Document:

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                                                                    EXHIBIT 10.3

                 NATIONAL MARKETING AND DISTRIBUTION AGREEMENT
                 ---------------------------------------------

     This National Marketing and Distribution Agreement (this "Agreement") is
made as of May 2, 2000 (the "Effective Date") by and between Retractable
Technologies, Inc., a Texas corporation, with its principal offices at 511 Lobo
Lane, Little Elm, Texas 75068 ("Manufacturer"), and Abbott Laboratories, an
Illinois corporation ("Marketer"), with its principal offices at 100 Abbott Park
Road, Abbott Park, Illinois 60064. The term "Marketer" as used herein shall
include both Marketer and Marketer's Affiliates (as hereinafter defined).

                                   RECITALS

     WHEREAS, Manufacturer has developed and incorporated automated retraction
technology to needle products;

     WHEREAS, Manufacturer desires to collaborate with Marketer with respect to
the marketing and distribution of such needle products throughout all
possessions, territories and commonwealths of the United States of America.; and

     WHEREAS, Marketer desires to collaborate with Manufacturer with respect to
such needle products.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and undertakings contained herein, the parties hereto agree as follows:

1.   Definitions
     -----------

     In addition to the other terms defined elsewhere herein, the following
terms shall have the following meanings when used in this Agreement (and any
term defined in the singular shall have the same meaning when used in the
plural, and vice versa, unless stated otherwise):

     1.1   "Affiliate" shall mean any corporation or other business entity
controlled by, controlling of or under common control with a Party (as
hereinafter defined). For this purpose, "control" of any corporation or other
business entity shall mean direct or indirect beneficial ownership of at least
fifty (50%) percent of the voting interests of such corporation or other
business entity, or such other relationship that constitutes actual control of
such corporation or other business entity.

     1.2   "Business Combination Transaction" shall mean any transaction or
series of related transactions involving (a) any merger, consolidation, share
exchange, reorganization, recapitalization, business combination or similar
transaction unless, immediately following the consummation of such transaction
or series of related transactions, the common shareholders of Manufacturer
immediately prior thereto will continue to be holders of at least a majority of
the common equity securities of the ultimate parent entity surviving such
transaction or series of related transactions or (b) any sale or other transfer
(other than to a directly or indirectly wholly-owned subsidiary of Manufacturer)
of all or a substantial amount of the assets of Manufacturer or its
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subsidiaries, taken as a whole.

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

     1.4 "Calendar Year" shall mean, for the first Calendar Year, that time
period that commences on the Effective Date and ends on the following December
31, and for all subsequent Calendar Years, the twelve-month period commencing on
January 1 and ending on December 31.

     1.5 "Confidential Information" shall mean the existence and terms of this
Agreement, any and all technical data, information, materials and other know-how
including, but not limited to, trade secrets presently owned by or developed by,
or on behalf of either Party and/or its Affiliates during the term of this
Agreement, which relate to the Products (as hereinafter defined), their
development, manufacture, regulatory filings, promotion, marketing,
distribution, sale or use and any and all financial data and information
relating to the business of either of the Parties and/or of their Affiliates,
which a Party and/or its Affiliates discloses to the other Party and/or its
Affiliates in writing and identifies as being confidential, or if disclosed
orally, visually or through some other media, is identified as confidential at
the time of disclosure and is summarized in writing within thirty (30) days of
such disclosure and identified as confidential, except any portion thereof
which:

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

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

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

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

         (e)  is required by law to be disclosed.

     1.6 "Current Good Manufacturing Practices" or "cGMPs" shall mean the
current Good Manufacturing Practices as described in 21 CFR 211, as amended or
updated from time to time.

     1.7 "Demonstration Product" shall mean Product provided by Manufacturer to
Marketer at no charge for use in demonstrating the features and benefits of the
Product to customers.

     1.8 "Distribution Margin" shall mean Net ASP (as hereinafter defined) minus
Net Cost (as hereinafter defined).

     1.9 "Distribution Margin Percentage" shall mean the percentage derived from
the following calculation: (Net ASP - Transfer Price + Marketer Fee)/ Net ASP.
An example of such calculation is provided in Exhibit 1.9.
                                              -----------

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     1.10 "Distributor" means a natural person, corporation, partnership,
trust, joint venture, or other business entity or organization that is not a
Wholesaler (as hereinafter defined), and that primarily sells or resells
Products to end users.

     1.11 "Distributor Reversal" means, with respect to a Product, the
difference between the Distributor's acquisition cost for a Product and the
contract price at which the Distributor sold such Product to an end user.

     1.12 "Hospital Market" shall mean (a) all customers in the Territory (as
hereinafter defined) with a minimum of ten (10) in-patient beds; (b) all other
customers in the Territory purchasing any Product (or eligible to purchase any
Product) under purchasing contracts entered into by customers referenced in
Section 1.12 (a); and (c) any group purchasing organization in which customers
referenced in Section 1.12 (a) and (b) form a majority of the members.

     1.13 "Marketer Fee" shall mean the payment due to Marketer from
Manufacturer per unit of Product sold by Marketer.

     1.14 "Net ASP" shall mean the net average sales price which is determined
by dividing the Net Sales (as hereinafter defined) by the number of Saleable
Units of each Product attributable to such Net Sales.

     1.15 "Net Cost" shall mean the Transfer Price minus Marketer Fee.

     1.16 "Net Sales" shall mean the gross sales of a particular Product billed
to customers by Marketer in the Territory, less: (a) allowances and adjustments
separately and actually credited or payable to customers, including credit for
damaged, outdated and returned products; (b) trade discounts booked; (c) cash
discounts booked; (d) transportation charges (including transportation insurance
costs), handling charges, sales taxes, excise taxes and duties and other similar
charges invoiced to customers; (e) rebates, management/administrative fees, and
(f) wholesaler/distributor reversals paid or payable, if any. Any discount
allowance or rebate or management/administrative fee for the Product which is
given to a customer due to the purchase of a product other than the Product or
due to the purchase of any service (whether or not relating to the Product),
shall not be taken into consideration for the calculation of Net Sales.
Distribution of Samples also shall not be taken into consideration for the
calculation of Net Sales. As used herein, "management/administrative fee" shall
mean a fee paid to a customer or Third Party (as hereinafter defined) with
respect to the provision of services to such customer or Third Party.

     1.17 "Patent Rights" shall mean all United States patents and patent
applications owned or controlled by, or licensed to Manufacturer with a right to
sublicense, during the term of this Agreement, which relate to the Products
including, but not limited to, the patents and patent applications listed in
Exhibit 1.17, and all substitutions, extensions, reissues, renewals, divisions,
------------
continuations, improvements or continuations-in-part therefor or thereof.

     1.18 "Party" shall mean Abbott Laboratories or Retractable Technologies,
Inc., and "Parties" shall mean Abbott Laboratories and Retractable Technologies,
Inc.

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     1.19 "Person" shall mean a natural person, a corporation, a partnership, a
trust, a joint venture, any governmental authority, and any other entity or
organization.

     1.20 "Product" or "Products" shall mean one, several, or all of the
products listed on Exhibit 1.20, including any subsequent versions of such
                   ------------
Products.

     1.21 "Purchase Forecast" shall mean a written forecast which estimates,
in accordance with Section 3.1 of this Agreement, the amount of each Product
Marketer shall purchase from Manufacturer.

     1.22 "Purchase Order" shall mean a firm order specifying the amount of each
Product to be purchased by and delivered to Marketer.

     1.23 "Saleable Unit" shall mean the smallest amount of each Product that
can be purchased and sold by Marketer as specified on Exhibit 1.20.
                                                      ------------

     1.24 "Sample(s)" shall mean Product provided to a Third Party at no charge
for use in evaluating the performance of the Product.

     1.25 "Territory" shall mean all possessions, territories and commonwealths
of the United States of America.

     1.26 "Third Party" shall mean any Person that is not a Party or an
Affiliate of a Party.

     1.27 "Transfer Price" shall mean the price paid by Marketer for a Product.
Transfer prices are listed on Exhibit 1.20.
                              ------------

     1.28 "Wholesaler" shall mean a natural person, corporation, partnership,
trust, joint venture, or other business entity or organization that purchases
products from Marketer and primarily sells or resells Products to end users
which end users have contracts with the Parties at a price less than the price
at which Marketer invoices such Products to such entity, and who customarily
processes a reversal based upon the differences between such prices.

     1.29 "Wholesale Acquisition Cost" or "WAC" means, with respect to a
Product, the price at which Marketer invoices such Product to a Wholesaler.

     1.30 "Wholesaler Network"  is the aggregate of the Wholesalers.

     1.31 "Wholesaler Reversal" means, with respect to a Product, the difference
between the WAC for a Product and the contract price at which the Wholesaler
sold such Product to an end user in the Hospital Market.

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2.   Marketing and Distribution

     2.1  Marketer/Distributor Appointment. As of the Effective Date,
          --------------------------------
Manufacturer appoints Marketer, and Marketer accepts appointment, as the
non-exclusive marketer and distributor of the Products (as listed on Exhibit
                                                                     -------
1.20) to the Hospital Market in the Territory, with the right to commercially
----
distribute the Product to customers in the Hospital Market the Territory,
including all activities ancillary thereto (including, without limitation,
warehousing, order entry, shipping, billing and collection, promotional,
advertising, marketing and sales activities), provided, however, that if any
                                              --------- -------
customer in the Hospital Market agrees in writing to a purchasing agreement with
Marketer and actually purchases a Product through said purchasing agreement then
Marketer shall have the sole and exclusive right to distribute to such customer.
Marketer may appoint sub-distributors in the Territory. Marketer's efforts to
market and distribute the Products in the Territory shall be at least
commensurate with those used to market and distribute its own products of
similar nature and comparable market potential and Marketer shall to the extent
possible add Products to Marketer's group purchasing contracts. Manufacturer and
Marketer shall be the only marketers of the Products in the Hospital Market in
the Territory and Manufacturer shall not appoint another marketer in the
Hospital Market in the Territory during the term of this Agreement.

     2.2  Marketing Plans and Promotional Materials. Marketer shall draft a
          -----------------------------------------
marketing plan for the Products on an annual basis, provided, however, that such
                                                    --------  -------
marketing plan shall not be implemented without the prior written consent of
Manufacturer, which consent shall not be unreasonably withheld. Marketer has the
right to use Manufacturer's Proprietary Marks (as defined in 8.1) and to create
promotional materials for the Products, provided, however, such proprietary and
                                        --------  -------
promotional materials shall not be used by Marketer to promote the Products
without the prior written consent of Manufacturer, which consent shall not be
unreasonably withheld.

     2.3  Coordination/Transition Efforts.
          -------------------------------

     (a)  General. Designated representatives of Marketer and Manufacturer
          -------
shall meet once per Calendar Quarter at Manufacturer's facility in Little Elm,
Texas, or other designated place, during the term of this Agreement to
coordinate sales, marketing, and distribution efforts for the Products.

     (b)  Research and Development. Within thirty (30) days of the Effective
          ------------------------
Date of this Agreement, Manufacturer and Marketer shall form a team composed of
not less than two (2) members from each of Manufacturer and Marketer (the "New
Product Team"). Within ninety (90) days of the Effective Date, the New Product
Team shall have drafted a proposed plan for bringing to market new products
using retractable technology (the "New Product Plan"). The New Product Plan
shall be subject to the written approval of both the Manufacturer and Marketer
before implementation of such plan.

     (c)  Inventory. Within thirty (30) days of the Effective Date, the
          ---------
Parties shall use reasonable commercial efforts to complete an inventory
assessment of all Products held by Wholesalers and Distributors as of the
Effective Date; the results of such inventory assessment shall be used to
determine appropriate Wholesaler or Distributor Reversal adjustments as
described in Section 2.3(d) hereof. Marketer, for its sole account, shall pay
for all costs and expenses, including

                                      -5-
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without limitation transportation costs, associated with conducting the
inventory assessment described in the preceding sentence.

     (d)  Wholesaler and Distributor Reversal Adjustment. Marketer shall assume
          ----------------------------------------------
Manufacturer's liability for all Wholesaler and Distributor Reversals for
Products Manufacturer sold to the Wholesaler Network and Distributors prior to
the date of Marketer's first sale of the Products. (the "First Sales Date"). As
compensation for Marketer assuming such Wholesaler and Distributor Reversal
liability for Products Manufacturer sold to the Wholesaler Network and
Distributors, Manufacturer shall pay to Marketer within sixty (60) days after
the Parties complete the inventory assessment described in Section 2.3(c)
hereof, the actual amount of Wholesaler Reversals paid by Marketer to the
Wholesaler Network with respect to Products sold by Manufacturer prior to the
First Sales Date. In the event that not all Product inventory held by
Wholesalers and Distributors as of the date the Parties complete the inventory
assessment described in Section 2.3(c) hereof is sold to end users sixty (60)
days after such date, Manufacturer shall pay to Marketer, at the end of each
subsequent thirty (30) day period, the actual amount of Wholesaler Reversals
paid by Marketer to the Wholesaler Network with respect to sales to end users in
the Hospital Market during each such thirty (30) day period of any such.

     In the event Manufacturer elects or is requested by Marketer to issue a
credit to the Wholesaler Network for Wholesaler Reversals with respect to
Products sold by Manufacturer prior to the First Sales Date, Manufacturer will
be entitled to offset the amount of any such credit against its liability to
Marketer for the Wholesaler Reversals calculated pursuant to this Section
2.3(d).

     2.4  Customer List. Within ninety (90) days of the Effective Date,
          -------------
Manufacturer shall meet with Marketer to review Manufacturer's existing
contracts, including group purchasing contracts, and supply Marketer with a list
of all of Manufacturer's customers within the Territory.

     2.5  Contract Delegation. Within ninety (90) days of the Effective Date,
          -------------------
Manufacturer shall designate Marketer as Manufacturer's marketing, sales, and
distribution representative under all of Manufacturer's existing group
purchasing contracts.

     2.6  Reservation of Rights. Manufacturer reserves the right to appoint
          ---------------------
other authorized distributors or resellers outside the Hospital Market or
Territory without restriction. Marketer shall have no right to directly solicit
sales of, promote, advertise, market, buy, or sell Product outside the
Territory. Marketer shall use commercially reasonable efforts to ensure that
Products sold within the Territory are not used outside the Territory. If
Marketer discovers that Products sold by Marketer to a Third Party are being
used outside the Territory, then Marketer shall discontinue sales of Products to
such Third Party until such time as such Third Party discontinues using Products
outside the Territory. When Marketer notifies Manufacturer that Products sold by
Manufacturer to a Distributor are being resold inside Marketer's Hospital Market
within the Territory, then Manufacturer shall discontinue sales of Products to
such Distributor until such time as such Distributor discontinues selling
Products inside the Hospital Market within the Territory.

     2.7  Notice of Business Combination Transaction Proposals. Until the
          ----------------------------------------------------
expiration or termination of this Agreement pursuant to Section 9 of this
Agreement, Manufacturer shall notify Marketer in writing (a "Proposal Receipt
Notice") promptly, and in any event no later than five (5) business days after
the receipt by Manufacturer of any proposal to enter into any agreements or

                                      -6-
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understandings regarding any Business Combination Transaction. Each Proposal
Receipt Notice shall include, to the extent possible, a detailed explanation of
the nature of such proposal, including the proposed terms and conditions of any
proposed transaction, and the identity of the Person or Persons making such
proposal or on whose behalf such proposal is made.

     2.8  Right of First Negotiation. Prior to the expiration or termination
          --------------------------
of this Agreement, Manufacturer shall not enter into any agreements, or
understandings with any Person, other than (i) discussions with Manufacturer's
financial, legal, accounting or other advisors and (ii) customary financial,
legal or accounting advisory, consulting or similar agreements, that relate to
or provide for any Business Combination Transaction, unless Manufacturer first:

          (a) provides Marketer with written notice of its intention to
enter into any such agreements or understandings, which notice shall include a
detailed explanation of the nature of the agreements, or understandings that
Manufacturer proposes to enter into, including the proposed terms and conditions
of any such agreements or understandings, and the identity of any Persons and
classes of Persons with whom Manufacturer intends to enter into any such
agreement or understanding (a "Business Combination Notice"); and

          (b) negotiates solely, exclusively and in good faith with Marketer for
a period of not less than sixty (60) days from the date of Marketer's receipt of
the corresponding Business Combination Notice (the "Exclusive Negotiating
Period") regarding entering into a Business Combination Transaction with
Marketer on terms at least as favorable to Manufacturer as the proposed terms
and mutually acceptable to Marketer and Manufacturer.

3.   Forecasts, Orders, and Deliveries
     ---------------------------------

     3.1  Forecasts. At least thirty (30) days prior to the end of each Calendar
          ---------
Quarter during the term of this Agreement, Marketer shall provide to
Manufacturer a rolling twelve (12) month Purchase Forecast which shall specify
firm orders of Products to be delivered by Manufacturer to Marketer for the
first Calendar Quarter and an estimated forecast for the following three
Calendar Quarters. Attached as Exhibit 3.1 is a Purchase Forecast for the first
                               -----------
twelve (12) months following the Effective Date and an estimated forecast for
the following four (4) years.

     3.2  Purchase Orders. Each Purchase Order for Product shall be governed
          ---------------
by the terms of this Agreement, and none of the provisions of such Purchase
Order shall be applicable except those specifying quantity ordered, delivery
dates, special shipping instructions and invoice information. Each Purchase
Order shall specify quantities consistent with quantities forecasted on the
applicable Purchase Forecast.

     3.3  Minimum and Maximum Orders. Marketer shall have the right to order
          --------------------------
each Product in amounts which range from ninety percent (90%) to one-hundred ten
percent (110%) of the firm order amounts specified in the Purchase Forecast for
the applicable Calendar Quarter. If Marketer places Purchase Orders for
additional quantities of any Product above one-hundred ten percent (110%) of the
quantity forecasted, then Manufacturer shall use commercially reasonable efforts
to produce and deliver to Marketer said additional quantities within ninety (90)
days of issuance of the Purchase Order. Marketer acknowledges that Manufacturer
is not obligated to meet all of Marketer's

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demands for any Product, provided, however, that in the event that demand for
Products exceeds Manufacturer's production capabilities, Manufacturer shall
allocate production resources based on forecasted orders specified in Marketer's
Purchase Forecast.

     3.4  Delivery and Shipping. Manufacturer shall deliver all Product F.O.B.
          ---------------------
the Manufacturer's facility in Little Elm, Texas to any of the five (5)
distribution centers designated by Marketer as set forth in Exhibit 3.4. Title
                                                            -----------
and risk of loss shall pass to Marketer at such time that Product is loaded onto
a carrier designated by Marketer. Shipment shall be via such carrier. Marketer
shall be responsible for all shipping costs. If Marketer does not provide
monthly shipping instructions, then Marketer shall pay a Twenty-Five Dollar
($25.00) per month per pallet storage fee.

     3.5  Return of Defective Shipment. Marketer shall notify Manufacturer in
          ----------------------------
writing of any defect or shortage in the quantity of any shipment of Product no
later than ten (10) business days following receipt of the Product. In the event
of any such defect or shortage, Manufacturer shall, at Manufacturer's choice,
replace the defective Product or make up the shortage if replacement stock is
available in the next shipment of Product, but in any case no later than twenty
(20) days or, if no such replacement stock is available, as soon as reasonably
practical after receiving such notice, at no additional cost to Marketer.

     3.6  Product Returns to Marketer. All Products shipped to Marketer from
          ---------------------------
Manufacturer shall have a Marketer lot number. Marketer will not accept any
Product without a Marketer lot number. Marketer shall only be responsible for
processing customer returns that have a Marketer lot number and that are
returned in accordance with Marketer's Returned Goods Policy, which is attached
hereto as Exhibit 3.6. Promptly after the Effective Date, Marketer shall supply
          -----------
Manufacturer with lot number suffices and lot number blocks.

     3.7  Samples. Manufacturer and Marketer shall meet within thirty (30) days
          -------
from the Effective Date to develop by mutual agreement a program for Samples
whereby Manufacturer shall provide Samples to Marketer at no charge in
accordance with a monthly forecast (the "Sample Forecast"). If Marketer requires
Samples in excess of the Sample Forecast, then Marketer must pay for each Sample
the Transfer Price minus the Marketer Fee. Sample programs and Sample Forecasts
shall be updated quarterly to reflect new Products as they are launched.

     3.8  Demonstration Product. Manufacturer and Marketer shall meet within
          ---------------------
thirty (30) days from the Effective Date to develop by mutual agreement a
program for Demonstration Product, whereby Manufacturer shall provide
Demonstration Product to Marketer in order for Marketer's sales representatives
to demonstrate the features and benefits of the Products to the end-user
customer. Demonstration Product shall be supplied in accordance with a quarterly
forecast (the "Demonstration Product Forecast"). If Marketer requires
Demonstration Product in excess of the Demonstration Product Forecast, then
Marketer must pay for each Demonstration Product the Transfer Price minus the
Marketer Fee. Demonstration Product programs and Demonstration Product Forecasts
shall be updated quarterly.

4.   Quality Assurance.
     -----------------

     4.1  Compliance. Manufacturer shall comply with all applicable local or
          ----------
municipal, state, and federal laws, and regulations concerning the manufacture
of the Products. Manufacturer shall

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promptly notify Marketer of any impending visit or inspection, or significant
inquiry, by a regulatory authority with regards to any Product.

     4.2  Product Requirements. Manufacturer must comply with all product
          --------------------
specifications, quality assurance procedures, and labeling specifications
provided to Marketer and attached hereto as Exhibit 4.2. Such specifications and
                                            -----------
procedures may not be modified, changed or added to without prior written
notification to Marketer ("Product Change Notification"). Any subsequent or
replacement versions of Products listed on Exhibit 1.20 developed and
                                           ------------
manufactured by Manufacturer may be added to the Products marketed and
distributed by Marketer under the general terms and conditions of this
Agreement.

     4.3  Complaint Handling and Customer Service. Any and all product
          ---------------------------------------
complaints of which Marketer becomes aware relating to the Products during the
term of the Agreement shall promptly be forwarded to Manufacturer. Notification
shall be given by telephone, with a facsimile confirmation following within (1)
business day. Marketer shall be responsible for addressing all product
complaints related to Marketer's distribution, order processing, shipping and
handling of Products. Manufacturer shall be responsible for addressing all other
product complaints.

     4.4  Recalls. In the event Manufacturer shall be required (or shall
          -------
voluntarily decide) to initiate a recall, withdrawal or field correction of, or
field alert report with respect to, any Product manufactured by Manufacturer and
distributed by Marketer pursuant to this Agreement, whether or not such recall,
withdrawal, field correction or field report has been requested or ordered by
FDA, Manufacturer shall notify Marketer, and Marketer shall fully co-operate
with Manufacturer to implement the same. Manufacturer shall make all contacts
with the FDA and shall be responsible for coordinating all of the necessary
activities in connection with any such recall, withdrawal, field correction or
field alert report, and Manufacturer shall make all statements to the media,
including press releases and interviews for publication or broadcast. Marketer
agrees to make no statement to the media, except to refer the media to the
Manufacturer for comment, unless otherwise required by law, and in any such
event, Marketer shall cooperate with Manufacturer on the content of any such
statement. Manufacturer shall indemnify Marketer against all reasonable and
necessary costs and expenses which Marketer may incur as a result of any recall,
withdrawal, field correction or field alert to the extent that it is the direct
result of any fault or omission attributable to Manufacturer. Marketer shall
indemnify Manufacturer against all reasonable and necessary costs and expenses
which Manufacturer may incur as a result of any recall, withdrawal, field
correction or field alert to the extent that it is the direct result of any
fault or omission attributable to Marketer.

5.   Pricing and Payments.
     --------------------

     5.1  Transfer Prices.
          ---------------

          (a) The Transfer Prices for the Products set forth in Exhibit 1.20
                                                                ------------
shall be firm for the first Calendar Year of this Agreement. Thereafter, the
Parties shall meet annually to discuss changes to Transfer Prices for the
Products. Any adjustment to the Transfer Prices of the Products shall be agreed
upon in writing by both Parties.

          (b) In addition, Manufacturer shall be allowed an annual inflationary
adjustment to the

                                      -9-
<PAGE>

Transfer Prices for demonstrable increases in raw material and/or labor costs.
Such annual inflationary increases shall be limited to the lesser of the annual
percentage increase for the most recent twelve (12) month period for which
figures are available in the Consumer Price Index (CPI), issued by the Bureau of
Labor Statistics, U.S. Department of Labor, or Marketer's annual inflationary
price increase to end user customers.

     5.2  Invoice and Payment. Manufacturer shall invoice Marketer upon shipment
          -------------------
of Product. Marketer shall make payment by wire transfer net thirty (30) days
from the date of Manufacturer's invoice. Manufacturer's invoice may be
accompanied by copies of receipts or any other supporting information.

     5.3  Monthly Sales Reports. Not later than twenty (20) days after the last
          ---------------------
day of each month Marketer shall provide to Manufacturer Net Sales information
for each Product for the preceding month. Such report shall also detail for each
purchase: i) the purchaser's name and identification number, and ii) the
quantity and net price of each Product sent to the purchaser. Each Calendar
Quarter, the Marketer shall provide a report of product sales by contract, if
any, under which each purchase was made.

     5.4  Quarterly Payments
          ------------------

     (a)  Within thirty (30) days of the end of each Calendar Quarter, Marketer
shall issue to Manufacturer a quarterly sales report ("Quarterly Sales Report")
identifying the amount of Product sold by Marketer during the preceding Calendar
Quarter. Manufacturer shall pay to Marketer a Marketer Fee of ten cents ($.10)
per unit of Product sold in the preceding Calendar Quarter. Such Marketer Fee is
due and payable within forty-five (45) days after receipt of the Quarterly Sales
Report.

     (b)  If the Distribution Margin does not exceed $.25, then Marketer shall
retain the portion of the Distribution Margin which is less than or equal to
$.25. If the Distribution Margin does exceed $.25, then Marketer and
Manufacturer shall divide equally any portion of the Distribution Margin which
exceeds $.25 and is equal to or less than $.35, and Marketer shall retain any
portion of the Distribution Margin which is less than or equal to $.25 and any
portion of the Distribution Margin which exceeds $.35. Marketer and Manufacturer
shall split profits in accordance with this Section 5.4(b) on a quarterly basis.
An example of this profit splitting arrangement is attached hereto as Exhibit
                                                                      -------
5.4(b).
------

     5.5  Resale Product Prices. Marketer shall have sole discretion to set
          ---------------------
resale prices for Products purchased from Manufacturer, however, Marketer's Net
ASP of a Product shall not be less than the Marketer's Net Cost of said Product.

     5.6  Taxes. Any federal, state, county or municipal sales or use tax,
          -----
excise, customs charges, duties or similar charge, or any other tax assessment
(other than taxes assessed against Manufacturer's income), license, fee, or
other similar charge lawfully assessed or charged on the sale or transportation
of Product sold shall be paid by Marketer.

     5.7  Audit of Marketer. Marketer shall keep and maintain books and
          -----------------
records reasonably required to determine accurately Net Sales and amounts
payable to Manufacturer hereunder. Once

                                      -10-
<PAGE>

per Calendar Year, Manufacturer shall have the right, at its cost, to have
audited Marketer's books and records kept pursuant to this Agreement to
determine whether there was any mistake or impropriety in determining amounts
payable to Manufacturer by Marketer during the current or previous Calendar
Year. Such audits shall be conducted by an independent auditing or accounting
firm chosen by the auditing party and agreed to by the audited party, such
agreement not to be unreasonably withheld. Any audit hereunder shall be preceded
by no less than thirty (30) days' prior written notice of intent to audit, and
shall be conducted during normal business hours, at an agreed upon date and
time. The independent auditing or accounting firm may reveal to Manufacturer
only the existence and the amount of any discrepancy. If an audit reveals any
underpayment or overpayment by Marketer, the Parties shall reconcile such
discrepancy within fifteen (15) days from date of audit completion. If an audit
reveals an underpayment greater than five (5%) between amounts due and amounts
paid to Manufacturer, then Marketer shall reimburse Manufacturer for the cost of
such audit. Marketer's books and records and any audit report shall be
considered Confidential Information by Manufacturer. If Manufacturer decides to
employ the use of an independent auditing or accounting firm pursuant to the
terms of this Section 5.7, then such auditor shall execute a written
confidentiality agreement with Marketer, which confidentiality agreement shall
be at least as stringent as that provided herein. The scope of such auditor's
report to the Manufacturer shall be strictly limited to the scope of the audit
permitted pursuant to the terms of this Agreement and a copy of such report
shall be delivered to both Parties.

6.   Equity Investment
     -----------------

     As of the Effective Date, Marketer shall invest Five Million Dollars
(US$5,000,000) in Manufacturer's Series IV Class B Convertible Preferred Stock
in accordance with the terms and conditions of the Subscription Agreement under
Manufacturer's Private Placement Memorandum dated January 11, 2000, attached
hereto as Exhibit 6.
          ---------

7.   Loan Documents
     --------------

     Marketer and Manufacturer agree to negotiate in good faith the terms and
conditions of a credit agreement and a security agreement pursuant to which
Marketer shall loan to Manufacturer Five Million Dollars (US$5,000,000) within
five (5) business days of the Effective Date. The loan shall (1) accrue interest
from the date the loan is granted, (2) bear interest at an annual rate equal to
one percent (1%) plus the Prime Rate (as hereinafter defined), and (3) interest
shall be repayable no earlier than June 30, 2001. "Prime Rate" means that rate
of interest per year announced from time to time by The Northern Trust Company
called its prime rate.

8.   Intellectual Property
     ---------------------

     8.1  Proprietary Marks and Good Will. "Manufacturer's Proprietary Marks"
          -------------------------------
include all trademarks, trade names, and logotype employed by Manufacturer and
include, but are not limited to: i) the name "VanishPoint", ii) the letters "RT"
surrounded by an oval; and iii) the graphic depiction of a needle surrounded by
a spring.

     Marketer agrees that its use of Manufacturer's Proprietary Marks shall
enure to the benefit of Manufacturer. Marketer hereby: i) acknowledges the
validity of Manufacturer's Proprietary Marks; ii) acknowledges that Manufacturer
is the owner of Manufacturer's Proprietary Marks and of all

                                      -11-
<PAGE>

goodwill associated with Manufacturer's Proprietary Marks or with the Products;
iii) agrees not to acquire any interest in, infringe upon, contest, or take any
other action to injure or to assist another to injure Manufacturer's rights in
Manufacturer's Proprietary Marks; and iv) agrees that any interest which may be
acquired by Marketer during the term of this Agreement or within one year
thereafter in Manufacturer's Proprietary Marks or in goodwill associated with
Manufacturer's Proprietary Marks or the Products, whether in the Territory or
elsewhere, shall be acquired on behalf of and for the benefit of Manufacturer
and shall be assigned to Manufacturer upon request at no charge.

         Marketer shall use Manufacturer's Proprietary Marks only in connection
with Manufacturer's Products, and only during the term of this Agreement.
Marketer shall seek to benefit from the goodwill associated with Manufacturer's
Proprietary Marks or the Products only during the term of this Agreement and
only within the Territory. Marketer shall promptly report to Manufacturer any
violation of Manufacturer's rights in Manufacturer's Proprietary Marks or
goodwill of which Marketer becomes aware.

9.       Term and Termination
         --------------------

         9.1 Term and Termination. Marketer's distribution obligations under
             --------------------
this Agreement shall commence on the Effective Date and the initial term shall
expire five (5) years from the end of the first month in which Marketer records
commercial sales of a Product, provided, however, that in no event shall the
initial term extend beyond June 30, 2005. The Agreement shall renew
automatically for a subsequent three (3) year term (the "Second Term" ) if,
twelve (12) months prior to the expiration of the initial term, Marketer has
achieved total sales of at least eighty-five (85) percent of the cumulative
forecasted sales as described in Exhibit 9.1. Upon renewal Marketer shall
                                 -----------
provide Manufacturer with a five (5) year sales forecast which shall be at least
equal to Marketer's annual sales level at the time of the renewal. Following the
expiration of the subsequent three (3) year term the Agreement shall renew
automatically for additional one (1) year terms unless terminated earlier by
either Party pursuant to the terms of this Agreement.

         9.2 Termination By Manufacturer. If Marketer fails to achieve the sales
             ---------------------------
required for automatic renewal as described in Section 9.1, Manufacturer may
terminate this Agreement with twelve (12) months prior written notice. Twelve
(12) months prior to the expiration of the Second Term, or anytime thereafter,
Manufacturer may terminate this Agreement with twelve (12) months prior written
notice.

         9.3 Termination by Marketer. Marketer may terminate this Agreement upon
             -----------------------
one hundred eighty (180) days prior written notice to Manufacturer if Marketer's
Distribution Margin Percentage decreases below ten percent (10%) for two (2)
consecutive Calendar Quarters for the Products then distributed. Distribution
Margin Percentage shall be calculated as described in Exhibit 1.9.
                                                      -----------

         9.4 Termination for Breach. Either Party may terminate this Agreement
             ----------------------
upon sixty (60) days written notice of the other Party's breach of a material
term or condition of this Agreement, provided that such termination shall not
take effect if the other Party remedies such breach, to the terminating Party's
reasonable satisfaction, within such sixty (60) day notice period.

                                      -12-
<PAGE>

         9.5 Termination for Insolvency. Either Party may terminate this
             --------------------------
Agreement by giving the other at least sixty (60) days prior written notice upon
the bankruptcy or insolvency of the other Party.

         9.6 Termination Upon Acquisition. Either Party may terminate this
             ----------------------------
Agreement by giving the other Party at least one hundred and twenty (120) days
prior written notice following the acquisition by the other Party of a Third
Party which makes, has made, uses, offers for sale, and/or sells products which
directly compete with the Products. In addition, either Party may terminate this
Agreement by giving the other Party at least one hundred and twenty (120) days
prior written notice following the acquisition of the other Party by a Third
Party which makes, has made, uses, offers for sale, and/or sells products which
directly compete with the Products.

         9.7 Effect of Termination.
             ---------------------

             (a) Accrued Obligations. Except as otherwise provided, expiration
                 -------------------
or termination of this Agreement for any reason shall not release any party
hereto from liability accrued under this Agreement prior to such expiration or
termination, nor preclude either party hereto from pursuing any rights or
remedies accrued prior to such expiration or termination or accrued at law or in
equity with respect to any breach of this Agreement.

             (b) Inventory. Within thirty (30) days after the expiration or
                 ---------
termination of this Agreement, Marketer shall use its reasonable efforts to
provide Manufacturer with a complete inventory list of Products in Marketer's
possession or control. Within thirty (30) days after Manufacturer's receipt of
such inventory list, Manufacturer may inspect Marketer's Product inventory and
audit Marketer's records with respect to Product inventory during normal
business hours and upon at least two (2) weeks prior notice. Marketer's records
with respect to Product inventory shall be considered Confidential Information
of Marketer by Manufacturer.

             (c) Return of Materials. All trademarks, trade names, patents,
                 -------------------
formulas or other data, photographs, samples, literature, and sales and
promotional aids of every kind provided by Manufacturer shall remain the
property of Manufacturer. Within thirty (30) days after the effective date of
termination of this Agreement, Marketer shall destroy all tangible items
bearing, containing, or contained in, any of the foregoing, in its possession or
control and provide written certification of such destruction, or prepare such
tangible items for shipment to Manufacturer, as Manufacturer may direct, at
Manufacturer's expense. Marketer shall not make or retain any copies of any
confidential items or information which may have been entrusted to it; however,
Marketer may retain one copy of each such item or information received by it
hereunder and notes regarding the same, provided that said copy shall be
retained and used solely for compliance purposes and shall be held in Marketer's
confidential file. Effective upon the termination of this Agreement, Marketer
shall cease to use all trademarks and trade names of Manufacturer related to
Product in the Territory. During the term of this Agreement and after any
termination or expiration of this Agreement, Manufacturer shall have the right
to continue to use and disclose for any purpose customer lists, customer data
and other customer information and any and all clinical trial results and other
data relating to the Product and provided by Marketer to Manufacturer during the
term of this Agreement.

             (d) Products. Upon termination of this Agreement, Manufacturer
                 --------
shall have the option to repurchase from Marketer all or any portion of Products
remaining in Marketer's

                                      -13-
<PAGE>

inventory, FOB Marketer's facility, at the Transfer Prices paid by Marketer for
those Products under first-in first-out accounting principles. Any Products
tendered for repurchase by Marketer to Manufacturer shall be in new and original
condition and in Saleable Unit sizes. If this Agreement is terminated pursuant
to Section 9.5, then Marketer shall have the right to market and distribute all
remaining inventory in Marketer's possession as of the date of termination of
this Agreement.

              (e) Transition. Upon termination of this Agreement, Marketer
                  ----------
and Manufacturer shall diligently cooperate to effect a smooth and orderly
transition in the distribution of the Product in the Territory. From the time
that a notice of termination is received by either party until the effective
termination date, Marketer shall refer all Product inquiries to Manufacturer and
shall cooperate fully with any newly-appointed distributors.

              (f) No Renewal, Extension or Waiver.  Acceptance of any order
                  -------------------------------
from, or sale of, any Product to Marketer after the date of termination of this
Agreement shall not be construed as a renewal or extension hereof, or as a
waiver of termination by Manufacturer.

         9.8  Survival. The provisions of Sections 5.1, 5.4, 8.1 and 9.7, and
              --------
Articles 4, 6, 7, 10, 11 and 12 shall survive the expiration or termination of
this Agreement for any reason. Any other provisions of this Agreement
contemplated by their terms to pertain to the period of time following
termination or expiration of this Agreement shall survive.

10       Guarantees, Warranties and Indemnification.
         ------------------------------------------

         10.1 Manufacturer Guarantees. Manufacturer guarantees to Marketer that
              -----------------------
Products delivered to Marketer pursuant to this Agreement shall have been
manufactured in accordance with all applicable state and federal laws and
regulations, including cGMPs.

         10.2 Marketer Warranties.
              -------------------

         (a) Marketer warrants that it has full power and authority to enter
into this Agreement and shall carry out the distributorship granted hereunder in
good faith. Marketer further warrants that it has made no commitments
inconsistent with this Agreement.

         (b) Marketer shall sell Products only in Saleable Units. Marketer shall
not make any warranties or representations regarding the Products beyond those
warranties and representations which are expressly issued or approved by
Manufacturer in writing or which are included in Manufacturer's promotional or
informational materials.

         (c) Marketer shall pass on to customers Manufacturer's standard limited
warranties and disclaimers. Marketer further agrees not to represent the
Products in a manner that is inconsistent with the Products' label claims or the
Product literature or to otherwise misrepresent the Products.

         (d) Marketer warrants that in the event that Marketer, during the term
of this Agreement, obtains rights to needle technology by purchase,
amalgamation, merger, or Business Combination Transaction, which rights would be
infringed by the manufacture, use, offer for sale, or sale of Products by
Manufacturer, Marketer shall not assert such rights against Manufacturer during
the

                                      -14-
<PAGE>

term of this Agreement and Marketer shall continue to meet its obligations
under the terms of this Agreement.

         10.3 Manufacturer Warranties.
              -----------------------

              (a) Manufacturer warrants that, it has full power and authority to
enter into this Agreement and grant to Marketer the distributorship granted
hereunder. Manufacturer further warrants that it has made and shall make no
commitments inconsistent with this Agreement.

              (b) Manufacturer warrants that, to the best of its knowledge,
it is unaware of any Third Party intellectual property rights, including but not
limited to, patent, trademark, copyright, and/or trade secret rights that would
be infringed as a result of the making, using, offering for sale, and/or selling
of Products in the Territory. Manufacturer further warrants that it does not
have current communications from Third Parties alleging that the making, using,
offering for sale, and/or selling of Products in the Territory is an
infringement of any Third Party's intellectual property right.

              (c) Manufacturer warrants that after due inquiry and to its
best knowledge and belief, it has the right to make, use, offer for sale, and/or
sell products that are within the scope of the Patent Rights.

              (d) Any warranty for the Products shall run directly from
Manufacturer to customers, notwithstanding the fact that customers may return
Products to Marketer and not to Manufacturer. Marketer shall not make any
warranty or representation to any customer which is more protective of such
customer than the warranties and/or representations provided by Manufacturer.
For purposes of clarification, the sole remedy of customers in the case of
defective Product shall be that Manufacturer shall replace such returned
defective Product.

              (e) Manufacturer's liability for failure of the Products to
conform with any other implied warranty, express warranty or specification
required for conformance with this Agreement shall be limited to a return of the
purchase price paid by Marketer.

         10.4 Marketer Indemnification. Marketer shall indemnify, defend and
              ------------------------
hold Manufacturer and its Affiliates and their officers, directors, employees,
and representatives harmless from and against any and all Third Party claims,
causes of action, suits, proceedings, losses, damages, demands, fees, expenses,
fines, penalties and costs (including reasonable attorney's fees) arising out
of, related to or in connection with: (a) the breach of Marketer's warranties,
representations or covenants set forth in this Agreement; (b) any claim alleging
noncompliance by Marketer with the Food, Drug and Cosmetic Act and the
regulations promulgated thereunder; and/or (c) any wrongful or negligent acts or
omissions on the part of Marketer's employees, agents or representatives, except
to the extent caused by any wrongful or negligent acts or omissions on the part
of Manufacturer's employees, agents or representatives.

         10.5 Manufacturer Indemnification. Manufacturer shall indemnify, defend
              ----------------------------
and hold Marketer and its Affiliates and their officers, directors, employees,
and representatives harmless from and against any and all Third Party claims,
causes of action, suits, proceedings, losses, damages, demands, fees, expenses,
fines, penalties and costs (including reasonable attorney's fees)

                                      -15-
<PAGE>

arising out of, related to or in connection with: (a) the manufacture and
shipment of Products to Marketer or the use or sale of Products including
product liability claims, product recalls and government regulatory actions; (b)
the breach of Manufacturer's warranties, representations or covenants set forth
in this Agreement; (c) the termination by Manufacturer of any distributor of
Products in the Territory (other than Marketer and any sub-distributor appointed
by Marketer hereunder); and/or (d) the wrongful or negligent acts or omissions
on the part of Manufacturer's employees, agents or representatives except to the
extent caused by wrongful or negligent acts or omissions on the part of
Marketer's employees, agents or representatives.

              Manufacturer shall: i) carry liability insurance with a minimum
limit of five million dollars ($5,000,000); ii) list Marketer as an additional
insured of the policy throughout the Term of this Agreement; and iii) provide
Marketer with a certificate evidencing such insurance within thirty (30) days
after execution of this Agreement.

         10.6 Conditions of Indemnification. When seeking indemnification under
              -----------------------------
this Agreement the Party seeking indemnification must, as a condition of
indemnification, provide the indemnifying Party with: i) prompt notice of the
reported or alleged defect, infringement, injury or claim; ii) the opportunity
to investigate such claim, control the defense of such claim, and settle such
claim at its discretion; iii) all information obtained by the Party seeking
indemnification relating to any complaint or to any claimed or actual defect or
deficiency regarding any Product, including, but not limited to, information
relating to any legal proceeding involving Manufacturer, involving any Product,
or involving Marketer in connection with Marketer's relationship with
Manufacturer; and iv) such additional information and assistance as the
indemnifying Party may reasonably require to defend against such claim. The
indemnifying Party shall have the option to assume the other Party's defense in
any such claim or suit with counsel reasonably satisfactory to the other Party.
No settlement or compromise shall be binding on a Party hereto without its prior
written consent, which consent shall not be unreasonably withheld. Each Party
shall, to the extent allowed by law, regard as Confidential Information all
matters referenced in this paragraph

         Except as otherwise provided, neither Party shall be liable for any
special, incidental, indirect or consequential damages arising out of or
relating to this Agreement; provided, however, this limitation shall not apply
                            --------  -------
to losses arising from Third Party claims for which a party is indemnified under
the terms of this agreement.

11       Confidentiality and Public Announcements.
         ----------------------------------------

         11.1 Confidentiality. The Parties acknowledge and agree that during the
              ---------------
term of this Agreement, each of them and their Affiliates may exchange
Confidential Information, and the disclosure and use of any such Confidential
Information shall be governed by the provisions of this Article 11. Each Party
shall use the Confidential Information of the other Party only for the purpose
of the activities contemplated by this Agreement and shall not disclose such
Confidential Information to a Third Party except in accordance with the
provisions of this Agreement. The Parties shall ensure that their Affiliates
keep all Confidential Information exchanged hereunder confidential in accordance
with the provisions hereof as though the Affiliates were parties hereto. This
provision shall remain in effect for a period of five (5) years after
termination or expiration of this Agreement for all Confidential Information
excluding trade secrets. Trade secrets shall be kept

                                      -16-
<PAGE>

confidential by the Receiving Party (as defined in Section 11.2 hereof)
according to the terms set forth in Section 11.2.

         11.2 Handling of Trade Secrets. During the course of its performance
              -------------------------
hereunder, a Party (the "Disclosing Party") may desire or be requested to
disclose Confidential Information to the other Party (the "Receiving Party"),
which the Disclosing Party considers a trade secret. In such event, the
Disclosing Party first shall inform the Receiving Party, on a non-confidential
basis, the general nature of the trade secret information. The Receiving Party
shall have ten (10) days to decide whether it wishes to have such trade secrets
disclosed to it and to inform the Disclosing Party in writing that it wishes to
receive such a disclosure. Any trade secrets so disclosed between the Parties
shall be marked "Trade Secret," and the Receiving Party shall not disclose or
use such trade secret for the term of this Agreement and for a period of five
(5) years after the expiration or termination of this Agreement except as
expressly permitted under this Agreement. In the event the Disclosing Party
discloses the trade secrets to the Receiving Party without written approval of
the Receiving Party and/or without appropriately marking such information as
"Trade Secret" that trade secret shall be handled as Confidential Information
under Section 11.1.

         11.3 Public Announcements. Marketer and Manufacturer agree to mutually
              --------------------
approve the text of an initial press release to be jointly issued announcing the
execution of this Agreement or the consummation of the transactions contemplated
hereby and to consult with each other prior to making any other public statement
concerning this Agreement and the transactions contemplated by this Agreement
which approval shall not be unreasonably withheld. However, following the
approval of any such press release, the facts and matters contained in such
press release shall no longer be deemed Confidential Information. The foregoing
shall not be deemed to prevent either party from making any public disclosure
which may be required of either party or its Affiliates under the federal
securities laws or by the rules and regulations of any national securities
exchange upon which the securities of either party or its Affiliates are traded.
However, if a party is required to make such a disclosure, the disclosing party
shall notify the other party and provide the disclosure and the rationale for it
in writing to the other party at least thirty (30) days prior to making such
disclosure. The other party shall have the opportunity to review that portion of
the disclosure which references such party or this Agreement or the subject
matter of this Agreement and suggest changes or deletions to protect the
Confidential Information, competitive position or sensitive commercial
information of such party. The disclosing party shall implement such suggested
changes to the extent allowed by applicable law or regulation.

12.      Miscellaneous.
         -------------

         12.1 Applicable  Law.  This Agreement shall be construed, interpreted
              ---------------
and governed by the laws of the State of Texas, except for choice of law rules.

         12.2 Alternative Dispute Resolution. The Parties agree that any dispute
              ------------------------------
that arises in connection with this Agreement shall first be presented to the
respective presidents of Manufacturer and the Hospital Products Division of
Marketer, or their designees, for resolution. If no resolution is reached, then
such dispute may be resolved by Alternative Dispute Resolution ("ADR") in the
manner described in Exhibit 12.2.
                    ------------

                                      -17-
<PAGE>

         12.3 Force Majeure. Any delay in the performance of any of the duties
              -------------
or obligations of either Party hereto (except the payment of money) shall not be
considered a breach of this Agreement and the time required for performance
shall be extended for a period equal to the period of such delay, provided that
such delay has been caused by or is the result of any acts of God, acts of the
public enemy, insurrections, riots, embargoes, labor disputes, including
strikes, lockouts, job actions, boycotts, fires, explosions, floods, shortages
of qualified equipment, material or energy, or other unforeseeable causes beyond
the control and without the fault or negligence of the Party so affected. The
affected Party shall give prompt notice to the other Party of such cause, and
shall take promptly whatever reasonable steps are necessary to relieve the
effect of such cause. If such event prevents or will prevent performance of a
material provision of this Agreement by one Party for more than six (6) months,
then the other party may immediately terminate this Agreement upon written
notice to the non-performing Party.

         12.4 Independent Contractors. The relationship of Manufacturer to
              -----------------------
Marketer established by this Agreement is that of an independent contractor.
Nothing contained in this Agreement shall be construed to constitute
Manufacturer as a partner, agent or joint venturer with Marketer or as a
participant in a joint or common undertaking with Marketer. Neither party has
any express or implied right under this Agreement to assume or create any
obligation on behalf of or in the name of the other party, or to bind the other
party to any contract, agreement or undertaking with any Third Party, and no
conduct of the parties shall be deemed to infer such right.

         12.5 Notices. All notices hereunder shall be delivered personally, or
              -------
by registered or certified mail (postage prepaid), or by recognized private mail
carrier or by facsimile with a confirmation copy sent by registered or certified
mail (postage prepaid), to the following addresses of the respective Parties:

         If to Manufacturer:

                  Retractable Technologies, Inc.
                  511 Lobo Lane
                  Little Elm, Texas 75068
                  Attention: Thomas J. Shaw
                  Chief Executive Officer and President

         With a copy to:

                  Legal Department
                  511 Lobo Lane
                  Little Elm, Texas 75068
                  Attention: Michele Larios

         If to Marketer:

                  Senior Vice President
                  Hospital Products Division

                                      -18-
<PAGE>

                  Abbott Laboratories
                  200 Abbott Park Road
                  Abbott Park, Illinois 60064-3537

         With a copy to:

                  Divisional Vice President, D-322
                  Abbott Laboratories
                  100 Abbott Park Road
                  Abbott Park, Illinois  60064-3500

Notices shall be effective upon receipt if personally delivered or delivered by
facsimile, or on the third business day following the date of mailing or the
carrier receipt date if by private mail carrier. A Party may change its address
listed above by notice to the other Party.

         12.6 Assignment. The Parties shall not assign this Agreement or any
              ----------
part thereof without the prior written consent of the other Party; provided,
however, a Party may assign this Agreement to an Affiliate of such Party without
consent of the other Party. Any permitted assignee shall assume all obligations
of its assignor under this Agreement. No assignment shall relieve any Party of
responsibility for the performance of any accrued obligation which such Party
then has hereunder.

         12.7 Entire Agreement. This terms and conditions contained herein
              ----------------
constitute the entire agreement between the Parties relating to the subject
matter hereof and thereof and shall supersede all previous communications and/or
agreements between the Parties with respect to the subject matter hereof and
thereof, respectively. No course of dealing or usage of trade shall be used to
modify the terms and conditions hereof.

         12.8 Severability. This Agreement is subject to the restrictions,
              ------------
limitations, terms and conditions of all applicable laws, governmental
regulations, approvals and clearances. If any term or provision of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof, and this Agreement shall be interpreted and
construed as if such term or provision, to the extent the same shall have been
held to be invalid, illegal or unenforceable, had never been contained herein

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

                           [Signature page follows]

                                      -19-
<PAGE>

         The Parties intending to be bound by the terms and conditions hereof
have caused this Agreement to be signed by their duly authorized representatives
on the date first above written.

ABBOTT LABORATORIES                           RETRACTABLE TECHNOLOGIES, INC.

By: /s/ Richard A. Gonzalez                   By: /s/ Thomas J. Shaw
   ------------------------------                -----------------------------

       Senior Vice President,
Title:   Hospital Products                    Title:          CEO
      ---------------------------                    -------------------------

Date:      May 2, 2000                        Date:        5/4/00
     ----------------------------                  ---------------------------

                                      -20-
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                  Exhibit 1.9
                                  -----------

                        Distribution Margin Percentage
                        ------------------------------

Calculation made as follows:

         (Net ASP - Transfer Price + Marketer Fee)/ Net ASP

Example:

         3cc Syringe
         -----------

         Net ASP = $.42

         Transfer Price = $.45

         Marketer Fee = $.10

         (.42 - .45 + .10)/.42 = 16.6%
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                 Exhibit 1.17
                                 ------------

                            Manufacturer's Patents
                            ----------------------

Syringe Patents    Issue Date

6,015,438         Full Displacement Retractable Syringe               01/18/00

5,637,092         Syringe Plunger Locking Assembly                    06/10/97

5,632,733         Tamperproof Retractable Syringe                     05/27/97

5,578,011         Tamperproof Retractable Syringe                     11/26/96

5,389,076         Single Use Medical Device with Retraction Mechanism 02/14/95

5,385,551         Nonreusable Medical Device with Front Retraction    01/31/95

5,267,961         Nonreusable Syringe with Safety Indicator           12/07/93

5,188,613         Nonreusable Syringe with Safety Indicator           02/23/93

5,120,310         Nonreusable Syringe                                 06/09/92

Blood Collection Tube Holder                                          Issue Date

5,810,775         Cap Operated Retractable Medical Device             09/22/98

5,423,758         Retractable Fluid Collection Device                 06/13/95
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                 Exhibit 1.20
                                 ------------

                            Product and Price List
                            ----------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                 Product Description                        Saleable Unit        Transfer Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>
         3cc VanishPoint(R) syringe 25G x 5/8"             100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 25G x 1"               100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 23G x 1"               100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 22G x 1"               100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 22G x 1 1/2"           100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 21G x 1"               100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 21G x 1 1/2"           100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 20G x 1"               100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 20G x 1 1/2"           100/bx               $45.00/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         5cc VanishPoint(R) syringe 22G x 1"               100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 22G x 1 1/2"           100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 21G x 1"               100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 21G x 1 1/2"           100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 20G x 1"               100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 20G x 1 1/2"           100/bx               $75.00/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         10cc VanishPoint(R) syringe 22G x 1"              100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                                                                                           Sales Margin Split
                  Product Description                  Net Cost                            50/50 for Net ASP:
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>
         3cc VanishPoint(R) syringe 25G x 5/8"         $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 25G x 1"           $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 23G x 1"           $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 22G x 1"           $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 22G x 1 1/2"       $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 21G x 1"           $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 21G x 1 1/2"       $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 20G x 1"           $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

         3cc VanishPoint(R) syringe 20G x 1 1/2"       $35.00/bx         more than $60/bx and less than or equals to $70/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         5cc VanishPoint(R) syringe 22G x 1"           $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 22G x 1 1/2"       $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 21G x 1"           $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 21G x 1 1/2"       $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 20G x 1"           $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

         5cc VanishPoint(R) syringe 20G x 1 1/2"       $65.00/bx         more than $90/bx and less than or equals to $100/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         10cc VanishPoint(R) syringe 22G x 1"          $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<S>                                                        <C>                  <C>
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 22G x 1 1/2"          100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 21G x 1"              100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 21G x 1 1/2"          100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 20G x 1"              100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 20G x 1 1/2"          100/bx               $85.00/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         VanishPoint(R) blood collection tube holder       250/cs               $87.50/cs
------------------------------------------------------------------------------------------------------------------------------------

         VanishPoint(R) small diameter tube adapter        25/bx                $6.25/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         1cc VanishPoint(R) tuberculin syringe 25G x       100/bx               $50.00/bx
  5/8"
------------------------------------------------------------------------------------------------------------------------------------

         1cc VanishPoint(R) tuberculin syringe 27G x       100/bx               $50.00/bx
  1/2"
------------------------------------------------------------------------------------------------------------------------------------

         1cc VanishPoint(R) U-100 insulin syringe          100/bx               $50.00/bx
  29G x 1/2"
------------------------------------------------------------------------------------------------------------------------------------

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

<S>                                                    <C>               <C>
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 22G x 1 1/2"      $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 21G x 1"          $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 21G x 1 1/2"      $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 20G x 1"          $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------

         10cc VanishPoint(R) syringe 20G x 1 1/2"      $75.00/bx         more than $100/bx and less than or equals to $110/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         VanishPoint(R) blood collection tube holder   $62.50/cs         more than $125/cs and less than or equals to $150/cs
------------------------------------------------------------------------------------------------------------------------------------

         VanishPoint(R) small diameter tube adapter    $3.75/bx          more than $10/bx and less than or equals to $12.50/bx
------------------------------------------------------------------------------------------------------------------------------------

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

         1cc VanishPoint(R) tuberculin syringe 25G x   $40.00/bx         more than $65/bx and less than or equals to $75/bx
  5/8"
------------------------------------------------------------------------------------------------------------------------------------

         1cc VanishPoint(R) tuberculin syringe 27G x   $40.00/bx         more than $65/bx and less than or equals to $75/bx
  1/2"
------------------------------------------------------------------------------------------------------------------------------------

         1cc VanishPoint(R) U-100 insulin syringe      $40.00/bx         more than $65/bx and less than or equals to $75/bx
  29G x 1/2"
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                             ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                  Exhibit 3.1
                                  -----------

                               Purchase Forecast
                               -----------------

                             RTI PURCHASE FORECAST

                               (000's of UNITS)

                 Month 1     Month 2    Month 3    Month 4    Month 5   Month 6

                 July 2000   Aug        Sept       Oct        Nov       Dec
                 ---------   ---        ----       ---        ---       ---

3 cc syringe     XXXX        XXXX       XXXX       XXXX       XXXX      XXXX

5 cc syringe     X           XXX        XXX        XXX        XXX       XXX

10 cc syringe    X           XXX        XXX        XXX        XXX       XXX

1 cc syringe     X           X          X          X          X         X

BCTH             XXXX        XXXX       XXXX       XXXX       XXXX      XXXX

Adaptor          X           XXX        XXX        XXX        XXX       XXX

                 Month 7     Month 8    Month 9    Month 10   Month 11  Month 12

                 Jan. 2001   Feb        March      April      May       June
                 ---------   ---        -----      -----      ---       ----

3 cc syringe     XXXX        XXXX       XXXX       XXXX       XXXX      XXXX

5 cc syringe     XXX         XXX        XXX        XXX        XXX       XXX

10 cc syringe    XXX         XXX        XXX        XXX        XXX       XXX

1 cc syringe     XXXX        XXXX       XXXX       XXXX       XXXX      XXXX

BCTH             XXXX        XXXX       XXXX       XXXX       XXXX      XXXX

Adaptor          X           X          X          X          X         X

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as "xxxxx". The redacted information was
separately filed with the Commission.

<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                  Exhibit 3.4
                                  -----------

                             Distribution Centers
                             --------------------

     1.   Atlanta Distribution Center, 1635 Stone Ridge Drive, Stone Mountain,
          GA 30083, Phone: (770) 493-8330, Fax: (770) 938-9945

     2.   Chicago Distribution Center, Attn: D-209, AP5, One Abbott Park Road,
          Abbott Park, IL 60064-3500, Phone: (847) 937-5973, Fax: (847) 937-1708

     3.   Dallas Distribution Center, 4653 Nall Road, Farmer's Branch, TX 75244-
          4618, Phone: (972) 934-1050, Fax (972) 934-1054

     4.   King of Prussia Distribution Center, 920 Eighth Avenue East, King of
          Prussia, PA 19406, Phone: (610) 265-9100, Fax (610) 265-9103

     5.   Los Angeles Distribution Center, 13939 Borale Street, (PO Box 60162
          Terminal Annex, LA 90060), Sante Fe Springs, CA 90670, Phone: (562)
          921-0321, Fax (562) 921-7432
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                  Exhibit 3.6
                                  -----------

                             Returned Goods Policy
                             ---------------------

GENERAL INFORMATION
TERMS OF SALE AND RETURN GOODS POLICY
DRUG WHOLESALERS & MED/SURG DISTRIBUTORS & RADIOLOGY SUPPLIERS
EFFECTIVE DECEMBER 1, 1997

Return Goods Policy
-------------------

     .  It is the intention of the Hospital Products Division of Abbott
        Laboratories to issue full credit for all Return Goods, provided the
        minimal conditions of this policy are met.

     .  Authorization for returns must be obtained from an Abbott Trade Sales
                                  ----
        Specialist. Call your Hospital Products Division Sales Specialist or
        Customer Service at 1-800-ABBOTT3 (1-800-222-6883) to arrange a
        representative visit. The Returned Goods Authorization (RGA) form must
        be completed and signed by the customer in accordance with FDA good
        manufacturing practices. No credit is granted without an authorized and
        signed RGA. Returns must be shipped to the assigned Abbott Distribution
        Center or other location designated by an Abbott Trade Sales Specialist
        or customer service and shipped freight prepaid. Collect shipments will
        be charged back to the customer. Product must be returned within thirty
        (30) days from the date the RGA was initiated.

     .  Shortages/Damaged product. Shortages or damaged must be reported to
        Customer Service at 1-800-222-6883 upon receipt of product. To insure
        credit for damaged product, please provide the carrier's damaged goods
        report or other similar documentation.

     .  Credit for expiration-dated products will be allowed as follows:

Full Credit for products returned in salable condition with remaining dating or
not less than 3 months past expiration.

Exceptions:

          .   Controlled drugs and temperature sensitive products (e.g.
              Liposyn(R), Quelicin(R), Atracurium, Lorazepam, Cenolate(R), and
              Pancuronium Bromide) must have 6 or fewer months of dating or not
              be less than three (3) months past expiration.

          .   Calcijex(R) is not returnable for credit except in the event of an
              ordering or shipping error reported within ten (10) days of
              delivery. Expired product is not eligible for credit.

     .  Full credit granted for non-expiration-dated products returned in full
                                -----------------------------
        salable cases within one (1) year of purchase from Abbott.

     .  Schedule II product returns must be arranged by calling Abbott
        Laboratories at 1-800-323-9030, extension 6868 so that appropriate forms
        and labels can be mailed.
<PAGE>

     .  Products are ineligible for credit which were:

          1.  returned in less than a full salable unit.

          2.  returned opened, marked, or not in original packaging.

          3.  acquired from Abbott as nonreturnable.

          4.  previously sold by Drug Wholesalers, Radiology Suppliers, or
              Med/Surg Distributors to end customers.

          5.  manufactured to customer specification.

          6.  not shipped and billed to Drug Wholesalers, Radiology Suppliers,
              or Med/Surg Distributors by Abbott.

          7.  involved in a deal, or bankruptcy sale, or have deteriorated due
              to conditions beyond Abbott's control, such as from improper
              storage, heat, cold, humidity, water, dust, dirt, smoke, or fire.

     .  Abbott reserves the right to destroy products which are returned outside
        the above policy, or which are considered unfit or unsafe for use; to
        reduce or refuse credit when inadequate inventory controls cause
        excessive product returns; and to revise or make exceptions to this
        policy at Abbott's discretion.

     .  Customers are encouraged to return only full, unopened cases of product
        unless product is expired or nearly expired. Prior to returning
        overstocked product to Abbott, multi-location
        wholesalers/distributors/suppliers are encouraged to employ
        interdivisional transfers when possible.
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                National Marketing and Distribution Agreement

                                  Exhibit 4.2
                                  -----------

                            Product Specifications
                            ----------------------

                                 See Attached

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as "xxxxx". The redacted information was separately
filed with the Commission. The request for confidential treatment covers 47
pages of redacted documents.

<PAGE>

                         RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                 Exhibit 5.4(b)
                                 --------------

                              Profit Split Example
                              --------------------

Example 1

1.   Assume
Net ASP = XXXXX/Unit
Profit Split begins when Distribution Margin is greater than XXXXX and up to
 XXXXX
Abbott keeps all margin XXXX above Net ASP

2.   Calculation:
Abbott Pays RTI Transfer Price of: XXXXX/Unit
Marketer Fee: XXXXX/Unit
Net Cost to Abbott is: XXXXX/Unit
Distribution Margin: XXXXX - XXXXX = XXXXX
Share of Distribution Margin to Abbot = XXXXX

Example 2

1.   Assume:
Net ASP = XXXXX/Unit
Profit Split begins when Distribution Margin is greater than XXXXX and up to
 XXXXX
Abbott keeps all margin XXXX above Net ASP

2.   Calculation:
Abbott Pays RTI Transfer Price of: XXXXX/Unit
Marketer Fee: XXXXX/Unit
Net Cost to Abbott is: XXXXX/Unit
Distribution Margin: XXXXX - XXXXX = XXXXX
Share of Distribution Margin to RTI: (XXXX - XXXX) x XXX = XXXXXX
Share of Distribution Margin to Abbott: XXXXX - XXXXX = XXXXXX

Example 3

1.   Assume:
Net ASP = XXXXX/Unit
Profit Split begins when Distribution Margin is greater than XXXXX and up to
 XXXXX
Abbott keeps all margin XXXX above Net ASP

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as "xxxxx". The redacted information was
separately filed with the Commission.

<PAGE>

2.  Calculation:
Abbott Pays RTI Transfer Price of:  XXXXX/Unit
Marketer Fee:  XXXXX/Unit
Net Cost to Abbott is:  XXXXX/Unit
Distribution Margin:  XXXXX - XXXXX = XXXXX
Share of Distribution Margin to RTI: (XXXX-XXXX) x XXX = XXXXX
Share of Distribution Margin to Abbott:  XXXXX - XXXXX = XXXXX

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as "xxxxx". The redacted information was
separately filed with the Commission.
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                   Exhibit 6
                                   ---------

Subscription Agreement under Private Placement Memorandum dated January 11, 2000
--------------------------------------------------------------------------------

                                 See Attached

<PAGE>

                                  Exhibit 4.2

Packaging Specification - PK271

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

Description   : Packaging VanishPoint Small Tube Adapter
Revision      : 00
ECN           : 106
Date          : 02/02/1999
Ref. Drawing  : PK271

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

4.1   Class I Defects
      None

4.2   Class II Defects

      4.2.1  Incorrect Lot Number
             Lot No. on Carton Label does not match product inside.

      4.2.2  Missing Shelf Carton Label

4.3   Class III Defects
      None

4.4   Class IV Defects
      None

4.5   Class V Defects
      None

5.0   Other Requirements

Non applicable.

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

                                End of Document                           Page 3

<PAGE>

                         RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                  Exhibit 9.1
                                  -----------

                                Forecasted Sales
                                ----------------

                                  See Attached

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as "xxxxx". The redacted information was
separately filed with the Commission.

<PAGE>

                                  Exhibit 9.1
                            Five Year Sales Forecast
                           (In Thousands of Dollars)

                            2000     2001     2002     2003     2004     2005

3 cc syringe               XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX
5 cc syringe               XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX
10cc syringe               XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX
1 cc syringe               XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX
BCTH                       XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX
Tube Adapter               XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX

Total VanishPoint Sales $  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX  XXXXXXX

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as "xxxxx". The redacted information was
separately filed with the Commission.
<PAGE>

                        RETRACTABLE TECHNOLOGIES, INC.

                                      AND

                              ABBOTT LABORATORIES

                 National Marketing and Distribution Agreement

                                 Exhibit 12.2
                                 ------------

                        Alternative Dispute Resolution
                        ------------------------------

         The parties recognize that bona fide disputes as to certain matters may
arise from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their designees)
of the affected subsidiaries, divisions, or business units within twenty-eight
(28) days after such notice is received (all references to "days" in this ADR
provision are to calendar days).

         If the matter has not been resolved within twenty-eight (28) days of
the notice of dispute, or if the parties fail to meet within such twenty-eight
(28) days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.

         1.   To begin an ADR proceeding, a party shall provide written notice
to the other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved within the
same ADR.

         2.   Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution ("CPR"), 366
Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral
pursuant to the following procedures:

              (a)  The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall be an
employee, director, or shareholder of either party or any of their subsidiaries
or affiliates.

              (b)  Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.

              (c)  Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference) and shall deliver
the list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates, that party shall provide a written explanation of the conflict
to the
<PAGE>

CPR along with its list showing its order of preference for the candidates. Any
party failing to return a list of preferences on time shall be deemed to have no
order of preference.

              (d)  If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately shall designate as
the neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference, or (ii) issue a new list of
not less than five (5) candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.

         3.   No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral shall hold a hearing to resolve each of
the issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutral
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or affiliates.

         4.   At least seven (7) days prior to the hearing, each party shall
submit the following to the other party and the neutral:

              (a)  a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;

              (b)  a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;

              (c)  a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue.

              (d)  a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.

                   Except as expressly set forth in subparagraphs 4(a) - 4(d),
no discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.

         5.   The hearing shall be conducted on two (2) consecutive days and
shall be governed by the following rules:

              (a)  Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether each party has had
the five (5) hours to which it is entitled.

              (b)  Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their
<PAGE>

direct testimony, and cross-examination time shall be charged against the party
conducting the cross-examination.

              (c)  The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues raised
in the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.

              (d)  Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.

              (e)  Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances. Affidavits prepared
for purposes of the ADR hearing also shall not be admissible. As to all other
matters, the neutral shall have sole discretion regarding the admissibility of
any evidence.

         6.   Within seven (7) days following completion of the hearing, each
party may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief shall not
contain or discuss any new evidence and shall not exceed ten (10) pages. This
page limitation shall apply regardless of the number of issues raised in the ADR
proceeding.

         7.   The neutral shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each disputed
issue but may adopt one party's proposed rulings and remedies on some issues and
the other party's proposed rulings and remedies on other issues. The neutral
shall issue a written ruling which shall contain the findings of fact and
conclusions of law.

         8.   The neutral shall be paid a reasonable fee plus expenses. These
fees and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows:

              (a)  If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.

              (b)  If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate fees and expenses in a way that
bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.

         9.   The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be entered as a
final judgment in any court having jurisdiction.

         10.  The rulings of the neutral shall be subject to judicial review
only to the extent that such review shall be limited to the findings of fact and
conclusions of law to establish whether the
<PAGE>

ruling was arbitrary and capricious and/or clearly erroneous.

         11.  Except as provided in paragraph 10 or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and briefs), and
the rulings shall be deemed Confidential Information. The neutral shall have the
authority to impose sanctions for unauthorized disclosure of Confidential
Information.
<PAGE>

                                   EXHIBIT C

                            SUBSCRIPTION DOCUMENTS
<PAGE>

                            SUBSCRIPTION AGREEMENT

Mr. Douglas W. Cowan                                    Memorandum No. _________
Chief Financial Officer and Treasurer
Retractable Technologies, Inc.
511 Lobo Lane, P. O. Box 9
Little Elm, Texas 75068

Dear Mr. Cowan:

The undersigned hereby tenders this subscription and applies for the purchase of
Series IV Class B Convertible Preferred Stock (the "Preferred Stock"), $10.00
per share, of Retractable Technologies, Inc., a Texas corporation (the
"Company").

1.       Purchase:  Terms of Offering.
         ----------------------------

         Subject to the terms and conditions of this Subscription Agreement, the
         undersigned irrevocably agrees to purchase $________________ of the
         Series IV Class B Convertible Preferred Stock at $10.00 per share and
         tenders herewith the cash contribution as set forth on Page 4 below.

2.       Tender of Subscription.
         ----------------------

         The undersigned is delivering to the Company at the address set forth
         above the following:

         (i)      One signed copy of this Subscription Agreement;

         (ii)     One Suitability Questionnaire with Sections A and D completed
                  and Sections B (Determination of Accredited Investor Status)
                  and C (Agent Account Information) completed where appropriate;
                  and

         (iii)    A check payable to Retractable Technologies Escrow Account in
                  the amount set forth on page 4 below.

         Upon receipt and acceptance of this Subscription Agreement, the Company
         will deposit any check tendered herewith and promptly deliver the
         subscribed Preferred Stock after receipt of the minimum subscription of
         $500,000. The undersigned acknowledges that the Company may, at its
         sole discretion, terminate the offering of Preferred Stock for any
         reason. If for any reason the subscription is rejected, all amounts
         received hereunder shall be returned without interest or deductions,
         together with this Subscription Agreement. The Company may accept
         subscriptions while continuing the offering until termination.

3.       Representations and Warranties.
         ------------------------------

         The undersigned hereby makes the following representations and
         warranties to the Company and agrees to indemnify, hold harmless and
         pay all judgments or any claims against the Company from any liability
         or injury incurred (including all legal fees and expenses) as a result
         of any misrepresentation herein or any warranties not performed by the
         undersigned.

                                      -1-
<PAGE>

         (c) If the undersigned is a corporation, partnership, trust or other
             entity, (1) it is duly organized, validly existing, and in good
             standing under the laws of its relevant jurisdiction and has all
             the requisite power and authority to invest the shares as provided
             herein, (2) such investment does not result in any violation of, or
             conflict with, any term of the charter in or bylaws of the
             undersigned or any instrument or regulation applicable to it; (3)
             such investment has been duly authorized by all necessary action on
             behalf of the undersigned; and (4) this Subscription Agreement has
             been duly executed and delivered on behalf of the undersigned and
             constitutes a legal, valid and binding agreement of the
             undersigned, enforceable in accordance with its terms.

         (e) I have consulted with the following advisor(s), if any (such
             advisor[s]) are hereinafter collectively referred to as the
             "Purchaser Representative") (if NONE, so indicate):

             None
             -------------------------------------------------------------------

             ___________________________________________________________________

         (f) I and/or my Purchaser Representative have read and analyzed and are
             familiar with the Confidential Private Placement Memorandum dated
             January 11, 2000 (the "Private Placement Memorandum"), this
             Subscription Agreement, and any other related documents, and I
             confirm that all documents requested by me and/or my Purchaser
             Representative have been made available to us, and that we have
             been supplied with all of the additional information concerning
             this investment that we have requested.

         (g) I personally, or together with my Purchaser Representative, have
             such knowledge and experience in financial, securities, investment
             and business matters that I am, or we are, capable of evaluating
             the merits and risks of this investment.

         (h) I understand that an investment in the Preferred Stock is highly
             speculative and subject to substantial risks, and I am capable of
             bearing the high degree of economic risk and burdens of this
             venture, including, but not limited to, the possibility of the
             complete loss of all contributed capital, the lack of a public
             market and limited transferability of the Preferred Stock, such
             that it might not be possible to readily liquidate this investment.

         (i) The solicitation of this offer to purchase Preferred Stock was
             directly communicated to me by the Company through the Private
             Placement Memorandum, to which this Subscription Agreement is
             attached, in such a manner that I was able to ask questions and
             receive answers from a person acting on behalf of the Company
             concerning the terms and conditions of this transaction and, at no
             time was I presented with or solicited by or through any leaflet,
             public promotional meeting, television advertisement or any other
             form of general advertising.

         (j) No representations or promises have been made concerning the
             marketability or value of the Preferred Stock. The undersigned
             understands the restrictions on transfer described

                                      -2-
<PAGE>

             in the Private Placement Memorandum. The undersigned further
             acknowledges and agrees that, because the Preferred Stock has not
             been registered under the Securities Act and is being offered and
             sold pursuant to an exemption from registration, the Preferred
             Stock cannot be sold unless it is subsequently registered under
             said Act or an exemption from registration is available, and the
             undersigned must continue to bear the economic risk of his or her
             investment in the Preferred Stock for an indefinite period of time.

         (k) The Preferred Stock will not be resold or otherwise disposed of,
             unless the Preferred Stock is subsequently registered under the
             Securities Act and appropriate state securities laws or unless the
             Company receives an opinion of counsel satisfactory to it that an
             exemption from registration is available.

         (l) I am aware of the following:

             (1) There are substantial restrictions on the transferability to
                 the Preferred Stock, the Preferred Stock will not be registered
                 under the Securities Act or the securities laws of any state
                 and any such registration is unlikely. In addition, investors
                 in the Company have no right to require that the Preferred
                 Stock be registered under the Securities Act or the securities
                 laws of any state.

             (2) No federal or state agency has made any finding or
                 determination as to the fairness for public investment, nor any
                 recommendation nor endorsement, of the Preferred Stock.

         (m) The representation, warranties, agreements and acknowledgments
             contained herein and the information set forth in the Suitability
             Questionnaire executed by me, are true and correct, and may be
             relied on by the Company in determining whether to accept or reject
             this subscription. The undersigned will promptly notify the Company
             if the above-mentioned representations or information become no
             longer accurate. In addition, all such representations, warranties,
             agreements and acknowledgments shall survive the purchase of the
             Preferred Stock.

         (n) I have not distributed the Private Placement Memorandum to anyone
             other than my Purchaser Representative and no persons other than
             myself and my Purchaser Representative have used this Private
             Placement Memorandum or any copies thereof.

         (o) I hereby agree to indemnify the Company and hold the Company
             harmless from and against any and all liability, damage, cost or
             expense incurred on account of or arising out of:

             (1) Any inaccuracy in my declaration, representations and
                 warranties herein above set forth;

             (2) My disposition of any of the Shares contrary to my foregoing
                 declarations, representations and warranties.

         (p) I understand that all investment funds accepted by the Company
             pursuant to the sale of Preferred Stock through this offering shall
             be made immediately available to the Company for use as described
             in the Private Placement Memorandum.

4.       Title.
         -----

         The undersigned desires to take title to this interest as follows
         (check one):

           X
         ----   (a)  Separate Property;
         ____   (b)  Joint Tenancy;
         ____   (c)  Community Property;
         ____   (d)  Tenancy in Common;
         ____   (e)  Other: _________________________________ (please describe)

                                      -3-
<PAGE>

         The exact spelling of the name(s) under the title to the Shares shall
         be taken is (please print):

         Abbott Laboratories
         ---------------------------------------------------------------------

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

5.       No Transferability.
         ------------------

         The undersigned agrees not to transfer or assign the obligations or
         duties contained in this Subscription Agreement, or any of his or her
         interest herein.

6.       Regulation D.
         ------------

         Notwithstanding anything contained herein to the contrary, every person
         or entity who, in addition to or in lieu of the undersigned, is deemed
         to be a purchaser pursuant to Regulation D promulgated under the
         Securities Act makes and joins in making all of the covenants,
         representations and warranties made by the undersigned.

7.       Acceptance.
         ----------

         Execution and delivery of this Subscription Agreement and tender of the
         payment referenced in Paragraph 1 above shall constitute an irrevocable
         offer to purchase the Preferred Stock indicated, which offer may be
         accepted or rejected by the Company. Acceptance shall be only by
         written acceptance executed by a duly authorized officer of the
         Company.

TOTAL SHARES 500,00 OF PREFERRED STOCK SUBSCRIBED (at $10.00 per share):

DOLLAR AMOUNT: $5 Million

MAKE ALL CHECKS PAYABLE TO:  "RETRACTABLE TECHNOLOGIES ESCROW ACCOUNT"

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
this 4th day of May, 2000.

     May, 2000
-----------------------------------------
Abbott Laboratories

by: Richard A. Gonzalez
-----------------------------------------
(Signature of Investor)
 its Senior Vice President, Hospital Products               FEIN 36-0698440

_________________________________________
Please print name (Investor)

_________________________________________
(Additional signature if joint ownership)

_________________________________________
Please print joint owner's name (if any)

200 Abbott Park Road
-----------------------------------------
Street

                                      -4-
<PAGE>

Abbott Park                 Illinois          40061 3537
-----------------------------------------------------------
City                          State              Zip

Telephone No.  (847) 938-5962

Please indicate if investor is a non-resident alien:  Yes_____ No X
                                                                 ---

ACCEPTED BY:

RETRACTABLE TECHNOLOGIES, INC.

By: [SIGNATURE ILLEGIBLE]
   ----------------------------------

Date: 5/4/2000
     --------------------------------

                                      -5-
<PAGE>

                           SUITABILITY QUESTIONNAIRE

Mr. Douglas W. Cowan
Chief Financial Officer and Treasurer
Retractable Technologies, Inc.
51 Lobo Lane, P. O. Box 9
Little Elm, Texas 75068-0009

Dear Mr. Cowan:

The following information is furnished to you in regard to an offer to purchase
shares of Series IV Class B Convertible Preferred Stock (the "Shares") of
Retractable Technologies, Inc., a Texas corporation (the "Company"), pursuant to
Sections 3(b) and 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Regulation D promulgated thereunder ("Regulation D") or
Regulation S. I understand that you will rely upon the following information for
purposes of such determination, and that the Shares will not be registered under
the Securities Act in reliance upon the exemption from registration provided by
Sections 3(b) and 4(2) of the Securities Act and Regulation D and Regulation S.

I AM FURNISHING YOU THE FOLLOWING INFORMATION WITH THE UNDERSTANDING THAT ALL
INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY. I
agree that you may present this questionnaire to such parties as you deem
appropriate if called upon to establish that the proposed offer and sale of the
Shares is exempt from registration under the Securities Act or meets the
requirements of applicable state securities laws.

I understand that this questionnaire is merely a request for information. I
understand that this questionnaire is not an offer to sell the Shares and that
no sale will occur prior to the acceptance of my subscription by the Company.

                          PLEASE ANSWER ALL QUESTIONS

If the appropriate answer is "None" or "Not applicable," please so state. Please
print or type your answer to all questions. Attach additional sheets if
necessary to complete your answers to any item.

                                      -6-
<PAGE>

                                                            N/A

                                   SECTION A

                              GENERAL INFORMATION
                  (All Investors must Complete this Section)

COMPLETE ITEMS 4 AND 5 FOR TENANTS IN COMMON AND JOINT TENANTS ONLY IF THE
--------------------------------------------------------------------------
INFORMATION DIFFERS FROM THAT GIVEN ABOVE.
------------------------------------------

                                      -7-
<PAGE>

11       a.       Federal income tax filing status for last year:

                  _____ Single              _____ Married Filing Jointly
                    X   Corporation         _____ Married Filing Separately
                  -----

         b.       Expected Federal income tax status for current year:

                  _____ Single              _____ Married Filing Jointly
                    X   Corporation         _____ Married Filing Separately
                  -----

         c.       Not applicable because I am not a U.S. Citizen _____

                                      -8-
<PAGE>

                                   SECTION B

                  DETERMINATION OF ACCREDITED INVESTOR STATUS

This section is used to determine if the investor will qualify as an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act. Item 1 of this Section B is for individuals who are
accredited investors, Item 2 is for partnerships, corporations or other entities
other than trusts who are accredited investors, and Item 3 is for trusts who are
accredited investors. Any investor who claims accredited status pursuant to
Items 1, 2 or 3 must also initial Item 4.
                                  ------

ITEM 1.           ACCREDITED INDIVIDUAL INVESTOR MUST INITIAL ONE OR MORE OF THE
                  --------------------------------------------------------------
                  FOLLOWING STATEMENTS:
                  --------------------

N/A (a)           I certify that I am an accredited investor because (1) I had
---               individual income (exclusive of any income attributable to my
                  spouse) of more than $200,000 in each of the most recent two
                  years, and I reasonably expect to have an individual income in
                  excess of $200,000 for the current year, or (2) I had joint
                  income (including income attributable to my spouse) of more
                  than $300,000 in each of the most recent two years, and I
                  reasonably expect to have joint income in excess of $300,000
                  for the current year.

N/A (b)           I certify that I am an accredited investor because I have an
---               individual net worth, or my spouse and I have a combined
                  individual net worth, in excess of $1,000,000. For purposes of
                  this section, "individual net worth" means the excess of the
                  total assets at fair market value, including home and personal
                  property, over total liabilities.

N/A (c)           I certify that I am an accredited investor because I am a
---               director or executive officer of the Company.

ITEM 2.           ACCREDITED  PARTNERSHIPS, CORPORATIONS OR OTHER ENTITIES WHICH
                  --------------------------------------------------------------
                  ARE NOT TRUSTS MUST INITIAL AT LEAST ONE OF THE FOLLOWING
                  ---------------------------------------------------------
                  STATEMENTS:
                  ----------

 X  (a)           The investor hereby certifies that it has (1) total assets in
---               excess of $5,000,000, and (2) was not formed for the specific
                  purchase of investing in the Company.

N/A (b)           The investor hereby certifies that all of the equity owners of
---               the investor are accredited individual investors as defined in
                  Item 1, above. All equity owners must complete page 11 if this
                                                   ----
                  Item 2(b) is being utilized to claim accredited investor
                  status.

N/A (c)           The investor hereby certifies that it is either (1) a bank as
---               defined in Section 3(a)(2) of the Securities Act, or a savings
                  and loan association or other institution as defined in
                  Section 3(a)(5)(A) of the Securities Act whether acting in its
                  individual or fiduciary capacity; (2) a broker or dealer
                  registered pursuant to Section 15 of the Securities Exchange
                  Act of 1934; (3) an insurance company as defined in Section
                  2(13) of the Securities Act; (4) an investment company
                  registered under the Investment Company Act of 1940, or a
                  business development company as defined in Section 2(a)(48) of
                  that Act; (5) a Small Business Investment Company licensed by
                  the U. S. Small Business Administration under Section 301(c)
                  or (d) of the Small Business Investment Act of 1958; or (6) an
                  employee benefit plan within the meaning of Title I of the
                  Employee Retirement Income Security Act of 1974, if the
                  investment decision is made by a plan fiduciary, as defined in
                  Section 3(21) of such Act, which is either a bank, savings and
                  loan association, insurance company or registered investment
                  advisor, or if the employee benefit plan has total assets in
                  excess of $5,000,000 or, in a self-directed plan, with
                  investment decisions made solely by persons who are accredited
                  investors.

N/A (d)           The undersigned hereby certifies that it is a private business
---               development company as defined in Section 202(a)(22) of the
                  Investment Advisor Act of 1940.

                                      -9-
<PAGE>

ITEM 3.           ACCREDITED TRUSTS MUST INITIAL AT LEAST ONE OF THE FOLLOWING
                  ------------------------------------------------------------
                  STATEMENTS:
                  ----------

N/A (a)           The investor hereby certifies that (1) it has total assets in
---               excess of $5,000,000, (2) the investor was not formed for the
                  specific purpose of investing in the Company, and (3) this
                  purchase has been directed by a person acting on behalf of the
                  investor who, ether alone or with his or her purchaser
                  representative(s) has such knowledge and experience in
                  financial and business matters that he or she is capable of
                  evaluating the merits and risks of this investment.

N/A (b)           The investor hereby certifies that it is a revocable trust
---               that may be amended or revoked at any time by the grantors,
                  and all the grantors are accredited individual investors as
                  defined in Item 1, above. If this Item 3(b) is being utilized
                  to claim accredited investor status, page 11 must be completed
                  by each of the grantors of the trust.

ITEM 4.           ALL ACCREDITED INVESTORS MUST INITIAL THE FOLLOWING LINE:
                  --------------------------------------------------------

 X  (a)           I understand that the representations contained in this
---               Section B are made for the purpose of qualifying me as an
                  accredited investor as that term is defined by the Securities
                  and Exchange Commission for the purpose of inducing a sale of
                  securities to me. I hereby represent that the statement or
                  statements initialed above are true and correct in all
                  respects. I understand that a false representation may
                  constitute a violation of law, and that any person who suffers
                  damage as a result of a false representation may have a claim
                  against me for damages.

                                     -10-
<PAGE>

                                     -11-
<PAGE>

                                                          N/A
                                   SECTION C

                            AGENT ACCOUNT INFORMATION

                                     -12-
<PAGE>

                                   SECTION D

                SIGNATURE PAGE TO BE COMPLETED BY ALL INVESTORS

I represent that:

     (a)    I am aware that any Preferred Stock purchased by me will be
            "restricted securities," thereby requiring my investment to be
            maintained for an indefinite period of time and that the Company is
            under no obligation to register the Preferred Stock for resale under
            the federal or state securities laws.

     (b)    I acknowledge that all information that I have provided anywhere in
            this Suitability Questionnaire concerning me and my financial
            position is correct and complete as of the date set forth below, and
            if there should be any material change in such information prior to
            the acceptance of any subscription, I will immediately provide such
            information to the Company.

     (c)    I purchased the Preferred Stock:

            (i)  directly from the Company; or

IN WITNESS WHEREOF, the undersigned has executed this questionnaire this  4/th/
                                                                         -------
day of May in the City of Abbott Park and State or Country of Illinois.

                  AIS:
                              __________________________________________________
                              Signature

                              __________________________________________________
                              Print or Type Name

                              __________________________________________________
                              Additional Investor Signature (i.e., joint tenant)

                  ENTITIES:   Abbott Laboratories
                              --------------------------------------------------
                              Print or Type Name of Entity

                              By: Richard A. Gonzalez
                                 -----------------------------------------------
                                    Signature

                              Richard H. Gonzalez
                              Senior Vice President, Hospital Products
                              --------------------------------------------------
                              Title and Name of Person Making Investment
                              Decision

                                     -13-
<PAGE>

                               CREDIT AGREEMENT

     This Credit Agreement (this "Agreement"), is entered into as of May 4,
2000, by and between Abbott Laboratories, an Illinois corporation ("Abbott"), as
lender, and Retractable Technologies, Inc., a Texas corporation (the "Company"),
as borrower.

                             W I T N E S S E T H:

     WHEREAS, the Company and Abbott have agreed to enter into this Agreement,
which provides that Abbott, as lender, shall loan to the Company, as borrower at
the Company's request, an amount not to exceed an aggregate of Five Million
Dollars ($5,000,000).

     NOW, THEREFORE, the Company and Abbott hereby agree as follows:

     1.   Interpretation of Agreement; Definitions.
          ----------------------------------------
            1.1  Definitions. Unless the context otherwise requires, whenever
                 -----------
                 used in this Agreement, the following terms shall have the
                 following definitions and those definitions shall be equally
                 applicable to both the singular and plural forms of any of the
                 terms defined in this Agreement:

                 (a)  "Acceleration" means that the Loan (as defined in Section
                      2.1): (i) shall not have been paid at the Maturity Date,
                      or (ii) shall have become due and payable prior to its
                      stated maturity pursuant to Section 7.2.

                 (b)  "Affiliate" means any Person (other than a Subsidiary):
                      (i) which directly or indirectly through one or more
                      intermediaries controls, or is controlled by, or is under
                      common control with, the Company, (ii) which beneficially
                      owns or holds ten percent (10 %) or more of any class of
                      the Voting Stock of the Company, or (iii) ten percent
                      (10%) or more of the Voting Stock or in the case of a
                      Person which is not a corporation, ten percent (10 %) or
                      more of the equity interest of which is beneficially owned
                      or held by the Company or a Subsidiary. The term "control"
                      means the possession, directly or indirectly, of the power
                      to direct or cause the direction of the management and
                      policies of a Person, whether through the ownership of
                      Voting Stock, by contract or otherwise.

                 (c)  "Agreement" means this Credit Agreement.

                 (d)  "Board of Directors" means either the board of directors
                      of the Company or any duly authorized committee thereof.
<PAGE>

                 (e)  "Business Day" means any day other than a Saturday,
                      Sunday, legal holiday or other day on which commercial
                      banks located in Dallas, Texas or Chicago, Illinois are
                      authorized or required by law to be closed.

                 (f)  "Collateral" shall have the meaning set forth in the
                      Security Agreement.

                 (g)  "Commission" means the Securities and Exchange Commission,
                      or successor regulatory entity.

                 (h)  "Common Stock" means the Common Stock, no par value, of
                      the Company.

                 (i)  "Company" means Retractable Technologies, Inc., a Texas
                      corporation, and any Person who in accordance with the
                      terms of this Agreement succeeds to all, or substantially
                      all, of the assets or business of Retractable
                      Technologies, Inc.

                 (j)  "Disbursement Date" means any date on or prior to June 30,
                      2005, on which a disbursement of the Loan is made. Each
                      Disbursement Date shall be on the date designated in a
                      written notice from the Company to Abbott; provided,
                      however, that (i) Abbott shall not be required to make any
                      disbursement if the conditions hereto are not satisfied,
                      and (ii) Abbott shall in no event be required to make any
                      disbursement after June 30, 2005.

                 (k)  "ERISA" means the Employee Retirement Income Security Act
                      of 1974, as amended, and any successor statute of similar
                      import, together with the regulations thereunder, in each
                      case as in effect from time to time. References to
                      sections of ERISA shall be construed to also refer to any
                      successor sections.

                 (l)  "Event of Default" shall have the meaning set forth in
                      Section 7.

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

                 (n)  "GAAP" means generally accepted accounting principles at
                      the time in the United States.

                 (o)  "Holder" means the registered holder of the Note,
                      initially Abbott.

                                      -2-
<PAGE>

                 (p)  "Interest Payment Date" means the last day of each March,
                      June, September and December commencing with the later of
                      (i) June 30, 2001 or (ii) the first such date after the
                      initial Disbursement Date.

                 (q)  "Lien" means any interest in property securing an
                      obligation owed to, or a claim by, a Person other than the
                      owner of the property, whether such interest is based on
                      the common law, statute or contract, and including but not
                      limited to the security interest or lien arising from a
                      mortgage, encumbrance, pledge, conditional sale or trust
                      receipt or a lease, consignment or bailment for security
                      purposes. The term "Lien" shall include reservations,
                      exceptions, encroachments, easements, rights-of-way,
                      covenants, conditions, restrictions, leases, and other
                      title exceptions and encumbrances (including, with respect
                      to stock, stockholder agreements, voting trust agreements,
                      buy-back agreements and all similar arrangements)
                      affecting property. For the purposes of this Agreement,
                      the Company shall be deemed to be the owner of any
                      property which it has acquired or holds subject to a
                      conditional sale agreement, capitalized lease or other
                      arrangement pursuant to which title to the property has
                      been retained by or vested in some other Person for
                      security purposes and such retention or vesting shall
                      constitute a Lien.

                 (r)  "Maturity" means any date on which the Loan or any portion
                      thereof becomes due and payable, whether as stated or by
                      virtue of mandatory prepayment, by acceleration or
                      otherwise.

                 (s)  "Maturity Date" means June 30, 2005.

                 (t)  "Nasdaq" and "Nasdaq National Market" shall have the
                      meanings specified in paragraph 9.5(f).

                 (u)  "National Marketing and Distribution Agreement" means the
                      Marketing and Distribution Agreement governing
                      collaboration between the Company and Abbott on the
                      marketing and distribution of needles using automated
                      retraction technology developed by the Company of even
                      date herewith.

                 (v)  "Note" means the note described in Section 2.6.

                 (w)  "Obligations" means all loans, advances, debts,
                      liabilities, obligations, covenants and duties owing to
                      Abbott by the Company, of any kind or nature, present or
                      future, whether or not evidenced by any note, guaranty or
                      other instrument, arising under this Agreement.

                                      -3-
<PAGE>

                 (x)  "Person" means an individual, partnership, corporation,
                      limited liability company, trust or unincorporated
                      organization, and a government or agency or political
                      subdivision thereof.

                 (y)  "Prime Rate" means that rate of interest per year
                      announced from time to time by The Northern Trust Company
                      called its prime rate, which may not at any time be the
                      lowest rate of interest charged by The Northern Trust
                      Company. Changes in the rate of interest resulting from a
                      change in the Prime Rate shall take effect on the date set
                      forth in each announcement.

                 (z)  "Preferred Stock" means stock of the Company of any class
                      or series ranking prior to any other class or series of
                      stock of the Company with respect to the payment of
                      dividends or the distribution of assets upon the
                      liquidation, dissolution or winding up of the Company.

                 (aa) "Registration Rights Agreement" means the Registration
                      Rights Agreement by and between Abbott and the Company of
                      even date herewith a copy of which is attached hereto as
                      Exhibit A.

                 (bb) "Securities Act" means the Securities Act of 1933, as
                      amended.

                 (cc) "Security Agreement" means a security agreement, in form
                      satisfactory to Abbott, dated the date hereof of the
                      Company, as amended, modified or restated from time to
                      time.

                 (dd) "Stated Maturity," when used with respect to the Note or
                      any installment of interest hereon, means the date
                      specified in the Note as the fixed date on which the
                      principal of the Note or any installment of interest is
                      due and payable.

                 (ee) "Subsidiary" means a corporation, partnership or other
                      entity at least a majority of whose Voting Stock is owned
                      directly or indirectly by the Company.

                 (ff) "Voting Stock" means securities of any class or classes,
                      the holders of which are ordinarily, in the absence of
                      contingencies, entitled to elect a majority of the
                      corporate directors (or Persons performing similar
                      functions).

          1.2    Accounting Principles. Where the character or amount of any
                 ---------------------
                 asset or liability or item of income or expense is required to
                 be determined or any consolidation or other accounting
                 computation is required to be made for the purposes of this
                 Agreement, the same shall be done in accordance with GAAP, to
                 the extent

                                      -4-
<PAGE>

                 applicable, except where such principles are inconsistent with
                 the requirements of this Agreement. Each accounting term not
                 defined herein and each accounting term partly defined herein
                 to the extent not defined shall have the meaning given to it
                 under generally accepted accounting principles.

          1.3    Directly or Indirectly. Where any provision in this Agreement
                 ----------------------
                 refers to action to be taken by any Person, or which such
                 Person is prohibited from taking, such provision shall be
                 applicable whether the action in question is taken directly or
                 indirectly by such Person.

          1.4    Legal Holidays. In any case where any Interest Payment Date or
                 --------------
                 Stated Maturity of the Note or the last date on which Abbott
                 has the right to convert the Note is not a Business Day, then
                 (notwithstanding any other provision of this Agreement or of
                 the Note) payment of interest or principal or conversion of the
                 Note, as the case may be, need not be made on such date, but
                 may be made on the next succeeding Business Day with the same
                 force and effect as if made on the Interest Payment Date, or at
                 the Stated Maturity, or on such last day for conversion.

     2.   Loan.
          ----

          2.1    Procedure for Loan. Subject to all of the terms and conditions
                 ------------------
                 of this Agreement, Abbott agrees to make periodic loans (the
                 "Loan") prior to June 30, 2005, to the Company in an aggregate
                 amount of up to Five Million Dollars ($5,000,000) to be
                 governed by the terms and conditions of, and repaid in
                 accordance with, this Agreement. The Company shall provide
                 Abbott with fifteen (15) Business Days written notice of a
                 requested disbursement. Disbursement amounts shall be in
                 multiples of One Million Dollars ($1,000,000). Subject to the
                 satisfaction of the terms and conditions set forth in this
                 Agreement, Abbott shall disburse up to Five Million Dollars
                 ($5,000,000) to the Company at the Company's request. Amounts
                 repaid may not be reborrowed.

          2.2    Interest.
                 --------

                 (a)  Interest. The Loan shall bear interest from the
                      --------
                      Disbursement Date on the unpaid principal amount thereof
                      until the earlier of an Event of Default or the date upon
                      which such amount shall become due and payable (whether
                      upon Maturity, by Acceleration or otherwise) at a rate per
                      annum equal to one percent (1 %) plus the Prime Rate.

                 (b)  Accrual And Computation of Interest. Interest shall accrue
                      -----------------------------------
                      daily and shall be computed on the basis of a year of 360
                      days for the actual number of days elapsed.

                                      -5-
<PAGE>

          2.3    Maximum Interest Rate. Nothing in this Agreement shall require
                 ---------------------
                 the Company to pay interest at a rate exceeding the maximum
                 amount permitted by applicable law to be charged by Abbott.

          2.4    Repayment.
                 ---------

                 (a)  Interest Payments. On each Interest Payment Date until the
                      -----------------
                      Maturity Date, and on the Maturity Date, the Company shall
                      pay Abbott all interest then accrued.

                 (b)  Loan Payment. The Company shall repay the entire
                      ------------
                      outstanding principal amount of the Loan in full on the
                      Maturity Date.

                 (c)  Optional Prepayment. The Company may at any time prepay
                      -------------------
                      the entire outstanding principal amount of the Loan or any
                      portion thereof without penalty.

          2.5    Post-maturity Interest. After the earlier of an Event of
                 ----------------------
                 Default or Maturity (whether by Acceleration or otherwise) of
                 the Loan, the Loan shall bear interest, payable on demand, at a
                 rate per annum equal to the greater of (i) ten percent (10%) or
                 (ii) three percent (3%) plus the Prime Rate, subject to Section
                 2.3.

          2.6    Note. The Loan made by Abbott pursuant to this Agreement shall
                 ----
                 be evidenced by the note (the "Note") of the Company in the
                 form of Annex A hereto, payable to the order of Abbott on the
                 Maturity Date in the principal amount of up to Five Million
                 Dollars ($5,000,000) in accordance with Section 2.1. The
                 Company hereby authorizes Abbott to indicate upon a schedule
                 attached to the Note all disbursements made by Abbott pursuant
                 to this Agreement and all payments of principal and interest
                 thereon. Absent manifest error, such notations shall be
                 presumptive evidence as to the aggregate unpaid principal
                 amount of the Loan, and interest due thereon, but the failure
                 by Abbott to make such notations or the inaccuracy or
                 incompleteness of any such notations shall not affect the
                 obligations of the Company hereunder or under the Note.

            2.7  Payments by the Company. All payments (including prepayments)
                 -----------------------
                 to be made by the Company shall be made without set-off or
                 counterclaim and shall be made to Abbott by wire transfer in
                 United States dollars and in immediately available funds to the
                 following Abbott account: Citibank, N.A., New York, ABA
                 #021000089 for credit to Abbott Laboratories Account 0000-1329
                 (or to such other account as may be designated by written
                 notice to the Company), no later than 12:00 noon, Central time,
                 of the business day on which payment is

                                      -6-
<PAGE>

                 due. Any payment which is received in Abbott's account later
                 than 12:00 noon, Central time, shall be deemed to have been
                 received on the immediately succeeding Business Day. Whenever
                 any payment hereunder shall be stated to be due on a day other
                 than a Business Day, such payment shall be made on the next
                 succeeding Business Day, and such extension of time shall in
                 such case be included in the computation of interest.

     3.   Representations and Warranties of The Company and Its Subsidiaries.
          ------------------------------------------------------------------
          Except as otherwise set forth in the Disclosure Schedule attached to
          this Agreement as Exhibit B (the "Disclosure Schedule") or in any
          document expressly referenced in the Disclosure Schedule, the Company
          represents and warrants to Abbott as of the date set forth above as
          follows:

          3.1  Subsidiaries of the Company. The Company has no Subsidiaries.
               ---------------------------

          3.2  Corporate Organization And Authority.  The Company:
               ------------------------------------

               (a)  is a corporation duly organized, validly existing and in
                    good standing under the laws of its jurisdiction of
                    incorporation;

               (b)  has all requisite power and authority and all necessary
                    licenses and permits to own and operate its properties and
                    to carry on its business as now conducted and as presently
                    proposed to be conducted; and

               (c)  is duly licensed or qualified and is in good standing as a
                    foreign corporation in each jurisdiction wherein the nature
                    of the business transacted by it or the nature of the
                    property owned or leased by it makes such licensing or
                    qualification necessary.

          3.3  Capitalization.
               --------------

               (a)  The Company's authorized capital stock consists of:

                    (1)  one hundred million (100,000,000) shares of Common
                         Stock, no par value, of which fourteen million
                         (14,000,000) shares are issued and outstanding as of
                         the date hereof;

                    (2)  five million (5,000,000) shares of $1 par value Class A
                         Preferred Stock, of which five million (5,000,000)
                         shares are issued and outstanding as of the date
                         hereof, and which are convertible into five million
                         (5,000,000) shares of Common Stock; and

                    (3)  five million (5,000,000) shares of $1 par value Class B
                         Preferred Stock, par value, of which:

                                      -7-
<PAGE>

               (A)  one million (1,000,000) shares have been designated Series I
                    Class B Preferred Stock, of which one million (1,000,000)
                    shares are issued and outstanding as of the date hereof, and
                    which are convertible into one million (1,000,000) shares of
                    Common Stock,

               (B)  one million (1,000,000) shares have been designated Series
                    II Class B Preferred Stock, of which one million (1,000,000)
                    shares are issued and outstanding as of the date hereof, and
                    which are convertible into one million (1,000,000) shares of
                    Common Stock,

               (C)  one million one hundred sixty thousand, two hundred
                    (1,160,200) shares have been designated Series III Class B
                    Preferred Stock, of which one million one hundred sixty
                    thousand, two hundred (1,160,200) shares are issued and
                    outstanding as of the date hereof, and which are convertible
                    into one million one hundred sixty thousand, two hundred
                    (1,160,200) shares of Common Stock, and

               (D)  one million three hundred thousand (1,300,000) shares have
                    been designated Series IV Class B Preferred Stock, of which
                    one hundred sixty three thousand, seven hundred (163,700)
                    shares are issued and outstanding as of the date hereof, and
                    which are convertible into one million one hundred sixty
                    three thousand, seven hundred (163,700) shares of Common
                    Stock.

          (b)  All of the issued and outstanding shares of Common Stock, Series
               A Preferred Stock, and Series B Preferred Stock have been duly
               authorized and validly issued and are fully paid and
               nonassessable. As of the date hereof, the Company had outstanding
               options to purchase an aggregate of one million four hundred
               thousand (1,400,000) shares of Common Stock.

          (c)  Except as otherwise set forth in Exhibit B Disclosure Schedule,
               there are no preemptive or other outstanding rights, options,
               warrants, voting agreements, conversion rights, or agreements for
               the purchase or acquisition from the Company of any shares of its
               capital stock or other securities of the Company.

     3.4  Equity Investments.  The Company does not own any equity stock or
          ------------------
          interest, directly or indirectly, in any corporation, partnership,
          joint venture, firm or other entity.

                                      -8-
<PAGE>

     3.5  Authority.
          ---------

          (a)  The Company has all requisite corporate power and authority to
               enter into this Agreement and the Security Agreement and will
               have all requisite corporate power and authority to issue the
               Note and, subject to satisfaction of the conditions set forth
               herein and therein, to consummate the transactions contemplated
               hereby and thereby. The execution and delivery of this Agreement
               and the Security Agreement and the consummation of the
               transactions contemplated hereby and thereby have been, and the
               execution and delivery of the Note and the consummation of the
               transactions contemplated thereby will be, duly authorized by all
               necessary corporate action on the part of the Company. This
               Agreement and the Security Agreement have been, and the Note will
               be, duly executed and delivered by the Company, and constitute
               the valid and binding obligation of the Company, enforceable in
               accordance with their respective terms, subject to the effect of
               applicable bankruptcy, insolvency, reorganization, or other
               similar laws affecting the rights of creditors and the effect or
               availability of rules of law governing specific performance,
               injunctive relief, or other equitable remedies. Provided the
               conditions set forth in Section 6 are satisfied, the execution
               and delivery of this Agreement, the Security Agreement, and the
               Note do not or will not, and the consummation of the transactions
               contemplated hereby or thereby will not, conflict with, or result
               in any violation of or default (with or without notice or lapse
               of time, or both) under, or give rise to a right of termination,
               cancellation, or acceleration of any obligation under (i) any
               provision of the Articles of Incorporation or Bylaws of the
               Company, or (ii) any material agreement or instrument, permit,
               franchise, license, judgment or order, applicable to the Company
               or its properties or assets.

          (b)  No consent, approval, order or authorization of, or registration,
               declaration or filing with, any court, administrative agency or
               commission or other governmental authority (a "Governmental
               Entity") or other Person or entity, is required by, or with
               respect to, the Company in connection with the execution and
               delivery of this Agreement or the Security Agreement or the
               consummation by the Company of the transactions contemplated
               hereby or thereby, except for such consents, approvals, orders,
               authorizations, registrations, declarations, and filings as may
               be required under applicable federal and state securities laws
               and the laws of any foreign country.

     3.6  Financial Statements.  The Company has furnished to Abbott its audited
          --------------------
          statement of operations, statement of stockholders' equity and
          statement of

                                      -9-
<PAGE>

          cash flows for the fiscal year ended December 31, 1998 and the
          Company's audited balance sheet at December 31, 1998; and the
          unaudited statement of operations and statement of cash flows for the
          nine (9) months ended September 30, 1999 and the unaudited balance
          sheet at December 31, 1999. The balance sheet at December 31, 1999 is
          hereinafter referred to as the "Company Balance Sheet," and all such
          financial statements are hereinafter referred to collectively as the
          "Company Financial Statements." The Company Financial Statements have
          been and will be prepared in accordance with GAAP applied on a
          consistent basis, except for any change due to the adoption of an
          accounting principle established by the FASB, AICPA, SEC or any other
          accounting standard setting board, during the periods involved, and
          fairly present and will present the consolidated financial position of
          the Company and the results of its operations as of the date and for
          the periods indicated thereon. At the date of the Company Balance
          Sheet (the "Company Balance Sheet Date"), the Company had no
          liabilities or obligations, secured or unsecured (whether accrued,
          absolute, contingent or otherwise) not reflected on the Company
          Balance Sheet or the accompanying notes thereto.

     3.7  Business Changes.  As of the date of execution, since December 31,
          ----------------
          1999, except as otherwise contemplated by this Agreement or as
          disclosed in Exhibit B Disclosure Schedule, the Company has conducted
          its business only in the ordinary and usual course and, without
          limiting the generality of the foregoing:

          (a)  There have been no changes in the condition (financial or
               otherwise), business, net worth, assets, properties, employees,
               operations, obligations or liabilities of the Company which, in
               the aggregate, have had or may be reasonably expected to have a
               materially adverse effect on the condition, business, net worth,
               assets, prospects, properties or operations of the Company.

          (b)  The Company has not issued, or authorized for issuance, or
               entered into any commitment to issue, any equity security, bond,
               note, or other security of the Company.

          (c)  The Company has not incurred debt for borrowed money, nor
               incurred any obligation or liability except in the ordinary and
               usual course of business and in any event not in excess of Fifty
               Thousand Dollars ($50,000) for any single occurrence.

          (d)  The Company has not paid any obligation or liability, or
               discharged, settled or satisfied any claim, lien or encumbrance,
               except for current liabilities in the ordinary and usual course
               of business and in any event

                                     -10-
<PAGE>

               not in excess of Fifty Thousand Dollars ($50,000) for any single
               occurrence.

          (e)  The Company has not declared or made any dividend, payment, or
               other distribution on or with respect to any share of capital
               stock of the Company.

          (f)  The Company has not purchased, redeemed or otherwise acquired or
               committed itself to acquire, directly or indirectly, any share or
               shares of capital stock of the Company.

          (g)  The Company has not mortgaged, pledged, or otherwise encumbered
               any of its assets or properties.

          (h)  The Company has not disposed of, or agreed to dispose of, by
               sale, lease, license or otherwise, any asset or property,
               tangible or intangible, except, in the case of such other assets
               and property, in the ordinary and usual course of business, and
               in each case for a consideration believed to be at least equal to
               the fair value of such asset or property and in any event not in
               excess of Fifty Thousand Dollars ($50,000) for any single item or
               One Hundred Thousand Dollars ($100,000) in the aggregate other
               than inventory sold or returned in the normal course of business.

          (i)  The Company has not purchased or agreed to purchase or otherwise
               acquire any securities of any corporation, partnership, joint
               venture, firm, or other entity; the Company has not made any
               expenditure or commitment for the purchase, acquisition,
               construction or improvement of a capital asset, except in the
               ordinary and usual course of business and in any event not in
               excess of Fifty Thousand Dollars ($50,000) for any single item or
               One Hundred Thousand Dollars($100,000) in the aggregate.

          (j)  The Company has not entered into any transaction or contract, or
               made any commitment to do the same, except in the ordinary and
               usual course of business.

          (k)  The Company has not sold, assigned, transferred or conveyed, or
               committed itself to sell, assign, transfer or convey, any
               Proprietary Rights (as defined in Section 3.14).

          (l)  The Company has not adopted or amended any bonus, incentive,
               profit-sharing, stock option, stock purchase, pension,
               retirement, deferred-compensation, severance, life insurance,
               medical or other benefit plan, agreement, trust, fund or
               arrangement for the benefit of

                                     -11-
<PAGE>

                 employees of any kind whatsoever, nor entered into or amended
                 any agreement relating to employment, services as an
                 independent contractor or consultant, or severance or
                 termination pay, nor agreed to do any of the foregoing.

            (m)  The Company has not effected or agreed to effect any change in
                 its directors, officers or key employees.

            (n)  The Company has not effected or committed itself to effect any
                 amendment or modification in its Articles of Incorporation or
                 Bylaws, except as contemplated by this Agreement.

            (o)  The Company has not modified its accounting principles in any
                 material respect, except for those changes required by the
                 adoption of an accounting principle promulgated by the FASB,
                 the AICPA, the Securities and Exchange Commission, or any other
                 accounting standards setting bodies.

       3.8  Indebtedness. Exhibit B Disclosure Schedule, correctly describes all
            ------------
            debt of the Company in excess of Two Hundred Fifty Thousand
            Dollars($250,000) outstanding on the date of this Agreement.

       3.9  Litigation. There is no claim, dispute, action, proceeding, notice,
            ----------
            order, suit, appeal or investigation, at law or in equity, pending
            against the Company, or involving any of its assets or properties,
            before any court, agency, authority, arbitration panel or other
            tribunal (other than those, if any, with respect to which service of
            process or similar notice has not yet been made on the Company), and
            none have been threatened. The Company is aware of no facts which,
            if known to stockholders, customers, governmental authorities or
            other Persons, would result in any such claim, dispute, action,
            proceeding, suit or appeal or investigation which would have a
            material adverse effect on the condition (financial or otherwise),
            business, net worth, assets, prospects, properties or operations of
            the Company. The Company is not subject to any order, writ,
            injunction or decree of any court, agency, authority, arbitration
            panel or other tribunal, nor is it in default with respect to any
            notice, order, writ, injunction or decree.

       3.10 Compliance With Law. All material licenses, franchises, permits,
            -------------------
            clearances, consents, certificates and other evidences of authority
            of the Company which are necessary to the conduct of the Company's
            business ("Permits") are in full force and effect and the Company is
            not in violation of any Permit in any material respect. Except for
            possible exceptions, the curing or non-curing of which would not
            have a material adverse effect on the condition (financial or
            otherwise), business, net worth, assets, prospects, properties or
            operations of

                                     -12-
<PAGE>

            the Company, the business of the Company has been conducted in
            accordance with all applicable laws, regulations, orders and other
            requirements of governmental authorities.

     3.11   Title to Properties. The Company has good and marketable title in
            -------------------
            fee simple (or its equivalent under applicable law) to all material
            parcels of real property and has good title to all the other
            material items of property it purports to own, except as sold or
            otherwise disposed of in the ordinary course of business. None of
            the Collateral is subject to any Lien, except Liens for the benefit
            of Abbott.

     3.12   Licenses, Etc. The Company owns or possesses all the material trade
            -------------
            names, service marks, licenses, governmental approvals, and rights
            with respect to the foregoing necessary for the present conduct of
            its business, without any known conflict with the rights of others.

     3.13   No Default.
            ----------

            (a)  Each of the Company's material agreements or contracts is a
                 legal, binding and enforceable obligation by or against the
                 Company, subject to the effect of applicable bankruptcy,
                 insolvency, reorganization, moratorium or other similar federal
                 or state laws affecting the rights of creditors and the effect
                 or availability of rules of law governing specific performance,
                 injunctive relief or other equitable remedies (regardless of
                 whether any such remedy is considered in a proceeding at law or
                 in equity). To the Company's knowledge, no party with whom the
                 Company has an agreement or contract is in default thereunder
                 or has breached any term or provision thereof which is material
                 to the conduct of the Company's business.

            (b)  The Company has performed, or is now performing, the
                 obligations of, and the Company is not in material default (or
                 would by the lapse of time and/or the giving of notice be in
                 material default) in respect of, any contract, agreement or
                 commitment binding upon it or its assets or properties and
                 material to the conduct of its business. No third party has
                 raised any claim, dispute, or controversy with respect to any
                 of the contracts of the Company, whether fully performed or
                 currently being performed, nor has the Company received written
                 notice or warning of alleged nonperformance, delay in delivery
                 or other noncompliance by the Company with respect to its
                 obligations under any of those contracts, nor are there any
                 facts which exist indicating that any of those contracts may be
                 totally or partially terminated or suspended by the other
                 parties thereto.

                                     -13-
<PAGE>

     3.14   Proprietary Rights.
            ------------------

            (a) The Company has provided Abbott with a complete list in writing
                of all patents and applications for patents, trademarks, trade
                names, service marks, and copyrights, and applications therefor,
                owned or used by the Company or in which it has any rights or
                licenses, except for software used by the Company and generally
                available on the commercial market. The Company has disclosed to
                Abbott all material agreements of the Company with each officer,
                employee or consultant of the Company providing the Company with
                title and ownership to patents, patent applications, trade
                secrets and inventions developed or used by the Company in its
                business. All of such agreements so described are valid,
                enforceable and legally binding, subject to the effect of
                applicable bankruptcy, insolvency, reorganization or other
                similar laws affecting the rights of creditors or availability
                of rules of law governing specific performance, injunctive
                relief or other equitable remedies (regardless of whether any
                such remedy is considered in a proceeding at law or in equity).

            (b) The Company owns or possesses licenses or other rights to use
                all patents, patent applications, trademarks, trademark
                applications, trade secrets, service marks, trade names,
                copyrights, inventions, drawings, designs, customer lists,
                proprietary know-how or information, or other rights with
                respect thereto (collectively referred to as "Proprietary
                Rights"), used in the business of the Company, and the same are
                sufficient to conduct the Company's business as it has been and
                is now being conducted.

            (c) The operations of the Company do not conflict with or infringe,
                and no one has asserted to the Company that such operations
                conflict with or infringe, on any Proprietary Rights, owned,
                possessed or used by any third party. There are no claims,
                disputes, actions, proceedings, suits, or appeals pending
                against the Company with respect to any Proprietary Rights
                (other than those, if any, with respect to which service of
                process or similar notice may not yet have been made on the
                Company), and, none has been threatened against the Company. To
                the knowledge of the Company, there are no facts or alleged
                facts which would reasonably serve as a basis for any claim that
                the Company does not have the right to use, free of any rights
                or claims of others, all Proprietary Rights in the development,
                manufacture, use, sale, or other disposition of any or all
                products or services presently being used, furnished, or sold in
                the conduct of the business of the Company as it has been and is
                now being conducted.

                                     -14-
<PAGE>

            (d) To the Company's knowledge, no employee of the Company is in
                violation of any term of any employment contract, proprietary
                information and inventions agreement, non-competition agreement,
                or any other contract or agreement relating to the relationship
                of any such employee with the Company or any previous employer.

     3.15   Taxes. All tax returns required to be filed by the Company in any
            -----
            jurisdiction have, in fact, been filed, and all taxes, assessments,
            fees and other governmental charges upon the Company or upon any of
            its properties, income or franchises, which are shown to be due and
            payable in such returns have been paid. For all taxable years ending
            on or before December 31, 1999, the federal income tax liability of
            the Company has been satisfied. The Company does not know of any
            proposed additional tax assessment against it for which adequate
            reserves have not been made on its balance sheet, and no material
            controversy in respect of additional federal or state income taxes
            due since said date is pending or, to the knowledge of the Company,
            threatened. The reserves for taxes on the books of the Company are
            adequate in all material respects for all open years, and for its
            current fiscal period.

     3.16   Use of Proceeds. The net proceeds from the Loans will be used to for
            ---------------
            equipment and manufacturing operations.

     3.17   Private Offering. Neither the Company, directly or indirectly, nor
            ----------------
            any agent on its behalf has offered or will offer the Note or any
            similar security or has solicited or will solicit an offer to
            acquire the Note or any similar security from or has otherwise
            approached or negotiated or will approach or negotiate in respect of
            the Note or any similar security with any Person other than Abbott.
            Neither the Company, directly or indirectly, nor any agent on its
            behalf has offered or will offer the Note or any similar security or
            has solicited or will solicit an offer to acquire the Note or any
            similar security from any Person so as to require registration of
            the Note under section 5 of the Securities Act.

     3.18   Employee Plans And Relations.
            ----------------------------

            (a)  The Company does not have, and is not liable with respect to,
                 any employee benefit plans, multi-employer plans and employee
                 benefit plans (as defined in section 3(2) or section 3(3) of
                 the Employee Retirement Income Security Act of 1974, as
                 amended).

            (b)  The Company has no liabilities with respect to any of the
                 following which would have a reasonable likelihood of having a
                 material adverse effect on the condition (financial or
                 otherwise), business, net worth, assets, prospects, properties
                 or operations of the Company:

                                     -15-
<PAGE>

            (i)   bonus, deferred compensation, incentive, restricted stock,
                  stock purchase, stock option, stock appreciation right,
                  phantom stock, debenture, supplemental pension, profit-
                  sharing, royalty pool, commission or similar plan or
                  arrangement;

            (ii)  employment, consulting or termination agreement; or

            (iii) other plan, program, agreement, procedure, policy, commitment,
                  understanding or other arrangement relating to employee
                  benefits, executive compensation, fringe benefits, severance
                  pay, terms of employment or services as a director, officer,
                  employee or independent contractor.

            (c)   The Company has not been and is not a party to, or subject to,
                  or affected by, any collective bargaining agreement or other
                  labor contract. The Company has complied in all respects with
                  all laws, rules and regulations relating to employment, equal
                  employment opportunity, nondiscrimination, immigration, wages,
                  hours, benefits, collective bargaining, the payment of social
                  security and similar taxes, occupational safety and health and
                  plant closing.

     3.19   Environmental Matters. The Company is, and at all times during the
            ---------------------
            period prior to the date set forth above the Company has been, in
            compliance with all applicable local, state and federal statutes,
            orders, rules, ordinances and regulations relating to pollution or
            protection of the environment ("Environmental Laws"), including,
            without limitation, laws relating to zoning and land use and to
            emissions, discharges, releases or threatened releases of
            pollutants, contaminants, hazardous or toxic materials or wastes
            into or on land, ambient air, surface water, ground water, personal
            property or structures (including the protection, cleanup, removal,
            remediation or damage thereof), or otherwise related to the
            manufacture, processing, distribution, use, treatment, storage,
            disposal, transport, discharge or handling of pollutants,
            contaminants or hazardous or toxic substances, materials, or wastes.
            The Company has no liability with respect to any Environmental Laws.

     3.20   Brokers or Finders. The Company has not dealt with any broker or
            ------------------
            finder in connection with the transactions contemplated by this
            Agreement. The Company has not incurred, and shall not incur,
            directly or indirectly, any liability for any brokerage or finders'
            fees or agents' commissions or any similar charges in connection
            with this Agreement or any transaction contemplated hereby.

     3.21   Full Disclosure. Neither the Company Financial Statements referred
            ---------------
            to in Section 3.6 nor this Agreement, or any other written statement
            furnished by

                                     -16-
<PAGE>

               the Company to Abbott in connection with the negotiation of the
               sale of the Note, contains any untrue statement of a material
               fact or omits a material fact necessary to make the statements
               contained herein or therein not misleading. There is no fact
               peculiar to the Company which the Company has not disclosed to
               Abbott in writing which materially adversely affects nor, so far
               as the Company can now foresee, will materially adversely affect,
               the properties, business, profits, or condition (financial or
               otherwise) of the Company.

     4.   Representations And Warranties of Abbott. Except as contemplated by
          ----------------------------------------
          this Agreement, Abbott represents and warrants to the Company as of
          the date set forth above as follows:

          4.1  Corporate Organization. Abbott is a corporation duly
               ----------------------
               incorporated, validly existing and in good standing under the
               laws of Illinois.

          4.2  Authority. Abbott has all requisite corporate power and authority
               ---------
               to enter into this Agreement and the related agreements
               contemplated herein, and, subject to satisfaction of the
               conditions set forth herein, to consummate the transactions
               contemplated hereby. The execution and delivery of this Agreement
               and the consummation of the transactions contemplated hereby have
               been duly authorized by all necessary corporate action on the
               part of Abbott. This Agreement has been duly executed and
               delivered by Abbott and constitutes the valid and binding
               obligation of Abbott enforceable in accordance with its terms,
               subject to the effect of applicable bankruptcy, insolvency,
               reorganization or other similar federal or state laws affecting
               the rights of creditors and the effect or availability of rules
               of law governing specific performance, injunctive relief or other
               equitable remedies.

          4.3  Restricted Note. Abbott represents and agrees, and in entering
               ---------------
               into this Agreement the Company understands, that

               (a)  Abbott is acquiring the Note for Abbott's own account, and
                    for the purpose of investment and not with a view to the
                    distribution thereof, and that Abbott has no present
                    intention of selling, negotiating, or otherwise disposing of
                    the Note; it being understood, however, that the disposition
                    of Abbott's property shall at all times be and remain within
                    its control, and

               (b)  the Note has not been registered under section 5 of the
                    Securities Act and that Abbott will only re-offer or resell
                    the Note purchased by Abbott under this Agreement pursuant
                    to an effective registration statement under the Securities
                    Act or in accordance with an available exemption from the
                    requirements of section 5 of the Securities Act.

                                     -17-
<PAGE>

          4.4  No Conflict. The execution and delivery of this Agreement by
               -----------
               Abbott and the performance of Abbott's obligations hereunder,

               (a)  are not in violation or breach of, and will not conflict
                    with or constitute a default under, any of the terms of the
                    Articles of Incorporation or Bylaws of Abbott or any of its
                    Subsidiaries, or any material contract, agreement or
                    commitment binding upon Abbott or any of its assets or
                    properties;

               (b)  will not result in the creation or imposition of any Lien,
                    equity or restriction in favor of any third party upon any
                    of the assets or properties of Abbott; and

               (c)  will not conflict with or violate any applicable law, rule,
                    regulation, judgment, order or decree of any government,
                    governmental instrumentality or court having jurisdiction
                    over Abbott or any of its assets or properties.

          4.5  Brokers or Finders. Abbott has not dealt with any broker or
               ------------------
               finder in connection with the transactions contemplated by this
               Agreement. Abbott has not incurred, and shall not incur, directly
               or indirectly, any liability for any brokerage or finders' fees
               or agents commissions or any similar charges in connection with
               this Agreement or any transaction contemplated hereby.

     5.   Covenants of the Company. From and after the date of this Agreement
          ------------------------
          and continuing so long as any amount remains unpaid on the Note, the
          Company covenants and agrees with Abbott that:

          5.1  Corporate Existence. The Company shall do or cause to be done all
               -------------------
               things necessary to preserve and keep in full force and effect
               the existence, rights and franchises of the Company.

          5.2  Conduct of Business in Normal Course. The Company shall carry on
               ------------------------------------
               its business and activities diligently and in the ordinary course
               and shall not make 1or institute any unusual or novel methods of
               purchase, sale, lease, management, accounting, or operation that
               will vary materially from the methods used by the Company as of
               April 28, 2000. The Company shall maintain its business and
               activities in a normal and customary manner consistent with prior
               practice.

          5.3  Maintenance. The Company will maintain, preserve and keep, its
               -----------
               material properties which are used or useful in the conduct of
               its business (whether owned in fee or a leasehold interest) in
               good repair and working order and from time to time will make all
               necessary repairs, replacements, renewals and

                                     -18-
<PAGE>

               additions so that at all times the efficiency thereof shall be
               maintained in all material respects.

          5.4  Preservation of Business And Relationships. The Company will not
               ------------------------------------------
               engage in any business if, as a result, the general nature of the
               business, which would then be engaged in by the Company would be
               substantially changed from the general nature of the business
               engaged in by the Company on the date of this Agreement.

          5.5  Merger; Acquisitions: The Company shall not:
               --------------------

               (a)  consolidate with or merge into any other Person,

               (b)  acquire or agree to acquire by merging or consolidating
                    with, or by purchasing a substantial portion of the assets
                    of, or by any other manner, any business or any Person or
                    division thereof,

               (c)  otherwise acquire or agree to acquire any assets which are
                    material to the Company except in the ordinary course of
                    business consistent with prior practice; or

               (d)  acquire any stock or other equity securities of any Person.

          5.6  Sale or Lease of Assets; Dispositions. The Company shall not
               -------------------------------------
               sell, lease, transfer, or otherwise dispose of any of its assets
               (other than the sale of inventory in the ordinary course of
               business), except in the ordinary course of business consistent
               with prior practice.

          5.7  Indebtedness. The Company shall not incur any indebtedness for
               ------------
               borrowed money other than customary Senior Indebtedness (as
               defined in Section 8.1) in amounts not in excess of the Company's
               stockholders' equity (i.e., not to exceed a one to one debt to
               equity ratio) in the aggregate at any time outstanding or
               guarantee any such indebtedness or issue or sell any debt
               securities of the Company or guarantee any debt securities of
               others.

          5.8  Insurance. The Company shall at all times during the term of this
               ---------
               Agreement maintain product liability insurance covering the
               products with minimum annual limits of Five Million Dollars
               ($5,000,000) per occurrence and Five Million Dollars ($5,000,000)
               in the aggregate. The Company shall maintain such insurance for a
               minimum of five (5) years after termination of this Agreement.
               Within thirty (30) days of the first Disbursement Date, the
               Company shall deliver to Abbott a certificate of insurance
               evidencing such insurance and stating that the policy will not be
               canceled or modified without at least thirty(30) days prior
               written notice to Abbott.

                                     -19-
<PAGE>

          5.9  Taxes, Claims For Labor And Materials, Compliance With Laws. The
               -----------------------------------------------------------
               Company will promptly pay and discharge, all lawful taxes,
               assessments, and governmental charges or levies imposed upon the
               Company, or upon or in respect of all or any part of the property
               or business of the Company, all trade accounts payable in
               accordance with usual and customary business terms, and all
               claims for work, labor, or materials, which if unpaid might
               become a Lien upon any property of the Company; provided,
               however, that the Company shall not be required to pay any such
               tax, assessment, charge, levy, account payable or claim if:

               (a)  the validity, applicability, or amount thereof is being
                    contested in good faith by appropriate actions or
                    proceedings which will prevent the forfeiture or sale of any
                    property of the Company or any material interference with
                    the use thereof by the Company, and

               (b)  the Company shall set aside, in accordance with GAAP, on its
                    books, reserves deemed by it to be adequate with respect
                    thereto. The Company will promptly comply with all laws,
                    ordinances, or governmental rules and regulations to which
                    it is subject including, without limitation, the
                    Occupational Safety and Health Act of 1970, as amended,
                    ERISA, and all laws, ordinances, governmental rules and
                    regulations relating to environmental protection in all
                    applicable jurisdictions, the violation of which could
                    materially and adversely affect the properties, business,
                    profits or condition of the Company.

          5.10 Notice of Claims and Litigation. The Company will give prompt
               -------------------------------
               notice to Abbott of any claim or action at law or in equity, or
               before any governmental, administrative or regulatory body or
               arbitration panel instituted against the Company, or disputes
               that have a high probability of resulting in a suit of
               significance against the Company involving a claim against the
               Company, for damages in excess of Two Hundred Fifty Thousand
               Dollars ($250,000) or which, if concluded adversely to the
               Company, would materially and adversely affect the business or
               assets of the Company.

          5.11 Liens. The Company will not create, or permit to exist, any Lien
               -----
               on any of the Collateral property, except Liens for the benefit
               of Abbott.

          5.12 Transactions With Affiliates. Except for transactions and
               ----------------------------
               arrangements with employee Affiliates, the Company will not enter
               into or be a party to any material transaction or arrangement
               with any Affiliate (including, without limitation, the purchase
               from, sale to or exchange of property with, or the rendering of
               any service by or for, any Affiliate), except pursuant to the
               reasonable requirements of the Company's business and upon fair
               and

                                     -20-
<PAGE>

               reasonable terms no less favorable to the Company than would be
               obtained in a comparable arm's-length transaction with a Person
               other than an Affiliate. The Company, has properly disclosed all
               transactions with its Affiliates on Exhibit B, Disclosure
               Schedule.

          5.13 Reports and Access to Information. The Company shall furnish
               ---------------------------------
               promptly to Abbott:

               (a)  a copy of each report, schedule and other document filed or
                    received by the Company during such period pursuant to the
                    requirements of federal and state securities laws, if any,

               (b)  all other material information concerning the business,
                    properties and personnel of the Company and any other
                    materials as Abbott may reasonably request. Abbott will not
                    use such information for purposes other than this Agreement
                    and will otherwise hold all confidential material contained
                    in such information in confidence (and Abbott will cause its
                    consultants and advisors to also hold such information in
                    confidence), and

               (c)  within 120 days after the end of each fiscal year of the
                    Company, an audited balance sheet of the Company as at the
                    end of such year and audited statements of income and of
                    cash flows of the Company for such year, certified by
                    certified public accountants of established national
                    reputation selected by the Company, and prepared in
                    accordance with GAAP. The foregoing financial statements
                    shall be prepared on consolidated basis, if the Company then
                    has any subsidiaries.

          To the extent such information is publicly available on the Internet,
          the Company shall have fulfilled its obligations under this Section
          5.13.

          5.14 Rule 144 Reporting. With a view to making available the benefits
               ------------------
               of certain rules and regulations of the Commission which ma1y
               permit the sale of the restricted Common Stock to the public
               without registration, as long as a public market exists for the
               Common Stock, the Company agrees to use its best efforts to:

               (a)  make and keep public information available, as those terms
                    are understood and defined in Rule 144 under the Securities
                    Act;

               (b)  file with the Commission in a timely manner all reports and
                    other documents required of the Company under the Securities
                    Act and the Exchange Act;

                                     -21-
<PAGE>

               (c)  so long as a Holder owns any restricted Common Stock,
                    furnish to the Holder forthwith upon request a written
                    statement by the Company as to its compliance with the
                    reporting requirements of Rule 144, and of the Securities
                    Act and the Exchange Act, a copy of the most recent annual
                    or quarterly report of the Company, and such other reports
                    and documents of the Company and other information in the
                    possession of or reasonably obtainable by the Company as a
                    Holder may reasonably request in availing itself of any rule
                    or regulation of the Commission allowing a Holder to sell
                    any such securities without registration.

     6.   Conditions Precedent to Obligations of Abbott. The obligation of
          ---------------------------------------------
          Abbott to make any disbursement of the Loan shall be subject to the
          prior or contemporaneous satisfaction of each of the following
          conditions:

          6.1  Authorizations. Abbott shall have received such instruments or
               --------------
               documents as Abbott may reasonably request relating to the
               existence and good standing of the Company and the authority for
               execution, delivery and performance of this Agreement, in full
               force and effect on the Disbursement Date.

          6.2  Security Agreement. Abbott shall have received a duly executed
               ------------------
               Security Agreement, together with such financing statements and
               other documents as Abbott may require to provide for the
               perfection of its security interest.

          6.3  Opinion of Counsel. Abbott shall have received an opinion of
               ------------------
               counsel from counsel to the Company in form satisfactory to
               Abbott.

          6.4  No Existing Default. No Event of Default (as defined in Section
               -------------------
               7.1) or event which, upon the lapse of time or the giving of
               notice or both, would constitute an Event of Default by the
               Company (an "Incipient Default") shall exist on the Disbursement
               Date.

          6.5  Representations And Warranties Correct. Each of the
               --------------------------------------
               representations and warranties made by the Company shall be true
               and correct in all material respects on the Disbursement Date
               with the same effect as though made on and as of such date; and
               the Company shall have performed and complied with all
               agreements, covenants and conditions required by this Agreement
               to be performed and complied with by the Company on or prior to
               the Disbursement Date.

          6.6  Other Agreements. The National Marketing and Distribution
               ----------------
               Agreement and the Registration Rights Agreement shall be in full
               force and effect, and the Company shall not be in breach or
               default of any material covenant, condition or other provision
               thereof.

                                     -22-
<PAGE>

          6.7  Equipment. The Company shall have identified to Abbott in writing
               ---------
               any equipment to be financed, in whole or in part, with proceeds
               of the Loan.

     7.   Events of Default. If any of the events specified in this Section 7
          -----------------
          shall occur (herein individually referred to as an "Event of
          Default"), the Holder of the then outstanding Note issued pursuant to
          this Agreement may, so long as such condition exists, declare the
          entire principal and unpaid accrued interest hereon immediately due
          and payable, by notice in writing to the Company:

     7.1  Payments. Default in the payment of the principal and unpaid accrued
          --------
          interest of the Note when due and payable if such default is not cured
          by the Company within ten (10) days after the Holder has given the
          Company written notice of such default.

     7.2  Bankruptcy. The institution by the Company of proceedings to be
          ----------
          adjudicated as bankrupt or insolvent, or the consent by it to
          institution of bankruptcy or insolvency proceedings against it or the
          filing by it of a petition or answer or consent seeking reorganization
          or release under the federal Bankruptcy Code, or any other applicable
          federal or state law, or the consent by it to the filing of any such
          petition or the appointment of a receiver, liquidator, assignee,
          trustee, or other similar official of the Company, or of any
          substantial part of its property, or the making by it of an assignment
          for the benefit of creditors, or the taking of corporate action by the
          Company in furtherance of any such action.

     7.3  Commencement of an Action. If, within sixty (60) days after the
          -------------------------
          commencement of an action against the Company (and service of process
          in connection therewith on the Company) seeking any bankruptcy,
          insolvency, reorganization, liquidation, dissolution, or similar
          relief under any present or future statute, law, or regulation, such
          action shall not have been resolved in favor of the Company or all
          orders or proceedings thereunder affecting the operations or the
          business of the Company stayed, or if the stay of any such order or
          proceeding shall thereafter be set aside, or if, within sixty (60)
          days after the appointment without the consent or acquiescence of the
          Company of any trustee, receiver or liquidator of the Company or of
          all or any substantial part of the properties of the Company, such
          appointment shall not have been vacated.

     7.4  Default of Senior Indebtedness. Any default of the Company under any
          ------------------------------
          Senior Indebtedness (as defined in Section 8) that gives the holder
          thereof the right to accelerate such Senior Indebtedness, or any such
          Senior Indebtedness shall not be paid when due.

                                     -23-
<PAGE>

     7.5   Covenants And Agreements. The Company shall default in the
           ------------------------
           performance of any of its material covenants and agreements set forth
           in any provision of this Agreement or the Security Agreement and the
           continuance of such default for ten (10) days after the Holder has
           given the Company written notice of such default.

     7.6   Default Under Other Agreements. The Company breaches or defaults on
           ------------------------------
           any covenant, condition or other provision of the National Marketing
           and Distribution Agreement and such breach or default continues after
           the applicable grace period, if any, specified therein but in no
           event more than thirty (30) days after the Holder has given the
           Company written notice of such breach or default or such National
           Marketing and Distribution Agreement shall cease to be in full force
           and effect.

     7.7   Change of Control of The Company. Any change in control of the
           --------------------------------
           Company which includes any consolidation of the Company with, or
           merger of the Company into, any other Person, any merger of another
           Person into the Company (other than a merger which does not result in
           any reclassification, conversion, exchange, or cancellation of
           outstanding shares of Common Stock), any acquisition of at least a
           majority of the Voting Stock of the Company or any sale or transfer
           of all or substantially all of the business or assets of the Company
           (a "Change of Control"), or Abbott's receipt of written notice from
           the Company that a Change of Control will occur as described in
           Section 9.11.

     7.8   Monetary Judgments. One or more non-interlocutory judgments, non-
           ------------------
           interlocutory orders, decrees or arbitration awards is entered
           against the Company involving in the aggregate a liability (to the
           extent not covered by independent third-party insurance as to which
           the insurer does not dispute coverage) as to any single or related
           series of transactions, incidents or conditions, of $250,000 or more,
           and the same shall remain unsatisfied, unvacated and unstayed pending
           appeal for a period of 10 days after the entry thereof.

     7.9   Non-Monetary Judgments. Any non-monetary judgment, order or decree is
           ----------------------
           entered against the Company which does or would reasonably be
           expected to have a material adverse effect on its condition
           (financial or otherwise), business, net worth, assets, properties or
           operations, and there shall be any period of 10 consecutive days
           during which a stay of enforcement of such judgment or order, by
           reason of a pending appeal or otherwise, shall not be in effect.

                                     -24-
<PAGE>

     7.10  Other Remedies. If any Event of Default shall occur and be
           --------------
           continuing, Abbott shall have, in addition to the remedies set forth
           in Section 7, all other remedies otherwise available at law and
           equity.

8.   Subordination. The indebtedness evidenced by the Note is hereby expressly
     -------------
     subordinated except as otherwise provided in the Security Agreement
     attached to this Agreement as Exhibit C, to the extent and in the manner
     hereinafter set forth, in right of payment to the prior payment in full of
     all the Company's Senior Indebtedness (as defined herein).

     8.1  Senior Indebtedness. As used in the Note, the term "Senior
          -------------------
          Indebtedness" shall mean the principal of (in amounts not exceeding a
          debt to equity ratio of one to one at any time outstanding) and unpaid
          accrued interest on:

          (a)  all indebtedness of the Company to banks, insurance companies, or
               other financial institutions regularly engaged in the business of
               lending money, which is for money borrowed by the Company
               (whether or not secured), and

          (b)  any such indebtedness or any debentures, notes or other evidence
               of indebtedness issued in exchange for such Senior Indebtedness,
               or any indebtedness arising from the satisfaction of such Senior
               Indebtedness by a guarantor.

     8.2  Default on Senior Indebtedness. If there should occur any
          ------------------------------
          receivership, insolvency, assignment for the benefit of creditors,
          bankruptcy, reorganization or arrangements with creditors (whether or
          not pursuant to bankruptcy or other insolvency laws), sale of all or
          substantially all of the assets, dissolution, liquidation or any other
          marshalling of the assets and liabilities of the Company, or if the
          Note shall be declared due and payable upon the occurrence of an Event
          of Default with respect to any Senior Indebtedness, then (a) no amount
          shall be paid by the Company in respect of the principal of or
          interest on the Note at the time outstanding, unless and until the
          principal of and interest on the Senior Indebtedness then outstanding
          shall be paid in full, and (b) no claim or proof of claim shall be
          filed with the Company by or on behalf of the Holder of the Note that
          shall assert any right to receive any payments in respect of the
          principal of and interest on the Note, except subject to the payment
          in full of the principal of and interest on all of the Senior
          Indebtedness then outstanding. If there occurs an Event of Default
          that has been declared in writing with respect to any Senior
          Indebtedness, or in the instrument under which any Senior Indebtedness
          is outstanding, permitting the holder of such Senior Indebtedness to
          accelerate the maturity thereof, then, unless and until such Event of
          Default shall have been cured or waived or shall have ceased to exist,
          or all Senior Indebtedness shall have been paid in full, no

                                     -25-
<PAGE>

          payment shall be made in respect of the principal of or interest on
          the Note, unless within three (3) months after the happening of such
          Event of Default, the maturity of such Senior Indebtedness shall not
          have been accelerated.

     8.3  Effect of Subordination. Subject to the rights, if any, of the holders
          -----------------------
          of Senior Indebtedness under this Section 8 to receive cash,
          securities or other properties otherwise payable or deliverable to the
          Holder of the Note, nothing contained in this Section 8 shall impair,
          as between the Company and the Holder, the obligation of the Company,
          subject to the terms and conditions of this Agreement, to pay to the
          Holder the principal hereof and interest hereon as and when the same
          become due and payable, or shall prevent the Holder of the Note, upon
          default hereunder, from exercising all rights, powers and remedies
          otherwise provided herein or by applicable law.

     8.4  Subrogation. Subject to the payment in full of all Senior Indebtedness
          -----------
          and until the Note shall be paid in full, the Holder shall be
          subrogated to the rights of the holders of Senior Indebtedness (to the
          extent of payments or distributions previously made to such holders of
          Senior Indebtedness pursuant to the provisions of Section 8.2) to
          receive payments or distributions of assets of the Company applicable
          to the Senior Indebtedness. No such payments or distributions
          applicable to the Senior Indebtedness shall, as between the Company
          and its creditors, other than the holders of Senior Indebtedness and
          the Holder, be deemed to be a payment by the Company to or on account
          of the Note; and for the purposes of such subrogation, no payments or
          distributions to the holders of Senior Indebtedness to which the
          Holder would be entitled except for the provisions of this Section 8
          shall, as between the Company and its creditors, other than the
          holders of Senior Indebtedness and the Holder, be deemed to be a
          payment by the Company to or on account of the Senior Indebtedness.

     8.5  Security Agreement. Notwithstanding any provisions of this Section 8
          ------------------
          to the contrary, proceeds of Collateral as defined in the Security
          Agreement or payments received in consideration of the release of any
          Collateral shall not be subject to the subordination set forth in this
          Section 8.

     8.6  Undertaking. By its acceptance of the Note, the Holder agrees to
          -----------
          execute and deliver such documents as may be reasonably requested from
          time to time by the Company or the lender of any Senior Indebtedness
          in order to implement the foregoing provisions of this Section 8.

9.   Conversion of Note.
     ------------------

     9.1  Conversion Privilege and Conversion Price. Subject to and upon
          -----------------------------------------
          compliance with the provisions of this Section 9 (including but not
          limited to the limitation

                                     -26-
<PAGE>

          on conversion contained in Section 9.4), at the option of Abbott at
          any time and from time to time at Abbott's sole discretion, the Note
          may be converted at the principal amount thereof, into fully paid and
          nonassessable shares of Common Stock at the Conversion Price, in
          effect at the time of conversion. The price at which shares of Common
          Stock shall be delivered upon conversion (the "Conversion Price")
          shall be initially $10.00 per share of Common Stock. The Conversion
          Price shall be adjusted in certain instances as provided in Section
          9.5.

     9.2  Exercise of Conversion Privilege. In order to exercise the conversion
          --------------------------------
          privilege, Abbott shall surrender the Note duly endorsed or assigned
          to the Company or in blank, at any office or agency of the Company
          maintained for that purpose, accompanied by written notice of
          conversion in the form provided on the Note (or such other notice as
          is acceptable to the Company) at such office or agency that Abbott
          elects to convert such Note. Upon conversion the Company shall pay
          interest accrued but unpaid on the Note surrendered for conversion
          through the date of such conversion. The Note shall be deemed to have
          been converted immediately prior to the close of business on the day
          of surrender of the whole portion of the principal amount thereof for
          conversion in accordance with the foregoing provisions, and at such
          time the rights of Abbott under the Note shall cease, and the Person
          or Persons entitled to receive the Common Stock issuable upon
          conversion shall be treated for all purposes as the record holder or
          holders of such Common Stock at such time. As promptly as practicable
          on or after the conversion date, the Company shall issue and shall
          deliver at such office or agency a certificate or certificates for the
          number of duly authorized, validly issued, fully paid and
          nonassessable shares of Common Stock issuable upon conversion,
          together with payment in lieu of any fraction of a share, as provided
          in Section 9.3.

     9.3  Fractions of Shares. No fractional shares of Common Stock shall be
          -------------------
          issued upon conversion of the Note. Instead of any fractional share of
          Common Stock which would otherwise be issuable upon the conversion of
          the Note, the Company shall pay a cash adjustment in respect of such
          fraction of a share of Common Stock in an amount equal to the
          remaining principal amount of the Note which is not converted by
          reason of this Section 9.3.

     9.4  Limitation on Conversion Privilege. If the shares of Common Stock
          ----------------------------------
          issuable upon conversion of the Note, together with the shares of
          Common Stock then beneficially owned by Abbott, would exceed 19% of
          the then outstanding shares of Common Stock of the Company (giving
          effect to such issuance upon conversion to Abbott), then Abbott may
          only convert that portion of the principal amount of the Note that
          would result in Abbott holding 19% of the then outstanding shares of
          Common Stock of the Company (in whole shares

                                     -27-
<PAGE>

          rounded down) and the remaining unconverted principal amount of the
          Note shall remain outstanding.

     9.5  Adjustment of Conversion Price.
          ------------------------------

          (a)  In case the Company shall pay or make a dividend or other
               distribution on any class of capital stock of the Company in the
               form of Common Stock, the Conversion Price in effect at the
               opening of business on the day following the date fixed for the
               determination of stockholders entitled to receive such dividend
               or other distribution shall be reduced by multiplying such
               Conversion Price by a fraction the numerator of which shall be
               the number of shares of Common Stock outstanding at the close of
               business on the date fixed for such determination and the
               denominator shall be the sum of such number of shares and the
               total number of shares constituting such dividend or other
               distribution, such reduction to become effective immediately
               after the opening of business on the day following the date fixed
               for such determination. For the purposes of this paragraph
               9.5(a), the number of shares of Common Stock at any time
               outstanding shall not include shares held in the treasury of the
               Company but shall include shares issuable in respect of scrip
               certificates issued in lieu of fractions of shares of Common
               Stock. The Company will not pay any dividend or make any
               distribution on shares of Common Stock held in the treasury of
               the Company.

          (b)  In case the Company shall issue rights, options, or warrants to
               all holders of its Common Stock (not being available on an
               equivalent basis to Abbott upon conversion) entitling them to
               subscribe for or purchase shares of Common Stock at a price per
               share less than the current market price per share of the Common
               Stock, determined as provided in paragraph 9.5(f), on the date
               fixed for the determination of stockholders entitled to receive
               such rights, options, or warrants (other than pursuant to a
               dividend reinvestment plan), the Conversion Price in effect at
               the opening of business on the day following the date fixed for
               such determination shall be reduced to a price (calculated to the
               nearest cent) determined by multiplying such Conversion Price by
               a fraction the numerator of which shall be the number of shares
               of Common Stock outstanding at the close of business on the date
               fixed for such determination plus the number of shares of Common
               Stock which the aggregate consideration received by the Company
               for the total number of additional shares of Common Stock so
               offered for subscription or purchase would purchase at the
               Conversion Price in effect immediately prior to the date fixed
               for such determination and the denominator of which shall be the
               number of shares of Common Stock outstanding at the close of
               business on the date fixed for such determination plus the

                                     -28-
<PAGE>

               number of shares of Common Stock so offered for subscription or
               purchase, such reduction to become effective immediately at the
               opening of business on the day following the date fixed for such
               determination. For purposes of this paragraph 9.5(b), the number
               of shares of Common Stock at any time outstanding shall not
               include shares held in the treasury of the Company but shall
               include shares issuable in respect of scrip certificates issued
               in lieu of fractions of shares of Common Stock. The Company will
               not issue any rights, options, or warrants in respect of shares
               of Common Stock held in the treasury of the Company.

          (c)  In case outstanding shares of Common Stock shall be subdivided
               into a greater number of shares of Common Stock, the Conversion
               Price in effect at the opening of business on the day following
               the day upon which such subdivision becomes effective shall be
               proportionately reduced, and, conversely, in case outstanding
               shares of Common Stock shall each be combined into a smaller
               number of shares of Common Stock, the Conversion Price in effect
               at the opening of business on the day following the day upon
               which such combination becomes effective shall be proportionately
               increased, such reduction or increase, as the case may be, to
               become effective immediately after the opening of business on the
               day following the day upon which such subdivision or combination
               becomes effective.

          (d)  In case the Company shall, by dividend, redemption, stock
               purchase or otherwise, distribute to holders of its Common Stock
               evidences of its indebtedness or assets (including securities,
               but excluding any rights, options, or warrants referred to in
               paragraph 9.5(b), any dividend or distribution paid exclusively
               in cash and any dividend or distribution referred to in Section
               9.5(d)), the Conversion Price shall be adjusted to equal the
               price determined by multiplying the Conversion Price in effect
               immediately prior to the close of business on the date fixed for
               the determination of stockholders entitled to receive such
               distribution by a fraction the numerator of which shall be the
               current market price per share, determined as provided in
               paragraph 9.5(f), of the Common Stock on the date fixed for such
               determination less the then fair market value (as determined in
               good faith by an independent majority of the Board of Directors)
               of the portion of the assets or evidences of indebtedness so
               distributed applicable to one share of Common Stock and the
               denominator shall be the current market price per share,
               determined as provided in paragraph 9.5(f), of the Common Stock,
               such adjustment to become effective immediately prior to the
               opening of business on the day following the date fixed for the
               determination of stockholders entitled to receive such
               distribution.

                                     -29-
<PAGE>

          (e)  The reclassification of Common Stock into securities including
               securities other than Common Stock (other than any
               reclassification upon a consolidation or merger to which Section
               9.11 applies) shall be deemed to involve (i) a distribution of
               such securities other than Common Stock to all holders of Common
               Stock and the effective date of such reclassification shall be
               deemed to be "the date fixed for the determination of
               stockholders entitled to receive such distribution" and the "date
               fixed for such determination" within the meaning of paragraph
               9.5(c), and (ii) a subdivision or combination, as the case may
               be, of the number of shares of Common Stock outstanding
               immediately prior to such reclassification into the number of
               shares of Common Stock outstanding immediately thereafter.

          (f)  For the purpose of any computation under paragraphs 9.5(c), (d),
               and (e), the current market price per share of Common Stock on
               any date shall be deemed to be the average of the daily Closing
               Prices for the five (5) consecutive trading days selected by the
               Company commencing not more than twenty (20) trading days before,
               and ending not later than, the earlier of the day in question and
               the day before the "ex" date with respect to the issuance or
               distribution requiring such computation. The "Closing Price" for
               each trading day shall be the reported last sale price regular
               way or, in case no such reported sale takes place on such day,
               the average of the reported closing bid and asked prices regular
               way, in either case on the principal national securities exchange
               on which the Common Stock is listed or admitted to trading or, if
               not listed or admitted to trading on any national securities
               exchange, on the National Association of Securities Dealers
               Automated Quotations system ("Nasdaq") National Market System
               ("Nasdaq National Market") or, if not listed or admitted to
               trading on Nasdaq National Market, on Nasdaq, or, if the Common
               Stock is not listed or admitted to trading on any national
               securities exchange or Nasdaq National Market or quoted on
               Nasdaq, the average of the closing bid and asked prices in the
               over-the-counter market as furnished by any New York Stock
               Exchange member firm selected from time to time by the Company
               for that purpose, or, if the Common Stock does not have any
               closing bid and asked prices in the over-the-counter market
               during the relevant period of time, the fair market value per
               share as determined in good faith by an independent majority of
               the Board of Directors as of the most recent available month-end
               determined pursuant to GAAP. For purposes of this paragraph, the
               term "`ex' date," when used with respect to any issuance or
               distribution, shall mean the first date on which the Common Stock
               trades regular way on such exchange or in such market without the
               right to receive such issuance or distribution.

                                     -30-
<PAGE>

          (g)  The Company may make such reductions in the Conversion Price, in
               addition to those required by paragraphs 9.5(a), (b), (c) and
               (d), as it considers to be advisable in order to avoid or
               diminish any income tax to any holders of shares of Common Stock
               resulting from any dividend or distribution of stock or issuance
               of rights or warrants to purchase or subscribe for stock or from
               any event treated as such for federal income tax purposes or for
               any other reasons.

     9.6  Notice of Adjustments of Conversion Price. Whenever the Conversion
          -----------------------------------------
          Price is adjusted as herein provided:

          (a)  the Company shall compute the adjusted Conversion Price in
               accordance with Section 9.5 and shall prepare a certificate
               signed by the Chief Financial Officer of the Company setting
               forth the adjusted Conversion Price and showing in reasonable
               detail the facts upon which such adjustment is based, and such
               certificate shall forthwith be filed at the offices of the
               Company.

          (b)  a notice stating that the Conversion Price has been adjusted and
               setting forth the adjusted Conversion Price shall forthwith be
               required, and as soon as practicable after it is required, such
               notice shall be mailed by the Company to the Holder in accordance
               with the terms of Section 12.2 herein.

     9.7  Notice of Certain Corporate Action.  In case:
          ----------------------------------

          (a)  the Company shall declare a dividend (or any other distribution)
               on its Common Stock payable otherwise than in cash out of its
               earned surplus; or

          (b)  the Company shall authorize the granting to the holders of its
               Common Stock of warrants to subscribe for or purchase any shares
               of capital stock of any class or of any other rights, including
               grants given under the Company Stock Option Plan; or

          (c)  of any reclassification of the Common Stock of the Company (other
               than a subdivision or combination of its outstanding shares of
               Common Stock), or of any consolidation, merger or share exchange
               to which the Company is a party and for which approval of any
               stockholders of the Company is required, or of the sale or
               transfer of all or substantially all of the assets of the
               Company; or

          (d)  of the voluntary or involuntary dissolution, liquidation or
               winding up of the Company; then the Company shall cause to be
               filed at the offices of

                                     -31-
<PAGE>

                 the Company, and shall cause to be mailed to the Holder at its
                 last address as it shall appear in the Note Register, at least
                 twenty (20) days or ten (10) days in any case specified in
                 paragraph 9.7 (a) or (b) prior to the applicable record or
                 effective date hereinafter specified, a notice stating (x) the
                 date on which a record is to be taken for the purpose of such
                 dividend, distribution, rights or warrants, or, if a record is
                 not to be taken, the date as of which the holders of Common
                 Stock of record to be entitled to such dividend, distribution,
                 rights or warrants are to be determined, or (y) the date on
                 which such reclassification, consolidation, merger, share
                 exchange, sale, transfer, dissolution, liquidation or winding
                 up is expected to become effective, and the date as of which it
                 is expected that holders of Common Stock of record shall be
                 entitled to exchange their shares of Common Stock for
                 securities, cash or other property deliverable upon such
                 reclassification, consolidation, merger, share exchange, sale,
                 transfer, dissolution, liquidation or winding up. Neither the
                 failure to give such notice nor any defect therein shall affect
                 the legality or validity of the proceedings described in
                 paragraphs 9.7 (a) through (d).

     9.8    Company to Reserve Common Stock. The Company shall at all times
            -------------------------------
            reserve and keep available out of its authorized but unissued Common
            Stock, for the purpose of effecting the conversion of the Note, the
            full number of shares of Common Stock then issuable upon the
            conversion of the Note.

     9.9    Taxes on Conversions. The Company will pay any and all taxes that
            --------------------
            maybe payable in respect of the issuance or delivery of shares of
            Common Stock on conversion of the Note pursuant to this Agreement.

     9.10   Covenant as to Common Stock. The Company covenants that all shares
            ---------------------------
            of Common Stock which may be issued upon conversion of the Note will
            upon issuance be fully paid and nonassessable and, except as
            provided in Section 9.9, the Company will pay all taxes, liens and
            charges with respect to the issue thereof.

     9.11   Provisions in Case of Consolidation, Merger or Sale of Assets. In
            -------------------------------------------------------------
            case of any Change of Control of the Company, the Company will
            notify Abbott at least thirty (30) days prior to the closing of the
            transaction that will effect the Change of Control, and Abbott may
            convert the Note in accordance with Section 9 prior to the
            transaction or declare an Event of Default and accelerate the Note
            and terminate this Agreement in accordance with Section 9.

     9.12   Transfer And Exchange of Note. The Note may be freely transferred or
            -----------------------------
            assigned by Abbott with the written consent of the Company. Such
            transfer and assignment shall be made in accordance with applicable
            federal and state

                                     -32-
<PAGE>

            securities laws. At any time and from time to time, upon not less
            than twenty (20) days notice to that effect given by Abbott and,
            upon surrender of the Note at the Company's office by Abbott, the
            Company will deliver in exchange therefor, without expense to
            Abbott, except as set forth below, one Note for the same aggregate
            principal amount as the then unpaid principal amount of the Note so
            surrendered, provided such Note shall be in the amount of the full
            principal amount of the Note and there shall be no right to divide
            the Note, dated as of the date to which interest has been paid on
            the Note so surrendered or, if such surrender is prior to the
            payment of any interest thereon, then dated as of the date of issue,
            registered in the name of such Person as may be designated by
            Abbott, and otherwise of the same form and tenor as the Note so
            surrendered for exchange. The Company may require the payment of a
            sum sufficient to cover any stamp tax or governmental charge imposed
            upon such exchange or transfer.

     9.13   Loss, Theft, Mutilation or Destruction of Note. Upon receipt of
            ----------------------------------------------
            evidence satisfactory to the Company of the loss, theft, mutilation
            or destruction of the Note, the Company will make and deliver
            without expense to Abbott thereof, a new Note, of like tenor, in
            lieu of such lost, stolen, mutilated or destroyed Note.

     9.14   Expenses, Stamp Tax Indemnity. The Company agrees to pay duplicating
            -----------------------------
            and printing costs and charges for shipping the Note, adequately
            insured to Abbott's home office or at such other place as Abbott may
            designate, and all reasonable expenses of Abbott (including, without
            limitation, the reasonable fees and expenses of any financial
            advisor to Abbott) relating to any proposed or actual amendment,
            waivers or consents pursuant to the provisions of this Agreement,
            including, without limitation, any proposed or actual amendments,
            waivers, or consents resulting from any work-out, re-negotiations,
            or restructuring relating to the performance by the Company of its
            obligations under this Agreement and the Note. The Company also
            agrees that it will pay and hold Abbott harmless against any and all
            liabilities with respect to stamp and other taxes, if any, which may
            be payable or which may be determined to be payable in connection
            with the execution and delivery of this Agreement or the Note,
            whether or not the Note is then outstanding. The Company agrees to
            protect and indemnify Abbott against any liability for any and all
            brokerage fees and commissions payable or claimed to be payable to
            any Person (other than any Person engaged by a Purchaser) in
            connection with the transactions contemplated by this Agreement.

     9.15   Cancellation of Converted Note. The Note delivered for conversion
            ------------------------------
            shall be canceled by or at the direction of the Company.

                                     -33-
<PAGE>

   10. Costs and Expenses.  The Company shall:
       ------------------

            (a) whether or not the transactions contemplated hereby are
                consummated, pay or reimburse Abbott within five Business Days
                after demand for all costs and expenses incurred by Abbott in
                connection with the development, preparation, delivery,
                administration and execution of, and any amendment, supplement,
                waiver or modification to (in each case, whether or not
                consummated), this Agreement, and any other documents prepared
                in connection herewith or therewith, and the consummation of the
                transactions contemplated hereby and thereby, including
                reasonable attorneys fees and expenses incurred by Abbott with
                respect thereto; and

            (b) pay or reimburse Abbot within five Business Days after demand
                for all costs and expenses (including reasonable attorneys fees
                and expenses) incurred by it in connection with the enforcement,
                attempted enforcement, or preservation of any rights or remedies
                under this Agreement or any other document delivered in
                connection therewith during the existence of an Event of Default
                or after acceleration of the loans (including in connection with
                any "workout" or restructuring regarding the Loans).

   11. Indemnification.
       ---------------

       11.1 Indemnification by the Company.
            ------------------------------

   The Company agrees to defend and indemnify Abbott, its subsidiaries,
   affiliates, directors, officers, employees, and shareholders, and their
   respective successors and assigns (collectively, the "Indemnitees"), harmless
   from and against any and all liabilities, obligations, losses, damages,
   penalties, actions, judgments, suits, costs, charges, expenses and
   disbursements (including reasonable attorneys fees and expenses of any kind
   or nature whatsoever which may at any time (including at any time following
   repayment of the Loans) be imposed on, incurred by or asserted against any
   such Abbott Indemnitee in any way relating to or arising out of this
   Agreement, or the transactions contemplated hereby, or any action taken or
   omitted by any such Person under or in connection with any of the foregoing,
   including with respect to any investigation, litigation or proceeding
   (including any insolvency proceeding or appellate proceeding) related to or
   arising out of this Agreement or the Loans or the use of the proceeds
   thereof, whether or not any Indemnified Person is a party thereto (all the
   foregoing, collectively, the "Indemnified Liabilities"); provided, that the
                                 -----------------------    --------
   Company shall have no obligation hereunder to any Indemnitee with respect to
   Indemnified Liabilities resulting solely from the gross negligence or willful
   misconduct of such Indemnitee.  The agreements in this Section shall survive
   payment of all other obligations hereunder.

       11.2 Indemnification Procedure. A party seeking indemnification
            -------------------------
            (the "Indemnitee") shall use its commercially reasonable best
            efforts to

                                     -34-
<PAGE>

       minimize any liabilities, damages, deficiencies, claims, judgments,
       assessments, costs and expenses in respect of which indemnity may be
       sought under this Agreement. The Indemnitee shall give prompt written
       notice to the party from whom indemnification is sought (the
       "Indemnitor") of the assertion of a claim for indemnification; provided,
       however, that the Indemnitee's failure to notify the Indemnitor shall not
       excuse the Indemnitor's obligation to indemnify the Indemnitee except to
       the extent that such failure prejudices the Indemnitor's defense of any
       such claim. No such notice of assertion of a claim shall satisfy the
       requirements of this Section 11 unless it describes in reasonable detail
       and in good faith the facts and circumstances upon which the asserted
       claim for indemnification is based. If any action or proceeding shall be
       brought in connection with any liability or claim to be indemnified
       hereunder, the Indemnitee shall provide the Indemnitor twenty (20)
       calendar days to decide whether to defend such liability or claim. During
       such period, the Indemnitee shall take all necessary steps to protect the
       interests of itself and the Indemnitor, including the filing of any
       necessary responsive pleadings, the seeking of emergency relief or other
       action necessary to maintain the status quo, subject to reimbursement
       from the Indemnitor of its expenses in doing so. The Indemnitor shall
       (with, if necessary, reservation of rights) defend such action or
       proceeding at its expense, using counsel selected by the insurance
       company insuring against any such claim and undertaking to defend such
       claim, or by other counsel selected by it and approved by the Indemnitee,
       which approval shall not be unreasonably withheld or delayed. The
       Indemnitor shall keep the Indemnitee fully apprised at all times of the
       status of the defense and shall consult with the Indemnitee prior to the
       settlement of any indemnified matter. Indemnitee agrees to use reasonable
       efforts to cooperate with Indemnitor in connection with its defense of
       indemnifiable claims. In the event the Indemnitee has a claim or claims
       against any third party growing out of or connected with the indemnified
       matter, then upon receipt of indemnification, the Indemnitee shall fully
       assign to the Indemnitor the entire claim or claims to the extent of the
       indemnification actually paid by the Indemnitor and the Indemnitor shall
       thereupon be subrogated with respect to such claim or claims of the
       Indemnitee.

   12. Miscellaneous.
       -------------

       12.1 Powers And Rights Not Waived; Remedies Cumulative.  No delay or
            -------------------------------------------------
            failure on the part of Abbott in the exercise of any power or right
            shall operate as a waiver thereof; nor shall any single or partial
            exercise of the same preclude any other or further exercise thereof,
            or the exercise of any other power or right, and the rights and
            remedies of Abbott are cumulative to, and are not exclusive of, any
            rights or remedies Abbott would otherwise have.

                                     -35-
<PAGE>

       12.2 Notice.  Except as otherwise expressly provided herein, any notice,
            ------
            consent or document required or permitted hereunder shall be given
            in writing and it or any certificates or other documents delivered
            hereunder shall be deemed effectively given or delivered (as the
            case may be) upon personal delivery (professional courier
            permissible) or when mailed by receipted United States certified
            mail delivery, or five (5) business days after deposit in the United
            States mail. Such certificates, documents or notice may be
            personally delivered to an authorized representative of the Company
            or Abbott (as the case may be) at any address where such authorized
            representative is present and otherwise shall be sent to the
            following address:

                If to the Company:
                          Retractable Technologies, Inc.
                          P.O. Box 9
                          511 Lobo Lane
                          Little Elm, Texas 75068-0009
                          Attention: Thomas J. Shaw
                                     President and CEO

                With a copy to:
                          Retractable Technologies, Inc.
                          Finance Department
                          P.O. Box 9
                          511 Lobo Lane
                          Little Elm, Texas 75068-0009
                          Attention: Douglas W. Cowan
                                     Chief Financial Officer and Treasurer

                If to Abbott:
                          Abbott Laboratories
                          200 Abbott Park Road
                          Abbott Park, IL 60064-3537
                          Attention: Senior Vice President,
                                     Hospital Products Division

                                     -36-
<PAGE>

                With a copy to:

                          Abbott Laboratories
                          Legal Division
                          D-322, AP6D
                          100 Abbott Park Road
                          Abbott Park, IL  60064-6049
                          Attn: Divisional Vice President,
                          D-322, 6049

       12.3 Successors And Assigns. This Agreement shall be binding upon and
            ----------------------
            inure to the benefit of the Company and its successors and assigns
            and shall be binding upon and inure to the benefit of Abbott and its
            successors and assigns; provided, however, that neither the Company
            nor Abbott shall assign this Agreement or any of its rights, duties
            or obligations hereunder without the prior written consent of the
            other party which consent shall not be unreasonably withheld.

       12.4 Survival of Covenants And Representations. All covenants,
            -----------------------------------------
            representations and warranties made by the Company herein and in any
            certificates delivered pursuant hereto, whether or not in connection
            with the Disbursement Date, shall survive the closing and the
            delivery of this Agreement and the Note.

       12.5 Severability. Should any part of this Agreement for any reason be
            ------------
            declared invalid or unenforceable, such decision shall not affect
            the validity or enforceability of any remaining portion, which
            remaining portion shall remain in force and effect as if this
            Agreement had been executed with the invalid or unenforceable
            portion thereof eliminated and it is hereby declared the intention
            of the parties hereto that they would have executed the remaining
            portion of this Agreement without including therein any such part,
            parts or portion which may, for any reason, be hereafter declared
            invalid or unenforceable.

       12.6 Counterparts. This Agreement may be executed in one or more
            ------------
            counterparts, each of which shall be deemed an original, but all of
            which shall constitute one and the same instrument.

       12.7 Governing Law. This Agreement and the Note issued and sold hereunder
            -------------
            shall be governed by and construed in accordance with Illinois law
            (except Section 9 which shall be governed by and contained in
            accordance with Texas law), without regard to the conflict of laws
            provisions thereof.

       12.8 Captions. The descriptive headings of the various sections or parts
            --------
            of this Agreement are for convenience only and shall not affect the
            meaning or construction of any of the provisions of this Agreement.

                                     -37-
<PAGE>

       12.9  Dispute Resolution. Disputes shall be resolved as provided in Annex
             ------------------
             B attached hereto.

       12.10 Amendments and Waivers. No amendment or waiver of any provision of
             ----------------------
             this Agreement, and no consent with respect to any departure by
             the Company therefrom, shall be effective unless the same shall be
             in writing and signed by Abbott and the Company, and then any such
             waiver or consent shall be effective only in the specific instance
             and for the specific purpose for which given.

                                     -38-
<PAGE>

     In Witness Whereof, the parties hereto have executed this Agreement as of
the date and year first above written.

ABBOTT LABORATORIES                                   RETRACTABLE TECHNOLOGIES,
                                                      INC.

By: Richard A. Gonzalez                               By: Thomas J. Shaw
   ----------------------------                          -----------------------
   Richard A. Gonzalez

Its:  Senior Vice President                           Its:  CEO
    ---------------------------                           ----------------------
    Hospital Products

                                     -39-
<PAGE>

                                   ANNEX A
                                   -------

                                PROMISSORY NOTE
                                ---------------

$5,000,000                                                       _________, 2000

     FOR VALUE RECEIVED, the undersigned, Retractable Technologies, Inc., a
Texas corporation (the "Company"), hereby promises to pay to the order of Abbott
                        -------
Laboratories ("Abbott") the principal sum of Five Million Dollars ($5,000,000)
               ------
or, if less, the aggregate unpaid principal amount of all Loans made by Abbott
to the Company pursuant to the Credit Agreement dated as of _______________,
2000 (such Credit Agreement, as it may be amended, restated, supplemented or
otherwise modified from time to time, being hereinafter called the "Credit
                                                                    ------
Agreement"), between the Company and Abbott on the dates and in the amounts
---------
provided in the Credit Agreement. The Company further promises to pay interest
on the unpaid principal amount of the Loans evidenced hereby from time to time
at the rates, on the dates, and otherwise as provided in the Credit Agreement.

     Abbott is authorized to endorse the amount and the date on which each Loan
is made, the maturity date therefor and each payment of principal with respect
thereto on the schedules annexed hereto and made a part hereof, or on
continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Note).

     This Note is the Note referred to in, and is entitled to the benefits of,
the Credit Agreement, which Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified. This Note
is secured pursuant to the Security Agreement, as defined in the Credit
Agreement.

                                     -40-
<PAGE>

     Terms defined in the Credit Agreement are used herein with their defined
meanings therein unless otherwise defined herein.  This Note shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.

                                          RETRACTABLE TECHNOLOGIES, INC.

                                          By:_____________________________
                                          Title:__________________________

                                     -41-
<PAGE>

                                                                Schedule to Note

                         LOANS AND REPAYMENT OF LOANS
                         ----------------------------

    (1)              (2)                 (3)                      (4)
   Date              Amount              Amount                  Notation
                       of                  of                      Made
                    Base Loan           Loan Repaid                 By
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

                                     -42-
<PAGE>

                                    ANNEX B

                              DISPUTE RESOLUTION

The parties recognize that a bona fide dispute as to certain matters may arise
from time to time during the term of this Agreement which relates to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days). If the matter has not been resolved
within twenty-eight (28) days of the notice of dispute, or if the parties fail
to meet within such twenty-eight (28) days, either party may initiate an ADR
proceeding as provided herein. The parties shall have the right to be
represented by counsel in such a proceeding.

     1.  To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days after
its receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.

     2.  Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution ("CPR"), 366
Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral
pursuant to the following procedures: (a) The CPR shall submit to the parties a
list of not less than five(5) candidates within fourteen (14) days after receipt
of the request, along with a CURRICULUM VITAE for each candidate. No candidate
shall be an employee, director, or shareholder of either party or any of their
subsidiaries or affiliates. (b) Such list shall include a statement of
disclosure by each candidate of any circumstances likely to affect his or her
impartiality. (c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference) and shall deliver
the list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates, that party shall provide a written explanation of the conflict
to the CPR along with its list showing its order of preference for the
candidates. Any party failing to return a list of preferences on time shall be
deemed to have no order of preference. (d) If the parties collectively have
identified fewer than three (3) candidates deemed to have conflicts, the CPR
immediately shall designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie should result
between two candidates, the CPR may designate either candidate. If the parties
collectively have identified three (3) or more candidates deemed to have
conflicts, the CPR shall review the explanations regarding conflicts and, in its
sole discretion, may either (i) immediately designate as the neutral the
candidate for whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not

                                     -43-
<PAGE>

less than five (5) candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.

     3.  No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location in the State of Illinois agreed upon by the parties. If the parties
cannot agree, the neutral shall designate a location in the State of Illinois
other than the principal place of business of either party or any of their
subsidiaries or affiliates.

     4.  At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral: (a) a copy of all exhibits on
which such party intends to rely in any oral or written presentation to the
neutral; (b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness; (c) a proposed
ruling on each issue to be resolved, together with a request for a specific
damage award or other remedy for each issue. The proposed rulings and remedies
shall not contain any recitation of the facts or any legal arguments and shall
not exceed one (1) page per issue. (d) a brief in support of such party's
proposed rulings and remedies, provided that the brief shall not exceed twenty
(20) pages. This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding. Except as expressly set forth in subparagraphs
4(a) - 4(d), no discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.

     5.  The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules: (a) Each party shall be entitled to five (5)
hours of hearing time to present its case. The neutral shall determine whether
each party has had the five (5) hours to which it is entitled. (b) Each party
shall be entitled, but not required, to make an opening statement, to present
regular and rebuttal testimony, documents or other evidence, to cross-examine
witnesses, and to make a closing argument. Cross-examination of witnesses shall
occur immediately after their direct testimony, and cross-examination time shall
be charged against the party conducting the cross-examination. (c) The party
initiating the ADR shall begin the hearing and, if it chooses to make an opening
statement, shall address not only issues it raised but also any issues raised by
the responding party. The responding party, if it chooses to make an opening
statement, also shall address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other evidence,
and closing arguments shall proceed in the same sequence. (d) Except when
testifying, witnesses shall be excluded from the hearing until closing
arguments. (e) Settlement negotiations, including any statements made therein,
shall not be admissible under any circumstances. Affidavits prepared for
purposes of the ADR hearing also shall not be admissible. As to all other
matters, the neutral shall have sole discretion regarding the admissibility of
any evidence.

     6.  Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in support of
its proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not

                                     -44-
<PAGE>

exceed ten (10) pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.

     7.  The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one party's proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues.  The neutral shall  issue
a written opinion or otherwise explain the basis of the ruling.

     8.  The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court reporter, and any expenses for a hearing room, shall be paid
as follows: (a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the other
party on other issues, the neutral shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
parties. The neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the party prevailing on
more issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.

     9.  The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be entered as a
final judgment in any court having jurisdiction.

     10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the rulings
shall be deemed Confidential Information. The neutral shall have the authority
to impose sanctions for unauthorized disclosure of Confidential Information.
EX-5 6 EXHIBIT 5

                                     -45-
<PAGE>

                               Credit Agreement

                                   Exhibit A
                         Registration Rights Agreement

<PAGE>

                         REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement ("Agreement") is made as of May ___,
2000, by and between Retractable Technologies, Inc., a Texas corporation with
its principal office at 511 Lobo Lane, Little Elm, Texas 75068 ("RTI"), and
Abbott Laboratories, an Illinois corporation with its principal office at 100
Abbott Park Road, Abbott Park, Illinois 60064-6400("Abbott").

                                   RECITALS

     WHEREAS, RTI and Abbott have entered into a Credit Agreement (the "Credit
Agreement") of even date herewith; and

     WHEREAS, the execution and delivery of this Agreement are a condition to
the Closing of the Credit Agreement;

NOW, THEREFORE, RTI and Abbott agree as follows:

1.   Definitions. All terms not otherwise defined in this Agreement shall have
     -----------
the same meanings ascribed to them in the Credit Agreement.  For purposes of
this Agreement:

     1.1    Exchange Act. The term "Exchange Act" shall mean the Securities
            -----------
            Exchange Act of 1934, as amended.

     1.2    Register, Registered, and Registration. The terms "register,"
            --------------------------------------
            "registered," and "registration" refer to a registration effected by
            preparing and filing a registration statement or similar document in
            compliance with the Securities Act, and the declaration or ordering
            of effectiveness of such registration statement or document.

     1.3    Registrable Securities. The term "Registrable Securities" means such
            ----------------------
            portion of the Shares that has not previously been registered or
            sold to the public.

     1.4    Registration Statement. The term "Registration Statement" means a
            ----------------------
            registration statement filed with the SEC under the Securities Act
            to register the resale of the Registrable Securities by Abbott.

     1.5    Rule 144.  The term "Rule 144" shall mean Rule 144, or its successor
            --------
            rule, promulgated by the SEC.

     1.6    SEC. The term "SEC" shall mean the Securities and Exchange
            ---
            Commission.

                                      -1-
<PAGE>

     1.7  Securities Act. The term "Securities Act" means the Securities Act of
          --------------
          1933, as amended.

     1.8  Shares. The term "Shares" means the shares of common stock of RTI, no
          ------
          par value, issuable or issued upon conversion of the Note issued
          pursuant to the Credit Agreement, and any shares of common stock of
          RTI issued as a dividend or other distribution with respect to such
          capital stock.

2.   Registration. RTI covenants and agrees as follows:
     ------------

     2.1  S-3 Registration. At any time after RTI becomes eligible to file a
          ----------------
          Registration Statement on Form S-3 (or any successor form relating to
          secondary offerings), Abbott may request RTI, in writing, to effect a
          registration on Form S-3 (or such successor form), of Registrable
          Securities. Thereupon, RTI shall, as expeditiously as possible, use
          its best efforts to effect the registration of Form S-3 (or such
          successor form) of all Registrable Securities which RTI has been
          requested to so register. The right to request registration on Form S-
          3 pursuant to this Section 2.1 may not be exercised more than three
          (3) times by Abbott. RTI shall not be required to include any
          Registrable Securities in such registration unless Abbott accepts the
          terms of the underwriting as agreed upon between RTI and the
          underwriters selected by RTI (provided that such terms must be
          consistent with this Agreement and are applicable to other
          shareholders offering their shares in such registration).

     2.2  Piggyback Registration. Whenever RTI proposes to register any of its
          ----------------------
          securities under the Securities Act for a public offering for cash,
          whether as a primary or secondary offering or pursuant to registration
          rights granted to holders of other securities of RTI other than (a) a
          registration relating solely to employee benefit plans on Form S-8 (or
          a similar successor form), or (b) a registration on Form S-4 (or a
          similar successor form) relating solely to a transaction subject to
          Rule 145 under the Securities Act), RTI will promptly give Abbott
          written notice thereof, and subject to the terms of Section 2.3 below,
          use its reasonable efforts to include in such registration (and any
          related qualification under blue sky laws or other compliance), and in
          any underwriting involved therein, all Registrable Securities
          specified in a written request to RTI made within fifteen (15)
          business days after the receipt of such written notice by Abbott.

                                      -2-

<PAGE>

     2.3  Underwriting.
          ------------

          (a)  If the registration of which RTI gives notice pursuant to Section
               2.2 is for a registered offering involving an underwriting, then
               Abbott's right to registration shall be conditioned upon Abbott's
               participation in the underwriting and the inclusion of Abbott's
               Registrable Securities in the underwriting to the extent provided
               in this Agreement. Abbott [together with RTI and the holders of
               other securities of RTI distributing their securities through
               that underwriting (such other holders being termed the "Other
               Holders")] shall enter into an underwriting agreement in
               customary form with the representative of the underwriter or
               underwriters selected by RTI.

          (b)  Notwithstanding any other provision of this Article 2, if the
               representative of the underwriters advises RTI in writing that
               marketing factors require a limitation on the number of shares to
               be underwritten, then RTI shall so inform Abbott and the Other
               Holders. The number of shares of RTI common stock being sold by
               RTI for its own account shall not be reduced by operation of this
               Section 2.3. The number of shares of Registrable Securities held
               by Abbott and the Other Holder(s) that may be included in the
               underwriting (in addition to those being sold by RTI for its own
               account) shall be allocated among Abbott and the Other Holders in
               proportion (as nearly as practicable) to the amount of
               Registrable Securities owned by each such holder.

          (c)  Any holder which does not agree to the terms of the such
               underwriting shall be excluded from that underwriting by written
               notice from RTI or the underwriter. Any Registrable Securities or
               other securities excluded or withdraw from that underwriting
               shall be withdrawn from the registration.

     2.4  Registration Expenses. RTI shall pay all "registration expenses" (as
          ---------------------
          defined below) in connection with any registration, qualification or
          compliance under this Agreement. Abbott shall pay all "selling
          expenses" (as defined below). The term "registration expenses" shall
          mean all expenses, except for selling expenses, incurred by RTI in
          complying with the registration provisions of this Agreement,
          including, without limitation, all registration, qualification and
          filing fees, printing expenses, escrow fees, fees and disbursements of
          counsel for RTI, accounting fees, blue sky fees and expenses, and the
          expense of any attest service incident to or required by any such
          registration. The term "selling expenses" shall mean all selling
          commissions, underwriting fees, and stock transfer taxes applicable to
          the Shares and all fees and disbursements of counsel for Abbott.

     2.5  Obligations of RTI. In the case of a registration effected by RTI
          ------------------
          pursuant to this

                                      -3-
<PAGE>

Article 2, RTI will use reasonable efforts to:

(a)  keep such registration effective until the earliest of:

     (i)       such date as all of the Shares have been sold, or

     (ii)      if RTI is not then eligible to effect such registration on Form
               S-3 (or a similar successor form), one hundred and twenty (120)
               days after the effective date of the Registration Statement, or

     (iii)     the termination of the registration rights pursuant to Section
               2.9 of this Agreement.

(b)  prepare and file with the SEC such amendments and supplements to the
     Registration Statement and the prospectus used in connection with the
     Registration Statement as may be necessary to comply with the provisions of
     the Securities Act with respect to the disposition of all securities
     covered by the Registration Statement;

(c)  furnish such number of prospectuses, prospectus supplements, and other
     documents incident thereto, including any amendment of or supplement to the
     prospectus, as Abbott from time to time may reasonably request;

(d)  cause all Shares registered as described in this Agreement to be listed on
     any securities exchange or quoted on any quotation service on which similar
     securities issued by RTI are then listed or quoted;

(e)  provide a transfer agent and registrar for all Registrable Securities
     registered pursuant to the Registration Statement and a CUSIP number for
     all such Shares;

(f)  otherwise use reasonable efforts to comply with all applicable rules and
     regulations of the SEC; and

                                      -4-

<PAGE>

          (g)  file the documents required of RTI and otherwise use reasonable
               efforts to maintain requisite blue sky clearance in:

               (i)  all jurisdictions in which any of the Shares are sold
                    originally; and

               (ii) all other states specified in writing by Abbott, provided as
                    to this clause (ii), however, that RTI shall not be required
                    to qualify to do business or consent to service of process
                    in any state in which it is not now so qualified or has not
                    so consented.

     2.6  Selling Procedures.
          ------------------

          (a)  In the event Abbott intends to resell Shares pursuant to a
               Registration Statement, Abbott shall give RTI five (5) business
               days notice of its intent to sell in reliance on such
               Registration Statement (the "Notice of Sale"). RTI may refuse to
               permit Abbott to resell any Shares pursuant to the Registration
               Statement; provided, however, that in order to exercise this
               right, RTI must deliver to Abbott a certificate in writing
               within three (3) business days following its receipt of the
               Notice of Sale from Abbott to the effect that a sale pursuant to
               the Registration Statement in its then current form could
               constitute a violation of the federal securities laws. In such an
               event, RTI shall either (i) use commercially reasonable efforts
               to amend promptly the Registration Statement, if necessary, and
               take all other actions necessary to allow such sale under the
               federal securities laws, and shall notify Abbott promptly after
               it has determined that such sale has become permissible under the
               federal securities laws, or (ii) exercise its right under
               paragraph (b) below to delay the sale.

          (b)  If in the good faith judgment of the Board of Directors of RTI,
               after consultation with counsel, the filing of a Registration
               Statement or an amendment thereto or prospectus supplement so as
               permit the proposed sale without a violation of securities laws
               would materially adversely affect a pending or scheduled public
               offering, or an acquisition, merger, or similar transaction, or
               negotiations of either of the foregoing, or would require the
               disclosure of another material development prior to the time it
               would otherwise be required to be disclosed in a manner adverse
               to the best interests of RTI, then it may decline to permit the
               resale of any Shares pursuant to the Registration Statement for
               up to a maximum of ninety (90) days, provided that it may not
               exercise this right more than once in any twelve (12) month
               period.

          (c)  If RTI has delivered a prospectus to Abbott and after having done
               so the prospectus is amended to comply with the requirements of
               the Securities

                                      -5-
<PAGE>

                    Act, RTI shall reasonably promptly notify Abbott and, if
                    requested, Abbott shall immediately cease making offers of
                    Registrable Securities and return all prospectuses to the
                    Company. The Company shall reasonably promptly provide
                    Abbott with revised prospectuses and, following receipt of
                    the revised prospectuses, Abbott shall be free to resume
                    making offers of the Registrable Securities.

               (d)  Abbott covenants and agrees that it will not sell any Shares
                    pursuant to a Registration Statement during the periods
                    sales in reliance upon the Registration Statement are
                    prohibited as set forth in this Section 2.6.

          2.7  Information from Abbott. It shall be a condition precedent to the
               -----------------------
               obligations of RTI to take any action pursuant to Article 2 of
               this Agreement with respect to the Shares that Abbott shall
               furnish to RTI such information as RTI may reasonably request,
               including information regarding Abbott, the Shares held by it,
               the intended method of disposition of such securities, and such
               other information as required to effect the registration of the
               Shares.

          2.8  Assignment of Registration Rights. The right to cause RTI to
               ---------------------------------
               register the Shares pursuant to this Agreement may be assigned by
               Abbott to a transferee of the Shares only if:

               (a)  RTI is, prior to such transfer, furnished with written
                    notice of the name and address of such transferee and the
                    Shares with respect to which such registration rights are
                    being assigned and a copy of a duly executed written
                    instrument in form reasonably satisfactory to RTI by which
                    transferee assumes all of the obligations and liabilities
                    of its transferor hereunder and agrees itself to be bound
                    hereby;

               (b)  immediately following such transfer the disposition of the
                    Shares by the transferee is restricted under the Securities
                    Act;

               (c)  such assignment includes all of the Shares then held by
                    Abbott; provided, however, that such share limitation shall
                            --------  -------
                    not apply to transfers by Abbott to its affiliates if all
                    such transferees or assignees agree in writing to appoint
                    a single representative as their attorney-in-fact for the
                    purpose of receiving any notices and exercising their rights
                    under this Agreement; and

               (d)  Abbott guarantees the performance of the transferee of its
                    obligations under this Agreement.

          2.9  Termination of Registration Rights. The registration rights
               ----------------------------------
               provided in this Agreement shall terminate if Abbott may sell all
               of the Shares pursuant to Rule 144 in any three (3) month period.
               Upon the termination of registration rights

                                      -6-
<PAGE>

          pursuant to this Section 2.9, RTI may withdraw the Registration
          Statement, or any portion thereof, covering the Shares.

     2.10 Reports Under Securities Exchange Act of 1934. With a view to making
          ---------------------------------------------
          available to Abbott the benefits of Rule 144 promulgated under the
          Securities Act and any other rule or regulation of the SEC that may at
          any time permit Abbott to sell securities of RTI to the public without
          registration or pursuant to a registration on Form S-3, RTI agrees to:

          (a)  make and keep public information available, as those terms are
               understood and defined in SEC Rule 144, at all times after ninety
               (90) days after the effective date of the first registration
               statement filed by RTI for the offering of its securities to the
               general public;

          (b)  file with the SEC in a timely manner all reports and other
               documents required of RTI under the Securities Act and the
               Exchange Act; and

          (c)  furnish to Abbott, so long as Abbott owns any Shares, forthwith
               upon request (i) a written statement by RTI that it has complied
               with the reporting requirements of SEC Rule 144 (at any time
               after ninety (90) days after the effective date of the first
               registration statement filed by RTI), the Securities Act and the
               Exchange Act (at any time after it has become subject to such
               reporting requirements), or that it qualifies as a registrant
               whose securities may be resold pursuant to Form S-3, (ii) a copy
               of the most recent annual or quarterly report of RTI and such
               other reports and documents so filed by RTI, and (iii) such other
               information as may by reasonably requested in availing Abbott of
               any rule or regulation of the SEC that permits the selling of any
               such securities without registration or pursuant to such form.

     2.12 "Lock-up" Agreement; Confidentiality of Notices.
          -----------------------------------------------

          (a)  If requested by the managing underwriter of an underwritten
               public offering by RTI of RTI common stock, Abbott hereby agrees
               that, for a period of one hundred eighty (180) days following the
               effective date of a Registration Statement, (i) it will not
               offer, pledge, sell, contract to sell, sell any option or
               contract to purchase, purchase any option or contract to sell,
               grant any option, right or warrant to purchase, lend, or
               otherwise transfer or dispose of, directly or indirectly, any
               shares of RTI common stock or any securities convertible into or
               exercisable or exchangeable for RTI common stock; (ii) it will
               not enter into any swap or other arrangement that transfers to
               another, in whole or in part, any of the economic consequences of
               ownership of the RTI common stock, whether any such transaction
               described in clause (i) or (ii) above is to be settled by

                                      -7-

<PAGE>

               delivery of RTI common stock or such other securities, in cash or
               otherwise; and (iii) it shall execute any other customary lock-up
               agreements as may be requested by the managing underwriters,
               provided that all stockholders holding not less than the number
               of shares of RTI common stock held by Abbott (including the
               shares of RTI common stock issuable upon conversion of the
               Shares, or other convertible securities, or upon exercise of
               options, warrants or rights) and all officers and directors of
               RTI enter into similar agreements.

          (b)  RTI may impose stop-transfer instructions with respect to
               Registrable Securities or other securities subject to the
               foregoing restrictions until the end of the applicable lock-up
               period.

          (c)  Abbott shall treat confidentially any written notice received by
               Abbott from RTI regarding RTI's plans to file a Registration
               Statement and shall not disclose such information to any person
               other than as necessary to exercise its rights under this
               Agreement.

3.   Indemnification and Contribution.
     --------------------------------

     3.1  Indemnification by RTI. RTI agrees to indemnify and hold harmless
          ----------------------
          Abbott, each of Abbott's directors, officers and U.S. wholly-owned
          subsidiaries, and each person, if any, who controls Abbott within the
          meaning of the Securities Act or the Exchange Act, from and against
          any losses, claims, damages, or liabilities (or actions or proceedings
          in respect thereof) to which they may become subject (under the
          Securities Act or otherwise) insofar as such losses, claims, damages,
          or liabilities (or actions or proceedings in respect thereof) arise
          out of, or are based upon any untrue statements of a material fact
          contained in (or upon the omission of a material fact from) a
          Registration Statement delivered or circulated by Abbott in connection
          with a sale of RTI securities by Abbott, or arise out of any failure
          by RTI to fulfill any undertaking included in the Registration
          Statement, and RTI will, as incurred reimburse Abbott and such persons
          for any legal or other expenses reasonably incurred in investigating,
          defending or preparing to defend any such action, proceeding, or
          claim; provided, however, that RTI shall not be liable in any such
          case to the extent that such loss, claim, damage, or liability arises
          out of, or is based upon:

          (a)  an untrue statement made in (or upon the omission of a material
               fact from) such Registration Statement in reliance upon and in
               conformity with written information furnished to RTI by or on
               behalf of Abbott specifically for use in preparation of the
               Registration Statement,

          (b)  the failure of Abbott to comply with the covenants or agreements
               contained in Section 2.6 hereof, or

                                      -8-
<PAGE>

               (c)  any untrue statement or omission in any prospectus that is
                    corrected in any subsequent prospectus that was delivered to
                    Abbott prior to the pertinent sale or sales by Abbott.

          3.2  Indemnification by Abbott. Abbott agrees to indemnify and hold
               -------------------------
               harmless RTI, each of RTI's directors and officers, and each
               person, if any, who controls RTI within the meaning of the
               Securities Act or the Exchange Act, from and against any losses,
               claims, damages or liabilities (or actions or proceedings in
               respect thereof) to which they may become subject (under the
               Securities Act or otherwise) insofar as such losses, claims,
               damages or liabilities (or actions or proceedings in respect
               thereof) arise out of, or are based upon:

               (a)  either an untrue statement made in or the omission of a
                    material fact from such Registration Statement in reliance
                    upon and in conformity with written information furnished to
                    RTI by or on behalf of Abbott specifically for use in
                    preparation of the Registration Statement,

               (b)  the failure of Abbott to comply with the covenants or
                    agreements contained in Section 2.6 hereof, or

               (c)  any untrue statement or omission in any prospectus that is
                    corrected in any subsequent prospectus that was delivered to
                    Abbott prior to the pertinent sale or sales by Abbott, and
                    Abbott will, as incurred, reimburse RTI and such persons for
                    any legal or other expenses reasonably incurred in
                    investigating, defending, or preparing to defend any such
                    action, proceeding, or claim;

               provided, however, that in no event shall Abbott's cumulative
               aggregate liability under this Section 3.2, or under Section 3.4,
               or under Sections 3.2 and 3.4 together, exceed the net amount
               received by Abbott from the sale of the Shares to which such loss
               relates minus the amount of any damages which Abbott has
               otherwise been required to pay by reason of such untrue or
               allegedly untrue statement or omission or alleged omission.

                                      -9-
<PAGE>

3.3  Indemnification Procedures. Promptly after receipt by any indemnified party
     --------------------------
     of a notice of a claim or the beginning of any action in respect of which
     indemnity is to be sought against an indemnifying person pursuant to this
     Article 3, such indemnified person shall notify the indemnifying person in
     writing of such claim or of the commencement of such action and, subject to
     the provisions hereinafter stated, in case any such action shall be brought
     against an indemnified person and the indemnifying person shall have been
     notified thereof, the indemnifying person shall be entitled to participate
     therein, and, to the extent that it shall wish, to assume the defense
     thereof, with counsel reasonably satisfactory to the indemnified person.
     After notice from the indemnifying person to such indemnified person of the
     indemnifying person's election to assume the defense thereof, the
     indemnifying person shall not be liable to such indemnified person for any
     legal expenses subsequently incurred by such indemnified person in
     connection with the defense thereof; provided, however, that if there
     exists or shall exist a conflict of interest that would make it
     inappropriate in the reasonable judgment of the indemnified person for the
     same counsel to present both the indemnified person and such indemnifying
     person or any affiliate or associate thereof, the indemnified person shall
     be entitled to retain its own counsel at the expense of such indemnifying
     person.

3.4  Contribution. If the indemnification provided for in this Article 3 is
     ------------
     unavailable to or insufficient to hold harmless an indemnified party under
     Section 3.1 or 3.2 above in respect of any losses, claims, damages, or
     liabilities (or actions or proceedings in respect thereof) referred to
     therein, then each indemnifying party shall contribute to the amount paid
     or payable by such indemnified party as a result of such losses, claims,
     damages, or liabilities (or actions in respect thereof) in such proportion
     as is appropriate to reflect the relative fault of RTI on one hand and
     Abbott on the other in connection with the statements or omissions which
     resulted in such losses, claims, damages, or liabilities (or actions in
     respect thereof), as well as any other relevant equitable considerations.
     The relative fault shall be determined by reference to, among other things,
     whether the untrue or alleged untrue statement of a material fact or the
     omission or alleged omission to state a material fact related to
     information supplied by RTI on one hand or Abbott on the other and the
     parties' relative intent, knowledge, access to information, and opportunity
     to correct or prevent such statement or omission; provided, however, that
     in no event shall Abbott's cumulative aggregate liability under this
     Section 3.4, or under Section 3.2, or under Sections 3.2 and 3.4 together,
     exceed the net amount received by Abbott from the sale of the Shares to
     which such loss relates minus the amount of any damages which Abbott has
     otherwise been required to pay by reason of such untrue or allegedly untrue
     statement or omission or alleged omission. RTI and Abbott agree that it
     would not be just and equitable if contribution pursuant to this Section
     3.4 were determined by pro rata allocation or by any other method of
     allocation which does not take account of the equitable considerations
     referred to above in this Section 3.4. The amount paid or payable

                                     -10-

<PAGE>

               by an indemnified party as a result of the losses, claims,
               damages, or liabilities (or actions in respect thereof) referred
               to above in this Section 3.4 shall be deemed to include any legal
               or other expenses reasonably incurred by such indemnified party
               in connection with investigating or defending any such action or
               claim. No person guilty of fraudulent misrepresentation (within
               the meaning of Section 11(f) of the Securities Act) shall be
               entitled to contribution from any person who was not guilty of
               such fraudulent misrepresentation.

          3.5  Continuing Obligations. The obligations of RTI and Abbott under
               ----------------------
               this Article 3 shall survive the completion of the offering of
               the Shares pursuant to the Registration Statement and shall be in
               addition to any liability that RTI and Abbott may otherwise have.

     4.   Miscellaneous.
          -------------

          4.1  Waiver. The failure on the part of RTI or Abbott to exercise or
               ------
               enforce any right conferred upon it hereunder shall not be deemed
               to be a waiver of any such right, nor operate to bar the exercise
               or enforcement thereof at any time or times thereafter.

          4.2  Notices. Any notice required or permitted to be given by the
               -------
               terms of this Agreement by a party shall be given by prepaid,
               registered air mail or by express delivery service, such as
               Federal Express or DHL, properly addressed to the address of the
               other party set forth below, or to such other address as may,
               from time to time, be designated in writing by such other party,
               and shall be deemed to have been given upon receipt:

                    As to Abbott:
                            Senior Vice President
                            Hospital Products Division
                            Abbott Laboratories
                            200 Abbott Park Road
                            Abbott Park, Illinois 60064-3537

                    With copy (which will not constitute notice) to:

                            Divisional Vice President, D-322
                            Abbott Laboratories
                            100 Abbott Park Road
                            AP6D D-322
                            Abbott Park, Illinois 60064-6049

                                     -11-
<PAGE>

                    As to RTI:

                         Retractable Technologies, Inc.
                         511 Lobo Lane
                         Little Elm, Texas 75068
                         Attn: Thomas J. Shaw, Chief
                              Executive Officer and President

                    With copy (which will not constitute notice) to:

                         Retractable Technologies, Inc.
                         Legal Department
                         511 Lobo Lane
                         Little Elm, Texas 75068
                         Attn: Michele Larios

          4.3  Applicable Law. The corporate law of the State of Texas shall
               --------------
               govern all issues concerning the relative rights of RTI and its
               stockholders. All other questions concerning the construction,
               validity and interpretation of this Agreement shall be construed
               and interpreted according to the law of the State of Illinois,
               without giving effect to its conflict of law provisions.

          4.4  Alternative Dispute Resolution. The parties shall attempt to
               ------------------------------
               amicably resolve disputes arising between them regarding the
               validity, construction, enforceability, or performance of the
               terms of this Agreement and any differences or disputes in the
               interpretation of the rights, obligations, liabilities and/or
               remedies hereunder, which have been identified in a written
               notice from one party to the other, by good faith settlement
               discussions between the President of Abbott's Hospital Products
               division and the President and Chief Executive Officer of RTI.
               The parties agree that any dispute that arises in connection with
               the Agreement, which cannot be amicably resolved by such
               representative within thirty (30) days after the receipt of such
               written notice, shall be resolved by binding Alternative Dispute
               Resolution ("ADR") in the manner described in Annex B to the
               Credit Agreement.

          4.5  Captions. The captions to the Articles and Sections of this
               --------
               Agreement are for convenience only, and shall not be deemed of
               any force or effect whatsoever in construing this Agreement.

          4.6  Entire Agreement. The terms and provisions contained herein,
               ----------------
               including the Annex hereto, and the Credit Agreement and the
               exhibits and annexes thereto, constitute the entire agreement
               between the parties and shall supersede all previous
               communications, representations, agreements or understandings,
               either oral or written, between the parties hereto with respect
               to the subject matter hereof. No amendment to this Agreement
               varying or extending the terms hereof will be binding upon either
               party hereto unless in writing, signed by duly authorized
               officers of the respective parties, and referencing this
               Agreement.

                                     -12-
<PAGE>

     4.7  Assignment. This Agreement shall not be assignable by the parties,
          ----------
          except as permitted under section 2.9 or (a) to an Affiliate of such
          party, provided the assigning party guarantees the performance of the
          Affiliate, (b) as mutually agreed to in writing in advance, or (c) as
          incident to the merger, consolidation, reorganization, or acquisition
          of stock or assets affecting actual voting control of the assigning
          party or affecting all or substantially all of the assets of such
          party to which this Agreement relates. Any permitted assignment shall
          be binding on the successors of the assigning party. Any assignment or
          attempted assignment by any party in violation of the terms of this
          Section 4.7, shall be null and void and of no legal effect. For
          purposes of this Agreement, the term "Affiliate" shall mean, with
          respect to any party hereto, any corporation or other form of
          business organization, which directly owns, controls, is controlled
          by, or is under common control with, such party. An entity shall  be
          regarded as being in control of another entity if the former entity
          has the direct or indirect power to order or cause the direction of
          the policies of the other entity whether (x) through the ownership of
          more than fifty percent (50%) of the voting securities of the other
          entity; or (y) by contract, statute, regulation, or otherwise.

     4.8  Severability. In the event that any provision of this Agreement is
          ------------
          held by a court of competent jurisdiction to be unenforceable because
          it is invalid or in conflict with any law of any relevant
          jurisdiction, (a) the validity of the remaining provisions shall not
          be affected, (b) the particular provision shall to the extent
          permitted by the law be reasonably construed and equitably reformed to
          be valid and enforceable, and (c) the rights and obligations of the
          parties shall be construed and enforced as if the Agreement did not
          contain the unreformed, particular provisions held to be enforceable.

     4.9  Counterparts. This agreement may be executed in one or more
          ------------
          counterparts, each of which shall be deemed an original.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized officers as of the date first
above written.

ABBOTT LABORATORIES                               RETRACTABLE TECHNOLOGIES,
                                                  INC.

By:/s/Richard A. Gonzalez                         By:/s/ Thomas J. Shaw
   ----------------------                            -------------------------
   Richard A. Gonzalez

Title: Senior Vice President,                     Title: CEO
       Hospital Products                                ----------------------

                                     -13-
<PAGE>

                               Credit Agreement

                                   Exhibit B
                              Disclosure Schedule
                        (Confidential Private Placement
                               Memorandum Dated
                               January 11, 2000)
<PAGE>

                               Credit Agreement

                                   Exhibit C
                       Financial Statements and Reports
                          of Independent Accountants
                       for December 13, 1998, 1997, 1996
<PAGE>

                               Credit Agreement

                                   Exhibit D
                             Disclosure Statement
<PAGE>

                     CREDIT AGREEMENT DISCLOSURE STATEMENT

RTI has raised additional capital in 1999 through issuance of its Series III
Convertible Preferred Stock in the amount of $11.6 million.

RTI has sold $1.6 million of its Series IV Convertible Preferred Stock in 2000.

RTI completed a loan and credit facility for $1.5 million and $.5 million,
respectively, in February 2000 through 1/st/ International Bank. These funds
were used to pay off an existing loan and provide additional funds for equipment
and working capital needs of RTI. The loan is secured by land, building, and
building improvements. It is the property located at 511 Lobo Lane, Little Elm,
Texas

The proceeds of the Credit Agreement will be used for equipment and
manufacturing operations.

RTI has no monetary judgments of $250,000 or more against it.

RTI currently has $3.7 million of long term debt, including current maturities.

RTI anticipates a debt to equity ratio no lower than 1:1 in five years. Current
projections are 1:20 in 2003.

Product liability insurance is $5 million each occurrence and $6 million
aggregate.

RTI currently has 1.4 million stock options and warrants outstanding.

RTI does provide Employee Benefits, such as medical, dental and life insurance
<PAGE>

RTI Confidential

Retractable Technologies Inc.

<TABLE>
<CAPTION>
                                                                                        Change                          Change
                                                            12/31/98      12/31/99     98 to 99        Apr-00        99 to Apr-00
          <S>                                              <C>           <C>           <C>            <C>            <C>
          Preferred Stock - Class A Series 1                5,000,000     5,000,000           -
          Preferred Stock - Class B Series 1                1,000,000     1,000,000           -
          Preferred Stock - Class B Series II               1,000,000     1,000,000           -
          Preferred Stock - Class B Series III   (note 1)         -       1,160,200     1,160,200
          Preferred Stock - Class B Series IV    (note 2)         -             -             -       1,615,000      1,615,000
          Common Stock                                          1,000         1,000           -
          Additional Paid in Capital                       16,680,281    23,670,110     6,989,829

               1. Sale of Series III Class B Convertible Stock
               2. Sale of Series IV Class B Convertible Stock
</TABLE>
<PAGE>

Pledged Fixed Asset Listing (assumes Legacy Bank and Textron Financial are paid
off)

As of 4/19/2000

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------  -----------
                                                                                                                         Outstanding
                                      Description                          Vendor/Mfg           Acq Value                Loan/Lease
        Lender                                                                                              Asset Value  Commitment
-----------------------------------------------------------------------------------------------------------------------  -----------
<S>                          <C>                                           <C>                 <C>          <C>          <C>
</TABLE>
                                 Page 1 of 15

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request. The request for confidential treatment covers 15 redacted pages. The
redacted information was separately filed with the Commission.
<PAGE>

                              SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Agreement") dated as of May 4, 2000,
                                        ---------                   -
is between Retractable Technologies, Inc., a Texas corporation (the "Company"),
and Abbott Laboratories, an Illinois corporation ("Abbott").
                                                   ------

                             W I T N E S S E T H:
                             - - - - - - - - - -

         WHEREAS, Abbott may from time to time make loans, advances or other
 financial accommodations to the Company;

         WHEREAS, the obligations of the Company to Abbott are to be secured
pursuant to this Agreement;

         NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company by Abbott,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

         1.    Definitions. When used herein, (a) the terms Equipment and
               -----------                                  ---------
Inventory shall have the respective meanings assigned to such terms in the
---------
Uniform Commercial Code (as defined below) and (b) the following terms have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):

         Account Debtor means the party who is obligated on or under any Account
         --------------
Receivable or Contract Right.

         Account Receivable means any right of the Company to payment for goods
         ------------------
sold or leased or for services rendered.

         Assignee Deposit Account - see Section 4.
         ------------------------       ---------

         Collateral means all property and rights of the Company in which a
         ----------
security interest is granted hereunder.

         Contract Right means any right of the Company to payment under a
         --------------
contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.

         Credit Agreement means the credit agreement dated the date hereof
         ----------------
between Abbott and the Company and any amendment, modification or restatement
thereof.
<PAGE>

         Default means (i) an "Event of Default" is defined in the Credit
         -------
Agreement or (ii) the occurrence of any default by the Company under any
agreement with the Abbott, including this Agreement.

         Liabilities means all obligations (monetary or otherwise) of the
         -----------
Company to Abbott, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to become
due.

         NMDA Payments - see Section 2.
         -------------

         Non-Tangible Collateral means, collectively, the Company's Accounts
         -----------------------
Receivable with respect to which Abbott is the Account Debtor, Contract Rights
with respect to which Abbott is the Account Debtor and NMDA Payments.

         Uniform Commercial Code means the Uniform Commercial Code as in effect
         -----------------------
in the State of Illinois on the date of this Agreement; provided that, as used
in Section 8 hereof, "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the applicable jurisdiction.

         2.    Grant of Security Interest. As security for the payment of all
               --------------------------
Liabilities, the Company hereby assigns to Abbott, and grants to Abbott a
continuing security interest in, the following, whether now or hereafter
existing or acquired:

         All of the Company's:

            (i) Accounts Receivable; with respect to which Abbott is the Account
                Debtor;

           (ii) Contract Rights; with respect to which Abbott is the Account
                Debtor;

          (iii) right, title and interest in payments (the "NMDA Payments") owed
                by Abbott to the Company under the National Marketing and
                Distribution Agreement between the Company and Abbott dated the
                date hereof;

          (iv)  finished goods manufactured pursuant to the terms of the
                National Marketing and Distribution Agreement, allocated for
                Abbott, and thereby identified with Abbott Lot Numbers; and

           (v)  unencumbered molds as listed in Schedule IV, and all additions,
                improvements, substitutions and replacements thereto;

             together with all books, records, writings, data bases,
             information and other property relating to, used or useful in
             connection with, or evidencing, embodying, incorporating or
             referring to any of the foregoing, and all proceeds, products,
             offspring, rents, issues, profits and returns of and from any of
             the foregoing.

         3.    Warranties. The Company warrants that: (i) no financing statement
               ----------
covering any of the Collateral is on file in any public office, except for the
benefit of Abbott; (ii) the Company is and will be the lawful owner of all
Collateral, free of all liens and claims whatsoever, other than the security
interest hereunder with full power and authority to execute this Agreement and

                                      -2-
<PAGE>

perform its obligations hereunder, and to subject the Collateral to the security
interest hereunder; (iii) all information with respect to Collateral set forth
in any schedule, certificate or other writing at any time heretofore or
hereafter furnished by the Company to Abbott is and will be true and correct in
all material respects as of the date furnished; (iv) the Company's chief
executive office and principal place of business are as set forth on Schedule I
                                                                     ----------
hereto (and the Company has not maintained its chief executive office and
principal place of business at any other location at any time after July 1,
1999); (v) each other location where the Company maintains a place of business
is set forth on Schedule II hereto; (vi) except as set forth on Schedule III
                -----------                                     ------------
hereto, the Company is not now known and during the five years preceding the
date hereof has not previously been known by any trade name; (vii) except as set
forth on Schedule III hereto, during the five years preceding the date hereof
         ------------
the Company has not been known by any legal name different from the one set
forth on the signature pages of this Agreement nor has the Company been the
subject of any merger or other corporate reorganization; (viii) the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation; (ix) the execution and delivery of this
Agreement and the performance by the Company of its obligations hereunder are
within the Company's corporate powers, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval
(if any shall be required), and do not and will not contravene or conflict with
any provision of law or of the charter or by-laws of the Company or of any
material agreement, indenture, instrument or other document, or any material
judgment, order or decree, which is binding upon the Company; (x) this Agreement
is a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except that the enforceability of this Agreement may
be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law); and (xi) the Company is in compliance with the requirements of all
applicable laws (including the provisions of the Fair Labor Standards Act),
rules, regulations and orders of every governmental authority, the non-
compliance with which would reasonably be expected to result in a material
adverse effect on the Company's business, condition (financial or otherwise),
properties or prospects.

         4.    Collections, etc. Until such time during the existence of a
               ----------------
Default as Abbott shall notify the Company of the revocation of such power and
authority, the Company may, in the ordinary course of its business, at its own
expense, sell, lease or furnish under contracts of service any of the Inventory
normally held by the Company for such purpose, use and consume, in the ordinary
course of its business, any raw materials, work in process or materials normally
held by the Company for such purpose, and use, in the ordinary course of its
business (but subject to the terms of any agreement with Abbott), the cash
proceeds of Collateral and other money which constitutes Collateral. Abbott,
however, may, at any time that a Default exists, whether before or after any
revocation of such power and authority or the maturity of any of the
Liabilities, make payments directly to Abbott of any amounts due or to become
due in respect of the Collateral.

         Upon request by Abbott during the existence of a Default, the Company
will forthwith, upon receipt, transmit and deliver to Abbott, in the form
received, all cash, checks, drafts and other instruments or writings for the
payment of money (properly endorsed, where required, so that such items may be
collected by Abbott) which may be received by the Company at any time in full or
partial payment or otherwise as proceeds of any of the Collateral. Except as
Abbott may otherwise consent in writing, any such items which may be so received
by the Company

                                      -3-
<PAGE>

will not be commingled with any other of its funds or property, but will be held
separate and apart from its own funds or property and upon express trust for
Abbott until delivery is made to Abbott. The Company will comply with the terms
and conditions of any consent given by Abbott pursuant to the foregoing
sentence.

         During the existence of a Default, all items or amounts which are
 delivered by the Company to Abbott on account of partial or full payment or
 otherwise as proceeds of any of the Collateral shall be deposited to the credit
 of a deposit account (the "Assignee Deposit Account") of the Company with a
                            ------------------------
 financial institution selected by Abbott over which Abbott has sole dominion
 and control, as security for payment of the Liabilities. The Company shall not
 have any right to withdraw any funds deposited in the Assignee Deposit Account.
 Abbott may, from time to time, in its discretion, and shall upon request of the
 Company made not more than once in any week, apply all or any of the then
 balance, representing collected funds, in the Assignee Deposit Account toward
 payment of the Liabilities, whether or not then due, in such order of
 application as Abbott may determine, and Abbott may, from time to time, in its
 discretion, release all or any of such balance to the Company.

         Abbott (or any designee thereof) is authorized to endorse, in the name
 of the Company, any item, howsoever received by Abbott, representing any
 payment on or other proceeds of any of the Collateral.

         5.    Certificates, Schedules and Reports. The Company will from time
               -----------------------------------
 to time, as Abbott may request, deliver to Abbott such schedules, certificates
 and reports respecting all or any of the Collateral at the time subject to the
 security interest hereunder, and the items or amounts received by the Company
 in full or partial payment of any of the Collateral, as Abbott may reasonably
 request. Any such schedule, certificate or report shall be executed by a duly
 authorized officer of the Company and shall be in such form and detail as
 Abbott may specify. The Company shall immediately notify Abbott of the
 occurrence of any event causing any loss or depreciation in the value of its
 Inventory pledged hereunder which is material to the Company, and such notice
 shall specify the amount of such loss or depreciation.

         6.    Agreements of the Company. The Company (a) will, upon request of
               -------------------------
 Abbott, execute such financing statements and other documents (and pay the cost
 of filing or recording the same in all public offices reasonably deemed
 appropriate by Abbott) and do such other acts and things, all as Abbott may
 from time to time reasonably request, to establish and maintain a valid
 security interest in the Collateral (free of all other liens, claims and rights
 of third parties whatsoever) to secure the payment of the Liabilities; (b) will
 keep all its Inventory at, and will not maintain any place of business at any
 location other than, its address(es) shown on Schedules I and II hereto or at
                                               -----------     --
 such other addresses of which the Company shall have given Abbott not less than
 10 days' prior written notice, (c) will keep its records concerning the
 Non-Tangible Collateral in such a manner as will enable Abbott or its designees
 to determine at any time the status of the Non-Tangible Collateral; (d) will
 furnish Abbott such information concerning the Company, the Collateral and the
 Account Debtors as Abbott may from time to time reasonably request; (e) will
 permit Abbott and its designees, from time to time, on reasonable notice and at
 reasonable times and intervals during normal business hours (or at any time
 without notice during the existence of a Default) to inspect the Company's
 Inventory pledged hereunder, and to inspect, audit and make copies of and
 extracts from all records and other papers in the possession of the Company
 pertaining to the Collateral, and will, upon request of Abbott during the
 existence of a Default, deliver to Abbott all of such records and papers;(f)
 except for the sale or

                                      -4-
<PAGE>

lease of Inventory in the ordinary course of its business and sales of Equipment
which is no longer useful in its business or which is being replaced by similar
Equipment, will not sell, lease, assign or create or permit to exist any lien or
security interest on any Collateral; (g) will at all times keep all of its
Inventory pledged hereunder insured under policies maintained with reputable,
financially sound insurance companies against loss, damage, theft and other
risks to such extent as is customarily maintained by companies similarly
situated, and cause all such policies to provide that loss thereunder shall be
payable to Abbott as its interest may appear (it being understood that (A) so
long as no Default exists, Abbott shall deliver any proceeds of such insurance
which may be received by it to the Company and (B) whenever a Default exists,
Abbott may apply any proceeds of such insurance which may be received by it
toward payment of the Liabilities, whether or not due, in such order of
application as Abbott may determine), and such policies or certificates thereof
shall, if Abbott so requests, be deposited with or furnished to Abbott; (h) will
take such actions as are reasonably necessary to keep its Inventory pledged
hereunder in good repair and condition; (i) will take such actions as are
reasonably necessary to keep its Equipment pledged hereunder in good repair and
condition and in good working order, ordinary wear and tear excepted; (j) will
promptly pay when due all license fees, registration fees, taxes, assessments
and other charges which may be levied upon or assessed against the ownership,
operation, possession, maintenance or use of its Equipment pledged hereunder and
other Goods; (k) will, upon request of Abbott, (i) cause to be noted on the
applicable certificate, in the event any of its Equipment is covered by a
certificate of title, the security interest of Abbott in the Equipment covered
thereby, and (ii) deliver all such certificates to Abbott or its designees; (l)
will take all steps reasonably necessary to protect, preserve and maintain all
of its rights in the Collateral; (m) will keep all of the tangible Collateral in
the United States; and (n) will reimburse Abbott for all expenses, including
reasonable attorney's fees and charges, incurred by Abbott in seeking to collect
or enforce any rights in respect of the Collateral.

         Any expenses incurred in protecting, preserving or maintaining any
 Collateral shall be borne by the Company.

         7.    Default. Whenever a Default shall be existing, Abbott may
               -------
exercise from time to time any right or remedy available to it under applicable
law. The Company agrees, in case of Default, (i) to assemble, at its expense,
all its Inventory pledged hereunder at a convenient place or places acceptable
to Abbott. Any notification of intended disposition of any of the Collateral
required by law shall be deemed reasonably and properly given if given at least
ten days before such disposition. Whenever a Default shall be existing, any
proceeds of any disposition by Abbott of any of the Collateral and any NMDA
Payments or payments under Accounts Receivable or Contract Right, may be applied
directly by Abbott to payment of expenses in connection with the Collateral,
including reasonable attorney's fees and charges (including time charges of
attorneys who are employees of Abbott), and any balance of such proceeds, NMDA
Payments and payments may be applied by Abbott toward the payment of such of the
Liabilities, and in such order of application, as Abbott may from time to time
elect. After proceeds in an amount equal to $1,000,000 for Collateral described
in Section 2(v) are applied pursuant to this Section 7, Abbott shall return all
remaining Collateral described in Section 2(v) and all remaining proceeds
thereof to the Company.

         8.    General. Abbott shall be deemed to have exercised reasonable care
               -------
in the custody and preservation of any of the Collateral in its possession if it
takes such action for that purpose as the Company requests in writing, but
failure of Abbott to comply with any such request shall not of itself be deemed
a failure to exercise reasonable care, and no failure of

                                      -5-
<PAGE>

Abbott to preserve or protect any right with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by the Company, shall be deemed of itself a failure
to exercise reasonable care in the custody or preservation of such Collateral.

         Any notice shall be given in the manner provided under the Credit
Agreement.

         The Company agrees to pay all expenses, including reasonable attorney's
 fees and charges paid or incurred by Abbott in endeavoring to collect the
 Liabilities, or any part thereof, and in enforcing this Agreement, and such
 obligations will themselves be Liabilities.

         No delay on the part of Abbott in the exercise of any right or remedy
 shall operate as a waiver thereof, and no single or partial exercise by Abbott
 of any right or remedy shall preclude other or further exercise thereof or the
 exercise of any other right or remedy.

         This Security Agreement shall remain in full force and effect until all
 Liabilities have been paid in full and all commitments by Abbott to make loans,
 advances or other financial accommodations to the Company have terminated. If
 at any time all or any part of any payment theretofore applied by Abbott to any
 of the Liabilities is or must be rescinded or returned by Abbott for any reason
 whatsoever (including the insolvency, bankruptcy or reorganization of the
 Company), such Liabilities shall, for the purposes of this Agreement, to the
 extent that such payment is or must be rescinded or returned, be deemed to have
 continued in existence, notwithstanding such application by Abbott, and this
 Agreement shall continue to be effective or be reinstated, as the case may be,
 as to such Liabilities, all as though such application by Abbott had not been
 made.

         This Agreement shall be construed in accordance with and governed by
 the laws of the State of Illinois applicable to contracts made and to be fully
 performed in such State, subject, however, to the applicability of the Uniform
 Commercial Code of any jurisdiction in which any Goods may be located at any
 given time. Whenever possible, each provision of this Agreement shall be
 interpreted in such manner as to be effective and valid under applicable law,
 but if any provision of this Agreement shall be prohibited by or invalid under
 applicable law, such provision shall be ineffective to the extent of such
 prohibition or invalidity, without invalidating the remainder of such provision
 or the remaining provisions of this Agreement.

         The rights and privileges of Abbott hereunder shall inure to the
benefit of its successors and assigns.

         This Agreement may be executed in any number of counterparts and by the
 different parties hereto on separate counterparts, and each such counterpart
 shall be deemed to be an original, but all such counterparts shall together
 constitute one and the same Agreement.

         This Agreement and the Collateral shall not be subject to the
 subordination agreement set forth in Section 9 of the Credit Agreement.

                                      -6-
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.

                               ABBOTT LABORATORIES

                               By: /s/ Richard A. Gonzalez
                                   --------------------------------------------
                                Title: Senior Vice President, Hospital Products
                                       ----------------------------------------

                               RETRACTABLE TECHNOLOGIES, INC.

                               By: /s/ Thomas J. Shaw
                                   ---------------------------------------------
                                Title: CEO
                                       -----------------------------------------

                                      -7-
<PAGE>

                                  SCHEDULE I
                                  ----------

The Company's chief executive office is located at:

          511 Lobo Lane
          Little Elm, TX 75068

                                      -8-
<PAGE>

                                  SCHEDULE II
                                  -----------

The Company also has a location at:

         622 South Mill Street
         Lewisville, TX 75057

                                      -9-
<PAGE>

                                 SCHEDULE III

                                     None

                                     -10-
<PAGE>

                                  SCHEDULE IV
                                  -----------

                              Security Agreement
                              Unencumbered Molds

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
 Category                        Description                                Vendor
---------------------------------------------------------------------------------------
<S>                  <C>                                                  <C>
 Production Molds     Magor Mold 10cc Family from CIP                     Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold 5cc Family from CIP                      Magor Mold
---------------------------------------------------------------------------------------
                      8 cavity Tubeholder Housing mold                    Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold 8 cavity Tubeholder-Small Tube Adapter   Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold cavity Tubeholder Activation Tube        Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold 8 cavity Tubeholder - Threaded Disk      Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold/Mold #1522 (cavities match Mold 1498)    Magor Mold
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
 Molds on Order       Magor Mold 32 cavity housing for 1cc line           Magor Mold
---------------------------------------------------------------------------------------
                      Magor Mold 16 cavity runner for 1cc line            Magor Mold
---------------------------------------------------------------------------------------
</TABLE>

                                     -11-
<PAGE>

                         REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement ("Agreement") is made as of May 4,
2000, by and between Retractable Technologies, Inc., a Texas corporation with
its principal office at 511 Lobo Lane, Little Elm, Texas 75068 ("RTI"), and
Abbott Laboratories, an Illinois corporation with its principal office at 100
Abbott Park Road, Abbott Park, Illinois 60064-6400 ("Abbott").

                                   RECITALS

         WHEREAS, RTI and Abbott have entered into a Credit Agreement (the
"Credit Agreement") of even date herewith; and

         WHEREAS, the execution and delivery of this Agreement are a condition
to the Closing of the Credit Agreement;

NOW, THEREFORE, RTI and Abbott agree as follows:

1.       Definitions. All terms not otherwise defined in this Agreement shall
         -----------
have the same meanings ascribed to them in the Credit Agreement. For purposes of
this Agreement:

         1.1   Exchange Act. The term "Exchange Act" shall mean the Securities
               ------------
               Exchange Act of 1934, as amended.

         1.2   Register, Registered, and Registration. The terms "register,"
               --------------------------------------
               "registered," and "registration" refer to a registration effected
               by preparing and filing a registration statement or similar
               document in compliance with the Securities Act, and the
               declaration or ordering of effectiveness of such registration
               statement or document.

         1.3   Registrable Securities. The term "Registrable Securities" means
               ----------------------
               such portion of the Shares that has not previously been
               registered or sold to the public.

         1.4   Registration Statement. The term "Registration Statement" means a
               ----------------------
               registration statement filed with the SEC under the Securities
               Act to register the resale of the Registrable Securities by
               Abbott.

         1.5   Rule 144. The term "Rule 144" shall mean Rule 144, or its
               --------
               successor rule, promulgated by the SEC.

         1.6   SEC.  The term "SEC" shall mean the Securities and Exchange
               ---
               Commission.

RTI - Reg. Rights Agmt
May 2, 2000                             -1-
<PAGE>

         1.7   Securities Act. The term "Securities Act" means the Securities
               --------------
               Act of 1933, as amended.

         1.8   Shares. The term "Shares" means the shares of common stock of
               ------
               RTI, no par value, issuable or issued upon conversion of the Note
               issued pursuant to the Credit Agreement, and any shares of common
               stock of RTI issued as a dividend or other distribution with
               respect to such capital stock.

2.       Registration.  RTI covenants and agrees as follows:
         ------------

         2.1   S-3 Registration. At any time after RTI becomes eligible to file
               ----------------
               a Registration Statement on Form S-3 (or any successor form
               relating to secondary offerings), Abbott may request RTI, in
               writing, to effect a registration on Form S-3 (or such successor
               form), of Registrable Securities. Thereupon, RTI shall, as
               expeditiously as possible, use its best efforts to effect the
               registration on Form S-3 (or such successor form) of all
               Registrable Securities which RTI has been requested to so
               register. The right to request registration on Form S-3 pursuant
               to this Section 2.1 may not be exercised more than three (3)
               times by Abbott. RTI shall not be required to include any
               Registrable Securities in such registration unless Abbott accepts
               the terms of the underwriting as agreed upon between RTI and the
               underwriters selected by RTI (provided that such terms must be
               consistent with this Agreement and are applicable to other
               shareholders offering their shares in such registration).

         2.2   Piggyback Registration. Whenever RTI proposes to register any of
               ----------------------
               its securities under the Securities Act for a public offering for
               cash, whether as a primary or secondary offering or pursuant to
               registration rights granted to holders of other securities of RTI
               other than (a) a registration relating solely to employee benefit
               plans on Form S-8 (or a similar successor form), or (b) a
               registration on Form S-4 (or a similar successor form) relating
               solely to a transaction subject to Rule 145 under the Securities
               Act), RTI will promptly give Abbott written notice thereof, and
               subject to the terms of Section 2.3 below, use its reasonable
               efforts to include in such registration (and any related
               qualification under blue sky laws or other compliance), and in
               any underwriting involved therein, all Registrable Securities
               specified in a written request to RTI made within fifteen (15)
               business days after the receipt of such written notice by Abbott.

RTI - Reg. Rights Agmt
May 2, 2000                             -2-
<PAGE>

         2.3   Underwriting.
               ------------

               (a)  If the registration of which RTI gives notice pursuant to
                    Section 2.2 is for a registered offering involving an
                    underwriting, then Abbott's right to registration shall be
                    conditioned upon Abbott's participation in the underwriting
                    and the inclusion of Abbott's Registrable Securities in the
                    underwriting to the extent provided in this Agreement.
                    Abbott [together with RTI and the holders of other
                    securities of RTI distributing their securities through that
                    underwriting (such other holders being termed the "Other
                    Holders")] shall enter into an underwriting agreement in
                    customary form with the representative of the underwriter or
                    underwriters selected by RTI.

               (b)  Notwithstanding any other provision of this Article 2, if
                    the representative of the underwriters advises RTI in
                    writing that marketing factors require a limitation on the
                    number of shares to be underwritten, then RTI shall so
                    inform Abbott and the Other Holders. The number of shares of
                    RTI common stock being sold by RTI for its own account shall
                    not be reduced by operation of this Section 2.3. The number
                    of shares of Registrable Securities held by Abbott and the
                    Other Holder(s) that may be included in the underwriting (in
                    addition to those being sold by RTI for its own account)
                    shall be allocated among Abbott and the Other Holders in
                    proportion (as nearly as practicable) to the amount of
                    Registrable Securities owned by each such holder.

               (c)  Any holder which does not agree to the terms of the such
                    underwriting shall be excluded from that underwriting by
                    written notice from RTI or the underwriter. Any Registrable
                    Securities or other securities excluded or withdrawn from
                    that underwriting shall be withdrawn from the registration.

         2.4   Registration Expenses. RTI shall pay all "registration expenses"
               ---------------------
               (as defined below) in connection with any registration,
               qualification or compliance under this Agreement. Abbott shall
               pay all "selling expenses" (as defined below). The term
               "registration expenses" shall mean all expenses, except for
               selling expenses, incurred by RTI in complying with the
               registration provisions of this Agreement, including, without
               limitation, all registration, qualification and filing fees,
               printing expenses, escrow fees, fees and disbursements of counsel
               for RTI, accounting fees, blue sky fees and expenses, and the
               expense of any attest service incident to or required by any such
               registration. The term "selling expenses" shall mean all selling
               commissions, underwriting fees, and stock transfer taxes
               applicable to the Shares and all fees and disbursements of
               counsel for Abbott.

         2.5   Obligations of RTI. In the case of a registration effected by RTI
               ------------------
               pursuant to this

RTI - Reg. Rights Agmt
May 2, 2000                             -3-
<PAGE>

               Article 2, RTI will use reasonable efforts to:

               (a)  keep such registration effective until the earliest of:

                    (i)   such date as all of the Shares have been sold, or

                    (ii)  if RTI is not then eligible to effect such
                          registration on Form S-3 (or a similar successor
                          form), one hundred and twenty (120) days after the
                          effective date of the Registration Statement, or

                    (iii) the termination of the registration rights pursuant to
                          Section 2.9 of this Agreement.

               (b)  prepare and file with the SEC such amendments and
                    supplements to the Registration Statement and the prospectus
                    used in connection with the Registration Statement as may be
                    necessary to comply with the provisions of the Securities
                    Act with respect to the disposition of all securities
                    covered by the Registration Statement;

               (c)  furnish such number of prospectuses, prospectus supplements,
                    and other documents incident thereto, including any
                    amendment of or supplement to the prospectus, as Abbott from
                    time to time may reasonably request;

               (d)  cause all Shares registered as described in this Agreement
                    to be listed on any securities exchange or quoted on any
                    quotation service on which similar securities issued by RTI
                    are then listed or quoted;

               (e)  provide a transfer agent and registrar for all Registrable
                    Securities registered pursuant to the Registration Statement
                    and a CUSIP number for all such Shares;

               (f)  otherwise use reasonable efforts to comply with all
                    applicable rules and regulations of the SEC; and

RTI - Reg. Rights Agmt
May 2, 2000                             -4-
<PAGE>

               (g)  file the documents required of RTI and otherwise use
                    reasonable efforts to maintain requisite blue sky clearance
                    in:

                    (i)   all jurisdictions in which any of the Shares are sold
                          originally; and

                    (ii)  all other states specified in writing by Abbott,
                          provided as to this clause (ii), however, that RTI
                          shall not be required to qualify to do business or
                          consent to service of process in any state in which it
                          is not now so qualified or has not so consented.

         2.6   Selling Procedures.
               ------------------

               (a)  In the event Abbott intends to resell Shares pursuant to a
                    Registration Statement, Abbott shall give RTI five (5)
                    business days notice of its intent to sell in reliance on
                    such Registration Statement (the "Notice of Sale"). RTI may
                    refuse to permit Abbott to resell any Shares pursuant to the
                    Registration Statement; provided, however, that in order to
                    exercise this right, RTI must deliver to Abbott a
                    certificate in writing within three (3) business days
                    following its receipt of the Notice of Sale from Abbott to
                    the effect that a sale pursuant to the Registration
                    Statement in its then current form could constitute a
                    violation of the federal securities laws. In such an event,
                    RTI shall either (i) use commercially reasonable efforts to
                    amend promptly the Registration Statement, if necessary, and
                    take all other actions necessary to allow such sale under
                    the federal securities laws, and shall notify Abbott
                    promptly after it has determined that such sale has become
                    permissible under the federal securities laws, or (ii)
                    exercise its right under paragraph (b) below to delay the
                    sale.

               (b)  If in the good faith judgment of the Board of Directors of
                    RTI, after consultation with counsel, the filing of a
                    Registration Statement or an amendment thereto or prospectus
                    supplement so as permit the proposed sale without a
                    violation of securities laws would materially adversely
                    affect a pending or scheduled public offering, or an
                    acquisition, merger, or similar transaction, or negotiations
                    of either of the foregoing, or would require the disclosure
                    of another material development prior to the time it would
                    otherwise be required to be disclosed in a manner adverse to
                    the best interests of RTI, then it may decline to permit the
                    resale of any Shares pursuant to the Registration Statement
                    for up to a maximum of ninety (90) days, provided that it
                    may not exercise this right more than once in any twelve
                    (12) month period.

               (c)  If RTI has delivered a prospectus to Abbott and after having
                    done so the prospectus is amended to comply with the
                    requirements of the Securities

RTI - Reg. Rights Agmt
May 2, 2000                             -5-
<PAGE>

                    Act, RTI shall reasonably promptly notify Abbott and, if
                    requested, Abbott shall immediately cease making offers of
                    Registrable Securities and return all prospectuses to the
                    Company. The Company shall reasonably promptly provide
                    Abbott with revised prospectuses and, following receipt of
                    the revised prospectuses, Abbott shall be free to resume
                    making offers of the Registrable Securities.

               (d)  Abbott covenants and agrees that it will not sell any Shares
                    pursuant to a Registration Statement during the periods
                    sales in reliance upon the Registration Statement are
                    prohibited as set forth in this Section 2.6.

         2.7   Information from Abbott. It shall be a condition precedent to the
               -----------------------
               obligations of RTI to take any action pursuant to Article 2 of
               this Agreement with respect to the Shares that Abbott shall
               furnish to RTI such information as RTI may reasonably request,
               including information regarding Abbott, the Shares held by it,
               the intended method of disposition of such securities, and such
               other information as required to effect the registration of the
               Shares.

         2.8   Assignment of Registration Rights. The right to cause RTI to
               ---------------------------------
               register the Shares pursuant to this Agreement may be assigned by
               Abbott to a transferee of the Shares only if:

               (a)  RTI is, prior to such transfer, furnished with written
                    notice of the name and address of such transferee and the
                    Shares with respect to which such registration rights are
                    being assigned and a copy of a duly executed written
                    instrument in form reasonably satisfactory to RTI by which
                    such transferee assumes all of the obligations and
                    liabilities of its transferor hereunder and agrees itself to
                    be bound hereby;

               (b)  immediately following such transfer the disposition of the
                    Shares by the transferee is restricted under the Securities
                    Act;

               (c)  such assignment includes all of the Shares then held by
                    Abbott; provided, however, that such share limitation shall
                            --------  -------
                    not apply to transfers by Abbott to its affiliates if all
                    such transferees or assignees agree in writing to appoint a
                    single representative as their attorney-in-fact for the
                    purpose of receiving any notices and exercising their rights
                    under this Agreement; and

               (d)  Abbott guarantees the performance of the transferee of its
                    obligations under this Agreement.

         2.9   Termination of Registration Rights. The registration rights
               ----------------------------------
               provided in this Agreement shall terminate if Abbott may sell all
               of the Shares pursuant to Rule 144 in any three (3) month period.
               Upon the termination of registration rights

RTI - Reg. Rights Agmt
May 2, 2000                             -6-
<PAGE>

               pursuant to this Section 2.9, RTI may withdraw the Registration
               Statement, or any portion thereof, covering the Shares.

         2.10  Reports Under Securities Exchange Act of 1934. With a view to
               ---------------------------------------------
               making available to Abbott the benefits of Rule 144 promulgated
               under the Securities Act and any other rule or regulation of the
               SEC that may at any time permit Abbott to sell securities of RTI
               to the public without registration or pursuant to a registration
               on Form S-3, RTI agrees to:

               (a)  make and keep public information available, as those terms
                    are understood and defined in SEC Rule 144, at all times
                    after ninety (90) days after the effective date of the first
                    registration statement filed by RTI for the offering of its
                    securities to the general public;

               (b)  file with the SEC in a timely manner all reports and other
                    documents required of RTI under the Securities Act and the
                    Exchange Act; and

               (c)  furnish to Abbott, so long as Abbott owns any Shares,
                    forthwith upon request (i) a written statement by RTI that
                    it has complied with the reporting requirements of SEC Rule
                    144 (at any time after ninety (90) days after the effective
                    date of the first registration statement filed by RTI), the
                    Securities Act and the Exchange Act (at any time after it
                    has become subject to such reporting requirements), or that
                    it qualifies as a registrant whose securities may be resold
                    pursuant to Form S-3, (ii) a copy of the most recent annual
                    or quarterly report of RTI and such other reports and
                    documents so filed by RTI, and (iii) such other information
                    as may be reasonably requested in availing Abbott of any
                    rule or regulation of the SEC that permits the selling of
                    any such securities without registration or pursuant to such
                    form.

         2.12  "Lock-up" Agreement; Confidentiality of Notices.
               -----------------------------------------------

               (a)  If requested by the managing underwriter of an underwritten
                    public offering by RTI of RTI common stock, Abbott hereby
                    agrees that, for a period of one hundred eighty (180) days
                    following the effective date of a Registration Statement,
                    (i) it will not offer, pledge, sell, contract to sell, sell
                    any option or contract to purchase, purchase any option or
                    contract to sell, grant any option, right or warrant to
                    purchase, lend, or otherwise transfer or dispose of,
                    directly or indirectly, any shares of RTI common stock or
                    any securities convertible into or exercisable or
                    exchangeable for RTI common stock; (ii) it will not enter
                    into any swap or other arrangement that transfers to
                    another, in whole or in part, any of the economic
                    consequences of ownership of the RTI common stock, whether
                    any such transaction described in clause (i) or (ii) above
                    is to be settled by

RTI - Reg. Rights Agmt
May 2, 2000                             -7-
<PAGE>

                    delivery of RTI common stock or such other securities, in
                    cash or otherwise; and (iii) it shall execute any other
                    customary lock-up agreements as may be requested by the
                    managing underwriters, provided that all stockholders
                    holding not less than the number of shares of RTI common
                    stock held by Abbott (including the shares of RTI common
                    stock issuable upon conversion of the Shares, or other
                    convertible securities, or upon exercise of options,
                    warrants or rights) and all officers and directors of RTI
                    enter into similar agreements.

               (b)  RTI may impose stop-transfer instructions with respect to
                    Registrable Securities or other securities subject to the
                    foregoing restrictions until the end of the applicable lock-
                    up period.

               (c)  Abbott shall treat confidentially any written notice
                    received by Abbott from RTI regarding RTI's plans to file a
                    Registration Statement and shall not disclose such
                    information to any person other than as necessary to
                    exercise its rights under this Agreement.

3.       Indemnification and Contribution.
         --------------------------------

         3.1   Indemnification by RTI. RTI agrees to indemnify and hold harmless
               ----------------------
               Abbott, each of Abbott's directors, officers and U.S. wholly-
               owned subsidiaries, and each person, if any, who controls Abbott
               within the meaning of the Securities Act or the Exchange Act,
               from and against any losses, claims, damages or liabilities (or
               actions or proceedings in respect thereof) to which they may
               become subject (under the Securities Act or otherwise) insofar as
               such losses, claims, damages, or liabilities (or actions or
               proceedings in respect thereof) arise out of, or are based upon
               any untrue statements of a material fact contained in (or upon
               the omission of a material fact from) a Registration Statement
               delivered or circulated by Abbott in connection with a sale of
               RTI securities by Abbott, or arise out of any failure by RTI to
               fulfill any undertaking included in the Registration Statement,
               and RTI will, as incurred reimburse Abbott and such persons for
               any legal or other expenses reasonably incurred in investigating,
               defending or preparing to defend any such action, proceeding, or
               claim; provided, however, that RTI shall not be liable in any
               such case to the extent that such loss, claim, damage, or
               liability arises out of, or is based upon:

               (a)  an untrue statement made in (or upon the omission of a
                    material fact from) such Registration Statement in reliance
                    upon and in conformity with written information furnished to
                    RTI by or on behalf of Abbott specifically for use in
                    preparation of the Registration Statement,

               (b)  the failure of RTI to comply with the covenants or
                    agreements contained in Section 2.5 hereof, or

RTI - Reg. Rights Agmt
May 2, 2000                             -8-
<PAGE>

               (c)  any untrue statement or omission in any prospectus that is
                    corrected in any subsequent prospectus that was delivered to
                    Abbott prior to the pertinent sale or sales by Abbott.

         3.2   Indemnification by Abbott. Abbott agrees to indemnify and hold
               -------------------------
               harmless RTI, each of RTI's directors and officers, and each
               person, if any, who controls RTI within the meaning of the
               Securities Act or the Exchange Act, from and against any losses,
               claims, damages or liabilities (or actions or proceedings in
               respect thereof) to which they may become subject (under the
               Securities Act or otherwise) insofar as such losses, claims,
               damages or liabilities (or actions or proceedings in respect
               thereof) arise out of, or are based upon:

               (a)  either an untrue statement made in or the omission of a
                    material fact from such Registration Statement in reliance
                    upon and in conformity with written information furnished to
                    RTI by or on behalf of Abbott specifically for use in
                    preparation of the Registration Statement,

               (b)  the failure of Abbott to comply with the covenants or
                    agreements contained in Section 2.6 hereof, or

               (c)  any untrue statement or omission in any prospectus that is
                    corrected in any subsequent prospectus that was delivered to
                    Abbott prior to the pertinent sale or sales by Abbott, and
                    Abbott will, as incurred, reimburse RTI and such persons for
                    any legal or other expenses reasonably incurred in
                    investigating, defending, or preparing to defend any such
                    action, proceeding, or claim;

               provided, however, that in no event shall Abbott's cumulative
               aggregate liability under this Section 3.2, or under Section 3.4,
               or under Sections 3.2 and 3.4 together, exceed the net amount
               received by Abbott from the sale of the Shares to which such loss
               relates minus the amount of any damages which Abbott has
               otherwise been required to pay by reason of such untrue or
               allegedly untrue statement or omission or alleged omission.

RTI - Reg. Rights Agmt
May 2, 2000                             -9-
<PAGE>

         3.3   Indemnification Procedures. Promptly after receipt by any
               --------------------------
               indemnified party of a notice of a claim or the beginning of any
               action in respect of which indemnity is to be sought against an
               indemnifying person pursuant to this Article 3, such indemnified
               person shall notify the indemnifying person in writing of such
               claim or of the commencement of such action and, subject to the
               provisions hereinafter stated, in case any such action shall be
               brought against an indemnified person and the indemnifying person
               shall have been notified thereof, the indemnifying person shall
               be entitled to participate therein, and, to the extent that it
               shall wish, to assume the defense thereof, with counsel
               reasonably satisfactory to the indemnified person. After notice
               from the indemnifying person to such indemnified person of the
               indemnifying person's election to assume the defense thereof, the
               indemnifying person shall not be liable to such indemnified
               person for any legal expenses subsequently incurred by such
               indemnified person in connection with the defense thereof;
               provided, however, that if there exists or shall exist a conflict
               of interest that would make it inappropriate in the reasonable
               judgment of the indemnified person for the same counsel to
               present both the indemnified person and such indemnifying person
               or any affiliate or associate thereof, the indemnified person
               shall be entitled to retain its own counsel at the expense of
               such indemnifying person.

         3.4   Contribution. If the indemnification provided for in this Article
               ------------
               3 is unavailable to or insufficient to hold harmless an
               indemnified party under Section 3.1 or 3.2 above in respect of
               any losses, claims, damages, or liabilities (or actions or
               proceedings in respect thereof) referred to therein, then each
               indemnifying party shall contribute to the amount paid or payable
               by such indemnified party as a result of such losses, claims,
               damages, or liabilities (or actions in respect thereof) in such
               proportion as is appropriate to reflect the relative fault of RTI
               on one hand and Abbott on the other in connection with the
               statements or omissions which resulted in such losses, claims,
               damages, or liabilities (or actions in respect thereof), as well
               as any other relevant equitable considerations. The relative
               fault shall be determined by reference to, among other things,
               whether the untrue or alleged untrue statement of a material fact
               or the omission or alleged omission to state a material fact
               related to information supplied by RTI on one hand or Abbott on
               the other and the parties' relative intent, knowledge, access to
               information, and opportunity to correct or prevent such statement
               or omission; provided, however, that in no event shall Abbott's
               cumulative aggregate liability under this Section 3.4, or under
               Section 3.2, or under Sections 3.2 and 3.4 together, exceed the
               net amount received by Abbott from the sale of the Shares to
               which such loss relates minus the amount of any damages which
               Abbott has otherwise been required to pay by reason of such
               untrue or allegedly untrue statement or omission or alleged
               omission. RTI and Abbott agree that it would not be just and
               equitable if contribution pursuant to this Section 3.4 were
               determined by pro rata allocation or by any other method of
               allocation which does not take account of the equitable
               considerations referred to above in this Section 3.4. The amount
               paid or payable

RTI - Reg. Rights Agmt
May 2, 2000                             -10-
<PAGE>

               by an indemnified party as a result of the losses, claims,
               damages, or liabilities (or actions in respect thereof) referred
               to above in this Section 3.4 shall be deemed to include any legal
               or other expenses reasonably incurred by such indemnified party
               in connection with investigating or defending any such action or
               claim. No person guilty of fraudulent misrepresentation (within
               the meaning of Section 11(f) of the Securities Act) shall be
               entitled to contribution from any person who was not guilty of
               such fraudulent misrepresentation.

         3.5   Continuing Obligations. The obligations of RTI and Abbott under
               ----------------------
               this Article 3 shall survive the completion of the offering of
               the Shares pursuant to the Registration Statement and shall be in
               addition to any liability that RTI and Abbott may otherwise have.

4.       Miscellaneous.
         -------------

         4.1   Waiver. The failure on the part of RTI or Abbott to exercise or
               ------
               enforce any right conferred upon it hereunder shall not be deemed
               to be a waiver of any such right, nor operate to bar the exercise
               or enforcement thereof at any time or times thereafter.

         4.2   Notices. Any notice required or permitted to be given by the
               -------
               terms of this Agreement by a party shall be given by prepaid,
               registered air mall or by express delivery service, such as
               Federal Express or DHL, properly addressed to the address of the
               other party set forth below, or to such other address as may,
               from time to time, be designated in writing by such other party,
               and shall be deemed to have been given upon receipt:

                      As to Abbott:
                              Senior Vice President
                              Hospital Products Division
                              Abbott Laboratories
                              200 Abbott Park Road
                              Abbott Park, Illinois 60064-3537

                      With copy (which will not constitute notice) to:

                              Divisional Vice President, D-322
                              Abbott Laboratories
                              100 Abbott Park Road
                              AP6D D-322
                              Abbott Park, Illinois 60064-6049

RTI - Reg. Rights Agmt
May 2, 2000                             -11-
<PAGE>

                      As to RTI:
                              Retractable Technologies, Inc.
                              511 Lobo Lane
                              Little Elm, Texas 75068
                              Attn: Thomas J. Shaw, Chief
                                    Executive Officer and President

                      With copy (which will not constitute notice) to:

                              Retractable Technologies, Inc.
                              Legal Department
                              511 Lobo Lane
                              Little Elm, Texas 75068
                              Attn: Michele Larios

         4.3   Applicable Law. The corporate law of the State of Texas shall
               --------------
               govern all issues concerning the relative rights of RTI and its
               stockholders. All other questions concerning the construction,
               validity and interpretation of this Agreement shall be construed
               and interpreted according to the law of the State of Illinois,
               without giving effect to its conflict of law provisions.

         4.4   Alternative Dispute Resolution. The parties shall attempt to
               ------------------------------
               amicably resolve disputes arising between them regarding the
               validity, construction, enforceability, or performance of the
               terms of this Agreement and any differences or disputes in the
               interpretation of the rights, obligations, liabilities and/or
               remedies hereunder, which have been identified in a written
               notice from one party to the other, by good faith settlement
               discussions between the President of Abbott's Hospital Products
               division and the President and Chief Executive Officer of RTI.
               The parties agree that any dispute that arises in connection with
               the Agreement, which cannot be amicably resolved by such
               representative within thirty (30) days after the receipt of such
               written notice, shall be resolved by binding Alternative Dispute
               Resolution ("ADR") in the manner described in Annex B to the
               Credit Agreement.

         4.5   Captions. The captions to the Articles and Sections of this
               --------
               Agreement are for convenience only, and shall not be deemed of
               any force or effect whatsoever in construing this Agreement.

         4.6   Entire Agreement. The terms and provisions contained herein,
               ----------------
               including the Annex hereto, and the Credit Agreement and the
               exhibits and annexes thereto, constitute the entire agreement
               between the parties and shall supersede all previous
               communications, representations, agreements or understandings,
               either oral or written, between the parties hereto with respect
               to the subject matter hereof. No amendment to this Agreement
               varying or extending the terms hereof will be binding upon either
               party hereto unless in writing, signed by duly authorized
               officers of the respective parties, and referencing this
               Agreement.

RTI - Reg. Rights Agmt
May 2, 2000                             -12-
<PAGE>

         4.7   Assignment. This Agreement shall not be assignable by the
               ----------
               parties, except as permitted under Section 2.9 or (a) to an
               Affiliate of such party, provided the assigning party guarantees
               the performance of the Affiliate, (b) as mutually agreed to in
               writing in advance, or (c) as incident to the merger,
               consolidation, reorganization, or acquisition of stock or assets
               affecting actual voting control of the assigning party or
               affecting all or substantially all of the assets of such party to
               which this Agreement relates. Any permitted assignment shall be
               binding on the successors of the assigning party. Any assignment
               or attempted assignment by any party in violation of the terms of
               this Section 4.7, shall be null and void and of no legal effect.
               For purposes of this Agreement, the term "Affiliate" shall mean,
               with respect to any party hereto, any corporation or other form
               of business organization, which directly owns, controls, is
               controlled by, or is under common control with, such party. An
               entity shall be regarded as being in control of another entity if
               the former entity has the direct or indirect power to order or
               cause the direction of the policies of the other entity whether
               (x) through the ownership of more than fifty percent (50%) of the
               voting securities of the other entity; or (y) by contract,
               statute, regulation, or otherwise.

         4.8   Severability. In the event that any provision of this Agreement
               ------------
               is held by a court of competent jurisdiction to be unenforceable
               because it is invalid or in conflict with any law of any relevant
               jurisdiction, (a) the validity of the remaining provisions shall
               not be affected, (b) the particular provision shall to the extent
               permitted by law be reasonably construed and equitably reformed
               to be valid and enforceable, and (c) the rights and obligations
               of the parties shall be construed and enforced as if the
               Agreement did not contain the unreformed, particular provisions
               held to be unenforceable.

         4.9   Counterparts. This Agreement may be executed in one or more
               ------------
               counterparts, each of which shall be deemed an original.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized officers as of the date first
above written.

ABBOTT LABORATORIES                          RETRACTABLE TECHNOLOGIES, INC.

By: /s/ Richard A. Gonzalez                  By: /s/ Thomas J. Shaw
   -----------------------------                -----------------------------
   Richard A. Gonzalez

Title:  Senior Vice President,               Title:  CEO
        Hospital Products

RTI - Reg. Rights Agmt
May 2, 2000                          -13-<PAGE>

                                                                   EXHIBIT 10.14

                                 MIRENCO, INC.

                      2001 COMMON STOCK COMPENSATION PLAN

     THIS 2001 COMMON STOCK COMPENSATION PLAN ("Plan"), effective as of the date
of its approval by the Board of Directors, the 31st day of March, 2001, is
hereby adopted and established by Mirenco, Inc., an Iowa corporation,
("Company") and will be maintained by the Company for the purpose of providing
stock options and stock appreciation rights for selected management, key
employees,  Advisors and Consultants as provided herein.

                              Article I -- Purpose

          The purpose of the Plan is to provide additional incentive to those
officers, employees,  advisors and consultants of the Company and any Subsidiary
whose substantial contributions are essential to the continued growth and
success of the business of the Company or Subsidiary in order to strengthen
their commitment to the Company or Subsidiary, to motivate them to faithfully
and diligently perform their assigned responsibilities and to attract and retain
competent and dedicated individuals whose efforts will result in the long-term
growth and profitability of the Company and its Subsidiaries.  To accomplish
such purposes, the Plan provides that the Company may grant Incentive Stock
Options,  Nonqualified Stock Options and Stock Appreciation Rights.

                           Article II -- Definitions

          2.01  Scope.  For purposes of this Plan, unless the language or
context clearly indicates that a different meaning is intended, capitalized
terms have the meaning specified in this Article.

          2.02  Definitions.  The following terms used in this Plan shall have
the following meanings:

          (a) "Advisor" or "Consultant" shall mean an advisor or consultant who
is an independent contractor with respect to the Company or a Subsidiary, and
who provides bona fide services (other than in connection with the offer or sale
of securities in a capital raising transaction) to the Company or a Subsidiary;
who is not an employee, officer, or director of the Company or any of its
Subsidiaries; and whose services the Committee determines are of vital
importance to the overall success of the Company or any of its Subsidiaries.

          (b) "Agreement" shall mean the written agreement evidencing the grant
of an Award  and setting forth the terms and conditions thereof.

          (c) "Award" shall mean, individually or collectively, a grant under
this Plan of Options, Stock Appreciation Rights, or both as the context
requires.

                                       1
<PAGE>

          (d) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.

          (e) "Change in Control" shall mean any one of the following events:

              (1) any "person" or group of persons acting in concert (as defined
          in Sections 13(d) and 14(d) of the Exchange Act), other than the
          Company, or a trustee or other fiduciary holding securities under an
          employee benefit plan of the Company or any Subsidiary, acquires,
          directly or indirectly, after the Effective Date of this Plan
          "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
          Act) of any class of securities representing at least thirty percent
          (30%) of the combined voting power of the Company;

              (2) the stockholders of the Company approve a merger or
          consolidation other than (i) a merger that would result in the voting
          securities of the Company outstanding immediately prior thereto
          continuing to represent (either by remaining outstanding or by being
          converted into voting securities of the surviving entity), in
          combination with the ownership of any trustee or other fiduciary
          holding securities under an employee benefit plan of the Company or
          any Subsidiary, at least fifty percent (50%) of the combined voting
          power of all classes of stock of the Company or such surviving entity
          outstanding immediately after such merger or consolidation or (ii) a
          merger effected to implement a recapitalization of the Company (or
          similar transaction) in which the shareholders of the Company
          immediately prior to the recapitalization (or similar transaction)
          acquire at least fifty percent (50%) of the combined voting power of
          the Company's then outstanding securities through the recapitalization
          (or similar transaction); or

              (3) the stockholders of the Company approve a plan of complete
          liquidation of the Company or a sale of all or substantially all of
          the assets of the Company.

          (f) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

          (g) "Committee" shall mean a committee which may be appointed by the
Board to administer the Plan to perform the functions set forth herein, and if
the Company has shares of stock registered under the Securities Act, and is a
reporting company pursuant to Section 12 of the Exchange Act, the Committee
shall thereafter be composed of two or more directors who are Non-Employee
Directors, as defined in paragraph (b)(3)(i) of Rule 16b-3, or any other
successor rule thereto, under the Exchange Act.  Unless and until the Board
appoints such Committee, the Board shall administer the Plan and perform the
functions set forth herein, and references herein to the Committee shall be
deemed to refer to the Board.

          (h) "Company" shall mean Mirenco, Inc., an Iowa corporation, or any
successor thereto.

          (i) "Disability" shall mean, if the Participant is covered by an
individual or group long-term disability policy paid for by the Company or a
Subsidiary, disability as defined in such

                                       2
<PAGE>

policy without regard to any waiting period. If the Participant is not covered
by such a policy, Disability means the Participant suffering a sickness,
accident or injury which in the judgment of a physician satisfactory to the
Company, prevents the Participant from performing substantially all of his or
her normal duties for the Company and/or its Subsidiaries. As a condition to any
benefits, the Company may require the Participant to submit to such physical or
mental evaluations and tests as the Company deems appropriate. "Disabled" shall
mean to suffer from a Disability.

          (j) "Effective Date" shall mean the date first written above on which
this Plan was adopted by the Board.

          (k) "Eligible Employee" shall have the meaning given to it by Article
V.

          (l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

          (m) "Fair Market Value" shall mean the fair market value of one (1)
Share as determined by the Committee in good faith and in its sole discretion,
provided, however, that (1) if the Shares are then admitted to trading on a
national securities exchange, the Fair Market Value on any date shall be the
last sale price reported for one (1) Share on such exchange on such date or on
the last date preceding such date on which a sale was reported, (2) if the
Shares are admitted to quotation on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or other comparable quotation
system and have been designated as a National Market System ("NMS") security,
the Fair Market Value on any date shall be the last sale price reported for one
(1) Share on such system on such date or on the last day preceding such date on
which a sale was reported, or (3) if the Shares are admitted to quotation on
NASDAQ and have not been designated an NMS security, the Fair Market Value on
any date shall be the average of the highest bid and lowest asked prices of one
(1) Share on such system on such date.  Such determination of the Fair Market
Value shall be conclusive and binding on the Participant and all other persons.

          (n) "Free Standing Stock Appreciation Right" shall mean a Stock
Appreciation Right that is not granted in conjunction with the grant of an
Option.

          (o) "Incentive Stock Option" shall mean an Option within the meaning
of Section 422 of the Code.

          (p) "Nonqualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.

          (q) "Option" shall mean an Incentive Stock Option, a Nonqualified
Stock Option, or either or both of them, as the context requires.

          (r) "Participant" shall mean a person to whom an Award has been
granted under the Plan.

                                       3
<PAGE>

          (s) "Plan" shall mean the Mirenco, Inc. 1998 Common Stock Compensation
Plan, as amended or restated from time to time.

          (t) "Related Stock Appreciation Right" shall mean a Stock Appreciation
Right that is granted in conjunction with the grant of an Option.

          (u) "Retirement" shall mean termination of employment with the Company
or a Subsidiary by a Participant (other than as a result of death or
Disability), if the Participant is at least sixty (60) years of age.

          (v) "Securities Act" shall mean the Securities Act of 1933, as
amended.

          (w) "Share" shall mean shares of common stock, without par value, of
the Company.

          (x) "Stock Appreciation Right" shall mean the right to receive all or
some portion of the increase in the value of the Shares as provided in Article
VII hereof.

          (y) "Subsidiary" shall mean any corporation in a descending, 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
fifty percent (50%) or more of the total combined voting power of all  classes
of stock in one of the other corporations in such chain.

          (z) "Ten-Percent Stockholder" shall mean an Eligible Employee, who, at
the time an Incentive Stock Option is to be granted to such Eligible Employee,
owns (within the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, a parent or a Subsidiary within the meaning of Sections
424(e) and 424(f), respectively, of the Code.

                         Article III -- Administration

  3.01 Committee Administration.  The Plan shall be administered by the Board
or, if the Board so determines, by a Committee, and if the Company has shares of
stock registered under the Securities Act, and is a reporting company pursuant
to Section 12 of the Exchange Act, the Committee shall at all times satisfy the
provisions of Rule 16b-3 under the Exchange Act.  The Committee shall hold
meetings at such times as may be necessary for the proper administration of the
Plan.  The Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may authorize any
action.  Any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made at a meeting duly
held.  All actions, determinations or interpretations made in good faith with
respect to the Plan or any Option shall be conclusive and binding on the
Participants and all other persons.  The Company shall pay all expenses incurred
in the administration of the Plan.

  3.02 Powers.  Subject to the express terms and conditions set forth herein,
the Committee shall have the power to perform any and all actions,
determinations and

                                       4
<PAGE>

interpretations related to the administration of the Plan, including, without
limitation, the power from time to time:

       (a) to determine those Eligible Employees to whom Awards shall be granted
     under the Plan and the number of Shares subject to such Awards to be
     granted to each Eligible Employee and to prescribe the terms and conditions
     (which need not be identical) of each Award, including the purchase price
     per share of each Award, and the forfeiture provisions, if any, if the
     Employee leaves the employment of the Company or a Subsidiary within a
     prescribed time or acts against the interests of the Company within a
     prescribed time;

       (b) to construe and interpret the Plan, the Awards granted hereunder and
     to establish, amend and revoke rules and regulations for the administration
     of the Plan, including, but not limited to, correcting any defect or
     supplying any omission, or reconciling any inconsistency in the Plan or in
     any Agreement, and (subject to the provisions of Article X below) to amend
     the terms and conditions of any outstanding Award to the extent such terms
     and conditions are within the discretion of the Committee as provided in
     the Plan, in the manner and to the extent it shall deem necessary or
     advisable to make the Plan fully effective;

       (c) to determine the duration and purposes for leaves of absence which
     may be granted to a Participant without constituting a termination of
     employment or service for purposes of the Plan; and

       (d) generally, to exercise such powers and to perform such acts as are
     deemed necessary or advisable to promote the best interests of the Company
     with respect to the Plan.

                      Article IV -- Stock Subject to Plan

     4.01 Number of Shares.  The maximum number of Shares that may be issued or
transferred pursuant to Awards granted under this Plan is Two Hundred Fifty
Thousand (250,000) Shares of common stock (or the number and kind of shares of
stock or other securities that are substituted for those Shares or to which
those Shares are adjusted pursuant to Article IX), and the Company shall reserve
for the purposes of the Plan, out of its authorized but unissued Shares, such
number of Shares.

     4.02 Terminated Options.  Whenever any outstanding Award or portion thereof
expires, is canceled or is otherwise terminated (other than by exercise of the
Award ), the Shares allocable to the unexercised portion of such Award may again
be the subject of Awards hereunder.

                                       5
<PAGE>

                            Article V - Eligibility

  Eligible Employees shall be the officers, employees, Advisors and Consultants
of the Company and any Subsidiary who, in the view of the Committee, occupy
managerial, professional, or key positions, or who provide valuable services,
and who, in the view of the Committee, have the capability of making a
substantial contribution to the success of the Company.  In making the selection
and in determining the form and amount of Awards, the Committee may give
consideration to the functions and responsibilities of the individual, past and
potential contributions to profitability and sound growth, the value of the
individual's services to the Company, and any other factors deemed relevant by
the Committee.  The Committee shall have full and final authority on selecting
those Eligible Employees who will receive Awards, provided, however, only
individuals who are treated as employees of the Company or any Subsidiary
pursuant to the relevant provisions of the Code may receive Incentive Stock
Options.

                             Article VI -- Options

  The Committee may grant Options to any Eligible Employee in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
Each Option and Agreement shall be subject to the following conditions:

  6.01 Purchase Price.  The purchase price or the manner in which the purchase
price is to be determined for Shares under each Option shall be set forth in the
Agreement, provided, however, that the purchase price per Share under (a) each
Nonqualified Stock Option shall not be less than eighty-five percent (85%) of
the Fair Market Value of a Share at the time the Option is granted, (b) each
Incentive Stock Option shall not be less than one hundred percent (100%) of the
Fair Market Value of a Share at the time the Option is granted, and (c) each
Incentive Stock Option granted to a Ten-Percent Stockholder shall not be less
than one hundred ten (110%) of the Fair Market Value of a Share at the time the
Option is granted.

  6.02 Duration.  Options granted hereunder shall be for a term which will
expire on March 31, 2010, or five (5) years from the date it is granted in the
case of an Incentive Stock Option granted to a Ten-Percent Stockholder.

  6.03 Non-transferability.

       (a) No Option granted hereunder shall be transferable by the Participant
  to whom such Option is granted otherwise than by will or the laws of descent
  and distribution. An Option may be exercised during the lifetime of such
  Participant only by the Participant, or the Participant's guardian or legal
  representative. The terms of such

                                       6
<PAGE>

  Option shall be binding upon the beneficiaries, executors, administrators,
  heirs, assignees and successors of the Participant.

       (b) At the discretion of the Committee and in accordance with the
  provisions of Section 14.03, any Agreement may provide for the designation of
  a beneficiary of the Participant, who may exercise the Option after the
  Participant's death and obtain the economic benefits thereof, subject to the
  consent of the Participant's spouse where required by law.

  6.04 Vesting.  Subject to Section 6.05, the vesting period shall be
specifically set forth in the Agreement, including any acceleration of vesting
upon the occurrence of a death, Retirement, or Disability of the Participant.
The Committee may accelerate the exercisability of any Option or portion thereof
at any time.

  6.05 Accelerated Vesting.  Notwithstanding the provisions in Section 6.04,
each Option granted to a Participant shall become vested in full and immediately
exercisable upon the occurrence of a Change in Control.

  6.06 Termination of Employment.  In the event that a Participant ceases to be
employed by, or ceases to provide services to, the Company and all Subsidiaries,
any outstanding unvested Options held by such Participant shall, unless this
Plan or the Agreement evidencing such Option provides otherwise, terminate as
follows:

       (a) If the Participant's termination of employment is due to his or her
     death,  Disability, or Retirement, all remaining unvested Options granted
     in the Agreement shall terminate immediately; and

       (b) If the Participant's termination of employment is for any other
     reason (including a Participant's ceasing to be employed by a Subsidiary as
     a result of the sale of such Subsidiary or an interest in such Subsidiary),
     the outstanding, unvested Options shall terminate immediately.

      Notwithstanding the foregoing, the Committee may provide, either at the
time an Option is granted or thereafter, that the Option may be exercised after
the periods provided for in this Section, but in no event beyond the term of the
Option.

  6.07 Cancellation and Recission of Options. Unless the Agreement specifies
otherwise, the Committee may cancel and rescind any unexpired, unpaid,
unexercised, or deferred Options (whether vested or unvested pursuant to this
Article VI) at any time before the exercise thereof, if the Participant is not
in compliance with the following conditions:

       (a) A Participant shall not render services for any organization or
  engage directly or indirectly in any business which, in the judgment of the
  Committee, is or becomes competitive with the Company or any Subsidiary, or
  which organization or business, or the rendering of services to such
  organization or business, is or becomes

                                       7
<PAGE>

  prejudicial to or in conflict with the interests of the Company or any
  Subsidiary. For Participants whose employment has terminated, the judgment of
  the Committee shall be based on the Participant's position and
  responsibilities while employed by the Company or its Subsidiaries; the
  Participant's post-employment responsibilities and position with the other
  organization or business; the extent of past, current, and potential
  competition or conflict between the Company (or Subsidiary) and the other
  organization or business; the effect of the Participant's assuming the post-
  employment position on the Company's or its Subsidiary's customers, suppliers,
  and competitors; and such other considerations as are deemed relevant given
  the applicable facts and circumstances. A Participant may, however, purchase
  as an investment or otherwise, stock or other securities of any organization
  or business so long as such investment does not represent a greater than five
  percent (5%) equity interest in the organization or business.

       (b) A Participant shall not, without prior written authorization from the
  Company, disclose to anyone outside the Company or Subsidiaries, or use in
  other than the Company's or Subsidiary's business, any information or
  materials determined to be confidential by the Committee relating to the
  business of the Company or its Subsidiaries, acquired by the Participant
  either during or after employment with the Company or its Subsidiaries.

  6.08  Method of Exercise.  The exercise of an Option shall be made only
by a written notice delivered to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted.  The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon such
exercise in cash, by check, or, at the discretion of the Committee and upon such
terms and conditions as the Committee shall approve, by (a) a loan made by the
Company to the Participant,  or (b) transferring Shares already owned to the
Company pursuant to Section 6.09.  If requested by the Committee, the
Participant shall deliver the Agreement evidencing the Option to the Secretary
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Participant.

  6.09  Alternative Payment Method.  If the Committee, in its sole discretion,
determines that the Participant may pay for the purchase price of Shares
purchased pursuant to an exercise of an Option by using Shares already owned,
the Participant shall deliver a notarized statement of ownership (hereinafter,
"Statement"), in a form to be determined by the Committee, to the Company
indicating that the Participant owns Shares of sufficient number and value to
cover the purchase price of the Shares purchased pursuant to the exercise of the
Option. However, no surrender of the actual stock certificates relating to the
Shares listed in the Statement is necessary. The number of Shares in the
Statement will be treated as a constructive payment of the purchase price, and
the Participant shall retain ownership of such Shares. The Company shall issue a
stock certificate for a number of Shares equal to the Shares purchased pursuant
to the Option minus the number of Shares used for the constructive payment. All
Shares listed in the Statement shall be valued at their Fair Market Value.

                                       8
<PAGE>

      6.10    Rights of Participants.  No Participant shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered the Shares to the Participant, (c) the
Participant's name shall have been entered as a stockholder of record on the
books of the Company and (d) the provisions of Section 13.07 have been
satisfied. Thereupon, the Participant shall have full voting, dividend and other
ownership rights with respect to such Shares.

      6.11    Annual Limitation.  To the extent that the aggregate Fair Market
Value (measured at the date of grant) of Incentive Stock Options which become
exercisable for the first time by any Participant during any calendar year
exceeds one hundred thousand dollars ($100,000), the excess of such Options
shall be treated as Nonqualified Stock Options.

      6.12    Effect of Exercise.  The exercise of any Option shall cancel that
number of Related Stock Appreciation Rights, if any, which is equal to the
number of Shares purchased pursuant to the exercised Option.

      6.13    Registration Rights.    As promptly as practicable after the
Company's listing on any NASDAQ or other exchange, the Company shall cause the
shares underlying this Option to be registered for trading by use of S-8 or
other registration statement filed with the Securities and Exchange Commission.

                    Article VII -- Stock Appreciation Rights

      7.01    Grant. The Committee may from time to time, and subject to such
other terms and conditions as the Committee may prescribe, grant a Free Standing
Stock Appreciation Right or a Related Stock Appreciation Right to any Eligible
Employee.  The terms and conditions of such Stock Appreciation Right shall be
set forth in the Agreement.  A Related Stock Appreciation Right shall be related
on a one-for-one basis to Shares which are subject to the Option concurrently
being granted under the Plan to the grantee of such Related Stock Appreciation
Right.  A Related Stock Appreciation Right shall be subject to the same terms
and conditions as the related Option, and shall only be granted at the same time
as the related Option is so granted.  A Free Standing Stock Appreciation Right
may be granted by the Committee at any time.

      7.02    Exercise of a Related Stock Appreciation Right.  A Participant who
has been granted a Related Stock Appreciation Right may, in lieu of the exercise
of an equal number of Options, elect to exercise one or more Related Stock
Appreciation Rights and thereby become entitled to receive from the Company
payment of the amount determined pursuant to Section 7.05.  Related Stock
Appreciation Rights shall be exercisable only to the same extent and subject to
the same conditions as the Option or Options related thereto are exercisable, as
provided for in Article VI.  A Related Stock Appreciation Right issued in tandem
with an Incentive Stock Option may be exercised only when the Fair Market Value
of the Shares subject to the Incentive Stock Option exceeds the exercise price
of such Option.  The Committee may, in its discretion, prescribe additional
conditions to the exercise of any Related Stock Appreciation Rights.

                                       9
<PAGE>

      7.03    Exercise of Free Standing Stock Appreciation Rights.  Free
Standing Stock Appreciation Rights generally will be exercisable at such time or
times, and may be subject to such other terms and conditions, as shall be
determined by the Committee, in its discretion, and such terms and conditions
shall be set forth in the Agreement; provided, however, that no Free Standing
Stock Appreciation Right shall be exercisable after the expiration of ten (10)
years from the date it is granted.  No Free Standing Stock Appreciation Right
granted hereunder shall be transferable by the Participant to whom such right is
granted otherwise than by will or the laws of descent and distribution, and a
Free Standing Stock Appreciation Right may be exercised during the lifetime of
such Participant only by the Participant or such Participant's guardian or legal
representative.  The terms of such Free Standing Stock Appreciation Right shall
be binding upon the beneficiaries, executors, administrators, heirs and
successors of the Participant.

      7.04    Change in Control.  Notwithstanding any other provision in this
Plan, each Stock Appreciation Right granted to a Participant shall become
immediately exercisable in full upon the occurrence of a Change in Control.

      7.05    Amount Payable. Upon the exercise of each Stock Appreciation
Right, the Participant shall be entitled to receive the following:

              (a) If the Participant exercised a Free Standing Stock
     Appreciation Right, the amount equal to the excess of the Fair Market Value
     of one Share on the exercise date over the Fair Market Value of one Share
     on the grant date; and

              (b) If the Participant exercised a Related Stock Appreciation
     Right, the amount equal to the excess of the Fair Market Value of one Share
     on the exercise date over the exercise price for one Share under the Option
     to which the Stock Appreciation Right relates.

      7.06    Effect of Exercise. The exercise of a Related Stock Appreciation
Right shall cancel an equal number of Shares subject to Options related thereto.

      7.07    Method of Exercise. Stock Appreciation Rights shall be exercised
by a Participant only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised.  If requested by the Committee, the Participant shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and with
respect to a Related Stock Appreciation Right, the Agreement evidencing any
related Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement or Agreements to the
Participant.

      7.08    Form of Payment.  Payment of the amount determined under this
Article, may be made solely in whole Shares in a number determined based upon
their Fair Market Value on the date of exercise of the Stock Appreciation Right,
or alternatively, at the sole discretion of the Committee, solely in cash, or in
a combination of cash and Shares as the Committee deems

                                       10
<PAGE>

advisable. In the event that a Stock Appreciation Right is exercised within
sixty (60) days following a Change in Control, any amount payable shall be
solely in cash. If the Committee decides to make full payment in Shares, and the
amount payable results in a fractional Share, payment for the fractional Share
will be made in cash.

                             Article VIII -- Loans

      8.01    Provision for Loans.   The Company or any Subsidiary may make
loans to a Participant in connection with the exercise of an Option, subject to
the terms and conditions in this Article and such other terms and conditions not
inconsistent with the Plan including the rate of interest, as the Committee
shall impose from time to time.

      8.02    Amount.  No loan made under the Plan shall exceed the sum of (a)
the aggregate purchase price payable pursuant to the Option with respect to
which the loan is made, plus (b) if applicable, the amount of the reasonably
estimated income and payroll taxes payable by the Participant with respect to
the exercise of the Option.  In no event may any such loan exceed the Fair
Market Value, at the date of exercise, of the Shares received pursuant to such
exercise.

      8.03    Term.  No loan shall have an initial term exceeding five (5)
years, provided, however, that loans under the Plan shall be renewable at the
discretion of the Committee, and provided, however, that the indebtedness under
each loan shall become due and payable, as the case may be, on a date no later
than (a) one (1) year after termination of the Participant's employment due to
death or Disability, or (b) the date of termination of the Participant's
employment for any reason other than death or Disability.

      8.04    Payment.  Loans under the Plan may be satisfied by a Participant,
as determined by the Committee, in cash or, with the consent of the Committee,
in whole or in part by the transfer to the Company of Shares whose Fair Market
Value on the date of such payment is equal to part or all of the outstanding
balance of such loan.

      8.05    Security.  A loan shall be secured by a pledge of Shares with a
Fair Market Value of not less than the principal amount of the loan.  After any
repayment of a loan, pledged Shares no longer required as security may be
released to the Participant.

      8.06    Other Provisions.  Every loan shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and shall satisfy the
applicable laws and regulations under the Code for imputed interest.

              Article IX -- Adjustment and Modification of Options

      9.01    Change in Capitalization.  In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or exchange of shares or
other similar corporate change, the Committee will adjust on a pro-rata basis
appropriate to the aggregate number and kind of Shares issuable under the Plan,
the number and kind of Shares covered by Awards made under the Plan,

                                       11
<PAGE>

and the exercise price of outstanding Options. Any fractional Share resulting
from such adjustment shall be rounded up to the nearest whole Share. The
adjustment provided for by this Section shall be conclusive and binding on all
Participants and all other persons.

      9.02    Incentive Stock Options.  Any such adjustment in the Shares or
other securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.

      9.03    Exercise after a Transaction.  In the event of any liquidation,
dissolution, merger, consolidation or other reorganization (collectively, a
"Transaction") of the Company, the Options and Agreements shall continue in
effect in accordance with their respective terms, except that following a
Transaction each Participant, upon the exercise of any Option, shall be entitled
to receive in respect of each Share subject to an Option the same number and
kind of stock, securities, cash, property or other consideration, as the case
may be, that each holder of a Share was entitled to receive in the Transaction
in respect of a Share.

      9.04    Modification and Assumption.  Within the limitations of the Plan,
the Committee may modify, assume, cancel or accept the cancellation of Options
in return for the grant of new Options for the same or a different number of
Shares and at the same or a different exercise price, provided, however, no
modification, assumption or cancellation of an Option shall, without the written
consent of the Participant, impair the Participant's rights or increase or
decrease the Participant's obligations under such Option.

               Article X --Termination and Amendment of the Plan

      10.01   Termination.  The Plan shall terminate on the day preceding the
tenth anniversary of its Effective Date, except with respect to Awards
outstanding on such date, and no Awards may be granted thereafter.  The Board
may sooner terminate or amend the Plan at any time, and from time to time;
provided, however, that, except as provided in Article IX hereof, no amendment
shall be effective unless approved by the stockholders of the Company where
stockholder approval of such amendment is required (a) to comply with Rule 16b-
3, or any successor provision thereto, under the Exchange Act, or (b) to comply
with any other law, regulation or stock exchange rule.

      10.02   Effect of Amendment. Except as provided in Article IX hereof,
rights and obligations under any Award  granted before any amendment of the Plan
shall not be adversely altered or impaired by such amendment, except with the
consent of the Participant.

                   Article XI -- Non-Exclusivity of the Plan

      The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable,

                                       12
<PAGE>

including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.

                     Article XII -- Limitation of Liability

      12.01   Limitation.  As illustrative of the limitations of liability of
the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:

       (a) give any officer, employee, Advisor or Consultant any right to be
     granted an Award other than at the sole discretion of the Committee;

       (b) give any person any rights whatsoever with respect to Shares except
     as specifically provided in the Plan;

       (c) limit in any way the right of the Company or its Subsidiaries to
     terminate the employment of any person at any time; or

       (d) be evidence of any agreement or understanding, expressed or implied,
     that the Company, or its Subsidiaries, will employ any person in any
     particular position, at any particular rate of compensation or for any
     particular period of time.

      12.02   Liability and Indemnification.

       (a) Notwithstanding any provision herein to the contrary, neither the
     Company, any of its Subsidiaries nor any individual acting as an employee,
     agent, or director of the Company or any Subsidiary shall be liable to any
     Participant, former Participant, designated Beneficiary, or any other
     person for any claim, loss, liability or expense incurred in connection
     with the Plan, unless attributable to fraud or willful misconduct on the
     part of the Company, Subsidiary or any such employee, agent, or director of
     the Company or Subsidiary.

       (b) The Company shall indemnify, to the fullest extent permitted by law,
     members of the Committee and directors and employees of the Company, both
     past and present, to whom are or were delegated duties, responsibilities or
     authority with respect to the Plan, against any and all claims, losses,
     liabilities, fines, penalties and expenses (including, but not limited to,
     all legal fees relating thereto), reasonably incurred by or imposed upon
     such persons, arising out of any act or omission in connection with the
     operation and administration of the Plan, other than fraud or willful
     misconduct.

         Article XIII -- Regulations and Other Approvals; Governing Law

      13.01   Governing Law.  This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of Iowa.

                                       13
<PAGE>

      13.02   Obligation to Issue Shares.  The obligation of the Company to sell
or deliver Shares with respect to Options granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.

      13.03   Rule 16b-3.  After the Company has shares of stock registered
under the Securities Act, and is a reporting company pursuant to Section 12 of
the Exchange Act, any provisions of the Plan inconsistent with Rule l6b-3, or
any successor provision thereto, under the Exchange Act shall be inoperative and
shall not affect the validity of the Plan.

      13.04   Mandatory Changes.  Except as otherwise provided in Article X, the
Board may make such changes in the Plan or any Agreement as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Participants granted Incentive Stock Options, the
tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.

      13.05   Securities Laws.  Each Award is subject to the requirement that,
if at any time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Shares issuable pursuant to the Plan
is required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or the
issuance of Shares, no Awards shall be granted or payment made or Shares issued,
in whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as acceptable to
the Committee.

      13.06   Transfer Restrictions.  In the event that the disposition of
Shares acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act and is not otherwise exempt from
such registration, such Shares shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the Company
may place a restrictive legend on the share certificate indicating such
restrictions.  Furthermore, the Committee may require a Participant receiving
Shares pursuant to the Plan, as a condition precedent to receipt of such Shares,
to represent to the Company in writing that the Shares acquired by such
Participant are acquired for investment only and not with a view to
distribution.

      13.07   Share Agreements.  The Committee, in its sole discretion, may
require any Participant, beneficiary, guardian or legal representative of a
Participant or any other person to execute one (1) or more agreements, relating
to the Shares of the Company, with the Company and/or any of the Company's
shareholders; and no Share may be issued by the Company pursuant to an exercise
of an Option or Stock Appreciation Right, unless and until such agreements, if
any, are executed.

                          Article XIV --Miscellaneous

                                       14
<PAGE>

      14.01   Multiple Agreements.  The terms of each Award may differ from,
other Awards granted under the Plan at the same time, or at any other time.  The
Committee may also grant more than one Award to a given Participant during the
term of the Plan, either in addition to, or in substitution for, one or more
Awards previously granted to that Participant.  The grant of multiple Awards may
be evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.

      14.02   Withholding of Taxes.

       (a) Whenever the Company proposes to issue or transfer Shares under the
     Plan, the Company shall have the right to require the Participant to remit
     to the Company prior to the issuance of any stock certificates and to
     deduct from any payment of cash to the Participant an amount sufficient to
     satisfy any federal, state, and local withholding tax requirements.

       (b) Whenever under the Plan payments are to be made in cash, such
     payments will be net of an amount sufficient to satisfy any federal, state,
     and local withholding tax requirements.

       (c) With the consent of the Committee, any Participant may satisfy,
     totally or in part, the obligations pursuant to Section 14.02(a) by
     electing to have Shares withheld having a Fair Market Value equal to the
     amount of cash required to be withheld.  All elections shall be
     irrevocable, and be made in writing and signed by the Participant prior to
     the day of exercise.

       (d) The Agreement evidencing any Incentive Stock Options granted under
     this Plan shall provide that if the Participant makes a disposition, within
     the meaning of Section 424(c) of the Code and regulations promulgated
     thereunder, of any Share or Shares issued to such Participant pursuant to
     such Participant's exercise of an Incentive Stock Option, and such
     disposition occurs within the two (2) year period commencing on the day
     after the date of grant of such Option or within the one (1) year period
     commencing on the day after the date of transfer of the Share or Shares to
     the Participant pursuant to the exercise of such Option, such Participant
     shall, within ten (10) days of such disposition, notify the Company thereof
     and thereafter immediately deliver to the Company any amount of federal,
     state or local income taxes and other amounts that the Company informs the
     Participant the Company is required to withhold.

      14.03   Designation of Beneficiary.

       (a) Each Participant may, with the consent of the Committee, designate a
     person or persons to receive in the event of such Participant's death, any
     Award or any amount of Shares payable pursuant thereto, to which such
     Participant would then be entitled on forms supplied by the Company. The
     Participant may revoke or amend a designation at any time by a subsequent
     written designation.  However, no such designation, revocation or amendment
     shall be effective unless signed and dated by the

                                       15
<PAGE>

     Participant and delivered to the Company within the Participant's lifetime.
     The Company makes no guarantees or assurances that the beneficiary forms
     supplied by the Company will effect a proper nontestamentary transfer of
     any Award or amount of Shares. The Participant is solely responsible for
     determining whether any form submitted to the Company is in compliance with
     the laws of the applicable jurisdiction at the time of his or her death.

       (b) In the event of the death of a Participant and in the absence of a
     beneficiary validly designated under the Plan who is living at the time of
     such Participant's death, the Company shall deliver such Options, Stock
     Appreciation Rights, and/or amounts payable to the executor or
     administrator of the estate of the Participant, or if no such executor or
     administrator has been appointed (to the knowledge of the Company), the
     Company, in its discretion, may deliver such Options, Stock Appreciation
     Rights, and/or amounts payable to the spouse or to any one or more
     dependents or relatives of the Participant, or if no spouse, dependent or
     relative is known to the Company, then to such other person as the Company
     may designate.

      14.04   Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

      14.05   Severability.  In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

      14.06   Successors.  All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

      14.07   Headings and Captions.  The headings and captions in this Plan are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

      14.08   Shareholder Approval.  Shareholder approval of this Plan is
required to qualify any Option as an Incentive Stock Option, and if shareholder
approval is not received within twelve (12) months after the Effective Date of
this Plan, any Awards of Incentive Stock Options shall be automatically
converted into Nonqualified Stock Options.

                                       16
<PAGE>

      IN WITNESS WHEREOF, this Plan is made effective as of the day, month and
year first above written.

                                    MIRENCO, INC.

                                    By: /s/ Dwayne Fosseen
                                        ------------------
                                    Dwayne Fosseen, CEO and Chairman

                                       17

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