Document:

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                               i-STAT CORPORATION
                              EQUITY INCENTIVE PLAN

1.    Purpose.

            The purpose of this plan (the "Plan") is to secure for i-STAT
Corporation (the "Company") and its stockholders the benefits arising from
capital stock ownership by employees and members of the Board of Directors of,
and consultants and advisors to, the Company and any Parent Corporation, or
Subsidiary (each as defined in Section 15 hereof), who are expected to
contribute to the Company's future growth and success.

2.    Types of Awards and Administration.

            (a) Types of Awards. Awards pursuant to this Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be (i) incentive stock options
("Incentive Stock Options") to purchase shares of the Company's Common Stock,
par value $.15 per share ("Common Stock"), meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"),(ii)
non-statutory options to purchase shares of Common Stock, which are not intended
to meet the requirements of Code Section 422 ("Non-Statutory Stock Options" and,
together with Incentive Stock Options, "Options"), or (iii) shares of Common
Stock ("Restricted Shares" and, together with "Options", "Awards").

            (b) Administration. This Plan will be administered by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions hereof shall be final and conclusive. The Board of Directors may in
its sole discretion make Awards and authorize the Company to issue shares of
Common Stock pursuant to such Awards, as provided in, and subject to the
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terms and conditions of, this Plan. The Board shall have authority, subject to
the express provisions of this Plan, to construe this Plan and the respective
written agreements setting forth the terms and conditions of an Award (each, an
"Award Agreement"), to prescribe, amend and rescind rules and regulations
relating to this Plan, to determine the terms and provisions of Award
Agreements, which need not be identical, to advance the lapse of any waiting,
forfeiture or installment periods and exercise dates, and to make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of this Plan. The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in this Plan or in
any Award Agreement in the manner and to the extent it shall deem expedient to
carry this Plan into effect and it shall be the sole and final judge of such
expediency. No director shall be liable for any action or determination taken or
made in good faith under or with respect to this Plan or any Award.

            (c) Delegation of Authority. The Board of Directors may, to the full
extent permitted by law, delegate any or all of its powers under this Plan to a
committee (the "Committee") of two or more directors each of whom is a
Non-Employee Director (as hereinafter defined), and if the Committee is so
appointed all references to the Board of Directors in this Plan shall mean and
relate to such Committee to the extent of the powers so delegated. For the
purposes of this Plan, a director or member of such Committee shall be deemed to
be a "Non-Employee Director" only if such person qualifies as a "Non-Employee
Director" within the meaning of paragraph (b)(3) of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
successor rule.

            (d) Limitation on Options Granted in Any Twelve Months. No
individual may be granted, in any twelve-month period, Options under this Plan
which are exercisable with respect to more than 200,000 shares of Common Stock.

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3.    Eligibility.

            Awards shall be made only to persons who are, at the time of grant,
officers, employees or directors of, or consultants or advisors to, (provided,
in the case of Incentive Stock Options, such directors or officers are then also
employees of) the Company or any Parent Corporation or Subsidiary. A person who
has been granted an Award may, if such person is otherwise eligible, be granted
an additional Award or Awards if the Board of Directors shall so determine.

4.    Stock Subject to Plan.

            Subject to adjustment as provided in Sections 11 and 12 hereof, the
maximum number of shares of Common Stock of the Company which may be issued and
sold pursuant to Awards made under this Plan is 2,300,000 shares. Such shares
may be authorized and unissued shares or may be shares issued and thereafter
acquired by the Company. If either (i) Restricted Shares are forfeited following
their award under this Plan, or (ii) Options granted under this Plan are
canceled, or expire or terminate for any reason without having been exercised in
full, the forfeited Restricted Shares, or the unpurchased shares of Common Stock
subject to any such Option, as the case may be, shall again be available for
subsequent Awards under this Plan. Restricted Shares, Options and shares of
Common Stock issuable upon exercise of Options granted under this Plan may be
subject to transfer restrictions, repurchase rights or other restrictions as
shall be determined by the Board of Directors.

5.    Award Agreements.

            As a condition to the grant of an Award under this Plan, each
recipient of an Award shall sign an Award Agreement not inconsistent with this
Plan in such form, and providing for such terms and conditions, as the Board of
Directors shall determine at the time such Award is

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authorized to be granted. Such Award Agreements need not be identical but shall
comply with, and be subject to, the terms and conditions set forth herein.

6.    Options Generally.

            (a) Purchase Price. The purchase price per share of Common Stock
deliverable upon the exercise of an Option (hereinafter sometimes referred to as
the "exercise price") shall be not less than the fair market value of the Common
Stock as determined by the Board of Directors on the date such Option is
authorized to be granted. The "fair market value" of the Common Stock on any
date (the "Value Date") shall mean (i) the closing price of the Common Stock, as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if the Common Stock is listed on a stock exchange, the
principal stock exchange on which the Common Stock is listed, on the last
trading day prior to the Value Date for which a closing price is available, or
(ii) if the Board of Directors determines, in the exercise of its business
judgment, that such closing price does not properly reflect the fair market
value of the Common Stock on the Value Date, then such other price as may then
be determined in good faith by the Board of Directors. If the Common Stock is
not reported on NASDAQ or listed on any stock exchange, then the "fair market
value" shall be determined in good faith by the Board of Directors.

            (b) Payment of Exercise Price. Payment of the exercise price of an
Option shall be in cash or, in the sole discretion of the Board of Directors, in
capital stock of the Company, by the surrender of other rights to purchase
capital stock of the Company (including Options)or by any other lawful means.
The Company may, in its sole discretion, make loans to an Option holder in an
amount equal to all or part of the exercise price of Options held by such Option
holder; provided, that the grant of a loan on any occasion to one or more Option
holder(s) shall not

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obligate the Company to grant loans on any other occasion or to such or any
other Option holder.

            (c) Option Term. Each Option and all rights thereunder shall expire
on such date as the Board of Directors shall determine on the date such Option
is authorized to be granted, but in no event may any Option remain in effect
after the expiration of ten years from the day on which such Option is granted
(or five years in the case of Options described in paragraph (b) of Section 7
and in Section 9 hereof), and such Option shall be subject to earlier
termination as provided in this Plan. Notwithstanding the foregoing, except with
respect to Incentive Stock Options, if at any time during the last six (6)
months of the term of any Option, the holder thereof is precluded from selling
shares of Common Stock underlying such Option solely by reason of the
application to such holder of the Company's "Policy Regarding Confidential
Information and Insider Trading For All Employees and Directors" (or similar
successor policy), the term of such Option shall be deemed automatically
extended by a period equal to six (6) months beginning with the first day during
which such Option holder shall no longer be so precluded.

            (d) Exercise of Options. Each Option shall be exercisable either in
full or in installments at such time or times and during such period as shall be
set forth in the Award Agreement evidencing such Option; provided, however,
that, subject to the exception set forth in paragraph (c) above, (i) no Option
shall have a term in excess of ten years from the date of grant (or five years
in the case of Options described in paragraph (b) of Section 7 and in Section 9
hereof), and (ii) the periods of time following an Option holder's cessation of
employment with the Company, any Parent Corporation or Subsidiary, or service as
an Outside Director (as defined in Section 9 hereof), or as consultant or
advisor to the Company, any Parent Corporation or Subsidiary, or following an
Option holder's death or disability, during which an Option may be exercised, as
provided in paragraph (f) below, shall not be included for

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purposes of determining the number of shares of Common Stock with respect to
which such Option may be exercised.

            (e) Rights as a Stockholder. The holder of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of issue of a stock certificate to such person for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.

            (f) Effect of Cessation of Service. Notwithstanding anything
contained in this Plan to the contrary, no Option may be exercised unless, at
the time of such exercise, the recipient is, and has been continuously since the
date of grant of such person's Option, employed by, or serving as an Outside
Director, consultant or advisor to one or more of the Company, a Parent
Corporation or a Subsidiary, except that if and to the extent the applicable
Award Agreement so provides:

                  (i) the Option may be exercised within the period of three
months after the date the holder thereof ceases to be employed by or to serve as
an Outside Director of or consultant or advisor to any of the foregoing entities
(or within such lesser period as may be specified in the Award Agreement) for
any reason other than death or disability;

                  (ii) if the holder thereof dies while in the employ of, or
serving as an Outside Director of or consultant or advisor to, the Company, a
Parent Corporation or a Subsidiary or within three months after such holder
ceases to be such an employee, Outside Director, consultant or advisor, the
Option may be exercised by the person to whom it is transferred by will or the
laws of descent and distribution within the period of one year after the date of
death (or within such lesser period as may be specified in the Award Agreement);
and

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                  (iii) if the holder thereof becomes disabled (within the
meaning of Section 22(e)(3) of the Code) while in the employ of or serving as an
Outside Director of or consultant or advisor to the Company, a Parent
Corporation or a Subsidiary, the Option may be exercised within the period of
one year after the date such holder ceases to be an employee or Outside Director
of, or consultant or advisor to, any of the foregoing entities because of such
disability (or within such lesser period as may be specified in the Award
Agreement);

                  provided, however, that in no event may any Option be
exercised after the expiration date of the Option, except to the extent provided
in paragraph (c) above. In the case of a holder of a Non-Statutory Stock Option
whose relationship with the Company or any Parent Corporation or Subsidiary
changes during the term of such Option in a manner that does not constitute a
complete separation therefrom (for example, from employee to consultant or
director, or vice versa), the Board shall have authority to determine whether or
not such change constitutes a cessation of employment or service for purposes of
this paragraph.

            (g) Transfer Restrictions. Except as otherwise approved by the Board
of Directors, during the life of the holder thereof an Option shall be
exercisable only by or on behalf of such person and no Option granted under the
Plan shall be assignable or transferable by the person to whom it is granted,
either voluntarily or by operation of law, except by will or the laws of descent
and distribution.

            (h) Other Awards. Awards of Options may be made alone, in addition
to or in tandem with Awards of Restricted Shares under the Plan.

7.    Incentive Stock Options.

            Options granted under the Plan which are intended to be Incentive
Stock Options shall be specifically

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designated as Incentive Stock Options and shall be subject to the following
additional terms and conditions:

            (a) Dollar Limitation. The aggregate fair market value (determined
as of the respective date or dates of the grant) of the Common Stock with
respect to which Incentive Stock Options granted to any employee under the Plan
(and under any other incentive stock option plans of the Company, and any Parent
Corporation and Subsidiary) are exercisable for the first time shall not exceed
$100,000 in any one calendar year. In the event that Section 422 of the Code is
amended to alter the limitation set forth therein so that following such
amendment such limitation shall differ from the limitation set forth in this
paragraph (a), the limitation of this paragraph (a) shall be automatically
adjusted accordingly.

            (b) 10% Stockholder. If any employee to whom an Incentive Stock
Option is to be granted under the Plan is at the time of the grant of such
Option the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Parent Corporation or any
Subsidiary, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:

            (i) the purchase price per share of Common Stock subject to such
      Incentive Stock Option shall not be less than 110% of the fair market
      value thereof at the time of grant; and

            (ii) the exercise period of such Incentive Stock Option shall not
      exceed five years from the date of grant.

Except as modified by the preceding provisions of this Section 7, all the
provisions of the Plan applicable to Options generally shall be applicable to
Incentive Stock Options granted hereunder.

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8.    Restricted Shares.

            (a) Awards of Shares. Awards of Restricted Shares may be made under
this Plan on such terms and conditions as the Board of Directors may from time
to time approve. Awards of Restricted Shares may be made alone, in addition to
or in tandem with Awards of Options under this Plan. Subject to the terms of
this Plan, the Board of Directors shall determine the number of Restricted
Shares to be awarded to each recipient and the Board of Directors may impose
different terms and conditions on a Restricted Share Award than on any other
Award made to the same recipient or other Award recipients. Each recipient of
Restricted Shares shall, except in the circumstances described in paragraph (b)
below, be issued one or more stock certificates evidencing such Restricted
Shares. Each such certificate shall be registered in the name of such recipient,
and shall bear an appropriate legend referring to the terms and conditions
applicable to the Restricted Shares evidenced thereby.

            (b) Forfeiture of Restricted Shares. In making an Award of
Restricted Shares, the Board of Directors may impose a requirement that the
recipient must remain in the employment or service (including service as an
Outside Director, advisor or consultant) of the Company or any Parent
Corporation or Subsidiary for a specified minimum period of time, or else
forfeit all or a portion of such Restricted Shares. In the case of a holder of
Restricted Shares whose relationship with the Company or any Parent Corporation
or Subsidiary changes during the term of any applicable forfeiture period in a
manner that does not constitute a complete separation therefrom (for example,
from employee to consultant or director, or vise versa), the Board shall have
authority to determine whether or not such change constitutes a cessation of
employment or service for purposes of such requirement. In such case, the
certificate(s) evidencing the Restricted Shares shall be held in custody by the
Company until such Shares are no longer subject to forfeiture.

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            (c) Rights as a Stockholder; Stock Dividends. Subject to any
restrictions set forth in the applicable Award Agreement, a recipient of
Restricted Shares shall have voting, dividend and all other rights of a
stockholder of the Company as of the date such Shares are issued and registered
in recipient's name (whether or not certificates evidencing such Shares are
delivered to such recipient). Except as may otherwise be set forth in the
applicable Award Agreement, stock dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares under the applicable
Award Agreement and shall be subject to the same terms and conditions that apply
to the Restricted Shares with respect to which such dividends are issued.

9.    Annual Automatic Awards to Outside Directors.

            (a) Annual Automatic Awards of Options and Restricted Shares to
Outside Directors. Each member of the Board of Directors of the Company who is
not an employee of the Company or of any Parent Corporation or Subsidiary (each,
an "Outside Director") shall be granted, upon such person's election and
re-election as an Outside Director, (i) Non-Statutory Stock Options to purchase
that number of shares of Common Stock which results in such Options having a
value, as of their grant date, of approximately $33,333.33 (the "Award Value"),
and (ii) that number of Restricted Shares which, when divided by the fair market
value of a share of Common Stock on the date of grant, of such Shares, have a
fair market value on such date of approximately $33,333.33. For purposes of
clause (i) above, the value of Non-Statutory Stock Options shall be determined
in accordance with paragraph (c) of this Section 9 and, for purposes of clause
(ii) above, fair market value shall be determined in accordance with paragraph
(a) of Section 6 hereof.

            If an Outside Director is elected other than at an annual meeting of
the Company's stockholder (an "Annual Meeting"), the Award Value shall be
reduced to the result of the multiplication of the Award Value by a fraction,
(i) the

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numerator of which shall be the difference between 365 and the number of days
elapsed since the Annual Meeting immediately preceding such Outside Director's
election and (ii) the denominator of which shall be 365.

            If, as a result of the computations set forth in the first paragraph
of this Section 9(a), the number of shares of Common Stock underlying Options or
constituting Restricted Shares to be awarded to an Outside Director is less than
a whole number, such number shall be rounded down to the nearest whole number,
and the fair market value (determined in the same manner as for purposes of
computing the applicable Award Value) of any fractional shares shall be paid to
the Outside Director in cash.

            (b) Terms and Conditions of Awards to Outside Directors. Awards
granted to Outside Directors pursuant to this Section 9 shall (i) in the case of
Options, not be exercisable prior to (and will be fully exercisable from and
after), and (ii) in the case of Restricted Shares, be subject to complete
forfeiture prior to, the later of the 30th day following the grant date or the
day immediately preceding the end of the Company's fiscal quarter in which they
are granted. In each such case, the Outside Director must have been in
continuous service as such since the date of grant of such Options or Restricted
Shares in order for such Options to become exercisable and/or for such
Restricted Shares to no longer be subject to forfeiture. Options granted to
Outside Directors are exercisable at an exercise price per share of Common Stock
underlying such Options equal to the fair market value thereof on the date of
grant, as determined in accordance with paragraph (a) of Section 6 hereof, and
shall expire five years after the date of grant except to the extent extended as
provided in paragraph (c) of Section 6 hereof. Shares purchased upon the
exercise of any Option granted under this Section 9 may not be sold prior to the
expiration of six (6) months after the date of grant of such Option.

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            (c) Valuation Method for Awards of Non-Statutory Stock Options to
Outside Directors. The Black-Scholes valuation method shall be used to determine
the value of Options granted to Outside Directors pursuant to this Section 9,
for which purpose the following are assumed: (i) a volatility measure based on
the twelve months ending immediately prior to the date of grant; (ii) the
applicable Federal interest rate for the month of grant (as published by the
U.S. Department of the Treasury); (iii) the maximum term of the Options (but
without giving effect to any extension that may result from the application of
the provisions of paragraph (c) of Section 6 hereof); (iv) the exercise prices
of such Options; and (v) the fair market value of the Common Stock on the day
before the grant date (as determined in accordance with paragraph (a) of Section
6 hereof).

            (d) Plan Applicable. Except as modified by the preceding provisions
of this Section 9, Awards granted to Outside Directors shall remain subject to
all provisions of this Plan applicable to Awards generally.

            (e) Other Outside Director Compensation. Nothing in this Section 9
shall preclude the payment by the Company or any Parent Corporation or
Subsidiary to Outside Directors of any other form of compensation, including the
granting of Options or Restricted Shares pursuant to other provisions of this
Plan.

10.   General Award Restrictions.

            (a) Investment Representations. The Company may require any person
to whom an Award is made, as a condition of such Award, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the Award for such person's
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems

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necessary or appropriate in order to comply with applicable Federal and State
securities laws.

            (b) Special Conditions to Issuance of Shares. Each Award shall be
subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares of
Common Stock subject to such Award upon any securities exchange or under any
State or Federal law, or the consent or approval of any governmental or
regulatory body, is necessary as a condition of, or in connection with, the
issuance or purchase of such shares thereunder, such shares may not be issued
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.

11.   Recapitalization.

            In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision,
appropriate adjustment shall be made in the number and kind of shares available
under this Plan and under any Options granted under this Plan. Such adjustment
to outstanding Options shall be made without change in the total exercise price
applicable to the unexercised portion of such Options, but a corresponding
adjustment in the applicable Option exercise price per share shall be made. No
such adjustment shall be made which would, within the meaning of any applicable
provisions of the Code, constitute a modification, extension or renewal of any
Option or a grant of additional benefits to the holder of an Option.

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12.   Reorganization or Change in Control of the Company.

            (a) Reorganization. In case (i) the Company is merged or
consolidated with another corporation and the Company is not the surviving
corporation, (ii) all or substantially all of the assets or more than 50% of the
outstanding voting stock of the Company is acquired by any other corporation or
(iii) of a reorganization or liquidation of the Company, the Board of Directors
of the Company, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to outstanding Options, either (x) make
appropriate provision for the protection of any such outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect of the shares of Common Stock of the Company, provided that
no additional benefits shall be conferred upon holders of Options as a result of
such substitution, and the excess of the aggregate fair market value of the
shares subject to any Option immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the shares subject to such Option immediately before such substitution
over the purchase price thereof, or (y) upon written notice to the holders of
Options, provide that all unexercised Options must be exercised within a
specified number of days of the date of such notice or they will be terminated.
In any such case, the Board of Directors may, in its discretion, accelerate the
exercise dates of outstanding Options; provided, however, that paragraph (b)
below shall govern acceleration of exercisability of Options with respect to the
events described in clauses (i), (ii) and (iii) of such paragraph.

            (b) Change in Control. In case (i) of any consolidation or merger
involving the Company if the shareholders of the Company immediately before such
merger or consolidation do not own, directly or indirectly, immediately
following such merger or consolidation, more than fifty percent (50%) of the
combined voting power of the

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outstanding voting securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
shares of Common Stock immediately before such merger or consolidation; (ii) of
any sale, lease, license, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the business
and/or assets of the Company or assets representing over 50% of the operating
revenue of the Company; or (iii) any person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) who was not, on April 21, 1995, a
"controlling person" (as defined in Rule 405 under the Securities Act of 1933,
as amended) (a "Controlling Person") of the Company shall become (x) the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
over 50% of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally or (y) a Controlling Person of the
Company, all outstanding Awards, regardless of the date of such Awards, shall
(A) in the case of Options, immediately become exercisable with respect to 100%
of the shares of Common Stock subject to such Options and (B) in the case of
Restricted Shares, immediately become fully vested and no longer subject to any
forfeiture unless otherwise provided in the applicable Award Agreement.

13.   No Special Employment Rights.

            Nothing contained in this Plan or in any Award Agreement shall
confer upon any Award recipient any right with respect to the continuation of
such person's employment by the Company (or any Parent Corporation or
Subsidiary) or interfere in any way with the right of the Company (or any Parent
Corporation or Subsidiary), subject to the terms of any separate agreement to
the contrary, at any time to terminate such employment or to increase or
decrease the compensation of the Award recipient from the rate in existence at
the time of the Award. Whether an authorized leave of absence, or absence in
military or government service, shall constitute termination or cessation of

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employment for purposes of this Plan or any Award shall be determined by the
Board of Directors.

14.   Other Employee Benefits.

            The amount of any compensation deemed to be received by an employee
as a result of any Award (including the exercise of an Option, or the sale of
shares of Common Stock received upon such exercise or of Restricted Shares) will
not constitute "earnings" with respect to which any other employee benefits of
such employee are determined, including without limitation benefits under any
pension, profit sharing, life insurance or salary continuation plan.

15.   Definitions.

            (a) Subsidiary. The term "Subsidiary" as used in this Plan shall
mean any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
For purposes only of Awards of Non-Statutory Options or Restricted Shares, the
term "Subsidiary" shall also mean any partnership or limited partnership of
which the Company or any Subsidiary controls 50% or more of the voting power, or
any corporation in an unbroken chain of Subsidiaries if each of the Subsidiaries
other than the last Subsidiary in the unbroken chain either owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations or controls 50% or more of the voting
power of any such partnership or limited partnership in such chain.

            (b) Parent Corporation. The term "Parent Corporation" as used in
this Plan shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company owns stock possessing

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50% or more of the combined voting power of all classes of stock in one of the
other corporations in such chain.

            (c) Employment. The term "employment", as used in this Plan and in
any Award Agreement, shall, unless the context otherwise requires, be defined in
accordance with the provisions of Section 1.421-7(h) of the Federal Income Tax
Regulations (or any successor regulations).

16.   Amendment of this Plan.

            The Board of Directors may at any time and from time to time modify,
amend or terminate this Plan in any respect, except to the extent stockholder
approval is required by law. The termination or any modification or amendment of
this Plan shall not, without the consent of an Award recipient, affect such
Award recipient's rights under any Award Agreement unless such Agreement so
specifies. With the consent of the Award recipient affected, the Board of
Directors may amend outstanding Award Agreements in a manner not inconsistent
with this Plan. The Board of Directors shall have the right to amend or modify
the terms and provisions of this Plan and of any outstanding Incentive Stock
Options granted under this Plan to the extent necessary to qualify any or all
such Options for such favorable Federal income tax treatment (including deferral
of taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code.

17.   Withholding.

            The Company's obligation to deliver Restricted Shares awarded, or
shares deliverable upon the exercise of any Option granted, under this Plan
shall be subject to the Award recipient's satisfaction of all applicable
Federal, State and local income and employment tax withholding requirements.

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18.   Duration of this Plan.

            Unless earlier terminated by the Board of Directors, this Plan shall
terminate upon the earlier of (i) the close of business on March 31, 2008 or
(ii) the date on which all shares available for issuance under this Plan shall
have been issued pursuant to the exercise of Options granted under this Plan
and/or are no longer subject to forfeiture pursuant to the terms of any
applicable Award Agreement. If the date of termination is determined under (i)
above, then Awards outstanding on such date shall continue to have force and
effect in accordance with the provisions of the Award Agreements evidencing such
Awards.

                              Adopted on April 1, 1998 by the Board of
                              Directors; amended on May 29, 1998 by the Board of
                              Directors; approved by the stockholders on May 29,
                              1998; amended as of February 5, 1999 by the Board
                              of Directors; and amended as of June 10, 1999 by
                              the Board of Directors.

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                              CONSULTING AGREEMENT
                                     BETWEEN
                       I-STAT CORPORATION (THE "COMPANY")
                                       AND
                            IMANTS R. LAUKS ("LAUKS")
                             DATED SEPTEMBER 1, 1999

1.  POSITION:              Senior Consultant.

2.  CONSULTING
SERVICES:                  Lauks shall render exclusive consulting services to
                           the Company in connection with the manufacture and
                           marketing of medical diagnostic products, and in
                           connection with the completion of development of
                           coagulation products currently under development and
                           the redesign of the Company's existing products for
                           point-of-care blood analysis based on the Company's
                           core technology. The Consulting Agreement does not
                           extend to work on new products, whether or not based
                           on the Company's core technology and whether or not
                           for point-of-care blood analysis applications. It is
                           the expectation that Lauks shall make himself
                           available to the Company for consulting services for
                           up to 80 full working days during the first 12 months
                           of the Term (as defined below) and up to 44 full
                           working days during the last 6 months of the Term.
                           While the operating assumption will be that Lauks
                           will perform the consulting services on the basis of
                           two days per week, the parties acknowledge the need
                           for mutual flexibility in the work schedule.
                           Accordingly, the parties will cooperate in designing
                           a work schedule that gives due weight to the need for
                           reliability, dependability and continuity in the
                           performance of services as well as the need to
                           respond to operational emergencies, while at the same
                           time recognizing Lauks' desire to pursue other,
                           non-conflicting interests. Notwithstanding anything
                           contained in the Consulting Agreement to the
                           contrary, the Company shall be entitled to request
                           that no services be provided at any given time,
                           without affecting any of the Company's obligations to
                           Lauks.

3.  RESIGNATION:           Lauks hereby resigns from all of his positions at the
                           Company and i- STAT Canada, Ltd., including his
                           positions as Executive Vice President and Chief
                           Technology Officer of the Company, and as Vice
                           President of Research and Development of i-STAT
                           Canada, Ltd.

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<PAGE>   2
4.  TERM:                  Eighteen (18) months.

5.  COMPENSATION:          $412,500 payable over the term of the Consulting
                           Agreement in accordance with the Company's customary
                           payroll practices for its senior management
                           personnel.

6.  EXPENSES:              During the term of the Consulting Agreement, the
                           Company shall reimburse Lauks for his reasonable
                           out-of-pocket expenses incurred in the performance of
                           his duties under the Consulting Agreement, upon
                           receipt by the Company of reasonably satisfactory
                           documentation of such expenses.

7.  BENEFITS:              The Company shall continue to provide Lauks with
                           medical and dental benefits in accordance with
                           existing policy so long as Lauks is providing
                           consulting services to the Company in accordance with
                           the terms of the Consulting Agreement.

8.  STATUS OF CURRENT
STOCK OPTIONS:             Upon execution of the Consulting Agreement, of the
                           non-statutory options held by Lauks to purchase up to
                           306,440 shares of Common Stock, (i) options to
                           purchase up to 58,234 shares will be canceled; (ii)
                           options to purchase up to 25,400 shares (the
                           "Remaining Unvested Options") will continue to vest
                           and remain exercisable in accordance with the terms
                           of their respective agreements (except that vesting
                           and exercisability will be tied to Lauks' continued
                           service as a consultant rather than as an employee);
                           and (iii) options to purchase up to 222,806 shares
                           (which currently are fully vested) will remain
                           exercisable in accordance with the terms of their
                           respective agreements (except that exercisability
                           will be tied to Lauks' continued service as a
                           consultant rather than an employee). In accordance
                           with the terms of the Company's 1985 Stock Option
                           Plan, Lauks' outstanding incentive stock options to
                           purchase up to 30,705 shares of Common Stock shall
                           terminate three months after termination of Lauks'
                           employment with the Company. Lauks shall no longer be
                           required to comply with the reporting, limited
                           "window" sales periods and other obligations
                           applicable to the Company's executive officers and
                           directors under the Company's "Policy Regarding
                           Confidential Information and Insider Trading".
                           However, Lauks will acknowledge that in the
                           performance of his consulting services he may become
                           privy to information which may render him an
                           "insider" for purposes of both such Policy and the
                           trading proscriptions applicable under U.S.
                           securities laws.

9.  TAX EQUALIZATION
BENEFITS:                  So long as Lauks continues to provide consulting
                           services under the Consulting Agreement, and Lauks
                           resides in Canada, the Company shall reimburse Lauks
                           for any income taxes paid in Canada by Lauks in
                           respect of (i) any compensation paid to Lauks under
                           the Consulting Agreement, (ii) the exercise of stock
                           options during the term of the Consulting Agreement
                           and (iii) the sale of the shares of Common

                                       -2-
<PAGE>   3
                          Stock issued upon such exercise during the term of the
                          Consulting Agreement, but only (A) to the extent such
                          taxes exceed the taxes payable by Lauks under the
                          highest combined United States Federal marginal income
                          tax rate applicable to Lauks were Lauks a United
                          States and Pennsylvania resident during the period in
                          question; and (B) to the extent of $300,000 in the
                          aggregate over the term of the Consulting Agreement.
                          The parties hereby agree that Lauks owes the Company
                          $59,822.62 in respect of past tax equalization advance
                          payments made by the Company on behalf of Lauks
                          through December 31, 1998. Such amount shall be paid
                          upon execution of the Consulting Agreement. In
                          addition, Lauks shall execute the promissory note
                          attached as Exhibit A (the "Promissory Note") in the
                          principal amount of $82,660.25, as such amount may be
                          adjusted pursuant to the terms of the Promissory Note,
                          in respect of tax equalization advance payments made
                          by the Company on behalf of Lauks for calendar year
                          1999.

10.  TERMINATION
OF CONSULTING
AGREEMENT AND
PAYMENTS UPON
TERMINATION:              Either the Company or Lauks may terminate the
                          Consulting Agreement, as provided below upon thirty
                          (30) days written notice to the other, subject to the
                          continuing obligations set forth elsewhere in the
                          Consulting Agreement.

                          1.     Termination By Lauks

                          a. No Reason
                                 Payments:   None.

                          b. Breach by Company of its material obligations under
                             the Consulting Agreement, provided that the Company
                             shall be entitled to a reasonable opportunity to
                             cure (the term "reasonable" to be judged in
                             relation to the circumstances applicable at the
                             time, but in no event to exceed 10 days)

                                 Payments: Payments equal to the amount required
                                 to be paid over the balance of the Term,
                                 payable at Lauks' option in a lump sum or in
                                 accordance with the Company's customary payroll
                                 practices for its senior management personnel.
                                 The Company also shall be obligated to make tax
                                 equalization payments as described above as if
                                 the Consulting Agreement had not been
                                 terminated.

                                 Remaining Unvested Options Acceleration: All
                                 Remaining Unvested Options then held by Lauks
                                 shall become fully exercisable.

                                       -3-
<PAGE>   4
                                 In the event of a breach by the Company, in
                                 addition to and without prejudice to Lauks'
                                 right to terminate this Consulting Agreement,
                                 Lauks shall have the right to demand the
                                 payments referred to in 1(b) above without
                                 terminating the Consulting Agreement, and in
                                 such event Lauks' stock options shall continue
                                 to vest and remain exercisable for the
                                 remainder of the term of the Consulting
                                 Agreement.

                      2.  Termination By Company

                          a. For Cause, as defined as: (i) any felony conviction
                             or admission of felonious guilt, (ii) any breach or
                             nonobservance by Lauks of any material covenant in
                             the Consulting Agreement (including the Existing
                             Confidentiality Agreement, defined below), or (iii)
                             any willful or deliberate conduct by Lauks which is
                             materially injurious to the Company. In the case of
                             (ii), Lauks shall be entitled to a reasonable
                             opportunity to cure (the term "reasonable" to be
                             judged in relation to the circumstances applicable
                             at the time, but in no event to exceed 10 days).

                                 Payments: Accrued payments to that date.  No
                                 further compensation payable.

                                 Stock Options: Lauks shall have no right to
                                 exercise any stock options to purchase Common
                                 Stock if he breaches any non-competition
                                 covenant contained in the Existing
                                 Confidentiality Agreement.

11.  CONTINUATION OF
EMPLOYEE
CONFIDENTIALITY,
NON-SOLICITATION AND
NON-COMPETITION
COVENANTS:            The existing agreement between Lauks and the Company
                      regarding confidentiality, non-solicitation and
                      non-competition (the "Existing Confidentiality Agreement")
                      shall remain in place as if Lauks remained employed by the
                      Company, except that the covenants regarding
                      non-competition shall run for 18 months after the
                      execution of the Consulting Agreement.

12. RELEASE:          Lauks shall release the Company and each of its officers,
                      directors, shareholders, employees and representatives
                      from and against any and all known and unknown claims
                      Lauks may have against the Company or any such officer,
                      director, shareholder, employee or representative.
                      Accordingly, as a term and condition of this Consulting
                      Agreement, Lauks shall execute and not revoke the release
                      attached as Exhibit B

                                       -4-
<PAGE>   5
                           hereto. Excluded from this release is any claim that
                           may arise under the Consulting Agreement, the
                           Promissory Note or the Director Indemnification
                           Agreement between the Company and Lauks. The Company
                           hereby represents that it has no present knowledge of
                           any claims it may have against Lauks.

13.  APPLICABLE LAW/
ARBITRATION OF
DISPUTES:                  The Consulting Agreement shall be governed by the
                           laws of the State of New Jersey. All controversies
                           and claims arising under the Consulting Agreement
                           that cannot be settled by the parties shall be
                           settled by arbitration in Toronto, Ontario or
                           Princeton, New Jersey (at the option of Lauks) in
                           accordance with the rules of the American Arbitration
                           Association and there shall be no action taken in any
                           other court or in any other jurisdiction. This
                           arbitration provision shall not affect the Company's
                           rights under the Existing Confidentiality Agreement
                           to seek specific enforcement of the provisions
                           thereof as provided therein.

14.  RENEWAL
OF TERM:                   The Term of the Consulting Agreement may be extended
                           upon the written agreement of each of Lauks and the
                           Company.

15.  LEGAL FEES:           The Company shall reimburse Lauks for up to U.S.
                           $10,000 for legal fees incurred in connection with
                           the preparation of the Consulting Agreement.

16.  ASSIGNABILITY:        Lauks acknowledges that the services to be rendered
                           to the Company are unique and personal. Accordingly,
                           Lauks may not assign his rights or delegate his
                           duties or obligations under the Consulting Agreement.
                           The Company's rights and obligations under the
                           Consulting Agreement shall inure to the benefit of
                           the Company's successors and assigns.

17.  AMENDMENT AND
WAIVER:                    No provision in the Consulting Agreement may be
                           amended unless such amendment is agreed to in writing
                           and signed by the party against whom enforcement is
                           sought . The waiver of any breach of any duty, term
                           or condition of the Consulting Agreement shall not be
                           deemed to constitute a waiver of any preceding or
                           succeeding breach of the same or any other duty, term
                           or condition of the Consulting Agreement.

18.  SEVERABILITY:         If any provision of the Consulting Agreement shall be
                           determined to be invalid or unenforceable for any
                           reason, in whole or in part, in any jurisdiction, the
                           provision shall be enforceable to the fullest extent
                           permitted by law in such jurisdiction and shall
                           continue to be enforceable in accordance with its
                           terms in any other jurisdiction and the validity,
                           legality and enforceability of the remaining
                           provisions contained in the Consulting Agreement
                           shall not be affected.

                                       -5-
<PAGE>   6
19.  WITHHOLDING:     All amounts required to be paid by the Company herein
                      shall be subject to reduction in order to comply with
                      applicable U.S. Federal, state and local tax withholding
                      requirements.

                                       i-STAT CORPORATION

                                       By:  /s/ William P. Moffitt
                                            ----------------------
                                               Name: William P. Moffitt
                                               Title: President and CEO

                                       /s/ Imants R. Lauks
                                       -------------------
                                       Imants R. Lauks

                                          -6-

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