Marketing And Distribution Agreement

MARKETING AND DISTRIBUTION AGREEMENT


THIS AGREEMENT is made by and between Abbott Laboratories, an Illinois corporation having its principal place of business at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500 ("Abbott"), and i-STAT Corporation, a Delaware corporation having its principal place of business at 303 College Road East, Princeton, New Jersey 08540 ("i-STAT").


WITNESSETH:


WHEREAS, i-STAT develops, manufactures and sells medical diagnostic products for point-of-care blood analysis;


WHEREAS, i-STAT has entered into a Distribution Agreement with FUSO Pharmaceutical Industries, Ltd. and JCR Pharmaceutical Co., Ltd. (together "FUSO") dated August 23, 1988 ("FUSO Agreement") for the distribution of certain of such i-STAT products in Japan, South Korea and Taiwan;


WHEREAS, i-STAT has entered into a Distribution Agreement with Hewlett-Packard Company ("HP") dated July 28, 1995 ("HP Agreement") for the distribution of certain of such i-STAT products in Europe, the Middle East and Africa;


WHEREAS, i-STAT wishes to expand its worldwide sales of certain of such products through an additional distribution arrangement;


WHEREAS, Abbott, through its Diagnostics Division ("ADD"), is engaged in the development, manufacture, marketing and distribution of medical diagnostic products; 2
WHEREAS, Abbott desires to become a worldwide distributor of certain of such i-STAT products;


WHEREAS, in accordance with the terms and conditions hereof, i-STAT is willing to appoint Abbott as a worldwide distributor of all such products, and Abbott is willing to accept such appointment;


WHEREAS, concurrent with this Agreement, Abbott and i-STAT are executing a stock purchase agreement and other related agreements by which Abbott will acquire a minority ownership interest in i-STAT ("Stock Purchase Agreements"); and


WHEREAS, concurrent with this Agreement, Abbott and i-STAT are executing a research and development agreement by which Abbott will fund joint research and development projects designed to develop for commercialization by Abbott additional medical diagnostic products ("Funded Research & Development and License Agreement" and, together with this Agreement and the Stock Purchase Agreements, the "Alliance Agreements").


NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and upon the terms and subject to conditions set forth below, Abbott and i-STAT hereby agree as follows:


ARTICLE 1 - DEFINITIONS


The following words and phrases, when used herein with initial capital letters, shall have the meanings set forth or referenced below:


1.1 "Actual Cartridge Purchase Price" shall mean the price for
Cartridges (as hereinafter defined) purchased hereunder by
Abbott and its Affiliates (as hereinafter defined)


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from i-STAT and its Affiliates calculated during the year-end
reconciliation described in Section 5.3.


1.2 "Additional Units" shall mean the number of Cartridges
purchased hereunder by Abbott and its Affiliates from i-STAT
and its Affiliates in a Contract Year (as hereinafter defined)
that exceeds the Estimated Volume of Cartridges, all of which
is more fully described in Section 5.5.


1.3 "Affiliate" shall mean, with respect to each Party (as
hereinafter defined), any legal entity which is, directly or
indirectly, controlling, controlled by or under common control
with such Party. For purposes of this definition, a Party
shall be deemed to control another entity if it owns or
controls, directly or indirectly, more than fifty percent
(50%) of the voting equity of the other entity (or other
comparable ownership interest for an entity other than a
corporation).


1.4 "Analyte" shall mean an individual compound, protein or
fragment thereof, or substance which is the target of
quantitative or qualitative measurement.


1.5 "Analyzer" shall mean a device that processes Cartridges and
is capable of detecting at least one (1) Analyte for use in
the Field, including analyzers integrated into in vitro
diagnostic devices, but excluding analyzers which are not
integrated into in vitro diagnostic devices, which devices are
devices designed primarily for the delivery of patient care
(e.g., the monitors currently being marketed and distributed
by HP pursuant to a license from i-STAT).


1.6 "Ancillary Products" shall mean any hardware (not including
Cartridges) and/or software that is not part of an Analyzer,
but is essential to the use of an Analyzer (e.g., a simulator
device used for testing Analyzers by simulating certain of the
electrical characteristics


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of a Cartridge or by some other testing means), and which is
identified on Schedule 1.6, as may be amended from time to
time.


1.7 "Annualized" shall mean the number being measured during the
Base Period divided by the number of days in the Base Period
times three hundred sixty-five (365).


1.8 "AUP" shall mean average unit selling price.


1.9 "Base AUP" shall mean the Net Sales (as hereinafter defined)
of Cartridges sold by i-STAT and its Affiliates in the Field
(as hereinafter defined) in the United States (as hereinafter
defined) to Base Customers (as hereinafter defined) *** (as
hereinafter defined), divided by the number of Cartridges sold
by i-STAT and its Affiliates in the United States to Base
Customers ***.


1.10 "Base Customers" shall mean customers that purchased
Cartridges from i-STAT and its Affiliates under Third Party
Agreements (as hereinafter defined) for use in the Field in
the United States as of the Starting Date.


1.11 "Base Fully Burdened Manufacturing Cost" shall mean ***


*** Confidential treatment requested


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1.12 "Base Period" shall mean the period from and including January
1, 1998, until, but not including, the Starting Date.


1.13 "Base Sales" shall mean the Annualized Net Sales of i-STAT
Products (as hereinafter defined) by i-STAT and its Affiliates
in the Field in the United States.


1.14 "Base Units" shall mean the Annualized number of Cartridges
sold by i-STAT and its Affiliates in the Field in the United
States.


1.15 "Book Value" shall mean the Purchase Price (as hereinafter
defined) of the Analyzers, less accumulated depreciation based
on a depreciation schedule determined in accordance with
Abbott's standard accounting procedures, but not to exceed
four (4) years.


1.16 "Business" shall mean the promotion, marketing, distribution
and sale of i-STAT Products by i-STAT and its Affiliates in
the Field in the United States.


1.17 "Business Day" means any day other than a day which is a
Saturday or Sunday or other day on which commercial banks in
New York, New York are authorized or required to remain
closed.


1.18 "Calendar Quarter" shall mean a period of three (3)
consecutive calendar months commencing on January 1, April 1,
July 1 or October 1 of any Contract Year.


1.19 "Cartridge" shall mean the disposable component of a Product
(as hereinafter defined) that contains i-STAT Sensors (as
hereinafter defined) and fluid handling channels and operate
on the Analyzer or any other analyzer or integrated device
sold by a Third Party (as hereinafter defined) under an
agreement with i-STAT.


1.20 "Certificate of Analysis" shall mean finished goods test
results accompanying the release of Products.


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1.21 "Change of Control" shall mean: (a) the consolidation or
merger of i-STAT or any Affiliate of i-STAT with or into any
Third Party wherein the shareholders of i-STAT immediately
prior to such transaction shall cease to be the holders of at
least fifty percent (50%) of the outstanding securities of the
surviving corporation in such transaction; (b) the assignment,
sale, transfer, lease or other disposition of all or
substantially all of the assets of i-STAT; or (c) the
acquisition by any Third Party or group of Third Parties
acting in concert, of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission
("SEC") under the Securities and Exchange Act of 1934) of more
than fifty percent (50%) of the outstanding shares of voting
stock of i-STAT.


1.22 "Closing" shall mean the closing of the transaction provided
for in this Agreement, as more fully described in Section 8.1.


1.23 "Closing Date" shall mean the date on which the Closing
occurs.


1.24 "Co-exclusive FUSO Territory" shall mean the territory into
which FUSO currently has the right to distribute certain
i-STAT Products on a non-exclusive basis pursuant to the FUSO
Agreement, which territory shall be reduced from time to time
pursuant to Sections 2.1 and 2.2. As of the Signing Date (as
hereinafter defined), the Co-exclusive FUSO Territory consists
of Japan, South Korea and Taiwan.


1.25 "Confidential Information" shall mean any and all technical
data, information, materials and other know-how, including
Trade Secrets (as hereinafter defined), presently owned by or
developed by, on behalf of, or derived either directly or
indirectly from Program Technology (as hereinafter defined) of
either Party and/or its Affiliates during the Term (as
hereinafter defined) which relates to a Product, its
development, manufacture, promotion,


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marketing, distribution, sale or use and any and all financial
data and information relating to the business of either of the
Parties and/or of their Affiliates, which a Party and/or its
Affiliates discloses to the other Party and/or its Affiliates
in writing and identifies as being confidential, or if
disclosed orally, visually or through some other media, is
identified as confidential at the time of disclosure and is
summarized in writing within thirty (30) days of such
disclosure and identified as confidential, except any portion
thereof which:


(a) is known to the receiving Party and/or its Affiliates
at the time of the disclosure, as evidenced by its
written records;


(b) is disclosed to the receiving Party and/or its
Affiliates by a Third Party having a right to make
such disclosure;


(c) becomes patented, published or otherwise part of the
public domain through no fault of the receiving Party
and/or its Affiliates; or


(d) is independently developed by or for the receiving
Party and/or its Affiliates without use of
Confidential Information disclosed hereunder, as
evidenced by its written records.


1.26 "Contract Year" shall mean a calendar year during the Term (as
hereinafter defined), beginning on January 1, except that the
first Contract Year may begin on the Starting Date and shall
end on December 31, 1999.


1.27 "Customer Contracts" shall mean those Third Party Agreements
listed on Schedule 1.27.


1.28 "Designated Country" shall mean a country in the Territory (as
hereinafter defined) outside of the United States to which
Products shall be delivered.


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1.29 "Delivered" and "Delivery" shall have the meanings ascribed to
them in Section 6.1.


1.30 "Distributor Territories" shall mean those countries
identified on Schedule 1.30, as may be amended from time to
time in accordance with the provisions of Section 2.4.


1.31 "Estimated Cartridge Purchase Price" shall mean the weighted
average price for Cartridges purchased by Abbott and its
Affiliates from i-STAT and its Affiliates hereunder, as
determined in accordance with the terms of Section 5.2.


1.32 "Estimated Volume of Cartridges" shall mean the estimated
volume of Cartridges in excess of Base Units *** as specified
in Schedule 5.5.


1.33 "Exclusive Territory" shall mean the Territory, except for the
Co-exclusive FUSO Territory, the HP Territory and the
Distributor Territories, subject to the Co-exclusive FUSO
Territory, the HP Territory and the Distributor Territories,
or portions thereof, becoming part of the "Exclusive
Territory" pursuant to Sections 2.1, 2.2, 2.3 and 2.4.


1.34 "FDA" shall mean the United States Food and Drug
Administration and any successor agency thereto.


1.35 "Field" shall mean the professionally attended human
healthcare delivery market, including, without limitation,
hospitals, physician office laboratories, alternate site
facilities, surgi-centers, emergicare, ambulances and home
care. Subject to Abbott's right of first negotiation as set
forth in Section 2.5, "Field" shall not include the consumer
self-testing market.


*** Confidential treatment requested


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1.36 "Fully Burdened Manufacturing Costs" shall mean ***


1.37 "FUSO Agreement" shall mean the Distribution Agreement dated
August 23, 1988, between i-STAT and FUSO.


1.38 "FUSO Development Agreement" shall mean the Development
Agreement dated August 23, 1988, between i-STAT and FUSO.


1.39 "FUSO License Agreement" shall mean the Manufacturing License
Agreement dated August 23, 1988, between i-STAT and FUSO.


1.40 "HP Agreement" shall mean the Distribution Agreement dated
July 28, 1995 between i-STAT and HP.


1.41 "HP Exclusivity Period" shall mean the period under the HP
Agreement during which HP shall have exclusive rights to
distribute certain of i-STAT's products, as determined by
Abbott in its sole discretion.


1.42 "HP License Agreement" shall mean the License Agreement dated
July 28, 1995 between i-STAT and HP.


1.43 "HP Stock Purchase Agreement" means the Series B Preferred
Stock Purchase Agreement dated as of June 23, 1995 between
i-STAT and HP.


*** Confidential treatment requested


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1.44 "HP Territory" shall mean the territory into which HP has the
right to distribute certain i-STAT Products pursuant to the HP
Agreement. As of the Signing Date, the HP Territory consists
of the countries set forth on Schedule 1.44.


1.45 "HSR Act" shall mean the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976, including all regulations
promulgated thereunder, and any foreign equivalent.


1.46 "Incremental AUP" shall mean the Net Sales of Incremental
Units (as hereinafter defined) sold by Abbott and its
Affiliates in the Territory during a Calendar Quarter divided
by the number of Incremental Units sold by Abbott and its
Affiliates in the Territory during such Calendar Quarter.


1.47 "Incremental Units" shall mean the number of Cartridges
purchased by Abbott and its Affiliates from i-STAT and its
Affiliates hereunder in a Contract Year in excess of the Base
Units.


1.48 "i-STAT Distributors" shall mean Third Parties, other than
FUSO and HP, that, as of the Signing Date, distribute i-STAT
Products in the Distributor Territories, pursuant to
agreements, understandings or arrangements with i-STAT.


1.49 "i-STAT Product" shall mean Analyzers, Cartridges and
Ancillary Products, or any combination of the foregoing, in
the Field, including the manuals, labeling, packaging and
package inserts thereto. For purposes of this Agreement, any
New Product (as hereinafter defined) shall be deemed to be an
"i-STAT Product".


1.50 "i-STAT Sensors" shall mean at least one (1) solid state
potentiometric, amperimetric and/or conductometric microsensor
device or an integrated group of such devices


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designed to detect the presence and/or quantity of at least
one (1) Analyte. ***


1.51 "i-STAT Trademarks" shall mean the trademarks of i-STAT as set
forth in Schedule 1.51.


1.52 "Liabilities" shall mean any claims, damages, losses,
liabilities, debts or obligations of any nature, whether known
or unknown, accrued, absolute, contingent or otherwise, and
whether due or to become due.


1.53 "Minimum Cartridge Purchase Price" shall mean the minimum
price i-STAT shall invoice Abbott and its Affiliates for any
Cartridge as set forth in Schedule 1.53, as may be adjusted in
accordance with the provisions of Section 5.6.


1.54 "Net Sales" shall mean the total of the gross amount billed or
invoiced to Third Parties for the sale of Product, less:


(a) Rebates granted and allowances, trade, quantity or
cash discounts actually allowed and taken;


(b) Retroactive price reductions imposed by government
authorities;


(c) Fees, commissions or rebates lawfully paid pursuant
to contracts with group purchasing organizations;


(d) Amounts actually repaid a Third Party by reason of
rejection or return of defective Product; and


*** Confidential treatment requested


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(e) Upcharges invoiced and paid by Third Parties as part
of a reagent agreement plan or similar arrangement.


1.55 "New Product" shall mean any i-STAT Product or modification or
follow-on to an i-STAT Product intended for use in the Field,
which i-STAT may develop or offer for sale during the Term,
with the exception of Program Products (as hereinafter
defined).


1.56 "Party" shall mean i-STAT or Abbott, and "Parties" shall mean
i-STAT and Abbott.


1.57 "Prepayment" shall mean periodic cash payments made by Abbott
to i-STAT which i-STAT shall credit or repay to Abbott in
accordance with the terms and conditions set forth in Sections
5.5 or 18.3.


1.58 "Product" shall mean i-STAT Products and Program Products.


1.59 "Program Product" shall have the same meaning as is ascribed
to such term under the Funded Research & Development and
License Agreement.


1.60 "Program Technology" shall have the same meaning as is
ascribed to such term under the Funded Research & Development
and License Agreement.


1.61 "Purchase Price" shall mean the price for Analyzers and
Ancillary Products purchased by Abbott and its Affiliates from
i-STAT and its Affiliates hereunder, as more fully described
in Section 5.1.


1.62 "Signing Date" shall mean the last date on which a Party
executes this Agreement.


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1.63 "Specifications" shall mean the Product characteristics set
forth in Schedule 1.63, and New Product and Program Product
characteristics at such time as the same are available and
i-STAT's manufacturing specifications.


1.64 "Starting Date" shall mean January 1, 1999, unless an earlier
date is mutually agreed in writing by the Parties; provided,
however, the Starting Date shall not occur unless the Closing
has first occurred.


1.65 "Term" shall mean the period beginning on the Starting Date
and ending on December 31, 2003 or any extensions thereto,
unless otherwise terminated earlier in accordance with the
terms and conditions of Article 17.


1.66 "Territory" shall mean the Co-exclusive FUSO Territory, the HP
Territory (after the expiration the HP Exclusivity Period),
the Distributor Territories and the Exclusive Territory, which
collectively shall mean the entire world.


1.67 "Third Party" shall mean a natural person, corporation,
partnership, trust, joint venture, governmental authority or
other legal entity or organization other than the Parties
and/or their Affiliates.


1.68 "Third Party Agreements" shall mean all written or oral
agreements, contracts, purchase or sale orders and commitments
with Third Parties for the sale of i-STAT Product in the
United States.


1.69 "Trade" shall mean those potential customers for i-STAT
Product, including, without limitation, facilities operating
in the Field and group purchasing organizations.


1.70 "Trade Secrets" shall mean the technical or nontechnical data,
formulae, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data,


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financial plans, marketing plans, product plans and the like,
owned or licensed by a Party and/or its Affiliates: (a) from
which a Party and/or its Affiliates derives actual or
potential economic value by being held in secrecy and not
known by Third Parties who are not under an obligation of
confidentiality with respect thereto; or (b) which gives such
Party an advantage over Third Party competitors who do not
know or use it.


1.71 "Transition Period" shall mean the period of time between the
Signing Date and the Starting Date.


1.72 "United States" shall mean the fifty (50) states of the United
States, including its territories and possessions and the
District of Columbia and Puerto Rico.


1.73 "Warranty Period" shall have the meaning ascribed to it in
Section 14.1(b).


ARTICLE 2 - APPOINTMENT TO MARKET AND DISTRIBUTE


2.1 Exclusive Appointment. As of the Closing Date, i-STAT hereby
appoints Abbott and its Affiliates for the Term as i-STAT's
exclusive distributor of Products in the Exclusive Territory
for use in the Field and Abbott accepts such appointment. As
part of such appointment under this Section 2.1, Abbott shall
have the right to appoint sub-distributors in those countries
or territories in the Exclusive Territory in which ADD does
not then distribute products similar to Products. The Parties
acknowledge that, during the Term, either pursuant to
Section(s) 2.2, 2.3, 2.4 or otherwise, countries within the
Co-exclusive FUSO Territory, the HP Territory or the
Distributor Territory may no longer be subject to FUSO's, HP's
and i-STAT Distributors' distribution rights ...