8-K

   1


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT


                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                         DATE OF REPORT: AUGUST 3, 2001




                               i-STAT CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



   DELAWARE                         0-19841                22-2542664
(STATE OR OTHER JURISDICTION OF   (COMMISSION           (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)    FILE NUMBER)          IDENTIFICATION NO.)



                104 WINDSOR CENTER DRIVE, EAST WINDSOR, NJ 08520
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (609) 443-9300
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

   2
Item 5. Other Events

i-STAT Corporation today announced that it has completed a $34.1 million private
placement of Common Stock and a new Zero Coupon Series C Preferred Stock with
several institutional investors. The purchase price for the shares (on an
as-converted basis) is in the range of $9.22 to $10.00 per share, with the final
purchase price to be based on a ten cent premium to the average trading price of
the Company's Common Stock during a five-day measurement period following the
closing of the transaction. Upon such determination, the gross proceeds raised
by the Company in the transaction may increase to $37.0 million. UBS Warburg LLC
served as lead placement agent and Dougherty & Company LLC served as
co-placement agent on the transaction.

The Company intends to use the net proceeds of the offering for general
corporate purposes, including the implementation of its marketing plans, new
product research and development programs, expansion of manufacturing capacity,
and for working capital. A portion of the net proceeds will also be used to
pre-pay the $3.5 million secured promissory note to Nova Biomedical Corporation.

The Company has agreed to register the resale of the shares issued in the
private placement with the Securities and Exchange Commission. Upon
effectiveness of the Registration Statement (and with certain exceptions), on
the 130th day following the closing, the Series C Preferred shares will
automatically convert into Common Stock, with the conversion ratio to be based
on a 12% discount to the trading price of the Common Stock during a 20-day
measurement period which concludes ten days prior to the conversion date. In
addition, for a period of five days prior to the conversion date, the Series C
Preferred shares are subject to being redeemed by either the Company or the
investors (for between $20.46 million and $22.20 million) if there is a drop in
the average trading price of i-STAT Common Stock, as measured during the
conversion period, below the purchase price at closing of the placement (an
"Adverse Trading Price"). Assuming conversion of the Series C Preferred shares,
the Company expects that up to 3.7 million shares of Common Stock may be issued
and sold in this transaction. However, the number of shares issuable will exceed
3.7 million if there is an Adverse Trading Price Change and if the Series C
Preferred shares are not redeemed. In such case, the number of additional shares
issuable will depend on the degree of the Adverse Trading Price Change. The
Company believes that it is unlikely that the number of additional shares
issuable as a result of an Adverse Trading Price Change will materially
increase; however, no such assurance can be given.

In connection with the private placement, the investors were issued 6-year
warrants to purchase up to an additional 1.295 million shares of i-STAT Common
Stock for a strike price equal to 110% of the final purchase price for the
shares of Common Stock being issued at the closing of the placement. The
warrants are subject to anti-dilution protection and are callable by the Company
under certain circumstances, in exchange for replacement warrants with a higher
strike price. The number of shares underlying the warrants will be reduced
ratably to the extent the Series C Preferred shares are redeemed (but not below
43% of the shares initially covered). Under certain circumstances, the investors
will have the right to participate in i-STAT financings which are concluded
within a year after the closing of the placement.

The foregoing summary does not contain all the material terms of the private
placement. For a more complete description of the terms of the private
placement, please see the copies of the transaction documents attached hereto as
exhibits to this Current Report on Form 8-K, which are incorporated by reference
into this report.

Certain statements in this Current Report on Form 8-K may relate to future
events and expectations and as such constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
words "believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements expressed or implied by
such forward-looking statements to vary significantly from reporting period to
reporting period. Such factors include, among others, competition from existing
manufacturers and marketers of blood analysis products who have greater
resources than the Company, economic conditions affecting the company's target
markets, the uncertainty of new product development initiatives, the ability to
attract and retain key scientific, technological and management personnel,
dependence upon limited sources for product manufacturing components, upon a
single manufacturing facility and upon innovative and highly technical
manufacturing techniques, market resistance to new products and point of care
blood diagnosis, inconsistency in customer order patterns, domestic and
international regulatory constraints, uncertainties of international trade,
pending and potential disputes concerning ownership of intellectual property,
availability of capital upon favorable terms and dependence upon and
contractual relationships with strategic partners, particularly Abbott
Laboratories. See additional discussion under "Factors That May Affect Future
Results" in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, and other factors detailed from time to time in the Company's
other filings with the Securities and Exchange Commission.
   3

Item 7. Exhibits.

(c) Exhibits



Item No.          Exhibit List
               
3.4               Certificate of Designation, Preferences and Rights of Series C
                  Convertible Preferred Stock.

10.57             Registration Rights Agreement, dated as of August 2, 2001,
                  between Registrant and the Purchasers named therein.

10.58             Form of Warrant, issued as of August 2, 2001, to purchase
                  shares of Common Stock of Registrant.

10.59             Securities Purchase Agreement, dated as of August 2, 2001,
                  between the Registrant and the Purchasers named therein.





                                    SIGNATURE

                  Pursuant to the requirements of the Securities Exchange Act of
1934, i-STAT Corporation has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

                                     i-STAT CORPORATION

                                     By: /s/ Roger J. Mason
                                       ------------------------------------
                                       Roger J. Mason
                                       Vice President of Finance,
                                       Treasurer and Chief Financial Officer


Date: August 3, 2001
   4


                                  Exhibit Index



Item No.          Exhibit List
               
3.4               Certificate of Designation, Preferences and Rights of Series C
                  Convertible Preferred Stock.

10.57             Registration Rights Agreement, dated as of August 2, 2001,
                  between Registrant and the Purchasers named therein.

10.58             Form of Warrant, issued as of August 2, 2001, to purchase
                  shares of Common Stock of Registrant.

10.59             Securities Purchase Agreement, dated as of August 2, 2001,
                  between the Registrant and the Purchasers named therein.

EX-3.4

   1
                                                                     Exhibit 3.4


                               i-STAT CORPORATION

                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES C CONVERTIBLE PREFERRED STOCK

         i-STAT Corporation (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Corporation's Board of
Directors (the "Board") by the Corporation's Restated Certificate of
Incorporation, as amended and including any Certificate of Designations filed
therewith (the "Certificate"), and pursuant to Section 151 of the General
Corporation Law of the State of Delaware, the Board at a meeting duly held on
August 1, 2001, adopted resolutions (i) authorizing a new series of the
Corporation's previously authorized preferred stock, $0.10 par value per share,
and (ii) providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of 25,000 shares of Series C Convertible Preferred Stock
of the Corporation, as follows:

         RESOLVED, that the Corporation is authorized to issue 25,000 shares of
Series C Convertible Preferred Stock, $0.01 par value per share (the "Series C
Preferred Stock"), which shall have the following powers, designations,
preferences and other special rights:

                  Section 1. Designation, Amount and Par Value. The series of
preferred stock shall be designated as the Company's Series C Convertible
Preferred Stock (the "Preferred Stock") and the number of shares so designated
shall be 25,000 (which shall not be subject to increase without the consent of
the holders of the Preferred Stock (each, a "Holder" and collectively, the
"Holders")). Each share of Preferred Stock shall have a par value of $.10 per
share and a stated value equal to the greater of (i) $1,000 and (ii) an amount
equal to 60% of the aggregate purchase price paid by the original Holders
pursuant to the Purchase Agreement divided by the total number of shares of
Preferred Stock issued to the original Holders pursuant to the Purchase
Agreement (the "Stated Value"). Capitalized terms used and not defined elsewhere
in this certificate of designation shall have the respective meanings ascribed
to them in Section 5. Upon any liquidation, dissolution or winding-up of the
Company, no Holder shall be entitled to any liquidation preference in connection
with its ownership of the shares of Preferred Stock.

                  Section 2. Voting Rights. Except as otherwise provided herein
and as otherwise required by law, the Preferred Stock shall have no voting
rights. However, so long as any shares of Preferred Stock are outstanding, the
Company shall not, without the affirmative vote of the Holders the shares of the
Preferred Stock then outstanding, (a) alter or change adversely the powers,
preferences or rights given to the Preferred Stock or alter or amend this
Certificate of Designations, (b) amend its certificate or articles of
incorporation or other charter documents so as to affect adversely any rights of
the Holders, (c) increase the authorized number of shares of Preferred Stock, or
(d) enter into any agreement with respect to the foregoing.
   2

                  Section 3. Conversion.

                  (a)(i) Conversion at the option of Holder. Subject to the
limitations set forth in Section 3(a)(iii), each share of Preferred Stock shall
be convertible into shares of Common Stock at the Conversion Ratio, at the
option of the Holder, at any time and from time to time from and after the 125th
day following the Original Issue Date (such 125th day, the "Initial Conversion
Date"), provided, that the Holder shall be entitled, upon receipt of the
Company's written consent, to convert shares of Preferred Stock commencing the
63rd day following the Original Issue Date, even if prior to the Initial
Conversion Date. Holders shall effect conversions by providing the Company with
the form of conversion notice attached hereto as Exhibit A (a "Conversion
Notice"). Each Conversion Notice shall specify the number of shares of Preferred
Stock to be converted, the number of shares of Preferred Stock owned prior to
the conversion at issue, number of shares of Preferred Stock owned subsequent to
the conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the Holder delivers such Conversion
Notice by facsimile (the "Holder Conversion Date"). The number of shares of
Preferred Stock shown as owned by the Holder prior to and giving effect to a
conversion shall control absent manifest or mathematical error. If no Holder
Conversion Date is specified in a Conversion Notice, the Holder Conversion Date
shall be the date that such Conversion Notice is deemed delivered hereunder. To
effect conversions of Preferred Stock, a Holder shall not be required to
surrender the certificate(s) representing such shares of Preferred Stock to the
Company unless all of the shares of Preferred Stock represented thereby are so
converted.

                  (ii) Automatic Conversion. Subject to the provisions of this
paragraph and Section 4(b)(i), all of the shares of Preferred Stock issued to
the Holder on the Original Issue Date less any shares of Preferred Stock for
which Conversion Notices have previously been received or for which redemption
has been made or required hereunder shall be automatically converted on the
130th day following the Original Issue Date (such 130th day, the "Automatic
Conversion Date"), at the Conversion Ratio. If, on the Automatic Conversion
Date: (a)(1) the Underlying Shares Registration Statement is not then effective;
(b) there are not sufficient shares of Common Stock authorized and reserved for
issuance upon such conversion; (c) the Common Stock is not being listed or
quoted for trading on the Nasdaq or on a Subsequent Market or (d) an automatic
conversion pursuant to this Section shall violate the provisions of Section
3(a)(iii), then the Holder shall be entitled to delay the automatic conversion
pursuant to this Section, in whole or in part, until each applicable event or
violation is cured. Each of a Holder Conversion Date and the Automatic
Conversion Date is collectively referred to herein as a "Conversion Date."

                  (iii) Certain Conversion Restrictions.

                  (A) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by a Holder upon any
conversion of shares of Preferred Stock (or otherwise in respect hereof) shall,
until the 217th day following the Original Issue Date, be limited to the extent
necessary to insure that, following such conversion (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its affiliates and any other persons whose beneficial ownership of Common
Stock would be aggregated with such Holder's for purposes of Section 13(d) of
the Exchange Act, does not


                                       2
   3
exceed 9.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of a Conversion Notice hereunder will
constitute a representation by a Holder that it has evaluated the limitation set
forth in this paragraph and determined that issuance of the full number of
Underlying Shares requested in such Conversion Notice is permitted under this
paragraph. The Company will have no obligation to issue shares of Common Stock
in excess of the limitation referred to in this Section until such time, if any,
as such shares of Common Stock may be issued in compliance with such limitation.
By written notice to the Company, a Holder may waive the provisions of this
Section, but (i) any such waiver or increase will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such waiver
will apply only to such Holder and not to any other Holder.

                  (B) The Company may not issue in excess of 3,713,195 shares of
Common Stock (which equals 19.999% of the number of shares of Common Stock
outstanding on the Trading Day immediately preceding the Original Issue Date)
(subject to equitable adjustment for stock splits, recombinations and similar
events affecting the Common Stock) upon conversions of Preferred Stock at a
price per share that is less than the closing sales price of the Common Stock on
the Trading Day immediately preceding the Original Issue Date (such number of
shares, the "Issuable Maximum"). Each Holder shall be entitled to a portion of
the Issuable Maximum equal to the quotient obtained by dividing: (x) the number
of shares of Preferred Stock issued and sold to such Holder on the Original
Issue Date by (y) the total number of shares of Preferred Stock issued and sold
by the Company on the Original Issue Date. If any Holder shall no longer hold
shares of Preferred Stock, then such Holder's remaining portion of the Issuable
Maximum shall be allocated pro-rata among the remaining Holders.

                  (b)(i) Not later than three Trading Days after each Conversion
Date, the Company will deliver to the Holder a certificate or certificates which
shall be free of restrictive legends and trading restrictions (other than those
required by Section 4.1(b) of the Purchase Agreement) representing the number of
shares of Common Stock being acquired upon the conversion of shares of Preferred
Stock. The Company shall, upon request of the Holder, if available, use its best
efforts to deliver any certificate or certificates required to be delivered by
the Company under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions. If in the case of any Conversion Notice such certificate or
certificates are not delivered to or as directed by the applicable Holder by the
fourth Trading Day after the Conversion Date, the Holder shall be entitled to
elect by written notice to the Company at any time on or before its receipt of
such certificate or certificates thereafter, to rescind such conversion, in
which event the Company shall immediately return the certificates representing
the shares of Preferred Stock tendered for conversion.

                  (ii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or certificates
pursuant to Section 3(b)(i), by the fourth Trading Day after the Conversion
Date, and if after such fourth Trading Day the Holder purchases (in an open
market transaction or otherwise) Common Stock to deliver in satisfaction of a
sale by such Holder of the Underlying Shares which the Holder was entitled to
receive upon such conversion (a "Buy-In"), then the Company shall (A) pay in
cash to the Holder the amount

                                       3
   4
by which (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was entitled to
receive from the conversion at issue multiplied by (2) the market price of the
Common Stock at the time of the sale giving rise to such purchase obligation and
(B) at the option of the Holder, either return the shares of Preferred Stock for
which such conversion was not honored or deliver to such Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its conversion and delivery obligations under Section 3(b)(i). For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the market price of the Underlying Shares
on the date of conversion totaled $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In. Nothing herein shall limit a Holder's
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon conversion of the shares
of Preferred Stock as required pursuant to the terms hereof.

               (c)(i) The conversion price for each share of Preferred Stock
in effect on any Conversion Date (the "Conversion Price") shall equal $18.45
(subject to equitable adjustment for stock splits, recombinations and similar
events), provided, that on and after the 120th day following the Original Issue
Date (such 120th day, the "Reset Date"), the Conversion Price shall be reset to
88% of the average of the 20 VWAP's during the 20 Trading Days immediately
preceding the Reset Date (subject to equitable adjustment for stock splits,
recombinations and similar events).

                  (ii) If the Company, at any time while shares of Preferred
Stock are outstanding, shall distribute to all holders of Common Stock (and not
to Holders) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security, then in each such case the Conversion
Price at which each share of Preferred Stock shall thereafter be convertible
shall be determined by multiplying the Conversion Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be the
Per Share Market Value determined as of the record date mentioned above, and of
which the numerator shall be such Per Share Market Value on such record date
less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Board of Directors in good faith. If
the Holder shall dispute the findings of the Company's Board of Directors, then
such fair market value shall be determined by the Company's independent
certified public accountants that regularly examine the financial statements of
the Company. In either case the adjustments shall be described in a statement
provided to the Holders of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

                                       4
   5

                  (iii) All calculations under this Section 3 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.

                  (iv) Whenever the Conversion Price is adjusted pursuant to the
terms hereof the Company shall promptly mail to each Holder, a notice setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

                  (v) In case of any reclassification of the Common Stock, or
any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, the Holders shall have the right
thereafter to convert such shares only into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holders
shall be entitled upon such event to receive such amount of securities, cash or
property as a holder of the number of shares of Common Stock of the Company into
which such shares of Preferred Stock could have been converted immediately prior
to such reclassification or share exchange would have been entitled. This
provision shall similarly apply to successive reclassifications or share
exchanges.

                  (vi) Subject to Section 4, in case of any merger or
consolidation of the Company with or into another Person, or sale by the Company
of more than one-half of the assets of the Company (on an as valued basis) in
one or a series of related transactions, a Holder shall have the right
thereafter to convert its shares of Preferred Stock into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and such
Holder shall be entitled upon such event or series of related events to receive
such amount of securities, cash and property as the shares of Common Stock into
which such shares of Preferred Stock could have been converted immediately prior
to such merger, consolidation or sales would have been entitled. The terms of
any such merger, sale or consolidation shall include such terms so as continue
to give the Holders the right to receive the securities, cash and property set
forth in this Section upon any conversion or redemption following such event.
This provision shall similarly apply to successive such events.

                  (vii) If (a) the Company shall declare a dividend (or any
other distribution) on the Common Stock, (b) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock, (c) the
Company shall authorize the granting to all holders of Common Stock, rights or
warrants to subscribe for or purchase any shares of capital stock of any class
or of any rights, (d) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, or any compulsory share
of exchange whereby the Common Stock is converted into other securities, cash or
property, or (e) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then the
Company shall notify the Holders at their last addresses as they shall appear

                                       5
   6
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange. Holders are entitled to convert shares of
Preferred Stock during the 20-day period commencing the date of such notice to
the effective date of the event triggering such notice.

                  (d) The Company covenants that it will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of Preferred Stock, each as
herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holders, not less than such number of
shares of Common Stock as shall be issuable upon the conversion of all
outstanding shares of Preferred Stock. The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized and issued and fully paid and nonassessable.

                  (e) Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in respect of any
final fraction of a share based on the Per Share Market Value at such time. If
any fraction of an Underlying Share would, except for the provisions of this
Section, be issuable upon a conversion hereunder, the Company shall pay an
amount in cash equal to the Conversion Ratio multiplied by such fraction.

                  (f) The issuance of certificates for Common Stock on
conversion of Preferred Stock shall be made without charge to the Holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such shares of Preferred
Stock so converted.

                  (g) Any and all notices or other communications or deliveries
to be provided by the Holders of the Preferred Stock hereunder, including,
without limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to the attention of the Chief Financial Officer of the
Company addressed to104 Windsor Center Drive, East Windsor, NJ 08520, Facsimile
No.: (609) 243-9311, attention Chief Financial Officer, or to such other address
or facsimile number as shall be specified in writing by the Company for such
purpose. Any and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered personally,
by facsimile or sent by a nationally recognized overnight courier service,
addressed to each Holder at the facsimile telephone number or address of such
Holder appearing on the books of the Company, or if no such facsimile telephone
number or address appears, at the principal place of business of the Holder. Any
notice or other communication or deliveries

                                       6
   7
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time)(with confirmation of transmission), (ii) the date after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section later than 5:30 p.m.
(New York City time) (with confirmation of transmission) on any date and earlier
than 11:59 p.m. (New York City time) on such date (with confirmation of
transmission), (iii) upon receipt, if sent by a nationally recognized overnight
courier service (next day service specified), or (iv) upon actual receipt by the
party to whom such notice is required to be given.

                  Section 4. Redemption. During the period between the Reset
Date and the 5th day following the Reset Date, if the Conversion Price
(subsequent to the reset pursuant to Section 3(c)(i)) shall be less than the
average of the 5 VWAP's during a period which includes the Original Issue Date
and the 4 Trading Days immediately following the Original Issue Date, provided,
that such number shall not be greater than $10.00 nor less than the greater of
(A) $9.00 and (B) the greater of (i) average of the Per Share Market Values for
the five Trading Days preceding the Original Issue Date and (ii) the Per Share
Market Value for the Trading Day immediately preceding the Original Issue Date.
(subject to equitable adjustment for stock splits, recombinations and similar
events, the "Target Price"), the Holder shall have a one-time right to require
the Company to redeem all or a portion of the shares of Preferred Stock then
held by such Holder and the Company shall have a one-time right to redeem all or
a portion of the shares of Preferred Stock then held by such Holder, in each
case, for a redemption price equal to the aggregate Stated Value for such shares
of Preferred Stock being redeemed (such price, the "Redemption Price"). In
addition, if the Underlying Shares Registration Statement is not declared
effective by the Commission on or before the Reset Date, the Holder may require
the Company to redeem all or a portion of the shares of Preferred Stock then
held by such Holder for the Redemption Price. The redemption obligations of the
Company pursuant to this Section shall be secured by those certain standby
letters of credit, dated as of the Original Issue Date, as amended, and such
additional standby letters of credit, as the case may be, which may be issued in
accordance with Section 2.3 of the Purchase Agreement (collectively, the "Letter
of Credit"), issued by PNC Bank, National Association ("PNC"). In connection
with any request for redemption of shares of Preferred Stock by a Holder, such
Holder shall simultaneously deliver to PNC a redemption notice to the Company
and a draw certificate in the form provided for in the Letter of Credit (the
"Draw Certificate"), with a copy of each such item to the Company. In connection
with any request for redemption of shares of Preferred Stock by the Company, the
Company shall deliver a redemption notice to the Holder and, unless the Holder
elects to convert such shares of Preferred Stock pursuant to the last sentence
of this Section, the Holder shall thereafter deliver to PNC a redemption notice
and the Draw Certificate. Assuming due compliance by the Holder with the
completion and delivery of the Draw Certificate pursuant to the terms of the
Letter of Credit, the Redemption Price shall be due and payable in cash by PNC
on the second (2nd) Trading Day following the date on which the redemption
notice and Draw Certificate is delivered by the Holder to PNC (such second (2nd)
Trading Day, the "Payment Date"). Assuming due compliance by the Holder with the
completion and delivery of the Draw Certificate pursuant to the terms of the
Letter of Credit, if PNC fails to pay the Redemption Price hereunder in full
pursuant to this Section on the Payment Date, then, the Holder may require the
Company to immediately pay the Redemption Price, provided, that the Holder may:
(i) require the Company to pay interest on all or any portion of the unpaid
Redemption Price at a rate of

                                       7
   8
18% per annum (or the lesser amount permitted by applicable law), accruing daily
from the Payment Date until the Redemption Price, plus all such interest
thereon, is paid in full or (ii) deem such redemption null and void with respect
to all or any portion of the shares of Preferred Stock for which the Redemption
Price has not been paid in full and convert such shares of Preferred Stock
pursuant to Section 3(a)(ii) hereof. Unless the Holder deems such redemption
null and void, the Holder shall be deemed a creditor and not subject to any
conversion provisions hereof. Notwithstanding anything herein to the contrary,
if the Company elects to redeem shares of Preferred Stock pursuant to the terms
hereof, then the Holder shall be entitled to convert all or a portion of the
shares of Preferred Stock subject to the Company's redemption notice by delivery
of a notice to the Company no later than one (1) Trading Day following the
Holder's receipt of the Company's redemption notice, provided, that the
Conversion Price for any such conversion shall equal the Target Price.

                  Section 5. Definitions. For the purposes hereof, the following
terms shall have the following meanings:

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the Company's common stock, par value
$0.15 per share, and stock of any other class into which such shares may
hereafter have been reclassified or changed.

                  "Conversion Ratio" means, at any time, a fraction, the
numerator of which is Stated Value and the denominator of which is the
Conversion Price at such time.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Nasdaq" means the Nasdaq National Market

                  "Original Issue Date" shall mean the Closing Date (as defined
in the Purchase Agreement).

                  "Per Share Market Value" means, for any date, the price
determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on the Nasdaq or a Subsequent Market, the closing
bid price per share of the Common Stock for such date (or the nearest preceding
date) on the Nasdaq or such Subsequent Market on which the Common Stock is then
listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the closing bid price per share of the Common Stock for such
date (or the nearest preceding date) so quoted; (c) if prices for the Common
Stock are then reported in the "Pink Sheets" published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by a majority-in-interest of the Holders.

                  "Person" means a corporation, an association, a partnership,
an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.

                                       8
   9

                  "Purchase Agreement" means the Securities Purchase Agreement,
dated as of August 2, 2001, to which the Company and the original Holders are
parties, as amended, modified or supplemented from time to time in accordance
with its terms.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 2, 2001, to which the Company and the original
Holders are parties, as amended, modified or supplemented from time to time in
accordance with its terms.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Subsequent Market" means either the New York Stock Exchange,
American Stock Exchange or Nasdaq SmallCap Market.

                  "Trading Day" means (a) a day on which the shares of Common
Stock are traded on the Nasdaq or on such Subsequent Market on which the shares
of Common Stock are then listed or quoted, or (b) if the shares of Common Stock
are not listed on the Nasdaq or a Subsequent Market, a day on which the shares
of Common Stock are traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (c) if the shares of Common Stock are not quoted on the
OTC Bulletin Board, a day on which the shares of Common Stock are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the shares of Common Stock
are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading
Day shall mean any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other government action to close.

                  "Transaction Documents" shall have the meaning set forth in
the Purchase Agreement.

                  "Underlying Shares" means, collectively, the shares of Common
Stock into which the shares of Preferred Stock are convertible in accordance
with the terms hereof.

                  "Underlying Shares Registration Statement" means a
registration statement that meets the requirements of the Registration Rights
Agreement and registers the resale of all Registrable Securities (as defined in
the Registration Rights Agreement) by the Holder, who shall be named as a
"selling stockholder" thereunder.

                  "VWAP" means the daily volume weighted average price (as
reported by Bloomberg Financial L.P. using the "VAP" function for the date in
question (it being understood that the average of the VWAP's for a certain
number of Trading Days shall be obtained by using the "HP" function)) of the
Common Stock on the date in question, or if there is no such price on such date,
then the daily volume weighted average price on the date nearest preceding such
date.


                                       9
   10


                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder
in order to convert shares of Preferred Stock)

The undersigned hereby elects to convert the number of shares of Series C
Convertible Preferred Stock indicated below, into shares of common stock, par
value $0.15 per share (the "Common Stock"), of i-STAT Corporation, a Delaware
corporation (the "Company"), according to the conditions hereof, as of the date
written below. If shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
Holder for any conversion, except for such transfer taxes, if any.



                                         
Conversion calculations:
                                            Date to Effect Conversion


                                            Number of shares of Preferred Stock to be Converted


                                            Stated Value of shares of Preferred Stock to be Converted


                                            Number of shares of Preferred Stock remaining after Conversion

                                            Number of shares of Common Stock to be Issued

                                            Applicable Conversion Price
                                            Signature

                                            Name
                                            Address


[ ] By the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 3(a)(iii)(A) of the certificate of designation governing
the rights and privileges of the Preferred Stock.


                  [Remainder of page intentionally left blank]


                                       10
   11



         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed as of the 1st day of August, 2001.


                             i-STAT Corporation

                             By: /s/ Roger J. Mason
                                ------------------------------------------------
                                Name: Roger J. Mason
                                Title: Vice President
                                Chief Financial Officer

EX-10.57

   1
                                                                   Exhibit 10.57

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of August 2, 2001, among i-STAT Corporation, a Delaware
corporation (the "Company"), and the investors signatory hereto (each such
investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").

                  This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

         1.       Definitions

                  Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

                  "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York or the State of New Jersey generally are authorized or
required by law or other government actions to close.

                  "Closing Date" shall have the meaning set forth in the
Purchase Agreement.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Shares" shall have the meaning set forth in the
Purchase Agreement.

                  "Common Stock" means the Company's common stock, par value
$0.15 per share, or such securities that such stock shall hereafter be
reclassified into.

                  "Effectiveness Date" means, with respect to the initial
Registration Statement required to be filed hereunder, the 90th day following
the date of this Agreement and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 90th day
following the date that such additional Registration Statement is required to be
filed pursuant to Section 3(c).

                  "Effectiveness Period" shall have the meaning set forth in
Section 2(a).

   2

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Filing Date" means the 30th day following the date of this
Agreement and, with respect to any additional Registration Statements which may
be required pursuant to Section 3(c), the 30th day following the date that such
additional Registration Statement is required to be filed pursuant to Section
3(c).

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Preferred Stock" means the Company's Series C Convertible
Preferred Stock issued to the Purchasers in accordance with the Purchase
Agreement.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "Registrable Securities" means the Common Shares and the
shares of Common Stock issuable upon conversion in full of the Preferred Stock
and exercise in full of the Warrants.

                  "Registration Statement" means the registration statement and
any additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

                                      -2-
   3
                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Special Counsel" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

                  "Warrants" shall have the meaning set forth in the Purchase
Agreement.

             2.    Shelf Registration

                  (a) On or prior to each Filing Date, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering the
resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith as the Holders may consent) and
shall contain (except if otherwise directed by the Holders) the "Plan of
Distribution" attached hereto as Annex A, and cause the Registration Statement
to become effective and remain effective as provided herein. The Company shall
use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and shall use its
best efforts to keep such Registration Statement continuously effective under
the Securities Act until the date which is two years after the date that such
Registration Statement is declared effective by the Commission or such earlier
date when all Registrable Securities covered by such Registration Statement have
been sold or may be sold without volume restrictions pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company's transfer agent and the
affected Holders (the "Effectiveness Period"), provided, that the Company shall
not be deemed to have used its best efforts to keep the Registration Statement
effective during the Effectiveness Period if it voluntarily takes any action
that would result in the Holders not being able to sell the Registrable
Securities covered by such Registration Statement during the Effectiveness
Period, unless such action is required under applicable law or the Company has
filed a post-effective amendment to the Registration Statement and the
Commission has not declared it effective.

                                      -3-
   4
                  (b) The initial Registration Statement required to be filed
hereunder shall include a number of shares of Common Stock equal to no less than
6,475,000.

                  (c) If: (a) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not subject to further review,
or (b) after a Registration Statement is filed with and declared effective by
the Commission, such Registration Statement ceases to be effective as to all
Registrable Securities at any time prior to the expiration of the Effectiveness
Period without being succeeded within fifteen Trading Days by an amendment to
such Registration Statement or by a subsequent Registration Statement filed with
and declared effective by the Commission (any such failure or breach being
referred to as an "Event," and for purposes of clause (a) the date on which such
five Trading Day period is exceeded or for purposes of clause (b) the date which
such fifteen Trading Day-period is exceeded, being referred to as "Event Date"),
then, on each such Event Date and on each monthly anniversary thereof until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages for the estimated cost to the Holders of not having
liquid securities in the time contemplated by the Transaction Documents (as
defined in the Purchase Agreement) and not as penalty, equal to 2% of the
purchase price paid by such Holder pursuant to the Purchase Agreement. If the
Company fails to pay any liquidated damages pursuant to this Section in full
within seven (7) days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the
date such liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The liquidated damages pursuant to the terms hereof
shall apply on a pro-rata basis for any portion of a month prior to the cure of
an Event.

         3.       Registration Procedures

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a) Not less than three Business Days prior to the filing of
the Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall, (i) furnish to the
Holders and their Special Counsel copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders and
their Special Counsel, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities and their Special Counsel shall reasonably object.

                                      -4-
   5

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten days, to
any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and as promptly as reasonably possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

                  (c) File additional Registration Statements if the number of
Registrable Securities at any time exceeds 85% of the number of shares of Common
Stock then registered in a Registration Statement. Notwithstanding anything
herein to the contrary, if the Company shall issue Additional Warrants (as
defined in the Warrants issued to the Purchasers on the Closing Date) to the
Purchasers pursuant to Section 5(f) of the Warrants issued to the Purchasers on
the Closing Date, then the shares of Common Stock issuable upon exercise of such
Additional Warrants shall, for all purposes of this Agreement, be considered
"Registrable Securities" and the Company shall file a new Registration Statement
in order to register such shares of Common Stock pursuant to the terms hereof.

                  (d) Notify the Holders of Registrable Securities to be sold
and their Special Counsel as promptly as reasonably possible (and, in the case
of (i)(A) below, not less than five Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time the Company becomes aware that any of the
representations and warranties of the Company contained in any Transaction
Document (as defined in the Purchase Agreement) ceases to be true and correct in
all material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification

                                      -5-
   6
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                  (e) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

                  (f) Furnish to each Holder and their Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

                  (g) Promptly deliver to each Holder and their Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

                  (h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or subject the
Company to any material tax in any such jurisdiction where it is not then so
subject.

                  (i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the

                                      -6-
   7
Purchase Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holders may request.

                  (j) Upon the occurrence of any event contemplated by Section
3(d)(vi), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  (k) Comply with all applicable rules and regulations of the
Commission.

                  4. Registration Expenses. All fees and expenses incident to
the performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not any Registrable Securities are sold pursuant
to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the Nasdaq, and (B) in compliance with
applicable state securities or Blue Sky laws (including, without limitation,
fees and disbursements of counsel for the Holders in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and, in case of Special Counsel for the Holders, up to $7,500 (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder.

             5.   Indemnification

                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder


                                      -7-
   8
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder for use therein, or to the extent that such information
relates to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and approved in writing by such Holder
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(e).
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement. Such indemnification shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Holder or its officers, directors, agents and controlling Person of such
Holder and shall survive the transfer of the Registrable Securities.

                  (b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (1) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type


                                      -8-
   9
specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(e). In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. Such indemnification shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or such director, officer or controlling Person and shall
survive the transfer of the Registrable Securities.

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the Indemnifying
Party

                                      -9-
   10
(regardless of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnifying Party
may require such Indemnified Party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).

                  (d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

                  The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

         6.       Miscellaneous

                  (a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for

                                      -10-
   11
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

                  (b)      [Intentionally deleted]

                  (c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statement
other than the Registrable Securities, and the Company shall not after the date
hereof and without the consent of the Holders, enter into any agreement
providing any such right to any of its security holders.

                  (d) Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (e) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(j),
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions of
this paragraph.

                  (f) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered.

                  (g) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders and that

                                      -11-
   12
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.

                  (h) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) (with confirmation of transmission) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) (with confirmation of
transmission) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service (next day service specified), or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as follows:

         If to the Company:                      i-STAT Corporation
                                                 104 Windsor Center Drive
                                                 East Windsor, NJ 08520
                                                 Facsimile No.: (609) 243-9311
                                                 Attn: Chief Financial Officer

         With a copy to:                         Paul, Hastings, Janofsky &
                                                 Walker LLP 1055 Washington
                                                 Boulevard Stamford, CT 06901
                                                 Facsimile No.: (203) 359-3031
                                                 Attn: Esteban A. Ferrer, Esq.

         If to a Purchaser:                      To the address set forth under
                                                 such Purchaser's name on the
                                                 signature pages hereto.

         If to any other Person who is then the registered Holder:

                                                 To the address of such Holder
                                                 as it appears in the stock
                                                 transfer books of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                  (i) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

                                      -12-
   13

                  (j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (k) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of this
Agreement), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

                  (l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (m) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that

                                      -13-
   14
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

                  (n) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (o) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                  (p) Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES TO FOLLOW]



                                      -14-
   15



                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                        i-STAT CORPORATION



                                        By:_____________________________________
                                        Name:
                                        Title:




                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                    SIGNATURE PAGES OF PURCHASERS TO FOLLOW]


   16



                                    PINE RIDGE FINANCIAL INC.

                                    By:_____________________________________
                                    Name:
                                    Title:


                                    Address for Notice:
                                    Pine Ridge Financial Inc.
                                    Cavallo Capital Corp.
                                    660 Madison Avenue
                                    New York, NY 10022
                                    Facsimile No.:  212-651-9010
                                    Attn: Avi Vigder and Eldad Gal

With copies to:

                                    Robinson Silverman Pearce
                                    Aronsohn & Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630 and
                                    (212) 541-1432
                                    Attn: Eric L. Cohen, Esq.


   17



                                    MONTROSE INVESTMENTS LTD.

                                    By:_____________________________________
                                    Name:
                                    Title:


                                    Address for Notice:
                                    Montrose Investments Ltd.
                                    c/o HBK Investments L.P.
                                    300 Crescent Court, Suite 700
                                    Dallas, TX 75201
                                    Facsimile No.:  214-758-1207
                                    Attn: Jeff Estes and Kim Rozman

With copies to:                     Robinson Silverman Pearce
                                    Aronsohn  & Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630 and
                                    (212) 541-1432
                                    Attn: Eric L. Cohen, Esq.


   18



                                    DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.

                                    By:_____________________________________
                                    Name:
                                    Title:


                                    Address for Notice:
                                    c/o Deephaven Capital Management LLC
                                    130 Cheshire Lane
                                    Minnentonka, MN 55305
                                    Facsimile No.: 952-249-5320
                                    Attn: Bruce Lieberman

 With copies to:                    Robinson Silverman Pearce
                                    Aronsohn & Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630 and
                                    (212) 541-1432
                                    Attn: Eric L. Cohen, Esq.
   19



                                    KESSLER FAMILY LIMITED PARTNERSHIP

                                    By:_____________________________________
                                    Name:
                                    Title:


                                    Address for Notice:
                                    c/o Deephaven Capital Management LLC
                                    130 Cheshire Lane
                                    Minnentonka, MN 55305
                                    Facsimile No.: 952-249-5320
                                    Attn: Bruce Lieberman

With copies to:                     Robinson Silverman Pearce
                                    Aronsohn & Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630 and
                                    (212) 541-1432
                                    Attn: Eric L. Cohen, Esq.


   20



                                    IRVIN KESSLER

                                    ____________________________________________



                                    Address for Notice:
                                    c/o Deephaven Capital Management LLC
                                    130 Cheshire Lane
                                    Minnentonka, MN 55305
                                    Facsimile No.: 952-249-5320
                                    Attn: Bruce Lieberman

With copies to:                     Robinson Silverman Pearce
                                    Aronsohn & Berman LLP
                                    1290 Avenue of the Americas
                                    New York, NY  10104
                                    Facsimile No.:  (212) 541-4630 and
                                    (212) 541-1432
                                    Attn: Eric L. Cohen, Esq.


   21



                                    HARE & CO. F/B/O JOHN HANCOCK SMALL CAP
                                    VALUE FUND

                                    By:_____________________________________
                                    Name:
                                    Title:


                                    Address for Notice (both required):
                                    Hare & Co. f/b/o John Hancock Small
                                    Cap Value Fund
                                    c/o Bank of New York Securities Department
                                    P.O. Box 11,203
                                    New York, NY 10249
                                    Facsimile No.: 617-330-6583

                                    Hare & Co. f/b/o John Hancock Small
                                    Cap Value Fund
                                    c/o John Hancock Advisers, Inc.
                                    Attn: Investment Operations, 4th Floor
                                    Private Placement Corporate Actions
                                    101 Huntington Avenue
                                    Boston, Ma 02199-7603
                                    Facsimile No.: 617-375-4808



   22



                                     Annex A


                              PLAN OF DISTRIBUTION

         The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:

- -        ordinary brokerage transactions and transactions in which the
         broker-dealer solicits purchasers;

- -        block trades in which the broker-dealer will attempt to sell the shares
         as agent but may position and resell a portion of the block as
         principal to facilitate the transaction;

- -        purchases by a broker-dealer as principal and resale by the
         broker-dealer for its account;

- -        an exchange distribution in accordance with the rules of the applicable
         exchange;

- -        privately negotiated transactions;

- -        short sales;

- -        broker-dealers may agree with the Selling Stockholders to sell a
         specified number of such shares at a stipulated price per share;

- -        a combination of any such methods of sale; and

- -        any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

   23

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

         The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of one counsel to
the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

EX-10.58

   1
                                                                   Exhibit 10.58


THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

                               i-STAT CORPORATION

                                     WARRANT

Warrant No. [ ]                                Originally Issued: August 2, 2001

         i-STAT Corporation, a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, [ ] or its, registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of [ ] shares
of common stock, par value $0.15 per share (the "COMMON STOCK"), of the Company
(each such share, a "WARRANT SHARE" and all such shares, the "WARRANT SHARES"),
at any time and from time to time from and after the date hereof and through and
including August 2, 2007 (the "EXPIRATION DATE"), at an exercise price equal to
$10.139 per share (the "INITIAL EXERCISE PRICE"); provided that the Initial
Exercise Price shall be increased, on the sixth Trading Day after the original
issue date of this Warrant ("ORIGINAL ISSUE DATE"), if 110% of the average of
the 5 VWAPs (as defined in the Securities Purchase Agreement among the Company
and the signatories thereto dated as of the Original Issue Date (the "PURCHASE
AGREEMENT")) during the 5 Trading Day period beginning on the Original Issue
Date (the "ADJUSTMENT AMOUNT"), is greater than the Exercise Price, to an amount
equal to the lesser of (i) the Adjustment Amount and (ii) $11.00 (as such
Initial Exercise Price has been adjusted, and as it may be further adjusted from
time to time as provided in Section 9, the "EXERCISE PRICE"), subject to the
following terms and conditions.

         1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein that are
defined in the Purchase Agreement have the meanings given to such terms in the
Purchase.

         2. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

         3. Registration of Transfers. The Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at its address specified herein. Upon
any such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "NEW WARRANT"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee
   2
thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Warrant.

         4. Exercise and Duration of Warrants. This Warrant shall be exercisable
by the registered Holder at any time and from time to time on or after February
3, 2002 to and including the Expiration Date. At 5:30 P.M., New York City time
on the Expiration Date, the portion of this Warrant not exercised prior thereto
shall be and become void and of no value, provided, that, if the closing sales
price of the Common Stock on the Expiration Date is greater than 102% of the
Exercise Price on the Expiration Date, then this Warrant shall be deemed to have
been exercised in full (to the extent not previously exercised) on a "cashless
exercise" basis at 6:30 P.M. New York City time on the Expiration Date.

         5. Delivery of Warrant Shares.

                  (a) Upon delivery of the Form of Election to Purchase to the
Company (with the attached Warrant Shares Exercise Log) at its address for
notice set forth in Section 13 and upon payment of the Exercise Price multiplied
by the number of Warrant Shares that the Holder intends to purchase hereunder,
the Company shall promptly (but in no event later than three Business Days after
the Date of Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise with the legend
required pursuant to the terms of the Purchase Agreement, if any. Any person so
designated by the Holder to receive Warrant Shares shall be deemed to have
become holder of record of such Warrant Shares as of the Date of Exercise of
this Warrant. The Company shall, upon request of the Holder, if available, use
its best efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions, provided, that, the Company may, but will not be
required to change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the Depository Trust Corporation.

                   A "Date of Exercise" means the date on which the Holders
shall have delivered to the Company (i) the Form of Election to Purchase
attached hereto (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) payment of the Exercise Price for the number
of Warrant Shares so indicated by the holder hereof to be purchased.

                  (b) If the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to Section
5(a) by the fourth Trading Day after the Date of Exercise, then the Holder will
have the right to rescind such exercise.

                  (c) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder a certificate or certificates
representing the Warrant Shares pursuant to Section 5(a) by the fourth Trading
Day after the Date of Exercise, and if after such fourth Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company
shall pay (1) in cash to the Holder the amount by which (x) the Holder's total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver pursuant to
Section 5(b) to deliver to the Holder in connection with the exercise at issue
by (B) the closing bid price of the Common Stock at the time of the obligation
giving rise to such purchase obligation and (2) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant
Shares for which such exercise was not

                                      -2-
   3
honored or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and delivery
obligations under Section 5(b). For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with a market price on the date
of exercise totaled $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In.

                  (d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. If the Company breaches its obligations under this Warrant,
then, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all costs of collection and enforcement (including reasonable attorneys fees
and expenses).

                  (e) If, by the 130th day following the date of the issuance of
this Warrant (such 130th day, the "Target Date"), the Company shall have
redeemed any shares of its Series C Convertible Preferred Stock (the "Preferred
Stock") held by the original Holder pursuant to Section 4 of the certificate of
designation governing the rights and preferences of the Preferred Stock, then,
on the Target Date, up to 42.857% of the aggregate Warrant Shares subject to
this Warrant shall be automatically cancelled by the Company. The number of
Warrant Shares subject to automatic cancellation pursuant to the terms of this
Section 5(e) shall be calculated in accordance with the following formula:

         [(APP/PP) x 25%] - [([APP-SV]/PP) x 25%] = RWS

         where:

         WS  =    Warrant Shares which may be acquired under this Warrant as
                  of the date of issuance.

         APP =    60% of aggregate purchase price paid by the original Holder
                  pursuant to the Purchase Agreement.

         SV =     Stated Value (as defined in the certificate of designation
                  filed pursuant to the Purchase Agreement) of the shares of
                  Preferred Stock redeemed from the Holder pursuant to Section 4
                  of such certificate of designation, if any.

         PP  =    $9.218; provided, that this amount shall be increased to an
                  amount equal to the lesser of (i) $10.00 and (ii) $.10 plus
                  the average of the 5 VWAPs during the five Trading Day period
                  beginning on the date hereof, if such amount is greater
                  (subject to equitable adjustment for stock splits,
                  recombinations and similar events).

         RWS =    Number of Warrant Shares subject to cancellation pursuant to
                  this Section 3(c).

                                      -3-
   4
                  Notwithstanding anything herein to the contrary, prior to the
Target Date, the Holder will not transfer or exercise this Warrant with respect
to Warrant Shares representing 42.857% of the Warrant Shares.

                  (f) Commencing at any time after the six month anniversary of
the date of the issuance of this Warrant, if: (i) the closing price of the
Common Stock for each of 10 consecutive Trading Days is greater than $16.50
(subject to equitable adjustment for stock splits, recombinations and similar
events) (a "Trigger Period") and (ii) the Warrant Shares are either registered
for resale pursuant to an effective registration statement naming the Holder as
a selling stockholder thereunder and the Common Stock is listed for trading
during the Trading Period and the five Trading Days immediately following the
conclusion of the Trigger Period, then the Company shall have the right, upon 20
days' notice to the Holder given not later than five (5) business days after the
conclusion of any such Trigger Period (the "Redemption Notice"), to redeem all
of the Warrant Shares then unexercised (the "Redeemable Shares") at a price of
$.01 per (the "Redemption Price"), on the date set forth in the Redemption
Notice, but in no event earlier than 20 Trading Days following the date of the
receipt by the Holder of the Redemption Notice (the "Redemption Date"). The
Holder may exercise this Warrant at any time prior to the Redemption Date. So
long as any portion of the condition set forth in clause (ii) of this Section is
satisfied during the entire 20 Trading Day period, any portion of this Warrant
not exercised by 6:30 p.m. (New York City time) on the Redemption Date shall no
longer be exercisable and shall be returned to the Company, and the Company,
upon its receipt of the unexercised portion of this Warrant, shall issue
therefor in full and complete satisfaction of its obligations under such
remaining portion of this Warrant to the Holder an amount equal to the number of
shares of Common Stock then issuable hereunder multiplied by the Redemption
Price. The Redemption Price shall be mailed to such Holder at its address of
record, and the Warrant shall be canceled. Notwithstanding anything herein to
the contrary, together with its delivery of the Redemption Notice, the Company
shall also deliver to the Holder a new common stock purchase warrant, in the
form identical to this Warrant, mutatis mutandis (provided that such new Warrant
shall not include Section 5(e) set forth herein) pursuant to which the Holder
shall be entitled to purchase a number of shares of Common Stock equal to the
Redeemable Shares at an exercise price equal to $19.25 (subject to equitable
adjustment for stock splits, recombinations and similar events), for a period
equal to six years less the period of time which has elapsed since the original
issue date of this Warrant (the "Additional Warrant"). With respect to the
shares of Common Stock issuable upon exercise of the Additional Warrant, the
holder of the Additional Warrant shall be entitled to all of the rights and
privileges available to the original Holder pursuant to the Registration Rights
Agreement (as defined in the Purchase Agreement) (the "Registration Rights
Agreement") with respect to the Registrable Securities (as defined in the
Registration Rights Agreement). In furtherance of the foregoing, such shares of
Common Stock shall be included within the definition of "Registrable Securities"
and the Additional Warrant shall be included within the definition of "Warrants"
(as defined in the Registration Rights Agreement).

         6. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or
other incidental tax or expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder. The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.

                                      -4-
   5
         7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.

         8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.

         9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.

                  (a) Stock Dividends and Splits. If the Company, at any time
while this Warrant is outstanding: (i) pays a stock dividend on its Common Stock
or otherwise makes a distribution on any class of capital stock that is payable
in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.

                  (b) Pro Rata Distributions. If the Company, at any time while
this Warrant is outstanding, distributes to all holders of Common Stock (i)
evidences of its indebtedness, (ii) any security (other than a distribution of
Common Stock covered by the preceding paragraph), (iii) rights or warrants to
subscribe for or purchase any security, or (iv) any other asset (in each case,
"DISTRIBUTED PROPERTY"), then in each such case the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution shall be adjusted (effective on such
record date) to equal the product of such Exercise Price times a fraction of
which the denominator shall be such Exercise Price and of which the numerator
shall be such Exercise Price less the then fair market value of the Distributed
Property distributed in respect of one outstanding share of Common Stock, as
determined by the Company's Board of Directors in good faith. If the Holder
shall dispute the findings of the Company's Board of Directors, then such fair
market value shall be determined by the Company's independent certified public
accountants that regularly examine the financial statements of the Company. As
an alternative to the foregoing adjustment to the Exercise Price, at the request
of the Holder delivered before the 90th day after such record date, the Company
will deliver to such Holder, within five Trading Days after such request (or, if
later, on the

                                      -5-
   6
effective date of such distribution), the Distributed Property that such Holder
would have been entitled to receive in respect of the Warrant Shares for which
this Warrant could have been exercised immediately prior to such record date.

                  (c) Fundamental Transactions. If, at any time while this
Warrant is outstanding: (i) the Company effects any merger or consolidation of
the Company with or into another Person, (ii) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "FUNDAMENTAL TRANSACTION"), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the "ALTERNATE
CONSIDERATION"). The aggregate Exercise Price for this Warrant will not be
affected by any such Fundamental Transaction, but the Company shall apportion
such aggregate Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's request, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

                  (d) Subsequent Equity Sales.

                           (i) If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues additional shares of Common
Stock or rights, warrants, options or other securities or debt convertible,
exercisable or exchangeable for shares of Common Stock or otherwise entitling
any Person to acquire shares of Common Stock (collectively, "COMMON STOCK
EQUIVALENTS") at a price per share of Common Stock (the "EFFECTIVE PRICE") less
than the Exercise Price then in effect (subject to equitable adjustment for
stock splits, recombinations and similar events), then, at the option of the
Holder: (i) from the Closing Date through the second year anniversary of the
Closing Date, the Exercise Price shall be reduced to equal the Effective Price
and (ii) following the second year anniversary of the Closing Date, the Exercise
Price shall be reduced to equal the product of: (A) the Exercise Price in effect
immediately prior to such issuance of Common Stock or Common Stock Equivalents
times (B) a fraction, the numerator of which is the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issuance, plus (2)
the number of shares of Common Stock which the aggregate Effective Price of the
Common Stock issued (or deemed to be issued) would purchase at the Exercise
Price, and the denominator of which is the aggregate number of shares of Common
Stock outstanding or deemed to be outstanding immediately after such issuance.
For purposes of the foregoing adjustment, in connection with any issuance of any
Common Stock Equivalents, (x) the maximum number of shares of Common Stock
potentially issuable at any time upon

                                      -6-
   7
conversion, exercise or exchange of such Common Stock Equivalents (the "DEEMED
NUMBER") shall be deemed to be outstanding upon issuance of such Common Stock
Equivalents, (y) the Effective Price applicable to such Common Stock shall equal
the minimum dollar value of consideration payable to the Company to purchase
such Common Stock Equivalents and to convert, exercise or exchange them into
Common Stock, divided by the Deemed Number, and (z) no further adjustment shall
be made to the Exercise Price upon the actual issuance of Common Stock upon
conversion, exercise or exchange of such Common Stock Equivalents. However, upon
termination or expiration of any Common Stock Equivalents the issuance of which
resulted in an adjustment to the Exercise Price pursuant to this paragraph, the
Exercise Price shall be recomputed to equal the price it would have been had the
adjustments in this paragraph been made, at the time of issuance of such Common
Stock Equivalents, only with respect to that number of shares of the Common
Stock actually issued upon conversion, exercise or exchange of such Common Stock
Equivalents and at the Effective Prices actually paid in connection therewith.

                           (ii) If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents with
an Effective Price that floats or resets or otherwise varies or is subject to
adjustment based on market prices of the Common Stock (a "FLOATING PRICE
SECURITY"), then for purposes of applying the preceding paragraph in connection
with any subsequent exercise, the Effective Price will be determined separately
on each Exercise Date and will be deemed to equal the lowest Effective Price at
which any holder of such Floating Price Security is entitled to acquire shares
of Common Stock on such Exercise Date (regardless of whether any such holder
actually acquires any shares on such date).

                           (iii) Notwithstanding the foregoing, no adjustment
will be made under this paragraph (d) in respect of:(i) the issuance of shares
of Common Stock or the granting of options, restricted stock awards or similar
equity incentive awards to employees, officers and directors of the Company
pursuant to any stock option plan duly adopted by the Company or to the issuance
of Common Stock upon exercise of such options, (ii) the issuance of options,
warrants, stock appreciation rights or shares of Common Stock to bona fide
consultants of the Company in payment of consulting fees of up to an aggregate
of $500,000 in any twelve month period based upon the applicable market price of
the Common Stock, (iii) the issuance of warrants or shares of Common Stock in
connection with bona fide acquisitions by the Company, (iv) the sale of shares
of Common Stock to Abbott Laboratories, (v) the issuance of shares of Common
Stock upon exercise of any warrant or option permitted to be issued pursuant to
this Section 9(d)(ii), or (vi) shares of Common Stock issuable upon conversion
of the Preferred Stock and exercise of other common stock purchase warrants
issued pursuant Purchase Agreement.

                  (e) Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraphs (a), (b) or (d) of this
Section, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.

                  (f) Calculations. All calculations under this Section 9 shall
be made to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issue or sale of Common
Stock.

                                      -7-
   8
                  (g) Notice of Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.

                  (h) Notice of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 20 calendar days
prior to the applicable record or effective date on which a Person would need to
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.

         10. Payment of Exercise Price.

                  (a) The Holder shall pay the Exercise Price in one of the
following manners:

                  (i) Cash Exercise. The Holder may deliver immediately
available funds; or

                  (ii) Cashless Exercise. At any time after the earlier to occur
of the Effectiveness Date (as defined in the Registration Rights Agreement) and
the date the registration statement required to be filed pursuant to the
Registration Rights Agreement is declared effective by the Securities and
Exchange Commission (such earlier date, the "Cashless Exercise Date"), when a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective, the Holder may
satisfy its obligation to pay the Exercise Price through a "cashless exercise,"
in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:

                           X = Y [(A-B)/A]
                  where:
                           X = the number of Warrant Shares to be issued to the
                           Holder.

                           Y = the number of Warrant Shares with
                           respect to which this Warrant is being
                           exercised.

                           A = the average of the Closing Prices for
                           the five Trading Days immediately prior to
                           (but not including) the Exercise Date.

                           B = the Exercise Price.

                  (b) Notwithstanding anything herein to the contrary, after the
Cashless Exercise Date, the Company shall be entitled, upon delivery of to the
Holder of a notice no later than the

                                      -8-
   9
30th day preceding any Exercise Date, to require that when the Holder exercise
this Warrant on such forthcoming Exercise Date that such exercise occur on a
cashless basis pursuant to Section 10(a)(ii) if the requirements for the
Holder's cashless exercise thereunder are satisfied on each applicable Exercise
Date (the Company may indicate in such notice that the election contained in
such notice shall continue for subsequent Exercise Dates until revised).

                  (c) For purposes of Rule 144 promulgated under the Securities
Act of 1933, as amended, it is intended, understood and acknowledged that the
Warrant Shares issued in a cashless exercise transaction shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall
be deemed to have commenced, on the date this Warrant was originally issued
pursuant to the Purchase Agreement.

         11. Limitation on Exercise. (a) Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice hereunder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this paragraph and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under this
paragraph. The Company will have no obligation to issue shares of Common Stock
in excess of the limitation referred to in this Section until such time, if any,
as such shares of Common Stock may be issued in compliance with such limitation.
By written notice to the Company, the Holder may waive the provisions of this
Section, but (i) any such waiver or increase will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such waiver
will apply only to the Holder and not to any other holder of Warrants.

                  (b) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 9.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph. The Company will have no obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
until such time, if any, as such shares of Common Stock may be issued in
compliance with such limitation. By written notice to the Company, the Holder
may waive the provisions of this Section, but (i) any such waiver or increase
will not be effective until the 61st day after such notice is delivered to the
Company, and (ii) any such waiver will apply only to the Holder and not to any
other holder of Warrants.

                                      -9-
   10
         12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant. If
any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon exercise of this Warrant, the Company shall pay an
amount in cash equal to the average of the Closing Prices of the Common Stock
for the five Trading Days immediately prior to (but not including) the Exercise
Date multiplied by such fraction; provided that, unless the Holder requests
otherwise, no payment shall be required pursuant to this sentence until the
aggregate amount payable exceeds $1,000, at which time all previously deferred
payments shall be made.

         13. Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:30 p.m. (New York City
time) (with confirmation of transmission) on a Trading Day, (ii) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New York City time) (with
confirmation of transmission) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized overnight
courier service (next day delivery specified), or (iv) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to 104 Windsor Center Drive,
East Windsor, NJ 08520, Facsimile No.: (609) 243-9311, attention Chief Financial
Officer, or (ii) if to the Holder, to the address or facsimile number appearing
on the Warrant Register or such other address or facsimile number as the Holder
may provide to the Company in accordance with this Section.

         14. Warrant Agent. First Union National Bank shall serve as warrant
agent under this Warrant. Upon 30 days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.

         15. Miscellaneous.

                  (a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. Subject to
the preceding sentence, nothing in this Warrant shall be construed to give to
any Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder and their successors and
assigns.

                  (b) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the "New York
Courts"). Each party hereto hereby irrevocably submits

                                      -10-
   11
to the exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of this
Agreement), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

                  (c) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                  (d) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                      -11-
   12
         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.


                                    i-STAT CORPORATION


                                    By:_____________________________________
                                            Name:
                                            Title:


                                      -12-
   13
                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To i-STAT Corporation:

         The undersigned hereby irrevocably elects to purchase _____________
shares of common stock, $0.15 par value per share, of i-STAT Corporation (the
"Common Stock") and , if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.

         The Exercise Price applicable to the purchase hereunder equals
$___________.

         By its delivery of this Form of Election To Purchase, the Holder
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock (determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                               PLEASE INSERT SOCIAL SECURITY OR
                                               TAX IDENTIFICATION NUMBER


- --------------------------------------------------------------------------------
                         (Please print name and address)



- --------------------------------------------------------------------------------
Dated: [ ]                     Name of Holder:


                                   (Print)
                                          --------------------------------------
                                   (By:)
                                        ----------------------------------------
                                   (Name:)
                                   (Title:)
                                   (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)
   14
                           WARRANT SHARES EXERCISE LOG




- --------------------------------------------------------------------------------------------
    Date            Number of Warrant         Number of Warrant Shares        Number of
                 Shares Available to be             Exercised              Warrant Shares
                      Exercised                                              Remaining to
                                                                             be Exercised
- --------------------------------------------------------------------------------------------
                                                                  


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

   15
                               FORM OF ASSIGNMENT

         [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of i-STAT Corporation to
which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of i-STAT Corporation with full power of
substitution in the premises.

Dated:   _______________, ____


                                        ---------------------------------------
                                        (Signature must conform in all respects
                                         to name of holder as specified on
                                         the face of the Warrant)


                                        ---------------------------------------
                                        Address of Transferee

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

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



In the presence of:


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

EX-10.59

   1
                                                                   Exhibit 10.59

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is dated as of
August 2, 2001 among i-STAT Corporation, a Delaware corporation (the "COMPANY"),
and the purchasers identified on the signature pages hereto (each a "PURCHASER"
and collectively the "PURCHASERS").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and Rule 506 promulgated thereunder, the Company desires
to issue and sell to the Purchasers, and the Purchasers, severally and not
jointly, desire to purchase from the Company, securities of the Company as more
fully described in this Agreement.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:

                  "AFFILIATE" means any Person that, directly or indirectly
         through one or more intermediaries, controls or is controlled by or is
         under common control with a Person, as such terms are used in and
         construed under Rule 144. With respect to a Purchaser, any investment
         fund or managed account that is managed on a discretionary basis by the
         same investment manager as such Purchaser will be deemed to be an
         Affiliate of such Purchaser.

                  "AGGREGATE PURCHASE PRICE" means the sum of the Closing Date
Purchase Amount and the total amount that all Purchasers are required to pay
under Section 2.3.

                  "CERTIFICATE OF DESIGNATIONS" means a certificate of
designations of the Preferred Stock, in the form of in Exhibit A.

                  "CLOSING" means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.

                  "CLOSING DATE" means the date of the Closing.

                  "CLOSING DATE PURCHASE AMOUNT" means the total amount of money
paid by all Purchasers to or as directed by the Company in accordance with
Section 2.2(b)(i).

                  "CLOSING PRICE" means, for any date, the price determined by
         the first of the following clauses that applies: (a) if the Common
         Stock is then listed or quoted on an Eligible Market or any other
         national securities exchange, the closing bid price per share
   2
         of the Common Stock for such date (or the nearest preceding date if
         there is no price on such date) at 4 P.M. (local time for such Eligible
         Market or other national securities exchange) on the primary Eligible
         Market or exchange on which the Common Stock is then listed or quoted;
         (b) if prices for the Common Stock are then quoted on the OTC Bulletin
         Board, the closing bid price per share of the Common Stock for such
         date (or the nearest preceding date) so quoted; (c) if prices for the
         Common Stock are then reported in the "Pink Sheets" published by the
         National Quotation Bureau Incorporated (or a similar organization or
         agency succeeding to its functions of reporting prices), the most
         recent bid price per share of the Common Stock so reported; or (d) in
         all other cases, the fair market value of a share of Common Stock as
         determined by an independent appraiser selected in good faith by a
         majority-in-interest of the Purchasers.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON SHARES" means the shares of Common Stock which are
being purchased by and issued to the Purchasers pursuant to this Agreement.

                  "COMMON STOCK" means the common stock of the Company, par
value $0.15 per share, or such securities into which such stock shall hereafter
be classified.

                  "COMPANY COUNSEL" means Paul, Hastings, Janofsky & Walker LLP,
counsel to the Company.

                  "EFFECTIVE DATE" means the date that an Underlying Shares
Registration Statement is first declared effective by the Commission.

                  "ELIGIBLE MARKET" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

                  "PER SHARE PURCHASE PRICE " means $9.218.

                  "PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.

                  "PREFERRED SHARES" means the shares of Preferred Stock which
are being purchased by and issued to the Purchasers pursuant to this Agreement.

                  "PREFERRED STOCK" means the Series C Convertible Preferred
Stock of the Company, which is convertible into shares of Common Stock which
shall have the terms set forth in the Certificate of Designations.

                  "PURCHASER COUNSEL" means Robinson Silverman Pearce Aronsohn &
Berman LLP, counsel to the Purchasers.


                                      -2-
   3
                  "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Purchasers, in the form of Exhibit B.

                  "REQUIRED EFFECTIVENESS DATE" means the date on which an
Underlying Shares Registration Statement is required to become effective
pursuant to the Registration Rights Agreement.

                  "RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "SECURITIES" means the Common Shares, Preferred Shares,
Warrants and Underlying Shares.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SUBSIDIARY" means any subsidiary of the Company that is
required to be listed in Schedule 3.1(a).

                  "TRADING DAY" means (a) any day on which the Common Stock is
traded on its primary Trading Market, or (b) if the Common Stock is not then
listed or quoted on any national securities exchange, market or trading or
quotation facility, then a day on which trading occurs on the New York Stock
Exchange (or any successor thereto).

                  "TRADING MARKET" means Nasdaq National Market or any other
national securities exchange, market or trading or quotation facility on which
the Common Stock is then listed or quoted.

                  "TRANSACTION DOCUMENTS" means this Agreement, the Securities,
the Registration Rights Agreement, the Certificate of Designations, the Transfer
Agent Instructions and any other documents or agreements executed in connection
with the transactions contemplated hereunder.

                  "TRANSFER AGENT INSTRUCTIONS" means instructions to the
Company's transfer agent, in the form of Exhibit E.

                  "UNDERLYING SHARES" means the shares of Common Stock issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants.

                  "UNDERLYING SHARES REGISTRATION STATEMENT" means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale of the Common Shares and Underlying
Shares by the Purchasers and their assignees.


                                      -3-
   4
                  "WARRANTS" means the Common Stock purchase warrants, in the
form of Exhibit D, issued to each Purchaser at the Closing and, if applicable,
upon a call of the aforementioned warrants in accordance with their terms.

                  "WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.

                                   ARTICLE II
                                PURCHASE AND SALE

         2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Common Shares, the Preferred Shares and the Warrants set forth next to the
Purchasers' names on the investor allocation table attached hereto as Exhibit F
(the "INVESTOR ALLOCATION TABLE"). The Closing shall take place at the offices
of Purchaser Counsel immediately following the satisfaction or waiver of the
conditions set forth in Article V of this Agreement, or at such other location
or time as the parties may agree.

         2.2      Closing Deliveries.

                  (a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser, the following:

                           (i) one or more stock certificates evidencing the
         number of Common Shares indicated next to such Purchaser's name in the
         Investor Allocation Table, registered in the name of such Purchaser;

                           (ii) one or more stock certificates evidencing a
         number of Preferred Shares indicated next to such Purchaser's name on
         the Investor Allocation Table, registered in the name of such
         Purchaser;

                           (iii) a Warrant, registered in the name of such
         Purchaser, pursuant to which such Purchaser shall have the right to
         acquire the number of Warrant Shares indicated next to such Purchaser's
         name on the Investor Allocation Table;

                           (iv) evidence that the Certificate of Designations
         has been filed on or prior to the Closing Date with the Secretary of
         State (or other appropriate office) of Delaware, in form and substance
         mutually agreed to by the parties;

                           (v) the legal opinion of Company Counsel, in the form
         of Exhibit C, executed by such counsel and delivered to the Purchasers;

                           (vi) a Registration Rights Agreement duly executed by
         the Company;

                           (vii) one or more standby letters of credit from, PNC
         Bank, National Association ("PNC BANK") in form and substance
         acceptable to the Purchasers (as the


                                      -4-
   5
         same may be amended, modified or supplemented from time to time
         (including, but not limited to, pursuant to Section 2.3(B)(I)) in
         accordance with their respective terms, the "LETTERS OF CREDIT"); and

                           (viii) Transfer Agent Instructions executed by the
         Company and delivered to and acknowledged by First Union National Bank,
         the Company's transfer agent.

                  (b) At the Closing, each Purchaser shall deliver or cause to
be delivered to the Company, the following:

                           (i) an amount equal to the sum of (A) the product of
         the number of Common Shares indicated next to such Purchaser's name on
         the Investor Allocation Table multiplied by the Per Share Purchase
         Price and (B) the number of Preferred Shares indicated next to such
         Purchaser's name on the Investor Allocation Table multiplied by $1,000,
         all in United States dollars and in immediately available funds, by
         wire transfer to an account designated in writing by the Company for
         such purpose;

                           (ii) a Registration Rights Agreement duly executed by
         such Purchaser.

         2.3 Post Closing Adjustment. On the 6th Trading Day following the
Closing Date, if the average of the 5 VWAP's (as defined in the Certificate of
Designations) during the 5 Trading Day period beginning on the Closing Date (the
"ADJUSTED PURCHASE PRICE") exceeds the Per Share Purchase Price, then (A) each
Purchaser shall, against delivery to it by the Company of the documentation set
forth in Section 2.3(B), deliver to or as directed by the Company an amount, in
United States dollars and in immediately available funds, by wire transfer to an
account designated in writing for such purpose, equal to the sum of: (I) the
product of: (x) the lower of: (i) $0.782 and (ii) the difference between the
Adjusted Purchase Price and the Per Share Purchase Price multiplied by (y) the
number of Common Shares issued to such Purchaser on the Closing Date, and (II)
the product of: (x) the lower of: (i) $0.782 and (ii) the difference between the
Adjusted Purchase Price and the Per Share Purchase Price multiplied by (y) a
number equal to the number of Preferred Shares indicated next to such
Purchaser's name on the Investor Allocation Table multiplied by 1,000, and
divided by the Per Share Purchase Price, and (B) the Company shall deliver or
cause to be delivered to each Purchaser: (I) an amendment to the Letter of
Credit, in the form and substance satisfactory to the such Purchaser and (II) a
calculation notice indicating the basis for the revision to the Stated Value (as
defined in the Certificate of Designations) under the Certificate of
Designations.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:


                                      -5-
   6
                  (a) Subsidiaries. The Company has no subsidiaries other than
those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the
Company owns all of the capital stock of each Subsidiary free and clear of any
lien, charge, security interest, encumbrance, right of first refusal or other
restriction (collectively, "LIENS"), and all the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights. If the Company has no
subsidiaries, then references in the Transaction Documents to the Subsidiaries
will be disregarded.

                  (b) Organization and Qualification. Each of the Company and
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate: (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any of the Transaction Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE
EFFECT").

                  (c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further action is required by the Company.
Each of the Transaction Documents has been (or upon delivery will be) duly
executed by the Company and, when delivered in accordance with the terms hereof
and assuming the applicable Transaction Documents constitute the legal, valid
and binding agreement of each party other than the Company, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter documents.

                  (d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment,

                                      -6-
   7
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company or
any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or result in a Material Adverse Effect.

                  (e) Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required under Section 4.8 and
the required filing of the Certificate of Designations pursuant to Section 2.2,
(ii) the filing with the Commission of the Underlying Shares Registration
Statement, (iii) the application(s) to each Trading Market for the listing of
the Common Shares and the Underlying Shares for trading thereon in the time and
manner required thereby and (iv) applicable Blue Sky filings (collectively, the
"REQUIRED APPROVALS").

                  (f) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has on the date hereof and will, at all
times while the Preferred Shares and the Warrants are outstanding, maintain an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of the Preferred Shares and the Warrants, to enable it
to perform its conversion, exercise and other obligations under this Agreement,
the Certificate of Designation and the Warrants. Such number of reserved and
available shares of Common Stock is not less than 4,995,000 (collectively, the
"INITIAL MINIMUM"). All such authorized shares of Common Stock shall be duly
reserved for issuance to the holders of the Preferred Shares and the Warrants.
When issued in accordance with the Certificate of Designation and the Warrants,
the Underlying Shares will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens.

                  (g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
Schedule 3.1(g). No securities of the Company are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities and except as disclosed in Schedule 3.1(g), there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or


                                      -7-
   8
exchangeable into shares of Common Stock. The issue and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.

                  (h) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. All material agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject have been filed as exhibits to the SEC Reports as
required under the Exchange Act.

                  (i) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans.

                  (j) Litigation. Except as set forth in the SEC Reports, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective


                                      -8-
   9
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an "ACTION") which: (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, individually or
in the aggregate, have or result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. The
Company does not have pending before the Commission any request for confidential
treatment of information, and the Company does not expect to make any such
request prior to the Required Effectiveness Date. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.

                  (k) Labor Relations. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.

                  (l) Compliance. Neither the Company nor any Subsidiary: (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or result in a
Material Adverse Effect.

                  (m) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

                  (n) Title to Assets. Except as set forth in Schedule 3.1(n),
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries. Any real property and


                                      -9-
   10
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.

                  (o) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could have a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights that could have or result in a Material Adverse
Effect.

                  (p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

                  (q) Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least ten days prior to the date hereof, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.

                  (r) Solvency. Based on the financial condition of the Company
as of the Closing Date: (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).


                                      -10-
   11
                  (s) Certain Fees. Except as described in Schedule 3.1(s), no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Company agrees that the Purchasers shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of any Person for fees of the type contemplated by this Section
3.1(s) with the transactions contemplated by this Agreement.

                  (t) Private Placement. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
3.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on the Company's
behalf has sold or offered to sell or solicited any offer to buy the Securities
by means of any form of general solicitation or advertising. Neither the Company
nor any of its Affiliates nor any person acting on the Company's behalf has,
directly or indirectly, at any time within the past six months, made any offer
or sale of any security or solicitation of any offer to buy any security under
circumstances that would: (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Securities as contemplated hereby or (ii) cause the
offering of the Securities pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or shareholder approval provisions, including without limitation
under the rules and regulations of any Trading Market. The Company is not, and
is not an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

                  (u) Form S-3 Eligibility. The Company is eligible to register
its Common Stock for resale by the Purchasers under Form S-3 promulgated under
the Securities Act.

                  (v) Listing and Maintenance Requirements. The Company has not,
in the two years preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

                  (w) Registration Rights. No holder of the Company's securities
has any demand or piggyback registration rights with respect to such securities
and the Company has not agreed to grant such rights to any Person.

                  (x) Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including


                                      -11-
   12
without limitation the Company's issuance of the Securities and the Purchasers'
ownership of the Securities.

                  (y) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that constitutes or might constitute
material information. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

         3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:

                  (a) Organization; Authority. If such Purchaser is an entity,
such Purchaser is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. If such Purchaser is an
entity, the purchase by such Purchaser of the Securities hereunder has been duly
authorized by all necessary action on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms. If such
Purchaser is a natural person, such Purchaser is of a legal age and capable to
enter into and execute this Agreement and the Registration Rights Agreement.

                  (b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, the Registration Rights Agreement and the
Warrants, at all times to sell or otherwise dispose of all or any part of such
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Purchaser to hold Securities for any
amount of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

                  (c) Purchaser Status. At the time such Purchaser was offered
the Common Shares, the Preferred Shares and its respective Warrants, it was, and
at the date hereof it is, and at each exercise date under its respective
Warrants, it will be, an "accredited investor" as defined in Rule 501(a) under
the Securities Act. Such Purchaser has not been formed solely for the purpose of
acquiring the Securities.


                                      -12-
   13
                  (d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

                  (e) Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

                  (f) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.

                  (g) General Solicitation. To the best of its knowledge, such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.

                  (h) Reliance. Such Purchaser understands and acknowledges
that: (i) the Securities are being offered and sold to it without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act and (ii) the availability of such
exemption, depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.

                  (i) Beneficial Ownership. Such Purchaser (other than John
Hancock Small Cap Value Fund and any Affiliate thereof), does not on the Closing
Date (after giving effect to the consummation of the transactions contemplated
hereunder), beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act) in excess of 14.999% of the shares of Common Stock outstanding
on the Closing Date, assuming enforcement of all exercise and conversion
limitations set forth in the applicable Transaction Documents.

         The Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.


                                      -13-
   14
                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1      Transfer Restrictions.

                  (a) Securities may only be disposed of pursuant to an
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable state securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or to the Company,
except as otherwise set forth herein, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with any transfer agent for the
securities of the Company, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes (subject to the qualifications
hereof). As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement and the Registration Rights Agreement.

                  (b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on the Securities:

         NEITHER THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
         SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]] HAVE BEEN REGISTERED WITH
         THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
         ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
         ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
         AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF
         COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
         BE REASONABLY ACCEPTABLE TO THE COMPANY.

                  None of the Securities shall contain the legend set forth
above or any other legend (other than as required pursuant to the Stockholder
Protection Plan, dated as of June 26, 1995 between the Company and First
Fidelity Bank, National Association, as rights agent (the "PLAN")): (i) while a
registration statement (including any Underlying Shares and Common Shares) is
effective under the Securities Act to cover the resale of such security, or (ii)
if Rule


                                      -14-
   15
144(k) may be utilized by the seller of such security or (iii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). The Company shall cause its counsel to issue the legal opinion
included in the Transfer Agent Instructions to the Company's transfer agent on
the Effective Date. If any Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant Shares
issuable in respect thereto, such Warrant Shares shall be issued without
legends. The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 4.1(b), it will, no later
than three Trading Days following the delivery by a Purchaser to the Company or
the Company's transfer agent of a certificate representing Securities issued
with a restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.

         4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance and conversion and exercise (as applicable) of the Securities will
result in dilution of the outstanding shares of Common Stock, which dilution may
be substantial under certain market conditions. The Company further acknowledges
that its obligation to issue the Securities pursuant to the Transaction
Documents is unconditional and absolute, regardless of the effect of any such
dilution.

         4.3 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such Person, the Company shall deliver to
such Person a written certification of a duly authorized officer as to whether
it has complied with the preceding sentence. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         4.4 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.

         4.5 Reservation and Listing of Securities. The Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents which number shall not be
less than the Initial Minimum. The Company shall: (i) in the time and manner
required by each Trading Market, prepare and file with such


                                      -15-
   16
Trading Market an additional shares listing application covering a number of
shares of Common Stock equal to no less than the sum of the Common Shares and
the Initial Minimum, (ii) take all steps necessary to cause such shares to be
approved for listing on each Trading Market as soon as possible thereafter,
(iii) provide to the Purchasers evidence of such listing, and (iv) maintain the
listing of such shares on each such Trading Market or another Eligible Market.

         4.6 Conversion and Exercise Procedures. The Transfer Agent Instructions
and Conversion Notice, as defined in the Certificate of Designations, set forth
the totality of the procedures with respect to the conversion of the Preferred
Shares. The Transfer Agent Instructions and Form of Election to Purchase under
the Warrants set forth the totality of the procedures with respect to the
exercise of the Warrants. No additional legal opinion or other information or
instructions shall be necessary to enable the Purchasers to convert their
Preferred Shares or exercise their Warrants. The Company shall honor conversions
of the Preferred Shares and exercises of the Warrants and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.

         4.7      Right of First Refusal.

                  (a) The Company will not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) any of its or the
Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable for Common Stock (any such offer, sale, grant, disposition or
announcement being referred to as a "SUBSEQUENT PLACEMENT"), from the date
hereof until the first year anniversary of the date hereof, unless: (i) the
Company delivers to each of the Purchasers a written notice (the "SUBSEQUENT
PLACEMENT NOTICE") of its intention to effect such Subsequent Placement, which
Subsequent Placement Notice shall describe in reasonable detail the proposed
terms of such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Placement is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (ii) such Purchaser shall not have notified the Company by
5:30 p.m. (New York City time) on the fifth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its
designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. The Company and the Purchasers shall use their
commercially reasonable efforts to complete such mutually acceptable
documentation by the 30th day following the date of the delivery of the
Subsequent Placement Notice. If the Purchasers shall fail to so notify the
Company of their willingness to participate in the full Subsequent Placement,
the Company may effect such Subsequent Placement on the terms and to the Persons
set forth in the Subsequent Placement Notice; provided that the Company must
provide the Purchasers with a second Subsequent Placement Notice, and the
Purchasers will again have the right of first refusal set forth above in this
paragraph (b), if the Subsequent Placement subject to the initial Subsequent
Placement Notice is not consummated for any reason on the terms set forth in
such Subsequent Placement Notice within 60 Trading Days after the date of the
initial Subsequent Placement Notice with the Person identified in the Subsequent
Placement Notice. If the Purchasers indicate a willingness to provide financing
in


                                      -16-
   17
excess of the amount set forth in the Subsequent Placement Notice, then each
Purchaser will be entitled to provide financing pursuant to such Subsequent
Placement Notice up to an amount equal to such Purchaser's pro rata portion of
the aggregate purchase price paid for the Securities under this Agreement, but
the Company shall not be required to accept financing from the Purchasers in an
amount in excess of the amount set forth in the Subsequent Placement Notice.

                  (b) Notwithstanding the foregoing, the provisions of Section
4.7(a) shall not apply to a Subsequent Placement in which each of the following
conditions is true: (i) such Subsequent Placement occurs on or after the 120th
day following the Closing Date, (ii) such Subsequent Placement is exclusively an
offer and sale of Common Stock at a purchase price per share which is equal to
or greater than each of the Per Share Purchase Price and the Conversion Price
(as defined in the Certificate of Designations) determined on the 121st day
following the Closing Date, (iii) such Subsequent Placement is not subject to a
collar or pricing reset mechanism of any kind, and (iv) the total warrant
coverage for such Subsequent Placement, at such time or any later time, enables
the holder or holders thereof to purchase a number of shares of Common Stock no
greater than 35% of the quotient obtained by dividing the aggregate purchase
price for such Subsequent Placement by the purchase price per share of Common
Stock issuable pursuant to such Subsequent Placement, provided, that, in case of
any Subsequent Placement meeting such conditions, each Purchaser shall have the
right (the "MAINTENANCE RIGHT") to participate in such Subsequent Placement in
order to maintain its percentage interest in Total Voting Power (as defined
below) of the Company beneficially owned (as determined by Rule 13d-3 of the
Exchange Act) by such Purchaser immediately prior to the delivery of the
Subsequent Placement. In the event the Maintenance Right is triggered, the
Company shall provide the Purchasers with a written notice, containing the same
information as the Subsequent Placement Notice. Each Purchaser shall have five
Trading Days to exercise its Maintenance Right by delivering to the Company a
written notice of its intention to so exercise. For purposes hereof, "Total
Voting Power" means the total number of votes which may be cast in the election
of directors of the Company at any meeting of stockholders of the Company if all
securities entitled to vote in the election of directors of the Company were
present and voted at such meeting.

                  (c) Except for: (i) Registrable Securities (as defined in the
Registration Rights Agreement), and (ii) Common Stock permitted to be issued
pursuant to Section 4.7(d), the Company shall not, without the prior written
consent of the Purchasers: (A) prior to the Effective Date, file a registration
statement with the Commission with respect to any securities of the Company or
the Subsidiaries or (B) prior to the 130th day following the Closing Date, cause
a registration statement permitted to be filed with the Commission pursuant to
the terms hereof to be declared effective by the Commission.

                  (d) The restrictions contained in paragraphs (a) and (c) of
this Section 4.7 shall not apply to: (i) the granting of shares of Common Stock,
restricted stock awards or similar equity incentive awards to employees,
officers and directors of the Company pursuant to any stock option plan duly
adopted by the Company or to the issuance of Common Stock upon exercise of such
options, (ii) the issuance of options, warrants, stock appreciation rights or
shares of Common Stock to bona fide consultants of the Company in payment of
consulting fees of up to an aggregate of $500,000 in any twelve month period
based upon the applicable market price


                                      -17-
   18
of the Common Stock, (iii) the issuance of warrants or shares of Common Stock in
connection with bona fide acquisitions by the Company, (iv) the sale of shares
of Common Stock to Abbott Laboratories, (v) the issuance of shares of Common
Stock upon exercise of any warrant or option permitted to be issued pursuant to
this Section 4.7(d), or (vi) securities issued in connection a public offering
for an aggregate purchase price in excess of $50,000,000 without a discount to
the market price of the Common Stock (which shall not include equity lines of
credit or similar transactions).

         4.8 Securities Laws Disclosure; Publicity. The Company shall: (i) on
the Closing Date, issue a press release acceptable to the Purchasers disclosing
the transactions contemplated hereby and (ii) make such other filings and
notices relating to the transactions contemplated hereby in the manner and time
required by the Commission. The Company shall, at least two Trading Days prior
to the filing or dissemination of any disclosure required by this paragraph,
provide a copy thereof to the Purchasers for their review. The Company and the
Purchasers shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the
Commission or any regulatory agency or Trading Market with respect to the
transactions contemplated hereby, and neither party shall issue any such press
release or otherwise make any such public statement, filing or other
communication without the prior consent of the other, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide
the other party with prior notice of such public statement, filing or other
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure.

         4.9 Use of Proceeds. Except in connection with redemptions of Preferred
Shares, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company's debt (other than payment of trade payables and accrued
expenses in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle in any
outstanding litigation, except that the Company may utilize up to $5,000,000 of
the net proceeds from the sale of the Securities hereunder to settle such
outstanding litigation. In order to fulfill its redemption obligations pursuant
to the Certificate of Designations, the Company shall be entitled to fund a cash
collateral account in favor of PNC Bank to support the Letters of Credit which
will support the redemption obligations of the Company pursuant to the
Certificate of Designations. The Company shall also be entitled to use the net
proceeds of the aforementioned cash collateral account to satisfy its
obligations under the Letters of Credit.

         4.10 Indemnification of the Purchasers. The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "PURCHASER PARTY") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to any misrepresentation,
breach or


                                      -18-
   19
inaccuracy, or any allegation by a third party that, if true, would constitute a
breach or inaccuracy, of any of the representations and warranties made by the
Company in this Agreement or in the other Transaction Documents. The Company
will reimburse such Purchaser Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.

         4.11 Indemnification of the Company. Each Purchaser will, severally and
not jointly, indemnify and hold the Company and its directors, officers,
shareholders, partners, employees and agents (each, a "COMPANY PARTY") harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Company Party may suffer or incur as a result of or
relating to any misrepresentation, breach or inaccuracy, or any allegation by a
third party that, if true, would constitute a breach or inaccuracy of any of the
representations or warranties made by such Purchaser in this Agreement or in the
other Transaction Documents. Such Purchaser will, severally and not jointly,
reimburse such Company Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.

         4.12 Shareholders Rights Plan. No claim will be made or enforced by the
Company that any Purchaser is an "Acquiring Person" under the Plan or in any way
could be deemed to trigger the provisions of the Plan by virtue of receiving
Securities under the Transaction Documents. Each Purchaser other than those who
are "Institutional Investors" under the Plan severally agree not to acquire in
excess of 14.99% of the shares of Common Stock on any date while such Purchaser
holds Warrants or Preferred Shares.

         4.13 Disclosure. The Company confirms that as long as any Purchaser
owns Securities, neither the Company nor any other Person acting on its behalf
will provide any of such Purchaser or its agents or counsel with any information
that constitutes or might constitute material non-public information, unless
such Purchaser shall have agreed to execute a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that the Purchasers shall be relying on the foregoing representations
in effecting transactions in securities of the Company.

         4.14 Certain Trading Restrictions. Each Purchaser agrees that neither
it nor its Affiliates will enter into any Short Sales (as hereinafter defined)
prior to the first year anniversary of the Closing Date. For purposes hereof, a
"Short Sale" by a Purchaser shall mean a sale of Common Stock by such Purchaser
that is marked as a short sale and that is made at a time when there is no
equivalent offsetting long position in the Common Stock held by such Purchaser.
For purposes of determining whether there is an equivalent offsetting long
position in the Common Stock held by a Purchaser, on any date of computation,
notwithstanding anything to the contrary contained in the Transaction Documents,
the sum of: (i) all Warrant Shares issuable upon exercise in full of the
Warrants issued to such Purchaser and (ii) all Underlying Shares issuable upon
conversion in full of all the Preferred Shares issued to such Purchaser at a


                                      -19-
   20
conversion price equal to the Target Price (as defined in the Certificate of
Designation), shall be deemed to be held long by such Purchaser.

                                    ARTICLE V

                              CONDITIONS TO CLOSING

         5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date (except for representations and warranties that speak of
a specific date, which need only be true and correct as of such date);

                  (b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing;

                  (c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;

                  (d) Adverse Changes. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
would be expected to have or result in a Material Adverse Effect;

                  (e) No Suspensions of Trading in Common Stock; Listing.
Trading in the Common Stock shall not have been suspended by the Commission or
any Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading on
an Eligible Market; and

                  (f) Standby Letters of Credit. The Company shall have obtained
the Letters of Credit in agreed form.

         5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:


                                      -20-
   21
                  (a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date; and

                  (b) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

         5.3 Termination. The Purchasers shall have the right to terminate this
Agreement, by written notice to the Company, at any time after August 10, 2001,
if the Company has not satisfied the conditions set forth in Section 5.1.


                                   ARTICLE VI
                                  MISCELLANEOUS

         6.1 Fees and Expenses. At the Closing, the Company shall reimburse Pine
Ridge Financial Inc. ("Pine Ridge") for its legal fees and expenses incurred in
connection with the preparation and negotiation of the Transaction Documents by
paying to Pine Ridge (or, at Pine Ridge's election, directly to Purchaser
Counsel), an aggregate of $30,000. In lieu of the payment required by the
immediately preceding sentence, Pine Ridge shall retain the amount of such
payment instead of delivering such amount to the Company at the Closing. Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the issuance of the Securities.

         6.2 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         6.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:30 p.m. (New York City time) (with
confirmation of transmission) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) (with confirmation of
transmission) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service (next
day service specified), or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:


                                      -21-
   22
         If to the Company:                 i-STAT Corporation
                                            104 Windsor Center Drive
                                            East Windsor, NJ 08520
                                            Facsimile No.: (609) 243-9311
                                            Attn: Chief Financial Officer

         With a copy to:                    Paul, Hastings, Janofsky & Walker
                                            LLP
                                            1055 Washington Boulevard
                                            Stamford, CT 06901
                                            Facsimile No.: (203) 359-3031
                                            Attn: Esteban A. Ferrer, Esq.

         If to a Purchaser:                 To the address set forth under such
                                            Purchaser's name on the signature
                                            pages hereof;

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

         6.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

         6.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

         6.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.

         6.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Sections 4.10 and 4.11 and may enforce the provisions of such
Sections.

         6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective


                                      -22-
   23
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the "New York Courts"). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

         6.9 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable, until the third year anniversary of the Closing Date.
The agreements and covenants shall survive the Closing and the delivery,
exercise and/or conversion of the Securities, as applicable, in accordance with
their terms.

         6.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

         6.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         6.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that


                                      -23-
   24
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

         6.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]


                                      -24-
   25
         IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                                 I-STAT CORPORATION

                                                 By:____________________________
                                                     Name:
                                                     Title:






                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]
   26
                                    PINE RIDGE FINANCIAL INC.

                                    By:_____________________________________
                                        Name:
                                        Title:


                              Address for Notice:
                              Pine Ridge Financial Inc.
                              c/o Cavallo Capital Corp.
                              660 Madison Avenue
                              New York, NY 10022
                              Facsimile No.:  212-651-9010
                              Attn: Avi Vigder and Eldad Gal

         With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                              1290 Avenue of the Americas
                              New York, NY  10104
                              Facsimile No.:  (212) 541-4630 and (212) 541-1432
                              Attn: Eric L. Cohen, Esq.
   27
                                    MONTROSE INVESTMENTS LTD.

                                    By:_____________________________________
                                        Name:
                                        Title:


                              Address for Notice:
                              Montrose Investments Ltd.
                              c/o HBK Investments L.P.
                              300 Crescent Court, Suite 700
                              Dallas, TX 75201
                              Facsimile No.:  214-758-1207
                              Attn: Jeff Estes and Kim Rozman

         With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                              1290 Avenue of the Americas
                              New York, NY  10104
                              Facsimile No.:  (212) 541-4630 and (212) 541-1432
                              Attn: Eric L. Cohen
   28
                                    DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.

                                    By:_____________________________________
                                        Name:
                                        Title:


                              Address for Notice:
                              c/o Deephaven Capital Management LLC
                              130 Cheshire Lane
                              Minnentonka, MN 55305
                              Facsimile No.: 952-249-5320
                              Attn: Bruce Lieberman

         With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                              1290 Avenue of the Americas
                              New York, NY  10104
                              Facsimile No.:  (212) 541-4630 and (212) 541-1432
                              Attn: Eric L. Cohen
   29
                                    KESSLER FAMILY LIMITED PARTNERSHIP

                                    By:_____________________________________
                                        Name:
                                        Title:


                              Address for Notice:
                              c/o Deephaven Capital Management LLC
                              130 Cheshire Lane
                              Minnentonka, MN 55305
                              Facsimile No.: 952-249-5320
                              Attn: Bruce Lieberman

         With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                              1290 Avenue of the Americas
                              New York, NY  10104
                              Facsimile No.:  (212) 541-4630 and (212) 541-1432
                              Attn: Eric L. Cohen
   30
                                    IRVIN KESSLER

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



                              Address for Notice:
                              c/o Deephaven Capital Management LLC
                              130 Cheshire Lane
                              Minnentonka, MN 55305
                              Facsimile No.: 952-249-5320
                              Attn: Bruce Lieberman

         With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                              1290 Avenue of the Americas
                              New York, NY  10104
                              Facsimile No.:  (212) 541-4630 and (212) 541-1432
                              Attn: Eric L. Cohen
   31
                              HARE & CO. F/B/O JOHN HANCOCK SMALL CAP VALUE FUND

                              By:_____________________________________
                                  Name:
                                  Title:





                              Address for Notice (both required):
                              Hare & Co. f/b/o John Hancock Small Cap Value Fund
                              c/o Bank of New York Securities Department

                              P.O. Box 11,203
                              New York, NY 10249
                              Facsimile No.: 617-330-6583

                              Hare & Co. f/b/o John Hancock Small Cap Value Fund
                              c/o John Hancock Advisers, Inc.
                              Attn: Investment Operations, 4th Floor
                              Private Placement Corporate Actions
                              101 Huntington Avenue

                              Boston, Ma 02199-7603
                              Facsimile No.: 617-375-4808
   32
Exhibits:

A        Form of Certificate of Designation
B        Form of Registration Rights Agreement
C        Form of Opinion of Company Counsel
D        Form of Warrant
E        Form of Transfer Agent Instructions
F        Investor purchase price allocation


Schedules:

3.1(a)   Subsidiaries
3.1(g)   Capitalization
3.1(n)   Title to Assets
3.1(s)   Commissions