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                                                                    EXHIBIT 10.2

                            DIAMETRICS MEDICAL, INC.

                             STOCK PURCHASE WARRANT

THE WARRANTS EVIDENCED HEREBY AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE UNDER SUCH ACT OR THE RULES OR REGULATIONS PROMULGATED
THEREUNDER.
                                                                  August 4, 1998
                                     WARRANT

     To Subscribe for and Purchase Common Stock of Diametrics Medical, Inc.

   VOID AFTER 5:00 P.M., MINNEAPOLIS, MINNESOTA TIME, ON AUGUST 4, 2003, OR IF
    NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., MINNEAPOLIS TIME, ON
                     THE IMMEDIATELY PRECEDING BUSINESS DAY

         This certifies that, for valuable consideration, receipt of which is
hereby acknowledged, [Purchaser], and permitted successors and assigns
("Holder") is entitled to purchase from Diametrics Medical, Inc. a Minnesota
corporation (the "Company") up to and including [__________] fully paid and
nonassessable shares (the "Number of Shares") of the common stock of the
Company, $.01 par value (the "Common Stock"), on the terms set forth herein at
an exercise price per share equal to $8.40 (the "Purchase Price"). The Number of
Shares and the Purchase Price may be adjusted from time to time as described in
this Warrant.

1.       Exercise.

         1.1 Time for Exercise. This Warrant may be exercised in whole or in
part at any time, and from time to time, during the period commencing on the
date of this Warrant and expiring on August 4, 2003.

         1.2 Manner of Exercise. This Warrant shall be exercised by delivering
it to the Company with the exercise form duly completed and signed, specifying
the number of shares as to which the Warrant is being exercised at that time
(the "Exercise Number"). The Holder shall simultaneously deliver to the Company
cash or a certified check or wire transfer in an amount equal to the Exercise
Number multiplied by the Purchase Price, and the Holder shall be entitled to
receive the full Exercise Number of shares of Common Stock.

         1.3 Effective Date of Exercise. Promptly (but in any case within ten
(10) business days) after any exercise, the Company shall deliver to the Holder
(a) duly executed certificates in the name or names specified in the exercise
notice representing the aggregate number of shares
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issuable upon such exercise, and (b) if this Warrant is exercised only in part,
a new Warrant of like tenor exercisable for the balance of the Number of Shares.
Such certificates shall be deemed to have been issued, and the person receiving
them shall be deemed to be a holder of record of such shares, as of the close of
business on the date the actions required in Section 1.2 shall have been
completed or, if on that date the stock transfer books of the Company are
closed, as of the next business day.

2.       Transfer of Warrants and Stock.

         2.1 Transfer Restrictions. This Warrant shall be freely transferable by
the Holder in accordance with the terms hereof; provided, however, that neither
this Warrant nor the securities issuable upon its exercise may be sold,
transferred or pledged unless the Company shall have been supplied with
reasonably satisfactory evidence that such transfer is not in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws. The Company may place a legend to that effect on this
Warrant, any replacement Warrant and each certificate representing shares
issuable upon exercise of this Warrant. Subject to the satisfaction of this
condition only, this Warrant shall be freely transferable by the Holder.

         2.2 Manner of Transfer. Upon delivery of this Warrant to the Company
with the assignment form duly completed and signed, the Company will promptly
(but in any case within five (5) business days) execute and deliver to each
transferee and, if applicable, the Holder, Warrants of like tenor evidencing the
rights (a) of the transferee(s) to purchase the Number of Shares specified for
each in the assignment forms, and (b) of the Holder to purchase any
untransferred portion, which in the aggregate shall equal the number of Shares
of the original Warrant. If this Warrant is properly assigned in compliance with
Section 2, it may be exercised by an assignee without having a new Warrant
issued.

         2.3 Loss, Destruction of Warrant Certificates. Upon receipt of (a)
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and (b) except in the case of mutilation, an
indemnity or security reasonably satisfactory to the Company, the Company will
promptly (but in any case within five (5) business days) execute and deliver a
replacement Warrant of like tenor representing the right to purchase the same
Number of Shares.

3. Cost of Issuances. The Company shall pay all expenses, transfer taxes and
other charges payable in connection with the preparation, issuance and delivery
of stock certificates or replacement Warrants, except for any transfer tax or
other charge imposed as a result of (a) any issuance of certificates in any name
other than the name of the Holder, or (b) any transfer of the Warrant. The
Company shall not be required to issue or deliver any Stock certificate or
Warrant until it receives reasonably satisfactory evidence that any such tax or
other charge has been paid by the Holder.


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4. Anti-Dilution Provisions. If any of the following events occur at any time
hereafter during the life of this Warrant, then the Purchase Price and the
Number of Shares immediately prior to such event shall be changed as described
in order to prevent dilution:

         4.1 Dividends; Stock Splits Etc. In case the Company shall (a) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock, (b) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (c) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Number of Shares purchasable
upon the exercise of this Warrant immediately prior thereto shall be adjusted so
that the Number of Shares purchasable upon exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon the
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately following such action
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately prior thereto. Such adjustment shall be made whenever
any event listed above shall occur and shall become effective immediately after
the record date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification. If the Company declares a dividend in money on its Common
Stock and at substantially the same time offers its Stockholders a right to
purchase new shares of Common Stock or of capital stock of any other class from
the proceeds of such dividend, or for an amount substantially equal to such
dividend, all shares of Common Stock or of capital stock of any other class so
issued shall for purposes hereof be deemed issued as a Stock dividend.

         4.2 Issuance of Rights or Warrants to Holders. In case the Company
shall issue rights, options or warrants to all holders of its shares of Common
Stock entitling them (for a period expiring within 45 days after the record date
therefor) to subscribe for or purchase shares of Common Stock at a price per
share which is lower at the record date mentioned below than the then Current
Market Price per share of Common Stock (as hereinafter defined), the Number of
Shares thereafter purchasable upon the exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares which the aggregate
offering price of the total number shares of Common Stock so offered would
purchase at the then Current Market Price per share of Common Stock. For
purposes of this Section 4.2, the issuance of rights, options or warrants to
subscribe for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights, options or warrants to purchase the Common
Stock into which such securities are convertible at an aggregate offering price
equal to the aggregate offering price of such securities plus the minimum
aggregate amount (if any) payable upon conversion of such securities into Common
Stock.


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         4.3 Merger; Consolidation; Sale of Assets. In case of (a) the
consolidation or the merger of the Company, (b) the sale of all or substantially
all of the properties and assets of the Company to any Person, (c) any capital
reorganization by the Company, or (d) any voluntary or involuntary dissolution,
liquidation, or winding up of the Company, this Warrant shall, after any such
event, entitle the Holder to receive upon exercise the number of shares of Stock
or other securities or property (including cash) of the Person (if applicable)
resulting from such event, which the holder of securities deliverable upon
exercise of this Warrant (at the time of such event) would have been entitled to
receive upon such event; and in any such case the provisions of Section 4 with
respect to the rights and interests thereafter of the holders of this Warrant
shall be appropriately adjusted so as to be applicable, as nearly as
practicable, to any shares of Stock or other securities or any property
(including cash) thereafter deliverable upon exercise of this Warrant. The
Person resulting from such sale or consolidation or surviving such merger or to
which such sale shall be made shall execute and deliver to the Holder a
supplemental agreement as provided in Section 6.5 below. Any adjustment pursuant
to this Section 4.3 which shall be approved in good faith by the Board of
Directors of the Company pursuant to a resolution delivered to the Holder shall
be conclusive for all purposes hereof. For the purposes of this Agreement
"person" means any individual, partnership, firm, corporation, limited liability
company or partnership, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

         4.4 Other Distributions. In case the Company shall distribute to all
holders of its shares of Common Stock shares of Stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or retained earnings and
dividends or distributions referred to in Section 4.1 above) or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
Section 4.2 above), then in each case the Number of Shares thereafter
purchasable upon the exercise of this Warrant shall be determined by multiplying
the Number of Shares theretofore purchasable upon the exercise of this Warrant,
by a fraction of which the numerator shall be the Current Market Price per share
of Common Stock on the record date mentioned below in this Section 4.4 plus the
then fair value (as reasonably determined by the Board of Directors of the
Company in good faith, whose determination shall be conclusive absent manifest
error, irrespective of the accounting treatment thereof) of the portion of the
shares of Stock other than Common Stock or assets or evidences of indebtedness
so distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Common Stock,
and of which the denominator shall be the Current Market Price per share of
Common Stock on such record date. Such adjustment shall be made whenever any
such distribution is made, and shall become effective immediately after the
record date for the determination of Stockholders entitled to receive such
distribution.

         4.5 Additional Adjustment of Purchase Price. Whenever the Number of
Shares purchasable upon the exercise of this Warrant is adjusted, as provided
herein, the Purchase Price

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payable upon exercise of this Warrant shall be adjusted by multiplying such
Purchase Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the Number of Shares purchasable upon the exercise of this
Warrant immediately prior to such adjustment, and of which the denominator shall
be the Number of Shares so purchasable immediately thereafter.

         4.6 No De Minimis Adjustments. No adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 4.6 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 4.6 shall be made to the nearest one-twentieth of a cent or to the
nearest one-hundredth of a share, as the case may be.

         4.7 Treasury Shares. For the purpose of Section 4, shares of Common
Stock or other securities held in the treasury of the Company shall not be
deemed to be outstanding, and the sale or other deposition of any shares of
Common Stock or other securities held in the treasury of the Company shall be
deemed an issuance thereof.

         4.8 Corporate Action. Before taking any action which would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of this Warrant, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.

         4.9 Independent Public Accountants. The certificate of a "Big Six" firm
of independent public accountants selected by the Board of Directors of the
Company shall be conclusive evidence of the correctness of any computation made
under Section 4.

         4.10 Notice of Certain Events. In case at any time prior to the
expiration date of this Warrant:

                  (I) the Company shall declare a dividend (or any other
         distribution) on the Common Stock (other than a dividend in cash out of
         retained earnings); or

                  (ii) the Company shall authorize the granting to the holders
         of Common Stock of rights or warrants to subscribe for or purchase any
         shares of stock of any class or of any other rights; or

                  (iii) there shall be any reclassification of the Common Stock
         of the Company (other than a subdivision or combination of its
         outstanding Common Stock); or

                  (iv) there shall be any capital reorganization by the Company;
         or


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                  (v) there shall be a consolidation or merger involving the
         Company or sale of all or substantially all of the Company's property
         and assets (except a merger or other reorganization in which the
         Company shall be the surviving corporation or a consolidation, merger
         or sale with a wholly-owned subsidiary); or

                  (vi) there shall be voluntary or involuntary dissolution,
         liquidation and winding up by the Company or dividend or distribution
         to holders of Common Stock (other than the customary cash and stock
         dividends); or

                  (vii) any other action shall occur which would give rise to an
         adjustment to the Purchase Price or the Number of Shares hereunder,
         then in any one or more of said cases, the Company shall cause to be
         delivered to the Holder, at the earliest practicable time (and, in any
         event, not less than 25 days before any record date or other date set
         for definitive action), notice of the date on which the books of the
         Company shall close or a record shall be taken for such dividend,
         distribution or subscription rights or such reorganization, sale,
         consolidation, merger, dissolution, liquidation or winding up shall
         take place, as the case may be. Such notice shall also set forth such
         facts as shall indicate the effect of such action (to the extent such
         effect may be known at the date of such notice) on the Purchase Price
         and the kind and amount of the shares of stock and other securities and
         property deliverable upon exercise of this Warrant. Such notice shall
         also specify the date, if known, as of which the holders of record of
         the Common Stock shall participate in said dividend, distribution or
         subscription rights or shall be entitled to exchange their shares of
         the Common Stock for securities or other property (including cash)
         deliverable upon such reorganization, sale, consolidation, merger,
         dissolution, liquidation or winding up, as the case may be (on which
         date, in the event of voluntary or involuntary dissolution,
         liquidation, or winding up of the Company, other than dissolution,
         liquidation or winding up following a consolidation or merger of the
         Company with or into, or sale of substantially all of its assets to,
         another corporation, the rights to exercise this Warrant shall
         terminate).

         4.11 Other Securities Adjustments. If as a result of Section 4, a
Holder is entitled to receive any securities other than Common Stock upon
exercise of this Warrant, the number and purchase price of such securities shall
thereafter be adjusted from time to time in the same manner as provided pursuant
to Section 4 for Common Stock. The allocation of purchase price between various
securities shall be made in writing by the Board of Directors of the Company in
good faith at the time of the event by which the holder became entitled to
receive new securities, and a copy sent to the Holder.

         4.12 Notices of Adjustments. When any adjustment is required to be made
under Section 4, the Company shall promptly (a) determine such adjustments, (b)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjustment; and (c) cause a copy of such
statement, together with any agreement required by Section 6.5, to be

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mailed to the Holder within 10 days after the date on which the circumstances
giving rise to such adjustment occurred.

         4.13 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Purchase Price shall be computed to the
nearest cent and the Number of Shares shall be calculated to the next highest
whole share. However, the fractional amount shall be used in calculating any
future adjustments. No fractional shares of Common Stock shall be issued in
connection with the exercise of this Warrant, but the Company shall, in the case
of the final exercise under this Warrant, make a cash payment for any fractional
shares based on the Current Market Price of the Common Stock on the date of
exercise. Notwithstanding any changes in the Purchase Price or the Number of
Shares, this Warrant, and any Warrants issued in replacement or upon transfer
thereof, may continue to state the initial Purchase Price and the Number of
Shares. Alternatively, the Company may elect to issue a new Warrant or Warrants
of like tenor for the additional shares of Common Stock purchasable hereunder
or, upon surrender of the existing Warrant, to issue a replacement Warrant
evidencing all the Warrants to which the Holder is entitled after such
adjustments.

         4.14 Exercise Before Payment Date. In the event that this Warrant is
exercised after the record date for any event requiring an adjustment, but prior
to the actual event, the Company may elect to defer payment of the adjusted
amount to the Holder until the actual event occurs; provided, however, that the
Company shall deliver a due bill or other appropriate instrument to the Holder
transferable to the same extent as the other securities issuable on exercise
evidencing the Holder's right to receive such additional amount upon the
occurrence of the event requiring such adjustment.

         4.15 Current Market Price. "Current Market Price" for the Common Stock
on any given date means (a) the closing price on the previous trading day for
the Common Stock on the principal stock exchange on which the Common Stock is
traded (or, in the case of issuances of stock options with an exercise price
equal to fair market value on the date of grant pursuant to the terms of a plan,
such date) or (b) if not so traded, the closing price (or, if no closing price
is available, the average of the bid and asked prices) for such date on the
NASDAQ if the Common Stock is listed on the NASDAQ or (c) if not listed on any
exchange or quoted on the NASDAQ, such value as may be determined in good faith
by the Company's Board of Directors, which determination shall be conclusively
binding on the parties.

5.       Redemption.

         5.1 Redemption at Company's Option. At any time following July __,
1999, if and to the extent that the Common Stock underlying the Warrants is
covered by an effective registration statement under the Securities Act, and no
right to immediate sale of the Common Stock underlying the Warrants has been
suspended pursuant to Section 10.1(b) of the Common Stock Purchase Agreement by
and among the Company, the initial Holder and certain other parties identified
therein dated June 30, 1998 (the "Common Stock Purchase Agreement"), the Company

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may, upon 30 days prior written notice (the "Redemption Notice") to the Holder,
redeem all, but not less than all of the Warrants granted hereunder that have
not been exercised before the date referred to in Section 5.2(d) at a redemption
price of $0.05 per Warrant (the "Redemption Price"), so long as the Current
Market Price (as defined in Section 4.15(a) and (b) above) is greater than the
following prices (the "Target Prices") for any period of 20 consecutive trading
days preceding the date the Redemption Notice is given:


                    TIME PERIOD                           TARGET PRICE
                    -----------                           ------------

          12 month period beginning on the                  $12.10    
          first anniversary of the date hereof                        

          12 month period beginning on the                  $14.52    
          second anniversary of the date hereof                       

          12 month period beginning on the                  $17.42    
          third anniversary of the date hereof                        

          12 month period beginning on the                  $20.90    
          fourth anniversary of the date hereof                       

         The date fixed for redemption of this Warrant is referred to herein as
the "Redemption Date."

         5.2 Redemption Notice. The Redemption Notice shall specify (a) the
Redemption Price, (b) the Redemption Date, (c) the place where this Warrant
shall be delivered and the Redemption Price paid, and (d) that the right to
exercise the Warrant shall terminate at 5:00 p.m. (Minneapolis time) on the
business day immediately preceding the Redemption Date. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a Holder (I) to
whom notice was not mailed (ii) whose notice was defective.

         5.3 Failure to Exercise. Any right to exercise this Warrant shall
terminate at 5:00 p.m. (Minneapolis time) on the business day immediately
preceding the Redemption Date. On and after the Redemption Date, the Holder
shall have no further rights except to receive, upon surrender of this Warrant,
the Redemption Price.

         5.4 Surrender of Warrant. From and after the Redemption Date, the
Company shall, at the place specified in the Redemption Notice, upon
presentation and surrender to the Company by or on behalf of the Holder of the
Warrant to be redeemed, deliver or cause to be delivered to or upon the written
order of the Holder a sum in cash equal to the Redemption Price of this Warrant.
From and after the Redemption Date and upon the deposit or setting aside by the

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Company of a sum sufficient to redeem this Warrant, it shall expire and become
void and all rights hereunder, except the right to receive payment of the
Redemption Price, shall cease.

         5.5 Adjustments. If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, the Target
Prices shall be proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding immediately after such
event.

6.       Covenants. The Company agrees that:

         6.1 Reservation of Stock. During the period in which this Warrant may
be exercised, the Company will reserve sufficient authorized but unissued
securities to enable it to satisfy its obligations on exercise of this Warrant
and shall use its reasonable best efforts to cause all shares of Common Stock
issued upon the exercise of this Warrant to be listed on any exchanges on which
the Common Stock is then listed. If at any time the Company's authorized
securities shall not be sufficient to allow the exercise of this Warrant, the
Company shall take such corporate action as may be necessary to increase its
authorized but unissued securities to be sufficient for such purpose;

         6.2 No Liens, etc. All securities that may be issued upon exercise of
this Warrant will, upon issuance, be validly issued, fully paid, nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
and shall be listed on any exchanges on which that class of securities is
listed;

         6.3 Furnish Information. During the term of this Warrant, the Company
will promptly deliver to the Holder copies of all financial statements, reports
and proxy statements which the Company shall have sent to its stockholders
generally;

         6.4 Stock and Warrant Transfer Books. Except upon dissolution,
liquidation or winding up or for ordinary holidays and weekends, the Company
will not at any time close its stock or warrant transfer books so as to result
in preventing or delaying the exercise or transfer of this Warrant; and

         6.5 Merger; Consolidation or Sale of Assets of the Company. Except in
the case of a merger or consolidation where the consideration is payable
entirely in cash or obligations, the Company will not merge or consolidate with
or into any Person, or sell or otherwise transfer its property, assets and
business substantially as an entirety to a successor Person, unless the Person
resulting from such merger or consolidation (if not the Company), or such
successor Person, shall expressly assume, by supplemental agreement reasonably
satisfactory in form to the then Majority Holders (as defined below) and
executed and delivered to the Holder, the due and punctual performance and
observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company. "Majority Holders", as of any date,

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shall mean the holders of this Warrant (or replacement warrants issued pursuant
hereto) and of the substantially similar warrants issued contemporaneously
herewith pursuant to the Common Stock Purchase Agreement (or replacement
warrants issued pursuant thereto) who together have rights to exercise such
warrants for a majority of the Warrant Shares (as defined in the Common Stock
Purchase Agreement).

7.       Status of Holder.

         7.1 Not a Stockholder. Unless the Holder exercises this Warrant in
writing, the Holder shall not be entitled to any rights (a) as a stockholder of
the Company with respect to the shares as to which the Warrant is exercisable
including, without limitation, the right to vote or receive dividends or other
distributions, or (b) to receive any notice of any proceedings of the Company
except as otherwise provided in this Warrant.

         7.2 Limitation of Liability. Unless the Holder exercises this Warrant
in writing, the Holder's rights and privileges hereunder shall not give rise to
any liability for the Purchase Price or as a stockholder of the Company, whether
to the Company or its creditors.

8. Registration Rights. The shares purchasable upon exercisable of this Warrant
shall be Registerable Securities as defined in Section 10.1 of the Common Stock
Purchase Agreement.

9.       General Provisions.

         9.1 Complete Agreement; Modifications. This Warrant and any documents
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. The Warrant may not be amended, altered or modified except by a writing
signed by the parties.

         9.2 Cooperation. Each party hereto agrees to execute any and all
further documents and writings and to perform such other reasonable actions
which may be or become necessary or expedient to effectuate and carry out this
Warrant.

         9.3 Notices. All notices under this Warrant shall be in writing and
shall be delivered by personal service or telecopy or certified mail return
receipt requested (if such service is not available, then by first class mail),
postage prepaid, to such address as may be designated from time to time by the
relevant party, and which shall initially be:


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                  (a)      If to the Company:

                           Diametrics Medical, Inc.
                           2658 Patton Road
                           Roseville, Minnesota 55113
                           Attention:  Chief Financial Officer
                           Telecopy:  (612) 639-8459

                           With a copy to:
                           Dorsey & Whitney LLP
                           Pillsbury Center South
                           220 South Sixth Street
                           Minneapolis, Minnesota 55402
                           Attention:  Kenneth Cutler
                           Telecopy:  (612) 340-8738

                  (b)      If to the Holder:

                           [Purchaser]
                           c/o Bay City Capital LLC
                           750 Battery Street, Suite 600
                           San Francisco, CA 94111
                           Attention:  Sandy Zweifach, Chief Financial Officer
                           Phone: (415) 676-3830
                           Fax: (415) 837-0996

                           with a copy to:

                           Heller, Ehrman, White & McAuliffe
                           333 Bush Street
                           San Francisco, CA 94104
                           Attention:  George H. Shenk, Esq.
                           Phone: (415) 772-6000
                           Fax: (415) 772-6268

         Any notice sent by certified mail shall be deemed to have been given
three (3) days after the date on which it is mailed. All other notices shall be
deemed given when received. No objection may be made to the manner of delivery
of any notice actually received in writing by an authorized agent of a party.

         9.4 No Third-Party Benefits; Successors and Assigns. None of the
provisions of this Warrant shall be for the benefit of, or enforceable by, any
third-party beneficiary. Except as

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provided herein to the contrary, this Warrant shall be binding upon and inure to
the benefit of the parties, their respective successors and permitted assigns.

         9.5 Governing Law. This Warrant concerns a Minnesota corporation, and
all questions with respect to the Warrant and the rights and liabilities of the
parties will be governed by the laws of Minnesota regardless of the choice of
law provisions of Minnesota or any other jurisdiction.

         9.6 Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.

         9.7 Severability. The validity, legality or enforceability of the
remainder of this Warrant shall not be affected even if one or more of its
provisions shall be held to be invalid, illegal or unenforceable in any respect.

         9.8 Attorneys' Fees. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provisions of this Warrant or the rights
and duties of any person or entity hereunder the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the attorneys' fees and court costs incurred by reason of such
litigation.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed effective as of August 4, 1998.

                                           DIAMETRICS MEDICAL, INC.


                                           By:_______________________________

                                           Title:_____________________________


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<PAGE>
 
                                 ASSIGNMENT FORM


         FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns and transfers to the transferee named below the rights to purchase
______________ of the Number of Shares under this Warrant, together with all
rights, title and interest therein. The rights to purchase the remaining Number
of Shares shall remain the property of the undersigned.

         Dated:  _____________________


                                           [NAME OF HOLDER]


                                           By_________________________________

                                           Name ______________________________
                                                          (Please Print)


                                           Address:____________________________
                                           ____________________________________
                                           ____________________________________

Employer Identification Number, Social
Security Number or other identifying
number:

_______________________________________



                                     - 13 -
<PAGE>
 
                                  EXERCISE FORM

                     To Be Executed Upon Exercise Of Warrant

         The undersigned hereby exercises the Warrant with regard to ___________
shares of Common Stock and herewith makes payment of the purchase price in full.
The undersigned requests that certificate(s) for such shares and the Warrant for
any unexercised portion of this Warrant be issued to the Holder.


         Dated:_______________________________


                                           [NAME OF HOLDER]


                                           By_________________________________

                                           Name ______________________________
                                                         (Please Print)


                                           Address:____________________________
                                           ____________________________________
                                           ____________________________________


Employer Identification Number, Social
Security Number or other identifying
number:


_______________________________________


                                     - 14 -