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EXHIBIT 10.17
 
MASTER AGREEMENT
 
This Master Agreement (this “Agreement”) is dated as of January 26, 2011
(“Effective Date”) by and among the National Institute for Strategic Technology
Acquisition and Commercialization, a Kansas non-profit corporation (“NISTAC”),
the Kansas State University Research Foundation, a Kansas non-profit corporation
(“KSURF”) and ABAXIS, Inc., a California corporation (“ABAXIS”).  NISTAC, KSURF
and ABAXIS are also each referred to as a “Party” or collectively as the
“Parties.”
 
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
below, the Parties hereby agree as follows:
 
1.           TERM.  Unless the Parties mutually agree otherwise, this Agreement
will commence on the Effective Date and automatically terminate on the day that
is ten (10) full calendar years after the Royalty Initiation Date (the
“Term”).  As used in this Agreement, “Royalty Initiation Date” means the first
day of the calendar year after which ABAXIS first receives samples for
veterinary diagnostic laboratory testing from a paying customer.  For example,
if ABAXIS receives its first sample from a paying customer on September 1, 2011,
the Royalty Initiation Date shall be January 1, 2012.
 
 2.          WARRANTS.  ABAXIS agrees to issue warrants, with the terms and in
the form attached hereto as Exhibit A, pursuant to the following schedule: (a)
warrants to acquire 10,000 shares of ABAXIS common stock to NISTAC
contemporaneous with the execution of this Agreement and (b) warrants to acquire
20,000 shares of ABAXIS common stock to NISTAC on the date ABAXIS first receives
samples from a paying customer for which the Veterinary Diagnostic Laboratory
operated by Kansas State University (“VDL”) could have performed one or more of
the veterinary diagnostic and laboratory testing and related services (the
“Services”) as set forth in the Master Technical Testing Services Agreement,
dated of even date herewith, by and among K-State Diagnostic and Analytical
Services, Inc. (“KDAS”), Kansas State University (“K-State”) and ABAXIS (the
“Master Technical Testing Services Agreement”).  Each warrant shall vest at a
rate of 20% annually from its issuance date.  Each warrant shall have an
exercise price of Three Dollars and 00/100 ($3.00) per share.  All warrants
issued by ABAXIS pursuant to this Section 2 shall be held by NISTAC for the
benefit of K-State.
 
 3.          ROYALTY PAYMENTS.
 
(a)           Computation of Royalty Payments.  Beginning on the Royalty
Initiation Date, and in compensation for any and all rights granted in Section 6
below, KSURF shall be entitled to receive royalty payments (the “Royalty
Payments”) from ABAXIS as follows:
 
 i.           For that portion of AVRL Net Sales (as defined below) generated by
the Initial AVRL Site, the Royalty Payments shall be in an amount equal to (A)
until the fifth anniversary of the Royalty Initiation Date, [*] of such AVRL Net
Sales and (B) for the remainder of the Term of this Agreement, either (1) [*] of
such AVRL Net Sales if the Master Technical Testing Services Agreement  is
renewed after its initial five (5) year term, or (2) [*] of such AVRL Net Sales
if the Master Technical Testing Services Agreement is not renewed after its
initial five (5) year term.  Notwithstanding the foregoing, if the Master
Technical Testing Services Agreement is terminated at any time upon one year
notice pursuant to Section 6.2 of the Master Technical Testing Services
Agreement, the Royalty Payment shall be [*] of such AVRL Net Sales after such
notice period.  Notwithstanding subparagraphs 3(a)(ii) or (iii) below, any work
or services done by the VDL shall be deemed to give rise to AVRL Net Sales
generated by the Initial AVRL Site and shall result in Royalty Payments at the
rates described in this subparagraph 3(a)(i).
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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 ii.           For that portion of AVRL Net Sales generated by the Second AVRL
Site, the Royalty Payments shall be in an amount equal to (A) until the fifth
anniversary of the Royalty Initiation Date, [*] of such AVRL Net Sales and (B)
for the remainder of the Term of this Agreement, either (1) [*] of such AVRL Net
Sales if the Master Technical Testing Services Agreement  is renewed after its
initial five (5) year term, or (2) [*] of such AVRL Net Sales if the Master
Technical Testing Services Agreement is not renewed after its initial five (5)
year term.  Notwithstanding the foregoing, if the Master Technical Testing
Services Agreement is terminated at any time upon one year notice pursuant to
Section 6.2 of the Master Technical Testing Services Agreement, the Royalty
Payment shall be [*] of such AVRL Net Sales after such notice period.
 
iii.           For that portion of AVRL Net Sales generated by any Other AVRL
Site, the Royalty Payments shall be in an amount equal to (A) until the fifth
anniversary of the Royalty Initiation Date, [*] of such AVRL Net Sales and (B)
for the remainder of the Term of this Agreement, either (1) [*] of such AVRL Net
Sales if the Master Technical Testing Services Agreement  is renewed after its
initial five (5) year term, or (2) [*] of such AVRL Net Sales if the Master
Technical Testing Services Agreement is not renewed after its initial five (5)
year term.  Notwithstanding the foregoing, if the Master Technical Testing
Services Agreement is terminated at any time upon one year notice pursuant to
Section 6.2 of the Master Technical Testing Services Agreement, the Royalty
Payment shall be [*] of such AVRL Net Sales after such notice period.
 
iv.           “AVRL Net Sales” shall mean the revenue from sales of all products
or services that are generated by the Initial AVRL Site, the Second AVRL Site,
or any Other AVRL Site (as the case may be), as calculated in accordance with
generally accepted accounting principles, consistently applied, and less the
following deductions:
 
(1)           all uncollectible amounts or refunds or credits;
 
(2)           volume, quantity or other customary trade discounts, rebates, and
allowances, to the extent actually allowed and taken by such third party and not
otherwise recovered by or reimbursed to the selling party;
 
(3)           sales and excise taxes, or import and export duties, tariffs or
taxes or other governmental charges, imposed on and actually paid by the selling
party; and
 
(4)           transportation costs, including insurance and shipping, freight,
and handling charges actually paid by ABAXIS.
 
 v.           “Initial AVRL Site” shall mean the Abaxis Veterinary Reference
Laboratory established in the State of Kansas, or any successor entity or
division (or entities or divisions) thereto that markets and sells veterinary
diagnostic laboratory testing services, whether controlled by ABAXIS or any
other entity, including subsequent Abaxis Veterinary Reference Laboratories
established at other sites, but excluding the Second AVRL Site or any Other AVRL
Site.  The Parties intend for the Initial AVRL Site to be largest and highest
volume AVRL Site.
 
 vi.           “Second AVRL Site” shall mean the first Abaxis Veterinary
Reference Laboratory that (a) is established after the establishment of the
Initial AVRL Site; (b) is physically located outside the States of Kansas and
Missouri; and (c) is established in response to a reasonable and good faith
determination by Abaxis that the Initial AVRL Site is not able to provide
certain veterinary diagnostic laboratory testing services to a particular
geographic region in a manner that is consistent with quality, turn-around time,
and other technical standards that are generally required to be competitive in
the marketplace. Any successor entity or division (or entities or divisions) to
the Second AVRL Site that markets and sells veterinary diagnostic laboratory
testing services and that is focused on the particular geographic region as the
original Second AVRL Site, whether controlled by ABAXIS or any other entity,
shall also be deemed to be a Second AVRL Site.  Any determination of the type
described in the first sentence of this sub-paragraph shall be communicated to
NISTAC in writing, with a reasonably detailed explanation of the basis for such
determination and the alternatives considered to permit the Initial AVRL Site to
meet the standards necessary to be competitive in the marketplace.  In the event
a Second AVRL Site is established, it shall not provide services or products
outside of the identified particular geographic region.
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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 vii.           “Other AVRL Site” shall mean any Abaxis Veterinary Reference
Laboratory that (a) is established after the establishment of a Second AVRL Site
and does not satisfy the definition of a Second AVRL Site (e.g., it is not a
successor to the Second AVRL Site that serves the particular geographic region
served by the original Second AVRL Site); (b) is physically located outside the
States of Kansas and Missouri; and (c) is established in response to a
reasonable and good faith determination by Abaxis that the Initial AVRL Site and
the Second AVRL Site are not able to provide certain veterinary diagnostic
laboratory testing services to a particular geographic region in a manner that
is consistent with quality, turn-around time, and other technical standards that
are generally required to be competitive in the marketplace.  Any successor
entity or division (or entities or divisions) to an Other AVRL Site that markets
and sells veterinary diagnostic laboratory testing services, whether controlled
by ABAXIS or any other entity, shall also be deemed to be an Other AVRL
Site.  Any determination of the type described in the first sentence of this
sub-paragraph shall be communicated to NISTAC in writing, with a reasonably
detailed explanation of the basis for such determination and the alternatives
considered to permit the Initial AVRL Site and the Second AVRL Site to meet the
standards necessary to be competitive in the marketplace.  In the event an Other
AVRL Site is established, it shall not provide services or products outside of
the identified particular geographic region.
 
(b)           Payment of Royalty Payments.  The Royalty Payments payable by
ABAXIS hereunder shall be payable to KSURF within thirty (30) days after the
close of each March 31 and September 30 during the Term.
 
(c)           Records and Inspection.  ABAXIS shall keep accurate books of
account and records relating to sales during the Term that give rise to AVRL Net
Sales.  On or before the dates specified in Section 3(b) above for payment of
each bi-annual Royalty Payment, ABAXIS shall submit to KSURF a statement (a
“Royalty Statement”) setting forth the AVRL Net Sales during the applicable
period and the total amount of the Royalty Payment payable as a result thereof.
Upon the request of KSURF, which shall be made by KSURF no later than forty-five
(45) days following receipt of any Royalty Statement deliverable to KSURF under
this Section 3(c), ABAXIS shall permit an independent third party accounting
firm that is reasonably acceptable to ABAXIS, upon five (5) business days prior
notice, to examine and inspect any books of account and records relating to
sales during the Term that give rise to AVRL Net Sales, during normal business
hours, subject to reasonable confidentiality undertakings.
 
(d)           Underpayment or Late Payment.  In the event of any underpayment of
any Royalty Payment payable hereunder, ABAXIS shall immediately remit to KSURF
the full amount of such underpayment together with interest on the amount of
such underpayment from the date on which such payment was due at a rate per
annum equal to five percent (5%) in excess of the Prime Rate then in effect on
the date the payment was due (the “Interest Rate”). In the event of any failure
by ABAXIS to make any Royalty Payments when and as due as provided in Section
3(b) hereof, any such late payments shall bear interest from the date on which
such payment was due at the Interest Rate.  For purposes of this Section 3(d),
the “Prime Rate” shall mean, for any given day, a rate per annum that is equal
to the corporate base rate of interest as stated in The Wall Street Journal,
changing when and as said corporate base rate changes.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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 (e)           Royalty Payment Dispute Procedure.  The Parties shall seek in
good faith to reach agreement as to any dispute concerning Royalty Payments to
be made hereunder.  If the Parties are unable to reach such agreement, then
either ABAXIS or KSURF may deliver a written notice to the other (the “Dispute
Notice”).  The Parties shall mutually agree upon an accounting firm (the
“Accounting Firm”) to resolve the dispute within fifteen (15) days of delivery
of the Dispute Notice (“Selection Period”).  In the event the Parties are unable
to agree upon an accounting firm within the Selection Period, each Party shall
select an accounting firm within five (5) days from the expiration of the
Selection Period and those two accounting firms shall select a third accounting
firm which has no prior relationship with any Party.  Such third accounting firm
shall be the Accounting Firm for the purpose of this Agreement.  The Accounting
Firm shall review any documents any Party hereto reasonably believes relevant to
the dispute, and shall make a determination as to the resolution of any such
dispute in accordance with the payment terms set forth in Section 3 of this
Agreement.  The determination of the Accounting Firm shall be delivered in
writing to the Parties as soon as practicable following selection of the
Accounting Firm, but in no event more than forty-five (45) days thereafter, and
shall be final, conclusive and binding upon the Parties hereto.  The Parties
shall each pay one-half of the fees and expenses of the Accounting Firm.
 
4.           REPRESENTATIONS AND WARRANTIES.  Each Party represents and warrants
to the other Party that: (i) the Party is duly organized, validly existing and
in good standing under the laws of the State in which it was organized; (ii) the
Party has the full corporate power and authority to execute, deliver and perform
this Agreement; and (iii) the execution, delivery and performance of this
Agreement have been duly authorized by the Party.
 
 5.           INDEMNITY; LIMITATION OF LIABILITY.  ABAXIS agrees to defend,
indemnify and hold harmless NISTAC and KSURF, their affiliates, officers,
managers, directors, employees, members and/or agents (“NISTAC and KSURF
Indemnified Persons”) from any and all third party claims and suits, and all
losses, damages, liabilities, costs and/or expenses incurred by the indemnitees
in connection therewith (collectively, “Claims”) resulting from: ABAXIS’ actions
and/or omissions in marketing or selling veterinary diagnostic laboratory
testing services or performing such services at the Abaxis Veterinary Reference
Laboratory or any successor entity or division thereto, except to the extent
that any such Claims arise from the bad faith, gross negligence or willful
misconduct, or the reckless disregard of duties or material breach by any NISTAC
and KSURF Indemnified Persons.  EXCEPT FOR BREACH OF SECTION 7 OR THE
INDEMNIFICATION PROVIDED IN THE PRECEDING SENTENCE, NO PARTY SHALL BE ENTITLED
TO RECOVER FROM ANOTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT.
 
 6.           COMPANY NAME.  Without prior written approval from the University
Licensing Office, ABAXIS shall not publish or use any advertising, sales
material or publicity matter relating to the Services, or relating to any
equipment, materials, products and reports furnished by NISTAC, the VDL, or
K-State, wherein the names of NISTAC, the VDL, or K-State are mentioned.  ABAXIS
shall submit any proposed use, at least thirty (30) days prior to use, to the
University Licensing Office for approval.  Once a statement using the names or
marks of NISTAC, the VDL, KDAS, KSVDL, KSUVDL, K-State VDL or K-State is
approved by the University Licensing Office, ABAXIS shall be permitted to use
such statement for the approved use for so long as it remains accurate and not
misleading. Subject to the limitations above, KSURF expressly agrees that (a)
ABAXIS may advertise or publicize the fact that the Abaxis Veterinary Reference
Laboratory (or any successor entity or division (or entities or divisions)
thereto that markets and sells veterinary diagnostic laboratory testing
services) offers services in collaboration with the VDL, KDAS and K-State and
(b) ABAXIS may refer to the VDL, KDAS and/or K-State by name in advertising or
publicity as its collaborator or subcontractor with respect to the
Services.  Nothing in this Section 6 shall be construed to permit ABAXIS any
greater rights to the use of the names or marks of the VDL, KDAS or K-State and
in particular the use of the names or marks of the VDL, KDAS or K-State for the
purposes of providing an endorsement of a specific product or service.  The
rights set forth in this Section 6 shall terminate immediately upon termination
of this Agreement or upon termination of the Master Technical Testing Services
Agreement.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

--------------------------------------------------------------------------------

 
 
7.           CONFIDENTIAL INFORMATION. The Parties hereby acknowledge that
NISTAC will receive confidential information of ABAXIS, the improper use or
disclosure of which could have a material adverse effect upon ABAXIS.  NISTAC
acknowledges and agrees that all information that relates to ABAXIS’ products,
services, business and that is provided to or learned by NISTAC or to its
representatives under this Agreement from time-to-time (“Confidential
Information”) will be confidential, and NISTAC shall not disclose the
Confidential Information to any person or entity and shall not use such
Confidential Information for any purpose other than to carry out its rights and
obligations under this Agreement.  Notwithstanding the foregoing, NISTAC may
disclose Confidential Information on a need-to-know basis to its employees,
consultants, accountants, attorneys and similar advisors bound by a duty of
confidentiality no less stringent than this Section 7.  This Section 7 will not
apply to information that is currently or becomes:  (i) required to be disclosed
pursuant to a Legal Requirement (but only to the extent of the Legal Requirement
and provided that NISTAC provides ABAXIS with prior notice of such requirement
and cooperates with ABAXIS in obtaining a protective order or similar remedy
preventing or limiting such disclosure); (ii) publicly known or available in the
absence of any improper or unlawful action on the part of NISTAC; (iii)
independently developed by NISTAC without use of or reference to the
Confidential Information; or (iv) disclosed to NISTAC on a non-confidential
basis by a third party having the right to make such disclosure.  “Legal
Requirement” means any federal, state, local, municipal, foreign, international,
or multinational constitution, law, regulation, ordinance, order, rule or
treaty, or principal of common law, in each case binding on or affecting NISTAC.
 
8.           NOTICES.  Unless otherwise specified, all notices, consents,
waivers and other communications under this Agreement shall be in writing and
shall be deemed given to a Party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile with personal confirmation of transmission by the
addressee; or (c) received or rejected by the addressee, if sent by certified
mail, return receipt requested, in each case to the following addresses or
facsimile numbers and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, or person as a
Party may designate by notice to the other Parties):
 

 
If to NISTAC:
2005 Research Park Circle

Manhattan, KS 66502
Fax No.: (785) 532-39
Attention: President

 
If to ABAXIS:
3240 Whipple Road

Union City, CA  94598
EFax No.:  510-952-3093
Attention: Martin Mulroy, Corporate V.P.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

--------------------------------------------------------------------------------

 
 

 
If to KSURF:
2005 Research Park Circle

Manhattan, KS  66502
Fax No.: (785) 532-3920
Attention: President
 
9.           WAIVER OF BREACH.  Failure to enforce any right or obligation by
any Party with respect to any matter arising in connection with this Agreement
will not constitute a waiver as to that matter or to any other matter.  No
waiver of any provision of this Agreement will be valid or enforceable unless in
writing and signed by the Party against whom enforcement of the waiver is
sought.  The waiver of any provision of this Agreement at any time by any Party
does not constitute a waiver of future compliance with such provision or a
waiver of compliance with any other provision of this Agreement.
 
10.         SUCCESSORS BOUND; NO ASSIGNMENT.
 
(a)         Successors Bound.  This Agreement will benefit and bind the Parties
and their respective successors and permitted assigns.
 
(b)         Assignment.  No Party may assign or transfer its rights or
obligations under this Agreement, in fact or by operation of law, in part or in
total, without the prior written consent of the other Parties.  Notwithstanding
the foregoing, ABAXIS shall be permitted, without any requirement that it obtain
the consent of NISTAC and KSURF, to assign both its rights and its obligations
under this Agreement to any person or entity acquiring all or substantially all
of the AVRL Business (as defined below), provided that such assignee expressly
agrees to assume ABAXIS’ obligations under this Agreement, including the
obligation to make the Royalty Payments.  Upon assignment of this Agreement as
described in the foregoing sentence, ABAXIS shall (i) provide written notice to
NISTAC and KSURF and (ii) remain fully liable for the performance of all terms
of this Agreement to be performed by the assignee.  If ABAXIS does not assign
its rights and its obligations under this Agreement to any person or entity
acquiring all or substantially all of the AVRL Business, then ABAXIS shall (i)
remain fully liable for the performance of all terms of this Agreement,
including the Royalty Payments as described in Section 3 and (ii) provide KSURF
access to such assignee’s books of account and records relating to sales that
give rise to AVRL Net Sales.  The “AVRL Business” shall mean the entity or
division that markets or sells veterinary diagnostic laboratory testing services
or performs such services.
 
 11.         SECTION HEADINGS.  All section titles are provided for the purpose
of reference and convenience and are not intended to affect the meaning of the
content or scope of this Agreement.  This Agreement will be construed simply
according to its fair meaning and not strictly for or against any Party.
 
 12.         GOVERNING LAW.  This Agreement and all disputes arising hereunder
will be subject to, governed by, and construed in accordance with the laws of
the State of Kansas (without regard to conflicts of laws provisions).
 
 13.         ENTIRE AGREEMENT.  This Agreement and the Master Technical Testing
Services Agreement constitute the entire agreement between the Parties relating
to the subject matter hereof and supersede any other prior understandings or
agreements, written or oral, between the Parties concerning such subject matter.
 
 14.         AMENDMENTS.  This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered by the Parties.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

--------------------------------------------------------------------------------

 
 
 15.         INCONSISTENCIES.  To the extent that this Agreement and the Master
Technical Testing Services Agreement are inconsistent, this Agreement will
control.
 
 16.         COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which will be an original and all of which together will
constitute one instrument.
 
 17.         SEVERABILITY.  In the event that any term or provision of this
Agreement, or the application of any such term or provision to any Party or set
of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to the Parties hereto or circumstances other than
those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized representative as of the date first above
written.
 
 

 
NATIONAL INSTITUTE FOR STRATEGIC TECHNOLOGY ACQUISITION AND COMMERCIALIZATION
             
By:
/s/ Kent Glasscock
       
Name 
Kent Glasscock
       
Title :
President
             
KANSAS STATE UNIVERSITY RESEARCH FOUNDATION
             
By:
/s/ R.W. Trewyn
       
Name:
R.W. Trewyn
       
Title:
President
             
ABAXIS, INC.
             
By:
/s/ Martin Mulroy
       
Name:
Martin Mulroy
       
Title:
VP Sales and Marketing

 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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Exhibit A to the Master Agreement
 
SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH
SECURITIES REASONABLY SATISFACTORY TO THE STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
 

 No.  1  January 26, 2011

 
WARRANT TO PURCHASE COMMON STOCK
OF
ABAXIS, INC.
 
1.             Number of Shares Subject to Warrant.  FOR VALUE RECEIVED, subject
to the terms and conditions herein set forth, Holder (as defined below) is
entitled to purchase from ABAXIS, Inc., a California corporation (the
“Company”), during the times specified in Section 6, at a price per share equal
to the Warrant Price (as defined below), the Warrant Stock (as defined below)
upon exercise of this Warrant pursuant to Section 6 hereof.
 
2.             Definitions.  As used in this Warrant, the following terms shall
have the definitions ascribed to them below:
 
(a)           “Holder” shall mean the National Institute for Strategic
Technology Acquisition and Commercialization.
 
(b)           “Securities” shall mean that 10,000 shares of the Common Stock of
the Company, subject to adjustment provided in Section 8.
 
(c)           “Warrant Price” shall be Three Dollars ($3.00) per share, subject
to adjustment as provided in Section 8.
 
(d)           “Warrant Stock” shall mean the Securities purchasable upon
exercise of this Warrant or issuable upon conversion of this Warrant.
 
(e)           “Market Price” of a share of Common Stock means:
 
i.           the average of the daily closing sales prices of the Common Stock
on an exchange (as defined in Section 3(a)(1) of the Securities Exchange Act of
1934) on which the Common Stock may at the time be listed, or, if there shall
have been no sales on any such exchange on any day, the average of the reported
bid and asked prices on all such exchanges at the end of such day, in each case
over the twenty trading days immediately before the date of determination of
Market Price, or
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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ii.           if the Common Stock is not listed on any national securities
exchange, the Market Price shall be deemed to be the fair value thereof
calculated as follows:
 
(A)           the Company’s Board of Directors shall initially determine in good
faith within 7 days the Market Price on the date of delivery of the applicable
notice or request and provide such determination in writing to the Holder;
 
(B)           the Holder shall have seven business days from the receipt of such
written determination to accept or object to the Market Price as determined by
the Company’s Board of Directors.  If the Holder objects, the Market Price shall
be determined by an appraiser who shall be an independent internationally
recognized investment banking firm jointly chosen by the Holder and the Company
within five business days of the Company’s receipt of the Holder’s
objection.  If the Holder and the Company fail to jointly appoint a sole
appraiser within the specified time, the Market Price shall be the value agreed
upon by an appraiser chosen at random by a mutually agreed upon party from a
group composed of three Company nominated appraisers and three Holder nominated
appraisers.  If the chosen appraiser declines to provide an appraisal, the
process shall be repeated from the group of remaining nominated appraisers.  The
compensation, costs, fees and expenses relating to the appraisers and the
related procedures for choosing an appraiser shall be borne equally by the
Holder and the Company.
 
(f)           “SEC” means the Securities and Exchange Commission.
 
3.             Fractional Shares.  No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share.  If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying the Holder an amount
computed by multiplying the fractional interest by the Market Price.
 
4.             No Shareholder Rights.  This Warrant, by itself, as distinguished
from any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
 
5.             Reservation of Stock.  The Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Warrant Stock upon the exercise or conversion of this
Warrant.  Issuance of this Warrant shall constitute full authority to the
Company’s officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Warrant Stock
issuable upon the exercise or conversion of this Warrant.
 
6.             Exercise of Warrant.  This Warrant may, subject to the vesting
schedule set forth in Section 11 below, be exercised by the surrender of this
Warrant, together with the Notice of Exercise and Investment Representation
Statement substantially in the forms attached hereto as Attachments 1 and 2,
respectively, duly completed and executed at the principal office of the
Company, specifying the portion of the Warrant to be exercised and accompanied
by payment in full of the Warrant Price in cash or by check with respect to the
shares of Warrant Stock being purchased. This Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as Holder of such shares of record as of the close of business on such
date.  As promptly as practicable after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of full shares of Warrant Stock issuable upon such
exercise.  If the Warrant shall be exercised for less than the total number of
shares of Warrant Stock then issuable upon exercise, promptly after surrender of
the Warrant upon such exercise, the Company will execute and deliver a new
Warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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7.           Conversion.  In lieu of exercising this Warrant or any portion
hereof, the Holder hereof shall have the right, subject to the vesting schedule
set forth in Section 11 below, to convert this Warrant or any portion hereof
into Warrant Stock by executing and delivering to the Company at its principal
office the written Notice of Conversion and Investment Representation Statement
in the forms attached hereto as Attachments 2 and 3, specifying the portion of
the Warrant to be converted, and accompanied by this Warrant.  The number of
shares of Warrant Stock to be issued to Holder upon such conversion shall be
computed using the following formula:
 
X = (P) (Y) (A-B) / A
 
 
X =
the number of shares of Securities to be issued to the Holder for the portion of
the Warrant being converted.

 
P =
the portion of the Warrant being converted expressed as a decimal fraction.

 
Y =
the total number of shares of Securities issuable upon exercise of the Warrant
in full.

 
A =
the Market Price.

 
B =
the Warrant Price on the date of conversion.

 
Any portion of this Warrant that is converted shall be immediately
canceled.  This Warrant or any portion hereof shall be deemed to have been
converted immediately prior to the close of business on the date of its
surrender for conversion as provided above, and the person entitled to receive
the shares of Warrant Stock issuable upon such conversion shall be treated for
all purposes as Holder of such shares of record as of the close of business on
such date.  As promptly as practicable after such date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of full shares of Warrant Stock issuable upon
such conversion.  If the Warrant shall be converted for less than the total
number of shares of Warrant Stock then issuable upon conversion, promptly after
surrender of the Warrant upon such conversion, the Company will execute and
deliver a new Warrant, dated the date hereof, evidencing the right of the Holder
to the balance of the Warrant Stock purchasable hereunder upon the same terms
and conditions set forth herein.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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8.             Adjustment of Exercise Price and Number of Shares.  The number of
shares issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor are subject to adjustment upon the
occurrence of the following events:
 
(a)           Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
etc.  The Warrant Price and the number of shares issuable upon exercise of this
Warrant shall each be proportionally adjusted to reflect any stock dividend,
stock split, reverse stock split, combination of shares, reclassification,
recapitalization or other similar event altering the number of outstanding
shares of the Company’s capital stock.
 
(b)           Adjustment for Other Dividends and Distributions.  In case the
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution with
respect to the shares payable in securities of the Company then, and in each
such case, the Holder, on exercise of this Warrant at any time after the
consummation, effective date or record date of such event, shall receive, in
addition to the Warrant Stock (or such other stock or securities) issuable on
such exercise prior to such date, the securities of the Company to which such
Holder would have been entitled upon such date if such Holder had exercised this
Warrant immediately prior thereto (all subject to further adjustment as provided
in this Warrant).
 
9.             Adjustment for Capital Reorganization, Consolidation, Merger.  If
any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with or into another corporation, or the
sale of all or substantially all of the Company’s assets to another corporation
shall be effected in such a way that holders of the Company’s capital stock will
be entitled to receive stock, securities or assets with respect to or in
exchange for the Company’s capital stock, and in each such case the Holder, upon
the exercise of this Warrant, at any time after the consummation of such capital
reorganization, consolidation, merger, or sale, shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
of this Warrant prior to such consummation, the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior to the consummation of
such capital reorganization, consolidation, merger, or sale; and in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
 
10.           Transfer of Warrant.  This Warrant may not be transferred or
assigned by the Holder hereof in whole or in part.
 
11.           Vesting and Termination.  The Holder shall not have the right to
exercise, pursuant to Section 6 above, or convert, pursuant to Section 7 above,
any portion of this Warrant that has not vested.  The right to exercise or
convert the Warrant Stock shall vest as to 20% of the Warrant and the underlying
Warrant Stock on the date of this Warrant and on each of the first four
anniversaries of the date of this Warrant.  There shall be no condition or
contingency to the vesting of this Warrant other than such passage of
time.  This Warrant shall terminate on the fifth anniversary of the date of this
Warrant and no longer be exercisable at 5:00 p.m. California time, on January
26, 2016.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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12.           Miscellaneous.  This Warrant shall be governed by the laws of the
State of California, as such laws are applied to contracts to be entered into
and performed entirely in California by California residents.  The headings in
this Warrant are for purposes of convenience and reference only, and shall not
be deemed to constitute a part hereof.  Neither this Warrant nor any term hereof
may be changed or waived orally, but only by an instrument in writing signed by
the Company and the Holder of this Warrant.  All notices and other
communications from the Company to the Holder of this Warrant shall be delivered
personally or mailed by first class mail, postage prepaid, to the address
furnished to the Company in writing by the last Holder of this Warrant who shall
have furnished an address to the Company in writing, and if mailed shall be
deemed given three days after deposit in the United States mail.
 
13.           Investment Representations.  The Holder hereby represents to the
Company as follows:
 
(a)           The Holder is an “accredited investor,” as such term is defined
under the Act.
 
(b)           This Warrant is being acquired for investment for the Holder’s own
account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and the Holder has no present intention of
selling, granting participation in or otherwise distributing the same, but
subject, nevertheless, to any requirement of law that the disposition of its
property shall at all times be within its control.  The Holder further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participation to such
person or to any third person, with respect to any portion of this the Warrant.
 
(c)           The Holder understands that the Warrant has not been registered
under the Act, and applicable state securities laws, on the ground that the
issuance of such securities is exempt pursuant to Section 4(2) of the Act and
state law exemptions relating to offers and sales not by means of a public
offering, and that the Company’s reliance on such exemptions is predicated on
the Holder’s representations set forth herein.
 
(d)           The Holder acknowledges that an investment in the Company is
highly speculative and represents that it is able to fend for itself in
connection with the issuance of the Warrant, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment.  The Holder represents
that it has had the opportunity to ask questions of the Company concerning the
Company’s business and assets and to obtain any additional information which it
considered necessary to verify the accuracy of or to amplify the Company’s
disclosures, and has had all questions which have been asked by it
satisfactorily answered by the Company.
 
(e)           The Holder acknowledges that the Warrant must be held indefinitely
unless subsequently registered under the Act or an exemption from such
registration is available.  The Holder is aware of the provisions of Rule 144
promulgated under the Act, which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, which may
include, among other things, the existence of a public market for the shares,
the availability of certain current public information about the Company, the
resale occurring not less than a specified period after a party has purchased
and paid for the security to be sold, the sale being through a “broker’s
transaction” or in transactions directly with a “market makers” (as provided by
Rule 144(f)) and the number of shares being sold during any three-month period
not exceeding specified limitations.
 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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  ABAXIS, INC.                          
 
By:
/s/ Clinton H. Severson       Name : Clinton H. Severson       Title : President
and CEO          

 
Accepted and Agreed:
 
NATIONAL INSTITUTE FOR
STRATEGIC TECHNOLOGY
ACQUISITION AND COMMERCIALIZATION
 

       By:
/s/ Kent Glasscock 
   Name :  Kent
Glasscock                                                                           
   Title : President  

 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 
 

--------------------------------------------------------------------------------

 
 
Attachment 1
NOTICE OF EXERCISE
 
TO:          ABAXIS, INC.
 
The undersigned hereby elects to purchase ________________ shares of the Warrant
Stock of Abaxis, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price in full, together with all applicable
transfer taxes, if any.
 
Please issue a certificate or certificates representing said shares of Warrant
Stock in the name of the undersigned or in such other name as is specified
below:
 

     
(Name)
         
(Address)

 

     
(Date)
 
(Name)

 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 
 

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Attachment 2
 
INVESTMENT REPRESENTATION STATEMENT
 
Shares of the Securities
 
(as defined in the attached Warrant) of
 
ABAXIS, INC.
 
In connection with the purchase of the above-listed securities, the undersigned
hereby represents to Abaxis, Inc. (the “Company”) as follows:
 
(a)       The undersigned is an “accredited investor,” as such term is defined
under the Act.
 
(b)       The securities to be received upon the exercise of the Warrant (the
“Securities”) will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof except as permitted under applicable securities laws, and the
undersigned has no present intention of selling, granting participation in or
otherwise distributing the same except as permitted under applicable securities
laws, but subject, nevertheless, to any requirement of law that the disposition
of its property shall at all times be within its control.  By executing this
Statement, the undersigned further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participation to such person or to any third person, with
respect to any Securities issuable upon exercise of the Warrant except as
permitted under applicable securities laws.
 
(c)       The undersigned understands that the Securities issuable upon exercise
of the Warrant at the time of issuance may not be registered under the Act, and
applicable state securities laws, on the ground that the issuance of such
securities is exempt pursuant to Section 4(2) of the Act and state law
exemptions relating to offers and sales not by means of a public offering, and
that the Company’s reliance on such exemptions is predicated on the
undersigned’s representations set forth herein.
 
(d)       The undersigned agrees that in no event will it make a disposition of
any Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company’s counsel to the
effect that (A) appropriate action necessary for compliance with the Act and any
applicable state securities laws has been taken or an exemption from the
registration requirements of the Act and such laws is available, and (B) the
proposed transfer will not violate any of said laws.
 
(e)       The undersigned acknowledges that an investment in the Company is
highly speculative and represents that it is able to fend for itself in the
transactions contemplated by this Statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment.  The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company’s business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company’s disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company.
 
(f)       The undersigned acknowledges that the Securities issuable upon
exercise of the Warrant must be held indefinitely unless subsequently registered
under the Act or an exemption from such registration is available.  The
undersigned is aware of the provisions of Rule 144 promulgated under the Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, which may include, among other
things, the existence of a public market for the shares, the availability of
certain current public information about the Company, the resale occurring not
less than a specified period after a party has purchased and paid for the
security to be sold, the sale being through a “broker’s transaction” or in
transactions directly with a “market makers” (as provided by Rule 144(f)) and
the number of shares being sold during any three-month period not exceeding
specified limitations.
 
Dated:
     

 

     
(Name)

 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 
 
 

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Attachment 3
 
NOTICE OF CONVERSION
 
TO:          ABAXIS, INC.
 
The undersigned hereby elects to acquire ________________ shares of the
Securities of Abaxis, Inc., pursuant to the terms of the attached Warrant, by
conversion of _____________ percent (________%) of the Warrant.
 
Please issue a certificate or certificates representing said shares of
Securities in the name of the undersigned or in such other name as is specified
below:
 

     
(Name)
         
(Address)
         
(Date)
         
(Name)

 
 
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
 

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