Exhibit 10.36

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

DISTRIBUTION
AGREEMENT

This
DISTRIBUTION 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 is engaged in the business of manufacturing and selling, among
          other things, those certain Cartridges, Analyzers and Ancillary Products
          described in Exhibit A attached hereto, which exhibit may be revised
          from time to time upon mutual agreement of the parties (collectively, the
          Products).

B.    
          Manufacturer and Distributor entered into that certain Distribution Agreement
          dated as of August 23, 1988, that certain Instrument Manufacturing License
          Agreement dated as of August 23, 1988 and that certain Development Agreement
          dated as of August 23, 1988, each as may have been amended to date
          (collectively, the Prior Agreements), concerning, among other
          things, the distribution of certain Products by Distributor.

C.    
          Since the execution of the Prior Agreements, Distributor provided valuable
          financial assistance to Manufacturer during the start-up of Manufacturers
          business pursuant to the terms and conditions of the Prior Agreements.

D.    
          Manufacturer and Distributor desire to terminate the Prior Agreements and enter
          into this Agreement with respect to the distribution of Products by Distributor
          for the consideration and on the terms and conditions hereinafter set forth.

E.    
          This Agreement and the Prepayment Agreement (defined below) set forth the terms
          and conditions of a purchase and sale transaction involving Products between
          Manufacturer and Distributor and no longer contain a grant of intellectual
          property rights in any respect, which used to be the case under the Prior
          Agreements.

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

1. DEFINITIONS.

1.1 Analyzer means
a device wholly manufactured by Manufacturer that processes one or more Cartridges and is
capable of detecting at least one analyte for use in the Field, which devices are designed
for the delivery of professionally attended human patient care and veterinary care, and
specifically excluding analyzers designed primarily for use in patient self-testing.
Should Manufacturer develop an analyzer for the patient self-test market and elect to
enter the market in the Territory, Manufacturer and Distributor will negotiate in good
faith for a period of ninety (90) days regarding marketing rights. The parties acknowledge
that any such agreement would be separate from this Agreement and contain terms,
conditions and obligations appropriate to the patient self-test market. Nothing in this
Agreement shall obligate Manufacturer to reach an agreement with Distributor for the
patient self-test market.

1.2 Ancillary
Products means those items listed under the heading Ancillary
Products in Exhibit A hereto, as such exhibit may be revised from time to time upon
the mutual written agreement of the parties.

1.3 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 1.8 hereof).

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

1.5 Cartridge
means the disposable component that contains one or more Sensor Chips and fluid handling
channels and operates on an Analyzer or a Phillips Medical Systems integrated device
(formerly known as the Hewlett-Packard blood analysis module).

1.6 Cartridge
Removal means an event where any governmental or regulatory authority in the
Territory issues a directive or order that one or more Cartridges be withdrawn from use in
the Territory for the reason of safety or quality problems, and Distributor is unable to
sell other Cartridges that would reasonably substitute for such withdrawn Cartridges
(after exhausting inventory of Cartridges) for a period of not less than ten (10) business
days.

1.7 Cartridge
Sales means the gross volume of Cartridges sold by Distributor to Third Parties,
in the case of Third Party customers, for the purpose of consumption by that customer and,
in the case of Third Party dealers, for resale and delivery to customers for the purpose
of consumption by those customers, in each case net of returns, for use in the Field in
the Territory.

1.8 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 the 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 the combined voting power of Manufacturers then outstanding
securities.

1.9 Certificate of Destruction has the meaning ascribed to it in Section 5.4.2 herein.

1.10 Effective Date has the meaning ascribed to it in Section 11.16 herein.

1.11 Field means
the professionally attended human health care market and the veterinary care market,
specifically excluding the patient self-testing market.

1.12 Fully Burdened
Manufacturing Cost shall mean Manufacturers total cost to manufacture
including materials, direct labor, indirect labor and materials, manufacturing overhead
and yield losses, costs associated with Product testing and required retains, as measured
and adjusted on a semi-annual basis. Manufacturing overhead shall include expenses
directly related to improving or enhancing performance specifications, quality,
reliability, lifetime and/or usability of manufactured Products and expenses associated
with the continuous improvements of the manufacturing process.

1.13 Log Files
means Distributors books of accounts and records in written and any other
appropriate format (including, without limitation, electronic format) with respect to all
of Distributors activities under this Agreement including, without limitation, all
information necessary to support the information provided on the Resale Certificate
attached hereto as Exhibit B.MHLW means the Ministry of Health,
Labor and Welfare of Japan.

1.14 Net Sales
means the gross sales amount billed or invoiced to Third Parties for Products, less:

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

(b)    
          Retroactive price reductions imposed by government authorities;

(c)    
          Fees, commissions or rebates lawfully paid pursuant to contracts with dealers or
          other Third Party organizations; and

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

1.15 Prepayment Agreement has the meaning ascribed to it in Section 4.2 herein.

1.16 Prepayment Application
Amount means (x) the number of Cartridges (irrespective of their types) sold and
shipped by Distributor to Third Parties in the Territory during the period covered by the
applicable Resale Certificate in the respective ordinary courses of business of
Distributor and Third Parties, multiplied by (y)***.

1.17 Prepayment Term has the meaning ascribed to it in Section 4.2 herein.

1.18 Purchase Order has the meaning ascribed to it in Section 8.2 herein.

1.19 Sensor Chip
means a solid state potentiometric, amperimetric and/or conductometric microsensor device
or an integrated group of such devices designed to detect the presence and/or quantity of
at least one analyte in blood.

1.20 Territorymeans the country of Japan.

1.21 Third Party
means a customer within the Territory and the Field that purchases Products for its own
consumption or a dealer that purchases Products solely for the purpose of resale to
customers within the Territory and the Field, each being a natural person, corporation,
partnership, trust, joint venture, government authority or other legal entity or
organization other than Distributor or Manufacturer and/or their respective affiliates.

1.22 Warranty Period shall have the meaning ascribed to it in Section 5.4.1(b) herein.

2.    
          APPOINTMENT; EXCLUSIVITY.

2.1 Appointment. Effective as
of December 31, 2002 (the Appointment Effective Date), and subject to
the provisions of this Agreement, Manufacturer hereby appoints Distributor as its
distributor of Products authorized to sell and ship only within the Territory and solely
for use in the Field, and Distributor hereby accepts such appointment, on the basis of
each and all of the covenants, agreements, terms and conditions of this Agreement.
Manufacturer reserves the right to appoint additional distributors within the Territory
for use in the Field during the Non-Exclusive Period (as defined below) and any other
period, if any, in which Distributors rights become non-exclusive pursuant to
Section 3.2. Manufacturer shall have no restriction on its right to appoint distributors
outside the Territory, or within the Territory but outside the Field.

2.2 Exclusivity.
Distributors appointment as distributor of the Products described in Section 2.1
above shall be (a) on a non-exclusive basis during the period commencing on the
Appointment Effective Date and terminating December 31, 2003 (the Non-Exclusive
Period), and (b) unless Distributor fails to achieve either of the Performance
Milestones (as defined below) described in Section 3, on an exclusive basis during the
period commencing January 1, 2004 and terminating at the end of the Term (as defined in
Section 10.1) (the Exclusive Period); provided, however,
that notwithstanding anything to the contrary in this Agreement, Distributors
appointment as a distributor of the Products relating to the veterinary care market shall
be solely on a non-exclusive basis during the Term (as defined in Section 10.1).

3.    
          PERFORMANCE MILESTONES.

3.1 Performance Milestones.
Distributor agrees that the exclusivity of its rights to sell Products under this
Agreement during the Exclusive Period shall be subject to Distributors achievement
of each of the following performance milestones (the Performance
Milestones):

(a)       
          Distributors cumulative sales of at least *** Cartridges to Third Parties
          in the ordinary course of business in the Field in the Territory between January
          1, 2003 and December 31, 2005 (the First Performance
          Milestone); and

(b)       
          Distributors cumulative sales of at least *** Cartridges to Third Parties
          in the ordinary course of business in the Field in the Territory between January
          1, 2003 and December 31, 2007 (the Second Performance
          Milestone).

(c)       
          In the event of a Cartridge Removal in any calendar year, each Performance
          Milestone shall be reduced by a number of Cartridges documented to be equal to
          the number of Cartridges corresponding to Net Sales affected by the Cartridge
          Removal by Distributor to Third Parties during such calendar year, as mutually
          agreed by Manufacturer and Distributor. The number of Cartridges affected in
          reduced Net Sales shall be calculated on the basis of the following: (i) the
          number of relevant Cartridges actually sold by Distributor to Third Parties in
          the ordinary course of business for the immediately preceding four calendar
          quarters divided by 365 days (or the appropriate prorated number of days prior
          to the completion of the first four calendar quarters), multiplied by (ii) the
          number of days during which the relevant Cartridge Removal lasted. Distributor
          shall furnish Manufacturer with relevant data to verify information set forth in
          (i) and (ii) above.

Distributor
acknowledges and agrees that Distributors purchases of Cartridges from Manufacturer
shall not count toward the achievement of the Performance Milestones unless and until
written evidence of Distributors resale and delivery of such Cartridges to Third
Parties for use in the Field in the Territory, in the ordinary course of business, has
been provided to Manufacturer in the form attached hereto as Exhibit B (the
Resale Certificate). Distributor shall maintain full, complete and
accurate Log Files at its principal place of business. Manufacturer shall have the right,
upon not less than forty-eight (48) hours advance notice, to inspect and audit the Log
Files during Distributors normal business hours. All audit rights under this Section
3.1 shall survive the termination of this Agreement for a period of two (2) years, and no
Log Files may be destroyed prior to termination of such audit rights. Manufacturer shall
bear the costs of any audit conducted pursuant to this Section 3.1; provided,
however, that in the event that such audit results in a finding that the
information provided in any Resale Certificate reports Cartridge Sales that are greater
than actual Cartridge Sales by at least three percent (3%), Distributor shall reimburse
Manufacturer for all costs and expenses relating to such audit within fifteen (15)
calendar days of receipt of notice of such inaccuracy from Manufacturer, and provide
Manufacturer with corrected Resale Certificates. For the avoidance of doubt, such
reimbursement right shall be in addition to, and without prejudice to, any other rights or
remedies available to Manufacturer.

3.2 Loss of Exclusivity; Early
Termination. In the event that Distributor fails to achieve the First Performance
Milestone, Distributors rights to distribute Products hereunder shall automatically
become non-exclusive during the period commencing January 1, 2006 and terminating December
31, 2006, and notwithstanding any other provisions of this Agreement, this Agreement shall
automatically terminate on December 31, 2006 without further action by Manufacturer. In
the event that Distributor achieves the First Performance Milestone but fails to achieve
the Second Performance Milestone, Distributors rights to distribute Products
hereunder shall automatically become non-exclusive during the period commencing January 1,
2008 and terminating at the end of the Term. Manufacturer shall notify Distributor in
writing following the conversion of Distributors rights to a non-exclusive basis.

4.    
          PAYMENTS TO MANUFACTURER.

4.1 Marketing Support Fee.

(a)       
          In consideration of Manufacturers support services to be rendered in
          connection with Distributors marketing of the Products in the Territory as
          more fully set forth in Section 5.2 hereof, Distributor shall pay Manufacturer
          the amount of Two Million Dollars ($2,000,000)(the Marketing Support
          Fee) within thirty (30) days of from the date of execution of this
          Agreement. Distributor acknowledges and agrees that the Marketing Support Fee
          does not constitute, and is in no way to be characterized as, a loan or other
          similar type of agreement. The Marketing Support Fee shall be in addition to,
          and not be a part of, the Prepayment Amount.

(b)       
          In the event of (i) a Change of Control, Asset Disposition of 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 this
          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 hereof, 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 Marketing Support Fee with
          no interest payable thereon. Any such written request 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, Asset Disposition or acquisition of
          Manufacturer by an Excluded Person promptly following the occurrence thereof.
          After December 31, 2003, the entire Marketing Support Fee shall become
          non-refundable.

4.2 Prepayment. Distributor
shall prepay to Manufacturer on or before October 1, 2003 the amount of Eleven Million
Dollars ($11,000,000) (as such amount may be reduced in accordance with this Section 4.2
and/or Section 8.5 from time to time, the Prepayment Amount) with no
interest payable thereon by Manufacturer under any circumstance, which Prepayment Amount
shall be applied to the purchase of Cartridges that Distributor will purchase from
Manufacturer and sell to Third Parties between *** (the Prepayment
Term). Distributor shall be entitled to a refund of all or part of the
Prepayment Amount under the terms of, and subject to the conditions of, that certain
Prepayment Agreement by and between the parties of even date herewith (the
PrepaymentAgreement). For purposes of this Agreement, Distributor
shall, from time to time, but no less frequently than each quarter, certify the number of
Cartridges sold under item (x) in the definition of Prepayment Application Amount by
delivering a completed and executed Resale Certificate to Manufacturer. Distributor shall
then be authorized by Manufacturer to apply the resulting Prepayment Application Amount to
open invoices for purchases of Product from Manufacturer. Distributor agrees to uniquely
number or otherwise identify each Resale Certificate provided to Manufacturer and to
accompany each Resale Certificate with a listing of all prior Resale Certificates and
related Prepayment Application Amounts previously presented and the net balance of the
remaining Prepayment Amount. 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 and 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.

5. OBLIGATIONS OF
MANUFACTURER

5.1 Manufacture of Products.
Manufacturer shall use commercially reasonable efforts to maintain the necessary
manufacturing capability to fill all orders for Products received from Distributor and
accepted pursuant to the provisions of this Agreement. In the event of a Product shortage
for any reason, Manufacturer shall have the right to allocate or apportion available
Products among its customers as Manufacturer, in the exercise of its discretion, and upon
prior consultation with Distributor, deems appropriate, without incurring any liability to
Distributor. Manufacturer may discontinue the manufacture or sale of any Products, with
respect to Analyzers upon twelve months prior written notice and with respect to all
other Products upon one hundred eighty (180) days prior written notice to
Distributor. Manufacturer may materially alter the performance of any or all of the
Products upon ninety (90) days prior notice to Distributor. Manufacturer or its
in-country caretaker will use commercially reasonable efforts to secure MHLW regulatory
approval for such changes, as required by MHLW. If Manufacturer discontinues the
manufacture or sale of any Analyzer, at Distributors request Manufacturer will
negotiate with Distributor an appropriate length of time for the continued support of that
Analyzer beyond the date of discontinuing manufacture or sale, including continuation of
software support. For the 200-series Analyzer, Manufacturer will continue
support for at least three (3) years from the date of discontinuing manufacture or sale.
Manufacturer will use its best efforts to consult with Distributor prior to any
discontinuance of manufacture of any Product or material alteration of any Product where
such alteration would require MHLW regulatory approval.

5.2 Marketing Support.
Manufacturer shall provide marketing support services outside of the Territory to
facilitate Distributors marketing of Products, including the marketing of Products
as a replacement for laboratory-based blood test devices including, without limitation,
(i) annual marketing meetings between representatives of both parties; (ii) marketing
seminars and training for Distributors sales representatives on a frequency to be
mutually agreed; (iii) visits to hospitals in the United States that already purchases
large quantities of Products from Manufacturer on a frequency to be mutually agreed; and
(iv) regular telephonic and electronic-mail communications on marketing needs with
Manufacturers marketing officers in the United States. Unless otherwise agreed,
Manufacturer and Distributor will each be responsible for their respective expenses and
costs.

Manufacturer
shall supply to Distributor at no charge samples of Cartridges in the amounts and on the
timeframe as set forth in Exhibit F. Manufacturer shall have sole discretion as to which
Cartridge type or types are supplied.

5.3 Documentation.
Manufacturer shall furnish Distributor with such quantities of manuals, catalogs,
technical information, promotional material and other information and literature as
Manufacturer in its sole discretion shall deem appropriate to assist Distributor in the
effective distribution, marketing and sale of Products within the Territory.

5.4 Product Warranty/Replacement or Repair/Exclusions/Limitation.

5.4.1 Product Warranty. Manufacturer represents and warrants to Distributor that the Products, that have an
expressed warranty, delivered to Distributor hereunder shall:

| | (a)       
               perform in all material respects in accordance with published claims;
| | -----------------------------------------------------------------------------------------------

| | (b)       
               be free in all material respects from defects in material and workmanship (i) in
               the case of Analyzers or Ancillary Products that do not have a labeled shelf
               life, until 15 months after date of shipment and (ii) in the case of Cartridges
               and Ancillary Products having a labeled shelf life, the shelf life as labeled by
               Manufacturer or Manufacturers supplier (the Warranty
               Period);
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)       
               be free and clear of any third party security interest, lien or encumbrance; and
| | ----------------------------------------------------------------------------------------------------------

| | (d)       
               be approved for sale by MHLW in the Territory.
| | ------------------------------------------------------------------------

With
respect to clauses (a), (b) and (d) of this Section 5.4.1, the parties acknowledge and
agree that any Product not conforming to clauses (a), (b) and (d) of this Section 5.4.1
shall be handled in accordance with Section 5.4.2 and shall not constitute a material
breach of this Agreement.

5.4.2 Product Replacement or
Repair. At its option, Manufacturer may replace or repair during the Warranty Period
any Product, which fails to meet the warranty set forth in Section 5.4.1. Manufacturer
will not, after acceptance by Distributor thereof in accordance with the terms hereof,
accept returns of Product in exchange for a refund of the purchase price therefor, nor for
a credit against the Prepayment Amount. If Manufacturer opts to repair the Product,
Distributor shall deliver the Product to be repaired to Manufacturer. If Manufacturer opts
to replace the Product, Distributor, at Manufacturers instruction and discretion,
shall either (i) deliver the Product to be replaced to Manufacturer or (ii) destroy such
Product and fax and send by reputable overnight courier to Manufacturer a certificate of
destruction, signed by a quality control officer of Distributor acceptable to
Manufacturer, substantially in the form of Exhibit D hereto (Certificate
of Destruction). If Manufacturer determines to repair Products, which fail to
meet the warranty set forth in Section 5.4.1, Manufacturer shall bear the cost of shipping
them for repair from Distributors distribution center to Manufacturers
facility. Distributor shall reimburse Manufacturer for Products shipped for repair under
the warranty, which are subsequently determined not to be defective. Manufacturer shall
bear the cost of shipping the replaced or repaired Products to Distributor, unless the
underlying Products are determined not to be defective in which case Distributor shall
bear the cost of such shipment.

5.4.3 Exclusions. Manufacturer
shall have no obligations to Distributor or any Third Party with respect to any defects,
damage, or nonconformances of Products that, after delivery to Distributor (as more fully
set forth in Section 8.6 hereof), result from improper installation, operation,
maintenance or other use by any party other than Manufacturer; unauthorized repair;
tampering, unusual environmental operating conditions; or from accidents, or acts of God;
or other events of force majeure, as described in Section 11.7 herein. If any Products
returned for repair or replacement are not defective or are nonconforming or contain
defects where such nonconforming or defective condition is caused by a factor outside the
scope of Manufacturers warranty, Distributor shall pay Manufacturer, at
Manufacturers normal service rate, for services performed with respect to such
defective returned units, together with any costs of shipping such Products.

5.4.4 Limitation on
Warranties. MANUFACTURER MAKES NO WARRANTIES REGARDING THE PRODUCTS OTHER THAN THE
EXPRESS WARRANTIES IN THIS SECTION 5.4 AND THERE SHALL BE NO IMPLIED OR STATUTORY
WARRANTIES INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT. IN NO EVENT SHALL MANUFACTURER BE LIABLE TO DISTRIBUTOR, ITS
AGENTS, DEALERS, DISTRIBUTORS, REPRESENTATIVES, EMPLOYEES, CUSTOMERS OR ANY OTHER THIRD
PARTY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
INCLUDING, WITHOUT LIMITATION, LOSS OF USE, LOSS OF REVENUE OR LOSS OF PROFIT, IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE EXISTENCE, FURNISHING OR
FUNCTIONING OF ANY ITEM OR SERVICES PROVIDED FOR IN THIS AGREEMENT OR FROM ANY OTHER CAUSE
INCLUDING, WITHOUT LIMITATION, CLAIMS BY THIRD PARTIES, EVEN IF MANUFACTURER HAS BEEN
ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. MANUFACTURERS SOLE LIABILITY
OF ANY KIND, WHETHER ON WARRANTY, CONTRACT, STRICT LIABILITY OR NEGLIGENCE GROUNDS, WITH
RESPECT TO THE PRODUCTS FURNISHED UNDER THIS AGREEMENT SHALL BE LIMITED TO THE REPAIR OR
REPLACEMENT OF ANY DEFECTIVE PRODUCTS; PROVIDED, HOWEVER, THAT MANUFACTURER SHALL BE UNDER
NO OBLIGATION TO MAKE REPAIRS OR PROVIDE REPLACEMENTS NECESSITATED IN WHOLE OR IN PART BY
CATASTROPHE, FAULT OR NEGLIGENCE OF THE CUSTOMER OR OTHER USER OR ANY THIRD PARTY,
IMPROPER OR UNAUTHORIZED MODIFICATION AND/OR USE OF PRODUCTS, USE OF PRODUCTS IN A MANNER
FOR WHICH THEY WERE NOT DESIGNED OR INTENDED OR BY CAUSES EXTERNAL TO THE SUBJECT PRODUCT
INCLUDING, WITHOUT LIMITATION, SHIPPING DAMAGE.

6. OBLIGATIONS OF
DISTRIBUTOR

6.1 Generally. Distributor
shall at all times and at its own cost and expense use commercially reasonable efforts and
all due diligence to energetically and aggressively develop the Territory, to promote the
sale of the Products therein and to enhance the reputation and goodwill associated with
the Products including, without limitation, to develop and implement a marketing program
to position the Products as superior to and a replacement for competing laboratory-based
products. In connection therewith, Distributor shall maintain warehouses and other
facilities suitable for performance of all its obligations hereunder; shall provide
aggressive, dedicated, continuous representation within and throughout the Territory by
means of actual trained and competent sales personnel contact with existing and
prospective customers of the Products in the Field in the Territory; shall provide
training and in-house services to existing and prospective customers of the Products in
the Field in the Territory in order to achieve the maximum level of efficiency of
utilization of Cartridges; and shall hire and maintain a sales staff sufficient in number,
qualifications and training to aggressively promote and market the Products in the Field
in the Territory.

6.2 Conduct of Business and
Expenses. Distributor shall conduct its business consistent with the provisions of
this Agreement and all applicable laws, which may in any way relate to sale or
distribution of the Products in the Field in the Territory. Distributor shall maintain in
effect at all times the necessary registrations and licenses with any and all governmental
agencies and other authorities which may be required under the laws of the Territory in
order to conduct the contemplated business in the Field in the Territory. Distributor
shall be responsible for all expenses incurred in connection with the operation of its
business and its activities hereunder including, without limitation, all expenses for
appropriate and customary advertising, promotional items and trade shows, and all
communication, travel and accommodations; and shall be responsible for all acts, omissions
and expenses of its officers, directors, agents, employees and representatives.
Distributor and any Third Party to whom Distributor sells Products shall not conduct
business outside of the Territory, nor outside of the Field within the Territory, without
the prior written consent of Manufacturer.

6.3 Warranty/Product Quality.
Distributor shall have no authority to modify or supplement Manufacturers standard
form of limited warranty. Distributor shall be solely responsible for any modified or
supplemental warranty with respect to the Products made to Distributors customers,
and Distributor shall indemnify, defend and hold harmless Manufacturer and its Related
Persons (as defined below) from and against any Claims (as defined in Section 6.4 hereof)
asserted against and, any losses or damages suffered by Manufacturer or any of its Related
Persons, directly or indirectly, in connection therewith. Distributor shall provide
Manufacturer with prompt written notice specifying in reasonable detail all problems
related to the Products, without limitation, warranty matters, defects and customer
complaints, which come to the attention of Distributor. Distributor shall cooperate with
Manufacturer in any recall of any Products, as appropriate. Distributor shall make no
modifications of the Products.

6.4 Indemnification.
Distributor shall indemnify, defend and hold harmless Manufacturer and Manufacturers
Related Persons (as defined in this Section 6.4) from and against any and all liabilities,
losses, damages, injuries, costs, expenses, causes of action, claims, suits, demands,
legal proceedings, investigations, assessments and similar matters including, without
limitation, attorneys and other experts fees (collectively,
Claims), directly or indirectly resulting from or arising out of the
inaccuracy or breach of any representation or warranty made by Distributor, the failure of
Distributor to fully and completely perform and comply with its obligations hereunder or
any act or omission of Distributor or any of Distributors Related Persons.
Manufacturer shall have the right, in its sole discretion, to offset against any amounts
due and payable to Distributor, or against any remaining balance of the Prepayment Amount,
any amounts due and payable to Manufacturer pursuant to this Section. In the event that
any claim, suit or other legal proceeding is brought against Distributor in connection
with any of the Products, or the sale or use thereof, Distributor shall promptly notify
Manufacturer thereof in writing and in reasonable detail and Manufacturer may elect to
defend such matter by counsel selected by Manufacturer and, in the event of such defense,
Distributor shall, and shall cause its Related Persons to, fully cooperate with
Manufacturer and its counsel in the conduct of such defense. For purposes of this
Agreement, Related Persons of any party to this Agreement shall mean
the officers, directors, shareholders, affiliates, agents, representatives, employees,
successors and assigns of such party.

6.5 Insurance. Distributor
shall obtain and maintain a policy of comprehensive business liability insurance including
without limitation public liability and property damage insurance, issued by an insurer
reasonably acceptable to Manufacturer. Such policy shall name Manufacturer as an
additional insured and shall be in amounts, respectively, that are reasonable and
customary in the Territory for medical products companies of comparable size and
activities, but in no event less than Four Million Dollars ($4,000,000) per occurrence.
Distributor shall furnish Manufacturer with a certificate of insurance evidencing such
insurance within thirty (30) days of the execution of this Agreement and shall provide
Manufacturer at least thirty (30) days prior written notice of cancellation or
material modification of such insurance, all of which shall be satisfactory, in form and
substance, to Manufacturer.

6.6 Sales to Third Parties.
Distributor shall sell Products to Third Parties, whether directly to customers for their
own consumption and usage or to its dealers for the express purpose of resale to customers
and in the ordinary course of business with such dealers, and Distributor shall not stock
its customers, its dealers and its inventories with Products in excess of
inventories maintained in its customers, its dealers or its ordinary course of
business.

7.    
          REPRESENTATIONS AND WARRANTIES.

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

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

(b)       
          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.

(c)       
          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.

(d)       
          Manufacturer has obtained, and shall obtain, through its in-country caretaker in
          the Territory, all approvals necessary for Products to be sold in the Territory
          including, without limitation, approval from MHLW.

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

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

(b)       
          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.

(c)       
          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.

(d)       
          Distributor has taken, and shall take, all actions required under any applicable
          law or regulation necessary for Distributor to distribute Products hereunder
          including, without limitation, notification under Pharmaceutical Law to MHLW.

8. ORDERING AND DELIVERY
OF PRODUCTS

8.1 Forecasts. Distributor
shall furnish Manufacturer with, no later than forty-five (45) calendar days before the
beginning of each calendar quarter, a written forecast of Product purchase requirements
for each of the next six sequential calendar quarters. The quantity for each Product set
forth in the first such calendar quarter shall constitute a binding purchase commitment by
Distributor in such quarter, which Distributor shall simultaneously confirm with Purchase
Orders pursuant to Section 8.2 herein. The quantity for each Product ordered in the second
such calendar quarter shall not vary by more than 10% from the original forecast for such
quarter without Manufacturers prior written consent which may be withheld or delayed
in its sole discretion. The quantity for each Product ordered in the third and fourth such
calendar quarters shall not vary by more than 20% from the original forecast for each such
quarter without Manufacturers prior written consent which may be withheld or delayed
in its sole discretion.

8.2 Purchase Orders. Each
order by Distributor for shipment of Products shall be by firm purchase order in writing
on Manufacturers standard form, a copy of which is attached hereto as Exhibit
E (each, a PurchaseOrder). Each such Purchase Order shall be sent
by facsimile or electronic mail. Manufacturer may accept any such Purchase Order in whole
or in part in accordance with allocation procedures set forth in Section 5.1 by actual
delivery in accordance with the terms of Purchase Order. Manufacturer shall use its
commercially reasonable efforts to honor any shipping instructions set forth in a Purchase
Order; provided, that notwithstanding the terms of a Purchase Order, Manufacturer
shall confirm via electronic mail with Distributor the anticipated shipment date for each
such order.

8.3 Price of Products. The
initial prices to be paid by Distributor as of the Effective Date for each type of Product
are as specified in Exhibit C attached hereto. Such prices may be adjusted by
Manufacturer as required to reflect market conditions, costs of components or other costs
of manufacture and supply of the Products. Such price adjustments shall be effective upon
sixty (60) days prior written notice to Distributor and shall be applicable to new
Purchase Orders from Distributor received by Manufacturer after such date. All Product
prices shall be exclusive of any applicable customs charges and duties; sales, use,
privilege, excise and similar taxes; and transportation, rigging, handling charges,
insurance costs and other expenses associated with the delivery of the items ordered to
the destination specified by Distributor, which shall be at Distributors sole
expense. Distributor shall have the right to audit Manufacturers Fully Burdened
Manufacturing Cost, upon not less than forty-eight (48) hours advance written notice
during normal business hours. Distributor shall bear the costs of any audit conducted
pursuant to this Section 8.3. At each change of Manufacturers Fully Burdened
Manufacturing Cost, Manufacturer will provide Distributor with an explanation of changes
from the previously established Fully Burdened Manufacturing Cost.

8.4 Terms and Conditions. All
Products purchased by Distributor shall be sold F.O.B. Manufacturers designated
shipping location and shall be subject to such additional terms and conditions of sale as
shall be specified on each Purchase Order. In the event of conflict between the terms of a
Purchase Order and the terms of this Agreement, the terms of this Agreement shall govern.
Any other terms and conditions shall be wholly inapplicable to this Agreement and to the
individual orders hereunder.

8.5 Payment Requirements. With
respect to the purchase of Products, payment of the net invoice price for all Products
purchased by Distributor shall be received by Manufacturer within thirty (30) days after
Manufacturer delivers finished goods to Distributors designated carrier or freight
forwarder at Manufacturers designated shipping location. Distributor shall pay in
cash any balance remaining after offsetting the purchase price against any Prepayment
Application Amount. In the event that Distributor fails to pay Manufacturer in a timely
manner as required by this Section 8.5, any unpaid balance shall be subject to a late
charge at the rate of one percent (1%) per month for each month or portion thereof during
which such payment is overdue or, if lower, the highest rate then permitted by applicable
law. In addition, Manufacturer may, at its option, suspend all shipments to Distributor
(including stoppage in transit), may require that future shipments be paid for in advance
or may make any other credit arrangements satisfactory to Manufacturer in its sole
discretion. Manufacturers rights pursuant to this Section 8.5 shall be
cumulative and without prejudice to Manufacturers right to declare Distributor in
default under this Agreement by reason of such delinquency, and Manufacturer shall have
the right to avail itself of any and all other remedies to which it may be entitled
hereunder, at law or in equity including immediately offsetting any such amounts due and
owing, plus late charges, against the Prepayment Amount.

8.6 Delivery; Acceptance; Risk of
Loss. Delivery and acceptance of delivery of any order hereunder shall be deemed to
occur upon Manufacturers delivery of the Products to the carrier or freight
forwarder at Manufacturers facility selected by Distributor. Title to and risk of
loss of all Products sold hereunder shall pass to Distributor upon such delivery, and the
risks of loss, damage or delay in transit shall be solely the responsibility and risk of
Distributor.

9. INTELLECTUAL PROPERTY
MATTERS

9.1 Trademarks. Unless
specifically agreed in writing in advance, Distributor shall have no right to use the
trademarks, trade names, trade dress or logotypes that Manufacturer applies to its
Products or otherwise uses in its business (collectively, Trademarks)
in the name of Distributors business, on the exterior or interior of its business
premises or otherwise to identify its business. Distributor shall market and sell the
Products without removing, adding to, or altering any labels, trade names, trademarks,
notices, labels, serial numbers or other identifying marks, symbols or legends affixed to
any of the Products or their containers or packages, without the need to secure a prior
written consent of Manufacturer. Manufacturer and Distributor hereby agree that no license
of any kind is granted by Manufacturer to Distributor under this Agreement.

9.2 Proprietary Information.
(i) Distributor hereby acknowledges that certain of the information provided to
Distributor by Manufacturer hereunder including, without limitation, Product drawings,
specifications, technical information, customer contacts or lists and other information
and literature, constitutes proprietary and confidential trade secret information of
Manufacturer. Distributor shall not disclose any such trade secrets, directly or
indirectly, or use them in any way, either during the Term or at any time thereafter,
without the prior written consent of Manufacturer. Any and all such trade secrets shall
remain the sole and exclusive property of Manufacturer and shall be returned to
Manufacturer or destroyed (to be certified by President of Distributor in form and
substance acceptable to Manufacturer) immediately upon expiration or termination of this
Agreement for any reason.

(ii)       
          Manufacturer hereby acknowledges that certain of the information provided to
          Manufacturer by Distributor hereunder including, without limitation, Third Party
          contacts or lists, sale prices to Third Parties, sales statistics of Products in
          the Territory and other information and literature, constitutes proprietary and
          confidential trade secret information of Distributor. Manufacturer shall not
          disclose any such trade secrets, directly or indirectly, or use them in any way,
          either during the Term or at any time thereafter, without the prior written
          consent of Distributor. Any and all such trade secrets shall remain the sole and
          exclusive property of Distributor and shall be returned to Distributor or
          destroyed (to be certified by President of Manufacturer in form and substance
          acceptable to Distributor) immediately upon expiration or termination of this
          Agreement for any reason.

9.3 Conflicts of Interest;
Competitive Products. To avoid any conflict between its other business activities and
its obligations to Manufacturer hereunder, Distributor shall not, during the Exclusive
Period,, without the prior written consent of Manufacturer, directly or indirectly (a)
purchase, solicit the sale of, promote the sale of, sell, exhibit for sale, distribute or
manufacture any product competitive with or of like nature to any of the Products in the
Field in the Territory, (b) act as distributor, broker, representative, agent, dealer or
in any other capacity on behalf of the manufacturer, importer or distributor of any such
competitive or similar product, (c) do any act to impair, prejudice or harm the goodwill
of Manufacturer or the relationship or dealing between Manufacturer and any actual or
potential customer, dealer or other Third Party or between Manufacturer and any of its
employees, (d) own equity in any competitor of Manufacturer (excluding securities
representing up to 1% of the combined voting power of the outstanding securities of any
publicly-traded company), (e) knowingly hire or retain as an employee, consultant,
independent contractor or in any other capacity any employee or former employee of
Manufacturer who was involved in the performance of this Agreement, without the prior
written consent of Manufacturer, or (f) assist any other person or entity in any such
acts.

9.4 Relief. Distributor
acknowledges that (a) the restrictions contained in Sections 9.1 through 9.3 hereof shall
apply in all areas where such application is permitted by law, (b) the provisions of
Sections 9.1 through 9.3 are reasonable and necessary to protect the legitimate interests
of Manufacturer, (c) the restrictions contained in Sections 9.1 through 9.3 will not
prevent Distributor from earning or seeking a livelihood, and (d) any violation of
Sections 9.1 through 9.3 by Distributor would result in irreparable harm to Manufacturer.
Accordingly, Distributor consents and agrees that if, after receipt of written notice from
Manufacturer, it continues to violate Section 9.1 or 9.2 for a period of forty-eight (48)
hours, or in the case of other provisions of this Agreement for a period of ten (10) or
more business days, Manufacturer shall be entitled, in addition to other remedies
available to it, to injunctive relief, without the necessity of bond or other undertaking,
to be issued by any court of competent jurisdiction restraining Distributor from
committing or continuing any violation of this Agreement.

In
the event that the whole or any part of the provisions of Sections 9.1 through 9.4 hereof
shall be determined to be invalid by reason of the extent, duration, scope or other
provision set forth therein, the extent, duration, scope or other provision, those
sections shall be reduced so as to cure such invalidity and in its reduced form the
provisions of Sections 9.1 through 9.3 shall be enforceable in the manner contemplated
hereby.

9.5 Infringement. In the event
of any demand, suit, action or other proceeding against Distributor involving any claim of
infringement based upon Distributors sale of the Products, whether based on laws of
the United States, Japan, or any other country, Distributor shall promptly send
Manufacturer copies of all papers delivered or served with respect to such demand, or in
such suit, action or other proceeding. At its option, Manufacturer may, at its sole cost
and expense, defend all claims of infringement set forth in any such demand, suit, action
or other proceeding. Distributor shall provide testimony and other evidence against such
demand, or in suit, action or other proceeding, and shall otherwise cooperate with
Manufacturer in any way necessary or desirable in order to permit Manufacturer
successfully to defend such demand, suit, action or other proceeding.

10. TERM AND TERMINATION

10.1 Term. Unless earlier
terminated pursuant to Section 3.2 and another provision of this Section 10, the term of
this Agreement (the Term) shall commence on the date first set forth
above and shall expire on December 31, 2008.

10.2 Negotiation of Possible
Extension of Term. In the event that Distributor achieves both Performance Milestones,
the parties shall, during the 60-day period commencing on January 1, 2008, negotiate in
good faith the terms of a possible extension of the Term. The parties agree that neither
of them has entered into any agreement to negotiate a definitive future agreement for the
extension of the Term pursuant to the terms of this Section 10.2, and that the provisions
of this Section 10.2 shall not be deemed to constitute such definitive agreement. The
parties further agree that this Section 10.2 imposes no burden to negotiate further the
terms and conditions of any such extension until January 1, 2008.

10.3 Termination. (i)
Manufacturer may terminate this Agreement effective immediately upon delivery of written
notice to Distributor in the event of the occurrence of any of the following:
(a) Distributors breach of duty to perform or observe any material provision of
this Agreement that is not cured within thirty (30) days after receipt of written notice
of such breach from Manufacturer, provided, that in the event such material breach is
incurable, no such cure period is required prior to termination; (b) Distributor
becomes bankrupt or insolvent or any agreement or court proceeding is initiated relating
to Distributors financial instability; (c) failure to maintain Distributors
account on a current basis and in accordance with Manufacturers terms and conditions
of sale; (d) the sale or transfer of more than fifty percent (50%) of the fair market
value of the ownership of Distributor, or the sale or transfer of the assets of
Distributor to which this Agreement relates, without Manufacturers prior written
consent; ; or (e) as set forth in Section 3.2 herein.

(ii)       
          Distributor may terminate this Agreement effective immediately upon (a) delivery
          of written notice to Manufacturer in the event of Manufacturers breach of
          duty to perform or observe any material provision of this Agreement that is not
          cured within thirty (30) days after receipt of written notice of such breach
          from Distributor, provided, that in the event such material breach is
          incurable, no such cure period is required prior to termination; (b) an order or
          administrative guidance that has the effect of law by MHLW to cease importation
          and sale of substantially all of the Products in the Territory or revocation of
          the existing approvals by MHLW to import and sell substantially all of the
          Products in the Territory such that continued marketing and distribution of
          Products is judged impractical by mutual agreement of the parties without any
          fault on the part of the Distributor; or (c) Manufacturer initiates insolvency
          proceedings for liquidation.

(iii)       
          Upon return of the Marketing Support Fee and/or Prepayment Amount, this
          Agreement shall automatically terminate.

10.4 Consequences of
Termination. Upon the expiration or termination of this Agreement for any reason,
(a) all sums which either party then owes to the other hereunder shall become
immediately due and payable including, without limitation, any refund payable to
Distributor under the Prepayment Agreement, (b) all remaining obligations of
Manufacturer to make deliveries and sales hereunder shall immediately cease, except that
Manufacturer, in its sole discretion, may deliver to Distributor Products previously
ordered by Distributor in a binding purchase order (for which Distributor shall pay in
accordance with the terms of this Agreement), (c) Distributor shall immediately
discontinue any use of Manufacturers Trademarks and any related marks or names, and
shall cease to hold itself out as an authorized distributor of Manufacturer, (d)
Distributor shall immediately return to Manufacturer all catalogs, drawings,
specifications, technical information, promotional material and other information and
literature concerning the Products as have previously been furnished to Distributor by
Manufacturer or furnish a certificate signed by the President of Distributor certifying
that all of the foregoing have been destroyed, (e)  any remaining inventory shall be
repurchased by Manufacturer at the original net invoice price or, to the extent not
saleable, shall be destroyed by Distributor at no cost to Manufacturer, (f) the Prepayment
Amount shall be reduced in accordance with this Agreement with respect to all amounts due
and owing to Manufacturer, (g) Distributor shall promptly deliver to Manufacturer, with
respect to Third Parties to which Products have been sold by Distributor, Third Party
lists, which shall include, without limitation, the Third Party name, contact person,
telephone and fax numbers, address and electronic mail address, and other relevant contact
information, Third Party purchase history for the most recent twelve (12) month period and
all pricing agreements with Third Parties and (h) the provisions of Sections 6.4,
6.5, 9.2 through 9.4 and 11 hereof shall survive such termination.

10.5 No Liability.
Manufacturer shall not be liable by reason of the termination, expiration or nonrenewal of
this Agreement to Distributor for compensation, reimbursement or damages on account of any
loss of prospective profits on anticipated sales or on account of expenditures,
investment, leases, or other commitments relating to the business or goodwill of
Distributor. Distributor agrees to indemnify Manufacturer and the Related Persons from all
Claims of Third Parties including, without limitation, its dealers, customers, medical
representatives, agents, employees or representatives for similar compensation,
reimbursement or damages.

11. MISCELLANEOUS

11.1 Termination of Prior
Agreements. The parties acknowledge and agree that effective as of the Effective Date,
this Agreement shall supersede the Prior Agreements, and the Prior Agreements shall
terminate and be of no further force or effect, provided, however, that Distributors
duty to indemnify Manufacturer under such agreements for acts and omissions occurring
during their terms shall survive and remain in full force and effect.

11.2 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. 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.

11.3 Foreign Corrupt
Practices. Distributor represents that it is familiar with the Foreign Corrupt
Practices Act of 1977 and will comply with said act and is aware of the sensitive nature
of international contracting and the types of impropriety, which have received widespread
publicity concerning some such contracts. Distributor will at all times conduct its work
under this Agreement so as to strictly abide by the laws of the United States and Japan,
and will at all times avoid any situation which would cause any representative or agent of
the government to appear to have a conflict of interest.

11.4 Export Regulation
Requirements. Distributor agrees to give a written statement disclosing all political
contributions, fees, or commissions in respect to such sales. A political
contribution includes any loan, gift, donation, or other payment offered directly or
indirectly whether in cash or in kind, with a value of $1,000.00 or more to or for the
benefit of any candidate, committee, political party, political faction or government or
employee or office or official thereof to secure the conclusion of a sale;
provided, however, that the foregoing prohibition does not include charges
required to be paid by applicable law. A fee or commission includes any loan,
gift, donation, or other payment valued at $1,000.00 or more offered directly or
indirectly in cash or in kind to secure a sale. These requirements are explained in detail
in title 22, Chapter 1, of Part 130 of the United States Code of Federal Regulations.
Distributor agrees to comply and assist Manufacturer in complying with such laws. The
inclusion of this provision in the Agreement should not be construed as approval of any
such expenditures.

11.5 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 of 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:

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

11.7 Force Majeure. If either
Manufacturer or Distributor shall be unable, by reason of any event referred to herein as
force majeure, to carry out its obligations under this Agreement, either
wholly or in part, the party so failing shall give notice and particulars in reasonable
detail of such event or events in writing to the other party as soon as possible after the
occurrence of any such event, and thereupon such obligation shall be suspended during the
continuance of such cause which, however, shall be remedied or removed with all possible
dispatch; and the obligations, terms and conditions of this Agreement shall be extended
for such period as may be reasonably necessary for the purpose of making good any
suspension so caused, provided that no claim for suspension shall be made by either
party when the period of suspension so caused shall be less than ten (10) consecutive
business days. The events referred to herein as force majeure shall include
fire, casualty, unavoidable accident, failure of the usual sources of supply, strikes,
labor conditions, lockouts, war, acts of God, the enactment of any federal, state or
municipal law or ordinance or the issuance of any executive, administrative or judicial
order or action, whether federal, state or municipal, or of any other legally constituted
authority, cooperation with the United States Food and Drug Administration or any health
regulatory authority, accidents to machinery or any other cause not within the control of
the party claiming relief from any of the requirements of this Agreement and that, by the
exercise of due diligence, the party is unable to prevent or overcome. Mere inability to
make any payment of money required hereunder shall not constitute an event of force
majeure.

11.8 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.

11.9 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.

11.10 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.

11.11 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 Manufacturer and Distributor shall comply with the
export control laws and regulations of the United States, and neither Manufacturer nor
Distributor shall, directly or indirectly, export or re-export any Product in any manner
contrary to the applicable export control laws or laws and regulations of the United
States or any country. 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.

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

11.13 Tax Withholding. In the
event any payment under this Agreement is subject to tax withholding by the government of
Japan, such tax amount shall be deducted from payments owed by Distributor to
Manufacturer. Manufacturer shall be provided with the appropriate tax receipts in order to
enable it to receive the United States tax credits therefor.

11.14 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 filing, administrative, and arbitrator fees in
connection with arbitration proceedings shall be shared equally between the parties.

11.15 Entire Agreement. This
Agreement, together with the Prepayment Agreement, sets forth the entire agreement between
the parties hereto, fully supersedes any and all prior agreements or understandings
between the parties hereto pertaining to the subject matter hereof including without
limitation the Prior Agreements 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.

11.16
Effectiveness of Agreement.The parties acknowledge and agree that the
effectiveness of this Agreement and the consummation of the transactions contemplated
hereby 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

EXHIBIT A

PRODUCTS

The Products Distributor shall be
entitled to distribute and sell shall be the following:

|                     | 
|-------------------- | 
|Cartridges           | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Cartridge            | 
|Analyzers            | 
|Analyzer 200         | 
|Analyzer 300F        | 
|Ancillary Products   | 
|Serial Downloader    | 
|Network Downloader   | 
|Power Supply         | 
|Cable Kit            | 
|Recharger Tray       | 
|Rechargeable Battery | 
|Printer              | 
|Box                  | 
|Control Solutions    | 
|Linearity Solutions  | 
|CDS Software         | 

As new products are commercialized by
Manufacturer, the parties will negotiate the addition of such products to this Exhibit A
with a view toward, among other things, the applicability of the products to the Field in
the Territory and the mutual profitability of the parties.

EXHIBIT B

FORM OF RESALE
CERTIFICATE

Pursuant
to the requirements of Sections 3.1 and 4.2 of that certain Distribution Agreement dated
as of January __, 2003 by and between Fuso Pharmaceutical Industries, Ltd., a Japanese
corporation (Fuso), and iSTAT Corporation, a Delaware corporation
(the Agreement), Fuso hereby certifies that the following number of
Cartridges (as defined in the Agreement) were sold and shipped by Fuso to Third Parties
including, without limitation, its dealers for resale to customers in the field of
professionally attended human health care and veterinary care in the country of Japan in
their respective ordinary courses of business during the quarter commencing
________________, 200_ and terminating ________________, 200_:

_____________________________________________
Cartridges

FUSO PHARMACEUTICAL INDUSTRIES, LTD.

_________________________________________

By:Its:

---

EXHIBIT C

PRODUCT PRICES

Cartridges

The price of Cartridges shall be ***
(the Minimum Transfer Price or MTP). The price for each Creatinine cartridge shall be *** and shall not be th MTP. The Yen to United States
dollar (US$) exchange rate used to translate the Cartridge pricing into US$ shall be
calculated every six (6) months, on April 1 and October 1. The MTP is subject to adjustment by both the Yen to US$ exchange rate
and NJ Urban Wage Consumer Price Index (CPI) every six (6) months using the formula
described below. The initial MTP adjustment will be calculated on April 1st, 2004 for the period from April 1, 2004 through and including September 30, 2004.

The following formula shall be used
to calculate the MTP:

|1. |  | The current yen to dollar exchange ratio shall be the determined by calculating
               the average daily exchange rate for the 6 month period from April 1st through
               and including September 30th, or from October 1st through and
               including March 31st, as provided on the by the Oanda Corporation
               (www.oanda.com) the Current Exchange Rate). The base exchange rate
               shall be 90 yen per US$ (as set in July 1995) (the Base Exchange
               Rate). The change between the Current Exchange Rate and the Base Exchange
               Rate shall be calculated as a percentage where an increase in the rate (more Yen
               to the US$) shall cause a negative percentage change result. The resulting
               yen-to-dollar percentage change shall be multiplied by *** to calculate the
               Exchange Rate Adjustment Factor for the period.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | The current CPI (Current CPI) shall be determined by averaging the
               reported CPI for each of the two months preceding each adjustment date (either
               April 1 or October 1). The source for the reported CPI shall be the U.S.
               Department of Labor. The CPI base rate shall be 158.3 (the Base CPI)
               (as set in July 1995). The difference between the Base CPI and Current CPI shall
               be calculated as a percentage where an increase in the CPI shall cause a
               positive percentage change to result. The resulting CPI percentage change shall
               be multiplied by *** to calculate the CPI Adjustment Factor for the period.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | The amount of *** shall be subtracted from *** (Base MTP Without
               Packaging). The Base MTP Without Packaging shall be multiplied by the sum
               of (i) 1.00 plus (ii) the Exchange Rate Adjustment Factor for the period plus
               (iii) the CPI Adjustment Factor for the period to calculate an adjusted minimum
               transfer price without packaging for the period (Adjusted MTP Without
               Packaging). The new Minimum Transfer Price for the subsequent six month
               period shall be the Adjusted MTP Without Packaging plus ***, the fixed packaging
               amount. In no event shall the calculated new Minimum Transfer Price for the
               period be less than ***.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PRODUCT                                      | PRICE
|-------------------------------------------- | -----
|                                             |      
|Analyzers                                    |      
|Analyzer 200                                 |      
|Analyzer 300F                                |      
|Ancillary Products                           |      
|Electronic Simulator                         |      
|Serial Downloader                            |      
|Network Downloader                           |      
|Power Supply***                              |      
|Cable Kit                                    |      
|Recharger Tray                               |      
|Rechargeable Battery                         |      
|Martel Printer***                            |      
|Hewlett Packard Printer***                   |      
|Analyzer Box                                 |      
|Control Solutions (3 levels)                 |      
|Linearity Solutions                          |      
|CDS 5 Software                               |      
|CDS 5 yearly Software license fees**         |      
|CDS 5 Upgrade Software                       |      
|CDS 5 Upgrade yearly Software license fees** |      
|CDS 5 Basic* Software                        |      
|CDS 5 Basic yearly Software license fees**   |      
|HL7 Interface Software                       |      
|HL7 Interface yearly Software license fees** |      

* data transfer functionality only
** Software license fees are payable on a yearly basis effective upon the one year anniversary of the
purchase of the relevant software package.
*** Products that may be purchased directly from the OEM supplier by Fuso

---

EXHIBIT D

CERTIFICATE OF
DESTRUCTION

i-STAT Corporation
(Manufacturer)104 Windsor Center DriveEastWindsor, NJ 08520USA ATTN: __________________



2.    
          Quarter covered: ______________ (the Quarter)

3.    
          The following Products were returned by and received from Third Parties during
          the Quarter:

|        |  |                              
|------- |  | -----------------------------
|Product |  | [Serial Number or Lot Number]

4.    
          At the request of Manufacturer and in accordance with Section 5.4.2 of the
          Distribution Agreement, Distributor has permanently destroyed the following
          Products as of the date hereof.

|        |  |                              
|------- |  | -----------------------------
|Product |  | [Serial Number or Lot Number]

This Certificate of Destruction is
executed of even date herewith. The undersigned hereby certifies each and every matter
contained herein to be true and correct.

_________________Name: Title:

---

EXHIBIT E

FORM OF PURCHASE ORDER

[Month covered/Page #]                                            Date:_____________________

i-STAT Corporation
(Manufacturer)104 Windsor Center DriveEastWindsor, NJ 08520USA ATTN: __________________



ORDER SHEET

We are placing an order with Manufacturer for the following articles:

Order No. Article Quality* Quantity** Price Shipment

(Picture of Purchase Order)

* Shelf-life (based on label) left when arriving in Osaka
** Number of lots for each Cartridge should be as small as possible.

Designation: FOB New Jersey, USA
Insurance: To be effected by Distributor
Payment: To be wire transferred

Fuso Pharmaceutical Industries, Ltd.

By:_________________________

Name:                                       Title:

---

EXHIBIT F

SCHEDULE OF DELIVERY
OF SAMPLES

Samples of Cartridges of a type
determined by Manufacturer in its sole discretion shall be delivered to Distributor in
accordance with the following schedule:

|Quarter of DeliveryEnd of: | Quantity
|-------------------------- | --------
|***                        | ***     
|                          
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***     
|***                        | ***