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                                                                   EXHIBIT 10.45


                      MARKETING AND DISTRIBUTION AGREEMENT

         THIS AGREEMENT is made by and between Abbott Laboratories, an Illinois
corporation having its principal place of business at 100 Abbott Park Road,
Abbott Park, Illinois 60064-3500 ("Abbott"), and i-STAT Corporation, a Delaware
corporation having its principal place of business at 303 College Road East,
Princeton, New Jersey 08540 ("i-STAT").

                                  WITNESSETH:

         WHEREAS, i-STAT develops, manufactures and sells medical diagnostic
products for point-of-care blood analysis;

         WHEREAS, i-STAT has entered into a Distribution Agreement with FUSO
Pharmaceutical Industries, Ltd. and JCR Pharmaceutical Co., Ltd. (together
"FUSO") dated August 23, 1988 ("FUSO Agreement") for the distribution of certain
of such i-STAT products in Japan, South Korea and Taiwan;

         WHEREAS, i-STAT has entered into a Distribution Agreement with
Hewlett-Packard Company ("HP") dated July 28, 1995 ("HP Agreement") for the
distribution of certain of such i-STAT products in Europe, the Middle East and
Africa;

         WHEREAS, i-STAT wishes to expand its worldwide sales of certain of such
products through an additional distribution arrangement;

         WHEREAS, Abbott, through its Diagnostics Division ("ADD"), is engaged
in the development, manufacture, marketing and distribution of medical
diagnostic products;
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         WHEREAS, Abbott desires to become a worldwide distributor of certain of
such i-STAT products;

         WHEREAS, in accordance with the terms and conditions hereof, i-STAT is
willing to appoint Abbott as a worldwide distributor of all such products, and
Abbott is willing to accept such appointment;

         WHEREAS, concurrent with this Agreement, Abbott and i-STAT are
executing a stock purchase agreement and other related agreements by which
Abbott will acquire a minority ownership interest in i-STAT ("Stock Purchase
Agreements"); and

         WHEREAS, concurrent with this Agreement, Abbott and i-STAT are
executing a research and development agreement by which Abbott will fund joint
research and development projects designed to develop for commercialization by
Abbott additional medical diagnostic products ("Funded Research & Development
and License Agreement" and, together with this Agreement and the Stock Purchase
Agreements, the "Alliance Agreements").

         NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and upon the terms and subject to conditions set forth below,
Abbott and i-STAT hereby agree as follows:

                             ARTICLE 1 - DEFINITIONS

         The following words and phrases, when used herein with initial capital
letters, shall have the meanings set forth or referenced below:

         1.1      "Actual Cartridge Purchase Price" shall mean the price for
                  Cartridges (as hereinafter defined) purchased hereunder by
                  Abbott and its Affiliates (as hereinafter defined)


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                  from i-STAT and its Affiliates calculated during the year-end
                  reconciliation described in Section 5.3.

         1.2      "Additional Units" shall mean the number of Cartridges
                  purchased hereunder by Abbott and its Affiliates from i-STAT
                  and its Affiliates in a Contract Year (as hereinafter defined)
                  that exceeds the Estimated Volume of Cartridges, all of which
                  is more fully described in Section 5.5.

         1.3      "Affiliate" shall mean, with respect to each Party (as
                  hereinafter defined), any legal entity which is, directly or
                  indirectly, controlling, controlled by or under common control
                  with such Party. For purposes of this definition, a Party
                  shall be deemed to control another entity if it owns or
                  controls, directly or indirectly, more than fifty percent
                  (50%) of the voting equity of the other entity (or other
                  comparable ownership interest for an entity other than a
                  corporation).

         1.4      "Analyte" shall mean an individual compound, protein or
                  fragment thereof, or substance which is the target of
                  quantitative or qualitative measurement.

         1.5      "Analyzer" shall mean a device that processes Cartridges and
                  is capable of detecting at least one (1) Analyte for use in
                  the Field, including analyzers integrated into in vitro
                  diagnostic devices, but excluding analyzers which are not
                  integrated into in vitro diagnostic devices, which devices are
                  devices designed primarily for the delivery of patient care
                  (e.g., the monitors currently being marketed and distributed
                  by HP pursuant to a license from i-STAT).

         1.6      "Ancillary Products" shall mean any hardware (not including
                  Cartridges) and/or software that is not part of an Analyzer,
                  but is essential to the use of an Analyzer (e.g., a simulator
                  device used for testing Analyzers by simulating certain of the
                  electrical characteristics


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                  of a Cartridge or by some other testing means), and which is
                  identified on Schedule 1.6, as may be amended from time to
                  time.

         1.7      "Annualized" shall mean the number being measured during the
                  Base Period divided by the number of days in the Base Period
                  times three hundred sixty-five (365).

         1.8      "AUP" shall mean average unit selling price.

         1.9      "Base AUP" shall mean the Net Sales (as hereinafter defined)
                  of Cartridges sold by i-STAT and its Affiliates in the Field
                  (as hereinafter defined) in the United States (as hereinafter
                  defined) to Base Customers (as hereinafter defined) *** (as
                  hereinafter defined), divided by the number of Cartridges sold
                  by i-STAT and its Affiliates in the United States to Base
                  Customers ***.

         1.10     "Base Customers" shall mean customers that purchased
                  Cartridges from i-STAT and its Affiliates under Third Party
                  Agreements (as hereinafter defined) for use in the Field in
                  the United States as of the Starting Date.

         1.11     "Base Fully Burdened Manufacturing Cost" shall mean ***

*** Confidential treatment requested


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         1.12     "Base Period" shall mean the period from and including January
                  1, 1998, until, but not including, the Starting Date.

         1.13     "Base Sales" shall mean the Annualized Net Sales of i-STAT
                  Products (as hereinafter defined) by i-STAT and its Affiliates
                  in the Field in the United States.

         1.14     "Base Units" shall mean the Annualized number of Cartridges
                  sold by i-STAT and its Affiliates in the Field in the United
                  States.

         1.15     "Book Value" shall mean the Purchase Price (as hereinafter
                  defined) of the Analyzers, less accumulated depreciation based
                  on a depreciation schedule determined in accordance with
                  Abbott's standard accounting procedures, but not to exceed
                  four (4) years.

         1.16     "Business" shall mean the promotion, marketing, distribution
                  and sale of i-STAT Products by i-STAT and its Affiliates in
                  the Field in the United States.

         1.17     "Business Day" means any day other than a day which is a
                  Saturday or Sunday or other day on which commercial banks in
                  New York, New York are authorized or required to remain
                  closed.

         1.18     "Calendar Quarter" shall mean a period of three (3)
                  consecutive calendar months commencing on January 1, April 1,
                  July 1 or October 1 of any Contract Year.

         1.19     "Cartridge" shall mean the disposable component of a Product
                  (as hereinafter defined) that contains i-STAT Sensors (as
                  hereinafter defined) and fluid handling channels and operate
                  on the Analyzer or any other analyzer or integrated device
                  sold by a Third Party (as hereinafter defined) under an
                  agreement with i-STAT.

         1.20     "Certificate of Analysis" shall mean finished goods test
                  results accompanying the release of Products.


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         1.21     "Change of Control" shall mean: (a) the consolidation or
                  merger of i-STAT or any Affiliate of i-STAT with or into any
                  Third Party wherein the shareholders of i-STAT immediately
                  prior to such transaction shall cease to be the holders of at
                  least fifty percent (50%) of the outstanding securities of the
                  surviving corporation in such transaction; (b) the assignment,
                  sale, transfer, lease or other disposition of all or
                  substantially all of the assets of i-STAT; or (c) the
                  acquisition by any Third Party or group of Third Parties
                  acting in concert, of beneficial ownership (within the meaning
                  of Rule 13d-3 of the Securities and Exchange Commission
                  ("SEC") under the Securities and Exchange Act of 1934) of more
                  than fifty percent (50%) of the outstanding shares of voting
                  stock of i-STAT.

         1.22     "Closing" shall mean the closing of the transaction provided
                  for in this Agreement, as more fully described in Section 8.1.

         1.23     "Closing Date" shall mean the date on which the Closing
                  occurs.

         1.24     "Co-exclusive FUSO Territory" shall mean the territory into
                  which FUSO currently has the right to distribute certain
                  i-STAT Products on a non-exclusive basis pursuant to the FUSO
                  Agreement, which territory shall be reduced from time to time
                  pursuant to Sections 2.1 and 2.2. As of the Signing Date (as
                  hereinafter defined), the Co-exclusive FUSO Territory consists
                  of Japan, South Korea and Taiwan.

         1.25     "Confidential Information" shall mean any and all technical
                  data, information, materials and other know-how, including
                  Trade Secrets (as hereinafter defined), presently owned by or
                  developed by, on behalf of, or derived either directly or
                  indirectly from Program Technology (as hereinafter defined) of
                  either Party and/or its Affiliates during the Term (as
                  hereinafter defined) which relates to a Product, its
                  development, manufacture, promotion,


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                  marketing, distribution, sale or use and any and all financial
                  data and information relating to the business of either of the
                  Parties and/or of their Affiliates, which a Party and/or its
                  Affiliates discloses to the other Party and/or its Affiliates
                  in writing and identifies as being confidential, or if
                  disclosed orally, visually or through some other media, is
                  identified as confidential at the time of disclosure and is
                  summarized in writing within thirty (30) days of such
                  disclosure and identified as confidential, except any portion
                  thereof which:

                  (a)      is known to the receiving Party and/or its Affiliates
                           at the time of the disclosure, as evidenced by its
                           written records;

                  (b)      is disclosed to the receiving Party and/or its
                           Affiliates by a Third Party having a right to make
                           such disclosure;

                  (c)      becomes patented, published or otherwise part of the
                           public domain through no fault of the receiving Party
                           and/or its Affiliates; or

                  (d)      is independently developed by or for the receiving
                           Party and/or its Affiliates without use of
                           Confidential Information disclosed hereunder, as
                           evidenced by its written records.

         1.26     "Contract Year" shall mean a calendar year during the Term (as
                  hereinafter defined), beginning on January 1, except that the
                  first Contract Year may begin on the Starting Date and shall
                  end on December 31, 1999.

         1.27     "Customer Contracts" shall mean those Third Party Agreements
                  listed on Schedule 1.27.

         1.28     "Designated Country" shall mean a country in the Territory (as
                  hereinafter defined) outside of the United States to which
                  Products shall be delivered.


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         1.29     "Delivered" and "Delivery" shall have the meanings ascribed to
                  them in Section 6.1.

         1.30     "Distributor Territories" shall mean those countries
                  identified on Schedule 1.30, as may be amended from time to
                  time in accordance with the provisions of Section 2.4.

         1.31     "Estimated Cartridge Purchase Price" shall mean the weighted
                  average price for Cartridges purchased by Abbott and its
                  Affiliates from i-STAT and its Affiliates hereunder, as
                  determined in accordance with the terms of Section 5.2.

         1.32     "Estimated Volume of Cartridges" shall mean the estimated
                  volume of Cartridges in excess of Base Units *** as specified
                  in Schedule 5.5.

         1.33     "Exclusive Territory" shall mean the Territory, except for the
                  Co-exclusive FUSO Territory, the HP Territory and the
                  Distributor Territories, subject to the Co-exclusive FUSO
                  Territory, the HP Territory and the Distributor Territories,
                  or portions thereof, becoming part of the "Exclusive
                  Territory" pursuant to Sections 2.1, 2.2, 2.3 and 2.4.

         1.34     "FDA" shall mean the United States Food and Drug
                  Administration and any successor agency thereto.

         1.35     "Field" shall mean the professionally attended human
                  healthcare delivery market, including, without limitation,
                  hospitals, physician office laboratories, alternate site
                  facilities, surgi-centers, emergicare, ambulances and home
                  care. Subject to Abbott's right of first negotiation as set
                  forth in Section 2.5, "Field" shall not include the consumer
                  self-testing market.

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         1.36     "Fully Burdened Manufacturing Costs" shall mean ***

         1.37     "FUSO Agreement" shall mean the Distribution Agreement dated
                  August 23, 1988, between i-STAT and FUSO.

         1.38     "FUSO Development Agreement" shall mean the Development
                  Agreement dated August 23, 1988, between i-STAT and FUSO.

         1.39     "FUSO License Agreement" shall mean the Manufacturing License
                  Agreement dated August 23, 1988, between i-STAT and FUSO.

         1.40     "HP Agreement" shall mean the Distribution Agreement dated
                  July 28, 1995 between i-STAT and HP.

         1.41     "HP Exclusivity Period" shall mean the period under the HP
                  Agreement during which HP shall have exclusive rights to
                  distribute certain of i-STAT's products, as determined by
                  Abbott in its sole discretion.

         1.42     "HP License Agreement" shall mean the License Agreement dated
                  July 28, 1995 between i-STAT and HP.

         1.43     "HP Stock Purchase Agreement" means the Series B Preferred
                  Stock Purchase Agreement dated as of June 23, 1995 between
                  i-STAT and HP.

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         1.44     "HP Territory" shall mean the territory into which HP has the
                  right to distribute certain i-STAT Products pursuant to the HP
                  Agreement. As of the Signing Date, the HP Territory consists
                  of the countries set forth on Schedule 1.44.

         1.45     "HSR Act" shall mean the United States Hart-Scott-Rodino
                  Antitrust Improvements Act of 1976, including all regulations
                  promulgated thereunder, and any foreign equivalent.

         1.46     "Incremental AUP" shall mean the Net Sales of Incremental
                  Units (as hereinafter defined) sold by Abbott and its
                  Affiliates in the Territory during a Calendar Quarter divided
                  by the number of Incremental Units sold by Abbott and its
                  Affiliates in the Territory during such Calendar Quarter.

         1.47     "Incremental Units" shall mean the number of Cartridges
                  purchased by Abbott and its Affiliates from i-STAT and its
                  Affiliates hereunder in a Contract Year in excess of the Base
                  Units.

         1.48     "i-STAT Distributors" shall mean Third Parties, other than
                  FUSO and HP, that, as of the Signing Date, distribute i-STAT
                  Products in the Distributor Territories, pursuant to
                  agreements, understandings or arrangements with i-STAT.

         1.49     "i-STAT Product" shall mean Analyzers, Cartridges and
                  Ancillary Products, or any combination of the foregoing, in
                  the Field, including the manuals, labeling, packaging and
                  package inserts thereto. For purposes of this Agreement, any
                  New Product (as hereinafter defined) shall be deemed to be an
                  "i-STAT Product".

         1.50     "i-STAT Sensors" shall mean at least one (1) solid state
                  potentiometric, amperimetric and/or conductometric microsensor
                  device or an integrated group of such devices


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                  designed to detect the presence and/or quantity of at least
                  one (1) Analyte. ***

         1.51     "i-STAT Trademarks" shall mean the trademarks of i-STAT as set
                  forth in Schedule 1.51.

         1.52     "Liabilities" shall mean any claims, damages, losses,
                  liabilities, debts or obligations of any nature, whether known
                  or unknown, accrued, absolute, contingent or otherwise, and
                  whether due or to become due.

         1.53     "Minimum Cartridge Purchase Price" shall mean the minimum
                  price i-STAT shall invoice Abbott and its Affiliates for any
                  Cartridge as set forth in Schedule 1.53, as may be adjusted in
                  accordance with the provisions of Section 5.6.

         1.54     "Net Sales" shall mean the total of the gross amount billed or
                  invoiced to Third Parties for the sale of Product, less:

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

                  (b)      Retroactive price reductions imposed by government
                           authorities;

                  (c)      Fees, commissions or rebates lawfully paid pursuant
                           to contracts with group purchasing organizations;

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

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                  (e)      Upcharges invoiced and paid by Third Parties as part
                           of a reagent agreement plan or similar arrangement.

         1.55     "New Product" shall mean any i-STAT Product or modification or
                  follow-on to an i-STAT Product intended for use in the Field,
                  which i-STAT may develop or offer for sale during the Term,
                  with the exception of Program Products (as hereinafter
                  defined).

         1.56     "Party" shall mean i-STAT or Abbott, and "Parties" shall mean
                  i-STAT and Abbott.

         1.57     "Prepayment" shall mean periodic cash payments made by Abbott
                  to i-STAT which i-STAT shall credit or repay to Abbott in
                  accordance with the terms and conditions set forth in Sections
                  5.5 or 18.3.

         1.58     "Product" shall mean i-STAT Products and Program Products.

         1.59     "Program Product" shall have the same meaning as is ascribed
                  to such term under the Funded Research & Development and
                  License Agreement.

         1.60     "Program Technology" shall have the same meaning as is
                  ascribed to such term under the Funded Research & Development
                  and License Agreement.

         1.61     "Purchase Price" shall mean the price for Analyzers and
                  Ancillary Products purchased by Abbott and its Affiliates from
                  i-STAT and its Affiliates hereunder, as more fully described
                  in Section 5.1.

         1.62     "Signing Date" shall mean the last date on which a Party
                  executes this Agreement.


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         1.63     "Specifications" shall mean the Product characteristics set
                  forth in Schedule 1.63, and New Product and Program Product
                  characteristics at such time as the same are available and
                  i-STAT's manufacturing specifications.

         1.64     "Starting Date" shall mean January 1, 1999, unless an earlier
                  date is mutually agreed in writing by the Parties; provided,
                  however, the Starting Date shall not occur unless the Closing
                  has first occurred.

         1.65     "Term" shall mean the period beginning on the Starting Date
                  and ending on December 31, 2003 or any extensions thereto,
                  unless otherwise terminated earlier in accordance with the
                  terms and conditions of Article 17.

         1.66     "Territory" shall mean the Co-exclusive FUSO Territory, the HP
                  Territory (after the expiration the HP Exclusivity Period),
                  the Distributor Territories and the Exclusive Territory, which
                  collectively shall mean the entire world.

         1.67     "Third Party" shall mean a natural person, corporation,
                  partnership, trust, joint venture, governmental authority or
                  other legal entity or organization other than the Parties
                  and/or their Affiliates.

         1.68     "Third Party Agreements" shall mean all written or oral
                  agreements, contracts, purchase or sale orders and commitments
                  with Third Parties for the sale of i-STAT Product in the
                  United States.

         1.69     "Trade" shall mean those potential customers for i-STAT
                  Product, including, without limitation, facilities operating
                  in the Field and group purchasing organizations.

         1.70     "Trade Secrets" shall mean the technical or nontechnical data,
                  formulae, patterns, compilations, programs, devices, methods,
                  techniques, drawings, processes, financial data,


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                  financial plans, marketing plans, product plans and the like,
                  owned or licensed by a Party and/or its Affiliates: (a) from
                  which a Party and/or its Affiliates derives actual or
                  potential economic value by being held in secrecy and not
                  known by Third Parties who are not under an obligation of
                  confidentiality with respect thereto; or (b) which gives such
                  Party an advantage over Third Party competitors who do not
                  know or use it.

         1.71     "Transition Period" shall mean the period of time between the
                  Signing Date and the Starting Date.

         1.72     "United States" shall mean the fifty (50) states of the United
                  States, including its territories and possessions and the
                  District of Columbia and Puerto Rico.

         1.73     "Warranty Period" shall have the meaning ascribed to it in
                  Section 14.1(b).

                ARTICLE 2 - APPOINTMENT TO MARKET AND DISTRIBUTE

         2.1      Exclusive Appointment. As of the Closing Date, i-STAT hereby
                  appoints Abbott and its Affiliates for the Term as i-STAT's
                  exclusive distributor of Products in the Exclusive Territory
                  for use in the Field and Abbott accepts such appointment. As
                  part of such appointment under this Section 2.1, Abbott shall
                  have the right to appoint sub-distributors in those countries
                  or territories in the Exclusive Territory in which ADD does
                  not then distribute products similar to Products. The Parties
                  acknowledge that, during the Term, either pursuant to
                  Section(s) 2.2, 2.3, 2.4 or otherwise, countries within the
                  Co-exclusive FUSO Territory, the HP Territory or the
                  Distributor Territory may no longer be subject to FUSO's, HP's
                  and i-STAT Distributors' distribution rights for i-STAT
                  Products, respectively. In such event, i-STAT shall notify
                  Abbott in writing at least thirty (30) days prior to the
                  expiration or termination of FUSO's, HP's, or any


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                  termination of such rights, such countries shall automatically
                  be deemed part of the Exclusive Territory. As exclusive
                  distributor hereunder, Abbott and its Affiliates shall have
                  the sole and exclusive right to market, promote, sell and
                  distribute Products in the Exclusive Territory for use in the
                  Field, which right shall operate to exclude all others,
                  including i-STAT, its Affiliates and all Third Parties;
                  provided, however, that i-STAT may maintain certain
                  consultative and technical staff, at i-STAT's expense, to
                  assist Abbott in connection with such marketing, promotion,
                  sales and distribution efforts, in accordance with Article 3.
                  In addition, i-STAT may continue to promote the concept and
                  benefit of point-of-care testing without violation of its
                  obligations hereunder.

         2.2      Appointment in Co-exclusive FUSO Territory. As of the Closing
                  Date, i-STAT hereby appoints Abbott and its Affiliates as a
                  co-exclusive distributor of i-STAT Products with FUSO in the
                  Co-exclusive FUSO Territory for use in the Field from the
                  Starting Date until December 31, 2002. As part of such
                  appointment under this Section 2.2, i-STAT shall not appoint
                  any other Third Party as a distributor of Products in the
                  Co-exclusive FUSO Territory; provided, however, Abbott and its
                  Affiliates shall have the right to appoint sub-distributors in
                  those countries or territories in the Co-exclusive FUSO
                  Territory in which ADD does not then distribute products
                  similar to Products. ***

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                  ***

         2.3      Appointment in HP Territory. As of the expiration of the HP
                  Exclusivity Period (of which i-STAT shall provide written
                  notice to Abbott), i-STAT hereby appoints Abbott and its
                  Affiliates as a co-exclusive distributor of i-STAT Products
                  with HP in the HP Territory until such time as HP no longer
                  has any rights, on a country-by-country basis (of which i-STAT
                  shall provide written notice to Abbott), to distribute any
                  i-STAT Products under the HP Agreement, at which time Abbott
                  and its Affiliates shall become the exclusive distributor for
                  Products for such country ***

*** Confidential treatment requested


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                  ***

         2.4      Distributor Territories. ***

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         ***

         2.5      Right of First Negotiation. i-STAT hereby grants to Abbott the
                  first right of negotiation with regard to any transaction
                  contemplated by i-STAT whereby i-STAT, directly or indirectly,
                  would license, sell, transfer, convey, assign to a Third Party
                  or otherwise encumber any right, title or interest of i-STAT
                  to sell, market, promote or distribute any i-STAT Product in
                  the consumer self-testing market (other than i-STAT's sales
                  directly to Third Parties in the usual and customary channel
                  of distribution of products to the retail consumer market). In
                  the event i-STAT determines to solicit a proposal for the
                  foregoing, i-STAT first shall promptly provide, exclusively to
                  Abbott written notice of such proposed solicitation, including
                  a detailed summary of all material terms and conditions. In
                  the event i-STAT receives an unsolicited Third Party proposal
                  with respect to such a transaction and i-STAT intends to
                  pursue negotiations with the Third Party submitting such
                  proposal, i-STAT shall promptly provide, exclusively to
                  Abbott, a detailed summary of the material terms and
                  conditions of such proposal. Abbott shall have thirty (30)
                  days from receipt of the solicitation or the unsolicited
                  Third Party proposal to advise i-STAT in writing (the
                  "Negotiation Notice") of whether Abbott shall negotiate with 
                  i-STAT regarding the terms and

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                  conditions of the solicitation, or will "meet" such
                  unsolicited Third Party proposal, as the case may be. If
                  Abbott elects to negotiate with i-STAT regarding the terms
                  and conditions of the solicitation, or to "meet" such
                  unsolicited Third Party proposal, as the case may be, Abbott
                  and i-STAT shall negotiate exclusively in good faith, for not
                  less than sixty (60) days after Abbott's written election, a
                  definitive agreement reflecting the material terms of the
                  solicitation or proposal. If Abbott and i-STAT are unable in
                  good faith to reach a definitive agreement within the sixty
                  (60) day period, i-STAT may enter into negotiations and
                  conclude a definitive agreement with a Third Party on terms
                  no less favorable to i-STAT than those finally offered
                  by or to Abbott in all material respects.     

         2.6      Noncompetition. During the Term, so long as the Product is
                  materially meeting customer requirements, ADD shall not,
                  directly or indirectly, promote, market, distribute or sell a
                  directly competitive product in the Field in the Territory
                  which "functions the same" as the Products which ADD is
                  distributing. In the event Abbott notifies i-STAT in writing
                  that a Product is not materially meeting customer
                  requirements, Abbott shall afford i-STAT an opportunity to
                  conform Product to the necessary customer requirements within
                  a reasonable period of time. If i-STAT cannot or does not
                  conform such Product to the necessary customer requirements
                  within such reasonable period of time, then i-STAT promptly
                  shall notify Abbott in writing of the continuation of such
                  nonconforming Product, and as of the date of such notice,
                  Abbott shall no longer be subject to Abbott's obligation of
                  non-competition for such Product as set forth in this Section
                  2.6. For purposes of this Section 2.6, "functions the same"
                  shall mean the following: 

                  ***

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                  ***

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                  ***

         2.7      Trade Costs. Abbott and its Affiliates shall be responsible
                  for payment of all rebates, discounts, management fees,
                  service allowances, credits and taxes associated with the sale
                  by Abbott or its Affiliates of Products.

         2.8      Selling Price. Abbott and its Affiliates shall, in their sole
                  discretion, determine the final sales price of Products sold
                  by Abbott and its Affiliates to the Trade; provided, however,
                  that Abbott shall consult with i-STAT at least once each
                  Calendar Quarter with respect to i-STAT's observations, ideas
                  and strategies regarding marketing the Products.

         2.9      Contracting Rights. During the Term and subject to existing
                  rights of FUSO, HP, and i-STAT Distributors with respect to
                  i-STAT Products, Abbott and its Affiliates shall have the
                  exclusive right to contract with the Trade for the sale of
                  Products in the Territory.

         2.10     Assignment and Assumption of Customer Contracts. i-STAT shall
                  use reasonable commercial efforts to assign Customer Contracts
                  to Abbott or its Affiliate, and Abbott or its Affiliate shall
                  assume, effective as of the Starting Date, all of i-STAT's
                  rights and post-Starting Date obligations under the assigned
                  the Customer Contracts.

                  (a)      i-STAT Liabilities. Notwithstanding the foregoing,
                           neither Abbott nor its Affiliates are assuming (and
                           shall not be deemed to have assumed), without
                           limitation, any Liabilities of i-STAT, its Affiliates
                           or any Third Party prior to the Starting Date under
                           the Customer Contracts or any Third Party Agreements.
                           Without in any way

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                           limiting the generality of the foregoing, it is
                           expressly agreed that neither Abbott nor its
                           Affiliates is assuming any of the following
                           Liabilities, whether civil or criminal:

                                    (i) any Liability in any way arising out of
                           or resulting from i-STAT Products manufactured,
                           distributed or sold by i-STAT, its Affiliates or any
                           Third Party prior to the Starting Date, whether for
                           breach of any warranties, expressed or implied, or
                           any Liabilities to a Third Party, including any
                           Liabilities under any of the Third Party Agreements;

                                    (ii) any Liabilities arising out of
                           withdrawals or recalls, rebates, trade or customer
                           promotional expenses, chargebacks or customer returns
                           of i-STAT Products manufactured, distributed or sold
                           by i-STAT, its Affiliates or any Third Party prior to
                           the Starting Date; or

                                    (iii) any Liabilities for taxes or liens for
                           taxes or other governmental charges relating to the
                           Business. 

                  Further, Abbott shall not be liable and i-STAT shall defend,
                  indemnify and hold Abbott and its Affiliates and their
                  officers, directors, employees and representatives harmless
                  from and against Liabilities resulting from or arising out of
                  the breach by i-STAT or any of its Affiliates of i-STAT's or
                  its Affiliates' obligations under Third Party Agreements prior
                  to the Starting Date.

                  (b)      Abbott Liabilities. i-STAT and its Affiliates shall
                           not be liable, and Abbott shall defend, indemnify and
                           hold i-STAT and its Affiliates and their officers,
                           directors, employees and representatives harmless
                           from and against Liabilities resulting from or
                           arising out of the breach by Abbott or any of its
                           Affiliates of Abbott's or any of



                                      -22-
<PAGE>   23
                           its Affiliates' obligations under assigned Third
                           Party Agreements from and after the Starting Date.

         2.11     Program Products. i-STAT has no rights to market, promote,
                  sell and/or distribute Program Products in the Field in the
                  Territory.

                       ARTICLE 3 - MARKETING AND PROMOTION

         3.1      Cooperation. After the Closing Date, Abbott and i-STAT shall
                  create a marketing council to facilitate communications and
                  assist Abbott in its decision making, which council shall be
                  comprised of no less than three (3) and no more than five (5)
                  representatives from each of Abbott's and i-STAT's sales,
                  marketing and support organizations. At all times during the
                  Term, the number of Abbott representatives to the marketing
                  council shall constitute a majority of the total number of
                  representatives on such council.

                  (a)      Abbott's Responsibilities. Abbott shall use its
                           reasonable commercial efforts to promote, market,
                           sell and distribute Products in the Territory. Such
                           efforts may include, but shall not be limited to, the
                           use of sales and marketing representatives who
                           dedicate greater than *** of their professional
                           efforts to the marketing, promotion and sale of
                           Products. Such efforts may also include, but shall
                           not be limited to, preparing collateral marketing
                           materials, conducting advertising, presenting
                           educational seminars, participating in customer
                           visitations, displaying exhibits at trade shows and
                           ensuring representation and attendance at industry
                           meetings, all of which shall be performed in
                           accordance with ADD's usual and customary practices.
                           Abbott shall, on an on-going basis, and at Abbott's
                           cost, train and supervise the appropriate personnel

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                                      -23-
<PAGE>   24
                           within the ADD sales force (including the MediSense
                           sales force) in the promotion and sale of Products in
                           the Territory.

                  (b)      i-STAT's Responsibilities. For the initial training,
                           i-STAT shall provide, at i-STAT's cost, training
                           personnel, in such scope, time and quantity as the
                           Parties may mutually agree, to train ADD's sales
                           force. i-STAT, at i-STAT's cost, also shall assist
                           Abbott in the preparation of appropriate sales force
                           training materials. Further, i-STAT shall attend with
                           Abbott, at i-STAT's expense, major trade shows in
                           1998 and 1999, as mutually agreed by the Parties, to
                           provide Abbott with necessary technical and i-STAT
                           Product information support.

         3.2      Development of Promotional and Marketing Materials. Promptly
                  after the Closing Date, i-STAT shall deliver to Abbott copies
                  of all promotional and marketing materials owned or controlled
                  by i-STAT to be used by Abbott and its Affiliates in the
                  promotion and sale of i-STAT Products hereunder. During the
                  Term, Abbott shall develop and prepare, at Abbott's sole
                  discretion and at its cost, promotional and marketing
                  materials for use in its sale of Products. Prior to
                  publication, Abbott shall submit all such materials to i-STAT
                  for verification of technical accuracy and conformity with
                  regulatory requirements and with i-STAT Trademark usage
                  guidelines. i-STAT shall provide such verification in writing
                  within fifteen (15) days of receipt of any such materials and
                  shall not unreasonably withhold its approval thereof.

         3.3      Marketing Plans. Abbott shall develop and prepare, at Abbott's
                  sole discretion and at its cost, all marketing plans for the
                  promotion and sale of Products; provided, however, Abbott
                  shall provide to i-STAT for its review and comment only, prior
                  to implementation, any marketing plans developed by Abbott
                  with respect to Products. i-STAT shall not disclose to any


                                      -24-
<PAGE>   25
                  Third Party, including, without limitation, the i-STAT
                  Distributors, HP and FUSO, the existence of or any term or
                  concept contained within any such marketing plans. Abbott
                  agrees that pricing programs for Products shall be independent
                  of pricing for other ADD products.

         3.4      Sales Reports. Abbott shall provide to i-STAT within thirty
                  (30) days after each Calendar Quarter, a sales report
                  reflecting the sales of Product in the Territory by Abbott and
                  its Affiliates. Each such report shall provide Net Sales
                  dollars and unit sales of Products, listed separately by
                  component, for that Calendar Quarter, and for year-to-date.
                  These sales reports shall be considered Confidential
                  Information.

         3.5      Product Support.

                  (a)      Installation and Training in the United States.
                           During the Term, i-STAT shall install all Product
                           sold to the Trade in the United States and shall
                           provide such Trade with sufficient initial Product
                           training to enable such Trade to implement the
                           Product fully. This service shall not include the
                           installation of network communication hardware and a
                           software computer interface to the Trade's computer
                           systems, but shall include the installation and
                           training related to the i-STAT Central Data Station.
                           ***

                  (b)      Computer Interface Installation. During the Term, if
                           requested by Abbott, i-STAT shall use its reasonable
                           commercial efforts to install network communications
                           hardware and computer interface software to customers
                           in the Trade in the United States.

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<PAGE>   26
                  ***

                  (c)      Telephone Support. i-STAT shall provide telephone
                           support to customers in the Trade in the United
                           States, *** at a quality comparable to the quality of
                           service i-STAT provides as of the Closing Date.

                  (d)      Product Support Charges. i-STAT shall invoice Abbott
                           for non-Warranty Period support of Products at: ***

                  (e)      International Support. With respect to the services
                           and support to be provided by i-STAT as described in
                           Section 3.5(a), Abbott and its Affiliates shall
                           provide all such services and support in the
                           Territory outside of the United States and shall use
                           reasonable commercial efforts to ***

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<PAGE>   27
                  To assist Abbott in performing these service and support
                  activities, i-STAT shall provide Abbott and its Affiliates
                  such training as may be mutually agreed in the technical
                  service and support of Products.

         3.6      Product Samples. During the Term, i-STAT shall make reasonable
                  quantities as requested by Abbott and its Affiliates (*** of
                  actual purchase orders placed by Abbott and its Affiliates) of
                  Product samples available to Abbott, at *** to be used by
                  Abbott and its Affiliates and sub-distributors to demonstrate
                  and sample the Products to the Trade in the Territory, except
                  to those countries subject to HP's exclusive rights for i-STAT
                  Products, but only for so long as such rights remain
                  exclusive. During the Term, i-STAT shall provide as available,
                  outdated and rejected Product as requested by Abbott at no
                  charge. i-STAT shall add to each label of such outdated and
                  rejected Product the following: "Not For Resale".

                  ARTICLE 4 - MANUFACTURE AND SUPPLY OF PRODUCT

         4.1      Manufacture.

                  (a)      Product Supply. Upon the terms and subject to the
                           conditions of this Agreement, i-STAT shall
                           manufacture, or cause to be manufactured, and provide
                           to Abbott such quantities of Products as are
                           consistent with the forecasting and ordering
                           provisions set forth in Section 4.2.

                  (b)      Product Labeling and Package Inserts. i-STAT, at its
                           expense, shall translate and modify each Product's
                           documentation and labeling and all Analyzer and
                           certain Ancillary Products, such as central data
                           station screens and displays, into Spanish,

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                                      -27-
<PAGE>   28
                           Italian, French, Dutch, German and Swedish and Abbott
                           shall be responsible for translation into any other
                           language so that such Products comply with all local
                           requirements for sale and clinical use in each
                           country or region of the Territory. Each Party shall
                           assist the other Party with such translation at such
                           other Party's request. Further, subject to the
                           requirements of applicable law, i-STAT shall include
                           on all Products a co-branded label identifying Abbott
                           and i-STAT with equal prominence.

                  (c)      Product Registrations. i-STAT owns, holds and has all
                           right, title and interest in and to all registrations
                           with respect to i-STAT Products, and shall provide,
                           at i-STAT's sole expense, such authorizations
                           thereunder to Abbott as may be required to permit
                           Abbott to distribute the i-STAT Products. If for any
                           reason, Abbott must obtain additional consents or
                           authorizations to obtain marketing rights for the
                           Products in a particular Designated Country, Abbott
                           shall advise i-STAT in writing and the Parties shall
                           work together to obtain all such necessary consents
                           and authorizations, at i-STAT's expense.

                  (d)      Product Changes. i-STAT shall notify Abbott in
                           writing of any proposed changes in i-STAT's
                           manufacturing process which affect fit, form or
                           function of Product. Upon the request of Abbott,
                           i-STAT shall provide to Abbott representative samples
                           of such changed Product in sufficient quantities.
                           Upon such notice of any proposed change, and after
                           receipt of such representative samples, Abbott may
                           evaluate and communicate to i-STAT its approval or
                           disapproval of such change within thirty (30) days
                           after the date of notice; provided, however, that
                           Abbott shall not unreasonably withhold its approval
                           of any such change. Only upon notice of written
                           approval from Abbott may


                                      -28-
<PAGE>   29
                           i-STAT incorporate such change into the manufacturing
                           process. i-STAT shall be obligated only to notify
                           Abbott in writing of any proposed significant changes
                           in i-STAT's manufacturing process which do not affect
                           fit, form or function of Product (which may, but not
                           necessarily include changes to written quality plans,
                           changes that affect written quality plans for
                           production or written quality procedures respecting
                           the same, as well as, changes outside the validated
                           level or procedure, in manufacturing procedures,
                           component part or raw materials vendors,
                           manufacturing sites or chip shrink and wafer
                           dimension changes, and Abbott shall have no right of
                           approval with respect to any such changes.

                  (e)      Certified Vendor. Each Party shall use its reasonable
                           commercial efforts to enable i-STAT to become an
                           Abbott certified vendor within three (3) months after
                           the Closing Date by satisfying the quality
                           requirements and standards as previously delivered to
                           i-STAT.

                  (f)      Special Provisions. i-STAT shall maintain stock of
                           items critical to the manufacture of Products in
                           accordance with its standard operating procedure for
                           ordering special materials reflected in SOP-2002, as
                           may be revised from time to time, and which is
                           incorporated herein by reference. i-STAT shall
                           provide Abbott notice of any change to SOP-2002
                           reasonably likely to affect the production of
                           Products.

                  (g)      Fully Burdened Manufacturing Costs Report. i-STAT
                           shall provide to Abbott a written report within
                           thirty (30) days after each Calendar Quarter
                           reflecting a detailed analysis of the Fully Burdened
                           Manufacturing Costs for the preceding Calendar
                           Quarter for Products purchased on a cost or cost-plus
                           basis. Further, i-STAT shall advise


                                      -29-
<PAGE>   30
                           Abbott in writing sufficiently in advance of any
                           proposed change in i-STAT's accounting methodology
                           and treatment so that Abbott can adjust its
                           record-keeping accordingly to integrate such change.

         4.2      Forecasting. Within thirty (30) days after the Signing Date,
                  the Parties shall agree in writing to a forecasting
                  methodology which, given best reasonable efforts, assures an
                  uninterrupted supply of Product to the Trade. The components
                  of the forecasting methodology will include:

                  (a)      Short-term forecasts which ensure proper planning of
                           manufacturing production to meet demand. Purchase
                           orders from Abbott to i-STAT should be, within a
                           mutually acceptable range, consistent with this
                           forecast;

                  (b)      Long-term forecasts which aid i-STAT in capacity
                           planning and ensure optimal investments in
                           manufacturing expansions;

                  (c)      The forecasts shall be developed taking into account
                           lead time requirements necessary to ramp up
                           production as well as assuring proper supply of long
                           lead time materials; and

                  (d)      A mechanism for sharing of expenses associated with
                           under utilization of capacity and long lead time
                           materials.

         4.3      Failure to Supply. In the event i-STAT does not supply
                  conforming Products that were ordered in compliance with the
                  forecasting process to be established in accordance with
                  Section 4.2, the growth levels necessary to avoid the growth
                  deficiency described in Section 17.3 shall be reduced by the
                  quantity of Product not so delivered. In the event i-STAT is
                  unable to supply Product in accordance with Abbott's and its
                  Affiliates' firm purchase orders as a result of


                                      -30-
<PAGE>   31
                  nonconforming Product or an event of force majeure, the growth
                  levels necessary to avoid the growth deficiency described in
                  Section 17.3 shall be reduced by the quantity of Product not
                  supplied.

         4.4      Supply Allocation. In the event of a shortage of i-STAT
                  Product during the portion of the Term in which Abbott is a
                  co-exclusive distributor of i-STAT Product, i-STAT shall
                  allocate i-STAT Product in a reasonable manner so as to
                  support Abbott and its Affiliates as a supplier of i-STAT
                  Products, and at a minimum, i-STAT shall allocate its
                  manufacturing capability on a unit basis so that Abbott and
                  its Affiliates receive the same percentage of i-STAT's total
                  output of i-STAT Products as Abbott and its Affiliates
                  received on average during the most recent six (6) months
                  prior to the shortage.

         4.5      Ordering Processing. Except with respect to rights of HP, FUSO
                  and the i-STAT Distributors to the i-STAT Products, Abbott and
                  its Affiliates shall be responsible for solicitation and for
                  receiving and processing orders for Product from the Trade in
                  the Territory. Purchase orders for Products received by i-STAT
                  from the Trade in the Exclusive Territory or from Third
                  Parties under contract with Abbott or its Affiliates in the
                  Distributor Territory, the Co-exclusive FUSO Territory and the
                  HP Territory shall be transferred immediately to Abbott for
                  handling and invoicing. i-STAT may receive and process orders
                  for Products on behalf of Abbott as mutually agreed from time
                  to time.

                           ARTICLE 5 - PRICE AND TERMS

         5.1      Purchase Price for Analyzers and Ancillary Products. The
                  Purchase Price for Analyzers and Ancillary Products shall be
                  ***

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<PAGE>   32
                  *** except that the Purchase Price for those certain Ancillary
                  Products that i-STAT purchases from Third Parties as described
                  in Schedule 1.6 (under "Distributed Products") shall be ***.
                  During the Term, Abbott and its Affiliates may, at their
                  discretion, source directly all Ancillary Products purchased
                  by i-STAT from a Third Party; provided that such Ancillary
                  Products conform to the Specifications. Prior to contracting
                  directly for such Ancillary Products, Abbott and its
                  Affiliates shall advise i-STAT in writing and the Parties
                  shall coordinate a reasonable transition period in which to
                  enable i-STAT to reduce any inventory of such Ancillary
                  Products ordered by i-STAT as a result of a firm purchase
                  order for such Ancillary Products placed by Abbott or its
                  Affiliates.

         5.2      Estimated Cartridge Purchase Price. Except for the first
                  Contract Year, wherein the Estimated Cartridge Purchase Price
                  shall be ***, the Parties shall determine the Estimated
                  Cartridge Purchase Price to be used for all purchases of
                  Cartridges by Abbott and its Affiliates for each subsequent
                  Contract Year on or before *** of the then current Contract
                  Year. The Estimated Cartridge Purchase Price shall be
                  determined by assigning a single Estimated Cartridge Purchase
                  Price, by product code, to be charged in such subsequent
                  Contract Year based on the projected number of Cartridges
                  Abbott and its Affiliates shall buy from i-STAT in such
                  subsequent Contract Year contained in Abbott's annual forecast
                  provided to i-STAT in accordance with the methodologies to be
                  mutually agreed to by the Parties under Section 4.2. The
                  calculation to derive this single Estimated Cartridge Purchase
                  Price is as follows: ***

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                                      -32-
<PAGE>   33
                  ***. The Estimated Cartridge Purchase Price for each Contract
                  Year is subject to adjustments pursuant to Sections 5.3 and
                  5.4. (See the example in Schedule 5.2.)

         5.3      Year-End Reconciliation. Within fifteen (15) days after the
                  end of each Contract Year, Abbott and i-STAT shall reconcile,
                  by product code, the Actual Cartridge Purchase Price for the
                  just completed Contract Year against the actual number of
                  Cartridges purchased by Abbott and its Affiliates hereunder as
                  reflected in the sales reports provided i-STAT pursuant to
                  Section 3.4. This reconciliation shall be performed to, among
                  other reasons, ***. The calculations and results of such
                  reconciliation shall be contained in a written report
                  submitted to i-STAT within fifteen (15) days after the end of
                  the just completed Contract Year. i-STAT shall make any
                  adjustments as to overpayments or underpayments, if any, by
                  credit or debit memo, as the case may be, within fifteen (15)
                  days after i-STAT's receipt of the report; provided, however,
                  any such adjustment in the final Contract Year shall be
                  handled by a check or wire transfer of the overpayment or
                  underpayment to the affected Party within thirty (30) days
                  after the end of the final reconciliation. (See example in
                  Schedule 5.3)

         5.4      Calendar Quarter Reconciliations. Within fifteen (15) days
                  after the end of each Calendar Quarter, Abbott and i-STAT
                  shall reconcile, by product code, *** for the just completed
                  Calendar Quarter against the ***

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                                      -33-
<PAGE>   34
         ***. In addition, i-STAT shall report to Abbott pursuant to Section
         4.1(g) *** during the just completed Calendar Quarter. ***

         The calculations and results of such reconciliation shall be contained
         in a written report submitted to i-STAT within fifteen (15) days after
         the end of the just completed Calendar Quarter. i-STAT shall make any
         adjustments as to overpayments or underpayments, if any, by credit or
         debit memo, as the case may be, within fifteen (15) days after i-STAT's
         receipt of the report, provided, however, any such adjustment in the
         final Calendar Quarter shall be handled by a check

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                                      -34-
<PAGE>   35
                  or wire transfer of the overpayment or underpayment to the
                  affected Party within thirty (30) days after the end of the
                  final reconciliation. (See example in Schedule 5.4)

         5.5      Prepayments. Subject to Abbott's satisfaction, at its sole
                  discretion, that the conditions to Closing described in
                  Article 8 have been met, or have been waived by Abbott, Abbott
                  shall prepay to i-STAT a total of Twenty-Five Million Dollars
                  (US$25,000,000) during the first three (3) Contract Years on
                  the terms and conditions described below in this Section 5.5.
                  The Prepayments shall constitute future gross margin to i-STAT
                  on the sale of Cartridges to Abbott and its Affiliates and
                  shall be repaid to Abbott by i-STAT as a credit against actual
                  purchases of Incremental Units *** as part of the Calendar
                  Quarter reconciliation described in Section 5.4. The
                  Prepayments shall be made in accordance with the schedule set
                  forth in Schedule 5.5. ***

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         5.6      Minimum Cartridge Purchase Price. Notwithstanding anything in
                  this Article 5 or any other section of this Agreement to the
                  contrary, during the Term, the Estimated Cartridge Purchase
                  Price and the Actual Cartridge Purchase Price shall be no less
                  than the Minimum Cartridge Purchase Price as set forth in
                  Schedule 1.53. The Parties shall evaluate the calculation of
                  the Minimum Cartridge Purchase Price ***, if requested by
                  either Party, and shall adjust such Minimum Cartridge Purchase
                  Price, if at all, taking into consideration, but without
                  limitation, ***.

         5.7      Program Product Pricing. Prior to a Program Product launch,
                  the Parties shall negotiate the purchase price Abbott and its
                  Affiliates shall pay i-STAT for such Program Product. In
                  determining such purchase price, the Parties shall consider
                  such factors as ***. If the Parties are not able to mutually
                  agree to a purchase price for such Program Product, the
                  purchase price for such Program Product shall be ***. The
                  purchase price of any Program Product shall be subject to ***.

         5.8      Payment Terms. Each Party shall invoice the other Party or its
                  Affiliates, as the case may be, for Products purchased and
                  services provided hereunder, as appropriate. Each Party shall
                  pay such invoices in United States dollars net thirty (30)
                  days from the date of receipt of the invoice. In the event
                  either Party fails to make a payment when due, overdue
                  payments shall bear

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                                      -36-
<PAGE>   37
                  interest at the rate of one and one-half percent (1.5%) per
                  month, or if lower, the highest rate permitted by law, from
                  the date due until paid.

                        ARTICLE 6 - SHIPMENT AND DELIVERY

         6.1      Shipment. Delivery shall occur for Products shipped to
                  Designated Countries *** for Products shipped in the United
                  States. ("Delivery" or "Delivered"). Unless otherwise agreed,
                  freight charges for Products Delivered to the United States
                  will be *** in its sole discretion. With regard to shipments
                  of Products to Designated Countries, i-STAT shall ***. i-STAT
                  may make partial shipments of the Products, subject to prompt
                  filling of any resulting backorder.

         6.2      Delivery in the United States. For Delivery of Products in the
                  United States, i-STAT shall ship Products sold by Abbott and
                  its Affiliates in accordance with shipping instructions
                  provided by Abbott. At Abbott's request (including pursuant to
                  shipping instructions provided on purchase orders submitted by
                  Abbott), i-STAT shall ship Products directly to the Trade in
                  the United States.

         6.3      Export Licenses; Import Certificates; Customs and Regulatory
                  Approval for Delivery of Products Outside the United States.

                  (a)      i-STAT's Duties. i-STAT, at its cost, shall: ***

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                                      -37-
<PAGE>   38
                           *** and take all reasonable steps to cooperate with
                           Abbott in complying with any import, export or custom
                           regulations applicable to the Products, to the extent
                           consistent with applicable law, including filling out
                           necessary paperwork or reports to obtain any
                           applicable waiver, exemption or reduction of such
                           duties in a timely manner.

                  (b)      Abbott's Duties. Abbott shall: ***.

                  (c)      To the extent Abbott or its Affiliates cannot, ***.

         6.4      Title and Risk of Loss. Title to and risk of loss of Products
                  shall pass to Abbott at the time of Delivery. Any loss or
                  damage to Products prior to Delivery shall be at i-STAT's
                  risk.

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                                      -38-
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         6.5      Taxes. Subject to Section 6.3(c), any foreign, federal, state,
                  county or local sales, use, value-added or excise tax or
                  similar charge, including customs and import duties, or other
                  tax assessment (other than that assessed against income),
                  license fee (other than royalties owed to Third Parties) or
                  other charge lawfully assessed or charged on the sale or
                  transportation of Products sold pursuant to this Agreement
                  after Delivery to Abbott shall be paid by Abbott.

         6.6      Certificate of Analysis. i-STAT shall provide Abbott with a
                  Certificate of Analysis with each batch of Cartridges sold to
                  Abbott hereunder certifying compliance with the
                  Specifications. Full batch documentation, including batch
                  production records, and manufacturing and analytical records
                  shall be available for review by Abbott on site at i-STAT upon
                  reasonable notice from Abbott.

                       ARTICLE 7 - ACCEPTANCE OF PRODUCT;

                      INSPECTION OF MANUFACTURING FACILITY

         7.1      i-STAT Testing. i-STAT shall inspect and test Products for
                  conformity to the Specifications in accordance with its normal
                  quality assurance procedures as such procedures may be amended
                  from time to time prior to release to Abbott and its
                  Affiliates or to the Trade in the United States. i-STAT shall
                  notify Abbott prior to any change in its quality assurance
                  procedures that reasonably may be expected to affect the
                  quality of the Product.

         7.2      Abbott Testing. Until such time as i-STAT becomes an Abbott
                  certified vendor pursuant to Section 4.1(e), acceptance of all
                  Product shall be subject to Abbott's or its Affiliates'
                  inspection and approval. Abbott or its Affiliates shall,
                  within ten (10) days after receipt of the representative
                  sample of Products, inspect and test such sample and may
                  reject any representative sample of Products which is:


                                      -39-
<PAGE>   40
                  (a)      not in compliance with the Specifications;

                  (b)      not in compliance with all manufacturing procedures,
                           in-process controls, testing, specifications and
                           storage conditions, as set forth in i-STAT's 510(k),
                           or any foreign equivalent for Product, or any
                           subsequent amendments thereto;

                  (c)      not manufactured in accordance with cGMPs;

                  (d)      not conforming to instructions agreed upon by the
                           Parties in writing regarding packaging or transport;

                  (e)      shipped in violation of any applicable statute,
                           administrative order or regulation; 
          
                  (f)      recalled by any governmental agency or by i-STAT for
                           reasons for which Abbott and its Affiliates are not
                           at fault; or

                  (g)      shipped by i-STAT with less than *** dating for
                           United States sales or *** dating for non-United
                           States sales with respect to Cartridges and Ancillary
                           Products having an expiration date.

         If Abbott, or its Affiliates, as the case may be, reject any Product,
it shall give i-STAT written notice of such rejection within the ten (10) day
testing period, accompanied by a written summary of the grounds for rejection
and any testing performed by Abbott, or its Affiliates, as the case may be. Upon
receipt of such notice, i-STAT may request Abbott, or its Affiliates, as the
case may be, to return the rejected Product, or samples thereof, for testing by
i-STAT. Abbott's or its Affiliates' rejection shall be final unless i-STAT
notifies Abbott within thirty (30) days after the later of the receipt of the
rejection notice or the rejected Product, or samples thereof, that i-STAT
disagrees with Abbott's or its Affiliates' conclusions with respect to the
rejected Product.

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If the Parties are unable to resolve the dispute, samples of the rejected
Product shall be submitted to a mutually acceptable independent testing
laboratory for analysis. The results of the independent testing laboratory shall
be final and binding on the Parties. The costs of the independent testing
laboratory shall be paid by the Party against whom the discrepancy is resolved.
The Parties' inability to agree upon an independent testing laboratory shall be
resolved through the dispute resolution procedures set forth in Section 21.6.
All i-STAT Product properly rejected by Abbott or its Affiliates pursuant to the
terms and conditions of this Section 7.2 and not otherwise replaced by i-STAT in
a timely fashion to enable Abbott and its Affiliates to consummate the available
sale to the Trade shall be included in any calculation with respect to credits
against Prepayments as described in Section 5.5, growth deficiencies as
described in Section 17.3, *** and any other provision hereunder where the
quantity of Abbott's purchases of i-STAT Product or Net Sales is a factor.

         7.3      Abbott Inspection. i-STAT shall permit Abbott, upon reasonable
                  notice and during regular business hours, but no more often
                  than once in each Contract Year, access to those areas of
                  i-STAT's manufacturing facilities where the Products are
                  manufactured, tested, packaged, stored, handled and shipped to
                  verify i-STAT's compliance with its obligations hereunder.

                        ARTICLE 8 - CONDITIONS TO CLOSING

         8.1      Closing. The Closing shall be held at the time and place
                  specified in Section 1.2 of the Stock Purchase Agreement at
                  the offices of Paul, Hastings, Janofsky & Walker LLP, 399 Park

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<PAGE>   42
                  Avenue, New York, New York at 10:00 a.m., as soon as
                  practicable, but in any event no later than the fifth Business
                  Day following the satisfaction or waiver of the conditions set
                  forth in this Article 8, or at such other time and place upon
                  which i-STAT and Abbott shall mutually agree.

         8.2      General Conditions. The obligations of Abbott and i-STAT to
                  effect the Closing shall be subject to the satisfaction at or
                  prior to the Closing of the following conditions:

                  (a)      No order, statute, rule, regulation, executive order,
                           injunction, stay, decree or restraining order shall
                           have been enacted, entered, promulgated or enforced
                           by any court of competent jurisdiction or
                           governmental or regulatory authority or
                           instrumentality that prohibits the execution,
                           delivery or performance of any of the Alliance
                           Agreements, and no proceeding by any governmental or
                           regulatory authority or instrumentality shall be
                           pending or threatened, which seeks to prohibit or
                           declare illegal the execution, delivery or
                           performance of any of the Alliance Agreement;

                  (b)      All filings under the HSR Act and other laws of any
                           jurisdiction applicable to the transactions
                           contemplated in the Alliance Agreements shall have
                           been made and any required waiting period under such
                           laws shall have expired or been earlier terminated;
                           and

                  (c)      The "Closing" as such term is defined in the Stock
                           Purchase Agreement shall have occurred or shall be
                           occurring simultaneously.

         8.3      Conditions to Obligations of Abbott. The obligations of Abbott
                  to effect the Closing shall be further subject to the
                  satisfaction at or prior to the Closing of the following
                  conditions:


                                      -42-
<PAGE>   43
                  (a)      All corporate and other proceedings taken or to be
                           taken in connection with the transactions
                           contemplated in the Alliance Agreements, and all
                           documents incident thereto, shall be reasonably
                           satisfactory in form and substance to Abbott and
                           Abbott's counsel. Without limiting in any way the
                           generality of the foregoing, i-STAT shall have duly
                           received all authorizations, waivers, consents,
                           approvals, licenses, franchises and permits by or of
                           all persons necessary or advisable, in the reasonable
                           opinion of Abbott and Abbott's counsel, for the
                           execution, delivery and performance by i-STAT of its
                           obligations under the Alliance Agreements;

                  (b)      The representations and warranties of i-STAT
                           contained herein and in the other Alliance Agreements
                           shall be true and correct at and as of the Signing
                           Date and at and as of the Closing Date as though
                           restated on and as of the Closing Date (except in the
                           case of any representation and warranty that by its
                           terms is made as of a date specified therein, in
                           which case such representation and warranty shall be
                           true and correct as of such date);

                  (c)      Abbott shall have received from i-STAT's counsel,
                           Paul, Hastings, Janofsky & Walker LLP, an opinion
                           addressed to Abbott substantially in the form of
                           Schedule 8.3, dated the Closing Date; and

                  (d)      Abbott shall have received from i-STAT a certificate
                           signed by an appropriate officer as to i-STAT's
                           compliance with the conditions set forth in clauses
                           (a) and (b) of this Section 8.3.


                                      -43-
<PAGE>   44
         8.4      Conditions to Obligations of i-STAT. The obligations of i-STAT
                  to effect the Closing shall be further subject to the
                  satisfaction at or prior to the Closing of the following
                  condition:

                  (a)      All corporate and other proceedings taken or to be
                           taken in connection with the transactions
                           contemplated in the Alliance Agreements, and all
                           documents incident thereto, shall be reasonably
                           satisfactory in form and substance to i-STAT and
                           i-STAT's counsel. Without limiting in any way the
                           generality of the foregoing, Abbott shall have duly
                           received all authorizations, waivers, consents,
                           approvals, licenses, franchises and permits by or of
                           all persons necessary or advisable, in the reasonable
                           opinion of i-STAT and i-STAT's counsel, for the
                           execution, delivery and performance by i-STAT of its
                           obligations under the Alliance Agreements.

         8.5      Non-Fulfillment of Conditions. The non-fulfillment of any of
                  the conditions described in Sections 8.2, 8.3 or 8.4 (whether
                  or not the Closing occurs) shall not result in any liability
                  to any Party unless such non-fulfillment is a result of a
                  breach of this Agreement or any of the other Alliance
                  Agreements by such Party.

         8.6      Condition Subsequent. Within 30 days after the Closing Date
                  but not later than the Starting Date, i-STAT shall use its
                  reasonable commercial efforts to assign the Customer Contracts
                  to Abbott as provided in Section 2.10, together with any
                  required consents under such of the Customer Contracts
                  permitting such assignment.


                                      -44-
<PAGE>   45
            ARTICLE 9 - REGULATORY COMPLIANCE AND MEDICAL COMPLAINTS

         9.1      No Modification to Product. Abbott shall not modify,
                  repackage, reformulate or alter any Product, including its
                  label, except with specific written authorization from i-STAT.

         9.2      Regulatory Compliance. i-STAT shall be responsible for all
                  governmental and regulatory filings in the Territory for
                  Products. All responses to governmental agencies concerning
                  the Products shall be the sole responsibility of i-STAT, with
                  reasonable assistance from Abbott, at i-STAT's expense, as
                  requested by i-STAT. i-STAT shall provide Abbott copies of all
                  filings and/or responses concerning the Products which occur
                  after the Closing Date. In the event i-STAT is unable to
                  obtain or maintain the requisite governmental approvals to
                  enable Abbott and its Affiliates to sell Products in any such
                  country in the Territory, Abbott's inability to meet the
                  purchase or sales targets described in Sections 2.2 (a), 5.5,
                  and 17.3, and any other provision hereunder where the quantity
                  of Abbott's purchases of Products or Net Sales is a factor
                  shall be adjusted based on the most recent six (6) month sales
                  of the affected Product in such country, multiplied by two (2)
                  and adjusted for the period that such Product is off the
                  market, to reflect the adverse impact to Abbott due to the
                  absence of regulatory clearance.

         9.3      Customer Complaints. In the event Abbott or its Affiliates
                  receives a customer complaint regarding Products, Abbott shall
                  evaluate the complaint and promptly notify i-STAT in writing
                  regarding such complaint. If Abbott determines that the
                  complaint is due to a matter that is within i-STAT's
                  responsibilities hereunder, then i-STAT, at Abbott's request
                  and at i-STAT's expense, shall assist Abbott or its Affiliates
                  in follow-up correction of such complaints. Subject to the
                  provisions of any nondisclosure agreements by which the
                  Parties are bound, the Parties shall exchange on a
                  confidential basis all pertinent information regarding a
                  customer complaint


                                      -45-
<PAGE>   46
                  with respect to i-STAT Products sold in the Co-exclusive FUSO
                  Territory, the HP Territory and the Distributor Territories,
                  or if the complaint involves a problem common to Abbott and
                  FUSO, HP and/or the i-STAT Distributors.

                    ARTICLE 10 - PRODUCT RECALL OR WITHDRAWAL

         10.1     Event of Recall and Withdrawal. In the event: (a) any
                  governmental or regulatory authority in the Territory issues a
                  request, directive or order that Product be recalled or
                  withdrawn, or such request, directive or order is imminent;
                  (b) a court of competent jurisdiction orders such recall or
                  withdrawal; or (c) either Party reasonably determines after
                  consultation with the other that a recall or withdrawal is
                  necessary or advisable (each a "Recall"), the Parties shall
                  take all appropriate corrective action.

         10.2     Expense of Recall. In the event a Recall results from any
                  cause or event arising from the manufacture, packaging,
                  shipment of Products by i-STAT and its Affiliates, or the
                  marketing, promotion, sale or distribution of Products by a
                  Third Party (excluding Third Parties in privity with Abbott),
                  or other cause or event attributable to i-STAT, its Affiliates
                  or Third Parties (excluding Third Parties in privity with
                  Abbott), i-STAT shall be responsible for the expense of the
                  Recall. In the event a Recall results from any cause or event
                  attributable to Abbott, its Affiliates or distributors and
                  arising from the marketing, promotion, sale or distribution of
                  Products by Abbott, its Affiliates or distributors, or other
                  cause or event attributable to Abbott, its Affiliates or
                  distributors, Abbott shall be responsible for the expense of
                  the Recall. In each instance, the Parties shall cooperate to
                  effectuate efficiently the Recall. For purposes of this
                  Agreement, Recall expenses shall include, without limitation,
                  the expenses of


                                      -46-
<PAGE>   47
                  notification and destruction or return of the recalled or
                  withdrawn Product and Abbott's, its Affiliates' or
                  sub-distributors' costs for the Products recalled or
                  withdrawn.

                         ARTICLE 11 - TRANSITION PERIOD

         11.1     Conduct During Transition Period. During the Transition
                  Period, except as otherwise provided for in this Agreement or
                  as Abbott shall otherwise consent (which consent shall not be
                  unreasonably withheld), i-STAT covenants and agrees that, with
                  respect to the Business, i-STAT shall:

                  (a)      not enter into any transaction that would reasonably
                           be expected to affect the Business adversely;

                  (b)      not amend any Third Party Agreements in any respect
                           that would affect adversely i-STAT's rights
                           thereunder, or terminate any of the Third Party
                           Agreements, other than in accordance with the terms
                           of such agreements for breach, or default in the
                           performance of any covenant or obligation thereunder
                           which default is not cured within any applicable
                           grace period;

                  (c)      continue its pricing and sales practices
                           substantially in accordance with i-STAT's past
                           practices, and in accordance therewith, not offer any
                           financial terms or incentives to any customers to
                           purchase i-STAT Products more favorable than the
                           average cash discount or payment terms as offered by
                           i-STAT between January 1, 1998 through June 30, 1998;

                  (d)      not enter into any contract providing for any
                           license, sale, assignment or otherwise transfer any
                           rights or grant any covenant not to sue with respect
                           to any i-STAT


                                      -47-
<PAGE>   48
                           Know-How and Technology (as that term is defined in
                           Section 1.34 of the Funded Research & Development and
                           License Agreement) which would have a material
                           adverse impact on the Business;

                  (e)      continue the customer service hotline and order entry
                           function with respect to the Business at the same
                           level of service as provided by i-STAT between
                           January 1, 1998 through June 30, 1998; and

                  (f)      other than in the ordinary course of business, not
                           enter into any agreement with any Third Party for the
                           sale or resale of i-STAT Products or offer any
                           rebates or other agreements related to i-STAT
                           Products, unless i-STAT first obtains Abbott's prior
                           written consent. If Abbott grants such consent, then
                           such agreement shall be added as a Third Party
                           Agreement.

         11.2     Customer Transition Matters. In accordance with the following
                  dates, except as otherwise contemplated by this Agreement or
                  as Abbott shall otherwise agree in writing in advance with
                  respect to the Business, in order effectively to maintain and
                  transition the Base Customers from i-STAT to Abbott or its
                  Affiliates, i-STAT and Abbott each covenant and agree that as
                  appropriate each shall or shall cause its Affiliates to:

                  (a)      no later than thirty (30) days after the Starting
                           Date, and for a period of an additional thirty (30)
                           days, i-STAT shall participate in joint sales calls
                           with Abbott or its Affiliates, at the discretion of
                           Abbott, to introduce Abbott's or its Affiliates'
                           sales representatives to i-STAT's customers;

                  (b)      prior to the Starting Date, i-STAT shall, with
                           Abbott, participate in planning for the effective
                           transition of the Base Customers to Abbott or its
                           Affiliates;


                                      -48-
<PAGE>   49
                  (c)      no later than fifteen (15) days after the Signing
                           Date, i-STAT and Abbott shall have an initial meeting
                           and shall continue to meet thereafter until the
                           Starting Date, as necessary, to integrate or
                           transition to Abbott or its Affiliates i-STAT's order
                           entry system, customer and contract numbers, pricing,
                           i-STAT Product list numbers and the like;

                  (d)      prior to the Starting Date, i-STAT and Abbott shall
                           meet to determine the Parties' ability to and need
                           for an integration of systems and any concerns
                           regarding Year 2000 Compliant (as hereinafter
                           defined) issues associated with any such integration;
                           and

                  (e)      prior to the Starting Date, i-STAT and Abbott shall
                           mutually agree to perform any other transition
                           activity deemed appropriate.

                         ARTICLE 12 - BOOKS AND RECORDS

         12.1     Abbott and i-STAT each shall maintain proper books and records
                  in accordance with generally accepted accounting principles
                  reflecting Net Sales, Base AUP, AUP, Incremental AUP,
                  Estimated Cartridge Purchase Price, Actual Cartridge Purchase
                  Price, Purchase Price, Base Fully Burdened Manufacturing Costs
                  and Fully Burdened Manufacturing Costs calculations, as
                  appropriate. Upon thirty (30) days' prior written notice to
                  the audited Party (but not more frequently than once in any
                  Contract Year, unless there is a dispute, then as frequently
                  as is necessary), the requesting Party may retain, at its own
                  expense, an independent certified public accountant reasonably
                  acceptable to the audited Party to examine the audited Party's
                  books and records relating to the matters described herein,
                  which shall be transferred to, if not already at, the audited
                  Party's principal place of business. Such examination shall
                  occur at the audited Party's


                                      -49-
<PAGE>   50
                  principal place of business during normal business hours for
                  the sole purpose of verifying the accuracy of such
                  calculations. Such accountant shall be required to execute a
                  mutually acceptable confidentiality agreement and shall report
                  to the requesting Party only the amount of any discrepancy in
                  the calculations. Within thirty (30) days after completion of
                  such examination, the Parties shall reconcile any underpayment
                  or overcharge, if any, by credit or debit memo; provided,
                  however, if such adjustment is to occur at the end of the
                  final Contract Year, any overpayment or underpayment shall be
                  paid by check or wire transfer to the affected Party within
                  thirty (30) days after the end of the final reconciliation.
                  Such examination rights may be exercised by the Parties only
                  with respect to records for the then current Contract Year and
                  the then prior Contract Year.

                       ARTICLE 13 - PATENTS AND TRADEMARKS

         13.1     Trademark License. i-STAT hereby grants to Abbott and its
                  Affiliates a non-exclusive license, with the right to
                  sublicense, to use the i-STAT Trademarks in the Field with
                  respect to i-STAT Products, and in the Program Field (as that
                  term is defined in the Funded Research & Development and
                  License Agreement) with respect to Program Products, to
                  market, promote, distribute and sell Products in the
                  Territory. On or before January 1 of each Contract Year,
                  i-STAT shall provide Abbott with a Trademark report reflecting
                  all applications for Trademarks and the status thereof. In
                  addition, i-STAT shall, at its expense, file new applications
                  to register any or all of the i-STAT Trademarks in any or all
                  of the countries in the Territory, as may be reasonably
                  requested by Abbott. Abbott shall give i-STAT at least ninety
                  (90) days' prior written notice before marketing, promoting,
                  selling or distributing any Product under the i-STAT


                                      -50-
<PAGE>   51
                  Trademarks in any country not identified in the i-STAT
                  Trademark report. The Parties shall mutually agree on the
                  trademark approach in any such country, taking into
                  consideration, among other things, the length of time required
                  to obtain trademark registration, laws relating to trademark
                  use, the existence of any conflicting trademark registrations,
                  applications or uses and the anticipated sales volumes of the
                  relevant Products in such country. Any use of an Abbott
                  trademark by i-STAT shall be subject to Abbott's prior
                  approval, which approval may be withheld by Abbott at Abbott's
                  sole discretion.

         13.2     Trademark Ownership. It is understood and agreed that i-STAT,
                  is the sole and exclusive owner of all rights, title and
                  interests in and to the i-STAT Trademarks. Nothing contained
                  in this Agreement shall be construed as an assignment to
                  Abbott of any rights, title or interests in the i-STAT
                  Trademarks; it being understood that all rights, title and
                  interests relating to the i-STAT Trademarks are expressly
                  reserved by i-STAT, except for the rights being licensed
                  hereunder.

         13.3     Infringement. Each Party shall notify the other Party of any
                  suspected infringements by Third Parties of the i-STAT
                  Trademarks in the Field or any patent or other proprietary
                  right of i-STAT in the Field that may come to such Party's
                  attention. i-STAT shall have the initial right to determine
                  whether any action shall be taken on account of any such
                  infringement, and i-STAT shall have the right to employ
                  counsel of its choosing and to direct the handling of the
                  litigation and any settlements thereof, at such i-STAT own
                  expense. In the event i-STAT does not pursue such potential
                  infringement within three (3) months after notice of such
                  potential infringement, Abbott shall have the right to take
                  action on its own behalf, to employ counsel of its choosing
                  and to direct the handling of the litigation and any
                  settlements thereof, at


                                      -51-
<PAGE>   52
                  Abbott's own expense. The Parties agree to cooperate with each
                  other in maintaining, protecting and defending the Trademarks.

         13.4     Possible Removal From Market. Except as provided in Section
                  13.5, in the event that the manufacture, use, sale or
                  importation for sale of Product becomes, or, in the opinion of
                  i-STAT and confirmed by Abbott, may become, the subject of any
                  claim, suit or proceeding for infringement or if the
                  manufacture, use, sale or importation for sale of the Product
                  is or is likely to be enjoined for infringement, i-STAT shall,
                  at its option and expense, do one (1) or more of the
                  following:

                  (a)      obtain for Abbott, its Affiliates and
                           sub-distributors the right to use, sell and import
                           for sale the Product;

                  (b)      modify the Product so that it becomes non-infringing
                           or replace the Product with a non-infringing product
                           while remaining in compliance with i-STAT's published
                           Specifications in effect at the time; or

                  (c)      require that Abbott, its Affiliates and
                           sub-distributors cease to deliver the Product in the
                           affected country.

         In the event i-STAT does not perform (a) or (b) above, and such
nonperformance reduces Abbott's annual Net Sales for Products *** Abbott either
may adjust the calculations of its purchase of Product and Net Sales under
Sections 2.2, 5.5 and 17.3, and any other provision hereunder where the quantity
of Abbott's purchases of Product or Net Sales is a factor, by the quantity of
Product affected by such nonperformance, or terminate this Agreement.

         13.5     Third Party Claims for Infringement.

*** Confidential treatment requested


                                      -52-
<PAGE>   53
                  (a)      If a Third Party brings a legal action or
                           administrative proceeding against either or both of
                           the Parties alleging infringement by Product in the
                           Field in the Territory, the Parties agree that they
                           shall confer in good faith to determine the most
                           effective means of cooperating to defend their sole
                           and mutual interests. Each Party shall bear its own
                           expenses related to the defense unless otherwise
                           agreed at the time.

                  (b)      If the Product which is the subject of the action or
                           proceeding is an i-STAT Product, i-STAT will be
                           financially responsible for any judgment and have the
                           first right to take the lead in the coordinated
                           defense.

                  (c)      If the Product which is the subject of the action or
                           proceeding is a Program Product and it is clear that
                           the predominant aspect of the Product at issue was
                           contributed by one Party rather than the other, then
                           the contributing Party will be financially
                           responsible for any judgment and have the first right
                           to take the lead in the coordinated defense.

                  (d)      If the Product which is the subject of the action or
                           proceeding is a Program Product and it is not clear
                           that the predominant aspect of the Program Product at
                           issue was contributed by one Party rather than the
                           other, then the Parties will share equally in any
                           judgment and negotiate in good faith as to which
                           Party takes the lead in the coordinated defense.

                  (e)      In any event, with respect to each such legal action
                           or administrative proceeding:


                                      -53-
<PAGE>   54
                           (i)      Neither Party shall have the right to enter
                                    into any financial, commercial or other
                                    settlement with such Third Party without the
                                    consent of the other Party, which consent
                                    shall not be withheld unreasonably.

                           (ii)     Neither Party shall have the right to make
                                    any adverse admissions relating to
                                    infringement without the consent of the
                                    other Party, which consent shall not be
                                    withheld unreasonably.

                           (iii)    Each Party, upon notice to the other Party,
                                    shall have the right to mitigate potential
                                    damages as such Party deems appropriate,
                                    including, without limitation, stopping the
                                    manufacture of the alleged infringing
                                    Product or action, stopping
                                    commercialization of such alleged infringing
                                    Product or action, stopping
                                    commercialization of such alleged infringing
                                    Program Product or action, redesigning the
                                    alleged infringing Product or action, and
                                    reconfiguring the alleged infringing Product
                                    or action. Any such mitigation taken by a
                                    Party shall not be used against that Party
                                    when determining that Party's performance
                                    under this Agreement.

                  (f)      Any lead taken by a Party under this Section 13.5
                           relating to defending the other Party in such legal
                           action or administrative proceeding shall not be used
                           against the non-lead Party when determining the
                           non-lead Party's performance under this Agreement.


                                      -54-
<PAGE>   55
         Only if a Party fails to perform its obligations under this Section
13.5, shall the other Party be entitled to indemnification for such obligations
pursuant to the provisions of Article 15.

         13.6     Co-Labeled Product. i-STAT shall sell Products identified by
                  an Abbott trademark or trade name only to Abbott and its
                  Affiliates or to an Abbott-appointed sub- distributor.

         13.7     Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE
                  OTHER FOR ANY AMOUNTS REPRESENTING ITS LOSS OF PROFITS, LOSS
                  OF BUSINESS, OR INDIRECT, SPECIAL, EXEMPLARY, CONSEQUENTIAL OR
                  PUNITIVE DAMAGES, ARISING FROM THE PERFORMANCE OR
                  NONPERFORMANCE OF THIS AGREEMENT OR ANY ACTS OR OMISSIONS
                  ASSOCIATED THEREWITH OR RELATED TO THE USE OF ANY ITEMS OR
                  SERVICES FURNISHED HEREUNDER, WHETHER THE BASIS OF THE
                  LIABILITY IS BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE
                  AND STRICT LIABILITY), STATUTES OR ANY OTHER LEGAL THEORY,
                  EXCEPT FOR A BREACH BY i-STAT OR ITS AFFILIATES OF SECTION
                  14.6.

                   ARTICLE 14 - REPRESENTATIONS AND WARRANTIES

         14.1     i-STAT Product Representations and Warranties. i-STAT
                  represents and warrants that Product delivered to Abbott
                  hereunder shall be:

                  (a)      manufactured in accordance with cGMPs and the
                           Specifications;

                  (b)      free from defects in material and workmanship until
                           one (1) year after date of shipment for the Analyzer
                           and/or the shelf life for Cartridges and Ancillary
                           Products having an expiration date (the "Warranty
                           Period");

                  (c)      free and clear of any Third Party security interest,
                           lien or encumbrance;


                                      -55-
<PAGE>   56
                  (d)      manufactured in compliance with all applicable
                           foreign, federal, state and local laws and
                           regulations in the location of manufacture; and

                  (e)      Year 2000 Compliant as of July 1, 1999 in accordance
                           with the following terms: 

                           (i) all Product that operate on date data software
                           and hardware; 

                           (ii) all hardware and software supplied by i-STAT;
                           and 

                           (iii) all hardware and software used in i-STAT's
                           manufacturing process of Product shall have no lesser
                           functionality with respect to records containing
                           dates before or after January 1, 2000, than
                           previously with respect to dates prior to January 1,
                           2000 ("Year 2000 Compliant").

                  With respect to clauses (a), (b) and (d) of this Section 14.1,
         the Parties acknowledge and agree that unless i-STAT fails to deliver
         Product consistently to Abbott, at a mutually agreed upon level, any
         Product not conforming to clauses (a), (b) and (d) of this Section 14.1
         shall be handled in accordance with Section 14.2 and shall not
         constitute a material breach of this Agreement.

         14.2     Product Replacement or Repair. At its option, i-STAT may
                  repair or replace Products returned during the Warranty Period
                  which fail to meet the warranty set forth in Section 14.1
                  ("Defective Products"). Customers in the United States may
                  return Defective Products directly to i-STAT. Customers
                  outside the United States shall return Defective Products to
                  Abbott, its Affiliates or sub-distributors for return to
                  i-STAT. i-STAT shall accept returned Products in accordance
                  with the terms in Schedule 14.2. i-STAT shall bear the cost of
                  return


                                      -56-
<PAGE>   57
                  shipment of Defective Products to i-STAT and the cost of
                  shipping repaired or replaced Products to the customer or
                  Abbott its Affiliates and sub-distributors, as the case may
                  be.

     14.3         Exclusions. i-STAT shall have no obligations with respect to
                  any defects, damage, or nonconformances of Products that
                  result from: improper installation by other than i-STAT or an
                  i-STAT-approved Third Party, operation or maintenance;
                  unauthorized repair; tampering, unusual environmental
                  operating conditions outside the Specifications; or from
                  accidents, or acts of God; or other events of force majeure,
                  as described in Section 20.1, after Delivery. If any Products
                  returned for repair or replacement are not defective or
                  nonconforming or contain defects or a nonconforming condition
                  caused by a factor outside the scope of i-STAT's warranty, ***
                  i-STAT's normal service rate for (a) services performed with
                  respect to such defective returned units, or (b) "no fault
                  found" with respect to returned units which are not defective,
                  but only for such returned Products *** stated as a percentage
                  of returns to total units of Products sold by i-STAT. The
                  Parties shall meet at least every six (6) months to review the
                  status of the costs of returns and shall modify the percentage
                  stated above, as is appropriate.

     14.4         Limitation on Warranties. i-STAT MAKES NO WARRANTIES REGARDING
                  THE PRODUCTS OTHER THAN THE EXPRESS WARRANTIES IN THIS ARTICLE
                  AND THERE SHALL BE NO IMPLIED OR STATUTORY WARRANTIES,
                  INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
                  FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

     14.5         Patent Representations and Warranties.

*** Confidential treatment requested


                                      -57-
<PAGE>   58
         (a)    Except as provided in Schedule 14.5, i-STAT represents and
                warrants to Abbott as of the Signing Date, and as of the
                Closing Date as though restated on and as of the Closing Date,
                that:

                (i)  to its knowledge, there are no Third Party patents,
                     trademarks or other proprietary rights which are valid and
                     which would be infringed by making, having made, using,
                     selling, offering for sale or importing i-STAT Products in
                     the Territory in accordance with the terms of this
                     Agreement;

                (ii) at no time prior to the termination of the last to
                     terminate of the Alliance Agreements shall i-STAT enter
                     into any transaction providing for debt financing which
                     would (A) result in the imposition of a lien, license,
                     security interest or other encumbrance upon or transfer of
                     any of i-STAT's Know-How and Technology, or (B) prohibit or
                     materially impair i-STAT from fulfilling its obligations
                     under the Alliance Agreements; and

                (iii) to its knowledge, i-STAT is not, and as a result of the
                     execution and delivery of the Alliance Agreements or the
                     performance of i-STAT thereunder will not be in violation
                     of or lose any rights pursuant to any license, sublicense
                     or agreement previously provided to a Third Party.

14.6     Special Representations Warranties. i-STAT represents and warrants to
         Abbott that as of the Signing Date and as of the Closing Date as
         though restated on and as of the Closing Date as follows:

         (a)      The execution, delivery and performance of this Agreement by
                  i-STAT shall not be in conflict with or result in the breach
                  of any obligations of i-STAT under any


                                      -58-
<PAGE>   59
                  agreement by and between i-STAT and FUSO and i-STAT and HP,
                  respectively, including, without limitation, the FUSO
                  Agreement, the FUSO Development Agreement, the HP Stock
                  Purchase Agreement, the FUSO License Agreement, the HP
                  Agreement or the HP License Agreement;

         (b)      There is no provision in the FUSO Agreement that will prevent
                  Abbott from obtaining exclusive distribution rights to i-STAT
                  Products in accordance with the terms of Section 2.2;

         (c)      FUSO only has non-exclusive rights to i-STAT Products in the
                  Co-exclusive Territory and FUSO has no rights to i-STAT
                  Products outside the Co-exclusive Territory; and

         (d)      The representations and warranties of clauses (a), (b), and
                  (c) of this Section 14.6 shall survive for so long as the
                  agreement between i-STAT and HP or FUSO, respectively,
                  pertaining to such representations and warranties is still in
                  effect.

14.7     General Representations and Warranties. Each Party represents and
         warrants to the other Party as of the Signing Date and as of the
         Closing Date as though restated on and as of the Closing Date, as
         follows:

         (a)      It is a corporation duly organized and validly existing under
                  the laws of its state of incorporation;

         (b)      It has the power and authority to execute and deliver the
                  Alliance Agreements and to perform its obligations thereunder;


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<PAGE>   60
                  (c)      The execution, delivery and performance by it of the
                           Alliance Agreements and its compliance with the terms
                           and provisions thereof does not and will not conflict
                           with or result in a breach of any other agreement or
                           relationship; and

                  (d)      All hardware and software used in the performance of
                           its duties and obligations hereunder shall be Year
                           2000 Compliant no later than July 1, 1999, which
                           representation shall survive the Closing.

                      ARTICLE 15 - GENERAL INDEMNIFICATION

         15.1     i-STAT Indemnification. i-STAT shall indemnify, defend and
                  hold Abbott and its Affiliates and their officers, directors,
                  employees, and representatives harmless from and against any
                  and all claims, causes of action, suits, proceedings, losses,
                  damages, demands, fees, expenses, fines, penalties and costs
                  (including reasonable attorney's fees) arising out of, related
                  to or in connection with: (a) the manufacture, shipment or use
                  of Product; (b) the breach of i-STAT's warranties,
                  representations or covenants set forth in this Agreement; (c)
                  the termination by i-STAT of any distributor of Product in the
                  Territory; and/or (d) the wrongful or negligent acts or
                  omissions on the part of i-STAT's employees, agents or
                  representatives.

         15.2     Abbott Indemnification. Abbott shall indemnify, defend and
                  hold i-STAT and its Affiliates and their officers, directors,
                  employees, and representatives harmless from and against any
                  and all claims, causes of action, suits, proceedings, losses,
                  damages, demands, fees, expenses, fines, penalties and costs
                  (including reasonable attorney's fees) arising out, related to
                  or in connection with: (a) the breach of Abbott's warranties,
                  representations or covenants set forth in


                                      -60-
<PAGE>   61
                  this Agreement; or (b) the wrongful or negligent acts or
                  omissions on the part of Abbott's employees, agents or
                  representatives.

         15.3     Cooperation. Each Party shall promptly notify the other Party
                  of any claim or potential claim covered by the indemnification
                  provisions of this Article 15 and under Section 2.10, and
                  shall include sufficient information to enable the other Party
                  to assess the facts. Each Party shall cooperate with the other
                  Party in the defense of all such claims. No settlement or
                  compromise shall be binding on a Party without such Party's
                  prior written consent, which consent shall not be unreasonably
                  withheld or delayed.

         15.4     Insurance. i-STAT shall procure and maintain during the Term
                  comprehensive commercial liability insurance, including
                  contractual and products liability coverage, in aggregate
                  annual limits of $20,000,000. i-STAT shall cause Abbott and
                  its Affiliates to be named as an additional insured on such
                  policies and i-STAT policies shall be primary with respect to
                  any indemnification of Abbott and its Affiliates hereunder.
                  i-STAT shall provide Abbott with not less than thirty (30)
                  days' prior written notice of any cancellation, modification
                  or reduction of coverage under such policies.

                       ARTICLE 16 - INTENTIONALLY OMITTED

                        ARTICLE 17 - TERM AND TERMINATION

         17.1     Term. Subject to early termination as set forth in this
                  Article 17, this Agreement shall begin on the Signing Date and
                  shall continue until December 31, 2003. Thereafter, this
                  Agreement shall be extended automatically for one (1)
                  additional Contract Year at a time, unless


                                      -61-
<PAGE>   62
                  either Party provides the other Party with not less than
                  twelve (12) months' prior written notice of such Party's
                  decision to terminate this Agreement.

         17.2     Termination For Cause. Either Party may terminate this
                  Agreement for cause upon written notice to the other Party in
                  the event the other Party: (a) appoints a receiver, executes
                  an assignment for the benefit of creditors or files or
                  otherwise becomes subject to bankruptcy or insolvency
                  proceedings; or (b) materially breaches this Agreement and
                  fails to cure such breach within sixty (60) days after receipt
                  of written notice of breach from the non-breaching Party, as
                  such cure period may be extended for such additional period as
                  the non-breaching Party reasonably determines that the
                  breaching Party is diligently pursuing a cure of such breach.

         17.3     By i-STAT For Growth Deficiencies. i-STAT shall have the right
                  to terminate this Agreement at the end of the third Contract
                  Year only if Abbott ***. In the event of termination pursuant
                  to this Section 17.3, Abbott and i-STAT shall continue to
                  perform their obligations hereunder for a period *** to enable
                  i-STAT to transition back into the business. (See example in
                  Schedule 17.3)

         17.4     By Abbott for Change of Control. Abbott shall have the right
                  to terminate this Agreement upon twelve (12) months' prior
                  written notice to i-STAT in the event of a Change of Control
                  of i-STAT.

         17.5     Continuation of Force Majeure. Either Party may terminate this
                  Agreement in the event a force majeure event continues for one
                  hundred eighty (180) consecutive days and prevents a Party
                  from materially performing its obligations under this
                  Agreement.

*** Confidential treatment requested


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<PAGE>   63
         17.6     Delay of Closing. This Agreement may be terminated, and the
                  transactions contemplated abandoned, by either Party by
                  written notice to the other Party if the Closing Date does not
                  occur on or before the date which is one hundred and thirty
                  (130) days from the Signing Date.

         17.7     Accrued Obligations. Termination, expiration, cancellation or
                  abandonment of this Agreement through any means and for any
                  reason shall not relieve the Parties of any obligation
                  accruing prior thereto and shall be without prejudice to the
                  rights and remedies of either Party with respect to any
                  antecedent breach of any of the provisions of this Agreement.

         17.8     Additional Remedies for Breach. Notwithstanding the terms and
                  conditions of Section 17.2, neither Party shall be obligated
                  to terminate this Agreement in the event the other Party
                  materially breaches this Agreement. The non-breaching Party
                  shall have the right to seek, in accordance with Section 21.6,
                  other remedies available to it at law and equity to recover
                  for such breach, without having to terminate the Agreement.

                    ARTICLE 18 - CONSEQUENCES OF TERMINATION

         18.1     Buy-out of Assets and Inventory. In the event of any
                  termination of this Agreement pursuant to Article 17, i-STAT
                  shall, within ninety (90) days after such termination,
                  purchase from Abbott and its Affiliates *** the Analyzers that
                  are placed with customers by Abbott and its Affiliates to
                  Third Parties and at Abbott's and its Affiliates' *** any
                  inventory of Product held by Abbott or its Affiliates.

         18.2     Termination Fee. In the event of any termination of this
                  Agreement pursuant to Article 17, except for termination by
                  i-STAT for cause under Section 17.2 or Section 17.3, and

*** Confidential treatment requested


                                      -63-
<PAGE>   64
                  except for termination by Abbott under Section 17.1, i-STAT
                  shall pay to Abbott upon the effective date of such
                  termination, a one-time termination fee *** which fee shall
                  not be deemed a penalty.

         18.3     Prepayment Refund. In the event of any termination of this
                  Agreement pursuant to Article 17, except for termination by
                  i-STAT for cause under Section 17.2 or Section 17.3, i-STAT
                  shall refund to Abbott in cash, upon the effective date of
                  such termination, any Prepayments made to i-STAT and not
                  credited to Abbott pursuant to Section 5.5.

         18.4     Residual Payments. In the event of any termination of this
                  Agreement pursuant to Article 17, except for termination by
                  i-STAT for cause under Section 17.2 or Section 17.3, and
                  except for termination by Abbott under Section 17.1, and in
                  consideration of Abbott efforts in developing i-STAT Product
                  sales and goodwill during the Term, i-STAT shall pay for five
                  (5) years following the effective date of termination of this
                  Agreement, a residual to Abbott, equal to the percentages
                  listed below for the appropriate year, based on Abbott's and
                  its Affiliates' and sub-distributors' Net Sales of Products
                  *** during the final twelve (12) months of the Agreement prior
                  to such termination. i-STAT shall make the residual payments
                  to Abbott in United States dollars by check or wire transfer
                  on the first five (5) anniversaries of the termination of this
                  Agreement. The residual payment schedule is as follows:

                     Year                       Percentage of Net Sales

                       1                                ***
                       2                                ***
                       3                                ***
                       4                                ***
                       5                                ***

*** Confidential treatment requested


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<PAGE>   65
              ARTICLE 19 - CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS

         19.1     Confidentiality. The Parties acknowledge and agree that during
                  the Term, each of them and their Affiliates may exchange
                  Confidential Information, and the disclosure and use of any
                  such Confidential Information shall be governed by the
                  provisions of this Article 19 and not by the provisions of the
                  Confidentiality and Standstill Agreement between the Parties,
                  dated March 11, 1998. Each Party shall use the Confidential
                  Information of the other Party only for the purpose of the
                  activities contemplated by this Agreement and shall not
                  disclose such Confidential Information to a Third Party except
                  in accordance with the provisions of this Agreement. The
                  Parties shall ensure that their Affiliates keep all
                  Confidential Information exchanged hereunder confidential in
                  accordance with the provisions hereof as though the Affiliates
                  were parties hereto. This provision shall remain in effect for
                  a period of three (3) years after termination or expiration of
                  this Agreement for all Confidential Information excluding
                  Trade Secrets. Trade Secrets shall be kept confidential by the
                  Receiving Party (as defined in Section 19.2 hereof) according
                  to the terms set forth in Section 19.2.

         19.2     Handling of Trade Secrets. During the course of its
                  performance hereunder, a Party (the "Disclosing Party") may
                  desire or be requested to disclose Confidential Information to
                  the other Party (the "Receiving Party"), which the Disclosing
                  Party considers a Trade Secret. In such event, the Disclosing
                  Party first shall inform the Receiving Party, on a
                  non-confidential basis, the general nature of the Trade Secret
                  information. The Receiving Party shall have ten (10) days to
                  decide whether it wishes to have such Trade Secrets disclosed
                  to it and to inform the Disclosing Party in writing that it
                  wishes to receive such a disclosure. Any Trade Secrets so
                  disclosed between the Parties shall be marked "Trade Secret,"
                  and the Receiving Party shall not


                                      -65-
<PAGE>   66
                  disclose or use such Trade Secret for the Term and thereafter
                  except as expressly permitted under this Agreement. In the
                  event the Disclosing Party discloses the Trade Secrets to the
                  Receiving Party without written approval of the Receiving
                  Party and/or without appropriately marking such information as
                  "Trade Secret" that Trade Secret shall be handled as
                  Confidential Information under Section 19.1.

         19.3     Confidential Treatment. i-STAT shall seek confidential
                  treatment for the terms and conditions of this Agreement to
                  the fullest extent permitted by the SEC and any other
                  governmental agency or self-regulatory organization to which
                  i-STAT provides a copy of this Agreement or any of the other
                  Alliance Agreements. Prior to seeking confidential treatment
                  from the SEC or any other governmental agency or
                  self-regulatory organization for any such document, i-STAT
                  shall consult with Abbott and Abbott's counsel and provide
                  them with a reasonable opportunity to request the inclusion of
                  specified provisions in any request by i-STAT for confidential
                  treatment.

         19.4     Public Announcements. Neither Party shall make any public
                  announcement concerning the Alliance Agreements, nor make any
                  public statement which includes the name of the other Party or
                  any of its Affiliates, or otherwise use the name of the other
                  Party or any of its Affiliates in any public statement or
                  document without the consent of the other Party, which consent
                  shall not be unreasonably withheld except: (i) as may be
                  required by law or judicial order, without the consent of the
                  other Party, which consent shall not be unreasonably withheld;
                  or (ii) either Party may include in a subsequent public
                  statement or document, information regarding the Alliance
                  Agreements which has already been approved by the other Party.


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<PAGE>   67
                           ARTICLE 20 - FORCE MAJEURE

         20.1     Event of Force Majeure. Neither Party shall be held in breach
                  of this Agreement for failure to perform any of its
                  obligations hereunder and, subject to the terms and conditions
                  of Section 17.5, the time required for performance shall be
                  extended for a period equal to the period of such delay,
                  provided that such delay has been caused by or is a result of
                  any acts of God; acts of the public enemy; civil strife; wars
                  declared or undeclared; embargoes; labor disputes, including
                  strikes, lockouts, job actions or boycotts; fires; explosions;
                  floods; shortages of material or energy; events caused by
                  reason of laws or regulations or orders by any government,
                  governmental agency or instrumentality or by any other
                  supervening unforeseeable circumstances beyond the reasonable
                  control of the Party so affected. The Party so affected shall:
                  (a) give prompt written notice to the other Party of the
                  nature and date of commencement of the force majeure event and
                  its expected duration; and (b) use its reasonable best efforts
                  to relieve the effect of such cause as rapidly as possible.

                           ARTICLE 21 - MISCELLANEOUS

         21.1     Relationship of the Parties. The relationship of the Parties
                  under this Agreement is that of independent contractors.
                  Nothing contained in this Agreement shall be construed so as
                  to constitute the Parties as partners, joint venturers or
                  agents of the other. Neither Party or its Affiliates has any
                  express or implied right or authority under this Agreement to
                  assume or create any obligations or make any representations
                  or warranties on behalf of or in the name of the other Party
                  or its Affiliates.

         21.2     Assignment. Neither Party may assign its rights or obligations
                  under this Agreement without the prior written consent of the
                  other Party, which consent shall not be


                                      -67-
<PAGE>   68
                  unreasonably withheld; provided, however, that Abbott may
                  assign this Agreement, in whole or in part, without such
                  consent, to an Affiliate of Abbott; and provided, further,
                  that Abbott shall promptly notify i-STAT of any such
                  assignment. Any permitted assignee shall assume all
                  obligations of its assignor under this Agreement. No
                  assignment shall relieve any Party of responsibility for the
                  performance of any obligation which such Party may have or
                  incur hereunder.

         21.3     Binding Effect. This Agreement shall be binding upon and inure
                  to the benefit of each of the Parties and its successors and
                  permitted assigns.

         21.4     Entire Agreement. This Agreement, including the Schedules,
                  which are incorporated herein by reference, together with the
                  other Alliance Agreements and all documents delivered in
                  connection therewith, set forth the entire understanding of
                  the Parties concerning the subject matter hereof and
                  supersedes all written or oral prior agreements or
                  understandings with respect thereto.

         21.5     Governing Law. This Agreement and the legal relations between
                  the Parties hereunder shall be construed, interpreted and
                  governed by the law of the State of New York, without regard
                  to its conflict of laws principles.

         21.6     Dispute Resolution. Any controversy or claim arising out of or
                  relating to this Agreement, or the breach thereof, shall be
                  resolved through the alternate dispute resolution procedure
                  described in Schedule 21.6; provided, however, that this shall
                  not prevent a Party from seeking and obtaining injunctive
                  relief in a court of competent jurisdiction.

         21.7     Notices. All notices hereunder shall be in writing and shall
                  be: (a) delivered personally; (b) mailed by registered or
                  certified mail, postage prepaid; (c) sent by overnight


                                      -68-
<PAGE>   69
                  courier; or (d) sent by facsimile or express mail to the
                  following addresses of the respective Parties:

   If to Abbott:     Abbott Laboratories

                         Director, Acquisitions and Technology Assessment
                         D-9RK, Building AP6C
                         100 Abbott Park Road
                         Abbott Park, Illinois 60064-3500
                         Facsimile Number: (847) 937-6951

   with copy to:     Divisional Vice President
                         Domestic Legal Operations
                         D-322, Building AP6D
                         100 Abbott Park Road
                         Abbott Park, Illinois 60064-3500
                         Facsimile Number: (847) 938-1206

   If to i-STAT:     i-STAT Corporation

                         President and Chief Executive Officer
                         303 College Road East
                         Princeton, New Jersey 08540
                         Facsimile Number: (609) 243-0507

   with copy to:     Paul, Hastings, Janofsky & Walker LLP
                         1055 Washington Boulevard
                         Stamford, CT 06901
                         Attention: Esteban A. Ferrer, Esq.
                         Facsimile Number: (203) 359-3031

Notice shall be effective: (i) upon receipt if personally delivered; (ii) on the
third Business Day following the date of mailing if sent by registered or
certified mail; (iii) on the second Business Day following the date of delivery
to the express mail service if sent by express mail; and (iv) on the first
Business Day following the date of transmission or delivery to the overnight
courier if sent by facsimile or overnight courier. A Party may change its
address listed above by sending notice to the other Party.


                                      -69-
<PAGE>   70
         21.8     Severability. If any provision of this Agreement for any
                  reason shall be held invalid, illegal or unenforceable in any
                  respect, such invalidity, illegality or unenforceability shall
                  not affect any other term or provision hereof, and this
                  Agreement shall be interpreted and construed as if such term
                  or provision, to the extent the same shall have been held to
                  be invalid, illegal or unenforceable, had never been contained
                  herein.

         21.9     Use of Funds. i-STAT has no present plan or intention to use
                  the funds from the sale of stock to Abbott under the Stock
                  Purchase Agreement and the payment of the Prepayments
                  hereunder ("Funds") for any purpose other than the improvement
                  and expansion of i-STAT's manufacturing operations, the
                  development of New Products and Program Products, working
                  capital, and general corporate purposes consistent with the
                  foregoing. Abbott acknowledges that i-STAT's plans and
                  intentions must of necessity be subject to change based on
                  numerous factors, including the degree of market acceptance of
                  Products, technological developments, competitive conditions
                  and other factors which require i-STAT to keep the interests
                  of all its shareholders in mind. Subject to the foregoing,
                  i-STAT acknowledges the importance of applying the Funds
                  towards the support of its strategic relationship with Abbott,
                  as evidenced by the Alliance Agreements.

         21.10    Interpretation. When a reference is made in this Agreement to
                  Sections or Schedules, such references shall be to a Section
                  or Schedule to this Agreement unless otherwise indicated. The
                  words "include," "includes" and "including" when used herein
                  shall be deemed in each case to be followed by the words
                  "without limitation." The table of contents and headings
                  contained in this Agreement have been inserted for convenience
                  of reference only and shall not be relied upon in construing
                  this Agreement. Use of any gender herein to refer to any
                  person shall


                                      -70-
<PAGE>   71
                  be deemed to comprehend masculine, feminine, and neuter unless
                  the context clearly requires otherwise.

         21.11    Waiver or Modification of Agreement. No waiver or modification
                  of any of the terms of this Agreement shall be valid unless in
                  writing and signed by authorized representatives of both
                  Parties. Failure by either Party to enforce any of its rights
                  under this Agreement shall not be construed as a waiver of
                  such rights nor shall a waiver by either Party in one or more
                  instances be construed as constituting a continuing waiver or
                  as a waiver in other instances.

         21.12    Survival. Expiration or early termination of this Agreement
                  shall not relieve either Party of its obligations incurred
                  prior to such expiration or early termination. The following
                  provisions shall survive expiration or early termination of
                  this Agreement: Article 1, Sections 2.10, 5.3, 5.4, 5.8,
                  Articles 10 and 12, Sections 13.5, 13.6 and 13.7, Articles 14
                  and 15, Section 17.7, Article 18, Sections 19.1, 19.2, 21.5,
                  21.6, 21.7 and 21.12.

         21.13    Headings. The captions to the Articles and Sections in this
                  Agreement are inserted for convenience only and are not a part
                  hereof.

         21.14    Counterparts. This Agreement may be executed in two (2)
                  original counterparts, each of which shall be deemed an
                  original, but both of which together shall constitute one and
                  the same instrument.

         21.15    Mutual Drafting. This Agreement is the joint product of Abbott
                  and i-STAT, and each provision hereof has been subject to the
                  mutual consultation, negotiation and agreement of the Parties
                  and their respective legal counsel and advisers and any rule
                  of construction that a document shall be interpreted or
                  construed against the drafting party shall not be applicable.


                                      -71-
<PAGE>   72
         IN WITNESS WHEREOF, each Party has caused this Marketing and
Distribution Agreement to be executed on its behalf by its duly authorized
officer as of the Signing Date.

ABBOTT LABORATORIES                 i-STAT CORPORATION
By:/s/ Miles D. White                        By:/s/ William P. Moffitt
Name: Miles D. White                Name: William P. Moffitt
Title: Executive Vice President     Title: President and Chief Executive Officer
Date: August 3, 1998                         Date: August 3, 1998


                                      -72-