<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1996 Commission File Number 0-19841
-------
i-STAT Corporation
(Exact name of registrant as specified in its charter)
Delaware 22-2542664
(State or other jurisdiction of (IRS employer
incorporation or organization) Identification No.)
303 College Road East, Princeton, New Jersey 08540
(Address of principal executive offices)
(609) 243-9300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the Issuer's classes of common stock
as of the latest practicable date.
<TABLE>
<CAPTION>
Class October 25,1996
----- ---------------
<S> <C>
Common Stock, $ .15 par value 11,210,617
</TABLE>
<PAGE> 2
i-STAT CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Condensed Statements of Operations for the three
months and nine months ended September 30, 1996 and 1995 ........................... 3
Consolidated Condensed Balance Sheets
as of September 30, 1996 and December 31, 1995. .................................... 4
Consolidated Condensed Statements of Cash Flows for the nine
months ended September 30, 1996 and 1995 ........................................... 5
Notes to Consolidated Condensed Financial Statements .................................. 6
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 7-9
PART II. OTHER INFORMATION
ITEM 1 - Legal Proceedings............................................................. 10
ITEM 2 - Changes in Securities......................................................... N/A
ITEM 3 - Defaults upon Senior Securities............................................... N/A
ITEM 4 - Submission of Matters to a Vote of
Security Holders....................................................... N/A
ITEM 5 - Other Information............................................................. N/A
ITEM 6 - Exhibits and Reports on Form 8-K.............................................. 11
SIGNATURES ..................................................................................... 12
</TABLE>
<PAGE> 3
i-STAT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales .......................... $ 7,772 $ 5,591 $ 20,923 $ 14,075
Cost of sales ...................... (6,650) (5,849) (19,085) (16,613)
------------ ------------ ------------ ------------
Gross profit (loss) ... 1,122 (258) 1,838 (2,538)
------------ ------------ ------------ ------------
Operating expenses:
Research and development .... 1,512 1,326 4,196 3,979
General and administrative .. 1,386 1,247 4,047 3,631
Sales and marketing ......... 2,724 2,636 8,639 8,019
------------ ------------ ------------ ------------
Total operating expenses .... 5,622 5,209 16,882 15,629
------------ ------------ ------------ ------------
Operating loss ........ (4,500) (5,467) (15,044) (18,167)
------------ ------------ ------------ ------------
Other income (expenses), net ....... 491 555 1,646 283
------------ ------------ ------------ ------------
Net loss ........................... ($ 4,009) ($ 4,912) ($ 13,398) ($ 17,884)
============ ============ ============ ============
Net loss per share ................. ($ 0.30) ($ 0.37) ($ 1.01) ($ 1.52)
============ ============ ============ ============
Shares used in computing
net loss per share ............. 13,326,127 13,200,238 13,311,853 11,752,065
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 4
i-STAT CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 33,600 $ 47,494
Short-term investments .................................................. -- 2,025
Accounts receivable, net ................................................ 3,679 4,053
Inventories ............................................................. 8,414 9,003
Prepaid expenses and other current assets ............................... 581 688
--------- ---------
Total current assets ................................................ 46,274 63,263
Plant and equipment, net of accumulated depreciation of $11,771 and $9,758 .. 11,061 9,163
Other assets ................................................................ 1,569 1,624
--------- ---------
Total assets ........................................................ $ 58,904 $ 74,050
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................ $ 1,228 $ 1,554
Accrued expenses ........................................................ 3,014 2,527
Deferred revenue, current ............................................... 3,310 --
--------- ---------
Total current liabilities ........................................... 7,552 4,081
Deferred revenue, non-current ............................................... 793 6,375
--------- ---------
Total liabilities ................................................... 8,345 10,456
--------- ---------
Stockholders' equity:
Preferred Stock, $.10 par value, shares authorized 7,000,000:
Series A Junior Participating Preferred Stock, $.10 par value,
1,500,000 shares authorized; none issued ........................ -- --
Series B Preferred Stock, $.10 par value,
2,138,702 shares authorized and issued ........................... 214 214
Common Stock, $.15 par value, shares authorized 25,000,000; shares issued
11,187,634 at September 30, 1996 and 11,123,698 at
December 31, 1995 ................................................... 1,678 1,669
Additional paid-in capital .............................................. 186,148 188,698
Other, net .............................................................. (239) (3,143)
Accumulated deficit ..................................................... (137,242) (123,844)
--------- ---------
Total stockholders' equity .......................................... 50,559 63,594
--------- ---------
Total liabilities and stockholders' equity .......................... $ 58,904 $ 74,050
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
4
<PAGE> 5
i-STAT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................ ($13,398) ($17,884)
Adjustments to reconcile net loss to net cash used in
operating activities .................................... (121) 966
Change in assets and liabilities ........................ 1,375 (5,952)
-------- --------
Net cash used in operating activities ............. (12,144) (22,870)
-------- --------
Cash flows from investing activities:
Purchase of investments ................................. -- (10,032)
Sale of investments ..................................... 2,025 27,527
Purchase of equipment ................................... (3,930) (2,727)
Other ................................................... (116) (195)
-------- --------
Net cash provided by (used in) investing activities (2,021) 14,573
-------- --------
Cash flows from financing activities:
Proceeds from sale of Common Stock ...................... 366 439
Proceeds from sale of Preferred Stock ................... -- 59,244
Purchase of Treasury Stock .............................. (2) --
-------- --------
Net cash provided by financing activities ......... 364 59,683
-------- --------
Effect of currency exchange rate changes on cash ........... (93) (23)
-------- --------
Net increase (decrease) in cash and cash equivalents ....... (13,894) 51,363
Cash and cash equivalents at beginning of period ........... 47,494 4,719
-------- --------
Cash and cash equivalents at end of period ................. $ 33,600 $ 56,082
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
5
<PAGE> 6
i-STAT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The information presented as of September 30, 1996 and 1995, and for the
periods then ended, is unaudited, but includes all adjustments
(consisting only of normal recurring accruals) which the management of
i-STAT Corporation (the "Company") believes to be necessary for the fair
presentation of results for the periods presented. The results for the
interim periods are not necessarily indicative of results to be expected
for the year. The year end consolidated condensed balance sheet data was
derived from the audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. These
condensed financial statements should be read in conjunction with the
Company's audited financial statements for the year ended December 31,
1995 which were included as part of the Company's Annual Report on Form
10-K, File No. 0-19841.
2. NET LOSS PER SHARE
Net loss per share is calculated using the weighted average number of
common shares and preferred shares outstanding for all periods presented.
Preferred shares have been included in the calculation since their date
of issuance as they are convertible into common shares on a 1:1 basis and
have substantially the same characteristics as common stock. Options
outstanding are not included in the calculation as they are
anti-dilutive.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Raw materials $ 2,432,000 $3,113,000
Work in process 1,718,000 1,146,000
Finished goods 4,264,000 4,744,000
----------- ----------
$ 8,414,000 $9,003,000
=========== ==========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company is a defendant in a case entitled Nova Biomedical
Corporation, Plaintiff v. i-STAT Corporation, Defendant. The Complaint,
which was filed in the United States District Court for the District of
Massachusetts on June 27, 1995, alleges infringement by i-STAT of Nova's
U.S. Patent No. 4,686,479. The Plaintiff seeks unspecified damages and
that the damages be trebled. Nova also is asking for attorneys' fees and
prejudgement interest. The case currently is in the pre-trial discovery
stage. Management intends to contest the case vigorously and does not
believe that it has infringed the Nova patent. The Company has obtained
an opinion from recognized patent counsel to the effect that no
infringement has occurred. However, if the plaintiff should prevail in
this matter, it could have a material impact on the financial position,
results of operations and cash flows of the Company. The Company has
asserted counterclaims under the antitrust laws alleging that Nova
commenced the action knowing that the patent was not infringed and that
it had reason to believe that the patent was invalid and unenforceable.
The Company is a defendant in a class action complaint entitled Susan
Kaufman, on behalf of herself and all others similarly situated,
Plaintiff, v. i-STAT Corporation, William P. Moffitt, Lionel N. Sterling,
Imants R. Lauks and Matthias Plum, Jr. The class action was brought by
Susan Kaufman on her behalf and on behalf of all purchasers of the
Company's Common Stock between May 9, 1995 and March 19, 1996. The
complaint, which was filed in the Superior Court of New Jersey in Mercer
County on June 19, 1996, alleges New Jersey common law "fraud on the
market" in connection with certain sales of i-STAT stock by the Company's
chief executive officer, chief technology officer and two outside
directors during a nine-month period. The plaintiffs seek unspecified
compensatory damages, interest and payment of all costs and expenses
incurred in connection with the class action. Management believes the
complaint is without merit and intends to vigorously contest it. However,
if the plaintiff should prevail in this matter, it could have a material
impact on the financial position, results of operations and cash flows of
the Company.
6
<PAGE> 7
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company develops, manufactures and markets medical diagnostic products
for blood analysis that provide health care professionals with immediate and
accurate critical diagnostic information at the point of patient care. The
Company markets and distributes its products in the United States and Canada
principally through its own direct sales and marketing organization, in Japan
through Japanese marketing partners and in South America through selected
distribution channels. In February 1996, the Hewlett Packard Company ("HP")
began marketing and distributing the Company's products in certain countries in
Europe through its distribution arrangements with the Company. In April 1996,
the Company and HP entered into a marketing agreement pursuant to which HP and
the Company have begun to jointly market the Company's products into the
critical care departments of hospitals in the United States which meet certain
criteria. The Company is actively planning market introduction into other
foreign markets, including but not limited to, through its arrangements with HP.
During the first three quarters of 1996, international sales as a component of
total sales increased to approximately 34% from approximately 19% in the same
period in 1995. This was due primarily to the introduction of the Company's
blood gas product in Japan, increases in the unit transfer prices specified in
the Company's contracts with its Japanese partners, increased amortization of
deferred revenue, and changes in the Company's U.S. marketing strategy discussed
below. This is not necessarily indicative of a trend. Deferred Japanese revenue
is currently being amortized to income at the rate of approximately $3.2 million
per year ($0.8 million and $2.4 million for the three and nine months ended
September 30, 1996, respectively). Such deferred revenue will be fully amortized
by December 31, 1997, when the period of exclusivity under the Company's
agreements with its Japanese marketing partners comes up for review. Sales to
its Japanese marketing partners represented approximately 81% and 68% of the
Company's international sales (including deferred revenue) during the first nine
months of 1996 and 1995, respectively.
This management's discussion and analysis of financial condition and
results of operations contains both historical financial information and forward
looking statements. The Company operates in a high technology, emerging market
environment that involves significant risks and uncertainties which may cause
actual results to vary from such forward looking statements and to vary
significantly from reporting period to reporting period. These risks include,
among others, competition from existing manufacturers and marketers of blood
analysis products who have greater resources than the Company, the uncertainty
of new product development initiatives, difficulties in transferring new
technology to the manufacturing stage, market resistance to new products,
domestic and international regulatory constraints, uncertainties of
international trade and other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996
The Company generated revenues of approximately $7.8 million and $5.6
million for the quarters ended September 30, 1996 and 1995, respectively,
including international revenues of $2.4 million and $1.2 million, respectively.
The $2.2 million (39.0%) increase in revenues was primarily due to increased
shipment volume of the Company's cartridges and analyzers, reflecting higher
cartridge consumption by existing hospital customers and the addition of new
hospital customers in the U.S. and internationally. Worldwide cartridge
shipments increased 28.7% to 795,567 units from 618,040 units and worldwide
analyzer shipments increased 77.1% to 611 units from 345 units for the three
months ended September 30, 1996 and 1995, respectively. Other elements of the
increase in revenues included 1) recognition of an additional $0.3 million of
deferred revenue, due to a change of accounting estimate in 1996, from the
Company's Japanese marketing partners, 2) higher average selling prices per unit
of the Company's analyzers, and 3) slightly higher worldwide average selling
prices per unit of the Company's cartridges reflecting higher average Japanese
selling prices per unit which were largely offset by lower average selling
prices per unit in the U.S. as a result of a shift to higher volume U.S.
customers that receive lower cartridge list prices. The near term rate of sales
revenue growth may continue to be impacted by the Company's recent marketing
focus on potential large scale adopters of the i-STAT System. Such higher volume
customers tend to require a longer sales cycle as the marketing focus with
respect to such customers is on having these customers re-engineer or replace
their "stat" lab departments with the i-STAT System, as compared to other
potential customers who may be using the i-STAT System as a supplement to their
existing laboratory arrangements.
7
<PAGE> 8
The Company experienced a gross profit of $1.1 million in the quarter
ended September 30, 1996 compared with a gross loss of $0.3 million in the
quarter ended September 30, 1995. The improvement in gross margin was primarily
due to increased shipment volume of the Company's cartridges and analyzers. To
the extent that sales volume increases, the Company expects its gross profit to
improve as manufacturing costs (including direct labor and a large component of
overhead) are spread over a larger number of product units. The additional
deferred revenue and higher average selling prices noted above also contributed
to the gross margin improvement.
The Company incurred research and development costs (as a percentage of
sales) of approximately $1.5 million (19.5%) and $1.3 million (23.7%) for the
quarters ended September 30, 1996 and 1995, respectively, consisting of costs
associated with the personnel, material, equipment and facilities necessary for
conducting new product development.
The Company incurred general and administrative expenses (as a percentage
of sales) of approximately $1.4 million (17.8%) and $1.2 million (22.3%) for the
quarters ended September 30, 1996 and 1995, respectively. General and
administrative expenses consisted primarily of salaries and benefits of
personnel, office costs, professional fees and other costs necessary to support
the Company's infrastructure. The increase primarily reflects the Company's
increased need for management personnel and other services to support its
continuing growth, and legal fees and expenses associated with the defense of
the Nova patent infringement action.
The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $2.7 million (35.0%) and $2.6 million (47.1%) for the
quarters ended September 30, 1996 and 1995, respectively, consisting primarily
of salaries, benefits, travel, and other expenditures for sales representatives,
product literature, market research, clinical studies and other infrastructure
costs.
The decrease in other income (expense), net, to $0.5 million for the three
months ended September 30, 1996 from $0.6 million for the three months ended
September 30, 1995, primarily reflects lower interest income earned on lower
cash, cash equivalents and short-term investment balances in 1996. Interest
income is expected to continue to decline in the near future as cash and cash
equivalent balances decline.
NINE MONTHS ENDED SEPTEMBER 30, 1996
The Company generated revenues of approximately $20.9 million and $14.1
million for the nine months ended September 30, 1996 and 1995, including
international revenues of $7.1 million and $2.6 million, respectively. The $6.9
million (48.7%) increase in revenues was primarily due to increased shipment
volume of the Company's cartridges and analyzers primarily as a result of both
higher cartridge consumption by existing hospital customers and the addition of
new hospital customers in the U.S. and internationally. Worldwide cartridge
shipments increased 44.3% to 2,146,592 units from 1,487,141 units and worldwide
analyzer shipments increased 75.2% to 1,701 units from 971 for the nine months
ended September 30, 1996 and 1995, respectively. Other elements of the increase
in revenues included 1) recognition of an additional $1.5 million of deferred
revenue, due to a change in accounting estimate in 1996, from the Company's
Japanese marketing partners, 2) higher average selling prices per unit of the
Company's analyzers, and 3) slightly higher worldwide average selling prices per
unit of the Company's cartridges reflecting higher average Japanese selling
prices per unit which were partially offset by lower average selling prices per
unit in the U.S. as a result of a shift to higher volume U.S.
customers that receive lower cartridge list prices.
The manufacturing costs associated with product sales for the nine
months ended September 30, 1996 and 1995 were approximately $19.1 million and
$16.6 million, respectively. This resulted in a gross profit of $1.8 million in
the 1996 period, compared with a gross loss of $2.5 million in the 1995 period.
The improvement in gross margin was primarily due to increased shipment volume
of the Company's cartridges and analyzers. To the extent that sales volume
increases, the Company expects its gross profit to improve as manufacturing
costs (including direct labor and a large component of overhead) are spread over
a larger number of product units. The additional deferred revenue and higher
average selling prices noted above also contributed to the gross margin
improvement. The increase in manufacturing costs from 1995 to 1996 was primarily
attributable to the increase in materials, personnel and equipment necessary to
support the volume of product being produced and the anticipated requirements
throughout the remainder of 1996.
8
<PAGE> 9
The Company incurred research and development costs (as a percentage of
sales) of approximately $4.2 million (20.1%) and $3.9 million (28.3%) for the
nine months ended September 30, 1996 and 1995, respectively, consisting of costs
associated with the personnel, material, equipment and facilities necessary for
conducting new product development.
The Company incurred general and administrative expenses (as a percentage
of sales) of approximately $4.0 million (19.3%) and $3.6 million (25.8%) for the
nine months ended September 30, 1996 and 1995, respectively. General and
administrative expenses consisted primarily of salaries and benefits of
personnel, office costs, professional fees, and other costs necessary to support
the Company's infrastructure. The year-to-year increase reflects the Company's
increased need for management personnel and other services to support its
continuing growth, and legal fees and expenses associated with the defense of
the Nova patent infringement action.
The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $8.6 million (41.3%) and $8.0 million (57.0%) for the
nine months ended September 30, 1996 and 1995, respectively, consisting
primarily of salaries, benefits, travel and other expenditures for sales
representatives, product literature, market research, clinical studies and other
sales infrastructure costs. The dollar increase from 1995 to 1996 is
attributable to increased marketing activities, and the hiring of management and
other marketing personnel necessary to support the Company's planned growth in
product sales.
The increase in other income (expense), net, to $1.6 million for the nine
months ended September 30, 1996 from $0.3 million for the nine months ended
September 30, 1995, in part reflects additional interest income earned on
significantly higher cash, cash equivalents and short-term investment balances
in the corresponding 1996 period. Such higher balances reflect the receipt of
net proceeds of approximately $59.2 million in connection with the issuance of
Series B Preferred Stock to HP in July 1995. The Company also recorded a charge
against other income (expense), net, of $0.4 million in the nine months ended
September 30, 1995 relating to the implementation of stockholder protection
measures and a proposed offering of securities that was terminated. Interest
income is expected to decline in the near future as cash and cash equivalent
balances decline.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had cash and cash equivalents of
approximately $33.6 million, a decline of $13.9 million from the December 31,
1995 balance of approximately $47.5 million, primarily reflecting cash used in
operating activities for the nine months ended September 30, 1996. The Company
expects its existing funds to continue to decline until its revenues are
sufficient to support its growth, but to be sufficient to meet its obligations
and its liquidity and capital requirements for the near term. The Company
regularly monitors capital raising alternatives in order to take advantage of
opportunities to supplement its current working capital upon favorable terms,
including joint ventures, strategic corporate partnerships or other alliances
and the sale of equity and/or debt securities. The Company's need, if any, to
raise additional funds to meet its working capital and capital requirements will
depend upon numerous factors, including the results of its product marketing and
sales activities, its new product development efforts, manufacturing
efficiencies and competitive conditions.
The change in other, net, under stockholders' equity from ($3.1) million
at December 31, 1995 to ($0.2) million at September 30, 1996 primarily reflects:
1) the change of estimate in respect to the Company's Strategic Milestone Stock
Award Program of $2.3 million, and 2) treasury stock of $0.7 million which was
retired in the first quarter of 1996. During the first quarter of 1996 the
Company achieved its first milestone under its Strategic Milestone Stock Award
Program. In connection with the achievement of this milestone, an aggregate
amount of $33,000 will be recognized as a non-cash compensation expense over a
27 month period. This represents a reduction of approximately $2.3 million from
amounts previously estimated as of December 31, 1995. The difference relates to
changes in the price of the Company's Common Stock since the milestone first
appeared likely to be achieved.
9
<PAGE> 10
i-STAT CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in a case entitled Nova Biomedical
Corporation, Plaintiff v. i-STAT Corporation, Defendant. The
Complaint, which was filed in the United States District Court
for the District of Massachusetts on June 27, 1995, alleges
infringement by i-STAT of Nova's U.S. Patent No. 4,686,479. The
Plaintiff seeks unspecified damages and that the damages be
trebled. Nova also is asking for attorneys' fees and
prejudgement interest. The case currently is in the pre-trial
discovery stage. Management intends to contest the case
vigorously and does not believe that it has infringed the Nova
patent. The Company has obtained an opinion from recognized
patent counsel to the effect that no infringement has occurred.
However, if the plaintiff should prevail in this matter, it
could have a material impact on the financial position, results
of operations and cash flows of the Company. The Company has
asserted counterclaims under the antitrust laws alleging that
Nova commenced the action knowing that the patent was not
infringed and that it had reason to believe that the patent was
invalid and unenforceable.
The Company is a defendant in a class action complaint entitled
Susan Kaufman, on behalf of herself and all others similarly
situated, Plaintiff, v. i-STAT Corporation, William P. Moffitt,
Lionel N. Sterling, Imants R. Lauks and Matthias Plum, Jr. The
class action was brought by Susan Kaufman on her behalf and on
behalf of all purchasers of the Company's Common Stock between
May 9, 1995 and March 19, 1996. The complaint, which was filed
in the Superior Court of New Jersey in Mercer County on June 19,
1996, alleges New Jersey common law "fraud on the market" in
connection with certain sales of i-STAT stock by the Company's
chief executive officer, chief technology officer and two
outside directors during a nine-month period. The plaintiff seek
unspecified compensatory damages, interest and payment of all
costs and expenses incurred in connection with the class action.
Management believes the complaint is without merit and intends
to vigorously contest it. However, if the plaintiff should
prevail in this matter, it could have a material impact on the
financial position, results of operations and cash flows of the
Company.
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation *
3.2 By-Laws **
3.3 Certificate of Designation, Preferences and Rights of
Series A Preferred Stock **
3.4 Certificate of Designation, Preferences and Rights of
Series B Preferred Stock **
4.1 Stockholder Protection Agreement, dated as of June 26,
1995, between i-STAT Corporation and First Union National
Bank (formerly First Fidelity Bank, National Association)
**
10.4.3 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (U.S. Resident Non-Affiliate)
10.4.4 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (U.S. Resident Affiliate)
10.4.5 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (Ontario Resident Non-Affiliate)
10.4.6 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (Ontario Resident Affiliate)
10.4.7 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (Quebec Resident Non-Affiliate)
10.4.8 Form of Non-Statutory Stock Option Agreement under 1985
Stock Option Plan (Quebec Resident Affiliate)
27 Financial Data Schedule
(b) Reports on form 8-K
During the quarter for which this Report on Form 10-Q is
filed, no reports on Form 8-K were filed.
* These items are hereby incorporated by reference from the
exhibits to the Company's Form S-8/S-3 Registration
Statement (File No. 33-48889) and are made a part of this
Report.
** These items are hereby incorporated by reference from the
exhibits to the Company's Current Report on Form 8-K, dated
July 10, 1995 and amended on September 11, 1995, and are
made a part of this Report.
11
<PAGE> 12
i-STAT CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: October 30, 1996
i-STAT CORPORATION
(Registrant)
BY: /s/William P. Moffitt
---------------------
William P. Moffitt
President and Chief
Executive Officer
(Principal Executive Officer)
BY: /s/Roger J. Mason
---------------------
Roger J. Mason
Vice President of Finance,
Treasurer and Chief Financial
Officer
(Principal Financial Officer)
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation *
3.2 By-Laws **
3.3 Certificate of Designation, Preferences and Rights of Series A
Preferred Stock **
3.4 Certificate of Designation, Preferences and Rights of Series B
Preferred Stock **
4.1 Stockholder Protection Agreement, dated as of June 26, 1995, between
i-STAT Corporation and First Union National Bank (formerly First
Fidelity Bank, National Association) **
10.4.3 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (U.S. Resident Non-Affiliate)
10.4.4 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (U.S. Resident Affiliate)
10.4.5 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (Ontario Resident Non-Affiliate)
10.4.6 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (Ontario Resident Affiliate)
10.4.7 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (Quebec Resident Non-Affiliate)
10.4.8 Form of Non-Statutory Stock Option Agreement under 1985 Stock Option
Plan (Quebec Resident Affiliate)
27 Financial Data Schedule
</TABLE>
* These items are hereby incorporated by reference from the exhibits to
the Company's Form S-8/S-3 Registration Statement (File No. 33-48889)
and are made a part of this Report.
** These items are hereby incorporated by reference from the exhibits to
the Company's Current Report on Form 8-K, dated July 10, 1995 and
amended on September 11, 1995, and are made a part of this Report.
<PAGE> 1
U.S. RESIDENT (NON-AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a
Delaware corporation (the "Company"), hereby grants to ___________ (the
"Associate"), an option (the "Option"), pursuant to the Company's 1985 Stock
Option Plan (the "Plan"), to purchase up to an aggregate of _______ shares (the
"Shares") of Common Stock, U.S. $.15 par value ("Common Stock"), of the Company
at a price of U.S. $_____ per Share (the "Exercise Price"), purchasable as set
forth in and subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for
Termination.
(a) Exercisability of Option. The Option shall
become exercisable based on the number of years that have expired since the date
of grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- ---------------------------
<S> <C>
Less than One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's
cessation of service, death or disability, during which the Option remains
exercisable as provided in subsections (e) and (f) below, shall not be included
for purposes of determining the exercisability of the Option under this
subsection (a).
(b) Expiration Date. Except as otherwise
provided in this Agreement, the Option may not be exercised after the date
(hereinafter the "Expiration Date") that is the tenth anniversary of the Date of
Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the
conditions set forth in this Agreement, the Option shall be exercised by the
Associate's delivery of written notice of exercise to the chief financial
officer of the Company, specifying the number of Shares to be purchased and the
aggregate Exercise Price to be paid therefor and accompanied by payment in full
in accordance with Section 3. Such exercise shall be effective upon receipt by
the chief financial officer of the Company of such written notice together with
the required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as
otherwise provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate
ceases to be employed by the Company, a Parent Corporation or Subsidiary for any
reason other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If
the Associate dies or becomes disabled (within the meaning of Section 22(e)(3)
of the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior
to the Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the
aggregate Exercise Price for Shares purchased upon exercise of the Option shall
be made by delivery to the Company of cash or a check to the order of the
Company.
4. Delivery of Shares. The Company shall, upon
payment of the aggregate Exercise Price for the number of Shares purchased and
paid for, make prompt delivery of such Shares to the Associate, provided that if
any law or regulation requires the Company to take any action with respect to
such Shares before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to complete such action. No
Shares shall be issued and delivered upon exercise of the Option unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as
provided in subsection (f) of Section 2, the Option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option and
such rights shall, at the election of the Company, become null and void.
6. No Special Employment Rights. Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any Parent Corporation or
Subsidiary to continue the employment of the Associate for the period within
which the Option may be exercised. Moreover, during the period of the
Associate's employment, the Associate shall render diligently and faithfully the
services which are assigned to the Associate from time to time by the Board of
Directors or by the executive officers of the Company or any Parent Corporation
or Subsidiary and shall at no time take any action which directly or indirectly
would be inconsistent with the best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall
have no rights as a Shareholder with respect to any Shares which may be
purchased by exercise of the Option unless and until a certificate representing
such Shares is duly issued and delivered to the Associate. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued except as provided for in Sections 8 or 9
of this Agreement.
8. Recapitalization. In the event that the
outstanding shares of Common Stock of the Company are changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the
Company.
(a) Reorganization. In case (i) the Company is
merged or consolidated with another corporation and the Company is not the
surviving corporation, (ii) all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation or (iii) of a reorganization or liquidation of the Company prior to
the Expiration Date, the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the Option, either (x) make appropriate provision for the protection of the
Option by the substitution on an equitable basis of appropriate stock of the
Company, or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided that no additional benefits shall be conferred upon the Associate as a
result of such substitution, and the excess of the aggregate fair market value
of the Shares subject to the Option immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the Shares subject to the Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the Associate,
provide that the Option must be exercised within a specified number of days of
the date of such notice or they will be terminated. In any such case, the Board
of Directors may, in its discretion, accelerate the exercise dates of the
Option.
(b) Change in Control. In case, prior to the
Expiration Date, of (i) any consolidation or merger involving the Company, if
the shareholders of the Company immediately before such merger or consolidation
do not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation
to deliver Shares upon the exercise of the Option shall be subject to the
Associate's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
11. Miscellaneous.
(a) This Agreement and any instruments delivered
pursuant to this Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New Jersey, without regard to the
conflicts of law rules thereof.
(b) This Agreement shall extend to, be binding
upon and inure to the benefit of the Associate, his legal representatives, his
heirs, successors and assigns (subject, however, to the limitations set forth
herein with respect to the assignment of the Option or rights herein) and upon
the Company, its successors and assigns regardless of any change in the business
structure of the Company, be it through spinoff, merger, sale of stock, sale of
assets or any other transaction and shall be construed in a manner that is
consistent with the provisions of the Plan.
-6-
<PAGE> 7
(c) This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof. No waiver,
modification or change of any provision of this Agreement shall be valid unless
in writing and signed by both parties.
(d) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(e) All notices pursuant to this Agreement shall
be in writing and shall be sent by prepaid certified mail, return receipt
requested, addressed to the parties hereto at the addresses set forth beneath
their names below or to such other addresses as may hereafter be specified by
like notice in writing by either of the parties and shall be deemed given three
days after mailing in accordance with the foregoing.
(f) This Agreement may be executed in
counterparts, each of which shall be deemed an original but
-7-
<PAGE> 8
all of which shall together constitute one and the same
Agreement.
Date of Grant: i-STAT CORPORATION
___________________, 19__ By:_________________________________
Title:______________________________
Address: 303 College Road East
Princeton, New Jersey 08540
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Agreement and
agrees to the terms and conditions thereof. The undersigned hereby acknowledges
receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
___________________________________
Address: _________________________
_________________________
_________________________
-8-
<PAGE> 1
U.S. RESIDENT (AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a
Delaware corporation (the "Company"), hereby grants to ___________ (the
"Associate"), an option (the "Option"), pursuant to the Company's 1985 Stock
Option Plan (the "Plan"), to purchase up to an aggregate of _______ shares (the
"Shares") of Common Stock, U.S. $.15 par value ("Common Stock"), of the Company
at a price of U.S. $_____ per Share (the "Exercise Price"), purchasable as set
forth in and subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for
Termination.
(a) Exercisability of Option. The Option shall
become exercisable based on the number of years that have expired since the date
of grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- -----------------------------
<S> <C>
Less than One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's
cessation of service, death or disability, during which the Option remains
exercisable as provided in subsections (e) and (f) below, shall not be included
for purposes of determining the exercisability of the Option under this
subsection (a).
(b) Expiration Date. Except as otherwise
provided in this Agreement, the Option may not be exercised after the date
(hereinafter the "Expiration Date") that is the tenth anniversary of the Date of
Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the
conditions set forth in this Agreement, the Option shall be exercised by the
Associate's delivery of written notice of exercise to the chief financial
officer of the Company, specifying the number of Shares to be purchased and the
aggregate Exercise Price to be paid therefor and accompanied by payment in full
in accordance with Section 3. Such exercise shall be effective upon receipt by
the chief financial officer of the Company of such written notice together with
the required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as
otherwise provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate
ceases to be employed by the Company, a Parent Corporation or Subsidiary for any
reason other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If
the Associate dies or becomes disabled (within the meaning of Section 22(e)(3)
of the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior
to the Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the
aggregate Exercise Price for Shares purchased upon exercise of the Option shall
be made by delivery to the Company of cash or a check to the order of the
Company.
4. Delivery of Shares. The Company shall, upon
payment of the aggregate Exercise Price for the number of Shares purchased and
paid for, make prompt delivery of such Shares to the Associate, provided that if
any law or regulation requires the Company to take any action with respect to
such Shares before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to complete such action. No
Shares shall be issued and delivered upon exercise of the Option unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as
provided in subsection (f) of Section 2, the Option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option and
such rights shall, at the election of the Company, become null and void.
6. No Special Employment Rights. Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any Parent Corporation or
Subsidiary to continue the employment of the Associate for the period within
which the Option may be exercised. Moreover, during the period of the
Associate's employment, the Associate shall render diligently and faithfully the
services which are assigned to the Associate from time to time by the Board of
Directors or by the executive officers of the Company or any Parent Corporation
or Subsidiary and shall at no time take any action which directly or indirectly
would be inconsistent with the best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall
have no rights as a Shareholder with respect to any Shares which may be
purchased by exercise of the Option unless and until a certificate representing
such Shares is duly issued and delivered to the Associate. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued except as provided for in Sections 8 or 9
of this Agreement.
8. Recapitalization. In the event that the
outstanding shares of Common Stock of the Company are changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the
Company.
(a) Reorganization. In case (i) the Company is
merged or consolidated with another corporation and the Company is not the
surviving corporation, (ii) all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation or (iii) of a reorganization or liquidation of the Company prior to
the Expiration Date, the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the Option, either (x) make appropriate provision for the protection of the
Option by the substitution on an equitable basis of appropriate stock of the
Company, or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided that no additional benefits shall be conferred upon the Associate as a
result of such substitution, and the excess of the aggregate fair market value
of the Shares subject to the Option immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the Shares subject to the Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the Associate,
provide that the Option must be exercised within a specified number of days of
the date of such notice or they will be terminated. In any such case, the Board
of Directors may, in its discretion, accelerate the exercise dates of the
Option.
(b) Change in Control. In case, prior to the
Expiration Date, of (i) any consolidation or merger involving the Company, if
the shareholders of the Company immediately before such merger or consolidation
do not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation
to deliver Shares upon the exercise of the Option shall be subject to the
Associate's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
11. Acknowledgement and Legend.
(a) The Associate acknowledges and agrees
that (i) because of her/his position with the Company, the Associate may be
deemed to be an "affiliate" thereof (as such term is defined in Rule 144
promulgated under the Securities Act); (ii) the resale by an affiliate of the
Company of the Shares acquired upon any exercise of the Option is restricted by
law, notwithstanding any registration of the Shares on Form S-8 (or similar
successor form) promulgated under the Securities Act; (iii) any resale of the
Shares by an affiliate of the Company pursuant to said Rule 144 would be subject
to the volume limitations contained in paragraph (e) thereof; and (iv) the
Associate will not sell such Shares in violation of Rule 144(e) or any other
rule or regulation under the Securities Act.
(b) Legend on Stock Certificates. So long as the
Associate remains an affiliate of the Company, all stock certificates
representing Shares issued to the Associate upon exercise of the Option shall
have affixed thereto a
-6-
<PAGE> 7
legend substantially in the following form, in addition to any other legends
required by applicable state law:
"The Shares of stock represented by this
certificate are subject to the volume
limitations of Rule 144(e) promulgated
under the Securities Act of 1933, as
amended."
By making payment upon exercise of the Option, the
Associate shall be deemed to have reaffirmed, as of the date of such payment,
the representations made in this Section 11.
12. Miscellaneous.
(a) This Agreement and any instruments delivered
pursuant to this Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New Jersey, without regard to the
conflicts of law rules thereof.
(b) This Agreement shall extend to, be binding
upon and inure to the benefit of the Associate, his legal representatives, his
heirs, successors and assigns (subject, however, to the limitations set forth
herein with respect to the assignment of the Option or rights herein) and upon
the Company, its successors and assigns regardless of any change in the business
structure of the Company, be it through spinoff, merger, sale of stock, sale of
assets or any other transaction and shall be construed in a manner that is
consistent with the provisions of the Plan.
(c) This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof. No waiver,
modification or change of any provision of this Agreement shall be valid unless
in writing and signed by both parties.
(d) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(e) All notices pursuant to this Agreement shall
be in writing and shall be sent by prepaid certified mail, return receipt
requested, addressed to the parties hereto at the addresses set forth beneath
their names below or to such
-7-
<PAGE> 8
other addresses as may hereafter be specified by like notice in writing by
either of the parties and shall be deemed given three days after mailing in
accordance with the foregoing.
(f) This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same Agreement.
Date of Grant: i-STAT CORPORATION
____________________, 19__ By:_________________________________
Title:______________________________
Address: 303 College Road East
Princeton, New Jersey 08540
-8-
<PAGE> 9
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing
Agreement and agrees to the terms and conditions thereof. The undersigned hereby
acknowledges receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
________________________________
Address: ______________________
______________________
______________________
-9-
<PAGE> 1
ONTARIO RESIDENT (NON-AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a
Delaware corporation (the "Company"), hereby grants to ___________ (the
"Associate"), an option (the "Option"), pursuant to the Company's 1985 Stock
Option Plan (the "Plan"), to purchase up to an aggregate of _______ shares (the
"Shares") of Common Stock, U.S. $.15 par value ("Common Stock"), of the Company
at a price of U.S. $_____ per Share (the "Exercise Price"), purchasable as set
forth in and subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for
Termination.
(a) Exercisability of Option. The Option shall
become exercisable based on the number of years that have expired since the date
of grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- ---------------------------
<S> <C>
Less than One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's
cessation of service, death or disability, during which the Option remains
exercisable as provided in subsections (e) and (f) below, shall not be included
for purposes of determining the exercisability of the Option under this
subsection (a).
(b) Expiration Date. Except as otherwise
provided in this Agreement, the Option may not be exercised after the date
(hereinafter the "Expiration Date") that is the tenth anniversary of the Date of
Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the
conditions set forth in this Agreement, the Option shall be exercised by the
Associate's delivery of written notice of exercise to the chief financial
officer of the Company, specifying the number of Shares to be purchased and the
aggregate Exercise Price to be paid therefor and accompanied by payment in full
in accordance with Section 3. Such exercise shall be effective upon receipt by
the chief financial officer of the Company of such written notice together with
the required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as
otherwise provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate
ceases to be employed by the Company, a Parent Corporation or Subsidiary for any
reason other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If
the Associate dies or becomes disabled (within the meaning of Section 22(e)(3)
of the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior
to the Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the
aggregate Exercise Price for Shares purchased upon exercise of the Option shall
be made by delivery to the Company of cash or a check to the order of the
Company.
4. Delivery of Shares. The Company shall, upon
payment of the aggregate Exercise Price for the number of Shares purchased and
paid for, make prompt delivery of such Shares to the Associate, provided that if
any law or regulation requires the Company to take any action with respect to
such Shares before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to complete such action. No
Shares shall be issued and delivered upon exercise of the Option unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as
provided in subsection (f) of Section 2, the Option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option and
such rights shall, at the election of the Company, become null and void.
6. No Special Employment Rights. Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any Parent Corporation or
Subsidiary to continue the employment of the Associate for the period within
which the Option may be exercised. Moreover, during the period of the
Associate's employment, the Associate shall render diligently and faithfully the
services which are assigned to the Associate from time to time by the Board of
Directors or by the executive officers of the Company or any Parent Corporation
or Subsidiary and shall at no time take any action which directly or indirectly
would be inconsistent with the best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall
have no rights as a Shareholder with respect to any Shares which may be
purchased by exercise of the Option unless and until a certificate representing
such Shares is duly issued and delivered to the Associate. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued except as provided for in Sections 8 or 9
of this Agreement.
8. Recapitalization. In the event that the
outstanding shares of Common Stock of the Company are changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the
Company.
(a) Reorganization. In case (i) the Company is
merged or consolidated with another corporation and the Company is not the
surviving corporation, (ii) all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation or (iii) of a reorganization or liquidation of the Company prior to
the Expiration Date, the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the Option, either (x) make appropriate provision for the protection of the
Option by the substitution on an equitable basis of appropriate stock of the
Company, or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided that no additional benefits shall be conferred upon the Associate as a
result of such substitution, and the excess of the aggregate fair market value
of the Shares subject to the Option immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the Shares subject to the Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the Associate,
provide that the Option must be exercised within a specified number of days of
the date of such notice or they will be terminated. In any such case, the Board
of Directors may, in its discretion, accelerate the exercise dates of the
Option.
(b) Change in Control. In case, prior to the
Expiration Date, of (i) any consolidation or merger involving the Company, if
the shareholders of the Company immediately before such merger or consolidation
do not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation
to deliver Shares upon the exercise of the Option shall be subject to the
Associate's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
11. Acknowledgement and Legend.
(a) The Associate acknowledges and agrees
that the shares acquired pursuant to the exercise of the option cannot be sold
unless the Associate (i) obtains a ruling from the Ontario Securities Commission
(the "Commission") that the sale would not be prejudicial to the public
interest; (ii) a further exemption is available from the provisions of the
Securities Act (Ontario) (the "Ontario Act"); (iii) the sale of the shares
complies with the Commission's ruling dated June 28, 1984 (the "Ruling"), the
Company is a public company subject to the reporting requirements of the
Exchange Act, the trade is executed in the public market in the United States,
and the other terms and conditions of the Ruling are complied with; or (iv) the
resale is in accordance with s.72(5) of the Act.
(b) Legend on Stock Certificates. All stock
certificates representing Shares issued to the Associate upon exercise of the
Option shall have affixed thereto a
-6-
<PAGE> 7
legend substantially in the following form, in addition to any other legends
required by applicable state law:
"Resale of the shares of stock
represented by this certificate may be
subject to restrictions imposed by
Ontario securities legislation."
By making payment upon exercise of the Option, the
Associate shall be deemed to have reaffirmed, as of the date of such payment,
the representations made in this Section 11.
12. Miscellaneous.
(a) This Agreement and any instruments delivered
pursuant to this Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New Jersey, without regard to the
conflicts of law rules thereof.
(b) This Agreement shall extend to, be binding
upon and inure to the benefit of the Associate, his legal representatives, his
heirs, successors and assigns (subject, however, to the limitations set forth
herein with respect to the assignment of the Option or rights herein) and upon
the Company, its successors and assigns regardless of any change in the business
structure of the Company, be it through spinoff, merger, sale of stock, sale of
assets or any other transaction and shall be construed in a manner that is
consistent with the provisions of the Plan.
(c) This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof. No waiver,
modification or change of any provision of this Agreement shall be valid unless
in writing and signed by both parties.
(d) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(e) All notices pursuant to this Agreement shall
be in writing and shall be sent by prepaid certified mail, return receipt
requested, addressed to the parties hereto at the addresses set forth beneath
their names below or to such other addresses as may hereafter be specified by
like notice
-7-
<PAGE> 8
in writing by either of the parties and shall be deemed given three days after
mailing in accordance with the foregoing.
(f) This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall together
constitute one and the same Agreement.
Date of Grant: i-STAT CORPORATION
___________________, 19__ By:_________________________________
Title:______________________________
Address: 303 College Road East
Princeton, New Jersey 08540
-8-
<PAGE> 9
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing
Agreement and agrees to the terms and conditions thereof. The undersigned hereby
acknowledges receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
___________________________________
Address: _________________________
_________________________
_________________________
-9-
<PAGE> 1
ONTARIO RESIDENT (AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a
Delaware corporation (the "Company"), hereby grants to ___________ (the
"Associate"), an option (the "Option"), pursuant to the Company's 1985 Stock
Option Plan (the "Plan"), to purchase up to an aggregate of _______ shares (the
"Shares") of Common Stock, U.S. $.15 par value ("Common Stock"), of the Company
at a price of U.S. $_____ per Share (the "Exercise Price"), purchasable as set
forth in and subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for
Termination.
(a) Exercisability of Option. The Option shall
become exercisable based on the number of years that have expired since the date
of grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- ---------------------------
<S> <C>
Less that One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's
cessation of service, death or disability, during which the Option remains
exercisable as provided in subsections (e) and (f) below, shall not be included
for purposes of determining the exercisability of the Option under this
subsection (a).
(b) Expiration Date. Except as otherwise
provided in this Agreement, the Option may not be exercised after the date
(hereinafter the "Expiration Date") that is the tenth anniversary of the Date of
Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the conditions
set forth in this Agreement, the Option shall be exercised by the Associate's
delivery of written notice of exercise to the chief financial officer of the
Company, specifying the number of Shares to be purchased and the aggregate
Exercise Price to be paid therefor and accompanied by payment in full in
accordance with Section 3. Such exercise shall be effective upon receipt by the
chief financial officer of the Company of such written notice together with the
required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as
otherwise provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate
ceases to be employed by the Company, a Parent Corporation or Subsidiary for any
reason other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If
the Associate dies or becomes disabled (within the meaning of Section 22(e)(3)
of the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior
to the Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the
aggregate Exercise Price for Shares purchased upon exercise of the Option shall
be made by delivery to the Company of cash or a check to the order of the
Company.
4. Delivery of Shares. The Company shall, upon
payment of the aggregate Exercise Price for the number of Shares purchased and
paid for, make prompt delivery of such Shares to the Associate, provided that if
any law or regulation requires the Company to take any action with respect to
such Shares before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to complete such action. No
Shares shall be issued and delivered upon exercise of the Option unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as
provided in subsection (f) of Section 2, the Option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option and
such rights shall, at the election of the Company, become null and void.
6. No Special Employment Rights. Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any Parent Corporation or
Subsidiary to continue the employment of the Associate for the period within
which the Option may be exercised. Moreover, during the period of the
Associate's employment, the Associate shall render diligently and faithfully the
services which are assigned to the Associate from time to time by the Board of
Directors or by the executive officers of the Company or any Parent Corporation
or Subsidiary and shall at no time take any action which directly or indirectly
would be inconsistent with the best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall
have no rights as a Shareholder with respect to any Shares which may be
purchased by exercise of the Option unless and until a certificate representing
such Shares is duly issued and delivered to the Associate. No adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued except as provided for in Sections 8 or 9
of this Agreement.
8. Recapitalization. In the event that the
outstanding shares of Common Stock of the Company are changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the
Company.
(a) Reorganization. In case (i) the Company is
merged or consolidated with another corporation and the Company is not the
surviving corporation, (ii) all or substantially all of the assets or more than
50% of the outstanding voting stock of the Company is acquired by any other
corporation or (iii) of a reorganization or liquidation of the Company prior to
the Expiration Date, the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the Option, either (x) make appropriate provision for the protection of the
Option by the substitution on an equitable basis of appropriate stock of the
Company, or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided that no additional benefits shall be conferred upon the Associate as a
result of such substitution, and the excess of the aggregate fair market value
of the Shares subject to the Option immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the Shares subject to the Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the Associate,
provide that the Option must be exercised within a specified number of days of
the date of such notice or they will be terminated. In any such case, the Board
of Directors may, in its discretion, accelerate the exercise dates of the
Option.
(b) Change in Control. In case, prior to the
Expiration Date, of (i) any consolidation or merger involving the Company, if
the shareholders of the Company immediately before such merger or consolidation
do not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation
to deliver Shares upon the exercise of the Option shall be subject to the
Associate's satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
11. Acknowledgement and Legend.
(a) The Associate acknowledges and agrees that
(i) because of her/his position with the Company, the Associate may be deemed to
be an "affiliate" thereof (as such term is defined in Rule 144 promulgated under
the Securities Act); (ii) the resale by an affiliate of the Company of the
Shares acquired upon any exercise of the Option is restricted by law,
notwithstanding any registration of the Shares on Form S-8 (or similar successor
form) promulgated under the Securities Act; (iii) any resale of the Shares by an
affiliate of the Company pursuant to said Rule 144 would be subject to the
volume limitations contained in paragraph (e) thereof; and (iv) the Associate
will not sell such Shares in violation of Rule 144(e) or any other rule or
regulation under the Securities Act.
(b) The Associate acknowledges and agrees that
the shares acquired pursuant to the exercise of the option cannot be sold unless
the Associate (i) obtains a ruling from the Ontario Securities Commission (the
"Commission")
-6-
<PAGE> 7
that the sale would not be prejudicial to the public interest; (ii) a further
exemption is available from the provisions of the Securities Act (Ontario) (the
"Ontario Act"); (iii) the sale of the shares complies with the Commission's
ruling dated June 28, 1984 (the "Ruling"), the Company is a public company
subject to the reporting requirements of the Exchange Act, the trade is executed
in the public market in the United States, and the other terms and conditions of
the Ruling are complied with; or (iv) the resale is in accordance with s.72(5)
of the Act.
By making payment upon exercise of the Option, the
Associate shall be deemed to have reaffirmed, as of the date of such payment,
the representations made in this Section 11.
(c) Legend on Stock Certificates. (i) So long as
the Associate remains an affiliate of the Company, all stock certificates
representing Shares issued to the Associate upon exercise of the Option shall
have affixed thereto a legend substantially in the following form, in addition
to any other legends required by applicable state law:
"The Shares of stock represented by this
certificate are subject to the volume
limitations of Rule 144(e) promulgated
under the Securities Act of 1933, as amended."
(ii) All stock certificates representing
Shares issued to the Associate upon exercise of the Option shall have affixed
thereto an additional legend substantially in the following form:
"Resale of the shares of stock represented by
this certificate may be subject to
restrictions imposed by Ontario securities
legislation."
12. Miscellaneous.
(a) This Agreement and any instruments delivered
pursuant to this Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New Jersey, without regard to the
conflicts of law rules thereof.
(b) This Agreement shall extend to, be binding
upon and inure to the benefit of the Associate, his legal
representatives, his heirs, successors and assigns (subject,
-7-
<PAGE> 8
however, to the limitations set forth herein with respect to the assignment of
the Option or rights herein) and upon the Company, its successors and assigns
regardless of any change in the business structure of the Company, be it through
spinoff, merger, sale of stock, sale of assets or any other transaction and
shall be construed in a manner that is consistent with the provisions of the
Plan.
(c) This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof. No waiver,
modification or change of any provision of this Agreement shall be valid unless
in writing and signed by both parties.
(d) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(e) All notices pursuant to this Agreement shall
be in writing and shall be sent by prepaid certified mail, return receipt
requested, addressed to the parties hereto at the addresses set forth beneath
their names below or to such other addresses as may hereafter be specified by
like notice in writing by either of the parties and shall be deemed given three
days after mailing in accordance with the foregoing.
-8-
<PAGE> 9
(f) This Agreement may be executed in
counterparts, each of which shall be deemed an original but
all of which shall together constitute one and the same
Agreement.
Date of Grant: i-STAT CORPORATION
______________________, 19__ By:_________________________________
Title:______________________________
Address: 303 College Road East
Princeton, New Jersey 08540
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing
Agreement and agrees to the terms and conditions thereof. The undersigned hereby
acknowledges receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
____________________________________
Address: __________________________
__________________________
__________________________
-9-
<PAGE> 1
QUEBEC RESIDENT (NON-AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a Delaware
corporation (the "Company"), hereby grants to ___________ (the "Associate"), an
option (the "Option"), pursuant to the Company's 1985 Stock Option Plan (the
"Plan"), to purchase up to an aggregate of _______ shares (the "Shares") of
Common Stock, U.S. $.15 par value ("Common Stock"), of the Company at a price of
U.S. $_____ per Share (the "Exercise Price"), purchasable as set forth in and
subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for Termination.
(a) Exercisability of Option. The Option shall become
exercisable based on the number of years that have expired since the date of
grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- ---------------------------
<S> <C>
Less than One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's cessation of
service, death or disability, during which the Option remains exercisable as
provided in subsections (e) and (f) below, shall not be included for purposes of
determining the exercisability of the Option under this subsection (a).
(b) Expiration Date. Except as otherwise provided in this
Agreement, the Option may not be exercised after the date (hereinafter the
"Expiration Date") that is the tenth anniversary of the Date of Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the conditions set
forth in this Agreement, the Option shall be exercised by the Associate's
delivery of written notice of exercise to the chief financial officer of the
Company, specifying the number of Shares to be purchased and the aggregate
Exercise Price to be paid therefor and accompanied by payment in full in
accordance with Section 3. Such exercise shall be effective upon receipt by the
chief financial officer of the Company of such written notice together with the
required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as otherwise
provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate ceases to
be employed by the Company, a Parent Corporation or Subsidiary for any reason
other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If the
Associate dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior to the
Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the aggregate
Exercise Price for Shares purchased upon exercise of the Option shall be made by
delivery to the Company of cash or a check to the order of the Company.
4. Delivery of Shares. The Company shall, upon payment of
the aggregate Exercise Price for the number of Shares purchased and paid for,
make prompt delivery of such Shares to the Associate, provided that if any law
or regulation requires the Company to take any action with respect to such
Shares before the issuance thereof, then the date of delivery of such Shares
shall be extended for the period necessary to complete such action. No Shares
shall be issued and delivered upon exercise of the Option unless and until, in
the opinion of counsel for the Company, any applicable registration requirements
of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as provided in
subsection (f) of Section 2, the Option is personal and no rights granted
hereunder may be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) nor shall any such rights be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of the Option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or similar
process upon the Option or such rights, the Option and such rights shall, at the
election of the Company, become null and void.
6. No Special Employment Rights. Nothing contained in the
Plan or this Agreement shall be construed or deemed by any person under any
circumstances to bind the Company or any Parent Corporation or Subsidiary to
continue the employment of the Associate for the period within which the Option
may be exercised. Moreover, during the period of the Associate's employment, the
Associate shall render diligently and faithfully the services which are assigned
to the Associate from time to time by the Board of Directors or by the executive
officers of the Company or any Parent Corporation or Subsidiary and shall at no
time take any action which directly or indirectly would be inconsistent with the
best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall have no
rights as a Shareholder with respect to any Shares which may be purchased by
exercise of the Option unless and until a certificate representing such Shares
is duly issued and delivered to the Associate. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued except as provided for in Sections 8 or 9 of this
Agreement.
8. Recapitalization. In the event that the outstanding
shares of Common Stock of the Company are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the Company.
(a) Reorganization. In case (i) the Company is merged or
consolidated with another corporation and the Company is not the surviving
corporation, (ii) all or substantially all of the assets or more than 50% of the
outstanding voting stock of the Company is acquired by any other corporation or
(iii) of a reorganization or liquidation of the Company prior to the Expiration
Date, the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Option,
either (x) make appropriate provision for the protection of the Option by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect of the shares of Common Stock of the Company, provided that
no additional benefits shall be conferred upon the Associate as a result of such
substitution, and the excess of the aggregate fair market value of the Shares
subject to the Option immediately after such substitution over the purchase
price thereof is not more than the excess of the aggregate fair market value of
the Shares subject to the Option immediately before such substitution over the
purchase price thereof, or (y) upon written notice to the Associate, provide
that the Option must be exercised within a specified number of days of the date
of such notice or they will be terminated. In any such case, the Board of
Directors may, in its discretion, accelerate the exercise dates of the Option.
(b) Change in Control. In case, prior to the Expiration
Date, of (i) any consolidation or merger involving the Company, if the
shareholders of the Company immediately before such merger or consolidation do
not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation to deliver
Shares upon the exercise of the Option shall be subject to the Associate's
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
11. Miscellaneous.
(a) The Company and the Associate acknowledge that they
have expressly required and agreed that this Agreement and all documents or
notices relating thereto, including the Plan, be drawn in the English language;
la Compagnie et le Participant reconnaissent qui'ils ont expressement requis et
convenu que la presente convention ainsi que tout documents ou avis s'y
rapportant, y compris le texte du regime, soient rediges en anglais.
(b) This Agreement and any instruments delivered pursuant
to this Agreement shall be construed, interpreted and governed in accordance
with the laws of the State of New Jersey, without regard to the conflicts of law
rules thereof.
(c) This Agreement shall extend to, be binding upon and
inure to the benefit of the Associate, his legal representatives, his heirs,
successors and assigns (subject, however, to the limitations set forth herein
with respect to
-6-
<PAGE> 7
the assignment of the Option or rights herein) and upon the Company, its
successors and assigns regardless of any change in the business structure of the
Company, be it through spinoff, merger, sale of stock, sale of assets or any
other transaction and shall be construed in a manner that is consistent with the
provisions of the Plan.
(d) This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof. No waiver, modification or
change of any provision of this Agreement shall be valid unless in writing and
signed by both parties.
(e) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(f) All notices pursuant to this Agreement shall be in
writing and shall be sent by prepaid certified mail, return receipt requested,
addressed to the parties hereto at the addresses set forth beneath their names
below or to such other addresses as may hereafter be specified by like notice in
writing by either of the parties and shall be deemed given three days after
mailing in accordance with the foregoing.
-7-
<PAGE> 8
(g) This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same Agreement.
Date of Grant: i-STAT CORPORATION
________________________, 19__ By: _____________________________
Title: __________________________
Address: 303 College Road East
Princeton, New Jersey 08540
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Agreement and
agrees to the terms and conditions thereof. The undersigned hereby acknowledges
receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
Address: ________________________
________________________
________________________
-8-
<PAGE> 1
QUEBEC RESIDENT (AFFILIATE)
i-STAT CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
1. Grant of Option. i-STAT Corporation, a Delaware
corporation (the "Company"), hereby grants to ___________ (the "Associate"), an
option (the "Option"), pursuant to the Company's 1985 Stock Option Plan (the
"Plan"), to purchase up to an aggregate of _______ shares (the "Shares") of
Common Stock, U.S. $.15 par value ("Common Stock"), of the Company at a price of
U.S. $_____ per Share (the "Exercise Price"), purchasable as set forth in and
subject to the terms and conditions of this Agreement and the Plan.
2. Exercise of Option and Provisions for Termination.
(a) Exercisability of Option. The Option shall become
exercisable based on the number of years that have expired since the date of
grant (the "Date of Grant") set forth on the signature page hereof, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Number of Years Option Shares Available for
That Have Expired Purchase (Cumulative)
----------------- ---------------------------
<S> <C>
Less than One 0%
One but fewer than Two 20%
Two but fewer than Three 40%
Three but fewer than Four 60%
Four but fewer than Five 80%
Five or more 100%
</TABLE>
The periods of time following the Associate's cessation of
service, death or disability, during which the Option remains exercisable as
provided in subsections (e) and (f) below, shall not be included for purposes of
determining the exercisability of the Option under this subsection (a).
(b) Expiration Date. Except as otherwise provided in this
Agreement, the Option may not be exercised after the date (hereinafter the
"Expiration Date") that is the tenth anniversary of the Date of Grant or, if the
<PAGE> 2
Associate is a "10% Shareholder" as described in Section 11 of the Plan, the
fifth anniversary of the Date of Grant.
(c) Exercise Procedure. Subject to the conditions set
forth in this Agreement, the Option shall be exercised by the Associate's
delivery of written notice of exercise to the chief financial officer of the
Company, specifying the number of Shares to be purchased and the aggregate
Exercise Price to be paid therefor and accompanied by payment in full in
accordance with Section 3. Such exercise shall be effective upon receipt by the
chief financial officer of the Company of such written notice together with the
required payment. The Associate may purchase less than the total number of
Shares covered hereby, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten whole Shares.
(d) Continuous Employment Required. Except as otherwise
provided in this Section 2, the Option may not be exercised unless the
Associate, at the time he or she exercises the Option, is, and has been at all
times since the Date of Grant of the Option, an employee of one or more of the
Company, a Parent Corporation or a Subsidiary (as such terms are defined in the
Plan). For all purposes of this Agreement, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if the Option shall be
assumed or a new option substituted therefor in a transaction to which Section
425(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") or by a Parent
Corporation or a Subsidiary thereof (as defined in the Plan, respectively, but
with the Successor Corporation substituted for the Company in such definitions)
shall be considered for all purposes of this Agreement to be employment by the
Company, a Parent Corporation or a Subsidiary, as the case may be.
(e) Termination of Employment. If the Associate ceases to
be employed by the Company, a Parent Corporation or Subsidiary for any reason
other than death or disability or a discharge for "cause", as provided in
subsection (g) below, the right to exercise the Option shall terminate three
months after such cessation (but in no event after the Expiration Date).
-2-
<PAGE> 3
(f) Exercise Period Upon Death or Disability. If the
Associate dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Expiration Date, while he or she is an employee of the
Company, a Parent Corporation or a Subsidiary, or if the Associate dies within
three months after the Associate ceases to be an employee of any of the
foregoing entities (other than as the result of a discharge for "cause" as
specified in subsection (g) below), the Option shall be exercisable, within the
period of one year following the date of death or disability of the Associate
(but in no event after the Expiration Date), by the Associate, the Associate's
legal representative (in the event of legal incapacity) or by the person to whom
the Option is transferred by will or the laws of descent and distribution.
Except as otherwise indicated by the context, the term "Associate", as used in
this Agreement, shall be deemed to include the estate of the Associate, or any
person who acquires the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death of the Associate.
(g) Discharge for Cause. If the Associate, prior to the
Expiration Date, ceases his or her employment with the Company, a Parent
Corporation or a Subsidiary because he or she is discharged for "cause" (as
defined below), the right to exercise the Option shall terminate immediately
upon such cessation of employment. "Cause" shall mean willful misconduct in
connection with the Associate's employment or willful failure to perform his or
her employment responsibilities in the best interests of his or her employer, as
determined by the Company, which determination shall be conclusive.
3. Payment of Exercise Price. Payment of the aggregate
Exercise Price for Shares purchased upon exercise of the Option shall be made by
delivery to the Company of cash or a check to the order of the Company.
4. Delivery of Shares. The Company shall, upon payment of
the aggregate Exercise Price for the number of Shares purchased and paid for,
make prompt delivery of such Shares to the Associate, provided that if any law
or regulation requires the Company to take any action with respect to such
Shares before the issuance thereof, then the date of delivery of such Shares
shall be extended for the period necessary to complete such action. No Shares
shall be issued and delivered upon exercise of the Option unless and until, in
the opinion of counsel for the Company, any applicable registration requirements
of the Securities Act
-3-
<PAGE> 4
of 1933, as amended (the "Securities Act"), any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.
5. Non-transferability of Option. Except as provided in
subsection (f) of Section 2, the Option is personal and no rights granted
hereunder may be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) nor shall any such rights be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of the Option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or similar
process upon the Option or such rights, the Option and such rights shall, at the
election of the Company, become null and void.
6. No Special Employment Rights. Nothing contained in the
Plan or this Agreement shall be construed or deemed by any person under any
circumstances to bind the Company or any Parent Corporation or Subsidiary to
continue the employment of the Associate for the period within which the Option
may be exercised. Moreover, during the period of the Associate's employment, the
Associate shall render diligently and faithfully the services which are assigned
to the Associate from time to time by the Board of Directors or by the executive
officers of the Company or any Parent Corporation or Subsidiary and shall at no
time take any action which directly or indirectly would be inconsistent with the
best interests of the foregoing entities.
7. Rights as a Shareholder. The Associate shall have no
rights as a Shareholder with respect to any Shares which may be purchased by
exercise of the Option unless and until a certificate representing such Shares
is duly issued and delivered to the Associate. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued except as provided for in Sections 8 or 9 of this
Agreement.
8. Recapitalization. In the event that the outstanding
shares of Common Stock of the Company are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any recapitalization, reclassification, stock split, stock dividend,
combination or subdivision, appropriate adjustment
-4-
<PAGE> 5
shall be made in the number and kind of Shares to which the Option shall be
exercisable. Such adjustment to the Option shall be made without change in the
total price applicable to the unexercised portion of the Option, and a
corresponding adjustment in the Exercise Price per Share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of the
Option or a grant of additional benefits to the Associate.
9. Reorganization or Change in Control of the Company.
(a) Reorganization. In case (i) the Company is merged or
consolidated with another corporation and the Company is not the surviving
corporation, (ii) all or substantially all of the assets or more than 50% of the
outstanding voting stock of the Company is acquired by any other corporation or
(iii) of a reorganization or liquidation of the Company prior to the Expiration
Date, the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Option,
either (x) make appropriate provision for the protection of the Option by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect of the shares of Common Stock of the Company, provided that
no additional benefits shall be conferred upon the Associate as a result of such
substitution, and the excess of the aggregate fair market value of the Shares
subject to the Option immediately after such substitution over the purchase
price thereof is not more than the excess of the aggregate fair market value of
the Shares subject to the Option immediately before such substitution over the
purchase price thereof, or (y) upon written notice to the Associate, provide
that the Option must be exercised within a specified number of days of the date
of such notice or they will be terminated. In any such case, the Board of
Directors may, in its discretion, accelerate the exercise dates of the Option.
(b) Change in Control. In case, prior to the Expiration
Date, of (i) any consolidation or merger involving the Company, if the
shareholders of the Company immediately before such merger or consolidation do
not own, directly or indirectly, immediately following such merger or
consolidation, more than fifty percent (50%) of the combined
-5-
<PAGE> 6
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is not, on April 21, 1995, a controlling person (as
defined in Rule 405 under the Securities Act of 1933, as amended) (a
"Controlling Person") of the Company shall become (x) the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of over 50% of the
Company's outstanding Common Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally or (y) a
Controlling Person of the Company, the Option shall immediately become
exercisable with respect to 100% of the Common Stock subject to the Option.
10. Withholding Taxes. The Company's obligation to deliver
Shares upon the exercise of the Option shall be subject to the Associate's
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
11. Acknowledgement and Legend.
(a) The Associate acknowledges and agrees that (i)
because of her/his position with the Company, the Associate may be deemed to be
an "affiliate" thereof (as such term is defined in Rule 144 promulgated under
the Securities Act); (ii) the resale by an affiliate of the Company of the
Shares acquired upon any exercise of the Option is restricted by law,
notwithstanding any registration of the Shares on Form S-8 (or similar successor
form) promulgated under the Securities Act; (iii) any resale of the Shares by an
affiliate of the Company pursuant to said Rule 144 would be subject to the
volume limitations contained in paragraph (e) thereof; and (iv) the Associate
will not sell such Shares in violation of Rule 144(e) or any other rule or
regulation under the Securities Act.
(b) Legend on Stock Certificates. So long as the Associate
remains an affiliate of the Company, all stock certificates representing Shares
issued to the Associate upon exercise of the Option shall have affixed thereto a
-6-
<PAGE> 7
legend substantially in the following form, in addition to any other legends
required by applicable state law:
"The Shares of stock represented by
this certificate are subject to the
volume limitations of Rule 144(e)
promulgated under the Securities Act
of 1933, as amended."
By making payment upon exercise of the Option, the
Associate shall be deemed to have reaffirmed, as of the date of such payment,
the representations made in this Section 11.
12. Miscellaneous.
(a) The Company and the Associate acknowledge that they
have expressly required and agreed that this Agreement and all documents or
notices relating thereto, including the Plan, be drawn in the English language;
la Compagnie et le Participant reconnaissent qui'ils ont expressement requis et
convenu que la presente convention ainsi que tout documents ou avis s'y
rapportant, y compris le texte du regime, soient rediges en anglais.
(b) This Agreement and any instruments delivered pursuant
to this Agreement shall be construed, interpreted and governed in accordance
with the laws of the State of New Jersey, without regard to the conflicts of law
rules thereof.
(c) This Agreement shall extend to, be binding upon and
inure to the benefit of the Associate, his legal representatives, his heirs,
successors and assigns (subject, however, to the limitations set forth herein
with respect to the assignment of the Option or rights herein) and upon the
Company, its successors and assigns regardless of any change in the business
structure of the Company, be it through spinoff, merger, sale of stock, sale of
assets or any other transaction and shall be construed in a manner that is
consistent with the provisions of the Plan.
(d) This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof. No waiver, modification or
change of any provision of this Agreement shall be valid unless in writing and
signed by both parties.
-7-
<PAGE> 8
(e) The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
(f) All notices pursuant to this Agreement shall be in
writing and shall be sent by prepaid certified mail, return receipt requested,
addressed to the parties hereto at the addresses set forth beneath their names
below or to such other addresses as may hereafter be specified by like notice in
writing by either of the parties and shall be deemed given three days after
mailing in accordance with the foregoing.
(g) This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same Agreement.
Date of Grant: i-STAT CORPORATION
________________________, 19 __ By: ________________________________
Title: _____________________________
Address: 303 College Road East
Princeton, New Jersey 08540
-8-
<PAGE> 9
ASSOCIATE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Agreement and
agrees to the terms and conditions thereof. The undersigned hereby acknowledges
receipt of a copy of the Company's 1985 Stock Option Plan.
ASSOCIATE
____________________________________
Address: __________________________
__________________________
__________________________
-9-
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