<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
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 (I.R.S. employer
incorporation or organization) Identification No.)
104 Windsor Center Drive, East Windsor, NJ 08520
(Address of Principal Executive Offices) (Zip Code)
(609) 443-9300
(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.
Class May 14, 1999
Common Stock, $ .15 par value 15,646,360
<PAGE> 2
i-STAT CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements
<S> <C>
Consolidated Condensed Statements of Operations and Comprehensive Income
for the three months ended March 31, 1999 and 1998 ..................... 3
Consolidated Condensed Balance Sheets
as of March 31, 1999 and December 31, 1998 ............................. 4
Consolidated Condensed Statements of Cash Flows for the three
months ended March 31, 1999 and 1998 ................................... 5
Notes to Consolidated Condensed Financial Statements ...................... 6 - 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations .................................... 9 - 13
PART II OTHER INFORMATION
Item 1 - Legal Proceedings ................................................ 14
Item 2 - Changes in Securities and Use of Proceeds ........................ 14
Item 6 - Exhibits and Reports on Form 8-K ................................. 15
SIGNATURES ........................................................................... 16
</TABLE>
2
<PAGE> 3
i-STAT CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
Net sales (inclusive of related party sales of
$8,596 and $963) ............................ $ 10,337 $ 8,786
Cost of sales .................................... 8,083 7,690
------------ ------------
Gross profit ....................... 2,254 1,096
------------ ------------
Operating expenses:
Research and development .................... 1,930 1,769
General and administrative .................. 2,934 1,855
Consolidation of operations ................. 24 736
Sales and marketing ......................... 2,303 3,272
------------ ------------
Total operating expenses ................ 7,191 7,632
------------ ------------
Operating loss ..................... (4,937) (6,536)
------------ ------------
Other income (expense), net ...................... 446 409
------------ ------------
Net loss ......................................... (4,491) (6,127)
------------ ------------
Other comprehensive income (loss)
Foreign currency translation ................ 223 (7)
------------ ------------
Comprehensive loss ............................... $ (4,268) $ (6,134)
============ ============
Basic and diluted net loss per share ............. $ (0.26) $ (0.40)
============ ============
Shares used in computing basic and
diluted net loss per share .................. 17,473,965 15,355,804
============ ============
</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>
March 31, December 31,
1999 1998
--------- ---------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents ........................................ $ 33,808 $ 38,390
Accounts receivable, net ......................................... 340 2,849
Accounts receivable from related parties ......................... 5,090 2,843
Inventories ...................................................... 10,174 8,296
Prepaid expenses and other current assets ........................ 1,746 1,473
--------- ---------
Total current assets ......................................... 51,158 53,851
Plant and equipment, net of accumulated depreciation of
$20,934 and $19,721 .............................................. 14,417 13,336
Other assets .......................................................... 1,739 1,719
--------- ---------
Total assets ................................................. $ 67,314 $ 68,906
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................. $ 2,742 $ 2,684
Accrued expenses ................................................. 4,469 6,003
Deferred revenue (inclusive of related party deferred revenue of
$3,658 and $407) .......................................... 3,751 559
--------- ---------
Total current liabilities .................................... 10,962 9,246
--------- ---------
Deferred revenue from related party, non-current ................. 5,000 5,000
--------- ---------
Total liabilities ............................................ 15,962 14,246
--------- ---------
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, issued and outstanding .......... 214 214
Common Stock, $.15 par value, shares authorized 25,000,000:
shares issued and outstanding 15,638,807 at March 31, 1999 and
15,308,995 at December 31, 1998 .............................. 2,346 2,296
Additional paid-in capital ....................................... 233,425 230,328
Unearned compensation ............................................ (2,356) (169)
Accumulated deficit .............................................. (181,159) (176,668)
Accumulated other comprehensive loss related to
foreign currency translation ................................. (1,118) (1,341)
--------- ---------
Total stockholders' equity ................................... 51,352 54,660
--------- ---------
Total liabilities and stockholders' equity ................... $ 67,314 $ 68,906
========= =========
</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>
Three Months Ended
March 31,
1999 1998
-------- --------
Cash flows from operating activities:
<S> <C> <C>
Net loss ...................................................... $ (4,491) $ (6,127)
Adjustments to reconcile net loss to net cash used in operating
activities ................................................. 1,019 930
Change in assets and liabilities .............................. 675 2,193
-------- --------
Net cash used in operating activities ...................... (2,797) (3,004)
-------- --------
Cash flows from investing activities:
Purchase of equipment ......................................... (1,863) (1,390)
Other ......................................................... (45) (45)
-------- --------
Net cash used in investing activities ...................... (1,908) (1,435)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Common Stock ........................ 105 288
Other ......................................................... (2) --
-------- --------
Net cash provided by financing activities .................. 103 288
-------- --------
Effect of currency exchange rate changes on cash ................. 20 (5)
-------- --------
Net decrease in cash and cash equivalents ........................ (4,582) (4,156)
Cash and cash equivalents at beginning of period ................. 38,390 32,914
-------- --------
Cash and cash equivalents at end of period ....................... $ 33,808 $ 28,758
======== ========
</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. GENERAL
Basis of Presentation
The information presented as of March 31, 1999 and 1998, 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, 1998, including the Notes thereto, which were
included as part of the Company's Annual Report on Form 10-K, File No.
0-19841.
Basic and Diluted Loss per Share
Basic and diluted 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
calculations 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. Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the entity. The Company has not
included potential common shares in the diluted per-share computation
as the result is antidilutive.
Options to purchase 2,841,495 shares of common stock at $1.50 - $32.58
per share, which expire on various dates from May 1999 to February
2009, were outstanding at March 31, 1999. These shares were not
included in the computation of diluted EPS because the effect would be
antidilutive due to the net loss.
Recently Issued Accounting Pronouncements:
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999
(January 1, 2000 for the Company). SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income depending on
whether a derivative is designated as part of a hedge transaction and,
if it is, the type of hedge transaction. The Company presently does not
have any derivative instruments or hedging activities and,
consequently, SFAS No. 133 is not expected to have a material impact on
the Company's results of operations, financial position or cash flow.
Reclassification:
Certain reclassifications have been made to 1998 amounts to conform
them to the 1999 presentation.
6
<PAGE> 7
i-STAT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(continued)
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
(In thousands of dollars)
<S> <C> <C>
Raw materials $ 3,625 $ 2,537
Work in process 2,553 3,206
Finished goods 3,996 2,553
--------- ----------
$ 10,174 $ 8,296
========== ==========
</TABLE>
3. 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. In February 1998, the Court entered
summary judgment in favor of the Company on the issue of patent
infringement. Accordingly, the Company has been found not to infringe,
either literally or under the patent law "doctrine of equivalents",
Nova's patent. The plaintiff has appealed, and appellate argument was
held on May 5, 1999. The appellate court's opinion will be issued in
due course. If the plaintiff should prevail on this issue, a prospect
which the Company believes to be highly unlikely, it could have a
material impact on the financial position, results of operations and
cash flows of the Company. The Company had asserted and is pursuing
counterclaims under the antitrust laws alleging that Nova commenced the
action knowing that the patent was not infringed and that it has reason
to believe that the patent was invalid.
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 M.
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 and
negligent misrepresentation, and is predicated on a "fraud on the
market" theory 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. The Company
believes the complaint is without merit and, on April 28, 1998, the
Court entered summary judgment in favor of all the defendants. The
plaintiffs have appealed and appellate argument was held on March 8,
1999. The appellate court's opinion will be issued in due course.
Should the plaintiffs 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 is a defendant in a case entitled Customedix Corporation,
Plaintiff v. i-STAT Corporation, Defendant. The Complaint, which was
filed in the United States District Court for the District of
Connecticut on December 26, 1996, alleges infringement by i-STAT of
Customedix's U.S. Patent No. 4,342,964. The Plaintiff seeks injunctive
relief and an accounting for i-STAT's profits and the damages to
Customedix from such alleged infringement. The Company intends to
contest the case vigorously and does not believe that it has infringed
the Customedix patent. The Company has obtained an opinion from
recognized patent counsel to the effect that no infringement has
occurred. The court has interpreted the Customedix patent in a way
favorable to the Company and has denied Customedix's motion for
reconsideration of that interpretation. However, if the plaintiff
should prevail in this matter, it could have a material impact on the
financial position, results of operation and cash flows of the Company.
7
<PAGE> 8
i-STAT CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(continued)
4. RELATED PARTY TRANSACTIONS
On January 4, 1999, the Company received from Abbott Laboratories
("Abbott") its second installment of prepayments for guaranteed future
incremental cartridge sales (as defined in the Distribution Agreement
with Abbott), in the amount of $4 million. This amount is carried on
the consolidated condensed balance sheet as deferred revenue, current,
net of amortization of such prepayment to income as incremental
cartridge sales are generated.
The Company generated $7,719,000 and $877,000 of net sales from Abbott
and Hewlett-Packard Company ("HP") for the three months ended March 31,
1999, and at March 31, 1999, had $4,601,000 and $489,000 of accounts
receivable due from Abbott and HP, respectively. In addition, the
Company had $3,658,000 and $407,000 of deferred revenue, current, from
Abbott at March 31, 1999 and December 31, 1998, respectively.
5. RESTRICTED STOCK
On February 5, 1999, the board of directors awarded 310,000 shares of
restricted Common Stock to four executive officers of the Company. The
restricted Common Stock had a fair value at the date of grant of
approximately $2,751,250. One executive officer was awarded 250,000
shares of restricted Common Stock, 50,000 shares of which immediately
vested on February 5, 1999, and the remaining 200,000 shares cliff vest
on February 5, 2002. The 60,000 shares awarded to the other three
executive officers vest over a three year period. Compensation expense
in the amount of $587,000 was recorded in connection with this award
during the three months ended March 31, 1999.
8
<PAGE> 9
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company was incorporated in Delaware in 1983 and 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's current
products, known as the i-STAT(R) System, consist of portable, hand-held
analyzers and single-use disposable cartridges, each of which simultaneously
performs different combinations of commonly ordered blood tests in approximately
two minutes. The i-STAT System also includes peripheral components that enable
the results of tests to be transmitted by infrared means to both a proprietary
information system for managing the user's point-of-care testing program and to
the user's information systems for billing and archiving.
The i-STAT System currently performs blood tests for sodium, potassium,
chloride, glucose, creatinine, urea nitrogen, hematocrit, ionized calcium,
arterial blood gases, and bicarbonate, and to derive certain other values, such
as total carbon dioxide, base excess, anion gap, hemoglobin and O2 saturation,
by calculation from the tests performed. The Company continues to engage in
research and development in order to improve its existing products and develop
new products based on the i-STAT System technology. The Company currently is
developing a test for lactate and three tests for the measurement of
coagulation: partial thromboplastin time ("aPTT"), activated clotting time
("ACT") and prothombin time ("PT"). The Company is also studying the development
of cardiac marker tests, and other tests to measure enzymes and other analytes.
Subject to receipt of clearance to market by the FDA, the Company expects to
commence commercialization of its first coagulation test by the end of 1999.
Prior to November 1, 1998, the Company marketed and distributed its
products in the United States and Canada principally through its own direct
sales and marketing organization, in Japan through Japanese marketing partners,
in Europe through Hewlett-Packard Company ("HP") and in Mexico, South America,
China, Australia, and certain other Asian and Pacific Rim countries, through
selected distribution channels. Pursuant to a technology collaboration between
the Company and HP, in November 1997 HP commenced selling a patient monitoring
system (the "Integrated Analyzer") which integrates all of the blood diagnostics
capabilities of the i-STAT System. On September 2, 1998, the Company entered
into a long-term sales, marketing and research alliance with Abbott Laboratories
("Abbott") which, among other things, is expected both to significantly affect
the Company's research and development programs and alter the manner in which
the Company markets and sells its products worldwide. Abbott commenced
distribution of the i-STAT System on November 1, 1998. The majority of the
Company's revenues are now derived from Abbott. Please see "Long-Term Sales and
Marketing Alliance with Abbott Laboratories" under Item 7 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, for a
description of the Company's agreements with Abbott. Copies of such agreements
were filed with the Commission as exhibits to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1998.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
The Company generated revenues of approximately $10.3 million and $8.8
million for the three months ended March 31, 1999 and 1998, respectively,
including international revenues (as a percentage of total revenues) of $2.3
million (21.9%) and $2.5 million (28.2%), respectively. Revenues from Abbott
represented approximately 74.7% and 0% of the Company's worldwide revenues for
the three months ended March 31, 1999 and 1998, respectively. Sales to the
Company's Japanese marketing partners represented approximately 8.1% and 10.9%
of the Company's worldwide sales for the three months ended March 31, 1999 and
1998, respectively.
The $1.6 million (17.7%) increase in revenues was primarily due to
increased shipment volume of the Company's cartridges, 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 34% to 1,722,100 units in the three months ended March 31,
1999, from 1,284,575 units in the three months ended March 31, 1998. Revenues
from the increased cartridge shipments were partially offset by lower worldwide
average selling prices per cartridge,
9
<PAGE> 10
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
which declined from approximately $4.90 to $4.22 per cartridge in the same
periods. Cartridge average selling prices are expected to continue to decline
because of the product transfer pricing arrangements between the Company and
Abbott. The increase in revenues also includes approximately $0.5 million from
Abbott to fund certain research and development and marketing expenses.
Gross profit (as a percentage of sales) increased by approximately
$1.2 million to $2.3 million (21.8%) in the quarter ended March 31, 1999,
compared with a gross profit of $1.1 million (12.5%) in the quarter ended March
31, 1998. The improvement in gross margin was primarily due to increased
shipment volume of the Company's cartridges, which caused fixed manufacturing
costs to be spread over a larger number of product units, and the receipt of
approximately $0.5 million from Abbott to fund certain research and development
and marketing expenses. The increase in gross margin was partially offset by
lower average selling prices per cartridge and lower average selling prices for
analyzers, in each case because of the transfer pricing arrangements between the
Company and Abbott.
The Company incurred research and development costs (as a percentage
of sales) of approximately $1.9 million (18.7%) and $1.8 million (20.1%) for the
three months ended March 31, 1999 and 1998, respectively, consisting of costs
associated with the personnel, material, equipment and facilities necessary for
conducting new product development. The Company's current research and
development program includes the development of tests for lactate and
coagulation, which are expected to move into the commercialization phase by the
end of 1999. The Company also is studying the development of cardiac marker
tests, and other tests to measure enzymes and other analytes. Consequently,
research and development expenditures are expected to increase over the next
three years. The amount and timing of such increase will depend upon numerous
factors including the level of activity at any point in time, the breadth of the
Company's development objectives and the success of its development programs.
Some portion of these expenditures may be funded by Abbott, and revenues and
gross profit in the three months ended March 31, 1999, include approximately
$0.4 million of such funding.
The Company incurred general and administrative expenses (as a
percentage of sales) of approximately $2.9 million (28.4%) and $1.9 million
(21.1%) for the three months ended March 31, 1999 and 1998, 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 dollar increase from year to year is
primarily attributable to fees of approximately $877,000 for special consulting
services to assist in the development of manufacturing strategies and capacity
plans, and to identify business development opportunities, and a non-cash
compensation expense of approximately $587,000 associated with grants to
employees of 310,000 restricted shares of Common Stock in the three months ended
March 31, 1999. Additional special consulting fees of approximately $200,000 are
anticipated in the quarter ending June 30, 1999. Stockholders' equity at March
31, 1999, includes unearned compensation of approximately $2.2 million in
respect of the above grants of restricted stock, which will be amortized to
expense over the restriction periods. Additional compensation expense of
approximately $214,000 per quarter is anticipated in the next three quarters of
1999 in respect of these grants.
The Company incurred consolidation of operations expenses of
approximately $24,000 and $736,000 for the three months ended March 31, 1999 and
1998, respectively, in connection with the relocation of the Company's cartridge
operations from Plainsboro, New Jersey, to its manufacturing facility in
Ontario, Canada.
The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $2.3 million (22.3%) and $3.3 million (37.2%) for the
three months ended March 31, 1999 and 1998, respectively, consisting primarily
of salaries, benefits, travel, and other expenditures for sales representatives,
implementation coordinators, international marketing support, order entry,
distribution, technical services, product literature, market research, clinical
studies and other sales infrastructure costs. A portion of the costs of the
implementation coordinators is reimbursed by Abbott, and revenues and gross
profit in the three months ended March 31, 1999, include approximately $0.1
million of such reimbursement. The dollar decrease from year to year is
primarily attributable to the reduction in field sales and sales management
personnel following the assumption by Abbott of principal responsibility for the
marketing and sales of the i-STAT System.
10
<PAGE> 11
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Other income, net, of approximately $0.4 million for the three months
ended March 31, 1999 and for the three months ended March 31, 1998, primarily
reflects interest income earned on cash and cash equivalents balances.
Net loss for the three months ended March 31, 1999 decreased 26.7
percent to approximately $4.5 million, or 26 cents per share, compared with a
net loss of approximately $6.1 million, or 40 cents per share, for the first
quarter of 1998. The weighted average number of shares used in computing basic
and diluted net loss per share was approximately 17.474 million and 15.356
million in the 1999 and 1998 periods, respectively. The increase in the number
of shares in 1998 primarily reflects the issuance of 2 million shares of Common
Stock to Abbott in September 1998.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had cash and cash equivalents of
approximately $33.8 million, a decline of approximately $4.6 million from the
December 31, 1998 balance of approximately $38.4 million. The decrease primarily
reflects approximately $2.8 million of cash used in operating activities, and
equipment purchases of approximately $1.9 million, during the three months ended
March 31, 1999. Working capital decreased by approximately $4.4 million from
$44.6 million to $40.2 million during the same period, primarily reflecting the
decrease in cash and cash equivalents. Changes in working capital during the
three months ended March 31, 1999, also reflect an increase of approximately
$1.9 million in inventories to meet the anticipated growth of customer sales, a
reduction of approximately $1.5 million in accrued expenses which primarily
reflects the payment of accrued 1998 sales commissions and management bonuses,
and the payment of accrued retention bonuses, severance payments and vacation
pay in connection with both a reduction in sales force following assumption by
Abbott of principal responsibility for marketing and sales, and the
consolidation of cartridge assembly operations in the Company's manufacturing
facility in Ontario, Canada. Changes in working capital also include an increase
of approximately $3.2 million in deferred revenue, which reflects the receipt of
$4.0 million from Abbott in January 1999, representing the second installment of
prepayments for guaranteed future incremental cartridge sales, partially offset
by the amortization of such prepayments to income as incremental cartridge sales
(as defined in the Distribution Agreement with Abbott) are generated, by the
amortization to income of approximately $0.4 million of deferred research and
development reimbursements from Abbott and by the amortization of deferred
service contract revenues. 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 marketing and sales activities, its new product development
efforts, manufacturing efficiencies and competitive conditions.
The impact of inflation on the Company's business has been minimal
and is expected to be minimal for the near-term.
11
<PAGE> 12
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
IMPACT OF YEAR 2000
The "Year 2000" or "Y2K" issue is the result of computer programs
being written using two digits rather than four to define the applicable year.
Any of the Company's computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
The Company has identified its Year 2000 risks in five categories:
internal business operations software, internal manufacturing control software,
software used in computer controlled manufacturing equipment, software used in
computer-controlled products and external noncompliance by suppliers and
customers.
INTERNAL BUSINESS OPERATIONS SOFTWARE: The Company runs its financial
and inventory operations using a commercially available package supplied by QAD
Inc. running on a UNIX operating system supplied by HP. The Company's computer
networks are controlled by software provided by Microsoft Corporation and
Novell(R) Inc., and applications used for miscellaneous business operations are
supplied by Microsoft Corporation. All the above mentioned products are
certified Year 2000 compliant by these vendors.
INTERNAL MANUFACTURING CONTROL SOFTWARE: Certain manufacturing
operations are managed by internally developed software tools. Date handling
software operations in most of these tools utilize software routines that are
part of the software "platform" upon which these tools operate. These platforms,
primarily supplied by HP, are certified Y2K compliant. The Company has
identified only a few exceptions but has determined these tools either to be
compliant, not significant to the production process or require only minor
modifications included in planned upgrades. All upgrades are expected to be
completed during the first half of 1999.
SOFTWARE USED IN COMPUTER CONTROLLED MANUFACTURING EQUIPMENT: The
Company has identified all pieces of computer controlled manufacturing equipment
used in production processes and determined that where date handling functions
are significant to the production process, the functions are Y2K compliant.
SOFTWARE USED IN COMPUTER CONTROLLED PRODUCTS: Certain products made
by the Company have software components developed and maintained by the Company.
The Company has completed the software changes and testing necessary to certify
substantially all of these products as Y2K compliant, and expects to complete
the remaining changes and testing by mid-1999. The Company regularly distributes
software updates for these products as part of its normal business practices. To
date, the cost of providing the updated, Y2K compliant software to customers has
been at no incremental cost to the Company.
EXTERNAL NON COMPLIANCE BY SUPPLIERS AND CUSTOMERS: The Company is
engaged in the process of monitoring the Y2K program status of critical
suppliers. The Company expects to establish the appropriate contingency plans
for suppliers that are not able to supply sufficient certification by early
1999. These contingency plans may include establishing alternative suppliers
and/or accumulating inventory as appropriate. By the year 2000 the Company's
revenues are expected to be substantially derived from a few authorized
distributors, including Abbott and HP. The Company believes that these companies
have adequate Y2K compliance programs in place. Accordingly, it has no reason to
believe that additional operational risks are presented by the Company's
relationship with its most significant customers.
The cost of the Company's activities related to the Year 2000 project
have not been, nor are expected to be, material. Where modifications have been
required they have been incremental additions to software upgrades driven by
other business needs. The principal Company resource allocated to the Y2K issue
has been, and is expected to be, management time. Such internal personnel costs
allocated to the Y2K issue are estimated to have been less than $150,000 through
December 31, 1998, and are expected to be less than $50,000 in 1999.
12
<PAGE> 13
i-STAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Despite the Company's activities in regards to the Year 2000 issue,
there can be no assurance that Year 2000 problems will not result in an
interruption in, or failure of, certain normal business activities or
operations, that may have a material adverse effect on the Company's results of
operations, liquidity or financial condition.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. The Company presently
does not have any derivative instruments or hedging activities and consequently,
SFAS No. 133 is not expected to have a material impact on the Company's results
of operations, financial position or cash flows.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," RELATE TO FUTURE EVENTS AND
EXPECTATIONS AND AS SUCH CONSTITUTE "FORWARD-LOOKING STATEMENTS," WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE WORDS
"BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS," AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AND TO VARY
SIGNIFICANTLY FROM REPORTING PERIOD TO REPORTING PERIOD. SUCH FACTORS INCLUDE,
AMONG OTHERS, COMPETITION FROM EXISTING MANUFACTURERS AND MARKETERS OF BLOOD
ANALYSIS PRODUCTS WHO HAVE GREATER RESOURCES THAN THE COMPANY, ECONOMIC
CONDITIONS AFFECTING THE COMPANY'S TARGET MARKETS, THE UNCERTAINTY OF NEW
PRODUCT DEVELOPMENT INITIATIVES, THE ABILITY TO ATTRACT AND RETAIN KEY
SCIENTIFIC, TECHNOLOGICAL AND MANAGEMENT PERSONNEL, DEPENDENCE UPON LIMITED
SOURCES FOR PRODUCT MANUFACTURING COMPONENTS, UPON A SINGLE MANUFACTURING
FACILITY AND UPON INNOVATIVE AND HIGHLY TECHNICAL MANUFACTURING TECHNIQUES,
MARKET RESISTANCE TO NEW PRODUCTS AND POINT OF CARE BLOOD DIAGNOSIS,
INCONSISTENCY IN CUSTOMER ORDER PATTERNS, DOMESTIC AND INTERNATIONAL REGULATORY
CONSTRAINTS, UNCERTAINTIES OF INTERNATIONAL TRADE, PENDING AND POTENTIAL
DISPUTES CONCERNING OWNERSHIP OF INTELLECTUAL PROPERTY, AVAILABILITY OF CAPITAL
UPON FAVORABLE TERMS AND DEPENDENCE UPON AND CONTRACTUAL RELATIONSHIPS WITH
STRATEGIC PARTNERS, PARTICULARLY ABBOTT LABORATORIES. SEE ADDITIONAL DISCUSSION
UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS" IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AND OTHER FACTORS DETAILED FROM
TIME TO TIME IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
13
<PAGE> 14
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. In February 1998, the Court entered summary judgment in favor of the
Company on the issue of patent infringement. Accordingly, the Company has been
found not to infringe, either literally or under the patent law "doctrine of
equivalents", Nova's patent. The plaintiff has appealed, and appellate argument
was held on May 5, 1999. The appellate court's opinion will be issued in due
course. If the plaintiff should prevail on this issue, a prospect which the
Company believes to be highly unlikely, it could have a material impact on the
financial position, results of operations and cash flows of the Company. The
Company had asserted and is pursuing counterclaims under the antitrust laws
alleging that Nova commenced the action knowing that the patent was not
infringed and that it has reason to believe that the patent was invalid.
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 M. 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 and negligent misrepresentation, and is predicated on a "fraud on the
market" theory 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. The Company believes the complaint is without merit and,
on April 28, 1998, the Court entered summary judgment in favor of all the
defendants. The plaintiffs have appealed and appellate argument was held on
March 8, 1999. The appellate court's opinion will be issued in due course.
Should the plaintiffs 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 is a defendant in a case entitled Customedix Corporation,
Plaintiff v. i-STAT Corporation, Defendant. The Complaint, which was filed in
the United States District Court for the District of Connecticut on December 26,
1996, alleges infringement by i-STAT of Customedix's U.S. Patent No. 4,342,964.
The Plaintiff seeks injunctive relief and an accounting for i-STAT's profits and
the damages to Customedix from such alleged infringement. The Company intends to
contest the case vigorously and does not believe that it has infringed the
Customedix patent. The Company has obtained an opinion from recognized patent
counsel to the effect that no infringement has occurred. The court has
interpreted the Customedix patent in a way favorable to the Company and has
denied Customedix's motion for reconsideration of that interpretation. However,
if the plaintiff should prevail in this matter, it could have a material impact
on the financial position, results of operation and cash flows of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company entered into a Stock Option Agreement with a nationally
recognized consulting firm (the "Consultant"), pursuant to which the Consultant
was granted an Option to purchase up to 100,000 shares of the Company's Common
Stock for $7.50 per share, as partial consideration for rendering the
consulting services described elsewhere in this Report. The Option is currently
exercisable and expires on January 4, 2001, which is the second anniversary of
the effective date of the Agreement. In issuing the Option, the Company relied
on the exemption from registration contained in Section 4(2) of the Securities
Act of 1933.
14
<PAGE> 15
i-STAT CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation (Form S-8/S-3
Registration Statement, File No. 33-48889)*
3.2 By-Laws (Form 10-K for fiscal year ended December 31, 1996)*
3.3 Certificate of Designation, Preferences and Rights of Series A
Preferred Stock (Form 8-K, dated July 10, 1995 and amended on
September 11, 1995)*
3.4 Certificate of Designation, Preferences and Rights of Series B
Preferred Stock (Form 8-K, dated July 10, 1995 and amended on
September 11, 1995)*
4.1 Stockholder Protection Agreement, dated as of June 26, 1995,
between Registrant and First Fidelity Bank, National
Association (Form 8-K, dated July 10, 1995 and amended on
September 11, 1995)*
10.50 i-STAT Corporation Equity Incentive Plan
10.51 Form of Executive Officer Restricted Share Award Agreement
under Equity Incentive Plan
10.52 Form of Restricted Share Award Agreement with President and
Chief Executive Officer
27 Financial Data Schedule
* These items are hereby incorporated by reference from the
exhibits of the filing or report indicated (except where
noted, Commission File No. 0-19841) and are hereby made a part
of this Report.
(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.
15
<PAGE> 16
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: May 14, 1999
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 and
Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NO.
10.50 i-STAT Corporation Equity Incentive Plan
10.51 Form of Executive Officer Restricted Share Award Agreement under Equity
Incentive Plan
10.52 Form of Restricted Share Award Agreement with President and Chief
Executive Officer
27 Financial Data Schedule
17
<PAGE> 1
Exhibit 10.50
i-STAT CORPORATION
EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for i-STAT
Corporation (the "Company") and its stockholders the benefits arising from
capital stock ownership by employees and members of the Board of Directors of,
and consultants and advisors to, the Company and its parent and subsidiary
corporations, if any, who are expected to contribute to the Company's future
growth and success.
2. Types of Awards and Administration.
(a) Types of Awards. Awards pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be (i) incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"),(ii) non-statutory
options which are not intended to meet the requirements of Code Section 422
("Non- Statutory Stock Options" and, together with Incentive Stock Options,
"Options"), or (iii) shares of the Company's Common Stock, par value $.15 per
share ("Common Stock"), awarded pursuant to the provisions of Section 8 of the
Plan ("Restricted Shares" and, together with "Options", "Awards").
(b) Administration. The Plan will be administered by the Board
of Directors of the Company, whose construction and interpretation of the terms
and provisions of the Plan shall be final and conclusive. The Board of Directors
may in its sole discretion make Awards and authorize the Company to issue shares
of Common Stock
<PAGE> 2
pursuant to such Awards, as provided in, and subject to the terms and conditions
of, the Plan. The Board shall have authority, subject to the express provisions
of the Plan, to construe the Plan and the respective written agreements setting
forth the terms and conditions of an Award (each, an "Award Agreement"), to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of Award Agreements, which need not be
identical, to advance the lapse of any waiting, forfeiture or installment
periods and exercise dates, and to make all other determinations in the judgment
of the Board of Directors necessary or desirable for the administration of the
Plan. Without limitation of any of the foregoing, the Board of Directors may
determine the extent to which any waiting, forfeiture, installment or
exercisability period applicable to any Award shall be affected by the cessation
of the Award recipient's employment or service with the Company or any Parent
Corporation or Subsidiary (each as defined in Section 19 hereof). The Board of
Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award Agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director shall be liable for any
action or determination taken or made in good faith under or with respect to the
Plan or any Award.
(c) Delegation of Authority. The Board of Directors may, to
the full extent permitted by law, delegate any or all of its powers under the
Plan to a committee (the "Committee") of two or more directors each of whom is a
Non- Employee Director (as hereinafter defined), and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee. For the purposes of the Plan, a director or member of
such Committee shall be deemed to be a "Non- Employee Director" only if such
person qualifies as a "Non- Employee Director" within the meaning of paragraph
(b)(3) of
-2-
<PAGE> 3
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor rule.
(d) Limitation on Options Granted in Any Twelve Months. No
individual may be granted, in any twelve-month period, Options under the Plan
which are exercisable with respect to more than 200,000 shares of Common Stock.
3. Eligibility.
Awards shall be made only to persons who are, at the time of
grant, officers, employees or directors of, or consultants or advisors to,
(provided, in the case of Incentive Stock Options, such directors or officers
are then also employees of) the Company or any Parent Corporation or Subsidiary.
A person who has been granted an Award may, if he or she is otherwise eligible,
be granted an additional Award or Awards if the Board of Directors shall so
determine.
4. Stock Subject to Plan.
Subject to adjustment as provided in Sections 11 and 12 below,
the maximum number of shares of Common Stock of the Company which may be issued
and sold pursuant to Awards made under the Plan is 2,300,000 shares. Such shares
may be authorized and unissued shares or may be shares issued and thereafter
acquired by the Company. If either (i) Restricted Shares are forfeited following
their award under the Plan, or (ii) Options granted under the Plan are canceled,
or expire or terminate for any reason without having been exercised in full, the
forfeited Restricted Shares, or the unpurchased shares subject to any such
Option, as the case may be, shall again be available for subsequent Awards under
the Plan. Restricted Shares, Options and shares of Common Stock issuable upon
exercise of Options granted under the Plan may be subject to transfer
restrictions, repurchase rights or other restrictions as shall be determined by
the Board of Directors.
-3-
<PAGE> 4
5. Award Agreements.
As a condition to the grant of an Award under the Plan, each
recipient of an Award shall sign an Award Agreement not inconsistent with the
Plan in such form, and providing for such terms and conditions, as the Board of
Directors shall determine at the time such Award is authorized to be granted.
Such Award Agreements need not be identical but shall comply with, and be
subject to, the terms and conditions set forth herein.
6. Options Generally.
(a) Purchase Price. The purchase price per share of Common
Stock deliverable upon the exercise of an Option (hereinafter sometimes referred
to as the "exercise price") shall be not less than the fair market value of the
Common Stock as determined by the Board of Directors on the date such Option is
authorized to be granted. The "fair market value" of the Common Stock on any
date (the "Value Date") shall mean (i) the closing price of the Common Stock, as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if the Common Stock is listed on a stock exchange, the
principal stock exchange on which the Common Stock is listed, on the last
trading day prior to the Value Date for which a closing price is available, or
(ii) if the Board of Directors determines, in the exercise of its business
judgment, that such closing price does not properly reflect the fair market
value of the Common Stock on the Value Date, then such other price as may then
be determined in good faith by the Board of Directors. If the Common Stock is
not reported on NASDAQ or listed on any stock exchange, then the "fair market
value" shall be determined in good faith by the Board of Directors.
(b) Payment of Exercise Price. Payment of the exercise
price of an Option shall be in cash or, in the sole
-4-
<PAGE> 5
discretion of the Board of Directors, in capital stock of the Company, by the
surrender of other options to purchase capital stock of the Company or by any
other lawful means. The Company may, in its sole discretion, make loans to an
Option holder in an amount equal to all or part of the exercise price of Options
held by such Option holder; provided, that the grant of a loan on any occasion
to one or more Option holder(s) shall not obligate the Company to grant loans on
any other occasion or to such or any other Option holder.
(c) Option Term. Each Option and all rights thereunder shall
expire on such date as the Board of Directors shall determine on the date such
Option is authorized to be granted, but in no event may any Option remain in
effect after the expiration of ten years from the day on which such Option is
granted (or five years in the case of Options described in paragraph (b) of
Section 7), and such Option shall be subject to earlier termination as provided
in the Plan. Notwithstanding the foregoing, except as provided under or pursuant
to the Code with respect to Incentive Stock Options, if at any time during the
last six (6) months of the term of any Option granted under the Plan, the holder
thereof is precluded from selling shares of Common Stock underlying such Option
solely by reason of the application to such holder of the Company's "Policy
Regarding Confidential Information" (or similar successor policy), the term of
such Option shall be deemed automatically extended by a period equal to six (6)
months beginning with the first day during which such Option holder shall no
longer be so precluded.
(d) Exercise of Options. Each Option granted under the Plan
shall be exercisable either in full or in installments at such time or times and
during such period as shall be set forth in the Award Agreement evidencing such
Option; provided, however, that, subject to the exception set forth in paragraph
(c) above, (i) no Option granted under the Plan shall have a term in excess of
ten years from
-5-
<PAGE> 6
the date of grant (or five years in the case of Options described in paragraph
(b) of Section 7), and (ii) the periods of time following an Option holder's
cessation of employment with the Company or service as an Outside Director (as
defined in Section 9 hereof) of or consultant or advisor to the Company, or
following an Option holder's death or disability, during which an Option may be
exercised, as provided in paragraph (f) below, shall not be included for
purposes of determining the number of shares of Common Stock with respect to
which such Option may be exercised.
(e) Rights as a Stockholder. The holder of an Option shall
have no rights as a stockholder with respect to any shares covered by the Option
until the date of issue of a stock certificate to him or her for such shares.
Except as otherwise expressly provided in the Plan, 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.
(f) Effect of Termination of Service. Notwithstanding anything
contained in this Plan to the contrary, no Option may be exercised unless, at
the time of such exercise, the recipient is, and has been continuously since the
date of grant of his or her Option, employed by, or serving as an Outside
Director, consultant or advisor to one or more of the Company, a Parent
Corporation or a Subsidiary, except that if and to the extent the applicable
Award Agreement so provides:
(i) the Option may be exercised within the period of
three months after the date the holder thereof ceases to be employed by or to
serve as an Outside Director of or consultant or advisor to any of the foregoing
entities (or within such lesser period as may be specified in the Award
Agreement) for any reason other than death or disability;
-6-
<PAGE> 7
(ii) if the holder thereof dies while in the employ
of, or serving as an Outside Director of or consultant or advisor to, the
Company, a Parent Corporation or a Subsidiary or within three months after such
holder ceases to be such an employee, Outside Director, consultant or advisor,
the Option may be exercised by the person to whom it is transferred by will or
the laws of descent and distribution within the period of one year after the
date of death (or within such lesser period as may be specified in the Award
Agreement); and
(iii) if the holder thereof becomes disabled (within
the meaning of Section 22(e)(3) of the Code) while in the employ of or serving
as an Outside Director of or consultant or advisor to the Company, a Parent
Corporation or a Subsidiary, the Option may be exercised within the period of
one year after the date such holder ceases to be an employee or Outside Director
of, or consultant or advisor to, any of the foregoing entities because of such
disability (or within such lesser period as may be specified in the Award
Agreement); provided, however, that in no event may any Option be exercised
after the expiration date of the Option, except to the extent provided in
paragraph (c) above.
(g) Transfer Restrictions. Except as otherwise approved by the
Board of Directors, during the life of the holder thereof an Option shall be
exercisable only by or on behalf of such person and no Option granted under the
Plan shall be assignable or transferable by the person to whom it is granted,
either voluntarily or by operation of law, except by will or the laws of descent
and distribution.
(h) Other Awards. Awards of Options may be made alone, in
addition to or in tandem with Awards of Restricted Shares under the Plan.
7. Incentive Stock Options.
-7-
<PAGE> 8
Options granted under the Plan which are intended to be
Incentive Stock Options shall be specifically designated as Incentive Stock
Options and shall be subject to the following additional terms and conditions:
(a) Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of the grant) of the Common Stock
with respect to which Incentive Stock Options granted to any employee under the
Plan (and under any other incentive stock option plans of the Company, and any
Parent Corporation and Subsidiary) are exercisable for the first time shall not
exceed $100,000 in any one calendar year. In the event that Section 422 of the
Code is amended to alter the limitation set forth therein so that following such
amendment such limitation shall differ from the limitation set forth in this
paragraph (a), the limitation of this paragraph (a) shall be automatically
adjusted accordingly.
(b) 10% Stockholder. If any employee to whom an Incentive
Stock Option is to be granted under the Plan is at the time of the grant of such
Option the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Parent Corporation or any
Subsidiary, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) the purchase price per share of the Common Stock subject
to such Incentive Stock Option shall not be less than 110% of the fair
market value thereof at the time of grant; and
(ii) the exercise period of such Incentive Stock Option shall
not exceed five years from the date of grant.
Except as modified by the preceding provisions of this Section 7, all the
provisions of the Plan applicable to
-8-
<PAGE> 9
Options generally shall be applicable to Incentive Stock Options granted
hereunder.
8. Restricted Shares.
(a) Awards of Shares. Awards of Restricted Shares may be made
under the Plan on such terms and conditions as the Board of Directors may from
time to time approve. Awards of Restricted Shares may be made alone, in addition
to or in tandem with Awards of Options under the Plan. Subject to the terms of
the Plan, the Board of Directors shall determine the number of Restricted Shares
to be awarded to each recipient and the Board of Directors may impose different
terms and conditions on a Restricted Share Award than on any other Award made to
the same recipient or other Award recipients. Each recipient of Restricted
Shares shall, except in the circumstances described in paragraph (b) below, be
issued one or more stock certificates evidencing such Restricted Shares. Each
such certificate shall be registered in the name of such recipient, and shall
bear an appropriate legend referring to the terms and conditions applicable to
the Restricted Shares evidenced thereby.
(b) Forfeiture of Restricted Shares. In making an Award of
Restricted Shares, the Board of Directors may impose a requirement that the
recipient must remain in the employment or service (including service as an
Outside Director, advisor or consultant) of the Company or any Parent
Corporation or Subsidiary (as defined in Section 15 hereof) for a specified
minimum period of time, or else forfeit all or a portion of such Restricted
Shares. In such case, the certificate(s) evidencing the Restricted Shares shall
be held in custody by the Company until such Shares are no longer subject to
forfeiture.
(c) Rights as a Stockholder; Stock Dividends. Subject to any
restrictions set forth in the applicable Award Agreement, a recipient of
Restricted Shares shall have
-9-
<PAGE> 10
voting, dividend and all other rights of a stockholder of the Company as of the
date such Shares are issued and registered in recipient's name (whether or not
certificates evidencing such Shares are delivered to such recipient). Subject to
any restrictions set forth in the applicable Award Agreement, stock dividends
issued with respect to Restricted Shares shall be treated as additional
Restricted Shares under the applicable Award Agreement and shall be subject to
the same terms and conditions that apply to the Restricted Shares with respect
to which such dividends are issued.
9. Annual Automatic Grants of Options to Outside Directors.
(a) Annual Automatic Grants of Options to Outside Directors.
Each director of the Company who is not an employee of the Company or of any
Parent Corporation or Subsidiary (each, an "Outside Director") shall be granted
under the Plan (i) on the date of his or her first election to the Board of
Directors of the Company, Non-Statutory Options to purchase up to 20,000 shares
of Common Stock and (ii) on the date of each annual meeting of the Company's
stockholders at which such Outside Director is re-elected to the Board of
Directors, Non-Statutory Options to purchase up to 5,000 shares of Common Stock.
(b) Additional Automatic Grants of Options to Outside Director
Serving as Chairman of the Board of Directors. An Outside Director first elected
as Chairman of the Board of Directors (the "Chairman") shall be granted under
the Plan (i) on the date of his or her first election as Chairman, Non-Statutory
Options to purchase up to 5,000 shares of Common Stock and (ii) on each date
following his or her re-election by the stockholders of the Company as an
Outside Director on which he or she is re-elected by the Board of Directors as
Chairman, Non-Statutory Options to purchase up to 7,000 shares of Common Stock.
All Options
-10-
<PAGE> 11
granted pursuant to this paragraph shall be in addition to Options granted
pursuant to paragraph (a) above.
(c) Terms and Conditions of Options. Any Option granted to an
Outside Director pursuant to this Section 9 shall be exercisable over a three
year period with respect to the following percentages of the number of shares
originally underlying such Option: (i) 50% after the first anniversary of the
date of grant; and (ii) an additional 25% after each of the second and third
anniversaries of the date of grant, in each case at an exercise price equal to
the fair market value of such Common Stock, as defined in Section 6 above, on
the date of grant. Each such Option shall expire ten years after the date of
grant and shall be subject to earlier termination as provided in the Plan.
Notwithstanding the foregoing, if at any time during the last six (6) months of
the term of any Option granted pursuant to this Section 9, the holder thereof is
precluded from selling shares of Common Stock underlying such Option solely by
reason of the application to such Outside Director of the Company's "Policy
Regarding Confidential Information and Insider Trading" (or any similar
successor policy), the term of such Option shall be deemed automatically
extended by a period equal to six (6) months beginning with the first day during
which such Outside Director shall no longer be so precluded.
(d) Plan Applicable. Except as modified by the preceding
provisions of this Section 9, Options granted to Outside Directors shall remain
subject to all provisions of the Plan applicable to Options generally.
10. General Award Restrictions.
(a) Investment Representations. The Company may require
any person to whom an Award is made, as a condition of such Award, to give
written assurances in substance and form satisfactory to the Company to the
effect that such
-11-
<PAGE> 12
person is acquiring the Common Stock subject to the Award for his or her own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with applicable Federal and State
securities laws.
(b) Special Conditions to Issuance of Shares. Each Award shall
be subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such Award upon any securities exchange or under any State or Federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance or purchase of shares
thereunder, such shares may not be issued unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing, registration or
qualification.
11. 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 shall be made in the number and kind of shares available
under the Plan and under any Options granted under the Plan. Such adjustment to
outstanding Options shall be made without change in the total price applicable
to the unexercised portion of such Options, and a corresponding adjustment in
the applicable Option 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
-12-
<PAGE> 13
modification, extension or renewal of any Option or a grant of additional
benefits to the holder of an Option.
12. 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, the Board of Directors
of the Company, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to outstanding Options, either (x) make
appropriate provision for the protection of any such outstanding Options 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 holders of Options as a result of
such substitution, and the excess of the aggregate fair market value of the
shares subject to any 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 such Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the holders of
Options, provide that all unexercised Options 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 outstanding Options; provided, however, that paragraph (b)
below shall govern acceleration of Options with respect to the events described
in clauses (i), (ii) and (iii) of such paragraph.
-13-
<PAGE> 14
(b) Change in Control. In case 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 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 Exchange Act who
was 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 combined voting power of the Company's then
outstanding voting securities entitled to vote generally or (y) a Controlling
Person of the Company, all outstanding Awards, regardless of the date of such
Awards, shall (i) in the case of Options, immediately become exercisable with
respect to 100% of the Common Stock subject to such Options and (ii) in the case
of Restricted Shares, immediately become fully vested and no longer subject to
any forfeiture unless otherwise provided in the applicable Award Agreement.
13. No Special Employment Rights.
Nothing contained in the Plan or in any Award Agreement shall
confer upon any Award recipient any right with respect to the continuation of
his or her employment by the Company (or any Parent Corporation or Subsidiary)
or interfere in any way with the right of the Company (or any Parent Corporation
or Subsidiary), subject to the terms of
-14-
<PAGE> 15
any separate agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Award recipient from the rate
in existence at the time of the Award. Whether an authorized leave of absence,
or absence in military or government service, shall constitute termination or
cessation of employment for purposes of this Plan or any Award shall be
determined by the Board of Directors.
14. Other Employee Benefits.
The amount of any compensation deemed to be received by an
employee as a result of any Award (including the exercise of an Option, or the
sale of shares received upon such exercise or of Restricted Shares) will not
constitute "earnings" with respect to which any other employee benefits of such
employee are determined, including without limitation benefits under any
pension, profit sharing, life insurance or salary continuation plan.
15. Definitions.
(a) Subsidiary. The term "Subsidiary" as used in the Plan
shall mean any corporation in an unbroken chain of corporations beginning with
the Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
For purposes only of Awards of Non-Statutory Options or Restricted Shares, the
term "Subsidiary" shall also mean any partnership or limited partnership of
which the Company or any Subsidiary controls 50% or more of the voting power, or
any corporation in an unbroken chain of Subsidiaries if each of the Subsidiaries
other than the last Subsidiary in the unbroken chain either owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations or controls 50% or more of the voting
power of any such partnership or limited partnership in such chain.
-15-
<PAGE> 16
(b) Parent Corporation. The term "Parent Corporation" as used
in the Plan shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company owns stock possessing 50% or more of the combined voting power
of all classes of stock in one of the other corporations in such chain.
(c) Employment. The term "employment", as used in the Plan and
in any Award Agreement, shall, unless the context otherwise requires, be defined
in accordance with the provisions of Section 1.421-7(h) of the Federal Income
Tax Regulations (or any successor regulations).
16. Amendment of the Plan.
The Board of Directors may at any time and from time to time
modify, amend or terminate the Plan in any respect, except to the extent
stockholder approval is required by law. The termination or any modification or
amendment of the Plan shall not, without the consent of an Award recipient,
affect his or her rights under any Award Agreement unless such Agreement so
specifies. With the consent of the Award recipient affected, the Board of
Directors may amend outstanding Award Agreements in a manner not inconsistent
with the Plan. The Board of Directors shall have the right to amend or modify
the terms and provisions of the Plan and of any outstanding Incentive Stock
Options granted under the Plan to the extent necessary to qualify any or all
such Options for such favorable Federal income tax treatment (including deferral
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code.
-16-
<PAGE> 17
17. Withholding.
The Company's obligation to deliver Restricted Shares awarded,
or shares deliverable upon the exercise of any Option granted, under the Plan
shall be subject to the Award recipient's satisfaction of all applicable
Federal, State and local income and employment tax withholding requirements.
18. Duration of the Plan.
Unless earlier terminated by the Board of Directors, the Plan
shall terminate upon the earlier of (i) the close of business on March 31, 2008
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of Options granted under the Plan
and/or are no longer subject to forfeiture pursuant to the terms of any
applicable Award Agreement. If the date of termination is determined under (i)
above, then Awards outstanding on such date shall continue to have force and
effect in accordance with the provisions of the Award Agreements evidencing such
Awards.
Adopted on April 1, 1998 by the
Board of Directors; amended on May
29, 1998 by the Board of Directors;
approved by the stockholders on May
29, 1998; and amended as of February
5, 1999 by the Board of Directors.
-17-
<PAGE> 1
Exhibit 10.51
Form of Executive Officer Restricted Share Award Agreement
I-STAT CORPORATION
RESTRICTED SHARE AWARD AGREEMENT
WITH
_________________________________
This Restricted Share Award Agreement, (the "Agreement") dated as of
___________, ____, is between i-STAT Corporation, a Delaware corporation, having
its principal place of business at 104 Windsor Center Drive, East Windsor, New
Jersey 08520 (the "Company") and [_________________] ("Executive").
In connection with, and in consideration for, services rendered and to
be rendered to the Company by Executive, the Company desires to award to
Executive , pursuant to the Company's Equity Incentive Plan (the "Plan"), shares
of the Company's Common Stock, $.15 par value per share (the "Common Stock").
Accordingly, the Company and Executive hereby agree as follows:
1. Award of Shares. Subject to the terms and conditions set forth herein
and in the Plan, the Company hereby awards to Executive [__________ (____)]
shares of Common Stock (the "Award Shares").
2. Forfeiture of Award Shares.
(a) Voluntary and for Cause Termination. Except as provided in
paragraphs (b) and (c) of this Section 2, if prior to the third anniversary
hereof (the "Forfeiture Period"), either (i) Executive voluntarily terminates
his employment with the Company or (ii) the Company terminates Executive's
employment with the Company for "Cause" (as defined in paragraph (g) below),
then there shall be forfeited by Executive the percentage of Award Shares
specified in the following table (the "Forfeited Shares"), whereupon Executive
shall have no further rights whatsoever with respect to such Forfeited Shares.
<TABLE>
<CAPTION>
Percentage Of
Termination Date Forfeited Shares
---------------- ----------------
<S> <C>
Prior to First Anniversary 100%
First Anniversary to before Second Anniversary 80%
Second Anniversary to before Third Anniversary 60%
Third Anniversary and thereafter -0-
</TABLE>
<PAGE> 2
(b) Death or Disability. If during the Forfeiture Period,
Executive (x) dies or (y) becomes Permanently Disabled (as defined in paragraph
(g) below), then the number of Forfeited Shares shall be the number of Award
Shares equal to the lesser of (i) one-half of the Award Shares and (ii) (A) the
Award Shares less (B) that number of Award Shares which bears the same
proportion to all of the Award Shares as the number of days elapsed between the
date of this Agreement and the date of the termination of Executive's employment
for the reasons stated in clauses (x) or (y) above bears to the number of days
between the date of this Agreement and the third anniversary of the date of this
Agreement. Subsequent to the occurrence of either of the events set forth in
clauses (x) or (y) above, any Award Shares which are not forfeited as provided
for in this paragraph (b) shall be subject to no further risk of forfeiture.
(c) Termination Without Cause; Change in Control. If, during the
Forfeiture Period, either (i) the Company terminates the Executive's employment
without Cause or (ii) there occurs a Change in Control (as such term is defined
in the Plan), then no Award Shares shall remain subject to forfeiture.
(d) Stock Dividend; Other Events. If, during the Forfeiture
Period, there is (i) any stock dividend, stock split, combination or subdivision
or other change in the character or amount of any of the Company's outstanding
securities or (ii) any consolidation, merger or sale of all or substantially all
of the Company's assets, then, in such event, any and all new, substituted or
additional securities to which Executive is entitled by reason of his ownership
of Award Shares which, immediately prior to such event, were subject to
forfeiture, will be immediately subject to the forfeiture provisions of
paragraph (a) of this Section, and shall be included in the term "Award Shares"
for purposes of this Agreement.
(e) Rights As Stockholder. As long as Executive's Award Shares
have not been forfeited pursuant to paragraph (a) of this Section, Executive
shall have with respect to such Award Shares, voting, dividend and all other
rights of a holder of Common Stock.
(f) Certificates for Award Shares; Transfer Restrictions.
Certificates representing Award Shares subject to forfeiture pursuant to
paragraph (a) of this Section will be held by the Company until such Award
Shares are no longer subject to forfeiture. Award Shares subject to forfeiture
may not be sold, transferred, pledged or otherwise disposed of (including, but
not limited to, through transfer by gift or donation).
(g) Certain Definitions.
2
<PAGE> 3
(i) "Cause" for purposes of this Agreement shall mean with
respect to Executive (A) any felony conviction or admission of guilt, (B) any
breach or nonobservance by Executive of the employee policies or standards of
the Company, (C) any willful, intentional or deliberate disobedience or neglect
by Executive of the lawful and reasonable orders or directions of the Chairman
of the Board or Chief Executive Officer of the Company; provided that the
Executive has been given written notice of such disobedience or neglect and
Executive has failed to cure such disobedience or neglect within a period
reasonable under the circumstances, (D) any willful or deliberate misconduct by
Executive that is materially injurious to the Company, (E) any violation by
Executive of his obligations to the Company of non-disclosure, non-competition
or non-solicitation, or (F) any breach by Executive of any provision of this
Agreement. All determinations of "Cause" under this Agreement will be made
reasonably by the Chief Executive Officer of the Company, in the exercise of his
sole discretion, and will be final and binding upon Executive.
(ii) "Permanently Disabled" for purposes of this Agreement
means Executive's inability to substantially perform his duties and
responsibilities to the Company by reason of any physical or mental incapacity
for a period of 180 consecutive days, or two or more periods of 90 consecutive
days each in any 360-day period.
3. Representations of Executive. Executive represents, warrants
and covenants that:
(a) The Award Shares are being acquired by Executive for his own
account, for investment only and not with a view to, or for sale in connection
with, any distribution in violation of the Securities Act of 1933, as amended
(the "Securities Act") or any rule or regulation thereunder; and
(b) Executive understands that (i) the Award Shares currently are
not, and in the future may not be registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act;
(ii) the Award Shares cannot be sold, transferred or otherwise disposed of
unless they are registered under the Securities Act or an exemption from
registration is then available; and (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one (1) year and
even then will not be available unless a public market then exists for the
Common Stock of the Company, adequate information concerning the Company is then
available to the public, and the other terms and conditions of Rule 144 are
complied with.
4. Tax Consequences. Executive hereby represents that prior to or
on the date hereof, Executive has generally been advised of the tax consequences
to Executive of
3
<PAGE> 4
receiving the Award Shares and has obtained appropriate legal or tax advice with
respect thereto.
5. Legends. Stock certificates representing the Award Shares may
bear legends reflecting such restrictions as the Company deems appropriate and
in its best interests in accordance with the terms and conditions of this
Agreement. In such event, the Company may refuse to transfer ownership of the
Award Shares on its corporate record books until Executive has complied with
such restrictions.
6. Non-transferability of Award Agreement. This Agreement is
personal and no rights hereunder may be transferred, assigned, pledged or
hypothecated by Executive 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 by Executive to transfer, assign, pledge, hypothecate
or otherwise dispose of his rights under this Agreement contrary to the
provisions hereof, or upon the levy of any attachment or similar process upon
such rights, any such rights shall, at the election of the Company, become null
and void.
7. Delivery of Award Shares. Subject to the terms set forth in
Section 2(f) hereof, the Company will make prompt delivery to Executive of the
Award Shares, provided that if any law or regulation requires the Company to
take any action with respect to such Award Shares before the issuance thereof,
then the date of delivery of such Award Shares will be extended for the period
necessary to complete such action. No Award Shares will be issued and delivered
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act, any applicable listing or
quotation requirements of any exchange or quotation system on which stock of the
same class is then listed or quoted, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery shall have
been fully complied with.
8. No Special Employment Rights. Executive acknowledges that,
subject to the terms of any separate employment agreement to the contrary, his
employment is "at-will," and either the Company or Executive may terminate
Executive's employment at any time with or without "Cause" as defined in
paragraph (g) of Section 2 hereof. Nothing contained in the Plan or this
Agreement will confer upon Executive any right with respect to the continuation
of his employment by the Company (or any Parent Corporation (as defined in the
Plan) or Subsidiary (as defined in the Plan)) or interfere in any way with the
right of the Company (or any Parent Corporation or Subsidiary), subject to the
terms of any separate employment agreement to the contrary, at any time to
4
<PAGE> 5
terminate such employment or to increase or decrease the compensation of
Executive from the rate in existence at the time of the stock award.
9. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, in any jurisdiction the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law in such jurisdiction, and such
invalidity or unenforceability shall have no effect in any other jurisdiction.
10. Miscellaneous; Notices.
(a) This Agreement and any instrument delivered pursuant to this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New Jersey, without regard to the conflicts of law rules thereof.
Each party hereto submits to the venue and jurisdiction of the State courts
sitting in New Jersey as the sole and exclusive forum for any disputes arising
under this Agreement, and further agrees that, in the event of any action or
suit as to any disputes arising under this Agreement between the parties,
service of any process may be made upon the other party by mailing a copy of the
summons and/or complaint to the other party at the address set forth herein and
a party's refusal to accept any such notice shall be equivalent to service. The
parties hereby waive, to the fullest extent that each may effectively do so, all
objections that such party may now or may hereafter acquire to, or any right or
immunity on the grounds of, venue, the inconvenience of the forum or
jurisdiction of such State courts.
(b) This Agreement shall extend to, be binding upon and inure to
the benefit of Executive and his legal representatives, heirs, successors and
assigns (subject, however, to the limitations set forth in Section 6 with
respect to transfer of this Agreement or any rights hereunder), and upon the
Company and 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.
(c) This Agreement and the Plan contain the entire agreement of
the parties with respect to the subject matter hereof. No waiver, modification
or change of any provision of this Agreement will be valid unless in writing and
signed by both parties.
(d) No value deemed to be received by Executive as a result of the
award of Award Shares hereunder will constitute "earnings" with respect to which
any other Executive benefits of Executive are determined.
5
<PAGE> 6
(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 of any other duty, term or condition of this
Agreement.
(f) All notices pursuant to this Agreement will be in writing and
will be sent by personal delivery or by prepaid registered or certified mail,
return receipt requested, addressed to the parties hereto at the addresses set
forth beneath their names on the signature page hereto or to such other
addresses as may hereafter be specified by like notice in writing by either of
the parties, and will be deemed given upon receipt if by personal delivery or
upon mailing if sent by registered or certified mail. Copies of all notices
shall be sent to: Paul, Hastings, Janofsky & Walker LLP, 1055 Washington
Boulevard, Stamford, Connecticut 06901, Attention: Esteban A. Ferrer, Esq.
(g) The headings of the sections of this Agreement are inserted
for convenience of reference only and will not be deemed to constitute a part
hereof or to affect the meaning hereof.
(h) This Agreement may be executed in counterparts, each of which
will be deemed an original but all of which will together constitute one and the
same agreement.
[signature page follows this page]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first above written.
i-STAT CORPORATION
By:____________________
Name:
Title:
Address:
104 Windsor Center Drive
East Windsor, NJ 08520
Executive'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 Equity Incentive Plan.
Executive
____________________
Name:
Address:
____________________
____________________
____________________
7
<PAGE> 1
Exhibit 10.52
Form of Restricted Share Award Agreement
with President and Chief Executive Officer
i-STAT Corporation
RESTRICTED SHARE AWARD AGREEMENT
with William P. Moffitt
This Restricted Share Award Agreement ("Agreement"), dated as of
February 5, 1999, is between i-STAT Corporation, a Delaware corporation, having
its principal place of business at 104 Windsor Center Drive, East Windsor, New
Jersey 08520 (the "Company"), and William P. Moffitt ("Employee").
In connection with, and in consideration for, services rendered
and to be rendered to the Company by Employee, the Company desires to award to
Employee, pursuant to the Company's Equity Incentive Plan (the "Plan"), shares
of the Company's Common Stock, $.15 par value per share (the "Common Stock").
Accordingly, the Company and Employee hereby agree as follows:
1. Employment Agreement. The award evidenced by this Agreement
shall under no circumstances limit or otherwise affect the rights or obligations
of Employee or the Company pursuant to that certain Employment Agreement, dated
as of January 23, 1998, between the Company and Employee, as the same may be
amended from time to time (the "Employment Agreement"), or otherwise affect the
employment relationship between Employee and the Company. Nothing contained in
the Plan or this Agreement will confer upon Employee any right with respect to
the continuation of his employment by the Company or interfere in any way with
the right of the Company, subject to the terms of the Employment Agreement, to
terminate such employment or to increase or decrease the compensation of
Employee from the rate in existence at the time of the award contemplated
herein.
2. Award of Shares. Subject to the terms and conditions set forth
herein and in the Plan, the Company hereby awards to Employee Two Hundred Fifty
Thousand (250,000) shares of Common Stock (the "Award Shares").
3. Forfeiture of Award Shares; Employee's Rights in Shares. From
and after the date hereof, the Award Shares shall be subject to forfeiture by
Employee as set forth below:
<PAGE> 2
(a) Fifty thousand (50,000) of the Award Shares shall not be
subject to forfeiture by Employee under any circumstance (the
"Vested Shares").
(b) All of the Award Shares other than the Vested Shares (the
"Unvested Shares"), shall immediately be forfeited by Employee
if, prior to February 5, 2002 (the "Vesting Date"), (i)
Employee voluntarily resigns his employment with the Company
without Good Reason (as such term is defined in the Employment
Agreement) or (ii) the Company terminates Employee's
employment for Cause (as such term is defined in the
Employment Agreement).
(c) If, prior to the Vesting Date, (i) Employee dies or (ii) the
Company terminates Employee's employment due to Employee's
Permanent Disability (as such term is defined in the
Employment Agreement), then Employee shall forfeit that number
of Unvested Shares which is equal to the lesser of (i) 100,000
and (ii) (A) 200,000 less (B) that number of Unvested Shares
which bears the same proportion to all of the Unvested Shares
as the number of days elapsed between February 5, 1999 and the
date of termination of Employee's employment for the reasons
stated in clauses (i) or (ii) above bears to the number of
days between February 5, 1999 and the Vesting Date. Subsequent
to the occurrence of either of the events set forth in clauses
(i) or (ii) above, any Unvested Shares which are not forfeited
as provided for in this paragraph (c) shall be subject to no
further risk of forfeiture.
(d) Notwithstanding paragraphs (b) and (c) of this Section, the
Unvested Shares will automatically cease to be subject to
forfeiture upon the earlier to occur of (i) the Vesting Date,
(ii) the termination by the Company of Employee's employment
without Cause, (iii) the occurrence of a Change in Control (as
such term is defined in the Plan) and (iv) the voluntary
resignation by Employee of his employment with the Company due
to a Diminution of Responsibility (as such term is defined in
the Employment Agreement).
(e) Upon the forfeiture of any of the Unvested Shares pursuant to
the terms of this Section, Employee shall have no further
rights whatsoever with respect to such shares.
(f) If, prior to the Vesting Date, there is (i) any stock
dividend, stock split, combination or subdivision or other
change in the character or amount of
2
<PAGE> 3
any of the Company's outstanding securities or (ii) any
consolidation, merger or sale of all or substantially all of
the Company's assets, then, in such event, any and all new,
substituted or additional securities to which Employee is
entitled by reason of his ownership of Award Shares which,
immediately prior to such event, were subject to forfeiture,
will be (except to the extent any such event shall constitute
a Change in Control) immediately subject to the forfeiture
provisions of paragraphs (b) and (c) of this Section, and
shall be included in the term "Award Shares" for purposes of
this Agreement.
(g) As long as any of Employee's Award Shares have not been
forfeited pursuant to paragraphs (b) or (c) of this Section,
Employee shall have, with respect to such Award Shares,
voting, dividend and all other rights of a holder of Common
Stock.
(h) Certificates representing Award Shares subject to forfeiture
pursuant to paragraphs (b) and (c) of this Section will be
held by the Company until such Award Shares are no longer
subject to forfeiture. Award Shares subject to forfeiture may
not be sold, transferred, pledged or otherwise disposed of
(including, but not limited to, through transfer by gift or
donation).
4. Section 83(b) Election. (a) Within thirty (30) days of the date
hereof, Employee shall make an election under Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), by filing a statement meeting the
requirements of Treasury Regulations Section 1.83-2 with the applicable Internal
Revenue Service (the "IRS") office (with a copy to the Company) with respect to
all of the Unvested Shares (the "83(b) Election").
(b) Employee will, upon the request of the Company (and at the
Company's expense), contest any action or filing of any government or
governmental agency which would result in the payment by Employee of any tax
liability in respect of the Award Shares. Employee shall keep the Company
informed as to the status and progress of any such contest and shall consider in
good faith the Company's advice in connection therewith; provided, however, that
to the extent the Company has indemnified Employee with respect to such tax
liability, Employee shall follow the Company's advice in connection therewith.
Employee shall give the Company the opportunity to review and comment on any
written submissions and to attend any proceedings in connection with the
foregoing.
3
<PAGE> 4
5. Loan. (a) The Company shall, in accordance with its normal
policies and procedures for the payment of withholding tax, pay to the IRS and
the appropriate state and local revenue authorities (collectively, the "Tax
Authorities"), on behalf of Employee, an amount equal to the federal (including,
without limitation, Medicare taxes), state and local income taxes (the foregoing
taxes are hereinafter collectively referred to as "Income Taxes") required to be
withheld in connection with the award to Employee of the Award Shares (the
"Withholding Tax Amount"). On the day the Company pays the Withholding Tax
Amount on behalf of Employee to the Tax Authorities, Employee shall execute an
unsecured promissory note in substantially the form attached as Exhibit A hereto
(the "Withholding Tax Amount Promissory Note") reflecting Employee's obligation
to repay the Withholding Tax Amount to the Company (the "Withholding Tax Loan").
No later than five (5) days before Employee is obligated to pay to the Tax
Authorities any additional Income Taxes with respect to the Award Shares (after
taking into account any reduction in such liability based upon Employee's
personal tax position) (the "Remaining Taxes"), the Company shall loan (the
"Remaining Tax Loan") to Employee the full amount of the Remaining Taxes (the
"Remaining Tax Amount") and Employee shall thereafter promptly pay the Remaining
Tax Amount to the appropriate Tax Authorities. On the day the Company pays the
Remaining Tax Amount to Employee, Employee shall execute an unsecured promissory
note in substantially the form of Exhibit B hereto (the "Remaining Tax Amount
Promissory Note") reflecting Employee's obligation to repay the Remaining Tax
Loan to the Company. (The Withholding Tax Loan and the Remaining Tax Loan (to
the extent such loan is made by the Company to Employee) are hereinafter
collectively referred to as the "Loan"). In determining each of the Withholding
Tax Amount and the Remaining Tax Amount, the Company will base its calculation
on the information contained in the 83(b) Election made pursuant to Section 4
and Employee's federal, state and local income tax rate.
(b) The Loan is due and payable three years from the date of the
Remaining Tax Loan, if made, or, if the Remaining Tax Loan is not made, the date
of the Withholding Tax Loan (the "Due Date"). Interest on each of the
Withholding Tax Loan and the Remaining Tax Loan (if made by the Company) shall
accrue annually at the Applicable Interest Rate (as hereinafter defined) for the
month in which the Withholding Tax Loan or the Remaining Tax Loan, as the case
may be, is made and shall be due and payable by Employee annually in arrears on
the anniversary of the Remaining Tax Loan, or, if the Remaining Tax Loan is not
made, on the anniversary of the Withholding Tax Loan. To the extent the amount
of the Loan exceeds the actual Income Tax liability of Employee (after taking
into account any reduction in such liability based upon Employee's personal tax
position), Employee shall immediately repay such amount to the Company (plus
accrued interest thereon) and the principal amount of the Loan shall be reduced
accordingly. In connection with the determination of the Remaining Taxes
Employee
4
<PAGE> 5
agrees to take reasonable actions to maximize Employee's use of available
deductions and offsets with the intention of minimizing the amount of the
Remaining Taxes.
(c) "Applicable Interest Rate" for purposes of this Agreement
shall mean the minimum applicable federal rate determined under Code Section
1274(d), compounded semi-annually.
6. Forgiveness of Loan.
(a) Subject to paragraph (b) of this Section and to Section 7
hereof, so long as Employee is employed by the Company one-third of the
outstanding principal amount of the Loan shall be forgiven by the Company on
each anniversary date of the Remaining Tax Loan, or, if the Remaining Tax Loan
is not made, the date of the Withholding Tax Loan.
(b) Notwithstanding anything to the contrary contained in
paragraph (a) of this Section or in Section 7 hereof, the then outstanding
principal amount of the Loan, along with all accrued and unpaid interest
thereon, shall be forgiven by the Company upon the earlier of (i) Employee's
death, (ii) the termination by the Company of Employee's employment due to
Employee's Permanent Disability, (iii) the occurrence of a Change in Control,
(iv) the voluntary resignation by Employee of his employment with the Company
due to a Diminution of Responsibility and (v) the termination by the Company of
Employee's employment without Cause.
7. Acceleration of Loan. The then outstanding principal amount of
the Loan, together with all accrued and unpaid interest thereon, shall be due
and payable by Employee to the Company on the date which is 180 days following
the earlier of (i) Employee's voluntary resignation from the Company without
Good Reason prior to the Due Date and (ii) the termination of Employee's
employment by the Company for Cause. Upon the occurrence of either of the events
set forth in clauses (i) or (ii) of the preceding sentence, Section 6(a) shall
immediately be void and of no further force or effect.
8. Exercise of Options; Payment to the Company.
(a) From and after the date of the Withholding Tax Loan, but
subject to the limitation set forth in paragraph (b) of this Section, Employee
covenants and agrees that Employee shall pay to the Company any amounts realized
by Employee in connection with the exercise of the Designated Options (as
hereinafter defined) and the sale of the securities underlying such Options (the
"Covered Securities"), net of any Income Taxes and brokerage commissions payable
by Employee in connection therewith (the "Option
5
<PAGE> 6
Profits"). Employee shall pay the Option Profits to the Company within ten (10)
business days after the sale of any Covered Security. For purposes only of this
Section 8, the Income Taxes payable in connection with the sale of a Covered
Security shall be deemed to be equal to 42% of the proceeds payable to Employee
from such sale.
(b) To the extent that either the Withholding Tax Loan or the
Remaining Tax Loan is still outstanding at the time when Employee pays any
Option Profits to the Company, the Company shall apply the Option Profits
equally to the remaining outstanding principal amounts and accrued and unpaid
interest due under such loans. If only one of such loans is outstanding at the
time of such a distribution, the Company shall apply all of such Option Profits
to the outstanding principal amount and the accrued and unpaid interest due
under such loan. Any Option Profits received by the Company and applied to the
Withholding Tax Loan and/or the Remaining Tax Loan, as the case may be, shall be
applied first to any outstanding principal amounts due under such loan(s) and
next to any accrued and unpaid interest due thereon. If the Withholding Tax Loan
and/or for the Remaining Tax Loan, as the case may be, have been forgiven as
provided in Section 6 hereof, the Company and Employee shall consult and
determine the appropriate manner in which to treat such distribution by Employee
to the Company of any Option Profits.
(c) The obligations of Employee pursuant to this Section 8 shall
remain in full force and effect until the payment by Employee to the Company of
Option Profits equal to the original principal amount of the Loan, together with
any then accrued and unpaid interest thereon (the "Option Profits Obligation")
and whether or not the Loan shall have been forgiven in accordance with Section
6 hereof. Notwithstanding anything to the contrary contained in this Agreement,
if after the Option Profits Obligation has been satisfied there are still
Designated Options which have not been exercised, Employee shall be entitled to
retain such Designated Options, to exercise such Options in accordance with
their terms, and to retain any profits generated by the sale of the securities
underlying such Options for his own account.
(d) "Designated Options" for purposes of this Agreement shall mean
those stock options previously granted to Employee by the Company and which are
designated on the books and records of the Company as option numbers 002652,
001463, 002149, 002644, 001167, 001146, 001218, 000560 and 000619. Employee and
the Company acknowledge and agree that the Designated Options in the aggregate
represent the right of Employee to purchase up to 161,757 shares of Common
Stock, and that the latest date on which any such option can be exercised is
January 23, 2008.
6
<PAGE> 7
\ 9. Gross-Up.
(a) To the extent that all or any portion of the Loan is forgiven
by the Company as provided in Section 6 and Employee is obligated to pay any
Income Taxes as a result thereof, the Company shall pay to Employee, or on
behalf of Employee, as the case may be, the sum of (i) all Income Taxes due by
Employee as a result of the forgiveness of such Loan, plus (ii) an amount equal
to any and all Income Taxes paid or required to be paid with respect to the
receipt of the amount set forth in clause (i) above (including, without
limitation, any taxes on such additional amount). It is the intention of the
parties hereto that the Company will pay on behalf of Employee any withholding
tax due in connection with the forgiveness of all or any portion of the Loan and
that the Company will pay to Employee any out-of-pocket tax liability Employee
experiences in connection with the forgiveness of the Loan. Any amounts payable
by the Company to Employee pursuant to this Section 9 shall be paid no later
than five (5) business days before Employee is obligated to pay any taxes to the
Tax Authorities. The amounts payable to, or on behalf of Employee by the Company
pursuant to this Section 9 shall be in addition to, and not in limitation of,
the amounts payable to, or on behalf of Employee by the Company pursuant to
Section 17 hereof.
(b) To the extent that any additional Income Taxes (other than the
Withholding Tax Amount and the Remaining Tax Amount) are due and payable by
Employee in connection with the award contemplated by this Agreement, the
Company shall pay to Employee an amount, so that on an after-tax basis, Employee
will be in no different position than if no additional taxes were due with
respect to the Award Shares.
10. Manner of Payment. (a) Any payment required to be made by
Employee hereunder or pursuant to the Promissory Note may be made by Employee in
funds constituting lawful money of the United States of America or, at the
election of Employee, in shares of Common Stock. If Employee makes any payment
with shares of Common Stock, the Market Value (as hereinafter defined) of the
Common Stock as of the close of business on the business day immediately
preceding the payment date shall be used to determine the number of shares of
Common Stock which will be necessary to make such payment. Title to all shares
of Common Stock used to make any payment hereunder shall be transferred free and
clear of liens and encumbrances, and Employee shall make representations and
warranties to that effect which are reasonably acceptable to the Company.
(b) "Market Value" for purposes of this Agreement and of the
Promissory Note shall mean as of any date (the "Value Date") the average closing
price of the Common Stock as reported on the National Association of Securities
Dealers Automated Quotation
7
<PAGE> 8
System ("NASDAQ") or, if the Common Stock is listed on a stock exchange, the
principal stock exchange on which the Common Stock is listed, for the thirty
trading days immediately prior to the Value Date for which a closing price is
available. If the Common Stock is not reported on the NASDAQ or listed on any
stock exchange, then "Market Value" shall be determined in good faith by the
Company's Board of Directors.
11. Representations of Employee. Employee represents, warrants and
covenants that:
(a) The Award Shares are being acquired by Employee for his own
account, for investment only and not with a view to, or for sale in connection
with, any distribution in violation of the Securities Act of 1933, as amended
(the "Securities Act") or any rule or regulation thereunder; and
(b) Employee understands that (i) the Award Shares currently are
not, and in the future may not be registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act;
(ii) the Award Shares cannot be sold, transferred or otherwise disposed of
unless they are registered under the Securities Act or an exemption from
registration is then available; and (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one (1) year and
even then will not be available unless a public market then exists for the
Common Stock of the Company, adequate information concerning the Company is then
available to the public, and the other terms and conditions of Rule 144 are
complied with.
12. Tax Consequences. Employee hereby represents that prior to
or on the date hereof, Employee has been advised of the tax consequences to
Employee of receiving the Award Shares and has obtained appropriate legal or tax
advice with respect thereto.
13. Legends. Stock certificates representing the Award Shares
may bear legends reflecting such restrictions as the Company deems appropriate
and in its best interests in accordance with the terms and conditions of this
Agreement. In such event, the Company may refuse to transfer ownership of the
Award Shares on its corporate record books until Employee has complied with such
restrictions.
14. Non-transferability of Award Agreement. This Agreement is
personal and no rights hereunder may be transferred, assigned, pledged or
hypothecated by Employee 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 by Employee to transfer, assign, pledge, hypothecate
or otherwise dispose of his rights under this Agreement contrary to the
provisions hereof, or upon the levy of any attachment or similar process
8
<PAGE> 9
upon such rights, any such rights shall, at the election of the Company, become
null and void.
15. Delivery of Award Shares. Subject to the terms set forth in
Section 3(h) hereof, the Company will make prompt delivery to Employee of the
Award Shares, provided that if any law or regulation requires the Company to
take any action with respect to such Award Shares before the issuance thereof,
then the date of delivery of such Award Shares will be extended for the period
necessary to complete such action. No Award Shares will be issued and delivered
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act, any applicable listing or
quotation requirements of any exchange or quotation system on which stock of the
same class is then listed or quoted, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery shall have
been fully complied with.
16. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, in any jurisdiction the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law in such jurisdiction, and such
invalidity or unenforceability shall have no effect in any other jurisdiction.
17. Golden Parachute Excise Tax. To the extent that, as a result
of a Change in Control, (A) the Unvested Shares are no longer subject to a risk
of forfeiture as provided in Section 3 hereof and (B) the Loan is forgiven as
provided in Section 6 hereof, the Company shall pay to Employee an amount equal
to (i) any excise tax imposed by Section 4999 of the Code on any portion of the
value accruing to Employee in connection with (A) and (B) above plus (ii) any
other taxes imposed by the Code or under state or local law on the payments
provided for in this Section 17. The amount of the taxes provided for in clauses
(i) and (ii) of the immediately preceding sentence shall be determined by
PricewaterhouseCoopers or another national accounting firm selected by the
Company. The provisions of this Section 17 are intended to be complimentary to
Section 7 of the Employment Agreement and any rights or obligations of the
Company and Employee pursuant to this Section 17 shall be subject to and
governed by the terms and conditions set forth in Section 7 of the Employment
Agreement. To the extent that Employee, as a result of a Change in Control,
becomes entitled to the Unvested Shares and the Loan (plus accrued interest) is
forgiven, Employee shall be entitled to all of the benefits provided by Section
7 of the Employment Agreement. Any amounts payable by the Company to Employee
pursuant to this Section 17 shall be paid to Employee no later five (5) business
days before Employee is obligated to pay any taxes to the Tax
9
<PAGE> 10
Authorities. The amounts payable to Employee by the Company pursuant to this
Section 17 shall be in addition to, and not in limitation of, the amounts
payable to, or on behalf of Employee by the Company pursuant to Section 9
hereof.
18. Miscellaneous; Notices.
(a) This Agreement and any instrument delivered pursuant to this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New Jersey, without regard to the conflicts of law rules thereof.
Each party hereto submits to the venue and jurisdiction of the State courts of
New Jersey as the sole and exclusive forum for any disputes arising under this
Agreement, and further agrees that, in the event of any action or suit as to any
disputes arising under this Agreement between the parties, service of any
process may be made upon the other party by mailing a copy of the summons and/or
complaint to the other party at the address set forth herein and a party's
refusal to accept any such notice shall be equivalent to service. The parties
hereby waive, to the fullest extent that each may effectively do so, all
objections that such party may now or may hereafter acquire to, or any right or
immunity on the grounds of, venue, the inconvenience of the forum or
jurisdiction of such State courts.
(b) This Agreement shall extend to, be binding upon and inure to
the benefit of Employee and his legal representatives, heirs, successors and
assigns (subject, however, to the limitations set forth in Section 14 with
respect to transfer of this Agreement or any rights hereunder), and upon the
Company and 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.
(c) This Agreement and the Plan contain the entire agreement of
the parties with respect to the subject matter hereof. No waiver, modification
or change of any provision of this Agreement will be valid unless in writing and
signed by both parties.
(d) No value deemed to be received by Employee as a result of the
award of Award Shares hereunder will constitute "earnings" with respect to which
any other employee benefits of Employee are determined.
(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 of any other duty, term or condition of this
Agreement.
(f) All notices pursuant to this Agreement will be in writing and
will be sent by personal delivery or by prepaid registered or certified mail,
return receipt requested,
10
<PAGE> 11
addressed to the parties hereto at the addresses set forth beneath their names
on the signature page hereto or to such other addresses as may hereafter be
specified by like notice in writing by either of the parties, and will be deemed
given upon receipt if by personal delivery or upon mailing if sent by registered
or certified mail. Copies of all notices shall be sent to: Paul, Hastings,
Janofsky & Walker LLP, 1055 Washington Boulevard, Stamford, Connecticut 06901,
Attention: Esteban A. Ferrer, Esq.
(g) The headings of the sections of this Agreement are inserted
for convenience of reference only and will not be deemed to constitute a part
hereof or to affect the meaning hereof.
(h) This Agreement may be executed in counterparts, each of which
will be deemed an original but all of which will together constitute one and the
same agreement.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first above written.
i-STAT CORPORATION
By:______________________________
Name: J. Robert Buchanan, M.D.
Title: Chairman of the Board
Address:
104 Windsor Center Drive
East Windsor, NJ 08520
Employee'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 Equity Incentive Plan.
Employee
--------------------------------
Name: William P. Moffitt
Address:
412 Ramsey Road
Yardley, Pennsylvania 19067
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 33,808
<SECURITIES> 0
<RECEIVABLES> 5,620
<ALLOWANCES> (190)
<INVENTORY> 10,174
<CURRENT-ASSETS> 51,158
<PP&E> 35,351
<DEPRECIATION> (20,934)
<TOTAL-ASSETS> 67,314
<CURRENT-LIABILITIES> 10,962
<BONDS> 0
0
214
<COMMON> 2,346
<OTHER-SE> 48,792
<TOTAL-LIABILITY-AND-EQUITY> 67,314
<SALES> 10,337
<TOTAL-REVENUES> 10,337
<CGS> 8,083
<TOTAL-COSTS> 8,083
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,491)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,491)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
