and
between MARIE A. BATTON, TRUSTEE OF THE W.F. BATTON AND MARIE A. BATTON TRUST
UTA DATED JANUARY 12, 1988, AS AMENDED, Lessor, and OMNICELL TECHNOLOGIES, INC.,
a California corporation, Lessee, for the Premises at 1085 East Meadow Circle,
Palo Alto, California.
Lessor and Lessee further agree as follows:
50. BASE RENT.
(a) Lessee shall pay to Lessor Base Rent per month based upon the
Premises consisting of 18,360 rentable square feet, as
follows:
<TABLE>
<CAPTION>
Base Rent
Period Rental Rate Per Month
------ ----------- ---------
<S> <C> <C>
December 15, 1999 -December 14, 2000 $2.25/Sq. Ft./Mo. NNN $41,310.00
December 15, 2000 -December 14, 2001 $2.33/Sq. Ft./Mo. NNN $42,778.80
December 15, 2001 -December 14, 2002 $2.41/Sq. Ft./Mo. NNN $44,247.60
December 15, 2002 -December 14, 2003 $2.49/Sq. Ft./Mo. NNN $45,716.40
December 15, 2003 -December 14, 2004 $2.58/Sq. Ft./Mo. NNN $47,368.80
</TABLE>
(b) Lessee shall pay to Lessor upon the execution and delivery of
this Lease the sum of $41,310 as Base Rent for the period
December 15, 1999 to January 14, 2000.
(c) Prior to Lessee occupying the Premises on the Early Possession
Date, Lessee shall deliver to Lessor a certificate of
insurance and waiver of subrogation.
51. OPTION TO EXTEND. Lessee shall have one (1) five (5) year
option to extend the Lease at one hundred percent (100%) of the then fair market
rent. In no event shall rent in the option period be less than the rent paid in
the last year of the initial term. Said option to extend shall not be exercised
by Lessee for the purpose of making a profit on a sublease. Assignment of the
Lease or subletting of the Premises or any portion thereof by Lessee during the
option extension period shall be subject to the prior written consent of Lessor
and shall be subject to the provisions of Paragraph 12 as supplemented by this
Paragraph 51. Assignment of the Lease or subletting of the Premises during the
option extension period shall also be subject to the prior written approval of
the Ground Lessor in accordance with the Ground Lease. Lessor may condition
Lessor's consent to an assignment or subletting to Lessor receiving fifty
percent (50%) of the bogus rent, if any, after deducting only a standard leasing
commission payable by Lessee which shall be subject to Lessor's prior written
approval, which approval shall not be unreasonably withheld. Any assignment or
sublease to which Lessor and the Ground Lessor consent in the first instance
shall expressly prohibit any further assignment or subletting of all or any
portion of the Premises by such initial assignee or sublessee. At Lessor's
option, Lessor may terminate the Lease and recapture the Premises upon
<PAGE>
receipt by Lessor of a request from Lessee for Lessor's consent to an assignment
or subletting of all or any portion of the Premises. If Lessor elects to
terminate this Lease, (a) as of the effective date of termination, Lessor and
Lessee shall be released and discharged from any liability or obligation to the
other under this Lease which accrues thereafter, and (b) Lessee agrees that
Lessor may enter into a direct lease with such proposed assignee or sublessee
without any obligation or liability to Lessee.
Lessee may exercise the option to extend by giving written notice of
exercise to Lessor at least six (6) months but not more than twelve (12) months
prior to the expiration of the initial Lease term, provided that if Lessee is
currently in default under the Lease at the time of exercise of the option or at
the commencement date of the option extension period, such notice shall be void
and of no force or effect and the option shall lapse. If exercised, the option
extension period shall be upon the same terms and conditions as the initial
Lease term, except that (i) the initial monthly Base Rent and rental adjustments
during the option period shall be one hundred percent (100%) of the then fair
market rent as agreed upon by the parties within thirty (30) days after the
exercise of the option or if the parties are unable to agree, then by appraisal,
but the initial monthly Base Rent shall not be less than the monthly Base Rent
payable during the last twelve (12) months of the initial Lease term and the
periodic adjustments of Base Rent shall not be less than the annual percentage
adjustments of Base Rent for the initial term as provided in Paragraph 50(a);
and (ii) there shall be no additional option to extend. If Lessee does not
exercise the option to extend at least six (6) months prior to the expiration of
the initial term, the option shall lapse, time being of the essence.
52. CONDITION OF THE PREMISES; TENANT IMPROVEMENTS.
(a) Prior to the occupancy of the Premises by Lessee, Lessor shall
cause to be constructed and completed the Tenant Improvements
to the Premises listed on the schematic plan prepared by LRS
Architects dated August 27, 1999, a copy of which has been
delivered by Lessor to Lessee and is incorporated by reference
herein. Lessor shall cause the Tenant Improvements to be
constructed by Dymond Construction Group (the "Contractor")
pursuant to an Agreement between Lessor and the Contractor
(the "Construction Contract"). The Construction Contract shall
be subject to Lessee's approval, which approval shall not be
unreasonably withheld. A copy of the approved Construction
Contract shall be attached hereto as EXHIBIT "A." Any
additional working drawings for the Tenant Improvements shall
be prepared by LRS Architects at Lessor's expense. The
Construction Contract and the working drawings for the Tenant
Improvements shall be subject to approval by Lessee, which
approval shall not be unreasonably withheld. The Construction
Contract shall include a guarantee by the Contractor against
defects in workmanship or materials for one (1) year. The
electrical system, HVAC ..system, and plumbing in the Premises
shall be in good working order upon completion of the Tenant
Improvements.
(b) The total cost of the Tenant Improvements is estimated to be
approximately Eight Hundred Fifty Thousand Dollars ($850,000).
Lessor shall pay (1) the cost of certain basic upgrades and
improvements to the Premises at a cost of approximately Three
Hundred Thirty-Five Thousand Dollars ($335,000), and (2)the
additional sum of Two Hundred Thirty-Five Thousand Dollars
($235,000) as Lessor's Tenant Improvement Allowance. The sum
of said two (2) amounts is referred to as "Lessor's
Contribution" to the cost of the Tenant Improvements. Lessee
shall pay to Lessor in a lump sum in cash promptly upon
completion of the Tenant Improvements and receipt by Lessee of
an invoice therefore from Lessor, that portion of the cost of
the Tenant Improvements which exceeds Lessor's Contribution
plus the added cost of any change orders requested by Lessee
pursuant to Paragraph 52(c).
<PAGE>
(c) After the working drawings have been approved by Lessor and
Lessee in final form in writing as provided above, Lessee
shall have the right to request change orders to the Tenant
Improvements. Any change order requested by Lessee shall be
subject to the prior written approval of Lessor, which consent
shall not be unreasonably withheld or delayed provided that
Lessee agrees to pay in a lump sum in cash promptly upon
completion of the Tenant Improvements any increase in the cost
of the Tenant Improvements resulting from such change order,
and provided further that if any change order results in a
delay in the completion of the Tenant Improvements beyond
December 15, 1999, the rent commencement shall be December 15,
1999.
(d) All of the Tenant Improvements shall become a part of the
realty and shall remain with the property upon the expiration
or sooner termination of this Lease, except for items which
Lessor and Lessee agree in writing prior to commencement of
construction may be or shall be removed by Lessee.
(e) If the Tenant Improvements are not completed by December 15,
1999 due solely to delays caused by Lessee which are
documented by Lessor and/or the Contractor, the Commencement
Date and rent commencement shall be December 15, 1999.
53. ALTERATIONS OR IMPROVEMENTS. If Lessee shall desire to make
any Alterations or improvements to the Premises, or any part or parts thereof at
any time or times during the term of this Lease or the option period, the same
shall be subject to Lessor's prior written approval, and if approved, such
Alterations shall be constructed without cost or expense to Lessor, in
accordance with the requirements of all laws, ordinances, codes, orders, rules
and regulations of all governmental authorities having jurisdiction over the
Premises. Should any modifications require a building permit, such work shall be
done by a licensed contractor. Subsequent structural or design modifications to
the Premises involving a cost of more than Twenty-Five Thousand Dollars
($25,000) shall not be made until the Ground Lessor has given its written
approval of detailed plans and specifications for the work. Lessor shall have
the right to require Lessee to restore the Premises to their original condition
on occupancy when the Lease expires or terminates. Upon request from Lessee,
Lessor shall advise Lessee in writing whether Lessor reserves the right to
require Lessee to remove any specific Alterations or Utility Installations from
the Premises upon the termination of the Lease. Otherwise, the Premises shall be
returned to Lessor in "clean" condition including carpet cleaning and repair of
any damages,
54. HAZARDOUS SUBSTANCES.
(a) DEFINITION; COVENANT BY LESSEE. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance,
chemical, material, or waste whose presence, nature, quantity
and/or intensity of existence, use, manufacture, disposal,
transportation, spill release or effect, either by itself or
in combination with other materials expected to be on the
Premises, is either (i) regulated or monitored by any
governmental authority, or (ii) a basis for liability of
Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substance
shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by-products or fractions
thereof. Lessee shall not cause any contamination or damage to
the Premises or the neighboring properties or cause Lessor to
incur any liability, loss, or damage as a result of the
generation, possession, storage, use, transportation, or
disposal by Lessee of any Hazardous Substances in the conduct
of Lessee's business on the Premises. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but in
compliance with all Applicable Law, use any ordinary and
customary materials reasonably required to be used by Lessee
in the normal course of Lessee's business permitted on the
Premises, so long as such use does not expose the
<PAGE>
Premises or neighboring properties to any meaningful risk of
contamination or damage or expose Lessor to any liability
therefor. Prior to the occupancy of the Premises by Lessee,
Lessee shall deliver to Lessor a list of the Hazardous
Substances which Lessee considers to be ordinary and customary
materials reasonably required to be used by Lessee in the
normal course of Lessee's permitted use of the Premises. If
Lessor concurs therewith, Lessor shall so confirm in writing
to Lessee, and such confirmation shall constitute Lessor's
consent to the existence, use, manufacture, storage, and
transportation of-such Hazardous Substances in, on, and about
the Premises during the term of this Lease.
(b) DUTY TO INFORM LESSOR. Upon the commencement of the Lease term
and on each anniversary date thereafter, Lessee shall provide
to Lessor a list of the primary Hazardous Substances which
Lessee uses or stores on the Premises, along with, as to each
such Hazardous Substance, its purpose and the approximate
volume brought onto the Premises since the last report to
Lessor under this Paragraph 54(b). Lessee shall deliver to
Lessor (1) a copy of Lessee's current Hazardous Substances
Management Plan, and any amendments or supplements thereto, or
replacements thereof, from time to time during the term of
this Lease, and (2) a copy of all Hazardous Substances reports
or plans filed by Lessee with the City of Palo Alto, even
though Lessee's Hazardous Substances Management Plan and any
such reports on plans filed with the City show that Lessee is
not currently using any reportable Hazardous Substances on the
Premises.
(c) INDEMNIFICATION.
(i) Lessee shall indemnify, protect, defend and hold
Lessor, and Lessor's agents, employees, successors
and assigns, harmless from and against any and all
loss of rents and/or damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, permits
and attorneys' and consultants' fees if incurred as a
result of the release, discharge or emission of any
Hazardous Substance or storage tank brought on the
Premises during the Lease term by or for Lessee or
under Lessee's control. Lessee's obligations under
this Paragraph 54 shall include, but not be limited
to, the effects of any contamination or injury to
person, property, or the environment created by
Lessee, and the cost of investigation (including
consultants' and attorneys' fee), testing, removal,
remediation, restoration and/or abatement thereof, or
of any contamination therein involved, and shall
survive the expiration or earlier termination of this
Lease. No termination, cancellation, or release
agreement entered into by Lessor and Lessee shall
release Lessee from Lessee's obligations under this
Lease with respect to Hazardous Substances or storage
tanks, unless specifically so agreed by Lessor in
writing at the time of such agreement.
(ii) Lessor represents and warrants to Lessee that to the
best of Lessor's knowledge there are no Hazardous
Substances located in, on, under, or about the
Premises as of the Commencement Date of the term of
this Lease. Lessee shall have no responsibility to
Lessor or to any other person with respect to the
existence of any Hazardous Substances or storage tank
on the Premises that is not brought onto the Premises
or caused by any of Lessee's employees, agents,
contractors, or other persons under Lessee's control
or acting for or on behalf of Lessee.
(iii) Lessor shall indemnify, defend, protect and hold
Lessee, its employees, agents, shareholders,
licensees, invitees, officers and directors, harmless
from and against any claims, actions,
<PAGE>
losses, costs, damages, liabilities or expenses
(including, without limitation, reasonable
attorneys', experts' and consultants' fees,
investigation and laboratory fees), arising out of or
in connection with any Hazardous Substance
(including, without limitation, asbestos) which
Lessee establishes was present on the Commencement
Date of the term of this Lease on, under, in or about
the Premises, soil, air, groundwater or surface water
thereof and was not caused by the acts or omissions
of Lessee or its agents, contractors, or employees.
(d) LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in
this Lease, Lessee shall, at Lessee's sole cost and expense,
fully diligently and in a timely manner, comply with all
"Applicable Law," which term is used in this Lease shall
include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the
requirements of any applicable fire insurance underwriter or
rating bureau, relating to Lessee's particular use of the
Premises, including, but not limited to, matters pertaining to
(i) industrial hygiene, (ii) environmental conditions on, in,
under or about the Premises, including soil and groundwater
conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous
Substance or storage tank), now in effect or which may
hereafter come into effect, and whether or not reflecting a
change in policy from any previously existing policy. Lessee
shall, within ten (10) business days after receipt of Lessor's
written request, provide Lessor with copies of all documents
and information, including, but not limited to, permits,
registrations, manifests, applications, reports and
certifications, evidencing compliance with any Applicable Law
specified by Lessor in writing (with copies or any documents
involved) or any threatened or actual claim known to Lessee,
notice, citation, warning, complaint or report within Lessee's
possession and control pertaining to or involving failure by
Lessee or the Premises to comply with any Applicable Law.
(e) INSPECTION COMPLIANCE. Lessor shall have the right to enter
the Premises at any time in the case of an emergency, and
otherwise at reasonable times upon at least 24 hours notice to
the Lessee and subject to Lessee's reasonable security
precautions, for the purpose of inspecting the condition of
the Premises and for verifying the compliance by Lessee with
this Lease and all Applicable Laws (as defined in subparagraph
(d) above), and to employ experts and/or consultants in
connection therewith and/or to advise Lessor with respect to
Lessee's activities, including, but not limited to, the
installation, operation, use, monitoring, maintenance, or
removal of any Hazardous Substance or storage tank on or from
the Premises. The costs and expenses of any such inspections
shall be paid by the party requesting same, unless a Breach of
this Lease is found to exist, or unless the inspection is
requested or ordered by a governmental authority as the result
of any such existing violation or contamination. In any such
case, Lessee shall upon request reimburse Lessor for the
reasonable costs and expenses of such inspections.
55. MAINTENANCE AND REPAIRS.
(a) Excluded from Lessee's obligations for maintenance and repairs
in Paragraph 7.1(a) are the structural elements of the
Premises, the roof, exterior walls and foundation of the
Premises.
(b) Notwithstanding anything to the contrary in the Lease, Lessor
shall perform and construct, at Lessor's sole cost and
expense, any repair, maintenance or improvement (i)
necessitated by the acts or omissions of Lessor or its agents,
employees, invitees, or licensees, (ii) required as a
consequence of any violation of Applicable Laws or a
construction defect in the Premises as of the
<PAGE>
Commencement Date, (iii) which would be treated as a "capital
expenditure" under generally accepted accounting principles,
(iv) occasioned by fire, acts of God or other casualty or by
the exercise of the power of eminent domain, (v) for which
Lessor has a right of reimbursement from others, (vi)to the
structural elements of the Premises, the structural elements
of the roof (but excluding the roof membrane), exterior walls
and foundation of the Premises, and (vii) relating to the
abatement, removal, encapsulation, or other handling of
asbestos in, on or about the Premises existing on the
Commencement Date. Notwithstanding the foregoing, Lessee shall
reimburse Lessor for costs incurred with respect to (iii)
above (excluding costs of asbestos abatement) but only to the
extent that (a) the same reduces the expenses otherwise
payable by Lessee under the Lease and (b) Lessee's share of
such costs during any twelve-month period of the Lease is
amortized over the useful life of the capital item in
question.
(c) Pursuant to Paragraphs 7.1 and 7.2, Lessor's Obligations, of
the printed portion of this Lease, Lessor and Lessee agree
that this Lease is a "NNN Lease" and that it shall be solely
Lessee's obligation to repair and maintain the Premises, and
the equipment therein. Lessee shall reimburse Lessor within
thirty (30) days after written demand for all operating
expenses of the Premises, including, but not limited to, real
property taxes and assessments, and Lessor's property
insurance and liability insurance. Lessee shall directly
contract for and shall be responsible for the performance and
payment for all repairs and maintenance, including but not
limited to, repair and maintenance (and replacement, as
necessary) of the parking area; landscaping; common areas;
building repairs; repair and maintenance of the HVAC system,
including an HVAC service contract providing for inspection,
service and maintenance on a quarterly basis; repair and
maintenance of all other mechanical systems in the building,
and utilities; maintenance, repair, and replacement of the
roof membrane; and other structural and non-structural repairs
and replacement of building elements required as a result of
the installation, repair, maintenance, operation and removal
of Lessee's improvements, fixtures, and equipment.
(d) Upon request, Lessor shall advise Lessee in writing whether it
reserves the right to require Lessee to remove any Alterations
or Utility Installations from the Premises upon termination of
the Lease.
(e) The first sentence of Paragraph 7.4(c), Surrender/Restoration,
is amended to read as follows:
Lessee shall surrender the Premises by the Expiration Date or
any earlier termination date, with all of the improvements, parts and
surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear, acts of
God, casualties, condemnation, Hazardous Substances (other than those
stored, used or disposed of by Lessee in or about the Premises), and
Alterations or Utility Installations which Lessor states in writing may
be surrendered at the termination of the Lease, excepted.
56. INSURANCE.
(a) The parties acknowledge and agree that Lessor is the "Insuring
Party" for purposes of Paragraph 1.9 and Paragraph 8.
(b) Paragraphs 8.3(a) and 8.3(b) of the printed portion of this
Lease (which Paragraphs shall remain in full force and effect)
are supplemented as follows:
<PAGE>
The property insurance carried by Lessor pursuant to Paragraph 8.3
shall include (i) property insurance insuring the building and all improvements
which now are or hereafter become a part of the Premises for perils covered by a
causes of loss-special form insurance policy containing both replacement cost
and agreed amount endorsements or options; (ii) boiler and machinery-insurance,
if applicable; (iii) flood insurance; (iv)earthquake insurance (if required by
Lessor's mortgage lender in the future and Lessor's mortgage lender determines
that the cost and availability of earthquake insurance is reasonable); (v)
builders risk insurance during all periods of construction; (vi) insurance
against all other hazards as may be reasonably required by Lessor's lender or
the Ground Lessor; and (vii) rental value insurance for the perils insured
against by Lessor for one hundred percent (1.00%) of the Rent (including
operating expenses, real estate taxes, assessments and insurance costs which are
Lessee's liability) for a period of twelve (12) months.
57. ASSIGNMENT AND SUBLETTING. Paragraph 12, Assignment and
Subletting, of the printed Lease form is amended as follows:
(a) Any assignment of this Lease or any sublease of all or any
portion of the Premises shall be subject to Lessor's prior
written approval, the prior written approval of the Ground
Lessor, and the conditions specified in Paragraph 12 of this
Lease, amended and supplemented as follows: (1) any sublease
base rent in excess of the amount Lessee is paying to Lessor
shall be shared 50-50 by Lessor and Lessee, alter deducting
from such excess only Lessee's customary brokerage fees in
obtaining the assignment or sublease in an amount approved by
Lessor; (2)any such sublease shall provide that further
assignment or sub-subletting by the sublessee is expressly
prohibited; (3) in lieu of approving or disapproving an
assignment or sublease, Lessor may terminate this Lease and
recapture the Premises without any liability to Lessee; and
(4)Lessor shall have not less than fifteen (15) business days
after receipt by Lessor of Lessee's written request for
consent to an assignment or sublease, and all relevant
information requested by Lessor including the transaction
documentation, within which to give Lessor's approval or
disapproval of the sublease, or to terminate this Lease and
recapture the Premises.
(b) Lessee shall reimburse Lessor for Lessor's attorney's fees
incurred in connection with any assignment or sublease
transaction. Said attorney's fees shall be billed at the
attorney's normal hourly rate, but such fees shall not exceed
the total of One Thousand Dollars ($1,000).
(c) Notwithstanding anything to the contrary in this Lease, Lessee
may, without Lessor's prior written consent, without any
participation by Lessor in assignment and subletting proceeds,
and without Lessor's right of recapture the Premises, sublet
the Premises or assign this Lease to a subsidiary, affiliate,
division, or corporation controlling, controlled by or under
common control with Lessee; a successor corporation related to
Lessee by merger, consolidation, nonbankruptcy reorganization,
or government action; or a purchaser of substantially all of
Lessee's assets; provided that in any such case each of the
following conditions is satisfied: no default by Lessee under
this Lease then remains uncured; Lessee shall provide Lessor
with documentary evidence reasonably satisfactory to Lessor
that as of the effective date of such transaction the
assignee, sublessee or transferee has a positive net worth at
least equal to that of Lessee as of the date of this Lease;
and the assignee, sublessee, or transferee shall expressly
assume and agree to perform all of the obligations of Lessee
under this Lease by a written assignment, acceptance of
assignment and assumption, a copy of which shall be delivered
to Lessor concurrently with the assignment, sublease, or
transfer.
58. LATE CHARGES. The second sentence of Paragraph 13.4, Late
Charges, shall read:
<PAGE>
Accordingly, if any Rent shall not be received by Lessor within ten
(10) days after receipt by Lessee of written notice from Lessor that
the same is due, Lessee shall pay to Lessor a one time late charge
equal to ten percent (10%) of such overdue amount.
59. CONDEMNATION. If the Premises or any portion thereof are taken
under the power of eminent domain or sold under the threat of the exercise of
said power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever occurs first. If the portion of the Premises
taken by condemnation materially impairs Lessee's use and occupancy of the
Premises, Lessee may, at Lessee's option, to be exercised in writing within ten
(10) days after Lessor shall have given Lessee written notice of such taking (or
in the absence of such notice, within ten (10) days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminate this
Lease in accordance with the foregoing, this Lease shall remain in full force
and effect as to the portion of the Premises remaining, except that the Base
Rent shall be reduced in the same proportion as the rentable floor area of the
Premises taken bears to the total rentable floor area of the building located on
the Premises and Rent shall be further equitably abated during any restoration
of the Premises. No reduction of Base Rent shall occur if the only portion of
the Premises taken is land on which there is no building. Any award for the
taking of all or any part of the Premises under the power of eminent domain or
any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
compensation separately awarded to Lessee for Lessee's relocation expenses
and/or loss of Lessee's Trade Fixtures, any tenant improvements constructed by
Lessee solely at Lessee's expense and Lessee's personal property. In the event
that this Lease is not terminated by reason of such condemnation, Lessor shall
to the extent of its net severance damages received, over and above the legal
and other expenses incurred by Lessor in the condemnation matter, repair any
damage to the Premises caused by such condemnation, except to the extent that
Lessee has been reimbursed therefor by the condemning authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair to the extent that Lessee has been
reimbursed therefor by the condemning authority.
60. ESTOPPEL CERTIFICATES.
(a) Each Party (as "Responding Party") shall within ten (10)
business days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the
Requesting Party a statement in writing certifying: (1) that
none of the terms or provisions of this Lease have been
changed (or if they have been changed, stating how they have
been changed); (2) that this Lease has not been cancelled or
terminated; (3) the last date of payment of Base Rent and
other charges and the time period covered by such payment; and
(4) that, to the party's actual current knowledge, the other
party is not in default under this Lease (or if the other
party is claimed to be in default, stating why).
61. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the
right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times upon one (1) business day's prior notice subject
to Lessee's reasonable security measures for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the
<PAGE>
Premises any ordinary "For Sublease" sign. Lessor shall, however, at all times
minimize any interference with Lessee's operations at the Premises.
62. SIGNS. Lessor grants to Lessee the right to construct a
monument sign and a building sign with Lessee's name thereon at Lessee's
expense, subject to the prior written approval by Lessor of the. size, design,
and location of such signage and subject to approval of such signage by the City
of Palo Alto. Lessee shall remove all such signage at Lessee's expense promptly
upon the expiration or sooner termination of this Lease.
62A. QUIET POSSESSION. Paragraph 38, Quiet Possession, is amended
to read as follows:
At all times that no Breach of this Lease by Lessee exists,
subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee's part to be observed
and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof. Any remedy for
breach of this provision shall be limited to damages or injunction and
not Lease termination.
63. GROUND LEASE. Lessor's interest in the Premises is a leasehold
estate under a Ground Lease dated November 27, 1974, as amended (the "Ground
Lease"), between California Pacific Commercial Corporation ("Ground Lessor"),
and W.F. Batton and Marie A. Batton ("Ground Lessee"). This Lease is therefore a
Sublease. This Lease is subject and subordinate to the terms and provisions of
the Ground Lease. There is an action pending in Santa Clara County Superior
Court, Action No. CV767605 between Ground Lessor and Ground Lessee. This Lease
is subject to the consent of the Ground Lessor in a form and upon terms and
conditions satisfactory to Ground Lessee.
64. ADDENDUM TO GOVERN. In the event of any inconsistency between
the printed provisions of this Lease and this typed Addendum to Lease, the
provisions of this typed Addendum to Lease shall govern.
65. SUBLEASE OF 1180 E. MEADOW CIRCLE. Lessor agrees that Lessor
will not unreasonably withhold Lessor's consent to Lessee's anticipated
subleasing of the premises at 1180 E. Meadow Circle, Palo Alto, California,
subject to obtaining the prior written approval of the Ground Lessor in
accordance with the Ground Lease.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
set forth above.
LESSOR
/s/ Marie A. Batton
Marie A. Batton, Trustee of The W.F. Batton and
Marie A. Batton Trust UTA dated January 12, 1988,
as amended
LESSEE
OMNICELL TECHNOLOGIES, INC.,
a California corporation
By /s/ Earl E. Fry
Its Vice President and Chief Financial Officer
By
---------------------------------------
Its
<PAGE>
Memo
W.F. Batton C., Inc.
1190-East Meadow Dr.
Palo Alto, CA 94303-4269
650-494-7491
CONFIDENTIAL 1/13/00
To: Pete McGoff
From: Harold Balzer
Re: Amendment to 1085 Lease
Dear Pete,
Enclosed is your signed copy of the Amendment to the 1085 lease agreement.
It has been a pleasure working with you. Please do not hesitate to call me with
any future requests.
Sincerely,
/s/ H. Balzer
H. Balzer
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
1085 EAST MEADOW CIRCLE
PALO ALTO, CALIFORNIA
This First Amendment to Lease Agreement (this "Amendment") is entered
into by and between MARIE A. BATTON, TRUSTEE OF THE W.F. BATTON AND MARIE A.
BATTON UTA JANUARY 12, 1988, AS AMENDED ("Lessor"), and OMNICELL TECHNOLOGIES,
INC., a California corporation ("Lessee"), effective January 3, 2000 (the
"Effective Date"). This First Amendment amends the Lease Agreement and Addendum
to Lease entered into between Landlord and Tenant as of September 24, 1999
(collectively, the "Lease").
RECITALS
A. Lessor and Lessee entered into that certain Lease for the
Premises located 1085 East Meadow Circle, Palo Alto, California.
B. The Lease term commences on December 15, 1999 and expires on
December 15, 2004.
C. The Lessee, subsequent to executing the Lease, has formally
changed its corporate name form OmniCell Technologies, Inc. to Omnicell.com.
D. Certain delays in the construction and completion of the
Tenant Improvements to the Premises have occurred which will delay Lessee's
possession to the Premises under the Lease.
E. The parties have agreed to delete the last sentence of Section
63, namely, the recitation that the subject Lease (sublease) shall be subject to
the consent of the Ground Lessor.
F. The Lessee has recently been made aware of Ground Lessor's
desire and intent to terminate the subject Lease prior to the expiration of the
Term should Ground Lessor be successful in its action to terminate the Ground
Lease for the Property.
G. The parties desire to amend the terms and conditions of the
Lease as set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants contained in this Amendment and of good, lawful and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lessor and Lessee agree as follows:
1. LESSEE CORPORATE NAME CHANGE. Effective October 20, 1999, and
as evidenced by the copy of the Certificate of Amendment to the Lessee's
Articles of Incorporation filed with the California Secretary of State's Office,
attached hereto as Exhibit A, Lessee has formally changed its corporate name
from OmniCell Technologies, Inc. to Omnicell.com. Section 1.1 of the Lease, and
any other references to OmniCell Technologies, shall hereby be revised to
reflect such change.
2. TERM. The Original Term of the Lease, as defined in Section
1.3, shall be revised to reflect a Commencement Date of February 1, 2000 and an
Expiration Date of January 31, 2005. Any Other provisions in the Lease,
dependant on such dates, shall hereby be revised accordingly.
<PAGE>
3. GROUND LEASE. The original text of Section 63 is hereby
deleted and replaced by the following:
"Lessor's interest in the Premises is a leasehold estate under a Ground
Lease dated November 27, 1974, as amended (the "Ground Lease"), between
California Pacific Commercial Corporation ("Ground Lessor"), and W.F.
Batton and Marie A. Batton ("Ground Lessee"). This Lease is therefor a
Sublease. This Lease is subject and subordinate to the terms and
provisions of the Ground Lease. There is an action pending in Santa
Clara County Superior Court, Action No. CV767605 between Ground Lessor
and Ground Lessee, which if decided in favor of Ground Lessor, could
result in the early termination of Ground Lessee's (Lessor under the
instant Lease) interest in the Premises. Ground Lessor, by the letter
of Dan McGanney, III, President of Ground Lessor, has notified Lessor
of Ground Lessor's intention to terminate early the instant Lease
should Ground Lessor be successful in the civil action described above.
The parties acknowledge that the Lease is not subject to the approval
of the Ground Lessor; however, the Lease agreement must be submitted to
Ground Lessor for Ground Lessor's review.
Only in the event that Ground Lessor is successful in terminating the
Ground Lease and Ground Lessor thereby terminates this Lease prior to
the expiration of the original term or any extended term, Lessor hereby
agrees to indemnify and reimburse Lessee for reasonable costs and
expenses incurred by Lessee in relocating to suitable replacement
premises in the greater San Francisco Bay Area ("Relocation Expenses").
Such Relocation Expenses shall include, but are not limited to, tenant
improvements at the substitute premises, moving costs for approximately
100 employees, de-installation and re-installation of furniture, costs
related to the installation of alarm and phone systems and the design,
development and installation of hardware, software and systems for
computer network and data/voice wiring costs. Any leasing commission
expenses incurred, if any, shall be paid by Lessee.
Lessee's cost of tenant improvements at the substitute premises to be
reimbursed by Lessor shall not exceed the cost of the tenant
improvements paid for Lessee for the Premises which is currently
estimated to be $310,000. The exact amount of Lessee's cost of the
tenant improvements performed by Lessee at the Premises shall be
confirmed by letter agreement between Lessor and Lessee upon completion
of the tenant improvement work at the Premises. The total of the tenant
improvement costs to be reimbursed to Lessee at the time of the
Lessee's move shall be the Lessee's original tenant improvement costs,
as specified in the letter agreement, increased at the simple rate of
five percent (5%) per year.
Lessor shall liable for the aggregate Relocation Expenses NOT TO EXCEED
$600,000 ("Relocation Expense Cap"), which Relocation Expense Cap shall
be reduced by a factor of ten percent (10%) per year from the
Commencement Date.
In the event that the Ground Lessor is not successful in the legal
action referred to above in terminating the Ground Lease, or the Ground
Lease is terminated under the circumstances where this Lease remains in
full force and effect as confirmed in writing by Lessor and/or
California Pacific Commercial Corporation, and Lessee in form and under
terms reasonably acceptable to Lessee, Lessee agrees upon request of
either Lessor or California Pacific Commercial Corporation to enter
into a further amendment of this Lease specifying such disposition of
the legal action referred to above and releasing the indemnity
obligation referred to in this Section."
4. GENERAL PROVISIONS. In the event of a conflict between the
terms or provisions of this Amendment and the terms or provisions of the Lease,
the terms of this Amendment shall prevail in all respects. All terms and
<PAGE>
conditions of the Lease not specifically modified herein shall remain unchanged
and in full force and effect. All terms not specifically defined herein are as
defined in the Lease. Except as modified herein, the Lease shall remain
unchanged and in full force and effect.
AUTHORIZED SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the dates indicated.
"LESSOR LESSEE"
MARIE A. BATTON, TRUSTEE OF OMNICELL TECHNOLOGIES, INC
THE W.F. BATTON AND MARIE A. a California corporation
BATTON UTA January 12, 1988, AS
AMENDED
By: /s/ Marie A. Barton
Marie A. Batton, Trustee of The By: /s/ Earl E. Fry
W.F. Batton and Marie A. Batton Earl Fry, Vice President and
Trust UTA dated January 12, 1988, Chief Financial Officer
As amended
Date: 01/05/00 Date: 01/03/00
<PAGE>
EXHIBIT A
OMNICELL TECHNOLOGIES, INC. CERTIFICATE OF AMENDMENT
TO ITS ARTICLES OF INCORPORATION
<PAGE>
February 3, 2000
Mr. Peter McGoff
Omnicell.Com
1101 East Meadow Drive
Palo Alto, CA 94303
Dear Peter,
I spoke to David Balzer today and he indicated that both he and Pat DiResta were
in agreement that Omnicell.com would be moving into 1085 East Meadow Drive,
February 21, 2000.
The initial term of the lease between Omnicell and Marie A. Batton should be
changed from February 1, 2000 to February 21, 2000. All other provisions in the
"Initial Term" of the lease agreement shall remain the same.
If the above information is true and correct, please sign and return to me at
your earliest convenience.
Sincerely,
/s/ Harold Balzer /s/ Peter McGoff
Harold Balzer
W.F. Batton Management Company Omnicell.Com
Date: 02/03/00 Date: 02/04/00
<PAGE>
EXHIBIT 10.2
AMHURST INDUSTRIAL CENTER I
WAUKEGAN, ILLINOIS
LEASE
BETWEEN
AMLI COMMERCIAL PROPERTIES LIMITED PARTNERSHIP
a Delaware limited partnership
Landlord
AND
OMNICELL TECHNOLOGIES, INC.,
a California corporation,
Tenant
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
1. FUNDAMENTAL LEASE TERMS............................................................... 1
2. DEFINED TERMS......................................................................... 2
3. AGREEMENT TO LEASE.................................................................... 5
4. RENT.................................................................................. 5
5. LANDLORD'S SERVICES................................................................... 6
6. SECURITY DEPOSIT...................................................................... 8
7. USE................................................................................... 8
8. CONDITION OF PREMISES................................................................. 9
9. EARLY POSSESSION...................................................................... 9
10. ASSIGNMENT AND SUBLETTING............................................................. 9
11. REPAIRS AND ALTERATIONS............................................................... 10
12. CERTAIN RIGHTS RESERVED BY LANDLORD................................................... 12
13. COVENANT AGAINST LIENS................................................................ 13
14. WAIVERS AND INDEMNITIES............................................................... 13
15. DEFAULTS AND LANDLORD'S REMEDIES...................................................... 14
16. SURRENDER OF POSSESSION............................................................... 15
17. INSURANCE............................................................................. 16
18. FIRE OR CASUALTY...................................................................... 17
19. CONDEMNATION.......................................................................... 18
20. NOTICES............................................................................... 18
21. ADDITIONAL COVENANTS OF TENANT........................................................ 19
22. ESTOPPEL CERTIFICATES: MORTGAGE ISSUES................................................ 21
23. MISCELLANEOUS......................................................................... 22
24. SIGNAGE............................................................................... 25
25. OPTION TO RENEW TERM.................................................................. 25
26. TRUCK DOCKS........................................................................... 26
27. TENANT IMPROVEMENTS................................................................... 26
Exhibit A - Plan of the Premises
Exhibit B - Work Letter
Exhibit C - Legal Description of the Land
Exhibit D - Landlord's Insurance
Exhibit E - Trailer Area
Exhibit F - Form of Tenant Estoppel Letter
Exhibit G - Form of Landlord's Estoppel Letter
Exhibit H - Form of Subordination, Non-Disturbance and Attornment Agreement
Exhibit I - Truck Docks
</TABLE>
<PAGE>
AMHURST INDUSTRIAL I
LEASE
THIS LEASE ("Lease") is entered into as of the day of April, 1999, by and
between AMLI COMMERCIAL PROPERTIES LIMITED PARTNERSHIP, a Delaware limited
partnership (together with its successors and assigns, "Landlord") and OMNICELL
TECHNOLOGIES, INC., a California corporation (together with its permitted
successors and assigns, "Tenant").
1. FUNDAMENTAL LEASE TERMS. Certain fundamental lease terms (the "Fundamental
-----------
Lease Terms") are set forth below in this Section 1:
- -----------
1.1 Building and Address: Amhurst Industrial Center 1
--------------------
3651 Burwood Drive
Waukegan, Illinois 60085
1.2 Tenant: Omnicell Technologies, Inc.
-------
1.3 Tenant's Current Address
------------------------
and Facsimile Telephone No.: 1101 E. Meadow Drive
---------------------------
Palo Alto, CA 94303
650-843-6266
1.4 Landlord: Amli Commercial Properties Limited
--------
Partnership
1.5 Landlord's Address: 222 Spring Lake Drive
------------------
Itasca, IL 60143
1.6 Premises: approximately 38,459 square feet of
--------
space located in the Building
containing approximately 166,466 square
feet, as shown on the plan attached
hereto and made a part hereof as
Exhibit A.
---------
1.7 Term: eighty-four (84) calendar months
----
commencing on the Commencement Date,
provided that if the Commencement Date
is not the first (1st) day of a
calendar month, the Term shall end
eighty-four (84) calendar months after
the last day of the calendar month in
which the Commencement Date occurs.
1.8 Commencement Date: July 1, 1999, subject to a delay in
-----------------
the substantial completion of the
Tenant Improvements to be made in the
Premises, as described in the Work
Letter attached hereto and made a part
hereof as Exhibit B.
---------
1.9 Base Rent: 1/st/ Lease Year $253,829.40
---------
2/nd/ Lease Year $261,444.28
3/rd/ Lease Year $269,287.61
4/th/ Lease Year $277,366.24
5/th/ Lease Year $285,687.23
1.
<PAGE>
6/th/ Lease Year $294,257.84
7/th/ Lease Year $303,085.58
1.10 Security Deposit: $21,152.45
----------------
1.11 Tenant's Proportionate Share: 23.10%
----------------------------
1.12 Permitted Use: general office, warehouse and
-------------
stockroom purposes, refurbishment of
used equipment and uses generally
related thereto, including, without
limitation, light manufacturing and
painting
1.13 Broker: Paine Wetzel Associates, Inc.
------
1.14 Parking: one hundred (100) spaces
-------
2. DEFINED TERMS. As used in this Lease, the following terms shall have the
-------------
respective meanings set forth below in this Section 2.
---------
2.1 Affiliate: means any person or entity controlling, controlled by or
---------
under common control with Tenant. For purposes hereof, "control" shall mean the
ownership of not less than sixty-six and two-thirds percent (66-2/3%) of the
economic ownership interests in an entity, along with the power to control the
management and policy-making decisions of such entity.
2.2 Alteration: means any alteration, decoration, improvement or addition
----------
to the Premises, or installation of any utility, mechanical, communication or
alarm system in the Premises, provided that any such alteration, decoration,
improvement, addition or installation shall not constitute an "Alteration" if
such item(s): (i) individually, and in the aggregate (assuming there are several
items for a particular project), does not cost in excess of $5,000-00, (ii) does
not affect the roof or structural components of the Building, (iii) does not
affect the HVAC, utility or mechanical systems, or equipment of the Building,
(iv) does not require a building permit to perform, and (v) is not visible from
outside the Premises.
2.3 Association: means the Amhurst Lake Business Park Association, the
-----------
association of owners of property in the business park in which the Property is
located.
2.4 Calendar Year: means the twelve (12) month period January through
-------------
December of any year (or portion thereof) falling within the Term.
2.5 City: means Waukegan.
----
2.6 Events of Bankruptcy: means the occurrence of any one or more of the
--------------------
following events or circumstances:
(a) If Tenant shall file in any court a petition in bankruptcy or
insolvency or for reorganization within the meaning of the Federal
Bankruptcy Code, or for arrangement within the meaning of such Code (or for
reorganization or arrangement under any future bankruptcy or reform act for
the same or similar relief), or for the appointment of a receiver or
trustee for all or a portion of the property of Tenant, or
(b) If an involuntary petition shall be filed against Tenant and such
petition shall not be vacated or withdrawn within thirty (30) days after
the date of filing thereof, or
(c) If Tenant shall make an assignment for the benefit of creditors,
or
2.
<PAGE>
(d) If Tenant shall be adjudicated a bankrupt or shall admit in
writing an inability to pay its debts as they become due, or
(e) If a receiver shall be appointed for the property of Tenant by
order of a court of competent jurisdiction (except where such receiver
shall be appointed in an involuntary proceeding, and be withdrawn within
thirty (30) days from the date of his appointment).
2.7 Events of Force Majeure: means any accident, governmental
-----------------------
restriction, inability to obtain fuel or materials, strike or lockout (whether
legal or illegal), act of God or other event, occurrence or circumstance beyond
Landlord's reasonable control.
2.8 Hazardous Materials: means (i) substances defined as "hazardous
-------------------
substances", "toxic substances" or "hazardous wastes" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C., Sec. 9061, et. seq.), the Hazardous Materials Transportation Act (49
U.S.C., Sec. 1802), the Resource Conservation and Recovery Act (42 U.S.C., Sec.
6901 et. seq.), the Toxic Substances Control Act of 1976, as amended (15 U.S.C.,
Sec. 2601, et. seq.) or in any other federal, state or local laws and ordinances
now or hereafter in effect governing similar matters, or in any regulations
adopted or publications promulgated pursuant thereto (collectively,
"Environmental Laws"); (ii) asbestos and asbestos containing materials; and
(iii) petroleum and petroleum based products.
2.9 Land: means the land on which the Building is located, which Land
----
is legally described on Exhibit C attached hereto and made a part hereof.
---------
2.10 Landlord's Representative: means Michael Murphy.
-------------------------
2.11 Laws: means all laws (including, without limitation, Environmental
----
Laws); statutes (including, without limitation, the Americans with Disabilities
Act); codes; ordinances; governmental rules, regulations or requirements;
judicial decrees or orders; administrative rulings or orders; covenants,
conditions or restrictions of record; and governmental permits, licenses,
approvals or certificates (including, without limitation, any certificate of
occupancy for the Premises or the Building) now or hereafter in effect and
applicable to the Premises, the Property or the use, occupancy or operation of
the Premises or the Property.
2.12 Lease Year: means each consecutive twelve (12) month period
----------
beginning with the Commencement Date, except that if the Commencement Date is
other than the first day of a calendar month, then the first Lease Year shall be
the period from the Commencement Date through the date twelve (12) months after
the last day of the calendar month in which the Commencement Date occurs, and
each subsequent Lease Year shall be the period of twelve (12) months following
the last day of the prior Lease Year.
2.13 Material Alteration: means any Alteration which: (i) affects the
-------------------
roof or structural components of the Building, (ii) affects any HVAC, utility or
mechanical systems or equipment in the Building, (iii) is visible from outside
of the Premises, (iv) costs more than $10,000 to complete (including all labor
and material costs), or (v) requires a building permit to perform.
2.14 Mortgagee: means the mortgagee, from time to time, under any
---------
mortgage granted by Landlord and now or hereafter encumbering the Property or
any portion thereof (including the Premises).
2.15 Operating Expenses: means for any Calendar Year those costs or
------------------
expenses paid or incurred by or on behalf of Landlord for owning, managing,
operating, maintaining and repairing the Property and Landlord's personal
property used in connection with the Property, including, without limitation:
Taxes; dues and other amounts payable to any owner's association; the cost of
fire monitoring, security and security device systems for the Building, if any;
snow and ice removal; exterior cleaning, sweeping, planting and landscaping; the
cost of maintaining and repairing: (i) sewer, water, mechanical,
3.
<PAGE>
electrical, sprinkler and other utility systems and equipment, (ii) parking
lots, (iii) heating, ventilating and air conditioning systems and equipment,
(iv) exterior lighting systems and equipment, and (v) the roof and structural
components of the Building; utilities, fuel and water if not separately metered;
exterior window cleaning; insurance (including, but not limited to, fire,
extended coverage, all risk, rent loss, liability, worker's compensation, and
any other insurance carried by Landlord and applicable to the Property and not
carried by tenants under any provision of their lease); deductibles paid by
Landlord under the insurance policies described above; uninsured losses;
exterior painting; management fees (not to exceed 3% of gross rentals from the
Property for the Calendar Year); supplies; the cost of wages, salaries and
benefits of all persons at the level of property manager and below, engaged in
the operation, management, maintenance and repair of the Property; legal and
accounting expenses; and any other expense or charge which would be considered
as an expense of owning, managing, operating, maintaining or repairing the
Property. Notwithstanding anything herein to the contrary, Operating Expenses
shall not include: costs of tenant alterations to tenant space; marketing costs;
costs of capital improvements to the Property, except for the cost of
resurfacing the parking areas, driveways and sidewalks on the Property and
except as provided below; depreciation charges; real estate brokerage and
leasing commissions; the cost of any service sold directly to any tenant
(including Tenant) or other occupant for which Landlord is entitled to be
reimbursed as an additional charge or rental over and above the basic rent and
escalations payable under the lease with that tenant; expenses in connection
with services or other benefits of a type that are not provided to Tenant but
which are provided another tenant or occupant of the Property; overhead and
profit paid to Landlord or to subsidiaries or affiliates of Landlord for
services on or to the Building to the extent that fees paid for said services
materially exceed competitive costs of said services offered by other third
parties; all interest, loan fees, and other carrying costs related to any
mortgage or deed of trust or related to any capital item, and all rental and
other payments due under any ground or underlying lease, or any lease for any
equipment ordinarily considered to be of a capital nature (except janitorial
equipment and the like which is not affixed to the building); expenses for which
Landlord has been reimbursed (other than pursuant to rent escalation or tax and
operating expense reimbursement provisions in leases), but only to the extent of
any said reimbursement; wages, salaries, or other compensation paid to any
executive employees above the grade of building manager; any costs, interest or
penalty charges incurred by Landlord due to the violation by Landlord of any Law
or failure to timely pay obligations of Landlord under this Lease or any other
lease in the building resulting from Landlord's gross negligence or willful
misconduct, except to the extent any said violation or failure results from
Tenant's failure to perform its obligations under this Lease; and the cost of
correcting any building code or other violations which were violations prior to
the Commencement Date. Notwithstanding the foregoing, the cost of any capital
improvements to the Property made after the date of this Lease which are
reasonably intended to reduce Operating Expenses or which are required under any
Laws which were not applicable to the Property prior to the Commencement Date
amortized over the life expectancy of such capital improvements as Landlord
shall reasonably determine, together with interest on the unamortized cost of
any such improvements (at the prevailing construction loan rate available to
Landlord on the date the cost of such improvements was incurred) shall be
included in Operating Expenses. The cost of any capital improvements made in
connection with resurfacing the parking areas,. driveways and sidewalks on the
Property shall also be amortized, with interest, as provided in the immediately
preceding sentence, and included in Operating Expenses. In the event the
Property is not fully occupied during any Calendar Year, the variable Operating
Expenses (e.g. water, Taxes and snow removal) for that year may be adjusted
----
by Landlord to reflect the Operating Expenses as though the Property were fully
occupied; provided, however, that in no event shall the payments made by all
tenants of the Property to Landlord for Operating Expenses exceed the actual
Operating Expenses paid or incurred by Landlord in any Calendar Year.
Notwithstanding anything to the contrary contained in this Section 2.15,
------------
Operating Expenses may include, at Landlord's reasonable discretion an equitable
proportion, to be reasonably determined by Landlord, of both (i) snow removal
costs, and/or (ii) maintenance, repair and/or replacement costs of the parking
areas for both the Property and the building directly north of and immediately
adjacent to the Property (the "Adjacent Property"); provided, however, in no
event shall Tenant's Proportionate Share of the aggregate cost for (i) snow
removal for the Property and the Adjacent Property; or (ii) maintenance, repair
and/or replacement costs of the parking areas for both the Property and the
Adjacent Property exceed Tenant's Proportionate Share of snow removal costs for
the Property or Tenants Share of maintenance, repair and/or replacement costs of
the parking area for the Property. Notwithstanding anything to the contrary in
this
4.
<PAGE>
Section 2.15, to the extent personal property costs, management fees and any
- ------------
other items are attributable to other properties owned or managed by Landlord,
they will be allocated to such properties.
2.16 Property: means collectively, the Land, the Building and all other
--------
improvements located on the Land.
2.17 Rent: means collectively, Base Rent, Additional Rent and all other
----
amounts to be paid by Tenant to Landlord under this Lease or under the Work
Letter.
2.18 Taxes: means all real estate taxes and assessments and similar
-----
governmental charges, special or otherwise, direct or indirect, ordinary or
extraordinary (including, without limitation, those levied or assessed by
special taxing districts now or hereafter created) levied or assessed upon or
with respect to the Property and/or Landlord's leasehold interest in the
Property, and ad valorem taxes for Landlord's personal property used in
connection therewith. Should any political subdivision or governmental
authority having jurisdiction over the Property, impose a tax, assessment,
charge or fee which Landlord shall be required to pay, either by way of
substitution for such real estate taxes and ad valorem personal property taxes,
or in addition to such real estate taxes and ad valorem personal property taxes,
or impose an income or franchise tax or a tax on rents which may be in addition
to or in substitution for a tax levied against the Property and/or Landlord's
personal property used in connection with the Property, such taxes, assessments,
fees or charges shall be deemed to constitute Taxes hereunder. "Taxes" shall
also include all reasonable fees and costs incurred by Landlord in connection
with reducing or limiting the increase in any Taxes, but only to the extent a
reduction or limitation is obtained. "Taxes" shall not include inheritance,
income, transfer or franchise taxes paid by Landlord, other than as described
above. In determining the amount of Taxes for any Calendar Year, the amount of
special assessments to be included shall be limited to the amount of the
installment (plus any interest payable thereon) of such special assessment which
would have been required to have been paid during such year if Landlord had
elected to have such special assessment paid over the maximum period of time
permitted by law. Except as provided in the preceding sentence, all references
to Taxes "for" a particular year shall be deemed to refer to Taxes levied,
assessed or otherwise imposed for such year without regard to when such Taxes
are payable.
2.19 Tenant's Representative: means Patrick DiResta.
-----------------------
3. AGREEMENT TO LEASE. Landlord hereby leases to Tenant, and Tenant hereby
------------------
accepts and leases from Landlord, the Premises, together with the non-exclusive
right to use all common areas outside the Building and on the Property (provided
that Tenant shall not interfere with or disturb the conduct of other tenants'
business in the Building or their enjoyment of the common areas outside the
Building and on the Property), for the Term, subject to the terms and conditions
set forth in this Lease.
4. RENT.
----
4.1 Place and Manner of Payment. Tenant shall pay Rent to Landlord at
---------------------------
the address set forth in Section 1.5 hereof or to such other person or at such
-----------
other address as Landlord may designate from time to time, without offsets or
deductions of any kind whatsoever, at the times and in the manner set forth in
this Lease. Tenant's covenant to pay Rent shall be independent of every other
covenant in this Lease.
4.2 Base Rent. During the Term, Tenant shall pay annual Base Rent in
---------
the respective amounts set forth in Section 1.9 hereof. The Base Rent payable
-----------
for each Lease Year shall be paid in twelve (12) equal monthly installments,
paid in advance not later than the first (1st) day of each month. If the
Commencement' Date is other than the first (1st) day of a month, then the
installment of Base Rent for such initial month shall be prorated on a per diem
basis for such fractional period and shall be paid on the Commencement Date. If
the last day of the Term or Renewal Term is other than the last day of a month,
then the installment of Base Rent for such last month of the Term or Renewal
Term, as the case may be, shall be prorated on a per diem basis for such
fractional period.
5.
<PAGE>
4.3 Additional Rent. In addition to paying the Base Rent, Tenant shall
---------------
pay as "Additional Rent" the amounts determined as set forth below.
A. Tenant shall pay to Landlord as Rent, in addition to the Base
Rent, an amount (the "Operating Expense Amount") equal to Tenant's
Proportionate Share of the Operating Expenses for each Calendar Year.
Tenant shall pay to Landlord the Operating Expense Amount for each Calendar
Year in monthly installments, at the same time and place as Base Rent is to
be paid, in an amount reasonably estimated from time to time by Landlord in
a written notice to Tenant (the "Estimated Payments"). Landlord will
maintain books and records showing Operating Expenses in accordance with a
system of accounts and accounting practices consistently maintained on a
year-to-year basis. If the Commencement Date is other than the first (1st)
day of a month, then the installment of Operating Expense Amount for such
initial month shall be prorated on a per diem basis. Landlord shall
deliver to Tenant within ninety (90) days after the close of each Calendar
Year (including the Calendar Year in which this Lease terminates) a
statement showing the amount of the Operating Expenses for such Calendar
Year and the Operating Expense Amount. If the Estimated Payments paid by
Tenant during any Calendar Year are less than the Operating Expense Amount
for such Calendar Year, Tenant shall pay any deficiency to Landlord as
shown by such statement within thirty (30) days after receipt of such
statement. If the Estimated Payments paid by Tenant during any Calendar
Year exceed the Operating Expense Amount due from Tenant for such Calendar
Year, such excess shall be credited against payments next due hereunder.
If no such payments are next due, such excess shall be refunded by Landlord
within thirty (30) days of such reduction. Landlord's failure to deliver
an annual statement of the Operating Expenses for any Calendar Year shall
not constitute a waiver or release of, or relieve Tenant from, its
obligations under this Section. If the last day of the Term or Renewal
Term is other than the last day of a month, then the installment of
Operating Expense Amount for such last month of the Term or Renewal Term,
as the case maybe, shall be prorated on a per them basis for such
fractional period.
B. Since Landlord will not be able to determine the Taxes for a
Calendar Year until Landlord receives the real estate tax bills for such
Calendar Year (which bills are currently received 6 to 9 months after the
end of each Calendar Year), Landlord may deliver an annual statement to
Tenant for all Operating Expenses other than Taxes, and deliver a
subsequent statement to Tenant for Taxes, within ninety (90) days after
Landlord receives the real estate tax bills for such Calendar Year. In
such case, Landlord and Tenant shall make the payments or provide the
credits, at the times and in the manner described in Section 4.3A above,
------------
with respect to the items covered by any such statements delivered by
Landlord.
C. During the 90-day period immediately following Landlord's
delivery of any annual statement relating to Operating Expenses, Tenant
shall have the right to inspect Landlord's accounting records relating to
Operating Expenses at Landlord's or its agent's office, upon reasonable
prior notice. Unless Tenant shall take written exception to any item in any
such statement within said 90-day period, such statement shall be
considered as final and accepted by Tenant. Any payment due to Landlord or
credit or payment due to Tenant as shown on any such statement shall be
paid or applied in the manner and within the time periods described in
Section 4.3(A), whether or not written exception is taken thereto, provided
--------------
that such payment or application shall be without prejudice to any such
written exception. If Tenant makes such timely written exception, a
certification as to the proper amount of the Operating Expense Amount shall
be made by an independent certified public accountant reasonably acceptable
to both parties, which shall be final and conclusive. Tenant shall pay the
accountant's fees in connection with such audit and certification, unless
it is determined that Landlord's original determination of the Operating
Expense Amount was overstated by more than six percent (6%), in which case,
Landlord shall pay such reasonable accountant's fees.
D. Without limiting any other obligations of the parties which
survive the expiration of the Term, Landlord and Tenant's obligation to
reimburse or pay the Additional Rent, as the case may be shall survive the
expiration of the Term.
6.
<PAGE>
5. LANDLORD'S SERVICES. As long as Tenant is not in default under this Lease,
-------------------
Landlord shall furnish the following services:
(a) Repairs and maintenance (and if necessary, replacements) of: (i)
the air conditioning and heating units providing service to the Premises;
(ii) the roof and structural components of the Building; (iii) the parking
areas, driveways and sidewalks located on the Property; (iv) any
landscaping located on the Property; and (v) utility lines, pipes, conduit
and other equipment located on the Property and furnishing services to the
Premises, other than any such lines, pipes, conduit and equipment located
within the Premises (which shall be repaired, maintained and if necessary,
replaced by Tenant pursuant to Section 11.1 hereof). Notwithstanding the
------------
foregoing, all mechanical systems and sanitary sewer lines servicing the
Premises will be repaired and maintained by Landlord and in furtherance
thereof, Tenant shall provide Landlord access to the Premises to make such
repairs. Notwithstanding anything contained herein to the contrary, if any
repairs, maintenance or replacements are necessitated by the willful
misconduct or gross negligence of Tenant, its agents, servants or
employees, then the cost thereof shall be billed directly to Tenant, and
Tenant shall pay Landlord therefor within thirty (30) days after receiving
such bill together with reasonable supporting documentation.
(b) Reasonably adequate domestic water service in common with other
tenants. In the event that water is not separately metered for the
Premises and Tenant uses a materially greater amount of water than the
usual amount used in similar buildings, then Landlord may bill Tenant for
the additional cost of such increased use and for the cost of determining
such increased use, and Tenant shall pay Landlord therefor within thirty
(30) days after receiving such bill together with reasonable supporting
documentation. If as of the Commencement Date, water service is not
separately metered for the Premises, Landlord reserves the right to install
separate meters for the Premises at Tenant's sole cost and expense during
the Term of this Lease.
(c) Exterior window washing of all windows in the Premises, weather
permitting three (3) times per Calendar Year;
(d) Replacement of dock levelers, provided that if the replacement
is necessitated by the willful misconduct or gross negligence of Tenant,
its agents, servants or employees, then the cost thereof shall be billed
directly to Tenant, and Tenant shall pay Landlord therefor within thirty
(30) days after receiving such bill together with reasonable supporting
documentation;
(e) Reasonably adequate sanitary sewer service in common with other
tenants. If Landlord reasonably determines that additional sanitary sewer
capacity is required or that a separate sanitary sewer line servicing the
Premises is or may be prudent based on the nature of the Permitted Use
(e.g., excessive amounts or unique nature of discharge from the Premises),
----
Landlord may increase such capacity and/or install a separate sanitary
sewer line servicing the Premises, all at Tenant's sole cost (which cost
shall include a reasonable administrative fee payable to Landlord in
connection therewith). Any such costs shall be paid by Tenant to Landlord
within thirty (30) days after being billed therefor together with
reasonable supporting documentation. If a separate sanitary sewer line is
installed serving the Premises as a result of Tenant's excessive use of the
sanitary sewer service, as reasonably determined by Landlord, and such
service is not separately metered to the Premises, then Landlord may bill
Tenant for the cost of sanitary sewer service furnished to the Premises
through such separate line, and Tenant shall pay Landlord therefor within
thirty (30) days after receiving such bill.
Landlord shall arrange with the utility companies providing the Building
with electricity, telephone and natural gas service for the supply of such
services to the Premises. Such services shall be separately metered to the
Premises, and Tenant shall pay for the cost of any meter required in connection
therewith. Tenant shall pay the public utility companies and/or municipality
directly for any services provided and separately metered to the Premises.
Tenant shall bear the cost of maintaining light fixtures and replacing bulbs,
tubes, ballasts, etc.
7.
<PAGE>
Landlord shall not be obligated to provide any services other than those
expressly set forth above in this Section. Landlord does not warrant that any
of the services mentioned above will be free from interruptions caused by
repairs, improvements or alterations of their equipment by utility providers, or
by war, insurrection, civil commotion, acts of God or governmental action,
strikes, lockouts, picketing, whether legal or illegal, accidents, inability of
Landlord to obtain fuel or supplies, or any other cause or causes beyond
Landlord's reasonable control. Any such interruption of service shall never be
deemed an eviction (actual or constructive) or a disturbance of Tenant's use and
possession of the Premises or any part thereof and shall never render Landlord
liable to Tenant for damages or relieve Tenant from performance of Tenant's
obligations under this Lease. In any such event, however, Landlord shall use
its best efforts to cause all such interrupted services to be restored to the
Premises as soon as possible.
Except as expressly provided below in this paragraph, Tenant agrees that
Landlord shall not be liable for damages (by abatement of Rent or otherwise) for
any interruption in or failure to furnish or any delay in furnishing any of the
services described above in this Section, or for any diminution in the quality
or quantity thereof, when such interruption, failure, delay or diminution is
occasioned, in whole or in part, by any repairs, maintenance, replacements or
improvements, or by any strike, lockout or other labor trouble (whether legal or
illegal), by any failure to obtain fuel or supplies, by any accident, by any
act, omission or default of Tenant or other parties, or by any other cause
beyond Landlord's reasonable control; and any such interruption, failure, delay
or diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
(except as expressly provided below in this paragraph) or performing any of its
obligations under this Lease. Notwithstanding the foregoing, if (i) Landlord
ceases to furnish any of the services referred to in this Section as a result of
a condition which is within Landlord's reasonable control and is reasonably
susceptible of being remedied by Landlord, (ii) Tenant notifies Landlord of such
cessation within two (2) business days after obtaining knowledge thereof, and
(iii) as a result of such cessation, a portion of the Premises is rendered
untenantable (meaning that Tenant is unable to use such space in the normal
course of business) and Tenant in fact so ceases to use such space, for more
than five (5) consecutive days, then Base Rent and Additional Rent payable
hereunder shall be equitably abated based on the percentage of space in the
Premises so rendered untenantable and not being so used by Tenant, effective as
of the day the affected space becomes untenantable and Tenant ceases to so use
such space and continuing until the affected space once again becomes
tenantable.
6. SECURITY DEPOSIT. As additional security for the full and prompt
----------------
performance by Tenant of all its obligations hereunder, Tenant has upon
execution of this Lease paid to Landlord the amount set forth in Section 1.10
------------
hereof (the "Security Deposit"), which amount may be applied by Landlord for the
purpose of curing any default by Tenant which default continues beyond the
expiration of any applicable cure period set forth in Section 15.1 of this
------------
Lease. Landlord shall be permitted to commingle the Security Deposit with
Landlord's general funds. Landlord shall not be required to pay any interest on
the Security Deposit. If any portion of the Security Deposit is applied to cure
a default by Tenant which default continues beyond the expiration of any
applicable cure period set forth in Section 15.1 of this Lease, Tenant shall,
------------
within ten (10) business days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount, and Tenant's failure to do so shall be a breach of this Lease. If
Tenant has not defaulted hereunder or if Landlord has not applied the full
amount of the Security Deposit to said default beyond the expiration of any
applicable cure period set forth in Section 15.1 of this Lease, then the
------------
Security Deposit, or any portion thereof not so applied by Landlord, shall be
paid in cash to Tenant within sixty (60) days after Tenant shall have vacated
the Premises in accordance with the provisions of this Lease. The Security
Deposit is not an advance payment of Rent or an account of Rent, or any part or
settlement thereof, or a measure of Landlord's damages. If on the fifth
anniversary of the Commencement Date Tenant is not in default under this Lease
and no event has occurred and is continuing which with the giving of notice or
the passage of time, or both, would constitute a default under this Lease, the
Security Deposit still be reduced to Ten Thousand and 00/100 Dollars
($10,000.00). In the event Landlord transfers all or any part of its interest
in the Building or this Lease, upon such transferee's written assumption of all
of Landlord's obligations under this Lease, Landlord shall have the right to
transfer the Security Deposit to the transferee. Upon such transfer and
assumption, Landlord shall thereby be released by Tenant from all liability or
obligation for the return of the Security Deposit.
8.
<PAGE>
7. USE. Tenant shall use and occupy the Premises for the Permitted Use only
---
and for no other purpose, unless otherwise expressly agreed in writing by
Landlord. Tenant shall not use or occupy the Premises, or permit the Premises
to be used or occupied contrary to or in violation of any Laws, or in any manner
which would: (i) cause structural injury to the Premises or the Building; (if)
invalidate any insurance policy affecting the Premises or the Building; (iii)
increase the amount of premiums for any insurance policy affecting the Premises
or the Building; (iv) or may be dangerous to persons or property; (v) create a
nuisance, or disturb any other occupant of the Building.
8. CONDITION OF PREMISES. On the Commencement Date, Landlord shall deliver the
---------------------
Premises to Tenant in broom-clean condition. Subject to the correction and
completion of any items set forth on the punch list to be prepared under Section
-------
4 of the Work Letter, Tenant's taking possession of the Premises shall be
- -
conclusive evidence as against Tenant that the Premises were in good, clean and
sanitary order and repair and satisfactory condition and at such time were free
from defects, other than latent defects in the Tenant Improvements of which
Landlord is notified of within one (1) year after the Commencement Date. No
promise of Landlord to after, remodel or improve the Premises or the Building
and no representation respecting the condition of the Premises or the Building
has been made by Landlord to Tenant other than as may be contained herein or in
the Work Letter.
Landlord warrants to Tenant that as of the date of this Lease, to the
actual knowledge of Landlord, the Premises and any improvements to be
constructed by Landlord (a) are free from material structural defects, (b)
comply with all applicable Laws and (c) are free from contamination by any
Hazardous Materials. In the event of a breach of the foregoing warranties,
Landlord shall promptly rectify such breach at its sole cost and expense.
9. EARLY POSSESSION. If Tenant takes possession of all or any part of the
----------------
Premises prior to the Commencement Date, all of the covenants and conditions of
this Lease (except for the payment of Rent which shall be paid to Landlord in
accordance with the terms of this Lease commencing on the Commencement Date)
shall be binding upon the parties hereto the same as if the Commencement Date
had been fixed as of the date when Tenant took such possession.
10. ASSIGNMENT AND SUBLETTING.
-------------------------
10.1 Prohibitions. Tenant shall not, without the prior written consent
------------
of Landlord: (a) assign, convey or mortgage this Lease or any interest
hereunder, other than to an Affiliate or Successor (as hereinafter defined); (b)
permit any assignment of, or lien upon this Lease or Tenant's interest herein by
operation of law or otherwise; (c) sublet the Premises or any part thereof,
other than to an Affiliate or Successor; or (d) permit the use of the Premises
by any parties other than Tenant, its agents and employees. Landlord shall not
unreasonably withhold or delay its consent to any such assignment or subletting.
Tenant acknowledges and agrees that Landlord has a vital interest in the nature,
variety and location of tenants in the Building as a whole and that Landlord's
right to withhold its consent to any proposed assignment or subletting for
reasonable business concerns and purposes is a material consideration for the
rental rate and terms contained in this Lease. Neither an assignment or
subletting to an Affiliate or to a Successor, nor Landlord's consent to any
other assignment, subletting or transfer, nor Landlord's election to accept any
assignee, sublessee or transferee as Tenant hereunder, shall release the
original Tenant from any covenant or obligation under this Lease. Landlord's
consent to any assignment or subletting shall not constitute a waiver of
Landlord's right to consent to any future assignment or subletting.
10.2 Notice to Landlord. Tenant shall give Landlord written notice of
------------------
any proposed sublease or assignment (including, without limitation, a proposed
sublease or assignment to an Affiliate or to a Successor) at least forty-five
(45) days prior to the effective date of such proposed sublease or assignment.
Such notice shall contain the name of the proposed sublessee or assignee, a copy
of the proposed sublease or assignment document, a description of the intended
use of the Premises by the proposed sublessee or assignee, and such other
information as Landlord may reasonably request to evaluate the character,
reputation and creditworthiness of the proposed assignee or sublessee and the
proposed use of the Premises by such proposed assignee or sublessee. In
connection with a sublease
9.
<PAGE>
or assignment to an Affiliate or to a Successor, such notice shall be
accompanied by reasonable evidence that the proposed sublessee or assignee is an
Affiliate or a Successor.
10.3 Sharing of Profits. Without limitation of any other provision
------------------
hereof, should Tenant propose to assign this Lease or sublet the Premises to any
person or entity other than an Affiliate or to a Successor, Landlord may grant
its consent to the assignment or sublease on the condition that fifty percent
(50%) of the profits derived by Tenant from the assignment or sublease be paid
by Tenant to Landlord as Additional Rent. For purposes of this Section,
"profits" shall mean the amount of any and all consideration received by Tenant
in connection with such sublease or assignment, minus the amount of Rent to be
paid by Tenant under this Lease for the portion of the Term and the portion of
the Premises covered by such sublease or assignment, minus all reasonable, out-
of-pocket costs incurred by Tenant in connection with such assignment or
sublease (including leasing commissions, advertising expenses, costs of
alterations or improvements to the Premises and attorney's fees).
10.4 Transfers of Ownership Interests in Tenant. If Tenant is a
------------------------------------------
partnership or a corporation whose partnership interests or stock are not
publicly traded, any event or transaction or series of events or transactions
resulting in a transfer of control of Tenant shall be deemed to be a voluntary
assignment of this Lease by Tenant and shall be subject to the provisions of
this Section 10. For purposes of this Section 10.4, the term "control" shall
---------- ------------
have the meaning set forth in Section 2.1 hereof. Tenant shall pay to Landlord
-----------
as Additional Rent hereunder, all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees) paid or incurred by Landlord in
connection with any proposed assignment or subletting hereunder, regardless of
whether Landlord withholds or grants its consent to such assignment or
subletting.
Notwithstanding anything to the contrary contained herein, any assignment
of this Lease to a successor by reason of merger with Tenant, or assignment
between parent and subsidiary, or assignment to an entity acquiring
substantially all of the assets or capital stock of Tenant (the "Successor")
shall be permitted upon prior written notice to Landlord but without Landlord's
consent if on the date Tenant notifies Landlord of such assignment and on the
effective date of the assignment the Successor has "Tangible Net Worth" (as
hereinafter defined) equal to or greater than the greater of (i) the Tangible
Net Worth of Tenant on the date of this Lease, or (ii) the Tangible Net Worth of
Tenant on the date Tenant notifies Landlord of such Successor; provided,
however, neither an assignment or subletting to an Affiliate or Successor, nor
Landlord's consent to any other assignment, subletting or transfer, nor
Landlord's election to accept any assignee, sublessee or transferee as Tenant
hereunder, shall release the original Tenant from any covenant or obligation
under this Lease. "Tangible Net Worth" means the excess of total assets over
total liabilities, in each case as determined in accordance with generally
accepted accounting principles consistently applied.
In addition, and notwithstanding anything to the contrary herein, a sale or
transfer of the capital stock of Tenant shall be permitted without the consent
of Landlord provided that (a) Tenant becomes a publicly traded corporation as a
result of such sale or transfer, and (b) on the date Tenant notifies Landlord of
such sale or transfer to become a publicly traded corporation, and on the
effective date of Tenant becoming a publicly traded corporation, Tenant has
Tangible Net Worth equal to or greater than the greater of (i) the Tangible Net
Worth of Tenant on the date of this Lease, or (ii) the Tangible Net Worth of
Tenant on the date Tenant notifies Landlord of such sale or transfer to become a
publicly traded corporation. Tenant shall give Landlord written notice of any
public offering at least thirty (30) days prior to the effective date of such
proposed initial public offering.
11. REPAIRS AND ALTERATIONS.
-----------------------
11.1 Tenant's Repair Obligations. Tenant will, at its own expense, keep
---------------------------
the Premises in good condition and repair during the Term, and Tenant shall
promptly and adequately repair all damage to the Premises (including, without
limitation, docks, dock doors and seals and dock levelers) and replace or repair
all damaged or broken glass, fixtures, improvements and appurtenances, and
within any reasonable period of time specified by Landlord. Notwithstanding
anything to the contrary herein, any repairs by Tenant to mechanical, electrical
or plumbing systems in the Premises shall be performed under
10.
<PAGE>
the supervision and with the approval of Landlord. If Tenant fails to commence
any such repairs or replacements within five (5) business days after written
notice from Landlord of such required action, Landlord may, but need not, make
such repairs and replacements, and Tenant shall pay Landlord the cost thereof,
plus an additional ten percent (10%) to cover Landlord's overhead and related
expenses, forthwith upon being billed for same. Landlord may enter the Premises
at all reasonable times and with at least one business day prior verbal notice
to make such repairs and replacements and any other repairs, alterations,
improvements and additions to the Premises required hereunder or to the Building
or to any equipment located in the Building. Tenant shall not be obligated to
repair or replace the roof or any structural defects in the Premises.
Notwithstanding anything contained herein to the contrary, if any damage to the
Property or to the Premises or to any equipment thereon or appurtenance thereto
results from the willful misconduct or gross negligence of Tenant or of Tenant's
contractors, agents or employees, Landlord may, at Landlord's option, repair
such damage and Tenant shall, within thirty (30) days of receipt of a written
invoice and reasonable supporting documentation by Landlord, reimburse Landlord
forthwith for the total cost of such repairs, plus an additional ten percent
(10%) to cover Landlord's overhead and related expenses. In connection with any
entry made pursuant to this Paragraph 11, Landlord shall use reasonable efforts
to minimize any disruption to Tenant's business caused by any such entry and any
such repairs, alterations, additions or improvements to the Premises.
Notwithstanding anything to the contrary contained herein, Tenant's repair
obligations with respect to a casualty or condemnation shall be governed by the
terms of Sections 18 and 19 respectively. In addition, nothing in this Section
----------- -- -------
11.1 shall relieve Landlord of its obligations under Section 5.
- ---- ---------
11.2 Prohibition on Alterations. Tenant shall not, without the prior
--------------------------
written consent of Landlord, make any Alterations. Landlord may withhold its
consent to any Material Alterations in its sole but reasonable discretion. With
respect to all other Alterations, Landlord shall not unreasonably withhold or
delay its consent. Tenant may, without obtaining Landlord's consent, paint and
make minor decorative changes within the Premises (e.g., wallpaper and picture
----
hanging).
11.3 Performance of Alterations. The work necessary to make any
--------------------------
Alterations shall be done by contractors approved by Landlord, which approval
shall not be unreasonably withheld or delayed. If Alterations are, with
Landlord's consent, performed by contractors employed by Tenant, Tenant shall
deliver to Landlord, for its review and approval, which shall not be
unreasonably withheld or delayed, prior to commencing any such Alterations,
copies of all contracts and subcontracts related to such Alterations, and plans,
working drawings and specifications necessary to perform such work. Landlord's
review of Tenant's plans, specifications or working drawings shall impose no
responsibility or liability on Landlord, and shall not constitute a
representation, warranty or guarantee by Landlord, with respect to the
completeness, design, sufficiency or compliance thereof with any Laws.
Alterations shall be performed subject to any reasonable conditions Landlord may
impose, including, without limitation, furnishing Landlord with reasonable
security for the payment of all costs to be incurred in connection with such
Alterations and insurance against liabilities which may arise out of such
Alterations, as reasonably determined by Landlord. All Alterations performed by
Tenant or its contractors shall be done in a first-class, workmanlike manner
using only good grades of materials and shall comply with all insurance
requirements and all Laws. Other than out-of-pocket costs incurred by Landlord
which shall be reimbursed by Tenant upon demand (i.e., consultant fees), Tenant
shall permit Landlord to supervise all Alterations at no cost to Tenant if
Tenant's employees or contractors perform the Alterations. Landlord will charge
Tenant a supervising fee not to exceed ten percent (10%) of the total cost of
the Alterations, including, without limitation, all labor and material costs, if
Landlord's employees or contractors perform the Alterations. Tenant shall
promptly pay to Landlord and/or to Tenant's contractors, as the case may be,
when due, the cost of all work and of all decorating required in connection with
any Alterations, and all supervising fees, and if payment is made directly to
Tenant's contractors, upon completion of the Alterations, Tenant shall deliver
to Landlord evidence of payment and full and final waivers of all liens for
labor, services or materials. Tenant covenants and agrees not to suffer or
permit any liens to be placed against the Property or the Premises relating to
any Alterations, and in case of any such lien attaching or claim thereof being
asserted, Tenant covenants and agrees no later than thirty (30) days from the
filing thereof or such claim being asserted (i) to cause it to be released and
removed of record or (ii) to provide Landlord, with endorsements (reasonably
satisfactory to Landlord and Mortgagee) to Landlord and Mortgagee's title
insurance policies insuring against that existence of or attempted enforcement
of such
11.
<PAGE>
lien or a bond in form and substance reasonably acceptable to Landlord. In the
event that such lien is not released, removed, insured or bonded over within
said thirty (30) day period Landlord, at its sole option, may take all action
necessary to release and remove such lien (without any duty to investigate the
validity thereof) and Tenant shall, within ten (10) business days following
notice, either before or after such release and removal, pay or reimburse
Landlord, as Additional Rent hereunder, for all sums, costs and expenses
(including, without limitation, reasonable attorneys' fees and court costs)
incurred by Landlord in connection therewith. Except to the extent caused by
gross negligence or willful misconduct of Landlord or any of its agents,
employees, contractors or representatives, Tenant shall indemnify, defend and
hold Landlord and its partners and their respective officers, shareholders,
directors, agents and employees harmless from all claims, causes of action,
liabilities, losses, costs, damages, liens and expenses related to any
Alterations, whether performed by or under the direction of Landlord, and
whether performed in compliance with this Section 11 or any other conditions
----------
imposed by Landlord.
12. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the following
-----------------------------------
rights, exercisable without notice (except as expressly provided below) and,
except to the extent that any loss, injury or damage is suffered as a result of
the gross negligence or willful misconduct of Landlord or any of its agents,
employees or contractors, without liability to Tenant for damage or injury to
property, person or business, and without effecting an eviction, constructive or
actual, or disturbance of Tenant's use or possession of the Premises or giving
rise to any claim for set-off or abatement of Rent:
(a) To change the name or street address of the Building with at least
ninety (90) days' written notice to Tenant;
(b) To install, affix and maintain any and all signs within and on the
exterior of the Building (excluding the exterior portion of the Building
where the Premises is located) and on the Land;
(c) To designate and/or approve, prior to installation, all types of
window shades, blinds, drapes, awnings, window ventilators and other
similar equipment, and to control all internal lighting that may be visible
from the exterior of the Premises;
(d) To show the Premises to prospective tenants at reasonable hours
upon at least one business day's prior verbal notice to Tenant's
Representative or Tenant's site manager at the Premises during the last
nine (9) months of the Term and, if abandoned during such year, to prepare
the Premises for re-occupancy, and to show the Premises to prospective
purchasers and lenders of the Building at reasonable hours upon at least
one (1) business days prior verbal notice to Tenant's Representative or
Tenant's site manager at the Premises at any time during the Term;
(e) To retain at all times, and to use in appropriate instances upon
at least one (1) business day's prior verbal notice (except in cases of
emergency in which case no notice shall be necessary) to Tenant's
Representative or Tenant's site manager at the Premises, keys to all doors
(except secure areas) within and into the Premises. No locks shall be
changed without the prior written consent of Landlord;
(f) To decorate or to make repairs, alterations, additions, or
improvements, whether structural or otherwise, in and about the Building or
the Property, or any part thereof, and for such purposes to enter upon the
Premises upon at least one (1) business days prior verbal notice to
Tenant's representative or Tenant's site manager at the Premises (except in
an emergency, in which case no notice shall be necessary), and during the
continuance of any such work, to temporarily close roads, drives, doors,
entryways, public space and corridors in the Building or on the Property,
and to interrupt or suspend temporarily Building services and facilities,
all without abatement of Rent or affecting any of Tenant's obligations
hereunder, so long as the Premises are reasonably accessible and, Landlord
shall use reasonable efforts to minimize any disruption to Tenant's
business;
12.
<PAGE>
(g) To have and retain a paramount title to the Premises free and
clear of any act of Tenant purporting to burden or encumber it;
(h) In its reasonable discretion, to grant to anyone the exclusive
right to conduct any business or render any service in or to the Property,
provided such exclusive right shall not operate to affect any of Tenant's
rights under this Lease;
(i) To approve the location of equipment and articles in and about the
Premises and the Building so as not to exceed the legal live load; and
(j) To prohibit the placing of vending or dispensing machines of any
kind in or about the Premises, except for vending or dispensing machines
for the sole use of Tenant and its employees.
In connection with any action by or on behalf of Landlord performed
pursuant to this Paragraph 12, Landlord shall use reasonable efforts to minimize
any disruption to Tenant's business caused by any such action.
13. COVENANT AGAINST LIENS. Tenant covenants and agrees not to permit any lien
----------------------
of mechanics or materialmen to be placed against the Property or the Premises,
and in the case of any such lien attaching, to pay off and remove or bond over
any such lien to Landlord's reasonable satisfaction within thirty (30) days
after the filing thereof. If any such lien attaches, and Tenant fails to remove
or bond over such lien to Landlord's reasonable satisfaction within said 30-day
period, Landlord may, but shall not be obligated to, pay the amount necessary to
remove such lien without being responsible for making an investigation as to the
validity or accuracy thereof, and the amount so paid, together with all costs
and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, shall be deemed Additional Rent
hereunder, payable within ten (10) business days of Landlord's written demand,
which shall be delivered together with reasonable supporting documentation of
such amounts owed Landlord.
14. WAIVERS AND INDEMNITIES.
-----------------------
14.1 Waiver. To the extent not expressly prohibited by law and except
------
for the gross negligence or willful misconduct of Landlord or any of its agents,
employees, contractors or representatives, Tenant waives all claims it may have
against Landlord and its partners, and their respective officers, shareholders,
directors, agents and employees for any damage to person or property or loss of
business due to the Property, the Premises or any part of either thereof or any
appurtenances thereto or improvements thereon not being in good condition or
becoming out of repair, or due to the happening of any accident in or about the
Property or the Premises or due to any act or neglect of any tenant or occupant
of the Property or of any other person, including Landlord and its partners, and
their respective officers, shareholders, directors, agents and employees. This
provision shall apply particularly (but not exclusively) to damage caused by
water, snow, frost, steam, sewage, gas, faucets and plumbing fixtures, and shall
apply without distinction as to the person whose act or neglect was responsible
for the damage and whether the damage was due to any of the causes specifically
enumerated above or to some other cause of an entirely different kind. Tenant
further agrees that all Tenant's property upon the Premises shall be there at
the risk of Tenant only, and that Landlord shall not be liable for any damage
thereto or theft thereof.
14.2 Indemnification. Subject to Section 17.1 and except for the gross
--------------- ------------
negligence or willful misconduct of Landlord, Tenant hereby agrees to indemnify,
defend and hold harmless Landlord and its partners and their respective
officers, shareholders, directors, agents and employees against any claims or
liability for damage to person or property (or for loss or misappropriation of
property) occurring during the Term in or on the Property or in the Premises,
arising from any breach or default on the part of Tenant under this Lease, or
from any act or omission of Tenant or any employee, agent, servant, invitee or
contractor of Tenant in or on the Property or in the Premises, or from Tenant's
operations or activities on
13.
<PAGE>
or use of the Premises or the Property, and from any cost relating thereto
(including, without limitation, reasonable attorneys' fees).
Subject to Section 17.1 hereof and except for the gross negligence or
------------
willful misconduct of Tenant, Landlord hereby agrees to indemnify, defend and
hold harmless Tenant and its respective officers, shareholders, directors,
agents and employees against any claims or liability for damage to person or
property (or for loss or misappropriation of property) occurring during the Term
in or on the Property or the Premises, arising from any negligent act or
omission of Landlord or any employee, agent, servant, invitee or contractor of
Landlord in or on the Property or the Premises, or from any breach or default on
the part of Landlord under this Lease, or from Landlord's operations or
activities on or use of the Property or the Premises, and from any cost relating
thereto (including, without limitation, reasonable attorney's fees).
14.3 No Implicit Waivers. No waiver of any condition expressed in this
-------------------
Lease shall be implied by any neglect of Landlord or Tenant to enforce any
remedy on account of the violation of such condition if such violation be
continued or repeated subsequently, and no express waiver shall affect any
condition other than the one specified in such waiver and that one only for the
time and in the manner specifically stated. After the expiration of any
applicable cure period set forth in Section 15.1 of this Lease, no receipt of
------------
moneys by Landlord from Tenant after the termination in any way of the Term or
of Tenant's right of possession hereunder or after the giving of any notice
shall reinstate, continue or extend the Term or affect any notice given to
Tenant prior to the receipt of such moneys, it being agreed that after the
service of notice of the commencement of a suit or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
15. DEFAULTS AND LANDLORD'S REMEDIES.
--------------------------------
15.1 Defaults. It shall be a default under this Lease if: (i) default
--------
shall be made in the payment of Rent or any installment thereof or in the
payment of any other sum required to be paid by Tenant under this Lease, and
such default shall continue for five (5) days after receipt of written notice of
such default; or (ii) default shall be made in the performance of any of the
other covenants or conditions which Tenant or any Guarantor is required to
observe and perform under this Lease or under any Guaranty, and such default
shall continue for thirty (30) days after notice to Tenant (unless such default
shall give rise to a hazardous condition requiring an immediate cure, in which
case, no notice is necessary (although Landlord shall use reasonable efforts to
provide such notice) and Tenant must cure such default immediately); provided,
however, that Landlord shall not be entitled to exercise its remedies on account
of any default described in this clause (ii) if (a) such default cannot
reasonably be cured within thirty (30) days, (b) Tenant commences to cure such
default within said 30-day period and thereafter diligently and continuously
proceeds with such cure, and (c) Tenant cures such default within a reasonable
period of time after Landlord's notice of such default; or (iii) the interest of
Tenant in this Lease is levied on under execution or other legal process, or
(iv) an Event of Bankruptcy occurs, or (v) Tenant dissolves or ceases to exist
unless Tenant's interest in this Lease shall be transferred to an Affiliate or
to a Successor pursuant to the terms of Section 10 of this Lease, or (vi) Tenant
----------
shall abandon the Premises during the Term.
15.2 Landlord's Remedies. Upon a default under this Lease, Landlord at
-------------------
its option may, without notice or demand of any kind to Tenant or any other
person, exercise any one or more of the following described remedies in addition
to all other rights and remedies provided at law or in equity:
(a) Landlord may terminate this Lease and the Term created hereby,
in which event Landlord may forthwith repossess the Premises and be
entitled to recover forthwith as damages a sum of money equal to all Rent
accrued and unpaid for the period up to and including the date of
termination, plus as final and liquidated damages (and not as a penalty),
Landlord's reasonable estimate of the amount of Rent that would be payable
from the date of such termination through the balance of the scheduled
Term, less the fair rental value of the Premises for said period (taking
into consideration the time to relet the Premises, and taking into
consideration and
14.
<PAGE>
reducing said fair rental value by, the cost of reletting and retrofitting
the Premises), plus any other sum of money and damages owed by Tenant to
Landlord.
(b) Landlord may terminate Tenant's right of possession and may
repossess the Premises by forcible entry or detainer suit or otherwise,
without terminating this Lease, in which event Landlord may, but shall be
under no obligation to, relet the Premises for the account of Tenant, for
such rent and upon such terms as shall be satisfactory to Landlord. For
the purpose of such reletting, Landlord is authorized to decorate and make
any repairs, changes, alterations, or additions in or to the Premises that
may be necessary or appropriate, and Tenant shall, upon written demand, pay
the cost thereof. If Landlord shall fail or refuse to relet the Premises,
or if the Premises are relet and a sufficient sum shall not be realized
from such reletting to pay all of the costs and expenses (i) of such
decoration, repairs, changes, alterations and additions, (ii) of such
reletting (including, without limitation, all brokerage, advertising, and
legal expenses), and (iii) of the collection of the rent accruing
therefrom, and to satisfy the Rent provided for in this Lease, then Tenant
shall pay to Landlord as damages a sum equal to the amount of the Rent
reserved in this Lease for such period or periods, or, if the Premises have
been relet, Tenant shall satisfy and pay any such deficiency upon demand
therefor from time to time. Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this paragraph (b) from
time to time and that no suit or recovery of any portion due Landlord
hereunder shall be any defense to any subsequent action brought for any
amount not theretofore reduced to judgement in favor of Landlord. To the
extent required by law, Landlord shall use reasonable efforts to mitigate
its damages.
(c) Landlord may perform the obligation which is the subject of
such default for the account and at the expense of Tenant. All costs
incurred by Landlord in performing such obligation, plus an administrative
fee equal to ten percent (10%) of such costs, plus all attorneys' fees and
expenses of Landlord incurred in enforcing any of the obligations of Tenant
under this Lease shall become Additional Rent hereunder and shall be due
and payable by Tenant on demand.
16. SURRENDER OF POSSESSION.
-----------------------
16.1 Condition of Premises. At the termination of this Lease by lapse of
---------------------
time or otherwise, or upon a termination of Tenant's right of possession without
terminating this Lease, Tenant shall surrender possession of the Premises and
all Tenant Improvements to Landlord and deliver all keys to the Premises to
Landlord, and shall return the Premises and all equipment and fixtures of
Landlord to Landlord In as good condition as when Tenant originally took
possession, ordinary wear and tear, loss or damage by fire or other insured
casualty, and damage resulting from the acts of Landlord or any of its employees
and agents excepted, failing which Landlord may restore the Premises and such
equipment and fixtures to such condition and Tenant shall pay the reasonable
cost thereof to Landlord within ten (10) business days of receipt of Landlord's
invoice thereof, which shall be delivered to Tenant with reasonable supporting
documentation. All Alterations, whether temporary or permanent in character,
made by Landlord or Tenant in or upon the Premises shall become Landlord's
property, and unless Landlord requests their removal, shall remain upon the
Premises at the termination of this Lease by lapse of time or otherwise or upon
a termination of Tenant's right to possess the Premises, without compensation to
Tenant, excepting, however, Tenant's movable furniture, equipment and trade
fixtures, provided that they may be removed without permanent structural damage
to the Building. If Tenant does not remove such furniture, equipment and trade
fixtures upon the expiration or earlier termination of this Lease, or upon the
termination of Tenant's right to possess the Premises, at Landlord's election:
(i) Tenant shall be conclusively presumed to have conveyed the same to Landlord
under this Lease as a bill of sale without payment or credit by Landlord, or
(ii) Tenant shall be conclusively presumed to have forever abandoned such
property, and without accepting title thereto, Landlord may, at Tenant's
expense, remove, store, destroy, discard or otherwise dispose of all or any part
thereof without incurring liability to Tenant or to any other person, and Tenant
shall pay Landlord upon demand the reasonable expenses incurred in taking such
actions. Tenant's obligations under this Section 16.1 shall survive the
------------
expiration or earlier termination of the Term of this Lease. Notwithstanding
any of the foregoing, Tenant shall not be required
15.
<PAGE>
by Landlord to remove any Alterations from the Premises unless, at the time that
Tenant requests Landlord for its consent for the construction of the same,
Landlord informs Tenant of such removal obligation.
16.2 Holding Over. If Tenant retains possession of the Premises or any
------------
part thereof after the termination of this Lease, whether by lapse of time or
otherwise, or after a termination of Tenant's right to possess the Premises,
then Landlord may, at Landlord's sole election at any time after the termination
of this Lease or Tenant's right of possession, serve written notice on Tenant
that such holding over constitutes either: (a) the creation of a month-to-month
tenancy upon each of the terms herein provided as may be applicable to such
month-to-month tenancy, except that Tenant shall pay to Landlord Base Rent for
each month or portion thereof in the amount set forth below, plus all Additional
Rent (including, without limitation, the Operating Expense Amount and Estimated
Payments) coming due during such period, or (b) the creation of a tenancy at
sufferance upon each of the terms herein provided as may be applicable to such
tenancy at sufferance, except that Tenant shall pay to Landlord a per them rent
equal to the per them Base Rent set forth below, plus the per them amount of all
Additional Rent (including, without limitation, the Operating Expense Amount and
Estimated Payments). If no written notice is served by Landlord, then a tenancy
at sufferance with Rent as stated in (b) above shall have been created. The
provisions of this Section shall not operate as a waiver by Landlord of any
right of re-entry herein provided. In addition to and not in limitation of all
other remedies set out in this Section, Tenant shall be liable for all damages
(consequential as well as direct) sustained by Landlord on account of Tenant's
holding over. Base Rent payable during any holding over shall be as follows:
(i) during the first sixty (60) days following the termination of
this Lease or the termination of Tenant's right of possession, one hundred
twenty-five percent (125%) of the Base Rent for the calendar month
immediately preceding the termination date of this Lease or the termination
of Tenant's right of possession; and
(ii) from and after the sixty-first (61st) day following the
termination of this Lease or the termination of Tenant's right of
possession, one hundred fifty percent (150%) of the Base Rent for the
calendar month immediately preceding the termination date of this Lease or
the termination of Tenant's right of possession.
17. INSURANCE.
---------
17.1 Waiver of Subrogation. Landlord and Tenant each hereby waive all
---------------------
claims against the other for loss of or damage to the Property or Premises or to
the contents thereof, which loss or damage is covered by valid and collectible
fire and extended coverage insurance policies, to the extent that such loss or
damage is recoverable under said insurance policies. Inasmuch as this mutual
waiver will preclude the assignment of any such claim by subrogation (or
otherwise) to an insurance company (or any other person), Landlord and Tenant
each agree to give each insurance company which has issued, or in the future may
issue, to it policies of fire and extended coverage insurance, written notice of
the terms of this mutual waiver, and to have said insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waiver.
17.2 Tenant's Insurance. Tenant shall carry insurance during the entire
------------------
Term insuring Tenant and Landlord and their respective agents and employees, and
any other reasonable parties designated by Landlord from time to time
(including, without limitation, any Mortgagee) as their interests may appear,
with terms, coverages and in companies reasonably satisfactory to Landlord, and
with such increases in limits as Landlord may from time to time reasonably
request, but initially Tenant shall maintain the following coverages in the
following amounts:
(a) Comprehensive or Commercial General Liability insurance,
including Contractual Liability coverage of the indemnification provisions
contained in this Lease and host liquor liability insurance, with limits
for bodily injury or personal injury to or death of any person, or more
than one (1) person, or for damage to property in an amount of not less
than $1,000,000.00 per occurrence/$3,000,000.00 aggregate. The coverage
amounts may be provided through an
16.
<PAGE>
umbrella or excess liability policy. The Comprehensive or Commercial
General Liability policy shall include Landlord, Landlord's management
agent and any Mortgagee designated by Landlord from time to time as
additional insureds on a primary and non-contributory basis to any
insurance carried by Landlord, Landlord's management agent and any
Mortgagee.
(b) Insurance against "all risks" of physical loss for the full
insurable replacement value of the initial build-out of the Premises
(including, without limitation, the Tenant Improvements) and all
Alterations, and of all furniture, trade fixtures, equipment, merchandise
and all other items of Tenant's property on the Premises.
(c) Worker's Compensation insurance in amounts required by the
State of Illinois, including Voluntary Compensation, Broad Form All States
Endorsement.
(d) Automobile Liability insurance with limits for bodily injury or
personal injury to or death of any person, or more than one (1) person, or
for damage to property in an amount of not less than $1,000,000.00 combined
single limit, including Employer's Owned, Non-Owned and Hired Car coverage.
17.3 Evidence of Insurance. Tenant shall, prior to the commencement of
---------------------
the Term, furnish to Landlord certificates of insurance evidencing the insurance
coverage required under this Section 17, and Tenant shall deliver renewals
----------
thereof to Landlord not less than thirty (30) days prior to the end of the term
of such coverage, which certificates shall state that such insurance coverage
shall not be changed or canceled without at least thirty (30) days' prior
written notice to Landlord and any Mortgagee identified by Landlord from time to
time.
17.4 Landlord's Insurance. Attached hereto and made a part hereof as
--------------------
Exhibit D is a certificate of insurance. evidencing the insurance carried by
- ---------
Landlord for the Property as of the date of this Lease. Landlord covenants that
during the Term of this Lease it will continue to maintain insurance for the
Property customarily carried by similar owners of similar types of property.
18. FIRE OR CASUALTY.
----------------
(a) If the Premises or the Building (including machinery or
equipment used in the operation of the Building) shall be destroyed or
damaged by fire or other cause and if the Premises or Building may be
repaired and restored within two hundred seventy (270) days after such
damage, then Landlord shall, to the extent insurance proceeds are actually
made available to Landlord for purposes of repair and restoration,
diligently repair and restore same with reasonable promptness; provided,
however, that Landlord shall only be obligated to repair or restore any
improvements made to the Premises (including, without limitation, the
Tenant Improvements or any Alterations) to the extent that (i) Landlord
paid for the initial construction of such improvements (either directly or
through an allowance granted to Tenant), and (ii) Landlord receives the
insurance proceeds related to such improvements under the insurance
described in clause (b) of Section 17.2 hereof. Tenant agrees to execute
------------
all reasonable documents and take all actions reasonably necessary to make
the insurance proceeds described in clause (ii) of the immediately
preceding sentence available to Landlord for the repair and restoration of
the Premises. Notwithstanding anything contained herein to the contrary, if
the Premises or the Building are substantially damaged or destroyed during
the last twelve (12) months of the Term, either Landlord or Tenant shall
have the right to terminate this Lease as of the date of the fire or other
casualty by giving notice to the other within thirty (30) days after the
date of the fire or casualty, i n which event, Rent shall be apportioned on
a per them basis and paid to the date of such fire or casualty.
Notwithstanding anything contained herein to the contrary, if such damage
renders the Premises untenantable in whole or in part and cannot reasonably
be repaired and restored within two hundred seventy (270) days, or if
sufficient insurance proceeds are not made available to Landlord for repair
or restoration and Landlord elects to not obtain or provide alternative
financing, or if Landlord elects to demolish the Building or cease its
operation, then either party shall have the right to cancel and terminate
this Lease (which termination shall be
17.
<PAGE>
effective as of the date of such damage), in the manner as hereinafter
provided. Within seventy-five (75) days after the occurrence of the
casualty, Landlord agrees to provide Tenant with written notice (the
"Landlord's Casualty Notice") stating which, if any, of the conditions set
forth in the immediately preceding sentence (individually a "Termination
Event", and collectively, the "Termination Events") exist and its
reasonable estimate of the repair period. In the event that a Termination
Event does exist, Landlord shall exercise its termination right hereunder,
if at all, by electing to exercise the same in the Landlord's Casualty
Notice. Provided that a Termination Event exists and Landlord shall not
have previously chosen to terminate this Lease pursuant to the foregoing
sentence, Tenant shall terminate this Lease, if at all, by delivering
written notice to Landlord within twenty (20) days after receiving the
Landlord's Casualty Notice. Tenant's failure to deliver written notice of
termination within said 20-day period shall be deemed that Tenant has
waived its right to terminate this Lease under this Section 18(b). In the
-------------
event any fire or casualty renders the Premises untenantable, in whole or
in part, and if this Lease shall not be terminated by reason of such
damage, then Rent shall abate during the period beginning with the date of
such fire or other casualty and ending with the date when the Premises are
again rendered tenantable, by an amount bearing the same ratio to the total
amount of Rent for such period as the untenantable portion of the Premises
bears to the entire Premises. Notwithstanding anything contained herein to
the contrary, if any fire or other casualty is caused by the gross
negligence or willful misconduct of Tenant or its agents or employees,
Tenant shall not be entitled to terminate this Lease on account of such
fire or other casualty, and Rent shall only abate to the extent Landlord
actually recovers rent loss insurance proceeds specifically allocated to
the Rent due under this Lease.
(b) In the event neither Landlord nor Tenant terminate this Lease,
pursuant to the terms of Section 18(a), following a casualty to the
-------------
Premises, and Landlord elects to repair the Premises, Landlord shall
commence construction within thirty (30) days after receipt of a building
permit from the City, subject to Events of Force Majeure, and shall
substantially complete such repair or restoration of the Premises within
two hundred seventy (270) days from the date of the casualty, subject to
Events of Force Majeure. If Landlord fails to commence construction or
complete construction within the time periods hereinabove set forth,
subject to Events of Force Majeure, Tenant shall have the right to
terminate this Lease by delivering written notice within ten (10) days
after the expiration of the thirty (30) day period or within ten (10) days
after the expiration of the two hundred seventy (270) day period, as the
case may be. Tenant's failure to deliver written notice of its election to
terminate within the required time period shall be deemed that Tenant has
waived its right to terminate this Lease under this Section 18(b).
-------------
19. CONDEMNATION. If the whole or any material part of the Premises or the
------------
Building or any substantial portion of the parking area on the Land shall be
taken or condemned by any competent authority for any public use or purpose or
if any adjacent property or street shall be condemned or improved in such a
manner as to require the use of any part of the Premises or of the Building or
such parking area, the Term, at the option of Landlord, shall end upon the date
when the possession of the part so taken shall be required for such use or
purpose, and current Rent shall be apportioned as of the date of such
termination. In addition, if part of the Premises shall be taken or condemned
by any competent authority for any public use or purpose so that Tenant cannot,
in the reasonable judgment of Tenant, operate its business in the remaining
portion of the Premises, Tenant shall have the option to cancel this Lease as of
the date on which the condemning authority shall take possession of the part of
the Premises so taken, which option shall be exercised by written notice to
Landlord within thirty (30) days following Tenant's receipt of notice of the
intended taking. Tenant shall have no right to any apportionment of or share in
any condemnation award or judgement for damages made for the taking of any part
of the Premises or the Property but may seek its own award for loss of or damage
to Tenant's business or its property and relocation expenses resulting from such
taking, provided that such an award to Tenant does not in any way diminish the
award payable to Landlord on account of such taking. In the event of a taking
of the Premises and neither Landlord nor Tenant elects to terminate this Lease,
Base Rent shall be reduced in proportion to the floor area of the Premises
taken, which shall be evidenced by an amendment to this Lease executed by both
parties, and shall become effective on the date possession is delivered pursuant
to said taking.
18.
<PAGE>
20. NOTICES. All notices to be given by one party to the other under this Lease
-------
shall be in writing (except as expressly provided herein to the contrary),
mailed by certified or registered mail, postage prepaid, sent by overnight
courier, hand delivered, or sent by facsimile transmission with a copy to follow
within one (1) business day by one of the alternative methods of delivery
permitted hereunder as follows:
(a) To Landlord:
Amli Commercial Properties Limited Partnership
222 Spring Lake Drive
Itasca, IL 60143
Attention: President
Facsimile Telephone No.:630-227-9860
or to such other person or at such other address or to such other facsimile
telephone number designated by notice sent to Tenant in one of the manners
permitted under this Section 20, and during the Term with a copy to the
----------
address to which Rent is then being paid under this Lease.
(b) To Tenant: at the address or to the facsimile telephone number
set forth in Section 1.3 above, and during the Term with a copy to the
-----------
Premises or to such other address or facsimile telephone number designated
by notice to Landlord in one of the manners permitted under this Section
--------
20.
--
Any notice given in accordance with this Section 20 shall be deemed to have been
----------
given and received: (a) on the date of hand delivery if sent by hand delivery,
(b) on the date and at the time transmitted if sent by facsimile transmission,
as evidenced by the confirmation slip generated by the sender's facsimile
machine, or (c) on the date of actual delivery (or refusal thereof), as shown on
the return receipt, air bill or other delivery record if sent by any other means
permitted hereunder.
21. ADDITIONAL COVENANTS OF TENANT. Tenant hereby covenants and agrees to
------------------------------
comply with, and use reasonable efforts to cause its employees, agents, clients,
customers, invitees and guests to comply with, the following provisions:
(a) Any sign, lettering, picture, notice, or advertisement installed
within the Premises shall be installed at Tenant's cost and in compliance
with all Laws. Without obtaining Landlord's prior, written consent (which
consent may be withheld in Landlord's reasonable discretion) no sign,
lettering, picture, notice or advertisement may be placed on any portion of
the Premises which is visible from outside the Premises.
(b) Tenant shall not advertise the business, profession or activities
of Tenant in any manner which violates the letter or spirit of any code of
ethics adopted by any recognized association or organization pertaining
thereto, or use the name of the Building for any purpose other than for
identifying Tenant's business address, or use the name of the business
park, as it may from time to time be known, in which the Building is
located, or use any picture or likeness of the Building in any letterheads,
envelopes, circulars, notices, advertisements, containers or wrapping
material, without Landlord's prior consent in writing.
(c) Tenant shall not place any radio or television antenna on the roof
of the Building or on any other part of the Property other than inside the
Premises, or operate or permit to be operated any musical or sound
producing instrument or device inside or outside the Premises which may be
heard outside the Premises. Tenant shall not make noises, cause
disturbances or vibrations or use or operate any electrical or electronic
devices or other devices that emit sound or other waves or disturbances, or
create odors, any of which may be offensive to other tenants and occupants
of the Building or that would interfere with the operation of any device or
equipment or radio or television broadcasting or reception from or within
the Building or elsewhere.
19.
<PAGE>
(d) Tenant shall not obstruct sidewalks or entrances in and about the
Property. Tenant shall not place objects against doors or windows which
would be unsightly from the exterior of the Building, and will promptly
remove same upon notice from Landlord. Tenant shall store and dispose of
refuse as directed by Landlord, including, without limitation, storing and
disposing of all refuse in a neat and clean condition so as not to be
visible to members of the public outside the Premises and so as not to
create any health or fire hazard. In no event shall Tenant burn any refuse
at any time in the Premises or on or about the Property. Tenant shall not:
(i) leave or store any pallets on or around the loading docks, parking
areas or anywhere on the Property outside of the Premises or park any truck
trailers in the parking areas on the Land for any purposes (including,
without limitation, storage purposes, temporary or permanently; or (ii)
store any boxes, materials, goods or equipment anywhere on the Property
outside of the Premises. Notwithstanding anything to the contrary herein,
Tenant shall be permitted, subject to covenants, rules, regulations and
guidelines presently existing or imposed from time to time by the Amhurst
Lake Business Park Association, or any committee thereof, including,
without limitation, the Declaration of Protective Covenants for Amhurst
Lake Business Park, to park truck trailers within the area on the Land
which is crosshatched and depicted on Exhibit E attached hereto (the
---------
"Trailer Area"), for temporary or permanent (including overnight) storage
purposes provided all truck trailers are efficiently placed within the
Trailer Area along the south wall of the Building and do not interfere with
any truck maneuvering of other tenants within the truck area between the
Building and Amhurst Industrial Center II. Landlord covenants that at no
time during the Term will any rules or regulations be imposed by the
Landlord with respect to the Trailer Area materially affect Tenant's
ability to conduct its business
(e) Tenant shall not make any room-to-room canvass to solicit business
from other tenants in the Building, and shall not exhibit, sell or offer to
sell, use, rent or exchange any item or service in or from the Premises
unless expressly included within the Permitted Use.
(f) Tenant agrees to cooperate reasonably with Landlord to assure the
most effective operation of the Building's heating and air conditioning
systems, and shall not adjust any controls other than room thermostats
installed for Tenant's use or take any action which could jeopardize the
warranties covering the heating, ventilating and air conditioning systems.
(g) Door keys for doors in the Premises will be furnished at the
commencement of the Term by Landlord. Tenant shall not affix additional
locks on doors without the prior consent of Landlord and shall purchase
duplicate keys only from Landlord. At the and of the Term or upon a
termination of Tenant's right of possession, Tenant shall return all keys
to Landlord and will disclose to Landlord the combination of any safes,
cabinets or vaults left in the Premises.
(h) Tenant assumes full responsibility for protecting the Premises
from theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises (including, without limitation, truck
docks) closed and secured.
(i) Peddlers, solicitors and beggars shall be reported promptly to
Landlord.
(j) Tenant shall not install or operate heavy machinery of a nature
not related to the Permitted Use without the written permission of
Landlord.
(k) Tenant shall comply with all covenants, conditions and
restrictions of record encumbering or relating to the Property or any
portion thereof (including, without limitation, any declaration of
covenants, conditions, restrictions and easements encumbering the business
park in which the Property is located), and with all reasonable rules and
regulations issued from time to time by the Association or by Landlord,
provided that the same shall not unreasonably interfere with the conduct of
Tenant's business or its enjoyment of the Premises.
(l) Tenant will not in any manner deface or injure the Property or any
part thereof or overload the floors of the Premises.
20.
<PAGE>
(m) Tenant will not use the Premises for lodging or sleeping
purposes or for any immoral or illegal purposes.
(n) Tenant shall not at any time manufacture, sell, use or give
away, and shall not at any time permit the manufacture, sale, use or gift
of any spirituous, fermented, intoxicating or alcoholic liquors on the
Premises or Property. Except for Tenant's and its employees exclusive use
of vending machines within the Premises, Tenant shall not at any time sell,
purchase or give away, or permit the sale, purchase or gift of, food in any
form by or to any of Tenant's agents or employees or any other parties on
the Premises or Property.
(o) In no event shall Tenant permit on the Property flammables or
explosives or any other article of an intrinsically dangerous nature,
except for any such materials used in the ordinary course of Tenant's
business and in accordance with all Laws. If by reason of Tenant's failure
to comply with the provisions of this Section, any insurance coverage is
jeopardized or insurance premiums are increased, in addition to all other
rights and remedies available to Landlord upon a default by Tenant under
this Lease, Landlord shall have the right to require Tenant to make
immediate payment of the increased insurance premium, if any.
(p) Tenant shall not introduce, use, handle, generate, treat,
transport, store or dispose of, or permit the introduction, use, handling,
generation, treatment, transportation, storage or disposal of any Hazardous
Materials in, on, under, to, from, around or about the Premises, the
Building or the Property, except for Hazardous Materials contained in
products which are reasonably and customarily used in the normal course of
Tenant's business, such as photocopy machine solutions and cleaning
solvents, as long as such Hazardous Materials are only used in compliance
with all Laws (without the need for a special permit) and all
manufacturer's and supplier's instructions and recommendation, and in
quantities and for purposes which are reasonably and customarily used in
the normal course of Tenant's business. Tenant shall indemnify, defend and
hold harmless Landlord, its partners and their respective officers,
directors, shareholders, servants, agents and employees from and against
all fines, penalties, liens, suits, procedures, claims, demands,
liabilities, damages (including consequential damages), actions, causes of
action, costs and expenses of every kind and nature whatsoever (including,
without limitation, reasonable attorneys', engineers', experts and
consultants' fees and costs of testing, monitoring, remediation, removal
and cleanup), contingent or otherwise, known or unknown, incurred or
imposed, to the extent arising directly or indirectly out of or in any way
connected with Tenant's breach of the covenants set forth in this Section
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21(p). Tenant's obligations under the immediately preceding sentence shall
-----
survive the expiration or earlier termination of this Lease and a
termination of Tenant's right to possess the Premises.
22. ESTOPPEL CERTIFICATES: MORTGAGE ISSUES.
--------------------------------------
22.1 Estoppel Certificates. Tenant agrees that from time to time upon
---------------------
not less than ten (10) business days prior request by Landlord or any Mortgagee,
Tenant will deliver to Landlord or such Mortgagee an estoppel certificate
substantially in the form of Exhibit F attached hereto and made a part hereof or
---------
in such other form as Landlord or such Mortgagee may reasonably request. In the
event Tenant fails or refuses to deliver any such certificate within said 10-
business day period, in addition to all other rights and remedies available
under this Lease, at law or in equity upon a default by Tenant under this Lease,
Tenant shall be deemed to have accepted, agreed with and certified to, each of
the statements set forth in any such certificate. Landlord agrees that upon not
less than ten (10) business days prior request by Tenant's primary lender or
Successor, Landlord will deliver to Tenant and Tenant's primary lender or
Successor, as the case may be, an estoppel certificate substantially in the form
of Exhibit G attached hereto and made a part hereof or in such other form as
---------
Tenant's lender or Successor may reasonably request. In the event Landlord
fails or refuses to deliver any such certificate within said 10-business day
period, in addition to all other rights and remedies available under this Lease,
at law or in equity upon a default by Landlord under this Lease, Landlord shall
be deemed to have accepted, agreed with and certified to, each of the statements
set forth in any such certificate.
21.
<PAGE>
22.2 Subordination and Attornment. Landlord may sell the Land and
----------------------------
become the tenant under a ground or underlying lease of the Land and this Lease
and all rights of Tenant hereunder will then be subject and subordinate to such
underlying lease and any extensions or modifications thereof. This Lease and all
of Tenant's rights hereunder shall also be subject and subordinate to any
mortgage or mortgages (and the liens thereof) now or at any time hereafter in
force against the Building, the Land and/or the underlying leasehold estate, and
to all advances made or hereafter to be made upon the security thereof;
provided, however, that such subordination shall be conditioned upon the
Mortgagee under any such mortgage agreeing, in writing, that a foreclosure of
such mortgage or the giving of a deed in lieu of foreclosure shall not terminate
this Lease, and Tenant may remain In possession of the Premises pursuant to the
terms of this Lease, as long as Tenant is not in default beyond the expiration
of any applicable cure period set forth in Section 15.1 of this Lease (a "Non-
------------
Disturbance Agreement"). A Non-Disturbance Agreement may be contained in an
instrument signed by the Mortgagee only, or in an agreement entered into by
Tenant and any such Mortgagee. For purposes of this Lease, "Mortgagee" shall
mean the mortgagee, from time to time, under any mortgage granted by Landlord
and now or hereafter encumbering the Property or any portion thereof or interest
therein. Tenant hereby acknowledges that as of the date hereof, Bank One,
Chicago, NA, 111 N. Canal Street, Chicago, Illinois 60606 is a Mortgagee.
Tenant shall execute such further reasonable instruments subordinating this
Lease to any such mortgage or mortgages (and containing such other terms and
agreements as are customarily contained in such instruments) as Landlord from
time to time may reasonably request, provided that any such instrument contains
a Non-Disturbance Agreement. Tenant covenants and agrees that, if by reason of
any default on the part of Landlord herein as tenant under said underlying
lease, or as mortgagor under any mortgage to which this Lease is subject and
subordinate, said underlying lease is terminated or such mortgage is foreclosed
by summary proceedings, voluntary agreement or otherwise, Tenant, at the
election of the landlord under said underlying lease or the Mortgagee of such
mortgage, as the case may be, will attorn to and recognize such landlord or
Mortgagee as the "Landlord" under this Lease. Tenant further agrees to execute
and deliver at any time upon request of Landlord, any Mortgagee or any party
which shall succeed to the interest of Landlord as tenant under said underlying
lease, any instrument to evidence such attornment and containing such other
terms and agreements as are customarily contained in such instruments. Tenant
waives the provision of any law now or hereafter in effect which may give to
Tenant any right of election to terminate this Lease or to surrender possession
of the Premises in the event any proceeding is brought by landlord under said
underlying lease or the Mortgagee under any such mortgage to terminate said
underlying lease or foreclose such mortgage, as long as any such Mortgagee has
provided a Non-Disturbance Agreement. At the election of any Mortgagee
(expressed in a document signed by such Mortgagee), such Mortgagee may make all
or some of Tenant's rights and interests in this Lease superior to any mortgage
held by such Mortgagee and the lien thereof. Landlord will use best efforts to
obtain a Subordination, Non-Disturbance and Attornment Agreement from its
current Mortgagee in the form attached hereto as Exhibit H as soon as possible
---------
after this Lease is executed by Tenant.
22.3 Notices to Mortgagees. Tenant agrees to give any Mortgagee, by
---------------------
registered mail, a copy of any notice of default served upon Landlord, provided
that Landlord shall have provided Tenant with a current address for Mortgagee.
Tenant further agrees that if Landlord shall have failed to cure such default,
then such Mortgagee shall have an additional thirty (30) days within which to
cure such default, or if such default cannot reasonably be cured by such
Mortgagee within thirty (30) days, such Mortgagee shall have such additional
time as may be necessary to cure such default (including, without limitation,
time necessary to obtain possession of the Property if possession is necessary
to cure such default), and Tenant shall not pursue any remedies it may have for
such default and this Lease shall not be terminated, while such cure is being
diligently pursued.
22.4 Quiet Possession. Upon payment by Tenant of the Rent due
----------------
hereunder, and upon the observance and performance of all the covenants, terms
and conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term, without
hindrance or interruption by Landlord or any other person or persons lawfully or
equitably claiming by, through or under Landlord, always subject, however, to
the terms and conditions of this Lease.
23. MISCELLANEOUS.
-------------
22.
<PAGE>
23.1 Definition of Landlord. For purposes of this Lease, Landlord shall
----------------------
mean Landlord hereinabove named, except that in the event of any sale or other
transfer of the Property or the Building, upon the transferee's written
assumption of Landlord's obligations under. this Lease, the seller or
transferor (and the beneficiaries of any selling or transferring land trust)
shall be and hereby is and are entirely freed and relieved of all agreements,
covenants and obligations of the Landlord hereunder accruing from and after the
effective date of such transfer, and without further agreement between the
parties and the purchaser or transferee on any sale or transfer, such purchaser
or transferee shall be deemed and held to have assumed and agreed to carry out
any and all agreements, covenants and obligations of the Landlord hereunder
accruing from and after the effective date of such sale or transfer.
23.2 Real Estate Broker. Tenant represents that Tenant has dealt with
------------------
no broker in connection with this Lease other than the Broker, and that insofar
as Tenant knows, no other broker or finder negotiated this Lease or is entitled
to any fee or commission in connection herewith. Tenant agrees to indemnify,
defend and hold Landlord and its partners and their respective officers.
shareholders, directors, agents and employees free and harmless from and against
all claims for broker's commissions or finder's fees by any person claiming to
have represented or procured, or to have been engaged by, Tenant in connection
with this transaction other than the Broker. Landlord represents that Landlord
has dealt with no broker in connection with this Lease other than the Broker and
that insofar as Landlord knows, no other broker or finder negotiated this Lease
or is entitled to any fee or commission in connection herewith. Landlord agrees
to indemnify, defend and hold Tenant and its officers, shareholders, directors,
agents and employees free and harmless from and against all claims for broker's
commissions or finder's fees by any person claiming to have represented or to
have been engaged by Landlord in connection with this transaction. Landlord
shall pay Broker all fees and commissions due to Broker in connection with this
Lease.
23.3 Cumulative Remedies. All rights and remedies of Landlord under
-------------------
this Lease shall be cumulative, and none shall exclude any other rights and
remedies allowed by law.
23.4 Default Interest. All payments becoming due to Landlord from
----------------
Tenant under this Lease shall be considered as Rent, and if any such payments
remain unpaid for more than five (5) business days after written notice of such
default, such payments shall bear interest from the date when due until the date
paid at a rate of interest per annum equal to five percent (5%) in excess of the
rate announced or published from time to time by Harris Trust and Savings Bank
at its office in Chicago, Illinois as its prime or equivalent base rate of
interest adopted as a general benchmark from which Harris Trust and Savings Bank
determines the floating interest rates chargeable on various loans to borrowers
from time to time. Landlord's right to receive such interest shall not, in any
way, limit any of Landlord's other remedies under this Lease or at law or
equity.
23.5 Grammatical Interpretation. The word "Tenant" wherever used herein
--------------------------
shall be construed to mean Tenants in all cases where there is more than one
Tenant, and the necessary grammatical changes required to make the provisions
hereof apply either to corporations or individuals, men or women, shall in all
cases be assumed as though in each case fully expressed.
23.6 Successors and Assigns. Each of the provisions of this Lease shall
----------------------
extend to and shall, as the case may require, bind or inure to the benefit, not
only of Landlord and of Tenant, but also of their respective heirs, legal
representatives, successors and assigns, provided this clause shall not permit
any assignment contrary to the provisions of Section 10 hereof.
----------
23.7 No Oral Modifications. All of the representations and obligations
---------------------
of Landlord and Tenant are contained herein, and no modification, waiver or
amendment of this Lease or of any of its conditions or provisions shall be
binding upon Landlord unless contained in a writing signed by Landlord and
Tenant or by a duly authorized agent of Landlord or Tenant empowered by a
written authorization signed by Landlord or Tenant, as the case may be.
23.8 Irrevocable Offer; No Option. In consideration of Landlord's
----------------------------
administrative expense in considering this Lease, Tenant's submission to
Landlord of this Lease, duly executed by Tenant, shall
23.
<PAGE>
constitute Tenant's irrevocable offer to continue for ten (10) business days
from and after receipt by Landlord or until Landlord shall deliver to Tenant
written notice of rejection of Tenant's offer, whichever shall first occur. If
within said 10 business day period Landlord shall neither return this Lease duly
executed by Landlord nor so advise Tenant of Landlord's rejection of Tenant's
offer, then Tenant shall be free to revoke its offer. Although Tenant's
execution of this Lease shall be deemed an irrevocable offer by Tenant, the
submission of this Lease by Landlord to Tenant for examination shall not
constitute a reservation of or option for the Premises. This Lease shall become
effective only upon execution thereof by both parties and delivery thereof to
Tenant.
23.9 No Air Rights. No rights to light or air over any property,
-------------
whether belonging to Landlord or any other person, are granted to Tenant by this
Lease.
23.10 Intentionally Deleted.
---------------------
23.11 Landlord's Title. Landlord's title to the Property is and always
----------------
shall be paramount to the title of Tenant. Nothing herein contained shall
empower Tenant to do any act which can, shall or may encumber the title of
Landlord to the Property.
23.12 Recording Prohibited. Neither this Lease, nor any memorandum,
--------------------
affidavit or other writing with respect hereto, shall be recorded in any public
record by Tenant or by anyone acting through, under or on behalf of Tenant, and
the recording thereof in violation of this provision shall make this Lease null
and void at Landlord's election.
23.13 Relationship of Parties. Nothing contained in this Lease shall be
-----------------------
deemed or construed by the parties hereto or by any third party, to create the
relationship of principal and agent, partnership, joint venture or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any other provisions
contained in this Lease nor any acts of the parties hereto shall be deemed to
create any relationship between Landlord and Tenant other than the relationship
of lessor and lessee.
23.14 Limitation of Liability. Except for actions arising from
-----------------------
Landlord's fraud or willful misconduct, any claim against, or liability or
obligation of, Landlord under this Lease or relating to the Property or the
Premises shall be limited solely to and satisfied solely from the interest of
Landlord in the Property, and no partner in Landlord, or partner in a partner,
shall be individually or personally liable for any claim arising out of this
Lease or relating to the Property or the Premises. A deficit capital account of
any such partner shall not be deemed an asset or property of Landlord.
23.15 Excuse for Non-Performance. Except as expressly provided to the
--------------------------
contrary in this Lease, this Lease and Tenant's obligation to pay Rent hereunder
and to perform all of Tenant's covenants and agreements hereunder shall not be
impaired or affected, and Landlord shall not be in default hereunder, if
Landlord is unable to fulfill any of its obligations under this Lease because of
any Events of Force Majeure.
23.16 Late Charge. If any payment or installment of Rent owed by Tenant
-----------
under this Lease or under the Work Letter is not paid within five (5) business
days of the date when due, in addition to the amounts due under Section 23.4
------------
hereof, Tenant shall pay, as a late charge, an amount equal to five percent (5%)
of the amount overdue for each and every thirty (30) day period or portion
thereof that said amount remains unpaid.
23.17 Parking. Landlord hereby grants to Tenant, the non-exclusive right
-------
to use, during the Term, the number of parking spaces on the Property set forth
under Section 1.14. Tenant and its agents, employees, customers, guests and
------------
invitees shall not use parking spaces on the Property exceeding, at any time,
the number of parking spaces permitted under Section 1.14. Tenant agrees to
------------
comply with all reasonable rules and regulations which Landlord may promulgate
from time to time with respect to use of the parking areas on the Property.
24.
<PAGE>
23.18 Riders and Exhibits. All exhibits and riders attached to this
-------------------
Lease are made a part hereof and are incorporated herein by reference.
23.19 Year 2000 Compliance. Landlord will use reasonable care to
--------------------
ascertain that systems owned and controlled by Landlord in performing its
obligations under this Lease will continue to function beyond December 31, 1999
(the "Y2K Problem"). Landlord cannot, however, assure that all such systems will
perform as expected. Moreover, many goods and services received by Tenant are
neither owned nor controlled by Landlord including, but not limited to,
electricity, water, gas, cable television, telephone, transportation, police and
fire protection and other governmental services. Notwithstanding anything to the
contrary contained in this Lease, including Section 5, Tenant agrees that
Landlord shall have no liability to Tenant for any loss, claim, liability,
damage, expense or injury to Tenant or any other person or property resulting
from a Y2K Problem unless the same results solely from Landlord's gross
negligence or willful misconduct. Any failure of or problems with Landlord's
and/or Tenant's systems or equipment attributable to the Y2K Problem shall not
release Tenant from or otherwise modify or affect Tenant's duties, obligations
and liabilities under this Lease.
24. SIGNAGE. Prior to the Commencement Date, Landlord shall, at its sole cost,
-------
install one (1) ground mounted sign (the "Monument Sign") with a panel
containing Tenant's name and logo, and such other panels containing names of
other tenants at the Property, the order of said names to be determined by
Landlord. The Monument Sign shall be located on the Land or such other location
mutually agreed to by Landlord and Tenant, provided such location shall also be
approved, to the extent required, by the City of Waukegan, the County of Lake
and the Illinois Department of Transportation; provided, however, that Landlord
may, at its cost, change the location of the Monument Sign from time to time
upon not less than thirty (30) days written notice to Tenant, subject to
Tenant's prior approval of the new location of the Monument Sign (which approval
shall not be unreasonably withheld). The size, color, material, content, manner
of installation and general appearance of the Monument Sign (and Tenant's panel
thereon) shall comply with all applicable Laws and all covenants, conditions and
restrictions of record encumbering the Property and all rules, regulations and
guidelines imposed from time to time by the Amhurst Lake Business Park
Association (or any subdivision or committee thereof), and shall otherwise be
reasonably acceptable to Landlord in its sole discretion. Following the
installation of the Monument Sign, Landlord shall keep the Monument Sign in good
condition and repair, and the cost thereof shall be included in Operating
Expenses.
25. OPTION TO RENEW TERM.
--------------------
25.1 Renewal Option. Subject to the terms and conditions set forth
--------------
below in this Section 25, this Lease may be extended at Tenant's option (the
----------
"Renewal Option") for five (5) years. Such period is called the "Renewal Term".
The Renewal Term shall be upon the same terms, covenants and conditions
contained in this Lease (excluding the Work Letter and this Section 25), except
----------
for the amount of Base Rent payable during the Renewal Term, which shall be
determined in accordance with Section 25.2 below. Any reference in this Lease to
------------
the "Term" shall be deemed to include the Renewal Term and apply thereto, unless
it is expressly provided otherwise. Tenant shall have no extension or renewal
option other than the Renewal Option. Any termination of this Lease or of
Tenant's right of possession shall terminate all of Tenant's rights under this
Section 25. Tenant shall exercise the Renewal Option by delivering written
- ----------
notice thereof to Landlord not less than nine (9) months prior to the first day
of the Renewal Term. If Tenant fails to deliver any such notice within the time
period set forth in the immediately preceding sentence, Tenant shall be deemed
to have irrevocably waived its right to exercise the Renewal Option. If Tenant
delivers written notice exercising the Renewal Option, such notice shall be
irrevocable.
25.2 Base Rent During the Renewal Term. The Base Rent during the first
---------------------------------
(1st) Lease Year of the Renewal Term shall be based on an annual per square foot
rental rate equal to the greater of: (i) one hundred three percent (103%) of the
net annual per square foot base rental rate in effect under this Lease during
the seventh (7th) Lease Year of the Term, or (ii) ninety-five percent (95%) of
the then Prevailing Market Rental Rate (as defined in Subsection 25.4 hereof)
---------------
for the Premises, as reasonably determined by Landlord. Thereafter, Base Rent
shall increase by three percent (3%) each Lease Year during the
25.
<PAGE>
Renewal Term on a cumulative basis. Tenant's obligation to pay Additional Rent
(including, without limitation, the Operating Expense Amount) and all other
amounts to be paid by Tenant to Landlord under this Lease, shall continue during
the Renewal Term.
25.3 Conditions to Exercising the Renewal Option. Tenant's right to
-------------------------------------------
exercise the Renewal Option is subject to the conditions that on the date that
Tenant delivers its written notice exercising its Renewal Option: (I) Tenant is
not in default under this Lease; (ii) no event has occurred and is continuing
which with the giving of notice or the passage of time, or both, would
constitute a default under this Lease; and (iii) Tenant shall not have assigned
this Lease or sublet more than fifty percent (50%) of the Premises (other than
to an Affiliate or Successor). Promptly after Tenant exercises the Renewal
Option and the Base Rent to be paid during the Renewal Term is determined,
Landlord shall prepare an amendment to this Lease to reflect the extension of
this Lease for the Renewal Term on the terms set forth above in this Section.
Tenant shall execute and return such amendment to Landlord within fifteen (15)
days after its receipt thereof.
25.4 Prevailing Market Rental Rate. For purposes of this Lease,
-----------------------------
"Prevailing Market Rental Rate" shall mean the then prevailing per rentable
square foot market rental rate per annum for Base Rent for the Premises based on
comparable space and size in the Building and in comparable buildings in the
north suburban Chicago metropolitan market area, for fully creditworthy tenants
for a comparable term commencing on or about the first day of the Renewal Term.
26. TRUCK DOCKS. Landlord hereby grants to Tenant the exclusive right to use
-----------
during the Term the four (4) exterior docks identified in Exhibit I, each of
---------
which shall be equipped with 30,000 pound levelators. Landlord shall pay for
the initial installation of the levelators.
27. TENANT IMPROVEMENTS. Subject to the terms of this Section 27, Tenant shall
------------------- ----------
be permitted to amortize the cost of the Tenant Improvements (as defined in the
Work Letter) which exceed the allowance of $615,344.00 as more fully set forth
in Section 1 of the Work Letter. The cost of the Tenant Improvements which
---------
Tenant may amortize shall in no event exceed One Hundred Thousand and 00/100
Dollars ($100,000.00), and shall be amortized over the Term of the Lease
(excluding the Renewal Term) at the rate of ten and three-quarters percent
(10.75%) per annum. Upon the Landlord's determination of the aggregate costs of
the Tenant Improvements, Landlord shall prepare, at Landlord's election, an
amendment to this Lease or side letter agreement, evidencing the foregoing and
Tenant shall execute and return the amendment or side letter agreement within
fifteen (15) days after its receipt thereof. If Tenant does not exercise its
option hereunder within a reasonable period of time after the aggregate costs of
the Tenant Improvements is determined, the total cost of the Tenant Improvements
that exceed $615,344.00 shall be paid to Landlord in accordance with Section 1
---------
of the Work Letter.
[Signature Page to Follow]
26.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be duly
executed as of the date and year first set forth above.
TENANT:
OMNICELL TECHNOLOGIES, INC., a California
corporation
By: /s/ Earl E. Fry
------------------------------------------
Its: Vice President & Chief Financial Officer
-----------------------------------------
LANDLORD:
AMLI COMMERCIAL PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership
By: AMLI COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment
trust, its general partner
By: /s/ Michael Murphy
--------------------------------
Its:___________________________
27.
<PAGE>
Exhibit A
LEGAL DESCRIPTION
A-1.
<PAGE>
Exhibit B
WORK LETTER
All of the terms and conditions of the Lease are incorporated herein by
reference and, except as may be expressly set forth to the contrary in this Work
Letter or the Lease, shall apply as fully to this Work Letter as to the Lease.
The capitalized terms used but not defined in this Work Letter shall have the
meanings ascribed to them in the Lease.
1. Construction of Tenant Improvements. Landlord shall, at its sole cost up
-----------------------------------
to a total cost of $615,344.00, provide the construction material, hardware and
equipment and the labor to construct the Tenant Improvements (as hereinafter
defined). Tenant shall pay that part of the total cost of the Tenant
Improvements that exceed $615,344.00 ($16.00 per square foot of the Building).
If the total cost of the Tenant Improvements exceed $615,344.00 based on the
Plans (as defined in Paragraph 2 below) approved by Tenant and Landlord pursuant
to Paragraph 2 below, subject to the terms of Section 27 of the Lease, Tenant
----------
shall pay to Landlord such costs in excess of $615,344.00 in one lump sum
payment within thirty (30) days after receiving an invoice from Landlord,
showing that such excess costs have been paid, together with reasonable
supporting documentation of such costs. If the total cost of the Tenant
Improvements is less than $615,344.00, Tenant shall receive a credit against
monthly Base Rent which credit shall commence on the Commencement Date and shall
be utilized towards the first installments of monthly Base Rent due under the
Lease; provided, however, that for any one calendar month during the Term,
Tenant may not receive a credit against monthly Base Rent of more than one-half
(1/2) of the monthly Base Rent due and owing for such month. "Tenant
Improvements" means (i) the materials, hardware and equipment to be incorporated
into the Premises pursuant to the Plans (as defined below and as the same may be
modified pursuant to Section 3 of this Work Letter), and the labor to construct
---------
and install such items, and (ii) the other building standard items described in
the Plans, as the same may be modified pursuant to Section 3 of this Work
---------
Letter. Landlord shall proceed diligently to cause the Tenant Improvements to
be substantially completed substantially in accordance with the Plans and the
terms and conditions of the Lease. If Tenant elects to engage an interior
designer for the Premises (the "Interior Designer"), Tenant shall have the right
to do so, subject to Landlord's reasonable approval, and Tenant shall contract
directly with the Interior Designer for the provision of services. All other
architects, engineers, contractors, subcontractors, suppliers, manufacturers or
materialmen performing services or supplying materials in connection with the
design and/or construction of the Tenant Improvements (the "Contractors") shall
be selected by Landlord, and shall enter into contracts directly with Landlord
for the provision of services and materials. Landlord will make available to
Tenant for its review, at Landlord's office, the books and records relating to
the total cost of the Tenant Improvements.
2. The Plans. Landlord and Tenant have approved the preliminary description
---------
of the Tenant Improvements attached to this Work Letter as Schedule 1 and made a
----------
part hereof. Landlord will cause to be prepared at Landlord's cost, and
Landlord and Tenant shall act in good faith and cooperate with each other to
finalize and approve as soon as reasonably possible, the plans, drawings and
specifications for the Tenant Improvements based on the description in Schedule
--------
1. If Landlord and Tenant have not approved the final plans, drawings and
- -
specifications for the Tenant Improvements within thirty (30) days after the
execution and delivery of the Lease by Landlord and Tenant, at the request of
either party, any disagreements regarding such final plans, drawings and
specifications shall be submitted to and resolved by arbitration in accordance
with the rules of the American Arbitration Association. Any such arbitration
proceedings shall be conducted in Chicago, Illinois and the cost of such
arbitration proceedings shall be split evenly between Landlord and Tenant,
provided that each party shall be solely responsible for its own costs and
expenses incurred in connection with any arbitration proceedings. The final
plans, drawings and specifications for the Tenant Improvements approved by
Landlord and Tenant prior to the commencement of construction are collectively
referred to as the "Plans".
B-1.
<PAGE>
3. Changes to the Plans.
--------------------
3.1 Tenant Changes to the Plans. Tenant may propose one or more changes
---------------------------
to the Plans to Landlord at any time before the Substantial Completion Date (as
hereinafter defined), and, as promptly as reasonably practicable after the
receipt and approval thereof by Landlord (which approval may be withheld in
Landlord's reasonable discretion), Landlord shall provide Tenant with a
reasonable written estimate of the delay (if any) in the Substantial Completion
Date (which delay shall be a Tenant Delay [as defined below]) and the additional
cost (if any) to complete the Tenant Improvements which will result from such
change (whether hard costs or soft costs), which costs shall include, without
limitation: (i) the actual cost of all materials, supplies, equipment and labor
used or supplied in making the proposed change, including general conditions and
any contractor's fees; (ii) any architect and engineer fees; (iii) a developer's
fee payable to Landlord equal to ten percent (10%) of such additional costs; and
(iv) any other reasonable additional costs and expenses of owning and operating
the Premises during the extended construction period (if any) resulting from
such change(s). If Tenant falls to approve the estimate within five (5)
business days after delivery of same, Tenant shall be deemed to have abandoned
its request for such change, and the Tenant Improvements shall be constructed
substantially in accordance with the then existing Plans. If Tenant approves
the estimate within said 5-day period by signing and returning a copy of
Landlord's estimate, Landlord shall diligently cause the Tenant Improvements to
be constructed substantially in accordance with the Plans as so revised. If and
to the extent there are actual increased costs due to Tenant's changes in the
Plans, Tenant shall pay such amount to Landlord within ten (10) business days
after Tenant's receipt of an invoice for such amount showing Landlord's payment
of such amount, together with reasonable supporting documentation thereof unless
the increased costs are covered by the $615,344.00 allowance. Unless requested
in writing by Tenant to the contrary, Landlord shall continue with construction
of the Tenant Improvements according to the then existing Plans during the
pendency of any proposed change in the Plans until such change is approved by
Landlord and Tenant as provided above. Any delay resulting from a halt in
construction requested in writing by Tenant shall constitute a Tenant Delay.
If Tenant approves Landlord's estimate of the time and cost of a proposed
change to the Plans: (a) Tenant shall be liable for the actual cost of such
change, whether or not such actual cost exceeds Landlord's estimate, and (b)
Landlord shall not be liable for any delay in the Substantial Completion Date
resulting from the requested change, whether or not the delay exceeds Landlord's
estimate, and any such delay shall be a Tenant Delay. Upon Tenant's request,
Landlord shall provide Tenant with reasonable evidence of the actual cost of
such change and the basis for any delay in the Substantial Completion Date
resulting from such change.
If Tenant requests a change to the Plans pursuant to this Section 3.1, and
-----------
Tenant does not ultimately approve the resulting revised Plans or estimate,
Tenant shall promptly reimburse Landlord, as Additional Rent, for any reasonable
costs and expenses resulting from such requested changes incurred by Landlord.
3.2 Landlord Changes to the Plans. Landlord may make changes to the Plans
-----------------------------
without Tenant's consent, provided that such changes (i) are necessary to
address field conditions, (ii) will not create any additional monetary
obligation for Tenant under the Lease, (iii) are in material conformity with the
Plans (as they may have been previously revised by permissible Tenant and/or
Landlord changes thereto), and (iv) will not result in the use of materials or
equipment which are of a materially lesser quality or materially different
appearance than those specified in the Plans.
4. Punchlist Items. Before Tenant takes occupancy of the Premises, but no
---------------
later than five (5) business days after the Substantial Completion Date,
Landlord, Landlord's architect, Tenant and at Tenant's election, Tenant's
consulting architect or other construction consultants shall conduct an
inspection of the Premises, and work in good faith to jointly prepare a
punchlist for the Tenant Improvements. Subject to Landlord's obligations for
latent defects under Section 8 of the Lease, any items not on such punchlist
---------
shall be deemed accepted by Tenant. Landlord shall complete all punchlist items
as soon as reasonably practicable after such punchlist items are finally
determined, but in no event later than thirty (30) days following the
Commencement Date, subject to long lead times for materials.
B-2.
<PAGE>
5. Representatives of Landlord and Tenant. Wherever this Work Letter requires
--------------------------------------
any notice to be given to or by a party, or any determination or action to be
made or taken by a party, Landlord's Representative or Tenant's Representative,
as the case may be, shall act for and on behalf of such party, and the other
party shall be entitled to rely thereon. Either party may designate one or more
additional or substitute representatives for all or a specified portion of the
provisions of this Work Letter, subject to notice to the other party of the
identity of such additional or substitute representative(s).
6. Delay In the Commencement Date.
------------------------------
6.1 The Substantial Completion Date. If the Tenant Improvements have not
-------------------------------
been substantially completed on or before the date set forth in Section 1.8 of
-----------
the Lease, then the Commencement Date shall be the Substantial Completion Date.
The "Substantial Completion Date" shall mean the earliest to occur of: (i)
the date on which both of the following have been satisfied: Landlord receives
the City's approval authorizing occupancy of the Premises by Tenant, which
approval may take the form of a conditional certificate of occupancy so long as
Tenant may occupy the Premises and Tenant has received a "Delivery of Possession
Letter from Landlord, or (ii) the date on which both of the following have been
satisfied: Landlord's architect issues a certificate to Landlord and Tenant
stating that the Tenant Improvements have been substantially completed
substantially in accordance with the Plans and Tenant has received a "Delivery
of Possession Letter" from Landlord, or (iii) if the substantial completion of
the Tenant Improvements has been delayed as a result of one or more Tenant
Delays (as defined below), the date on which Landlord would have substantially
completed the Tenant Improvements but for such Tenant Delays, as so certified by
the Landlord's architect; provided, however, that in no event shall the
Substantial Completion Date be earlier than the date set forth in Section 1.8 of
-----------
the Lease.
6.2 Tenant Delays. "Tenant Delay" shall mean any interruption or delay at
-------------
any time in the progress of the Tenant Improvements to the extent caused by: (i)
Tenant changes to the Plans, including, in addition to delays resulting from the
actual execution of such changes to the Plans, any delay occurring because the
change to the Plans requested by Tenant expressly requires the design or
construction of the Premises to be halted or delayed pending resolution of any
request by Tenant for a change to the Plans, whether or not the requested change
is ultimately approved by Landlord and/or Tenant; (ii) the performance or non-
performance of any work at the Premises by Tenant or any person, firm or
corporation employed by Tenant; or (iii) any other act or omission of Tenant
(for example, but not by way of limitation, failure to timely respond to
requests for information or approval of construction related matters submitted
by Landlord [and failure to act in good faith and to cooperate with Landlord in
finalizing and approving the Plans pursuant to Section 2 of this Work Letter]).
---------
6.3 Force Majeure Delays. "Force Majeure Delay" shall mean any
--------------------
interruption or delay at any time in the progress of the Tenant Improvements
which is not a Tenant Delay and is the result of any Events of Force Majeure.
6.4 Notice of Tenant Delays and Force Majeure Delays. Landlord agrees
------------------------------------------------
that it shall exercise reasonable efforts to provide Tenant with written notice
of any Tenant Delay or Force Majeure Delay (and the expected length of the
applicable delay) as soon as reasonably practicable following the date Landlord
has been notified of any such delay; provided, however, that Landlord's failure
to furnish such notice shall in no event be deemed to a waiver by Landlord of
the Tenant Delay or Force Majeure Delay or otherwise affect the operation of
this Section 6.
---------
7. Governmental Approvals. Landlord shall use reasonable and diligent efforts
----------------------
to obtain all governmental licenses, permits and approvals necessary for the
construction of the Tenant Improvements. If Landlord is unable to obtain any
permit, license or approval from any governmental authority necessary for the
construction of the Tenant Improvements and after notice thereof to Tenant,
Tenant, within thirty (30) days after said notice, fails or is unable to take
any action to cause such permit, license or approval to be issued, Landlord may
elect to terminate the Lease upon written notice to Tenant delivered within
thirty (30) days after agreement upon the final Plans, upon which termination
Landlord shall return to Tenant any Security Deposit and Base Rent in Landlord's
possession, and thereafter Landlord shall have no further liability to Tenant
hereunder or under the Lease.
B-3.
<PAGE>
8. Access by Tenant Prior to Commencement Date. Landlord will permit Tenant
-------------------------------------------
and Tenant's agents, suppliers, contractors and workmen to enter the Premises
prior to the completion of the Tenant Improvements to enable Tenant to do such
other things as maybe required by Tenant to make the Premises ready for Tenant's
occupancy, provided that Tenant shall fully perform and comply with each of the
following covenants, conditions and requirements:
(a) Tenant and Tenant's agents, contractors, workmen, mechanics,
suppliers and invitees, shall work in harmony and not interfere with
Landlord and Landlord's agents in performing the Tenant Improvements or
work for other tenants and occupants of the Building, and if at any time
such entry shall in the reasonable judgment of Landlord cause or threaten
to cause disharmony or interference, Landlord shall have the right to
withdraw such permission upon twelve (12) hours written notice.
(b) Tenant agrees that any such entry into the Premises shall be
deemed to be under all of the terms, covenants, conditions, and provisions
of the Lease except the covenant to pay Rent, and further agrees that in
connection therewith Landlord shall not be liable in anyway for any injury,
loss or damage which may occur to any of Tenant's work or installations
made in the Premises or to property placed therein prior to the
Commencement Date, the same being at Tenant's sole risk, except to the
extent that any such injury, loss or damage is caused by the gross
negligence or willful misconduct of Landlord or any of its agents,
employees, contractors or representatives. In addition, Tenant shall
require all entities performing work on behalf of Tenant to provide
protection for existing improvements to an extent that is reasonably
satisfactory to Landlord and shall allow Landlord access to the Premises,
for inspection purposes, at all times during the period when Tenant is
undertaking construction activities therein. In the event any entity
performing work on behalf of Tenant causes any damage to the Tenant
Improvements or the property of Landlord or others, Tenant shall cause such
damage to be repaired at Tenant's or such entity's expense, and if Tenant
fails to cause the commencement of the repair of such damage promptly upon
Landlord's demand therefor, Landlord may in addition to any other rights or
remedies available to Landlord under the Lease or at law or equity cause
such damage to be repaired, in which event Tenant shall, within ten (10)
business days of receiving Landlord's invoice, together with reasonable
supporting documentation of such costs, pay to Landlord the cost of such
repairs as Additional Rent.
(c) All contractors and subcontractors shall use only those entrances
designated by Landlord for ingress and egress of personnel, and the
delivery and removal of equipment and material through or across any common
areas of the Building or parking areas on the Property shall only be
permitted with the written approval of Landlord and during hours reasonably
determined by Landlord. Landlord shall have the right to order Tenant or
any contractor or subcontractor who violates the above requirements to
cease work and remove it, its equipment, and its employees from the
Building and the Property.
(d) During the performance of Tenant's work and Tenant's fixturing,
Landlord may provide trash removal service from a location reasonably
designated by Landlord. Tenant shall be responsible for breaking down
boxes and placing trash in Landlord's containers at such designated
location. Tenant shall accumulate its trash In containers supplied by
Tenant and Tenant shall not permit trash to accumulate within the Premises
or in the corridors or public areas adjacent to the Premises. Tenant shall
cause each entity employed by it to perform work on the Premises to abide
by the provisions of this Work Letter as to the storage of trash and shall
require each such entity to make reasonable efforts to perform its work in
a way that dust and dirt is contained entirely within the Premises and not
within any other portion of the Building, and shall cause Tenant's
contractors to leave the Premises broom clean at the end of each day.
Should Landlord reasonably deem it necessary to remove Tenant's trash
because of accumulation, an additional charge to Tenant will be on a time
and material basis.
(e) Tenant agrees that all services and work performed on the Premises
by, on behalf of, or for the account of Tenant, including installation of
materials and personal property
B-4.
<PAGE>
delivered to the Premises shall be done in a first-class workmanlike manner
using only good grades of material, shall be performed in accordance with
Laws, and, to the extent the services and work are performed on the
Premises prior to the Commencement Date, such services and work shall be
performed only by persons covered by a collective bargaining agreement with
the appropriate trade union.
(f) Tenant agrees to protect, indemnify, defend and hold harmless
Landlord and its partners, and their respective officers, directors,
shareholder, agents and employees from and against any and all losses,
damages, liabilities, claims, liens, costs and expenses, including
reasonable attorneys' fees, of whatever nature, including those to the
person and property of Tenant, its employees, agents, invitees, licensees
and others arising out of or in connection with the activities of Tenant or
Tenant's contractors in or about the Premises or the Property undertaken
pursuant to any entry under this Section 8. and the cost of any repairs to
---------
the Premises or the Property necessitated by such activities of Tenant or
Tenant's contractors.
(g) Tenant shall secure, pay for, and maintain during the continuance
of its work within the Premises, policies of insurance with such coverages
and such amounts as Landlord may reasonably require, which policies shall
be endorsed to include Landlord and its contractors and their respective
employees and agents and any Mortgagee as additional insured parties, and
which shall provide thirty (30) days prior written notice of any alteration
or termination of coverage. Tenant shall not permit Tenant's contractors
to commence any work until all required insurance has been obtained by
Tenant and certificates evidencing such coverage have been delivered to and
approved by Landlord in writing.
9. Termination of Work Letter; Survival of Terms. Landlord and Tenant
---------------------------------------------
acknowledge and agree that the provisions of this Work Letter are intended and
designed to govern certain rights and obligations of the parties relating to the
construction of the Tenant Improvements and other matters prior to the
Commencement Date. Accordingly, except as hereinafter set forth in this Section
-------
9, from and after the Commencement Date, the terms and provisions of this Work
- -
Letter shall become null and void and of no further force or effect.
Notwithstanding anything to the contrary in this Section 9, however, the
---------
following provisions shall not terminate and shall continue in full force and
effect after the Commencement Date, and shall survive the Commencement Date:
Sections 1 and 4 (both of which * shall terminate at such time as all punchlist
- ----------------
items have been completed and all claims in connection therewith have been
satisfied In full); Sections 8(b), 8(e), 8(f), 9 and 10 (which shall remain in
-----------------------------------
effect for the duration of the Term); and Section 11 (which shall terminate at
----------
such time as the parties have executed the Confirmatory Memorandum).
10. Application of Work Letter. This Work Letter shall not be applicable to
--------------------------
any space added to the Premises or in the event of a renewal or extension of the
Term of the Lease or the exercise of any expansion option granted to Tenant
pursuant to the Lease.
11. Confirmatory Memorandum. At the request of either party, at such time
-----------------------
as the Substantial Completion Date has been finally determined, the parties
shall jointly execute a written memorandum in the form attached to this Work
Letter as Schedule 2, and such memorandum shall be attached to and become a part
----------
of the Lease.
B-5.
<PAGE>
SCHEDULE 1
DESCRIPTION OF TENANT IMPROVEMENTS
----------------------------------
Project No: 9718-9 prepared by Gordon, Wigodner, Chin & Associates, Ltd.
Preliminary Space Plan, Sheet No. SP-1 dated 3-8-99, 3-25-99, 3-29-99 and
4-8-99.
B-6.
<PAGE>
SCHEDULE 2
Form of Confirmatory Memorandum
-------------------------------
____________________ ("Landlord") and __________________ ("Tenant") hereby
execute and deliver this Confirmatory Memorandum pursuant to Section 11 of the
Work Letter attached as Exhibit B to that certain Lease between Landlord and
Tenant dated ______, 199__.
1. This Confirmatory Memorandum is for the convenience and reference of the
parties. The provisions of the Lease and the Work Letter shall be valid and
given their full force and effect with respect to the terms contained in this
Confirmatory Memorandum, notwithstanding the failure or refusal of either party
to execute this document.
2. Landlord and Tenant further agree and acknowledge as follows:
(a) the Substantial Completion Date occurred on _____________, 199__ and
(b) the Commencement Date occurred on ____________, 199__
Executed and delivered as of ____________, 199__
TENANT:
_________________________________
By: ____________________________
Its: ____________________________
LANDLORD:
_________________________________
By:______________________________
Its:_____________________________
B-7.
<PAGE>
Exhibit C
LEGAL DESCRIPTION OF THE LAND
PARCEL 11: LOT 281 IN AMHURST INDUSTRIAL CENTER RESUBDIVISION, BEING A
RESUBDIVISION OF LOTS 79 THROUGH 94, BOTH INCLUSIVE, IN AMHURST LAKE BUSINESS
PARK PHASE ONE, BEING A SUBDIVISION OF PARTS OF THE SOUTHWEST 1/4 OF SECTION 31,
TOWNSHIP 45 NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, THE SOUTHEAST
1/4 OF SECTION 36, TOWNSHIP 45 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL
MERIDIAN, THE NORTHEAST 1/4 OF SECTION 1, TOWNSHIP 44 NORTH, RANGE 11, EAST OF
THE THIRD PRINCIPAL MERIDIAN, AND THE NORTHWEST 1/4 OF SECTION 6, TOWNSHIP 44
NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, RECORDED SEPTEMBER 7,
1989 AS DOCUMENT 2828136, AND THE CERTIFICATE OF CORRECTION THEREOF RECORDED
OCTOBER 3, 1989 AS DOCUMENT 2837031; AND LOTS 224 THROUGH 252, BOTH INCLUSIVE,
IN AMHURST LAKE BUSINESS PARK PHASE FIVE, BEING A SUBDIVISION OF PART OF THE
NORTH 1/2 OF SECTION 1, TOWNSHIP 44 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL
MERIDIAN, AND PART OF THE SOUTH 1/2 OF SECTION 36, TOWNSHIP 45 NORTH, RANGE 11,
EAST OF THE THIRD PRINCIPAL MERIDIAN, RECORDED APRIL 2, 1996 AS DOCUMENT
3805401; ACCORDING TO THE PLAT OF SAID RESUBDIVISION RECORDED MARCH 18, 1998 AS
DOCUMENT 4103113, IN LAKE COUNTY, ILLINOIS.
C-1.
<PAGE>
Exhibit D
LANDLORD'S INSURANCE
D-1.
<PAGE>
Exhibit E
TRAILER AREA
E-1.
<PAGE>
Exhibit F
FORM OF TENANT ESTOPPEL LETTER
Lease Date: ____________, 199__
- ----------
Landlord:
- -------- ________________________________
Tenant:
- ------ ________________________________
Premises: Unit No. ________,______________
- --------
Rentable Area: ____________________ square feet.
- -------------
The undersigned, being the Tenant Under the above-described Lease hereby
certifies to _____________ _________________ ("Lender" or "Purchaser") as
follows:
1. The Lease requires monthly base rent installments of $_______ each,
commencing on _____, 19___.
2. No advance rental or other payment has been made in connection with the
Lease.
3. A security deposit in the amount of $ _____ is being held by Landlord,
which amount is not subject to any setoff or reduction or to any increase for
interest or other credit due to Tenant. The Lease is or ___________ is not
(check applicable provision) guaranteed by a third party. If the Lease is
guaranteed by a third party, the name of the guarantor is _________________
4. The Lease is a valid lease and is in full force and effect. Attached
hereto is a true and complete copy of the Lease and all amendments thereto and
other agreements relating to the Lease and the rent payable thereunder, which
documents represent the entire agreement between the parties.
5. There is no existing default by Landlord, or to Tenant's knowledge, by
Tenant under the Lease, and no event has occurred which, with the giving of
notice or the passage of time, or both, would constitute an event of default by
Landlord, or to Tenant's knowledge, by Tenant, under the Lease.
6. The Lease provides for a primary term of _______ (__) months, commencing on
________, 19__ and ending on ________, 19__. The Lease contains an option for
_______ (__) additional terms of _______ (__) years each upon the terms and
conditions as set forth in the Lease.
7. There are no actions, voluntary or involuntary, pending against Tenant
under the bankruptcy laws of the United States or any state thereof.
8. Tenant is entitled to no rent concessions under the Lease other than the
following:
9. All construction work to be completed to date by Landlord in the Premises
has been completed.
10. Tenant has obtained or will obtain all necessary licenses and permits to
carry on its business at the Premises prior to opening for business.
11. Tenant has received no notice of any claim, litigation or proceeding,
pending or threatened, against or relating to Tenant that would adversely affect
Tenant's ability to fulfill its obligations under the Lease or with respect to
the Premises. Tenant has received no notice of, and has no knowledge of, any
violations of any federal, state, county or municipal statutes, laws, codes,
ordinances, rules, regulations,
F-1.
<PAGE>
orders, decrees or directives relating to the use or condition of the Premises
or Tenants operation thereon. Tenant has received no notice from any
governmental body or agency or from any person or entity with respect to any
actual or threatened taking of the Property or any portion thereof for any
public or quasi-public purpose by the exercise of condemnation or eminent
domain.
This certification is made knowing that [Lender] [Purchaser] is relying
upon the representations herein made.
TENANT:
_______________________________________
F-2
<PAGE>
*****
Exhibit G
FORM OF LANDLORD ESTOPPEL LETTER
Lease Date: ____________, 199__
- ----------
Landlord: ______________________________
- --------
Tenant: ______________________________
- ------
Premises: Unit No. ________,_______________
- --------
Rentable Area: _______________ square feet.
- -------------
The undersigned, being the Landlord Under the above-described Lease hereby
certifies to __________________________ ("Lender" or "Successor") as follows:
1. The Lease requires monthly base rent installments of $_______ each,
commencing on _____, 19___.
2. A security deposit in the amount of $ _____ is being held by Landlord,
which amount is not subject to any setoff or reduction or to any increase for
interest or other credit due to Tenant.
3. The Lease is a valid lease and is in full force and effect. Attached
hereto is a true and complete copy of the Lease and all amendments thereto and
other agreements relating to the Lease and the rent payable thereunder, which
documents represent the entire agreement between the parties.
4. There is no existing default by Tenant, or to Landlord's knowledge, by
Landlord under the Lease, and no event has occurred which, with the giving of
notice or the passage of time, or both, would constitute an event of default by
Tenant, or to Landlord's knowledge, by Landlord, under the Lease.
5. The Lease provides for a primary term of _______ (__) months, commencing on
________, 19__ and ending on ________, 19__. The Lease contains an option for
_______ (__) additional terms of _______ (__) years each upon the terms and
conditions as set forth in the Lease.
6. There are no actions, voluntary or involuntary, pending against Tenant
under the bankruptcy laws of the United States or any state thereof.
7. Landlord has received no notice of any claim, litigation or proceeding,
pending or threatened, against or relating to Landlord that would adversely
affect Landlord's ability to fulfill its obligations under the Lease or with
respect to the Premises. Landlord has received no notice of, and has no
knowledge of, any violations of any federal, state, county or municipal
statutes, laws, codes, ordinances, rules, regulations, orders, decrees or
directives relating to the use or condition of the Premises. Landlord has
received no notice from any governmental body or agency or from any person or
entity with respect to any actual or threatened taking of the Property or any
portion thereof for any public or quasi-public purpose by the exercise of
condemnation or eminent domain.
This certification is made knowing that [Lender] [Successor] is relying upon
the representations herein made.
LANDLORD:
_______________________________________
G-1.
<PAGE>
Exhibit H
FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS INSTRUMENT WAS PREPARED BY AND This space is reserved for
AFTER RECORDING RETURN TO: Recorder's use only.
Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601
Attn: C. Olivia Martinez, Esq.
________________________________
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE ATTORNMENT AGREEMENT (the "Agreement")
is made as of the _____ day of ____________, 1998, between Bank One, Illinois,
NA ("Bank One"), as agent (Bank One, in such capacity, being the "Agent") for
the Banks (as such term is defined in the Credit Agreement), which has an office
of 200 South Wacker Drive, Chicago, Illinois 60603, and _____________________
("Tenant"), which has an office at _______________________________.
RECITALS
A. Tenant has entered into that certain lease agreement dated April 1,
1997 with AMLI ("Original Landlord"), as Lessor, which lease agreement covers
certain premises (the "Premises") in that certain real property (the "Property")
commonly known as Windham Industrial Center I and more particularly described in
Exhibit A attached hereto and made a part hereof (herein, said lease agreement,
together with any and all amendments, modifications, extensions, renewals,
consolidations and replacement thereof now existing or hereafter entered into,
are collectively referred to herein as the "Lease");
B. The Lessor's interest under the Lease has been assigned by the
Original Landlord to AMLI Commercial Properties Limited Partnership
("Landlord");
C. Pursuant to that certain Credit Agreement dated as of _______, 1998
(the "Credit Agreement") among Landlord, the Banks (as such term is defined in
the Credit Agreement) and Bank One as Agent for the Banks, the Banks have agreed
to make loans (the "Loans") to Landlord in an outstanding principal amount up to
$50,000,000, to be secured by the lien of a mortgage from Landlord to the Agent
(herein, together with all amendments, modifications, extension, renewals,
consolidations and replacements thereof now existing or hereafter entered into,
collectively referred to as the "Mortgage") on the Property; and
D. Tenant has agreed to subordinate the Lease to the lien of the Mortgage
and the Agent has agreed to grant non-disturbance to Tenant under the Lease on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Premises and of the sum of One
Dollar ($1.00) by each party in hand paid to the other, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
H-1.
<PAGE>
1. Subordination. The Lease (including all of the terms, covenants and
-------------
provisions thereof) is and shall be subject and subordinate in all respects to
the Mortgage, to the full extent of any and all amounts from time to time
secured thereby and interest thereon, all with the same force and effect as if
the Mortgage had been executed, delivered and recorded prior to the execution
and delivery of the Lease.
2. Attornment. Tenant, for itself and its successors and assigns, agrees
----------
that it will attorn to and recognize any purchaser of the Property at a
foreclosure sale under the Mortgage or any transferee who acquires the Property
by deed in lieu of foreclosure or otherwise, and the successors and assigns of
such purchaser or transferee, as its landlord for the unexpired balance (and any
extensions or renewals, if previously, at that time or thereafter exercised by
Tenant) of the term of the Lease upon the same terms and conditions set forth in
the Lease.
3. Non-Disturbance. The Agent, for itself and its successors and assigns,
---------------
for any purchaser at a foreclosure sale under the Mortgage, for any transferee
who acquires the Property by deed in lieu of foreclosure or otherwise, and for
the successors and assign of such purchaser and transferee (herein, the Agent
and each such other party is called a "New Landlord"), hereby covenants and
agrees with Tenant that if the Agent or other New Landlord shall commence any
proceedings to foreclose the Mortgage for any reason whatsoever or shall succeed
to the interest of Landlord by foreclosure, deed in lieu thereof or otherwise,
provided Tenant is not then in default (after expiration of any applicable grace
period) under the Lease, and so long as Tenant is not in default (after
expiration of any applicable grace period) under the Lease, that: (a) Tenant
shall not be named as a party defendant in any foreclosure action unless Tenant
is deemed to be a necessary party; (b) subject to the next succeeding
grammatical paragraph, the Lease, in accordance with its terms, shall remain in
full force and effect as direct indenture or lease between the Agent, or such
other New Landlord (as the case may be), and Tenant, with the same force and
effect as if originally entered into with the Agent, or such other New Landlord
(as the case may be); and (c) Tenant's possession of the Premises and Tenant's
rights and privileges under the Lease shall not be diminished, interfered with
or disturbed by such Agent or such other New Landlord by such foreclosure under
the Mortgage or by any such attempt to foreclose or to succeed to the interests
of Landlord by foreclosure, deed in lieu thereof or otherwise.
If the Agent or any other New Landlord shall succeed to the Interest of
Landlord under the Lease, Tenant agrees as follows:
(a) The Agent or such other New Landlord shall not be: (i) subject to
any credits, offsets, defenses, claims or counterclaims which Tenant might have
against any prior landlord (including Landlord); (ii) bound by any rent or
additional rent which Tenant shall have paid more than one (1) month in advance
to any prior landlord (including Landlord); or (iii) bound by any covenant to
undertake or complete any improvement to the Premises or the Property.
(b) No New Landlord (including, without limitation, Agent) shall be
liable for: (i) any act or omission of any prior landlord (including Landlord);
(ii) return of any security deposit made by Tenant to Landlord unless such New
Landlord shall have actually received such security deposit from Landlord; or
(iii) any payment to Tenant of any sums, or the granting to Tenant of any
credit, in the nature of a contribution towards the cost of preparing,
furnishing or moving into the Premises or any portion thereof; and
(c) Tenant shall look solely to the Property for recovery of any
judgment or damages from the Agent or such other New Landlord, and neither the
Agent, such other New Landlord, any partner, officer, director, shareholder or
agent of them or any successor or assign of any of the foregoing shall have any
personal liability, directly or indirectly, under or in connection with the
Lease or this Agreement or any amendment or amendments to either thereof made at
any time or times, heretofore or hereafter, and Tenant hereby forever and
irrevocably waives and releases any and all such personal liability. The
limitation of liability provided in this paragraph is in addition to, and not in
limitation of, any limitation on liability applicable to the Agent or such other
New Landlord provided by law or by any other contract, agreement or instrument.
2.
<PAGE>
4. Landlord's Default. Tenant hereby agrees to provide the Agent with
------------------
written notice of any casualty damage to the Premises and any default under the
Lease by the Landlord and to provide the Agent thirty (30) days to remedy such
default prior to exercising any right or remedy of Tenant under the Lease.
Notwithstanding the foregoing, Tenant agrees that the Agent shall have no
obligation to remedy any such default.
5. Estoppel Certificate. Tenant agrees at any time and from time to time
--------------------
to execute, deliver and acknowledge to Landlord, to the Agent or to any third
party designated by Landlord or by the Agent within ten (10) days following
Landlord's or the Agent's written request therefor, (a) a statement in writing
certifying that the Lease is in full force and effect, that Landlord is not in
default thereunder (or specifying any defaults by Landlord which Tenant
alleges), that rent has not been prepaid more than one (1) month in advance, and
specifying any further information about the Lease or the Premises which
Landlord or the Agent or said third party may reasonably request; (b) a
statement in writing, that Tenant will recognize the Agent as assignee of the
Landlord's rights under the Lease; and (c) a statement in writing acknowledging
or denying receipt of notice of any conditional or security assignment of the
Lease to any third party. Tenant understands that the Agent and/or prospective
purchasers, other agents or lessors of the Premises or any part thereof will
rely on such certificates. Tenant's obligation to deliver such certificates
within ten (10) days as described above is a material obligation of Tenant
hereunder and under the Lease.
6. Further Subordination. Tenant, for itself and its successors and
---------------------
assigns, agrees that, without the prior written consent of the Agent, Tenant
will not (a) enter into any subordination agreement with any person other than
the Agent; or (b) agree to attorn to or recognize any purchaser of the Property
at any foreclosure sale under any lien other than that of the Mortgage or any
transferee who acquires the Property by deed in lieu of foreclosure or otherwise
under any lien other than that of the Mortgage (provided, however, that this
provision shall not be deemed to constitute the Agent's consent to the placing
of any lien other than the Mortgage on the Property).
7. Insurance Proceeds and Condemnation Awards. Tenant hereby agrees that
------------------------------------------
any interest of Tenant in any insurance, condemnation or eminent domain proceeds
or awards made with respect to any interest in the Premises shall be subordinate
to the interests of Agent in such proceeds or awards. Tenant will neither seek
nor accept insurance, any condemnation or eminent domain proceeds or awards made
with respect to any interest in the Premises until all amounts secured by the
Mortgage have been paid in full. However, Tenant reserves the right to make a
separate claim for trade fixtures and moving expenses if separately allocated.
8. Notice. Each notice, demand or other communication in connection with
------
this Agreement shall be in writing and shall be deemed to be given to and served
upon the addressee thereof on the earlier of (a) actual delivery to such
addressee at its address set out above, or (b) the third business day after the
deposit thereof in the United States mails, registered or certified mail, return
receipt requested, first class postage prepaid, addressed to such addressee at
its address set out above. By notice complying with this section, any party from
time to time may designate a different address in the forty-eight (48)
contiguous continental United States as its address for the purpose of the
receipt of notice hereunder.
9. Binding Effect. This Agreement shall be binding upon the Tenant and
--------------
its successors and assigns and shall inure to the benefit of the Agent and the
Banks and their respective successors and assigns.
10. Recording. The parties hereto agree that this Agreement may be
---------
recorded in the public records of the county in which the Property is located.
11. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by each of the undersigned on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Agreement.
3.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
document as of the day and year first above written.
TENANT:
________________________________
By:_____________________________
Name:___________________________
Title:__________________________
AGENT:
BANK ONE, ILLINOIS, NA
By:_____________________________
Name:___________________________
Title:__________________________
4.
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, ___________________, a notary public in and for said county, in the
State aforesaid, DO HEREBY CERTIFY that________________________________________
personally known to me to be the ___________________of_____________________ and
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that as such, he/she signed and delivered said instrument pursuant to proper
authority given, as his/her free and voluntary act, and as the free and
voluntary act and deed of said entity, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this ____day of ________, 1999.
________________________________________
Notary Public
[Seal]
My Commission expires:
5.
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, ___________________, a notary public in and for said county, in the
State aforesaid, DO HEREBY CERTIFY that________________________________________
personally known to me to be the _________________________ of _________________
and personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that as such, he/she signed and delivered said instrument pursuant to proper
authority given, as his/her free and voluntary act, and as the free and
voluntary act and deed of said entity, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this ____day of ________, 1998.
________________________________________
Notary Public
[Seal]
My Commission expires:
6.
<PAGE>
Exhibit I
TRUCK DOCKS
I-1.
<PAGE>
EXHIBIT 10.3
STANDARD FORM LEASE
(INDUSTRIAL; SINGLE TENANT; NET)
This Lease dated April 3, 1996 (this "Lease") is entered into by and
between O'Donnell Palo Alto Associates, a California general partnership
("Landlord"), and Omnicell Technologies, Inc., a California corporation
("Tenant").
ARTICLE I.
BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean
and refer to the following terms, the application of which shall be governed by
the provisions in the remaining Articles of this lease:
1. Address of Landlord: c/o Insignia O'Donnell Commercial Group, Inc.
160 W. Santa Clara St., Suite 1350
San Jose, CA 95113 Attn: Mark E. Schmidt
2. Building Address: 1057 E. Meadow Circle
Palo Alto, CA 94303
3. Address of Tenant:
(a) Notices: 1057 E. Meadow Circle
Palo Alto, CA 94303
(b) Billing: 1057 E. Meadow Circle
Palo Alto, CA 94303
4. Tenant's Trade Name: Omnicell Technologies, Inc.
5. Tenant's Contact: Mr. Earl Fry Telephone: (415) 843-6124
6. Building Square Footage: Approximately 23,020 square feet
7. Anticipated Commencement Date: August 12, 1996
8. Term: Seven (7) years, 8/11/03
9. Initial Monthly Rent: $27,624.00/month (subject to adjustment per
Addendum
10. Security Deposit: $29,926.00
11. Permitted Uses: General office, research and development, light
manufacturing, warehousing and other lawful uses related thereto, all in
accordance with Applicable Laws and Restrictions (or hereafter defined) and
pursuant to approvals to be obtained by Tenant from all relevant City, County
and other required governmental agencies and authorities.
12. Broker: Cornish & Carey Commercial
13. Landlord's Architect: Dowler & Associates
14. Guarantor: N/A
15. Vehicle parking Spaces: All on-site parking spaces
1.
<PAGE>
16. Additional Insureds: Landlord and Landlord's constituent parts and
management agents (including, without limitation, Insignia Commercial Group,
Inc.)
17. Tenant's Liability Insurance Limits: $3,000,000
Exhibits:
A Description of Premises G Rules and Regulations
B Project Site Plan H Environmental Questionnaire
C Work Letter
D Commencement Date Memorandum
(Exhibits E, F, I, J and K have been intentionally omitted.
Riders: Addendum to Lease
ARTICLE II
DEFINITIONS
2.1 Certain Definitions. The capitalized terms set forth below,
unless the context clearly requires otherwise, shall have the following meanings
in this Lease:
"Additional Rent" means any and all sums (whether or not specifically
called "additional Rent" in this Lease) other than Monthly Rent which Tenant is
or becomes obligated to pay Landlord under this Lease. See also Rent.
"Alterations" means any alterations, decorations, modifications,
additions or improvements made in, on, about, under or contiguous to the
Building or the Premises after the Commencement Date, including, but not limited
to, lighting, HVAC and electrical fixtures, pipes and conduits, transfer,
storage and disposal facilities, partitions, drapery, wall coverings, shelves,
cabinetwork, carpeting and other floor coverings, ceiling tiles, fixtures and
carpentry installations.
"Applicable Laws" means the laws, rules, regulations, ordinances,
restrictions, and practices described in Section 5.2.
"Applicable Rate" means the greater of ten percent (10%) per annum or
five percent (5%) in excess of the discount rate of the Federal Reserve Ban of
San Francisco in effect on the twenty-fifth 25th) day of the calendar month
immediately prior to the event giving rise to the Applicable Rate imposition;
provided, however, the Applicable Rate shall in no event exceed the maximum
interest rate permitted to be charged by applicable law.
"Broker" means the person or entity identified in Item 12 of the Basic
Lease Provisions.
"Building" means that certain building comprising a portion of the
Premises located at the address set forth in Item 2 of the Basic Lease
Provision.
"Building Square Footage" means the approximate floor area of the
Building as set forth in Item 6 of the Basic Lease Provisions.
"Building Square Footage" means the approximate floor area of the
Building as set forth in Item 6 of the Basic Lease Provisions.
"Casualty" is defined in Section 12.1.
2.
<PAGE>
"CC&R's" means the Declaration of Covenants, Conditions and Restrictions
applicable to the Project recorded in the Official Records of the County as the
same may be amended from time to time.
"City" means the city in which the Premises are located.
"Commencement Date" means the commencement date of the Term, described in
Section 3.2.
"Common Area" means all areas and facilities within the Project exclusive
of the Building and other portion of the Project leased (or to be leased)
exclusively to other tenants which are specifically designated on the Project
Site Plan for the use in common by Tenant with others. The Common Area may; but
need not, include parking areas, access and perimeter roads, sidewalks,
landscaped areas and similar areas and facilities. Tenant's use of the Common
Area, and its rights and obligations with respect thereto, are more particularly
described in Article X.
"County" means the county in which the Premises are located.
"Event of Default" means the Tenant defaults described in Section 15.1.
"Guarantor" means the person(s) or entity identified in Item 14 of the
Basic Lease Provision, if any.
"HVAC" means the heating, ventilating and air conditioning system serving
the Building.
"Hazardous Materials" is defined in Section 6.1.
"Landlord's Agents" means Landlord's authorized agents, representatives,
property managers (whether as agents or independent contractors), consultants,
contractors, partners, subsidiaries, affiliates, directors, officers and
employees, including without limitation the Additional Insureds named in Item 16
of the Basic Lease Provisions.
"Landlord's Architect" means the architect or architectural firm from
time to time designated by Landlord to perform the function of Landlord's
Architect set forth in this Lease. Landlord' Architect initially shall be the
architect or architectural firm designated in Item 13 of the basic Lease
Provisions.
"Lease" means this instrument together with all exhibits, amendments,
addenda and riders attached hereto and made a part hereof.
"Maintenance Expenses" is defined in Section 7.2.
"Monthly Rent" means the monthly rental which Tenant is to pay to
Landlord pursuant to Section 4.1., as the same may be adjusted from time to time
as set forth in this Lease. See also Rent.
"Mortgage" means any mortgage, deed of trust, or similar lien on or
covering the Project or any part thereof.
"Mortgagee" means any mortgagee of a mortgage, beneficiary of a deed of
trust or lender having a lien on or covering the Project or any part thereof.
"Notice" means each and ever notice, communication, request, demand,
reply or advice, or duplicate thereof, in this Lease provided or permitted to be
given, made or accepted by either party to any other party which shall be in
writing and given in accordance with the provisions of Section 21.6.
"Outside Areas" means the areas of the Premises outside the exterior
walls of the Building, including without limitation the roof of the Building, as
shown in Exhibit A.
"Plans" means the final working drawings for the construction of the
Tenant Improvements to be prepared and approved as set forth in the Work Letter.
3.
<PAGE>
"Premises" means the premises shown in Exhibit A of the exclusive use of
Tenant. The Premises include the Building at the address set forth in Item 2 of
the Basic Lease Provisions.
"Project" means that certain real property, and all improvements thereon,
including the Building and other buildings, if any, located within the
boundaries of such property, shown on the Project Site Plan.
"Project Site Plan" means Exhibit B.
"REA" means the Reciprocal Easement Agreement applicable in the Project,
if any, recorded in the Official Records of the County as the same may be
amended from time to time.
"Real Property Taxes" is defined in Section 7.4.
"Rent" means Monthly Rent and Additional Rent, collectively.
"Restrictions" means, collectively, the CC&R's, the REA and any other
covenants, conditions or restrictions affecting the Premises or any portion
thereof, as the same may be amended from time to time.
"Rules and Regulations" means the rules and regulations attached hereto
as Exhibit G and any modifications thereto promulgated by Landlord or Landlord's
Agents from time to time.
"Security Deposit" means the amount set forth in Item 10 of the Basic
Lease Provisions, which shall be paid to Landlord by Tenant pursuant to Section
4.6.
"Substantial Completion" and "substantially completed" means et Tenant
Improvements, or repair of the Premises following a Casualty, have been fully
completed except of minor details of construction , mechanical adjustments or
decoration which do not materially interfere with Tenant's use and enjoyment of
the Premises (items normally referred to as "punch list" items).
"Tenant Delays" means (i) any and all delays in the construction of the
Tenant Improvements due to the fault of the Tenant, as defined and specified in
the Work Letter, and (ii) Tenant's failure to deliver to Landlord prior to the
Anticipated Commencement Date, executed copies of policies of insurance or
certificates thereof as required under Section 11.8.
"Tenant Improvements" means those certain improvements, if any, to be
constructed on the Premises as provided in Article XX and in the Work Letter.
"Tenant's Agents" means Tenant's agents, representatives, consultants,
contractors, affiliates, subsidiaries, officers, directors, employees,
subtenants, quests and invitees.
"Tenant's Personal Property" means Tenant's removal trade fixtures,
furniture, equipment and other personal property located in or on the Premises.
"Term" means the term of this lese, as provided in Section 3.2.
"Unavoidable Delay" means any delays which are beyond a party's
reasonable control, including, but not limited to, delays due to inclement
weather, strikes, acts of God, inability to obtain labor or materials, inability
to secure governmental approvals or permits, governmental restrictions, civil
commotion, fire, earthquake, explosion, flood hurricane, the elements, or the
public enemy, action or interference of governmental authorities or agents, war,
invasion, insurrection, rebellion, riots, lockouts or any other cause whether
similar or dissimilar to the foregoing which is beyond a party's reasonable
control; provided however, that in no event shall any of the foregoing ever
apply with respect to the payment of any monetary obligation.
"Work Letter" means the work letter between Landlord and Tenant regarding
the construction of the Tenant Improvements, if any, in the form of Exhibit C.
4.
<PAGE>
2.2. Other Definitions. Terms defined elsewhere in this Lease, unless
the context clearly requires otherwise, shall have the meaning as there given.
ARTICLE III
PREMISES AND TERM
3.1 Lease of Premises. Subject to and upon the terms and conditions
set forth therein, Landlord hereby leases the Premises to Tenant, and Tenant
hereby leases the Premises from Landlord.
3.2 Term and Commencement. Unless sooner terminated as provided
herein, the term of this Lease shall be for that period of years and months set
forth in Item 8 of the Basic Lease Provisions, as the same may be extended in
accordance with any option or options to extend the Term granted herein, and
shall commence (the "Commencement Date") on the earlier of (i) the date upon
which the City has approved the Tenant Improvements in accordance with its
building code, as evidenced by its written approval thereof in accordance with
the building permits issued for the Tenant Improvements, provided that in such
event Landlord shall deliver to Tenant a certificate of occupancy (temporary or
otherwise) from the City for the Premises with five (5) business days of such
date, (ii) the date Landlord's Architect has certified in writing that the
Tenant Improvements are substantially completed in accordance with the Plans,
provided that in such event Landlord shall deliver to Tenant a certificate of
occupancy (temporary or otherwise) from the City for the Premises within five
(5) business days of such date, or (iii) the date Tenant commences occupancy of
the Premises. When the actual Commencement Date has occurred, Landlord and
Tenant shall execute a Commencement Date Memorandum in the form shown in Exhibit
D. Landlord and Tenant anticipate that the Term will commence on the
"Anticipate Commencement Date" set forth in Item 7 of the Basic Lease
Provisions, but the Anticipated Commencement Date shall in no event affect the
actual Commencement Date, which shall be determined as set forth in this Section
3.2.
3.3. Early Entry. Tenant and its authorized agents, contractors,
subcontractors and employees shall be granted a license by Landlord to enter
upon the Premises, at Tenant's sole risk and expense, during ordinary business
hours prior t the Commencement Date, for the sole purpose of installing Tenant's
trade fixtures and equipment in the Premises; provided, however, that (i) the
provisions of this Lease, other than with respect to the payment of Monthly
Rent, shall apply during such early entry, including, but not limited to, the
provisions of Article XI relating to Tenant's indemnification of Landlord, (ii)
prior to any such entry, Tenant shall pay for and provide evidence of the
Insurance to be provided by Tenant pursuant to the provisions of Article XI,
(iii) Tenant shall pay all utility, service and maintenance charges for the
Premises attributable to Tenant's early entry and use of the Premises as
reasonably determined by Landlord, (iv) Tenant shall not unreasonably interfere,
delay or hinder Landlord, its agents, contractors or subcontractors in the
construction of the Tenant Improvements in accordance with the provisions of
this Lease, and (v) Tenant shall not use the Premises of the storage of
inventory or otherwise commence the operation of business during the period of
such early entry. Upon Tenant's breach of any of the foregoing conditions,
Landlord may, in addition to exercising any of its other rights and remedies set
forth herein, revoke such license upon notice to Tenant. Early entry by Tenant
in accordance with this Section 3.3 shall not constitute occupancy of the
Premises of purposes of establishing the Commencement Date.
3.4 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant with the Tenant Improvements substantially
completed on or before the Anticipated Commencement Date, Landlord shall not be
subject to any liability therefor, and such failure shall not affect the
validity of this Lease or the obligations of Tenant hereunder, but in such case,
Tenant shall not be obligated to pay Monthly Rent or Additional Rent other than
as provided in Section 3.3 and Section 3.5 until the Commencement Date has
occurred. If the Commencement Date has not occurred within one hundred twenty
(120) days following the Anticipated Commencement Date plus periods attributable
to Tenant Delays or Unavoidable Delay, Tenant may, at its option, by Notice to
Landlord within ten (10) days thereafter, terminate this Lease, in which event
the parties shall be discharged from all further obligations hereunder;
provided, however, if tenant fails to give such notice to Landlord within such
ten-day period, Tenant shall no longer have the right to terminate this Lease
under this Section 3.4. Tenant understands that, notwithstanding anything to
the contrary contained herein, Landlord shall have no obligation to deliver
possession of the Premises to Tenant for so long as Tenant fails to deliver to
Landlord execute copies of policies of insurance or certificates thereof as
required under Section 11.8.
5.
<PAGE>
3.5 Tenant Delays. The Commencement Date shall not be delayed or
postponed due to Tenant Delays, and the Term. Tenant's obligations to pay Rent
and all of Tenant's other obligations under this Lease shall commence upon the
date which would have been the Commencement Date but for Tenant Delays.
3.6 Condition of Premises. Landlord's sole construction obligations,
if any, regarding Tenant Improvements of the Premises are set forth in Article
XX and the Work Letter. The taking of possession or use of the Premises by
Tenant for any purpose other than as provided in Section 3.3 shall conclusively
establish that Tenant has inspected the Premises and accepts them as being in
good and sanitary order, condition and repair and that the Tenant Improvements
have been constructed in accordance with the Plans; provided, however, Tenant
shall have a period of thirty (30) days after taking possession of the Premises
in which to notify Landlord in writing of any construction deficiencies or
defects and any uncompleted punch list items (the punch list shall be limited to
items required to be accomplished by Landlord under the Work Letter) and, except
as hereafter provided, Landlord will repair, replace or compete at its expense
all items referenced in such notice within thirty (30) days after receipt of
such notice, subject to Unavoidable Delay, or as soon thereafter as Landlord,
acting in good faith, can repair, replace or complete the same. If Landlord
reasonably contends that a particular item in such notice is not justified, the
parties will refer the issue to Landlord's Architect for resolution. Landlord's
Architect's determination shall be final and binding upon the parties. Nothing
in this Section 3.6 shall limit or expand Landlord's maintenance and repair
obligations set forth in Article IX.
3.7 No Representations. Tenant acknowledges that neither Landlord nor
any of Landlord's Agents has made any representations or warranties as to the
suitability or fitness of the Premises of the conduct of Tenant's business,
including, but not limited to, any representations or warranties regarding
zoning or other land use matters, or for any other purpose, and that neither
Landlord nor any of Landlord's Agent has agreed to undertake any alterations or
additions or construct any Tenant Improvements to the Premises except as
expressly provided in this Lease.
ARTICLE IV
RENT AND ADJUSTMENTS
4.1 Monthly Rent, from and after the Commencement Date, Tenant shall
pay to the Landlord, for each calendar month of the Term, the Monthly Rent set
forth in Item 9 of the Basic Lease Provision, as the same may be adjusted from
time to time as provided in Section 4.2. Monthly Rent shall be due and payable
to Landlord in lawful money of the United States, in advance, on the first (1st)
day of each calendar month of the Term, without abatement, deduction, claim or
offset, and without prior notice, invoice or demand, at Landlord's address set
forth in Item 1 of the Basic Lease Provisions or at such place as Landlord may
from time to time designate tenant's payment of Monthly Rent for the first (1st)
month of the Term shall be delivered to Landlord concurrently with Tenant's
execution of this Lease.
4.2 Adjustments. Monthly Rent shall be adjusted from time to time as
provided in the Addendum.
4.3 Additional Rent. All additional Rent shall be due and payable to
Landlord in lawful money of the United States, at Landlord's address set forth
in Item 1 of the Basic Lease Provisions or at such other place as Landlord may
from time to time designate, without abatement, deduction, claim or offset,
within ten (10) days of receipt of Landlord's invoice or statement for same, or,
if this Lease provides another time for the payment of certain items of
Additional Rent, then at such other time.
4.4 Prorations. If the Commencement Date is not the first (1st) day
of the month, or if the expiration of the Term f this Lease is not the last day
of a month, a prorated installment of Monthly Rent based on a thirty (30) day
month shall be paid for the fractional month during which the Term commences or
terminates.
4.5 Late Payment Charges. Tenant acknowledges that late payment by
Tenant to Landlord of Rent under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which is extremely difficult
or impracticable to determine. Such costs include, but are not limited to,
processing and accounting changes, late charges that may be imposed on Landlord
by the terms of any Mortgage, and late charges and penalties that may be imposed
due to late payment of Real Property Taxes. Therefore, if any installment of
6.
<PAGE>
Monthly Rent or any payment of Additional Rent due from Tenant is not received
by Landlord in good funds by the second (2nd) calendar day from the applicable
due date, Tenant shall pay to Landlord an additional sum equal to five percent
(5%) of the amount overdue as a late charge for every month or portion thereof
that such amount remains unpaid. The parties acknowledge that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant. Acceptance of any late Rent and late
charge therefor shall not prevent Landlord from exercising any of the other
rights and remedies available to Landlord for any other Event of Default under
this Lease. Notwithstanding the foregoing (i) should any payment of Rent by
personal check be rejected for insufficient funds, Landlord shall have the
right, upon notice to Tenant, to require that all future payments by Tenant
under this Lease be by cashier's check acceptable to Landlord, and (ii) upon the
third (3rd) occurrence during the Term of Tenant's failure to timely pay Rent
when due, Landlord may, upon notice to Tenant, require that Monthly Rent for the
balance of the Term be made in quarterly installments, in advance, in an amount
equal to the sum of the Monthly Rent amounts payable during such three (3) month
period.
4.6 Security Deposit. Tenant has deposited with Landlord the sum set
forth in Item 10 of the Basic Lease Provisions as a Security Deposit for the
full and faithful performance of every provision of this Lease to be performed
by Tenant. Landlord may apply, in its sole discretion at any time during the
Term of this Lease, all or any part of the Security Deposit to the payment of
all prepaid expenses by Landlord for which Tenant would be required to reimburse
Landlord under this Lease, including without limitation for Tenant Improvements
and Broker commissions. Such application of the Security Deposit is not and
shall never be dependent upon an Event of Default. Upon an Event of Default,
and whether or not Landlord is informed of or has knowledge of the Event of
Default, the Security Deposit (if not already applied as hereinabove provided)
shall be deemed to be automatically applied, without waiver of any rights
Landlord may have under this Lease or at law or in equity as a result of an
Event of Default, to the payment of any Rent not paid when due, the repair of
damage to the Premises or the payment of any other amount which Landlord may
spend or become obligated to spend by reason of an Event of Default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of an Event of Default, to the full extent permitted by law. If any
portion of the Security Deposit is so applied, Tenant shall, within ten (10)
days after written demand therefor deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount. Landlord
shall not be required to keep the Security Deposit separate from its general
funds. The unused portion of the Security Deposit, if any, shall be returned to
Tenant within thirty (30) days of the expiration of this Lease or any
termination of this Lease not resulting from an Event of Default, so long as
Tenant has vacated the Premises in the manner required by this Lease and paid
all sums required to be paid under this Lease, providd however that Landlord may
retain the Security Deposit until such time as any amounts of Additional Rent
due from Tenant have been determined and paid in full. Tenant hereby waives the
provisions of Section 1950.7(c) of the California Civil Code and any present or
future laws otherwise governing the return of the Security Deposit to Tenant to
the extent of reasonably anticipated Additional Rent retained by Landlord
pursuant to the previous sentence.
ARTICLE V
USE
5.1 Tenant's Use. Tenant shall use the Premises solely for the
purposes set forth in Item 11 of the Basic Lease Provisions and shall use the
Premises for no other purpose. Tenant's use of the Premises shall be subject to
all of the terms and conditions of this Lease, including, but not limited to,
all the provisions of this Article V. Tenant, at Tenant's sole cost and
expense, shall procure, maintain and make available for Landlord's inspection
throughout the Term, all governmental approvals, licenses and permits required
for the proper and lawful conduct of Tenant's permitted use of the Premises. At
Landlord's request, Tenant shall deliver copies of all such approvals, licenses
and permits to Landlord.
5.2 Compliance with Applicable Laws. Throughout the Term, Tenant, at
Tenant's sole cost and expense, shall comply with, and shall not use the
Premises, Building or Common Area, or suffer or permit anything to be done in or
about the same which will in any way conflict with, (i) any and all present and
future laws, statutes, zoning restrictions, ordinances, orders, regulations,
directions, rules and requirements of all governmental or private authorities
having jurisdiction over all or any part of the Premises (including, but not
limited to, state, municipal, county and federal governments and their
departments, bureaus, boards and officials) pertaining to the use or occupancy
of, or applicable to, the Premises or privileges appurtenant to or in connection
with the enjoyment of the
7.
<PAGE>
Premises, (ii) any and all applicable federal, state and local laws, regulations
or ordinances pertaining to air and water quality, hazardous materials (as
defined in Section 6.1), waste disposal, air emissions and other environmental
or health and safety matters, zoning, land use or occupation of the Project or
any portion thereof, (iii) the requirements of the Board of Fire Underwriters or
other similar body now or hereafter constituted relating to or affecting the
condition, use or occupancy of the Project or any portion thereof, (iv) any
covenants, conditions, easements or restrictions, including but not limited to
the Restrictions, now or hereafter affecting or encumbering the Project or any
portion thereof, regardless of when they become effective, (v) the Rules and
Regulations, and (vi) good business practices (collectively, (i) through (vi)
above are hereinafter referred to as "Applicable Laws"). Tenant shall not
commit any waste of the Premises, Building or Project, or any public or private
nuisance or any other act or thing which might or would disturb the quiet
enjoyment of any other tenant of Landlord or any occupant of nearby property.
Tenant shall not place or permit to be placed any loads upon the floors, walls
or ceilings in excess of the maximum designed load specified by Landlord or
which might damage the Building, or place or permit to be placed any harmful
liquids in the drainage systems, and Tenant shall not dump or store, or permit
to be dumped or stored, any inventory, waste materials, refuse or other
materials or allow any such materials to remain in the Outside Areas or Common
Area, except in designated enclosed trash areas. Tenant shall not conduct or
permit any suctions, sheriff's sales or other like activities at the Project or
any portion thereof.
5.4 Landlord's Right of Entry. Landlord and Landlord's Agents shall
have the right to enter the Premises at all reasonable times upon reasonable
notice to Tenant, except for emergencies in which case no notice shall be
required, to inspect the Premises, to take samples and conduct environmental
investigations, to post notices of nonresponsibility and similar notices and
signs indicating the availability of the Premises for sale, to show the Premises
to interested parties such as prospective lenders and purchasers, to make
necessary Alterations or maintenance and repairs, to perform Tenant's
obligations as permitted herein when Tenant has failed to do so and, at any
reasonable time after one hundred eighty (180) days prior to the expiration of
the Term, to place upon the Premises reasonable signs indicating the
availability of the Premises for lease and to show the Premises to prospective
tenants, all without being deemed to have caused an eviction of Tenant and
without any liability to Tenant or abatement of Rent. The above rights are
subject to reasonable security regulations of Tenant, and in exercising its
rights set forth herein, Landlord shall endeavor to cause the least possible
interference with Tenant's business. Landlord shall at all times have the right
to retain a key which unlocks all of the doors in the Premises, excluding
Tenant's vaults and safes, and Landlord and Landlord's Agents shall have the
right to use any and all means which Landlord may deem proper to open the doors
in an emergency to obtain entry to the Premises, and any entry to the Premises s
obtained by Landlord or Landlord's Agents shall not under any circumstances be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction of Tenant from the Premises.
ARTICLE VI
HAZARDOUS MATERIALS
6.1 Definition of Hazardous Materials. For purposes of this Lease,
the term "Hazardous Materials" includes (i) any "hazardous materials" as defined
in Section 25501(k) of the California Health and Safety Code unless Tenant
establishes, to the satisfaction of Landlord, that because of the quantity,
concentration, or physical or chemical characteristics, such substance or matter
does not pose a present or potential hazard to human health and safety or to the
environment, (ii) any other substance or matter which results in liability to
any person or entity from exposure to such substance or matter under any
statutory or common law theory, and (iii) any substance or matter which is in
excess of relevant and appropriate levels set forth in any applicable federal,
state or local law or regulation pertaining to any hazardous or toxic substance,
material or waste, or for which any applicable federal, state or local agency
orders or otherwise requires removal, treatment or remediation.
6.2 Use of Hazardous Materials. Tenant shall not cause or permit any
Hazardous Materials to be brought upon, stored, used, generated, released into
the environment or disposed of on, under, from or about the Premises (which for
purposes of this Article VI shall include, but is not limited to, subsurface
sell and ground water) by Tenant or Tenant's Agents without the prior written
consent of Landlord. Landlord may, in its sole discretion, place such
conditions as Landlord deems appropriate with respect to such Hazardous
Materials, and may further require that Tenant demonstrates to Landlord that
such Hazardous Materials are necessary or useful to Tenant's business and will
be generated, stored, sued and disposed of in a manner that complies with all
Applicable Laws regulating such Hazardous Materials and with good business
practices. Tenant understands that Landlord may
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utilize an environmental consultant to assist in determining conditions of
approval and monitoring in connection with the presence, storage, generation or
use of Hazardous Materials on or about the Premises by tenant, and Tenant agrees
that any costs reasonably incurred by Landlord in connection with any such
environmental consultant's services shall be reimbursed by Tenant to Landlord as
Additional Rent upon demand.
6.3 Environmental Questionnaire Disclosure. Prior to the execution of
this Lease, Tenant shall complete, execute and deliver to Landlord an
Environmental Questionnaire and Disclosure Statement (the "Environmental
Questionnaire") in the form of Exhibit H, and Tenant shall certify to Landlord
all information contained in the Environmental Questionnaire as true and correct
to the best of Tenant's knowledge and belief. The completed Environmental
Questionnaire shall be deemed incorporated into this Lease for all purposes, and
Landlord shall be entitled to rely fully on the information contained therein.
On each anniversary of the Commencement Date (each such date is hereinafter
referred to as a "Disclosure Date"), until and including the first Disclosure
Date occurring after the expiration or sooner termination of this Lease, Tenant
shall disclose to Landlord in writing the names and amounts of all Hazardous
Materials, or any combination thereof, which were stored, generated, used or
disposed of on, under or about the Premises for the twelve-month period prior to
each Disclosure Date, and which Tenant Intends to store, generate, use or
dispose of on, under or about he Premises through the next Disclosure Date. At
Landlord's option, Tenant's disclosure obligations under this Section 6.3 shall
include a requirement that Tenant update, execute and deliver to Landlord the
Environmental Questionnaire as the same may be modified by Landlord from time to
time. In addition to the foregoing, Tenant shall promptly notify Landlord of,
and shall promptly provide Landlord with true, correct, complete and legible
copies of, all of the following environmental items relating to the Premises:
reports filed pursuant to any self-reporting requirements; reports filed
pursuant to any Applicable Laws or this Lease; all permit applications, permits,
monitoring reports, workplace exposure and community exposure warnings or
notices, and all other reports, disclosures, plans or documents (even those
which may be characterized as confidential) relating to water discharges, air
pollution, waste generation or disposal, underground storage tanks or Hazardous
Materials; all orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation, compliance, clean up, remedial and corrective actions, and
abatement of Hazardous Materials whether or not required by Applicable Laws; and
all complaints, pleading sand other legal documents filed against Tenant related
to Tenant's use, handling, storage or disposal of Hazardous Materials.
6.4 Inspection; Compliance. Landlord and Landlord's Agents shall have
the right, but not the obligation to Inspect, Investigate, sample and/or monitor
the Premises, including any air, soil, water, groundwater or other sampling, and
any other testing, digging, drilling or analyses, at any time to determine
whether Tenant is complying with the terms of this Article VI, and in connection
therewith, Tenant shall provide Landlord with full access to all relevant
facilities, records and personnel. If Tenant is not in compliance with any of
the provisions of this Article VI, or in the event of a release of any Hazardous
Material on, under, from or about the Premises, Landlord and Landlord's Agents
shall have the right, but not the obligation, without limitation on any of
Landlord's other rights and remedies under this Lease, to immediately enter upon
the Premises and to discharge Tenant's obligations under this Article VI at
Tenant's expense, including without limitation the taking of emergency or
long-term remedial action. Landlord and Landlord's Agents shall endeavor to
minimize interference with Tenant's business but shall not be liable for any
such interference. In addition, Landlord, at Tenant's sole cost and expense,
shall have the right, but not the obligation, to join and participate in any
legal proceedings or actions initiated in connection with any claims or causes
of action arising out of the storage, generation, use or disposal by Tenant or
Tenant's Agents of Hazardous materials on, under, from or about the Premises.
All sums reasonably disbursed, deposited or incurred by Landlord in connection
herewith, including, but not limited to, all costs, expenses and actual
attorneys fees, shall be due and payable by Tenant to Landlord, as an Item of
Additional Rent, on demand by Landlord, together with Interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.
6.5 Tenant Obligations. If the presence of any Hazardous Materials
on, under or about the Premises or the Project caused or permitted by Tenant or
Tenant's Agents results in (i) injury to any person, (ii) injury to or
contamination of the Premises or the Project, or (iii) injury to or
contamination of any real or personal property wherever situated, Tenant, at its
sole cost and expense, shall promptly take all actions necessary to return the
Premises and the Project to the condition existing prior to the introduction of
such Hazardous Materials to the Premises and the Project and to remedy or repair
any such injury or contamination. Without limiting any other rights or remedies
of Landlord under this Lease, Tenant shall pay the cost of any cleanup work
performed on, under or about the Premises, the Building and the Project as
required by this Lease or any Applicable Laws in connection
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with the removal, disposal, neutralization or other treatment of such Hazardous
Materials caused or permitted by Tenant or Tenant's Agents. If Landlord has
reason to believe that Tenant or Tenant's Agents may have caused or permitted
the release of Hazardous Materials on, under, from or about the premises, then
Landlord may require Tenant, at Tenant' sole cost and expense, to conduct
monitoring activities on or about the Premises satisfactory to Landlord, in its
sole and absolute judgment, concerning such release of Hazardous materials on,
under, from or about the Premises. Notwithstanding anything in the foregoing,
Tenant shall not, without Landlord's prior written consent take any remedial
action in response to the presence of any Hazardous Materials on, under or about
the Premises, or enter into any settlement agreement consent decree or other
compromise with any governmental agency with respect to any Hazardous Materials
claims; provided, however, Landlord's prior written consent shall not be
necessary in the even that the presence of Hazardous Materials on, under or
about the Premises (i) poses an immediate threat to the health, safety or
welfare of any individual or (ii) is of such a nature that an immediate remedial
response is necessary it is not possible to obtain Landlord's consent before
taking such action.
6.6 Indemnification. To the fullest extent permitted by law, Tenant
hereby agrees to indemnify hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and Landlord's Agents, and any successors to
all or any portion of Landlord's interest in the Premise, the Building and the
Project and their directors, officers, partners, employees authorized agents,
affiliates, representatives and Mortgagees, from and against any and all
liabilities, losses, damages (including, but not limited to, damages for the
loss or restriction on use of rentable or usable space or any amenity of the
Premises, the Building and the Project or damages arising from any adverse
impact on marketing of space in the Premises, the Building and the Project),
diminution in the value of the Premises, the Building and the Project,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including, but not limited to, reasonable attorneys' fees, disbursements and
court costs and all other professional or consultant's expenses), whether
foreseeable or unforeseeable, arising directly or indirectly out of the
presence, use, generation, storage, treatment, on or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the necessary repair, restoration, clean-up (including but not limited
to, the costs of investigation and removal of Hazardous Materials) or
detoxification of the Premises, the Building and the Project and the preparation
of an closure or other required plans, whether or not such action is required or
necessary during the Term or after the expiration of this lease.
6.7 Tenant's Responsibility at Conclusion of Lease. Promptly upon the
expiration or sooner termination of this Lese, Tenant shall represent to
Landlord in writing that (i) Tenant has made a diligent effort to determine
whether any Hazardous Materials are on, under or about the Premises as a result
of any acts or omissions of Tenant or Tenant's Agents and (ii) no such Hazardous
Materials exist on, under or about the Premises other than as specifically
identified to Landlord by Tenant in writing. If Tenant discloses the existence
of Hazardous Materials on, under or about the Premises, or if Landlord at any
time discovers that Tenant or Tenant's Agents caused or permitted the release of
a hazardous Material on, under, from or about the Premises, Tenant shall, at
Landlord's request, immediately prepare and submit to Landlord within thirty
(30) days after such request a comprehensive plan, subject to Landlord's
approval, specifying the actions to be taken by Tenant to return the Premises to
the condition existing prior to the Introduction of such Hazardous Materials.
Upon Landlord's approval of such clean up plan, Tenant shall, at Tenant's sole
cost and expense, without limitation on any rights and remedies of Landlord
under this Lease or at law or in equity, immediately implement such plan and
proceed to clean up such Hazardous Materials in accordance with all Applicable
Laws and as required by such plan and this Lease.
6.8 Tenant shall not be responsible for any Hazardous Materials
contamination of the Project occurring prior to the Commencement Date and not
otherwise caused by the acts or omissions of Tenant or Tenant's Agents.
ARTICLE VII
MAINTENANCE EXPENSES; TAXES; UTILITIES
7.1 Payment of Maintenance Expenses. Prior to the Commencement Date
and thereafter prior to the commencement of each of Landlord's fiscal years
during the Term, Landlord shall give Tenant a written estimate of Maintenance
Expenses (hereafter defined) for the ensuing fiscal year or partial fiscal year,
as the case may be. Tenant shall pay, as an item of Additional Rent, such
estimated amount in equal monthly installments, in advance, or on before the
first (1st) day of each calendar month concurrent with its payment of Monthly
Rent. If Landlord has
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not furnished its written estimate by the time set forth above, Tenant shall pay
monthly installments of Maintenance Expenses at the rate established for the
prior fiscal year, if any; provided that when the new estimate is delivered to
Tenant, Tenant shall at the next monthly payment date pay Landlord any accrued
deficiency based on the new estimate, or Landlord shall credit any accrued
overpayment based on such estimate toward Tenant's next installment payment
hereunder. Within a reasonable period of time after the end of each fiscal year
(in no event less than one hundred (120) days after the end of each fiscal year
unless sooner completed by Landlord) Landlord shall furnish Tenant a statement
showing in reasonable detail the actual Maintenance Expenses incurred for the
period in question. If Tenant's estimated payments are less than the actual
Maintenance Expenses as shown by the applicable statement, Tenant shall pay the
difference to Landlord within thirty (30) days thereafter. If Tenant shall have
overpaid Landlord, Landlord shall credit such overpayment toward Tenant's next
installment payment hereunder. When the final determination is made of the
actual Maintenance Expenses of the fiscal year in which this lease terminates,
Tenant shall, even if this Lease has terminated, pay to Landlord with fifteen
(15) days after notice the excess of such actual Maintenance Expenses over the
estimate of Maintenance Expenses paid. Conversely, any overpayment shall be
rebated by Landlord to Tenant. If Landlord shall determine at any time that the
estimate of Maintenance Expenses of the current fiscal year is or will become
inadequate to meet all such Maintenance Expenses for any reason, Landlord shall
immediately determine the approximate amount of such inadequacy and issue a
supplemental estimate as to such Maintenance Expenses and Tenant shall pay any
increase as reflected by such supplemental estimate, Landlord shall keep or
cause to be kept separate and complete books of accounting covering all
Maintenance Expenses and shall preserve for at least twelve (12) months after
the close of each fiscal year all material documents evidencing said Maintenance
Expenses for that fiscal year. Tenant, at its sole cost and expense, through
any certified public accountant designated by it, shall have the right, during
reasonable business hours and not more frequently than once during any fiscal
year, to examine and/or audit the books and documents mentioned above evidencing
such costs and expenses of the previous fiscal year. Any delay or failure by
Landlord in delivering any estimate or statement pursuant to this Section 7.1
shall not constitute a waiver of its right to require Tenant to pay all
Maintenance Expenses pursuant hereto.
7.2 Definition of Maintenance Expenses. The term "Maintenance
Expenses" means all costs and expenses incurred by Landlord or Landlord's Agents
in connection with the operation, maintenance and repair of the Outside Areas
and of the Building's proportionate share of the Project (such share determined
as the ratio of the Building Square Footage to the total square footage of the
floor area leased or held for lease by tenants as of the date upon which such
computation is made of all buildings within the Project, as determined by
Landlord), including, but not limited to, the following: actual costs and
expenses incurred in connection with labor and materials utilized in the
performance of Landlord's maintenance and repair obligations pursuant to Section
9.1; any and all assessments levied against the Premises or the Project pursuant
to the Restrictions; water, electrical and other utility services not supplied
directly to a tenant, removal of trash, rubbish and other refuse from the
Project, cleaning of and replacement of signs of the Project, including
relamping and repairs made as required; repair, operation and maintenance of the
Common Area, including, but not limited to, removal of any obstructions not
reasonably required for the Common Area uses, prohibition and removal of the
sale or display of merchandise or the storing of materials and/or equipment in
the Common Area, and payment of all electrical, water and other utility charges
or fees for services furnished to the Common Area; obtaining and maintaining
public liability, property damage and other forms of insurance which Landlord
may or is required to maintain in connection with the Building and the Project
(including the payment of any deductibles thereunder); costs incurred in
connection with compliance of any laws or changes in laws applicable to the
Project, including without limitation any laws or changes in laws regarding
Hazardous materials; establishment of reasonable reserves for replacements
and/or repair of Outside Areas and Common Area Improvements, equipment and
supplies; employment of such personnel as Landlord may deem reasonably
necessary, if any, to direct parking and police the Common Are and facilities;
the cost of any capital improvements (other than tenant improvements for
specific tenants) made by or on behalf of Landlord to the Outside Areas, the
Project or Common Area to the extent of the amortized amount thereof over the
useful life of such capital improvements calculated at a market cost of funds,
all as determined by Landlord, for each such year of useful life during the
Term; depreciation of machinery and equipment used in connection with the
maintenance and operation of the Outside Areas of the Common Area for whicha
reasonable reserve has not been established as herein provided; employment of
personnel used in connection with any of the foregoing, including, but not
limited to, payment or provision for unemployment insurance, worker's
compensation insurance and other employee costs; the cost of bookkeeping,
accounting and auditing and legal services provided in connection with any of
the foregoing; the cost of any respect to Hazardous Materials; the cost of any
tax, insurance or other consultant utilized in connection with the Project; and
any other items reasonably necessary from time to time to property repair,
replace,
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maintain and operate the Outside Areas of the Project. Maintenance Expenses
shall also include a management fee to cover Landlord's management, overhead and
administrative expenses (which management fee shall not exceed the
then-prevailing market management fee being charged by professional property
managers for projects located in the vicinity of the Project that are comparable
to the Project provided, however, if Landlord elects to delegate its duties
hereunder to a professional property manager then Maintenance Expenses shall not
include any management fee to Landlord (except for any costs and/or
administrative and overhead expenses reasonably incurred by Landlord in
monitoring and auditing the performance delegated to the professional property
manager), but under such circumstances any reasonable amounts paid to the
professional property manager shall be added to and deemed a part of Maintenance
Expenses. If Landlord elects to perform any maintenance or repair herein
described in conjunction with properties other than the Project, and if a common
maintenance contractor is contracted with for such purpose, the contract amount
allocable to the project, as reasonably determined by Landlord, shall be added
to and deemed a part of Maintenance Expenses hereunder. Increases in
Maintenance Expenses by reason of a disproportionate impact by Tenant thereon
(for example, and not by way of limitation, increases in costs of trash
collection because of Tenant's excessive generation of trash or increases in
costs of Outside Areas or Common Area maintenance because of Tenant's
Unpermitted storage of inventory or materials in the Outside Areas or Common
Area), in Landlord's reasonable judgment, may be billed by Landlord, as an item
of Additional Rent, directly to Tenant.
7.3 Payment of Real Property Taxes. Landlord shall pay, at Tenant's
expense and subject to reimbursement by Tenant as hereinafter set forth, all
Real Property Taxes (as hereinafter defined) levied against the Premises during
the Term. The amount of such payments by Landlord shall be based on tax bills
and notices received by Landlord pertaining to the Premises (and if Tenant
receives any such tax bills or notices, Tenant shall immediately forward same to
Landlord) and such payment shall be made before the last day such Real Property
Taxes are payable without penalty. Tenant shall reimburse to Landlord, as an
item of Additional Rent, the full amount of such Real property Taxes paid by
Landlord within ten (10) days after Landlord's statement or invoice thereof,
which statement or invoice shall be accompanied by reasonable evidence of the
amount of such Real Property Taxes. Alternatively, Landlord may elect to
include the cost of Real Property Taxes in the definition of Maintenance
Expenses, in which event Tenant shall pay such cost in the manner set forth in
Section 7.1.
7.4. Definition of Real Property Taxes. The term "Real Property Taxes"
means any form of tax, assessment, charge, license, fee, rent tax, levy, penalty
(if a result of Tenant's delinquency), real property or other tax (other than
Landlord's net income, estate, succession, inheritance, or franchise taxes), now
or hereafter imposed with respect to the Premises or any part thereof (including
any Alterations), this Lease of any Rent payable under this Lease by any
authority having the direct or indirect power to tax, or by any city, county,
state or federal government or any improvement district or other district or
division thereof, whether such tax or any portion thereof (i) is determined by
the area of the Premises or any part thereof or the Rent payable under this
Lease by Tenant including, but not limited to, any gross income or excise tax
levied by any of the foregoing authorities with respect to receipt of the Rent
due under this Lease, (ii) is levied or assessed in lieu of, in substitution
for, or in addition to, existing or additional taxes with respect to the
Premises or any part thereof whether or not now customary or within the
contemplation of Landlord or Tenant, or (iii) is based upon any legal or
equitable interest of Landlord in the Premises or any part thereof.
7.5 Apportionment of Taxes. If the Premises is assessed as part of a
larger parcel, then Landlord shall equitably apportion the Real Property Taxes
assessed against the real property which includes the Premises and reasonably
determine the amount of Real property Taxes attributable to the Premises. If
other buildings exist on the assessed parcel, the Real Property Taxes
apportioned to the Premises shall be based upon the ration of the Building
Square Footage to the square footage of all buildings on the assessed parcel.
Landlord's reasonable determination of such apportionment shall be conclusive.
7.6 Taxes on Tenant's personal Property; Permitted Contests. Tenant
shall be directly responsible for and shall pay the full amount of all taxes
levied on Tenant's Personal property, and shall hold Landlord free and harmless
therefrom. if any such taxes are included in the tax bill for Real Property
Taxes of the Premises, Tenant shall reimburse Landlord therefor in the manner
described in Section 7.3, and shall make every effort with the applicable tax
authorities to have such personal property taxes removed from the Real Property
Taxes bill. Tenant may contest the amount of validity of any Real Property
Taxes or taxes levied on Tenant's Personal Property by appropriate proceedings,
provided that Tenant gives Landlord prior Notice of any such contest and keeps
Landlord
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advised as to all proceedings, and provided further than Tenant shall continue
to reimburse Landlord for Landlord's payment of such Real Property Taxes unless
such proceedings shall operate to prevent or stay such payment and the
collection of the tax so contested. Landlord shall join in any such proceedings
if any Applicable Laws shall so require, provided that Tenant shall hold
harmless, indemnify, protect and defend Landlord from and against any liability,
claim, demand, cost or expense in connection therewith including, but not
limited to, actual attorneys' fees and costs reasonably incurred.
7.7 Utilities and Services. Tenant shall be responsible for and shall
pay promptly, directly to the appropriate supplier, all charges for water, gas,
electricity, heat, light, power, telephone, refuse pickup, janitorial service,
interior landscape maintenance and all other utilities, materials and services
furnished directly to Tenant or the Premises or used by Tenant in, on or about
the Premises during the Term, together with any taxes thereon. If any utilities
or services are not separately metered or assessed to Tenant, Landlord shall
make a reasonable determination of Tenant's proportionate share of the cost of
such utilities and services and Tenant shall pay such amount to Landlord, as an
Item of Additional Rent, within ten (10) days after receipt of Landlord's
statement or invoice therefor. Alternatively, Landlord may elect to include
such cost in the definition of Maintenance Expenses, in which event Tenant shall
pay such cost in the manner set forth in Section 7.1. Landlord may also require
Tenant to have any Specialized HVAC system separately metered to Tenant, at
Tenant's expense. Landlord shall not be liable in damages or otherwise for any
failure to interruption of any utility or other service furnished to the
Premises. No such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any Rent due
hereunder.
ARTICLE VIII
ALTERATIONS
8.1 Permitted Alterations. After the Commencement Date, Tenant shall
not make or permit any Alterations in, on or about the Premises without the
prior written consent of Landlord, which consent may be withheld in Landlord's
sole and absolute discretion. Notwithstanding the foregoing, Landlord shall not
unreasonably withhold its consent to any Alterations not exceeding One Dollar
$1.00) per square foot of the Building in aggregate cost over the Term and which
do not (i) affect the exterior of the Building or the Outside Areas (or be
visible from adjoining sites), (ii) affect or penetrate any of the structural
portions of the Building, including, but not limited, the roof, (iii) require
any change to the basic floor plan of the Building, any change to the structural
or mechanical components of the Building, or any governmental approval or permit
as a prerequisite to the construction thereof, (iv) interfere in any manner with
the proper functioning of or Landlord's access to any mechanical, electrical,
plumbing or HVAC systems, facilities or equipment located in or serving the
Building, or (v) diminish the value of the Premises. All Alterations shall be
constructed pursuant to plans and specifications previously provided to and,
when applicable, approved in writing by Landlord, shall be installed by a
licensed contractor at Tenant's sole expense in compliance with all Applicable
Laws, and shall be accomplished in a good and workmanlike manner confirming in
quality and design with the Building existing as of the Commencement Date. No
Hazardous Materials, including, but not limited to, asbestos or
asbestos-containing materials, shall be used by Tenant or Tenant's Agents in the
construction of any Alterations permitted hereunder. Tenant shall, if required
by Landlord, obtain and pay for, at its own expense, a completion and indemnity
bond covering such work, the form and amount of which shall be subject to the
approval of Landlord. All Alterations made by Tenant shall be and become the
property of Landlord upon the installation thereof and shall not be deemed
Tenant's Personal Property; provided, however, that Landlord may, at its option,
require that Tenant, upon the termination of this Lease, at Tenant's expense,
remove any or all no-structural Alterations installed by or on behalf of Tenant
and return the Premises to its condition as of the Commencement Date of this
Lease, normal wear and tear excepted. Notwithstanding any other provisions of
this Lease, Tenant shall be solely responsible for the maintenance, repair and
replacement of any and all Alterations made by or on behalf of Tenant (including
without limitation by Landlord on behalf of Tenant) to the Premise.
8.2 Trade Fixtures. Tenant shall, at its own expense, provide,
install and maintain in good condition all of Tenant's Personal Property
required in the conduct of its business in the Premises.
8.3 Mechanics' Liens. Tenant shall give Landlord Notice of Tenant's
intention to perform any work on the Premises which might result in any claim of
lien at least twenty (20) days prior to the commencement of such
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work to enable Landlord to post and record a notice of nonresponsiblity or other
notice Landlord deems proper prior to the commencement of any such work. Tenant
shall not permit any mechanic's, materialmen's or other liens to be filed
against the property of which the Premises are a part or against Tenant's
leasehold interest in the Premises. If Tenant fails to cause the release of
record of any lien(s) filed against the Premises or its leasehold estate therein
by payment or posting of a proper bond within ten (10) days from the date of the
lien filing(s), then Landlord may, at Tenant's expense, cause such lien(s) to be
released by any means Landlord deems proper, including, but not limited to
payment of or defense against the claim giving rise to the lien(s). All sums
reasonably disbursed, deposited or incurred by Landlord in connection with the
release of the lien(s), including, but not limited to, all costs, expenses and
actual attorneys' fees, shall be due and payable by Tenant to Landlord, as an
item of Additional Rent, on demand by Landlord, together with interest thereon
at the Applicable Rate from the date of such demand until paid by Tenant.
ARTICLE IX
MAINTENANCE AND REPAIR
9.1 Landlord's Maintenance of Outside Areas. Landlord shall, subject
to receiving Tenant's payment of Maintenance Expenses, and subject to Section
9.2, Article XII and Article XIII, maintain in good condition and repair the
Outside Areas and every part thereof, including but not limited to, landscaping
(including replacement thereof), sprinkler systems, walkways, parking areas, and
approved signage. Such maintenance shall include pest control, restriping of
the parking areas and painting of the exterior walls of the Building, as and
when the same becomes necessary in Landlord's sole discretion. Such maintenance
shall further include the roof of the Building (excluding any skylights, but
including as needed any replacement thereof) _______________________ (including,
without limitation, the foundation, load-bearing walls and roof structure),
provided that Landlord shall not be required to make any repairs to the roof or
the structural components unless and until Tenant has notified Landlord in
writing of the need for such repair and Landlord shall have a reasonable period
of time thereafter to commence and complete said repair. The cost of any
maintenance and repairs on the part of Landlord provided for in this Section 9.1
shall be considered part of Maintenance Expenses and paid by Tenant in the
manner set forth in Section 7.1, except that repairs which Landlord deems arise
out of any act or omission of Tenant or Tenant's Agents shall be made at the
expense of Tenant. Landlord's obligation to repair and maintain hereunder shall
be limited to the cost of effecting such repair and maintenance and in no event
shall Landlord be liable for any costs or expenses in excess of said amounts,
including but not limited in any consequential damages, opportunity costs or
lost profits incurred or suffered by Tenant. Notwithstanding the foregoing,
Landlord may, by Notice to Tenant, elect at any time to cease maintaining all or
any portion of the Outside Areas and/or the roof of the Building, in which event
Tenant shall be responsible for such maintenance as set forth in Section 9.2
below.
9.2 Tenant's Maintenance and Repair Obligations. Tenant shall at all
times during the Term of this Lease, at Tenant's sole cost and expense, clean,
keep, maintain, repair and make necessary improvements to, the Building and
every part thereof and all improvements therein or thereto, in good and sanitary
order and condition to the reasonable satisfaction of Landlord and in compliance
with all Applicable Laws, usual wear and tear excepted. Any damage or
deterioration of the Building shall not be deemed usual wear and tear if the
same could have been prevented by good maintenance practices by Tenant.
Tenant's repair and maintenance obligations herein shall include, but are not
limited to, all necessary maintenance and repairs to all portions of the
Building, and all exterior entrances, all glass, windows, window easements, show
window moldings, partitions, doors, doorjambs, door closures, hardware,
fixtures, electrical lighting and outlets, plumbing fixtures, sewage facilities,
interior walls, floors, ceilings, skylights, fans and exhaust equipment, fire
extinguisher equipment and systems, and all repairs to the HVAC and any
Specialized HVAC (as hereinafter defined). As part of its maintenance
obligations hereunder, Tenant shall, at Landlord's request, provide Landlord
with copies of all maintenance schedules, reports and notices prepared by, for,
or on behalf of Tenant. Landlord may impose reasonable restrictions and
requirements with respect to repairs by Tenant, which repairs shall be at least
equal in quality to the original work, and the provisions of Section 8.3 shall
apply to all such repairs. Tenant's obligation to repair includes the
obligation to replace, as necessary, regardless of whether the benefit of such
replacement extends beyond the Term; provided however, if the replacement in
question is of a capital nature, the cost therefor shall be amortized over its
useful life and, in the event such useful life extends beyond the expiration
_____ sooner termination of the Lease (including any extensions of the Term),
Landlord shall reimburse Tenant for the unamortized portion thereof promptly
following the expiration or sooner termination of the Lease. All replacements
by Tenant shall be subject to Landlord's prior
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approval. Any special or above-standard heating, ventilating and air
conditioning installed by, on behalf of, or at the request of Tenant
("Specialized HVAC"), shall be paid for and maintained by Tenant at Tenant's
sole cost and expense. Notwithstanding the foregoing, Landlord shall have the
right, upon Notice to Tenant, to undertake the responsibility for maintenance
and repair of automatic fire extinguisher equipment, such as sprinkler system
and alarms, HVAC, specialized HVAC and other obligations of Tenant hereunder
which Landlord deems appropriate to undertake, in which even the cost thereof
shall be included as part of Maintenance Expenses and paid by Tenant in the
manner set forth in Section 7.1. Tenant shall not permit or authorize any
person to go onto the roof of the Building without the prior written consent of
Landlord. After Landlord ceases to maintain all or any portion of the Outside
Areas and/or the roof of the Building pursuant to Section 9.1, Tenant shall
immediately become obligated at Tenant's sole cost and expense, to clean, keep,
repair, replace and maintain in good, safe and sanitary order, condition and
repair the same to the reasonable satisfaction of Landlord.
9.3 Waiver. Tenant hereby waives all rights provided for by the
provisions of Sections 1941 and 1942 of the California Civil Code and any
present or future laws regarding Tenant's right to make repairs at the expense
of Landlord or to terminate this Lease because of the condition of the Premises.
9.4 Self-Help. If Tenant refuses or fails to repair and maintain the
Premises as required hereunder within ten (10) days from the date on which
Landlord makes a written demand on Tenant to effect such repair and maintenance,
Landlord may enter upon the Premises and make such repairs or perform such
maintenance without liability to Tenant for any loss or damage that may accrue
to Tenant or its merchandise, fixtures or other property or to Tenant's business
by reason thereof. All sums reasonably disbursed, deposited or incurred by
Landlord in connection with such repairs or maintenance, plus ten percent (10%)
for overhead, shall be due and payable by Tenant to Landlord, as an item of
Additional Rent, on demand by Landlord, together with interest at the Applicable
Rate on such aggregate amount from the date of such demand until paid by Tenant.
ARTICLE X
COMMON AREA AND PARKING
10.1 Grant of Nonexclusive Common Area License and Right. Landlord
hereby grants to Tenant and its permitted subtenants, in common with Landlord
and all persons, firms and corporations conducting business in the Project and
their respective customers, guests, licensees, invitees, subtenants, employees
and agents, to use the Common Area within the Project for such purposes and for
doing such things as may be provided for, authorized and/or permitted by the
Restrictions, such nonexclusive license and right to be appurtenant to Tenant's
leasehold estate created by this Lease. The nonexclusive license and rights
granted pursuant to the provisions of this Article X shall be subject to the
provisions of the Restrictions, which pertain in any way to the Common Area
covered by such Restrictions, and the provisions of this Lease.
10.2 Use of Common Area. Notwithstanding anything to the contrary
herein, Tenant and its successors, assigns, employees, agents and invitees shall
use the Common Area only of the purposes permitted hereby and by the
Restrictions and the Rules and Regulations. All uses permitted within the Common
Area shall be undertaken with reason and judgment so as not to interfere with
the use of the Common Area by others. In no event shall Tenant erect, install,
or place, or cause to be erected, installed, or placed any structure, building,
trailer, fence, wall, signs or other obstructions on the Common Area except as
otherwise permitted herein and in the Restrictions, and Tenant shall not store
or sell any merchandise, equipment or materials on the Common Area.
10.3 Control of Common Area. Subject to provisions of the
Restrictions, all Common Area and all improvements located from time to time
within the Common Area shall at all times be subject to the exclusive control
and management of the Landlord. Landlord shall have the right to construct,
maintain and operate lighting facilities within the Common Area; to police the
Common Area from time to time; to change the area, level, location and
arrangement of the parking areas and other improvements within the Common Area;
to restrict parking by tenants, their officers, agents and employees to employee
parking areas; to enforce parking charges (by operation of meters or otherwise);
to close all or any portion of the Common Area or Improvements therein to such
extent as may, in the opinion of counsel for Landlord, be legally sufficient to
prevent a dedication thereof or the accrual of any rights to any person or to
the public therein; to close temporarily all or any portion of the Common Area
and/or the improvements thereon; to discourage noncustomer parking; and to do
and perform such other acts in and to said
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Common Area and improvements thereon as, in the use of good business judgment,
Landlord shall determine to be advisable.
10.4 Maintenance of Common Area. Subject to the provisions of the
Restrictions, Landlord shall operate and maintain (or cause to be operated and
maintained) the Common Area in a first-class condition, in such manner as
Landlord in its sole discretion shall determine from time to time. Without
limiting the scope of such discretion, Landlord shall have the full right and
authority to employ or cause to be employed all personnel and to make or cause
to be made all rules and regulations pertaining to or necessary for the proper
operation and maintenance of the Common Area and the improvements located
thereon. The cost of such maintenance of the Common Area shall be included as
part of Maintenance Expenses. No part of the Common Area may be used for the
storage of any items, including without limitation, vehicles, materials,
inventory and equipment. All trash and other refuse shall be placed in
designated receptacles. No work of any kind, including, but not limited to,
painting, drying, cleaning, repairing, manufacturing, assembling, cutting,
merchandising or displaying shall be permitted upon the Common Area.
10.5 Revocation of License. All Common Area and improvements located
thereon which Tenant is permitted to use and occupy pursuant to the provisions
of this Lease are to be used and occupied under a revocable license and right,
and if any such license be revoked, or if the amount of such areas be
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to compensation or diminution or abatement of Rent, and such revocation
or diminution of such areas shall not be deemed constructive or actual eviction.
It is understood and agreed that the condemnation or other taking or
appropriation by any public or quasi-public authority, or sale in lieu of
condemnation, of all or any portion of the Common Area shall not constitute a
violation of Landlord's agreements hereunder, and Tenant shall not be entitled
to participate in or make any claim for any award or other condemnation proceeds
arising from any such taking or appreciation of the Common Area.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Landlord shall provide to Tenant the number of vehicle parking
spaces set forth in Item 15 of the Basic Lease Provisions throughout the Term
(subject to the rights of Landlord under this Article X).
10.6 Landlord's Reserved Rights. Landlord reserves the right to
install, use, maintain, repair, relocate and replace pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the Premises or outside
the Premises, change the boundary lines of the Project and install, use,
maintain, repair, alter or relocate, expand and replace any Common Area;
provided, however, Landlord shall not unreasonably interfere with Tenant's use
of the Premises. Such rights of Landlord shall include, but are not limited to,
designating from time to time certain portion of the Common Area as exclusively
for the benefit of certain tenants in the Project.
10.7 Parking. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 15 of the basic lease provisions, which spaces
shall be unreserved and unassigned, on those portions of the Outside Areas
and/or Common Area designated by Landlord for parking by Tenant and Tenant's
Agents. Tenant shall not use more parking spaces than such number. Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be
loaded, unloaded, or parked in areas other than those designated by Landlord for
such activities. If Tenant permits or allows any of the prohibited activities
described above, then Landlord shall have the right, without notice, in addition
to such other rights and remedies that Landlord may have, to remove or two away
the vehicle involved and charge the cost to Tenant, which cost shall be
immediately payable upon demand by Landlord. Parking shall be limited to
striped parking stalls, and no parking shall be permitted in any driveways,
accessways or in any area which would prohibit or impede the free flow of
traffic within the Common Area. There shall be no overnight parking of any
vehicles of any kind, an vehicles which have been abandoned or parking in
violation of the terms hereof may be towed away at the owner's expense.
ARTICLE XI
INDEMNITY AND INSURANCE
11.1 Indemnification. To the fullest extent permitted by law, Tenant
hereby agrees to defend (with attorneys acceptable to Landlord), indemnify
protect and hold harmless Landlord and Landlord's Agents and any successors to
all or any portion of Landlord's interest in the Premises and their directors,
officers, partners,
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employees, authorized agents, representatives, affiliates and Mortgagees, from
and against any and all damage, loss, claim, liability and expense including,
but not limited to, actual attorneys' fees and legal costs incurred directly or
indirectly by reason of any claim, suit or judgment brought by or on behalf of
(i) any person or persons for damage, loss or expense due to, but not limited
to, bodily injury or property damage sustained by such person or persons which
arise out of, are occasioned by, or are in any way attributable to the use or
occupancy of the Premises or the acts or omissions of the Tenant or Tenant's
Agents in or about the Premises or the Project (including but not limited to any
Event of Default hereunder), or (ii) Tenant or Tenant's Agents for damage, loss
or expense due to, but not limited to, bodily injury or property damage which
arise out of, are occasioned by, or are in any way attributable to the use of
any of the Common Area, except to the extent caused by the negligence or willful
misconduct of Landlord.
11.2 Property Insurance. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies of insurance, with
deductibles at the sole discretion of Landlord, covering loss or damage to the
Premises and the Building, the Tenant Improvements and objects owned by Landlord
and normally covered under a "Boiler and Machinery" policy (as such term is used
in the nsurance industry) at least in the amount of the full replacement cost
thereof, and in no event less than the total amount required by Mortgagees,
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, special extended perils ("all risk" or
"special causes of action," as such terms are used in the insurance industry,
including, at Landlord's option, collapse, earthquake and flood) and other
perils as required by the Mortgagees or deemed necessary for Landlord. A
stipulated value or agreed amount endorsement deleting any co-insurance
provision of said policy or policies shall be procured with said insurance. The
cost of such insurance policies shall be included in the definition of
Maintenance Expenses, and shall be paid by Tenant in the manner set forth in
Section 7.1. Such insurance policies shall provide for payment of loss
thereunder to Landlord or, at Landlord's election, the Mortgagees. If the
Premises are part of a larger building, or if the Premises are part of a group
of buildings owned by Landlord which are adjacent to the Premises, then Tenant
shall pay for any increase in the property insurance of the Building or such
other building or buildings within the Project if such increase is caused by
Tenant's acts, omissions, use or occupancy of the Premises. Tenant shall obtain
and keep in force during the Term, at its sole cost an expense, (i) an "all
risk" or "special cause of action" property policy in the amount of the full
replacement cost covering Tenant's Personal Property and any Alterations made by
or at the request of Tenant, with Landlord insured as its interest may appear,
and (ii) an "all risk" or "special causes of action" policy of business
interruption and/or loss of income insurance covering a period of six (6)
months, plus such additional period of time, if any , as will permit Tenant to
be in a position to have the same revenues as were in effect the day before a
loss giving rise to a claim under such insurance occurs.
11.3 Liability/Miscellaneous Insurance. Tenant shall maintain in full
force and effect at all times during the Term (plus such earlier an later
periods as Tenant may be in occupancy of the Premises), at its sole cost and
expense, policies of insurance issued by a carrier or carriers acceptable to
Landlord and the Mortgagees which afford the following coverages: (i) statutory
workers' compensation, (ii) employer's liability with minimum limits of Five
Hundred Thousand Dollars ($500,000), (iii) comprehensive/commercial general
liability insurance including, but not limited to, blanket contractual liability
(including the indemnity set forth in Section 11.1), fire and water legal
liability, broad form property damage, personal injury, completed operations,
products liability, independent contractors, warehouser's legal liability and,
if alcoholic beverages are served, manufactured, distributed or sold in the
Premises, comprehensive liquor liability, and owned, non-owned and hired
vehicles, of not less than the limits set forth in Item 17 of the Basic Lease
Provisions (or current limit carried, which ever is greater), naming Landlord,
the Mortgagees, and the Additional Insureds named in Item 16 of the Basic Lease
Provisions as additional insureds, and including a cross-liability or
severability of interests endorsement, and (iv) such other insurance in such
form and amounts as may be required by Landlord or the Mortgagees from time to
time. Landlord or Landlord's Agents on behalf of Landlord may, at Landlord's
election, obtain liability insurance in such amounts and on such terms as
Landlord shall determine, and the cost thereof shall be included in Maintenance
Expenses and paid by Tenant in the manner described in Section 7.1.
11.4 Hazardous Materials. In the event Landlord consents to Tenant's
use, generation or storage of Hazardous Materials on, under or about the
Premises pursuant to Section 6.2, Landlord shall have the continuing right to
require Tenant, at Tenant's sole cost and expense, to purchase insurance
specified and approved by Landlord, with coverage of no less than Five Million
Dollars ($5,000,000.00), insuring (i) any Hazardous Materials shall be removed
from the Premises, (ii) the Premises shall be restored to a clean, neat,
attractive health, safe and
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sanitary condition, and (iii) any liability of Tenant, Landlord and Landlord's
Agents arising from such Hazardous Materials.
11.5 Deductibles; Blanket Coverage. Any policy of insurance required
pursuant to this Lease containing a deductible exceeding Ten Thousand Dollars
($10,000.00) per occurrence must be approved in writing by Landlord prior to the
issuance of such policy. Tenant shall be solely responsible for the payment of
any deductible. Any insurance required of Tenant pursuant to this Lease may be
provided by means of a so-called "blanket policy", so long as (i) the Premises
are specifically covered (by rider, endorsement or otherwise), (ii) the limits
of the policy are applicable on a "per location" basis to the Premises and
provide for restoration of the aggregate limits, and (iii) the policy otherwise
complies with the provisions of this Lease.
11.7 Sufficiency of Coverage. Neither Landlord nor any of Landlord's
Agents makes any representation that the types of insurance and limits specified
to be carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing contained herein shall limit Tenant's liability under this Lease, and
Tenant's Liability under any provision of this Lease, including without
limitation under any indemnity provisions, shall not be limited to the amount of
any insurance obtained.
11.8 Insurance Requirements. Tenant's insurance (i) shall be in a form
satisfactory to Landlord and the Mortgagees and shall be carried with companies
that have a general policyholder's rating of not less than "A" and that are
determined by Landlord, in its sole discretion, as financially sound on a
current basis, (ii) shall provide that such policies shall not be subject to
material alteration or cancellation except after at least thirty (30) days prior
written notice to Landlord, and (iii) shall be primary, and any insurance
carried by Landlord or Landlord's Agents shall be noncontributing. Tenant's
policy or policies, or duly executed certificates for them in the form and
content acceptable to Landlord, shall be deposited with Landlord prior to the
Commencement Date, and prior to renewal of such policies. If Tenant fails to
procure and maintain the insurance required to be procured by Tenant under this
Lease, Landlord may, but shall not be required to, order such Insurance at
Tenant's expense. All sums reasonably disbursed, deposited or incurred by
Landlord in connection therewith, including, but not limited to, all costs,
expenses and actual attorneys' fees, shall be due and payable by Tenant to
Landlord, as an item of Additional Rent, on demand by Landlord, together with
interest thereon at the Applicable Rate from the date of such demand until paid
by Tenant.
11.9 Impound Funds. If requested by any Mortgagees to whom Landlord
has granted a security interest in the Premises, or if any Event of Default
occurs under this Lease, Tenant shall, at Landlord's election, pay Landlord,
concurrently with each payment of Monthly Rent, a sum equal to one-twelfth
(1/12) of the annual insurance premiums payable to Tenant for all insurance
which Tenant is required to obtain pursuant to this Article XI. Such sums (the
"Impound Funds") shall be held by Landlord and applied to the payment of such
insurance premium when due; provided, however, Landlord shall not be required to
keep the impound funds separate from other funds, Tenant shall not be entitled
to interest on the Impound Funds and no trust relationship shall be created with
respect to the Impound Funds. The amount of the Impound Funds when unknown
shall be reasonably estimated by Landlord. If the Impound Funds paid to
Landlord by Tenant under this Section 11.9 are insufficient to discharge the
obligation of Tenant to pay such insurance premiums as the same become due,
Tenant shall pay to Landlord, within ten (10) days after Landlord's written
request therefor, such additional sums necessary to pay such obligations. If an
Event of Default has occurred, any balance remaining from the Impound Funds may,
at the option of Landlord, be applied to any obligation then due under this
Lease in lieu of being applied to the payment of insurance premiums. The unused
portion of the Impound Funds, if any, shall be returned to Tenant within thirty
(30) days of the expiration of this lease or any termination of this Lease not
resulting from an Event of Default, provided that Tenant has vacated the
Premises in the manner required by this Lease.
11.10 Landlord's Disclaimer. Notwithstanding any other provisions of
this Lease, and to the fullest extent permitted by law, Landlord and Landlord's
Agents shall not be liable for any loss or damage to persons or property
resulting from theft, vandalism, fire, explosion, falling materials, glass, tile
or sheetrock, steam, gas, electricity, water or rain which may leak from an part
of the Premises, or from the pipes, appliances or plumbing works therein or from
the roof, street or subsurface or whatsoever, unless caused by or due to the
sole active negligence or willful misconduct of Landlord. Landlord and
Landlord's Agents shall not be liable for interference
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with light or air, or for any latent defect in the Premises except as otherwise
expressly provided in this Lease. Tenant shall give prompt Notice to Landlord
in case of a casualty, accident or repair needed to the Premises.
11.11 Waiver of Subrogation. Landlord, except to the extent Tenant's
insurance covers loss to Landlord plus Tenant's obligation with respect to
maintenance and repair and payment of insurance deductibles hereunder, and
Tenant each hereby waives all rights of recovery against the other and the
other's agents on account of loss and damage occasioned to such waiving party to
the extent only that such loss or damage is insured against under any insurance
policies required by this Article XI (and to the extent such insurance is
inadequate to cover such loss, this waiver shall not apply to amounts of loss
above such coverage). Tenant and Landlord shall, upon obtaining policies of
insurance required hereunder, give notice to the insurance carriers that the
foregoing waiver of subrogation is contained in this lease. Notwithstanding the
foregoing, it is agreed that in the event that any loss is due to the act,
omission or negligence or willful misconduct of Tenant or Tenant's Agents,
Tenant's liability insurance shall be primary and shall cover all losses and
damages prior to any other insurance hereunder.
ARTICLE XII
DAMAGE OR DESTRUCTION
12.1 Landlord's Obligation to Rebuild. If the Premises are damaged or
destroyed by fire or other casualty (a 'Casualty"), Tenant shall promptly give
notice thereof to Landlord, and Landlord shall thereafter repair the Premises as
set forth in Sections 12.4 and 12.5 unless Landlord has the right to terminate
this Lease as provided in Section 12.2 and Landlord elects to so terminate or
Tenant has the right to terminate this Lease as provided in Section 12.3 and
Tenant elects to so terminate.
12.2 Landlord's Right to Terminate. Landlord shall have the right to
terminate this Lease following a Casualty if any of the following occurs: (i)
insurance proceeds (together with any additional amounts tenant elects, at its
option, to contribute) are not available to Landlord to pay one hundred percent
(100%) of the cost to fully repair the Premises, excluding the deductible (for
which Tenant shall pay such deductible); (ii) Landlord's Architect determines
that the Premises cannot, with reasonable diligence, be fully repaired by
Landlord (or cannot be safety repaired because of the presence of hazardous
factors, including, but not limited to, Hazardous Materials, earthquake faults,
radiation, chemical waste and other similar dangers) within one hundred eighty
(180) days after the date of such Casualty; (iii) the Premises are destroyed or
damaged during the last twelve (12) months of the Term; or (iv) an Event of
Default has occurred and is continuing at the time of such Casualty. If
Landlord elects to terminate this Lease following a Casualty pursuant to this
Section 12.2, Landlord shall give Tenant Notice of its election to terminate
within thirty (30) days after Landlord has knowledge of such Casualty, and this
Lease shall terminate fifteen (15) days after the date of such Notice.
12.3 Tenant's Right to Terminate. Subject to the later terms hereof,
Tenant shall have the right to terminate this Lease following the destruction of
the Premises (or damage to the Premises so extensive as to reasonably prevent
Tenant's substantial use and enjoyment of the remises) if any if the following
occurs: (i) the Premises cannot, with reasonable diligence, be fully repaired
by Landlord within one hundred eighty (180) days after the date of the damage or
destruction, as determined by Landlord's Architect; (ii) the Premises cannot
safely be repaired because of the presence of hazardous factors, including
Hazardous Materials, earthquake faults, radiation, chemical waste and other
similar dangers; or (iii) the damage or destruction occurs during the last
twelve (12) months of the Term and cannot, with reasonable diligence, be fully
repaired by Landlord within ninety (90) days after the date of the destruction
or damage, as determined by Landlord's Architect. Notwithstanding the
foregoing, Tenant shall not have the right to terminate under this Section 12.3
if (a) an Event of Default has occurred and is continuing at the time of such
damage or destruction or at the time of exercising the right to terminate, or
(b) the damage or destruction was caused, in whole or in part, by the act or
omission of Tenant or Tenant's Agents. If Tenant elects to terminate this Lease
pursuant to this Section 12.3, Tenant shall give Landlord Notice of its election
to terminate within ten (10) days after the date of such damage or destruction,
and this Lease shall terminate thirty (30) days after the date of such Notice.
12.4 Effect of Termination. If this Lease is terminated following a
Casualty pursuant to Section 12.2 or Section 12.3, Landlord shall, subject to
the rights of the Mortgagees, be entitled to receive and retain all the
insurance proceeds resulting from or attributable to such Casualty, except for
those proceeds payable under policies
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obtained by Tenant which specifically insure Tenant's Personal Property. If
neither party exercises any such right to terminate this Lease, this Lease will
continue in full force and effect, and Landlord shall, promptly following the
tenth (10th) day after the date of such Casualty and receipt of the amounts set
forth in clause (i) of Section 12.2, commence the process of obtaining necessary
permits and approvals of the repair of the Premises, and shall commence such
repair and prosecute the same diligently to completion as soon thereafter as is
practicable. In the event that such repair is not completed within 225 days
following the date of such Casualty, Tenant shall have the right, as its sole
and exclusive remedy, to terminate this Lease by providing Landlord with written
notice thereof within 5 days following the lapse of such 225 day period, and
this Lease shall terminate upon such timely notice. In the event Tenant fails
to provide Landlord with such notice of termination within such 5 day period,
this Lease shall continue in full force and effect. Tenant shall fully
cooperate with Landlord in removing Tenant's Personal Property and any debris
from the Premises to facilitate the making of such repairs.
12.5 Limited obligation to Repair. Landlord's obligation, should it
elect or be obligated to repair the Premises following a Casualty, shall be
limited to the basic Building and Tenant Improvements and Tenant shall, at its
expense, replace or fully repair all Tenant's Personal Property and any
Alterations installed by Tenant existing at the time of such Casualty. If the
Premises are to be repaired in accordance with the foregoing, Tenant shall make
available to Landlord any portion of insurance proceeds it receives which are
allocable to the Tenant Improvements.
12.6 Abatement of Monthly Rent. During any period when Landlord or
Landlord's Architect reasonably determines that there is substantial
interference with Tenant's use of the Premises by reason of a Casualty, Monthly
Rent shall be temporarily abated in proportion to the degree of such substantial
interference, but only to the extent of any business interruption or loss of
income insurance proceeds received by Landlord from Tenant's insurance described
in Section 11.2. Such abatement shall commence upon the date Tenant notifies
Landlord of such Casualty and shall end upon the Substantial Completion of the
repair of the Premises which Landlord undertakes or is obligated to undertake
hereunder. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the Premises. Tenant's Personal Property or
other damage or any inconvenience occasioned by a Casualty or by the repair or
restoration of the Premises thereafter, including, but not limited to, any
consequential damages, opportunity costs or lost profits incurred or suffered by
Tenant, Tenant hereby waives the provisions of Section 1932(2) and Section
1933(4) of the California Civil Code, and the provisions of any similar or
successor statutes.
12.7 Landlord's Determination. The determination in good faith by
Landlord's Architect of or relating to the estimated cost of repair of any
damage, replacement cost, the time period required for repair or the
interference with or suitability of the Premises for Tenant's use or occupancy
shall be conclusive for purposes of this Article XII and Article XIII.
ARTICLE XIII
CONDEMNATION
13.1 Total Taking - Termination. If title to the Building or so much
thereof is taken for any public or quasi-public use under any statute or by
right of eminent domain so that reconstruction of the Building will not result
in the Building being reasonably suitable for Tenant's continued occupancy for
the users and purposes permitted by this Lease, the Lease shall terminate as of
the date possession of the Building or part thereof is to taken.
13.2 Partial Taking. If any part of the Building is taken for any
public or quasi-public use under any statute or by right o eminent domain and
the remaining part is reasonably suitable for Tenant's continued occupancy for
the uses permitted by this Lease, this Leas shall, as to the part so taken,
terminate as of the date that possession of such part of the Building is taken
and the Monthly Rent shall be reduced in the same proportion that the floor area
of the portion of the Building so taken (less any addition thereto by reason of
any reconstruction) bears to the original Building Square Footage, as reasonably
determined by Landlord or Landlord's Architect. Landlord shall, at its own cost
and expense, make all necessary repairs or alterations to the Building so as to
make the portion of the Building not taken a complete architectural unit, such
work shall not, however, exceed the scope of the work done by Landlord in
originally construction the Building. If severance damages from the condemning
authority are not available to Landlord insufficient amounts to permit such
restoration, Landlord may terminate this Lease upon Notice to Tenant. Monthly
Rent due and payable hereunder shall be temporarily abated during such
restoration
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period in proportion to the degree to which there is substantial interference
with Tenant's use of the Building, as reasonably determined by Landlord or
Landlord's Architect. Each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure and any present or future law
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Building or Premises.
13.3 Taking of Parking Areas. In the event there shall be a taking of
Outside Areas or portions of the Common Area made available to Tenant for
vehicle parking under this Lease such that Landlord can no longer provide to
Tenant the number of vehicle parking spaces set forth in Item 15 of the Basic
Lease Provisions, Landlord may substitute reasonably equivalent parking spaces
in a location reasonably cost to the Building; provided that if Landlord fails
to make such substitution within one hundred eighty (180) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by giving Landlord
Notice of its election to terminate within thirty (30) days after the expiration
of such 180-day period. In the event of such termination by Tenant, this Lease
shall terminate thirty (30) days after the date of such Notice. If this Lease
is not so terminated by Tenant, there shall be no abatement of Rent and this
Lease shall continue in full force and effect.
13.4 No Apportionment of Award. No award for any partial or total
taking shall be apportioned, it being agreed and understood that Landlord shall
be entitled to the entire award for any partial or entire taking. Tenant
assigns to Landlord its interest in any award which may be made in such taking
or condemnation, together with any and all rights of Tenant arising in or to the
same or any part thereof. Nothing contained herein shall be deemed to give
Landlord any interest in or require Tenant to assign to Landlord any separate
award made to Tenant for the taking of Tenant's Personal Property, for the
interruption of Tenant's business or its moving costs, or for the loss of its
goodwill.
13.5 Temporary Taking. No temporary taking of the Building (which for
purposes hereof shall mean a taking of all or any part of the Building for one
hundred eighty (180) days or less) shall terminate this Lease or give Tenant any
right to any abatement of Rent. Any award made to Tenant by reason of such
temporary taking shall belong entirely to Tenant and Landlord shall not be
entitled to share therein. Each party agrees to execute and deliver to the
other all instruments that may be required to effectuate the provisions of this
Section 13.5.
13.6 Sale Under Threat of Condemnation. A sale made in good faith to
any authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for all purposes of this Article XIII.
ARTICLE XIV
ASSIGNMENT AND SUBLETTING
14.1 Prohibition. Tenant shall not directly or indirectly, voluntarily
or by operation of law, assign (which term shall include any transfer,
assignment, pledge, mortgage or hypothecation) this Lease, or any right or
interest hereunder, or sublet the Premises or any part thereof, or allow any
other person or entity to occupy or use all or any part of the Premises without
first obtaining the written consent of Landlord in each instance, which consent
shall not be unreasonably withheld. No assignment, encumbrance, subletting, or
other transfer in violation of the terms of this Article XIV, whether voluntary
or involuntary, by operation of law, under legal process or proceedings, by
receivership, in bankruptcy, or otherwise shall be valid or effective and, at
the option of Landlord, shall constitute an Event of Default under this Lease.
To the extent not prohibited by provisions of the Bankruptcy Code of 1978, 11
U.S.C. Section 101 et seq. (the "Bankruptcy Code"), Tenant on behalf of itself,
creditors, administrators and assigns waives the applicability of Sections
541(c) and 365(e) of the Bankruptcy Code unless the proposed assignee of the
trustee for the estate of the bankrupt meets Landlord's standards for consent as
set forth below, Landlord has entered into this Lease with Tenant in order to
obtain for the benefit of the Project the unique attraction of Tenant's name and
business; the foregoing prohibition on assignment or subletting is expressly
agreed to by Tenant in consideration of such fact. If this Lease is assigned to
any person or entity pursuant to the provisions of the Bankruptcy Code, any and
all monies or other considerations payable or otherwise to be delivered in
connection with such assignment shall be paid or delivered to Landlord, shall be
and remain the exclusive property of Landlord and shall not constitute property
of Tenant or the estate of Tenant within the meaning of the Bankruptcy Code.
Any and all monies or other considerations constituting Landlord's property
under the preceding sentence not paid or delivered to Landlord shall be held in
trust for the benefit of Landlord and be promptly paid or
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delivered to Landlord. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed without
further act or deed to have assumed all of the obligations arising under this
Lease on and after the date of such assignment. Any such assignee shall upon
demand execute and deliver to Landlord an instrument confirming such assumption.
14.2 Landlord's Consent. In the event Landlord consents to any
assignment or subletting, such consent shall not constitute a waiver of any of
the restrictions of this Article XIV and the same shall apply to each successive
assignment or subletting hereunder, if any, in no event shall Landlord's consent
to an assignment or subletting affect the continuing primary liability of Tenant
(which, following assignment, shall be joint and several with the assignee), or
relieve Tenant of any of its obligations hereunder without an express written
release being given by Landlord. In the even that Landlord shall consent to an
assignment or subletting under this Article XIV, such assignment or subletting
shall not be effective until the assignee or sublessee shall assume all of the
obligations of this Lease on the part of Tenant to be performed or observed and
whereby the assignee or sublessee shall agree that the provisions contained in
this Lease shall, notwithstanding such assignment or subletting, continue to be
binding upon it with respect to all future assignments and sublettings. Such
assignment or sublease agreement shall be duly executed and a fully executed
copy thereof shall be delivered to Landlord, and Landlord may collect Monthly
Rent and Additional Rent due hereunder directly from the assignee or sublessee.
Collection of Monthly Rent and Additional Rent directly from as assignee or
sublessee shall not constitute a consent or a waiver of the necessity of consent
to such assignment or subletting, nor shall such collection constitute a
recognition of such assignee or sublessee as the Tenant hereunder or a release
of Tenant from the performance of all of its obligations hereunder.
14.3 Information. Regardless of whether Landlord's consent is required
under this Article XIV, Tenant shall notify Landlord in writing of Tenant's
intent to assign this Lease or any right or interest hereunder, or to sublease
the Premises or any part thereof, and of the name of the proposed assignee or
sublessee, the nature of the proposed assignee's or sublessee's business to be
conducted on the Premises, the terms and provisions of the proposed assignment
or sublease, a copy of the proposed assignment or sublease form, and such other
information as Landlord may reasonably request concerning the proposed assignee
or sublessee, including, but not limited to, net worth, income statements and
other financial statements for a two-year period preceding Tenant's request for
consent, evidence of insurance complying with requirements of Article XI, a
completed Environmental Questionnaire from the proposed assignee or sublessee,
and the fee described in Section 14.7.
14.4 Standard for Consent. Landlord shall, within thirty (30) days of
receipt of such Notice and all information requested by Landlord concerning the
proposed assignee or sublessee, elect to take on of the following actions:
(a) consent to such proposed assignment or sublease;
(b) refuse to consent to such proposed assignment or sublease,
which refusal shall be on reasonable grounds; or
(c) If Tenant proposes to sublease all or part of the Premises for the
entire remaining Term, Landlord may, at its option exercised by thirty (30) days
Notice to Tenant, elect to recapture such portion of the Premises as Tenant
proposes to sublease and as of the thirtieth (30th) day after Landlord so
notifies Tenant of its election to recapture, this Lease shall terminate as to
the portion of the Premises recaptured and the Monthly Rent payable under this
Lease shall be reduced in the same proportion that the floor area of that
portion of the Premises so recaptured bears to the Building Square Footage prior
to such recapture.
Tenant agrees, by way of exempt and without limitation, that it shall not
be unreasonable for Landlord to withhold its consent to a proposed assignment or
subletting if any of the following situations exist or may exist:
(i) Landlord determines that the proposed assignee's or sublesses's
use of the Premises conflicts with Article V or Article VI, presents an
unacceptable risk, as determined by Landlord, under Article VI (and Landlord may
require such assignee or sublessee to complete the Environmental Questionnaire
in the manner described in Section 6.5 prior to making such determination), or
conflicts with any other provision under this Lease;
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(ii) Landlord determines that the proposed assignee or
sublessee is not as financially responsible as Tenant as of the date of Tenant's
request for consent or as of the effective date of such assignment or
subletting;
(iv) Landlord determines that the proposed assignment or
subletting would breach a covenant, condition or restriction in some other
lease, financing agreement or other agreement relating to the Project, the
Building, the Premises or this Lease;
(v) Landlord determines that the proposed assignee or
sublessee (A) has been required by any prior Landlord, lender or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property if such contamination resulted from the proposed
assignee's or sublessee's actions or use of the property in question, or (B) is
subject to any enforcement order issued by any governmental authority in
connection with the use, disposal or storage of a hazardous material; or
(vi) An Event of Default has occurred and is continuing
at the time of Tenant's request for Landlord's consent, or as of the effective
date of such assignment or subletting.
Tenant acknowledges that if Tenant has any exterior sign rights under
this Lease, such rights are personal to Tenant and may not be assigned or
transferred to an assignee of this Lease or sublessee of the Premises without
Landlord's prior written consent, which consent may be withheld in Landlord's
sole and absolute discretion.
14.5 Bonus Value. Tenant agrees that fifty percent (50%) of any
amounts paid by the assignee of sublessee, however described, in excess of (i)
the Monthly Rent payable by Tenant hereunder (or, in the case of sublease of a
portion of the Premises, in excess of the Monthly Rent reasonably allocable to
such portion), plus (ii) Tenant's direct out-of-pocket costs which Tenant
certifies to Landlord have been paid to provide occupancy related services to
such assignee or sublessee of a nature commonly provided by Landlords of similar
space, shall be the property of Landlord and such amounts shall be payable
directly to Landlord by the assignee or sublessee. At Landlord's request, a
written agreement shall be entered into by and among Tenant, Landlord and the
proposed assignee or sublessee confirming the requirements of this Section 14.5.
14.6 Certain Transfers. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business), or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association or partnership in the aggregate in excess of fifty
percent (50%) which such transfer, assignment or hypothecation is also
accompanied by a change in Tenant's management (excluding, however, a transfer
of publicly trades shares of stock in the aggregate in excess of fifty percent
(50%) shall be deemed an assignment within the meaning and provisions of this
Article XIV.
14.7 Landlord's Fee and Expenses. If Tenant requests Landlord's
consent to an assignment or subletting by Tenant under this Lease, Tenant shall
pay to Landlord all of the Landlord's out-of-pocket expenses, including, but not
limited to, attorneys' fees reasonably incurred related to such assignment or
subletting by Tenant, whether or not the assignment or subletting is approved.
14.8 Transfer of the Premises by Landlord. Upon any conveyance of the
Premises an assignment by Landlord of this Lease, Landlord shall and is hereby
entirely released from all liability under any and all of its covenants and
obligation contained in or derived from this Lease occurring after the date of
such conveyance and assignment, and Tenant agrees to attorn to any entity
purchasing or otherwise acquiring the Premises.
ARTICLE XV
DEFAULTS AND REMEDIES
15.1 Tenant's Default. At the option of the Landlord, a default under
this Lease by Tenant shall exist if any of the following events shall occur
(each is called an "Event of Default"):
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(a) Tenant fails to pay the Rent payable hereunder, as and when
due, for a period of three (3) days after Notice by Landlord; provided, however,
the Notice given hereunder shall be in lieu of, and not in addition to, any
notice required under Section 1161, ET SEQ., of the California Code of Civil
Procedure;
(b) Tenant attempts to make or suffers to be made any transfer,
assignment or subletting, except as provided in Article XIV hereof;
(c) Any of Tenant's rights under this Lease are sold or
otherwise transferred by or under court order or legal process or otherwise or
if any of the actions described in Section 15.2 are taken by or against Tenant
or any Guarantor;
(d) The Premises are used for any purpose other than as
permitted pursuant to Article V;
(e) Any representation or warranty given by Tenant under or in
connection with this Lease proves to be materially false or misleading;
(f) Tenant fails to timely comply with the provisions of
Article VI ("Hazardous Materials"), Article XIV ("Assignment and Subletting"),
Article XVI ("Subordination; Estoppel Certificate; Financials"), Section 21.5
("Modifications for Mortgagees") or Section 21.19 ("Authority"); or
(g) Tenant fails to observe, keep, perform or cure within
fifteen (15) days after Notice by Landlord any of the other terms, covenants,
agreements or conditions contained in this Lease or those set forth in any other
agreements or rules or regulations which Tenant is obligated to observe or
perform. In the event such default reasonably could not be cured or corrected
within such fifteen-day period, but is reasonably susceptible to cure or
correction, then Tenant shall not be in default hereunder if Tenant commences
the cure or correction of such default within such fifteen-day period and
diligently prosecutes the same to completion after commencing such cure or
correction. The Notice required by this subparagraph 15.1(b) shall be in lieu
of, and not in addition to, any notice required under Section 1161, ET SEQ., of
the California Code of Civil Procedure.
Notices given under this Section 15.1 shall specify the alleged default and
shall demand that Tenant perform the provisions of this Lease or pay the Rent
that is in arrears, as the case may be, within the applicable period of time, or
quit the Premises. No such Notice shall be deemed a forfeiture or a termination
of this Lease unless Landlord so elects in the Notice.
15.2 Bankruptcy or Insolvency. In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease be
an asset of Tenant in any receivership, bankruptcy, insolvency or reorganization
proceeding. In the event:
(a) A court makes or enters any decree or order adjudging
Tenant to be insolvent, or approving as properly filled by or against Tenant a
petition seeking reorganization or other arrangement of Tenant under any
provisions of the Bankruptcy Code or any applicable state law, or directing the
winding up or liquidation of Tenant and such decree or order shall have
continued for a period of thirty (30) days;
(b) Tenant makes or suffers any transfer which constitutes a
fraudulent or otherwise avoidable transfer under any provisions of the
Bankruptcy Code or any applicable state law;
(c) Tenant assigns its assets for the benefit of its creditors;
or
(d) The material part of the property of Tenant or any property
essential to Tenant's business or of Tenant's interest in this Lease is
sequestered, attached or executed upon, and Tenant fails to secure a return or
release of such property within ten (10) days thereafter, or prior to sale
pursuant to such sequestration, attachment or levy, whichever is earlier;
then this Lease shall, at Landlord's election, immediately terminate and be of
no further force or effect whatsoever, without the necessity for any further
action by Landlord, except that Tenant shall not be relieved of obligations
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which have accrued prior to the date of such termination. Upon such
termination, the provisions herein relating to the expiration or earlier
termination of this Lease shall control and Tenant shall immediately surrender
the Premises in the condition required by the provisions of this Lease.
Additionally, Landlord shall be entitled to all relief, including recovery of
damages from tenant, which may from time to time be permitted, or recoverable,
under the Bankruptcy Code or any other applicable state laws.
15.3 Landlord's Remedies. Upon the occurrence of an Event of Default,
then, in addition to and without waiving any other rights and remedies available
to Landlord at law or in equity or otherwise provided in this Lease, Landlord
may, at its option, cumulatively or in the alternative, exercise the following
remedies:
(a) Landlord may terminate Tenant's right to possession of the
Premises, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. No act by Landlord other than
giving Notice to Tenant of Landlord's election to terminate Tenant's right to
possession shall terminate this Lease. Acts of maintenance, efforts to relet
the Premises, or the appointment of a receiver on Landlord's initiative to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession. Termination shall terminate Tenant's right to
possession of the Premises but shall not relieve Tenant of any obligation under
this Lease which has accrued prior to the date of such termination. Upon such
termination, Landlord shall have the right to re-enter the Premises, and remove
all persons and property, and Landlord shall also be entitled to recover from
Tenant:
(i) The worth at the time of award of the unpaid Monthly
Rent and Additional Rent which had been earned at the time of termination;
(ii) The worth at the time of award of the amount by
which the unpaid Monthly Rent and Additional Rent which would have been earned
after termination until the time of award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by
which the unpaid Monthly Rent and Additional Rent for the balance of the Term
after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided;
(iv) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result from Tenant's default, including, but not limited to, the cost
of recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, demolition and renovation of the Premises
to the condition existing immediately prior to Tenant's occupancy, the
unamortized portion of any Tenant Improvements and brokerage commissions funded
by Landlord in connection with this Lease, the cost of rectifying any damage to
the Premises occasioned by the act or omission of Tenant, reasonable attorneys'
fees, and any other reasonable costs; and
(v) At Landlord's election, all other amounts in
addition to or in lieu of the foregoing as may be permitted law.
As used in subsections (i) and (ii) above, the "worth at the time of
award" shall be computed by allowing interest at the maximum legal rate
permitted by law. As used in subsection (iii) above, the "worth at the time of
award" shall be computed by discounting the amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
(b) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event this Lease will continue in full
force and effect as long as Landlord does not terminate Tenant's right to
possession, and Landlord may continue to enforce all of its rights and remedies
under this Lease, including the right to collect all Rent as it becomes due. In
the event that Landlord elects to avail itself of the remedy provided in this
subparagraph 15.3(b), Landlord shall not unreasonably withhold its consent to an
assignment or subletting of the Premises subject to the reasonable standards for
Landlord's consent as are contained in this Lease. In addition, in the event
Tenant has entered into a sublease which is valid under the terms of this Lease,
Landlord may also, at its
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option, cause Tenant to assign to Landlord the Interest of Tenant under said
sublease, including, but not limited to, Tenant's right to payment of Rent as it
becomes due. Landlord may elect to enter the Premises and relet them, or any
part of the, to third parties for Tenant's Premises, including, but not limited
to, broker's commissions, expenses of cleaning and remodeling the Premises
required by the reletting, attorneys' fees and like costs. Reletting can be for
a period shorter or longer than the remaining Term of this Lease and for the
entire Premises or any portion thereof. Tenant shall pay to Landlord the
Monthly Rent and Additional Rent due under this lease on the dates the Monthly
Rent and such Additional Rent are due, less the Rent Landlord actually collects
from any reletting. Except as provided in the preceding sentence, if Landlord
relets the Premises or any portion thereof, such reletting shall not relieve
Tenant of any obligation hereunder. Notwithstanding the above, no act by
Landlord allowed by this subparagraph 15.3(b) shall terminate this Lease unless
Landlord notifies Tenant in writing that Landlord elects to terminate this
Lease.
15.4 No Surrender. Tenant waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections 1174 and 1179,
or under any other present or future law in the event Tenant is evicted or
Landlord takes possession of the Premises by reason of an Event of Default. No
act or thing done by Landlord or Landlord's Agents during the Term shall be
deemed an acceptance of a surrender of the Premises, an no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord. No employee
of Landlord or of Landlord's Agents shall have any power to accept the keys to
the Premises prior to the termination of this Lease, and the delivery of the
keys to any employee shall not operate as a termination of this Lease or a
surrender of the Premises.
15.5 Interest on Late Payments. Any Rent due under this Lease that is
not paid to Landlord within three (3) days of the date when due shall commence
to bear interest at the Applicable Rate until fully paid. Neither the accrual
nor the payment of Interest shall cure any default by Tenant under this Lease.
15.6 Attorneys' and Other Fees. All sums reasonably incurred by
Landlord in connection with an Event of Default or holding over of possession by
Tenant after the expiration or termination of this Lease, including, but not
limited to, all costs, expenses and actual accountants', appraisers', attorneys'
and other professional fees, and any collection agency or other collection
charges, shall be due and payable by Tenant to Landlord on demand, and shall
bear Interest at the Applicable Rate from the date of such demand until paid by
Tenant. In addition, in the event that any action shall be instituted by either
of the parties hereto for the enforcement of any of its rights in and under this
Lease, the party in whose favor judgment shall be rendered shall be entitled to
recover from the other party all expenses reasonably incurred by the prevailing
party in such action, including actual costs and reasonable attorneys' fees.
15.7 Landlord's Default. Landlord shall not be deemed to be in default
in the performance of any obligation required to be performed by it hereunder
unless it has failed to perform such obligation within thirty (30) days after
receipt of Notice by Tenant to Landlord (and the Mortgages who have provided
Tenant with notice) specifying the nature of such default; provided, however,
that if the nature of Landlord's obligation is such that more than thirty (30)
days are required for its performance, then Landlord shall not be deemed to be
in default if it shall commence such performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
15.8 Limitation of Landlord's Liability. The obligations of Landlord
do not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners. If
Landlord shall fail to perform any covenant, term, or condition of this Lease
upon Landlord's part to be performed, Tenant shall recover a money judgment
against Landlord, such judgment shall be satisfied only out of the proceeds of
sale received upon execution of such judgment and levied thereon against the
right, title and interest of Landlord in the Building and out of rent or, other
Income from such property receivable by Landlord or out of consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title or Interest in the Building, and no action for any
deficiency may be sought or obtained by Tenant.
15.9 Mortgage Protection. Upon any default on the part of Landlord,
Tenant will give notice by registered or certified mail to any Mortgagee who has
provided Tenant with notice of its interest together with an address for
receiving notice, and shall offer such Mortgagee a reasonable opportunity to
cure the default (which in no event shall be less than sixty (60) days),
including time to obtain possession of the Premises by power of sale or a
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judicial foreclosure, if such should prove necessary, to effect a cure. Tenant
agrees that each of the Mortgagees to whom this Lease has been assigned by
Landlord is an express third party beneficiary hereof. Tenant shall not make
any prepayment of Monthly Rent more than one (1) month in advance without the
prior written consent of such Mortgage. Tenant waives any right under
California Civil Code Section 1950.5 or any other present or future law to the
collection of any deposit from such Mortgagee or any purchaser at a foreclosure
sale of such Mortgagee's Interest unless such Mortgage or such purchaser shall
have actually received and not refunded the deposit. Tenant agrees to make all
payments under this Lease to the Mortgages with the most senior encumbrance upon
receiving a direction, in writing, to pay said amounts to such Mortgagee.
Tenant shall comply with such written direction to pay without determining
whether an event of default exists under such Mortgagee's Loan to Landlord.
15.10 Landlord's Right to Perform. If Tenant shall at any time fail to
make any payment or perform any other act on its part to be made or performed
under this Lease. Landlord may (but shall not be obligated to), at Tenant's
expense, and without waiving or releasing Tenant from any obligation of Tenant
under this Lease, make such payment or perform such other act to the extent
Landlord may deem desirable, and in connection therewith, pay expenses and
employ counsel. All sums paid by Landlord and all penalties, interest and
costs, including, but not limited to, collection costs and attorneys' fees
reasonably incurred in connection therewith, shall be due and payable by Tenant
to Landlord, as an Item of Additional Rent, on demand by Landlord, together with
Interest thereon at the Applicable Rate from the date of such demand until paid
by Tenant.
15.11 Limitation of Actions Against Landlord. Any claim, demand or
right of any kind by Tenant which is based upon or arises in connection with
this Lease shall be barred unless Tenant commences an action thereon within six
(6) months after the date that the act, omission, event or default upon which
the claim, demand or right arises, has occurred.
15.12 Waiver of Jury Trial. To the full extent permitted by law, Tenant
hereby waives the right to trial by jury in any action, proceeding or
counterclaim brought by Tenant on any matter whatsoever arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises and/or any claim of injury or damage.
ARTICLE XVI
SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
16.1. Subordination, Attornment and Non-Disturbance. Without the
necessity of any additional document being executed by Tenant for the purpose of
effecting a subordination, and at the election of Landlord or any Mortgagee or
any ground lessor with respect to the land of which the Premises are a part,
this Lease shall be subject and subordinate at all times to (i) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Building, and (ii) the lien of any Mortgage which may now exist or
hereafter be executed in any amount for which the Project, the Building, ground
leases or underlying leases, or Landlord's interest or estate in any of said
items is specified as security. Landlord or any such Mortgagee or ground lessor
shall have the right, at its election, to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this Lease. No subordination shall permit material interference with Tenant's
rights hereunder, and any ground lessor or Mortgagee shall recognize Tenant and
its permitted successors and assigns as the tenant of the Premises and shall not
disturb Tenant's right to quiet possession of the Premises during the Term so
long as no Event of Default has occurred and is continuing under this Lease. If
Landlord's Interest in the Premises is acquired by any ground lessor or
Mortgagee, or in the event proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under, any Mortgage made by Landlord
covering the Premises or any part thereof, or in the event a conveyance in lieu
of foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination and upon the request of such successor in interest to Landlord,
attorn to and become the Tenant of the successor in interest to Landlord and
recognize such successor in interest as the Landlord under this Lease. Although
this Section 16.1 is self-executing, Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord, or any
Mortgagee or ground lessor, any additional documents evidencing the priority or
subordination of this Lease with respect to any such ground lessee or underlying
leases or the lien of any such Mortgagee, or evidencing the attornment of Tenant
to any successor in interest to Landlord as herein provided, Tenant's failure to
timely execute and deliver such additional documents shall, at Landlord's
option, constitute an Event of Default hereunder.
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16.2. Estoppel Certificate. Tenant shall within ten (10) days following
written request by Landlord, execute and deliver to Landlord any documents,
including estoppel certificates, in a form required by Landlord (i) certifying
that this Lease is unmodified and in full force and effect or, if modified,
attaching a copy of such modification and certifying that this Lease, as so
modified, is In full force and effect and the date to which the Rent and other
charges are paid in advance, if any, (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of the Landlord or stating
the nature of any uncured defaults, (iii) evidencing the status of this Lease as
may be required by a Mortgagee or a purchaser of the Premises, (iv) certifying
the current Monthly Rent amount and the amount and form of Security Deposit on
deposit with Landlord, and (v) certifying to such other Information as Landlord,
Landlord's Agents, Mortgagees and prospective purchasers may reasonably request,
including, but not limited to, any requested information regarding Hazardous
Materials. Tenant's failure to deliver an estoppel certificate within ten (10)
days after delivery of Landlord's written request therefor shall constitute an
Event of Default hereunder.
16.3. Financial Information. Tenant shall deliver to Landlord, prior to
the execution of this Lease, and within ten (10) days following written request
therefor by Landlord at any time during the Term, Tenant's current financial
statements, and Tenant's financial statements for the two (2) years prior to the
current fiscal financial statement's year, certified to be true, accurate and
complete by the chief financial officer of Tenant, including a balance sheet and
profit and loss statement for the most recent prior year (collectively, the
"Statements"), which Statements shall accurately and completely reflect the
financial condition of Tenant. Landlord agrees that it will keep the Statements
confidential, except that Landlord shall have the right to deliver the same to
any proposed purchaser of the Premises, the Project or any portion thereof, and
to the Mortgagees of Landlord or such purchaser. Tenant acknowledges that
Landlord is relying on the Statements in its determination to enter into his
Lease, and Tenant represents to Landlord, which representation shall be deemed
made on the date of this Lease and again on the Commencement Date, that no
material change in the financial condition of Tenant, as reflected in the
Statements, has occurred since the date Tenant delivered the Statements to
Landlord. If any material change in Tenant's financial condition, as reflected
in the Statements, to inform Landlord of any such material change, Landlord
shall have the right, in addition to any other rights and remedies of Landlord,
to terminate this Lease by notice to Tenant given within thirty (30) days after
Landlord learns of such material change.
ARTICLE XVII
SIGNS AND GRAPHICS
Landlord shall designate the location on the Premises for one (1) or more
exterior identification signs for Tenant on the Project for one (1) monument
identification sign for Tenant. Prior to installation and thereafter throughout
the Term, Tenant shall, at its sole cost and expense, secure all necessary
governmental permits and approvals relating to the installation and continued
maintenance of such permitted signs, and Landlord makes no representation or
warranty to Tenant as to the availability of such permits and approvals. Tenant
shall have no right to maintain identification signs in any other location in,
on or about the Premises and shall not display or erect any other signs,
displays or other advertising materials that are visible from the exterior of
the Building. The size, design, color and other physical aspects of permitted
signs shall be subject to Landlord's written approval prior to installation,
which approval may be withheld in Landlord's discretion, any Restrictions and
any applicable municipal or other governmental permits and approvals. All such
signs and graphics shall conform to the Sign criteria established by Landlord.
The cost of all signs and graphics, including the installation, maintenance and
removal thereof, shall be at Tenant's sole cost and expense. If Tenant fails to
maintain its signs, or if Tenant fails to remove same upon termination of this
Lease and repair any damage caused by such removal (including, but not limited
to, repainting the affected area, if required by Landlord), Landlord may do so
at Tenant's expense. All sums reasonably disbursed, deposited or incurred by
Landlord in connection with such removal, including, but not limited to, all
costs, expenses and actual attorneys' fees, shall be due and payable by Tenant
to Landlord on demand by Landlord, together with interest thereon at the
Applicable Rate from the date of such demand until paid by Tenant.
28.
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ARTICLE XVIII
QUIET ENJOYMENT
Landlord covenants that Tenant, upon performing the terms, conditions and
convenants of this Lease, shall have quiet and peaceful possession of the
Premises as against any person claiming the same by, through or under Landlord.
ARTICLE XIX
SURRENDER; HOLDING OVER
19.1. Surrender of the Premises. Upon the expiration or earlier
termination of this Lease, and subject to Section 4.2 of the Addendum relating
to the Dock Wall, tenant shall surrender the Premises to Landlord in its
condition existing as of the Commencement Date, normal wear and tear and acts of
God excepted, with all Interior walls in good repair, all carpets shampooed and
cleaned, the HVAC equipment, plumbing, electrical and other mechanical
installations to the condition existing as of the Commencement Date (or, with
respect to any equipment or installations repaired by Landlord pursuant to
Section 3 of the Addendum, to the condition existing immediately following such
repair) and all floors cleaned and waxed, all to the reasonable satisfaction of
Landlord. Tenant shall remove from the Premises all of Tenant's Alterations
which Landlord requires Tenant to remove pursuant to Section 8.1 and all
Tenant's Personal Property, and shall repair any damage and perform any
restoration work caused by such removal. If Tenant fails to remove such
Alterations and Tenant's Personal Property which Tenant is authorized and
obligated to remove pursuant to the above, and such failure continues after the
termination of this Lease, Landlord may retain such property and all rights of
Tenant with respect to it shall cease, or Landlord may place all or any portion
of such property in public storage for Tenant's account. Tenant shall pay to
Landlord, upon demand, the costs of removal of any such Alterations and Tenant's
Personal Property and storage and transportation costs of same, and the cost of
repairing and restoring the Premises, together with attorneys' fees and interest
on said amounts at the Applicable Rate from the date of expenditure by Landlord.
If the Premises are not so surrendered at the termination of this Lease, Tenant
hereby agrees to Indemnify Landlord and Landlord's Agents against all loss or
liability resulting from any delay by Tenant in so surrendering the Premises,
including but not limited to, any claims made by any succeeding tenant, losses
to Landlord due to lost opportunities to lease to succeeding tenants, and actual
attorneys' fees and costs.
19.2. Holding Over. If Tenant remains in possession of all or any part
of the Premises after the expiration of the Term with the prior written consent
of Landlord, such possession shall constitute a month-to-month tenancy only and
shall not constitute a renewal or extension for any further term. If Tenant
remains in possession of all or any part of the Premises after the expiration of
the Term without the prior written consent of Landlord, such possession shall
constitute a tenancy at sufferance. In either of such events, Monthly Rent
shall be increased to an amount equal to one hundred fifty percent (150%) of the
Monthly Rent payable during the last month of the Term, and any other sums due
hereunder shall be payable in the amounts and at the times specified in this
Lease. Any such tenancy shall be subject to every other term, condition, and
covenant contained in this Lease.
ARTICLE XX
CONSTRUCTION OF TENANT IMPROVEMENTS
The obligations of Landlord and Tenant, if any, with respect to the
Tenant Improvements, are set forth in the Work Letter attached on EXHIBIT C. It
is acknowledged and agreed that all Tenant Improvements under this lease are and
shall be the property of Landlord from and after their installation.
ARTICLE XXI
MISCELLANEOUS AND INTERPRETIVE PROVISIONS
21.1 Broker. Landlord and Tenant each warrant and represent to the
other that neither has had any dealing with any real estate broker, agent or
finder in connection with the negotiation of this Lease or the
29.
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introduction of the parties to this transaction, except for the Broker (whose
commission shall be paid by Landlord), and that it knows of no other real estate
broker, agent or finder who is or might be entitled to a commission or fee in
connection with this Lease. In the event of any additional claims for brokers'
or finders' fees with respect to this Lease, Tenant shall indemnify, hold
harmless, protect and defend Landlord from and against such claims if they shall
be based upon any statement or representation or agreement made by Tenant, and
Landlord shall indemnify, hold harmless, protect and defend Tenant from and
against such claims if they shall be based upon any statement, representation or
agreement made by Landlord.
21.2 Examination of Lease. Submission of this Lease for examination or
signature by Tenant does not create a reservation of or option to lease. This
Lease shall become effective and binding only upon full execution of this Lease
by both Landlord and Tenant.
21.3 No Recording. Tenant shall not record this Lease or any
memorandum of this Lease without Landlord's prior written consent, but if
Landlord so requests, Tenant agrees to execute, have acknowledged and deliver a
memorandum of this Lease in recordable form which Landlord thereafter may file
for record.
21.4 Quitclaim. Upon any termination of this Lease, Tenant shall, at
Landlord's request, execute, have acknowledged and deliver to Landlord an
instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in and to the Premises by reason of this Lease or
otherwise.
21.5 Modifications for Mortgagees. In connection with obtaining
financing for the Premises or any portion thereof, Landlord's Mortgagees shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant shall not unreasonably withhold, delay or defer its consent thereto,
provided such modifications do not adversely affect Tenant's rights hereunder.
Tenant's failure to so consent shall constitute an Event of Default under this
Lease.
21.6 Notice. Any Notice required or desired to be given under this
Lease shall be in writing and shall be addressed to the address of the party to
be served. The addresses of Landlord and Tenant are as set forth in Items 1 and
3, respectively, of the Basic Lease Provisions, except that (a) prior to the
Commencement Date, the address for Notices to Tenant shall be as set forth
opposite Tenant's signature on this Lease, and (b) from and after the
Commencement Date, notwithstanding the addresses for Tenant set forth in Item 3
of the Basic Lease Provisions, all Notices regarding the operation and
maintenance of the Project shall be delivered to Tenant at the Premises. Each
such notice shall be deemed effective and given (i) upon receipt, if personally
delivered (which shall include delivery by courier or overnight delivery
service), (ii) upon being telephonically confirmed as transmitted, if sent by
telegram, telex or telecopy, (iii) two (2) business days after deposit in the
United States mail in Orange County or in the county in which the Premises are
located, certified and postage prepaid, properly addressed to the party to be
served, or (iv) upon receipt if sent in any other way. Any party hereto may
from time to time, by Notice to the other in accordance with this Section 21.6,
designate a different address than that set forth above for the purposes of
Notice.
21.7. Caption. The captions and headings used in this Lease are for the
purposes of convenience only and shall not be construed to limit or extend the
meaning of any part of this Lease.
21.8. Executed Copy. Any fully executed copy of this Lease shall be
deemed an original for all purposes.
21.9. Time. Time is of the essence for the performance of each term,
condition and convenant of this Lease.
21.10 Severability. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality, or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had not been contained herein.
30.
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21.11. Survival. All covenants and indemnities set forth herein which
contemplate the payment of sums, or the performance by Tenant after the Term or
following and Event of Default, including specifically, but not limited to, the
covenants and indemnities set forth in Section 5.3., Article VI, Article VII,
Section 8.1, Section 9.2, Section 11.1, Section 11.10, Article XV, and
Article XIX, and all representations and warranties of Tenant, shall survive the
expiration or sooner termination of this Lease.
21.12. Choice of Law. This Lease shall be construed and enforced in
accordance with the laws of the State of California. The language in all parts
of this Lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.
21.13. Gender: Singular or Plural. When the context of this Lease
requires, the neutral gender includes the masculine, the feminine, a partnership
or corporation or joint venture, the singular includes the plural and the plural
includes the singular.
21.14. Non-Agency. It is not the intention of Landlord or Tenant to
create hereby a relationship of master-servant or principal-agent, and under no
circumstance shall tenant herein be considered the agent of Landlord, it being
the sole purpose and intent of the parties hereto to create a relationship of
Landlord and tenant.
21.15. Successors. The intent, covenants, conditions and agreements
contained in this Lease shall, subject to the provisions as to assignment,
subletting, and bankruptcy contained herein and any other provisions restricting
successors or assign, apply to and bind the heirs, successors, legal
representatives and assigns of the parties hereto.
21.16. Waiver: Remedies, Cumulative. The waiver by either party of any
term, covenant, agreement or condition herein contained shall not be deemed to
be a waiver of any subsequent breach of the same or any other term, covenant,
agreement or condition herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of this Lease be construed
to waive or to lessen the right of either party to insist upon the performance
by the other party in strict accordance with all of the provisions of this
Lease. The subsequent acceptance of Rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any provisions,
covenant, agreement or condition of this Lease, other than the failure of Tenant
to pay the particular Rent payment so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such Rent
payment. Landlord's acceptance of any check, letter or payment shall in no
event be deemed an accord and satisfaction, and Landlord shall accept the check,
letter or payment without prejudice to Landlord's right to recover the balance
of the Rent or pursue any other remedy available to it. The rights and remedies
of either party under this Lease shall be cumulative and in addition to any and
all other rights and remedies which either party have or may have.
21.17. Unavoidable Delay. Except for the monetary obligations of Tenant
under this Lease, neither party shall be chargeable with, liable for, or
responsible to the other for anything or in any amount for any Unavoidable Delay
and any Unavoidable Delay shall not be deemed a breach of or default in the
performance of this Lease, it being specifically agreed that any time limit
provision contained in this Lease (other than the scheduled expiration of the
Term) shall be extended for the same period of time lost by Unavoidable Delay.
21.18. Entire Agreement. This Lease is the entire agreement between the
parties, and supersedes any prior agreements, representations, negotiations or
correspondence between the parties except as expressed herein. Except as
otherwise provided herein, no subsequent change or obligation to this Lease
shall be binding unless in writing and signed by the parties herein.
21.19. Authority. If Tenant is a corporation or a partnership, each
individual executing this Lease on behalf of the corporation or partnership, as
the case may be, represent and warrants that he is duly authorized to execute
and deliver this Lease on behalf of said entity in accordance with its corporate
bylaws, statement of partnership or certificate of limited partnership, as the
case may be, and that this Lease is by Landlord, within thirty (30) days after
execution of this Lease and prior to entering into possession of the Premises,
deliver to Landlord a certified copy of a resolution of the Board of Directors
of the corporation or certificate of the Secretary of the corporation,
authorizing, ratifying or confirming the execution of this Lease. If Tenant is
a partnership, Tenant shall, if requested by Landlord, within thirty (30) days
after the execution of this Lease and prior to entering into
31.
<PAGE>
possession of the Premises, deliver to Landlord's certified copy of its
partnership agreement authorizing such execution.
21.20. Guaranty. As a condition to the execution of this Lease by
Landlord, the obligations, covenants and performance of the Tenant as herein
provided shall be guaranteed in writing by the Guarantor listed in Item 14 of
the Basic Lease Provisions, if any, on a form of guarantee provided by Landlord.
21.21. Exhibits; References. All exhibits, amendments, riders and
addenda attached to this Lease are hereby incorporated into and made a part off
this Lease. In the event of variation or discrepancy, the duplicate original
hereof (including exhibits, amendments, riders and addenda, if any, specified
above) held by Landlord shall control. All references in this Lease to
Articles, Sections, Exhibits, Riders and clauses are made, respectively, to
Articles, Sections, Exhibits, Riders and clauses of this Lease, unless otherwise
specified.
21.22. Basic Lease Provisions. The Basic Lease Provisions at the
beginning of this Lease are intended to provide general information only. In
the event of any inconsistency between the basic Lease Provisions and the
specific provisions of this Lease, the specific provisions of this Lease shall
prevail.
21.23. No Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall
not work a merger, and shall, at the option of Landlord, teerminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all such subtenancies.
21.24. Joint and Several Obligations. If more than one person or entity
is Tenant, the obligations imposed on each such person or entity shall be joint
and several.
21.25. No Light or Air Easement. Any diminution or shutting off of light
or air by any structure which may be erected on lands adjacent to the Building
shall in no way affect this Lease, abate Rent or otherwise impose any liability
on Landlord. This Lease does not confer any right with regard to the subsurface
below the ground level of the Building.
21.26. Security Measures. Tenant hereby acknowledges that Landlord shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Project. Tenant assumes all
responsibility for the protection of Tenant, Tenant's Agents and the property of
Tenant and of Tenant's Agents from acts of third parties. Nothing herein
contained shall prevent Landlord, at Landlord's sole option, from providing
security protection for the Project or any part thereof, in which event the cost
thereof shall be included within the definition of Maintenance Expenses and paid
by Tenant in the manner set forth in Section 7.1.
32.
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THIS LEASE is effective as of the date the last signatory necessary to
execute this Lease shall have executed this Lease.
"LANDLORD"
O'DONNELL PALO ALTO ASSOCIATES,
a California general partnership
By: /s/ Donald S. Grant
------------------------------
DONALD S. GRANT
Its: Authorized Signature
ADDRESS FOR NOTICES PRIOR TO "TENANT"
COMMENCEMENT DATE:
OMNICELL TECNHOLOGIES, INC.,
a California corporation
1101 E. Meadow Drive
--------------------
Palo Alto, CA 94303 By: /s/ Earl E. Fry
------------------- ------------------------------
Attn: Earl Fry
Name: Earl E. Fry
------------------------------
Title: VP & CFO
33.
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EXHIBIT A
DESCRIPTION OF PREMISES
This Exhibit is attached to and made a part of that certain Standard Form
Lease dated April 3, 1996, by and between O'DONNELL PALO ALTO ASSOCIATES, a
California general partnership ("Landlord"), and OMNICELL TECNHOLOGIES, INC., a
California corporation ("Tenant"), for the Premises known as 1057 E. Meadow
Circle, Palo Alto, California.
[FLOOR PLAN]
1.
<PAGE>
EXHIBIT B
PROJECT SITE PLAN
This Exhibit is attached to and made a part of that certain Standard Form Lease
dated April 3, 1996, by andBetween O'DONNELL PALO ALTO ASSOCIATES, a California
general partnership ("Landlord"), and OMNICELL TECHNOLOGIES, INC., a California
corporation ("Tenant"), for the Premises known as 1057 E. Meadow Circle, Palo
Alto, California.
EAST MEADOW CIRCLE BUILDING
[SITE PLAN]
1.
<PAGE>
EXHIBIT C
WORK LETTER
This Exhibit is attached to and made a part of that certain Standard Form
Lease dated April 3, 1996, by and between O'DONNELL PALO ALTO ASSOCIATES, a
California general partnership, as "Landlord", OMNICELL TECHNOLOGIES, INC., a
California corporation, as "Tenant", for the Premises known as 1057 E. Meadow
Circle, Palo Alto, California.
1. APPLICATION OF EXHIBIT
Capitalized terms used and not otherwise defined heroin shall have the
same definitions as set forth in the Lease. The provisions of this Work Latter
shall apply to the planning and completion of leasehold improvements requested
by Tenant (the "Tenant Improvements") for the fitting out of the Promises, as
more fully set forth herein.
2. LANDLORD AND TENANT PRE-CONSTRUCT ION OBLIGATIONS
(a) PRELIMINARY PLANS. Within seven (7) business days following full
execution of this Lease by both Landlord and Tenant, Landlord's Architect shall
prepare preliminary space plans for the Tenant Improvements (the "Preliminary
Plans") which shall include, without limitation, sketches and/or drawings
showing the locations of door, partitioning, electrical fixtures, outlets and
switches, plumbing fixtures, floor loads and other requirements, and a list of
all specialized installations and improvements and upgrade specifications
determined by Tenant as required for its use of the Premises. Tenant agrees to
and shall promptly and fully cooperate with Landlord's Architect and shall
supply all information Landlord's Architect dooms necessary for the preparation
of the Preliminary Plans. Tenant acknowledges that the Preliminary Plans shall
be prepared by Landlord's Architect after consultation and cooperation between
Tenant and Landlord's Architect regarding the proposed Tenant Improvements and
Tenant's requirements. Landlord and Landlord's Architect shall be entitled, in
all respects, to rely upon all information supplied by Tenant regarding the
Tenant Improvements. The costs associated with preparation of the Preliminary
Plans shall be borne by Tenant and paid as set forth in Sections 5 and 6 of the
Work Letter.
(b) WORKING DRAWINGS. Within fifteen (15) business days following
full execution of this Lease by both Landlord and Tenant Landlord's Architect
shall prepare working drawings (the "Working Drawings") for the Tenant
improvements based upon the approved Preliminary Plans. The Working Drawings
shall include architectural, mechanical and electrical construction drawings for
the Tenant Improvements based on the Preliminary Plans. Notwithstanding the
Preliminary Plans, in all cases the Working Drawings (i) shall be subject to
Landlord's final approval, which approval shall not be unreasonably withhold,
(ii) shall not be in conflict with building codes for the City or County or with
insurance requirements for a fire resistive class A building, and (iii) shall be
in a form satisfactory to appropriate governmental authorities responsible for
issuing permits and licenses required for construction. The costs associated
with preparation of the Working Drawings shall be borne by Tenant and paid as
set forth in Sections 5 and 6 of this Work Letter.
(c) APPROVAL OF WORKING DRAWINGS. Landlord or Landlord's Architect
shall submit the working Drawings to Tenant for Tenant's review, and Tenant
shall notify Landlord and Landlord's Architect within five (5) days after
delivery thereof of any requested revisions. Within three (3) business days
after receipt of Tenant's notice, Landlord's Architect shall make all approved
revisions to the Working Drawings and submit two (2) copies thereof to Tenant
for its final review and approval, which-approval shall be given within three
(3) days thereafter. Concurrently with the above review and approval process,
Landlord may submit all plans and specifications to City and other applicable
governmental agencies in an Attempt to expedite City approval and issuance of
all necessary permits and licenses to construct the Tenant Improvements as shown
on the Working Drawings. Any changes
1.
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which are required by City or other governmental agencies shall be immediately
submitted to Landlord for Landlord's review and reasonable approval, and
Landlord shall promptly notify Tenant of such changes.
(d) SCHEDULE OF CRITICAL DATES. Set forth below is a schedule of
certain critical dates relating to Landlord's and Tenant's respective
obligations for the design and construction of the Tenant Improvements. Such
dates and the respective obligations of Landlord and Tenant are more fully
described elsewhere in this Work Letter. The purpose of the following schedule
in to provide a reference for Landlord and Tenant and to make certain the Final
Approval Date occurs as set forth herein. Following the Final Approval Date,
Tenant shall be deemed to have released Landlord to commence construction of the
Tenant Improvements As set forth in Section 4 below.
<TABLE>
<CAPTION>
Reference Date Due Responsible Party
---------- --------- -----------------
<S> <C> <C> <C>
A. "Preliminary Plan Completion" Seven (7) business days after full Tenant and
execution of the Lease Landlord
B. "Working Drawings Completion" Fifteen (15) business days after full Landlord
execution of the Lease
C. "Working Drawings Revision" Five (5) days after Landlord submits the Tenant
Working Drawings to Tenant
D. "Working Drawings Revision" Three (3) business days after Tenant Landlord
returns the Working Drawings to Landlord
E. "Final Approval Date" Three (3) days after Landlord submits the Tenant
revised Working Drawings to Tenant
</TABLE>
3. BUILDING PERMIT
After the Final Approval Date has occurred, Landlord shall, if Landlord
ham not already done so, submit the Working Drawings to the appropriate
governmental body or bodies for final plan checking and a building permit,
Landlord, with Tenant's cooperation, shall cause to be made any change in the
Working Drawings necessary to obtain the building permit; provided, however,
after the Final Approval Data, no changes shall be made to the Working Drawings
without the prior written approval of both Landlord and Tenant, and than only
after agreement by Tenant to pay any excess costs resulting from such changes.
4. CONSTRUCTION OF TENANT IMPROVEMENTS
After the Final Approval Date has occurred and a building permit for the
work has been issued, Landlord shall, through a guaranteed maximum cost or fixed
price (at Landlord's sole option) construction contract ("Construction
Contract") with a reputable, licensed contractor selected by Landlord
("Contractor"), cause the construction of the Tenant Improvements to be carried
out in substantial conformance with the Working Drawings in a good and
workmanlike manner using first-class materials. The costs associated with the
construction of the Tenant Improvements shall be paid as set forth in Sections 5
and 6 of this Work Letter. Landlord shall see that the construction complies
with all applicable building, fire, health, and sanitary codes and regulations,
the satisfaction of which shall be evidenced by a certificate of occupancy for
the Premises.
5. TENANT IMPROVEMENT ALLOWANCE
Landlord shall provide Tenant with a Tenant Improvement Allowance in the
amount of One Hundred Fifteen Thousand One Hundred Dollars ($115,000) towards
the cost of the design, purchase and construction of the Tenant Improvements,
including without limitation design, engineering and consulting fees
(collectively, the "Tenant Improvement Costs"). The Tenant Improvement
Allowance shall be used for payment of the following Tenant Improvements Costs:
2.
<PAGE>
(i) Preparation by Landlord's Architect of the Preliminary
Plans and the Working Drawings as provided in Section 2 of this Work Letter,
including without limitation all fees charged by City (including without
limitation fees for building permits and plan checks) in connection with the
Tenant Improvements work in the Promises;
(ii) Construction work for completion of the Tenant Improvements
as reflected in the Construction Contract; and
(iii) All contractors' charges, general conditions, performance
bond premiums and construction fees.
6. COSTS IN EXCESS OF TRUANT IMPROVEMENT ALLOWANCE AT TENANT'S EXPENSE
(a) COST APPROVAL. Tenant shall pay the excess of the Tenant
Improvement Costs over the amount of the Tenant Improvement Allowance available
to defray such costs. Concurrent with the plan checking referred to in Section
3 of this Work Letter, Landlord shall prepare and submit to Tenant a written
estimate of the amount of the remaining Tenant Improvement Costs and the cost of
the Tenant Improvement Allowance still available to defray such costs (after
preparation of the Preliminary Plans and Working Drawings). Tenant shall
approve or disapprove any such estimate by written notice to Landlord within
three (3) days after receipt thereof. It Tenant fails to notify Landlord of its
disapproval within such three (3) day period, Tenant shall be deemed to have
approved such estimate. If such estimate exceeds the Tenant Improvement
Allowance then still available and Tenant approves such estimate, Tenant's
notice of approval shall include payment to Landlord for the full amount of such
excess. If Tenant disapproves such estimate within the three (3) day period,
Tenant shall be required to direct Landlord and Landlord's Architect to amend
the Working Drawings in a manner satisfactory to Landlord so as to reduce the
estimated costs to an amount acceptable to Tenant, and any excess estimated
costs remaining after such amendment shall be paid by Tenant in the manner
described in the preceding sentence. Tenant shall additionally pay any costs
resulting from such amendment and Tenant shall be liable for the delay in
completing the Tenant improvements and the increased costs, if any, resulting
from such delay. If Tenant is unwilling or unable to amend the Working Drawings
in a manner acceptable to Landlord, then Tenant shall be, deemed to have
approved of the estimate for the Working Drawings as prepared, and shall pay in
full the amount of any excess estimated costs together with any costs arising
from delay as a result of Tenant's actions hereunder, in the manner hereinabove
provided.
(b) FINAL COSTS. Within sixty (60) days after completion by Landlord
of the Tenant Improvements, Landlord shall determine the actual final Tenant
Improvements Costs and shall submit a written statement of such amount to
Tenant. If any estimate previously paid by Tenant exceeds the amount due
hereunder from Tenant for such work, such excess shall be refunded to Tenant.
If any amount is still due from Tenant for such work, then Tenant shall pay such
amount in full within ten (10) days of receipt of Landlord's statement.
7. CHANGE ORDERS
Tenant may from time to time request and obtain change orders during the
course of construction provided that; (i) each such request shall be
reasonable, shall be in writing and signed by or on behalf of Tenant, and shall
not result in any structural change in the Building, as reasonably determined by
Landlord, (ii) all additional charges and costs, Including without limitation
architectural and engineering costs, construction and material costs, and
processing costs of any governmental entity shall be the sale and exclusive
obligation of Tenant, and (iii) any resulting delay in the completion of the
Tenant improvements shall be doomed a Tenant Delay and in no event shall extend
the Commencement Date of the Lease. Upon Tenant's request for a change order,
Landlord shall as soon as reasonably possible submit to Tenant a written
estimate of the increased or decreased cost and anticipated delay, if any,
attributable to such requested change. Within three (3) days of the date such
estimated cost adjustment and delay are delivered to Tenant, Tenant shall advise
Landlord whether it wishes to proceed with the change order, and if Tenant
elects to proceed with the change order, Tenant shall remit, concurrently with
Tenant's notice to proceed, the amount of the increased cost, if any,
attributable to such change order. Unless Tenant includes in its initial change
order request that the work in process at the time such request in made be
halted pending approval and execution of a change order, Landlord shall not be
obligated to stop construction of the Tenant Improvements, whether or not the
change order relates to the work then in process or about to be started.
3.
<PAGE>
8. TENANT DELAYS
In no event shall the Commencement Date of the Lease be extended or
delayed due or attributable to delays due to the fault of Tenant ("Tenant
Delays"). Tenant Delays shall include, but are not limited to, delays caused by
or resulting from any one or more of the following
(a) Tenant's failure to timely review and reasonably approve the
Working Drawings or to promptly cooperate with Landlord's Architect and furnish
information to Landlord for the preparation of the Preliminary Plans and Working
Drawings
(b) Tenant's request for or use of special materials, finishes or
installations which are not readily available, provided that Landlord shall
notify Tenant in writing that the particular material, finish, or installation
is not readily available promptly upon Landlord's discovery of same;
(c) Change orders requested by Tenant;
(d) Interference by Tenant or by Tenant's Agents with Landlord's
construction activities;
(e) Tenant's failure to approve any other item or perform any other
obligation in accordance with and by the dates specified herein or in the
Construction Contract;
(f) Tenant's requested changes in the Preliminary Plans, Working
Drawings or any other plans and specifications after the approval thereof by
Tenant or submission thereof by Tenant to Landlord;
(g) Tenant's failure to approve written estimates of costs in
accordance with this Work Letter; or
(h) Tenant's obtaining or failure to obtain any necessary governmental
approvals or permits for Tenant's intended use of the Premises.
If the Commencement Date at the Lease is delayed by any Tenant Delays,
whether or not within the control of Tenant, then the Commencement Data of the
Lease and the payment of Rent shall be accelerated by the number of days of such
delay. Landlord shall give Tenant written notice within a reasonable time of
any circumstance that Landlord believes constitutes a Tenant Delay.
9. TRADE FIXTURES AND EQUIPMENT
Tenant acknowledges and agrees that Tenant is solely responsible for
obtaining, delivering and installing in the Promises all necessary and desired
furniture, trade fixtures, equipment and other similar items, and that Landlord
shall have no responsibility whatsoever with regard thereto. Tenant further
acknowledges and agrees that neither the Commencement Date of the Lease nor the
payment of Rent shall be delayed for any period of time whatsoever due to any
delay in the furnishing of the Premises with such items.
10. FAILURE OF TENANT TO COMPLY
Any failure of Tenant to comply with any of the provisions contained in
this Work Letter within the times for compliance herein set forth shall be
deemed a default tinder the Lease. In addition to the remedies provided to
Landlord in this Work Letter upon the occurrence of such a default by Tenant,
Landlord shall have all remedies available at law or equity to a Landlord
against a defaulting tenant pursuant to a written lease, including but not
limited to those met forth in the Lease.
4.
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EXHIBIT D
COMMENCEMENT DATE MEMORANDUM
DATE: August 8, 1996
RE: Standard Form Lease dated April 3, 1996, by and between O'Donnell Palo
Alto Associates as "Landlord", and OmniCell Technologies, Inc. as
"Tenant", for the Premises known an 1057 East Meadow Circle, Palo Alto,
California.
AGREEMENT
The undersigned hereby agree as follows:
1. The Tenant Improvements (as defined in the Lease) to the Promises
have been substantially completed in accordance with the terms and conditions of
the Lease, subject only to "punch list" items agreed to by Landlord and Tenant
pursuant to the terms of the Lease.
2. The Commencement Date, as defined in and determined in accordance
with the Lease, is hereby stipulated for all purposes to be August 12, 1996.
3. In accordance with the Lease, Monthly Rent (as defined In the
Lease) in the amount of Twenty-Seven Thousand Six Hundred Twenty-Four and no/100
Dollars ($27,624.00), subject to adjustment in accordance with the terms of the
Lease, commences to accrue on August 12, 1996, and is due and payable in advance
on the first day of each and every month during the Term (as defined in the
Lease). Unless and until notified by Landlord to the contrary, Tenant shall
make its Rent chocks payable to O'Donnell Palo Alto Associates, Dept. 66221, El
Monte, CA 91735-6221.
"LANDLORD"
O'DONNELL PALO ALTO ASSOCIATES,
a California general partnership
By: /s/ Donald S. Grant
-------------------------------------
Donald S. Grant
Its: Authorized Signature
------------------------------------
"TENANT"
OMNICELL TECHNOLOGIES, INC.,
a California corporation
By: /s/ Earl E. Fry
-------------------------------------
Its: VP & CFO
------------------------------------
1.
<PAGE>
EXHIBIT 10.4
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
March 25, 1994, is made by and between W.F. Batton & Co., Inc., a California
corporation and OmniCell Technologies, Inc., a California corporation
("Lessee"), (collectively the "Parties," or individually a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of 1101 East Meadow Drive, Palo Alto, CA located in
the County of Santa Clara, State of California and generally described as
(describe briefly the nature of the property) approximately 30,600 sq. ft.
1.3 Term: Five (5) years commencing on the later of (i) May 1, 1994 and
(ii) the date by which all of the following have occurred: (a) Lessor has
substantially completed the Lessee Interior Improvements in accordance with the
Work Letter attached hereto as Exhibit "A", (b) Lessor has delivered possession
of the Premises to Lessee, and (c) Lessee may lawfully occupy the Premises under
applicable law.
If the Commencement Date has not occurred for any reason whatsoever on or
before August 1, 1994, then in addition to Lessee's other rights or remedies,
(i) Lessee may terminate this Lease by written notice to Lessor, whereupon any
monies previously paid by Lessee to Lessor shall be reimbursed to Lessee,
together with interest thereon from the date of the termination until paid at
two percent (2%) plus the "prime rate" charged by Bank of America N.T. & S.A.
("Bank") or the highest rate permitted by law, whichever is less (herein the
"Interest Rate"); or (ii) at Lessee's election, the date Lessee is otherwise
obliged to commence payment of rent shall be delayed by one day for each day
that the Commencement Date is delayed beyond August 1, 1994.
1.4 Early Possession: ________________________ ("Early Possession Date").
(See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent:
BASE MONTHLY
RENT SCHEDULE: Months Base Monthly Rent NNN
1 $ 0
2-6 $19,890 $ 99,450 5
7-12 $22,950 137,700 6
13-24 $24,480 293,760 12
25-36 $28,458 341,496 12
37-48 $31,518 378,216 12
49-60 $33,354 400,248 12
(59) $27,980
(60) $27,514
1.6 Base Rent Paid Upon Execution: See Attached Addendum (insert 2) as
Base Rent for the period ___________________________.
1.7 Security Deposit: $27,450 ("Security Deposit"). (See Paragraph 5 for
further provisions.)
1.8 Permitted Use: General office, marketing, research and development,
light assembly, engineering and other legal uses (See Paragraph 6 for further
provisions.)
1.
<PAGE>
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes): Wayne Mascia Associates
represents Lessor exclusively ("Lessor's Broker"); and Cornish & Carey
Commercial represents Lessee exclusively ("Lessee's Broker"). (See Paragraph 15
for further provision.)
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by _________________________________ ("Guarantor"). (See Paragraph 37
for further provisions.)
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Inserts 1 through 36 and Exhibit "A" Work Letter all of which constitute a part
of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the premises,
including, without limitation, the roof, structural elements of the Building and
all building systems serving the Premises, including, without limitation,
electrical, plumbing, fire sprinkler system, lighting, air conditioning,
heating, and loading doors, if any, in the Premises, other than those
constructed by Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a non-
compliance with this warranty within thirty (30) days after the Commencement
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the Premises and improvements on the Premises comply
with all applicable covenants or restrictions of record and applicable building
codes, regulations and ordinances in effect on the Commencement Date. Said
warranty does not apply to the specific use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor's expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.
2.5 Operating Expenses. Prior to the execution of this Lease, Lessor shall
have provided Lessee with a breakdown of current operating expenses relating to
the Premises for which Lessee shall be responsible in addition to the Monthly
Base Rent. Lessee shall be responsible for paying any actual increases in said
operating expenses which occur during the initial term, and the option term if
the option to extend is exercised.
2.
<PAGE>
2.6 Parking. Lessee shall have the right to the use of one hundred twenty
(120) parking spaces in the parking lot adjacent to the building.
3. Term.
3.1 Term. The Commencement Date, expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease, however,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
3.3 Option.
(a) Lessee shall have an option to extend the term of the Lease for an
additional five (5) year term commencing on the day following the Expiration
Date, subject to all the terms and provisions of this Lease, except that (1)
there shall be no additional options to extend, and (2) the Base Monthly Rent
for the option period shall be equal to ninety-five percent (95%) of the fair
market rent of the Premises as of the commencement date of the option extension
period, but the Base Monthly Rent shall not be less than $27,515 per month, (the
"Option Base Monthly Rent"). The Option Base Monthly Rent for the Premises shall
be determined by comparison with base monthly rents being obtained under new
leases of premises in similar office buildings located in the Palo Alto area.
The Option Base Monthly Rent for the option extension period (and rental
adjustments during the option term, if any) shall be determined by agreement
between the Lessor and Lessee, if possible, and by the process of appraisal if
the parties cannot reach agreement.
(b) At lease six (6) months, but not more than twelve (12) months, prior
to the expiration of the initial term, Lessee shall deliver written notice to
Lessor of Lessee's exercise of its option to extend the Lease Term. If Lessee
fails to give such written notice of exercise within said period, said option
shall automatically lapse, time being of the essence with respect to the
exercise of the option. If Lessee gives such notice, the parties shall then
attempt to in good faith to agree upon the Option Base Monthly Rent within
thirty (30) days. If Lessor and Lessee reach such agreement, Lessor and Lessee
shall promptly execute an amendment to this Lease stating the amount of Option
Base Monthly Rent for the Premises during the option extension period (including
rental adjustments, if any).
(c) If after the expiration of said thirty (30) day period the parties
have not reached agreement as to the Option Base Monthly Rent for the Premises,
then the Option Base Monthly Rent shall be determined by appraisal in accordance
with the then customary practice in the Santa Clara County industrial/commercial
real estate industry for determining rent for option periods by appraisal.
(d) Notwithstanding anything to the contrary contained in this Paragraph,
if the Option Base Monthly Rent is determined by appraisal and if Lessee does
not, in its sole discretion, approve the rental amount established by such
appraisal, Lessee may rescind its exercise of the option by giving Lessor
written notice of such election to rescind within ten (10) days after receipt of
the results of appraisal. If Lessee rescinds its exercise of the option, then
(I) the Lease shall terminate on the thirtieth (30th) day after Lessee's notice
of rescission or on the date the Lease would have otherwise terminated absent
Lessee's exercise of the option, whichever date is later; and (ii) Lessee shall
pay all costs and expenses of the appraisal.
4. Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time as herein provided to be
received by Lessor in lawful money of the United States, without offset or
deduction, on or before the day on which it is due under the terms of this
Lease. Base Rent and all other rent and charges for any period during the term
hereof which is for less than one (1) full calendar month shall be prorated
based upon the actual number of days of the calendar month involved. Payment of
Base Rent and other
3.
<PAGE>
charges shall be made to Lessor at its address stated herein or to such other
persons or at such other addresses as Lessor may from time to time designate in
writing to Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor Sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep all or
any part of the Security Deposit separate from its general accounts. Lessor
shall, at the expiration or earlier termination of the term hereof and after
Lessee has vacated the Premises, return to Lessee (or, at Lessor's option, to
the last assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any moneys to be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the purposes
set forth in Paragraph 1.8, or any other use which is comparable thereto, and
for no other purpose unless approved in writing by Lessor, which approval shall
not be unreasonably withheld. Lessee shall not use or permit the use of the
Premises in a manner that creates waste or a nuisance, or that disturbs owners
and/or occupants of, or causes damage to, neighboring premises or properties.
Lessor hereby agrees to not unreasonably withhold or delay its consent to any
written request by Lessee, Lessees assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not impair the structural integrity of the
improvements on the Premises, the mechanical or electrical systems therein, is
not significantly more burdensome to the Premises and the improvements thereon,
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to
withhold such consent, Lessor shall within five (5) business days give a written
notification of same, which notice shall include an explanation of Lessor's
reasonable objections to the change in use.
6.2 Hazardous Substances.
(a) Definition; covenant by Lessee. The term "Hazardous Substance" as used
in this Lease shall mean any product, substance, chemical, material, or waste
whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either (i) regulated or monitored by any governmental authority, or (ii) a basis
for liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substance shall include, but
not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products,
by-products or fractions thereof. Lessee shall not cause any contamination or
damage to the Premises or the neighboring properties or cause Lessor to incur
any liability, loss, or damage as a result of the generation, possession,
storage, use, transportation, or disposal by Lessee of any Hazardous Substances
in the conduct of Lessee's business on the Premises. Notwithstanding the
foregoing, Lessee may, without Lessor's prior consent, but in compliance with
all Applicable Law, use any ordinary and customary materials reasonably required
to be used by Lessee in the normal course of Lessee's business permitted on the
Premises, so long as such use does not expose the Premises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. Prior to the occupancy of the Premises by Lessee, Lessee
shall deliver to Lessor a list of the Hazardous Substances which Lessee
considers to be ordinary and customary materials reasonably required to be used
by Lessee in the normal course of Lessee's permitted use of the Premises. If
Lessor concurs therewith, Lessor shall so confirm in writing to Lessee, and such
confirmation shall constitute Lessor's consent to the existence, use,
manufacture, storage, and transportation of such Hazardous Substances in, on,
and about the Premises during the term of this Lease.
4.
<PAGE>
(b) Duty to Inform Lessor. Upon the commencement of the Lease term and on
each anniversary date thereafter, Lessee shall provide to Lessor a list of the
primary Hazardous Substances which lessee uses or stores on the Premises, along
with, as to each such Hazardous Substance, its purpose and the approximate
volume brought onto the Premises since the last report to Lessor under this
Paragraph 6.2(b).
(c) Indemnification.
(i) Lessee shall indemnify, protect, defend and hold Lessor, and
Lessor's agents, employees, successors and assigns, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, costs, claims,
liens, expenses, penalties, permits and attorneys' and consultants' fees if
incurred as a result of the release, discharge or emission of any Hazardous
Substance or storage tank brought on the Premises during the Lease term by or
for Lessee or under Lessee's control. Lessee's obligations under this Paragraph
6.2 shall include, but not be limited to, the effects of any contamination or
injury to person, property, or the environment created by Lessee, and the cost
of investigation (including consultants' and attorneys' fee), testing, removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation, or release agreement entered into by
Lessor and Lessee shall release Lessee from Lessee's obligations under this
Lease with respect to Hazardous Substances or storage tanks, unless specifically
so agreed by Lessor in writing at the time of such agreement.
(ii) Lessor represents and warrants to Lessee that to the best of
Lessor's knowledge there are no Hazardous Substances located in, on, under, or
about the Premises as of the Commencement Date of the term of this Lease. Lessee
shall have no responsibility to Lessor or to any other person with respect to
the existence of any Hazardous Substances or storage tank on the Premises that
is not brought onto the Premises or caused by any of Lessee's employees, agents,
contractors, or other persons under Lessee's control or acting for or on behalf
of Lessee.
(iii) Lessor shall indemnify, defend, protect and hold Lessee, its
employees' agents, shareholders, licensees, invitees, officers and directors,
harmless from and against any claims, actions, losses, costs, damages,
liabilities or expenses (including, without limitation, reasonable attorneys',
experts' and consultants fees, investigation and laboratory fees), arising out
of or in connection with any Hazardous Substance (including, without
limitations, asbestos) which Lessee establishes was present on the Commencement
Date of the term of this Lease on, under, in or about the Premises, soil, air,
groundwater or surface water thereof and was not caused by the acts or omissions
of Lessee or its agents, contractors, or employees.
(d) Lessee's Compliance with Law. Except as otherwise provided in the
Lease, Lessee, shall, at Lessee's sole costs and expense, fully diligently and
in a timely manner, comply with all "Applicable Law," which term is used in this
Lease shall include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, relating to Lessee's
particular use of the Premises, including, but not limited to, matters
pertaining to (i) industrial hygiene, (ii) environmental conditions on, in,
under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any Hazardous Substance or
storage tank, now in effect or which may hereafter come into effect, and whether
or not reflecting a change in policy from any previously existing policy. Lessee
shall, within ten (10) business days after receipt of Lessor's written request,
provide Lessor with copies of all documents and information, including, but not
limited to permits, registrations, manifests, applications, reports and
certifications, evidencing compliance with any Applicable Law specified by
Lessor in writing (with copies or any documents involved) or any threatened or
actual claim known to Lessee, notice, citation, warning, complaint or report
within Lessee's possession and control pertaining to or involving failure by
Lessee or the Premises to comply with any Applicable Law.
(e) Inspection Compliance. Lessor shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times upon at least 24 hours notice to the Lessee and subject to Lessee's
reasonable security precautions, for the purpose of inspecting the condition of
the Premises and for verifying the compliance by Lessee with this Lease and all
Applicable Laws (as defined in subparagraph (d) above), and to employ experts
and/or consultants in connection therewith and/or to advise Lessor with respect
to Lessee's
5.
<PAGE>
activities, including, but not limited to, the installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance or storage tank
on or from the Premises. The costs and expenses of any such inspections shall be
paid by the party requesting same, unless a Breach of this Lease is found to
exist, or unless the inspection is requested or ordered by a governmental
authority as the result of any such existing violation or contamination. In any
such case, Lessee shall upon request reimburse Lessor for the reasonable costs
and expenses of such inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as
to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc).
7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation) and except to the extent required as a result of the negligence
or willful misconduct of Lessor or Lessor's employees, agents, licensees or
invitees, Lessee shall, at Lessee's sole cost and expense and at all times keep
the Premises and every part thereof in good order, condition and repair
excluding structural elements of the Premises, the roof, exterior walls and
foundation of the Premises whether or not such portion of the Premises requiring
repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee's use, any prior use, the elements or the age of such portion
of the Premises, including, without limiting the generality of the foregoing,
all equipment or facilities serving the Premises, such as plumbing, heating, air
conditioning, ventilating, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire sprinkler and/or standpipe and hose or other
automatic fire extinguishing system, including fire alarm and/or smoke detection
systems and equipment, fire hydrants, fixtures, walls (interior and exterior),
foundations, ceilings, roofs, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, or, about, or adjacent to the Premises. Lessee shall
not cause or permit any Hazardous Substance to be spilled or released in, on,
under or about the Premises (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee's expense, take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of, and for the maintenance,
security and/or monitoring of the Premises, the elements surrounding same, or
neighboring properties, that was caused or materially contributed to by Lessee,
or pertaining to or involving any Hazardous Substance and/or storage tank
brought onto the Premises by or for Lessee or under its control. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. If Lessee occupies the Premises of seven (7) years or more, Lessor may
require Lessee to repaint the exterior of the buildings on the Premises as
reasonably required, but not more frequently than once every seven (7) years.
(b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (I) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.
7.2 Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to, or which affords Lessee the right to make
repairs at the expense of Lessor or to terminate this Lease by reason of any
needed repairs. Notwithstanding anything to the
6.
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contrary in the Lease, Lessor shall perform and construct, at Lessor's sole cost
and expense, any repair, maintenance or improvement (i) necessitated by the acts
or omissions of Lessor or its agents, employees, invitees, or licensees (ii)
required as a consequence of any violation of Applicable Laws or a construction
defect in the Premises as of the Commencement Date (iii) which would be treated
as a "capital expenditure" under generally accepted accounting principles; (iv)
occasioned by fire, acts of God or other casualty or by the exercise of the
power of eminent domain, (v) for which Lessor has a right of reimbursement from
others, (vi) to the structural elements of the Premises, the structural elements
of the roof (but excluding the roof membrane), exterior walls and foundation of
the Premises, and (vii) relating to the abatement, removal, encapsulation, or
other handling of asbestos in, on or about the Premises existing on the
Commencement Date. Notwithstanding the foregoing, Lessee shall reimburse Lessor
for costs incurred with respect to (iii) above (excluding costs of asbestos
abatement) but only to the extent that (a) the same reduces the expenses
otherwise payable by Lessee under the Lease and (b) Lessee's share of such costs
during any twelve-month period of the Lease is amortized over the useful life of
the capital item in question.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
is used in this Lease to refer to all carpeting, window coverings, all lines,
power panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about he Premises
installed at Lessee's sole expense. The term "Trade Fixtures" shall mean
Lessee's furniture, fixtures, signage, machinery and equipment that can be
removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements on the Premises from that which
are provided by lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor as defined
in Paragraph 7.49a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations or non-
structural alternations to the interior of the Premises (excluding the roof)
without Lessor's consent as long as they are not visible from the outside, do
not involve puncturing, relocating or removing the roof or any existing walls,
and the cumulative cost thereof during the term of this Lease as extended does
not exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications of the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, content the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect itself, Lessor
and the Premises against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-half
times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay
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Lessor's attorney's fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or
become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Additions made to the Premises by Lessee shall be the
property of and owned by Lessee. Unless otherwise instructed per subparagraph
7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at
the expiration or earlier termination of this Lease, become the property of
Lessor and remain upon and be surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor. Upon request,
Lessor shall advise Lessee in writing whether it reserves the right to require
Lessee to remove any Alterations or Utility Installations from the Premises upon
termination of the Lease.
(c) Surrender/Restoration. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, with all
of the improvements, parts and surfaces thereof clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear,
acts of God, casualties, condemnation, Hazardous Substances (other than those
stored, used or disposed of by Lessee in or about the Premises), and Alterations
or Utility Installations which Lessor states in writing may be surrendered at
the termination of the Lease excepted. "Ordinary wear and tear" shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease. Except as otherwise agreed or specified in writing by Lessor, the
Premises, as surrendered, shall include the Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Alterations and/or Utility Installations, as well as the removal
of any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Law and/or good service practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.
8. Insurance; Indemnity.
8.1 Payment for Insurance. Regardless of whether the Lessor Lessee is the
Insuring Party, Lessee shall pay for all insurance required under this Paragraph
8 except to the extent of the cost attributable to liability insurance carried
by Lessor in excess of $3,000,000 per occurrence. Premiums for policy periods
commencing prior to or extending beyond the Lease term shall be prorated to
correspond to the Lease term. Payment shall be made by Lessee to Lessor within
ten (10) days following receipt of an invoice for any amount due.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee and Lessor (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than $3,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises"
Endorsement and contain the "Amendment of the Pollution Exclusion" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance required by this Lease or as carried by
Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of
any obligation hereunder. All insurance to be carried by Lessee shall be primary
to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
8.
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(b) Carried by Lessor. In the event Lessor is in the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds
of trust or ground leases on the Premises ("Lender(s)"), insuring loss or damage
to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by Lenders, but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the unique
nature or age of the improvements involved, such latter amount is less than full
replacement cost. If Lessor is the Insuring Party, however, Lessee Owned
Alterations and Utility Installations shall be insured by Lessee under Paragraph
8.4 rather than by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
City nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss, as defined in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in addition, obtain and
keep in force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said insurance shall provide that in the event the Lease is
terminated by reason of an insured loss, the period of indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in the event of such loss.
(c) Tenant's Improvements. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease. If Lessee is the Insuring Party, the policy
carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations
and Utility Installations.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.3, Lessee at its cost shall either by separate policy or Lessee's option, by
endorsement to a policy already carried, maintain insurance coverage on all of
Lessee's personal property, Lessee Owned Alterations and Utility Installations
and Tenant Improvements in, on, or about the Premises similar in coverage to
that carried by the Insuring Party under Paragraph 8.3. Such insurance shall be
full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender having a lien
on the
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Premises, as set forth in the most current issue of "Best's Insurance Guide."
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in this Paragraph 8. If Lessee is the Insuring
Party, Lessee shall cause to be delivered to Lessor certified copies of policies
of such insurance or certificates evidencing the existence and amounts of such
insurance with the insureds and loss payable clauses as required by this Lease.
No such policy shall be cancellable or subject to modification except after
thirty (30) days prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. If the Insuring Party shall fail to
procure and maintain the insurance required to be carried by the Insuring Party
under this Paragraph 8, the other Party may, but shall not be required to,
procure and maintain the same, but at Lessee's expense.
8.6 Waiver of Subrogation. The parties hereto release each other and their
respective agents, employees, successors, assignees and subtenants from all
liability for injury to any person or damage to any property that is caused by
or results from a risk which is actually insured against, which is required to
be insured against under this Lease, or which would normally be covered by the
standard form of "all risk-extended coverage" casualty insurance, without regard
to the negligence or willful misconduct of the entity so released. Each party
shall use its best efforts to cause each insurance policy it obtains to provide
that the insurer thereunder waives all right of recovery by way of subrogation
as required herein in connection with any injury or damage covered by the
policy. If such insurance policy cannot be obtained with such waiver of
subrogation, or if such waiver of subrogation is only available at additional
cost and the party for whose benefit the waiver is not obtained does not pay
such additional cost, then the party obtaining such insurance shall immediately
notify the other party of that fact.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties or other provisions of this Lease by Lessor or Lessor's agents,
employees, licensees or invitees, and subject to Paragraph 8.6 above, Lessee
shall indemnify, protect, defend and hold harmless, Lessor and its agents,
Lessor's master or ground lessor, partners and Lenders, from and against any and
all claims, loss of rents and/or damages, costs, liens, judgments, penalties,
permits, attorney's and consultant's fees, expenses and/or liabilities arising
out of, involving, or in dealing with use of the Premises by Lessee, negligence
or willful misconduct of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
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Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
which was caused by an event required to be covered by the insurance described
in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on , or under the
Premises.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make the insurance
proceeds available to Lessee on a reasonable basis of that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, the shortage in proceeds was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate insurance thereof, within ten (10) days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said ten (10) day
period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If in such case Lessor does not so elect, then this Lease
shall terminate sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2 notwithstanding that there
may be some insurance coverage, but the net proceeds of any such insurance shall
be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease, Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such
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damage totally at Lessee's expense and without reimbursement from Lessor. Lessee
shall provide Lessor with the required funds or satisfactory assurance thereof
within thirty (30) days following Lessee's said commitment. In such event this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible and the required funds are
available. If Lessee does not give such notice and provide the funds or
assurance thereof within the time specified above, this Lease shall terminate as
of the date specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds. Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial Damage
- - Insured), whether or not Lessor or Lessee repairs or restores the Premises,
the Base Rent, Real Property Taxes, insurance premiums, and other charges, if
any, payable by Lessee hereunder of the period during which such damage, its
repair of the restoration continues (not to exceed the period for which rental
value insurance is required under Paragraph 8.3(b)), shall be abated in
proportion to the degree to which Lessee's use of the premises is impaired.
Except for abatement of Base Rent, Real Property Taxes, insurance premiums, and
other charges, if any, as aforesaid, all other obligations of Lessee hereunder
shall be performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair of restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after receipt of such notice, this Lease shall
continue in full force and effect. "Commence" as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof
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required by Applicable Law and this Lease shall continue in full force and
effect, but subject to Lessor's rights under Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the giving of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the investigation and remediation of such Hazardous Substance
Condition totally at Lessee's expense and without reimbursement from Lessor
except to the extent of an amount equal to twelve (12) times the then monthly
Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with
the funds required of Lessee or satisfactory assurance thereof within thirty
(30) days following Lessee's said commitment. In such even this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
investigation and remediation as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the times specified above, this Lease
shall terminate as of the date specified in Lessor's notice of termination. If a
Hazardous Substance Condition occurs for which Lessee is not legally
responsible, there shall be abatement of Lessee's obligations under this Lease
to the same extent as provided in Paragraph 9.6(a) for a period of not to exceed
twelve (12) months.
9.8 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Surety Deposit
as has not been, or is not then required to be, used by Lessor under the terms
of this Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Premises during the term of this
Lease. Subject to Paragraph 10.19b), all such payment shall be made at least
ten (10) days prior to the delinquency date of the applicable installment. Upon
Lessor's request, Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes to be paid by Lessee
shall cover any period of time prior to or after the expiration or earlier
termination of the term hereof, Lessee's share of such taxes shall be equitably
prorated to cover only the period of time within the tax fiscal year this Lease
is in effect, and Lessor shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by this
Lease to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessees shall reimburse Lessor therefor upon demand.
10.2 Definition of "Real Property Taxes." As used herein, the term "Real
Property Taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income, gift transfer or estate taxes) imposed upon the Premises by any
authority having the direct or indirect power to tax, including any city, state
or federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part. Lessor's right to rent or other income therefrom,
and/or Lessor's business of leasing the Premises. The term "Real Property
Taxes" shall also include any tax, levy, assessment or charge, or any increase
therein, imposed by reason of events occurring, or changes in applicable law
taking effect, during the term of this Lease, including but not limited to a
change in the ownership of the Premises or in the improvements thereon, the
execution of this Lease, or any modification, amendment or transfer thereof, and
whether or not contemplated by the Parties.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
of all of the land and improvements included within the tax parcel
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assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any
of Lessee's said personal property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee within ten
(10) days ___________ to delinquency thereof as stated in a written statement
setting for the taxes applicable to Lessee's property or, at Lessor's option, as
provided in Paragraph 10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively,
"assignment") or sublet all or any part of Lessee's interest in this Lease or in
the Premises without Lessor's prior consent given under and subject to the terms
of Paragraph 36.
(b) Lessee may, without Lessor's prior written consent and without
any participation by Lessor in assignment and subletting proceeds, sublet the
Premises or assign the Lease to: (i) a subsidiary, affiliate, division or
corporation controlling, controlled by or under common control with Lessee; (ii)
a successor corporation related to Lessee by merger, consolidation,
nonbankruptcy reorganization, or government action; (iii) a purchaser of
substantially all of Lessee's assets located in the Premises. Any such sublease
shall expressly state therein that such sublease shall be subject to all of the
terms and provisions of this Lease. The assignee in any such assignment shall
expressly assume in writing for the benefit of Lessor all of the obligations of
the Lessee under this Lease. Executed counterparts of the foregoing sublease or
assignment documents shall be delivered to Lessor upon request. For the purposes
of this Lease, sale or transfer of Lessee's capital stock through any public
exchange, shall not be deemed an assignment, subletting, or any other transfer
of the Lease or the Premises.
(c) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) after the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent of performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent or performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment of subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any
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amendments or modifications thereto if Lessor notifies Lessee or anyone else
liable on the Lease or sublease and obtains their consent, and such action shall
not relieve such persons from liability under this Lease or sublease.
(d) In the event of any Default or Breach of Lessee's obligations
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
any one else responsible for the performance of the Lessee's obligations under
this Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposes
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $500 as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease. Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of this or any
other assignment of such sublease to Lessor, nor by reason of the collection of
the rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor unless received
by Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublease to attorn to Lessor, in which event Lessor
shall undertake the obligations of the subleasor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit ;aid by such subleases to such sublessor for any other prior Defaults
or Breaches of such subleasor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The
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sublessee shall have a right to reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to observe, comply with or perform any of the terms, covenants, conditions or
rules applicable to Lessee under this Lease. A "Breach is defined as the
occurrence of any one or more of the following Defaults, and, where a grace
period for cure after notice is specified herein, the failure by Lessee to cure
such Default prior to the expiration of the applicable grace period, shall
entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.1:
(a) The vacating of the Premises without payment of Rent or
performance of Lessee's other obligations hereunder.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent or any other monetary payment
required to be made by Lessee hereunder, whether to Lessor to a third party, as
and when due, the failure by Lessee to provide Lessor with reasonable evidence
of insurance or surety bond required under this Lease, where such failure
continues for a period of ten (10) days following written notice thereof by or
on behalf of Lessor to Lessee.
(c) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than those
described in subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(d) The occurrence of any of the following events: (i) The making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. (S)101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within sixty (60) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within sixty (60) days; provided, however, in the
event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity
of the remaining provisions.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was
materially false. (intentionally??)
13.2 Remedies. In the event of a Breach of this Lease by Lessee, Lessor
may at its option (but without obligation to do so), perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check. In the event of a Breach of
this Lease by Lessee, as defined in Paragraph 13.1, with or without further
notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds
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the amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform it obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses of reletting including necessary renovation and alteration of
the Premises, reasonable attorneys' fees, and that portion of the leasing
commission paid by Lessor applicable to the unexpired term of this Lease. The
worth at the time of award of the amount referred to in provision (iii) of the
prior sentence shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the item of award plus one
percent (1%) Efforts by Lessor to mitigate damages caused by Lessee's Default or
Breach of this Lease shall not waive Lessor's right to recover damages under
this Paragraph. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve therein the right to recover all or any part thereof in a separate suit
for such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
subparagraphs 13.1(b), (c) or (d). In such case, the applicable grace period
under subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer statute
shall run concurrently after the one such statutory notice, and the failure of
Lessee to cure the Default within the greater of the two such grace periods
shall constitute both an unlawful detainer and a Breach of this Lease entitle
Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws of judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof prior to such termination or by reason of
Lessee's occupancy of the Premises.
13.3 [deleted]
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within 10 (ten) day after receipt
by Lessee of written notice from Lessor that such amount shall be due, then
Lessee shall pay to Lessor a late charge equal to six percent (6%) of such
overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's Default or Breach with respect to such overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the even that a late charge is payable hereunder, whether
or not collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any of the provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have
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been furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than thirty (30)
days after such notice are reasonably required for its performance, then Lessor
shall not be in breach of this Lease if performance is commenced within such
thirty (30) day period and thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If the portion of the Premises taken by
condemnation materially impairs Lessee's use and occupancy of the Premises,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the building located on the Premises
and Rent shall be further equitably abated during any restoration of the
Premises. No reduction of Base Rent shall occur if the only portion of the
Premises taken is land on which there is no building. Any award for the taking
of all or any part of the Premises under the power of eminent domain or any
payment made under threat of the exercise of such power shall be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of the leasehold or for the taking of the fee, or as severance damages;
provided, however, that Lessee shall be entitled to any compensation separately
awarded to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade
Fixtures any tenant improvements constructed by Lessee solely at Lessee's
expense and Lessee's personal property. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its net
severance damages received, over and above the legal and other expenses incurred
by Lessor in the condemnation matter, repair any damage to the Premises caused
by such condemnation, except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall be responsible for the
payment of any amount in excess of such net severance damages required to
complete such repair to the extent that Lessee has been reimbursed therefor by
the condemning authority.
15. Broker's Fee.
15.1 The Brokers named in Paragraph 1.10 are the procuring causes of this
Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually designate
in writing, a fee as set forth in a separate written agreement between Lessor
and said Brokers.
15.3 Lessee and Lessor each represent and warrant to the other that it has
had no dealings with any person, firm, broker or finder (other than the Brokers,
if any named in Paragraph 1.10) in connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and that no
broker or other person, firm or entity other than said named brokers is entitled
to any commission or finder's fee in connection with said transaction. Lessee
and Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party to reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
15.4 Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.
16. Tenancy Statement
16.1 Each Party (as "Responding Party") shall within ten (10) business
days after written notice from the other Party (the "Requesting Party") execute,
certifying: (1) that none of the terms or provisions of this Lease have been
changed (or if they have been changed, stating how they have been changed); (2)
that this Lease has not been cancelled or terminated; (3) the last date of
payment of Base Rent and other charges and the time period
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covered by such payment; and (4) that, to the party's actual current knowledge,
the other party is not in default under this Lease (of if the other party is
claimed to be in default, stating why).
16.2 If Lessor desires to finance, refinance, or sell the Premises, any
part thereof, or the building of which the Premises are a part, Lessee shall
deliver to any potential lender or purchaser designated by Lessor such available
financial statements of Lessee may be reasonably required by such lender or
purchaser, including but not limited to Lessee's financial statements for the
past three (3) years if available. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
of the provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due to at the rate of 8% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease, the Addenda,
work letter, and any other exhibits contain all agreements between the Parties
with respect to any matter mentioned herein and no other prior or
contemporaneous agreement or understanding shall be effective.
23. Notices.
23.1 All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a
19.
<PAGE>
copy is also delivered via delivery or mail. If notice is received on a Sunday
or legal holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor or Lessee of the Default or Breach of any
term, covenant or condition hereof by Lessee or Lessor shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent Default or
Breach by Lessee of the same or of any other term, covenant or condition hereof.
Lessor's consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent
or similar act by Lessee, or be construed as the basis of an estoppel to enforce
the provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any preceding Default or
Breach by Lessee of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted. Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible of repayment of any fees or taxes applicable thereto.
26. No Right to Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all of the remedies
at law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. Provided that the ground lessor, Lender, or other
holder of the interest to which this Lease would be subordinated executes a
recognition and nondisturbance agreement which provides that this Lease shall
not be terminated so long as no Breach by Lessee exists under this Lease, this
Lease and any Option granted hereby shall be subject and subordinate to any
ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, "Security Device"), now or hereafter placed by Lessor upon the
real property of which the Premises are a part, to any and all advances made on
the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions thereof, Lessee agrees that the Lenders holding any
such Security Device shall have no duty, liability or obligation to perform any
of the obligations of Lessor under this Lease, but that in the event of Lessor's
default with respect to any subobligation, Lessee will give any Lender whose
name and address have been furnished Lessee in writing for such purpose notice
of Lessor's default and allow such Lender the same period available for Lessor
for the cure of said default before invoking any remedies Lessee may have by
reason thereof. If any Lender shall elect to have this Lease and/or any Option
granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3 and such recognition and non-disturbance agreement, Lessee agrees to attorn
to a Lender of any other party who acquires ownership of the Premises by reason
of a foreclosure of a Security Device, and that in the event of such
foreclosure, such new owner shall not: (i) be liable for any act or omission of
any prior lessor or with respect to events occurring
20.
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prior to acquisition of ownership, unless such Lender had previously consented
to the same, (ii) be subject to any offsets or defenses which Lessee might have
against any prior lessor, or (iii) be bound by prepayment of more than one (1)
month's rent, unless the same was paid to such Lender.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, "Prevailing Party"
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times upon one (1) business day's prior
notice subject to Lessee's reasonable security measures for the purpose of
showing the same to prospective purchasers, lenders, or lessee, an making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part, as Lessor may reasonably deem necessary.
Lessor may at any time place on or about the Premises or building any ordinary
"For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For
Lease" signs. All such activities of Lessor shall be without abatement of rent
or liability to Lessee. Lessor shall, however, at all times minimize any
interference with Lessee's operations at the Premises.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signage. Lessor grants to Lessee the right to construct a monument sign and
a building sign with Lessee's name thereon at Lessee's expense, subject to the
prior written approval by Lessor of the size, design, and location of such
signage and subject to approval of such signage by the City of Palo Alto. Lessee
shall remove all such signage at Lessee's expense promptly upon the expiration
or sooner termination of this Lease.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor' selection to have such
event constitute the termination of such interest.
21.
<PAGE>
36. Consents.
(a) Accept for Paragraph 33 hereof (Auctions) wherever in this Lease the
consent, approval, designation, determination or judgment of a Party is
required, such consent, approval, designation, determination or judgment shall
not be unreasonable or unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including but not limited to architects',
attorneys', engineers' or other consultants' fees) incurred in the consideration
of, or response to, a request by Lessee for any Lessor consent pertaining to
this Lease or the Premises, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance,
practice or storage tank, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. Lessor's consent to any act,
assignment of this Lease or subletting of the Premises by Lessee shall not
constitute an acknowledgement that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. (Deleted section)
38. Quiet Possession. At all times that no Breach of this Lease by Lessee
exists, upon payment by Lessee of the rent for the Premises and the observance
and performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises of the entire term hereof subject to all of the
provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on the property of
Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise, except that Lessee may, without Lessor's prior
written consent and without any participation by Lessor in assignment and
subletting proceeds, sublet the Premises or assign the Lease to: (i) a
subsidiary, affiliate, division or corporation controlling, controlled by or
under common control with Lessee; (ii) a successor corporation related to Lessee
by merger, consolidation, nonbankruptcy reorganization, or government action;
(iii) a purchaser of substantially all of Lessee's assets located in the
Premises. Any such sublease shall expressly state therein that such sublease
shall be subject to all of the terms and provisions of this Lease. The assignee
in any such assignment shall expressly assume in writing for the benefit of
Lessor all of the obligations of the Lessee under this Lease. Executed
counterparts of the foregoing sublease or assignment documents shall be
delivered to Lessor upon request. For the purposes of this Lease, sale or
transfer of Lessee's capital stock through any public exchange, shall not be
deemed as assignment, subletting, or any other transfer of the Lease or the
Premises.
39.3 Multiple Options. In the event that Lessee has any Multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
22.
<PAGE>
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured.
(a) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to
exercise an Option because of the provisions of Paragraph
39.4(a).
40. [deleted]
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or the security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee or increase Lessee's cost of such use or occupancy or Lessee's
obligations hereunder. Lessee agrees to sign any documents reasonably requested
by Lessor to effectuate any such easement rights, dedication, map or
restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions. Any conflict between this form of this Lease and any
Addenda, Work Letter or Exhibits shall be controlled by the later.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
49. Reasonable Expenditures. Notwithstanding anything to the contrary in this
Lease, any expenditure by a party permitted or required under this Lease, for
which such party is entitled to demand and does demand reimbursement from the
other party, shall be limited to the fair market value of the goods and services
involved, shall be reasonably incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours.
23.
<PAGE>
50. Addendum. The Inserts 1 through 36 set forth on the Addendum attached
hereto are incorporated in the text of this Lease at the places indicated by the
numbers in the margins of this Lease, which numbers correspond to the Insert
numbers on the Addendum.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWD THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
IFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS
OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTURAL REAL EASTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR
THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES
SHALL RELY SOLEY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
<TABLE>
<S> <C>
Executed at ___________________________________ Executed at ___________________________________
on ____________________________________________ on ____________________________________________
by LESSOR: W. F. BATTON & CO., INC. by LESSEE: OMNICELL TECHNOLOGIES, INC.
a California corporation a California corporation
By /s/ W. F. Batton By /s/ Randall Lipps
-------------------------------------------- --------------------------------------------
Name Printed: W. F. Batton Name Printed: Randall Lipps
---------------------------------- ---------------------------------
Title: ________________________________________ Title: ________________________________________
By ____________________________________________ By ____________________________________________
Name Printed: _________________________________ Name Printed: _________________________________
Title: ________________________________________ Title: ________________________________________
Address: ______________________________________ Address: ______________________________________
_______________________________________________ _______________________________________________
Tel No. (___) _______ Fax No. (___) ___________ Tel No. (___) ________ Fax No. (___) __________
</TABLE>
24.
<PAGE>
WORK LETTER
THIS WORK LETTER is made part of the Lease dated March 25, 1994 (the "Lease"),
by and between W. F. BATTON & CO., INC., a California corporation, as Lessor
("Lessor") and OMNICELL TECHNOLOGIES, INC., a California corporation, as Lessee
("Lessee"), pertaining to certain premises consisting of approximately 30,600
rentable square feet of space located on the property commonly known as 1101
East Meadow Drive, Palo Alto, California (the "Premises").
Lessor and Lessee agree as follows:
1. Agreement to Construct: Lessor shall construct the interior
improvements ("Lessee Interior Improvements") for the Premises to be occupied by
Lessee pursuant to the Lease in accordance with this Work Letter.
2. Plans, Specification, and Working Drawings.
(a) Preliminary Plans. Lessor and Lessee have reviewed preliminary plans
and specifications for the Lessee Interior Improvements.
(b) Preparation of Working Drawings. On or before April 8, 1994, Lessor
shall cause to be prepared final plans, specifications, and working
drawings ("Working Drawings") which shall substantially conform to the
preliminary plans and specifications reviewed by Lessor and Lessee.
Within five (5) days after receipt thereof, Lessee shall approve such
Working Drawings or Lessee shall deliver to Lessor Lessee's specific
written changes or objections to such Working Drawings. Lessee shall
not unreasonably withhold or delay its approval of the Working
Drawings. The parties shall negotiate in good faith to reach agreement
on any aspect of the Working Drawings disapproved by Lessee, with each
party using its best efforts to complete and to approve the Working
Drawings on or before April 15, 1994.
(c) Approval of Working Drawings. Upon approval, Lessor and Lessee shall
each initial and date the Working Drawings and Lessor shall submit the Working
Drawings to all appropriate governmental agencies for approval. Immediately
after all necessary governmental approvals have been obtained, four (4) copies
of the Working Drawings shall be initialed and dated by Lessor and Lessee if any
changes thereto have been made by the governmental agencies. The Working
Drawings as approved, and all change orders permitted pursuant to Paragraph 5
hereof are referred to herein as the "Approved Plans."
3. Prime Contractor.
(a) The prime contractor to be used to construct the Lessee Interior
Improvements shall be Jack Dymond Co. (hereafter "Dymond").
(b) Dymond shall have the following obligations during the course of the
Construction Contract (as such term is defined in Paragraph 4 below), and, where
appropriate, following the completion of the construction of the Lessee Interior
Improvements, in addition to all other conditions and obligations set forth in
the Construction Contract or otherwise applicable to Dymond:
(1) Dymond shall obtain at least three (3) competitive bids for all
subcontractors unless Lessor and Lessee approve in writing a fewer number of
competitive bids;
(2) Dymond shall expressly assume responsibility for all work done by
all persons working under its supervision and control; and
(3) Dymond shall use its best efforts to ensure that all persons
working under its supervision and control are, during the entire course of their
duties, properly licensed and qualified to do the particular jobs for which they
were hired.
25.
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4. Construction Contract. Lessor and Lessee shall cooperate to cause the
Lessee Interior Improvements to be constructed in the following manner:
(a) Dymond to Construct Interior Improvements. The parties agree that
the Lessee Interior Improvements shall be constructed by Dymond pursuant to a
fixed price construction contract (the "Construction Contract") between Lessor
and Dymond. The Construction Contract shall provide that Dymond shall provide a
warranty of one year with respect to the Lessee Interior Improvements.
(b) Lessor's Securing of Bids. Lessor shall obtain Dymond's bid to
construct the Lessee Interior Improvements, which bid shall be itemized to show
the amount to be charged by each subcontractor for its part or the work.
Subcontractors shall be chosen on the basis of competitive bids, as set forth in
the Paragraph 3(b)(1) above herein. As soon as the bid is obtained from Dymond,
Lessor shall submit it to Lessee for Lessee's review and approval.
(c) Lessor's Disapproval of Subcontractor Bids. Lessor shall have the
right to disapprove any subcontractor bid for any item of the work, and if
Lessor does so, Lessor, Lessee and Dymond shall immediately confer and attempt
in good faith to reach agreement upon an alternative subcontractor whose bid is
acceptable to Lessor, Lessee and Dymond. If the parties are unable to reach
agreement within five (5) business days after Lessor has disapproved a
subcontractor, then, at Lessor's option, the part of the work that is the
subject of the bid disapproved by Lessor shall be rebid to one subcontractor,
and such work shall be awarded to the low bidder if such low bid is lower than
the bid disapproved by Lessor. In selecting alternative subcontractors, Lessor
and Lessee shall act reasonably and in good faith, acknowledging that a
subcontractor's ability to do quality work completed on time is as important as
the price charged, and acknowledging further that the approval of Dymond of any
subcontractor must be obtained. Any rebidding process undertaken pursuant to
this subparagraph shall be completed within ten (10) business days after Lessor
first disapproves the subcontractor bid in question.
(d) Lessee's Approval of Improvement Costs.
(1) Submittal of Dymond Bid. Once the bid of Dymond and its
subcontractors has been obtained, Lessor shall deliver to Lessee its final
estimate of the total "Improvement Costs" (as defined below) that will be
incurred to construct the Lessee Interior Improvements shown on the Approved
Plans. If the final estimate of the Improvement Costs is $765,000 or less, but
not less than $550,000, Lessee shall approve such amount.
(2) Review of Dymond Bid. If the final estimate of the
Improvement Costs exceeds $765,000 (30,600 rentable square feet x $25 per square
foot), Lessor and Lessee shall review the bid and shall jointly use their best
efforts to modify the Plans to reduce the total Improvements Costs to $765,000.
Notwithstanding the foregoing, if the final bid of Dymond for the total
Improvement Costs exceeds $765,000, Lessor and Lessee have reviewed the bid and
the Plans and are unable to agree upon changes to the Plans to reduce the
Improvement Costs to $765,000 within ten (10) days after receipt of said bid
after attempting in good faith to do so, Lessor shall have the option either (I)
to approve the final bid of Dymond, or (ii) to terminate the Lease by written
notice to Lessee, in which event Lessor and Lessee shall be relieved of all
further obligations thereunder and any prepaid rent and security deposit shall
be returned to Lessee.
(3) Redesign of Improvements by Lessee. All actions to modify
the Approved Plans and to reduce the bid of Dymond pursuant to this subparagraph
(d) shall be completed within ten (10) business days after the estimated
Improvement Costs figure has been submitted to Lessee. In the event of changes
in the Plans under the provisions of this subparagraph (d), the date set forth
in Paragraph 3.3 of the Lease, entitled "Delay in Possession," and Insert 1 in
the Addendum, which grant to Lessee the right to terminate the Lease, shall be
delayed on calendar day for each calendar day that the redesign or rebidding
actually delays the commencement of construction of the Lessee Interior
Improvements.
5. Change Orders. After the Working Drawings have been approved by Lessor
and Lessee in final form in writing as provided above, Lessee shall have the
right to request change orders. Any change order requested by Lessee shall be
subject to the prior written approval of Lessor, which consent shall not be
unreasonably withheld
26.
<PAGE>
or delayed provided that the change order does not increase the total
Improvement Costs. Lessee shall not be entitled to request, and Lessor shall not
be obligated to approve, any change order which increases the total Improvement
Costs to an amount which exceeds the maximum Lessee Improvement Allowance of
$765,000, unless Lessee is willing to pay for said changes.
6. Lessee Improvement Allowance. The Base Monthly Rent set forth in
Paragraph 1.5 of the Lease and Insert 2 of the Addendum is predicated upon a
base Lessee Improvement Allowance to be provided by Lessor of Twenty Dollars
($20) per square foot, or a total base Lessee Improvement Allowance of $612,000
(30,600 square feet x $20). Lessor has also agreed (1) that no less than
$550,800 (30,600 square feet x $18) shall be contributed by Lessor as the
minimum Lessee Improvement Allowance and (2) that Lessor shall contribute up to
a maximum amount of $765,000 as the maximum Lessee Improvement Allowance (30,600
square feet x $25). The Base Monthly Rent shall be adjusted in accordance with
Paragraph 8(d) of this Work Letter if the amount of the Lessee Improvement
Allowance actually spent is less than or greater than $612,000. If construction
of any Lessee Interior Improvements is deferred, Lessor and Lessee shall
mutually agree on the timing of subsequent construction.
To the extent that the total Improvements Costs initially equal less than
$765,000, then the unused portion of that amount shall be made available to
Lessee for future improvements during the Lease term with adjustments to be made
at that time in Base Monthly Rent as provided in Paragraph 8(d) of this Work
Letter.
7. Commencement and Construction. As soon as (i) the Working Drawings
have been prepared and approved as provided above, (ii) all necessary
governmental approvals have been obtained, and (iii) Lessor has entered into the
Construction Contract, then Lessor shall thereafter cause construction of the
Lessee Interior Improvements to be commenced and diligently prosecuted to
completion, so that the Lessee Interior Improvements may be Substantially
Completed (as defined below) as soon as practicable.
8. Improvements Costs. "Improvements Costs" for the Lessee Interior
Improvements shall mean the following "Included Costs," but not the following
"Excluded Costs" for the Lessee Interior Improvements:
(a) Included Costs. "Included Costs" shall mean the following: (i)
the total amount due pursuant to the fixed price Construction Contract entered
into pursuant to this Work Letter and any change orders approved pursuant to
this Work Letter; (ii) the cost paid to governmental authorities of governmental
applications, approvals, permits and fees required to construct the Lessee
Interior Improvements; (iii) fees of architects, space planners, engineers or
other professionals (other than employees of affiliates of Lessor) for services
rendered in connection with the design and construction of the Lessee Interior
Improvements up to a maximum of Seven Hundred Sixty-five Thousand Dollars
($765,000) or such additional amount as Lessor may approve; (iv) any costs paid
to governmental authorities to inspect and obtain approval of the Lessee
Interior Improvements; (v) the cost associated with the purchase and
installation of a supplemental HVAC unit as per the approved plans; and (vi) any
other costs of designing, constructing and obtaining governmental approvals of
the work shown on the Working Drawings, other than the "excluded Costs described
below.
(b) Excluded Costs. "Excluded Costs" (which will also not be paid by
Lessee) shall mean and "Improvements Costs" shall not include: (i) costs
incurred as a consequence of a contractor's or subcontractor's default, the
negligent act or omission or the willful misconduct of Lessor or its
consultants, agents, employees, contractors or subcontractor or Lessor's breach
of this Lease, or any contract for construction of the Lessee Interior
Improvements; (ii) interest, principal and other charges with respect to any
construction or permanent loan or the project; (iii) costs for which Lessor may
obtain reimbursement from others; (iv) costs for which Lessor has actually
received reimbursement from others; (v) costs associated with investigation,
removal, monitoring or remediation of hazardous materials; (vi) premium time and
other costs of accelerating the work to meet the scheduled completion date sated
in the Lease, unless the acceleration amount is approved by Lessee in wiring;
(vii) costs of management, design and all other services provided by employees
or affiliates of Lessor and the cost of any administration, profit and overhead
for Lessor or any of its administration, profit and overhead for Lessor or any
of its employees and affiliates; (viii) all costs and expenses incurred with
respect to work not required by the Approved Plans, as the same may be amended
by change orders; (ix) the cost of bringing the Building and surrounding
property into compliance with applicable building codes, Hazardous Materials
laws or other statutes, laws, rules or regulations; (x) all costs incurred in
connection with casualties and Acts of God; and (xi) any parking fees or fines
incurred in connection with the parking of vehicles by any contractor.
27.
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(c) Additional Lessor Improvements. In addition to the Lessee
Improvement Allowance to be contributed by Lessor as provided for in Paragraph 6
above, Lessor shall pay for the cost of repainting the exterior of the building,
restriping and resealing the parking lot, repairing or replacing the walk-in and
loading doors, repainting the roof screens, and repair or replace any HVAC units
that are not working. In addition to the Lessee Improvement Allowance, Lessor
shall also pay for any City or State required building code upgrades and seismic
reinforcement requirements in effect as of the date of execution and delivery of
this Lease. Any interior ADA or interior Title 24 requirements, other than
City/State building code upgrades and seismic reinforcement requirements shall
be paid for by Lessee as part of the Lessee Improvement Allowance. Exterior ADA
or exterior Title 24 requirements shall be paid for by Lessor unless caused by
Lessee's interior improvements.
(d) Rent Adjustment. If the Improvements Costs are less than
$612,000, the Base Monthly Rent provided for in Paragraph 1.5 of the Lease and
Insert 2 of the Addendum shall be decreased by $0.0208/sq.ft/dollar/per month.
If the Improvements Costs are more than $612,000, up to a total of $765,000 ($25
per square foot), the Base Monthly Rent shall be increased by
$0.0208/sq.ft/dollar/per month.
9. Final Accounting. When the Lessee Interior Improvements are
Substantially Completed (as defined below), Lessor shall submit to Lessee a
final and detained accounting of all Improvement Costs paid for the construction
of the Lessee Interior Improvements, certified as a true and correct by Lessor.
Lessee shall have the right, during normal business hours after giving Lessor at
least two (2) business days prior written notice, to audit the books, records,
and supporting documents of Lessor to the extent necessary to determine the
accuracy of such accounting. Lessee shall bear the cost of such audit. Any such
audit must be conducted, if at all, within ninety (90) calendar days after
Lessor delivers such accounting to Lessee.
10. Risk of Loss. The risk of loss of the Premises before the Commencement
Date of the Lease (as defined in the Lease) shall be borne by Lessor. At all
times prior to the Commencement Date, Lessor, at its sole cost and expense,
shall maintain contingent liability and broad form "builder's risk" insurance
with coverage in an among equal to the replacement cost of the shell of the
Premises plus the estimated cost of the Lessee Interior Improvements. If the
Premises are damaged or destroyed by a casualty covered by said insurance, then
Lessor shall promptly and diligently complete construction of the Premises and
the Lessee Interior Improvements in accordance with the Lease and this Work
Letter.
11. Substantial Completion. The Lessee Interior Improvements shall be
deemed "Substantially Completed" when: (i) Dymond has issued its written
certificate stating that such improvements have been Substantially Completed in
accordance with the Approved plans; (ii) the Premises substantially conform to
the Approved Plans, as amended by any change orders approved pursuant to
Paragraph 5 of this Work Letter, and (iii) Lessee may lawfully occupy the
Premises in accordance with applicable law.
12. Delay in Completion Caused by Lessee. Lessor and Lessee acknowledge
that the date on which Lessee is obligated to commence paying Base Monthly Rent
under the Lease would be delayed because of (i) Lessee's failure to review and
approve the Working Drawings within the time periods set forth in Paragraph 2
hereof; or (ii) as the result of any change orders requested by Lessee and
approved by Lessor pursuant to the terms of this Work Letter. It is the intent
of the parties hereto that the commencement of Lessee's obligation to pay Base
Monthly Rent not be delayed by any such causes, and if any of the events set
forth above causes an actual delay in Substantial Completion, Lessee's
obligation to pay Base Monthly Rent shall commence as of the date it would
otherwise have commenced absent said delay caused by Lessee.
13. Delivery of Possession.
(a) Walk Through. As soon as the Lessee Interior Improvements are
Substantially Completed, Lessor and Lessee shall conduct a joint "walk through"
of the Premises and shall inspect the Lessee Interior Improvements so completed
using their best efforts to discover all uncompleted or defective construction.
After such inspection has been completed, each party shall sign a "punch list"
setting forth any such defective items.
(b) Correction of "Punch List" Items. Lessor shall use its best
efforts to cause the Dymond to complete and/or repair such "punch list" items
within thirty (30) days after the "walk through." After the initial
28.
<PAGE>
"punch List" has been prepared, Lessee shall use its reasonable efforts to
discover any further defects and shall have the right to submit a further "punch
list" to Lessor within sixty (60) days after the Commencement Date. In such
case, Lessor shall cause Dymond to remedy such "punch list" items as soon as
reasonably practicable. Nothing contained herein shall impair any of Lessee's
other right under the Lease.
14. Warranty. Dymond shall warrant for a period of one year from the date
of substantial completion of construction that the Lessee Interior Improvements
shall be constructed in a good and workmanlike manner, using new materials of
good quality, and in accordance with the Approved Plans (as modified by any
change orders requested by Lessee and approved by Lessor pursuant to the terms
of Paragraph 5 of this Work Letter).
15. Ownership of the Interior Improvements.
(a) Parties' Respective Depreciation of Improvements. All of the
Lessee Interior Improvements which are constructed with funds of Lessor shall
become the property of Lessor. Any furnishings, trade fixtures, equipment
installed in the Premises and paid for by Lessee shall become the property of
Lessee upon installation thereof in the Premises and Lessee shall have the right
to depreciate and claim and collect investment tax credits on any such property
throughout the terms of the Lease.
(b) Allocation of Depreciation. If both Lessor and Lessee contribute
to the cost of constructing any of the Lessee Interior Improvements, Lessor and
Lessee shall to the extent reasonably practicable agree in writing which of such
improvements are to be constructed using Lessor's funds (and therefore are
Lessor's property) and which of the improvements are to be installed with
Lessee's funds (and therefore are Lessee's property). Such allocation of
ownership of the Lessee Interior Improvements shall be made in a reasonable
manner so that the benefits of accelerated or component depreciation for tax
purposes and any investment tax credit shall be shared by Lessor and Lessee in
proportion to the amount contributed by each of them for payment of the cost of
the Lessee Interior Improvements. Any Lessee Interior Improvements constructed
with Lessee's funds shall become a part of the realty and shall become Lessor's
property upon the expiration for sooner termination of the Lease, except for
items which Lessor and Lessee agree in writing prior to commencement of
construction may be or shall be removed by Lessee.
16. Lessee's Right to Install Trade Fixtures. When the construction of the
Lessee Interior Improvements has proceeded to the point where Lessee's work of
installing its fixtures and equipment in the Premises can be commenced in
accordance with good construction practices, Lessor shall notify Lessee to that
effect and shall permit Lessee, and its authorized representatives and
contractors, to have access to the Premises for a period of not less than
fourteen (14) days prior to the Commencement Date for the purpose of installing
Lessee's trade fixtures and equipment. Such entry by Lessee shall not advance
the Commencement Date or Lessee's obligation to pay Base Monthly Rent.
17. Headings. The descriptive headings used and inserted in this Work
Letter are for convenience only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
18. Effect of Agreement. In the event of any inconsistency between this
Work Letter and the Lease, the terms of the Lease shall prevail.
29.
<PAGE>
AMENDMENT NUMBER ONE TO LEASE
1101 East Meadow Drive
Palo Alto, California
THIS AMENDMENT NUMBER ONE TO LEASE ("this Amendment") is made and
entered into as of June 17, 1999 by and between W.F. BATTON & CO., INC., a
California corporation, Lessor, and OMNICELL TECHNOLOGIES, INC., a California
corporation, Lessee.
RECITALS
A. Lessor and Lessee entered into a Standard Industrial/Commercial
Single-Tenant Lease - Net and Addendum dated March 25, 1994 (the "Lease") of
premises consisting of approximately 30,600 square feet commonly known as 1101
East Meadow Drive, Palo Alto, California (the "Premises"). The Expiration Date
of the Original Term of the Lease is June 30, 1999.
B. In lieu of Lessee exercising the option to extend the Original Term
of the Lease contained in Insert 6, Paragraph 3.3, Option, in the Addendum to
the Lease, Lessor and Lessee have agreed to enter into this Amendment extending
the Original Term of the Lease upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, Lessor and Lessee agree as follows:
1. DEFINED TERMS. Defined terms in the Lease which are used in
this Amendment shall have the same meaning as in the Lease.
2. EXTENDED TERM.
(a) The Original Term of the Lease referred to in
Paragraph 1.3 of the Lease is hereby extended for one additional period of five
(5) years commencing on July 1, 1999 and ending on June 30, 2004 (the "Extended
Term"). The Extended Term shall be upon all of the terms and provisions of the
Lease, as amended by this Amendment.
(b) The option to extend the Original Term of the Lease
contained in Insert 6, Paragraph 3.3, of the Addendum to the Lease is hereby
deleted and said option to extend shall be of no further force or effect.
(c) Lessee shall have no option to extend upon the
expiration of the Extended Term.
3. BASE RENT. Lessee shall pay to Lessor Monthly Base Rent in
monthly installments in advance on the first day of each calendar month during
the Extended Term, in accordance with Paragraph 4.1 of the Lease, as follows:
1.
<PAGE>
<TABLE>
<CAPTION>
Monthly Base
Rent Per Monthly Base
Period Square Foot Rent NNN
- ----------------------------------- ----------- ------------
<S> <C> <C>
July 1, 1999 - December 31, 1999 $1.85 $56,610
January 1, 2000 - December 31, 2000 $2.00 $61,200
January 1, 2001 - December 31, 2001 $2.20 $67,320
January 1, 2002 - December 31, 2002 $2.30 $70,380
January 1, 2003 - December 31, 2003 $2.45 $74,970
January 1, 2004 - June 30, 2004 $2.60 $79,560
</TABLE>
4. REIMBURSEMENT OF COST OF TENANT IMPROVEMENTS. In addition to
the installments of Monthly Base Rent provided for in Paragraph 3 above, Lessee
shall pay to Lessor, together with the installments of Monthly Base Rent, the
sum of Four Thousand Two Hundred Forty-Nine and Forty-One Hundredths Dollars
($4,249.41) per month on the first day of each calendar month of the Extended
Term, commencing July 1, 1999 and continuing through June 30, 2004, as
reimbursement to Lessor of Lessor's contribution to the cost of the Tenant
Improvements of Two Hundred Thousand Dollars ($200,000) referred to in Paragraph
6 of this Amendment, plus interest thereon at the rate of ten percent (10%) per
annum.
5. OPERATING EXPENSES. In addition to the Monthly Base Rent and
the monthly payments to reimburse Lessor for Lessor's contribution to the cost
of the Tenant Improvements, Lessee shall during the Extended Term pay the
operating expenses of the Premises as Lessee has done during the Original Term,
plus any actual increases in said operating expenses which occur during the
Extended Term.
6. TENANT IMPROVEMENTS.
(a) Lessee acknowledges that, as of the date of this
Amendment, Lessee is occupying the Premises under the Lease. Lessee accepts the
Premises in their present condition as of the commencement date of the Extended
Term, subject to the construction of the Tenant Improvements pursuant to this
Paragraph 6.
(b) Promptly following the execution and delivery of this
Amendment, Lessor shall cause to be constructed and completed the Tenant
Improvements to the Premises listed on Exhibit "A" attached hereto and
incorporated by reference herein. Lessor shall cause the Tenant Improvements to
be constructed by Dymond Construction Group (the "Contractor") pursuant to an
Agreement between Lessor and the Contractor (the "Construction Contract") which
shall
2.
<PAGE>
provide for a guaranteed maximum cost in an amount which shall be approved
in writing by Lessor and Lessee. Plans for the Tenant Improvement's shall be
prepared by LRS & Associates. The cost of the plans shall be paid by Lessor and
shall be charged against Lessor's contribution to the cost of the Tenant
Improvements. The Construction Contract and the plans for the Tenant
Improvements shall be approved in writing by Lessee, which approval shall not be
unreasonably withheld. The Construction Contract for the Tenant Improvements
shall include a guarantee by the Contractor against defects in workmanship or
materials for one (1) year.
(c) The Contractor shall obtain at least three (3)
competitive bids for the portion of the work which is to be performed by
subcontractors unless Lessor and Lessee approve in writing a fewer number of
competitive bids for such portion of the work. The final bid of the Contractor
for the construction of the Tenant Improvements shall be approved in writing by
Lessor and Lessee. Lessor's contribution to the cost of construction of the
Tenant Improvements shall be Two Hundred Thousand Dollars ($200,000) ("Lessor's
Contribution"), subject to Lessee's obligation to reimburse Lessor for Lessor's
Contribution plus interest thereon pursuant to Paragraph 4. Lessee shall pay to
Lessor in a lump sum in cash promptly upon completion of the Tenant Improvements
and receipt by Lessee of an invoice therefor from Lessor that portion of the
cost of the Tenant Improvements which exceeds Lessor's Contribution of Two
Hundred Thousand Dollars ($200,000), plus the added cost of any change orders
requested by Lessee pursuant to Paragraph 6(d).
(d) After the working drawings have been approved by
Lessor and Lessee in writing as provided above, Lessee shall have the right to
request change orders to the Tenant Improvements. Any change order requested by
Lessee shall be subject to the prior written approval of Lessor, which approval
shall not be unreasonably withheld or delayed, provided that the change order
does not increase the total cost of the Tenant Improvements to an amount in
excess of the total cost previously approved by Lessor and Lessee, unless Lessee
agrees in writing to pay such excess to Lessor in a lump sum in cash promptly
upon completion of the Tenant Improvements.
(e) All of the Tenant Improvements, furnishings, trade
fixtures, and equipment installed in the Premises which are paid for from
Lessor's Contribution to the Tenant Improvements, paid for directly by Lessee,
or reimbursed by Lessee to Lessor, shall become the property of Lessee upon
installation thereof in the Premises, and Lessee shall have the right to
depreciate and claim and collect investment tax credits on any such property
throughout the Extended Term. Notwithstanding the foregoing, Tenant Improvements
constructed with Lessor's Contribution to the Tenant Improvements or with the
Lessee's funds shall become a part of the realty and shall become Lessor's
property upon the expiration or sooner termination of the Extended Term, except
for items which Lessor and Lessee agree in writing prior to commencement of
construction of the Tenant Improvements may be or shall be removed by Lessee.
7. ASPHALTIC CONCRETE REPAIR WORK. Lessor shall cause to be
performed by R. Gunn Construction, Inc. ("Gunn Construction") the asphaltic
concrete repair work to the Premises at a total cost of Twenty-Nine Thousand
Seven Hundred Fifty-Seven Dollars ($29,757) which is described in Gunn
Construction's Estimate #99-1069 dated May 18, 1999 to Lessor, a copy of which
Lessor has delivered to Lessee. One-half (1/2) of the cost of the work
($14,878.50) shall
3.
<PAGE>
be paid by Lessor and charged against Lessor's Contribution to the cost of
the Tenant Improvements. The remaining one-half (1/2) of the cost of the work
($14,878.50) shall be paid by Lessor directly and shall not be charged
against Lessor's Contribution to the Tenant Improvements.
8. HAZARDOUS MATERIALS MANAGEMENT PLAN. Except as set forth on
Exhibit "B" attached hereto and incorporated herein by reference, Lessee shall
not bring onto the Premises any hazardous materials. Lessee shall deliver to
Lessor (a) a copy of Lessee's current Hazardous Materials Management Plan, and
any amendments or supplements thereto, or replacements thereof, from time to
time during the Extended Term, and (b) a copy of all Hazardous Materials reports
or plans filed by Lessee with the City of Palo Alto, even though Lessee's
Hazardous Materials Management Plan and any such reports or plans filed with the
City show that Lessee is not currently using any reportable hazardous materials
on the Premises.
9. AMENDMENT TO GOVERN. In the event of any inconsistency between
the printed provisions of the Lease or the Addendum thereto and this Amendment,
the provisions of this Amendment shall govern.
10. CONTINUING EFFECT. Except as extended and amended hereby, the
Lease shall remain in full force and effect.
4.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as
of the date set forth above.
LESSOR
W.F. BATTON & CO., INC.,
a California corporation
By /s/ Marie A. Batton
Its President
By
--------------------------------
Its
LESSEE
OMNICELL TECHNOLOGIES, INC.
a California corporation
By /s/ Earl E. Fry
Its VP and CFO
By
--------------------------------
Its
5.
<PAGE>
EXHIBIT "A"
SCOPE OF WORK FOR TENANT IMPROVEMENTS
<PAGE>
EXHIBIT "B"
HAZARDOUS MATERIALS USED BY LESSEE ON THE PREMISES
<PAGE>
EXHIBIT 10.5
MASTER ASSIGNMENT AGREEMENT
This Master Assignment Agreement ("Agreement") is dated as of
____________,1994 and is by and between Americorp Financial, Inc., a Michigan
corporation, having an address at 20300 West 12 Mile Road, Suite 202,
Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California
corporation, having an address at 1101 East Meadow Drive, Palo Alto, California
94303, ("Lessor").
WHEREAS, Lessor desires, from time to time to either (a) assign to AFI all
of its right, title and interest in and to certain leases and equipment pursuant
to the terms of the Bill of Sale and Assignment attached hereto as Exhibit A; or
(b) assign to AFI all its right, title and interest in and to certain leases and
grant to AFI a security interest in the equipment subject to such leases
pursuant to the terms of the Assignment Agreement attached hereto as Exhibit B
(any such leases, the equipment subject thereto and lessees being hereinafter
referred to as "Leases", "Equipment" and "Lessees", respectively); and
WHEREAS, AFI may, from time to time, in its sole discretion, accept such
assignments and arrangements under the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lessor and AFI agree as follows:
1. SCOPE. This Agreement shall apply to all leases which are entered into by
Lessor and are assigned to AFI by Lessor.
2. DOCUMENTATION. All transaction shall be documented pursuant to standards
set by AFI on forms provided by or acceptable to AFI. All Lessor-furnished
documentation accepted by AFI shall be in conformity with all applicable
laws and regulations, including but not limited to applicable laws related
to usury. Documentation presently required for all Leases submitted by
Lessor to AFI is described in Exhibit C hereto. All documents, materials,
and supplies furnished by AFI shall remain the property of AFI and shall be
returned at Lessor's expense, immediately upon demand or upon the
termination of this Agreement.
3. REPRESENTATION AND WARRANTIES AS TO LEASES AND EQUIPMENT
With respect to each Lease assigned to AFI pursuant to the Agreement,
Lessor hereby represents and warrants as follows:
(a) Such Lease resulted from a bona fide lease of the Equipment described
therein for business or commercial use; the Lease represents a valid
and enforceable obligation for the aggregate gross rentals in
accordance with the terms of the Lease; the Lease is the sole and
entire understanding and agreement with the Lessee and there are no
other agreements with respect to the rental of said Equipment; no term
of any Lease violates any material applicable law, including without
limitation any usury statures; all signatures on the Lease are
genuine; and
1.
<PAGE>
the Lease was duly authorized and properly executed by a Lessee having
legal capacity to enter into the Lease.
(b) All of the Equipment described in the Lease has been delivered to the
location stated in the Lease, was new at the time of such delivery,
and has been accepted by the Lessee in a condition satisfactory to the
Lessee.
(c) The Lease and the payments due thereunder are and will continue to be
throughout the term of the Lease unconditionally due and payable
without set-offs, abatements, counterclaims or defenses of any kind
whatsoever, and the Lessee has no right under the Lease or otherwise
to terminate the Lease or to return the Equipment prior to the
expiration of the initial term of the Lease. There has been no
prepayment of rent under the Lease.
(d) The Lessor named in the Lease is the sole owner of the Lease and the
Equipment covered thereunder, free from any liens, security interests,
rights of third parties, and encumbrances other than those created in
favor of AFI and the Lessee under the Lease. Each Lease is the only
original of such Lease.
(e) Lessor has done and shall do nothing that might impair the value of
any Lease or the rights of AFI therein.
(f) To the best of Lessor's knowledge, the Lessee has not made an
assignment for the benefit of creditors, has not ceased to do business
as a going concern, nor has filed or has had filed against it a
petition under the Bankruptcy Code or for appointment of a receiver.
(g) The Lessee is not in default with respect to any obligation under the
Lease, including any event which with the passing of time or the
giving of notice or both would constitute an event of default
thereunder.
(h) Any right, title, and interest of Lessor or any other party to the
Lease and the Equipment covered thereunder is subject and subordinate
to the right, title, and interest of AFI.
(i) Lessor has not granted, and will not grant, to any Lessee any
allowance, credit, adjustment, or enter into any settlement or
amendment of the Lease without the prior written consent of AFI.
(j) Lessor is not in default with respect to any of its obligations, if
any, under the Lease or in any transaction which gave rise to the
Lease, including any event which with the passing of time or the
giving of notice or both would constitute an event of default
thereunder and Lessor has no knowledge of any other default under the
Lease.
(k) Lessor is acting solely on its own behalf and is not acting as a
"super broker" or "co-broker" or receiving compensation for handling
any transaction from any
2.
<PAGE>
third party, unless such fact is disclosed in writing at the time such
transaction is submitted to AFI.
(l) Lessor has duly filed in all appropriated jurisdictions Uniform
Commercial Code financing statements, as applicable, against each
Lessee with respect to Equipment leased to such Lessee and such
financing statements are in full force and effect and are sufficient
to create a first perfected security interest in such Equipment in
favor of Lessor if such Lease is deemed to be a Lease for security.
4. REPRESENTATIONS AND WARRANTIES AS TO LESSOR
Lessor hereby represents and warrants to AFI as follows:
(a) That it is a corporation, duly organized, validly existing, and in
good standing under the laws of the State of California, and has all
requisite power and authority to own its property and to carry on its
business as now being conducted, to enter into this Agreement and to
carry out the provisions and conditions of this Agreement. Lessor is
duly qualified to do business in each jurisdiction wherein the
character of the goods owned or the nature of the activities conducted
therein makes such qualification necessary or will become so qualified
prior to the execution by Lessor of a Lease in such jurisdiction. All
necessary proceedings have been taken by Lessor in order to authorize
the execution, delivery, and performance of this Agreement, each Lease
and any other agreement of which Lessor is a party, and no other
proceedings on the part of Lessor are required.
(b) That each financial statement of Lessor furnished to AFI in connection
with this Agreement is true and correct and has been prepared in
accordance with generally accepted accounting principles consistently
followed throughout the period involved.
(c) That there is no litigation, at law or in equity, or any proceeding
any federal, state, or municipal board or other governmental or
administrative agency pending to the knowledge of Lessor which may
involve any risk of any judgment or liability not fully covered by
insurance or which may otherwise result in any material adverse change
in the business or assets or in the condition, financial or otherwise,
of Lessor or which questions the validity of any Lease or this
Agreement, or of any action taken or to be taken in connection
therewith; and no judgment, decree or order of any federal, state, or
municipal court, board or other governmental or administrative agency
has been issued against Lessor which has, or will have, any material
adverse effect on the business or assets or on the condition,
financial or otherwise, of Lessor.
(d) That neither the execution and delivery of this Agreement, nor the
consummation of any transaction contemplated hereby, nor the
fulfillment of the terms hereof, has constituted or resulted in, or
will constitute or result in, a breach of the provisions of any
agreement or instrument to which Lessor is a party, or is bound, or of
the charter or bylaws of Lessor, or the violation of any presently
existing
3.
<PAGE>
applicable law, judgment, decree, federal or state law or governmental
order, rule, or regulation.
Lessor's representations and warranties under Sections 3 and 4 shall be
continuing representations and warranties, and shall survive the assignment of
any Lease to AFI and shall be deemed to be made as of the date that any Lease is
assigned to AFI hereunder, provided, however, the representations and warranties
under subparagraphs (f) and (g) Section 3 shall only be made as of the date of
the assignment of each Lease.
5. REPRESENTATIONS AND WARRANTIES AS TO AFI
AFI hereby represents and warrants as follows:
(a) That it is a corporation, duly organized, validly existing, and in
good standing under the laws of the State of Michigan, and has all
requisite power and authority to own its property and to carry on its
business as now being conducted, to enter into this Agreement and to
carry out the provisions and conditions of this Agreement. AFI is
duly qualified to do business in each jurisdiction wherein the
character of the goods owned or the nature of the activities conducted
therein makes such qualification necessary or will become so qualified
prior to the purchase or assignment of a Lease in such jurisdiction.
All necessary proceedings have been taken by AFI in order to authorize
the execution, delivery, and performance of this Agreement.
(b) That there is no litigation, at law or in equity, or any proceeding
any federal, state, or municipal board or other governmental or
administrative agency pending to the knowledge of AFI which may
involve any risk of any judgment or liability not fully covered by
insurance or which may otherwise result in any material adverse change
in the business or assets or in the condition, financial or otherwise,
of AFI or which questions the validity of any Lease or this Agreement,
or of any action taken or to be taken in connection therewith; and no
judgment, decree or order of any federal, state, or municipal court,
board or other governmental or administrative agency has been issued
against AFI which has, or will have, any material adverse effect on
the business or assets or on the condition, financial or otherwise, of
AFI.
(c) That neither the execution and delivery of this Agreement, nor the
consummation of any transaction contemplated hereby, nor the
fulfillment of the terms hereof, has constituted or resulted in, or
will constitute or result in, a breach of the provisions of any
agreement or instrument to which Lessor is a party, or is bound, or of
the charter or bylaws of Lessor, or the violation of any presently
existing applicable law, judgment, decree, federal or state law or
governmental order, rule or regulation.
6. COVENANTS OF LESSOR
Lessor hereby covenants and agrees with AFI as follows:
4.
<PAGE>
(a) AFI may for reasonable business causes audit during normal business
hours Lessor's books and records relating to all Leases and any other
documents assigned to AFI and may endorse Lessor's name on any
remittances received from any Lessee.
(b) With respect to all Leases in which AFI has an interest, Lessor hereby
assigns to AFI all its rights and privileges under guarantees and
agreements and endorsements by third parties relating to the Lease.
(c) Lessor hereby defends, indemnifies, and holds AFI harmless from every
claim, loss, demand, liability, and expense of any kind (including
reasonable attorneys' fees) that AFI may become subject to arising out
of: (i) a breach of any of the warranties and representations herein
contained, or (ii) any misrepresentation or nonfulfillment of any
covenant on the part of Lessor provided in this Agreement or in any
statement or certificate furnished by Lessor to AFI; (iii) conduct of
the Lessor in endeavoring to repossess any Equipment or to collect
sums due under any Lease; or (iv) any claim or defense the Lessee
could now or hereafter assert against the Lessor, whether or not the
Lessee ultimately prevails. If the Lessee at anytime attempts to
revoke, mollify, or terminate the lease due to any breach or
non-performance by Lessor, or sets off any amount owing under the
Lease or pays it into escrow, the Lessor upon written notice by AFI
shall pay to AFI any monthly amount owing under the Lease until such
time as either the breach or non-performance is corrected or in the
event 120 days shall pass without Lessee resuming obligations then
Lessor shall immediately pay AFI all remaining amounts due or to
become due and any residual value due or to become due immediately per
Section 6 whether or not the Lessee's claim or defense has been
finally adjudicated. The Lessor agrees to pay all of AFI's legal and
other expenses of: (1) seeking to overcome or defending such claims
and defenses in the event AFI chooses to do so, and (2) enforcement of
its rights under Lessor's indemnity contained herein.
The foregoing indemnity is a continuing indemnity and shall survive
termination of this Agreement.
(d) Lessor agrees to execute and deliver any and all papers or documents
which AFI may reasonably request from time to time in order to carry
out the purpose hereof, or to facilitate the collection of monies due
or to become due from any Lessee under any Lease assigned to AFI. In
the event Lessor received or receives any monies due under any Lease
that have been assigned to AFI, Lessor agrees to immediately forward
such monies to AFI.
(e) Lessor shall notify AFI immediately upon obtaining knowledge of any
default in the performance of a Lessee's obligations under a Lease,
including without limitation the payment of sums due under the Lease.
5.
<PAGE>
(f) Lessor will not, without AFI's prior written consent, solicit or
accept collection of any rents due under a Lease, repossess or consent
to the return of any Equipment, or modify or terminate the Lease or
waive any of AFI's rights thereunder.
(g) Lessor shall pay all personal property taxes, including tangible and
intangible personal privilege, documentary, sales, transaction and
other like tax or taxes in lieu thereof, applicable to any of the
transactions contemplated by this Agreement, and which may be imposed
or assessed against the Equipment, this Agreement, the Leases or AFI,
except for taxes measured or imposed on the net income of AFI.
Provided, however, AFI shall collect and remit use and property taxes,
if AFI has received title to Equipment (i.e., in transactions where
AFI is receiving an assignment of all of Lessor's right, title, and
interest in and to Leases and Equipment pursuant to the Bill of Sales
and Assignment attached hereto as Exhibit A). In addition, in
instances where AFI has merely received a security interest in
Equipment pursuant to the Assignment Agreement attached hereto as
Exhibit B, AFI may forward collected use taxes to Lessor along with a
request that Lessor remit the collected tax to the proper taxing
jurisdiction, in which case Lessor shall remit such tax to such
jurisdiction.
7. EVENTS OF DEFAULT AND REMEDIES
(a) If any of Lessor's warranties and representations in Sections 3 and 4
hereof shall be untrue, or it Lessor shall breach any covenant in
Section 5 hereof and if such breach shall continue for a period of
fifteen (15) days after written notice thereof from AFI or if any
guarantor of Lessors' obligations hereunder shall be in default under
any guaranty hereof, then Lessor shall, upon demand by AFI, purchase
the Lease(s) to which such misrepresentation or breach pertains from
AFI for cash in an amount equal to any due but unpaid rentals or other
amounts under the lease, plus the net present value of the then unpaid
balance of the rentals due under the Lease) for the remainder of their
original terms and AFI's booked residual value of the Equipment, both
discounted at the rate of 6% per annum or such other rate as the
parties hereto shall agree upon in writing from time to time with
respect to such Lease(s) and Equipment at the time of original
assignment and, in addition, any and all commission or other
compensation paid or payable to or for the benefit of Lessor with
respect to such Leases(s) shall be forfeited and waived, and AFI shall
recover from Lessor any such commission or other compensation
previously paid to or for the benefit of Lessor by or on behalf of
AFI.
Any Lease reacquired by Lessor in accordance with the provisions of
this Agreement shall be reassigned by AFI to Lessor without recourse
and without warranty or representation of any kind whatsoever.
(b) Upon the occurrence of any material misrepresentation or breach as
provided in subparagraph (a) above, AFI may elect to rescind any
pending approvals (whether given to Lessor orally or in writing) with
respect to other Leases which have been presented by Lessor to AFI for
assignment or direct lease by AFI pursuant to this Agreement.
6.
<PAGE>
(c) In the event a Lessee defaults in the payment of rentals or other sums
under the Lease or in the performance of the Lessee's other covenants
under the Lease, then AFI may exercise all rights and remedies under
the Lease and all rights and remedies of a secured party under the
Uniform Commercial Code with respect to the Lease and the Equipment.
(d) The above remedies are cumulative and not alternative, and AFI shall
also have available all remedies at law or in equity.
8. MISCELLANEOUS
(a) TERMINATION. This Agreement may be terminated by either party hereto
at any time upon prior written notice to the other specifying the
effective date of such termination; provided, that no such termination
shall affect the rights and obligations of the parties to one another
with respect to Leases acquired by AFI on or prior to such termination
date.
(b) AUTHORITY OF LESSOR. Lessor is, and shall act, as an independent
contractor and shall not have any authority to make any commitments,
statements, representation, or incur any obligations, on behalf of
AFI, or to bind or commit AFI in any manner, to make, alter, or
execute any document or agreement on behalf of AFI. Lessor shall not
use any name or mark of AFI or any affiliate of AFI in any way unless
it has AFI's prior written approval. Lessor shall not accept service
of any legal process in any action that may be brought against AFI, or
employ attorneys to defend such without AFI's prior written approval.
(c) EXCLUSIVITY OF SUBMISSIONS. Leases offered to AFI will not have been
previously offered by Lessor to any other party without disclosure of
that fact in writing to AFI. For three (3) working days after receipt
by AFI of a complete submission, Lessor will not submit the same Lease
to any other party. AFI shall, in its sole discretion, decide whether
or not to accept a submitted Lease.
(d) ESTOPPEL. Lessor must notify AFI in writing of any claimed
discrepancies in any and all written statements of account sent to
Lessor by AFI. Failure to so notify AFI within 30 days of receipt of
said statements will estop Lessor from denying the accuracy of the
same.
(e) FINANCIAL STATEMENT. As long as this Agreement or any Lease assigned
hereunder is in effect, Lessor shall provide AFI with: (A) within 90
days after the end of each of Lessor's fiscal years, a copy of
Lessor's audited financial statement for such fiscal year (which may
be unaudited if such statements are not otherwise audited), prepared
in accordance with generally accepted accounting principles, and (B)
within 45 days after the end of each of Lessor's fiscal quarters
(except its fiscal year-end), a copy of its unaudited financial
statements for such fiscal quarter, prepared in accordance with
generally accepted accounting principles. In each case, the
statements shall be certified by Lessor's chief financial officer as
fairly presenting the financial position and results of operations of
Lessor.
7.
<PAGE>
(f) REMARKETING. In the event a Lessee under a Lease should default in
the payment or performance of any of the terms and conditions thereof,
and upon the request of AFI, Lessor shall attempt to repossess the
Equipment and store the Equipment after such repossession is completed
(at the cost of AFI). In such event, Lessor agrees to use its best
efforts to locate a purchaser or lessee for the Equipment on terms
satisfactory to AFI. At any time after Lessor takes possession of the
Equipment but prior to Lessor's locating a purchaser or lessee
satisfactory to AFI, AFI may, but shall not be obligated to, take
possession of and sell or re-lease the Equipment upon terms
satisfactory to AFI. Any proceeds realized on the sale or re-lease of
the Equipment shall be applied first to the costs of repossession,
refurbishment and sale of the Equipment (including attorneys' fees and
court costs), then to the unpaid balance of the rental payments due
under the Lease, together with late charges and any other amounts
payable to AFI under the Lease or other damages, including, without
limitation, AFI's booked residual value in such Equipment and any
damages that are available to AFI, and the balance, if any, shall be
paid to Lessor. AFI shall then reassign to Lessor without recourse or
warranty, all of AFI's rights in the Lease.
(g) CONFIDENTIALITY. Lessor and AFI hereby agree that they shall not
transmit or reveal to any person or entity any information concerning
either party's methods of operation or documentation.
(h) ASSIGNMENT. Lessor shall have no right to assign its rights and
obligations under this Agreement in whole or in part without the prior
written consent of AFI, and any unauthorized purported assignment
shall be null and void. AFI may assign its rights and obligations
under this Agreement and/or its rights under any Lease, in whole or in
part without the consent of Lessor.
(i) CHOICE OF LAW; VENUE; WAIVER; TRIAL BY JURY. This Agreement shall be
governed by the internal laws (as opposed to conflicts of law
provisions) and decisions of the State of California. The parties
hereto consent to the jurisdiction of any local, state, or federal
court location within California, and waived any objection relating to
improper venue or forum non conveniens to the conduct of any
proceeding in any such court. AFI AND LESSOR HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY.
(j) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between AFI and Lessor as to the subject matter hereof and supersedes
all prior or contemporaneous oral or written agreements, negotiations,
or understandings. This Agreement may not be amended or altered,
except by a written agreement signed by Lessor and an executive
officer of AFI. This Agreement shall benefit and bind the parties
hereto, and their successors and permitted assigns. Any provision of
this Agreement which is prohibited or unenforceable in any applicable
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of
8.
<PAGE>
such prohibition or unenforceability without invalidating the
remaining provisions hereof, or affecting the validity or
enforceability of such provision in any other jurisdiction.
(k) NOTICES. All notices hereunder shall be given in writing and shall be
effective when deposited in the U.S. mail, postage prepaid or when
sent by nationally recognized overnight delivery service to the
address set forth in the first paragraph hereof or such other
addresses as may be provided by the parties hereto from time to time
in accordance with this Agreement.
IN WITNESS WHEREOF, the parties thereto have executed this Agreement by
their duly authorized officers as of the date first above written.
OmniCell Technologies, Inc. Americorp Financial, Inc.
By: /s/ Chris Gardner By:
------------------------------ ------------------------------
Name: Chris Gardner Name:
Title: Corporate Controller Title:
9.
<PAGE>
MASTER RESALE AGREEMENT
Agreement made this 29th day of September, 1994, by and between Americorp
Financial, Inc., a Michigan corporation, 20300 West Twelve Mile Road, Suite 202,
Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California
corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").
WHEREAS, OmniCell previously sold equipment to AFI pursuant to the Master
Assignment Agreement between OmniCell and AFI; and
WHEREAS, AFI agrees to resell to OmniCell certain of such equipment and/or
residual rights under leases of such equipment, said equipment being described
in the Equipment Schedules to be executed by the parties and attached hereto
from time to time (the "Equipment"), all on the terms and conditions contained
herein.
NOW THEREFORE, in consideration of the covenants and premises contained
herein, the parties, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL. AFI agrees that it will sell the Equipment to
OmniCell at the price indicated on the Equipment Schedule at such time as AFI
has been paid in full all amount owing to AFI under any lease covering the
Equipment. Such amounts owing to AFI shall include any amounts owing to AFI
during any extension of a lease term wherein: (i) the lessee thereunder has not
paid AFI all amounts owing under the lease as of the expiration date of the
original term of the lease; or (ii) the Equipment is attached to other OmniCell
Equipment and the term of the lease of such other Equipment has not expired at
the time of expiration of the original term of the lease of the Equipment to be
sold to OmniCell hereunder.
1.
<PAGE>
2. TERMS OF SALE. The sale of the Equipment to OmniCell shall be AS IS
and WHERE IS. OmniCell expressly acknowledges that the Equipment is used, has
not been inspected or under the control of AFI, may not be located where
indicated in AFI's records, and is being accepted by OmniCell sight unseen. AFI
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES REGARDING THE EQUIPMENT, INCLUDING AND WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITIONS OF THE
EQUIPMENT AND LOCATION OF THE EQUIPMENT. OMNICELL TAKES THE EQUIPMENT WITH ALL
FAULTS, SIGHT UNSEEN AND ACCEPTS ALL RISKS OF LOCATING AND OBTAINING POSSESSION
OF THE EQUIPMENT.
3. SERVICING. Upon sale of the Equipment to OmniCell, AFI may, at
OmniCell's request, continue to collect all payments made by any lessee under
any extended lease term of any lease covering the Equipment. OmniCell shall pay
AFI 10 percent (%) of all amounts collected as a fee. At its option, AFI may
retain its servicing fee out of collections received by it.
4. BINDING EFFECT. This Agreement is binding upon and shall inure to the
benefit of the parties hereto, their respective successors and assigns.
5. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties and supersedes any conflicting provisions of any other
agreement with regard to the subject matter hereof. This Agreement may not be
amended or modified except by a writing signed by the authorized officers of the
parties hereto.
6. CALIFORNIA LAW. This Agreement shall be construed, governed,
interpreted, and enforced in accordance with the laws of the State of California
and will be deemed to be fully
2.
<PAGE>
performed within the State of California. The parties hereto consent to the
jurisdiction of any local, state or federal court located within the State of
California and hereby waive any objection relating to improper venue or forum
non conviens to the conduct of any proceeding in any such court. AFI and
OmniCell hereby irrevocably waive all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or any
of the terms or actions contemplated hereby.
7. ASSIGNMENT. OmniCell shall have no right to assign its rights under
this Agreement in whole or in part without the prior written consent of AFI.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
WITNESSES: AMERICORP FINANCIAL, INC.
By: /s/ Thomas Dunigan
- ------------------------------- ------------------------------
Its: President
------------------------
OMNICELL TECHNOLOGIES, INC.
By: /s/ Chris Gardner
- ------------------------------- ------------------------------
Its: Corporate Controller
------------------------
3.
<PAGE>
COLLECTION OF SERVICE AGREEMENT
Agreement made this 29th day of September, 1994 by and between Americorp
Financial, Inc., a Michigan corporation at 20300 West Twelve Mile Road, Suite
202, Southfield, Michigan 48076, ("AFI") and OmniCell Technologies, Inc., a
California corporation at 1101 East Meadow Drive, Palo Alto, California 94303,
("OmniCell").
Whereas OmniCell has or will sell or assign to AFI on an on going basis Rental
Agreements pursuant to the Master Assignment Agreement by and between OmniCell
and AFI,
Whereas, AFI agrees upon OmniCell's request to act as OmniCell's billing and
collecting agent for the Rental Service Contracts which are not part of the
Master Assignment Agreement.
AFI shall use its best efforts to collect all service payments due on a
non-recourse basis and agrees to turn over such collected amounts on a timely
basis.
OmniCell agrees to pay AFI for its collection services, of which shall be $2.50
per month, per account. OmniCell agrees to allow AFI to deduct the fee out of
the money collected each month.
In witness whereof, the parties hereof have executed this Agreement on the day
and year first above indicated.
Americorp Financial, Inc.
By: /s/ Thomas Dunigan
-------------------------------
Its: President
------------------------------
OmniCell Technologies, Inc.
By: /s/ Chris Gardner
-------------------------------
Its: Corporate Controller
------------------------------
1.
<PAGE>
AMENDMENT TO MASTER RESALE AGREEMENT
This Amendment, made this 27th day of March, 1996, by and between Americorp
Financial, Inc., a Michigan corporation, 20500 West Twelve Mile Road, Suite 202,
Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California
corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").
WHEREAS, OmniCell has previously sold certain equipment and assigned
certain equipment leases to AFI pursuant to a Master Assignment Agreement dated
September 28, 1994, and
WHEREAS, AFI has agreed to resell to OmniCell certain of such equipment
and/or AFI's residual rights under the assigned leases pursuant to a Master
Resale Agreement dated September 29, 1994; and
WHEREAS, the parties hereto desire to amend and clarify their rights and
obligations under said Master Resale Agreement.
NOW THEREFORE, in consideration of the covenants and premises contained
herein, the parties, intending to be legally bound, agree as follows:
1. REVOCATION OF AGREEMENT TO SELL. Notwithstanding any provision of the
Master Resale Agreement to the contrary, the parties agree that AFI shall retain
all equipment and/or residual rights to equipment assigned to AFI by OmniCell
pursuant to the Master Assignment Agreement, said equipment/rights being
described on Schedule A hereto. As consideration for this right to retain said
equipment/residual rights, AFI shall pay OmniCell the sums set forth on Schedule
A.
2. WARRANTY OF OMNICELL. OmniCell hereby represents and warrants that,
with respect to the equipment/residual rights listed on Schedule A attached
hereto, neither OmniCell
1.
<PAGE>
nor its officers, agents, employees or representatives of any kind has granted
to the lessee of such equipment, either in writing or orally, any rights in or
to said equipment, including, but not limited to, the right to own or purchase
the leased equipment at the termination of such lease for any sum or other
consideration. Any such right to purchase contained in an original lease
between a lessee and OmniCell, which was disclosed to AFI at the time such lease
was assigned by OmniCell to AFI pursuant to the Master Assignment Agreement,
shall be exempted from this paragraph and shall not be considered a breach of
this Agreement. Any other right to purchase or retain the leased equipment
which has been granted to a lessee subsequent to the assignment of said lease to
AFI, whether by amendment or otherwise, shall be considered a breach of this
warranty unless AFI has consented or consents to such action.
3. BREACH OF WARRANTY. In the event that OmniCell breaches its warranty
to AFI described in Paragraph 2 above, the parties agree that the consideration
paid by AFI to OmniCell for the right to retain said equipment/residual rights
as listed on Schedule A hereto shall immediately be repaid to AFI, together with
interest at the rate of nine and one-half percent (9.5%) from the date of this
Amendment to the date that such breach occurs and such payment is made.
4. APPLICABILITY OF AMENDMENT. This Amendment shall alter the rights of
the parties only with respect to the equipment/residual rights listed on
Schedule A hereto. With regard to all other equipment/residual rights, the
parties hereby reconfirm and ratify their rights and obligations as set forth in
the Master Resale Agreement as executed on September 29, 1994.
2.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
WITNESSES: AMERICORP FINANCIAL, INC.
By: /s/ Thomas Dunigan
- ------------------------------ -------------------------------
Thomas X. Dunigan
Its: President
OMNICELL TECHNOLOGIES, INC.
/s/ Sheldon Asher By: /s/ Earl E. Fry
- ------------------------------ -------------------------------
Earl E. Fry
Its: VP & CFO
-------------------------
3.
<PAGE>
SECOND AMENDMENT TO MASTER RESALE AGREEMENT
This Amendment, made this 4th day of April, 1996, by and between Americorp
Financial, Inc., a Michigan corporation, 20300 West Twelve Mile Road, Suite 202,
Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California
corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").
WHEREAS, OmniCell, on an on-going basis, will sell equipment and assign
certain equipment leases to AFI pursuant to a Master Assignment Agreement dated
September 29, 1994, and
WHEREAS, AFI has agreed to resell to OmniCell certain of such equipment
and/or AFI's residual rights under the assigned leases pursuant to a Master
Resale Agreement dated September 29, 1994, and
WHEREAS, the parties hereto desire to amend and clarify their rights and
obligations under said Master Resale Agreement.
NOW THEREFORE, in consideration of the covenants and premises contained
herein, the parties, intending to be legally bound, agree as follows:
1. REVOCATION OF AGREEMENT TO SELL. Notwithstanding any provision of the
Master Resale Agreement to the contrary, the parties agree that AFI shall retain
on an on-going basis, all equipment and/or residual rights to equipment assigned
to AFI by OmniCell pursuant to the Master Assignment Agreement, for all
transactions purchased by AFI after April 1, 1996. As consideration for this
right to retain said equipment/residual rights, AFI shall pay to OmniCell a
greater equipment cost, which shall be agreed upon and paid at the time of the
assignment and purchase by AFI.
2. WARRANTY OF OMNICELL. OmniCell hereby represents and warrants that,
with respect to the equipment/residual rights, neither OmniCell nor its
officers, agents, employees or
1.
<PAGE>
representatives of any kind has granted to the lessee of such equipment, either
in writing or orally, any rights in or to said equipment, including, but not
limited to, the right to own or purchase the leased equipment at the termination
of such lease for any sum or other consideration. Any such right to purchase
contained in an original lease between a lessee and OmniCell, which was
disclosed to AFI at the time such lease was assigned by OmniCell to AFI pursuant
to the Master Assignment Agreement, shall be exempted from this paragraph and
shall not be considered a breach of this Agreement. Any other right to purchase
or retain the leased equipment which has been granted to a lessee subsequent to
the assignment of said lease to AFI, whether by amendment or otherwise, shall be
considered a breach of this warranty unless AFI has consented or consents to
such action.
3. BREACH OF WARRANTY. In the event that OmniCell breaches its warranty
to AFI described in Paragraph 2 above, the parties agree that the consideration
paid by AFI to OmniCell for the right to retain said equipment/residual rights
shall immediately be repaid to AFI, together with interest at the rate of nine
and one-half percent (9.5%) from the date of this Amendment to the date that
such breach occurs and such payment is made.
4. APPLICABILITY OF AMENDMENT. This Amendment shall alter the rights of
the parties only with respect to the equipment/residual rights for transactions
purchased after April 1, 1996. With regard to all other equipment/residual
rights, the parties hereby reconfirm and ratify their rights and obligations as
set forth in the Master Resale Agreement as executed on September 29, 1994, and
its Amendment dated March 27, 1996.
2.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
WITNESSES: AMERICORP FINANCIAL, INC.
By: /s/ Thomas X. Dunigan
- ------------------------------ -------------------------------
Thomas X. Dunigan
Its: President
OMNICELL TECHNOLOGIES, INC.
/s/ Randall Lipps By: /s/ Earl E. Fry
- ------------------------------ -------------------------------
Its: VP & CFO
-------------------------
3.
<PAGE>
EXHIBIT 10.6
PREMIER PURCHASING PARTNERS, L.P.
GROUP PURCHASING AGREEMENT
TYPE OF EQUIPMENT: Automated Distribution Systems
& Accessories
EFFECTIVE DATE: June 1, 1997
Between And
Premier Purchasing Partners, L.P. OmniCell Technologies
Three Westbrook Corporate Center 1101 East Meadow Drive
Westchester, IL 60154 Palo Alto, CA 94303
Tel. No.: 708-409-4539 Tel. No.: 800-850-6664
Fax No.: 708-409-3499 Fax No.: 415-843-6294
Attn: Janet Roach Attn: Jeff Arbuckle
Central Vice President
800-474-2355x5102
Referred to as "Purchasing Partners" Referred to as "Seller"
INTRODUCTION
This is an agreement (the "Agreement") for Automated Distribution Systems and
Accessories as listed in Exhibit A and as subsequently added to this Agreement
by the mutual written agreement of the parties (collectively referred to herein
as the "Products" or individually as the "Product"). Seller agrees to provide
the Products to Premier Members (as that term is defined in Section 3.1 below)
according to the terms, conditions and prices contained herein. Seller will
provide Purchasing Partners and Premier Members with all clinical and in-service
support and expertise necessary to aid with conversions of Premier Members to
the Products and, if applicable, with all continuing support to maintain the
Product(s).
Purchasing Partners, as it deems necessary, will provide information regarding
this Agreement to the participants in the Premier Group Purchasing Program, will
actively support conversion and commitment to this Agreement and will aid in
communicating with Premier Members.
<PAGE>
1. AGREEMENT PERIOD
This Agreement will remain in effect for a period of thirty-six (36) months
commencing on the Effective Date set forth above, unless earlier terminated
pursuant to the terms of this Agreement. This Agreement may be extended, for an
additional two (2) years upon mutual agreement of the parties.
2. PRODUCTS COVERED
This Agreement covers Seller's full line of Products as listed in Exhibit A
and as subsequently added to this Agreement by the mutual written agreement
of the parties.
3. PARTICIPATING PREMIER MEMBERS
3.1 Option to Participate.
For purposes of this Agreement, a "Premier Member" is each current and
future (i) limited partner of Purchasing Partners ("Limited Partner");
(ii) any entity that is owned by or under common control of a Limited
Partner; (iii) individual participants or members of a group affiliate
of Purchasing Partner's corporate affiliate, Premier, Inc. or a direct
affiliate thereof; (iv) affiliate of a shareholder of Premier, Inc.;
(v) any entity that is owned or under common control of an affiliate
of a shareholder of Premier, Inc.; or (vi) any entity that is owned or
under common control of a direct affiliate or a participant or member
of a group affiliate of Premier, Inc., whether for-profit or not-for-
profit, including, without limitation, physicians, home care
providers, home infusion therapy providers, ambulatory care
facilities, outpatient surgery centers, outpatient diagnostic centers,
imaging centers, urgent care facilities, nursing homes, and hospices.
Seller agrees to offer to each Premier Member the Products pursuant to
the terms of this Agreement. A roster of Premier Members current at
the time of the signing of this Agreement is attached hereto as
Exhibit B. Seller shall receive a hard copy roster on a monthly basis
unless the Seller requests the roster on a diskette or via electronic
mail.
3.2 Commitment Requirements
Only Premier Members that execute the Commitment Document set forth in
Exhibit C will have access to the pricing and discounts covered in
this Agreement. A Premier Member which executes the Commitment
Document agrees to purchase from Seller a minimum of eighty percent
(80%) of such member's annual requirement for the Product(s) (in
dollars) specified in such letter. A Premier Member which signs the
Commitment Document shall be deemed a "Participating Premier Member."
The parties agree that any failure by a Participating Premier Member
to adhere to any of the terms and conditions of its Commitment
Document with Seller shall not constitute a breach by Purchasing
Partners hereunder.
1.
<PAGE>
3.3 Termination of Existing Contracts
Any Premier Member desiring to avail itself of the contractual
options, terms and conditions described herein may, at its option and
without liability, terminate any existing contract(s) or other
arrangement(s) by extending the current rental agreement between the
Premier Member and Seller for the sole purpose of participating in the
group purchasing arrangement set forth in this Agreement.
As an example; if the customer had already completed twenty-four
(24) months on an existing sixty (60) month rental agreement, pricing
per the terms of this Agreement would be used when the customer
extends and enters into a new sixty (60) month agreement for the
existing equipment.
4. TERMS AND CONDITIONS
4.1 Authorized Distributors
Except as provided herein, all Products purchased pursuant to this
Agreement by Participating Premier Members must be purchased directly
from Seller.
Participating Premier Members may purchase Supply Products through
Baxter Healthcare Corporation listed as "Baxter Distributed OmniCell
Supply Products" included under Exhibit A, provided that Participating
Premier Members participate in the group purchasing agreement entered
into by and between Baxter Healthcare Corporation and Purchasing
Partners for Automated Medication Distribution and Accessories
effective June 1, 1997 ("Baxter Group Purchasing Agreement"). Seller
represents and warrants that it has authorized Baxter Healthcare
Corporation to distribute the Products pursuant to the terms of this
Agreement. Seller further represents and warrants that Baxter
Healthcare Corporation shall be responsible for the administration of
such distribution pursuant to this Agreement and that Purchasing
Partners shall receive a report on a quarterly basis which includes
all information concerning such distribution, including but not
limited to, the name of the Participating Premier Member purchasing
Seller's products through Baxter Healthcare Corporation, the specific
products being purchased, the date of purchase, the date of order and
delivery, and the date of payment to Baxter Healthcare Corporation by
Participating Premier Member.
4.2 Payment Terms.
Payment of the first rental payment or purchase price in full is due
within forty-five (45) days following the delivery and acceptance of
Product(s) to Participating Premier Member. All monthly payments
after the first rental payment are due within thirty (30) days of
receipt of the monthly invoice. Service pricing for Products covered
under Rental/Lease Agreements are included in the Rental/lease monthly
rates in Exhibit A.
2.
<PAGE>
Payment terms for Products purchased through Baxter Healthcare
Corporation pursuant to Section 4.1 shall be as provided in this
Section 4.2.
4.3 Shipping Terms
All shipments are Free On Board (F.O.B.) Destination. Freight will be
prepaid and added to the Participating Premier Member's invoice.
Estimated shipping costs to Participating Premier Members in different
locations throughout the country are listed below. Shipping costs for
units shipped individually and in truckloads are listed.
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Approximate Cost Approximate Cost
Per Cell if Shipped Per Cell if Shipped
Area Miles in Single Units by Truck Load
---------------------------------------------------------------------
<S> <C> <C> <C>
Los Angeles 400 $ 75 $ 50
---------------------------------------------------------------------
Denver 1226 $115 $ 80
---------------------------------------------------------------------
Chicago 2155 $125 $105
---------------------------------------------------------------------
New York 2944 $165 $145
---------------------------------------------------------------------
</TABLE>
Participating Premier Member shall have ten (10) business days from
the date of delivery in which to inspect the Product(s) and to accept
or reject such Product(s). In the event the Participating Premier
Member, after such inspection, rejects the Product(s) due to discovery
of broken or damaged items of Product(s) or the packages containing
Products, the Participating Premier Member shall have the right to
return the damaged Products at the expense of Seller and Seller shall
replace such Product(s) within a mutually agreed upon time frame and
not to exceed thirty (30) days. Payment terms for Products purchased
through Baxter Healthcare Corporation pursuant to Section 4.1 of this
Agreement shall be as set forth in this Section 4.3.
4.4 Minimum Order
Not Applicable
4.5 Ordering
All purchase orders for Products may be placed by telephone,
telecopier, or through electronic order entry directly through Seller
at the following address and telephone number:
----------------------------------------------------------------------
Suzy Carr, Contracts Administrator Phone: (415) 843-6151
OmniCell Technologies, Inc. Fax: (415) 843-6294
1101 East Meadow Drive
Palo Alto, CA 94303
----------------------------------------------------------------------
3.
<PAGE>
Orders for Products purchased through Baxter Healthcare Corporation
pursuant to Section 4.1 of this Agreement may be purchased through
Baxter Healthcare Corporation at the following address and telephone
numbers:
----------------------------------------------------------------------
Baxter Healthcare Corporation Phone: (800) 323-4315
Productivity Systems Fax: (847) 270-5273
Customer Operations
RTE 120 & Wilson Rd.
Round Lake, IL 60073
----------------------------------------------------------------------
4.6 Guarantee of Delivery
Seller guarantees that all Products ordered by any Participating
Premier Member shall be delivered to member up to and should not
exceed more than ninety (90) days of Seller's receipt of such member's
order for the Product(s). Seller and Participating Premier Member
shall agree upon a specific date of delivery of the Product(s).
Participating Premier Member may delay any scheduled delivery of the
Product(s) for up to ninety (90) days after the execution of the
purchase order by providing written notice of such delay to the Seller
at least thirty (30) days prior to such scheduled date of delivery
without any increase in the price of the Product(s). If Seller fails
to deliver any Product(s) within the above-mentioned time period, the
Participating Premier Member, at its sole discretion, may exercise any
of the following options: (A) to purchase any substitute product(s)
from another source(s), and subsequently be reimbursed by Seller for
the difference between such member's actual acquisition cost for such
product(s) and the price(s) such member would have paid for Seller's
Product(s) under this Agreement; provided that the difference will not
exceed Seller's list prices; (B) to terminate the purchase order for
the Product(s) without penalty, and immediately refund to
Participating Premier Member all funds paid for the Product(s) and any
related materials pursuant to such purchase order, or (C) for those
Product(s) purchased, to extend the warranty period referred to in
Section 10.2, at no charge, by two (2) business days for each calendar
day, or portion thereof that delivery is delayed after the scheduled
date of delivery as agreed upon by the Seller and Participating
Premier Member. Any such warranty extension days described in (C)
will be provided on the days of the week covered under such warranty.
Upon the request of any Participating Premier Member, Seller will
assist any such Participating Premier Member in finding alternative
acceptable sources for any Product(s) which Seller cannot deliver
according to the guaranteed delivery time specified above.
For orders placed with an Authorized Seller's Distributor, guarantee
of delivery provisions will be negotiated between each Participating
Premier Member and the Authorized Seller's Distributor. If the
Authorized Seller's Distributor fails to deliver any Product(s) within
the foregoing negotiated time period because Seller has failed to
provide the Product(s) to the Authorized Seller's Distributor, the
Participating Premier Member may exercise any of the options (A)
through (C)
4.
<PAGE>
described above. Upon the request of any Participating Premier
Member, Seller will assist any such Participating Premier Member in
finding alternative acceptable sources for any Product(s) which an
Authorized Seller's Distributor cannot deliver according to the
guaranteed delivery time specified above.
4.7 Guarantee of Delivery Under Emergency Conditions
In the event of a natural disaster or industry wide shortage of
Products ("Emergency Condition"), Seller agrees to give priority to
orders placed by Participating Premier Members for Products during
the duration of the Emergency Condition. If possible, the Seller will
sequester a specific quantity of Products for the exclusive purchase
by Participating Premier Members for the duration of the Emergency
Condition.
4.8 Quality Standards and Specifications
In the event any Participating Premier Member determines within the
first thirty (30) days of use that any Product(s) purchased from
Seller hereunder does not satisfy the Seller's representations
relative to performance, accuracy, and service history, and is not
performing in accordance with such Product's(s') performance
specifications as set forth on Exhibit G ("Product Specifications"),
such member may return such Product(s) to Seller and receive a
replacement for or full repair of such Product(s). In the event
Participating Premier Member returns the Product(s) pursuant to this
Section. Seller shall bear all shipping expenses. This Section 4.8
shall in no way limit the remedies available for exchange of damaged
Product(s) provided in Section 4.3 above.
4.9 Special Handling/Services
Not Applicable
4.10 Clinical Site Preparation.
Subject to the terms of this Agreement, Participating Premier Member,
at its expense, will prepare the clinical site(s) where a Product
will be installed ("Clinical Site") for each such Product according
to the site preparation recommendations which are required to be
provided by Seller. In no event shall Seller be responsible for the
quality or adequacy of the work not performed by, or under the
authority of, Seller.
Notwithstanding any other provision of this Agreement, if any Product
or related equipment fails to perform to its Product Specifications
prior to acceptance by Participating Premier Member due to a
particular condition (or conditions) of such Product's or related
equipment's Clinical Site and that condition (or conditions) fully
meets Seller's site preparation recommendations described above or
modifications thereto agreed to by the parties in writing, Seller
will bear the expense of modifying such Clinical Site to correct such
failure of the Product(s) or related equipment to perform.
5.
<PAGE>
4.11 Installation.
After Delivering the Product(s) in accordance with Section 4.6
(Guarantee of Delivery), included in the price of the Product(s),
Seller will be fully responsible for performing all tasks necessary
to install the Product(s), including without limitation, uncrating,
unpacking, removal of packing material, field assembly,
interconnection, calibration and testing to ensure that the
Product(s) conform(s) to its Product Specifications and is completely
ready to perform all procedures for which it is designed and marketed
by Seller.
4.12 Acceptance.
Participating Premier Member will accept the Product(s) at the time
of delivery by signing a Certificate of Acceptance; provided,
however, that Seller offers a sixty (60) day free use period or
Conditional Period as described in Section 4.13 on the initial order
only.
The Participating Premier Member shall have the option during the
sixty (60) day period to test the Product(s) to confirm the safety,
reliability and performance of the Product(s) and to perform
corollary or parallel testing to verify the accuracy of the
Product's(s)' performance.
4.13 Conditional Period of Acceptance
Seller will allow a sixty (60) day validation period, (which shall be
known as a "Conditional Period") to Participating Premier Members who
are interested in evaluating Seller's Product(s) prior to purchasing
or renting the equipment on the initial order only. Product(s)
evaluated during the Conditional Period will be capped at a maximum
of two (2) nursing locations with no more than two (2) frames per
nursing location. No charges will be invoiced to Participating
Members during the Conditional Period.
Due to the breadth of this offer, Seller requests a conditional
purchase order from the Premier Member and a signed validation
agreement for the equipment to be validated in order to build and
ship the equipment.
A sixty (60) month rental agreement or a purchase agreement, an
annual coterminous service agreement and acceptance documents for the
delivered equipment must be executed for the equipment to remain for
longer than the 60-day Conditional Period. The Conditional Period may
be extended beyond 60 days at Seller's option.
If the Participating Premier Member does not accept Product(s) in
accordance with this section within the initial sixty (60) days
acceptance period, Seller will, upon written notice from
Participating Premier Member, remove the Product(s) at no charge,
immediately refund to Participating Premier Member all funds paid for
the Product(s) and may, without penalty, and in addition to pursuing
any and all other rights and remedies such member may have, upon
written notice to Seller
6.
<PAGE>
and Purchasing Partners immediately terminate its Commitment Document
with Seller in connection with this Agreement.
All expenses related to the removal of the Product(s) and its related
equipment shall be borne by Seller and Seller shall reimburse
Participating Premier Member for such member's costs associated with
any modifications of the Clinical Site for use of other products.
4.14 Controlling Terms.
In the event of a conflict of terms between the Seller's invoice or
Seller's Service Agreement in Exhibit K, Seller's Rental Agreement in
Exhibit I, Seller's Purchase Agreement in Exhibit J, and this
Agreement or the Commitment Document, the terms of this Agreement or
the Commitment Document shall control.
4.15 Return Goods Policy.
Seller's warranty is to repair or replace, at Seller's option, the
defective part, parts, software, or equipment.
Notwithstanding anything contained herein or covered under Seller's
Service Agreement in Exhibit K to the contrary, Product(s) may be
exchanged or returned either (i) if Participating Premier Member
returns goods in accordance with Section 4.8, or (ii) if
Participating Premier Member does not accept equipment in accordance
with Section 4.13, or if (iii) the Participating Premier Member
returns Product(s) at the end of their rental/lease agreement per the
terms of the Seller's Rental Agreement included herein under Exhibit
I. Participating Premier Member shall prepay shipping charges,
including crating and shipping by means mutually agreed to between
Participating Premier Member and Seller (and shall pay all duties and
taxes) for such Product(s) exchanged or returned to Seller if
returned pursuant to (ii) and (iii) above, unless return is due to
fault of Seller. Seller shall prepay shipping charges (and shall pay
all duties and taxes) for such Product(s) returned to Seller if
returned pursuant to (i) above.
5. PRICING
5.1 Best Pricing.
Given the size of Purchasing Partners and committed nature of
Purchasing Partners purchasing program, Seller warrants that the
prices, terms and conditions offered through this Agreement shall, at
all times, be equal to or better than those offered to any other
comparable customer (excluding the Federal Government) except to the
extent that Purchasing Partners has a lesser volume of purchases.
Purchasing Partners and Seller agree to meet at least on a quarterly
basis to review prices, terms and conditions to ensure that Seller is
in compliance with the provisions outlined above. If it is determined
that Seller is not in compliance,
7.
<PAGE>
Purchasing Partners and Seller shall amend this Agreement and Exhibits
to provide Purchasing Partners with more favorable terms.
5.2 Pricing.
Exhibit A sets forth the net member delivered price (excluding
shipping) to be offered to Participating Premier Members for each of
the Products. Prices in this Agreement will increase _____ percent
______ at the beginning of the second year of this Agreement, and
_____ percent _____ at the beginning of the third year. Pricing for
any extension of this Agreement will be negotiated by the parties.
In the event of any industry-wide price decrease for any Product
during the term of this Agreement, Seller will reduce the price of
that Product as set forth in Exhibit A by the same percentage
reduction as such industry-wide price decrease.
Guaranteed Base Discounts:
Participating Premier Members are guaranteed volume discounts based on
a simplified three tiered discount structure. The three tiered
discount structure is listed below. The discount is provided at the
time of purchase and is based on the aggregate dollar volume of
products listed on the purchase order.
----------------------------------------------------------------------
Purchasing Volume Discount off List Prices
----------------- ------------------------
----------------------------------------------------------------------
$0 to $200,000 ____ discount
----------------------------------------------------------------------
$200,001 to $1,000,000 ____ discount
----------------------------------------------------------------------
Over $1,000,000 Additional discounts negotiated case
----------------------------------------------------------------------
Seller offers an additional ______ percent _____ net discount if the
Participating Premier Member elects not to evaluate Product(s) or
utilize a Conditional Period (free use) described in Section 4.13
herein.
5.3 Large Orders
Any Participating Premier Member who purchases single orders totaling
$1,000,000 or more using the net prices in Exhibit A will be offered
special pricing that is negotiated between an individual Participating
Premier Member and Seller. All such negotiations must be coordinated
through Purchasing Partners.
5.4 Competitive Conversion Incentive
Seller will place aside $2,000,000 of Seller equipment to swap out
against any competitive equipment in Participating Premier Member
facilities. Such equipment swap shall be mutually agreed to by the
parties and must be utilized within the first twelve (12) months of
this Agreement. Each competitive equipment swap request by
Participating Premier Members will be up to and not
8.
<PAGE>
to exceed $500,000 per request. The net purchase prices listed in
Exhibit A and related shipping charges will be used to credit against
this swap fund. Rebates do not apply to swap equipment. As a general
guideline, Seller will agree to swap competitive systems for new
Seller systems on a 1:4 basis.
(a) Single Hospital Example:
A Participating Premier Member hospital has 4 competitive systems that
they would like to swap for Seller's equipment. The hospital would
need to have at least 16 Seller's systems installed within the single
location to be applicable for the competitive swap. In this example
four of the sixteen units are the swap units.
(b) Small Group of Hospitals Example:
For a small group of hospitals, the competitive swap would be
calculated based upon the total number of Seller's frames to be
installed throughout the Group. In the following example, the 30
competitive systems would be swapped on a competitive basis for a
minimum of 120 Seller's frames throughout the hospital group.
<TABLE>
<CAPTION>
----------------------------------------------------------------
Hospitals within Competitive Minimum OmniCell Frames
Group Systems Installed to be Installed
<S> <C> <C>
----------------------------------------------------------------
South Regional 8 48
----------------------------------------------------------------
North Regional 20 20
----------------------------------------------------------------
East Regional 0 22
----------------------------------------------------------------
West Regional 2 30
----------------------------------------------------------------
----------------------------------------------------------------
Total 30 120
----------------------------------------------------------------
</TABLE>
(c) Competitive Agreements Expiring less than One Year:
In addition, any competitive system which has less than one (1) year
remaining on its existing rental/lease agreement will be reviewed for
replacement on an account by account basis. Seller will credit the
Participating Premier Member for the time remaining on the contract by
giving a discount equivalent to the amount of the time left to be paid
on the replacement unit's contract.
For example;
If a Participating Premier Member has competitive systems with 6
months remaining on the rental commitment, and they wish to convert to
Seller's equipment on a 60 month rental agreement, Seller may
negotiate with the Participating Premier Member to allow for a 66
month rental agreement, in which the first six months are discounted
and prorated over the term of the rental agreement.
9.
<PAGE>
5.5 Special Promotions
Seller may, on occasion, offer special promotions for Product(s)
including feature options. Any such promotion will be offered to all
Participating Premier Members and will be limited to the terms and
conditions of the specific promotion. All promotions must be
coordinated by Seller through Purchasing Partners.
5.6 Targeted Group Purchases
From time to time, Purchasing Partners may identify group purchase
opportunities with Seller, whereby several Participating Premier
Members agree to purchase Seller's Product(s) during a specified time
period. Seller agrees to assist and participate in this Group
purchase and offer additional incentives to such Participating
Premier Members in the event of such a program.
5.7 Pricing for Updates/Upgrades
Updates/Upgrades/Enhancements will be provided for Product(s) at no
charge for Participating Premier Members with active
service/maintenance agreements. Feature options for Product(s) will
be chargeable, to Participating Premier Members and will vary
depending on the option. Examples of Updates/upgrades are under
Exhibit M.
5.8 Coterminous Agreements
Seller will accommodate coterminous agreements by adjusting the price
of new orders to allow for coterminous coordination with current
rentals/leases or extending the term of current rentals/leases to go
coterminous with new orders per Section 3.3
5.9 Supply Station/Pharmacy Automated Distribution System Ordering
Incentives
Seller shall provide an additional percent net discount to
Participating Premier Members who purchase both Seller's supply and
pharmacy stations under this Agreement. Seller shall also provide an
additional percent net discount on the purchase under this Agreement
of Seller's supply stations by Participating Premier Members who have
committed to the Baxter Group Purchasing Agreement and who purchase a
combination of Seller's supply stations and Baxter Healthcare
Corporation's automated medication distribution systems.
5.10 Exclusive Group Discounts
For any Participating Premier Members with a minimum of three (3)
acute care hospitals who sign up to utilize Seller as its exclusive
automation vendor, Seller will provide a Member Exclusivity discount
of an additional ______ percent
10.
<PAGE>
_____net discount. This discount is applied on a moving forward basis
and is not retroactive.
5.11 Pricing of New Products
Pricing for any additional and/or new products of Seller will be
negotiated at net prices consistent with the net prices of Products
already covered by this Agreement.
5.12 Electronic Transfer of Funds/Electronic Data Interchange
Seller and Purchasing Partner agree that in the event any
Participating Premier Member with the capability for electronic
transfer of funds or other form of electronic data interchange
compatible with that of Seller chooses to use such payment or
ordering method, the pricing set forth in this Agreement may be
reduced by a discount to be mutually agreed upon by such
Participating Premier Member and Seller.
5.13 Product Pricing Information (Sales Catalogs)
Seller will provide to Purchasing Partner product pricing information
in the ANSI X.12-832 format as detailed in Exhibit D. The timeframe
for product information to be available in this format is one (1)
year from the date of the Agreement. In the meantime, Seller may
utilize one of the alternative formats detailed in Exhibit D. If
after twelve (12) months, Seller shall be subject to assessment by
Purchasing Partners only for the additional costs associated with
processing product pricing information provided in a non-standard
format.
5.14 Taxes
No party shall be responsible for taxes imposed on any other party as
a result of or arising from the transactions contemplated by this
Agreement. Property and user taxes will be prepaid and added for
those customers in the states affected.
6. MARKETING/SALES SUPPORT/MAINTENANCE
6.1 Seller Representatives
Seller will provide representatives to call upon Participating
Premier Members on a periodic basis mutually agreed to by Seller and
each individual Participating Premier Member.
6.2 In-Service/Clinical Training
Included in the price of the Product(s), Seller will provide to each
Participating Premier Member In-service and Clinical Training, as
described herein under Exhibit L related to the Product(s) as
required or requested by each Participating Premier Member ("Train
the Trainer"). Seller will maintain a properly qualified
11.
<PAGE>
training staff to provide such In-service and Clinical Training, and
it shall be the responsibility of each Participating Premier Member to
ensure that its appropriate personnel attend and complete such
training. Specifically, Seller shall perform, at the convenience of
each Participating Premier Member, in-service training sessions at
Seller's facility for medical, clinical and technical personnel in the
use and operation of the Product(s). The scheduling of applications
training shall be made directly with the director of the Participating
Premier Member's applicable department and shall accommodate all
shifts that require training.
Also included in the price of the Product(s), Participating Premier
Members are required to participate in a week of training prior to the
clinical use of the system, The "System Administrator Training Course"
is held at Seller's headquarters in Palo Alto, California. The course
fee will be waived by Seller, while all travel and related expenses
will be the responsibility of the Participating Premier Member. The
Participating Premier Member must complete training prior to the
clinical use of the system in order to enforce the warranty and
indemnification provisions of this Agreement with respect to such
Participating Premier Member.
Also included in the price of the Product(s), Seller will provide a
written training guide and/or set of training video tapes to the
Participating Premier Member to be used for future in-service training
by Staff.
Also included in the price of the Product(s), Seller shall supply the
Participating Premier Members with the following items prior to or at
the time of delivery of the Product(s): (A) one (1) copy of operator
manuals covering all equipment and accessories; and (B) one (1) copy
of complete service manuals detailing all equipment and accessories
including, without limitation, parts lists and schematic diagrams.
All updates to manuals and final versions (where applicable) of
manuals are to be provided for the life of the equipment.
Participating Premier Members shall be entitled to make necessary
copies, for internal purposes only, of any training materials to be
used.
6.3 Biomedical/Technical Programs
Within the warranty period described in Section 10.2, Seller will make
available factory service school training including travel, room and
board, for the Participating Premier Member's clinical engineering
representative for $3,500.00 per course, plus travel and expenses.
This privilege shall extend for no more than five (5) years from the
acceptance of the Product(s) by Participating Premier Member and shall
not be utilized more than one time per year after the first year of
system operation. If possible, training shall be provided at regional
locations to accommodate multiple Participating Premier Members.
6.4 Remote Diagnostic Systems
Not Applicable
12.
<PAGE>
6.5 Product Developments/New Product Opportunities
At Purchasing Partners' request, Seller will meet with Purchasing
Partners at least two (2) times during each year of this Agreement to
share new product information and technology and to discuss
opportunities of mutual interest. All expenses associated with such
meetings during each year of this Agreement will be paid in a mutually
agreed upon arrangement. Seller will work with Purchasing Partners
and Participating Premier Members in developing new products and
exploring opportunities for market research, clinical trials and
technology transfer.
Contemporaneous with Seller's announcement to any other customer of
any new commercially available product, Seller will notify Purchasing
Partners in writing of the nature, potential uses and performance
specifications of such product.
6.6 Service and Related Agreements
Seller's Service Agreement, included herein under Exhibit K, is
required for Participating Premier Members on all rented/leased or
purchased Product(s).
6.7 Service and Maintenance
Seller offers basic and extended service to Participating Premier
Members. The price for the sixty (60) month rental of Product(s) with
Basic Service included under Exhibit A will be firm for the term of
the Agreement. The price for the twelve (12) month Basic Service
listed herein under Exhibit A will increase pursuant to Section 5.2.
Seller's basic or extended service prices will be discounted by ____
percent ____ (rounded to nearest $5) if a Participating Premier Member
facility agrees to the following:
1. Participating Premier Member(s) send a minimum of two Bio-Med
personnel to Seller's headquarters for system administrator
training as referenced in Section 6.3.
2. Once certified, Participating Premier Member trained personnel
must be available to perform on-site maintenance services
normally performed by Seller. This will include all services
that Seller is able to train Participating Premier Member Bio-med
personnel to perform.
3. The first call follow-up from Seller's help desk will go to the
Participating Premier Member's Bio-med service personnel.
Seller shall provide the Participating Premier Member participant a
list of parts, servicing and planned maintenance kits, and specialized
test and servicing equipment to be provided. This list shall include
pricing and available discounting.
13.
<PAGE>
6.8 Accessories and Replacement Parts
Included in the price of the Product(s) and for the life of the
Product(s), Seller will offer to Participating Premier Member each
item, including, without limitation, hardware, firmware, and software
("Accessory Item") which may be used with any Product(s) at a zero
percent (0%) discount off Seller's then-current list price for such
Accessory Item, or the lowest price which Seller offers such Accessory
Item to any of its other customers, whichever is lower. For any
Accessory Item ordered by Participating Premier Member, Seller will
install the Accessory Item at no charge when the Product(s) is not in
use according to a schedule approved by Participating Premier Member,
and will provide, at no charge, training to Participating Premier
Member designees regarding use of such Accessory Item, except in cases
of misuse (e.g. physical abuse, not providing voltage surge
protection, not providing preventative maintenance as described in the
operator's manual) by a Participating Premier Member, in which case
parts and labor will be charged at current rates.
Also included in the price of the Product(s), Seller will provide all
replacement parts for the Product(s) within twenty-four (24) hours of
Participating Premier Member's request. All replacement parts for the
Product(s) will be available for not less than ten (10) years
following the earlier of either (i) the date when Seller ceases to
sell the Product(s) or a reasonable substitute of the Product(s) or
(ii) the expiration of the warranty period described in Section 10.2,
including all extensions thereto, if applicable. Included in the
price of the Product(s), Seller shall provide all software and
hardware modifications necessary to meet regulatory requirements.
6.9 Downtime Protection
Seller is not able to track downtime for Product(s) as requested.
Seller will guarantee a 95% cumulative up-time for all equipment in
each Participating Premier Member facility. For each month that
passes where the 95% up-time is not maintained, Seller agrees to waive
the service fees for one month.
For example;
If a Participating Premier Member has 10 units installed, they would
have 7,200 hours of operation in a thirty day month. If the Member
has more that 360 hours (5%) of downtime (as calculated by the
Member), the service fees for the entire installation would be waived
for one month. If during the warranty period for any Product, such
product experiences twenty (20) or more continuous days of any
Downtime, or forty (40) or more days of any Downtime, Participating
Premier Member shall notify Seller in writing of such circumstances,
including a description of the problems or defects. Seller agrees to
provide at its expense and within twenty-four hours (24) of receiving
such notice, the technical personnel and assistance necessary to
remedy the failed Product and to prevent the problems or defects from
reoccurring, unless the problems are caused by the Participating
14.
<PAGE>
Premier Member's own interfaces to the Product(s). In the event that
Seller is unable to remedy the problems or defects in the Product(s)
within a time period reasonably determined by Participating Premier
Member, Seller shall remove such Product at no charge, immediately
refund to Participating Premier Member a prorated amount based on the
depreciation schedule of Product(s) all funds paid for such Product
if purchased and forgiveness of future rental charges for leased
Product(s) for such Product(s) that experienced Downtime. For
purposes of this Agreement, "forgiveness of future rental charges"
shall mean the Participating Premier Member shall not be considered
in default of their current rental agreement.
6.10 Response Time
Included in the price of the Product(s), Seller shall make available
to Participating Premier Members, a service engineer familiar with
the Product(s) to respond by telephone within a reasonable time not
to exceed four (4) hours of Participating Premier Member's placing a
telephone call to Seller requesting service regarding any problem
with the Product(s), or failure of the Product(s) to perform in
accordance with the Product Specifications. If Seller's response time
is later than four (4) hours on two or more occasions within a thirty
(30) day period, Seller will waive the service fees for that
Participating Premier Member for one month for those units affected.
If either the Participating Premier Member or Seller reasonably
determines that a service visit is necessary to correct the problem,
Seller shall have a service engineer at the Clinical Site as per the
terms of the applicable service agreement (basic or extended).
7. SALES DOCUMENTATION
Seller will provide Purchasing Partners with reports of all Products
purchased by each Participating Premier Member no later than thirty (30)
days after the last day of the quarter. Reports will include, reporting
period start and end dates, member name, city, state, monthly sales volume
per Product (totaled per member), and the administrative fee amount by
member. Participating Premier Members will be identified by HIN or DEA
number.
Seller will provide to Purchasing Partners sales documentation in the ANSI
X. 12-867 format as detailed in Exhibit E. The timeframe for sales
information to be available in this format is one (1) year from the date of
the Agreement. In the meantime, Seller may utilize one of the alternative
formats detailed in Exhibit E. However, if Seller deviates from the ANSI X.
12-867 standard after twelve (12) months, an additional fee (as set forth
in Section 8.3) will be assessed against Seller to compensate Purchasing
Partners for the additional costs associated with processing Product sales
data provided in a non-standard format.
15.
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Seller will identify to Purchasing Partners a contact person within
Seller's organization who will be responsible for the development and
distribution of the sales reports set forth in Section 7.0.
8. FEES
8.1 Administrative Fee
Seller will remit to Purchasing Partners monthly an administrative fee
(the "Administrative Fee") equal to ____ percent _____ of the total
dollar volume of Products purchased by Participating Premier Members
through Seller or through any Authorized Seller's Distributors during
such period. Seller will pay to Purchasing Partners the
Administrative Fee by a check payable to "Premier Purchasing Partners,
L.P." sent to the attention of "Controller" which shall be received at
Purchasing Partners' address as set forth above no later than thirty
(30) days after the last day of the quarter.
The administrative fee will be paid as a percent of the total cash
(including service and ancillary costs but excluding costs associated
with shipping) collected from Participating Premier Members.
Seller may make payment of the Administrative Fee electronically to
the designated Purchasing Partners' account. The current electronic
funds transfer instructions are as follows:
Seller shall pay to Purchasing Partners interest on any past due
amount owing Purchasing Partners hereunder at the lesser of (i) one
and one-half percent (1-1/2%) per month or (ii) the maximum interest
rate legally permitted.
8.2 Electronic Submission of Administrative Fee Sales Documentation
Seller will provide sales data in the electronic format specified in
Section 7.0 of this Agreement. The timeframe for product information
to be available in this format is one (1) year from the date of the
Agreement. If Seller does not provide data in the specified format
within that time period, Seller agrees to provide payment of the
charges resulting from the increased costs to Purchasing Partners in
addition to the Administrative Fee provided for in Section 8.1 of this
Agreement.
8.3 Electronic Submission of Product Pricing Information
Seller will provide product pricing information in the electronic
format specified in Section 5.10 of this Agreement. The time frame
for product information to be available in this format is one (1) year
from the date of the Agreement. If Seller does not provide pricing
information in the specified format within that period of time, Seller
agrees to provide payment of the charges resulting from the increased
costs to Purchasing Partners in addition to the Administrative Fee
provided for in Section 8.1 of this Agreement.
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9. COMPLIANCE WITH LAWS AND REGULATIONS
Purchasing Partners and Seller represent and warrants that throughout the
term of this Agreement and any extension hereof, Purchasing Partners,
Seller and the Products shall be and shall remain in compliance with all
mandatory applicable federal, state and local laws and regulations.
The dollar value of the goods and services provided pursuant to Section
6.0, and any other products and services not specifically paid for by
Participating Premier Members and received by Participating Premier Members
from Seller under this Agreement are "discounts or other reductions in
price" to Participating Premier Members under Section 1128B(b)(3)(A) of the
Social Security Act, 42 U.S.C. 1320a-7b(b)(3)(A). Upon request of any
Participating Premier Member, Seller shall disclose to the Participating
Premier Member, per the applicable regulations, the specified dollar value
of discounts or reductions in price. The Participating Premier Member
shall disclose the specified dollar value of discounts or reductions in
price under any state or federal program which provides cost or charge
based on reimbursement to Participating Premier Member for the Products and
services covered by this Agreement in accordance with applicable
regulations.
Seller agrees that, until the expiration of four (4) years after the
furnishing of any goods and services pursuant to this Agreement, it will
make available, upon written request of the Secretary of Health and Human
Services or the Comptroller General of the United States or any of their
duly authorized representatives, copies of this Agreement and any books,
documents, records and other data of Seller that are necessary to certify
the nature and extent of the costs incurred and other data of Seller that
are necessary to certify the nature and extent of the costs incurred by
Participating Premier Member in purchasing such goods and services. If
Seller carries out any of its duties under this Agreement through a
subcontract with a related organization involving a value or cost of ten
thousand dollars ($10,000) or more over a twelve-month period, Seller will
cause such subcontract to contain a clause to the effect that, until the
expiration of four (4) years after the furnishing of any good or service
pursuant to said contract, the related organization will make available
upon written request of the Secretary of Health and Human Services or the
Comptroller General of the United States or any of their duly authorized
representatives, copies of this Agreement and any books, documents, records
and other data of said related organization that are necessary to certify
the nature and extent of costs incurred by Seller for such goods or
services. Seller shall give Purchasing Partners notice immediately upon
receipt of any request from the Secretary of Health and Human Services or
the Comptroller General of the United States or any of their duly
authorized representatives for disclosure of such information.
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10. INDEMNIFICATION, WARRANTIES, SPECIFICATIONS AND NOTICES
10.1 Indemnification
(a) Damage from Use of Products
Subject to Section 10.2 below, Seller hereby agrees to indemnify,
defend (pursuant to Section 10.3 below) and hold harmless Purchasing
Partners, each Participating Premier Member, and their respective
directors, officers, employees and agents (each an "Indemnitee") from
and against any and all losses, expenses, damages, liabilities and
costs (including, without limitation, interest, penalties and
reasonable attorneys' fees) arising from any bodily injury or
property damage caused by use of any of the Products except Seller
shall not be financially responsible for that portion of any loss,
expense, damage, liability or cost which results from the negligence
of an Indemnitee.
(b) Infringement Claims
Subject to Section 10.2 below, Seller hereby agrees to indemnify and
hold harmless the Indemnitees from and against any and all losses,
expenses, damages, liabilities and costs (including, without
limitation, interest, penalties and reasonable attorneys' fees)
arising from an infringement of any U.S. copyright, U.S. patent, or
registered U.S. trademark or trade name of third parties. If any
Product is the subject of or, in Seller's opinion, is likely to
become, the subject of any such infringement claim, Seller may, at
its option and expense, either (i) procure for Participating Premier
Members that use the Product the right to continue using the Product;
(ii) replace or modify the Product so that it becomes non-infringing
while remaining functionally equivalent; or (iii), if neither (i) nor
(ii) is, in Seller's reasonable opinion, a viable option, remove the
affected Product, reimburse each Participating Premier Member that
uses the Product for its direct, documented, reasonable, out-of-
pocket costs in modifying its Clinical Site for use with substitute
products, and refund the purchase price actually paid for the removed
Products less depreciation calculated at _____ percent ____ per year
from the date of delivery. This paragraph 10.1 (b) states Seller's
entire liability for infringement claims and actions.
(c) Purchasing Partners Indemnification
Purchasing Partners agrees to indemnify, defend, and hold harmless
Seller and its respective directors, officers, employees and agents
(each an "Indemnitee") from and against any and all losses, expenses,
damages, liabilities and costs (including, without limitation,
interest, penalties and reasonable attorney's fees) arising from a
claim asserted by a third party regarding (i) Purchasing Partner's
obligation to provide information regarding this Agreement to the
participants in the Premier Group Purchasing Program, to actively
support conversions and commitment to this Agreement and to aid in
communicating with Premier Members; (ii) Purchasing Partners
representations concerning the Products that differ from those
18.
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made by Seller in Seller's documentation for the Product; and (iii)
Purchasing Partners failure to comply with the Medicare and Medicaid
anti-kickback provision of the Social Security Act, 42 U.S.C. 1320a-
7b, except Purchasing Partners shall not be financially responsible
for that portion of any loss, expense, damage, liability or cost
which results from the negligence of Indemnitee.
10.2 Exclusion
Seller will have no obligations to any Indemnitee under Section 10.1
for any claim based upon or any damages attributable to (a) use of
any version of a Product other than the unaltered release of the most
current version of such Product issued to the Participating Premier
Member (unless specifically approved by Seller in writing). To the
extent such claim or damage would have been avoided by use of the
unaltered current release of such Product; (b) use of any product not
in accordance with Seller's written instructions or for any purpose
other than its intended purposes; (c) any modification, alteration,
or repair to a Product not made by Seller or specifically authorized
by Seller in writing; or (d) combination, operation or use of Product
with equipment, programs or data not supplied or specifically
approved in writing by Seller to the extent such claim or damage
would have been avoided by use of the Product without such non-Seller
supplied or approved pursuant to Section 4.1 of this Agreement.
10.3 Defense of Third Party Claims
If any third party asserts a claim against Indemnitee for which
Indemnitee is entitled to indemnification by Purchasing Partners or
Seller under Section 10.1 ("Indemnitor") (subject to the exclusions
in Section 10.2), Indemnitor will defend such claim at its own
expense and pay any damages and costs finally awarded by a court of
competent jurisdiction, or any amount agreed to in a monetary
settlement, specifically attributable to such claim, provided that
Indemnitee (a) promptly notifies Indemnitor in writing of such claim
(b) gives Indemnitor sole control of the defense of such claim and
settlement negotiations related thereto, and (c) cooperates with and,
at Indemnitor's request and expense, assists Indemnitor in the
defense or settlement of such claim. Subject to the foregoing,
Indemnitee will have the right, at its own expense, to participate in
and be represented by its own counsel in the defense of any such
claim. Pursuant to Section 10.1, Indemnitor shall only be responsible
for that portion of any defense costs which correspond to
Indemnitor's percent of total liability as determined by a court of
competent jurisdiction.
10.4 Warranties and Published Specifications
Product(s) are covered under the warranty or warranties set forth in
Seller's Purchase, Rental, and Service Agreements, as applicable,
attached hereto as Exhibits J, I, and K respectively. Seller will
make a limited warranty directly to each Participating Premier Member
that acquires any of the Products under this Agreement. It is
understood and agreed that SELLER MAKES NO
19.
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WARRANTIES, EXPRESS OR IMPLIED, TO PURCHASING PARTNERS REGARDING ANY
OF THE PRODUCTS AND EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-
INFRINGEMENT.
10.5 Product Notices
Seller agrees to send all Product notices, as well as notices of any
other changes affecting the Product(s) and notices of new products,
to each Premier Member with copies to Purchasing Partners.
10.6 Insurance
Seller shall maintain adequate product liability, general public
liability and property damage insurance against any claim or claims
which might or could arise regarding products purchased by
Participating Premier Members from it under the Agreement. When
requested by Purchasing Partners, an insurance certificate indicating
the foregoing coverage, issued by an insurance company licensed to do
business in the relevant state or states and signed by an authorized
agent, shall be furnished to Purchasing Partners.
10.7 Limitation on Liabilities
In no event shall Seller be liable for any special, incidental,
indirect or consequential damages of Purchasing Partners arising out
of this Agreement; provided, however, that no limitation of
liability, under this Section 10.7 shall in any way act to limit
Seller's liability under the Indemnification provisions of Sections
10.1 and 10.2 of this Agreement.
11. TERMINATION
11.1 Termination for Breach
In the event of breach of any provision of this Agreement, the non-
breaching party shall notify, the breaching party in writing, of the
specific nature of the breach and shall request that it be cured. If
the breaching party does not cure the breach within thirty (30) days
of such notice, the non-breaching party may immediately terminate
this Agreement on written notice to the breaching party, and such
termination shall not preclude the non-breaching party from pursuing
any and all remedies available to it at law or at equity.
11.2 Orders Placed Prior to Termination
Seller shall fulfill, in accordance with the terms of this Agreement,
all orders for Products submitted by a Participating Premier Member
and accepted by Seller prior to termination or expiration of this
Agreement.
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11.3 Termination Without Cause
Purchasing Partners or Seller may terminate this Agreement for any or
no reason upon ninety (90) days written notice.
11.4 Survival
The following paragraphs of this Agreement shall survive expiration
or termination of this Agreement: (i) the payment of Administrative
Fees pursuant to Section 8.1 including, but not limited to, fees
relating to Products ordered prior to the effective date of
expiration or termination and delivered after expiration or
termination; (ii) the audit undertakings set forth in Section 13.12;
(iii) the representations, warranties and covenants set forth in
Section 10.3; (iv) the indemnification undertaking contained in
Section 10.1; (v) the designation of Premier Members as third party
beneficiaries pursuant to Section 13.7; (vi) the undertaking to fill
orders submitted to and accepted by Seller prior to the date of
expiration or termination set forth in Section 11.2; (vii) the
confidentiality undertakings contained in Article 12; (viii) the
inurement rights and limitations on assignment contained in Sections
13.4 and 13.10; (ix) the governing law provisions contained in
Section 13.1; (x) reasonable attorney's fees provided for in Section
13.9.
12. CONFIDENTIALITY
12.1 Confidential Information
For the purposes of this Agreement, confidential information
("Confidential Information") shall mean all proprietary, secret or
confidential information or data relating to Purchasing Partners or
Premier Members, or Seller and their respective operations,
employees, services, patients or customers. Such Confidential
Information may include oral statements or written material, whether
tangible or intangible, designated either orally or in writing, to be
confidential at the time of disclosure. Oral statements designated as
Confidential Information shall be reduced to writing within thirty
(30) days of such statements.
12.2 Protection of Confidential Information
The parties acknowledge that they may disclose Confidential
Information to each other in connection with this Agreement. If a
party receives Confidential Information it shall: (a) maintain the
Confidential Information in strict confidence; (b) use at least the
same degree of care in maintaining the secrecy of the Confidential
Information as the disclosing party uses in maintaining the secrecy
of its own proprietary, secret or confidential information, but in no
event less than a reasonable degree of care; (c) use Confidential
Information only to fulfill its obligations under this Agreement; and
(d) return or destroy all documents, copies, notes or other materials
containing any portion of the Confidential Information upon request
by the disclosing party.
21.
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12.3 Agreement Confidential
Neither party hereto shall disclose the terms of this Agreement to
any other person or entity other than a Premier Member or as required
by law, except that either party may disclose the terms of this
Agreement as is necessary for distribution of Seller's Products
pursuant to Section 4.1 of this Agreement and to its attorney and
accountant having a need to know in order to accomplish the purposes
contemplated by this Agreement. Neither party shall make any public
announcement concerning the existence of this Agreement or its terms
unless such party receives prior written approval by the other party,
except as required under Section 9.0 of this Agreement.
12.4 Limitation on Obligation
The parties shall have no obligation concerning any portion of the
Confidential Information which: (a) was known before receipt,
directly or indirectly, from the disclosing party; (b) is lawfully
obtained, directly or indirectly, from other than the disclosing
party; under no obligation of confidentiality; (c) is or becomes
publicly available other than as a result of an act or failure to act
by the disclosing party; or (d) is required to be disclosed by
applicable law or legal process. The parties shall not disclose any
portion of the Confidential Information to any person except those of
its employees, agents, or independent contractors having a need to
know such portion to accomplish the purposes contemplated by this
Agreement.
13. MISCELLANEOUS
13.1 Governing Law and Venue
This Agreement is being delivered and executed in the State of
Illinois. In any action arising under this Agreement, whether at law
or at equity, the validity, construction and enforcement of this
Agreement shall be governed in all respects by the laws of the State
of Illinois. Venue shall be proper only in a court of competent
jurisdiction located in the county and state in which the complaining
party is located. The parties agree to be subject to personal
jurisdiction in and consent to service of process issued by a court
in which venue is proper as defined in this Section 13.1.
13.2 Modification and Waiver
No modification of this Agreement shall be deemed effective unless in
writing and signed by each of the parties hereto. Any waiver of a
breach of any provision(s) of this Agreement shall not be deemed
effective unless in writing and signed by the party against whom
enforcement of the waiver is sought.
22.
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13.3 Headings
The descriptive headings of the sections of this Agreement are
inserted for convenience only and shall not control or affect the
meaning or construction of any provision hereof.
13.4 Assignment
Neither party may assign, subcontract, delegate or otherwise transfer
this Agreement or any of its rights or obligations hereunder, nor may
it contract with third parties to perform any of its obligations
without the other party's prior written consent; provided, however,
that this Section 13.4 shall not limit Seller's ability to assign,
subcontract, delegate or otherwise transfer its rights or obligations
hereunder to a successor corporation, if necessary, in the event
Seller becomes a publicly traded company through an initial public
offering of stock in accordance with the Securities and Exchange
Commission Act of 1934, as amended, or (ii) Purchasing Partners
ability to assign, subcontract, delegate or otherwise transfer its
rights or obligations hereunder to a subsidiary or affiliated entity
of Purchasing Partners or Premier, Inc. Neither party's consent shall
be unreasonably withheld or delayed. For purposes of this provision
it is not unreasonable for Purchasing Partners to reject an
assignment, subcontract, delegation or transfer based on its own
business judgement as to the assignees ability to perform the
requirements of this Agreement or if Purchasing Partners determines
that it is not otherwise in Premier Members' best interest.
13.5 Severability
If any part of this Agreement shall be determined to be invalid,
illegal or unenforceable by any valid Act of Congress or act of any
legislature or by any regulation duly promulgated by the United
States or a state acting in accordance with the law, or declared null
and void by any court of competent jurisdiction, then such part shall
be reformed, if possible, to conform to the law and, in any event,
the remaining parts of this Agreement shall be fully effective and
operative insofar as reasonably possible.
13.6 Notices
Any notice required to be given pursuant to the terms and provisions
hereof shall be in writing, postage and delivery charges pre-paid,
and shall be sent by telecopier, hand delivery, overnight mail
service, first-class mail or certified mail, return receipt
requested, to Purchasing Partners or Seller at the addresses and/or
facsimile numbers set forth above. Any party may change the address
to which notices are to be sent by notice given in accordance with
the provisions of this section. Notices hereunder shall be deemed to
have been given, and shall be effective upon actual receipt by the
other party, or, if mailed, upon the earlier of the fifth (5th) day
after mailing or actual receipt by the other party.
23.
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13.7 Enforceability
The parties hereto acknowledge and agree that (i) this Agreement is
entered into by Purchasing Partners for the express, intended
benefit of the Premier Members, (ii) each of the Premier Members
shall be and constitute an intended third party beneficiary of the
representations, warranties, covenants and agreements of the Seller
contained herein, and (iii) each of the Premier Members shall be
entitled to enforce the terms and provisions of this Agreement to
the same extent as Purchasing Partners.
13.8 Independent Contractors
The parties' relationship hereunder is that of independent
contractors. This Agreement does not create any employment, agency,
franchise, joint venture, partnership or other similar legal
relationship between Purchasing Partners and Seller. Neither party
has the authority to bind or act on behalf of the other party except
as otherwise specifically stated herein.
13.9 Attorneys' Fees
Should any party employ an attorney for the purpose of enforcing
this Agreement or any judgment based hereon in any court, including
bankruptcy court, courts of appeal or arbitration proceedings, the
prevailing party shall be entitled to receive its reasonable
attorneys' fees and costs, whether taxable or not.
13.10 Binding Effect
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted
assigns.
13.11 Force Majeure
The obligations of either party to perform under this Agreement will
be excused during each period of delay caused by acts of God or by
shortages of power or materials or government orders which are
beyond the reasonable control of the party obligated to perform
("Force Majeure Event"). In the event that either party ceases to
perform its obligations under this Agreement due to the occurrence
of a Force Majeure Event, such party shall: (1) immediately notify
the other party and, in the case of Seller, the Participating
Premier Member affected in writing of such Force Majeure Event and
its expected duration; (2) take all reasonable steps to recommence
performance of its obligations under this Agreement as soon as
possible. In the event that any Force Majeure Event delays a party's
performance for more than ninety (90) days following notice by such
party pursuant to this Agreement, the other party may terminate this
agreement immediately upon written notice to such party.
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13.12 Audit of Costs
Seller shall permit Purchasing Partners or its agent to conduct
annual audits of records relating to Seller's performance under this
Agreement including without limitation orders, invoices, volume
reports and administrative fees, subject to Seller's obligations
under any confidentiality agreement entered into by Seller and third
party. The audits shall be conducted upon reasonable advance notice
during regular business hours at Seller's principal office and in
such a manner as not to unduly interfere with Seller's operations.
Such audits shall be subject to the confidentiality provisions of
this Agreement set forth in Article 12 above.
13.13 Minority and Female Owned Businesses
Seller represents and warrants that it is an "equal opportunity
employer". Seller shall also use its reasonable efforts to support
Purchasing Partners' Minority, and Female Owned Businesses Policy as
set forth in Exhibit F.
13.14 Entire Agreement
This Agreement, including all Exhibits referenced herein,
constitutes the entire understanding and agreement between the
parties concerning the subject matter hereof, and supersedes all
prior negotiations, agreements and understandings between the
parties, whether oral or in writing, concerning the subject matter
hereof.
In Witness Whereof, the undersigned duly authorized representatives of the
parties have executed this Agreement as of the date below written.
Premier Purchasing Partners, L.P. OmniCell Technologies, Inc.
/s/ Lynn Detlor /s/ Earl Fry
- ----------------------------------- ------------------------------------
Lynn Detlor Earl Fry
President, Purchasing Partners CFO
May 28, 1997 May 15, 1997
- ----------------------------------- ------------------------------------
Date Signed Date Signed
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Exhibit A
Baxter Distributed OmniCell Supply Products
Products Description Model #
-------- ----------- -------
Cabinets 1 Cell OmniSupplier OS 104
1 Cell Auxiliary OX104
2 Cell OmniSupplier OS224
2 Cell Auxiliary OX224
3 Cell OmniSupplier OS344
3 Cell Auxiliary OX344
4 Cell OmniSupplier OS448
5 Cell OmniSupplier OS568
6 Cell OmniSupplier OS688
2 LOW Cell OS176
OmniExpress OS56
OmniCenter OmniCenter XPC XPC100
OmniCenter Supply XPC-SP
Transaction Processor TPC100
Network Processor NPC100
Partner Processor PPC100
OmniCenter XPC-CL XPC-CL
Modules Supply Drawer OSD24
Cath Rack OCR48
Suture Rack OSR24
Magnetic Card Reader MCR100
Upgrades OmniSupplier OS2
Upgrade OS2U
OmniSupplier PC Box OSPC
OmniSupplier Aux. Box OSAX
OmniSupplier Printer OSO
I.
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FIRST AMENDMENT
This First Amendment ("First Amendment") by and between Premier Purchasing
Partners, L.P., a Delaware corporation, ("Purchasing Partners") and OmniCell
Technologies Inc. hereby amends the Agreement effective July 1, 1997 by
Purchasing Partners and OmniCell Technologies (the "Agreement").
RECITALS
Whereas, Purchasing Partners have entered into an Agreement for the purpose
of selling OmniCell Technologies Inc. products to Premier facilities;
Whereas, OmniCell Technologies Inc. and Purchasing Partners desire to amend
the Agreement as set forth in this First Amendment.
Now, Therefore, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto promise and agree as follows:
1. Seller will remit to Purchasing Partners quarterly, an administrative
fee (the "Administrative Fee") equal to ___ percent __ of the total
dollar volume of Products purchased by Participating Premier Members
through Seller or through any Authorized Seller's Distributors during
such period. Seller will pay to Purchasing Partners the
Administrative Fee by a check payable to "Premier Purchasing Partners,
L.P." sent to the attention of "Controller" which shall be received at
Purchasing Partners' address as set forth above no later than thirty
(30) days after the last day of the quarter.
In Witness Whereof, the undersigned duly authorized representatives of the
parties have executed this First Amendment as of the date below written.
Premier Purchasing Partners, L.P. OmniCell Technologies Inc.
/s/ Lynn R. Detlor /s/ Jeff Arbuckle
- ----------------------------------- -----------------------------------
Lynn R. Detlor Jeff Arbuckle
President Central Vice President
November 18, 1997 November 18, 1997
- ----------------------------------- -----------------------------------
Date Signed Date Signed
1.
<PAGE>
PREMIER PURCHASING PARTNERS, L.P.
--------------------------------------------------
AMENDMENT NUMBER 2 TO GROUP PURCHASING AGREEMENT
--------------------------------------------------
CONTRACT #: PP-CE-047A
Product/Services Category: Automated Supply Stems and Accessories
(Year 2000 Compliance)
This Amendment Number 2 ("Amendment"), is entered into effective December
1, 1997 (the "Effective Date"), and shall amend and modify the Group Purchasing
Agreement (Contract #: PP-CE-047A) by and between Premier Purchasing Partners,
L.P. ("Purchasing Partners"), and OmniCell Technologies ("Seller"), dated
effective June 1, 1997 (the "Agreement"), as follows:
1. Year 2000 Compliance. The Agreement is hereby amended to add the
--------------------
following provision to the Agreement:
"Year 2000 Compliance. Seller warrants that any software and hardware
--------------------
included in the Products and any software and hardware used in information
systems by Seller to process transactions related to providing the Products
hereunder, including without limitation, sales order processing, sales
order acknowledgment processing, advanced shipping notice processing,
invoicing, purchase order processing, purchase order acknowledgments,
accounts receivable and accounts payable processes, and sales and
compliance reporting processes, shall operate properly prior to, during and
after the year 2000 and shall not cause any business interruptions or
response time delays (i.e., such software and hardware is "Year 2000
Compliant"). In this regard, Seller agrees that such software and hardware
shall contain, at a minimum:
a. date formats that have century recognition;
b. calculations that accommodate same-century and multi-century formulas
and date values;
c. date interface values that reflect the century; and
d. calculations that accommodate the occurrence of leap years.
Upon Purchasing Partners' request, Seller agrees to provide Purchasing
Partners with documentation demonstrating that the Products and Seller's
transaction processing systems are Year 2000 Compliant. If at any time
during the term hereof it is reasonably determined by Purchasing Partners
that any Products and/or Seller's transaction processing systems are not
Year 2000 Compliant, Seller agrees to correct the problem at no additional
charge within fifteen (15) days of receiving written notice of such problem
from Purchasing Partners (the "Problem Notice"). In the event Seller is
unable within such time period to correct any such problem with respect to
certain Products, Seller shall provide Participating Members with a full
refund of all monies paid for the applicable Product(s) within thirty (30)
days of its receipt of the Problem Notice.
1.
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2. Other Terms and Conditions. All other terms and conditions of the
--------------------------
Agreement shall remain in full force and effect.
This Amendment is hereby executed as of the Effective Date by the parties'
authorized representatives set forth below.
Premier Purchasing Partners, L.P. OmniCell Technologies
("Purchasing Partners") ("Seller")
By: PREMIER PLANS, INC.,
Its General Partner
By: /s/ Lynn Detlor By: /s/ Jeff L. Arbuckle
------------------------------ -------------------------------
Printed Name: Lynn Detlor Printed Name: Jeff L. Arbuckle
-------------------- ---------------------
Title: President P.P. Title: Vice President of Marketing
--------------------------- ----------------------------
2.
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EXHIBIT 10.7
June 26, 1997
Mr. Jeff Arbuckle
Central Vice President
OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303
Dear Jeff:
The University HealthSystem Consortium Services Corporation accepts your
proposal in response to our Request for Proposal CE-426 Supply Dispensing which
was dated and signed by Shelly Asher, President/CEO on November 21, 1996.
Agreement CE-426 was awarded dual supplier to OmniCell and Diebold. The
OmniCell portion of the award will hereafter be known as CE-426B Supply
Dispensing. This agreement for Automated Supply Dispensing Systems is to
include our complete supply dispensing product line. To access either UHCSC
agreements, CE-426A with Diebold or CE-426B with OmniCell, UHCSC Eligible
Participants will be required to make a Sole Source commitment for a minimum of
80% of the products covered in the agreement by signing a UHCSC Post Award
Commitment Document.
The initial term of the agreement will be from June 1, 1997 through June 30,
1999. Prices contained in this bid will remain firm for the initial two year
term of the agreement. At the end of the initial term of the agreement, the
committed participants will decide whether or not to ex-tend the agreement. If
any of the extension options are exercised prices may increase, per line item
for all supply dispensing systems, no more than ___ per year for years three
through six. Prices for the service contracts are fixed, for the first two
years and prices many increase no more than ___ in year three and no more than
___ in years four through six.
The UHCSC Standard Terms and Conditions of Bid and the UHCSC Special Terms and
Conditions shall govern this agreement as submitted by OmniCell and amended as
follows:
UHCSC STANDARD TERMS & CONDITIONS
10A Delete exception. Reinsert original language. In the second sentence
strike "orders shall be placed Monday through Friday, with delivery no
later than noon the next day (Tuesday through Saturday)" and replace with
"DELIVERY TERMS ARE 90 DAYS ARO".
10I Exception accepted as noted.
11A Exception accepted as noted.
12B Delete exception. Reinsert original language. Amend the first sentence
as follows:
"The party directly placing the purchase order.....the Products purchased
have been inspected and accepted WITHIN 30 DAYS AFTER DELIVERY. ONCE
ACCEPTANCE FOR EQUIPMENT IS SIGNED, THE CP MAY NOT REVOKE ITS
ACCEPTANCE". In the second sentence strike "fifteen" and change to
"THIRTY".
12F Delete exception. Reinsert original language. Striking _____ and at the
end of the sentence add "after acceptance".
12G Exception accepted as noted.
1.
<PAGE>
Page 2
CE-426B Award Letter
OmniCell Technologies
June 26, 1997
13 Exception accepted as noted.
20 Delete exception. Replace with the following: "WE HEREBY WARRANT THAT,
IF THE EQUIPMENT IS DEFECTIVE IN WORKMANSHIP OR MATERIALS, OR IF THE
SOFTWARE WE PROVIDE IS DEFECTIVE DURING THE TERM OF THIS AGREEMENT, WE
SHALL REPAIR OR REPLACE, AT OUR OPTION, THE DEFECTIVE PART, PARTS,
SOFTWARE, OR EQUIPMENT AND YOU AGREE THAT SUCH REPAIR OR REPLACEMENT
SHALL BE YOUR SOLE REMEDY AND RECOURSE IN THE EVENT OF SUCH DEFECT,
UNLESS AN ARBITRATOR DETERMINES THAT SUCH ACTIVITY HAS FAILED TO PROVIDE
YOU WITH A REASONABLE REMEDY. THE WARRANTY GRANTED HEREIN DOES NOT COVER
ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY
US. THIS WARRAN1T IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE
AND FITNESS FOR A PARTICULAR PURPOSE, BUT THE FORGOING DOES NOT AFFECT
OUR OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THIS WARRANTY
SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY
EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY
UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE."
25 Delete exception and replace with: "ANY CONTRACTS WHICH HAVE BEEN
EXECUTED TO DATE WITH ANY CUSTOMER CANNOT BE TERMINATED UNLESS SPECIFIED
IN THE TERMS OF THOSE AGREEMENTS. OMNICELL WILL ACCOMMODATE COTERMINOUS
AGREEMENTS BY ADJUSTING THE PRICE OF NEW ORDERS TO ALLOW FOR COTERMINOUS
COORDINATION WITH CURRENT RENTALS/LEASES OR EXTENDING THE TERM OF THE
CURRENT RENTALS/LEASES TO GO COTERMINOUS WITH NEW ORDERS."
26 Delete exception. Reinsert original language. Delete sections two (2)
and three (3). At the end of the paragraph add the following: "OMNICELL
SHALL HAVE THE ABILITY TO HAVE SEPARATE AGREEMENTS FOR BETA AND/OR
DEVELOPMENT ARRANGEMENTS WITH ANY CP, PROVIDED THAT OMNICELL HAS NOTIFIED
UHCSC. THE TERMS AND CONDITIONS OF THESE INDIVIDUAL AGREEMENTS SHALL BE
IN ADDITION TO ANY TERMS AND CONDITIONS OMNICELL HAS AGREED TO WITH
UHCSC.". UHCSC and OmniCell have mutually agreed to the attached
bilateral documents (Exhibit A) which are required documents that a CP
accessing this agreement must sign and are limited to the following
specific documents: Master Purchase Agreement, Master Rental Agreement,
Master Service Agreement, Validation Agreement and the Supplement for
each Master Agreement.
28 Delete exception. Reinsert original language. In the second sentence
strike "$10,000,000" and replace with "$4,000,000".
30A Delete exception. Reinsert original language. Amend as follows: ". .
. whether at law or in equity, TO THE EXTENT arising from or caused. .
. contained in the Purchasing Agreement or (2) DEFECTIVE condition of
any Product. . . defend and hold harmless shall not be applicable to
the extent the claim, liability. . . failure to act of UHCSC, the CP
or of the UHCAD, THEIR OFFICERS, DIRECTORS AND EMPLOYEES."
30B Delete exception. Reinsert original language.
47 Delete exception. Replace with: "TRAINING IS PROVIDED IN ACCORDANCE WITH
OMNICELL'S RENTAL, PURCHASE AND SERVICE AGREEMENTS. INITIAL TRAINING
ON-SITE DURING THE INSTALLATION IS PROVIDED AT NO CHARGE, RE-INSERVICING
CAN BE PROVIDED AS SET FORTH IN THE APPLICABLE SERVICE AGREEMENT. SYSTEM
ADMINISTRATOR TRAINING IS REQUIRED." See attached Exhibit B.
2.
<PAGE>
Page 3
CE-426B Award Letter
OmniCell Technologies
June 26, 1997
UHCSC SPECIAL TERMS & CONDITIONS
3.0 Delete exception. Reinsert original language. Add the following to the
end of the paragraph: "UPDATES/UPGRADES/ENHANCEMENTS WILL BE PROVIDED AT
NO CHARGE FOR PRODUCTS WITH ACTIVE SERVICE/MAINTENANCE AGREEMENTS.
FEATURE OPTIONS FOR PRODUCTS WILL BE CHARGEABLE, AT A DISCOUNT CONSISTENT
WITH THE TERMS OF THE BID, AND WILL VARY DEPENDING ON THE OPTION. ALL
OMNICELL PRODUCTS ARE FORWARD-BACKWARD COMPATIBLE, AND A MODULAR DESIGN
ALLOWS FOR EASY UPDATES AND UPGRADES. CONTEMPORANEOUS WITH ORNNICELL'S
ANNOUNCEMENT OF ANY NEW COMMERCIALLY AVAILABLE PRODUCT, OMNICELL WILL
NOTIFY UHCSC IN WRITING OF THE NATURE, POTENTIAL USES AND PERFORMANCE
SPECIFICATIONS OF THESE PRODUCTS.".
6.0 Delete exception. Reinsert original language. At the end of the first
sentence add: "ONLY FOR EQUIPMENT INITIALLY INSTALLED IN EACH
INSTITUTION UNDER A VALIDATION AGREEMENT". DELETE THE REST OF THE FIRST
PARAGRAPH AND REPLACE WITH: "FOR ADDITIONAL EQUIPMENT, A PERIOD OF THIRTY
DAYS FROM DELIVERY SHALL BE GIVEN TO THE CP FOR THE PURPOSE OF ACCEPTANCE
TESTING. BY THE END OF THE THIRTY DAY PERIOD, ACCEPTANCE DOCUMENTS WILL
BE SIGNED, WHICH WILL SIGNIFY THAT THE EQUIPMENT HAS MET OR EXCEEDED THE
BID SPECIFICATIONS. ACCEPTANCE TESTING MAY INCLUDE, BUT IS NOT LIMITED
TO, SAFETY TESTING, CALIBRATION, PERFORMANCE TESTING, DOCUMENTATION
INSPECTION, AND TESTING FOR ADHERENCE TO HOSPITAL SPECIFICATIONS.
INVOICE PAYMENT WILL BE INITIATED ON THIRTY DAYS TERMS AFTER ACCEPTANCE
IS SIGNED. A COMPLETE SET OF ALL TEST DOCUMENTATION AND PROCEDURES
SHALL BE MADE AVAILABLE TO HOSPITAL STAFF PRIOR TO FINAL ACCEPTANCE."
7.0 Delete exception. Reinsert original language. Add the following at the
end of the paragraph: "Customers are responsible for the costs of site
preparation. As part of the site preparation effort, OmniCell will work
with customers to identify site preparation costs."
10.0 Exception accepted. Replace with the following: "WE HEREBY WARRANT
THAT, IF THE EQUIPMENT IS DEFECTIVE IN WORKMANSHIP OR MATERIALS, OR IF
THE SOFTWARE WE PROVIDE IS DEFECTIVE DURING THE TERM OF THIS AGREEMENT,
WE SHALL REPAIR OR REPLACE, AT OUR OPTION, THE DEFECTIVE PART, PARTS,
SOFTWARE, OR EQUIPMENT AND YOU AGREE THAT SUCH REPAIR OR REPLACEMENT
SHALL BE YOUR SOLE REMEDY AND RECOURSE IN THE EVENT OF SUCH DEFECT,
UNLESS AN ARBITRATOR DETERMINES THAT SUCH ACTIVITY HAS FAILED TO PROVIDE
YOU WITH A REASONABLE REMEDY. THE WARRANTY GRANTED HEREIN DOES NOT COVER
ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY
US. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE
AND FITNESS FOR A PARTICULAR PURPOSE, BUT THE FORGOING DOES NOT AFFECT
OUR OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THIS WARRANTY
SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY
EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY
UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE."
3.
<PAGE>
Page 4
CE-426B Award Letter
OmniCell Technologies
June 26, 1997
11.0 Delete exception. Reinsert original language. At the end of the first
sentence add "ON ALL SYSTEMS IN A PARTICULAR INSTITUTION." Strike the
second, third and fourth sentence and replace with: "IF UPTIME
REQUIREMENTS ARE NOT MET IN ANY ONE MONTH, OMNICELL AGREES TO OFFER ONE
MONTH'S SERVICE COST AT NO CHARGE FOR EQUIPMENT IN USE."
12.0 Delete exception. REPLACE with the following: "OMNICELL OFFERS TWO
SERVICE PLANS: BASIC AND EXTENDED, AS OUTLINED IN THE ATTACHED MASTER
SERVICE AGREEMENTS (EXHIBITS A) FOR RENTAL AND PURCHASE. OMNICELL
PERSONNEL WILL PERFORM PREVENTATIVE MAINTENANCE FOR THE SERVICE CHARGES
LISTED IN THE SYSTEM DESCRIPTION TITLED "ROUTINE EMERGENCY SERVICE" (see
attached Exhibit C).".
13.0 Exception accepted as noted.
14.0 Delete exception. REINSERT original language. Amend the first sentence
as follows: "SUPPLIER SHALL PROVIDE TO THE CP ONE COMPLETE AND
UNABRIDGED......"
15.0 Exception accepted as noted.
16.0 Delete exception. Replace with the following: "A COMPLETE OVERVIEW OF
RESPONSE TIMES ARE PROVIDED M SECTION 14 OF THE MASTER SERVICE AGREEMENT
(EXHIBIT A). IF THOSE RESPONSE TIMES ARE NOT MET, OMNICELL AGREES TO A
PENALTY EQUIVALENT TO THE COST OF ONE MONTH'S SERVICE ON A PARTICULAR
UNIT."
17.0 Delete EXCEPTION. Replace with the following: "MAINTENANCE WILL BE
PROVIDED THROUGH THE CPS SYSTEM ADMINISTRATOR OR THROUGH THE SERVICE PLAN
OF THE CPS CHOICE. FAULTY EQUIPMENT WILL BE REPAIRED BY SERVICE
PERSONNEL IN ACCORDANCE WITH THE SERVICE TERMS, THEREFORE, THE ONLY
LOANER EQUIPMENT PROVIDED WILL BE A BACK-UP SERVER UNDER THE EXTENDED
SERVICE PLAN, AS DESCRIBED IN THE SERVICE PLANS."
20.0 Delete exception. Replace with the following: "OMNICELL DOES NOT PROVIDE
DIAGNOSTIC SOFTWARE OR TRAINING ASSOCIATED WITH IT. WHEN MUTUALLY AGREED
BY OMNICELL AND CP, OMNICELL MAY PROVIDE A NON-COMMERCIAL PRODUCT,
"JMAX", WHICH PROVIDES THE ABILITY TO PERFORM EQUIPMENT CONFIGURATION
CALCULATIONS. OMNICELL WILL NOT PROVIDE MAINTENANCE OR WARRANTY WITH
THIS SOFTWARE, AND UHCSC ACKNOWLEDGES THAT OMNICELL IS IN NO WAY LIABLE
FOR CUSTOMER'S USE OF THIS NON-COMMERCIAL PRODUCT."
21.0 Exception accepted as noted. SEE the attached Exhibit A, Master Service
Agreement section 14, for Service Contract Options.
22.0 Exception accepted as noted.
23.0 Exception accepted as noted.
24.0 Exception accepted as noted.
25.0 Exception accepted as noted.
27.0 Exception accepted as noted.
28.0 Exception accepted as noted.
32.0 Exception accepted as noted.
33.0 Exception accepted as noted.
34.0 Exception accepted as noted.
37.0 Exception accepted as noted.
38.0 Exception accepted as noted.
Should Eligible Participants (EPs) wish to avail themselves of this agreement,
you will be notified in writing by UHCSC when they have signed the UHCSC Post
Award Commitment
4.
<PAGE>
Page 5
CE-426B Award Letter
OmniCell Technologies
June 26, 1997
Document and meet the requirements of a Committed Participant (CP). Please do
not share agreement pricing with EPs. Any requests for pricing comparisons for
EPs should be directed to Vicki Ioffe-Polman at UHCSC.
Enclosed are updated lists of UHCSC Eligible Participants (Schedule 1) and
Supply Administrators. The Supply Administrators are UHCSC's primary contact in
Materials Management/Purchasing at each of the hospitals. In the event that you
would like to directly market to our members, this group would be your contact.
Please send a copy of any mailing or promotional materials to my attention at
UHCSC. An announcement of these awards will be sent to each Supply
Administrator from this office.
The UHCSC Purchasing Programs have clinical end-user contact persons in Nursing,
Information Technology and several other disciplines at each member hospital.
Because these individuals generally have a position which is broader than
product evaluation, UHC is not able to give you a list of their names. However,
I would be happy to do a direct mailing of product information to them on your
behalf. Please send 110 copies, per clinical area, of any material you would
like forwarded to these clinicians to my attention at UHCSC.
Melanie and I are looking forward to working with you to successfully implement
this agreement. Please sign and return one copy of this letter to my attention
at UHCSC.
Sincerely,
/s/ Maureen J. Sheehan
Maureen J. Sheehan
Program Director, Nursing Products and Services
Signed: /s/ Earl E. Fry
------------------------------
Printed Name: Earl E. Fry
------------------------
Title: VP & CFO Date: June 27, 1997
------------------------------- -----------------------
attachments
mah
cc: Henry Derewicz, Vice President
Andy Schoneich, Director
Melanie Hartmann, Assistant Director
Vicki Ioffe-Polman, Member Support Specialist
5.
<PAGE>
UNIVERSITY HEALTHSYSTEM CONSORTIUM
SERVICES CORPORATION
STANDARD TERMS AND CONDITIONS OF BID
FOR
SUPPLIER AGREEMENT
1. INTRODUCTION.
University HealthSystem Consortium Services Corporation ("UHCSC") is a
taxable co-operative governed by University HealthSystem Consortium ("UHC")
members, a non-profit corporation formed to aid academic health centers ("AHCs")
in their efforts to maintain and strengthen their marketplace position. UHC has
two membership categories (described in Subparagraphs A and B below) and two
non-membership categories (described in Subparagraphs C and D below)
A. AHC HOSPITAL. The following types of ARC hospitals are eligible
for UHC membership:
(1) Non-profit hospitals having common ownership with a
college of medicine.
(2) Non-profit or governmental hospitals where the
majority of medical school chairmen and hospital chiefs of service are
the same persons.
(3) Specialty, non-general, hospitals which satisfy
either (1) or (2) above.
B. ARC HOSPITAL SYSTEM. The following types of AMC hospital systems
are eligible for UHC membership:
(1) The system includes at least one ARC hospital (as
defined in Paragraph 1.A above).
(2) The system provides the clinical setting for no more
than one medical school.
(3) The system includes at least one other health care
provider formally affiliated with the ARC hospital.
C. NETWORK PARTICIPANT. An Network Participant ("NP") does not have
membership status in UHC; however, it can participate in UHCSC programs if it
meets the following participation criteria:
(1) The NP is sponsored by a UHC member who participates
in the Group Purchasing Programs.
1.
<PAGE>
(2) The NP complies with all policies, procedures and
conditions of the UHC Group Purchasing Programs.
(3) The NP may be an acute care hospital or other health
care provider.
D. ALTERNATE PURCHASING LOCATION. An Alternate Purchasing Location
("APL") does not have membership status in UHC; however, it can participate in
UHCSC programs if it meets the following participation criteria:
(1) The APL is sponsored by a UHC member which directly,
or indirectly through medical school chairmen or hospital chiefs of
service, establishes and/or controls the health care policies of the APL.
(2) The APL is operated legally and organizationally as
an integral and component part of either a UHC member or the entity which
operates and controls the UHC member.
(3) The APL is not an acute care hospital.
2. INVITATION FOR BID.
A. The Invitation for Bid (the "Bid Invitation") consists of the
transmittal letter accompanying these Standard Terms and Conditions of Bid (the
"Transmittal Letter"), these Standard Terms and Conditions of Bid, the Special
Conditions set forth in Appendix A (if any) to these Standard Terms and
Conditions of bid (if any), the bid specifications attached to these Standard
Terms and Conditions of Bid(the "Bid Specifications") and any other material
listed in the table of contents attached hereto. The Bid Invitation applies to
and is hereby made a part of any Purchasing Agreement (as defined in Paragraph
4.K) awarded pursuant hereto and to each purchase of products made thereunder.
B. The Bid Invitation applies to the following three methods of
product distribution: (1) products distributed directly to a Committed
Participant (the "CP") (as defined in Paragraph 3) by the Supplier (as defined
in Paragraph 4.J); (2) products distributed to a CP through a distributor
appointed or selected by the Supplier pursuant to Paragraph 8.B (the "Supplier
Appointed Distributor" or "SAD"); and (3) products distributed to a CP by the
Supplier through a distributor selected or appointed by UHCSC and/or the CP
pursuant to Paragraph 8.D (the "UHCSC Appointed Distributor" or "UHCAD"). UHCSC
and/or the CP shall have complete and sole discretion in selecting the method of
product distribution and may change the method of product distribution selected
from time to time during the Term of the Purchasing Agreement (as defined in
Paragraph 9 A.)
C. Because the Bid Invitation applies to the three different methods
of product distribution described in Paragraph 2.B, these Standard Terms and
Conditions impose on the Supplier and the SADs (if this method of product
distribution is selected) the same obligations and grant to the CPs and the
UHCADs (if this method of product distribution is selected) the same rights.
Notwithstanding anything to the contrary in these Standard Terms and Conditions,
if the Supplier uses a SAD to distribute the products covered by the Purchasing
Agreement (the
2.
<PAGE>
"Products") the following conditions shall apply, as appropriate, except as
otherwise expressly provided: (1) if the Supplier and the SAD are not parties to
a contract, these Standard Terms and Conditions are hereby automatically amended
to provide that the Supplier shall be required to use its best efforts to cause
the SAD to accept and perform the obligations herein imposed upon the SAD and
(2) if the Supplier and the SAD are parties to a contract which does not empower
the Supplier to cause the SAD to accept and perform one or more of the
obligations herein imposed upon the SAD (the "excepted obligations") these
Standard Terms and Conditions are hereby automatically amended to provide that
the Supplier shall be required to use its best efforts to cause the SAD to
accept and perform the excepted obligations herein imposed upon the SAD.
Further, notwithstanding anything to the contrary in these Standard Terms and
Conditions, the provisions of these Standard Terms and Conditions granting the
UHCAD rights shall only be applicable if the Supplier uses the UHCAD to
distribute the Products.
3. RELATIONSHIP OF PARTIES.
A. "Eligible Participants" or "EPs" are those institutions listed on
Schedule I, as amended from time to time. Each EP is eligible to participate in
UHCSC group purchasing agreements and is entitled to purchase under the
Purchasing Agreement if, and after, it becomes a CP. UHCSC may amend Schedule I
at any time to add or delete EPs by delivering a written notice of amendment to
the Supplier.
B. "Committed Participants" or "CPs" are those EPs which agree to be
bound by the UHCSC commitment policy agreement for the Products. UHCSC shall
provide the Supplier from time to time a list of current CPs. No other
commitment document, including any commitment document prepared by the Supplier,
shall be necessary to qualify an EP as a CP. UHCSC may add or delete CPs by
delivering a written notice of amendment to the Supplier. An EP which becomes a
CP shall become entitled to purchase Products under the Purchasing Agreement
within fifteen days after the posted date of said notice of amendment.
4. BIDS.
A. A firm (the "Bidder") shall submit to UHCSC a written response
(the "Bid") to the Bid Invitation in the form and manner set forth in the
Transmittal Letter or in the Bid Specifications {collectively, the
"Instructions"). The Bid Opening Time is set forth in the Instructions. Except
as may otherwise be provided in the Instructions, the bid must contain the
original signature of an authorized agent of the Bidder and be accompanied by
the Bid Invitation, signed by the bidder. The Bid shall become the property of
UHCSC.
In addition, if requested in the Instructions, the Bidder shall submit to
UHCSC, in the form and manner set forth in the Instructions, a written response
(the "Exceptions Response") to these Standard Terms of Conditions and to the
Special Conditions, setting forth the Bidder's exceptions and deviations
thereto. The Exceptions Response must be submitted to UHCSC prior to the
"Exceptions Response Date." The "Exceptions Response Date" is set forth in the
Instructions. The Exceptions Response must set forth all of the Bidder's
exceptions and deviations to these Standard Terms and Conditions and to the
Special Conditions. Pursuant to the provisions of Paragraph 4b, UHCSC shall not
consider a Bidder's Bid unless the Bidder submits to UHCSC its Exceptions
Response prior to the Exceptions Response Date. Pursuant
3.
<PAGE>
thereto, if a Bidder which desires to submit a Bid elects not to take any
exceptions or deviations, it must submit to UHCSC an Exceptions Response in
which it states that it is taking no exceptions or deviations in order for its
Bid to be considered. From and after the date on which the bidder submits its
Exceptions Response, the Bidder may not revise, modify or supplement the
Exceptions Response except in UHCSC's sole discretion. The Exceptions response,
together with revisions, modifications and supplements to the Exceptions
Response, shall become a part of the bid only to the extent they are agreed to
by UHCSC and the Bidder. Except as may otherwise be provided in the
instructions, the Exceptions Response, and all revisions, modifications and
supplements thereto, must contain the original signature of an authorized agent
of the Bidder. The Exceptions Response, and all revisions, modifications and
supplements thereto, shall become the property of UHCSC.
B. UHCSC will consider a Bid only if the following conditions are
satisfied: (i) the Bidder submits to UHCSC the Bid prior to the Bid Opening
Time; and (ii) if requested by UHCSC in the Instructions, the Bidder submits to
UHCSC the Exceptions Response prior to the Exceptions Response Date. UHCSC will
not accept late Bids unless UHCSC approves an extension of the Bid Opening Time
prior to the Bid Opening Time in which case all bidders will be duly notified.
In addition, UHCSC will not accept late Exceptions Responses unless UHCSC
approves an extension of the Exceptions Response Date prior to the Exceptions
Response Date in which case all bidders will be duly notified. If UHCSC
approves the submission of a late Bid prior to the Bid Opening Time, then no
Bids received prior to the Bid Opening Time will be opened thereon and UHCSC
shall set and notify all Bidders of a new Bid Opening Time (the Bid Opening
Time, together with the new Bid Opening Time, is referred to herein as the "Bid
Opening Time"). Further, if UHCSC approves the submission of a late Exceptions
Response prior to the 'Exceptions Response Date, then no Exceptions Responses
received prior to the Exceptions Response Date will be opened thereon and USCSC
shall set and notify all Bidders of a new Exceptions Response Date (the
Exceptions Response Date, together with the new Exceptions Response Date, is
referred to herein as the "Exceptions Response Date"). A Bidder may withdraw
its Bid by delivering to UHCSC a written notice of withdrawal at any time prior
to the Bid Opening time; provided, however, if a Bidder withdraws its Bid, it
may not resubmit a Bid except in UHCSC's sole discretion. In addition, a Bidder
may withdraw its Exceptions Response by delivering to UHCSC a written notice of
withdrawal at any time prior to the Exceptions Response Date; provided, however,
if a Bidder with-draws its Exceptions Response, it may not resubmit an
Exceptions Response except in UHCSC's sole discretion. A Bidder may not
withdraw a Bid after the Bid Opening Time; in addition, a Bidder may not
withdraw an Exceptions Response after the Exceptions Response Date. Bids and
Exceptions Responses submitted via facsimile machine will not be accepted.
C. The Bidder shall provide to UHCSC answers or clarifications to the
Bid Invitation or technical data for any product subject to the Bid within five
working days after it receives a request for answers or clarifications from
UHCSC. All answers, clarifications and technical data provided pursuant hereto
shall become part of the Bid and shall become the property of UHCSC.
D. Bidders may be required to complete and submit to UHCSC a vendor
questionnaire prior to the Bid Opening Time and/or the Exceptions Response Date
for use by UHCSC in evaluating Bids. The vendor questionnaire, and all
documentation and information submitted in response thereto, shall become the
property of UHCSC.
4.
<PAGE>
E. At the Bid Opening Time, UHCSC will open the Bids and read
publicly the names of the Bidders.
F. Bidders shall keep the prices, terms and all other conditions
contained in their Bid firm for sixty days after the Bid Opening Time.
G. UHCSC shall have complete discretion in determining which Bidders,
if any, shall be awarded a Purchasing Agreement. A PURCHASING AGREEMENT MAY BE
AWARDED TO A PRODUCT, A PRODUCT LINE, OR A FAMILY OF PRODUCTS CONSISTING OF SOLE
SOURCE AND MULTISOURCE PRODUCTS. In addition to price, other factors which
UHCSC may use to evaluate Bids may include: (1) criteria which affect
acceptability, including inspection, testing, quality, workmanship, delivery,
and suitability for a particular purpose; (2) criteria which affect price,
including rebates, free goods, volume discounts, pricing on an item that is
contingent upon the award of one or more distinct, item(s) and payment terms;
(3) criteria which consider "value-added goods and services"; (4) criteria which
consider the costs of converting from the CP's existing vendor to the new
vendor; (5) criteria which consider the manner of distributing the products,
including distribution through UHCADs and certified historically underutilized
business (HUB) distributors; (6) criteria which consider the fact that the
Bidder is itself a certified HUB distributor; (7) criteria relating to the use
of generally accepted standards of electronic transmission for the processing of
orders, invoices and other transactions; and (8) criteria relating to the
payment of the Administrative Fee (as defined in Paragraph 18).
H. Each Bidder shall attach to its Bid or its Exceptions Response (if
the Bidder is requested to submit the same in the Instructions) its return goods
policy. Unless otherwise agreed to in writing by UHCSC, only those portions of
a Bidder's return goods policy which are not inconsistent with the return goods
policy set forth in Paragraph 13 shall become part of its Bid.
I. Each Bidder shall attach to its Bid or its Exceptions Response (if
the Bidder is requested to submit the same in the Instructions) its
industry-wide policy for the minimum shipment of goods. Unless otherwise agreed
to in writing by UHCSC, only those portions of a Bidder's industry-wide policy
which are not inconsistent with the terms of these Standard Terms and Conditions
shall become part of its Bid.
J. Each Bidder shall attach to its Bid the following information: (1)
the recyclability of products offered by the Bidder; (2) the amount and/or
percentage of recycled materials contained in the products offered by the
Bidder; and (3) the recycled content and/or environmental advantages of the
packaging used for the products offered by the Bidder.
K. Upon the Supplier's receipt of the Letter of Award, the Bid
Invitation, the Supplier's Bid, the Letter of Award and all other accompanying
documentation approved by both UHCSC and the Supplier shall constitute the
Purchasing Agreement between the Supplier and U/4CSC (the "Purchasing
Agreement").
Bidders must submit their questions regarding the Bid Invitation in
writing to UHCSC, Suite 700, 2001 Spring Road, Oak Brook, Illinois 60521-1890.
(Please refer to the attached
5.
<PAGE>
Instructions for Bid for the name of the UHCSC staff person to whom questions
should be addressed). All questions must reference the Bid Invitation. UHCSC's
responses to questions shall be in writing and, if pertinent to the intent or
actual performance under a Purchasing Agreement, will be copied to all Bidders.
If for any reason UHCSC gives oral responses, they shall not be binding upon
UHCSC or the CPs.
5. PRICING.
A. In the Bid, the Bidder must set forth its product prices, and its
product prices must be exclusive of all distribution costs. In operating its
group purchasing program, UHCSC's intent is to separate the costs of product
manufacture and product distribution in order to decrease both costs to the CPs.
THEREFORE, UHCSC MAY NOT ACCEPT A BID IF IT DOES NOT INCLUDE PRODUCT PRICES
EXCLUSIVE OF ALL DISTRIBUTION COSTS.
B. The Bidder represents and warrants that the product prices set
forth in its Bid are not higher than: (1) the prices it charged any distributor
within the past sixty days; and (2) the prices it charged any comparable
purchaser within the past sixty days; and (3) the prices offered to any EP
within the past sixty days. "Past sixty days", as used herein, shall mean the
sixty days immediately preceding the posted date of the Bid.
C. Within thirty days after the posted date of the Letter of Award,
the Supplier shall submit to UHCSC, and, if requested, to each CP and UHCAD),
complete product catalogs (with list prices) and price lists with the prices
agreed to in the Purchasing Agreement (the "Award Prices").
D. If, from the Bid Opening Time until the expiration of the Term of
the Purchasing Agreement, the Supplier offers to any EP a price for products of
the type covered by the Purchasing Agreement that is lower than the Award Price,
then the Award Price shall automatically be amended to reflect the lower price.
E. The Supplier may lower the Award Prices at any time. It may also
increase any discount at any time.
F. Unless lowered pursuant to Subparagraphs D or E above, or
otherwise, the Award Prices shall prevail and remain firm for the Term of the
Purchasing Agreement.
G. During the term of the agreement, the Supplier agrees to disclose
to any EP the existence of any applicable UHCSC contracts when an EP purchases
products covered by a UHCSC contract from the Supplier.
6.
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6. BID SPECIFICATIONS, DEVIATIONS AND EXCEPTIONS.
A. Each Bidder shall meet the terms, conditions and specifications
(including the Bid Specifications) of the Bid Invitation. The Bidder must
describe fully in its Bid or in its Exceptions Response (if the Bidder is
requested to submit the same in the Instructions) all deviations or exceptions
thereto. In the absence of such a description, a Bidder's Bid shall be deemed
not to contain such deviation or exception and shall be accepted as if in strict
compliance with the terms, conditions and specifications (including the Bid
Specifications) of the Bid Invitation. If the Bid or the Exceptions Response
contains deviations or exceptions, USCSC, in its sole discretion, may reject the
Bid. UHCSC also reserves the right to accept the Bid (and/or the Exceptions
Response) with deviations or exceptions, to waive any technicality in the Bid
(and/or the Exceptions Response) and to accept any part of the Bid (and/or the
Exceptions Response).
B. The Bid Specifications set forth the minimum acceptable
specifications. The use of specific manufacturer and model numbers in the Bid
Specifications is intended to establish the design, type, construction, quality,
functional capability and/or performance level desired. If the Bidder includes
substitutions in the Bid, the Bidder must identify the manufacturer and stock
number and must include descriptive information to establish equivalency or
superiority. UHCSC shall be the sole judge of equivalency or superiority. In
awarding a Purchasing Agreement, UHCSC may select a manufacturer and model
number other than that set forth in the Bid Specifications.
7. QUANTITIES.
A. Quantities shown on the Bid Specifications are merely estimates
based on estimates supplied to UHCSC by selected CPs and are intended solely as
an aid to assist the Bidder to submit a Bid.
B. UHCSC, the CPs and the UHCADs shall have no obligation to purchase
any Products. Failure by UHCSC, the CPs and the UHCADs to purchase the
estimated quantities shall not constitute either a breach of the Purchasing
Agreement or grounds for termination of the Purchasing Agreement.
8. DISTRIBUTOR(S).
A. In awarding the Purchasing Agreement, UHCSC may give preference to
Bidders which agree to make the Products available through a distributor and, in
particular, a UHCAD. In addition, to encourage the participation of HUB
enterprises, UHCSC may give preference to Bidders which agree to make the
Products available through a distributor or a UHCAD which is a certified HUB
distributor.
B. If a Bidder intends to appoint one or more SADs to distribute the
Products, the Bidder must list the SADs in its Bid. The Supplier may not use a
SAD and may not add or delete a SAD except with UHCSC's prior written consent.
UHCSC may revoke its consent of a SAD for any reason at any time upon thirty
days' prior written notice to the Supplier. During the term of the agreement,
the Supplier agrees to require all SADs to disclose to any EP the existence of
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any applicable UHCSC contracts when an EP purchases products covered by a UHCSC
contract from the SAD.
C. UHCSC shall have the right to select from among the SADs listed by
the Supplier pursuant to Paragraph 8.B one or more SADs to distribute the
Products. The Supplier shall make whatever arrangements are necessary with the
SADs to: (1) implement the Purchasing Agreement, (2) sell at the Award Prices
the Products for resale to the CPs, and (3) insure that the Supplier's
obligations under the Purchasing Agreement are per-formed fully and completely
to the extent possible.
D. UHCSC and/or the CPs shall have the right to appoint one or more
UHCADs to distribute the Products to the CPs. The Supplier shall make whatever
arrangements are necessary with the UHCADs to sell at the Award Prices the
Products for resale to the CPs. The Supplier shall supply sufficient quantities
of the Products ordered by the UHCADs in a timely manner for the UHCADs to be
able to fulfill their obligations under their distribution agreements with
UHCSC.
E. The Supplier represents and warrants to UHCSC and to each CP that
its arrangements with the SADs and the UHCADs shall comply with all applicable
laws.
F. UHCSC and each CP shall have the right, when required by law,
regulation or internal policy, to appoint or select one or more certified HUB
distributor(s) to distribute a certain dollar amount of the Products. The
dollar amount to be distributed shall be specified by UHCSC and/or the CP;
provided that such dollar amount shall be equal to at least the amount required
or specified by the applicable law, regulation or internal policy requiring the
appointment or selection. The CP exercising said right shall be entitled to
make the final determination as to whether a HUB distributor is a "historically
underutilized business" and certified under its applicable state law.
G. By submitting a Bid, the Supplier commits to use its reasonable
efforts to appoint or select a certified HUB distributor(s) to distribute
Products on behalf of the Supplier as requested by UHCSC and/or any CP. If
within forty-five days after the request is made, the Supplier is unable to
appoint a certified HUB distributor, the Supplier shall submit to UHCSC written
documentation containing the following information and such other information as
UHCSC may reasonably request: (1) a detailed statement of the efforts made by
the Supplier to appoint or select a certified HUB distributor; (2) a detailed
statement of the efforts made by the Supplier to negotiate with a certified HUB
distributor; and (3) as to each HUB distributor which the Supplier considers
unacceptable, a detailed statement of the reasons for the conclusion. Failure
to submit the required documentation within the specified time may result in
termination of the Purchasing Agreement.
9. TERM AND TERMINATION OF PURCHASING AGREEMENT.
A. The Purchasing Agreement shall be effective as of the effective
date set forth in the Letter of Award (the "Award Date"). Unless sooner
terminated, the Purchasing Agreement shall continue in full force and effect
through the expiration date set forth in the Bid Specifications (the "Initial
Term"); may be renewed for the period of time and in accordance
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with the procedures set forth in the Bid Specifications,. if any (the "Renewal
Term"); and, thereafter, may be renewed at the option of UHCSC for one
additional year by delivery of written notice thereof to the Supplier not less
than ten days prior to the end of the Initial or Renewal Term. The Initial
Term, together with the Renewal Term and any additional renewal term, if any, is
referred to herein as the "Term".
B. UHCSC may terminate the Purchasing Agreement for any reason
whatsoever, including changes in the market price of the Products, by delivering
not less than thirty days' prior written notice thereof to the Supplier. UHCSC
may terminate the Purchasing Agreement immediately upon the breach of the
Purchasing Agreement by the Supplier or a SAD by delivering written notice
thereof to the Supplier.
C. Without limiting in any way UHCSC's right to terminate the
Purchasing Agreement upon not less than thirty days' prior written notice
pursuant to Paragraph B above, the Purchasing Agreement shall be subject to
force majeure, and in the event that the Supplier, a SA/), UHCSC, a CP or a
UHCAD shall be prevented from performing any act required thereunder by reason
of Acts of God, riots, insurrections, war or other reason of a like nature not
within the control of the party not performing any of its obligations under the
terms of the Purchasing Agreement, then performance of such obligations shall be
excused for the period of non-performance and the period for the performance of
any such obligations shall be extended for an equivalent period.
10. ORDERING.
A. Depending on the method of product distribution selected by UHCSC
and/or a CP pursuant to Paragraph 2.B, the CPs shall place purchase orders with
the Supplier, the SADs or the UHCADs; provided, however, if a CP places purchase
orders with the UHCADs, then the UHCADs may place purchase orders with the
Supplier or the SAD. Except as otherwise provided in the Bid Specifications or
as mutually agreed to by the Supplier and a CP, orders shall be placed Monday
through Friday, with delivery no later than noon the next day (Tuesday through
Saturday). The Purchasing Agreement shall govern all orders and sales,
notwithstanding any pre-printed terms on the forms of any of the par-ties;
provided, however, to the extent the terms of the purchase orders of a CP or a
UHCAD are not in conflict or inconsistent with the Purchasing Agreement, they
are by this reference incorporated into the Purchasing Agreement as though set
forth in full therein.
B. The Supplier or the SADs shall submit to each CP and UHCAD which
requests it a confirmation of the CP's and the UHCAD's electronically placed
order within one hour of the Supplier's or the SADs' receipt of the same from
the CP or the UHCAD.
C. If the Supplier and UHCSC agree that the Products be made
available exclusively for the use by the CPs, upon thirty days' prior written
notice to the Supplier from UHCSC, the Supplier shall establish and implement
the mechanisms and procedures necessary to ensure the immediate availability of
requested Products for the exclusive use of the CPs named in the notice.
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D. The Supplier or the SADs shall keep the CPs and the UHCADs
continuously informed of the status of product orders placed directly by them.
The Supplier or the SADs shall communicate product order status in one of three
ways: (1) the Supplier's or the SADs' computer print back to the computer
printer of the CPs and the UHCADs; (2) access to the Supplier's or the SADs'
computer via CP and UHCAD computer inquiry; and (3) personal telephone call from
the Supplier's or the SADs' personnel to the CP and the UHCAD. The Supplier or
the SADs shall consult with each CP and UHCAD to determine the best method of
communicating product order status, and shall implement the method selected by
each CP and UHCAD.
E. Unless otherwise agreed to in writing by UHCSC, notwithstanding
the provisions of this Paragraph 10, the Supplier and the SADs shall use their
best efforts to assist the CPs and the UHCADs to obtain Products on an emergency
basis, including providing the CPs and the UHCADs with a list of responsible
persons who can assist them to make orders twenty-four hours per day, seven days
a week.
F. Upon the written approval of UHCSC, the Supplier may appoint in
addition to a SAD an agent to perform some or all of its obligations under the
Purchasing Agreement, including the Supplier's record keeping and reporting
obligations; provided, however, that the Supplier's appointment of an agent
shall not relieve the Supplier of its obligations under the Purchasing Agreement
and the agent shall perform fully and completely all of the Supplier's
obligations applicable to it.
G. The Supplier represents and warrants to UHCSC and the CPs that the
Products are, if required, registered, and will not be distributed, sold or
priced by the Supplier or the SADs in violation of any federal, state or local
law.
H. The Supplier represents and warrants that as of 'the date of
delivery to the CPs and the UHCADs all Products will not be adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, from time to time, and will not violate or cause a violation of any
applicable law, ordinance, rule, regulation or order. The Supplier agrees it
will comply, and will ensure that the SADs comply, with all Good Manufacturing
Practices contained in 21 C.F.R. Part 820, as amended, from time to time, which
are applicable to the Supplier and the SADs.
I. Purchase orders placed directly with the Supplier or the SADs by
the CPs via the UHC Electronic Data Interchange Network, when available, will be
entitled to an additional discount of 1% of the total dollar value of the
purchase order. The discount shall be paid to each CP in the form of a credit
memo which clearly references the applicable purchase order number.
J. The Supplier or the SADs shall keep the CPs and the UHCADs
informed regarding back-orders and shall advise them when back-orders are
available. The Supplier or the SADs shall ship back-orders from alternate
locations if the back-orders are available at such alternate locations and if
shipment from such alternate locations is requested. Unless otherwise agreed to
in writing by USCSC and/or a CP, notwithstanding anything to the contrary
herein, the Supplier and the SADs shall fill the CPs' back orders within five
days.
10.
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11. DELIVERY AND RISK OF LOSS.
A. Products shall be delivered F.O.B. CP, unless otherwise requested
by the CP, or F.O.B. UHCAD, unless otherwise requested by the UHCAD). F.O.B.
CP or F.O.B. UHCAD shall mean that the Supplier shall bear all transportation
costs associated with the delivery and the risk of all loss or damage to the
Products until such Products have been accepted by the CP or the UHCAD.
B. Minimum shipment for Products shall be in accordance with the CP's
requirements, or in the absence of such requirements, the Supplier's
industry-wide policy attached to its Bid pursuant to Paragraph 4.I.
C. Products shall not be delivered to the CPs or the UHCADs by the
Supplier or by the SADs without a packing list and without the applicable
purchase order number set forth on the packing slip, carton label and invoice.
D. The Supplier or the SADs shall immediately give to UHCSC, the CPs
and the UHCADs written, or verbal followed by written, notice of any actual or
potential problem, such as a labor dispute, which could delay or threaten to
delay the timely delivery of Products by the Supplier or the SADs.
E. A CP or a UCAD shall have not less than thirty days from the date
of delivery to the CP or installation of the Products in the CP, whichever is
later, to inspect the Products and notify the Supplier or the SAD of any defects
with the Products or any non-conformance with the terms of the Purchasing
Agreement, in which case the CP or the UHCAD shall be entitled to reject any
defective or nonconforming Products or to set off the price of the defective or
nonconforming Products against any obligations due from the CP or the UHCAD to
the Supplier or the SAD.
F. Even though a CP or a UHCAD may be deemed to have accepted
Products under the Purchasing Agreement, the CP or the UHCAD shall be entitled
to seek damages and other relief (as appropriate) if the Products are later
determined to be defective or to be in breach of any warranty covering the
Products.
G. Unless otherwise provided in the Bid Specifications, the Supplier
or the SADs shall fill fully each purchase order for Products submitted by a CP
or a UHCAD; and, for each CP, the Supplier's or the SAD's fill rate on the first
delivery of each line item of each order shall be 98%, calculated by multiplying
100 times the quotient of the total lines shipped divided by the total lines
ordered.
H. If the Supplier is or the SADs are unable to ship Products
pursuant to the terms of the Purchasing Agreement, the Supplier or the SADs may
offer to the CP or the UHCAD substitute Products which may be accepted or
rejected in the sole discretion of the CP. The CP must approve all
substitutions prior to shipment.
I. In the event of the default of the Supplier or the SAD or its
failure to perform in accordance with the terms of the Purchasing Agreement, or
under circumstances of its inability to fulfill Purchasing Agreement commitments
due to product certification issues (e.g.,
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NDA/ANDA status, batch certification, etc.), the CP or the UHCAD may purchase
the Products from other sources and the Supplier shall be liable and responsible
to the CP or the UHCAD for all reasonable costs in excess of the Award Price
plus any other damages which UHCSC, the CP or the UHCAD may incur. If the
Supplier or the SAD fails to disclose to an EP the existence of an applicable
UHCSC contract, the Supplier shall be liable and responsible to the EP for all
reasonable costs in excess of the Award Price plus any other damages which
UHCSC, the EP or the UHCAD incur.
J. If applicable, sterile Products and other Products with a limited
shelf life sold by the Supplier pursuant to the Purchasing Agreement shall have
expiration dates as long as possible. Unless required by stability
considerations, there shall not be less than a eighteen month interval between a
Product's date of delivery by the Supplier or the SADs to the CP or by the
Supplier or the SADs to the UHCAD and its expiration date.
12. INVOICING AND PAYMENTS.
A. The party directly placing the purchase order with the Supplier or
the SADs shall alone be liable or responsible for payment for the Products
ordered. If the UHCAD directly places the purchase order, neither UHCSC nor any
CP shall be liable or responsible for the purchase; if a CP directly places the
purchase order, neither UHCSC nor any other CP shall be liable or responsible
for the purchase.
B. The party directly placing the purchase order shall make payment
in accordance with the terms of the purchase order (to the extent such terms are
not in conflict or inconsistent with the terms of the Purchasing Agreement);
provided, however, if a CP directly places the purchase order, it shall not be
required to make payment until the Products purchased have been delivered,
installed (if required), inspected and accepted as specified in Purchasing
Agreement. Unless otherwise specified in the Purchasing Agreement, the CP shall
have fifteen days to inspect and accept the Product from the date the Product is
delivered or is installed, whichever is latter.
C. The Supplier or the SADs shall submit invoices to the CP or the
UHCAD in accordance with instructions contained on the purchase orders including
reference to the purchasing order number. Unless otherwise requested by a CP,
invoices shall be sent in triplicate to the invoice payment processing address
shown on the purchase order; if no address is shown, invoices shall be sent to
the "ship to" address or to such other address as the CP or the UHCAD may
instruct. The Supplier and the SAD shall identify on the invoices the
quantities and types of Products ordered; the status of each Product if the
quantities ordered are not delivered; and such other information as UHCSC may
reasonably request from time to time.
D. Invoice discounts shall be determined from the date of receipt of
the invoice and/or the date of acceptance of the Products. Cash discount terms
stated on the Bid must be shown plainly on the invoice; however, cash discounts
not shown on the invoice but included in the Bid may be taken. In addition,
discounts set forth on the invoice, but not included in the Bid, may be taken.
12.
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E. Errors on the invoices of the Supplier or the SADs must be
corrected within fourteen days from (1) discovery by the Supplier or the SADs or
(2) notification to the Supplier or the SADs.
F. Unless otherwise provided in the Bid Specifications, invoice terms
of the Purchasing Agreement shall be 2% 15, net 30.
G. The Supplier shall assist UHCSC and any CP with an interest in
developing or the capability of developing an electronic invoice system to
develop such a system. UHCSC's or the CP's development and implementation of
such a system will entitle the CP with such a system to an additional discount
of 0.5% from any invoice paid through such a system.
H. The Supplier shall assist UHCSC and any CP with an interest in
developing or the capability of developing an electronic fund transfer system to
develop such a system. UHCSC's or the CP's development and implementation of
such a system will entitle the CP with such a system to an additional discount
of 0.5% from any invoice paid through such a system.
13. RETURN GOODS POLICY.
A. Unless prohibited by law, the CP or the UHCAD, without
authorization from the Supplier or the SAD, or waiver of other claims, may
return Products ordered by it to the Supplier or the SAD under any of the
following circumstances: (1) the Product is ordered or shipped in error; (2) the
Product is no longer needed by the CP due to deletion from its standard supply
list, e.g., formulary, or changes in usage patterns, provided the Product is
returned at least six months prior to its expiration date and is in a
re-saleable condition; (3) the Product is received outdated or is otherwise
unusable; (4) the Product is received damaged, or is defective or nonconforming;
(5) the Product is one which a product manufacturer or supplier specifically
authorizes for return through a distributor; or (6) the Product is recalled.
B. If Products are returned pursuant to Subparagraph A above, the
Supplier or the SAD to which it is returned shall pay the freight for the
returned Products, shall bear all risk of loss or damage to the Products from
and after the time they leave the physical possession of the CP or the UHCAD and
shall credit the CP or the UHCAD for the returned Products. The CP or the UHCAD
shall determine the type of credit for returned Products (i.e., replacement
products, credit memo, etc.). If the CP or the UHCAD elects credit, the
Supplier or the SAD shall issue the credit within seven days after its receipt
of the returned Product.
C. The right of the CP or the UHCAD to return Products is in addition
to and not a limitation on any other rights and remedies it may have.
14. PRODUCT RECALLS.
The Supplier shall immediately give UHCSC, the CPs' Purchasing Office and
the UHCADS written, or verbal followed by written, notice of any and all recalls
of the Products, or of any products whose recall might affect the availability
of such Products. If the recalled Product is a pharmaceutical, the Supplier
shall also send written notice of the recall to the Director of Pharmacy of each
CP.
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15. PACKAGING.
The Supplier shall give written notice to UHCSC, the CPs and the UHCADs
of any change in packaging for any Products at least sixty days prior to the
actual change. UHCSC reserves the right to cancel the Purchasing Agreement
immediately upon receipt of notification of the change or any time thereafter by
delivering written notice thereof to the Supplier.
16. QUALITY LEVEL.
Unless otherwise indicated in the Bid Invitation or unless agreed upon by
a CP in connection with Products it may order, all Products shall be new.
Products which are demonstrators, used, obsolete, seconds, or which have been
discontinued are unacceptable unless otherwise specified in the Bid Invitation
or the CP accepts delivery after receiving notice of the condition of the
Products.
17. REPORTS.
A. If requested by a CP, within forty-five days after the end of a
month ("Reporting Month"), the Supplier shall submit to the CP the following
reports:
(1) A computer print-out listing alphabetically all
Products purchased by and delivered to the CP during the Reporting Month,
the current price of each Product, the total quantity of Products
purchased during the most recent twelve months ending with the end of the
Reporting Month and the total price for such quantity purchased.
(2) A computer print-out with all the information
described in Paragraph 17.A(1), but arranged in de-creasing order by
total dollars for the twelve month period ending with the end of the
Reporting Month.
(3) A computer print-out listing alphabetically all
Products which are stocked by the Supplier or the SAD, their current
prices, and their order entry numbers.
(4) A computer print-out listing fill-rates for the
Reporting Month determined in accordance with the description of
fill-rate set forth in Paragraph 11.G.
(5) Such other reports as the CP may reasonably request.
B. Within forty-five days after the end of the Reporting Month, the
Supplier shall submit to UHCSC the following reports:
(1) A report listing the total dollar purchases of each
CP for the Reporting Month.
(2) A report itemizing the purchases of each CP for the
Reporting Month, which report shall contain, at a minimum, a description
of the Products purchased, the number of units purchased and the total
dollar amount of the products purchased.
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C. The reports listed in Subparagraphs A and B above shall be in hard
print form and/or in machine readable form (i.e., tape or diskette) in
accordance with UHCSC established specifications.
18. ADMINISTRATIVE FEE.
A. The Supplier shall remit to UHCSC as an administrative fee (the
"Administrative Fee") an amount equal to 2 % of the total dollar amount of all
purchases made under the Purchasing Agreement by the CPs and the UHCADs and
shall be calculated based on the Supplier's Award Prices. The Administrative
Fee shall be paid to UHCSC within fifteen days after the end of each month and
shall be calculated based upon said month's purchases. In determining the total
dollar amount of said month's purchases, Products purchased under the Purchasing
Agreement by CPs which became CPs during said month pursuant to the terms of
Paragraph 3B of these Standard Terms and Conditions shall be included in such
determination. If the Supplier and UHCSC enter into another purchasing
agreement for products not covered by the Purchasing Agreement providing for the
payment of an administrative fee, the Supplier may make payment of such
administrative fee thereunder in one consolidated payment provided the Supplier
provides UHCSC a report breaking down the administrative fee amounts
attributable to each purchasing agreement. If the Administrative Fee is not
timely paid when due, UHCSC shall be entitled to receive interest on the unpaid
amount at the rate of 1 and 1/2% per month, or the greatest amount permitted by
law, whichever is greater.
B. The Supplier shall pay the Administrative Fee by check made
payable to the "University HealthSystem Consortium Services Corporation." All
checks should reference the Purchasing Agreement number and should be mailed to
the following address:
University HealthSystem Consortium
Services Corporation
Suite 700
2001 Spring Road
Oak Brook, Illinois 60521-1890
Attention: Accounts Receivable
19. SALES CALLS.
The Supplier shall consult with each CP to establish a specific
time-table for sales calls by sales representatives. The Supplier shall
establish the times of the sales calls to satisfy the needs of the CP.
20. WARRANTY.
A. The Supplier shall warrant the Products against defects in
material, workmanship and design for the period set forth in the Bid. The
Supplier shall make all necessary arrangements to assign any such warranty to
the CPs where the Products are distributed to the CPs through an authorized
distributor. If the purchased Products are equipment, the manufacturer's
standard warranty shall apply at a minimum and must be honored by the Supplier.
The Supplier represents and warrants that the Products shall conform to the
specifications, drawings, and samples furnished by the Supplier or contained in
the Bid
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Specifications, shall be free from defects in material, workmanship and design,
and shall be safe for their intended use. If any Products are defective and a
claim is made by a CP or a UHCAD on account of such defect during the warranty
period, the Supplier shall, at the option of the CP or the UHCAD, either replace
the defective Products or credit the CP or the UHCAD. The Supplier shall bear
all costs of returning and replacing the defective Products, as well as all risk
of loss or damage to the defective Products from and after the time they leave
the physical possession of the CP or the UHCAD.
B. The warranties contained in this Paragraph 20 shall survive any
inspection, delivery, acceptance or payment by a CP or a UHCAD. In addition, if
there is at any time wide-spread failure of the Products even after the warranty
period has ended, the CP or the I/HCA may return all said Products for credit or
replacement, at its option. The remedies of this Paragraph 20 shall not be
applicable where the defect is the direct result of an act or failure to act by
the CP or the UHCAD. The remedies of this Paragraph are in addition to and not
a limitation on any other rights or remedies that may be available against the
Supplier.
21. DISPUTES.
The Supplier shall use its best efforts to resolve any dispute between it
or a SAD and a CP or a UHCAD through negotiation. If the Supplier fails to
resolve the dispute within a reasonable time, the Supplier shall submit such
dispute to UHCSC which may attempt, in its sole discretion, to assist in the
resolution of the dispute.
22. ARBITRATION.
UHCSC and the Bidder mutually agree that any controversy which may arise
between them from the Award Date until the expiration of the Term of the
Purchasing Agreement shall be resolved as follows: Whenever a controversy
between them shall arise, the parties shall first use their good faith best
efforts to resolve the controversy. If, following such attempt, the controversy
remains unresolved for a period of at least thirty days, either party may
request arbitration by written notice to the other party. Within ten days after
receipt of such written request, the parties shall mutually select an
arbitrator. If the parties cannot agree upon an arbitrator within such ten day
period, within ten days thereafter, they shall jointly submit or either one of
them may submit a request to the American Arbitration Association to select an
arbitrator. Within thirty days after the selection of an arbitrator, the
arbitrator shall conduct a formal hearing into the matter in dispute according
to the applicable rules of the American Arbitration Association then in effect.
All costs of arbitration, including the arbitrator's fee and transcript
expenses, but excluding the parties' legal expenses, shall be borne equally by
the parties. The arbitrator's award or decision may be enforced according to
the provisions of Illinois law.
23. INSOLVENCY.
If the Supplier should become bankrupt or insolvent or make an
unauthorized assignment or go into liquidation or should proceedings be
initiated for the purpose of having a receiving order or winding up order made
against the Supplier, or should the Supplier apply to the courts for protection
from its creditors, then and in any such case, UHCSC and the CPs may, without
16.
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prejudice to any of their other rights, demand adequate assurances of
performance under the Purchasing Agreement and suspend their obligations
thereunder until the Supplier's financial position appears satisfactory.
Failing such assurances, UHCSC may terminate the Purchasing Agreement by written
notice to the Supplier.
24. NONPAYMENT BY OR INSOLVENCY OF THE UHCAD.
If the UHCAD should fail to pay the Supplier or the SAD for Products or
should become bankrupt or insolvent or make an unauthorized assignment or go
into liquidation or should proceedings be initiated for the purpose of having a
receiving order or winding up order made against the UHCAD, or should the UHCAD
apply to the courts for protection from its creditors, then and in any such
case, the Purchasing Agreement shall, not terminate, but the Supplier shall have
the right, upon prior notice to UHCSC and the CPs, to discontinue providing
Products through the UHCAD, and the Supplier shall thereafter provide Products
to the CPs directly, through a SAD or through another UHCAD, as directed by
UHCSC.
25. EXISTING CONTRACTS.
The Bidder agrees that without penalty or liability of any kind each EP
with which the Bidder has a contract or contracts in force as of the Award Date
for the Products may terminate any such existing contract or contracts with the
Bidder within thirty days after either the Award Date or the date the EP becomes
a CP, whichever is latter, by delivering written notice thereof to the Bidder.
The foregoing right of termination shall apply irrespective of whether the
Bidder is awarded a Purchasing Agreement.
26. BILATERAL CONTRACTS.
The Supplier and a CP, at their election, may enter into a bilateral
contract in respect to the Products; provided, however, notwithstanding anything
to the contrary in the bilateral contract, the following conditions shall apply
with respect to such bilateral contract: (1) except with the prior written
consent of UHCSC, the terms of the Purchasing Agreement shall supersede the
terms of the bilateral contract in the event of conflict or inconsistency; (2)
unless required by UHCSC, execution of the bilateral contract by the CP shall
not be necessary for a CP to qualify as a CP and to purchase Products pursuant
to the Purchasing Agreement; and (3) the term of the bilateral contract shall be
coterminous with the Term of the Purchasing Agreement. The Supplier shall
provide UHCSC with a copy of the bilateral contract and any amendments thereto
for approval prior to their execution. No bilateral contract or any amendments
thereto shall become effective unless first approved in writing by UHCSC. If
approved, the Supplier shall provide UHCSC with an executed copy of the
bilateral contract or any amendment thereto within fifteen days after execution
by both the Supplier and the CP.
27. PATENT INFRINGEMENT.
The Supplier represents and warrants that the Products will be
manufactured or produced in accordance with applicable federal labor laws and
that sale or use of the Products will not infringe any United States patent.
The Supplier will, at its own expense, defend every suit which shall be brought
against UHCSC, a CP or a UHCAD (provided that the Supplier is notified in
writing of such suit and the papers therein are delivered to it) for any alleged
infringement of any
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patent by reason of the sale or use of the Products and shall pay all costs,
damages and profits recoverable in any such suit.
28. INSURANCE.
A. The Supplier shall maintain and keep in force during the Term of
the Purchasing Agreement product liability, general public liability and
property damage insurance against any insurable claim or claims which might or
could arise regarding Products purchased by the CPs or by the UHCADs from the
Supplier or a SAD under the Purchasing Agreement. Such insurance shall contain
a minimum combined single limit of liability for bodily injury and property
damage in the amounts of not less than $1,000,000 per occurrence and $10,000,000
in the aggregate; shall name UHCSC, the CPs and the UHCADs, as their interests
may appear, as additional insured, and shall contain an endorsement providing
that the carrier will provide directly to all named insured copies of all
notices and endorsements. The Supplier shall provide to UHCSC in its Bid and
thereafter within fifteen days after UHCSC's request, an insurance certificate
indicated the foregoing coverage, issued by an insurance company licensed to do
business in the relevant states and signed by an authorized agent.
Notwithstanding anything to the contrary in this Paragraph, the Supplier
may maintain a self-insurance program for all or any part of the foregoing
liability risks, provided such self-insurance policy in all material respects
complies with the requirements applicable to the product liability, general
public liability and property damage insurance set forth in this Paragraph. The
Supplier shall provide UHCSC in its Bid, and thereafter within fifteen days
after UHCSC's request: (1) the self-insurance policy; (2) the name of the
company managing the self-insurance program and providing reinsurance, if any;
(3) the most recent annual reports on claims and reserves for the program; and
(4) the most recent annual actuarial report on such program.
The Supplier shall not amend in any material respect that affects the
interests of UHCSC, the CP, and the UHCAD, or terminate said liability insurance
or self-insurance program except after thirty days' prior written notice to
UHCSC and shall provide to UHCSC copies of all notices and endorsements as soon
as practicable after it receives or gives them.
B. The Supplier shall (1) cause each SAD to agree to maintain and
keep in force during the Term of the Purchasing Agreement product liability,
general public liability and property damage insurance in coverage amounts
deemed reasonable under industry standards against any insurable claim or claims
which might or could arise regarding Products purchased by the CPs or by the
UHCADs under the Purchasing Agreement, (2) name UHCSC, the CPs and the UHCADs as
additional insured in any such insurance policy as their interests may appear,
and (3) furnish to UHCSC (upon its request) an insurance certificate indicating
the foregoing coverage, issued by an insurance company licensed to do business
in the relevant states and signed by an authorized agent. If the SAD refuses or
fails to agree to the foregoing, the Supplier shall immediately notify UHCSC.
29. COMPLIANCE WITH LAW.
The Supplier represents and warrants that to the best of its knowledge,
after due inquiry, it is in compliance with all federal and state statutes,
laws, ordinances and regulations applicable
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to it (the "Legal Requirements") which are material to the operation of its
business and the conduct of its affairs, including Legal Requirements pertaining
to the safety of the Products, occupational health and safety, environmental
protection, nondiscrimination, antitrust, and equal employment opportunity.
During the Term of the Purchasing Agreement, the Supplier shall: (1) promptly
notify UHCSC of any lawsuits, claims, administrative actions or other
proceedings asserted or commenced against it which assert in whole or in part
that the Supplier is in noncompliance with any Legal Requirement which is
material to the operation of its business and the conduct of its affairs and (2)
promptly provide UHCSC with true and correct copies of all written notices of
adverse findings from the U.S. Food and Drug Administration ("FDA") and all
written results of FDA inspections which pertain to the Products.
30. HOLD HARMLESS.
A. The Supplier shall indemnify and hold harmless, and, if requested,
defend UHCSC, the CPs and the UHCADs, and their respective officers, directors,
regents, agents and employees, from and against any claims, liabilities,
damages, actions, costs and expenses (including reasonable attorneys fees and
court costs) of any kind or nature, whether at law or in equity, arising from or
caused by (1) the breach of any representation, warranty, covenant or agreement
of the Supplier contained in the Purchasing Agreement or (2) the condition of
any Product sold pursuant to the Purchasing Agreement, existing at the time of
its delivery, including a defect in material, .workmanship or design; provided
that such indemnification and promise to indemnify, defend and hold harmless
shall not be applicable where the claim, liability, damage, action, cost or
expense arises as a result of an act or failure to act of UHCSC, the CP or of
the UHCAD.
B. This Paragraph and the obligations contained herein shall survive
the expiration or earlier termination of the Purchasing Agreement. The remedies
of this Paragraph are in addition to and not a limitation on any other rights or
remedies that may be available against the Supplier.
31. ANCILLARY AGREEMENTS.
A. Within thirty days after UHCSC sends a letter of award to a UHCAD,
UHCSC shall submit to the Supplier a summary of the distributor agreement
entered into by UHCSC and the UHCAD.
B. Within thirty days after the Supplier awards a contract to a SAD
for the Products, the Supplier shall notify UHCSC of the distributor agreement
entered into by the Supplier and the SAD.
32. CHOICE OF LAW.
The Purchasing Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of Illinois and the Illinois
courts shall have jurisdiction over all matters relating to the Purchasing
Agreement; provided, however, in the event of a dispute between a CP and the
Supplier, at the option of the CP, the Purchasing Agreement shall be governed by
and construed in accordance with the internal substantive laws of the state in
which
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the CP is located and the courts of the state in which the CP is located shall
have jurisdiction over the dispute.
33. INDEPENDENT CONTRACTOR.
Each UHCAD is an independent contractor and is not an agent or employee
of UHCSC or any CP. UHCSC, the CPs and their respective officers, directors,
regents, agents and employees shall not be responsible or liable for any claim,
damage or loss of the Supplier or any third party arising out of or resulting
from the act or failure to act of a UHCAD.
34. REPRESENTATIONS AND WARRANTIES OF THE SUPPLIER.
In addition to the Supplier's other representations and warranties
contained herein, the Supplier represents and warrants to UHCSC and to each CP
as follows: (1) neither the Purchasing Agreement nor the transactions
contemplated therein will violate, breach or cause a default under any provision
of the charter or bylaws of the Supplier or any agreement, order, judgment,
decree, or other restriction of any kind to which the Supplier is a party or by
which it or any of its assets is bound or affected, or violate any law or
regulation; and (2) the Purchasing Agreement and the transactions contemplated
therein have been duly authorized and approved by all necessary action under
applicable laws or otherwise, and the Purchasing Agreement has been duly
executed by and constitutes the legal, valid and binding obligation of the
Supplier, enforceable by UHCSC and/or the CPs in accordance with its terms.
35. OMNIBUS RECONCILIATION ACT.
To the extent that Section 1861(V) (1) (I) of the Social Security Act, as
amended, (the "Statute") is applicable to the Purchasing Agreement, the Supplier
shall comply with the following requirements of the Statute:
A. Until the expiration of four years after the services are
furnished under the Purchasing Agreement, the Supplier shall make available,
upon written request to the Secretary of the Department of Health and Human
Services ("HHS"), or upon request to the Comptroller General, or their duly
authorized representatives, the Purchasing Agreement, and all the books,
documents and records of the Supplier that are necessary to certify the nature
and extent of the costs incurred by the CPs under the Purchasing Agreement; and
B. If the Supplier carries out any of its duties through a
subcontract, with a value or cost of $10,000 or more over a twelve-month period,
with a related organization (as the term is defined with regard to a provider in
42 C.F.R. Section 405.427(b)), the subcontract shall contain a clause to the
effect that until the expiration of four years after the services are furnished
pursuant to the subcontract, the related organization shall make available, upon
written request to the Secretary of the Department of HHS, or upon request to
the Comptroller General, or any of their duly authorized representatives, the
subcontract, and all the books, documents and records of such organization that
are necessary to verify the nature and extent of such costs.
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36. OBLIGATIONS OF UHCSC.
A. UHCSC shall, after the award of the Purchasing Agreement, deliver
a summary or copy of the Purchasing Agreement to each CP and each UHCAD and
shall, from time to time, at the request of the Supplier, deliver to each CP and
each UHCAD such materials supplied by the Supplier to UHCSC which relate to the
purchase of Products.
B. UHCSC shall notify in writing the Supplier of the identity of each
CP and each UHCAD which becomes or ceases to be a CP or a UHCAD during the Term
of the Purchasing Agreement. The Supplier acknowledges and agrees that any
institution that becomes a CP or a UHCAD during the Term of the Purchasing
Agreement shall be deemed a "CP" or a "UHCAD" hereunder.
37. CERTIFICATION OF INDEPENDENT PRICE DETERMINATION.
The Bidder certifies, and in the case of a joint Bid, each Bidder thereto
certifies as to its own organization, that: (1) the Bidder has not either
directly or indirectly entered into any agreement, participated in any collusion
or otherwise taken any action or restraint of free competitive bidding in
connection with the Bid Invitation; (2) the prices in the Bid have been arrived
at independently without consultation, communication, or agreement, as to any
matter relating to such prices with any other Bidder or with any competitor; (3)
unless otherwise required by law, the prices quoted in the Bid have not been
knowingly disclosed by the Bidder and will not be knowingly disclosed by the
Bidder directly or indirectly to any other Bidder or to any competitor; and (4)
no attempt has been made or will be made by the Bidder to induce any other
person or firm to submit or not to submit a Bid for the purpose of restricting
competition.
38. DEFENSE OF THE PURCHASING AGREEMENT.
The Supplier shall, at its own expense, take such action as is reasonably
necessary to defend the validity and enforceability of the Purchasing Agreement
against any allegation in any litigation or proceeding commenced against it by a
third party to the effect that the Purchasing Agreement is unlawful or
unenforceable, and UHCSC shall cooperate with the Supplier in such defense. If
UHCSC is a party to any litigation or proceeding involving such an allegation,
the Supplier shall cooperate with UHCSC in its defense thereof.
39. THIRD PARTY BENEFICIARIES.
Each CP and UHCAD is an intended third party beneficiary of the
Purchasing Agreement. All terms and conditions of the Purchasing Agreement
shall inure to the benefit and be enforce-able by the CP and its successors and
assigns and all terms and conditions of the Purchasing Agreement which are
applicable to the UHCAD shall inure to the benefit and be enforceable by the
UHCAD and its successors and assigns.
40. AUDIT OF PRICING.
The Supplier shall allow UHCSC or its representatives to make periodic
visits for the express purpose of auditing invoices to ensure correct pricing
and performance under the Purchasing Agreement. All visits will be at a
mutually agreed upon time.
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41. NOTICES.
All notices or other communications required or permitted under the
Purchasing Agreement shall be in writing and shall be deemed sufficient when
mailed by United States mail, or delivered in person against receipt to the
party to which it is to be given, at the address of such party set forth below:
If to the Supplier:
BY MAIL OR BY HAND DELIVERY
to the Address Set Forth by the Supplier
in the Bid
If to UHCSC:
BY MAIL OR BY HAND DELIVERY
University HealthSystem Consortium
Services Corporation
2001 Spring Road
Suite 700
Oak Brook, Illinois 60521-1890
If to a CP:
BY MAIL OR BY HAND DELIVERY
TO THE CORRECT ADDRESS OF THE
COMMITTED PARTICIPANT
or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Paragraph.
42. USE OF NAME, LOGOS, ETC.
The Supplier agrees (and shall obtain a similar agreement from each SAD)
that it shall not use in any way in its promotional, informational or marketing
activities or materials the name of UHCSC or any CP, the trademarks, logos or
symbols of UHCSC or any CP, a description of the business or activities of UHCSC
or any CP, or the award or content of the Purchasing Agreement without in each
instance first obtaining the prior written consent of UHCSC.
43. CONFIDENTIAL INFORMATION.
A. The Supplier agrees (and shall obtain a similar agreement from
each SAD) that it shall: (1) keep strictly confidential and hold in trust all
confidential information of UHCSC and the CPs; (2) not use the confidential
information for any purpose other than the performance of its obligations under
the Purchasing Agreement, without the prior written consent of UHCSC; (3) not
disclose the confidential information to any third party (unless required by
law) without the prior written consent of UHCSC; and (4) not later than thirty
days after the expiration or earlier
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termination of the Purchasing Agreement', return to UHCSC, or the CP, as the
case may be, the confidential information.
B. "Confidential information", as used in Subparagraph A above, shall
consist of all information relating to the prices and usage of the Products
(including all information contained in the reports produced by the Supplier
pursuant to Paragraph 17) and all documents and other materials of UHCSC and the
CPs containing information relating to the programs of UHCSC and the CPs of a
proprietary or sensitive nature not readily available through sources in the
public domain. In no event shall the Supplier provide to the EPs any
information relating to the prices it charges the CPs or the UHCADs for Products
ordered pursuant to the Purchasing Agreement without the prior written consent
of UHCSC.
44. NON-ASSIGNMENT.
A. The Purchasing Agreement shall be binding upon and inure to the
benefit of the respective legal representatives, agents, successors and assigns
of UHCSC and the Supplier. "Successors", as used herein, shall include
successors in interest and successors in ownership, operation and control, and
shall include a successor corporation or other legal entity resulting from a
merger or consolidation and a corporation or other legal entity which acquires
all or substantially all of the assets of the acquired party.
B. No assignment of the rights thereunder may be made without the
prior written consent of the other party; except that UHCSC may assign its
rights and obligations to any affiliate of UHCSC. Any assignment of such rights
by either party in violation of this Paragraph shall not relieve that party of
the responsibility of performing its obligations thereunder to the extent that
such obligations are not satisfied in full by the assignee of such assignor.
45. HEADINGS.
Headings in the Bid Invitation are for convenience and reference only,
and shall in no way be held to explain, modify, amplify or aid in its
interpretation, construction or meaning.
46. SEVERABILITY.
Whenever possible, each provision of the Bid Invitation shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of the Bid Invitation shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of the Purchasing Agreement.
47. INSERVICE TRAINING.
The Supplier will provide inservice training at its own cost for
pertinent Products as requested by UHCSC or the CPs prior to and during the Term
of the Purchasing Agreement.
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48. ENTIRE AGREEMENT.
A. These Standard Terms and Conditions of Bid shall apply to any
purchase order issued by a CP or a UHCAD under the Purchasing Agreement unless
the special conditions set forth in Appendix A (e.g., "Special Conditions
Pharmaceutical"; "Special Radio-pharmaceuticals;" etc.) are applicable because
the products subject thereto are described in Appendix A. In such case, the
special conditions shall apply in addition to these Standard Terms and
Conditions of Bid and shall supersede these Standard Terms and Conditions of Bid
in the event of conflict or inconsistency.
B. The Purchasing Agreement, together with each CP's or each UHCAD's
purchase order (to the extent the terms of such purchase order are not in
conflict or inconsistent with the terms of the Purchasing Agreement) shall
constitute the entire agreement between each CP or each UHCAD and the Supplier
and no other terms and conditions in any document, acceptance, or acknowledgment
shall be effective or binding upon a CP or a UHCAD unless expressly agreed to in
writing by a CP.
Supplier:
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1.0 INTRODUCTION
The Special Terms and Conditions Capital Equipment Purchasing Program set forth
in this document are incorporated into and should be considered part of the
UHCSC Standard Terms and Conditions of Bid for Supplier agreement. These
Special Terms and Conditions apply only to capital equipment products and
services, and will be considered in addition to the Standard Terms and
Conditions of Bid. In the event of conflict or inconsistency, these Special
Terms and Conditions will supersede any other terms and conditions set forth in
the Standard Terms and Conditions of Bid. All defined terms used herein which
are not defined in these Special Terms and Conditions shall have the meaning
given those terms in the Standard Terms and Conditions of Bid.
2.0 FDA REQUIREMENTS
A Bidder shall provide evidence satisfactory to UHCSC to demonstrate compliance
with the below specified provisions of the federal Food, Drug and Cosmetic Act
(FD&C Act").
2.1 PREMARKET REVIEW.
A Bidder shall provide, together with each Bid, evidence satisfactory to
demonstrate compliance with Food and Drug Administration ("FDA") premarket
review requirements, if any, of the device subject to the Bid. Ordinarily, for
each device reviewed by FDA under Section 510(k) of the FD&C Act a letter is
received from the FDA determining that the device is "substantially equivalent"
to a preamendment device. Where a premarket approval has been submitted to FDA,
the Bidder should submit a copy of the notice of approval.
2.2 REPORTING AND TRACKING.
A Bidder shall submit, together with each Bid, a copy of this standard operating
procedure for device tracking, if device tracking is required under the FD&C
Act, for any device included in the Bid, together with a copy of its plan for
compliance with the manufacturer medical device reporting requirements.
Subsequent modifications to the procedure and plan shall be provided as they
become adopted by the Bidder. A Supplier shall assist, upon request, each CP
(CP) in complying with all device reporting and tracking obligations under the
FD&C Act.
2.3 PRODUCT RECALLS/MODIFICATIONS
A Supplier will, at no cost to the CP, provide the CP with each product
modification or replacement part necessary to correct a hazard
notification/recall on all goods and services covered by the Purchasing
Agreement. The hazard correction shall include, at no cost to the CP, all
labor, transportation and travel to the CP's site.
1.
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2.4 GMP INSPECTION REPORTS
A Bidder shall provide to UHCSC, together with each Bid, copies of all FDA Form
483's for the two most recent years together with evidence of actions taken by
the Bidder to address to the FDA's satisfaction violations of the FD&C Act. A
Supplier shall be under a continuing obligation to provide, on a timely basis,
copies of all subsequent FDA Form 483's and also to provide immediate notice to
UHCSC of any warning letter, recall, legal action or other regulatory action by
or on behalf of the FDA that affects a product for which a Bid has been
submitted and accepted by a Letter of Award.
3.0 NEW TECHNOLOGY
All Bidders, as a condition to submitting a Bid, will disclose to UHCSC pending
new technology equipment planned for introduction for the next two years which
provides the same function as the equipment subject to the Bid. Upon
introduction of the Supplier's new technology equipment, each CP will be
provided the option to exchange old technology equipment on a priority basis at
discounted prices and terms that will comply with Section 5 of the Standard
Terms and Conditions of Bid.
4.0 SAFE MEDICAL DEVICES ACT OF 1990
Each Bidder will be responsible for submitting their written plan of compliance
with the Safe Medical Devices Act (SMDA) of 1990 for both User Reporting and
Device Tracking. Suppliers will also be responsible for assisting the CP in
upholding the guidelines set forth by the SMDA for hospitals. This requirement
will not be fulfilled until the final SMDA ruling goes into effect. Suppliers
will be required to satisfy the above request immediately upon the final
effective date of the SMDA regardless of when the Purchasing Agreement had gone
into effect, as long as the Agreement is valid during the initial implementation
date of the ruling.
5.0 OSHA BLOOD BORNE PATHOGENS
Each Supplier shall abide by the state, federal, and hospital specific policies
developed by the CP regarding Blood Borne Pathogens. It wi1l be the
responsibility of the Suppliers and their representatives to request copies of
guidelines and training from the CP in order to fulfill the requirements of the
policy. The committed facility will be responsible for providing the Supplier
with the necessary supplies according to the written policy.
6.0 NEW EQUIPMENT ACCEPTANCE
A period of sixty days from first clinical use shall be given to the CP for the
purpose of acceptance testing. Upon completion of the installation, the
equipment shall meet or exceed the Bid Specifications and the specifications set
forth in the Supplier's published brochures. Acceptance testing shall include,
but is not limited to, safety testing, calibration, performance testing,
documentation inspection, and testing for adherence to hospital specifications.
Formal acceptance and invoice payment will occur only after the results of the
previously mentioned tests have been verified by hospital staff with at least
thirty days of clinical use but not later than sixty days from first clinical
use, at the CP's discretion A complete set of all test documentation and
procedures shall be made available to hospital staff prior to final acceptance.
2.
<PAGE>
If the equipment fails the acceptance testing, the CP shall, at its own
discretion, return the equipment to the Supplier for a complete cash
refund/exchange or may mandate the performance standards are met within five
working days.
If the equipment passes the acceptance testing, the warranty period for the
equipment shall begin sixty days from the first clinical use.
7.0 SITE PREPARATION
The Bidder shall provide to the CP a description of any pre-installation
planning services provided by the Bidder, including any costs that may be
incurred by the CP due to site preparation at the time the CT requests a bid
from the Bidder. The Bidder shall also provide any drawings, specifications, or
other material necessary for site preparation to be completed by the CP. The
above mentioned materials must be supplied as, and shall become part of the Bid
submitted by the Bidder to UHCSC.
8.0 INSTALLATION/ASSEMBLY
The Supplier shall provide a detailed description of the CP's and Supplier's
installation obligations including, but not limited to, electrical, mechanical
(HVAC), structural (including seismic where applicable), and plumbing
requirements. Based on past installations and review of the CP's site, the
Supplier shall estimate the cost the CT shall bear for each component of the
installation regardless if supplied by the Supplier or the CP. The CP shall
specify who will be responsible for installation. If the Supplier will be taking
responsibility for installation, the Supplier shall supply a schedule with
estimated dates and times for installation. If the CP will be taking
responsibility for installation, the Supplier shall contact the individual
selected by the CP that will be responsible for the installation of the
equipment subject to the Bid.
The Supplier shall provide a delivery and installation schedule to the CP based
on the specific details required by the CP.
If the product being purchased requires assembly (whether mechanical or
electrical, including cables), the Supplier shall specify who will be
responsible for assembly and any additional costs involved. If the Supplier
will be taking responsibility for assembly, the Supplier shall supply a schedule
of assembly requirements with estimated dates, times, and cost immediately after
the time a purchase order is issued.
9.0 DATA CONVERSION/INTERFACES
In the event that the product being purchased will require conversion of data
from another system, the Supplier agrees to perform this conversion either
manually or electronically at no charge to the CP. The Supplier shall also
supply the CP with the cost of performing data conversion during the warranty
period and after the warranty has expired. The data conversion will include all
data requested by the CP in writing and will take no longer then the agreed upon
time limit that should have been disclosed by the Supplier to the CP prior to
the commitment to
3.
<PAGE>
purchase. It shall be the responsibility of the Supplier to inform the CP, in
writing, of the length of time required to perform the conversion prior to the
issuance of a purchase order.
The Supplier shall also agree to include all interfaces requested by the CP at
no charge. Interfaces shall be real time connections to other information
systems owned by the CP and their affiliated members. All software interfaces
between devices and computerized information systems or between two devices
shall be identified as standard (with the appropriate standard {e.g. ACR, NEMA
III, HL7} referenced), proprietary ("off the shelf") or custom (to be specially
developed for the purchase).
10.0 WARRANTY/GUARANTEE
The Supplier shall clearly state in writing to the CP what is included in the
warranty in terms of equipment, attachments, subsystems, components, glassware,
etc. The Supplier shall also supply a second clearly written document listing
items that are limited in warranty or excluded from warranty coverage. During
the warranty period, the Supplier agrees to supply the CP with free loaner
equipment of identical type when the CP determines the need is required. Loaner
equipment shall be available and delivered to the CP's site within twenty four
hours of request at no charge to the CP.
During the warranty period, the Supplier will guarantee response to service
calls within one hour by phone and four hours on site unless specified otherwise
under unique instances. All warranty repairs will have 24 hour coverage at no
additional charge where the CP will be allowed to determine whether the service
response may be postponed to the following working day. A penalty equal to ___
of the total purchase price or the sum of the lease or rental will be payable by
the Supplier for each late response and for each occurrence that scheduled
maintenance is not performed by thc Supplier. This penalty fee will be
available to the CP within thirty days as a cash refund or credit to be used for
future purchases, at the CP's option per CP discretion.
The Supplier agrees to unconditionally guarantee all items against defect in
materials, workmanship, design, and performance for a period of one year for all
radiographic equipment and eighteen months for all other equipment. In case of
failure, the Supplier guarantees to use new original manufacture parts and not
rebuilt assemblies or components to perform the repair. If new manufacturer
parts are not available, thc Supplier will perform the repair with reconditioned
parts, and within thirty days replace the reconditioned parts with identical new
assemblies, components, printed circuit boards, etc.
As part of the Bid, the Bidder will be required to submit, in writing, the
equivalent cash value of thc above mentioned warranty/guarantee.
11.0 UPTIME/DOWNTIME CALCULATION (WARRANTY AND SERVICE CONTRACT)
The Supplier will guarantee that the equipment purchased under the Purchasing
Agreement shall maintain a level of uptime better than or equal to 98%. Any
costs associated with lost revenue due to failure by the Supplier to meet the
agreed uptime requirement shall be paid by the Supplier. Lost revenue shall be
calculated by multiplying the average number of procedures performed or the
average number of times the equipment would have been used times the current
4.
<PAGE>
hospital rate per use or procedure. The CP may elect to accept payment in the
form of cash reimbursement or account credit which may be used for future
purchases. Uptime shall be calculated using the following method:
100% uptime = H hours/day X D days/week X 13 weeks/quarter
= T hours (total potential uptime hours/quarter)
(T- TNF) X 100
--------------
% uptime = T
where: H is the pre-defined and agreed-upon number of hours per day that the
system will typically be used.
D is the pre-defined and agreed-upon number of days per week that the
system is typically used.
T is the total number of hours that the system will be in use per
year.
TNF is the number of hours the unit or any function of the unit is not
operational during the quarter (the hours calculated will only include
those hours that the unit would typically be in use). This time does
not included scheduled preventive maintenance.
If any portion of the total functionality of the equipment is unavailable for
clinical use, the unit shall be considered down. Downtime scheduled for
preventive maintenance, normal tube replacement (based on the average tube
life), or any other scheduled event including those for the convenience of the
hospital shall not be included in the downtime calculation
The % uptime shall be calculated every three months based on quarterly reports
that will be supplied by the Supplier. If uptime is less than 98%, the CP will
give written notice to the Supplier of its failure to meet the uptime
requirement and the costs associated with lost revenue shall be payable by the
Supplier within 30 days of receipt of the notice If the system falls below the
guaranteed uptime, the Supplier shall extend the warranty by one week for every
hour the system or function is not operational beyond the allowable 2%. The
same shall apply for CPs that have chosen to place their -nits under contract
after the warranty period has expired. The CP will be allowed to modify the
number of hours the unit is operational at any time within the quarter under
review. All calculations will be based on the agreed upon n-tuber of hours of
operation during that quarter.
12.0 PREVENTIVE MAINTENANCE
During the warranty period, the Supplier shall perform preventive maintenance
according to the manufacturer's recommendations and the policies developed by
the CP, at no charge to the CP. The Supplier shall supply the CP with a written
procedure that will be followed by the Supplier's representative during the
preventive maintenance process. Reasonable additional testing shall be
performed by the Supplier at no charge to the CP, upon request, to meet the
requirements of procedures developed by the CP. The frequency of preventive
maintenance and tests performed
5.
<PAGE>
shall comply with the manufacturers recommendations, external codes (state,
JCAHO, etc.), and all internal policies developed by the CP. During the
warranty period, the Supplier shall provide preventive maintenance after hours
at no additional charge if requested by the CP.
13.0 UPGRADES
The Supplier shall provide UHCSC and the CPs with a list of all optional
software including costs for the software both during the warranty period and
after the warranty period. Each CP shall be given all upgrades to acquired
software from the date of issuance of the purchase order through the expiration
of warranty, including penalty extensions, at no charge to the CP. Arrangements
shall be made to install all software upgrades within two weeks after the
release of any software upgrade. If the CP elects to purchase a maintenance
contract of any type after the warranty, all upgrades shall be provided at no
additional charge during the contract period. If the CP elects not to purchase
a service contract, the cost of upgrades will be no higher then the Supplier's
lowest published list price for the upgrade if a service contract had been
purchased.
14.0 MANUALS/SCHEMATICS/INSPECTION PROCEDURES
Supplier shall provide to the CP two complete and unabridged sets of operator
and service manuals for each model of equipment purchased including all
subassemblies and peripheral devices (including those manufactured by other
Suppliers). The technical service manuals furnished to the CP shall be at least
as complete and comprehensive as those furnished to the Supplier's technical
service personnel and minimally must include theory of operation (including
software), electrical and mechanical schematics, preventive maintenance
procedures and schedules, replacement parts lists, and troubleshooting
documentation. All updates to the above mentioned manuals shall be provided to
the CP within two weeks after release of such updates.
15.0 TRAINING
The Supplier shall provide inservice training for both operators and technical
service staff of the CP at the CP's site at the Suppliers own cost for pertinent
products or services as requested by UHCSC or CPs prior to the completion of the
sixty day acceptance period. The Supplier will perform initial inservice
training for the period required by the CP to complete training for the required
personnel. The Supplier shall, at no tuition, travel, lodging, or out of pocket
expenses to the CP, allow two staff members to attend the Supplier's technical
service training school. The Supplier shall also allow the CP to reproduce all
training material for use within the CP's facility. The Supplier shall provide
to the CP a schedule for technical service training provided by the Supplier,
and guarantee at least one space per CP in a technical service training class
prior to the end of the warranty period. Failure to provide the opportunity for
one attendee to attend technical service training class prior to the expiration
of the warranty shall cause the warranty to be extended by thirty days after the
technical training is provided. The Supplier shall provide follow-up inservice
training as determined by the CP for the life of the equipment at no additional
charge regardless of where the training is performed.
16.0 SERVICE RESPONSE TIME
The awarded Supplier shall guarantee a response time of one hour by phone and
four hours on-site for warranty, contract, or time and materials service calls
for all CPs. A penalty equal to 1%
6.
<PAGE>
of the total purchase price or the sum of the lease or rental payments (as
applicable) will be incurred by the Supplier for each occurrence of late
response. This penalty fee will be available to the CP within thirty days as a
cash refund or credit to be used for future purchases, at the CP's option. The
Supplier shall provide twenty four hour service coverage during the warranty
period for all CPs at no additional charge.
17.0 LOANER EQUIPMENT
In the event a CO's equipment is inoperable for any reason, the Supplier agrees
to provide loaner equipment of identical (compatible with the system the CP is
using) or superior type to the CP at its site at no additional charge during the
term of the Purchasing Agreement. Loaner equipment shall be available and
delivered to the CP's site within twenty four hours of the request by the CP.
It will be the responsibility of the Suppliers service representative to offer a
loaner when the equipment will be out of service. It will be left to the
discretion of the hospital to determine whether a loaner will be required while
equipment is out for repair. The Supplier shall also supply the CP with the
cost of loaner equipment after the Purchasing Agreement has expired.
18.0 CUSTOMIZATION OF SOFTWARE
At the rime of Bid, the Bidder shall supply an outline of the cost per hour or
per project that will be billed to the CP for the customization of software.
The Bid shall also include any additional charges that the CP shall incur for
annual maintenance, training, documentation, backup, etc. related to the
customized software.
19.0 OPERATIONAL SOFTWARE
All software licensure agreements shall be clearly stated in writing and copies
shall be submitted as part of the Bid. The Supplier shall also state whether
software is included in the warranty of the goods and services stated in the
Purchasing Agreement. All software necessary to operate the equipment/system
shall become the property of the CP upon completion of the equipment acceptance.
Ail new operational software shall be provided to the CP at no charge throughout
the warranty period and through the expiration of any maintenance contract that
is purchased for post-warranty service. Arrangements shall be made to install
all new software releases within two weeks after the release of new software.
20.0 DIAGNOSTIC SOFTWARE
All software necessary to troubleshoot and maintain the equipment listed on the
CP's purchase order shall be supplied to the CP at no charge. The diagnostic
software shall be identical to that used by the Supplier's service
representative Training for the use of diagnostic software shall be included in
the service training provided by the Supplier, and the Suppliers telephone
support shall also include assistance in diagnostic software operation.
Training in the use of diagnostic software and diagnostic software upgrades will
be offered by the Supplier, at no additional charge to the CP or the life of the
equipment within the CP's facility. Software updates shall be provided to the
CP within two weeks after the update release.
7.
<PAGE>
21.0 SERVICE CONTRACT OPTIONS
The Bidder shall enclose, with the Bid, annual service contract options with
annual costs specified for up to three years of coverage after the expiration of
warranty. If warranty on parts (or labor) extends beyond the warranty for labor
(or parts), then the parts (or labor) only contracts should be included for the
period while a partial warranty applies and then for three years beyond. The
types of contracts should include but are not limited to Full Service (Repair
and Preventive Maintenance), Repair Only, Preventive Maintenance Only, Pans
Only, Biomedical Screening; and Pans Consignment if available through the
Supplier. Each contract should include a tabular listing of options for
coverage hours and clearly state which items are covered or not covered with
cost implications for each incremental change in these terms. If pre-printed
contracts do not clearly list all items that are not covered under the
Purchasing Agreement, a separate list must be attached for clarification. Any
items, assemblies, or components that appear on the purchase order and which do
not appear on the List of Items Not Covered will assumed to be covered in full
by the contract. Multi-year agreements should be renewable annually based
solely upon the CP's discretion which will include the CP's perception of the
quality of service provided by the Supplier. Contract proposals should also
include a guarantee of service quality and response time with penalties for the
Supplier if these guarantees are not satisfied.
Regardless of which type of contract is chosen or whether a contract is chosen,
the Supplier will supply the CP with clinical and technical telephone service
response during the life of the equipment. In the response to the request for
bid, the Supplier shall supply the types of telephone support available, the
hours of coverage, and specify how to access the system. Telephone response
Will be guaranteed to a maximum of one hour response time with a penalty equal
to of the total purchase price or the sum of the lease or rental payments (as
applicable) for each late response time. This penalty fee will be available to
the CP within thirty days as a cash refund or credit that may be used for future
service or purchases, at the CP's option.
If upgrades are to be provided at no charge as part of the service contract, the
cost of any upgrade for CPs not electing to purchase service contracts shall not
exceed $0% of the service contract cost and in no event shall the cost exceed
the Supplier's lowest published price list for the upgrade.
22.0 SERVICE CONTRACT CANCELLATION
The CP reserves the right to cancel any service agreement, without cause or
penalty, with thirty days prior written notification to the Supplier. Payment
reimbursement will be prorated and the Supplier shall separate costs for
preventive maintenance and repair for the purpose of allocating expenses. The
Supplier will be required to leave the equipment in certifiable condition as
deemed by hospital staff. The Supplier shall not cancel the contract without a
minimum of thirty days prior written notification to the CP. Cancellation of
the contract shall not effect the Suppliers response time and quality of support
nor result in other penalties if the CP elects to use the Supplier for time and
materials repairs, perform the work in-house, or obtain service from another
Supplier.
8.
<PAGE>
23.0 ESCROW OF SOURCE CODE
The Supplier agrees to keep and maintain copies of the CP's source code and
documentation for such source code with an escrow agent at no charge to the CP.
The escrow agent shall be authorized to release the source code to the CP in the
event of that the Supplier ceases to conduct business or discontinues thc
product purchased under the Purchasing Agreement.
24.0 MAINTENANCE/PREVENTIVE MAINTENANCE/OTHER CHARGES
The Bidder shall outline separately, in the Request for Bid, the charges that
will be incurred for hourly service, overtime, travel, after hours preventive
maintenance, Saturday service, Sunday service, holiday service, and any other
charge that may relate after warranty/contract service. The Supplier shall
inform the CP of the typical location that service will be dispatched from with
the usual mileage and cost.
25.0 HISTORICAL PARTS/LABOR DATA
The Supplier shall provide the CP with historical parts/labor/cost data to
assist the factory in the analysis of the contract value. The Supplier shall
provide all data for the equipment being bid including any peripheral devices.
Historical data should include typical repairs, parts usage, and service
requests that had been issued by customers with similar facilities and usage
both under warranty and after warranty.
26.0 SERVICE PERSONNEL QUALIFICATIONS
Service provided by the Supplier shall be performed by qualified and trained
personnel, and work is to be scheduled whenever possible with minimal
inconvenience to hospital staff, patients, and visitors. The CPs reserve the
right to deem any service representative/sales representative as unacceptable.
The Supplier shall supply replacement individuals, upon the CPs request, at no
penalty or charge to the CP. The Bidder shall identify the quantity and
qualifications of its service and training personnel in the Bid. The Supplier
shall also supply each CP with a list of local service representative and their
qualifications upon request.
27.0 REPLACEMENT PARTS
As provided in Section 10, of these Special Terms and Conditions, replacement
parts used during the warranty period shall be newly manufactured parts or
assemblies, unless the hospital agrees otherwise. In the case where new parts
are not available, the service representative may install rebuilt parts in order
to make the unit operational. Within thirty days after the repair, the rebuilt
parts must be replaced with newly managed parts. After the warranty period,
repairs must be made with new or like new parts. Parts replaced may be returned
for credit to the Supplier, however, the CP reserves the right to retain parts
removed from equipment. Ail parts that are not eligible for Supplier credit
shall remain property of the CP. With regard to contracts that do not include
parts, the Supplier shall only replace and charge for parts necessary to bring
the equipment to operating condition. The Supplier shall warranty replacement
parts and labor for one year, or according to standard warranty, whichever is
longer.
9.
<PAGE>
28.0 SERVICE/PARTS AVAILABILITY
The Supplier shall stock repair parts, circuit boards, tools, and any additional
equipment necessary to support and maintain full functionality of purchased
equipment for a minimum of five years beyond the discontinuation of manufacture
of the model or the estimated useful life of the equipment as stated to the CP
at time of purchase, whichever is longer. The Supplier shall provide factory
trained service personnel for use by, and at the discretion of, the CP to
contract for the repair and maintenance of the purchased equipment at the
Supplier's stated cost for the same time period as mentioned above. The
Supplier shall supply the CP with current pricing for parts and service
including any discounts available. Parts shall be supplied at no more than
published list price provided to the hospital. The Supplier agrees to notify
the CP in writing one year prior to the discontinuation of service or parts.
Parts available after discontinuation of product production must be maintained
at the same level as pre-discontinuation for the five year period. Complete
assembly replacement instead of component parts is not acceptable.
Supplier service personnel shall be located within a four hour on-site response
time of the CP for the length of time stated in the Purchasing Agreement. The
CP shall be able to obtain parts seven days a week, twenty four hours a day.
The repair parts shall be available for delivery within twenty four hours of
request.
29.0 DETAILED SERVICE REPORTS
The Supplier's service representative must complete a detailed service report on
all service requests, regardless of the problem or whether the equipment is
under warranty, contract, or time and material coverage. The service report
shall detail travel time, labor hours (both regular and overtime), parts used
with part n-tubers and description, start time and date, completion time and
date, and any cost associated with the service. The service report shall
identify the device being serviced by serial number and/or Clinical Engineering
identification number. A brief description of the problem and action taken to
correct the problem is required on all service reports. The service report must
also include an acceptance signature from hospital staff after the service is
completed to verify satisfaction with the service.
Complete maintenance records shall be maintained by the Supplier and copies of
each service report are to be submitted to the CP immediately following each
service call or preventive maintenance. A complete summary of life to date
service shall be available to the CP upon request Any quality assurance program
available by the Supplier for the equipment and documentation of such shall be
provided to the CP upon request at no charge.
At the CP's option, the Supplier shall display the service provider's business
card prominently on the face of the equipment. The card shall indicate
appropriate phone numbers for twenty-four hour contact.
30.0 REPAIR ESTIMATES/AUTHORIZATIONS
The Supplier's service representative must report to the Clinical/Biomedical
Engineering representative or user department prior to beginning any work and
after the completion of any service. Supplier service representative shall,
after initial inspection, provide a written cost estimate of repairs to hospital
staff prior to beginning work After the estimate has been approved
10.
<PAGE>
service may be performed. It will be the responsibility of thc Supplier to work
with the CP in determining who will be authorized to approve estimates. Any
costs that exceed the amount of the estimate shall not be charged to the CP.
31.0 LIMIT ON CALLS
The Supplier will not limit the amount of calls a CP could make before charges
will be incurred by CP. In the case where thc CP continues to place a large
number of calls, it will become the responsibility of the Supplier to determine
why thc calls are being placed and how the problem will be resolved. The
Supplier shall absorb all costs involved in resolving thc concern to the CP's
satisfaction.
32.0 NUISANCE CALLS
The Supplier may not limit the number of "No Problem Found" calls from the CP.
Nuisance calls related to training problems, operator error, abuse, etc. shall
become the responsibility of the Supplier to resolve. Ail costs involved in the
resolution of such problem will become the responsibility of the Supplier. The
issues shall not be considered resolved until the CP is satisfied with the
solution.
33.0 SHIPPING AND FREIGHT
The Supplier shall pay all shipping costs, including insurance, for the
transportation of equipment and parts during the initial purchase and any
following purchases/repairs for the life of the equipment. The Supplier will be
responsible for both shipping from the Supplier to the CP and from the CP to the
Supplier. If the Supplier chooses not to insure shipping, the Supplier shall be
held responsible for any losses or damage and will agree to replace the item
with a new product within one week of the reported loss or damage. The Supplier
agrees to resolve any claims with thc CP within one week of thc claim.
34.0 DUTIES/TAXES
Deliveries of goods subject to the Purchasing Agreement shall be F.O.B. CP
unless otherwise specified by the CP. All prices presented to CPs shall be the
final purchase price and shall include any applicable duties/taxes.
35.0 INVOICING
The Supplier service invoice will clearly separate costs for parts, labor, and
travel. Invoices will be sent to thc CP within thirty days of completed service
or purchase. Terms of the invoice will allow thc CP a minimum of thirty days
for payment, and will be sent to the CP according to the policies and procedures
developed by each individual hospital.
36.0 ORDER CANCELLATION/RESTOCKING
The Bidder shall indicate in writing in the Bid, that the CPs will not be
charged any cancellation or restocking fees. Service parts could be returned
without any fee if they are returned within a
11.
<PAGE>
reasonable time period after delivery, arc still enclosed in the original
packaging material, and are returned in new condition.
37.0 REFERENCES
The Supplier shall make available to the CP a list of all installations
(including UHC members) of the Supplier's identical goods and services included
in the Purchasing Agreement within a fifty mile radius of the CP. The list
shall include contact names, titles, telephone numbers, types of installation,
and the model n-tuber of the equipment if not identical to that listed on the
Purchasing Agreement. UHCSC and the CPs reserve the right to contact any of the
Supplier's references without notice to or authorization from the Supplier.
38.0 ENVIRONMENTAL ISSUES
The Supplier shall bear all costs associated with the removal of packaging,
crating, and other material associated with the installation of the equipment.
The Supplier, at the discretion of the CP, shall remove the retired equipment at
the Supplier's expense. The Supplier will include in the bid any cost
reductions, rebates, credits, etc. associated with recyclable
materials/supplies returned to the Supplier, as well as, price reductions for
acquisition of recycled or remanufactured materials/supplies obtained from the
Supplier. The cost of waste disposal will be considered when purchasing
commodities from the Supplier.
39.0 REPORTS TO UHCSC
The Supplier shall submit a complete price catalogue to UHCSC and maintain the
price list with updates as released. Quarterly agreement activity reports shall
be sent to UHCSC indicating all purchases by CPs, and including at minimum
equipment model n-tuber, list price, net price, and hospital purchase order
number. Referenced quotations shall be provided to UHCSC, as requested, for all
capital equipment purchases made by the CPs.
40.0 SUPPLIES
Supplies necessary for the operation of the equipment in the Purchasing
Agreement shall be made available by the Supplier to the CP at the supplier's
published price list with any applicable discount for the duration of the
Purchasing Agreement. The Supplier shall state whether these parts are only
available through the Supplier, or whether they are available from other
sources. The Supplier shall not hold the CP liable in any way if the CP chooses
to purchase supplies from parties other then the Supplier. All warranties and
guarantees shall remain in force regardless of the source from which the CP
purchases supplies.
41.0 TAKEOVERS/ACQUISITIONS/MERGERS
The Purchasing Agreement and terms of the Purchasing Agreement shall remain in
force for the term of the Purchasing Agreement notwithstanding any takeover,
acquisition, or merger of., or by, the Supplier.
12.
<PAGE>
42.0 SUPPLIER ACCEPTANCE OF TERMS
SUPPLIER:
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TITLE:
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ADDRESS:
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SIGNATURE:
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DATE:
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REVISED 12/95
13.
<PAGE>
EXHIBIT 10.8
BEST AND FINAL PROPOSAL
FOR:
GSA SUPPLY CONTRACT
JUNE 13, 1997
SOLICITATION #: M3-QI-91 OSIII
SOLICITATION ISSUED BY: VA NATIONAL ACQUISITION CENTER (90N-M3), 1ST AVENUE, 1
BLOCK NORTH OF 22ND STREET, BUILDING 37, HINES, IL 60141
THIS PROPOSAL OR QUOTATION INCLUDES DATA THAT SHALL NOT BE DISCLOSED OUTSIDE THE
GOVERNMENT AND SHALL NOT BE DUPLICATED, USED OR DISCLOSED-IN WHOLE OR IN
PART-FOR ANY PURPOSE OTHER THAN TO EVALUATE THIS PROPOSAL OR QUOTATION. IF,
HOWEVER, A CONTRACT IS AWARDED TO THIS OFFEROR OR QUOTER AS A RESULT OF OR IN
CONNECTION WITH THE SUBMISSION OF THIS DATA, THE GOVERNMENT SHALL HAVE THE RIGHT
TO DUPLICATE, USE, OR DISCLOSE THE DATA TO THE EXTENT PROVIDED IN THE RESULTING
CONTRACT. THIS RESTRICTION DOES NOT LIMIT THE GOVERNMENT'S RIGHT TO USE
INFORMATION CONTAINED IN THIS DATA IF IT IS OBTAINED FROM ANOTHER SOURCE WITHOUT
RESTRICTION. THE DATA SUBJECT TO THIS RESTRICTION ARE CONTAINED IN SHEETS 1-41
AND THE ATTACHED EXHIBITS A-H REFERENCED IN THIS RFP RESPONSE.
<PAGE>
QUANTITY DISCOUNT(S)
OmniCell is offering a flat discount off of the purchase and rental prices
listed in Exhibit B REGARDLESS OF THE ORDER VOLUME.
- - Both our supply and pharmacy automation products are offered to the
Government at the same discount.
- - The discount includes the discount offered in our original solicitation
bid under Part IV-Representations and Instructions, Section
M-Evaluation Factors for Award, Part B-Discount and Sales Information
page 140.
- - NOTE: NET RENTAL AND PURCHASE PRICES ARE LISTED IN EXHIBIT D.
BASIC DISCOUNT(S)
NON-VALIDATION DISCOUNT
OmniCell is offering an additional net discount to individual facilities which
choose to purchase the OmniCell system without a validation (i.e.,
free-use-period, trial, evaluation).
COMBINATION COMMITMENT DISCOUNT
Government facilities will receive an additional net discount by committing to
buy OmniCell's supply and pharmacy system. If the facility has already installed
OmniCell's supply or pharmacy system and chooses to install the other system,
thee net discount will be awarded on a forward going basis once the member
facility purchases the additional systems.
DISCOUNTS ON SERVICE
OmniCell does NOT normally discount service prices to customers. The following
discounts are offered to government facilities off of the service list prices in
EXHIBIT B.
- - NOTE: DISCOUNTED SERVICE PRICES ARE LISTED IN EXHIBIT E.
- - EXTENDED SERVICE DISCOUNT: OmniCell offers a discount (rounded to
nearest $5) off of the Extended Service list prices for all government
facilities regardless of the volume of equipment ordered.
- - BIO-MED TRAINING DISCOUNT: OmniCell Basic and Extended service list
prices (12 month fixed price) will be discounted by _____ (rounded to
nearest $5) if a government facility agrees to the following:
1. Send a minimum of two Bio-reed personnel to OmniCell's
headquarters for system administrator training.
1.
<PAGE>
2. These two OmniCell trained personnel must be available to
perform on-site maintenance services normally performed by
OmniCell personnel. This will include all services that
OmniCell is able to train hospital bio-med personnel to
perform.
3. The first call follow-up from the OmniCell help desk will go
to the government facility's bio-med service personnel.
OmniCell will provide training in Palo Alto, California, for two bio-med
personnel at no charge for the training class (normally a $1,000 per person
fee). The government facility will pay the class fee for additional personnel.
The government facility will pay for all travel and lodging expenses incurred by
its personnel.
TEMPORARY PRICE REDUCTIONS (PROMOTIONS(S))
6 MONTH PROMOTIONAL DISCOUNT
Government facilities will receive an additional net promotional discount for
the first 6 months after our GSA contract is executed.
DRAWER PROMOTIONAL PERIOD
We would like to offer the government a promotional period on the following
pharmacy drawers. The promotional reduction to list price is available through
September 30, 1997.
<TABLE>
<CAPTION>
CURRENT PRICE LIST PROMO PRICE
<S> <C> <C>
Locking Drawer $3,000 $2,000
Return Drawer $2,500 $2,000
Sensing Drawer $2,000 $1,500
</TABLE>
PROMPT PAYMENT DISCOUNT
OmniCell does not offer a prompt payment discount.
END OF CONTRACT-ADDITIONAL DISCOUNT (AGGREGATE)(1)
OmniCell does not offer any end of contract discount.
SMALL REQUIREMENT (MINIMUM ORDER)
There is no minimum order.
- ----------
(1) End of Contract Additional Discount, Solicitation Offer, Page 139, M3-Q1-91.
2.
<PAGE>
FOB POINT(2)
OmniCell will ship equipment to government facilities in the 48 contiguous
States and the District of Columbia F.O.B destination as specified in the
contract.
DELIVERY TIME(3)
Delivery time is 90 days After Receipt of Order (ARO).
EMERGENCY DELIVERY
OmniCell agrees with term "I-FSS-140-B, Urgent Requirements (Jan 1994), page 8
of Amendment 5" for emergency delivery purposes.
FOREIGN ITEMS(4)
NONE
RETURN/EXCHANGE GOODS POLICY
NONE
WARRANTY(5)
OmniCell offers all warranties and service through a renewable service
agreement. The renewable service agreement covers defectives in workmanship or
materials for the duration of the service term. The standard service term is 12
months. The service contract is renewed on an annual basis.
We are offering the Government a 12 month warranty period. Below are listed the
terms from OmniCell's Master Service Agreement which constitute the one year
warranty we are offering the Government. If a Government facility would like any
of the other terms from the Master Service Agreement they must sign the optional
Master Service Agreement and pay for the additional services at the GSA service
prices. The warranty consists of terms (5) Installation, (7) Interfaces, (8)
Training, and (10) Limited Warranties.
WARRANTY TERMS
5. INSTALLATION. You agree to execute an OmniCell Installation
Worksheet prior to any Equipment installation. We shall make
reasonable commercial efforts to complete the installation of
such Equipment in a timely manner upon receipt of confirmation
that the Equipment has arrived at your location. Prior to
arrival of the Equipment at your location, you agree to
provide adequate space for the Equipment under conditions
suitable to the proper functioning of the Equipment. In
addition, you agree to provide clean commercial power
including our specified Uninterrupted
- ----------
(2) FOB terms, Amendment 4, Page 10 and 11, M3-Q1-91.
(3) Order terms, Amendment 2, Page 2, M3-Q1-91.
(4) Manufacturing Facilities/Place of Performance, Solicitation Offer, Page 127,
M3-Q 1-91.
(5) Warranty, Solicitation Offer, Page 138, M3-Q1-91.
3.
<PAGE>
Power Supply ("UPS") and the necessary communication cable
(telephone extension cable and jack or Local Area Network
("LAN") connection and jack) to each location where the
Equipment will be placed. You agree to provide a dedicated
direct inward dial (DID) communication line for remote access
for service ("RAS") at the location of the OmniCenter. If this
dedicated R. AS line is not provided, service will be charged
at twice the quoted monthly fee amount for the OmniCenter. We
shall provide all installation personnel, tools, equipment,
and material necessary to install the Equipment and will
install it in a workmanlike manner.
7. INTERFACES. You agree to provide service for your side of any
Software or Hardware interfaces.
A. SOFTWARE AND SERVICE AT NO CHARGE. OmniCell agrees to
provide the following initial interface Software and
services at no charge to you within the first twelve
(12) months from the date of this Master Service
Agreement.
I. ADT INTERFACE: We will provide at no charge, Software
which will run on the OmniCell System and will
receive Admitting, Discharge, Transfer ("ADT")
messages from your ADT/Patient Management system.
These ADT messages will be processed by the OmniCell
System to update patient information in the OmniCell
database. The format of the ADT interface messages,
and the communications mechanism will be mutually
agreed upon by us, the ADT/Patient Management system
vendor, and you. Software installation, software
set-up, and up to 20 hours of testing are included as
part of our side of the ADT interface. We are not
responsible for producing and transmitting ADT
interface records from the ADT system. We are only
responsible for receiving ADT interface records and
processing the records on the OmniCell System. We are
not responsible for development, installation,
set-up, or testing of the ADT system side of the ADT
interface.
II. PATIENT CHARGE INTERFACE: OmniCell will provide at no
charge, Software which will run on the OmniCell
System and will produce interface records for each
chargeable transaction that occurs on the OmniCell
System. These patient charge interface records will
be transmitted to the Customer's Patient Accounting
system in real-time, or as a daily batch. he format
of the Patient Charge interface messages, and the
communications mechanism will be mutually agreed upon
by us, the Patient Accounting system vendor, and you.
Software installation, software set-up, and up to 20
hours of testing are included as part of our side of
the Patient Charge interface. We are not responsible
for the processing of the Patient Charge interface
records which occurs on the Patient Accounting
system. We are not responsible for development,
installation, set-up, or testing of the Patient
Accounting system side of the Patient Charge
interface.
III. SUPPLY INVENTORY REPLENISHMENT INTERFACE: We will
provide at no charge, Software which will run on the
OmniCell System and will produce interface records
indicating the quantities of items that are required
to replenish each OmniSupplier. These Supply
Inventory Replenishment interface records will be
transmitted to your Materials Management system in
real-time, or in batches. The format of the Supply
Inventory Replenishment interface messages, and the
communications mechanism will be mutually agreed upon
by us, the Materials Management system vendor, and
you. Software installation, software set-up, and up
to 30 hours of testing are included as part of our
side of the Supply Inventor, Replenishment interface.
We are not responsible for the processing of the
Supply Inventory Replenishment interface records
which occurs on the Materials Management system. We
are not responsible for development, installation,
set-up, or testing of the Materials Management system
side of the Supply Inventory Replenishment interface.
IV. PHARMACY TRANSACTION CHARGES: OmniCell will provide
at no charge. Software which will run on the OmniCell
System and will produce interface records for each
chargeable pharmacy transaction that occurs on the
OmniCell System. These pharmacy patient
4.
<PAGE>
charge interface records will be transmitted to the
Customer's Pharmacy system in real-time, or as a
daily batch. The format of the Patient Charge
interface messages, and the communications mechanism
will be mutually agreed upon by us, the Pharmacy
system vendor, and you. Software installation,
software set-up, and up to 20 hours of testing are
included as part of our side of the Pharmacy Patient
Charge interface. We are not responsible for the
processing of the Pharmacy Patient Charge interface
records which occurs on the Pharmacy system. We are
not responsible for development, installation,
set-up, or testing of the Pharmacy system side of the
Pharmacy Patient Charge interface.
B. CHARGEABLE SOFTWARE AND SERVICE: We will charge you
for the following Software and services:
I. INTERFACE MODIFICATIONS: If you request changes to an
interface after initial installation, testing, and
your acceptance of that interface, a fee will be
charged to you for those modifications.
"Modifications" includes, but is not limited to: a)
change in record format; b) change in communications
mechanism; c) addition of new record types; and d)
addition of new processing functionality.
II. ADDITIONAL INTERFACES: Any interfaces in addition to
the ADT Interface, Patient Charge Interface, and
Supply Inventory Replenishment Interface, and
including initial interfaces not written within the
first twelve (12) months described in Section A above
will be charged to you at a rate of $5,000 per
interface. The specifications for each interface will
be mutually agreed upon by us, the vendor responsible
for the other side of the interface, and you.
III. REPLACEMENT OF AN EXISTING INTERFACE: If an existing
interface between the OmniCell System and one of your
Hospital Information System ("HIS") systems must be
replaced by a new interface, the implementation of
the replacement interface will be charged to you at a
rate of $5,000. The specifications for the
replacement interface must be collectively agreed
upon by us, the vendor responsible for the other side
of the interface, and you.
8. TRAINING. You agree to select, and we shall provide training
in the management, maintenance and use of the Equipment to,
one of your employees who is qualified to act as "System
Administrator." The System Administrator is responsible for
administering and managing the performance of the Equipment,
including maintaining the files and monitoring the performance
of the Equipment. The System Administrator shall be
responsible for reviewing and evaluating all end-user requests
for service and informing us of any problems which the System
Administrator cannot resolve. We shall provide training at our
Headquarters location for one System Administrator in the
system management and use of the Equipment. We shall also
provide reasonable end-user training for each location of
Equipment. You agree to also select one of our employees as a
back-up System Administrator.
MANDATORY TRAINING: Government facilities are required to have
appropriate personnel participate in a week of training prior
to the clinical use of the system. The "System Administrator
Training Course" is held at OmniCell's headquarters in Palo
Alto, California. Training must be completed prior to the
clinical use of the system in order to enforce any warranty
and indemnification claims. OmniCell will provide in-service
and clinical training related to the Equipment ("Train the
Trainer"). OmniCell will maintain a properly qualified
training staff to provide such in-service and clinical
training, and it shall be the responsibility of each
Government Facility to ensure that its appropriate personnel
attend and complete such training. Appropriate personnel must
complete training prior to the clinical use of the system.
10. LIMITED WARRANTIES. We hereby warrant that, if the Equipment
is defective in workmanship or materials, or if the Software
we provide is defective during the term of this Agreement, we
shall repair or replace, at our option, the defective part,
parts, Software, or Equipment, and you agree
5.
<PAGE>
that such repair or replacement shall be your sole remedy and
recourse in the event of such defect. THE WARRANTY GRANTED
HEREIN DOES NOT COVER ANY PRODUCTS THAT YOU MAY USE, CREATE,
OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRANTY IS IN
LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND
FITNESS FOR A PARTICULAR PURPOSE. THIS WARRANTY SHALL BE VOID
AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY EQUIPMENT
OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY
UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR
SOFTWARE.
INSTALLATION(6)
User manuals will be provided at the time of purchase in accordance with the
contract terms. In addition, during the site visit, OmniCell personnel will meet
with the healthcare facility's personnel to review the installation and training
process. A summary of the installation requirements are listed below.
NOTE: An installation procedure and checklist is attached in Exhibit G.
ELECTRICAL, COMMUNICATIONS AND DATA REQUIREMENTS
There are several facility requirements which must be met in order for the
OmniCell System to be installed. During our site visit we will inspect each area
to ensure that the necessary resources are available. A pre-installation
checklist is attached for your review.
/X/ ELECTRICAL REQUIREMENTS-Provide electrical service according
to OmniCell's specifications of one outlet for each
OmniSupplier control unit and auxiliary unit, and the
OmniCenter site. The hospital is responsible for all
electrical and cabling charges. All OmniSupplier control units
and auxiliary units and OmniCenter computers use ll0VAC.
/X/ TELEPHONE REQUIREMENTS-Provide telephone installation
according to OmniCell's specifications of one telephone line
per OmniSupplier site, and three (3) to five (5) telephone
lines per OmniCenter XPC. The lines needed are as follows:
1. One DID (Direct inward dial)-to conduct Remote Diagnostics
2. Analog phone lines to call the units. (In addition to the DID line)
An OmniCell Project Manager will consult with you to ensure that adequate phone
lines are available.
/X/ NETWORK REQUIREMENTS-OmniCell supports network connections
between the OmniSuppliers and the OmniCenter XPC. For those
customers planning to transfer to network connections, it is
recommended that, if new phone wiring
- ----------
(6) Installation and Instruction, Solicitation Offer, page 139, M3-Q1-91.
6.
<PAGE>
is installed, Cat 5 wiring be used. Termination for the Cat 5
wiring may still be to non-EtherNet standards during the
interim, but the Cat 5 wiring will accommodate the future
network conversion. Alternatively, the customer may choose to
provide both RJll phone jacks and RJ45 EtherNet jacks.
ENVIRONMENTAL REQUIREMENTS
/X/ Provide appropriate clearances around each unit. Adequate air
flow must not be blocked
/X/ Provide a floor plan showing the location of where each
OmniSupplier will be placed
/X/ Regulate the temperature range from 50DEG. to 95DEG. F
/X/ Maintain a humidity range of 08%-80% without condensation.
EQUIPMENT AND INVENTORY REQUIREMENTS
Provide a list of items, item IDs, charge IDs, predicted par levels,
manufacturer name and number, unit of issue and unit of stock for each
OmniSupplier location in one of the following file formats: Excel (.xls); Lotus
1-2-3 (.wk*); or database (.dbf)
OR
Provide a Master Item list with predicted par levels, unit of issue and unit of
stock for each OmniSupplier location in one of the following file formats: Excel
(.xls); Lotus 1-2-3 (.wk*); or database (.dbf)
/X/ Provide access to items that may require measuring, before
configuration of the OmniSupplier.
/X/ Gather the inventory items to be stocked in each OmniSupplier
prior to the OmniSupplier's setup for in-service (normally 2-3
days prior to in-service.)
/X/ Provide user IDs for personnel who will be using the System
and identify each users System access level.
CONFIGURATION
Each OmniSupplier cabinet is custom built for the unique needs of each
point-of-use area. In order to develop the cabinet configuration, we obtain PAR
lists on disk for all proposed areas and conduct a configuration analysis using
our proprietary JMAX technology and our database of the exact dimensions of tens
of thousands of items. Our manufacturing process requires that each
configuration is reviewed and signed off by hospital staff (i.e., Director of
Materials, D/rector of Pharmacy, Director of Nursing) in order to build and ship
the equipment.
7.
<PAGE>
The initial OmniSupplier configuration is provided with the purchase of the
cabinet. Training is provided to allow hospital personnel to reconfigure
OmniSupplier cabinets if required. Additional parts required for
reconfigurations can be purchased from OmniCell using the part list in Exhibit
C. Any facility requesting reconfiguration services from OmniCell field support
personnel will be charged the prevailing field service charge amount.
TRAINING(7)
Below are listed OmniCell's training policies for the Government. These are more
favorable than those offered to commercial customers.
SYSTEM ADMINISTRATOR TRAINING
Due to the technical nature of the network environment, OmniCell requires that
one person from the facility, who is familiar with systems, be appointed as a
OmniCell System Administrator.
One System Administrator should be selected for each OmniCell system that is
implemented-one for pharmacy and one for supply system. An additional System
Administrator should also be selected for backup purposes. The System
Administrators are responsible for working with OmniCell in learning basic
troubleshooting and maintenance skills for the OmniCell System. These people
should be comfortable with computers and have some knowledge of networks. All
training courses are available to the System Administrator. All training courses
are provided at OmniCell's headquarters in Palo Alto, CA.
TRAVEL AND EXPENSES
OmniCell will cover the expenses of the initial Government facility employees
attending System Administrator Training.
/X/ INITIAL GOVERNMENT EMPLOYEES: Each Government facility may
send a maximum of two employees if either supply systems or
pharmacy systems are purchased, or a maximum of four employees
if BOTH supply AND pharmacy systems are purchased. The
facility will cover all travel expenses for any additional
trainees.
/X/ TRAVEL ARRANGEMENTS: All travel arrangements must be made by
OmniCell Technologies. Attendees are required to provide
OmniCell with a 30 day notice of training attendance in order
to schedule training and travel. Training and travel
arrangements cannot be provided with less than the 30 day
notice. All travel arrangements are non-refundable. If a
Government employee cancels training attendance, OmniCell will
cover the costs of canceled attendance and the Government
employee will have to cover any future training and travel
expenses.
- ----------
(7) Installation and Instruction, Solicitation Offer, page 139, Me-Q1-91.
8.
<PAGE>
LOCATION AND TRAINING
The actual course fee for the initial candidates (maximum of two or four) will
be provided at no charge. Additional trainees must prepay the $1,000 training
fee person and will pay all travel, lodging and miscellaneous expenses.
/X/ SYSTEM ADMINISTRATOR TRAINING I: (System Administrator) The
System Administrator Training course covers OmniCell Product
Overview, Nurse Functions, Head Nurse Functions, Restock
Functions, Data Entry Clerk Functions, Material Manager
Functions, Reports Analysis, and "Train the Trainer" overview.
/X/ SYSTEM ADMINISTRATOR TRAINING II: (System Administrator) The
objectives of this course are as follows: participants will be
able to identify all software and hardware components of the
OmniCenter and OmniSupplier, be able to reconfigure an
OmniSupplier, monitor all ADT, Inventory and Billing
interfaces and perform first level trouble shooting if a
problem occurs.
BIO-MED TRAINING
See "Discounts on Service" above for the discount available for participating in
the Bio-Med Training program. The government facility must assist in scheduling
BioMed's approval to operate the OmniCell system in the hospital. OmniCell
suggests that a minimum of two OmniCell-trained Bio-med personnel be available
to perform on-site maintenance services normally performed by OmniCell
personnel. This will include all services that OmniCell is able to train Bio-med
personnel to perform. The first call follow-up from the OmniCell help desk will
go to Bio-med service personnel. OmniCell will provide training in Palo Alto,
CA, for two Bio-med personnel at no charge for the training class (normally a
$1,000 per person fee). Hospitals are responsible for all travel and lodging
expenses incurred by its personnel.
TRAIN THE TRAINER PROGRAM
OmniCell employs a "train the trainer" program. All training provided to the
facility staff will be provided to designated people by the healthcare
institution who will train additional personnel throughout the installation of
the system.
/X/ ADDITIONAL SYSTEMS: As additional OmniSupplier cabinets are
installed in the facility, the facility's trainers will
provide training to ensure that nurses and restock personnel
can operate the system.
/X/ TRAINING VIDEOS: Training videos are provided with the
acquisition of the system to assist with new employee
training.
/X/ TRAINING FOR SOFTWARE UPDATES: Software release notes are
provided with the installation of software updates. These
release notes are provided to the facility trainers so that
they can educate users (i.e., nurses, restock personnel, etc.)
on new features and functionality.
9.
<PAGE>
SERVICE AGREEMENT
OmniCell offers customers a choice of selecting from one of two service plans:
the Basic Service Plan and the Extended Service Plan. Service levels provided
under each plan are detailed below.
OmniCell's standard Service Agreement is attached.
BASIC SERVICE PLAN
The following details the important features of the Basic Service Plan:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
BASIC SERVICE PLAN DISABLED SYSTEM/HARDWARE OR SOFTWARE MALFUNCTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Phone Support 24 hours/Day
7 Days/Week
- -----------------------------------------------------------------------------------------------------------------------
Response Time 30 Minutes
Phone: (Monday-Friday 5AM - 6PM PST)
2 Hours
(Monday-Friday 6PM - 5AM PST & Saturday-Sunday)
- -----------------------------------------------------------------------------------------------------------------------
On-Site: Within 24 Hours for Disabled System
Within 48 Hours for Hardware or Software Malfunction
- -----------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary) 24 Hours/Day, 7 Days/Week for Disabled System
9AM - 5PM Monday-Friday for Hardware or Software Malfunction
- -----------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts Included (Except in cases of equipment misuse)
- -----------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics Included
- -----------------------------------------------------------------------------------------------------------------------
System Administrator Training Two training slots no-charge. $1,000 per additional
attendee. (Travel and expenses are included for two attendees
only)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXTENDED SERVICE PLAN
The following details the important features of the Extended Service Plan:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
EXTENDED SERVICE PLAN DISABLED SYSTEM/HARDWARE OR SOFTWARE MALFUNCTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Phone Support 24 Hours/Day
7 Days/Week
- -----------------------------------------------------------------------------------------------------------------------
Response Time 30 Minutes
Phone: (Monday-Friday 5AM - 6PM PST)
On-Site: Within 24 hours
- -----------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary) 24 Hours/Day
7 Days/Week
- -----------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts Included (Except in cases of equipment misuse)
- -----------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics Included
- -----------------------------------------------------------------------------------------------------------------------
Interface Support (ADT, Billing & Inventory) Included
- -----------------------------------------------------------------------------------------------------------------------
Backup Server Included
- -----------------------------------------------------------------------------------------------------------------------
Annual System Checkup Included
- -----------------------------------------------------------------------------------------------------------------------
Three Days - System Optimization Consulting Included
- -----------------------------------------------------------------------------------------------------------------------
System Administrator Training Two attendees at no charge per every 20 frames purchased
$1,000 per additional attendee. (Travel and expenses are
included for two attendees only)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
10.
<PAGE>
ADDITIONAL SERVICE
OmniCell provides the required personnel to install the OmniCell system. If the
systems need to be reconfigured, modified or moved, OmniCell field personnel can
assist for the applicable fee-based service charge listed below. The charts
below list the type of items which will require a PO for completion by OmniCell:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SERVICE ITEM SERVICE ESTIMATE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Misuse of OmniSupplier Hardware (broken button bars, plexiglass, etc.)* $675 minimum plus $150 per hour after
four hours - Plus parts
- -----------------------------------------------------------------------------------------------------------------------
Computer Damage Due to Customer Failure to Install UPS Protection for $675 minimum plus $150 per hour after
OmniSupplier Units and OmniCenter Server (correct corrupt files, etc.) four hours - Plus parts
- -----------------------------------------------------------------------------------------------------------------------
Physically Move OmniSupplier Units or OmniCenter Server After Live Date $675 minimum plus $150 per hour after
four hours
- -----------------------------------------------------------------------------------------------------------------------
Reconfiguration of OmniSupplier Units* $675 minimum plus $150 per hour after
four hours - Plus parts
- -----------------------------------------------------------------------------------------------------------------------
Field Installation of Product Modules $500 plus cost of product module
- -----------------------------------------------------------------------------------------------------------------------
New Interface $5,000 to $20,000
- -----------------------------------------------------------------------------------------------------------------------
Modification of Existing Interface Code $1,000 to $3,000
- -----------------------------------------------------------------------------------------------------------------------
Database Management* $675 minimum plus $150 per hour after
four hours
- -----------------------------------------------------------------------------------------------------------------------
Reconnecting OmniSupplier Units to Power or Communications* $675 minimum plus $150 per hour after
four hours
- -----------------------------------------------------------------------------------------------------------------------
On-Site Performance of System Maintenance Due to Customer Failure to $675 minimum plus $150 per hour after
Install a RAS Connection to the OmniCenter Server four hours - Plus parts
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The System Administrator(s) from your hospital have been trained by
qualified OmniCell personnel to perform these Service Items.
ADDITIONAL AVAILABLE FEE-BASED SERVICES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FEE-BASED SERVICE MINIMUM 1/2 DAY CHARGE ADDITIONAL CHARGE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Re-training $675 $150/hour after four hours
- -----------------------------------------------------------------------------------------------------------------------
System Administrator Functions $675 $150/hour after four hours
- -----------------------------------------------------------------------------------------------------------------------
Inventory Management Consulting $1,250 $2,000/Day
- -----------------------------------------------------------------------------------------------------------------------
Backup Server (Included with Extended Plan) $15,000 with $120/month service fee
- -----------------------------------------------------------------------------------------------------------------------
Annual System Checkup (Included with $1,200/OmniSupplier PC box
Extended Plan)
- -----------------------------------------------------------------------------------------------------------------------
Three Days - System Optimization Consulting $6,000
(Included with Extended Plan)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
ACCEPTANCE OF GOVERNMENT CREDIT CARDS(8)
We elect not to accept the government commercial credit card for payment for
supplied issued against the schedule contract.
- ----------
(8) Acceptance of Government Commercial Credit Card, Solicitation Offer, page
100, M3-Q1-91.
11.
<PAGE>
TRACKING CUSTOMER AND PRICE/DISCOUNT RELATIONSHIP
The customer designated as the "tracking customer" will be Premier. The
government and OmniCell Technologies, Inc. agree that if during the course of
this contract, for any sale under the Maximum Order (MO), the net price of any
awarded item is reduced to Premier, then the government net price will be
reduced proportionally.
SUMMARY-PREMIER OFFER FOR DUAL SUPPLY CONTRACT
For Premier, we will receive a supply only dual award where our products will be
listed jointly with Baxter Healthcare Corp.'s pharmacy SureMed products.
Customers will be able to buy OmniCell's pharmacy products, as we have added our
pharmacy products to the contract at the same discount as the supply products.
1. Award Type-Non-Exclusive Supply Contract
2. Products Listed-Supply and Pharmacy products
3. Product Discount Application-same discounts are applied to pharmacy and
supply products.
4. Volume Discounts (Pharmacy and Supply Products)
- $0 to $200,000 = _____
- $200,001 to $1,000,000 = ______
- Volume over $1,000,000 = _____
5. Non-Validation Discount
6. Combination Discount for Buying OmniCell Supply AND SureMed or OmniCell
Pharmacy = _______
7. Exclusivity Discount = ______. This two percent net discount applies for
Premier members with a minimum of three acute care hospitals who sign up to
utilize OmniCell as its exclusive automation vendor. Since no part of the
GSA contract is exclusive, this discount should not be used for the
purposes of price comparison; however, we have illustrated both price
comparison scenarios. The Government net price is lower than the net
Premier pricing even with the exclusivity discount included.
8. Service Discount = _____ on Bio-Med program only
9. Warranty = none
10. FOB = OmniCell (Customers pay shipping charges)
11. Training Discount NONE
12.
<PAGE>
SUMMARY-GOVERNMENT OFFER FOR NON-EXCLUSIVE PHARMACY CONTRACT
For the Government, we make the offer to receive a non-exclusive pharmacy award.
As with the Premier contract, customers will be able to buy both OmniCell's
pharmacy and supply products, as we have listed both product lines on the
contract. The same discounts will be applied to all pharmacy and supply
products.
1. Award Type-Non-Exclusive Pharmacy Contract
2. Products Listed-Pharmacy and Supply products
3. Product Discount Application-same discounts are applied to pharmacy and
supply products.
4. Volume Discounts (Pharmacy and Supply Products)
- $0 to $200,000 = _____
- $200,001 to $1,000,000 = _____
- Volume over $1,000,000 = _____
5. Non-Validation Discount = _____
6. Combination Discount for Buying OmniCell pharmacy and supply = _____
7. Promotional Discount for first 6 months of contract = _____
8. Service Discounts
- _____ on Extended service prices
- _____ on Bio-Med program
9. Warranty = one (1) year warranty is offered
10. FOB = Destination
11. Training Discount: Two (2) System Administrators per supply or pharmacy
system at no-charge, travel included (approximately a _____ discount, see
calculation below).
CUMULATIVE DISCOUNT AND VALUE OF INCENTIVES
The net cumulative discount to the government and the value of all incentives is
calculated below.
DISCOUNT (S) OFF PRICE LIST
The net discount resulting from the government discount and all incentive
discounts is _____ off of OmniCell's commercial price list. This discount
calculation does not take into account
13.
<PAGE>
1. The 1 year of warranty not offered to other customers,
2. No-charge for shipping,
3. Discounts on service,
4. Training Discounts.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Discount/Incentive Percent Net
----------------------------------------------------------------------
<S> <C> <C>
Government Discount ___% ___%
----------------------------------------------------------------------
Non-Validation Discount ___% ___%
----------------------------------------------------------------------
Combination Discount ___% ___%
----------------------------------------------------------------------
6 Month Promo Period ___% ___%
----------------------------------------------------------------------
Government Net Discount ___% ___%
----------------------------------------------------------------------
</TABLE>
VALUE OF WARRANTY AS A DISCOUNT
The value of the warranty can be expressed as the value of each annual service
contract. For example, the Basic Service price for a 3 Cell OmniSupplier is
$_______ per month. The extended one year contract is ______. The total purchase
price and extended one year service contract for a 3 Cell OmniSupplier is ____
plus _____ or _____. A one year no-charge warranty period represents _______
discount off of the total first year cost of the 3 Cell OmniSupplier.
VALUE OF SHIPPING AS A DISCOUNT
OmniCell will ship equipment to government facilities in the 48 contiguous
States and the District of Columbia F.O.B destination as specified in the
contract.(9)
The value of shipping can be expressed as a discount from the list price and
shipping to any point in the 48 contiguous states. Our estimated shipping costs
to different locations in the country are listed below. Shipping costs for units
shipped individually and in truckloads are listed. The average shipping cost per
cell is ________. A 3 Cell OmniSupplier would cost approximately $_____ to ship.
The extended purchase and shipping cost of a 3 Cell is _______. By incurring the
cost of shipping, OmniCell is effectively offering the government a ______
discount off of the 3 Cell OmniSupplier cost.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Approximate Cost Per Approximate Cost Per
Cell if Shipped in Call if Shipped by
Area Miles Single Units Truck Load Average
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Los Angeles 400 $120 $ 70 $ 95
- --------------------------------------------------------------------------------------------------------
Denver 1226 $120 $ 85 $103
- --------------------------------------------------------------------------------------------------------
Chicago 2155 $125 $115 $120
- --------------------------------------------------------------------------------------------------------
New York 2944 S165 $145 $155
- --------------------------------------------------------------------------------------------------------
AVERAGE $118
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(9) 9 FOB terms Amendment 4. Page 10 and 11, M3-Q1-91.
14.
<PAGE>
VALUE OF T&E AS A DISCOUNT
The value of Travel and Expenses (T&E) for System Administrator training can be
expressed as a discount from the total cost of the system. Our estimated costs
of one attendee at a week long system administrator training class is ______ per
attendee. The purchase price for an average sale of fifteen (15) are shown below
cabinets (Supply _____ Pharmacy RX _____ and Combo _______). By incurring the
cost of T&E, Omnicell is effectively offering the government a _______ to ___
discount off of the 3 Cell OmniSupplier net quote.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
T&E SUPPLY RX COMBO
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
People 2 2 4
---------------------------------------------------------------------------------------
Cost $ 2,500 $ 2,500 $ 2,500
---------------------------------------------------------------------------------------
Total $ 5,000 $ 5,000 $ 10,000
---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
QUOTE SUPPLY (1) RX (2) COMBO (3)
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unit Price $ 21,000 $ 29,000 $ 41.000
---------------------------------------------------------------------------------------
Average units/sale 15 15 15
---------------------------------------------------------------------------------------
Average Sale $ 315,000 $ 435,000 $ 615,000
---------------------------------------------------------------------------------------
Volume 18.00% 18.00% 18.00%
---------------------------------------------------------------------------------------
No Val 3.00% 3.00% 3.00%
---------------------------------------------------------------------------------------
Combo 0.00% 0.00% 2.00%
---------------------------------------------------------------------------------------
Promo 2.00% 2.00% 2.00%
---------------------------------------------------------------------------------------
Total 22.05% 22.05% 23.61%
---------------------------------------------------------------------------------------
Net Quote $ 245,540 $ 339,079 $ 469,800
---------------------------------------------------------------------------------------
T&E $ 5,000 $ 5,000 $ 10,000
---------------------------------------------------------------------------------------
Quote net of T&E $ 250,540 $ 344,079 $ 479,800
---------------------------------------------------------------------------------------
T&E Discount (%) 2.00% 1.45% 2.08%
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
EQUIPMENT CONFIGURATION OF THE UNIT MODELS LISTED BY UNIT PRICE
(1) 3 Cell
(2) 1 Cell, 1 return drawer, 2 locking drawers, 6 sensing drawers
(3) 3 Cell, 1 return drawer, 2 locking drawers, 6 sensing drawers, RX
Option
TOTAL DISCOUNT TO GOVERNMENT
The value of all discounts and incentives offered to the government is
calculated below as a ______% discount off of the total cost, including annual
service and shipping. The example below uses the 3 Cell OmniSupplier cabinet
list price to illustrate the total discount to the Government.
<TABLE>
<S> <C>
--------------------------------------------------------
3 Cell List Price $ 21,000
--------------------------------------------------------
Cost of annual service $ 900
--------------------------------------------------------
Cost of shipping $ 354
--------------------------------------------------------
Total 3 Cell List Cost $ 22,254
--------------------------------------------------------
</TABLE>
15.
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
<S> <C> <C>
Discount/Incentive Percent Net Price
---------------------------------------------------------------------
Government Discount % $
---------------------------------------------------------------------
Non-Validation Discount % $
---------------------------------------------------------------------
Combo Discount % $
---------------------------------------------------------------------
Promo Discount (6 mo.) % $
---------------------------------------------------------------------
Net Discount off Price List % $
---------------------------------------------------------------------
</TABLE>
<TABLE>
---------------------------------------------------------------------
<S> <C>
Cost of annual service $
---------------------------------------------------------------------
Cost of shipping $
---------------------------------------------------------------------
Total Additional Cost $
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Price with Additional Costs $
---------------------------------------------------------------------
---------------------------------------------------------------------
VALUE OF WARRANTY AND SHIPPING AS A $
DISCOUNT
---------------------------------------------------------------------
---------------------------------------------------------------------
TOTAL DISCOUNT TO THE GOVERNMENT %
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
NET DISCOUNT MODELS
The below model calculates the net price to the Government and Premier given:
(1) discounts offered, (2) warranty, (3) shipping, and (4) travel and expenses
for System Administrator Training.
Two models are shown: one with the Premier exclusivity discount included and one
with the Premier exclusivity discount removed.
The chart below summarized the net discount off of the total cost of the system.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
With Premier Exclusivity Without Premier Exclusivity
Discount Discount
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government % %
- -------------------------------------------------------------------------------------------------------------
Premier % %
- -------------------------------------------------------------------------------------------------------------
Discount Spread % %
- -------------------------------------------------------------------------------------------------------------
</TABLE>
16.
<PAGE>
DISCOUNT MODEL WITH PREMIER EXCLUSIVITY DISCOUNT
<TABLE>
<CAPTION>
- -----------------------------------------------------
3 CELL OMNISUPPLIER COST BREAK DOWN
- -----------------------------------------------------
<S> <C>
3 Cell OmniSupplier List $ 21,000
- -----------------------------------------------------
Annual Service $ 900
- -----------------------------------------------------
Shipping $ 354
- -----------------------------------------------------
Total Cost $ 22,254
- -----------------------------------------------------
Average units per sale $ 15
- -----------------------------------------------------
Extended Cost $ 333,810
- -----------------------------------------------------
- -----------------------------------------------------
</TABLE>
PREMIER MODEL - NON-EXCLUSIVE SUPPLY CONTRACT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Purchase range < 200 Nets 200-1MM Nets Net Prices
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Volume disc. % % % % $
- ---------------------------------------------------------------------------------------------------------------------
No validation % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Combo % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Exclusive Group % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount OPEN
- ---------------------------------------------------------------------------------------------------------------------
Warranty Discount NONE NONE $
- ---------------------------------------------------------------------------------------------------------------------
Shipping Discount NONE NONE $
- ---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost
- ---------------------------------------------------------------------------------------------------------------------
Number of Units 15
- ---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500 $ 5,000
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Extended Cost
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
PREMIER DISCOUNT OFF OF TOTAL COST
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MODEL - NON-EXCLUSIVE PHARMACY CONTRACT
- ---------------------------------------------------------------------------------------------------------------------
Purchase range < 200 Nets 200-1MM Nets Net Prices
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Volume disc. % % % $
- ---------------------------------------------------------------------------------------------------------------------
No validation % % % $
- ---------------------------------------------------------------------------------------------------------------------
Combo % % % $
- ---------------------------------------------------------------------------------------------------------------------
Promotional Period % % % $
- ---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount OPEN
- ---------------------------------------------------------------------------------------------------------------------
Warranty Discount NO-CHARGE NO-CHARGE $
- ---------------------------------------------------------------------------------------------------------------------
Shipping Discount NO-CHARGE NO-CHARGE $
- ---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost $
- ---------------------------------------------------------------------------------------------------------------------
Number of Units 15
- ---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500 NO-CHARGE
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Extended Cost
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
GOVERNMENT DISCOUNT OFF TOTAL COST
- ---------------------------------------------------------------------------------------------------------------------
DISCOUNT DELTA
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
17.
<PAGE>
DISCOUNT MODEL WITH PREMIER 2% EXCLUSIVITY DISCOUNT
<TABLE>
<CAPTION>
3 CELL OMNISUPPLIER COST BREAK DOWN
- -------------------------------------------------------
<C> <C>
3 Cell OmniSupplier List $ 21,000
- -------------------------------------------------------
Annual Service $ 900
- -------------------------------------------------------
Shipping $ 354
- -------------------------------------------------------
Total Cost $ 22,254
- -------------------------------------------------------
Average units per sale $ 15
- -------------------------------------------------------
Extended Cost $ 333,810
- -------------------------------------------------------
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PREMIER MODEL - NON-EXCLUSIVE SUPPLY CONTRACT
- ---------------------------------------------------------------------------------------------------------------------
Purchase range < 200 Nets 200-1MM Nets Net Prices
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Volume disc. % % % % $
- ---------------------------------------------------------------------------------------------------------------------
No validation % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Combo % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Exclusive Group % % % % $
- ---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount OPEN
- ---------------------------------------------------------------------------------------------------------------------
Warranty Discount NONE NONE $
- ---------------------------------------------------------------------------------------------------------------------
Shipping Discount NONE NONE $
- ---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost
- ---------------------------------------------------------------------------------------------------------------------
Number of Units 15
- ---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500 $ 5,000
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Extended Cost
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
PREMIER DISCOUNT OFF OF TOTAL COST
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MODEL - NON-EXCLUSIVE PHARMACY CONTRACT
- ---------------------------------------------------------------------------------------------------------------------
Purchase range < 200 Nets 200-1MM Nets Net Prices
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Volume disc. % % % $
- ---------------------------------------------------------------------------------------------------------------------
No validation % % % $
- ---------------------------------------------------------------------------------------------------------------------
Combo % % % $
- ---------------------------------------------------------------------------------------------------------------------
Promotional Period % % % $
- ---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount OPEN
- ---------------------------------------------------------------------------------------------------------------------
Warranty Discount NO-CHARGE NO-CHARGE $
- ---------------------------------------------------------------------------------------------------------------------
Shipping Discount NO-CHARGE NO-CHARGE $
- ---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost $
- ---------------------------------------------------------------------------------------------------------------------
Number of Units 15
- ---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500 NO-CHARGE
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Extended Cost
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
GOVERNMENT DISCOUNT OFF TOTAL COST
- ---------------------------------------------------------------------------------------------------------------------
DISCOUNT DELTA
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
18.
<PAGE>
OMNICELL CONTRACT TERM ADDITIONS
The following terms will be added to OmniCell's GSA contract. These terms are
taken from the OmniCell Master Purchase Agreement and have been modified per
prior discussions for inclusion in this contract.
PURCHASE TERMS
You agree to purchase from us certain equipment (hereinafter "Equipment") and to
license from us the accompanying software (as herein defined) as more fully
described on the attached Supplement to Master Purchase Agreement ("Supplement")
which is incorporated herein and any subsequent Supplements entered into by you
and us, on the terms and conditions set forth herein. You agree to pay to us the
purchase price shown below for each unit of Equipment as set forth on each
Supplement. For purposes of this Agreement, Equipment will also include all
replacement parts for the Equipment which you may receive under the Master
Service Agreement you have entered into with us in connection with this
Agreement. All Equipment you order will be new unless otherwise noted as "used"
or "reconditioned" on the relevant Supplement.
ADDITIONAL EQUIPMENT
If you would like to add OmniCell Equipment to your system, we shall send you a
Supplement listing such additional Equipment ("Additional Equipment") and the
purchase price per unit. Upon execution of the Supplement, we will deliver the
Additional Equipment listed thereon in accordance with the terms of the FSS
Contract. All terms of this FSS Contract shall apply to Additional Equipment
listed on any mutually executed Supplement(s).
LOSS AND DAMAGE
You agree to assume and bear the entire risk of casualty, or damage to the
equipment from any cause whatsoever from the date of delivery of the equipment
to your premises. No casualty or damage shall relieve you from the obligation to
make payment or to comply with any other obligation under this agreement.
LIMITATION OF LIABILITY
In no event shall OmniCell be liable for any indirect, incidental, special or
consequential damages, including loss of profits, revenue, data or use, incurred
by any of government facility or any third party, whether in an action in
contract or tort, or based on a warranty.
OmniCell will guarantee a 95% cumulative up-time for all equipment in each
Government facility. For each month that passes, where the 95% up-time is not
maintained, OmniCell agrees to waive the service fees for one month.
For example, if a facility has 10 units installed, they would have 7,200 hours
of operation in a thirty day month. If the facility has more that 360 hours (5%)
of downtime (as calculated by the facility), the service fees for the entire
installation would be waived for one month.
19.
<PAGE>
SOFTWARE
Subject to the terms of the Agreement, we grant to you the right to use one
copy, only of any software provided to you by us relating to the operation,
information storage and retrieval, record keeping, and communication of the
Equipment (the "Software") only in the manner described in the written materials
accompanying the Software and solely as installed on the Equipment in object
code form. You agree not to use it in any other way. You agree that the
structure and organization of the Software are valuable trade secrets of ours
and agree to protect the Software as you would other confidential, copyrighted
material. You understand and agree that we own the Software and any copies of it
and that the Software is licensed to you only for your use in connection with
the Equipment. You agree that you will neither modify, nor alter the Software,
nor decompile, reverse engineer, disassemble or otherwise attempt to obtain the
source code of the Software, or to encourage any third party to do so.
USE OF INFORMATION
You hereby grant to us an irrevocable, perpetual and royalty-free right and
license to utilize the Equipment to collect information (the "Information") with
regard to the use of the Equipment by you, including supply utilization,
inventory management, and billing information, provided that we shall have no
right to use any personal patient identifying information (such as name,
address, telephone number, or social security number). Your hereby agree to
grant to us an irrevocable, perpetual, royalty-free right and license to use the
Information for any purpose. We agree to keep confidential the name of your
hospital in connection with the Information unless otherwise agreed by us and
you.
OTHER RIGHTS
You agree that any delay or failure to enforce our rights under this FSS
Contract does not prevent us from enforcing any rights at a later time.
NOTICES
Any notices given under this Agreement shall be deemed received five (5) days
after the date of mailing, one (1) day after dispatch by overnight courier
service, or upon receipt if by hand delivery.
MANDATORY TRAINING
Government facilities are required to have appropriate personnel participate in
a week of training prior to the clinical use of the system. The "System
Administrator Training Course" is held at OmniCell's headquarters in Palo Alto,
California. Training must be completed prior to the clinical use of the system
in order to enforce any warranty and indemnification claims. OmniCell will
provide in-service and clinical training related to the Equipment ("Train the
Trainer"). OmniCell will maintain a properly qualified training staff to provide
such in-service and clinical training, and it shall be the responsibility of
each Government Facility to ensure that its appropriate personnel attend and
complete such training. Appropriate personnel must complete training prior to
the clinical use of the system.
20.
<PAGE>
BASIS FOR PRICE NEGOTIATIONS M-FSS-330(10)
CERTIFICATE OF ESTABLISHED CATALOG OR MARKET PRICE
Offeror certifies that to the best of his knowledge and belief:
1. The price(s) quoted in this proposal is based on established
catalog or market prices of commercial items, as defined in
FAR 15.804-3 ( c ), in effect on the date of the offer or on
the dates of any revisions submitted during the course of
negotiations.
2. Substantial quantities of the items have been sold to the
general public at such prices.
3. All of the data (including sales data) submitted with this
offer are accurate, complete, and current representations of
actual transactions to the date when price negotiations are
concluded.
NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER (type or print)
NAME: Sheldon Asher
- -------------------------------------------------------------------------------
SIGNATURE: /s/ Sheldon Asher
- -------------------------------------------------------------------------------
FIRM: OmniCell Technologies, Inc.
- -------------------------------------------------------------------------------
DATE OF EXECUTION: June 13, 1997
- -------------------------------------------------------------------------------
- ----------
(10) Solicitation Offer, page 136, M3-Q1-91.
21.
<PAGE>
REQUIREMENT FOR CERTIFICATION OF PROCUREMENT INTEGRITY 52.203-8(11)
Certificate of Procurement Integrity
(1) I, SHELDON ASHER (name of certifier), am the officer or employee responsible
for the preparation of this offer bid and hereby certify that, to the best of my
knowledge and belief, with the exception of any information described in this
certificate, I have no information concerning a violation or possible violation
of subsection 27(a), (d), or (f) of the Office of Federal Procurement Policy
Act, as amended (41 U.S.C 423), (hereinafter referred to as "the Act"), as
implemented in the FAR, occurring during the conduct of this procurement
M3-Q1-91 (solicitation number).
(2) As required by subsection 27(e)(1)(B) of the Act, I further certify that, to
the best of my knowledge and belief, each officer, employee, agent,
representative, and consultant of OMNICELL TECHNOLOGIES, INC. (Name of Offeror)
who has participated personally and substantially in the preparation or
submission of this offer has certified that he or she is familiar with, and
comply with, the requirements of subsection 27 (a) of the Act, as implemented in
the FAR, and will report immediately to me any information concerning a
violation or possible violation of Subsection 27(a), (b), (d) or (f) of the Act,
as implemented in the FAR, pertaining to this procurement.
(3) Violations or possible violations: (CONTINUE ON PLAIN BOND PAPER IF
NECESSARY, AND LABEL CERTIFICATE OF PROCUREMENT INTEGRITY (CONTINUATION SHEET),
ENTER NONE IF NONE EXISTS)
NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(4) I agree that, if awarded a contract under this solicitation, the
certifications required by subsection 27(e)(1)(B) of the Act shall be maintained
in accordance with paragraph (1) of this provision.
(Signature of the officer or, employee responsible for the offer and date)
/s/ Sheldon Asher
- --------------------------------------------------------------------------------
(Typed name of the officer or employee responsible for the offer)
Sheldon Asher
- --------------------------------------------------------------------------------
* Subsections 27(a), (b), and (d) are effective on December 1, 1990. Subsection
27(f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAK1NG OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.
(End of Certification)
- ----------
(11) Amendment Four (4) page 50-52 of 59 or Amendment 2 Attachment A page 1
and 2
22.
<PAGE>
EXHIBIT A
OMNICELL PRODUCT AND UL APPROVAL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Nationally Recognized
Testing Laboratory
Product Category Description Model # (NRTL) Approval
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cabinets (1) 1 Cell (OS104) OS104 UL
-----------------------------------------------------------------------------------
1 Aux. (OX104) OX104 UL
-----------------------------------------------------------------------------------
2 Cell (OS224) OS224 UL
-----------------------------------------------------------------------------------
2 Aux. (OX224) OX224 UL
-----------------------------------------------------------------------------------
3 Cell (OS344) OS344 UL
-----------------------------------------------------------------------------------
3 Aux (OX344) OX344 UL
-----------------------------------------------------------------------------------
4 Cell (OS448) OS448 UL
-----------------------------------------------------------------------------------
5 Cell (OS568) OS568 UL
-----------------------------------------------------------------------------------
6 Cell (OS688) OS688 UL
-----------------------------------------------------------------------------------
2 LOW Cell (OS176) (special order) OS176 Est. July 31, 1997
-----------------------------------------------------------------------------------
Xpress (OS56) (special order) OS56 Est. July 31, 1998
-----------------------------------------------------------------------------------
Xpress (OS56-7) OS56-7 Est. July 31, 1999
- ------------------------------------------------------------------------------------------------------------
Modules (2) Supply Drawer (OSD24) OSD24 UL
-----------------------------------------------------------------------------------
Cath Rack (OCR48) OCR48 NOT REQUIRED
-----------------------------------------------------------------------------------
Suture Rack (OSR24) OSR24 NOT REQUIRED
-----------------------------------------------------------------------------------
Mag Card Reader (MCRIOO) MCRIOO NOT REQUIRED
-----------------------------------------------------------------------------------
Locking Drawer (OLL12) OLL12 NOT REQUIRED
-----------------------------------------------------------------------------------
Sensing Drawer (OSL12) OSL12 NOT REQUIRED
-----------------------------------------------------------------------------------
Return Drawer(ORDIO) ORD10 NOT REQUIRED
-----------------------------------------------------------------------------------
Guiding Drawer (OGD24) OGD24 NOT REQUIRED
- ------------------------------------------------------------------------------------------------------------
Cabinet Options OmniSupplier PLUS Option (OS2U) OS2U NOT REQUIRED
-----------------------------------------------------------------------------------
OmniSupplier RX Option (OS-RXU) OS-RXU NOT REQUIRED
-----------------------------------------------------------------------------------
MOV Option (OS-MOV) OS-MOV NOT REQUIRED
-----------------------------------------------------------------------------------
OmniSuppIier Printer (OSP) OSP NOT REQUIRED
- ------------------------------------------------------------------------------------------------------------
OmniCenter OmniCenter (XPC100) XPC100 UL
-----------------------------------------------------------------------------------
OmniCenter Supply Option (XPC-SP) XPC-SP NOT REQUIRED
-----------------------------------------------------------------------------------
OmniCenter RX Option (XPC-RX) XPC-RX NOT REQUIRED
-----------------------------------------------------------------------------------
OmniCenter Cath Option (XPC-CL) XPC-CL NOT REQUIRED
-----------------------------------------------------------------------------------
OmniXpress Option (XTC-XP) XPC-XP NOT REQUIRED
-----------------------------------------------------------------------------------
Transaction Processor (TPC 100) TPCl00 UL
-----------------------------------------------------------------------------------
Network Workstation (NPC100) NPC100 UL
-----------------------------------------------------------------------------------
Partner Processor (PPC 100) PPCl00 UL
-----------------------------------------------------------------------------------
OmniSupplier PC Box (OSPC) OSPC NOT REQUIRED
-----------------------------------------------------------------------------------
OmniSupplier Aux. Box (OSAX) OSAX NOT REQUIRED
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B
OMNICELL COMMERCIAL PRICE LIST
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
60 Month Basic 12 Extended
Purchase Rental Month 12 Month
Product Category Description Model # Price (per mo.) Service Service
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cabinets (1) 1 Cell (OS 104) OS104 $ 14,000 $ 280 $ 55 $ 155
-------------------------------------------------------------------------------------------------------
1 Aux. (OX104) OX104 $ 10,500 $ 210 $ 10 $ 110
-------------------------------------------------------------------------------------------------------
2 Cell (OS224) OS224 $ 16,000 $ 320 $ 65 $ 165
-------------------------------------------------------------------------------------------------------
2 Aux. (OX224) OX224 $ 12,000 $ 240 $ 20 $ 120
-------------------------------------------------------------------------------------------------------
3 Cell (OS344) OS344 $ 21,000 $ 420 $ 75 $ 175
-------------------------------------------------------------------------------------------------------
3 Aux (OX344) OX344 $ 18,000 $ 360 $ 30 $ 130
-------------------------------------------------------------------------------------------------------
4 Cell (OS448) OS448 $ 27,000 $ 540 $ 85 $ 185
-------------------------------------------------------------------------------------------------------
5 Cell (OS568) OS568 $ 32,000 $ 640 $ 95 $ 195
-------------------------------------------------------------------------------------------------------
6 Cell (OS688) OS688 $ 37,000 $ 740 $ 105 $ 205
-------------------------------------------------------------------------------------------------------
2 LOW Cell (OS 176) (special order) OS176 $ 17,600 $ 352 $ 75 $ 175
-------------------------------------------------------------------------------------------------------
Xpress (OS56) (special order) OS56 $ 8,000 $ 160 $ 45 $ 145
-------------------------------------------------------------------------------------------------------
Xpress (OS56-7) OS56-7 $ 9,000 $ 180 $ 45 $ 145
- --------------------------------------------------------------------------------------------------------------------------
Modules (2) Supply Drawer (OSD24) OSD24 $ 2,000 $ 40 $ 5 $ 5
-------------------------------------------------------------------------------------------------------
Cath Rack (OCR48) OCR48 $ 5,000 $ 100 $ 15 $ 15
-------------------------------------------------------------------------------------------------------
Suture Rack (OSR24) OSR24 $ 5,000 $ 100 $ 15 $ 15
-------------------------------------------------------------------------------------------------------
Mag Card Reader (MCR 100) MCRIOO $ 2,500 $ 50 $ 5 $ 5
-------------------------------------------------------------------------------------------------------
Locking Drawer (OLL 12) OLL12 $ 3,000 $ 60 $ 5 $ 5
-------------------------------------------------------------------------------------------------------
Sensing Drawer (OSL 12) OSL12 $ 2,000 $ 40 $ 5 $ 5
-------------------------------------------------------------------------------------------------------
Return Drawer (ORD 10) ORD10 $ 2,500 $ 50 5 $
-------------------------------------------------------------------------------------------------------
Guiding Drawer (OGD24) OGD24 $ 2,000 $ 40 $ 5 $ 5
- --------------------------------------------------------------------------------------------------------------------------
Cabinet Options OmniSupplier PLUS Option (OS2U~ OS2U $ 2,000 $ 40 $ 5 $ 5
-------------------------------------------------------------------------------------------------------
OmniSupplier RX Option (OS-RXU) OS-RXU $ 5,000 $ 100 $ - $ -
-------------------------------------------------------------------------------------------------------
MOV Option (OS-MOV) OS-MOV $ 2,750 $ 55 $ - $ -
-------------------------------------------------------------------------------------------------------
OmniSupplier Printer (OSP) OSP $ 3,000 $ 60 $ 5 $ 5
- --------------------------------------------------------------------------------------------------------------------------
OmniCenter OmniCenter (XPC 100) XPC 100 $ 20,000 $ 400 $ 80 $ 80
-------------------------------------------------------------------------------------------------------
OmniCenter Supply Option (XPC-SP) XPC-SP $ 10,000 $ 200 $ 40 $ 40
-------------------------------------------------------------------------------------------------------
OmniCenter RX Option (XPC-RX) XPC-RX $ 10,000 $ 200 $ 40 $ 40
-------------------------------------------------------------------------------------------------------
OmniCenter Cath Option (XPC-CL) XPC-CL $ 5,000 $ 100 $ 20 $ 20
-------------------------------------------------------------------------------------------------------
OmniXpress Option (XPC-XP) XPC-XP $ 3,500 $ 70 $ 10 $ 10
-------------------------------------------------------------------------------------------------------
Transaction Processor (TPC 100) TPCIOO 5 15,000 $ 300 $ 60 $ 60
-------------------------------------------------------------------------------------------------------
Network Workstation (NPC 100) NPC 100 $ 20,000 $ 400 $ 80 $ so
-------------------------------------------------------------------------------------------------------
Partner Processor (PPC 100) PPCIOO $ 15,000 $ 300 $ 60 $ 60
-------------------------------------------------------------------------------------------------------
OmniSupplier PC Box (OSPC) OSPC $ 5,000 $ 100 $ 25 $ 25
-------------------------------------------------------------------------------------------------------
OmniSupplier Aux. Box (OSAX) OSAX $ 1,500 $ 30 $ 10 $ 10
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRICE LIST FOOTNOTES
(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and
bundled. Auxiliary units ordered for installed units, will be priced
using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary
(2) Prices for modules are factory installed.
Modules sold for installation in the field will incur a $500 field
installation charge.
This charge can be added to the purchase price or a $12 charge can be
added to the 60 month rental price.
<PAGE>
EXHIBIT C
OMNICELL COMMERCIAL PARTS LIST
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
OmniCell Omnicell
Category Part Quantity Part Number Price
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Drawer Drawer Bin 1 $ 15.00
--------------------------------------------------------------------------------
Full high drawer partition 1 $ 2.50
--------------------------------------------------------------------------------
Half high drawer partition 1 $ 1.50
- ---------------------------------------------------------------------------------------------
Labels Shelf Labels (#5667) sheet 95-3000 $ 2.50
--------------------------------------------------------------------------------
Cath Rack Front Labels (#5663) sheet 95-3018 $ 2.50
--------------------------------------------------------------------------------
Cath Rack Button Labels sheet 65-3007 $ 5.00
- ---------------------------------------------------------------------------------------------
Shelf Shelf (wire grill) 1 54-3001 $ 50.00
--------------------------------------------------------------------------------
Switch Panel Assembly (4 parts) 1 $ 175.00
--------------------------------------------------------------------------------
OS Switch Panel 1 71-3000 $ 125.00
--------------------------------------------------------------------------------
CL Rack Switch Panel 1 71-3002 $ 175.00
--------------------------------------------------------------------------------
Shelf Clip 1 57-3001 $ 5.00
--------------------------------------------------------------------------------
Single High Shelf Divider 1 57-3008 $ 10.00
--------------------------------------------------------------------------------
Double High Shelf Divider 1 57-3009 $ 15.00
--------------------------------------------------------------------------------
Triple High Shelf Divider 1 56-3014 $ 30.00
--------------------------------------------------------------------------------
Each Labels (each) 1 65-3003 $ 0.10
--------------------------------------------------------------------------------
Box Labels (each) 1 65-3004 $ 0.10
--------------------------------------------------------------------------------
Button Covers sheet of 15 65-3002 $ 5.00
--------------------------------------------------------------------------------
Single Wide Suture Tray 1 57-3000 $ 8.00
--------------------------------------------------------------------------------
Double Wide Suture Tray 1 90-6003 $ 25.00
--------------------------------------------------------------------------------
Can Dispenser 1 54-3004 $ 80.00
--------------------------------------------------------------------------------
Scrub Sack 1 90-6008 $ 100.00
- ---------------------------------------------------------------------------------------------
Frame Seismic Restraint Kit 1 - $ 500.00
--------------------------------------------------------------------------------
UPS Mount 1 53-2052 $ 100.00
- ---------------------------------------------------------------------------------------------
Doors Full cell door 1 11-4108 $ 1,000.00
--------------------------------------------------------------------------------
PC door 1 11-4102 $ 500.00
--------------------------------------------------------------------------------
One third door 1 11-4101 $ 500.00
--------------------------------------------------------------------------------
Two third door 1 11-4100 $ 750.00
--------------------------------------------------------------------------------
Panel, Cell Divider, Opaque, Omni2 1 6-2029 Rev $ 750.00
--------------------------------------------------------------------------------
Panel, Door, Full High, Opaque, Omni2 1 6-4017 Rev $ 1,000.00
--------------------------------------------------------------------------------
Panel, Door, 2/3 High, Opaque, Omni2 1 6-4018 Rev $ 750.00
--------------------------------------------------------------------------------
Panel, Door, PC Box, Opaque, Omni2 1 6-4019 Rev $ 500.00
- ---------------------------------------------------------------------------------------------
Computer Laser Printer Cartridge (Lexmark) 1 70-0017 $ 250.00
--------------------------------------------------------------------------------
Toner Cartridge (2000 Okidata) 1 70-0034 $ 50.00
--------------------------------------------------------------------------------
Okidata Printer Drum 1 70-0044 $ 250.00
--------------------------------------------------------------------------------
Backup tapes 1 70-0016 $ 25.00
--------------------------------------------------------------------------------
Additional Paper Tray 1 70-0012 $ 400.00
--------------------------------------------------------------------------------
Pharmacy Printer thermal paper 1 95-6015 $ 5.00
--------------------------------------------------------------------------------
Lexmark Printer 1 70-0010 $ 1,300.00
--------------------------------------------------------------------------------
Server Cart 1 70-0001 $ 500.00
- ---------------------------------------------------------------------------------------------
Training Supply Nurse Training Video 1 63-0001 $ 20.00
--------------------------------------------------------------------------------
Supply Restock Training Video 1 63-0000 $ 20.00
--------------------------------------------------------------------------------
Pharmacy Training Video 1 63-0002 $ 20.00
--------------------------------------------------------------------------------
OmniSupplier User Guide 1 60-0010 $ 10.00
--------------------------------------------------------------------------------
OmniCenter User Guide 1 60-0009 $ 20.00
--------------------------------------------------------------------------------
Pharmacy Flip Guide 1 60-0011 $ 15.00
--------------------------------------------------------------------------------
Implementation Guide 1 $ 20.00
--------------------------------------------------------------------------------
Reports Booklet 1 $ 20.00
- ---------------------------------------------------------------------------------------------
UPS (1)
APC #BP280 1 74-0000 $ 275.00
--------------------------------------------------------------------------------
Medical Grade -APC BK45OX-06 1 74-0001 $ 350 00
--------------------------------------------------------------------------------
Graybar Electronic-PBX 1 70-0014 $ 1,000.00
- ---------------------------------------------------------------------------------------------
</TABLE>
*SHIPPING AND HANDLING CHARGES ARE PREPAID AND ADDED TO THE INVOICE
(1) UPS purchased in volume from OmniCell use $275 price. Validation UPS or
volume purchases from Preferred Vendor use $175 price.
<PAGE>
EXHIBIT D
OMNICELL GOVERNMENT NET PURCHASE PRICES
Government Discount
Discounts Non-Validation Discount
Combination Discount
6 Month Promo Period
Net Discount
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Purchase
Product Category Description Model # Price
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cabinets (1) 1 Cell (OS 104) OS104 $ 14,000
------------------------------------------------------------
1 Aux. (OX104) OX104 $ 10,500
------------------------------------------------------------
2 Cell (OS224) OS224 $ 16,000
------------------------------------------------------------
2 Aux. (OX224) OX224 $ 12,000
------------------------------------------------------------
3 Cell (OS344) OS344 $ 21,000
------------------------------------------------------------
3 Aux (OX344) OX344 $ 18,000
------------------------------------------------------------
4 Cell (OS448) OS449 $ 27,000
------------------------------------------------------------
5 Cell (OS568) OS568 $ 32,000
------------------------------------------------------------
6 Cell (OS688) OS688 $ 37,000
------------------------------------------------------------
2 LOW Cell (OS176) (special OS176 $ 17,600
order)
------------------------------------------------------------
Xpress (OS56) (special order) OS56 $ 8,000
------------------------------------------------------------
Xpress (OS56-7) OS56-7 $ 9,000
- -----------------------------------------------------------------------------------
Modules (2) Supply Drawer (OSD24) OSD24 $ 2,000
------------------------------------------------------------
Cath Rack (OCR48) OCR48 $ 5,000
------------------------------------------------------------
Suture Rack (OSR24) OSR24 $ 5,000
------------------------------------------------------------
Mag Card Reader (MCR100) MCRI00 $ 2,500
------------------------------------------------------------
Locking Drawer (OLL12) OLL12 $ 3,000
------------------------------------------------------------
Sensing Drawer (OSL12) OSL12 $ 2,000
------------------------------------------------------------
Return Drawer (ORD10) ORD10 $ 2,500
------------------------------------------------------------
Guiding Drawer (OGD24) OGD24 $ 2,000
- -----------------------------------------------------------------------------------
Cabinet Options OmniSupplier PLUS Option (OS2U) OS2U $ 2,000
------------------------------------------------------------
OmniSupplier RX Option (OS-RXU) OS-RXU $ 5,000
------------------------------------------------------------
MOV Option (OS-MOV) OS-MOV $ 2,750
------------------------------------------------------------
OmniSupplier Printer (OSP) OSP $ 3,000
- -----------------------------------------------------------------------------------
OmniCenter OmniCenter (XPC100) XPC100 $ 20,000
------------------------------------------------------------
OmniCenter Supply Option XPC-SP $ 10,000
(XPC-SP)
------------------------------------------------------------
OmniCenter RX Option (XPC-RX) XPC-RX $ 10,000
------------------------------------------------------------
OmniCenter Cath Option (XPC-CL) XPC-CL $ 5,000
------------------------------------------------------------
OmniXpress Option (XPC-XP) XPC-XP $ 3,500
------------------------------------------------------------
Transaction Processor (TPC IGO) TPC100 $ 15,000
------------------------------------------------------------
Network Workstation (NPC 100) NPC100 $ 20,000
------------------------------------------------------------
Partner Processor (PPC 100) PPC100 $ 15,000
------------------------------------------------------------
OmniSupplier PC Box (OSPC) OSPC $ 5.000
------------------------------------------------------------
OmniSupplier Aux. Box (OSAX) OSAX $ 1,500
- -----------------------------------------------------------------------------------
</TABLE>
PRICE LIST FOOTNOTES
(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and
bundled. Auxiliary units ordered for installed units will be priced
using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary
(2) Prices for modules are factory installed.
Modules sold for installation in the field %% ill incur a $500
field installation charge.
This charge can be added to the purchase price or a $12 charge can be
added to the 60 month rental price.
<PAGE>
EXHIBIT D (CONTINUED)
OMNICELL GOVERNMENT 60 MONTH RENTAL PRICES
Government Discount
Discounts Non-Validation Discount
Combination Discount
6 Month Promo Period
Net Discount
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
60 Month
Rental
Product Category Description Model # (per mo.)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cabinets 1 Cell (OS104) OS104 $ 280
------------------------------------------------------------
1 Aux. (OX104) OX104 $ 210
------------------------------------------------------------
2 Cell (OS224) OS224 $ 320
------------------------------------------------------------
2 Aux (OX224) OX224 $ 240
------------------------------------------------------------
3 Cell (OS344) OS344 $ 420
------------------------------------------------------------
3 Aux (OX344) OX344 $ 360
------------------------------------------------------------
4 Cell (OS448) OS448 $ 540
------------------------------------------------------------
5 Cell (OS568) OS568 $ 640
------------------------------------------------------------
6 Cell (OS688) OS688 $ 740
------------------------------------------------------------
2 LOW Cell (OS176) (special OS176 $ 352
order)
------------------------------------------------------------
Xpress (OS56) (special order) OS56 $ 160
------------------------------------------------------------
Xpress (OS56-7) OS56-7 $ 180
- -----------------------------------------------------------------------------------
Modules (2) Supply Drawer (OSD24) OSD24 $ 40
------------------------------------------------------------
Cath Rack (OCR48) OCR48 $ 100
------------------------------------------------------------
Suture Rack (OSR24) OSR24 $ 100
------------------------------------------------------------
Mag Card Reader (MCR100) MICRI00 $ 50
------------------------------------------------------------
Locking Drawer (OLL12) OLL12 $ 60
------------------------------------------------------------
Sensing Drawer (OSL12) OSL12 $ 40
------------------------------------------------------------
Return Drawer (ORD10) ORD10 $ 50
------------------------------------------------------------
Guiding Drawer (OGD24) OGD24 $ 40
- -----------------------------------------------------------------------------------
Cabinet Options OmniSupplier PLUS Option (OS2U) OS2U $ 40
------------------------------------------------------------
OmniSupplier RX Option (OS-RXU) OS-RXU $ 100
------------------------------------------------------------
MOV Option (OS-MOV) OS-MOV $ 55
------------------------------------------------------------
OmniSupplier Printer (OSP) OSP $ 60
- -----------------------------------------------------------------------------------
OmniCenter OmniCenter (XPC100) XPCl00 $ 400
------------------------------------------------------------
OmniCenter Supply Option XPC-SP $ 200
(XPC-SP)
------------------------------------------------------------
OmniCenter RX Option (XPC-RX) XPC-RX $ 200
------------------------------------------------------------
OmniCenter Cath Option XPC-CL $ 100
(XPC-CL)
------------------------------------------------------------
OmniXpress Option (XPC-XP) XPC-XP $ 70
------------------------------------------------------------
Transaction Processor (TPC 100) TPC100 $ 300
------------------------------------------------------------
Network Workstation (NPC 100) NPC100 $ 400
------------------------------------------------------------
Partner Processor (PPC 100) PPC100 $ 00
------------------------------------------------------------
OmniSupplier PC Box (OSPC) OSPC $ 100
------------------------------------------------------------
OmniSupplier Aux, Box (OSAX) OSAX $ 30
- -----------------------------------------------------------------------------------
</TABLE>
PRICE LIST FOOTNOTES
(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and
bundled. Auxiliary units ordered for installed units will be priced
using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary
(2) Prices for modules are factory installed.
Modules sold for installation in the field %% ill incur a $500
field installation charge.
This charge can be added to the purchase price or a $12 charge can be
added to the 60 month rental price.
<PAGE>
EXHIBIT E
OMNICELL GOVERNMENT NET SERVICE PRICES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Government Government Basic 12
Basic 12 Extended 12 Month Extended 12
Month Month Bio-Med Month Bio-Med
Product Category Description Model # Service Service Service Service
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cabinets (1) 1 Cell (OS104) OS104 $ 55 $ 145 $ 45 $ 130
----------------------------------------------------------------------------------------------------
1 Aux. (OX104) OX104 $ 10 $ 105 $ 10 $ 95
----------------------------------------------------------------------------------------------------
2 Cell (OS224) OS224 $ 65 $ 155 $ 55 $ 140
----------------------------------------------------------------------------------------------------
2 Aux (OX224) OX224 $ 20 $ 115 $ 15 $ 100
----------------------------------------------------------------------------------------------------
3 Cell (OS344) OS344 $ 75 $ 165 $ 65 $ 150
----------------------------------------------------------------------------------------------------
3 Aux (OX344) OX344 $ 30 $ 125 $ 25 $ 110
----------------------------------------------------------------------------------------------------
Cell (OS448) OS448 $ 85 $ 175 $ 70 $ 155
----------------------------------------------------------------------------------------------------
5 Cell (OS568) OS568 $ 95 $ 185 $ 80 $ 165
----------------------------------------------------------------------------------------------------
6 Cell (OS688) OS688 $ 105 $ 195 $ 90 $ 175
----------------------------------------------------------------------------------------------------
2 LOW Cell (OS176) (special OS176 $ 75 $ 165 $ 65 $ 150
order)
----------------------------------------------------------------------------------------------------
Xpress (OS56) (special order) OS56 $ 45 $ 140 $ 40 $ 125
----------------------------------------------------------------------------------------------------
Xpress (OS56-7) OS56-7 $ 45 $ 140 $ 40 $ 125
- ------------------------------------------------------------------------------------------------------------------------
Modules (2) Supply Drawer (OSD24) OSD24 $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
Cath Rack (OCR48) OCR48 $ 15 $ 15 $ 15 $ 15
----------------------------------------------------------------------------------------------------
Suture Rack (OSR24) OSR24 $ 15 $ 15 $ 15 $ 15
----------------------------------------------------------------------------------------------------
Mag Card Reader (MCR 100) MCR100 $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
Locking Drawer (OLL12) OLL12 $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
Sensing Drawer (OSL12) OSL12 $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
Return Drawer (ORD10) ORD10 $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
Guiding Drawer (OGD24) OGD24 $ 5 $ 5 $ 5 $ 5
- ------------------------------------------------------------------------------------------------------------------------
Cabinet Options OmniSupplier PLUS Option (OS2U) OS2U $ 5 $ 5 $ 5 $ 5
----------------------------------------------------------------------------------------------------
OmniSupplier RX Option (OS-RXU) OS-RXU $ - $ - $ - $ -
----------------------------------------------------------------------------------------------------
MOV Option (OS-MOV) OS-MOV $ - $ - $ - $ -
----------------------------------------------------------------------------------------------------
OmniSupplier Printer (OSP) OSP $ 5 $ 5 $ 5 $ 5
- ------------------------------------------------------------------------------------------------------------------------
OmniCenter OmniCenter (XPC 100) XPC100 $ 80 $ 75 $ 70 $ 70
----------------------------------------------------------------------------------------------------
OmniCenter Supply Option XPC-SP $ 40 $ 40 $ 35 $ 35
(XPC-SP)
----------------------------------------------------------------------------------------------------
OmniCenter RX Option XPC-RX XPC-RX $ 40 $ 40 $ 35 $ 35
----------------------------------------------------------------------------------------------------
OmniCenter Cath Option (XPC-CL) XPC-CL $ 20 $ 20 $ 15 $ 15
----------------------------------------------------------------------------------------------------
OmniXpress Option (XPC-XP) XPC-XP $ 10 $ 10 $ 10 $ 10
----------------------------------------------------------------------------------------------------
Transaction Processor (TPC 100) TPC100 $ 60 $ 55 $ 50 $ 50
----------------------------------------------------------------------------------------------------
Network Workstation (NPC 100) NPC100 $ 80 $ 75 $ 70 $ 70
----------------------------------------------------------------------------------------------------
Partner Processor (PPC 100) PPCl00 $ 60 $ 55 $ 50 $ 50
----------------------------------------------------------------------------------------------------
OmniSupplier PC Box (OSPC) OSPC $ 25 $ 25 $ 20 $ 20
----------------------------------------------------------------------------------------------------
OmniSupplier Aux. Box (OSAX) OSAX $ 10 $ 10 $ 10 $ 10
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRICE LIST FOOTNOTES
(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and
bundled. Auxiliary units ordered for installed units will be priced
using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary
(2) Prices for modules are factory installed.
Modules sold for installation in the field %% ill incur a $500
field installation charge.
This charge can be added to the purchase price or a $12 charge can be
added to the 60 month rental price.
<PAGE>
EXHIBIT A ATTACHMENT TO PURCHASE ORDER #950327 TO OMNICELL
TECHNOLOGIES, INC. DATED 5/27/98
EXHIBIT A
<TABLE>
<CAPTION>
DIFFERENCE
LEASE NUMBER CUSTOMER NAME TERM PAYMENT AMOUNT AT AMOUNT ORIGINALLY OWED
9.5% PAID OMNICELL OMNICELL
<S> <C> <C> <C> <C> <C> <C>
0241202 Memorial Mission Hospital, Inc. 60 1,564.00 74,469.59 70,309.68 4,159.91
0241203 Memorial Mission Hospital, Inc. 60 4,498.00 214,171.49 202,207.76 11,963.73
0241204 Memorial Mission Hospital, Inc. 60 1,445.00 68,803.43 64,961.03 3,842.40
0241206 Memorial Mission Hospital, Inc. 60 3,297.00 156,986.09 148,216.76 8,769.33
0241207 Memorial Mission Hospital, Inc. 60 1,234.00 58,756.70 55,474.52 3,282.18
0241208 Memorial Mission Hospital, Inc. 60 617.00 29,378.35 27,737.26 1,641.09
0241209 Memorial Mission Hospital, Inc. 60 288.00 13,713.07 12,947.05 766.02
0241210 Memorial Mission Hospital, Inc. 60 205.00 9,761.04 9,215.78 545.26
0297802 Sedona Medical Center, Inc. 60 680.00 32,378.08 30,569.43 1,808.65
0353701 Monmouth Medical Center Inc. 48 4,652.00 185,167.96 175,018.82 10,149.14
0361301 St. Mary's Hospital of Richmon 60 1,150.92 54,800.86 51,156.68 3,644.18
0361302 St. Mary's Hospital of Richmon 60 4,717.42 224,619.14 205,109.10 19,510.04
0361304 St. Mary's Hospital of Richmon 60 3,597.04 171,272.44 161,705.07 9,567.37
0361305 St. Mary's Hospital of Richmon 60 1,908.00 90,849.09 85,774.21 5,074.88
0361306 St. Mary's Hospital of Richmon 60 540.40 25,731.05 24,293.70 1,437.35
0361307 St. Mary's Hospital of Richmon 60 700.88 33,372.28 31,508.09 1,864.19
0361308 St. Mary's Hospital of Richmon 60 1,417.16 67,477.83 63,708.48 3,769.35
0361309 St. Mary's Hospital of Richmon 60 1,125.00 53,566.68 50,574.42 2,992.26
0361310 St. Mary's Hospital of Richmon 60 358.00 17,046.11 16,093.90 952.21
0361311 St. Mary's Hospital of Richmon 60 950.40 45,253.13 42,725.26 2,527.87
0361501 Marcus J. Lawrence Medical Ct 60 2,190.00 104,276.47 97,342.25 6,934.22
0361502 Marcus J. Lawrence Medical Ct 60 435.00 20,712.45 19,555.44 1,157.01
0371701 Ball Memorial Hospital Inc. 60 2,160.00 102,848.03 97,102.88 5,745.15
0371702 Ball Memorial Hospital Inc. 60 3,936.00 187,411.96 176,943.03 10,468.93
0374701 Richmond Memorial Hospital 60 2,035.84 96,936.17 91,521.26 5,414.91
0374702 Richmond Memorial Hospital 60 1,907.30 90,815.76 85,742.74 5,073.02
0374901 Memorial Health System Inc. 60 4,555.00 216,885.54 204,770.20 12,115.34
0374902 Memorial Health System Inc. 60 2,296.00 109,323.64 103,216.77 6,106.87
0374903 Memorial Health System Inc. 60 3,587.00 170,794.39 161,253.72 9,540.67
0374904 Memorial Health System Inc. 60 1,685.00 80,230.98 75,749.24 4,481.74
0375601 University of Arkansas For Me 60 2,154.00 102,562.34 96,833.15 5,729.19
0375602 University of Arkansas For Me 57 637.67 29,161.19 27,602.90 1,558.29
0375603 University of Arkansas For Me 56 1,593.22 71,842.88 68,062.35 3,780.53
0375604 University of Arkansas For Me 54 602.37 26,384.87 25,039.71 1,345.16
0389101 Tenet Healthcare Corporation 48 8,778.78 349,430.09 333,365.04 16,065.05
--------- ------------ ------------ ----------
Total 73,498.40 3,387,191.15 3,193,407.68 193,783.47
--------- ------------ ------------ ----------
--------- ------------ ------------ ----------
</TABLE>
Rate: 0.095
1.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Quantity Discount(s)....................................................1
Basic Discount(s).......................................................1
Non-Validation Discount.................................................1
Combination Commitment Discount.........................................1
Discounts on Service....................................................1
Temporary Price Reductions (Promotions(s))..............................2
6 Month Promotional Discount............................................2
Drawer Promotional Period...............................................2
Prompt Payment Discount.................................................2
End of Contract-Additional Discount (Aggregate).........................2
Small Requirement (Minimum Order).......................................2
FOB Point...............................................................3
Delivery Time...........................................................3
Emergency Delivery......................................................3
Foreign Items...........................................................3
Return/Exchange Goods Policy............................................3
Warranty................................................................3
Installation............................................................6
Electrical, Communications and Data Requirements........................6
Environmental Requirements..............................................7
Equipment and Inventory Requirements....................................7
Configuration...........................................................7
Training................................................................8
System Administrator Training...........................................8
Travel and Expenses.....................................................8
Bio-Med Training........................................................9
Train the Trainer Program...............................................9
Service Agreement......................................................10
Basic Service Plan.....................................................10
Extended Service Plan..................................................10
Additional Service.....................................................11
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<CAPTION>
PAGE
<S> <C>
Additional Available Fee-Based Services................................11
Acceptance of Government Credit Cards..................................11
Tracking Customer and Price/Discount Relationship......................12
Summary-Premier Offer for Dual Supply Contract.........................12
Summary-Government Offer for Non-exclusive Pharmacy Contract...........13
Cumulative Discount and Value of Incentives............................13
Discount (s) Off Price List............................................13
Value of Warranty as a Discount........................................14
Value of Shipping as a Discount........................................14
Value of T&E as a Discount.............................................15
Total Discount to Government...........................................15
Net Discount Models....................................................16
OmniCell Contract Term Additions.......................................19
Purchase Terms.........................................................19
Additional Equipment...................................................19
Loss and Damage........................................................19
Limitation of Liability................................................19
Software...............................................................20
Use of Information.....................................................20
Other Rights...........................................................20
Notices................................................................20
Mandatory Training.....................................................20
Basis for Price Negotiations M-FSS-330.................................21
Requirement for Certification of Procurement Integrity 52.203-8........22
</TABLE>
ii.
<PAGE>
EXHIBIT 10.9
ASSET PURCHASE AGREEMENT
Dated as of December 18, 1998
Between
BAXTER HEALTHCARE CORPORATION
and
OMNICELL TECHNOLOGIES INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
ii.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
iii.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
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.
<PAGE>
(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;
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(o) all equipment that is subject to any product lease;
3.
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(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
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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.
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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.
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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.
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(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.
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7.
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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.
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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.
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(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.
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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;
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(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
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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
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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.
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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
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"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
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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
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Seller shall, upon
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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
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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
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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
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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
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shall assume responsibility for all accrued liabilities of the Seller relating
to accrued vacation pay
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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
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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
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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,
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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.
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(i) Conduct of the Seller Prior to Closing. From the date hereof to
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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
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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.
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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.
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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
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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
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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;
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(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
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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.
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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
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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
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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:
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(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.
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(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
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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).
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"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>
PAGE
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<S> <C>
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>
<CAPTION>
PAGE
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<S> <C>
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>
<CAPTION>
PAGE
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<S> <C>
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
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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
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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
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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
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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,
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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,
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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
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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.
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(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-
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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
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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
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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
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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
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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.
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(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.
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(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
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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
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(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)
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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.
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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.
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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.
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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.
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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.
<PAGE>
DOCUMENT NO:
CHANGE NO:
DOCUMENT TYPE: AUTHORIZING DOCUMENT ISSUE DATE:
ORIG. OFFICE: IVS EIS PROD. SYSTEMS PAGE: 1 of 11
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
CHANGE HISTORY
- -------------------------------------------------------------------------------
CHANGE INITIATION
NUMBER ISSUE DATE NUMBER REASON RO CHANGE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
<PAGE>
DOCUMENT NO:
CHANGE NO:
DOCUMENT TYPE: AUTHORIZING DOCUMENT ISSUE DATE:
ORIG. OFFICE: IVS EIS PROD. SYSTEMS PAGE: 2 of 11
- -------------------------------------------------------------------------------
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>
DOCUMENT NO:
CHANGE NO:
DOCUMENT TYPE: AUTHORIZING DOCUMENT ISSUE DATE:
ORIG. OFFICE: IVS EIS PROD. SYSTEMS PAGE: 3 of 11
- -------------------------------------------------------------------------------
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.
<PAGE>
DOCUMENT NO:
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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.
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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
<PAGE>
CONFIDENTIAL TREATMENT
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
EXHIBIT 10.11
VERTICAL HOSTED LICENSE AGREEMENT
This VERTICAL HOSTED LICENSE AGREEMENT (this "Agreement") is entered
into as of August ___, 1999 (the "Effective Date") by and between Commerce
One, Inc., a Delaware corporation having offices at 1600 Riviera Avenue,
Walnut Creek, California 94596 ("C1") and OmniCell, a California corporation
having offices at 1101 East Meadow, Palo Alto, CA 94303 ("Licensee").
WHEREAS, C1 is developing or has the rights to the software and
documentation described in Section 1 ("Definitions") below and desires to
license Licensee to use such software and documentation on the terms and
conditions stated herein; and
WHEREAS, Licensee is interested in licensing such software and
documentation on the terms and conditions set forth herein in order to create
a marketplace for the electronic procurement of goods and services by
businesses over the Internet.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and conditions stated herein, the parties agree as follows:
1. DEFINITIONS
1.1 "Authorized Users" means the total number of End Users and/or
Suppliers, as applicable, authorized to use the Software, as specified in
Schedule A ("Software, Users and License Fees").
1.2 "Confidential Information" means this Agreement (including
Schedules A-E attached hereto and incorporated herein by reference), any
addenda hereto signed by both parties, all Software listings, Documentation,
information, data, drawings, benchmark tests, specifications, trade secrets,
object code and machine-readable copies of the Software, and any other
proprietary information supplied to Licensee by C1, or by Licensee to C1, and
clearly marked as "confidential information", including all items defined as
"confidential information" in any other agreement between Licensee and C1
whether executed prior to or after the date of this Agreement.
1.3 "Documentation" means any on-line help files or written instruction
manuals regarding the use of the Software.
1.4 "End User" means an end user customer who accesses the Software for
the electronic procurement of products and/or services from one or more
Suppliers.
1.5 "Executable Code" means the fully compiled version of a software
program that can be executed by a computer and used by an end user without
further compilation.
1.6 "Field" means healthcare.
1.7 "Maintenance and Support" means the services described in Section 5
("Maintenance and Support").
1.8 "Vertical MarketSite Service" means a service that (i) is
specifically focused upon the provision of goods and services within the
Field, and is targeted to Suppliers and End Users within the Field, and (ii)
enables trading partners to (1) exchange business information within the
Field and (2) provide access to services that are specifically directed at
the Field.
1
<PAGE>
1.9 "Software" means the computer software programs specified in
Schedule A_("Software, Users and License Fees") (in machine executable object
code form).
1.10 "Source Code" means the human-readable version of the Software
that can be compiled into Executable Code, together with all applicable build
scripts, test scripts and programmers' notes and other documentation
necessary to understand and use the code.
1.11 "Supplier" means a third party supplier in the Field who provides
products and/or services to End Users.
1.12 "Update" means a version of the Software consisting of corrections
and minor functional enhancements to the prior version of the Software. C1
registers updates by means of a change of the number to the right of the
decimal point, e.g. 3.0 greater than 3.1.
1.13 "Upgrade" means a version of the Software in which substantial new
functionalities or other substantial changes to the prior version of the
Software. C1 registers upgrades by means of a change of the number to the
left of the decimal point, e.g. 3.0 greater than 4.0.
1.14 "Use" means utilization of the Software pursuant to the terms and
conditions set forth herein by no more than the number of Authorized Nodes
set forth on Schedule A ("Software, Users and License Fees").
2. Grant of Rights
---------------
2.1 Grant. Subject to the terms and conditions of this Agreement, C1
-----
hereby grants to Licensee during the Term, a perpetual, irrevocable, non-
exclusive, non-transferable, fully-paid and royalty-free license, without right
of sublicense, to Use the Software to (a) reproduce, install and use the
Software on computer hardware servers owned or operated by Licensee or, with
prior written notice to C1, reproduce the Software on substitute computer
hardware servers, (b) provide up to the number of Authorized Users with remote
access to the Software via such servers, and (c) use the Documentation in
connection with such use of the Software. The foregoing license to the
MarketSite Software shall be for the sole purpose of providing End Users with
access to the Vertical MarketSite Service and supporting such use by End Users.
In addition, with respect to the license to the BuySite Hosted Edition Software,
Use shall be limited only to Use with the MarketSite Software. This license
transfers to Licensee neither title nor any proprietary or intellectual property
rights to the Software, Documentation, or any copyrights, patents, or
trademarks, embodied or used in connection therewith, except for the rights
expressly granted herein.
2.2 Delivery and Acceptance; Source Code Escrow.
-------------------------------------------
(a) Delivery and Acceptance. C1 shall issue to Licensee, as soon
-----------------------
as practicable but in no event later than September 10, 1999, one (1)
machine-readable copy of the Software for Use at the Site only, along with
one (1) copy of the on-line Documentation. C1 will provide Licensee with
written copies of the Documentation at C1's standard charges. Licensee may
not copy the Documentation. Licensee acknowledges that no copy of the Source
ode of the Software will be provided to Licensee, except as provided herein.
Licensee shall test the Software for conformance with the Documentation
("Acceptance Test") by September 30, 1999. If the Software performs in
substantial accordance with the Documentation, then Licensee shall notify C1
in writing of its acceptance of the Software. In the event Licensee finds
material errors or defects with the Software, Licensee shall notify C1 in
writing of such errors or defects and provide adequate detail to facilitate
C1 replicating the error or defect. Upon receipt of written notice, C1 shall
have fifteen (15) days to correct the defect and reinstall the Software at
the Licensee site, and Omnicell shall then re-perform the Acceptance Test. If
Licensee does not accept the Software after the second Acceptance Test, then
C1 shall have an additional 15-day remediation period in which to correct the
defect and reinstall the Software at the Licensee site, and Omnicell shall
perform a third Acceptance Test. If after the third Acceptance Test, Licensee
does not accept the Software, Licensee may, at its sole option, elect to (i)
repeat the Acceptance Test or (ii) receive a refund of any Fees paid to C1 as
of such date and terminate the Agreement. Both parties acknowledge that any
professional services provided to
2
<PAGE>
Licensee subsequent to the installation and acceptance of the Software are non-
essential for the purpose of the acceptance of the Software.
(b) Source Code Escrow. As soon as is reasonably practicable, but
------------------
in no event later than forty-five (45) days after the Effective Date, C1 will
deposit two (2) copies of annotated listings of the Source Code for the Software
and all associated flowcharts, decision tables, schematics, and other technical
documentation and information necessary for a reasonably skilled programmer to
understand the structure of, correct errors in, and make modifications to such
Source Code (the "Escrow Materials") into escrow with a mutually acceptable
third party escrow agent pursuant to the terms of a mutually acceptable escrow
agreement that entitles Licensee to receive a copy of the Escrow Materials upon
the occurrence of any Release Condition described in Section 9.2 ("Termination
by Licensee").
2.3 Copies. Licensee will be entitled to make a reasonable number of
------
machine-readable copies of the Software for backup or archival purposes only.
Licensee may not copy the Software, except as permitted by this Agreement.
Licensee shall maintain accurate and up-to-date records of the number and
location of all copies of the Software and inform C1 in writing of such
location(s). All copies of the Software will be subject to all terms and
conditions of this Agreement. Whenever Licensee is permitted to copy or
reproduce all or any part of the Software, all titles, trademark symbols,
copyright symbols and legends, and other proprietary markings must be
reproduced.
2.4 End User Licenses. As to each End User or Supplier who is provided
-----------------
access to the Software, Licensee shall secure the End User's or Supplier's
consent to an end user agreement which provides that the End User or Supplier
may access and/or use the Software only under terms and conditions which
include, at a minimum, those set forth on Schedule B ("End User/Supplier Terms
and Conditions").
2.5 Attribution. The Vertical MarketSite Service shall conspicuously
-----------
display a graphic or other attribution to be provided by C1reasonably
acceptable to Licensee that indicates that C1's technology is being used. The
specifications for such graphic or other attribution shall be as set forth on
Schedule C ("Attribution Guidelines").
2.6 Trademark License. C1 hereby grants Licensee a nontransferable,
-----------------
nonexclusive license under C1's trademarks during the Term to display the C1
icon in accordance with Section 2.4 ("End User Licenses"), and otherwise, in
connection with the provision and promotion of the Vertical MarketSite
Service. Licensee agrees to submit materials containing C1's trademarks to C1
before release to the public for inspection, and C1 will have the right to
modify any such materials. Except as set forth in this Section, nothing in
this Agreement shall grant or shall be deemed to grant to Licensee any right,
title or interest in or to C1's trademarks. All uses of C1's trademarks by
Licensee shall inure to the benefit of C1. At no time during or after the
Term shall Licensee challenge or assist others to challenge the C1 trademarks
(except to the extent such restriction is prohibited by applicable law) or
the registration thereof or attempt to register any trademarks, marks or
trade names confusingly similar to those of C1.
2.7 Usage Reports. Within fifteen (15) days after the end of each month,
-------------
Licensee will deliver to C1 a user access log report, which report shall
include, at a minimum and without limitation, data describing transactions
and system activity, and such other information as the parties shall mutually
agree. The information contained in the reports, including but not limited to
data pertaining to End Users ("End User Data"), shall be deemed the
Confidential Information of Licensee.
2.8 Data Ownership. Licensee shall own all End User Data. C1 shall have no
--------------
rights in or to such End User Data, except C1 shall have a limited license, for
the term of this Agreement, to use such End User data as may be required to
perform its obligations under this Agreement.
3. License Restrictions
--------------------
3
<PAGE>
3.1 Licensee agrees that it will not itself, or through any parent,
subsidiary, affiliate, agent or other third party:
(a) sell, lease, license or sublicense the Software or the
Documentation;
(b) decompile, disassemble, or reverse engineer the Software, in
whole or in part;
(c) write or develop any derivative software or any other software
program based upon the Software or any Confidential Information; or
(d) provide, disclose, divulge or make available to, or permit use of
the Software by any third party without C1's prior written consent;
provided, however, that Licensee may allow its Suppliers and End Users
to use the Software solely for the purpose of transacting goods and
services via the Vertical MarketSite Service.
4. License Fee.
-----------
4.1 License Fee. In consideration of the License granted pursuant to
-----------
Section 2.1 ("Grant"), Licensee agrees to pay C1 the License Fees specified
Schedule A as follows:
(a) [*] of the license fee is due upon execution of this Agreement;
(b) [*] of the license fee is due by December 31, 1999, and
(c) [*] of the license fee is due by February 29, 2000.
4.2 Taxes. Licensee agrees to pay or reimburse C1 for all federal, state,
-----
dominion, provincial, or local sales, use, personal property, payroll, excise or
other taxes, fees, or duties arising out of this Agreement or the transactions
contemplated by this Agreement (other than taxes on the net income of C1).
4.3 No Offset. Except in the event of C1 breach, fees and expenses
---------
actually owed by Licensee under this Agreement may not be withheld or offset by
Licensee against other amounts actually owed to Licensee for any reason.
4.4 Audit. Each party shall provide the other with information as
-----
reasonably requested by such party to verify compliance with the terms of this
Agreement. In addition, subject to prior written approval by Licensee's
customer(s), which approval may be withheld in such customer's sole and complete
discretion, Licensee shall install and permit C1 to operate C1 "polling
software" which monitors all transactions associated with the Software. Subject
to prior written approval by Licensee's customer(s), which approval may be
withheld in such customer's sole and complete discretion, Licensee shall at all
times cooperate with C1 to ensure that C1 has remote access to Licensee's
equipment for such purposes. Where applicable, Licensee shall also provide C1
with reasonable access to such "polling software" to verify its operation.
Should any of Licensee's customer(s) fail to approve the installation or use of,
or access to, such "polling software," the parties shall use commercially
reasonable efforts to implement an alternate tracking and verification mechanism
that is acceptable to such customer(s).
5. Maintenance and Support
-------------------------
Subject to the provisions of Section 4.3 ("No Offset") pertaining to
OmniCell's right to offset in the event of C1 breach, for so long as Licensee is
current in the payment of all accrued Maintenance Fees (described below),
Licensee will be entitled to Maintenance and Support as specified in this
Section 5 ("Maintenance and Support").
4
<PAGE>
5.1 Term and Termination. C1's provision of Maintenance and Support to
--------------------
Licensee will commence on the Effective Date and will continue for an initial
term of one (1) year. Maintenance and Support will automatically renew at the
end of the initial term and any subsequent term for a renewal term of one (1)
year unless Licensee has provided C1 with written notice of its intention not to
renew the Maintenance and Support at least sixty (60) days prior to the
expiration of the then-current term. C1 reserves the right to propose reasonable
changes to standard Maintenance and Support services from time to time, and such
changes shall be subject to Licensee approval, which shall not be unreasonably
withheld. Termination of Maintenance and Support or failure to renew will not
affect the license of the Software.
5.2 Maintenance and Support Services. Maintenance and Support will be
--------------------------------
provided only with respect to versions of the Software that are being supported
by C1. For purposes of this Agreement, however, C1 will support all current
versions, (i.e., Upgrades, versus Updates), of the Software, in addition to the
two (2) previously-released versions (i.e., Upgrades, versus Updates) of the
Software. As part of Maintenance and Support, C1 will provide standard support
as follows: (i) timely delivery of all Updates and Upgrades, when and if
available, and related Documentation, and (ii) telephone assistance with respect
to the Software, including (a) clarification of functions and features of the
Software; (b) clarification of the Documentation; (c) guidance in the operation
of the Software; and (d) error verification, analysis and correction, to the
extent possible by telephone. C1's standard hours of service are Monday through
Friday, 7:00a.m. to 7:00p.m. (PST), except for holidays as observed by C1.
Support via pager coverage will be provided by C1 for hours outside standard
hours of service. C1 response times during standard hours of service shall be
consistent with C1's standard service escalation levels. C1 response times
during times of beeper coverage are two hours for Priority 1 issues and 4 hours
for all other issues. In addition to standard support services, C1 will
designate a C1 employee as Licensee's primary support contact. Licensee shall
designate up to five (5) Licensee support contacts, who shall have direct access
to the primary support contact at C1.
5.3 Installation. Upon Licensee's request, C1 or a designated C1 partner
------------
can perform the installation of the Software. Unless otherwise agreed, the costs
hereof shall be invoiced to Licensee on the basis of C1's then-current price
list rates, less any discounts applicable to Licensee.
5.4 Causes which are not attributable to C1. Maintenance and Support will
---------------------------------------
not include services requested as a result of, or with respect to causes which
are not attributable to C1. These services will be billed to Licensee at C1's
then-current standard price list rates, less any discounts applicable to
Licensee. Causes which are not attributable to C1 include but are not limited
to:
(a) accident; unusual physical, electrical or electromagnetic
stress; neglect; misuse; failure or fluctuation of electric power, air
conditioning or humidity control; failure of rotation media not furnished by C1;
excessive heating; fire and smoke damage; operation of the Software with other
media and hardware, software or telecommunication interfaces not meeting or not
maintained in accordance with the manufacturer's specifications; or causes other
than ordinary use;
(b) improper installation by Licensee or use of the Software
that deviates from any operating procedures established by C1 in the applicable
Documentation
(c) modification, alteration or addition or attempted
modification, alteration or addition of the Software undertaken by persons other
than C1 or C1's authorized representatives; and
(d) software programs made by Licensee, or other third parties,
which software programs are not specified by C1 to operate by the Software.
5.5 Responsibilities of Licensee. C1's provision of Maintenance and
----------------------------
Support to Licensee is subject to the following:
5
<PAGE>
(a) Subject to Licensee's standard security policies and
procedures, Licensee shall provide C1 with reasonable access to Licensee's
personnel and equipment during normal business hours. This access must include
the ability, upon prior written notice and approval, such approval not to be
unreasonably withheld or delayed, to dial-in to the equipment on which the
Software is operating and to obtain the highest privilege or clearance level
required, in Licensee's reasonable judgment, for C1 to provide Maintenance and
Support. C1 shall not be responsible for providing Maintenance and Support
absent adequate access to the equipment. C1 will inform Licensee of the
specifications of the modem equipment and associated software needed, and
Licensee will be responsible for the costs and use of said equipment.
(b) Licensee shall document and promptly report all material
errors or malfunctions of the Software to C1. Licensee shall take all steps
necessary to carry out procedures for the rectification of errors or
malfunctions within a commercially reasonable time after such procedures have
been received from C1. Licensee shall maintain a current backup copy of all
programs and data.
5.6 Maintenance Fee. The Maintenance Fee for each calendar year of
---------------------
Maintenance and Support will be [*] (for Hosted BuySite) and [*] (for
MarketSite) of the License Fees set forth in Schedule A ("Software, Users and
License Fees"). The initial Maintenance Fee payment is due and payable on [*]
the initial acceptance of the Software. Any undisputed amounts not paid
within thirty (30) days of such date will be subject to interest of 1% per
month, which interest will be immediately due and payable. Each calendar
year, the Maintenance Fee may be modified by written mutual agreement of the
parties at least thirty (30) days prior to the end of the then-current term.
In the event of a modification of the Maintenance Fee, Licensee may
discontinue Maintenance and Support. If Licensee elects not to renew
Maintenance and Support, Licensee may re-enroll only upon payment of the
annual Maintenance Fee for the coming year and fifty percent (50%) of all
Maintenance Fees that would have been paid had Licensee not terminated
Maintenance and Support, which entitles Licensee to all Updates and Releases
of the Software which have been released during the same period.
6. Limited Warranty and Limitation of Liability
--------------------------------------------
6.1 Warranty.
(a) C1 represents and warrants that any release of the Software will
perform in substantial accordance with the Documentation for a period of ninety
(90) days from the date Licensee installs and accepts such Software, which
acceptance, for the initial delivery of the software, is anticipated to occur no
later than September 30, 1999, provided that such initial delivery takes place
on or prior to September 10, 1999. If during this time period the Software does
not perform as warranted, C1 shall first (i) undertake to promptly correct the
Software, or (if correction of the Software is reasonably not possible) (ii)
replace such Software free of charge with other software, at Licensee's
discretion, that is supported by C1. If, after attempting both (i) and (ii),
neither of the foregoing successfully resolves the nonperformance, this
Agreement shall terminate, and C1 shall refund the License Fee, all Maintenance
Fees and any prepaid Maintenance Fees and Services Fees (refunded on a prorated
basis) paid by Licensee to C1 hereunder. In addition, C1 warrants that the media
on which the Software is distributed will be free from defects in materials and
workmanship under normal use for a period of ninety (90) days from the date
Licensee accepts such Software. C1 will replace any defective media returned to
C1 within the ninety (90) day period, at no additional charge to Licensee. The
warranty set forth above is made to and for the benefit of Licensee only. The
warranty will apply only if:
(1) the Software has been used at all times in accordance with
the instructions for use; and
(2) no modification, alteration or addition has been made to the
Software by persons other than C1 or C1's authorized representative; and
(3) Licensee has not requested modifications, alterations or
additions to the Software that cause it to deviate from the Documentation.
Notwithstanding the foregoing limitations of Section 6.1(a)(3)
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
6
<PAGE>
("Warranty"), should Licensee request modifications, alterations or additions to
the Software, the above warranty shall apply only to those portions of the
Software not modified, altered or added to, and no warranty shall apply to the
modified, altered or added to portions of the Software unless specific warranty
provisions are executed in writing by the parties to cover such modifications,
alterations or additions. (but only to the extent of such modifications,
alterations or additions).
(b) Harmful Code. C1 represents and warrants that, to the best of its
knowledge, the Software and media used to deliver the software contain at
delivery to Licensee no computer instructions, circuitry or other technological
means whose purpose or effect is to disrupt, damage or interfere with any use of
Licensee's computer and communications facilities or equipment ("Harmful Code"),
and it has used commercially reasonable efforts to prevent the introduction of
such Harmful Code to the Software prior to delivery to Licensee. For the
purposes of this warranty, Harmful Code shall include, without limitation, (a)
any instrumentality that could cause the Software to fail to be operative as a
result of use by more than the authorized number of users or use beyond the
termination or expiration date of this Agreement and (b) any code containing
viruses, Trojan horses, worms, or like destructive code or code that self-
replicates. C1shall defend, indemnify, and hold Licensee harmless from any and
all liabilities, losses, damages and expenses, including without limitation
attorneys' fees, arising from the presence of Harmful Code in or with the
Software or media used to deliver the Software.
(c) Year 2000 Compliance. Commerce One warrants that the Software,
when used in accordance with its associated documentation will be, prior to, on
and subsequent to 1/1/00, capable of accurately processing, providing and
receiving date data from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and leap year calculations. C1
shall use commercially reasonable efforts to correct or replace the defective
Software with conforming Software within a reasonable period of time.
(d) Each party represents and warrants that it will take all
necessary precautions to prevent injury to any persons or damage to property
during the term of this Agreement. Should either party (the "Permitting Party")
permit the other party to use any of the Permitting Party's equipment, tools, or
facilities during the term of this Agreement, such permission shall be
gratuitous and the other party shall be responsible for, and indemnify the
Permitting Party for, any injury to any person (including death) or damage to
property (including the Permitting Party's property) arising out of use of such
equipment, tools or facilities, whether or not such claim is based upon its
condition or on the alleged negligence of the Permitting Party in permitting its
use.
6.2 Disclaimer. EXCEPT AS SET FORTH HEREIN, C1 MAKES NO WARRANTIES,
----------
WHETHER EXPRESS, IMPLIED, OR STATUTORY REGARDING OR RELATING TO THE SOFTWARE OR
THE DOCUMENTATION, OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED TO
LICENSEE UNDER THIS AGREEMENT, INCLUDING MAINTENANCE AND SUPPORT. C1
SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO THE SOFTWARE,
DOCUMENTATION AND SAID OTHER MATERIALS AND SERVICES, AND WITH RESPECT TO THE USE
OF ANY OF THE FOREGOING.
6.3 Limitation of Liability. EXCEPT FOR INDEMNITY OBLIGATIONS HEREUNDER,
-----------------------
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE,
BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING
OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE OR SERVICES PERFORMED
HEREUNDER, WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT,
INCLUDING NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. C1 WILL NOT BE LIABLE FOR ANY DAMAGES CAUSED BY DELAY IN DELIVERY
OR FURNISHING THE SOFTWARE OR SERVICES, PROVIDED SUCH DELAY IS CURED WITHIN A
COMMERCIALLY REASONABLE TIME (NOT TO EXCEED THIRTY (30) DAYS). HOWEVER, THE
LIMITATION OF LIABILITY PROVIDED IN THIS SECTION 6.3 ("LIMITATION OF LIABILITY")
SHALL NOT APPLY TO ANY DAMAGES CAUSED BY C1'S FAILURE TO DELIVER OR
7
<PAGE>
FURNISH THE SOFTWARE OR SERVICES, AS OTHERWISE PROVIDED IN THIS AGREEMENT. EACH
PARTY'S LIABILITY UNDER THIS AGREEMENT FOR DAMAGES OF ANY KIND, INCLUDING,
WITHOUT LIMITATION, RESTITUTION, WILL NOT, IN ANY EVENT, EXCEED AN AMOUNT EQUAL
TO THE LICENSE FEE, ALL MAINTENANCE FEES AND ANY PREPAID MAINTENANCE FEES AND
SERVICES FEES (ON A PRORATED BASIS) PAID BY LICENSEE TO C1 UNDER THIS AGREEMENT.
6.4 No Other Warranty. No employee, agent, representative or affiliate of
-----------------
C1 has authority to bind C1 to any oral representations or warranty concerning
the Software. Any written representation or warranty not expressly contained in
this Agreement will not be enforceable.
6.5 Licensee Indemnity. Licensee shall indemnify and hold C1 harmless from
------------------
and against any costs, losses, liabilities and expenses (including reasonable
attorneys' fees) arising out of third party claims related to Licensee's use of
the Software outside of the scope of this Agreement, provided that: (a) prompt
notice shall be given to Licensee of any claim to which the foregoing indemnity
relates; (b) Licensee shall have sole control of the defense and settlement of
any such claim; and (c) C1 shall give Licensee all reasonable assistance at
Licensee's expense in the defense or settlement of such claim. THIS SECTION 6.5
("LICENSEE INDEMNITY") STATES LICENSEE'S ENTIRE LIABILITY AND C1'S SOLE AND
EXCLUSIVE REMEDY HEREUNDER.
7. Indemnification for Infringement
--------------------------------
7.1 Indemnity. C1 shall, at its expense, indemnify, defend and/or
---------
settle and hold Licensee harmless from and against any claim, action or
allegation brought against Licensee that the Software infringes or
misappropriates any copyright, patent or trade secret of any third party and
shall pay all expenses, fees and costs (including reasonable attorneys fees)
incurred by Licensee as a result thereof; provided that Licensee gives prompt
written notice to C1 of any such claim, action or allegation of infringement and
gives C1 the authority to proceed as contemplated herein. C1 will have the
exclusive right to defend any such claim, action or allegation and make
settlements thereof at its own discretion (provided such settlement
unconditionally releases Licensee and does not materially limit or restrict
Licensee's rights under the Agreement), and Licensee may not settle or
compromise such claim, action or allegation, except with prior written consent
of C1, which consent shall not be unreasonably withheld. Licensee shall give
such assistance and information as C1 may reasonably require to settle or oppose
such claims. In the event any such infringement, claim, action or allegation is
brought or threatened, C1 shall, at its sole option and expense:
(a) procure for Licensee the right to continue use of the
Software or infringing part thereof; or
(b) modify or amend the Software or infringing part thereof,
or replace the Software or infringing part thereof with other software having
substantially the same or better capabilities.
However, if, after C1 attempts both (a) and (b), above, the parties mutually
agree that neither (a) nor (b) is possible, C1 shall have the right to terminate
this Agreement and refund all fees paid by Licensee hereunder.
7.2 Exclusions. The foregoing obligations shall not apply to the extent
----------
the infringement arises as a result of (i) modifications to the Software made by
any party other than C1 or C1's authorized representative; or (ii) use of any
release of the Software which C1 has ceased to maintain and support.
7.3 Sole Obligation. The foregoing states the entire liability of C1 with
---------------
respect to infringement of any patent, copyright, trade secret or other
proprietary right.
8. Confidential Information
------------------------
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
8
<PAGE>
8.1 Obligations of Confidentiality. Each party acknowledges that the
------------------------------
Confidential Information constitutes valuable trade secrets and each party
agrees that it shall use Confidential Information solely in accordance with the
provisions of this Agreement and will not disclose, or permit to be disclosed,
the same, directly or indirectly, to any third party without the other party's
prior written consent. Each party agrees to exercise due care in protecting the
Confidential Information from unauthorized use and disclosure. However, neither
party bears any responsibility for safeguarding information that (i) is publicly
available, (ii) already in the other party's possession and not subject to a
confidentiality obligation, (iii) obtained by the other party from third parties
without restrictions on disclosure, (iv) independently developed by the other
party without reference to Confidential Information, or (v) required to be
disclosed by order of a court or other governmental entity or as is otherwise
required by law.
8.2 Injunctive Relief. In the event of actual or threatened breach of the
-----------------
provisions of Section 8.1 ("Obligations of Confidentiality"), the non-breaching
party will have no adequate remedy at law and will be entitled to immediate and
injunctive and other equitable relief, without bond and without the necessity of
showing actual money damages.
9. Term and Termination
--------------------
9.1 Term. This Agreement will take effect on the Effective Date and will
----
remain in force for a period of three (3) years ("Term") unless terminated in
accordance with this Agreement.
9.2 Termination by Licensee. Licensee may, by thirty (30) days written
-----------------------
notice to C1, terminate this Agreement without cause, provided that no such
termination will entitle Licensee to a refund of any portion of the License Fee
or Maintenance Fee. Further, Licensee may, by written notice to C1, terminate
this Agreement if (a) C1 is in material breach of any term, condition or
provision of this Agreement, which breach, if capable of being cured, is not
cured within thirty (30) days after Licensee gives C1 prior written notice of
such breach; (b) specifically, C1 is in material breach of Section 5.2
("Maintenance and Support Services"), which breach, if capable of being cured,
is not cured within thirty (30) days after Licensee gives C1 prior written
notice of such breach; or (c) C1 (i) terminates or suspends its business
activities, (ii) becomes insolvent, admits in writing its inability to pay its
debts as they mature, makes an assignment for the benefit of creditors, or
becomes subject to direct control of a trustee, receiver or similar authority,
or (iii) becomes subject to any bankruptcy or insolvency proceeding under
federal or state statutes (b and c each, a "Release Condition"). Upon the
occurrence of (a), (b) or (c) described above, C1 agrees to refund the License
Fee, all Maintenance Fees and any prepaid Maintenance Fees and Services Fees
(refunded on a prorated basis) paid by Licensee hereunder, and CI agrees to
provide reasonable assistance to transition Licensee to a comparable system. If
any Release Condition occurs, the License shall continue, and Licensee shall be
entitled to receive a copy of the Source Code from C1's then-current escrow
agent, and C1 agrees to execute all documents necessary to effect the release of
such Source Code to Licensee, but only after C1 has exhausted all reasonable
measures to cure or resolve any of the above Release Conditions within such
thirty (30) day period, absent a force majeure as described in Section 12.1
("Force Majeure").
9.3 Termination by C1. C1 may, by written notice to Licensee, terminate
-----------------
this Agreement if any of the following events (each, a "Termination Event")
occur, provided that no such termination will entitle Licensee to a refund of
any portion of the License Fee or Maintenance Fee:
(a) Licensee fails to pay any amount actually due to C1 within
thirty (30) days after C1 gives Licensee written notice of such non-payment; or
(b) Licensee is in material breach of any non-monetary term,
condition or provision of this Agreement, which breach, if capable of being
cured, is not cured, or disputed by Licensee, within thirty (30) days after C1
gives Licensee written notice of such breach; or
(c) Licensee (i) terminates or suspends its business activities,
(ii) becomes insolvent, admits in writing its inability to pay its debts as they
mature, makes an assignment for the benefit of creditors, or becomes subject to
direct
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
9
<PAGE>
control of a trustee, receiver or similar authority, or (iii) becomes subject to
any bankruptcy or insolvency proceeding under federal or state statutes.
If any Termination Event occurs, termination will become effective
immediately or on the date set forth in the written notice of termination. The
following Sections will survive termination of this Agreement for any reason:
2.1 ("License Grant"), 2.2(b) ("Source Code Escrow"), 2.6 ("Trademark License")
4 ("License Fee"), 6.1(a) ("Warranty"); 6.1(b) ("Harmful Code"), 6.1(c) ("Year
2000 Compliance"), 6.2 ("Disclaimer"), 6.3 ("Limitation of Liability"), 6.4 ("No
Other Warranty"), 6.5 ("Licensee Indemnity"), 7 ("Indemnification for
Infringement"), 8 ("Confidential Information"), 9 ("Term and Termination"), 10
("Non-assignment/Binding Agreement"), 11 ("Notices") and 12 ("Miscellaneous").
Termination of this Agreement will not affect the provisions regarding
Licensee's or C1's treatment of Confidential Information, provisions relating to
the payment of amounts due, or provisions limiting or disclaiming liability,
which provisions will survive termination of this Agreement.
9.4 Return of Materials. Except in the event of any occurrence described
-------------------
in Section 9.2 ("Termination by Licensee") relating to termination by Licensee
for cause, within twenty (20) days after the date of termination or
discontinuance of this Agreement for any reason whatsoever, Licensee shall
return the Software, derivative works and all copies thereof, in whole or in
part, all related Documentation and all copies thereof, and any other
Confidential Information in its possession. Licensee shall furnish C1 with a
certificate signed by an executive officer of Licensee verifying that the same
has been done. In the event of any Release Condition described in Section 9.2
("Termination by Licensee") resulting in a release of the Source Code to
Licensee, Licensee shall be entitled to retain any materials reasonably related
to maintaining and supporting the Software, including, but not limited to,
support documentation and other technical information. However, in such event,
Licensee shall return any materials not reasonably related to maintaining or
supporting the Software, including, but not limited to, financial, marketing,
corporate development and strategic alliance information.
10. Non-assignment/Binding Agreement
--------------------------------
Neither this Agreement nor any rights under this Agreement may be
assigned or otherwise transferred by either party, in whole or in part, whether
voluntary or by operation of law, including by way of sale of assets, merger or
consolidation, without the prior written consent of the other party, which
consent will not be unreasonably withheld. Subject to the foregoing, this
Agreement will be binding upon and will inure to the benefit of the parties and
their respective successors and assigns.
11. Notices
-------
Any notice required or permitted under the terms of this Agreement or
required by law must be in writing and must be (a) delivered in person, (b) sent
by first class registered mail, or air mail, as appropriate, (c) sent by
overnight air courier, or (d) by facsimile, in each case properly posted to the
appropriate address set forth above. Either party may change its address for
notice by notice to the other party given in accordance with this Section.
Notices will be considered to have been given at the time of actual delivery in
person, three (3) business days after deposit in the mail as set forth above,
one (1) day after delivery to an overnight air courier service, or one (1) day
after the moment of transmission by facsimile.
12. Miscellaneous
-------------
12.1 Force Majeure. Neither party will incur any liability to the
-------------
other party on account of any loss or damage resulting from any delay or failure
to perform all or any part of this Agreement if such delay or failure is caused,
in whole or in part, by events, occurrences, or causes beyond the control and
without negligence of the parties. Such events, occurrences, or causes will
include, without limitation, acts of God, strikes, lockouts, riots, acts of war,
failures of the Internet, earthquakes, fire and explosions, but the inability to
meet financial obligations is expressly excluded.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
10
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12.2 Waiver. Any waiver of the provisions of this Agreement or of a
------
party'srights or remedies under this Agreement must be in writing to be
effective. Failure, neglect, or delay by a party to enforce the provisions of
this Agreement or its rights or remedies at any time, will not be construed and
will not be deemed to be a waiver of such party's rights under this Agreement
and will not in any way affect the validity of the whole or any part of this
Agreement or prejudice such party's right to take subsequent action. Except as
expressly stated in this Agreement, no exercise or enforcement by either party
of any right or remedy under this Agreement will preclude the enforcement by
such party of any other right or remedy under this Agreement or that such party
is entitled by law to enforce.
12.3 Severability. If any term, condition, or provision in this Agreement
------------
is found to be invalid, unlawful or unenforceable to any extent, the parties
shall endeavor in good faith to agree to such amendments that will preserve, as
far as possible, the intentions expressed in this Agreement. If the parties fail
to agree on such an amendment, such invalid term, condition or provision will be
severed from the remaining terms, conditions and provisions, which will continue
to be valid and enforceable to the fullest extent permitted by law.
12.4 Entire Agreement. This Agreement (including the Schedules and any
----------------
addenda hereto signed by both parties) contains the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
previous communications, representations, understandings and agreements, either
oral or written, between the parties with respect to said subject matter. This
Agreement may not be amended, except by a writing signed by both parties.
12.5 Standard terms of Licensee. No terms, provisions or conditions of any
--------------------------
purchase order, acknowledgment or other business form that Licensee may use in
connection with the acquisition or licensing of the Software will have any
effect on the rights, duties or obligations of the parties under, or otherwise
modify, this Agreement, regardless of any failure of C1 to object to such terms,
provisions or conditions.
12.6 Public Announcements. Licensee acknowledges that C1 may desire to use
--------------------
its name in press releases, product brochures and financial reports indicating
that Licensee is a Licensee of C1, and Licensee agrees that C1 may use its name
in such a manner, subject to Licensee's prior written approval, which shall not
be unreasonably withheld or delayed. Reciprocally, C1 acknowledges that Licensee
may desire to use its name in press releases, product brochures and financial
reports indicating that C1 is a solutions provider to Licensee, and C1
acknowledges that Licensee may use its name in such a manner, subject to C1's
prior written approval, which shall not be unreasonably withheld or delayed.
12.7 Counterparts. This Agreement may be executed in counterparts, each of
------------
which so executed will be deemed to be an original and such counterparts
together will constitute one and the same agreement.
12.8 Applicable law; Jurisdiction. This Agreement will be interpreted and
----------------------------
construed in accordance with the laws of the State of California and the United
States of America, without regard to conflict of law principles. All disputes
arising out of this Agreement shall be subject to the exclusive jurisdiction and
venue of the state and federal courts of Santa Clara County, California, and the
parties consent to the exclusive and personal jurisdiction of these courts.
12.9 Headings. Section and Schedule headings are for ease of reference
--------
only and do not form part of this Agreement.
12.10 Non-solicitation. Licensee acknowledges and agrees that the
----------------
employees and consultants of C1 who perform the Maintenance and Support services
or other services are a valuable asset to C1 and are difficult to replace.
Accordingly, Licensee agrees that, during the Term of this Agreement, it will
not offer employment to any C1 employee who performs any of the Maintenance and
Support services, without the prior written consent of C1, which shall not be
unreasonably withheld.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
11
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LICENSEE COMMERCE ONE, INC.
By: /s/ Earl E. Fry By: /s/ Kirby Coryell
-------------------------- -----------------------
Name: EARL E. FRY Name: Kirby Coryell
------------------------ ---------------------
Title:VP & CFO Title: VP Operations
----------------------- --------------------
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
12
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SCHEDULE A
----------
SOFTWARE, USERS AND LICENSE FEES
Software:
BuySite Hosted Edition version 5.0
MarketSite version 2.0
Authorized Users:
BuySite Hosted Edition: Unlimited
MarketSite: Unlimited
License Fees:
BuySite Hosted Edition: [*]
MarketSite: [*]
PAYMENT TERMS
1. License Fees - as provided in Agreement.
2. Maintenance Fees - net 30 of Software acceptance [*], and each
year thereafter.
3. Transaction Fees - quarterly payments shall be due to Commerce One, net 30
days after OmniCell quarter close (schedule to be submitted by OmniCell to
Commerce One).
4. Services Fees - net 30 days from date of Commerce One invoice
ADDITIONAL TERMS AND CONDITIONS
1. Hosted BuySite and Branded Market Site
(a) The parties agree to undertake reasonable efforts to reach
agreement on a joint development agreement allowing OmniCell to customize
certain aspects of the CommerceOne Branded MarketSite Source Code for internal
use only.
(b) OmniCell and CommerceOne will use commercially reasonable efforts
to enable OmniCell to host healthcare suppliers (including, but not limited to,
[*]) for CommerceOne's BuySite customers (including, but not limited to,
the [*]).
(c) For a period of 12 months from the contract execution date,
CommerceOne agrees not to solicit business from the following companies relating
to Hosted BuySite and/or Branded MarketSite:
(i) [*]
(ii) [*]
(iii) [*]
(iv) [*]
(v) [*]
(vi) [*]
(vii) [*]
(viii) [*]
(ix) [*]
(x) [*]
(xi) [*]
(xii) [*]
(xiii) [*]
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
13
<PAGE>
* See (d), below, relating to Branded Market Site only.
(d) For a period of 9 months from the contract execution date,
CommerceOne agrees not to solicit business from the following companies relating
to Branded MarketSite only:
(i) [*]
(ii) [*]
(iii) [*]
2. Technical Program Manager
(a) OmniCell agrees to pay CommerceOne an additional fee of [*] upon
contract execution and, at OmniCell option and in its sole discretion, upon
each anniversary of the contract execution during the term of this Agreement
(and any renewal terms thereof), for the right to select a named CommerceOne
program manager ("Program Manager"), from a pool of at least five (5)
qualified candidates provided by CommerceOne. If, at any time, OmniCell
determines that such Program Manager is not meeting OmniCell's objectives,
OmniCell shall have the right to select an alternate Program Manager from a
pool of at least five (5) qualified candidates provided by CommerceOne.
(b) Further, for the term of this Agreement (and any renewal terms
thereof), OmniCell shall be permitted to participate in the following:
(i) CommerceOne Design Partner Program;
(ii) CommerceOne Partner Program(s);
(iii) CommerceOne Commerce Council (membership);
(iv) Planned Vertical Council (membership); and
(v) Technical Reviews of CommerceOne product roadmaps/product
development plans (quarterly)
3. Programming Support
(a) CommerceOne will provide a dedicated CommerceOne programming
resource to OmniCell to ensure prompt and timely attention to scheduled and
ad hoc application modifications per OmniCell direction
(b) OmniCell shall pre-pay Commerce One in 1000 hour `blocks' as
follows:
(i) All Programming Support will be billed at [*].
(ii) All Programming Support will be directed by the Commerce
One Technical Program Manager.
(iii) All pre-paid 1,000 hour blocks will be delivered within
a one year period and utilized in increments of 80 hours.
(iv) If increments less than 80 hours are needed by OmniCell, 4
week advance approval by the Commerce One Technical
Program Manager is required.
(c) The Technical Program Manager, based on application requests of
OmniCell, will manage staffing and utilization.
(d) All billing to OmniCell will be done as services are rendered, with
invoicing occurring monthly.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
14
<PAGE>
SCHEDULE B
----------
End User/Supplier Terms and Conditions
1. Third Party Beneficiary. Commerce One, Inc. ("Commerce One") shall be a
direct and intended third-party beneficiary to this Agreement.
2. Usage Reports. Within fifteen (15) days after the end of each month, End
User will deliver to Licensor a user access log report, which report shall
include, at a minimum and without limitation, data describing transactions
and system activity and such other information as the parties shall mutually
agree.
3. Audit. Licensor and Commerce One will have the right, exercisable not more
than once every twelve (12) months, to inspect upon reasonable notice and
during End User's regular business hours, End User's relevant records to
verify End User's compliance with the terms of this Agreement and/or
Licensor's compliance with its obligations to Commerce One.
4. NO WARRANTY. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE SOFTWARE
PROVIDED TO END USER HEREUNDER IS PROVIDED "AS IS" WITHOUT ANY CONDITION OR
WARRANTY WHATSOEVER. THE ENTIRE RISK ASSOCIATED WITH THE USE OF THE SOFTWARE
RESIDES WITH END USER. ALL OTHER CONDITIONS OR WARRANTIES, WHETHER EXPRESS,
IMPLIED, OR STATUTORY, ARE DISCLAIMED, INCLUDING WITHOUT LIMITATION, ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
5. LIMITATION OF LIABILITY. IN NO EVENT WILL LICENSOR, COMMERCE ONE OR THEIR
RESPECTIVE LICENSORS OR SUPPLIERS BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF
USE, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH
OR ARISING OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE OR
SERVICES PERFORMED HEREUNDER, WHETHER ALLEGED AS A BREACH OF CONTRACT OR
TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF LICENSOR, COMMERCE ONE OR
THEIR RESPECTIVE LICENSORS OR SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. IN ADDITION, LICENSOR, COMMERCE ONE AND THEIR RESPECTIVE
LICENSORS AND SUPPLIERS WILL NOT BE LIABLE FOR ANY DAMAGES CAUSED BY DELAY
IN DELIVERY OR FURNISHING THE SOFTWARE OR SAID SERVICES. LICENSOR, COMMERCE
ONE AND THEIR RESPECTIVE LICENSORS AND SUPPLIERS LIABILITY UNDER THIS
AGREEMENT FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL AND/OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, RESTITUTION, WILL NOT,
IN ANY EVENT, EXCEED THE FEE PAID BY END USER TO LICENSOR UNDER THIS
AGREEMENT.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
15
<PAGE>
SCHEDULE C
----------
Attribution Guidelines
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
16
<PAGE>
SCHEDULE D
----------
Revenue Share
Transaction Revenue Sharing:
A. Commerce One will promote OmniCell as the MarketSite service provider for
the healthcare vertical.
B. All Transaction Revenue Sharing pertains to the healthcare vertical only,
except as noted below:
i. For Commerce One customers who desire to use content from a named
OmniCell Supplier, OmniCell will provide such content through
CommerceOne in accordance with the Transaction Revenue Sharing
defined in this section. If it is not economically practical for
CommerceOne and its non-OmniCell customers to receive content from
OmniCell, Commerce One and such customers are not obligated to use
OmniCell content and, at the sole discretion of CommerceOne and its
customers, CommerceOne and its customers may source content for
themselves or from other parties.
C. The parties agree to share all revenues derived from transactions
performed using the OmniCell Branded MarketSite in accordance with the
following business mode:
i. Commerce One shares in all transaction-based revenues attained by
an OmniCell branded MarketSite.
ii. Commerce One will receive a [*] revenue share on all transaction
revenues received by OmniCell for transactions conducted within the
OmniCell Branded MarketSite. (See Exhibit C - example)
iii. OmniCell (or its designated outsourcing party) will disclose its
transaction fee schedule and pay fees to Commerce One at no less
than the then current Commerce One transaction fee schedule.
D. Definitions:
i. OmniCell Buyer - A buyer/buying organization that uses the
OmniCell BuySite Hosted Edition service offering.
ii. Commerce One Buyer - A Commerce One and/or PeopleSoft BuySite
customer (see Schedule E).
iii. OmniCell Supplier - A Supplier that has mutually agreed upon
OmniCell and Commerce One as a "named" OmniCell Supplier
iv. Commerce One Supplier - A Supplier whose content is available in
MarketSite.net.
E. The specific process for OmniCell to "name" Suppliers outlined below will
apply:
i. OmniCell shall submit to Commerce One a draft list of OmniCell
Suppliers on a quarterly basis.
ii. Upon OmniCell submitting the draft list, Commerce One and
OmniCell shall review such list and develop a final shared list,
which will become the "named" OmniCell Suppliers.
G. Transactions are defined as transactions through MarketSite.
H. Transaction Revenue Sharing is effective for the term of the Agreement,
for as long as OmniCell utilizes the Commerce One platform and maintains
their MarketSite (branded) as a healthcare Portal.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
17
<PAGE>
SCHEDULE D (continued)
----------------------
Transaction Revenue Share Example:
<TABLE>
<CAPTION>
Buyer Supplier Transactions Trans Rev OmniCell Share C1 Share
- ----------------------------------- ------------------ ---------------- ------------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
OmniCell OmniCell 100,000 [*] [*] [*]
OmniCell Commerce One 20,000 [*] [*] [*]
Commerce One OmniCell 20,000 [*] [*] [*]
TOTAL Transaction Revenue 140,000 [*] [*] [*]
Total Due to Commerce One [*]
</TABLE>
Any applicable transaction fees shall be capped at [*] of the then-current
CommerceOne transaction fee matrix. Presently such matrix is as follows:
Supplier / Vendor Guidelines
S.1 Catalogue [*] / per line item
Update Fee
Fee Structure: Suppliers will pay [*]/per line item to update
catalog content in MarketSite
Updates include -additions, modifications and deletions
Note 1: No charge for initial loading of catalog content
Note 2: No charge for pricing updates of catalog content
Note 3: If supplier changes format of data submission a fee of [*]
will be charged to re-create the mappings
Note 4: Billed on a quarterly basis
Note 5: This is a non-commission sales item
S.2 Purchase Order Transaction Fee Schedule
Fee is charged to suppliers based on the number of Purchase Orders
processed by MarketSite. Billing occurs on a quarterly basis.
Purchase Orders / month Cost per Purchase Order
----------------------- ------------------------
0 - 500 [*]
501 - 5000 [*]
5,001 - 10,000 [*]
* 10,000 [*]
___________
* Greater than
Example:
If MarketSite processed 22,100 PO's for supplier X in Q1 the total
amount due Commerce One would be: [*]
Month Num Po's Fee
- ---------------------------------------
Jan 800 [*]
- ---------------------------------------
Feb 7000 [*]
- ---------------------------------------
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
18
<PAGE>
- ---------------------------------------
March 14300 [*]
- ---------------------------------------
Total 22100 [*]
- ---------------------------------------
- --------------------------------------------------------------------------------
Rate Jan Feb March Total
- --------------------------------------------------------------------------------
PO's [*] 500 500 500 [*]
- --------------------------------------------------------------------------------
PO's [*] 300 4499 4499 [*]
- --------------------------------------------------------------------------------
PO's [*] 0 2001 4999 [*]
- --------------------------------------------------------------------------------
PO's [*] 0 0 4302 [*]
- --------------------------------------------------------------------------------
Total 800 7000 14300 [*]
- --------------------------------------------------------------------------------
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
19
<PAGE>
SCHEDULE E
----------
PeopleSoft OEM Agreement
OmniCell acknowledges the existence of an OEM arrangement between CommerceOne
and PeopleSoft, the general terms of which are specified below:
Distribution Arrangement: PeopleSoft has become the exclusive distributor of
Commerce One BuySite, Enterprise and Hosted Edition, into an account base of
3200 accounts as of the date of the Agreement between Commerce One and
PeopleSoft. Commerce One receives a royalty on all sales of BuySite and the
derivate PeopleSoft Business Network procurement product which will be jointly
developed by PeopleSoft and Commerce One, based on the initial Source Code of
BuySite.
Going forward, PeopleSoft will retain the exclusive right to distribute Commerce
One's BuySite and PeopleSoft's PSBN Site into this account base, subject to the
continued achievement of certain minimum revenue targets measured on a quarterly
basis.
The term of the exclusivity arrangement is five (5) years, provided PeopleSoft
continues to meet the minimum threshold commitments.
Commerce One MarketSite, including all partners who run MarketSite services that
offer multi-supplier goods and services, will be designated the exclusive MRO
portal by PeopleSoft for an initial period of eighteen (18) months.
PeopleSoft will also retain the right to distribute access to MarketSite.Net,
the Commerce One Portal, and other MarketSite partners world-wide, provided such
rights are agreed to by third party MarketSite operators.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND
230.406.
20
<PAGE>
[LOGO]
AMENDMENT TO VERTICAL HOSTED LICENSE AGREEMENT
This AMENDMENT (the "Amendment"), effective April 18, 2000 (the "Effective
Date"), is made to the Vertical Hosted License Agreement, by and between
COMMERCE ONE, INC. ("C1") and OMNICELL.COM, dated August 21, 1999 (the
"Agreement").
WHEREAS, C1 and Omnicell.com wish to amend the terms of the Agreement to better
reflect the original intent of the parties.
NOW THEREFORE, for good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows.
DEFINITIONS. All capitalized terms not specifically defined in this Amendment
shall have the meanings ascribed to such terms in the Agreement.
SECTION 9.1. TERM. THE ORIGINAL TEXT OF SECTION 9.1 IS HEREBY DELETED AND
REPLACED BY THE FOLLOWING: "This Agreement will take effect of the Effective
Date and, subject to the termination provisions of Sections 9.2 and 9.3,
including C1's right to terminate this Agreement for Omnicell.com's non-payment
of transaction revenue share amounts, the Agreement shall continue on a
perpetual basis."
SECTION 9.3. TERMINATION BY C1. THE FINAL PARAGRAPH OF SECTION 9.3 IS HEREBY
DELETED AND REPLACED BY THE FOLLOWING:
If any Termination Event occurs, termination will become effective immediately
or on the date set forth in the written notice of termination. The following
Sections will survive termination of this Agreement for any reason: 2.1
("License Grant"), 2.2(b) ("Source Code Escrow"), 2.6 ("Trademark License") 3
("License Restrictions") 4 ("License Fee"), 6.1(a) ("Warranty"); 6.1(b)
("Harmful Code"), 6.1(c) ("Year 2000 Compliance"), 6.2 ("Disclaimer"), 6.3
("Limitation of Liability"), 6.4 ("No Other Warranty"), 6.5 ("Licensee
Indemnity"), 7 ("Indemnification for Infringement"), 8 ("Confidential
Information"), 9 ("Term and Termination"), 10 ("Non-assignment/Binding
Agreement"), 11 ("Notices") and 12 ("Miscellaneous"). Termination of this
Agreement will not affect the provisions regarding Licensee's or C1's treatment
of Confidential Information, provisions relating to the payment of amounts due,
or provisions limiting or disclaiming liability, which provisions will survive
termination of this Agreement.
SCHEDULE A. ADDITIONAL TERMS AND CONDITIONS. 1. HOSTED BUYSITE AND BRANDED
MARKET SITE.
THE FIRST SENTENCE OF SUBSECTION (c) SHALL HEREBY BE REVISED TO READ AS FOLLOWS:
"For a period of 12 months from the contract execution date, Commerce One agrees
not to solicit business from or enter into any license agreement relating to
Hosted BuySite and/or Branded MarketSite with, the following companies:"
THE NUMBERING OF SUBSECTION (a) FOLLOWING SUBSECTION (c) AND THE FIRST SENTENCE
OF SUCH SUBSECTION SHALL BE REVISED AS FOLLOWS:
"(d) For a period of 9 months from the contract execution date, Commerce One
agrees not to solicit business from or enter into any license agreement with
the following companies, relating to the Branded MarketSite only:"
<PAGE>
EXTENSION OF MAINTENANCE AND SUPPORT OPTION. Pursuant to and consistent with the
letter agreement dated, September 24, 1999, from Rob Tarkoff, Vice President
Corporate Development and General Counsel of Commerce One to Jeff Arbuckle, Vice
President of E-Commerce Development for Omnicell.com, the parties hereby
reconfirm their intentions to renew and extend, under and subject to the terms
and conditions set forth in the Agreement, the maintenance and support option of
the Agreement and the revenue share terms and conditions of Schedule D of the
Agreement, through August 21, 2005.
All other terms and conditions of the Agreement remain unmodified and continue
with full force and effect as set forth therein.
IN WITNESS WHEREOF, the parties have executed this Amendment on this 18th day of
April, 2000.
COMMERCE ONE, INC. OMNICELL.COM
By: /s/ Robert Y. Newell, IV By: /s/ Peter Pervere
---------------------------- ----------------------------
Name: Robert Y. Newell, IV Name: Peter Pervere
-------------------------- --------------------------
Title: VP and CFO Title: SVP and CFO
------------------------- -------------------------
<PAGE>
EXHIBIT 10.12
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________, 1998
by and between OMNICELL TECHNOLOGIES, INC. a Delaware corporation (the
"Corporation"), and ____________ ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his/her
capacity as _______________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at
the request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as
amended (the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and
other agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as ______________
of the Corporation, the Corporation has determined and agreed to enter into
this Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
_______________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
______________ of the Corporation or as a director, officer or other
fiduciary of an affiliate of the Corporation (including any employee benefit
plan of the Corporation) faithfully and to the best of his ability so long as
he is duly elected and qualified in accordance with the provisions of the
Bylaws or other applicable charter documents of the Corporation or such
affiliate; PROVIDED, HOWEVER, that Agent may at any time and for any reason
resign from such position (subject to any contractual obligation that Agent
may have assumed apart from this Agreement) and that the Corporation or any
affiliate shall have no obligation under this Agreement to continue Agent in
any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time
to time (but, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than the Bylaws or the Code
permitted prior to adoption of such amendment).
1.
<PAGE>
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further
agrees to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and
any other amounts that Agent becomes legally obligated to pay because of any
claim or claims made against or by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
arbitrational, administrative or investigative (including an action by or in
the right of the Corporation) to which Agent is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that Agent
is, was or at any time becomes a director, officer, employee or other agent
of Corporation, or is or was serving or at any time serves at the request of
the Corporation as a director, officer, employee or other agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Corporation under the non-exclusivity provisions of the Code and Section
43 of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the
Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit
or advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment
under such insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers
2.
<PAGE>
vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise) and shall continue thereafter so
long as Agent shall be subject to any possible claim or threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
arbitrational, administrative or investigative, by reason of the fact that
Agent was serving in the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and
amounts paid in settlement and any other amounts that Agent becomes legally
obligated to pay in connection with any action, suit or proceeding referred
to in Section 3 hereof even if not entitled hereunder to indemnification for
the total amount thereof, and the Corporation shall indemnify Agent for the
portion thereof to which Agent is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against
the Corporation under this Agreement, notify the Corporation of the
commencement thereof; but the omission so to notify the Corporation will not
relieve it from any liability which it may have to Agent otherwise than under
this Agreement. With respect to any such action, suit or proceeding as to
which Agent notifies the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent
of its election to assume the defense thereof, the Corporation will not be
liable to Agent under this Agreement for any legal or other expenses
subsequently incurred by Agent in connection with the defense thereof except
for reasonable costs of investigation or otherwise as provided below. Agent
shall have the right to employ separate counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice
from the Corporation of its assumption of the defense thereof shall be at the
expense of Agent unless (i) the employment of counsel by Agent has been
authorized by the Corporation, (ii) Agent shall have reasonably concluded
that there may be a conflict of interest between the Corporation and Agent in
the conduct of the defense of such action or (iii) the Corporation shall not
in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of Agent's separate counsel shall be at
the expense of the Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on behalf
of the Corporation or as to which Agent shall have made the conclusion
provided for in clause (ii) above; and
3.
<PAGE>
(c) the Corporation shall not be liable to indemnify Agent under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably
withheld. The Corporation shall be permitted to settle any action except
that it shall not settle any action or claim in any manner which would impose
any penalty or limitation on Agent without Agent's written consent, which may
be given or withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all
expenses incurred by Agent in connection with such proceeding upon receipt of
an undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim
is made within ninety (90) days of request therefor. Agent, in such
enforcement action, if successful in whole or in part, shall be entitled to
be paid also the expense of prosecuting his claim. It shall be a defense to
any action for which a claim for indemnification is made under Section 3
hereof (other than an action brought to enforce a claim for expenses pursuant
to Section 8 hereof, provided that the required undertaking has been tendered
to the Corporation) that Agent is not entitled to indemnification because of
the limitations set forth in Section 4 hereof. Neither the failure of the
Corporation (including its Board of Directors or its stockholders) to have
made a determination prior to the commencement of such enforcement action
that indemnification of Agent is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors or its
stockholders) that such indemnification is improper shall be a defense to the
action or create a presumption that Agent is not entitled to indemnification
under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable
the Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's
Certificate of Incorporation or Bylaws, agreement, vote of stockholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office.
4.
<PAGE>
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of
the Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to
the benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such
succession had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity
or unenforceability shall not affect the validity or enforceability of the
other provisions hereof. Furthermore, if this Agreement shall be invalidated
in its entirety on any ground, then the Corporation shall nevertheless
indemnify Agent to the fullest extent provided by the Bylaws, the Code or any
other applicable law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed
by both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the
existence of this Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication
was directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with
postage prepaid:
(a) If to Agent, at the address indicated on the signature page hereof.
5.
<PAGE>
(b) If to the Corporation, to
OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303
or to such other address as may have been furnished to Agent by the
Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
OMNICELL TECHNOLOGIES, INC.
By:
---------------------------------
Title:
------------------------------
AGENT
------------------------------------
Address:
------------------------------------
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6.
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EXHIBIT 10.13
OMNICELL TECHNOLOGIES, INC.
1992 INCENTIVE STOCK PLAN,
AS AMENDED THROUGH JUNE 20, 1996
1. Purposes of the Plan. The purposes of this Incentive Stock Plan are to
attract and retain the best available personnel, to provide additional incentive
to the employees of OmniCell Technologies, Inc. (the "Company") and to promote
the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement. The Board also has the discretion to
grant Stock Purchase Rights.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean OmniCell Technologies, Inc., a California
corporation.
(f) "Consultant" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not; provided that if and in the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(g) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant, as applicable. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
<PAGE>
(h) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(i) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422A of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(m) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(n) "Parent" shall mean a "parent corporation whether now or
hereafter existing", as defined in Section 425(e) of the Code.
(o) "Plan" shall mean this 1992 Incentive Stock Plan.
(p) "Purchaser" shall mean an Employee or Consultant who exercises a
Stock Purchase Right.
(q) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "Stock Purchase Right" shall mean a right to purchase Common
Stock pursuant to the Plan or the right to receive a bonus of Common Stock for
past services.
(s) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 425(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares under the Plan is 5,410,000
shares of Common Stock. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Stock Purchase Right should expire or become unexercisable
for any reason without having been exercised in full, then the unpurchased
Shares which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant or sale under the Plan.
Notwithstanding any other provision of the Plan, shares issued under the Plan
and later repurchased by the Company shall not become available for future grant
or sale under the Plan.
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<PAGE>
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board of
Directors of the Company.
(i) Subject to subparagraph (ii), the Board of Directors may
appoint a Committee consisting of not less than two members of the Board of
Directors to administer the Plan on behalf of the Board of Directors, subject to
such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board of Directors. Members of the Board who are either eligible for Options
and/or Stock Purchase Rights or have been granted Options and/or Stock Purchase
Rights may vote on any matters affecting the administration of the Plan or the
grant of any Options and/or Stock Purchase Rights pursuant to the Plan, except
that no such member shall act upon the granting of an Option and/or Stock
Purchase Right to such member, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board during which action is
taken with respect to the granting of Options and/or Stock Purchase Rights to
the member.
(ii) Notwithstanding the foregoing subparagraph (i), if and in
any event the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, from the effective date of such registration
until six months after the termination of such registration, any grants of
Options and/or Stock Purchase Rights to officers or directors shall only be made
by the Board of Directors; provided, however, that if a majority of the Board of
Directors is eligible to participate in this Plan or any other stock option or
other stock plan of the Company or any of its affiliates, or has been eligible
at any time during the prior one-year period (or, if shorter, the period
following the initial registration of the Company's equity securities under
Section 12 of the Exchange Act) any grants of Options and/or Stock Purchase
Rights to directors must be made by, or only in accordance with the
recommendation of, a Committee consisting of three or more persons, who may but
need not be directors or employees of the Company, appointed by the Board of
Directors and having full authority to act in the matter, none of whom is
eligible to participate in this Plan or any other stock option or other stock
plan of the Company or any of its affiliates, or has been eligible at any time
during the prior one-year period (or, if shorter, the period following the
initial registration of the Company's equity securities under Section 12 of the
Exchange Act). Any Committee administering the Plan with respect to grants to
officers who are not also directors shall conform to the requirements of the
preceding sentence. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board of Directors.
(iii) Subject to the foregoing subparagraphs (i) and (ii), from
time to time the Board of Directors may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
3
<PAGE>
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, Nonstatutory Stock Options or Stock Purchase Rights; (ii) to determine,
upon review of relevant information and in accordance with Section 7 of the
Plan, the fair market value of the Common Stock; (iii) to determine the exercise
price per share of Options or Stock Purchase Rights, to be granted, which
exercise price shall be determined in accordance with Section 7 of the Plan;
(iv) to determine the Employees or Consultants to whom, and the time or times at
which, Options or Stock Purchase Rights shall be granted and the number of
shares to be represented by each Option or Stock Purchase Right; (v) to
interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) to determine the terms and provisions of each Option
and Stock Purchase Right granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend any provisions (including
provisions relating to exercise price) of any Option or Stock Purchase Right;
(viii) to accelerate or defer (with the consent of the Optionee) the exercise
date of any Option, consistent with the provisions of Section 5 of the Plan;
(ix) to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option or Stock Purchase Right previously
granted by the Board; and (x) to make all other determinations deemed necessary
or advisable for the administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees,
Purchasers and any other holders of any Options or Stock Purchase Rights granted
under the Plan.
5. Eligibility.
(a) Options and Stock Purchase Rights may be granted to Employees and
Consultants, provided that Incentive Stock Options may only be granted to
Employees. An Employee or Consultant who has been granted an Option or Stock
Purchase Right may, if such Employee or Consultant is otherwise eligible, be
granted additional Option(s) or Stock Purchase Right(s).
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair market
value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the fair market value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.
(d) The Plan shall not confer upon any Optionee or holder of a Stock
Purchase Right any right with respect to continuation of employment by or the
rendition of consulting services to the Company, nor shall it interfere in any
way with his or her right or the Company's right to terminate his or her
employment or services at any time, with or without cause.
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<PAGE>
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by vote of the
holders of a majority of the outstanding shares of the Company entitled to vote
on the adoption of the Plan. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 14 of the Plan.
7. Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option or Stock Purchase Right shall be such price as is
determined by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the fair
market value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the fair market value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option or a Stock
Purchase Right
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the fair market value per Share on the date of
grant.
For purposes of this Section 7(a), in the event that an Option or Stock
Purchase Right is amended to reduce the exercise price, the date of grant of
such Option or Stock Purchase Right shall thereafter be considered to be the
date of such amendment.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices (or the closing price per share if the Common Stock is listed on
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of grant, as reported
in the Wall Street Journal (or, if not so reported, as otherwise reported by the
NASDAQ System) or, in the event the Common Stock is listed on a stock exchange,
the fair market value per Share shall be the closing price on such exchange on
the date of grant of the Option or Stock Purchase Right, as reported in the Wall
Street Journal.
5
<PAGE>
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the method of payment,
shall be determined by the Board and may consist entirely of cash, check,
promissory note, other Shares of Common Stock which (i) either have been owned
by the Optionee for more than six (6) months on the date of surrender or were
not acquired directly or indirectly, from the Company, and (ii) have a fair
market value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, or any combination of
such methods of payment, or such other consideration and method of payment for
the issuance of Shares to the extent permitted under Sections 408 and 409 of the
California General Corporation Law. In making its determination as to the type
of consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 315(b)
of the California General Corporation Law).
8. Options.
(a) Term of Option. The term of each Incentive Stock Option shall be
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Option that
is not an Incentive Stock Option shall be ten (10) years and one (1) day from
the date of grant thereof or such shorter term as may be provided in the Stock
Option Agreement. However, in the case of an Option granted to an Optionee who,
at the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, (i) if the Option is an Incentive Stock Option, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
time as may be provided in the Stock Option Agreement, or (ii) if the Option is
a Nonstatutory Stock Option, the term of the Option shall be five (5) years and
one (1) day from the date of grant thereof or such other term as may be provided
in the Stock Option Agreement.
(b) Exercise of Option.
(i) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 7 of the Plan. Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with
6
<PAGE>
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. In the event that the exercise of an Option is treated
in part as the exercise of an Incentive Stock Option and in part as the exercise
of a Nonstatutory Stock Option pursuant to Section 5(b), the Company shall issue
a separate stock certificate evidencing the Shares treated as acquired upon
exercise of an Incentive Stock Option and a separate stock certificate
evidencing the Shares treated as acquired upon exercise of a Nonstatutory Stock
Option and shall identify each such certificate accordingly in its stock
transfer records. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(ii) Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months in the case of
an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement, exercise the
Option to the extent that such Employee or Consultant was entitled to exercise
it at the date of such termination. To the extent that such Employee or
Consultant was not entitled to exercise the Option at the date of such
termination, or if such Employee or Consultant does not exercise such Option
(which such Employee or Consultant was entitled to exercise) within the time
specified herein, the Option shall terminate.
(iii) Disability of Optionee. Notwithstanding the provisions of
Section 8(b)(ii) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of such Employee's or
Consultant's disability, such Employee or Consultant may, but only within six
(6) months (or such other period of time not exceeding twelve (12) months as is
determined by the Board, with such determination in the case of an Incentive
Stock Option being made at the time of grant of the Option) from the date of
such termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), exercise the Option to the
extent such Employee or Consultant was entitled to exercise it at the date of
such termination. To the extent that such Employee or Consultant was not
entitled to exercise the Option at the date of termination, or if such Employee
or Consultant does not exercise such Option (which such Employee or Consultant
was entitled to exercise) within the time specified herein, the Option shall
terminate.
(iv) Death of Optionee. In the event of the death of an
Optionee:
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<PAGE>
(A) during the term of the Option who is at the time of his
or her death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (but in
no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
six (6) months (or such other period of time as is determined by the Board at
the time of grant of the Option) after the date of death; or
(B) within thirty (30) days (or such other period of time
not exceeding three (3) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
(or such other period of time as is determined by the Board at the time of grant
of the Option) following the date of death (but in no event later than the date
of expiration of the term of such Option as set forth in the Option Agreement),
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination.
9. Stock Purchase Rights.
(a) Rights to Purchase. After the Board of Directors determines that
it will offer an Employee or Consultant a Stock Purchase Right, it shall deliver
to the offeree a stock purchase agreement or stock bonus agreement, as the case
may be, setting forth the terms, conditions and restrictions relating to the
offer, including the number of Shares which such person shall be entitled to
purchase, and the time within which such person must accept such offer, which
shall in no event exceed six (6) months from the date upon which the Board of
Directors or its Committee made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a stock purchase agreement or
stock bonus agreement in the form determined by the Board of Directors.
(b) Issuance of Shares. Forthwith after payment therefor, the Shares
purchased shall be duly issued; provided, however, that the Board may require
that the Purchaser make adequate provision for any Federal and State withholding
obligations of the Company as a condition to the Purchaser purchasing such
Shares.
(c) Repurchase Option. Unless the Board determines otherwise, the
stock purchase agreement or stock bonus agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the Purchaser's employment with the Company for any reason (including death or
disability). If the Board so determines, the purchase price for shares
repurchased may be paid by cancellation of any indebtedness of the Purchaser to
the Company. The repurchase option shall lapse at such rate as the Board may
determine.
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<PAGE>
(d) Other Provisions. The stock purchase agreement or stock bonus
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board of Directors.
10. Non-Transferability of Options and Stock Purchase Rights. The Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee or Purchaser, only by the Optionee or Purchaser.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option and Stock Purchase Right, and
the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Stock Purchase Right, or repurchase of Shares from a Purchaser
upon termination of employment, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock of the Company or
the payment of a stock dividend with respect to the Common Stock or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation.
12. Time of Granting Options. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Board makes the
determination granting such Option or Stock Purchase Right. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
13. Amendment and Termination of the Plan.
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<PAGE>
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 17 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options and Stock Purchase Rights; or
(iii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or amendment,
any material increase in the benefits accruing to participants under the Plan.
(b) Shareholder Approval. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 17 of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted and such Options or Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser (as the case may be)
and the Board, which agreement must be in writing and signed by the Optionee or
Purchaser (as the case may be) and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Rights unless the
exercise of such Option or Stock Purchase Rights and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option or Stock Purchase Rights,
the Company may require the person exercising such Option or Stock Purchase
Rights to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
16. Option, Stock Purchase and Stock Bonus Agreements. Options shall be
evidenced by written option agreements in such form as the Board shall approve.
Upon the exercise of Stock Purchase Rights, the Purchaser shall sign a stock
purchase agreement or stock bonus agreement in such form as the Board shall
approve.
17. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it may be obtained by the
written consent of the holders of a majority of the outstanding shares of the
Company's capital stock entitled to vote.
(b) If and in the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the shareholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan itself
or of any amendment thereto is solicited at any time otherwise than in the
manner described in Section 17(b) hereof, then the Company shall, at or prior to
the first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section 14(a)
of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.
18. Information to Optionees and Purchasers. The Company shall provide to
each Optionee and Purchaser, during the period for which such Optionee or
Purchaser has one or
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more Options or Stock Purchase Rights outstanding, a balance sheet and an income
statement at least annually. The Company shall not be required to provide such
information to key employees whose duties in connection with the Company assure
their access to equivalent information.
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EXHIBIT 10.14
OMNICELL TECHNOLOGIES, INC.
1995 MANAGEMENT STOCK OPTION PLAN
ADOPTED DECEMBER 13, 1995
AS AMENDED THROUGH JUNE 20 ,1996
1. Purposes.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall, in
the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "Company" means OmniCell Technologies, Inc., a California corporation.
(f) "Consultant" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided
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that the term "Consultant" shall not include Directors who are paid only a
director's fee by the Company or who are not compensated by the Company for
their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant" means the
individual's service for the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; or (ii) transfers between locations of the Company or between
the Company, Affiliates or their successors.
(h) "Covered Employee" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to shareholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(i) "Director" means a member of the Board.
(j) "Disinterested Person" means a Director who either (i) was not during
the one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
Affiliate entitling the participants therein to acquire equity securities of the
Company or any Affiliate except as permitted by Rule 16b-3(c)(2)(i); or (ii) is
otherwise considered to be a "disinterested person" in accordance with Rule 16b-
3(c)(2)(i), or any other applicable rules, regulations or interpretations of the
Securities and Exchange Commission.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of the common
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
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(2) If the common stock is quoted on the Nasdaq System (but not on
the National Market thereof) or is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a share of
common stock shall be the mean between the bid and asked prices for the common
stock on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable;
(3) In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(t) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(u) "Plan" means this OmniCell Technologies, Inc. 1995 Management Stock
Option Plan.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
3. Administration.
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(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; whether an Option will be an Incentive Stock Option or a Nonstatutory
Stock Option; the provisions of each Option granted (which need not be
identical), including the time or times such Option may be exercised in whole or
in part; and the number of shares for which an Option shall be granted to each
such person.
(2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan or an Option as provided in Section 11.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons and may also be, in the
discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Additionally,
prior to the date of the first registration of an equity security of the Company
under Section 12 of the Exchange Act, and notwithstanding anything to the
contrary contained herein, the Board may delegate administration of the Plan to
a committee of one or more individuals (in the event that the Company's state of
incorporation becomes the State of Delaware, such individuals shall be members
of the Board) and the term "Committee" shall apply to any person or persons to
whom such authority has been delegated. Notwithstanding anything in this Section
3 to the contrary, at any time the Board or the Committee may delegate to a
committee of one or more individuals (in the event that the Company's state of
incorporation becomes the State of Delaware, such individuals shall be members
of the Board) the authority to grant Options to eligible persons who (1) are not
then subject to Section 16 of the Exchange Act and/or (2) are either (i) not
then Covered Employees and are not expected to be Covered
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Employees at the time of recognition of income resulting from such Option, or
(ii) not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code.
(d) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply (i) prior to the date of the first registration of an
equity security of the Company under Section 12 of the Exchange Act, or (ii) if
the Board or the Committee expressly declares that such requirement shall not
apply. Any Disinterested Person shall otherwise comply with the requirements of
Rule 16b-3.
4. Shares Subject To The Plan.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate Five Million Four Hundred Ten Thousand (5,410,000)
shares of the Company's common stock, reduced by the number of shares of the
Company's common stock which are either issued or then subject to an option
granted under the Company's 1992 Incentive Stock Plan. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the stock not purchased under such Option shall revert
to and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. Eligibility.
(a) Incentive Stock Options may be granted only to Employees. Nonstatutory
Stock Options may be granted only to Employees, Directors or Consultants.
However, no Option shall be granted if the grant of such Option or the issuance
of shares of the Company's common stock is not exempt from the securities
qualification requirements of the California Corporations Code.
(b) A Director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of the Director as a
person to whom Options may be granted, or in the determination of the number of
shares which may be covered by Options granted to the Director: (i) the Board
has delegated its discretionary authority over the Plan to a Committee which
consists solely of Disinterested Persons; or (ii) the Plan otherwise complies
with the requirements of Rule 16b-3. The Board shall otherwise comply with the
requirements of Rule 16b-3. This subsection 5(b) shall not apply (i) prior to
the date of the first registration of an equity security of the Company under
Section 12 of the Exchange Act, or (ii) if the Board or Committee expressly
declares that it shall not apply.
(c) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock
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at the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be determined by the Board.
Notwithstanding the foregoing, the Board or the Committee may grant an Option
with an exercise price lower than that set forth above if such Option is granted
as part of a transaction to which section 424(a) of the Code applies.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option for Incentive Stock Options and at any time prior to exercise of the
Option for Nonstatutory Stock Options, (A) by delivery to the Company of other
common stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to whom
the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) Transferability. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order satisfying the requirements of
Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during
the lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a QDRO. The person to whom the Option is granted
may, by delivering written notice to the Company, in a
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form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) Vesting. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (i) the issuance of
the shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(g) Termination of Employment or Relationship as a Director or Consultant.
In the event an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) the date three (3) months after the
termination of the Optionee's Continuous Status as an Employee, Director or
Consultant, or such longer or shorter period specified in the Option Agreement,
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan. An Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee,
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Director, or Consultant (other than upon the Optionee's death or disability)
would result in liability under Section 16(b) of the Exchange Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the
last date in which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant (other than
upon the Optionee's death or disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Act, then the Option shall terminate on the earlier of (i) the expiration of
the term of the Option set forth in the first paragraph of this section 7, or
(ii) the expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant during which
the exercise of the Option would not be in violation of such registration
requirements.
(h) Disability of Optionee. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) Death of Optionee. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option at the
date of death) by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d), but
only within the period ending on the earlier of (i) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.
(j) Early Exercise. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option.
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Any unvested shares so purchased may be subject to a repurchase right in favor
of the Company or to any other restriction the Board determines to be
appropriate.
(k) Withholding. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
7. Covenants Of The Company.
(a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
8. Use Of Proceeds From Stock.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. Miscellaneous.
(a) The Board shall have the power to accelerate the time at which an
Option may first be exercised or the time during which an Option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in
the Option stating the time at which it may first be exercised or the time
during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant) or
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shall affect the right of the Company or any Affiliate to terminate the
employment of any Employee with or without cause, the right of the Company's
Board of Directors and/or the Company's shareholders to remove any Director
pursuant to the terms of the Company's By-Laws and the provisions of the
California Corporations Code (or the laws of the Company's state of
incorporation if changed from California), or the right to terminate the
relationship of any Consultant pursuant to the terms of such Consultant's
agreement with the Company or Affiliate.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Board or the Committee shall have the authority to effect, at any
time and from time to time (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of the affected holders of Options, the
cancellation of any outstanding Options and the grant in substitution therefor
of new Options under the Plan covering the same or different numbers of shares
of Common Stock, but having an exercise price per share not less than one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of an Incentive Stock Option granted to a ten
percent (10%) shareholder (as defined in subsection 5(c)), not less than one
hundred and ten percent (110%) of the Fair Market Value per share of Common
Stock on the new grant date. Notwithstanding the foregoing, the Board or the
Committee may grant an Option with an exercise price lower than that set forth
above if such Option is granted as part of a transaction to which section 424(a)
of the Code applies.
10. Adjustments Upon Changes In Stock.
(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, reincorporation,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a), and the outstanding Options will be appropriately adjusted in
the class(es) and number of shares and price per share of stock subject to such
outstanding Options. Such adjustments shall be made by the Board or Committee,
the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated as
a "transaction not involving the receipt of consideration by the Company.")
(b) In the event of: (1) a dissolution, liquidation, or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation and the shareholders of the
Company immediately prior to the merger are not beneficial owners of at least a
majority of the voting securities of the surviving corporation (or a parent of
such corporation) immediately following the merger; or (3) a reverse merger in
which
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the Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then to the extent permitted by applicable law: (i) any surviving,
acquiring or successor corporation or an Affiliate of such corporation shall
assume any Options outstanding under the Plan or shall substitute similar
Options for those outstanding under the Plan, or (ii) such Options shall
continue in full force and effect. In the event any surviving, acquiring or
successor corporation and its Affiliates refuse to assume or continue such
Options, or to substitute similar options for those outstanding under the Plan,
then, with respect to Options held by persons then performing services as
Employees, Directors or Consultants, the time during which such Options may be
exercised shall be accelerated and the Options terminated if not exercised prior
to such event.
(c) In the event that any such accelerated option vesting or lapse of the
Company's repurchase rights received or to be received by an Optionee pursuant
to subsection 10(b) (the "Benefit") would (i) constitute a "parachute payment"
within the meaning of Section 280G of the Code and (ii) but for this subsection
10(c), be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then such Benefit shall be reduced to the extent necessary so
that no portion of the Benefit would be subject to the Excise Tax, as determined
in good faith by the Company; provided, however, that if, in the absence of any
such reduction (or after such reduction), the Optionee believes that the Benefit
or any portion thereof (as reduced, if applicable) would be subject to the
Excise Tax, the Benefit shall be reduced (or further reduced) to the extent
determined by the Optionee in the Optionee's discretion so that the Excise Tax
would not apply. If, notwithstanding any such reduction (or in the absence of
such reduction), the Internal Revenue Service ("IRS") determines that the
Optionee is liable for the Excise Tax as a result of the Benefit, then the
Optionee shall be obligated to return to the Company, within thirty (30) days of
such determination by the IRS, a portion of the Benefit sufficient such that
none of the Benefit retained by the Optionee constitutes a "parachute payment"
within the meaning of Section 280G of the Code that is subject to the Excise
Tax.
11. Amendment of the Plan and Options.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under the
Plan;
(2) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or
(3) Modify the Plan in any other way if such modification requires
shareholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.
11
<PAGE>
(b) The Board may in its sole discretion submit any other amendment to the
Plan for shareholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(d) Rights and obligations under any Option granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Options; provided, however, that the rights and obligations
under any Option shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
12. Termination Or Suspension Of The Plan.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on December 12, 2005, which shall be within
ten (10) years from the date the Plan is adopted by the Board or approved by the
shareholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
13. Effective Date Of Plan.
The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the shareholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
12
<PAGE>
OMNICELL.COM
AMENDED AND RESTATED
1997 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS MARCH 18, 1997
APPROVED BY STOCKHOLDERS MARCH 6, 1998
AMENDED BY THE BOARD OF DIRECTORS APRIL __, 2000
AMENDMENT APPROVED BY STOCKHOLDERS ____, 2000
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which Employees of
the Company and certain designated Affiliates may be given an opportunity to
purchase shares of the Common Stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
such Employees, to secure and retain the services of new Employees and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.
(c) The Company intends that the Rights to purchase shares of the
Common Stock granted under the Plan be considered options issued under an
"employee stock purchase plan," as that term is defined in Section 423(b) of the
Code.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subparagraph 3(c) of the Plan.
(e) "COMMON STOCK" means the Common Stock of OmniCell.Com.
(f) "COMPANY" means OmniCell.Com, a California corporation.
(g) "DIRECTOR" means a member of the Board.
(h) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements
set forth in the Offering for eligibility to participate in the Offering.
1.
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(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate of the Company. Neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
"employment" by the Company or the Affiliate.
(j) "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights
intended to be options issued under an "employee stock purchase plan," as that
term is defined in Section 423(b) of the Code.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" means the value of a security, as determined in
good faith by the Board. If the security is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
then, except as otherwise provided in the Offering, the Fair Market Value of the
security shall be the closing sales price (rounded up where necessary to the
nearest whole cent) for such security (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the relevant security of the Company) on the
relevant determination date, as reported in THE WALL STREET JOURNAL or such
other source as the Board deems reliable, or if such date is not a trading day,
then on the next preceding trading day.
(m) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(n) "OFFERING" means the grant of Rights to purchase shares of the
Common Stock under the Plan to Eligible Employees.
(o) "OFFERING DATE" means a date selected by the Board for an Offering
to commence.
(p) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(q) "PARTICIPANT" means an Eligible Employee who holds an outstanding
Right granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Right granted under the Plan.
2.
<PAGE>
(r) "PLAN" means this OmniCell.Com Amended and Restated 1997 Employee
Stock Purchase Plan.
(s) "PURCHASE DATE" means one or more dates established by the Board
during an Offering on which Rights granted under the Plan shall be exercised and
purchases of shares of the Common Stock carried out in accordance with such
Offering.
(t) "RIGHT" means an option to purchase shares of the Common Stock
granted pursuant to the Plan.
(u) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.
(v) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(a) The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subparagraph 3(c).
Whether or not the Board has delegated administration, the Board shall have the
final power to determine all questions of policy and expediency that may arise
in the administration of the Plan.
(b) The Board (or the Committee) shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine when and how Rights to purchase shares of the
Common Stock shall be granted and the provisions of each Offering of such Rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and Rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 14.
(v) To terminate or suspend the Plan as provided in paragraph
(vi) Generally, to exercise such powers and to perform such
acts as it deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an Employee Stock Purchase Plan.
(c) The Board may delegate administration of the Plan to a Committee of
the Board composed of two (2) or more members, all of the members of which
Committee may be, in the
3.
<PAGE>
discretion of the Board, Non-Employee Directors and/or Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee of two (2) or
more Outside Directors any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or such a subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 13 relating to adjustments
upon changes in securities, the shares of the Common Stock that may be sold
pursuant to Rights granted under the Plan shall not exceed in the aggregate
seven hundred fifty thousand (750,000) shares of the Common Stock (the "Reserved
Shares"). As of each January 1, beginning with the annual stockholders' meeting
in 2000, and continuing through and including January 1, 2007, the number of
Reserved Shares will be increased automatically by the lesser of (i) one and a
half percent (1.5%) of the total number of shares of the Common Stock
outstanding on such January 1 or (ii) seven hundred fifty thousand (750,000)
shares. Notwithstanding the foregoing, the Board may designate a smaller number
of shares to be added to the share reserve as of a particular January 1. If any
Right granted under the Plan shall for any reason terminate without having been
exercised, the shares of the Common Stock not purchased under such Right shall
again become available for the Plan.
(b) The shares of the Common Stock subject to the Plan may be unissued
shares of the Common Stock or shares of the Common Stock that have been bought
on the open market at prevailing market prices or otherwise.
5. GRANT OF RIGHTS; OFFERING.
The Board may from time to time grant or provide for the grant of
Rights to purchase shares of the Common Stock under the Plan to Eligible
Employees in an Offering on an Offering Date or Dates selected by the Board.
Each Offering shall be in such form and shall contain such terms and conditions
as the Board shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all Employees granted Rights to purchase
shares of the Common Stock under the Plan shall have the same rights and
privileges. The terms and conditions of an Offering shall be incorporated by
reference into the Plan and treated as part of the Plan. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
document comprising the Offering or otherwise) the period during which the
Offering shall be effective, which period shall not exceed twenty-seven (27)
months beginning with the Offering Date, and the substance of the provisions
contained in paragraphs 6 through 9, inclusive.
6. ELIGIBILITY.
4.
<PAGE>
(a) Rights may be granted only to Employees of the Company or, as the
Board may designate as provided in subparagraph 3(b), to Employees of an
Affiliate. Except as provided in subparagraph 6(b), an Employee shall not be
eligible to be granted Rights under the Plan unless, on the Offering Date, such
Employee has been in the employ of the Company or the Affiliate, as the case may
be, for such continuous period preceding such grant as the Board may require,
but in no event shall the required period of continuous employment be greater
than two (2) years; provided, however, that Employees who are employed by the
Company as of the Effective Date of this Plan, as amended and restated, who
would otherwise be Eligible Employees if not for the required period of
continuous employment with the Company shall be eligible to participate in the
Plan with respect to the first Offering Period beginning with or immediately
following the Effective Date of this Plan, as amended and restated, without
regard to their period of prior continuous employment with the Company provided
that they remain in continuous employment through the end of the first Offering
Period.
(b) The Board may provide that each person who, during the course of an
Offering, first becomes an Eligible Employee will, on a date or dates specified
in the Offering which coincides with the day on which such person becomes an
Eligible Employee or which occurs thereafter, receive a Right under that
Offering, which Right shall thereafter be deemed to be a part of that Offering.
Such Right shall have the same characteristics as any Rights originally granted
under that Offering, as described herein, except that:
(i) the date on which such Right is granted shall be the
"Offering Date" of such Right for all purposes, including determination of the
exercise price of such Right;
(ii) the period of the Offering with respect to such Right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
(iii) the Board may provide that if such person first becomes
an Eligible Employee within a specified period of time before the end of the
Offering, he or she will not receive any Right under that Offering.
(c) No Employee shall be eligible for the grant of any Rights under the
Plan if, immediately after any such Rights are granted, such Employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 6(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such Employee.
(d) An Eligible Employee may be granted Rights under the Plan only if
such Rights, together with any other Rights granted under all Employee Stock
Purchase Plans of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such Eligible Employee's rights to purchase
shares of the Common Stock or any Affiliate to accrue at a rate which exceeds
twenty five thousand dollars ($25,000) of the fair market value of such shares
of the Common Stock (determined at the time such Rights are granted) for each
calendar year in which such Rights are outstanding at any time.
5.
<PAGE>
(e) The Board may provide in an Offering that Employees who are highly
compensated Employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
7. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each Eligible Employee, pursuant to an
Offering made under the Plan, shall be granted the Right to purchase up to the
number of shares of the Common Stock purchasable either:
(i) with a percentage designated by the Board not exceeding
fifteen percent (15%) of such Employee's Earnings (as defined by the Board in
each Offering) during the period which begins on the Offering Date (or such
later date as the Board determines for a particular Offering) and ends on the
date stated in the Offering, which date shall be no later than the end of the
Offering; or
(ii) with a maximum dollar amount designated by the Board
that, as the Board determines for a particular Offering, (1) shall be withheld,
in whole or in part, from such Employee's Earnings (as defined by the Board in
each Offering) during the period which begins on the Offering Date (or such
later date as the Board determines for a particular Offering) and ends on the
date stated in the Offering, which date shall be no later than the end of the
Offering and/or (2) shall be contributed, in whole or in part, by such Employee
during such period.
(b) The Board shall establish one or more Purchase Dates during an
Offering on which Rights granted under the Plan shall be exercised and purchases
of shares of the Common Stock carried out in accordance with such Offering.
(c) In connection with each Offering made under the Plan, the Board may
specify a maximum number of shares of the Common Stock that may be purchased by
any Participant as well as a maximum aggregate number of shares of the Common
Stock that may be purchased by all Participants pursuant to such Offering. In
addition, in connection with each Offering that contains more than one Purchase
Date, the Board may specify a maximum aggregate number of shares of the Common
Stock which may be purchased by all Participants on any given Purchase Date
under the Offering. If the aggregate purchase of shares of the Common Stock upon
exercise of Rights granted under the Offering would exceed any such maximum
aggregate amount, the Board shall make a pro rata allocation of the shares of
the Common Stock available in as nearly a uniform manner as shall be practicable
and as it shall deem to be equitable.
(d) The purchase price of shares of the Common Stock acquired pursuant
to Rights granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the shares of the Common Stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the shares of the Common Stock on the Purchase Date.
6.
<PAGE>
8. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An Eligible Employee may become a Participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board of such Employee's Earnings during the Offering (as
defined in each Offering). The payroll deductions made for each Participant
shall be credited to a bookkeeping account for such Participant under the Plan
and either may be deposited with the general funds of the Company or may be
deposited in a separate account in the name of, and for the benefit of, such
Participant with a financial institution designated by the Company. To the
extent provided in the Offering, a Participant may reduce (including to zero) or
increase such payroll deductions. To the extent provided in the Offering, a
Participant may begin such payroll deductions after the beginning of the
Offering. A Participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the Participant
has not already had the maximum permitted amount withheld during the Offering.
(b) At any time during an Offering, a Participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board in the Offering. Upon such withdrawal
from the Offering by a Participant, the Company shall distribute to such
Participant all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire shares of the Common
Stock for the Participant) under the Offering, without interest unless otherwise
specified in the Offering, and such Participant's interest in that Offering
shall be automatically terminated. A Participant's withdrawal from an Offering
will have no effect upon such Participant's eligibility to participate in any
other Offerings under the Plan but such Participant will be required to deliver
a new participation agreement in order to participate in subsequent Offerings
under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating Employee's employment
with the Company or a designated Affiliate for any reason (subject to any
post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of his
or her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire shares of the Common Stock for the
terminated Employee) under the Offering, without interest unless otherwise
specified in the Offering. If the accumulated payroll deductions have been
deposited with the Company's general funds, then the distribution shall be made
from the general funds of the Company, without interest. If the accumulated
payroll deductions have been deposited in a separate account with a financial
institution as provided in subparagraph 8(a), then the distribution shall be
made from the separate account, without interest unless otherwise specified in
the Offering.
(d) Rights granted under the Plan shall not be transferable by a
Participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 15 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such Rights
are granted.
7.
<PAGE>
9. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each Participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of shares of the Common Stock up to the maximum
number of shares of the Common Stock permitted pursuant to the terms of the Plan
and the applicable Offering, at the purchase price specified in the Offering. No
fractional shares of the Common Stock shall be issued upon the exercise of
Rights granted under the Plan unless specifically provided for in the Offering.
(b) Unless otherwise specifically provided in the Offering, the amount,
if any, of accumulated payroll deductions remaining in any Participant's account
after the purchase of shares of the Common Stock that is equal to the amount
required to purchase one or more whole shares of the Common Stock on the final
Purchase Date of the Offering shall be distributed in full to the Participant at
the end of the Offering, without interest. If the accumulated payroll deductions
have been deposited with the Company's general funds, then the distribution
shall be made from the general funds of the Company, without interest. If the
accumulated payroll deductions have been deposited in a separate account with a
financial institution as provided in subparagraph 8(a), then the distribution
shall be made from the separate account, without interest unless otherwise
specified in the Offering. The amount of accumulated payroll deductions
remaining in any Participant's account that is less than the amount required to
purchase one whole share of Common Stock on the final Purchase Date of the
Offering shall be carried over to the next Offering or shall, if the Participant
requests or does not participate in the next Offering, be refunded.
(c) No Rights granted under the Plan may be exercised to any extent
unless the shares of the Common Stock to be issued upon such exercise under the
Plan (including Rights granted thereunder) are covered by an effective
registration statement pursuant to the Securities Act and the Plan is in
material compliance with all applicable state, foreign and other securities and
other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no Rights granted
under the Plan or any Offering shall be exercised on such Purchase Date, and the
Purchase Date shall be delayed until the Plan is subject to such an effective
registration statement and such compliance, except that the Purchase Date shall
not be delayed more than twelve (12) months and the Purchase Date shall in no
event be more than twenty-seven (27) months from the Offering Date. If, on the
Purchase Date of any Offering hereunder, as delayed to the maximum extent
permissible, the Plan is not registered and in such compliance, no Rights
granted under the Plan or any Offering shall be exercised and all payroll
deductions accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire Shares) shall be distributed to the
Participants, without interest unless otherwise specified in the Offering. If
the accumulated payroll deductions have been deposited with the Company's
general funds, then the distribution shall be made from the general funds of the
Company, without interest. If the accumulated payroll deductions have been
deposited in a separate account with a financial institution as provided in
subparagraph 8(a), then the distribution shall be made from the separate
account, without interest unless otherwise specified in the Offering.
8.
<PAGE>
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Rights granted under the Plan, the Company
shall ensure that the number of shares of the Common Stock required to satisfy
such Rights are available.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of the Common Stock upon
exercise of the Rights granted under the Plan. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of shares of the Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell shares of the Common
Stock upon exercise of such Rights unless and until such authority is obtained.
11. USE OF PROCEEDS FROM SHARES.
Proceeds from the sale of shares of the Common Stock pursuant to Rights
granted under the Plan shall constitute general funds of the Company.
12. RIGHTS AS A STOCKHOLDER.
A Participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, shares of the Common Stock subject to
Rights granted under the Plan unless and until the Participant's shares of the
Common Stock acquired upon exercise of Rights under the Plan are recorded in the
books of the Company.
13. ADJUSTMENTS UPON CHANGES IN SECURITIES.
(a) If any change is made in the shares of the Common Stock subject to
the Plan, or subject to any Right, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares of the Common Stock subject to the Plan
pursuant to subparagraph 4(a), and the outstanding Rights will be appropriately
adjusted in the class(es), number of shares of the Common Stock and purchase
limits of such outstanding Rights. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction that
does not involve the receipt of consideration by the Company.)
(b) In the event of: (i) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation; or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then: (1) any surviving or acquiring corporation may assume Rights
outstanding under the Plan or may substitute similar rights (including a right
to acquire the same
9.
<PAGE>
consideration paid to the Company's stockholders in the transaction described in
this subparagraph 13(b)) for those outstanding under the Plan, or (2) in the
event any surviving or acquiring corporation does not assume such Rights or
substitute similar rights for those outstanding under the Plan, then, as
determined by the Board in its sole discretion, such Rights may continue in full
force and effect or the Participants' accumulated payroll deductions (exclusive
of any accumulated interest which cannot be applied toward the purchase of
shares of the Common Stock under the terms of the Offering) may be used to
purchase shares of the Common Stock immediately prior to the transaction
described above under the ongoing Offering and the Participants' Rights under
the ongoing Offering thereafter terminated.
14. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 13 relating to adjustments upon changes
in securities and except as to minor amendments to benefit the administration of
the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the
Company or any Affiliate, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code, Rule 16b-3
under the Exchange Act and any Nasdaq or other securities exchange listing
requirements. Currently under the Code, stockholder approval within twelve (12)
months before or after the adoption of the amendment is required where the
amendment will:
(i) Increase the number of shares of the Common Stock reserved
for Rights under the Plan;
(ii) Modify the provisions as to eligibility for participation
in the Plan to the extent such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3; or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Employee Stock Purchase Plans
and/or to bring the Plan and/or Rights granted under it into compliance
therewith.
(c) Rights and obligations under any Rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such Rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or Rights granted under the Plan comply with the
requirements of Section 423 of the Code.
10.
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15. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a beneficiary who
is to receive any shares of the Common Stock and/or cash, if any, from the
Participant's account under the Plan in the event of such Participant's death
subsequent to the end of an Offering but prior to delivery to the Participant of
such shares of the Common Stock and cash. In addition, a Participant may file a
written designation of a beneficiary who is to receive any cash from the
Participant's account under the Plan in the event of such Participant's death
during an Offering.
(b) The Participant may change such designation of beneficiary at any
time by written notice. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Company shall deliver such shares of the
Common Stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its sole discretion, may deliver such
shares of the Common Stock and/or cash to the spouse or to any one or more
dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
16. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate at the time that
all of the shares of the Common Stock subject to the Plan's reserve, as
increased and/or adjusted from time to time, have been issued under the terms of
the Plan. No Rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any Rights granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
as expressly provided in the Plan or with the consent of the person to whom such
Rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
Rights granted under the Plan comply with the requirements of Section 423 of the
Code.
17. EFFECTIVE DATE OF PLAN.
The Plan shall become effective simultaneously with the effectiveness
of the Company's registration statement under the Securities Act with respect to
the initial public offering of shares of the Company's Common Stock (the
"Effective Date"), but no Rights granted under the Plan shall be exercised
unless and until the Plan has been approved by the stockholders of the Company
within twelve (12) months before or after the date the Plan, as amended and
restated, is adopted by the Board, which date may be prior to the Effective
Date.
11.
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OMNICELL.COM
1999 EQUITY INCENTIVE PLAN
ADOPTED SEPTEMBER 1, 1999
AMENDED AND RESTATED ____, 2000
TERMINATION DATE: AUGUST 30, 2009
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock. The
Plan also provides for non-discretionary grants of Nonstatutory Stock Options to
Non-Employee Directors of the Company.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means OmniCell.Com, a California corporation.
(g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the
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term "Consultant" shall not include either Directors who are not compensated by
the Company for their services as Directors or Directors who are merely paid a
director's fee by the Company for their services as Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company, to
perform the major duties of that person's position with the Company or an
Affiliate of the Company because of the sickness or injury of the person and
(ii) after the Listing Date, the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable.
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(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(iii) Prior to the Listing Date, the value of the Common Stock
shall be determined in a manner consistent with Section 260.140.50 of Title 10
of the California Code of Regulations.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "IPO DATE" means the effective date of the initial public offering
of the Company's Common Stock.
(q) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
(r) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(s) "NON-EMPLOYEE DIRECTOR OPTION" means a Non-Statutory Stock Option
granted pursuant to Section 7 hereof.
(t) "NON-EMPLOYEE DIRECTOR OPTION AGREEMENT" means a written agreement
between the Company and a Non-Employee Director evidencing the terms and
conditions of a Non-Employee Director Option grant. Each Non-Employee Director
Option Agreement shall be subject to the terms and conditions of the Plan.
(u) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(v) "OFFICER" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
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(w) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(x) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(y) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(z) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(aa) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(bb) "PLAN" means this OmniCell.Com 1999 Equity Incentive Plan.
(cc) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.
(dd) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(ee) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(ff) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(gg) "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
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(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in
Section 13.
(iv) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY
TRADED. At such time as the Common Stock is publicly traded, in the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.
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(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to
review by any person and shall be final, binding and conclusive on all
persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 12 relating
to adjustments upon changes in Common Stock, the Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate five
million (5,000,000) shares of Common Stock, plus an annual increase to be
added each January 1, beginning January 1, 2001, equal to the lesser of
(i) five percent (5%) of the total number of shares of Common Stock
outstanding on such January 1 or (ii) three million (3,000,000) shares of
Common Stock. Notwithstanding the foregoing, the Board may designate a
smaller number of shares of Common Stock to be added to the share reserve as
of a particular January 1. The shares that may be issuable under incentive
stock options shall be limited to the above maximum number of shares reserved
under the Plan.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan. In addition, if any stock award issued under the Company's 1992
Incentive Stock Option Plan and 1995 Management Stock Option Plan shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such stock
award shall revert to and again become available for issuance under this Plan
provided such shares shall not be issuable under an incentive stock option.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.
(d) SHARE RESERVE LIMITATION. Prior to the Listing Date and to the
extent then required by Section 260.140.45 of Title 10 of the California Code of
Regulations, the total number of shares of Common Stock issuable upon exercise
of all outstanding Options and the total number of shares of Common Stock
provided for under any stock bonus or similar plan of the Company shall not
exceed the applicable percentage as calculated in accordance with the conditions
and exclusions of Section 260.140.45 of Title 10 of the California Code of
Regulations, based on the shares of Common Stock of the Company that are
outstanding at the time the calculation is made.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.
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(b) TEN PERCENT SHAREHOLDERS.
(i) A Ten Percent Shareholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock at the
date of grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant.
(ii) Prior to the Listing Date, a Ten Percent Shareholder
shall not be granted a Nonstatutory Stock Option unless the exercise price of
such Option is at least (i) one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the date of grant or (ii) such lower percentage of
the Fair Market Value of the Common Stock at the date of grant as is permitted
by Section 260.140.41 of Title 10 of the California Code of Regulations at the
time of the grant of the Option.
(iii) Prior to the Listing Date, a Ten Percent Shareholder
shall not be granted a restricted stock award unless the purchase price of the
restricted stock is at least (i) one hundred percent (100%) of the Fair Market
Value of the Common Stock at the date of grant or (ii) such lower percentage of
the Fair Market Value of the Common Stock at the date of grant as is permitted
by Section 260.140.41 of Title 10 of the California Code of Regulations at the
time of the grant of the Option.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million two
hundred thousand (1,200,000) shares of Common Stock during any calendar year.
This subsection 5(c) shall not apply prior to the Listing Date and, following
the Listing Date, this subsection 5(c) shall not apply until (i) the earliest
of: (1) the first material modification of the Plan (including any increase in
the number of shares of Common Stock reserved for issuance under the Plan in
accordance with Section 4); (2) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or
(4) the first meeting of shareholders at which Directors are to be elected that
occurs after the close of the third calendar year following the calendar year in
which occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (ii) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.
(d) CONSULTANTS.
(i) Prior to the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, either the
offer or the sale of the Company's securities to such Consultant is not exempt
under Rule 701 of the Securities Act ("Rule 701") because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by Rule 701, unless
the Company determines that such grant need not comply with the requirements of
Rule 701 and will satisfy another exemption under the Securities Act as well as
comply with the securities laws of all other relevant jurisdictions.
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(ii) From and after the Listing Date, a Consultant shall not
be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (E.G., on a Form S-3 Registration Statement) or
(B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such
grant complies with the securities laws of all other relevant jurisdictions.
(iii) Rule 701 and Form S-8 generally are available to
consultants and advisors only if (i) they are natural persons; (ii) they provide
bona fide services to the issuer, its parents, its majority-owned subsidiaries
or majority-owned subsidiaries of the issuer's parent; and (iii) the services
are not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Shareholders, no Option granted prior to the Listing Date shall be
exercisable after the expiration of ten (10) years from the date it was granted,
and no Incentive Stock Option granted on or after the Listing Date shall be
exercisable after the expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise
price of each Nonstatutory Stock Option granted prior to the Listing Date shall
be not less than eighty-five percent (85%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted. The
exercise price of each Nonstatutory Stock Option granted on or after the Listing
Date shall be not less than eighty-five percent (85%) of the Fair Market Value
of the Common Stock subject to the Option on the date the Option is
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granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option granted prior to the Listing Date shall not be transferable except
by will or by the laws of descent and distribution and, to the extent provided
in the Option Agreement, to such further extent as permitted by Section
260.140.41(d) of Title 10 of the California Code of Regulations at the time of
the grant of the Option, and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. A Nonstatutory Stock Option granted on or
after the Listing Date shall be transferable to the extent provided in the
Option Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the
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Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the
foregoing subsection 6(g), to the extent that the following restrictions on
vesting are required by Section 260.140.41(f) of Title 10 of the California Code
of Regulations at the time of the grant of the Option, then:
(i) Options granted prior to the Listing Date to an Employee
who is not an Officer, Director or Consultant shall provide for vesting of the
total number of shares of Common Stock at a rate of at least twenty percent
(20%) per year over five (5) years from the date the Option was granted, subject
to reasonable conditions such as continued employment; and
(ii) Options granted prior to the Listing Date to Officers,
Directors or Consultants may be made fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Company.
(i) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than thirty (30) days for Options
granted prior to the Listing Date unless such termination is for cause), or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate.
(j) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
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(k) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date) or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.
(l) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date) or (2) the expiration of the term of
such Option as set forth in the Option Agreement. If, after death, the Option is
not exercised within the time specified herein, the Option shall terminate.
(m) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Subject to the "Repurchase Limitation" in subsection 11(h), any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate. Provided that the "Repurchase Limitation" in subsection 11(h)
is not violated, the Company will not exercise its repurchase option until at
least six (6) months (or such longer or shorter period of time required to avoid
a charge to earnings for financial accounting purposes) have elapsed following
exercise of the Option unless the Board otherwise specifically provides in the
Option.
(n) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in
subsection 11(h), the Option may, but need not, include a provision whereby the
Company may elect, prior to the Listing Date, to repurchase all or any part of
the vested shares of Common Stock acquired by the Optionholder pursuant to the
exercise of the Option. Provided that the "Repurchase Limitation" in subsection
11(h) is not violated, the Company will not exercise its repurchase option until
at least six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes) have elapsed
following exercise of the Option unless the Board otherwise specifically
provides in the Option.
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(o) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares of Common Stock received
upon the exercise of the Option. Except as expressly provided in this subsection
6(o), such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.
(p) RE-LOAD OPTIONS.
(i) Without in any way limiting the authority of the Board to
make or not to make grants of Options hereunder, the Board shall have the
authority (but not an obligation) to include as part of any Option Agreement a
provision entitling the Optionholder to a further Option (a "Re-Load Option") in
the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Unless otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).
(ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
(iii) Any such Re-Load Option may be an Incentive Stock Option
or a Nonstatutory Stock Option, as the Board may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Re-Load Option as an Incentive Stock Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on the exercisability of Incentive
Stock Options described in subsection 11(d) and in Section 422(d) of the Code.
There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option
shall be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. NON-EMPLOYEE DIRECTOR STOCK OPTIONS.
Without any further action of the Board, each Non-Employee Director
shall be granted Nonstatutory Stock Options as described in subsections 7(a) and
7(b) (collectively, "Non-Employee Director Options"). Each Non-Employee Director
Option shall include the substance of the terms set forth in subsections 7(c)
through 7(k).
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(a) STOCK OPTION GRANTS.
(i) INITIAL GRANTS. After the IPO Date, each person who is
elected or appointed for the first time to be a Non-Employee Director
automatically shall, upon the date of his or her initial election or appointment
to be a Non-Employee Director by the Board or stockholders of the Company, be
granted an Initial Grant to purchase forty thousand (40,000) shares of Common
Stock on the terms and conditions set forth herein; provided, that a
Non-Employee Director who is one the Board on the IPO Date shall be granted his
or her Initial Grant on that date.
(ii) ANNUAL GRANTS. After the IPO Date, each person who is a
Non-Employee Director on the Board shall automatically as of the day following
the date of the annual shareholders' meeting be granted an Annual Grant to
purchase ten thousand (10,000) shares of Common Stock on the terms and
conditions set forth herein.
(b) TERM. Each Non-Employee Director Option shall have a term of ten
(10) years from the date it is granted.
(c) EXERCISE PRICE. The exercise price of each Non-Employee Director
Option shall be one hundred percent (100%) of the Fair Market Value of the stock
subject to the Non-Employee Director Option on the date of grant.
Notwithstanding the foregoing, a Non-Employee Director Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Non-Employee Director Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(d) VESTING.
(i) INITIAL GRANTS. Initial Grants shall vest one-thirty-sixth
(1/36th) for each month of Continuous Service of the Non-Employee Director from
the date of the stock option grant.
(ii) ANNUAL GRANTS. Annual Grants shall vest one-twelfth
(1/12th) for each month of Continuous Service of the Non-Employee Director from
the date of the stock option grant.
(e) CONSIDERATION. The purchase price of stock acquired pursuant to a
Non-Employee Director Option may be paid, to the extent permitted by applicable
statutes and regulations, in any combination of (i) cash or check, (ii) delivery
to the Company of other Common Stock, (ii) deferred payment or (iv) any other
form of legal consideration that may be acceptable to the Board and provided in
the Non-Employee Director Option Agreement; provided, however, that at any time
that the Company is incorporated in Delaware, payment of the Common Stock's "par
value," as defined in the Delaware General Corporation Law, shall not be made by
deferred payment. In the case of any deferred payment arrangement, interest
shall be compounded at least annually and shall be charged at the minimum rate
of interest necessary to
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avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.
(f) TRANSFERABILITY. A Non-Employee Director Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Non-Employee Director only by the
Non-Employee Director. Notwithstanding the foregoing, the Non-Employee Director
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Non-Employee Director, shall thereafter be entitled to exercise the Non-Employee
Director Option.
(g) TERMINATION OF CONTINUOUS SERVICE. In the event a Non-Employee
Director's Continuous Service terminates (other than upon the Non-Employee
Director's death or Disability), the Non-Employee Director may exercise his or
her Non-Employee Director Option (to the extent that the Non-Employee Director
was entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Non-Employee Director's Continuous Service, or (ii) the
expiration of the term of the Non-Employee Director Option as set forth in the
Non-Employee Director Option Agreement. If, after termination, the Non-Employee
Director does not exercise his or her Non-Employee Director Option within the
time specified in the Non-Employee Director Option Agreement, the Non-Employee
Director Option shall terminate.
(h) EXTENSION OF TERMINATION DATE. If the exercise of the Non-Employee
Director Option following the termination of the Non-Employee Director's
Continuous Service (other than upon the Non-Employee Director's death or
Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Non-Employee Director Option shall terminate on the earlier of (i) the
expiration of the term of the Non-Employee Director Option set forth in
subsection 7(c) or (ii) the expiration of a period of three (3) months after the
termination of the Non-Employee Director's Continuous Service during which the
exercise of the Non-Employee Director Option would not violate such registration
requirements.
(i) DISABILITY OF NON-EMPLOYEE DIRECTOR. In the event a Non-Employee
Director's Continuous Service terminates as a result of the Non-Employee
Director's Disability, the Non-Employee Director may exercise his or her
Non-Employee Director Option (to the extent that the Non-Employee Director was
entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the
Non-Employee Director Option as set forth in the Non-Employee Director Option
Agreement. If, after termination, the Non-Employee Director does not exercise
his or her Non-Employee Director Option within the time specified herein, the
Non-Employee Director Option shall terminate.
(j) DEATH OF NON-EMPLOYEE DIRECTOR. In the event (i) a Non-Employee
Director's Continuous Service terminates as a result of the Non-Employee
Director's death or (ii) the Non-Employee Director dies within the three-month
period after the termination of the Non-Employee Director's Continuous Service
for a reason other than death, then the Non-Employee
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Director Option may be exercised (to the extent the Non-Employee Director was
entitled to exercise the Non-Employee Director Option as of the date of death)
by the Non-Employee Director's estate, by a person who acquired the right to
exercise the Non-Employee Director Option by bequest or inheritance or by a
person designated to exercise the Non-Employee Director Option upon the
Non-Employee Director's death, but only within the period ending on the earlier
of (1) the date eighteen (18) months following the date of death or (2) the
expiration of the term of such Non-Employee Director Option as set forth in the
Non-Employee Director Option Agreement. If, after death, the Non-Employee
Director Option is not exercised within the time specified herein, the
Non-Employee Director Option shall terminate.
8. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.
(ii) VESTING. Subject to the "Repurchase Limitation" in
subsection 11(h), shares of Common Stock awarded under the stock bonus agreement
may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject
to the "Repurchase Limitation" in subsection 11(h), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the stock bonus agreement.
(iv) TRANSFERABILITY. For a stock bonus award made before the
Listing Date, rights to acquire shares of Common Stock under the stock bonus
agreement shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. For a stock bonus award made on or after the Listing
Date, rights to acquire shares of Common Stock under the stock bonus agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the stock bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the stock bonus agreement
remains subject to the terms of the stock bonus agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time,
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and the terms and conditions of separate restricted stock purchase agreements
need not be identical, but each restricted stock purchase agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:
(i) PURCHASE PRICE. Subject to the provisions of subsection
5(b) regarding Ten Percent Shareholders, the purchase price under each
restricted stock purchase agreement shall be such amount as the Board shall
determine and designate in such restricted stock purchase agreement. For
restricted stock awards made prior to the Listing Date, the purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.
For restricted stock awards made on or after the Listing Date, the purchase
price shall not be less than eighty-five percent (85%) of the Common Stock's
Fair Market Value on the date such award is made or at the time the purchase is
consummated.
(ii) CONSIDERATION. The purchase price of Common Stock
acquired pursuant to the restricted stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; provided, however, that at any time
that the Company is incorporated in Delaware, then payment of the Common Stock's
"par value," as defined in the Delaware General Corporation Law, shall not be
made by deferred payment.
(iii) VESTING. Subject to the "Repurchase Limitation" in
subsection 11(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject
to the "Repurchase Limitation" in subsection 11(h), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.
(v) TRANSFERABILITY. For a restricted stock award made before
the Listing Date, rights to acquire shares of Common Stock under the restricted
stock purchase agreement shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant. For a restricted stock award made on or
after the Listing Date, rights to acquire shares of Common Stock under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
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9. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
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(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
(g) INFORMATION OBLIGATION. Prior to the Listing Date, to the extent
required by Section 260.140.46 of Title 10 of the California Code of
Regulations, the Company shall deliver financial statements to Participants at
least annually. This subsection 11(g) shall not apply to key Employees whose
duties in connection with the Company assure them access to equivalent
information.
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(h) REPURCHASE LIMITATION. The terms of any repurchase option shall be
specified in the Stock Award and may be either at Fair Market Value at the time
of repurchase or at not less than the original purchase price. To the extent
required by Section 260.140.41 and Section 260.140.42 of Title 10 of the
California Code of Regulations at the time a Stock Award is made, any repurchase
option contained in a Stock Award granted prior to the Listing Date to a person
who is not an Officer, Director or Consultant shall be upon the terms described
below:
(i) FAIR MARKET VALUE. If the repurchase option gives the
Company the right to repurchase the shares of Common Stock upon termination of
employment at not less than the Fair Market Value of the shares of Common Stock
to be purchased on the date of termination of Continuous Service, then (i) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Stock Awards after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock") and (ii) the right terminates when the shares
of Common Stock become publicly traded.
(ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives
the Company the right to repurchase the shares of Common Stock upon termination
of Continuous Service at the original purchase price, then (i) the right to
repurchase at the original purchase price shall lapse at the rate of at least
twenty percent (20%) of the shares of Common Stock per year over five (5) years
from the date the Stock Award is granted (without respect to the date the Stock
Award was exercised or became exercisable) and (ii) the right to repurchase
shall be exercised for cash or cancellation of purchase money indebtedness for
the shares of Common Stock within ninety (90) days of termination of Continuous
Service (or in the case of shares of Common Stock issued upon exercise of
Options after such date of termination, within ninety (90) days after the date
of the exercise) or such longer period as may be agreed to by the Company and
the Participant (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code regarding "qualified small business stock").
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive.
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(The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the Company.)
(b) CHANGE IN CONTROL. In the event of (i) a dissolution, liquidation
or sale of substantially all of the assets of the Company, (ii) a merger or
consolidation in which the Company is not the surviving corporation or (iii) a
reverse merger in which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then, to the extent permitted by applicable law: (i) any
surviving corporation shall assume any Stock Awards outstanding under the Plan
or shall substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 12(c)) for those outstanding under the Plan, or (ii) such Stock
Awards shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Stock Awards, or to substitute
similar stock awards for those outstanding under the Plan, then with respect to
Stock Awards held by Participants whose Continuous Service has not terminated,
the time during which such Stock Awards may be exercised shall be accelerated,
and the Stock Awards terminated if not exercised prior to such event.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 12 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the shareholders of the Company to the extent shareholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) SHAREHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for shareholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under
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any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the shareholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the shareholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
16. CHOICE OF LAW.
The law of the State of California shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state's conflict of laws rules.
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EXHIBIT 10.17
PROGRAM AGREEMENT
THIS PROGRAM AGREEMENT ("Agreement") is dated as of ___________, 1999 by and
between GENERAL ELECTRIC COMPANY, acting through GE HEALTHCARE FINANCIAL
SERVICES ("GE"), a New York corporation, with an address at Suite 300, 20225
Watertower Boulevard., Brookfield, WI 53045, and OMNICELL TECHNOLOGIES, INC.
("OMNICELL"), a California corporation, with its principal place of business and
address at 1101 East Meadow Drive, Palo Alto, CA 94303, together with their
respective permitted successors and assigns.
OMNICELL and GE are entering into this Agreement with the principal objective of
providing a customer financing capability to support (i) the leasing of
equipment ("Equipment"), and (ii) the licensing of software products related to
the Equipment ("Software"), in each case manufactured or distributed by OMNICELL
in the United States (the "Program"). The Equipment and the license of Software
(if any) are hereinafter referred to as a "System".
NOW THEREFORE, in consideration of the above premises and of the
representations, warranties and agreements contained herein, the parties hereby
agree as follows:
1. DEFINITIONS.
a. "Agreement" means this Program Agreement and any riders, addenda,
exhibits and written amendments hereto.
b. "Application" means an application (including credit and financial
information concerning the Customer) and related documents required by
GE in accordance with this Agreement to initiate its consideration of
a proposed Transaction.
c. "Customer" means a customer of OMNICELL who is an obligor under a
Transaction or a guarantor of such Customer (other than OMNICELL).
d. "Default by GE" means a material breach by GE of any term or condition
of this Agreement or material breach of any agreement by which GE is
bound in connection with a Transaction.
e. "Default by OMNICELL" means (i) a material breach by OMNICELL of any
term or condition of this Agreement; or (ii) a material default of any
agreement by which OMNICELL is bound in connection with a Transaction
which leads to a Customer's failure to pay GE, and such failure to pay
has a reasonable opportunity of being adjudicated as a justifiable
non-payment because of OMNICELL's breach, or (iii) a material default
under any guaranty by OMNICELL hereunder.
f. "Event of Cancellation" means (i) a Material Adverse Change of
OMNICELL since the date of this Agreement or of a Customer since the
date of the related Application, or (ii) the occurrence of an event
which causes a representation made by OMNICELL or a Customer in
connection with a Transaction to be false in any material respect when
made, or (iii) a Default by OMNICELL, or (iv) notification by such
Customer to OMNICELL or to GE of its intent to cancel all or any part
of such Transaction or to refuse to accept any part of the related
System.
g. "Final Document Package" means such properly completed and duly
executed lease documentation, including a copy of the Master Rental
Agreement, a copy of the Master Service Agreement, Supplement(s) to
Rental Agreement, Supplement(s) to Service Agreement, UCCs, a purchase
order from Customer or a mutually agreeable Customer billing reference
number, a Certificate of Acceptance from the Customer, a Bill of Sale
(as shown on Exhibit "F") and a Master Assignment Letter (as shown on
Exhibit "D") as GE shall require in accordance with its standard
procedures in order to finalize a Transaction and to pay the Purchase
Price of the System to OMNICELL.
h. "Lease" means a Master Rental Agreement, Schedule(s), and if
applicable, a Master Service Agreement between OMNICELL and a
Customer, which have subsequently been assigned to GE, for a specified
term during which GE shall be the owner of the relevant Equipment (not
the Software) and the Customer shall be allowed the use of such
Equipment and related Software.
i. "Material Adverse Change" means (i) a change with respect to OMNICELL
or GE from the date of this Agreement that is materially adverse to
(a) the financial condition of OMNICELL or (b) the financial condition
of GE, or (ii) as to OMNICELL or GE, its insolvency, inability to pay
debts as they mature, failure to operate as a going concern, filing by
it under Title 11 of the United States
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Code or any successor or similar federal or state statute, assignment
for the benefit of creditors, appointment of a receiver, dissolution.
j. "Net Book Value" means the total of the following amounts due or to
become due under a Transaction: (i) all accrued and unpaid sums due
under the Transaction as of the date of default thereunder; plus (ii)
the remaining payments due during the remainder of the term of the
Transaction, with each such payment discounted to its present value
from the due date thereof to the date of the default under such
Transaction at the applicable Standard Rate; plus (iii) all accrued or
unpaid property taxes due under the Transaction.
k. "Purchase Price" means the amount funded by GE to OMNICELL based on
the discounted rental payments of the Lease and, if applicable, the
Service Agreement.
l. "Remarketing Period" means a period of ninety (90) days (or such other
period as the parties may agree upon in writing for a specific System)
which shall commence upon the date that GE approves the applicable
Out-Of-Pocket Costs (as defined herein) estimated by OMNICELL with
respect to such System.
m. "Remarketing Proceeds" means the proceeds of the remarketing of a
System, minus any applicable sales taxes.
n. "Standard Rates" means the lease discount rate applicable to
Transactions as further described in Section 8.
o. "Termination Event" means a Default by GE or a Default by OMNICELL or
a Material Adverse Change of GE or OMNICELL.
p. "Transaction" means the lease of a System by GE in the form of a Lease
or other product offered under the Program.
q. "Transaction Default Amount" means: (i) the Net Book Value of the
defaulted Transaction; plus (ii) all reasonable out-of-pocket expenses
(including actual attorneys' fees, if any) incurred by GE with respect
to such Transaction prior to GE's receipt of the Transaction Default
Amount.
2. ORIGINATING TRANSACTIONS. OMNICELL agrees that during the term of this
Agreement, OMNICELL will offer to its Customers GE as OMNICELL's financing
partner; provided that nothing contained herein shall require OMNICELL to offer
financing options through GE to any prospective customer who has requested that
another company finance its acquisition of a System or who has not requested
financing or impair OMNICELL's ability to seek third party financing for any
prospective customer whose Application has been declined by GE or for which GE
requires credit support from OMNICELL nor will it require OMNICELL to propose GE
as a funding source in Transactions where the Customer is not a hospital. GE
will be given first right of refusal on all new Transactions where the Customer
is a hospital and has a Customer Credit Rating Category of "A". In cases where
the hospital is adding to an existing Lease, OMNICELL reserves the right to
place that Schedule with the original financing company.
3. DOCUMENTATION. OMNICELL will provide its sales representatives with
OMNICELL's leasing or financing documentation, in a standard form approved to by
GE, prepared by OMNICELL, suitable for the markets he or she serves. The
approved documentation for the Master Rental Agreement and Master Service
Agreement are attached to this Agreement as Exhibit "C". Notwithstanding the
foregoing, OMNICELL may use other forms for Premier, UHC and GPO and may amend
any approved documentation, with GE's consent. OMNICELL will prepare Uniform
Commercial Code Financing Statements for each Transaction and ensure they are
signed and filed with the proper authorities in a manner which ensures that GE
obtains a perfected security interest. OMNICELL will also be responsible for
completing the Uniform Commercial Code Financing Statement assigning the
financing statements naming OMNICELL as secured party to GE upon receipt of the
Purchase Price from GE. OMNICELL shall be responsible for any loss to GE arising
from Uniform Commercial Code Financing Statements which are not filed in
accordance herewith.
4. REVIEW. OMNICELL will, prior to document preparation, provide the
name, address and Taxpayer Identification Number of the prospective Customer to
GE. GE will attempt to complete its review based upon publicly available
information. If insufficient information is publicly available, in the
reasonable determination of GE, then GE may request that OMNICELL obtain
additional reasonable credit information directly from the Customer and will
notify OMNICELL within two (2) business days of its receipt of the name, address
and Taxpayer ID number of the prospective Customer if such additional
information is needed. To the extent they may legally do so, OMNICELL
representatives will assist in providing any credit information regarding a
prospective
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Customer which is reasonably requested by GE. Upon receipt thereof, GE will
review and either approve or reject the Customer, at GE's sole discretion, and
will notify OMNICELL of its determination and of the customer credit rating
category (as shown on Exhibit "E"), if applicable, to which it has assigned the
prospective Customer. It is anticipated that seventy-five percent (75%) of
Customer Credit Rating Category, as a proportion of total dollar volume, will be
classified as "A" or "B". Should the actual percentage fall below this
percentage, then the Relationship Managers will meet to discuss changes to this
Agreement they deem necessary to achieve this target. GE will complete its
review (i) within three (3) business days after receipt of all information
required to complete such review where the Transaction size is under $250,000;
within five (5) business days in the case of any Transaction where the
Transaction size is between $250,000 and $2,000,000 and within ten (10) business
days in the case of any Transaction where the Transaction size is over
$2,000,000 and (ii) as soon as practicable and in no event later than ten (10)
business days after receipt of all information required to complete such review
in the case of any Transaction where the prospective Customer is a nonhospital
healthcare provider. If GE fails to meet these time frames on a Transaction,
then OMNICELL may take that specific Transaction to another financing source. GE
may suggest alternative financing structures which enable it to approve an
Application. If GE determines that it cannot approve an Application without
credit support from OMNICELL, GE shall notify OMNICELL of such determination and
OMNICELL may, in its sole discretion, elect to provide GE with such credit
support. If OMNICELL elects to provide GE with such credit support, OMNICELL
will, prior to GE's financing of the applicable Transaction, execute a recourse
letter in the form of Exhibit "A" hereto or such other form as OMNICELL and GE
agree to from time to time. OMNICELL will advise the Customer of the approval or
rejection of the proposed Transaction, and will deliver to GE the Final Document
Package for each approved Transaction. GE will provide any notice required to be
sent to a prospective Customer under the Equal Credit Opportunity Act and/or
Regulation "B" or other applicable statute or regulation in the event of a
rejected Application.
5. CONDITIONS OF APPROVAL. All approvals given by GE shall be valid up to
ninety (90) days from the date such approval is given to OMNICELL. GE may revoke
its agreement to enter into a Transaction or to purchase the related Equipment
and finance the license of the related Software, and may transfer to OMNICELL
any right, title or interest which it acquired in such Transaction or System if
(a) GE does not receive the Final Document Package within ninety (90) days after
the date GE notifies OMNICELL of its approval of such Transaction; or (b) prior
to GE's receipt of the Final Document Package or payment of the Purchase Price,
GE determines, in its good faith judgment, that an Event of Cancellation has
occurred. Upon receipt by OMNICELL of a written revocation of its agreement to
enter into a Transaction or to purchase the related Equipment and finance the
license of the related Software, GE shall have no further liability to the
Customer or to OMNICELL in connection with such Transaction.
6. FUNDING. Provided that GE has not revoked its approval of a
Transaction pursuant to Section 5, GE will pay OMNICELL the Purchase Price of
the System, together with any amounts to be financed by GE related to the Master
Service Agreement, within five (5) business days (or such other period as the
parties mutually agree in writing) following GE's receipt of the Final Document
Package.
7. EQUIPMENT TITLES AND WARRANTIES. (a) OMNICELL hereby (i) consents to
the assignment to GE of and all warranty rights in connection with, the
Equipment related to such Transaction, (ii) agrees that, upon the acceptance of
the related System by the applicable Customer on behalf of GE, it will deliver
to GE documentation showing that title to such Equipment has passed to GE and
the related Software has been licensed to such Customer, in the case of
Equipment, free and clear of all liens, claims and encumbrances, and (iii)
agrees that GE will not be liable for any obligations of such Customer except
the obligation to pay the Purchase Price of such System upon such Customer's
acceptance. (b) OMNICELL will bear all risk of loss to the System until the date
of its acceptance by the Customer. (c) In the event any Customer returns or
fails to accept any part of the System for any reason whatsoever, GE may assign
its rights to OMNICELL and thereafter will have no further liability to OMNICELL
or to such Customer.
8. STANDARD RATES. The Purchase Price of each System will equal all
amounts owed by Customer under a Lease discounted to the present value using the
Standard Rate. The Standard Rate equals the sum of the rate shown on Exhibit B
and the Three Year Treasuries rate as of the date of funding. The Standard Rate
will be fixed based on Three Year Treasuries rate on the day of funding.
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9. SERVICE CONTRACTS. (a) OMNICELL will offer service contracts to
prospective Customers which provide for Systems service and maintenance and
updated versions of existing Software capabilities ("Service Agreements"). In
the event that a prospective Customer agrees to enter into a Service Agreement,
in conjunction with a Transaction, which OMNICELL would like GE to finance or
bill and collect on OMNICELL's behalf, then OMNICELL shall notify GE of such
event and shall provide GE with a copy of the applicable Service Agreement.
Following consultation with OMNICELL, and provided OMNICELL has requested that
GE do the following, and in any event within five (5) business days, GE shall,
at its option, elect to: (i) bill and collect the Service Agreement on behalf of
OMNICELL at no charge to OMNICELL or (ii) fund OMNICELL an amount equal to
payments due under the Service Agreement over its initial term discounted from
the due date thereof to the date of payment at the Standard Rate. (b) If GE
elects to bill and collect the Service Agreement on behalf of OMNICELL, then GE
shall provide its customary billing and collections services in connection with
such Service Agreement and shall remit to OMNICELL all payments actually
collected by GE with respect to such Service Agreement on or before the tenth
day of each month following the month the money is collected. In the event that
any customer makes a single payment to GE for amounts owed under the Transaction
and amounts owed under the Service Agreement, then GE shall deduct from the
single payment the amounts it is owed under the Transaction and remit the
remaining amount to OMNICELL. GE shall have no liability or responsibility to
OMNICELL for any default by the applicable Customer under the applicable Service
Agreement or for any monies related to Service Agreements which are not actually
received by GE. (c) If GE elects to fund OMNICELL the net present value of the
payments due under the Service Agreement, then OMNICELL shall provide a contract
to the applicable Customer in which such Customer shall be required to make a
monthly payment for the System and a monthly payment for the Service Agreement.
If GE finances a Service Agreement, any payment default on the Customer's part,
whether it relates to the monthly payment for the System or the monthly payment
for the Service Agreement shall entitle GE to exercise the remedies available to
it in Section 16 hereof.
10. SYSTEM UPGRADES AND EARLY TERMINATIONS. Notwithstanding anything to
the contrary, OMNICELL reserves the right to enter into additional Supplements
with a Customer for whom GE has purchased other Supplements. (a) If any Customer
notifies GE that it wishes to have GE finance the replacement of Equipment
originally subject to a Transaction (the "Original Equipment") with new
Equipment (the "Upgrade Equipment"), or the original Software ("Original
Software") with Software which offers new capabilities (as opposed to an updated
version of existing capabilities) (the "New Software"), GE will notify OMNICELL
of the Customer's request. Following such notification, unless an Event of
Cancellation has occurred and subject to credit approval, at GE's sole
discretion, GE will finance the acquisition by such Customer of Upgrade
Equipment and New Software (if applicable) which will replace, in whole or in
part, the Original Equipment and Original Software (if applicable). (b) If the
Original Equipment and Original Software (if applicable) will no longer be used
by Customer, OMNICELL will pay GE the Net Book Value of the original Transaction
upon such Customer's acceptance of the Upgrade Equipment and New Software and GE
will pass title to the Original Equipment to OMNICELL (if applicable) and
reassign any financing statements related thereto. Thereafter, OMNICELL will
arrange with such Customer for the Original Equipment to be delivered to
OMNICELL. Upon satisfaction of the conditions set forth in Section 5 hereof, GE
will pay to OMNICELL the Purchase Price of the Upgrade Equipment and New
Software (if applicable) and will enter into a new Transaction with the
applicable Customer. GE will charge the Customer a one percent (1%) fee if the
upgrade occurs during the first twelve months of the contract. (c) If the
Upgrade Equipment and New Software (if applicable) replaces only in part the
Equipment and Software originally subject to the Transaction, that portion of
the Net Book Value of the original Transaction pertaining to Equipment and
Software which has not been replaced will be added to the Purchase Price of the
Upgrade Equipment and New Software (if applicable) to determine the payments due
during the remainder of the term of the new Transaction. OMNICELL shall have no
payment obligation to GE. (d) If any Customer notifies GE that it wishes GE to
finance its acquisition of Upgrade Equipment and New Software, GE will notify
OMNICELL of the Customer's request. If GE declines to finance the Customer's
acquisition of such Upgrade Equipment and New Software, GE will permit the
Customer to terminate the applicable Transaction without penalty upon the
payment to GE of an amount equal to the Net Book Value of the applicable
Transaction. (e) If any Customer notifies GE that it wishes to terminate any
Transaction prior to its scheduled expiration date for any reason other than an
upgrade, GE will notify OMNICELL of the Customer's request. Following such
notification, GE will permit the Customer to terminate the applicable
Transaction upon (i) the expiration of a thirty (30) day notice period and (ii)
the payment to GE of an amount equal to the Net Book Value of the applicable
Transaction, plus a fee for early termination of 5% of the amount funded if such
termination occurs in the first year, 4% of the amount funded if such
termination occurs in the second year, 3% of the amount funded if such
termination occurs in the third year, 2% of the amount funded if such
termination
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occurs in the fourth year and 1% of the amount funded if such termination occurs
in the fifth year. Upon early termination, OMNICELL may purchase the related
Equipment back from GE for one dollar ($1.00) free and clear of all liens
attributable to GE.
11. RELATIONSHIP MANAGERS. GE and OMNICELL will each appoint a
relationship manager ("Relationship Manager") to supervise the Program and to
serve as the primary management contact between GE and OMNICELL under the
Program. The Relationship Managers will be charged with managing the
relationship between OMNICELL and GE, and ensuring compliance with the terms of
this Agreement.
12. GENERAL ADMINISTRATIVE SERVICES. (a) The Program shall be administered
by GE under the name of GE Healthcare Financial Services. GE will provide
general administrative and operations services in connection with the Program,
including but not limited to, credit investigation, billing and collections and
customer service. GE will (i) maintain and operate systems which track the
status of each Application and Transaction, (ii) invoice Customers, collect
payments, process and apply funds, (iii) collect and pay all applicable
property, sales, use or similar taxes pertaining to the System and prepare and
file tax returns in connection therewith, and (b) GE personnel will be available
to answer Customer and OMNICELL inquiries relating to the Program or
Transactions on business days (via a toll free telephone line) between the hours
of 8:00 a.m. and 5:00 p.m., Central Time in the United States. Customer
inquiries received when no personnel are available will be recorded
electronically and promptly responded to. GE will conduct its communications
with Customers in a courteous, prompt and efficient manner. GE will endeavor to
resolve all Customer complaints relating to Transactions within two business
days of receipt and, failing that, will keep the affected Customer informed of
the progress toward resolution on a regular basis; provided, however, that
nothing in this Section 12 shall be deemed to require GE to resolve or endeavor
to resolve any Customer complaints relating to the System, or the maintenance or
servicing thereof, which shall remain the sole responsibility of OMNICELL. GE
shall use its best efforts to immediately notify OMNICELL in writing of all
Customer complaints relating to service, maintenance or the performance of the
System. OMNICELL will take such actions it deems reasonable and appropriate in
resolving such complaints, (c) OMNICELL hereby irrevocably appoints GE its
attorney-in-fact to endorse or sign OMNICELL's name on any and all checks
received, with regard to the Transactions and the related Systems.
13. REPORTING. GE will provide OMNICELL with periodic reports, in form and
substance reasonably acceptable to OMNICELL, on (i) delinquencies under the
Program; (ii) Application activity (including approvals, cancellations and
rejections), (iii) volume of leasing activity under the Program, and (iv) other
information reasonably requested by OMNICELL and able to be provided by GE.
14. REPRESENTATIONS AND WARRANTIES OF OMNICELL. OMNICELL hereby
represents, warrants and covenants to GE, its permitted successors and assigns,
as of the date hereof, of the Application and on each date that a Transaction is
purchased by GE, that: (a) OMNICELL is a duly organized and validly existing
corporation in its state of incorporation and has full power to enter into this
Agreement and to carry out the transactions contemplated hereby. (b) The
execution and delivery of this Agreement and the performance by OMNICELL of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action. (c) This Agreement constitutes a legal, valid and binding
obligation of OMNICELL enforceable in accordance with its terms. (d) Neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will constitute (i) a violation or default of any material
statute, rule, or decree of any court, administrative agency or governmental
body to which OMNICELL is subject, or (ii) a material default with respect to
any material indenture, loan agreement or other agreement to which OMNICELL is
bound. (e) All documents relating to a Transaction to which OMNICELL is a party
or by which it is bound will be genuine, legal, valid, and binding obligations
of OMNICELL. (f) In all documents where OMNICELL is responsible for obtaining
the Customer's signature, the signature of the named Customer is, to the best of
OMNICELL's knowledge, genuine, and the individual signing on behalf of the
Customer holds the office set forth below his signature. (g) OMNICELL will honor
any agreements made or warranties given by OMNICELL or its agents to any
Customer in connection with any Transaction, provided they are in writing and
duly executed. (h) OMNICELL has not received and kept any rent or other monies
from any Customer in respect of any Transaction (other than any required down
payments) which is owed to GE and OMNICELL will immediately remit any funds owed
to GE which it may receive. (i) GE will have good title to the Equipment free
and clear of all liens, claims, and encumbrances on the date it is accepted by a
Customer on behalf of GE. (j) Neither OMNICELL nor its agents have participated
in or have any knowledge of any fraudulent act in connection with any
Transaction or any Customer. (k) The System will be delivered to and
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accepted by the named Customer, properly installed and will be in good working
order, condition and repair, conforming to specifications, reasonable wear and
tear excepted, on the date title to said specific Equipment is transferred to
GE. OMNICELL will license, service and maintain the System in compliance with
any contracts it may have with the Customer. (l) All credit or other
information, reasonably relevant to a credit decision concerning the Customer,
known to OMNICELL and which can be lawfully provided by OMNICELL to GE will be
disclosed to GE. (m) All sales, use, or property taxes applicable to the System
assessed or imposed prior to the time GE pays the applicable Purchase Price,
will have been paid or will be timely remitted by OMNICELL to the appropriate
taxing authority and OMNICELL will on request provide GE with proof of such
payment as promptly as possible. (n) As of the date hereof, there are no suits
or proceedings pending or, to the knowledge of OMNICELL, threatened in any court
or before any regulatory commission, or other administrative or governmental
agency against or affecting OMNICELL which is reasonably likely to materially
impair OMNICELL's ability to perform its obligations hereunder or in connection
with any Transaction. (o) The financial statements of OMNICELL delivered to GE
from time to time fairly present the financial position of OMNICELL as of the
dates thereof and the results of operations of OMNICELL for the periods covered
thereby, all in conformity with generally accepted accounting principles applied
on a consistent basis, and since the date of the latest such financial
statements, there has been no Material Adverse Change of OMNICELL. (p) OMNICELL
will notify GE immediately upon becoming aware of a Material Adverse Change of
OMNICELL and will deliver to GE within one hundred twenty (120) days of the
close of each fiscal year, its audited financial statements or annual report,
and, within ninety (90) days of the close of the second fiscal quarter, its six
month unaudited interim financial report, certified by its chief financial
officer. (q) OMNICELL has evaluated the System which is subject to any
Transaction and has determined that such System will be Year 2000 Compliant.
"Year 2000 Compliant" means that the functionality and the performance of the
System will not be materially adversely affected as a result of the date change
from the calendar year 1999 to the calendar year 2000, including leap year
calculations, and that, to the extent applicable to the System's normal
operating specifications, the System will accurately accept, store, retrieve,
calculate, compare and otherwise process dates before and after January 1, 2000
in all material respects. (r) OMNICELL has a plan and organization in place to
minimize any materially adverse effects on its business operations caused by the
failure of any system or equipment which is material to OMNICELL's operations to
be Year 2000 Compliant. OMNICELL is conscientiously implementing such plan.
OMNICELL will, upon request from GE, provide GE with periodic updates on its
implementation of such plan. (s) OMNICELL will provide written notice of a
material change in a material portion of its stock or asset ownership.
15. REPRESENTATIONS AND WARRANTIES OF GE. GE hereby represents, warrants
and covenants to OMNICELL, its permitted successors and assigns, as of the date
hereof and throughout the term of any Transaction, that: (a) GE is a duly
organized and validly existing corporation and has full power to enter into this
Agreement and to carry out the transactions contemplated hereby. (b) The
execution and delivery of this Agreement and the performance by GE of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action. (c) This Agreement constitutes a legal, valid and binding
obligation of GE enforceable in accordance with its terms. (d) Neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will constitute (i) a violation or default of any statute,
rule, or decree of any court, administrative agency or governmental body to
which GE is or may be subject, or (ii) a material default with respect to any
indenture, loan agreement or other agreement to which GE is bound. (e) GE will
honor any agreements made or express warranties given by GE or its agents to any
Customer in connection with any Transaction. (f) There are no suits or
proceedings pending or, to the knowledge of GE, threatened in any court or
before any regulatory commission, or other administrative or governmental agency
against or affecting GE which could materially impair GE's ability to perform
its obligations hereunder or in connection with any Transaction.
16. REMARKETING ASSISTANCE. (a) Upon the occurrence of a failure of a
Customer to pay GE any amounts owed GE within sixty (60) days after the
applicable due date, provided that GE has made the applicable Equipment legally
available, OMNICELL will obtain physical possession of the System and pay all
costs related to taking possession, including but not limited to deinstallation
and transportation. OMNICELL will then have a first right of refusal to purchase
the Equipment at GE's Net Book Value. Should OMNICELL choose not to purchase the
Equipment, OMNICELL will promptly provide GE with a written estimate of its
costs of repair, refurbishment, insurance and remarketing ("Out-Of-Pocket
Costs"). If GE approves such Out-Of-Pocket Costs, OMNICELL will repair and
refurbish the System, including replacing the existing Software configuration
with its most recent available Software upgrades (if necessary), and attempt to
remarket the System to a third party on a ninety (90) day basis during the
Remarketing Period. During said time, OMNICELL agrees that if it sells
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refurbished Equipment, it will sell the GE Equipment first. If the Equipment has
not been remarketed by OMNICELL within the ninety (90) day period, GE and
OMNICELL may agree to continue to have OMNICELL remarket the equipment for
additional period(s) or GE shall be able to remarket the equipment itself. GE
will not be obligated to pay actual Out-Of-Pocket Costs which exceed the
estimated Out-Of-Pocket Costs by more than five percent (5%). If GE does not
approve such Out-Of-Pocket Costs, OMNICELL will promptly cause the System to be
crated and safety delivered to a location selected by GE.
(b) In performing its remarketing responsibilities hereunder: (i) OMNICELL
will not discriminate between the System and equipment and software owned by
another party to whom OMNICELL may be bound to provide remarketing assistance;
(ii) OMNICELL will refurbish and upgrade the System and make available
maintenance service to any subsequent purchaser or lessee of the Equipment and
licensee of the Software at OMNICELL's then current market rates; (iii) OMNICELL
will grant a valid license to the Software to any subsequent purchaser or lessee
of the Equipment upon such purchaser's or lessee's acceptance of OMNICELL's
standard software license agreement; (iv) OMNICELL will not permit any lien or
encumbrance to attach to the System, and will waive any right or claim to the
Equipment which may arise in connection with its remarketing services; (v)
OMNICELL will warrant that the System that is delivered to customers will be in
good working order, condition and repair, conforming to specifications according
to OMNICELL's current warranty policy for used equipment and will meet all
applicable governmental standards; and (vi) OMNICELL will not agree to any sales
price or lease terms without GE's prior approval.
(c) If OMNICELL GE or any other party is able to remarket the System to a
third party, the Remarketing Proceeds will be distributed in the following
manner: (i) first, to OMNICELL, an amount equal to its approved Out-Of-Pocket
Costs of refurbishment and remarketing; (ii) second, to GE, an amount equal to
the applicable Transaction Default Amount; (iii) third, to GE and OMNICELL, any
excess Remarketing Proceeds in equal amounts.
17. END-OF-TERM. Upon a Transaction reaching its end-of-term, provided all
payments, late charges and property taxes have been paid, OMNICELL shall have
the option to purchase the Equipment from GE on an "as-is where-is" basis for
One Dollar ($1.00). GE makes no representations or warranties as to the
condition of the Equipment, other than the Equipment will be free of all liens
and encumbrances attributable to GE.
18. INDEMNIFICATION. (a) OMNICELL shall indemnify and hold harmless GE,
its officers, directors, employees and agents, from any losses, claims,
liabilities, demands and expenses, including reasonable attorneys' fees and
additional tax liabilities arising out of actions against GE by any party other
than a Customer resulting from (i) any breach by OMNICELL of its
representations, warranties or obligations hereunder, or (ii) any act, failure
to act, omission, representation or misrepresentation by OMNICELL, its employees
or agents in connection with any Transaction or with the sale, use, operation,
ownership, licensing, servicing or maintenance of the System, including any
strict liability therefore, or (iii) the failure of the System to meet all
federal and state standards applicable to the existence and operation of the
System, or (iv) the expiration or earlier termination of any patent or copyright
pertaining to any item of the System. (b) GE shall indemnify and hold harmless
OMNICELL, its officers, directors, employees and agents, from any losses,
claims, liabilities, demands and expenses, including without limitation
reasonable attorneys' fees and additional tax liabilities resulting from the
receipt by OMNICELL of indemnities pursuant hereto, arising out of (i) any
breach by GE of its representations, warranties or obligations hereunder or (ii)
any act, failure to act, omission, representation or misrepresentation by GE,
its employees or agents in connection with any Transaction. (c) The indemnified
party shall not be required as a condition to receipt of payments hereunder to
contest or to permit the indemnifying party to participate in any contest in
connection with the foregoing or to attempt to recover from any Customer through
legal proceedings or otherwise. (d) All indemnities and obligations under this
Section 18 shall survive the expiration or termination of this Agreement and the
expiration or termination of any Transaction, but shall not apply in the case of
the indemnified party's negligence, gross negligence or intentional misconduct.
(e) In no event shall OMNICELL or GE indemnify the other party against liability
for indirect, special, consequential or incidental damages including loss of
use, revenue or profit regardless of the form of the cause of action. The
liability of each party hereunder shall be limited to the amounts actually paid
by GE to OMNICELL with respect to each applicable Transaction or Transaction(s).
19. TERM AND TERMINATION. This Agreement shall be effective upon execution
by GE and OMNICELL and shall continue from such effective date for a period of
five (5) years, unless sooner terminated by either party upon the occurrence of
a Termination Event or without cause with ninety (90) days prior written notice.
Upon the expiration or termination of this Agreement, the obligations of the
parties with respect to Transactions not
7.
<PAGE>
funded by GE shall cease, but all obligations with respect to Transactions which
have been funded by GE shall survive. If this Agreement is terminated upon the
occurrence of a Termination Event (other than a Termination Event caused by a
material Adverse Change), (i) GE's sole remedy, in the case of a termination
event caused by OmniCell, will be to require OMNICELL to repurchase all
remaining amounts owed to GE by a Customer on all Transactions materially
adversely affected by said Termination Event discounted to the present value
using the Standard Rate used when the Transaction was purchased by GE.
20. ASSIGNMENT OF RIGHTS. The rights and obligations of GE and OMNICELL
under this Agreement may not be assigned without the prior written consent of
the other party; provided that GE may without prior written consent assign any
of its rights hereunder or under any Transaction to an affiliate or other entity
in which a majority of the common stock is owned directly or indirectly by GE,
and OMNICELL may without prior written consent assign any of its rights to
payment hereunder to any party. GE may, in its sole discretion, securitize or
syndicate its rights under any Transaction including any recourse rights made
available by OMNICELL in connection with such Transaction.
21. CONFIDENTIALITY. From time to time GE or OMNICELL may provide
information to the other party which is plainly marked as "confidential". GE and
OMNICELL will take reasonable steps to preserve the confidential nature of such
information and to prevent its disclosure to third parties. Such information
shall not be considered confidential if (i) it is already in the public domain,
or (ii) it is obtained from an independent source who is not legally bound to
refrain from such disclosure, or (iii) it is independently developed by the
receiving party, as demonstrated by the receiving party's files and records
immediately prior to the date of disclosure. GE and OMNICELL will fulfill their
obligations hereunder if they exercise the same degree of care to preserve and
safeguard such confidential information as they use to preserve and safeguard
their own confidential information. GE and OMNICELL may disclose confidential
information to their respective affiliates, and confidential information
relating to specific Transactions may be disclosed by GE to its representatives
and agents, in the event that such Transactions are referred for collection, and
to any purchaser or administrator, in the event that such Transactions are
syndicated or securitized, provided that the receiving party agrees to be bound
by the terms hereof in writing. Nothing herein shall be deemed to prohibit
disclosure of confidential information that is required by law, so long as the
disclosing party, so far as practicable, consults with the other party prior to
such disclosure and takes such steps as the other party may reasonably request
to mitigate the effect of such disclosure.
22. MISCELLANEOUS. (a) GE and OMNICELL acknowledge that they are separate
entities, each of which has entered into this Agreement for independent business
reasons. (b) Except as provided for herein, OMNICELL shall have no right, and
will not attempt, to accept collections, repossess or consent to the return of
the System (other than for repairs) or modify the terms of any Transaction
without the prior written consent of GE, which shall not be unreasonably
withheld. (c) Notices to OMNICELL or GE under this Agreement shall be deemed to
have been given if sent by (i) recognized overnight delivery or registered or
certified mail, return receipt requested, or (ii) by telecopy (promptly
confirmed in writing) to the Relationship Manager at the address or telecopy
number first stated above or such other address or telecopy number as such party
may have provided by notice. (d) The parties agree that this Agreement shall be
governed by and construed in accordance with the laws (other than the choice of
law provisions) of the State of New York. (e) If at any time any provision of
this Agreement is held by any court of competent jurisdiction to be illegal,
void or unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall not impair the
enforceability of any other provision of this Agreement. (f) This Agreement
constitutes the entire agreement between the parties concerning the subject
matter hereof. The terms may not be terminated or amended orally, but only by an
instrument duly executed by each of the parties hereto. (g) In the event there
is any conflict between this Agreement and any ancillary agreements with respect
to any Transaction or System, the terms and conditions of this Agreement shall
control. (h) THE PARTIES WAIVE, TO THE EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
HEREUNDER.
8.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the date first above
written.
OMNICELL TECHNOLOGIES, INC. GENERAL ELECTRIC COMPANY
By: /s/ Earl E. Fry By: /s/ R.B. Berger
------------------------------ ------------------------------
Name: Earl E. Fry Name: R.B. Berger
---------------------------- ----------------------------
Title: VP & CFO Title:
--------------------------- ---------------------------
Date: June 4, 1999 Date: June 7, 1999
---------------------------- ----------------------------
9.
<PAGE>
RIDER NUMBER ONE
TO PROGRAM AGREEMENT
DATED AS OF June 7, 1999
(THE "PROGRAM AGREEMENT"),
BY AND BETWEEN
OMNICELL TECHNOLOGIES, INC., (OMNICELL)
AND
GENERAL ELECTRIC COMPANY,
ACTING THROUGH GE HEALTHCARE FINANCIAL SERVICES (GE)
1. GRANT AND SCOPE OF TRADEMARK LICENSE.
1.1 Grant of License. Subject to the limitations set forth below, OMNICELL
grants to GE, and GE accepts, a non-exclusive, royalty-free license during the
term of the Program Agreement to use the trademarks and tradenames set forth in
Exhibit A (the "Licensed Marks") in the United States solely in connection with
GE's activities pursuant to Section 9 of the Program Agreement. GE shall not use
the Licensed Marks for any other purpose, or in any other jurisdiction without
prior written approval of OMNICELL.
1.2 Form of Use. GE shall use the Licensed Marks only in the form(s) set
forth on Exhibit A hereto or otherwise approved in writing by OMNICELL and shall
include where appropriate the designation (R) and (TM) and a statement that the
Licensed Marks are the trademarks of OmniCell Technologies, Inc. and other
proprietary notices as reasonably required by OMNICELL from time-to-time.
2. QUALITY CONTROL.
2.1 The nature and quality of all services rendered by GE in connection
with the Licensed Marks shall conform to standards set by and under the control
of OMNICELL. OMNICELL shall have the right to monitor the quality of GE's use of
the Licensed Marks, and in connection therewith, GE agrees to undertake such
steps as OMNICELL may reasonably request to assist OMNICELL in monitoring and
preserving the quality of GE's use of the Licensed Marks, including, without
limitation, providing OMNICELL with samples of GE's use of the Licensed Marks,
and, at OMNICELL's request, modifying or ceasing any use of the Licensed Marks
to which OMNICELL may object.
2.2 GE shall comply with all applicable laws and regulations and obtain
all appropriate government approvals pertaining to its activities under the
Program Agreement. GE shall not do or suffer to be done any act or thing that
would impair OMNICELL's ownership or rights in the Licensed Marks, or damage the
reputation for quality inherent in the Licensed Marks. OMNICELL has the right to
take all action which it deems necessary to ensure that GE's uses of the
Licensed Marks are consistent with the reputation for quality and prestige of
the Licensed Marks. GE agrees not to adopt or use any other trademark, word,
symbol, letter, design or mark (i) in combination with a Licensed Mark in a
manner that would create a combination Mark or (ii) that is confusingly similar
to a Licensed Mark; provided, however, that GE may use a Licensed Mark with
other marks or names if such other marks or names are sufficiently separated
from the Licensed Mark and sufficiently distinctive to avoid the impression by a
reasonable consumer that such other marks or their owners are associated with
OMNICELL.
3. OWNERSHIP. GE acknowledges that it has no interest in the Licensed
Marks other than the license granted under the Program Agreement and that
OMNICELL is the sole and exclusive owner of all right, title and interest in the
Licensed Marks. GE agrees that any and all of GE's uses of the licensed Marks
will inure solely to the benefit of OMNICELL and will not create any right,
title or interest for GE in the Licensed Marks other than the license granted
under the Program Agreement. GE agrees that it will not contest, oppose or
challenge OMNICELL's ownership or registration of, or register or attempt to
register, the Licensed Marks in any jurisdiction. GE shall promptly notify
OMNICELL of any adverse use by a third party of the Licensed Marks or of a mark
or name confusingly similar to the Licensed Marks and agrees to take no action
with respect thereto except with the prior written authorization of OMNICELL. GE
further agrees to provide full cooperation with any legal or equitable action by
OMNICELL to protect OMNICELL's rights, title and interest in the Licensed Marks.
10.
<PAGE>
4. LICENSE TERMINATION.
4.1 Termination of the Program Agreement. The license granted hereunder
shall terminate upon termination of the Program Agreement.
OMNICELL TECHNOLOGIES, INC. GENERAL ELECTRIC COMPANY
By: /s/ Earl E. Fry By: /s/ R.B. Berger
----------------------------- -----------------------------
Name: Earl E. Fry Name: R.B. Berger
--------------------------- ---------------------------
Title: CFO Title:
-------------------------- --------------------------
Date: June 4, 1999 Date: June 7, 1999
--------------------------- ---------------------------
11.
<PAGE>
EXHIBIT "A"
OMNICELL Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303
Dear Sirs:
In consideration of the agreements contained in this letter and subject to
the provisions hereof, General Electric Company ("GE") has agreed to provide
financing capabilities to_______________________________________________________
_______________________ ("Customer") to rent a System from OMNICELL
Technologies, Inc. ("OMNICELL") (the "Transaction") pursuant to the Program
Agreement dated ________________ between OMNICELL and GE (the "Agreement").
GE and OMNICELL agree that if Customer fails to make payment in full of any
amount owed to GE under the Transaction within 45 days of the original due date
thereof, OMNICELL will, upon 10 days notice, pay GE _________ percent (x%) of
the Net Book Value of the Transaction (the "Recourse Amount").
OMNICELL agrees that OMNICELL's obligations to pay GE the Recourse Amount
shall not be conditioned upon, or in any way affected by: notice of debt or
obligation of the Customer to GE or of default or breach of such debt or
obligation; any requirement that GE exhaust its remedies against the Customer;
presentment, protest and demand and notice of protest and demand (or any of
them) with respect to the Transaction; any extension of time or performance to,
or any settlement or granting of any indulgence to, or any modification of any
obligation of the Customer; GE's failure to enforce any provision of the
Transaction; the acceptance, alteration, or release of any security provided by
the Customer; or the Customer's voluntary or involuntary bankruptcy, assignment
for the benefit of creditors, reorganization or similar proceedings affecting
the Customer or any of its assets, or the release of the Customer from any of
its agreements pursuant to the Transaction, by operation of law or otherwise.
Upon receipt by GE of the Recourse Amount, GE will assign the Transaction
to OMNICELL, including all rights to the Equipment and any related financing
statements.
The terms of this letter may not be amended or modified except by writing
signed by OMNICELL and GE. Defined terms shall have the meaning set forth in the
Agreement, except as expressly provided herein. This letter shall be subject to
the terms and conditions of the Agreement.
AGREED TO:
OMNICELL TECHNOLOGIES, INC. GENERAL ELECTRIC COMPANY
By:___________________________ By:___________________________
Title:________________________ Title:________________________
12.
<PAGE>
EXHIBIT "B"
STANDARD RATE MATRIX
CUSTOMER CREDIT
RATING CATEGORY
----------------------------------------------------------
T
R A B C D
A
N ----------------------------------------------------------
S S
A I under 3.80 4.00 4.50 4.95
C Z $1 million
T E
I ----------------------------------------------------------
O
N over 3.50 3.70 4.20 4.65
$1 million
----------------------------------------------------------
13.
<PAGE>
EXHIBIT "C"
OMNICELL
- --------------------------------------------------------------------------------
OMNICELL MASTER RENTAL AGREEMENT
- --------------------------------------------------------------------------------
Dated_____________, 1999 Master Rental Agreement #________________
Dear Customer: We use the words "you" and "your" to mean the Customer
indicated below. The words "we", "us", and "our" refer to OmniCell
Technologies, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
OmniCell Technologies Customer Customer
Mainz Address Billing Address Delivery Address
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Customer Legal Name:
OmniCell Technologies, Inc. ________________________________ ________________________________
1101 East Meadow Drive ________________________________ ________________________________
Palo Alto, CA 94303 ________________________________ ________________________________
Attn: Accounts Payable ________________________________ ________________________________
Tel: 1:800-850-664
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Rental Terms. We agree to rent to you and you agree to rent from us certain
OmniCell System or Sure-Med System equipment (hereinafter "Equipment') and
we agree to license to you and you agree to license from us the software
(as hereinafter defined) that accompanies such Equipment, all more fully
described on the attached Supplement, and any subsequent Supplement(s) to
this Agreement entered into by you and us (hereinafter the "Supplements"),
all on the terms and conditions set forth herein. Each Supplement shall
constitute a separate and independent lease; the original for such lease
shall consist of the signed Supplement and a copy of the Master Rental
Agreement. You agree to pay to us the monthly rent shown for each unit of
Equipment for the number of consecutive months shown under "Term" on each
Supplement. For purposes of this Agreement, Equipment will also include all
replacement parts for the Equipment which you may receive under the
separate Master Service Agreement you have entered into with us in
connection with this Agreement. All Equipment we provide to you will be new
unless otherwise noted as "used" or "reconditioned" on the relevant
Supplement.
2. Additional Equipment. If you would like to add Equipment to your system, we
shall send you a Supplement listing such additional Equipment ("Additional
Equipment') and the monthly rental payment per unit. Upon execution of the
Supplement we will deliver the Additional Equipment listed thereon in
accordance with the terms of this Master Rental Agreement. All terms of
this Master Rental Agreement shall apply to Additional Equipment listed on
any mutually executed Supplement.
3. Term and Rental Payments. The initial term of this Agreement for the unit
or units of Equipment described in each Supplement shall be as set forth
therein. You understand that time is of the essence as to your performance;
You agree to pay all Rental payments in advance and no later than the date
designated by us. Rental payments due do not include any applicable taxes.
If any Taxes (as hereinafter defined) are due, we shall invoice you for
them and you agree to pay the Tax billings along with your Rental payments.
Rental payments shall begin upon the date of delivery of the Equipment
listed in each Supplement. Rental Payments will be made at such place as we
may designate in writing. You authorize us to insert for the purposes of
the Rental, the serial numbers of the Equipment, and other information into
each Supplement.
- --------------------------------------------------------------------------------
You agree to all the terms and conditions of this Master Rental Agreement. These
terms and conditions are a complete and exclusive statement of our agreement
with respect to the subject matter hereof and may be modified only by a written
agreement signed by both of us and not by course of performance. Any terms and
conditions on any purchase order you submit in conjunction with this Master
Rental Agreement shall be invalid and of no force or effect to the extent such
terms and conditions contradict or are in addition to the terms of this Master
Rental Agreement. Your purchase orders shall be for reference purposes only and
shall not become a part of this Master Rental Agreement. This Master Rental
Agreement may not be terminated early. By signing this Master Rental Agreement,
each of us represents that he/she has the authority to bind our respective
parties to this Master Rental Agreement.
Accepted:
- ------------------------------------------------------------------------------
OMNICELL TECHNOLOGIES, INC. CUSTOMER
- ---------------------------------- --------------------------------
Signature Signature
- ---------------------------------- --------------------------------
Print Name: Print Name:
- --------------------------------- --------------------------------
Title: Title:
- ------------------------------------------------------------------------------
(See Pages 2 & 3 for Additional Terms)
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks or trademarks of OmniCell Technologies, Inc.
14.
<PAGE>
Master Rental Agreement Terms and Conditions
4. Default. You shall be in default of this Agreement upon any of the
following events: (A) You fail to pay any monthly payment, or any other sum
hereunder when due and such failure continues for fifteen (15) days, (B)
You materially breach any of the terms, conditions, warranties or
representations of this Agreement, or any other agreement between you and
us; (C) Any execution or writ of process is issued in any action or
proceeding to seize or detain any item of Equipment; (D) A proceeding in
bankruptcy, receivership or insolvency shall be instituted by or against
you (E) You shall enter into any agreement or composition with your
creditors, breach or default under any term of any loan or credit
agreement; (F) You become insolvent or unable to pay your debts when due;
(G) You merge, consolidate, or transfer all or substantially all of your
assets.
5. Remedies. Upon a default by you, we shall have the right to: (1) retake
immediate possession of the Equipment and the Software without any process
of law and may enter upon any premises where the Equipment may be and
remove it without notice of our intention to do so, without being liable in
any action or other proceeding by you. We may, at our option, sell or re-
rent the Equipment including the Software at any public or private sales
for cash or on credit and you shall be liable for the expense incurred in
the repossession, recovery, storage, repair, sale, re-rent, re-licensing
any court costs, in addition to any arrears in payment and the balance of
the payments provided for herein, together with reasonable attorneys fees,
less the net proceeds of disposition, if any, of the Equipment; and/or (2)
accelerate all sums payable under this Agreement and any other agreements
with us and require you to immediately pay us all sums that are already due
and the discounted value, at the discount rate of six percent (6%) as of
the date of default, of all payments that will be due under this Agreement,
plus our estimate at the time this Agreement was entered into of our
residual interest in the Equipment and Software reduced to present value at
a discount rate of six percent (6%) as of the date of default, less the net
proceed of disposition, if any, of the Equipment and Software. Such sums
shall be due and payable upon notice of acceleration and demand for payment
and if not so paid, we may institute legal proceedings against you with
your being responsible for said sums, court costs, and reasonable attorneys
fee incurred, and/or (3) exercise any other remedy available to us at law
or equity, notice thereof being expressly waived by you. Our rights
hereunder shall be cumulative. You agree that all sums due under the
calculations above shall become immediately due and payable and are to be
construed a liquidated damages rather than a penalty provision.
6. No Warranties. THE EQUIPMENT AND THE SOFTWARE IS PROVIDED TO YOU "AS IS".
WE MAKE NO WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE IN
CONNECTION WITH THIS MASTER RENTAL AGREEMENT OR THE EQUIPMENT OR THE
SOFTWARE. YOU HAVE BEEN OFFERED THE OPPORTUNITY TO ENTER INTO A SEPARATE
MASTER SERVICE AGREEMENT (THE "MASTER SERVICES AGREEMENT") WITH US
CONTAINING CERTAIN LIMITED WARRANTIES WITH RESPECT TO THE EQUIPMENT YOU
AGREE THAT YOUR OBLIGATIONS UNDER THIS MASTER RENTAL AGREEMENT ARE NOT
SUBJECT TO ANY CLAIMS OR DEFENSES WHICH YOU MAY HAVE DUE TO PERFORMANCE
UNDER THE MASTER SERVICE AGREEMENT OR THE WARRANTIES CONTAINED THEREIN.
7. Liability and Limitation of Liability. WE ARE NOT RESPONSIBLE FOR ANY
LOSSES OR INJURIES ARISING FROM THE INSTALLATION, OPERATION, CONDITION,
POSSESSION OR USE OF THE EQUIPMENT OR SOFTWARE. OUR TOTAL LIABILITY UNDER
THIS MASTER RENTAL AGREEMENT SHALL NOT EXCEED THE AMOUNT PAID BY YOU
HEREUNDER. IN NO EVEN SHALL WE BE LIABLE FOR ANY LOST PROFITS, COST OF
COVER, OR OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ARISING OUT
OF THIS MASTER RENTAL AGREEMENT, HOWEVER CAUSED AND WHETHER ARISING UNDER
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF WE HAVE BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. TO THE EXTENT PERMITTED BY LAW,
YOU HEREBY WAIVE ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR
OTHERWISE WHICH MAY REQUIRE US TO SELL, LEASE, LICENSE OR OTHERWISE USE ANY
EQUIPMENT OR SOFTWARE IN MITIGATION OF OUR DAMAGES.
8. Copyright Indemnity. WITH RESPECT TO THE SOFTWARE, WE AGREE TO INDEMNIFY
AND DEFEND YOU AGAINST ANY CLAIMS FOR INFRINGEMENT OF ANY U.S. COPYRIGHT
(WITH RESPECT TO THE SOFTWARE AS DEFINED IN SECTION 13), PROVIDED THAT WE
SHALL CONTROL THE DEFENSE AND SETMEMENT OF ALL SUCH CLAIMS. YOU AGREE THAT
SUCH INDEMNITY AND DEFENSE SHALL BE OUR SOLE LIABILITY TO YOU AND YOUR SOLE
RECOURSE IN THE EVENT A CLAIM OF U.S. COPYRIGHT INFRINGEMENT BASED ON THE
SOFTWARE IS BROUGHT AGAINST YOU.
9. Indemnification. You hereby assume all liability for, and agree to
indemnify and defend us and our successors, assigns, agents and employee
against any and all liabilities, losses, damages, claims and expenses
(including reasonable attorney fees) in any way relating to or arising out
of this Agreement, the Equipment, the Software or the installation, use,
possession, control, return, condition or operation of the Equipment or the
Software including without limitation, claims arising in contract or tort,
including negligence, strict liability, products liability or otherwise,
except for claim resulting from OmniCell's gross negligence or intentional
misconduct, or claims of U.S. copyright infringement as set forth in
Section 9. Your obligation to indemnify us shall survive the expiration or
termination of this Master Rental Agreement.
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System
are registered trademarks or trademarks of OmniCell Technologies, Inc.
15.
<PAGE>
10. Insurance. You agree to assume and bear the entire risk of casualty or
damage to the Equipment from any cause whatsoever from the date of delivery
of the Equipment to your premises. No casualty or damage shall relieve you
from the obligation to make payments or to comply with another obligation
under this Agreement. You agree, at your own cost and expense, to keep the
Equipment fully insured against loss until this Master Rental Agreement is
paid in full and to have us named as sole loss payee on all such policies.
You also agree to obtain a general public liability insurance policy from
an insurance company acceptable to us and to include us as an additional
insured on the policy. You agree to provide us certificates or other
evidence of such insurance acceptable to us. You agree to have your
insurance company notify us of any significant changes in coverage during
the term of this Master Rental Agreement. If you do not provide us with
acceptable evidence of insurance, we may, but will not be required to, buy
such insurance for you and add a charge to your monthly payments which will
include the premium cost, costs associated with effecting the insurance and
a carrying charge of 1.5% per month on the unpaid premium cost, or the
highest rate allowed by applicable law whichever is lower. We are under no
obligation to obtain such insurance, and any loss resulting during a period
in which the Equipment is uninsured shall be borne by you.
11. Taxes, Assessments, And Fees. You agree to pay all licensing and
registration fees for the Equipment and the Software, all personal property
taxes assessed against the Equipment and the Software and all other taxes,
assessments, fees and penalties (local, state, and federal) which may be
levied or assessed on the ownership, leasing, rental, sale, purchase,
possession, use, installation or servicing of the Equipment (collectively,
"Taxes") excluding any Taxes on or measured solely by our net income. If
any Taxes are due, we shall invoice you and you agree to pay the Tax in a
timely manner along with your monthly rent. We may, but are not obligated
to, pay such Taxes and other amounts and may file such returns on behalf of
you if you fail to do so, and you agree to reimburse us upon demand for any
amount expended for such Taxes, including fees or penalties paid by us
hereunder. Your obligations to pay such Taxes which are due or assessed
during the term of the rental shall survive the expiration or termination o
this Master Rental Agreement.
12. Assignment. You have no right to sell, transfer, assign, sublease, or
sublicense (a) the Equipment, (b) the Software, or (c) this Master Rental
Agreement. We may sell, assign, encumber, or transfer this Master Rental
Agreement and any or all or our rights created by it subject to your right
hereunder. Any such assignment shall not relieve us of our obligations to
you and you agree not to hold any assignee liable for any of these
obligations. You agree that the rights of the new owner or assignee shall
not be subject to any claims, counter-claims, defenses, or set offs that
you may have against us including those in any Master Service Agreement.
13. Software. Subject to the terms of this Agreement, we grant to you the right
to use one copy only of any software provided to you by us relating to the
operation, information storage and retrieval, record keeping, and
communication of the Equipment (the "Software") only in the manner
described in the written materials accompanying the Software and solely as
installed on the Equipment in object code form. You agree not to use it in
any other way. You agree that the structure and organization of the
Software are valuable trade secrets of ours and agree to protect the
Software as you would other confidential, copyrighted material. You
understand and agree that we own the Software and any copies of it and that
the Software is licensed to you only for your use in connection with the
Equipment. You agree that you will neither modify, nor alter the Software,
nor decompile, reverse engineer, disassemble or otherwise attempt to obtain
the source code of the Software, or to encourage any third party to do so.
14. Further Assurances. You agree to provide such additional documents,
instruments, and Uniform Commercial Code financing statements to assist us
in completing the transactions contemplated by this Master Rental Agreement
to protect our rights or our assignee's rights to the Equipment. You hereby
agree to authorize us to file UCC financing statements, amendments, and
assignments relating to the Equipment in any location and execute the same
as your attorney-in-fact. If we assign this Master Rental Agreement, you
agree to execute such documents as we may reasonably request confirming
your obligations under this Master Rental Agreement and you agree to make
all payments of rent and other amounts due under this Master Rental
Agreement directly to the assignee. If it is determined that the rental
payment includes interest, no such interest shall exceed the amount legally
allowed.
15. Use of Information. You agree hereby to grant to us the royalty-free right
and license to utilize the Equipment to collect information (the
"Information") with regard to the use of the Equipment by you, including
supply utilization, inventory management, and billing information provided
that we shall have no right to use any personal patient identifying
information (such as name, address, telephone number, or social security
number). You hereby agree to grant to us an irrevocable, perpetual,
royalty-free right and license to use the Information for any purpose. We
agree to keep confidential the name of your hospital in connection with the
Information unless otherwise agreed by us and you.
16. Late Charges. If any part of a payment due is more than fifteen (15) days
late, you agree to pay a late charge at the rate of 5%, or the highest rate
allowed by law, of the payment for each month or part of a month the
payment is not made.
17. Automatic Renewal. At the end of the term for each unit of equipment listed
on each Rental Supplement made part of this Master Rental Agreement, you
may choose to: (A) return the unit of Equipment and any accompanying
Software to us, or (B) enter into a new Master Rental. Agreement for the
applicable Equipment. If you do not notify us of your selection of one of
the previous two options prior to the end of any term, the Equipment will
automatically convert to a month-to-month rental agreement at the then
current month-to-month rental rate. In case of such conversion to a month-
to-month rental, all provisions of this Master Rental Agreement will remain
in full force and effect.
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System
are registered trademarks or trademarks of OmniCell Technologies, Inc.
16.
<PAGE>
18. Ownership of Equipment. We are the owner of the Equipment and Software and
shall retain at all times title to the Equipment and the Software delivered
to you hereunder.
19. Location of Equipment. You agree to keep and use the Equipment only at your
address shown above. You agree that the Equipment shall not be removed from
that address unless you get our written permission in advance to move it.
20. Return of Equipment. If you choose to return the Equipment at the end of
this Master Rental Agreement, you agree to immediately return the Equipment
to us in a condition as good as received, allowing for normal wear and
tear, to any place in the United States we designate. You agree to prepay
all expenses of crating and shipping by means we designate and you agree to
properly insure the shipment. At our option, we will supply you with
crating and packing materials. You agree to pay monthly rental payments for
any month or part thereof until the Equipment is returned.
21. Other Rights. You agree that any delay or failure to enforce our rights
under this Master Rental Agreement does not prevent us from enforcing any
rights at a later time.
22. Freight. All shipments are FOB OmniCell Technologies, Inc.
23. California Law, Jurisdiction and Venue. This Agreement shall be construed,
governed, interpreted, and enforced in accordance with the laws of the
State of California and shall be deemed to be fully and solely executed,
performed, and/or observed in the State of California. All actions of
proceedings arising under this Agreement shall be brought in the Federal
Courts of the Northern District of California or the State Courts located
in Santa Clara County, State of California, and the parties hereby consent
to and waive any objection to the jurisdiction of such court.
24. Notices. Any notices given under this Agreement shall be deemed received
five (5) days after the date of mailing, one (1) day after dispatch by
overnight courier service, or upon receipt if by hand delivery.
OMNICELL, MASTER RENTAL #__________________________
RENTAL SUPPLEMENT #______________________
MASTER RENTAL DATED______________________
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
OMNICELL SUPPLEMENT TO RENTAL AGREEMENT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CUSTOMER
- ----------------------------------------------------------------------------------------------------------------------------------
ADDRESS
- ----------------------------------------------------------------------------------------------------------------------------------
CITY COUNTY STATE ZIP
- ----------------------------------------------------------------------------------------------------------------------------------
CONTACT PHONE NO.
- ----------------------------------------------------------------------------------------------------------------------------------
ADDRESS OF INSTALLATION: STREET CITY COUNTY STATE ZIP
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. The Rental Supplement is subject to and incorporates by reference all the
terms, conditions, and agreements set forth in the Master Rental Agreement
identified above as is fully set forth at length herein. Serial numbers for
each unit of Equipment will be shown on attached Exhibit A made Part of
this Supplement.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly Term
Catalog Product Number of Rental Payment (Number of
Number Description Units for each unit Rental Payments)
<S> <C> <C> <C> <C>
___________________ ___________________ ___________________ ___________________ ___________________
___________________ ___________________ ___________________ ___________________ ___________________
___________________ ___________________ ___________________ ___________________ ___________________
___________________ ___________________ ___________________ ___________________ ___________________
Total Monthly Payment $ ____________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Monthly Rental payments shall be billed to Customer Purchase Order # The
terms and conditions on any such purchase order issued in conjunction with
this Supplement shall be for reference purposes only and shall not become a
part of the terms of this Supplement.
3. Customer promises to pay the monthly rent shown for each unit of Equipment
described above for the consecutive months shown under Term.
4. Customer acknowledges that they have the authority to sign this Rental
Supplement.
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System
are registered trademarks or trademarks of OmniCell Technologies, Inc.
17.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ACCEPTED: CUSTOMER:
This ____ day of _________________, 19 ______ SIGNATURE:_______________________________________________________
PRINT NAME:______________________________________________________
OMNICELL TECHNOLOGIES, INC. TITLE:___________________________________________________________
-----------------------------------------------------------------
CERTIFICATE OF ACCEPTANCE OF RENETED EQUIPMENT
SIGNATURE:________________________________________________
PRINT NAME:_______________________________________________ We hereby certify that all of the Equipment referred to in the
TITLE:____________________________________________________ Supplement has been delivered to and has been received by the
Customer, that the Equipment is in good working condition and
repair and is in all respects satisfactory to the Customer, and
that the Equipment is accepted by Customer for all purposes
under the Supplement.
Signature:_______________________________________________________
Title:___________________________________________________________
Date:____________________________________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ASSIGNMENT ACKNOWLEDGMENT
-------------------------
We acknowledge that as of ______ there are ______ payments remaining under
this Rental Supplement and that all future Rental Payments shall be paid
directly to General Electric Company, pursuant to Master Assignment Letter made
part of the Master Rental Agreement.
Signature:_________________________________
OMNICELL
- --------------------------------------------------------------------------------
OMNICELL MASTER SERVICE AGREEMENT
- --------------------------------------------------------------------------------
Dated ___________, 1999 Master Service Agreement # ___________
Master Rental Agreement Dated __________ Master Rental Agreement # ____________
Dear Customer: We use the words "you" and "your" to mean the Customer
indicated below. The words "we", "us", and "our" refer to OmniCell
Technologies, Inc.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
OmniCell Technologies Customer Customer
Mailing Address Billing Address Delivery Address
- ---------------------------------------------------------------------------------
<S> <C> <C>
Customer Legal Name:
OmniCell Technologies, Inc. ____________________ ________________
1101 East Meadow Drive ____________________ ________________
Palo Alto, CA 94303 ____________________ ________________
Attn.: Accounts Payable ____________________ ________________
Tel: 1-800-850-6664
- ---------------------------------------------------------------------------------
</TABLE>
1. Definitions. All capitalized terms used but not defined herein shall have
the same definitions as in the Master Rental Agreement designated above. An
"OmniCell System" means an integrated combination of OmniCell System and/or
Sure-Med System Equipment and Software as delivered to you under the Master
Rental Agreement.
2. Master Service Agreement. Provided you timely pay the Monthly Service
Payments designated on each Supplement you execute in connection with the
Master Rental Agreement referenced above, we agree to provide service as
described in this Agreement. Service shall cover the Equipment listed on
each Supplement, the Software provided by us in connection with the
Equipment, and our side of any Hardware or Software interfaces as may be
provided by us. You agree to pay the service payment ("Monthly Service
Payment') for each item of Equipment as set forth on the executed
Supplements for the number of consecutive months shown under Term on each
Supplement.
3. Additional Equipment. Each time you add Additional Equipment to your system,
you agree to execute a Supplement prepared by us listing the Additional
Equipment and the Monthly Service Payment, if any, per unit. All other terms
of this Master Service Agreement shall apply to Additional Equipment listed
on any additional Supplements. The Monthly Service Payment for each unit of
Additional Equipment shall begin on the date of installation of each unit of
Additional Equipment, if any.
4. Terms and Payments. The term of the Master Service Agreement shall be from
the date first set forth above through the last day of the month in which
the final Monthly Service Payment is made in accordance with the Supplements
you have executed. Your Monthly Service Payments shown on each Supplement do
not include any applicable Tax. If any Taxes are due, we shall invoice you
and you agree to pay the Tax in a timely manner in addition to your Monthly
Service Payments. We may, but are not obligated to, pay such Taxes and other
amounts and may file such returns on
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks of OmniCell Technologies, Inc.
18.
<PAGE>
behalf of you if you fail to do so, and you agree to reimburse us upon
demand for any amount expended for such Taxes, including fees or penalties
paid by us hereunder.
- --------------------------------------------------------------------------------
You agree to all the terms and conditions shown above and on Pages 2, 3 & 4
of this Master Service Agreement. These terms and conditions are a complete and
exclusive statement of our agreement with respect to the subject matter hereof
and may be modified only by a written agreement signed by both parties and not
by course of performance. The terms and conditions on any purchase order you
submit in conjunction with this Master Service Agreement shall be invalid and of
no force and effect to the extent such terms and conditions contradict or are in
addition to the terms of Us Master Service Agreement. Your purchase orders are
for reference purposes only and shall not become a part of this Master Service
Agreement.
You agree that this Master Service Agreement cannot be terminated except as
provided for in this Master Service Agreement. This Master Service Agreement may
not be terminated early. By signing this Master Service Agreement each of us
represents that he/she has the authority to bind our respective parties to this
Master Service Agreement.
Accepted:
- --------------------------------------------------------------------------------
OMNICELL TECHNOLOGIES, INC. CUSTOMER
_________________________________________ ___________________________________
Signature Signature
_________________________________________ ___________________________________
Print Name: Print Name:
_________________________________________ ___________________________________
Tide: Title:
- --------------------------------------------------------------------------------
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks of OmniCell Technologies, Inc.
19.
<PAGE>
Master Service Agreement Terms and Conditions
5. Installation. Under this Agreement you are entitled to installation by us
of any Equipment for which you pay a Monthly Service Payment. You agree to
execute an OmniCell Installation Worksheet prior to any Equipment
installation. We shall make reasonable commercial efforts to complete the
installation of such Equipment in a timely manner upon receipt of
confirmation that the Equipment has arrived at your location. Prior to
arrival of the Equipment at your location, you agree to provide adequate
space for the Equipment under conditions suitable to the proper functioning
of the Equipment. In addition, you agree to provide clear commercial power
including our specified Uninterrupted Power Supply ("UPS") and the
necessary communication cable (telephone extension cable and jack or Local
Area Network ("LAN") connection and jack) to each location where the
Equipment will be placed. You agree to provide a dedicated direct inward
dial (DID) communication line for remote access for service ("RAS") at the
location of the server(s). If this dedicated RAS line is not provided,
service will be charged at twice the quoted monthly fee amount. We shall
provide all installation personnel, tools, equipment, and material
necessary to install the Equipment and will install it in a workmanlike
manner.
6. Master Service. During the term of this Master Service Agreement, we shall
perform service to keep the Equipment, the Software and our portion of any
Software or Hardware interfaces in good working order based on the specific
needs of the item of Equipment or Software as determined by us. Master
Service will include adjustments and replacements of parts as we deem
necessary. If we are unable to repair an item of Equipment, we will replace
it. Replacement parts will be furnished on an exchange basis. In the event
any Equipment shall, for any reason, become disabled, you agree to
immediately advise us of the disability, specifying where the Equipment is
located, the nature of the disability and any known cause. Any repairs or
adjustments to the Equipment must be performed by an individual
specifically trained in the application and use of the OmniCell System.
During normal business hours we will use our good faith efforts to respond
to emergency service requests. THIS MASTER SERVICE AGREEMENT DOES NOT
ASSURE UNINTERRUPTED OR ERROR FREE SERVICE.
We shall provide service whether or not the Equipment has been used
properly in applications for which it was intended, provided that in the event
that the Equipment requires service due to misapplication, abuse, misuse,
alteration, or unauthorized repair or installation, Customer agrees to be
charged for the service at our minimum charge, plus our hourly rate after the
first four (4) hours of service and the list price for any replacement parts
required. We will charge at our rates and charges in effect at the time such
service is performed. Additionally, in the event you require any Additional Fee-
Based Services as described in the Master Services Agreement Plans, you agree to
be charged according to the corresponding schedule of charges. For any Software
service performed without a functional RAS line in place, Customer agrees to be
charged twice the quoted monthly fee amount, plus twice our hourly charge after
the first four (4) hours of service. We will charge at our rates and charges in
effect at the time such service is performed. You agree to provide us with entry
and access during normal business hours to the location of the Equipment for
purposes of providing service and repair.
7. Interfaces. You agree to provide service for your side of any Software or
Hardware interfaces.
A. Software and Service at No Charge. OmniCell agrees to provide the
following initial interface Software and services at no charge to you
within the first twelve (12) months from the date of this Master
Service Agreement.
I. ADT Interface: We will provide at no charge, Software which will run
on the OmniCell System and will receive Admitting Discharge Transfer
("ADT") messages from your ADT/Patient Management system. These ADT
messages will be processed by the OmniCell System to update patient
information in the OmniCell database. The format of the ADT interface
messages and the communications mechanism will be mutually agreed upon
by us, the ADT/Patient Management system vendor, and you. Software
installation, software set-up, and up to 20 hours of testing are
included as part of our side of the ADT interface We are not
responsible for producing and transmitting ADT interface records from
the ADT system. We are only responsible for receiving ADT interface
records and processing the records on the OmniCell System. We are not
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks of OmniCell Technologies, Inc.
20.
<PAGE>
responsible for development, installation, set-up, or testing of the
ADT system side of the ADT interface.
II. Patient Charge Interface: OmniCell will provide at no charge, Software
which will run on the OmniCell System and will produce interface
records for each chargeable transaction that occurs on the OmniCell
System. These patient charge interface records will be transmitted to
the Customer's Patient Accounting system in real-time, or as a daily
batch. The format of the Patient Charge interface messages, and the
communications mechanism will be mutually agreed upon by us, the
Patient Accounting system vendor, and you. Software installation,
software set-up, and up to 20 hours of testing are included as part of
our side of the Patient Charge interface. We are not responsible for
the processing of the Patient Charge interface record which occurs on
the Patient Accounting system. We are not responsible for
development, installation, set-up, or testing of the Patient
Accounting system side of the Patient Charge interface.
III. Supply Inventory Replenishment Interface: We will provide at no
charge, Software which will run on the OmniCell System and will
produce interface records indicating the quantities of items that are
required to replenish each Omni Supplier. Supply Inventory
Replenishment Interface for Sure-Med System will be provided at an
additional charge. These Supply Inventor. Replenishment interface
records will be transmitted to your Materials Management system in
real-time, or in batches. The format of the Supply Inventory
Replenishment interface messages, and the communications mechanism
will be mutually agreed upon by us, the Materials Management system
vendor, and you. Software installation, software set-up, and up to 30
hours of testing are included as part of our side of the Supply
Inventory Replenishment interface. We are not responsible for the
processing of the Supply Inventory Replenishment interface records
which occurs on the Materials Management system. We are not
responsible for development, installation, set-up, or testing of the
Materials Management system side of the Supply Inventory Replenishment
interface.
B. Chargeable Software and Service. We will charge you for the following
Software and services:
I. Interface Modifications: If you request changes to an interface after
initial installation, testing, and your acceptance of that interface,
a fee will be charged to you for those modifications. "Modifications"
includes, but is not limited to: a) change in record format; b) change
in communications mechanism; c) addition of new record types; and, d)
addition of new processing functionality.
II. Additional Interfaces: Any interfaces in addition to the ADT
Interface, Patient Charge Interface, and Supply Inventory
Replenishment Interface, and including initial interfaces not written
within the first twelve (12) months described in Section A above will
be charged to you at a rate of $5,000 per interface. The
specifications for each interface will be mutually agreed upon by us,
the vendor responsible for the other side of the interface, and you.
III. Replacement of an Existing Interface: If an existing interface
between the OmniCell System and one of your Hospital Information
System ("HIS") systems must be replaced by a new interface, the
implementation of the replacement interface will be charged to you at
a rate of $5,000. The specifications for the replacement interface
must be collectively agreed upon by us, the vendor responsible for the
other side of the interface, and you.
8. Training. You agree to select, and we shall provide training in the
management, maintenance and use of the Equipment to, one of your employees
who is qualified to act as "System Administrator." The System Administrator
is responsible for administering and managing the performance of the
Equipment, including maintaining the files and monitoring the performance
of the Equipment. The System Administrator shall be responsible for
reviewing and evaluating all end-user requests for service and informing us
of any problems which the System Administrator cannot resolve. We shall
provide training at our Headquarters location for one System Administrator
in the system management and use of the Equipment. System
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks of OmniCell Technologies, Inc.
21.
<PAGE>
Administrator Training shall be concluded within ninety (90) days from the
initial installation date of the Equipment at your location. We shall also
provide reasonable enduser training for each location of Equipment.
9. Subcontracting. We may subcontract any part of our obligations under this
Master Service Agreement, provided that any such subcontracting shall not
relieve us of our obligations or duties under this Agreement.
10. Limited Warranties. We hereby warrant that, if the Equipment is defective
in workmanship or materials, or if the Software we provide is defective
during the term of this Agreement, we shall repair or replace, at our
option, the defective part, parts, Software or Equipment, and you agree
that such repair or replacement shall be your sole remedy and recourse in
the event of such defect. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY
PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS
FOR A PARTICULAR PURPOSE. THIS WARRANTY SHALL BE VOID AND OF NO FORCE OR
EFFECT IF WE DETERMINE THAT ANY EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR
MISUSE OR NEGLECT OR ANY UNAUTHORIZED REPAIRS OR TAMPERING WITH THE
EQUIPMENT OR SOFTWARE.
11. Limitation of Liability. OUR TOTAL LIABILITY UNDER THIS AGREEMENT SHALL NOT
EXCEED THE AMOUNT PAID BY YOU HEREUNDER. IN NO EVENT SHALL WE BE LIABLE FOR
ANY LOST PROFITS, COST OF COVER, OR OTHER SPECIAL, CONSEQUENTIAL, OR
INCIDENTAL DAMAGES ARISING OUT OF THIS AGREEMENT, OR YOUR USE OF OR ANY
MALFUNCTION OF THE EQUIPMENT OR SOFTWARE, HOWEVER CAUSED AND WHETHER
ARISING UNDER CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF WE
HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING
THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
12. Default You shall be in material default of this Agreement if: (a) you are
in default under the Master Rental Agreement referenced above; (b) you fail
to pay any Monthly Service Payment when due and fail to cure such failure
to pay within fifteen (15) days after receipt of notice from us; (c) you
breach any material provision of this Agreement and such default is not
cured within fifteen (15) days after receipt of notice from us. In the
event you fail to cure any default within the prescribed period, if any, we
shall have the right, in addition to any other rights and remedies which
may be available to us at law or in equity, to accelerate all sums due us
under this Agreement and/or terminate this Agreement and cease providing
Master Service to you. For purposes of this Section, notice shall be deemed
given five (5) days after the date of mailing, one day after dispatch by
overnight courier service or upon receipt if by hand delivery.
13. California Law, Jurisdiction and Venue. This Agreement shall be construed,
governed, interpreted, and enforced in accordance with the laws of the
State of California and shall be deemed to be fully and solely executed,
performed, and/or observed in the State of California. All actions or
proceedings arising under this Agreement shall be brought in the Federal
Courts of the Northern District of California or the State Courts located
in Santa Clara County, State of California, and the parties hereby consent
to and waive any objection to the jurisdiction of such court.
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks of OmniCell Technologies, Inc.
22.
<PAGE>
Master Service Agreement Plans
<TABLE>
<CAPTION>
Basic Service Plan
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Service Plan Disabled System Hardware or Software Malfunction
- ----------------------------------------------------------------------------------------------------------------------------------
Phone Support 24 Hours/Day 24 Hours/Day
7 Days/Week 7 Days/Week
- ----------------------------------------------------------------------------------------------------------------------------------
Response Time 30 Minutes 30 Minutes
Phone: (Monday-Friday 5 AM - 6 PM PST) (Monday-Friday 5 AM - 6 PM PST)
2 Hours 2 Hours
(Monday-Friday 6 PM - 5 AM PST & (Monday-Friday 6 PM -5AM PST &
Saturday- Sunday) Saturday-Sunday)
- ----------------------------------------------------------------------------------------------------------------------------------
On-Site: 24 Hours 48 Hours
- ----------------------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary) 24 Hours/Day 9 AM - 5 PM
7 Days/Week Monday-Friday
- ----------------------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts Included Included
- ----------------------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics Included Included
- ----------------------------------------------------------------------------------------------------------------------------------
System Administrator Training $1,000/Attendee (Travel and e~= not
included)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Extended Service Plan
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Extended Service Plan Disabled System / Hardware or Software Malfunction
- ----------------------------------------------------------------------------------------------------------------------------------
Phone Support 24 Hours/Day
7 Days/Week
- ----------------------------------------------------------------------------------------------------------------------------------
Response Time 30 Minutes
Phone: (Monday-Friday 5 AM - 6 PM PSI)
2 Hours
(Monday-Friday 6 PM - 5 AM PST & Saturday-Sunday)
- ----------------------------------------------------------------------------------------------------------------------------------
On-Site: 24 Hours
- ----------------------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary) 24 Hours/Day
7 Days/Week
- ----------------------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts Included
- ----------------------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics Included
- ----------------------------------------------------------------------------------------------------------------------------------
Interface Support (ADT, Billing & Inventory) Included
- ----------------------------------------------------------------------------------------------------------------------------------
Back-up Server Included
- ----------------------------------------------------------------------------------------------------------------------------------
Annual System Checkup Included
- ----------------------------------------------------------------------------------------------------------------------------------
3 Days System Optimization Consulting Included
- ----------------------------------------------------------------------------------------------------------------------------------
System Administrator Training * 2 attendees at no charge per every 20 frames purchased (Travel and expenses
not include)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Additional Fee-Based Services
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Additional Fee-Based Services Minimum Charge 1st four (4) hours Additional Charge
- ----------------------------------------------------------------------------------------------------------------------------------
Relocation & All Services associated with Relocation $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Reconfiguration & Rearrangement of OmniSuppliers $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Field Installation of Product Modules & Module Conversions $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Data Management & Data Manipulation of OmniCenter $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Re-Training $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
System Administrator Functions $ 675 $150/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Inventory Management Consulting $1,250 $250/Hour
- ----------------------------------------------------------------------------------------------------------------------------------
Backup Server S 15,000 with $120/month service
fee
- ----------------------------------------------------------------------------------------------------------------------------------
Annual System Checkup $1,200/OmniSupplier Unit
- ----------------------------------------------------------------------------------------------------------------------------------
3 Days System Optimization Consulting $ 6,000
- ----------------------------------------------------------------------------------------------------------------------------------
OmniCell Full-time System Administrator Requires extended service plan As quoted
- ----------------------------------------------------------------------------------------------------------------------------------
Interfaces: Modification of existing Interfaces $1,000- - $3,000
New Interface $5,000
New Interface Maintenance $50/Month
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All customers must identify at least one individual. the System Administrator,
who will assume ongoing responsibility for OmniCell equipment Training is
completed in a two to three day session at an OmniCell facility
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks or trademarks of OmniCell Technologies, Inc.
23.
<PAGE>
OMNICELL
- --------------------------------------------------------------------------------
OMNICELL SUPPLEMENT TO SERVICE AGREEMENT
- --------------------------------------------------------------------------------
MASTER SERVICE AGREEMENT # __________
SERVICE SUPPLEMENT # ________________
DATED ___________________
Dear Customer: In this Supplement to Master Service Agreement (this
"Supplement"), we use the words "you" and "Your" to mean the Customer indicated
below. The words "we", "us", and "our" refer to OmniCell Technologies, Inc.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OmniCell Technologies Customer Customer
Mailing Address Billing Address Delivery Address
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Customer Legal Name:
OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303
Attn: Accounts Payable
Tel.: 800-850-6664
- ----------------------------------------------------------------------------------------------------------
</TABLE>
1. Service Agreement. We agree to provide service to you on the Equipment
listed below. You promise to pay to us the monthly service fee shown for
each unit of Equipment for the number of consecutive months shown under the
Term below.
2. Terms and conditions. You agree that all of the terms and conditions
contained in the Master Service Agreement identified above between you and
us will apply to this Supplement, except as stated in Section 3 below.
3. Term and Service Fee. The term and monthly service payment for each unit of
Equipment on this Supplement shall be as shown above. You agree to pay the
service fee payments on their due dates.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Equipment
- ----------------------------------------------------------------------------------------------------------
Monthly Service
Catalog Product Number of Payment Term (Number of
Number Description units for each unit Service Payments)
<S> <C> <C> <C> <C>
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
________________ ________________ ________________ ________________ ________________
Total Payment $___________________
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OmniCell Service Plan: Basic Service Plan Extended Service Plan
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
</TABLE>
By signing this Service agreement, each of us represents that he/she has the
authority to bind our respective parties to this Service agreement Accepted:
Accepted:
OMNICELL TECHNOLOGIES, INC. CUSTOMER
- ----------------------------------- -----------------------------------
Signature Signature
- ----------------------------------- -----------------------------------
Print Name: Print Name:
- ----------------------------------- -----------------------------------
Title: Title:
- --------------------------------------------------------------------------------
Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med
System are registered trademarks or trademarks of OmniCell Technologies, Inc.
24.
<PAGE>
EXHIBIT "D"
OMNICELL
1101 E. Meadow Drive
Palo Alto, CA 94303
Tel. 800-850-6664
MASTER ASSIGNMENT LETTER
Re: Master Rental No.__________
Dear Customer,
We are assigning the right to payments under your Master Rental Agreement with
us to General Electric Company. This assignment includes all present Rental
Supplements between us and any future Rentals Supplements you may enter into
(collectively "Rentals"). All payments made on and after this date under the
Rentals should be paid to General Electric Company at the address as indicated.
Please be advised that General Electric Company is only being assigned the
rights to payments under your Rentals and is not undertaking any of our
obligations thereunder. We remain solely liable for all obligations as the
renter under the Rentals, all warranties as manufacturer and/or supplier, all
claims under any service contract or any other matters concerning the Rentals or
the equipment. You acknowledge that any claims against us under the Rentals or
as vendor or supplier of the equipment or under any service contract shall be
made solely against us and not General Electric Company and that General
Electric Company shall not be subject to any claims, damages, liabilities, or
offsets against any payments due under any Rentals for any reason whatsoever.
Payments under all Rentals should be remitted to General Electric Company to the
address referenced on the invoices.
Thank you for your attention in this regard. Please acknowledge this assignment
by signing and returning a signed copy of this letter to us.
Very truly yours,
OmniCell Technologies, Inc.
1101 E. Meadow Drive
Palo Alto, CA 94303
ACKNOWLEDGED:
By:_____________________________
Title:__________________________
25.
<PAGE>
EXHIBIT "E"
CUSTOMER CREDIT RATING CATEGORY
Rating Requirements:
- ------ ------------
"A" Fund balance greater than $30 million
Net income greater than $4 million
Cash on hand greater than $5 million
(An "A" can be moved down to a "B" if the current
ratio is less than 1:1 and the debt ratio is
greater than 5:1)
"B" Fund balance greater than $20 million
Net income greater than $2 million
Cash on hand greater than $3 million
(A "B" can be moved up to an "A" if the current
ratio is greater than 3:1 and the debt ratio is
less than 1:1 or a "B" can be moved down to a "C"if
the current ratio is less than 1:1 and the debt
ratio is greater than 5:1)
"C" Fund balance greater than $15 million
Net income greater than $1 million
Cash on hand greater than $2 million
(A "C" can be moved up to a "B" if the current
ratio is greater than 2:1 and the debt ratio is
less than 2:1 or a "C" can be moved down to a "D"
if the current ratio is less than 1:1 and the debt
ratio is greater than 5:1)
"D" Fund balance less than $15 million
Net income less than $1 million
Cash on hand less than $2 million
(A "D" can be moved up to a "C" if the current
ratio is greater than 2:1 and the debt ratio is
less than 2:1)
26.
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EXHIBIT "F"
BILL OF SALE
OmniCell Technologies, Inc. ("Seller") in consideration of:
________________________________________________________________________________
paid by General Electric Company ("Buyer"), receipt of which is acknowledged,
hereby grants, sells, transfers and delivers to the Buyer the Master Rental
Agreement and Supplement No. To Rental Agreement, along with the OmniCell System
or Sure-Med System equipment ("Equipment"), as described below:
Master Rental Agreement Number:_________________________________________________
Master Rental Agreement Date:___________________________________________________
Supplement to Rental Agreement:_________________________________________________
Customer Name:__________________________________________________________________
Buyer shall have all rights and title to the Equipment, but shall have no rights
in any related software.
Seller warrants and represents to Buyer that the title to be conveyed is good,
its transfer is rightful and the Equipment is, has been, or shall be delivered
free from any interest or other lien or encumbrance.
IN WITNESS WHEREOF, Buyer and Seller have executed this Bill Of Sale this day of
___________________.
Seller: Buyer:
OMNICELL TECHNOLOGIES, INC. GENERAL ELECTRIC COMPANY
By:_____________________________ By:_____________________________
Title:__________________________ Title:__________________________
27.
<PAGE>
Exhibit 10.18
SENT BY FIRST CLASS MAIL, POSTAGE PREPAID
COPY BY FACSIMILE
OmniCell Technologies, Inc.
Series J Redemption Notice
February 26, 1999
To Sun Healthcare Group, Inc. ("you"):
Pursuant to the Amended and Restated Articles of Incorporation of OmniCell
Technologies, Inc. (the "Company"), you, as the holder of the Series J
Preferred Stock of the Company, have exercised your option to require the
Company to redeem the Series J Preferred in ten equal quarterly installments.
The first Series J Redemption Date is March 8, 1999 (the "First Redemption
Date").
The number of your shares of Series J Preferred Stock to be redeemed by the
Company on the First Redemption Date is 180,200. The per share Series J
Redemption Price is $14.03274. The total redemption price for your shares of
Series J Preferred Stock to be redeemed by the Company on the First
Redemption Date is $2,528,699.75 (the "Redemption Payment").
The Company hereby calls upon you to surrender to the Company your
certificates representing your shares of Series J Preferred Stock to be
redeemed. In the event that less than all of the shares represented by such
certificates are redeemed on the First Redemption Date, the Company will
promptly issue a new certificate representing the unredeemed shares.
INSTRUCTION: You are to surrender such certificates to the Company's
counsel, Cooley Godward LLP, at their offices located at Five Palo Alto
Square, 3000 El Camino Real, Palo Alto, California, 94306-2155 to the
attention to Jennifer DiNucci, Esq. on or before March 8, 1999.
You have requested, and by signing below, agree and acknowledge, that the
Redemption Payment is to be applied against your mutually agreed upon
outstanding debt to the Company. Accordingly, on the First Redemption Date,
the Redemption Payment will not be paid directly to you but will be applied
against your outstanding debt to the Company, which will be reduced
accordingly.
INSTRUCTION: Please indicate your receipt of this Redemption
Notice and your agreement and acknowledgment that on the First
Redemption Date the Company is to apply the Redemption Payment against
your outstanding debt to the Company (which outstanding debt exceeds
the Redemption Payment) by signing the enclosed copy of this Redemption
Notice and, on or before March 5,1999, returning it by facsimile to
Jennifer DiNucci at 650-857-0663 and the original by first class mail,
postage prepaid to: Cooley Godward LLP, Five Palo Alto Square, 3000 El
Camino Real, Palo Alto, California, 94306-2155, Attn: Jennifer DiNucci,
Esq.
Acknowledged and Agreed:
- ----------------------------------------
Sun Healthcare Group, Inc.
By: /s/ Bob Woltil
-------------------------------------
CFO
<PAGE>
SENT BY FIRST CLASS MAIL, POSTAGE PREPAID
COPY BY FACSIMILE
OmniCell Technologies, Inc.
Series J Redemption Notice
May 28, 1999
To Sun Healthcare Group, Inc. ("you"):
Pursuant to the Amended and Restated Articles of Incorporation of OmniCell
Technologies, Inc. (the "Company"), you, as the holder of the Series J
Preferred Stock of the Company, have exercised your option to require the
Company to redeem the Series J Preferred in ten equal quarterly installments.
The next Series J Redemption Date is June 8, 1999 (the "Second Redemption
Date").
The number of your shares of Series J Preferred Stock to be redeemed by the
Company on the Second Redemption Date is 180,200. The per share Series J
Redemption Price is $14.03274. The total redemption price for your shares of
Series J Preferred Stock to be redeemed by the Company on the Second
Redemption Date is $2,528,699.75 plus $540,509.54 in accrued interest (the
"Redemption Payment").
You have already surrendered to the Company your certificates representing
your shares of Series J Preferred Stock to be redeemed. You have requested,
and by signing below, agree and acknowledge, that the Redemption Payment is
to be applied against your outstanding debt to the Company to the extent that
the outstanding debt exceeds the Redemption Payment, and paid in cash to you
to the extent that the Redemption Payment is determined to exceed the
outstanding debt. Accordingly, on the Second Redemption Date, the Redemption
Payment may be paid directly to you in part and applied against your
outstanding debt to the Company in part, which will be reduced accordingly.
INSTRUCTION: Please indicate your receipt of this Redemption
Notice and your agreement and acknowledgment that on the Second
Redemption Date the Company is to apply the Redemption Payment as
described above by signing the enclosed copy of this Redemption Notice
and, on or before June 4, 1999, returning it by facsimile to Jennifer
DiNucci at 650-857-0663 and the original by first class mail, postage
prepaid to: Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino
Real, Palo Alto, California, 94306-2155, Attn: Jennifer DiNucci, Esq.
Acknowledged and Agreed:
- -------------------------------------
Sun Healthcare Group, Inc.
By: /s/ Bob Woltil
----------------------------------
CFO
<PAGE>
OmniCell Technologies, Inc.
Series J Redemption Notice
March 3, 2000
To Sun Healthcare Group, Inc. ("you"):
Pursuant to the Amended and Restated Articles of Incorporation of OmniCell
Technologies, Inc. (the "Company"), you, as the holder of the Series J Preferred
Stock of the Company, have exercised your option to require the Company to
redeem the Series J Preferred in ten equal quarterly installments. The next
Series J Redemption Date is March 8, 2000 (the "Fifth Redemption Date").
The number of your shares of Series J Preferred Stock to be redeemed by the
Company on the Fifth Redemption Date is 180,200. The per share Series J
Redemption Price is $14.03274. The total redemption price for your shares of
Series J Preferred Stock to be redeemed by the Company on the Fifth Redemption
Date is $2,528,699.75 (the "Redemption Payment").
The Company hereby calls upon you to surrender to the Company your certificates
representing your shares of Series J Preferred Stock to be redeemed. In the
event that less than all of the shares represented by such certificates are
redeemed on the Fifth Redemption Date, the Company will promptly issue a new
certificate representing the unredeemed shares.
INSTRUCTION: You are to surrender such certificates to the Company's
counsel, Cooley Godward LLP, at their offices located at Five Palo Alto
Square, 3000 El Camino Real, Palo Alto, California, 94306-2155 to the
attention Sally Kay, Esq. on or before March 8, 2000.
You have requested, and by signing below, agree and acknowledge, that a portion
of the Redemption Payment, $553,383.90*, is to be applied against your mutually
agreed upon outstanding debt to the Company. Accordingly, on the Fifth
Redemption Date, a portion of the Redemption Payment will be applied against
your outstanding debt to the Company which will be reduced accordingly; the
balance of $1,975,315.85* will be paid directly to you.
INSTRUCTION: Please indicate your receipt of this Redemption Notice and
your agreement and acknowledgment that on the Fifth Redemption Date the
Company is to apply a portion of the Redemption Payment against your
outstanding debt and pay the net balance directly to you by signing the
enclosed copy of this Redemption Notice and, on or before March 6,
2000, returning it by facsimile to Sally Kay at 849-7400 and the
original by first class mail, postage prepaid to: Cooley Godward LLP,
Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California,
94306-2155, Attn Sally A. Kay, Esq.
Acknowledged and Agreed:
/s/ Robert A. Wohil
Sun Healthcare Group, Inc.
By: Robert A. Wohil
<PAGE>
* Sun agrees to these amounts subject to further reconciliation; to the extent
the Company owes Sun additional amounts because the setoff amount is actually
less than $553,383.90, the Company will promptly pay such additional amount to
Sun.
<PAGE>
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of December 13,
1993 by and between OmniCell Technologies, Inc., a California corporation
(hereinafter referred to as the "Company"), and Sheldon D. Asher (hereinafter
referred to as the "Executive").
WITNESSETH:
The company desires to enter into this Agreement and to employ the
Executive and the Executive desires to enter into this Agreement and be employed
by the Company, upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, the Executive and the Company, in consideration of the
agreements, covenants and conditions contained herein, hereby agree as follows:
1. AGREEMENT TO EMPLOY
The Company hereby employs the Executive, and the Executive hereby agrees
to work in the employ of the Company, according to terms and conditions provided
herein.
2. TERM OF EMPLOYMENT
The employment term shall commence on December 13, 1993 (the "Commencement
Date") and shall be on an at-will basis with either party having a right to
terminate such employment, subject to the terms and provisions of this
Agreement, including but not limited to those contained in Section 9 hereof
(such period of employment being herein called the "Employment Period"),
provided that for the period from December 13, 1993 through December 31, 1993,
the Executive's base salary shall be 33% of the Base Rate as set forth in
Section 4.01 hereof.
3. DUTIES; SERVICE AS DIRECTOR
(a) The Executive shall be employed (i) in the capacity of
President and Chief Executive Officer of the Company to perform, subject to the
direction and control of the Board of Directors of the Company, such duties as
are customarily attendant to such office and such other duties as are reasonably
assigned from time to time by such Board of Directors, and (ii) in such
executive capacities as may be mutually agreed upon by the Board of Directors of
the Company and the Executive in subsidiaries or affiliates of the Company.
(b) Upon the Commencement Date, the Company's management shall
take such action as may be necessary to cause the
1.
<PAGE>
Executive to be named as a director of the Company. So long as the Executive is
employed hereunder, the company will use its best efforts to cause the Executive
to continue to serve as a director of the Company without any additional
compensation to the Executive, and the company will nominate the Executive and
recommend to its shareholders that they vote for the Executive as a director of
the Company.
(c) The Company agrees that, from and after an initial public
offering of the Company's Common Stock and for so long thereafter as the
Executive serves as a director of the Company, the Company will use its best
efforts to maintain in effect policies of directors' and officers' liability
insurance in an amount of coverage of at least $1,000,000 subject to a
deductible of not more than $100,000.
4. COMPENSATION OF THE EXECUTIVE
For the performance of his duties hereunder in all capacities, the
Executive shall be compensated by and entitled to compensation by the Company as
follows:
4.1 Regular Salary. Subject to Section 2 hereof, Employee shall be
entitled to receive a regular salary during the Employment Period at a rate
equal to the Base Rate (as hereinafter defined), payable in accordance with the
normal custom of the Company for its other executive employees. As used herein,
"Base Rate" shall mean an amount of compensation as determined by the Board of
Directors from time to time, which shall be reviewed at least annually, but
shall be at least $200,000 per year.
4.2 Performance Bonus. (a) In addition to such salary, commencing
January 1, 1994 and thereafter during the Employment Period the Executive shall
be entitled to receive additional compensation for his services ("Bonus
Compensation") in respect of each calendar year of the Company ("Calendar Year")
beginning or ending during the term of this Agreement, subject to subsection (b)
below, in an amount based on the performance of the Executive during such
Calendar Year as determined by the Board of Directors of the Company, provided
that such amount shall be at least $50,000 in each Calendar Year or, if greater,
for Calendar Year 1994, 1% of the gross revenues of the Company determined in
accordance with generally accepted accounting principles and as set forth in the
Company's financial statements, and for Calendar Years 1995 and thereafter, an
amount determined pursuant to a formula to be established by the Company's Board
of Directors based on relevant operating and other criteria. Bonus Compensation
of $12,500 shall be paid in respect of each of the first three calendar quarters
of the Company (each a "Calendar Quarter") (or, if greater, for each Calendar
Quarter in Calendar Year 1994, 1% of the Company's gross revenues for such
Calendar Quarter) within 10 days after the end
2.
<PAGE>
of the corresponding Calendar Quarter and the remaining Bonus Compensation shall
be paid within ninety (90) days after the end of the corresponding Calendar
Year. All Bonus Compensation will be payable in cash or, for Calendar Year 1994,
at the election of Executive, which election shall be made by written notice
given by the Executive to the Company no later than the last day of the
corresponding Calendar Quarter or Calendar Year, in any combination of cash or
the Company's stock as is mutually agreed upon.
(a) To the extent that any Bonus Compensation is being paid in
respect of a Calendar Quarter or Calendar Year during which the termination of
this Agreement occurs, the amount of such Bonus Compensation to be paid shall be
subject to proration based on the number of days in such Calendar Quarter or
Calendar Year occurring during the term of this Agreement.
4.3 Stock Options. Executive will receive as of the Commencement Date
the grant to Executive of (i) an incentive stock option qualified as such
pursuant to the Internal Revenue Code to purchase from the Company 330,000
shares of the company's common stock at a price equal to fair market value per
share at the date of grant, which shall be $0.21 per share. Such options shall
be granted pursuant to the Company's existing stock option plan (the "Plan") and
shall be evidenced by an appropriate option agreement. This option will become
exercisable with respect to one-sixtieth (1/60) of the total number of shares an
each successive monthly anniversary of the Commencement Date until all shares
covered thereby have become exercisable, provided that in the event that the
Executive's employment by the Company is terminated without cause pursuant to
Section 9(d) hereof or is terminated as a result of the Executive's death or
disability (i) within the first twelve months after the Commencement Date, this
option will accelerate and become immediately exercisable with respect to an
additional one-fifth (1/5) of the total number of shares subject to this option
and (ii) at or subsequent to twelve months after the Commencement Date, this
option will accelerate and become immediately exercisable with respect to the
greater of (A) an additional one-fifth (1/5) of the total number of shares
subject to this option and (B) 40% of the then-unvested shares subject to this
option, and provided further, that in the event that, as the result of any sale
of the Company's equity securities, merger, consolidation, sale of assets, or
proxy contest, the persons who were directors of the Company immediately prior
to such transaction shall not constitute a majority of the Board of Directors of
the Company (or of the board of directors of any successor to or assign of the
Company) immediately after the next election of directors of the Company (or
such successor or assign) following such transaction, this option will
accelerate and become immediately exercisable with respect to the total number
of shares subject to this option. Once the option becomes exercisable with
respect to a number of shares, the option will remain so
3.
<PAGE>
exercisable for the remainder of its term. The option will have a term of ten
years from the date of grant but would terminate in accordance with the Plan
after the Executive's employment by the Company or any of its affiliates
terminates.
5. VON-DISCLOSURE AND NON-COMPETITION
The Company and the Executive agree that they will enter into a mutually
acceptable agreement containing provisions with respect to non-disclosure by the
Executive of confidential information relating to the Company and restricting
the right of the Executive to compete with the Company during the period the
Company shall continue to pay Executive's compensation as set forth in Section
9(g) hereof.
6. EMPLOYEE BENEFITS
(a) During the Employment Period, the Executive and his
dependents shall be entitled to participate in such employee benefits,
including, but not limited to, sick days, holidays, group pension, life and
health insurance and other medical and dental benefits, as the %Company may from
time to time generally make available to its executive employees, provided that
the Executive may in addition elect to continue coverage for him and his
dependents pursuant to COBRA under his former employer's benefit plans for a
period not to exceed 90 days and the Company will reimburse Executive for the
cost thereof so long as such election is in effect. The Executive shall be
entitled, during the term of his employment hereunder, to a paid vacation
aggregating four (4) weeks per year, at a time or times mutually convenient to
the Company and the Executive.
(b) The Company shall pay or reimburse the Executive for (i) the
cost of a $1,000,000 term life insurance policy on the life of the Executive,
the owner and the beneficiaries of which may be designated by the Executive,
subject to the Executive satisfactorily completing any required physical
examination and (ii) a housing allowance which, for the period commencing on the
earlier of July 1, 1994 or the date on which the Executive closes on the
purchase of a home in the San Francisco Bay area, shall equal $50,000 per year,
payable monthly, through the earlier of (A) the first anniversary of the closing
of an initial public offering of the Company's common stock or of the
acquisition of the Company in which its shareholders receive cash or publicly
traded securities, (B) the closing of an acquisition of the Company in which its
shareholders receive all cash, and (C) the month in which the aggregate of the
Executive's Base Rate compensation plus his Bonus Compensation for the preceding
12 months equals or exceeds $350,000, provided that in any event, the $50,000
per year housing allowance will be paid for a minimum of 36 months after the
commencement of such period.
4.
<PAGE>
7. RELOCATION EXPENSES
(a) Expenses incurred on or prior to July 1, 1995 relating to
Executive's relocation from the Chicago metropolitan area to the San Francisco
Bay area will be borne as follows:
(i) customary closing costs (including real estate
commissions) payable by the seller relating to the sale of Executive's home in
Lake Bluff, Illinois will be borne by the Company;
(ii) costs associated with the relocation of Executive's
household (including 3 automobiles and packing and unpacking) from Lake Bluff,
Illinois to either rental or purchased housing in the San Francisco Bay area,
and, if to rental housing, from such rental -housing to purchased housing, will
be borne by the Company;
(iii) living expenses in transit and temporary housing in
the San Francisco Bay area (including apartment rental in lieu of hotel
estimated at $1,500 per month) will be borne by the Company:
(iv) customary closing costs (including up to a maximum of
three points) associated with obtaining a mortgage on and closing on Executive's
new residence in the San Francisco Bay area will be borne by the Company;
(v) costs associated with air fare between Chicago and the
San Francisco Bay area for the Executive and his family for the purpose of
seeking housing or schooling in the San Francisco Bay area will be borne by the
Company; and
(vi) 75% of the difference, if any, between the purchase
price of Executive's Lake Bluff, Illinois home and capital improvements thereon
and the selling price of such home (which difference, for purposes of
determining the amount to be borne by the Company, will not exceed $50,000
without the approval of the Board of Directors of the Company), will be borne by
the Company.
(b) With respect to any payment by the Company for relocation
expenses for the benefit of the Executive or his family pursuant to Section 7(a)
(a "Payment") which is subject to any state, federal, Medicare, FICA or other
income tax or would increase any such tax because of the deduction phase-out
penalty provisions, the Executive shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that after payment by the
Executive of all income taxes on such Payment, including, without limitation,
any taxes imposed upon the Gross-Up Payment, or due as a
5.
<PAGE>
result of such deduction phaseout penalty provisions, the Executive retains an
amount of the Gross-Up Payment equal to the income taxes imposed upon and/or
deductions lost as a result of such Payment. The Executive's accountant will
submit documentation to the Company evidencing the calculation of the amount of
any such Gross-Up Payment.
8. PURCHASE OF COMPANY STOCK
(a) The Company hereby agrees to sell to the Executive-, or if
designated by the Executive, to the Asher Family Trust and/or trusts for the
benefit of the Executive's children (the "Purchaser(s)"), 100,000 shares of
Series D preferred stock of the Company on the Commencement Date at a price
equal to $2.17 per share, payable in cash, and simultaneously therewith the
Company agrees to make five loans to the Purchaser(s) of $40,000 each (for an
aggregate of $200,000) in principal amount, each such loan to relate to 20,000
shares of such stock, such loans bearing interest at 4% per year, and the
principal of and accrued interest on such loans shall be repayable serially, the
first on January 1, 1995 and the second through the fifth on each successive
January 1 thereafter, Provided that so long as the Executive's employment by the
Company has not been terminated prior to the date of maturity of any such loan
the repayment of the principal of and all accrued interest on such 'loan shall
be forgiven by the Company on such date of maturity.
(b) Upon payment of the purchase price for the preferred stock
referred to above, the Purchaser(s) shall have all of the rights of a
stockholder with respect to the shares of preferred stock purchased by the
Purchaser(s) pursuant to this Section 8, including the right to receive
dividends and to vote such shares, except as provided in Subsection (c) hereof.
(c) All certificates representing the shares of preferred stock
of the Company purchased by the Purchaser(s) pursuant to this Section 8, shall
be kept in the stock records of the Company and shall be delivered to the
Purchaser(s) in installments of 20,000 shares each on January 1 in each year in
which a loan matures as such loan is repaid or forgiven. Upon such repayment or
forgiveness with respect to shares so held in the stock records of the Company,
the Company shall deliver to the Purchaser(s) the certificates representing such
shares and the Company shall pay any fees and expenses incident to such
delivery.
(d) The purchase of such shares by the Purchaser(s) shall be
subject to the condition subsequent that the Company shall raise at least
$5,000,000 in equity capital through the issuance and sale of Series E preferred
stock by no later than December 24, 1993.
6.
<PAGE>
9. TERMINATION
(a) The employment of the Executive hereunder shall terminate
automatically upon his death.
(b) In the event of the disability or incapacity of the
Executive, the Company may at any time thereafter elect to terminate the
employment of the Executive hereunder by giving written notice of such
termination to the Executive. For purposes hereof, "disability or incapacity"
shall be deemed to exist-at such time as either of the following conditions has
been met:
(i) The Executive - is unable to perform his basic duties
hereunder after reasonable accommodation by reason of physical or mental illness
or other incapacity and such disability shall exist for a continuous period in
excess of 90 days, or
(ii) The Executive shall refuse to submit to a medical
examination by a medical doctor reasonably acceptable to the Board of Directors
of the Company and to the Executive to determine whether the Executive is unable
to perform his basic duties hereunder by reason of physical or mental illness or
other incapacity.
(c) In the event of the engagement by the Executive in serious
misconduct, the Company may at any time thereafter elect to terminate the
employment of the Executive hereunder by giving written notice of such
termination to the Executive. For purposes hereof, "serious misconduct" shall
mean (i) fraud, misappropriation, embezzlement or other similar act of
dishonesty or material misconduct against the Company or any subsidiaries or
affiliates thereof or act materially contrary to their best interests, or (ii)
alcohol or drug abuse, or (iii) conviction of a felony.
(d) The Company, in its discretion, may elect to terminate the
employment of the Executive hereunder, whether or not there is an event of
disability or incapacity or serious misconduct (i.e., without cause), by giving
at least 20 days, prior written notice of such termination to the Executive.
(e) The Executive may elect to terminate his employment
hereunder for good reason. For purposes hereof, "good reason" shall mean the
occurrence of any of the following without the consent of the Executive:
(i) a change in the Executive's title or position which
represents a demotion from his title or position as in effect at the
Commencement Date;
7.
<PAGE>
(ii) the assignment to the Executive of material duties or
responsibilities which are not commensurate with such title or position or of
any duties, responsibilities or directions which violate law; or
(iii) a failure by the Company to pay the compensation
specified in section 4.01 or 4.02 or Sections 6, 7 or 8 hereof.
(f) In the event of the termination of the employment of the
Executive hereunder by reason of any of the events or circumstances described in
subsection (a) or (c) above, the Company shall pay to the Executive, as of the
effective date of such termination, any accrued and unpaid portion of his salary
hereunder through the date of such termination, and, except as may be provided
in the stock option agreement, Employer shall have no obligation to pay any
other or additional compensation to the Executive hereunder.
(g) In the event of the termination of the employment of the
Executive hereunder by the Company under subsection (b) or (d) above or by the
Executive under subsection (e) above, but in each case not under circumstances
permitting termination under subsection (a) or (c) above (it being agreed that
circumstances permitting termination under subsection (c) above shall be deemed
not to exist unless the Company has otherwise notified the Executive by the
effective date of such termination, in which event whether such circumstances
exist shall be determined as a matter of fact), the Executive shall be entitled
to receive compensation at the Base Rate in effect at the effective date of such
termination plus $50,000 for a period equal to one year following the effective
date of such termination, provided that in the event of termination under
subsection (b), such amounts may be paid by the Company's insurance carrier and
shall be reduced by the amount of proceeds received by Executive from federal or
state disability insurance. Any amount payable under the preceding sentence
shall be payable in three lump sum payments, the first 40% within 30 days after
the effective date of such termination, the next 40% within 180 days after the
effective date of such termination, and the final 20% within 360 days after the
effective date of such termination.
(h) In the event of the termination of the employment of the
Executive hereunder for any reason, the maturity date of all loans referred to
in Section 8 hereof shall be reset to the date which is 18 months after the
effective date of such termination, provided that if the employment of the
Executive is terminated without cause, the repayment of a pro rata portion of
the principal of and accrued interest on any such loans which would otherwise
have been due on the January 1 immediately after the effective date of such
termination (such proration to be based on the number of days worked by the
8.
<PAGE>
Executive in the year in which the effective date of such termination occurs)
shall be forgiven by the Company.
10. NOTICES
Any notice to be given hereunder by either party to the other may be
effected either by delivery of written notice in person or by mail, registered
or certified, postage prepaid, with return receipt requested. Mailed notices
shall be addressed to the party at the address as follows:
If to the Company, to:
OmniCell Technologies, Inc.
177 Jefferson Drive
Menlo Park, California 95025
If to the Executive, to:
Mr. Sheldon Asher
175 Norwich Court
Lake Bluff, IL 60044
Each party may change his or its address by written notice in accordance with
this Section. Notices delivered personally shall be deemed communicated as of
actual receipt. Mailed notices shall be deemed communicated as of three (3) days
after mailing.
11. AMENDMENTS
Any modifications to this Agreement shall be effective only if they are in
writing, signed by the Executive, and approved by the Board of Directors of the
Company.
12. APPLICABLE LAW
The rights, duties, and obligations of the Executive and the Company
hereunder shall be construed in accordance with the laws of the State of
California.
9.
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have executed this
Employment Agreement as of the date first above written.
OmniCell Technologies, Inc.
By: /s/ Randall Lipps
Name: Randall Lipps
Title: Chairman
/s/ Sheldon D. Asher
Sheldon D. Asher
10.
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
ORGANIZATION JURISDICTION NAME
------------ -----------------
<S> <C>
Omnicell HealthCare Canada, Inc. Canada
Omnicell Europe SARL France
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
March 29, 2000 (except for Note 18, as to which the date is April 19, 2000), in
the Registration Statement (Form S-1 No. ) and related Prospectus of
Omnicell.com for the registration of shares of its common stock.
/s/ ERNST & YOUNG LLP
San Jose, California
April 20, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 2,546 11,569 11,543
<SECURITIES> 4,152 10,503 4,997
<RECEIVABLES> 10,023 14,568 16,574
<ALLOWANCES> 338 278 218
<INVENTORY> 9,157 14,209 4,352
<CURRENT-ASSETS> 27,381 42,319 37,744
<PP&E> 12,665 6,478 4,840
<DEPRECIATION> 5,632 3,648 2,379
<TOTAL-ASSETS> 36,449 46,361 43,149
<CURRENT-LIABILITIES> 54,813 31,531 29,543
<BONDS> 0 0 0
15,166 25,282 25,260
33,854 33,854 33,854
<COMMON> 2,302 1,424 807
<OTHER-SE> (78,995) (45,797) (46,431)
<TOTAL-LIABILITY-AND-EQUITY> 36,449 46,361 43,149
<SALES> 45,570 44,088 33,546
<TOTAL-REVENUES> 52,604 48,212 36,073
<CGS> 36,140 17,384 16,211
<TOTAL-COSTS> 36,140 17,384 16,211
<OTHER-EXPENSES> 47,700 30,986 30,666
<LOSS-PROVISION> 60 60 60
<INTEREST-EXPENSE> (2,471) 0 0
<INCOME-PRETAX> (33,063) 821 (9,911)
<INCOME-TAX> 150 185 201
<INCOME-CONTINUING> (33,213) 636 (10,112)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (33,213) 614 (10,134)
<EPS-BASIC> (14.15) .29 (5.54)
<EPS-DILUTED> (14.15) .04 (5.54)
</TABLE>
