LICENSE AGREEMENT

Exhibit 10.3

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

LICENSE AGREEMENT

     This LICENSE AGREEMENT dated as of January 5, 2009 (the “ Effective Date ”), is entered into by and between Inverness Medical Switzerland GmbH, a corporation organized and existing under the laws of Switzerland, with its principal office for the conduct of business located at Bahnhofstrasse 28, CH- 6300 Zug, Switzerland (“ Licensor ”) and Abaxis, Inc,. a California corporation, having its principal office at 3240 Whipple Road, Union City, CA 94587 USA (“ Licensee ”).

     WHEREAS, Licensor owns or controls certain Patent Rights (as defined below) pertaining to lateral flow immunoassay devices and methods; and

     WHEREAS, subject to the terms and conditions of this License Agreement, Licensee desires and is willing to secure from Licensor, and Licensor desires and is willing to grant to Licensee an exclusive license in the Field (as defined below) and in the Professional Channel (as defined below) in and to the Patent Rights.

     NOW, THEREFORE, in consideration of these premises and the mutual covenants, agreements, representations and warranties herein contained, the Parties hereby agree as follows:

1.  Certain Defined Terms . The following terms shall have the meanings set forth below:

     1.1 “ Affiliates ” means any individual or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the individual or entity specified. For purposes of this definition, control of an individual or entity means the power, direct or indirect, to direct or cause the direction of the management and policies of such individual or entity whether by contract or otherwise and, in any event and without limitation of the previous sentence, any individual or entity owning fifty percent (50%) or more of the Voting Stock of a second individual or entity shall be deemed to control that second individual or entity. “ Voting Stock ” means, with respect to any entity, securities ordinarily (and apart from rights arising under special circumstances) having the right to vote in the election of directors or persons performing similar functions with respect to such entity.

     1.2 “ Control ”, “ Controls ” or “ Controlled by ” means, with respect to any item of or right under any Patent, the possession of (whether by ownership or license), or the ability of Licensor and/or its respective Affiliates to grant access to, or a license or sublicense of such item or right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party existing at the time Licensor would be required hereunder to grant such access, right or (sub)license.

     1.3 “ Effective Date ” shall have the meaning set forth in the Introductory Paragraph.

     1.4 “ Excluded Field ” means the detection of microbial food pathogens to assess the safety of food for human consumption.

     1.5 “ Field ” means the detection of diseases, physiologic conditions, and substances in non-human animals and products obtained from non-human animals, excluding the Excluded Field.

     1.6 “ Improved Product ” shall have the meaning set forth in Section 17.6.

     1.7 “ Lateral Flow Patent Rights ” means Patents that (i) exist as of the Effective Date, (ii) are Controlled by Licensor as of the Effective Date, and (iii) claim or cover a diagnostic test for at least one analyte and which test comprises a detectable entity and when wetted provides for liquid flow under capillary action.

     1.8 “ Laws ” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

     1.9 “ License Agreement ” means this License Agreement, including all exhibits and attachments hereto.

     1.10 “ Licensed Company ” shall have the meaning set forth in Section 3.2(b).

     1.11 “ Licensed Product ” means any product, branded under only one or more brands Controlled by Licensee or its Affiliates, the making, having made (on Licensee’s behalf), using, selling, offering for sale or importing of which by or on behalf of Licensee would, but for the license granted to Licensee pursuant to this License Agreement infringe a Valid Claim of a Patent included in the Patent Rights in the country in which any such product is so made, used, sold, offered for sale or imported by Licensee or on Licensee’s behalf.

     1.12 “ Licensee ” shall have the meaning set forth in the Introductory Paragraph.

     1.13 “ Licensor Competitor ” shall have the meaning set forth in Section 17.6.

     1.14 “ Licensor Indemnitees ” shall have the meaning set forth in Section 14.1.

     1.15 “ Licensor ” shall have the meaning set forth in the Introductory Paragraph.

     1.16 “ Minimum Annual Royalty ” shall have the meaning set forth in Section 3.5(a).

     1.17 “ Net Sales ” means the gross amounts invoiced or billed, and all other amounts (including as a result of any agreement or arrangement with any Third Party and whether in cash or non-cash consideration) received by Licensee with respect to sales by or on behalf of Licensee of Licensed Product to unaffiliated Third Parties less the sum of actual amounts for the following items: any outbound transportation, insurance and other shipping and handling costs paid or allowed; trade, quantity and discounts in amounts customary in the trade; allowances and credits to purchasers for damaged and returned product, including allowances and credits because of returns or rejections; excise, duty, sales or similar taxes; allowances for promotional and demonstration units permitted under Section 3.4; and [*]. “Net Sales” shall be measured on a country-by-country basis, when a Licensed Product is first sold or otherwise transferred for value by or on behalf of Licensee, or first used or leased in such country.

     1.18 “ Party ” means Licensee or Licensor, individually, and “Parties” means Licensee and Licensor, collectively.

     1.19 “ Patent Challenge ” shall have the meaning set forth in Section 2.7.

     1.20 “ Patent Rights ” means the Patents listed on Schedule A attached hereto.

     1.21 “ Patents ” means (a) patents and patent applications, (b) substitutions, divisionals, continuations, continuations-in-part, reissues, provisional applications, registrations, confirmations, reexaminations and renewals of any such patents and patent applications, and (c)

any foreign equivalents of the foregoing.

     1.22 “ Pre-Existing Licenses ” shall have the meaning set forth in Section 2.5.

     1.23 “ Professional Channel ” means sales or distribution channels where products or systems are designed or intended for, or marketed to, (a) professional providers of non-human animal health-care, including veterinary health-care, and professional non-human animal health-care centers, (b) other Third Party professionals trained to administer and/or analyze diagnostic tests on non-human animals, and (c) diagnostic laboratories. Notwithstanding anything to the contrary in this License Agreement, “Professional Channel” does not include sales or distribution channels where products or systems are primarily intended for or marketed to an end-user consumer for private use, including self-care, at-home care, and minute clinic channels.

     1.24 “ Representatives ” shall have the meaning set forth in Section 12.1.

     1.25 “ Royalties ” shall have the meaning set forth in Section 3.2(a).

     1.26 “ Third Party ” means any person or entity other than Licensee, Licensor and their respective Affiliates.

     1.27 “ Valid Claim ” means any unexpired issued claim or pending claim prosecuted in good faith of any Patent Right which has not lapsed, become abandoned or been held revoked, invalid, or unenforceable by a decision of a court or administrative or government authority or agency of competent jurisdiction from which no appeal can be or has been taken within the time allowed for such appeal, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

2. License Rights .

     2.1 Patent Rights . Subject to the terms and conditions set forth in this License Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts, a worldwide, exclusive (subject to limitation in Section 2.3), royalty-bearing, non-transferable (except as expressly set forth in Section 17.6) and non-sublicenseable right and license under Licensor’s rights in and to the Patents included in the Patent Rights, in the Field only, to make, have made for Licensee (including by contract manufacturers for Licensee), use, sell, offer for sale and import Licensed Products in the Professional Channel, and the right to practice the methods claimed in such Patent Rights in connection with such Licensed Products. Licensee may exercise its rights under this Section 2.1 directly or through distribution channels on its behalf.

     2.2 Sublicensing; Additional Licenses .

     (a)  No Sublicensing . Licensee shall not sublicense, directly or indirectly, the rights granted to Licensee under Section 2.1. The Parties agree that any potential sublicensee opportunity with respect to rights under this License Agreement shall be addressed pursuant to Section 2.2(b).

     (b)  Additional License Opportunities . In the event that either Party identifies a possible opportunity to grant licenses to Third Parties under the Patent Rights in the Field and in the Professional Channel, the other Party shall cooperate with such Party in connection with such opportunity. [*]

     2.3 Exclusivity . The license rights granted to Licensee under Section 2.1 are exclusive in the Field and in the Professional Channel as to (a) all persons and entities other than

Licensor and Third Parties to whom Licensor or any of its licensors or their predecessors has granted licenses as of the October 10, 2008 under the Patent Rights that may be exploited in the Field, including the Third Parties identified or contemplated under Section 2.5 below; and (b) any subsequent licensee agreed upon by the Parties pursuant to Section 2.2(b). Notwithstanding anything to the contrary in this License Agreement, the grant of rights by Licensor under this License Agreement shall be subject and limited in all respects by the terms of the applicable Third Party agreements and arrangements pursuant to which Licensor acquired any Patent Rights, and all rights or sublicenses granted under this License Agreement shall be limited to the extent that Licensor may grant such rights and sublicenses under the Patent Rights.

     2.4 Licensor Out-Licensing Restrictions . During the term of this License Agreement Licensor shall not, except with the written consent of Licensee, (i) enter into any new agreements with a Third Party pursuant to which Licensor grants such Third Party new license rights under any Lateral Flow Patent Rights in the Field and in the Professional Channel except in accordance with Section 2.2(b), or (ii) notwithstanding any rights to the contrary under any Pre-Existing License, amend any Pre-Existing License in a manner that extends or expands the license rights of such Third Party under any Lateral Flow Patent Rights in the Field and in the Professional Channel if such extension or expansion would materially adversely affect Licensee’s rights under this License Agreement.

     2.5 Pre-Existing Licenses .

          (a) The grant of rights by Licensor under this License Agreement shall be subject to and limited in all respects by the terms and conditions of the applicable agreements existing as of the Effective Date pursuant to which Licensor has control of any Patent Rights, and all rights or sublicenses granted under this License Agreement shall be limited to the extent that Licensor may grant such rights and sublicenses under the terms and conditions of the applicable agreements existing as of the Effective Date pursuant to which Licensor has granted any right or license to a Third Party under the Patent Rights (collectively, the “ Pre-Existing Licenses ”).

          (b) [*]

          (c) [*]

     2.6 Restrictions . Licensee shall not knowingly (i.e., knew or should have known) sell, transfer or otherwise provide, directly or indirectly, the Licensed Products for use or sale outside of the Field and/or outside of the Professional Channel. In connection with any Licensee transaction or agreement relating to any Licensed Product with a Third Party, Licensee shall restrict (through contracts and/or purchase orders, marketing literature, shipping documents, or similar documents used when a supply, distribution or similar agreement is not in place) such Third Party and require similar restrictions throughout the supply chain, from shipping or selling Licensed Products outside of the Field and/or outside of the Professional Channel. Licensee shall use commercially reasonable efforts to enforce such restrictions, including by (i) promptly suspending shipments of the Licensed Products to a Third Party if the Licensed Products are being sold or used by such Third Party outside the Field and/or outside of the Professional Channel, (ii) notifying such Third Party in writing of such alleged violation, (iii) conducting an investigation of such violation as reasonably appropriate under the circumstances, (iv) following

completion of such investigation, terminating any agreement with such Third Party following the investigation of which revealed that such Third Party failed to comply with such restrictions, and (v) pursuing a damage claim (or authorizing Licensor to pursue such damage claim on its behalf) against any such Third Party that failed to comply with its restrictions in accordance with this Section 2.6. In any written agreement of Licensee with a Third Party with respect to a Licensed Product to which Licensor is not a party, Licensee shall require that such Third Party agrees that Licensor shall be treated as an intended third party beneficiary for purposes of enforcing under such agreement the restrictions described in this Section 2.6.

     2.7 Licensee No-Challenge Covenant . In the event that Licensee or any of its Affiliates institutes or prosecutes itself or through a Third Patty (other than to defend any Patent licensed to Licensee under Section 2.1), or substantially supports a Third Party in instituting or prosecuting, before any administrative or regulatory body, including the U.S. Patent and Trademark Office or its foreign counterparts, any claim, demand, action or cause of action for declaratory relief, damages or any other remedy or for an enjoinment, injunction or any other equitable remedy, including any interference, re-examination, opposition or any similar proceeding, alleging that any claim in a Patent included in the Lateral Flow Patent Rights is invalid, unenforceable or otherwise not patentable (a “ Patent Challenge ”), Licensor shall have the right to terminate this License Agreement upon thirty (30) day prior written notice, if not cured within such 30-day period. For clarity, the term “substantially supports” as used in this Section 2.7 shall not include cooperation required to be provided pursuant to any order, subpoena or other response to any action undertaken by an administrative or regulatory body.

     2.8 Reservation of Rights . Licensor hereby reserves and retains all right, title and interest in and to the Patent Rights and all other rights not expressly granted hereunder and any and all remedies herein expressly conferred upon a Party will be deemed cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy available under this License Agreement or otherwise.

     2.9 Covenant not to Sue . Licensor hereby agrees that it will not (nor will Licensor grant any rights to a Third Party to) threaten, make a claim or undertake any action against Licensee, Licensee’s distributors or customers with respect to Licensee’s making, having made, using, selling, offering for sale or importing of Licensed Products in the Field and in the Professional Channel in accordance with this License Agreement during the term of this License Agreement. The obligations of Licensor under this Section 2.9 shall only apply with respect to any Valid Claims of Patents Controlled by Licensor as of the Effective Date solely to the extent that such Valid Claims claim or cover subject matter or a method that is necessary for Licensee to make, have made, use, sell, offer for sale or import Licensed Products in the Field and in the Professional Channel in accordance with the terms and conditions of this License Agreement. Notwithstanding anything to the contrary in this License Agreement, the foregoing shall have no force or effect with respect to any product manufactured, offered for sale, sold, transferred, or otherwise used, directly or indirectly, outside of the Field and/or outside of the Professional Channel.

3. License Fee and Royalties.

     3.1 License Fee . In partial consideration of the rights granted to Licensee under this

Licensee Agreement, Licensee shall pay to Licensor a license fee in the amount of Five Million Dollars ($5,000,000). Such license fee payment is due on the Effective Date and payable within two business days following the Effective Date. In addition, such license fee payment is nonrefundable and is not creditable against any other payments due to Licensor under this License Agreement.

     3.2 Earned Royalties .

     (a) In partial consideration of the rights granted to Licensee under this License Agreement, Licensee shall pay to Licensor a royalty of [*] of Net Sales of Licensed Products made by or on behalf of Licensee (“ Royalties ”). Royalties shall be paid on a Licensed Product by Licensed Product and country by country basis from the first commercial sale of each Licensed Product in a country until expiration of the last to expire of any issued Patent within the Patent Rights covering such Licensed Product or its manufacture or use in such country.

     (b) In the event that a Third Party that has a royalty-bearing license to or under any of the Patent Rights (a “ Licensed Company ”) (i) is acquired by Licensee or (ii) sells components to Licensee for integration by Licensee into a Licensed Product, the royalty that would otherwise be payable to Licensor with respect to Licensed Company’s or Licensee’s use of the Patent Rights in connection with the Licensed Products shall be included in (that is, not be in addition to) the [*] Royalties payable to Licensor by Licensee in connection with Net Sales of such Licensed Product.

     3.3 Royalties shall not be due on sales or transfers of any Licensed Product manufactured by Licensor on behalf of Licensee as contemplated under Section 5.

     3.4 Licensee may provide reasonable quantities of Licensed Products to Third Parties solely for promotional or demonstration purposes without charge, which Licensed Products shall not be deemed to be included in the calculation of Net Sales.

     3.5 Minimum Royalties .

     (a) For each completed calendar year during the term of this License Agreement, Licensee shall pay Licensor the following minimum royalty payments (“ Annual Minimum Royalty ”):

     (b) If the actual Royalties to Licensor in any calendar year are less than the Annual Minimum Royalty payment required for the specified year, Licensee may pay Licensor the difference between the actual Royalties during the applicable calendar year and the Annual Minimum Royalty payment in full satisfaction of its obligations under this Section 3.5 within sixty (60) days after the end of the applicable calendar year.

     (c) If in any calendar year Licensee fails to make the Annual Minimum Royalty payment and does not cure such failure within fifteen days (15) after written notice by Licensor, Licensor may, in its sole discretion, immediately upon written notice to Licensee, terminate this License Agreement or convert the exclusive license into a non-exclusive license, at which point there shall be no restrictions on Licensor’s ability to exploit or grant licenses under the Patent Rights, including Licensor’s right to grant additional licenses to Third Parties under the Patent Rights in the Field and in the Professional Channel. Waiver of any Annual Minimum Royalty payment by Licensor is not a waiver of any subsequent Annual Minimum Royalty payment.

     (d) Net Sales attributable to Licensed Products manufactured by Licensor on behalf of Licensee as contemplated under Section 5 shall be credited against the applicable Annual Minimum Royalty (as if earned Royalties had been paid on sales of such Licensed Products).

     3.6 Payments . Royalties shall be paid by Licensee within sixty (60) days after the end of each calendar quarter in which the applicable Net Sales are received by Licensee. Royalties payable to Licensor by Licensee shall be computed and paid in U.S. dollars by wire transfer. For purposes of determining the amount of Royalties due, the amount of Net Sales in any foreign currency shall be computed by converting such amount into U.S. dollars at a rate equal to the prevailing commercial rate of exchange for purchasing dollars with such foreign currency as published in the Wall Street Journal for the close of the last business day of the calendar quarter for which the relevant Royalty payment is to be made by Licensee. Payments shall be without deduction of exchange, collection, or other foreign currency translation charges. Any past due amounts under this License Agreement will be subject to an automatic late fee of 1 ¹ / 2 % per month or the highest rate allowed by law, whichever is less.

     3.7 Taxes . If a law or regulation of any country requires withholding of taxes of any type, levies or other similar charges with respect to any amounts payable hereunder, Licensee shall promptly pay such tax, levy or other charge to the appropriate government authority and furnish Licensor with documentation of such payment. Licensee shall be entitled to deduct such tax, levy or charge actually paid from the payment due to Licensor. Licensee agrees to assist Licensor in claiming exemption from such deduction or withholding.

     3.8 Reports . Licensee further shall deliver written reports to Licensor relating to the Net Sales of each Licensed Product on a calendar quarter basis, with each report setting forth (a) the quantity and dollar value of Licensed Products sold during the immediately prior calendar quarter by country in which such Licensed Product was sold, (b) the Net Sales of each Licensed Product by Licensee in each country and (c) a calculation of the amount of Royalty due. Such reports shall be provided to Licensor no later than sixty (60) days following the end of the corresponding calendar quarter.

4.  Records and Audit . Licensee shall keep complete and accurate records of sales by or on behalf of Licensee of each Licensed Product in sufficient detail to allow the accruing Royalties to be determined accurately for a period of not less than three (3) years. Licensor shall have the right to appoint at its expense an independent certified public accountant reasonably acceptable to Licensee to inspect the relevant records of Licensee to verify such report or statement, including historical payments for a period of up to three (3) years from the date of notice of inspection. Upon Licensee’s written request, Licensee shall permit such independent certified public accountant who has entered into a reasonably acceptable confidentiality agreement and, if necessary, Licensor’s technical personnel, to examine records, materials, and manufacturing

processes of Licensee, during regular business hours and no more frequently than one time per calendar year, at Licensee’s applicable facility, to verify the accuracy of the reports and payments by Licensee. Licensor agrees to hold in confidence and not use for any purpose all information concerning Royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for Licensor to reveal such information in order to enforce its rights under this License Agreement or if disclosure is required by law.

5. Manufacturing and Development .

     5.1 [*]

     5.2 [*]

          (a) [*]

          (b) [*]

6. Patent Marking . Licensee shall mark or cause to be marked all Lice