EXHIBIT 10.37





Exhibit 10.37  


*** Certain portions of this exhibit have been ommitted pursuant to a request for confidential treatment separately filed with the Securities and Exchange Commission.  





PREPAYMENT AGREEMENT 



        This
PREPAYMENT AGREEMENT (this “Agreement”) is made and entered into as of
this 18th day of January, 2003, and effective as of the Effective Date (as defined below),
by and between i-STAT Corporation, a Delaware corporation
(“Manufacturer”) and Fuso Pharmaceutical Industries, Ltd., a Japanese
corporation (“Distributor”). 




R E C I T A L S: 



     A.    
          Manufacturer and Distributor have entered into that certain Distribution
          Agreement of even date herewith (the “Distribution Agreement”)
          with respect to the distribution of Products (defined below) by Distributor, for
          the consideration and on the terms and conditions set forth therein. 



     B.    
          Manufacturer is engaged in the business of manufacturing and selling, among
          other things, those certain Analyzers, Cartridges and Ancillary Products (as
          defined in the Distribution Agreement) (collectively, the
          “Products”). 



     C.    
          In consideration of future purchases of Cartridges by Distributor from
          Manufacturer *** under the Distribution Agreement, Distributor agreed to prepay
          to Manufacturer the sum of Eleven Million Dollars ($11,000,000) on or before
          October 1, 2003 (the “Prepayment Amount”). 



     D.    
          Distributor and Manufacturer now desire to agree to the terms upon which
          Manufacturer shall be required to refund the Prepayment Amount or part thereof,
          all as more particularly provided in this Agreement. 



        NOW,
THEREFORE, the parties hereto do hereby agree as follows: 



     1.    
          Definitions. 



1.1 “Asset
Disposition” by Manufacturer means the sale, lease or exchange of all or
substantially all of the assets of Manufacturer to any person or entity other than
Excluded Persons (as defined in Section 1.3 hereof). 



1.2 “Beneficial
Owner” shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. 



1.3 “Change of
Control” of Manufacturer means the occurrence of the following: any person
(within the meaning of the Securities Exchange Act of 1934, as amended) is or becomes the
Beneficial Owner, directly or indirectly, of securities of Manufacturer (not including in
the securities beneficially owned by such person any securities acquired directly from
Manufacturer or its affiliates other than in connection with the acquisition by
Manufacturer or its affiliates of a business) representing fifty percent (50%) or more of
the combined voting power of Manufacturer’s then outstanding securities.
Notwithstanding the foregoing and solely for purposes of this Agreement, it shall not
constitute a Change of Control for any person or entity who, as of the date of this
Agreement owns securities of Manufacturer representing twenty percent (20%) or more of the
combined voting power of Manufacturer’s then outstanding securities
(“Excluded Persons”), to increase its combined voting power to fifty
percent (50%) or more of the combined voting power of Manufacturer’s then outstanding
securities. 




2. Prepayment Amount. 



2.1 Change of Control/Asset
Disposition. In the event of (i) a Change of Control of or Asset Disposition by
Manufacturer or acquisition of Manufacturer by an Excluded Person and (ii) a material
uncured breach by Manufacturer or its successor of any material provision of the
Distribution Agreement of which Manufacturer or its successor has been provided written
notice and opportunity to cure in accordance with the procedures set forth in Section 10.3
of the Distribution Agreement, where both (i) and (ii) occur on or before December 31,
2003, Manufacturer shall refund to Distributor, within thirty (30) calendar days of
receipt of Distributor’s written request, the Prepayment Amount with no interest
payable thereon. Any such written request for a refund by Distributor must be made within
fourteen (14) calendar days of the occurrence of both (i) and (ii) herein. Manufacturer
shall give Distributor written notice of the occurrence and contents of a Change of
Control or Asset Disposition promptly following the occurrence thereof. 



2.2 Termination of Distribution
Right. In the event that Distributor’s right to distribute the Products shall
terminate at any time prior to December 31, 2008 (any such date of termination, the
“Termination Date”), Manufacturer shall refund to Distributor within
sixty (60) calendar days of the Termination Date any portion of the Prepayment Amount
remaining under the Distribution Agreement as of the Termination Date as calculated
pursuant to Section 4.2 of the Distribution Agreement (subject to adjustment of Prepayment
Amount pursuant to the applicable provisions of the Distribution Agreement). 



2.3 Acknowledgment.
Distributor acknowledges and agrees that the Prepayment Amount is a prepayment of amounts
that would ordinarily have been paid to Manufacturer in the future for the purchase of
Cartridges does not constitute, and is in no way to be characterized as, a loan or other
similar type of agreement. Upon its payment, Manufacturer shall have the unrestricted
right to use the Prepayment Amount as working capital, notwithstanding that it has not yet
been earned by Manufacturer and may later be subject to a refund to Distributor. 



     3.    
          Representations and Warranties of Manufacturer. Manufacturer hereby
          represents and warranties to Distributor that, as of the Effective Date: 



3.1 Manufacturer is a corporation
duly incorporated, validly existing and in good standing under the laws of the State of
Delaware. 



3.2 Manufacturer has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings required to be
taken to authorize such execution, delivery, and consummation have been duly and properly
taken. 



3.3 This Agreement has been duly
executed and delivered by Manufacturer and constitutes the legal, valid and binding
obligation of Manufacturer, enforceable against Manufacturer in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally or by general equitable principles. 



     4.    
          Representations and Warranties of Distributor. Distributor hereby
          represents and warranties to Manufacturer that, as of the Effective Date: 


4.1      Distributor is a corporation duly incorporated, validly existing and in good standing under the laws of Japan.


4.2 Distributor has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings required to be
taken to authorize such execution, delivery, and consummation have been duly and properly
taken. 



4.3 This Agreement has been duly
executed and delivered by Distributor and constitutes the legal, valid and binding
obligation of Distributor, enforceable against Distributor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally or by general equitable principles. 



     5.    
          Miscellaneous. 



5.1 Relationship of Parties.
Manufacturer and Distributor each hereby acknowledges that it is an independent entity and
is not subject to the control of the other party hereto in any manner except as
specifically provided in this Agreement or the Distribution Agreement. Nothing herein
shall be construed to make the parties hereto partners or joint venturers, or to render
either party liable for any of the debts or obligations of the other party hereto. 



5.2 Notices. Any and all
notices and communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered personally, at the time of receipt if by confirmed facsimile or
(excluding notices of breach or termination) electronic mail for which delivery failure
message has not been received, or five (5) days after mailing when deposited with a
reputable international courier service, addressed to the parties at the following
addresses or to such other addresses as either of the parties hereto may from time to time
in writing designate to the other party hereto: 



		
	If to Manufacturer: 	 
	                  i-STAT Corporation
	                  104 Windsor Center Drive
	                  East Windsor, NJ    08520	
	                  Attn: President and Chief Executive Officer
	                  Fax:   1-609-443-9310	
	                  E-mail: moffittw@i-stat.com
	
	
	
	
	
	
	If to Distributor: 
	                  Fuso Pharmaceutical Industries, Ltd.
	                  3-11, Morinomiya 2-chome
	                  Joto-ku, Osaka, 536-8523, Japan
	                  Attn: President and Representative Director
	                  Fax:  81-6-6969-2341	
	                  E-mail:  tomxoda@mb.infoweb.ne.jp




5.3 Time. Time is of the
essence of this Agreement with respect to each and every material provision of this
Agreement in which time is a material factor. 



5.4 Waiver. No delay or
failure by either party to exercise any right, power or remedy with regard to any breach
or default by the other party under this Agreement shall impair any such right, power or
remedy and shall not be construed to be a waiver of any breach or default of the same or
any other provision of this Agreement. Any waiver, permit, consent or approval of any kind
or character on the part of any party of or to any breach or default by the other party
shall be effective only if in writing and shall not be construed to be a waiver, permit,
consent or approval of or to any succeeding breach or default or a waiver of any provision
of this Agreement. 



5.5 Assignment. This Agreement
is personal to Distributor and may not be assigned in whole or in part by Distributor
(including by operation of law) without the prior written consent of Manufacturer, which
may be withheld in Manufacturer’s sole discretion. 



5.6 Successors. The covenants,
agreements, terms and conditions contained in this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors and
assigns. 



5.7 Applicable Law. The
existence, validity, construction and operational effect of this Agreement, and the rights
and obligations hereunder of each of the parties hereto, shall be determined in accordance
with the laws of the State of New York and the United States of America, provided that any
provision of this Agreement which may be prohibited by or otherwise held invalid under
such law shall be ineffective only to the extent of such prohibition or invalidity and
shall not invalidate or otherwise render ineffective any or all of the remaining
provisions of this Agreement. Both parties hereby confirm their intention to exclude
application of the United Nations Convention on the International Sale of Goods if such
Convention would otherwise be applicable to any transaction contemplated by this
Agreement. 


5.8      Dollar Denomination.  Unless otherwise specified all amounts stated in this Agreement are payable in United States Dollars.


5.9 Controversy. In the event
of any controversy, claim or disputes between the parties arising out of or relating to
this Agreement, such controversy, claim or dispute shall be settled by mutual consultation
between the parties in good faith as promptly as possible, but failing an amicable
settlement shall be finally settled by arbitration. If based upon a claim by Distributor
against Manufacturer, the arbitration shall be held in New York City and shall be
conducted in accordance with the rules of arbitration of the American Arbitration
Association (“AAA”) by two arbitrators appointed, one by Distributor and one by
Manufacturer. If the arbitrators appointed cannot agree, they shall thereupon appoint a
third arbitrator, or upon their failure to agree upon such third arbitrator, such third
arbitrator shall be appointed by the AAA. Any decision by the arbitrators shall be binding
upon the parties hereto and may be entered as a final judgment in any court, state or
federal, having jurisdiction. If based upon a claim by Manufacturer against Distributor,
arbitration in English with similarly selected three arbitrators shall be held in Tokyo,
Japan under the Commercial Arbitration Rules of the Japan Commercial Arbitration
Association. Any award in such arbitration shall be in writing and shall set forth the
reasons therefor. The costs of any filing, administrative, and arbitrator fees in
connection with arbitration proceedings shall be shared equally between the parties. 



5.10 Entire Agreement. This
Agreement, together with the Distribution Agreement, sets forth the entire agreement
between the parties hereto, and shall upon the Effective Date, fully supersede any and all
prior agreements or understandings between the parties hereto pertaining to the subject
matter hereof, including without limitation the Prior Agreement (as defined in the
Distribution Agreement) and the Letter of Intent between the parties dated October 26,
2002, and no change in, modification of or addition, amendment or supplement to this
Agreement shall be valid unless set forth in writing and signed and dated by both of the
parties hereto subsequent to the execution of this Agreement. 



5.11 Effectiveness of
Agreement. The parties acknowledge and agree that the effectiveness of this Agreement
and the Distribution Agreement and the consummation of the transactions contemplated
hereby and thereby shall be subject to, and conditioned upon, the approval thereof by each
party’s board of directors. The date that each of the parties have received such
approval and notified the other party in writing of such receipt shall be referred to
herein as the “Effective Date.” In no event shall such date be later than 12:00
Noon, United States Eastern Standard Time, January 24, 2003 and, if both parties have not
received such approval on or before such date, then this Agreement shall be null and void
and have no force or effect. 







                       IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.  


		
	"Manufacturer"	"Distributor"
	i-STAT Corporation	Fuso Pharmaceutical Industries, Ltd.
	/s/ WILLIAM P. MOFFITT	/s/ MIKIA TODA
	
	

	
	
	
	By: William P. Moffitt	By: Mikio Toda
	Its:  President and Chief Executive Officer	Its: President and Representative Director