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                                EXHIBIT 10.19a

                             AMENDED AND RESTATED
                             STEEL DYNAMICS, INC.
                       1996 INCENTIVE STOCK OPTION PLAN

I.         PURPOSE AND SCOPE OF PLAN.

           1.1 Steel Dynamics, Inc. (the "Company") wishes to provide all
Employees of the Company and its Subsidiaries, each of whom is a key employee
and each of whom is in a position to materially affect the profitability and
growth of the Company and its Subsidiaries, an opportunity to acquire an
ownership interest in the Company and in the stockholder values which everyone
is working to create, and in so doing to encourage and motivate each such
person to more fully identify his or her increased welfare and well-being with
that of the Company. These objectives will be attained through periodic grants
to such Employees of options to purchase shares of the Company's common stock
("Stock").

           1.2 Directors who are also Employees are eligible to participate in
this Amended and Restated 1996 Incentive Stock Option Plan (the "Plan").

           1.3 The awards offered hereunder are not in lieu of but are
supplemental to any salary or other forms of compensation for services.

II.  EFFECTIVE DATE AND TERM OF PLAN.

           2.1 The original Plan became effective on October 28, 1996, upon
the approval by the Company's stockholders on the same date. The Plan, as
amended, was approved by the Board of Directors November 2, 2000, and when
approved by stockholders on May 24, 2001, will be deemed effective as of
November 2, 2000. From and after the Effective Date, subject to Section 2.2
the Plan shall remain in effect until all Stock subject to the Plan has been
purchased or acquired according to the Plan's provisions; provided, however,
that in no event may any options be granted under the Plan on or after
December 31, 2006.

           2.2 The Board of Directors may at any time suspend or terminate the
Plan. An option may not be granted while the Plan is suspended or after it is
terminated, but any rights and obligations under any option granted while the
Plan is in effect shall not be deemed altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the
option was granted. The power of the Board of Directors to administer and
construe any option granted prior to suspension or termination of the Plan
under Section 5.3 shall nevertheless continue after any such suspension or
termination.

III.  DEFINITIONS.

           When any word or phrase appears in this Plan with the initial
letter capitalized, and the word or phrase does not commence a sentence, that
word or phrase, unless a clearly different meaning is required by the context,
shall generally be given a meaning ascribed to it in this Section or elsewhere
if the word or phrase is defined within quotation marks. The following words
or phrases shall have the following meanings:

           3.1  "Board" means the Board of Directors of the Company.

           3.2 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

           3.3 "Committee" means the Committee of the Board described in
Article V, if any, or, in lieu of a separate Committee, the full Board.

           3.4  "Company" means Steel Dynamics, Inc., an Indiana corporation,
and its Subsidiaries.

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           3.5 "Disability" means termination of employment with the Company
or any of its Subsidiaries as a result of an Employee's inability to perform
substantially his or her duties and responsibilities to the Company or any of
its Subsidiaries by reason of a physical or mental disability or infirmity (i)
for a continuous period of six (6) months, or (ii) at such earlier time as
such Employee submits medical evidence satisfactory to the Committee, or the
Committee otherwise determines, that such Employee has a physical or mental
disability or infirmity that will prevent such Employee from substantially
performing his or her duties and responsibilities for six months or longer.

           3.6  "Effective Date" means the date determined under Section 2.1.

           3.7 "Employees" means full time employees of the Company and its
Subsidiaries, including officers, managers, supervisors, professionals, and
hourly employees, whose jobs contemplate service of not less than 1,000 hours
annually.

           3.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.

           3.9 "Fair Market Value" means, as of any date, the value of the
Stock determined as follows:

             (i) If the Stock is listed on any established stock exchange or a
       national market system, including without limitation the NASDAQ
       National Market of the National Association of Securities Dealers, Inc.
       Automated Quotation (NASDAQ) System, the Fair Market Value of a share
       of Stock shall be the closing sales price for such Stock (or the
       closing bid, if no sales were reported) as quoted on such system or
       exchange (or the exchange with the greatest volume of trading in the
       Stock) on the last market trading day prior to the Grant Date, as
       reported in the Wall Street Journal or such other source as the
       Committee deems reliable;

             (ii) If the Stock is quoted on the NASDAQ System (but not on the
       NASDAQ National Market thereof) or is regularly quoted by a recognized
       securities dealer but selling prices were not reported, the Fair Market
       Value of a share of Common Stock shall be the mean between the high bid
       and low asked prices for the Stock on the last market trading day prior
       to the Grant Date, as reported in the Wall Street Journal or such other
       source as the Committee deems reliable;

             (iii) In the absence of an established market for the Stock, the
       Fair Market Value shall be determined in good faith by the Committee,
       and for purposes of the first Grant Date described in Section 6.2 Fair
       Market Value shall be deemed to be the price of a share of Common Stock
       established by the Company's underwriters on the effective date of the
       Company's Registration Statement and reflected in the pricing amendment
       filed with the Securities and Exchange Commission in connection
       therewith.

           3.10 "Grant Date" means the date upon which an Option has been
granted as prescribed in Section 6.2.

           3.11 "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

           3.12 "Nonstatutory Stock Option" means an Option not intended to
qualify or otherwise not qualifying as an Incentive Stock Option.

           3.13  "Option" means a stock option granted pursuant to the Plan.

           3.14 "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of
the Plan.

           3.15  "Optionee" means an Employee who holds an outstanding Option.

           3.16 "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

           3.17  "Plan" means the Steel Dynamics, Inc. 1996 Incentive Stock
Option Plan, as Amended and Restated herein.

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           3.18 "Rules" means the regulations promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act.

           3.19 "Securities Act" means the Securities Act of 1933, as amended
from time to time.

           3.20 "Stock" means the $0.01 par value common stock of the Company
and such other securities of the Company as may be substituted for Stock
pursuant to the terms of the Plan.

           3.21  "Subsidiary" means and is limited to any wholly-owned
subsidiary.

IV.  SHARES OF STOCK SUBJECT TO THE PLAN.

           4.1 The total number of shares of Stock of the Company reserved and
available for distribution pursuant to Options granted hereunder shall not
exceed, in the aggregate, 4,903,000 shares of the authorized Stock of the
Company, subject to adjustment described below. Any shares issued by the
Company through the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Options under the
Plan.

           4.2 Stock which may be acquired under the Plan may be either
authorized but unissued shares or shares of issued Stock held by the Company's
treasury, or both, at the discretion of the Committee. Whenever any
outstanding Option or portion thereof expires, is canceled, is forfeited or is
otherwise terminated for any reason without having been exercised or without
having been fully vested, the shares allocable to the expired, canceled,
forfeited or otherwise terminated portion of the Option may again be the
subject of Options granted hereunder.

           4.3 In the event of any stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure
of the Company, corporate separation or division (including, but not limited
to, split-up, split-off, spin-off or distribution to Company stockholders
other than a normal cash dividend), sale by the Company of all or a
substantial portion of its assets, rights offering, merger, consolidation,
reorganization or partial or complete liquidation, or any other corporate
transaction or event having an effect similar to any of the foregoing, the
aggregate number of shares reserved for issuance under the Plan, the number
and Option price of shares subject to outstanding Options, and any other
characteristics or terms of the Options as the Committee shall deem necessary
or appropriate to reflect equitably the effects of such changes to the
Optionees, shall be appropriately substituted for new shares or adjusted, as
determined by the Committee in its discretion. Notwithstanding the foregoing,
each such adjustment, if any, with respect to any Option shall comply with the
rules of Section 424(a) of the Code, and in no event shall any adjustment be
made which would render any Option granted hereunder anything other than an
incentive stock option for purposes of Section 422 of the Code, except as
otherwise contemplated by Section 6.4(d), or without the consent of the
Optionee.

V.  ADMINISTRATION.

           5.1 The Plan shall be administered by the Board. If the Board
elects to do so, however, it may appoint a committee of directors to
administer the Plan and make such rules as it deems necessary to govern the
operation of such committee. Such Committee shall be composed solely of two or
more members of the Board, each of whom shall be both (i) a "non-employee
director" as such term is defined in Rule 16b-3 promulgated under Section 16
of the Exchange Act or any successor provision, and (ii) "outside directors"
as that term is used in Section 162 of the Code and the regulations
promulgated thereunder.

           5.2 The Board shall administer the Plan so as to comply at all
times with Rule 16b-3 of the Exchange Act, and Sections 162, 421, 422, and 424
of the Code. To the extent that any provision hereof or in any option granted
hereunder is not in compliance with any such rule or requirement, such
provision shall be deemed modified so as to be in compliance with such rule or
requirement, or if such modification is not possible, shall be deemed to be
null and void as it relates solely to such noncompliance.

           5.3 The Board has the exclusive power, authority and discretion,
without further stockholder approval, to:

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             (a)  Determine the terms and conditions, not inconsistent with
       the terms hereof, of any Option granted hereunder;

             (b)  Adopt, alter and repeal such administrative rules,
       guidelines and practices governing the Plan as it shall from time to
       time deem advisable;

             (c)  Interpret the terms and provisions of the Plan and any
       Option granted and any Option Agreements relating thereto;

             (d)  Accelerate or waive any term, condition, or restriction, but
       solely in such a manner as not to render any Option otherwise qualified
       hereunder nonqualified;

             (e)  Notwithstanding anything to contrary herein, but subject at
       all times to the requirements of SEC Rule 16b-3, Regulation T, the
       Code, and other federal, state and local tax and securities laws, the
       Board may determine the methods and manner of exercise of options or
       the means by which the exercise price of an Option may be paid,
       including the form of payment and the methods by which shares of Stock
       shall be delivered or transferred to Employees. Without limiting the
       power and discretion conferred on the Board pursuant to the preceding
       sentence, the Board may, in the exercise of its discretion, but need
       not, delegate to and contract with an authorized and licensed bank,
       trust company or broker to provide any administrative or other services
       otherwise required to be provided under the terms hereof by the Company
       or by the Board, in which case notices and deliveries to and from such
       bank, trust company or broker shall be deemed for all purposes
       hereunder to be notice and delivery to or from the Company or the
       Board, as the case may be. Likewise, the Board may allow an Optionee to
       pay the exercise price of an Option, in addition to the manner
       described in Section 6.4(f), by one or more of the following methods:
       (i) in the form of shares of our common stock already owned by the
       option holder having an aggregate fair market value on the date the
       option is exercised equal to the aggregate exercise price to be paid;
       (ii) by requesting cancellation, without payment, of outstanding and
       exercisable options for the number of shares of our common stock whose
       aggregate fair market value on the date of exercise, when reduced by
       their aggregate exercise price, equals the aggregate exercise price of
       the options being exercised; or (iii) by employing a "cashless
       exercise" or "same day sale" facility provided by an authorized bank,
       trust company or broker.

             (f)  Prescribe the form of each Option Agreement, which need not
       be identical for each Optionee; and

             (g)  Supervise the administration of the Plan and decide all
       other matters that must be determined in connection with an Option or
       this Plan.

If an option expires or terminates without having been exercised in full, the
unpurchased shares will continue to be available for subsequent award under
the Amended Plan.

           5.4 The Board's interpretation of the Plan, any Options granted
under the Plan, any Option Agreement, and all decisions and determinations by
the Board with respect to the Plan shall be final, binding, and conclusive on
all parties.

           5.5 The Board may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely upon
any opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Board in
engaging such counsel, consultant or agent shall be paid by the Company.

VI.  STOCK OPTIONS.

           6.1  All Employees are eligible to receive grants of Options
hereunder.

           6.2 Subject to the provisions of this Plan, grants of Options to
Employees shall occur twice annually, on November 21 for the six (6) month
period May 21 through November 20, and on May 21 for the six (6) month period
November 21 through May 20. Options on each Grant Date shall be provided to
each Employee in the following position categories and in the following
amounts, based upon the Fair Market Value of the Stock for that

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particular Grant Date, as determined under the provisions of Section 3.9 (any
fractional share of Stock to be rounded up to the next whole share):

<TABLE>
<CAPTION>
           Position                         Grants Per Year                       Semi-Annual Grant Value
           --------                         ---------------                       -----------------------
<S>                                      <C>                                  <C>
      President                                   2                             $   80,000.00
            Vice-President                        2                                 60,000.00
      Vice-President                              2                                 45,000.00
            Manager                               2                                 30,000.00
      Supervisors/Professionals
            Grade 3                               2                                 15,000.00
            Grade 2                               2                                 12,500.00
            Grade 1                               2                                 10,000.00
            Hourly                                2                                 2,500.00
</TABLE>

           6.3 The Options granted hereunder shall be evidenced by an Option
Certificate, or an electronic equivalent thereof, issued on behalf of the
Company by an officer designated by the Board, which Option Certificate or
electronic confirmation shall be subject to the terms of an Option Agreement
to be executed or otherwise entered into or confirmed by the Company and the
Optionee. Unless otherwise provided by the Board, the terms of the Option
Agreement shall be deemed incorporated into all future Option Certificates or
electronic confirmations. The Option Agreement shall describe the Options and
shall state that the Options reflected in all Option Certificates or
electronic confirmations issued pursuant thereto shall be subject to all of
the terms and provisions of the Plan. The Option Agreement may also contain
such other terms and provisions, consistent with the Plan, as the Board may
approve.

           6.4 Subject to the Board's authority under Section 5.3, Options
granted under the Plan shall be governed by the following additional terms and
conditions:

             (a) EXERCISE PRICE. The price per share under any Option granted
       hereunder shall be at one hundred percent (100%) of the Fair Market
       Value (110% in the case of an Incentive Stock Option granted to an
       Employee who, at the time the Option is granted, owns Stock of the
       Company or any Subsidiary or Parent of the Company possessing more that
       ten percent (10%) of the total combined voting power of all classes of
       stock of the Company or of any Subsidiary or Parent of the Company) on
       the date of grant, determined in the manner required by Section 3.9

             (b) TERM OF OPTION: EXERCISE. The time within which any Option
       granted hereunder shall be exercisable shall be not earlier than six
       (6) months nor later than five (5) years from the applicable Grant
       Date, subject to Sections 6.4(j), (k) and (l). The Optionee must remain
       in the continuous employment of the Company or any of its Subsidiaries
       from the date of the grant of the Option to and including the date of
       exercise of the Option in order to be entitled to exercise such Option.
       Options granted hereunder shall be exercisable in such manner and at
       such dates as the Board may specify or otherwise permit. Any options
       granted prior to the approval of this Plan by the Company's
       stockholders shall not be exercisable until such time as the Plan has
       been so approved. Continuous employment shall not be deemed to be
       interrupted by transfers between the Company and one or more of its
       Subsidiaries. The Board shall, at its discretion, determine the effect
       of approved leaves of absence and all other matters having to do with
       "continuous employment." Where an Optionee dies or is disabled while
       employed by the Company or any of its Subsidiaries, his or her Options
       may be exercised following such death or disability in accordance with
       the provisions of Sections 6.4(j) and (k) hereof.

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             (c) TYPE OF OPTION. Each Option granted hereunder shall be
       designated in the Option Agreement as either an Incentive Stock Option
       or as a Nonstatutory Stock Option, in order to take into account that
       the limitations described in Section 6.4(d) and/or elsewhere herein are
       or may be exceeded by the cumulative total of the grants contemplated
       by Section 6.2 to a specific person, such that the Options covered by
       such excess grants are rendered Nonstatutory Stock Options.

             (d) INDIVIDUAL DOLLAR LIMITATIONS. The aggregate Fair Market
       Value (determined as of the time of Option Grant) of all shares of
       Stock with respect to which Incentive Stock Options are first
       exercisable by an Optionee in any calendar year may not exceed
       $100,000.00. To the extent that the aggregate Fair Market Value of the
       Stock with respect to which Incentive Stock Options are exercisable for
       the first time by the Optionee during any calendar year (under all
       plans of the Company and any Parent or Subsidiary) exceeds $100,000.00,
       such Options shall be treated as Nonstatutory Stock Options, and such
       Nonstatutory Stock Options, at the time of grant, shall be specifically
       so designated.

             (e)  INDIVIDUAL SHARE LIMITATIONS.  In any fiscal year of the
       Company, no Employee shall be granted Options to purchase more than
       three hundred thousand (300,000) shares.

             (f) PAYMENT. No shares of Stock shall be issued until full
       payment therefor has been made, and an Optionee shall not have any
       rights to dividends or other rights of a stockholder with respect to
       shares subject to an Option until such time as the Stock is issued in
       the name of the Optionee following exercise of the Option in accordance
       herewith. Payment may be made in cash (by certified or bank check or
       such other instrument as the Board may prescribe or accept) or in any
       other manner, including those described in Section 5.3(e). Full payment
       shall also be made, no later than the time of issuance of the shares
       subject to answer, in respect of any tax withholding obligations
       contemplated by Section 9.2, either in cash, as described herein, or by
       any of the methods described in Section 5.3(e).

             (g) NOTICE. Each Option shall be exercised, in whole or in part,
       by notifying the Company, in written form or electronically in the
       manner prescribed by the Board and in sufficient detail to enable the
       Company to determine the person's intent, and by delivering or
       transmitting full payment to the Company for the shares being
       purchased.

             Unless the Board determines that such restrictions are no longer
       applicable because the Stock being issued is registered under the
       Securities Act of 1933, as amended (the "Act") and a prospectus in
       respect thereof is current, each such notice shall be deemed to contain
       representations on behalf of the Optionee that he or she acknowledges
       that the Company is selling the shares being acquired by him or her
       under a claim of exemption from registration under the Act, as a
       transaction not involving any public offering; that he or she
       represents and warrants that the shares are being acquired with a view
       to "investments" and not with a view to distribution or resale; and
       that he or she agrees not to transfer, encumber or dispose of the
       shares unless: (i) a registration statement with respect to the shares
       shall be effective under the Act, together with proof satisfactory to
       the Company that there has been compliance with applicable state laws,
       or (ii) the Company shall have received an opinion of counsel in form
       and content satisfactory to the Company to the effect that the transfer
       qualifies under Rule 144 or some other disclosure exemption from
       registration and that no violation of the Act or applicable state
       securities laws will be involved in such transfer, and/or such other
       documentation in connection therewith as the Company's counsel may
       require.

             (h) The Company may endorse such legend or legends upon the
       certificates for Stock issued pursuant to a grant hereunder, and may
       issue such "stop transfer" instructions to its transfer agent in
       respect of such Stock, on the electronic equivalent thereof, as, in its
       discretion, it determines necessary or appropriate to prevent a
       violation of, or to perfect an exemption from, the registration
       requirements of the Act, to implement the provisions of the Plan and
       any Option Agreement hereunder, or to permit the Company to determine
       the occurrence of a disqualifying disposition, as described in Section
       421(b) of the Code, of Stock transferred upon execution of an Option
       granted under the Plan.

             (i) NONTRANSFERABILITY OF OPTIONS. No Options shall be
       transferable by the Optionee otherwise than by will, by the laws of
       descent and distribution, pursuant to a Qualified Domestic Relations
       Order ("QDRO"), or as permitted under the Rules, and all Options shall
       be exercisable, during the Optionee's lifetime, only by the

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       Optionee. No right or interest of an Employee in any Option may be
       pledged, encumbered, or hypothecated to or in favor of any party other
       than the Company or a Subsidiary, or shall be subject to any lien,
       obligation, or liability of such Employee to any other party other than
       the Company or a Subsidiary.

             (j) TERMINATION BY REASON OF DEATH. Unless otherwise determined
       by the Board at or after grant, if an Optionee's employment by the
       Company terminates by reason of death, any Option held by such Optionee
       may thereafter be exercised, to the extent then exercisable or on such
       accelerated basis as the Board may determine at or after grant, by the
       legal representative of the estate or by the legatee of the Optionee
       under the will of the Optionee, for a period of one hundred eighty
       (180) days (or such shorter period as the Board may specify at grant)
       from the date of such death or until the expiration of the stated term
       of such Option, whichever period is shorter.

             (k) TERMINATION BY REASON OF DISABILITY. Unless otherwise
       determined by the Board at or after grant, if an Optionee's employment
       by the Company terminates by reason of Disability, any Option held by
       such Optionee may thereafter be exercised by the Optionee, to the
       extent it was exercisable at the time of termination, or on such
       accelerated basis as the Board may determine at or after grant, for a
       period of ninety (90) days (or such shorter period as the Board may
       specify at grant) from the date of such termination of employment or
       until the expiration of the stated term of such Option, whichever
       period is shorter; provided, however, that, if the Optionee dies within
       such ninety day (or such shorter period as the Board shall specify at
       grant), any unexercised Option held by such Optionee shall thereafter
       be exercisable to the extent to which it was exercisable at the time of
       death for a period of one hundred eighty (180) days from the date of
       such death or until the expiration of the stated term of such Option,
       whichever period is shorter.

             (l) RESIGNATION BY OPTIONEE; TERMINATION BY COMPANY WITHOUT
       CAUSE. Unless otherwise determined by the Board at or after grant, if
       an Optionee voluntarily resigns from his employment with the Company,
       or is terminated by the Company other than for cause (as herein
       defined), any Option held by such Optionee may thereafter be exercised
       by the Optionee, to the extent it was exercisable at the time of
       termination, or on such accelerated basis as the Board may determine at
       or after grant, for a period of ninety (90) days (or such shorter
       period as Board may specify at grant) from the date of such resignation
       or termination of employment or the expiration of the stated term of
       such Option, whichever period is shorter; provided, however, that, if
       the Optionee dies within such ninety (90)-day period, any unexercised
       Option held by such Optionee shall thereafter be exercisable, to the
       extent to which it was exercisable at the time of death, for a period
       of one hundred eighty (180) days from the date of such death or until
       the expiration of the stated term of such Option, whichever period is
       shorter. "Cause" shall mean either (i) if the Optionee has an
       employment agreement with the Company, the definition of Cause included
       in such employment agreement, or (ii) if the Optionee does not have an
       employment agreement with the Company, the termination of the
       Optionee's employment with the Company because of (i) the willful
       failure by the Optionee (other than by reason of incapacity due to
       physical or mental illness) to perform any material duty in connection
       with the Optionee's employment with the Company, (ii) the conviction of
       the Optionee of a felony or the Optionee's plea of no contest to a
       felony, or (iii) the perpetration by the Optionee of a material
       dishonest act or fraud against the Company or any Parent or Subsidiary
       thereof.

             (m) OTHER TERMINATION. Unless otherwise determined by the Board
       at or after grant, if an Optionee's employment by the Company
       terminates for any reason other than death, disability, the Optionee's
       resignation, or termination by the Company other than for Cause, the
       Option shall thereupon terminate.

VII.  AMENDMENTS AND TERMINATION.

           7.1 PLAN AMENDMENT. The Board may amend, alter or discontinue the
Plan at any time and from time to time, but no amendment, alteration, or
discontinuation shall be made (i) which would impair the rights of an Optionee
under an Option award previously granted, without the Optionee's consent, or
(ii) which, if such approval is not obtained, requires stockholder approval
under the Rules.

           7.2 INCENTIVE STOCK OPTION AMENDMENT. The Board may amend the terms
of any Option granted, prospectively or retroactively, but no such amendment
shall impair the rights of any Optionee without the Optionee's consent. The
Board may also substitute new Options for previously granted Options,
including previously granted Options having higher option prices. Subject to
the above provisions, the Board shall have broad

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authority to amend the Plan to take into account changes in applicable tax
laws, securities laws and accounting rules, as well as other developments.

VIII.  UNFUNDED STATUS OF PLAN.

           8.1 The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to an
Optionee by the Company, nothing contained herein shall give any such Optionee
any rights that are greater than those of a general creditor of the Company.
In its sole discretion, the Board may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to deliver
Stock; provided, however, that, unless the Board otherwise determines with the
consent of the affected Optionee, the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

IX.  GENERAL PROVISIONS.

           9.1 NONGUARANTY OF EMPLOYMENT. The adoption of the Plan shall not
confer upon any Optionee any right to continued employment with the Company
nor shall it interfere in any way with the right of the Company to terminate
its relationship with any of its employees at any time.

           9.2 WITHHOLDING OF TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the Optionee for
federal income tax purposes with respect to any Option under the Plan, the
Optionee shall pay to the Company or make arrangements satisfactory to the
Board regarding the payment of any federal state or local taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
the Company under the Plan shall be conditioned on such payment or
arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
the Optionee.

           9.3 NO STOCKHOLDER RIGHTS. No Option shall give the Employee any of
the rights of a stockholder of the Company unless and until shares of Stock
are in fact issued to such person in connection with such Option.

           9.4  EXPENSES.  The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.

           9.5 FRACTIONAL SHARES. No fractional shares of Stock shall be
issued, and the Board shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall
be eliminated by rounding up.

           9.6 SEVERABILITY. The provisions of this Plan, and any
administrative rules and regulations prescribed by the Board in connection
with this Plan, shall be applied in all cases so as to comply with the
requirements of Rule 16b-3 of the Securities Exchange Act of 1934 and with
Sections 162, 421, 422 and 424 of the Internal Revenue Code, and any Plan
provision, administrative rule or other action that would conflict with or
violate any of the foregoing will be deemed severed from the Plan, amended as
deemed necessary to comply, or otherwise rendered ineffective to the maximum
extent permissible to maintain compliance with such applicable rules or
statutes. Specifically, but without limitation, any change to the terms of an
option that would require approval by the Board of Directors as a new option
grant or which would otherwise not be exempt from Section 16(b) of the
Securities Exchange Act of 1934 in the absence of Board approval shall be
deemed ineffective and of no force whatsoever unless and until such approval
has been properly secured (provided, however, that, unless otherwise
prohibited, such approval may be declared effective retroactively). In like
manner, should any provision of this Plan or administrative rule, regulation
or action taken pursuant to this Plan, by the Board or otherwise, if applied
to an existing option, be such as to constitute a modification, extension or
renewal of that option, within the meaning of Section 424(h)(1) of the
Internal Revenue Code, such provision, ruling or action shall not be applied
retroactively to any existing options but shall be applied only prospectively
to then current and future options.

           9.7  GOVERNING LAW.  To the extent not governed by federal law, the
Plan and all Option Agreements shall be construed in accordance with and
governed by the laws of the State of Indiana.

                                     B-8<PAGE>   1
                                                                   Exhibit 10.57

                          REGISTRATION RIGHTS AGREEMENT

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

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

                  The Company and the Purchasers hereby agree as follows:

         1.       Definitions

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

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

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

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

                  "Commission" means the Securities and Exchange Commission.

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

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

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

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

<PAGE>   2

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

             2.    Shelf Registration

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

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

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

         3.       Registration Procedures

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

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

                                      -4-
<PAGE>   5

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

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

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

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

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

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

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

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

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

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

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

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

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

             5.   Indemnification

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

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

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

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

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

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

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

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

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

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

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

         6.       Miscellaneous

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

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

                  (b)      [Intentionally deleted]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -12-
<PAGE>   13

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

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

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

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

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

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

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

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

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

                                      -14-
<PAGE>   15

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

                                        i-STAT CORPORATION

                                        By:_____________________________________
                                        Name:
                                        Title:

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

<PAGE>   16

                                    PINE RIDGE FINANCIAL INC.

                                    By:_____________________________________
                                    Name:
                                    Title:

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

With copies to:

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

<PAGE>   17

                                    MONTROSE INVESTMENTS LTD.

                                    By:_____________________________________
                                    Name:
                                    Title:

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

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

<PAGE>   18

                                    DEEPHAVEN PRIVATE PLACEMENT TRADING LTD.

                                    By:_____________________________________
                                    Name:
                                    Title:

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

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

                                    KESSLER FAMILY LIMITED PARTNERSHIP

                                    By:_____________________________________
                                    Name:
                                    Title:

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

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

<PAGE>   20

                                    IRVIN KESSLER

                                    ____________________________________________

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

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

<PAGE>   21

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

                                    By:_____________________________________
                                    Name:
                                    Title:

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

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

<PAGE>   22

                                     Annex A

                              PLAN OF DISTRIBUTION

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

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

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

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

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

-        privately negotiated transactions;

-        short sales;

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

-        a combination of any such methods of sale; and

-        any other method permitted pursuant to applicable law.

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

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

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

<PAGE>   23

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

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

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