<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
SCHEDULE 13D
AMENDMENT NO. 1
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(a)
Diametrics Medical, Inc.
- ----------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, par value $0.01
- ----------------------------------------------------------------------------
(Title of Class of Securities)
[252532 10 6]
- ----------------------------------------------------------------------------
CUSIP Number
BCC Acquisition II LLC
c/o Bay City Capital LLC
750 Battery Street
Suite 600
San Francisco, California 94111
(415) 676-3830
with a copy to:
Timothy G. Hoxie, Esq.
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
(415) 772-6052
- ----------------------------------------------------------------------------
(Name, address and telephone number
of person authorized to receive notices and communications)
August 4,1998
--------------------
(Date of Event which requires
filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this statement because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box: / /
(Continued on following pages)
(Page 1 of 15 Pages)
<PAGE>
CUSIP NO. 252532 10 6 13D Page 2 of 15 pages
AMENDMENT NO. 1
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1) NAMES OF REPORTING PERSONS BCC Acquisition II LLC
- ------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3) SEC USE ONLY
- ------------------------------------------------------------------------------
4) SOURCE OF FUNDS WC, AF
- ------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
/ /
- ------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING
BENEFICIALLY OWNED POWER -0-
BY EACH REPORTING -------------------------------------------------
PERSON WITH (8) SHARED VOTING
POWER 3,400,541 shares
-------------------------------------------------
(9) SOLE DISPOSITIVE
POWER -0-
-------------------------------------------------
(10) SHARED DISPOSITIVE
POWER 3,400,541 shares
- ------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,400,541 shares
- ------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- ------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8%
- ------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON OO
- ------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 252532 10 6 13D Page 3 of 15 pages
AMENDMENT NO. 1
- ------------------------------------------------------------------------------
1) NAMES OF REPORTING PERSONS The Bay City Capital Fund I, L.P.
- ------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3) SEC USE ONLY
- ------------------------------------------------------------------------------
4) SOURCE OF FUNDS WC, AF
- ------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
/ /
- ------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING
BENEFICIALLY OWNED POWER -0-
BY EACH REPORTING -------------------------------------------------
PERSON WITH (8) SHARED VOTING
POWER 3,400,541 shares
-------------------------------------------------
(9) SOLE DISPOSITIVE
POWER -0-
-------------------------------------------------
(10) SHARED DISPOSITIVE
POWER 3,400,541 shares
- ------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,400,541 shares
- ------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- ------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8%
- ------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON PN
- ------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 252532 10 6 13D Page 4 of 15 pages
AMENDMENT NO. 1
- ------------------------------------------------------------------------------
1) NAMES OF REPORTING PERSONS Bay City Capital Management LLC
- ------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3) SEC USE ONLY
- ------------------------------------------------------------------------------
4) SOURCE OF FUNDS AF
- ------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
/ /
- ------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING
BENEFICIALLY OWNED POWER -0-
BY EACH REPORTING -------------------------------------------------
PERSON WITH (8) SHARED VOTING
POWER 3,400,541 shares
-------------------------------------------------
(9) SOLE DISPOSITIVE
POWER -0-
-------------------------------------------------
(10) SHARED DISPOSITIVE
POWER 3,400,541 shares
- ------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,400,541 shares
- ------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- ------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8%
- ------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON OO
- ------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 252532 10 6 13D Page 5 of 15 pages
AMENDMENT NO. 1
- ------------------------------------------------------------------------------
1) NAMES OF REPORTING PERSONS Bay City Capital LLC
- ------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- ------------------------------------------------------------------------------
3) SEC USE ONLY
- ------------------------------------------------------------------------------
4) SOURCE OF FUNDS AF
- ------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
/ /
- ------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING
BENEFICIALLY OWNED POWER -0-
BY EACH REPORTING -------------------------------------------------
PERSON WITH (8) SHARED VOTING
POWER 3,400,541 shares
-------------------------------------------------
(9) SOLE DISPOSITIVE
POWER -0-
-------------------------------------------------
(10) SHARED DISPOSITIVE
POWER 3,400,541 shares
- ------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,400,541 shares
- ------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
/ /
- ------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.8%
- ------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON OO
- ------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 252532 10 6 13D Page 6 of 15 pages
AMENDMENT NO. 1
INTRODUCTION
BCC Acquisition II LLC, a Delaware limited liability company ("BCC
Acquisition"), hereby files this Amendment No. 1 (the "Amendment") to the
Statement on Schedule 13D (the "Statement") on behalf of the Reporting
Persons (as defined under Item 2 of the Statement) identified in the
Statement pursuant to the Agreement with respect to Schedule 13D attached to
the Statement as Exhibit 7(1). Defined terms not otherwise defined herein
have the meanings ascribed thereto in the Statement.
Pursuant to a Common Stock Purchase Agreement (the "Common Stock
Purchase Agreement"), dated June 30, 1998, among Diametrics Medical, Inc., a
Minnesota corporation (the "Issuer"), BCC Acquisition and certain other
purchasers (named in the Common Stock Purchase Agreement attached to the
Statement as Exhibit 7(2)), the Issuer agreed to issue 1,952,191 shares
("Shares") of its common stock ("Common Stock") to BCC Acquisition and
190,667 shares of Common Stock to certain other purchasers.
Pursuant to the Common Stock Purchase Agreement, the Issuer also
agreed to issue to BCC Acquisition a warrant or warrants ("Warrant" or
"Warrants") to acquire, at any time and from time to time, 650,731 additional
shares of Common Stock, and to issue to certain other purchasers a Warrant or
Warrants to acquire 63,555 additional shares of Common Stock. The Warrant or
Warrants would be issued in the form attached to the Statement as Exhibit
7(3)).
The purchase and sale transaction was conditioned upon BCC
Acquisition arranging for a $7.3 million financing to enable the Issuer to
repay an outstanding note to Howmedica, Inc. in the same principal amount.
The terms of the financing are set forth in a note purchase agreement ("Note
Purchase Agreement") that is an exhibit to the Common Stock Purchase
Agreement and the notes to be issued pursuant thereto ("Notes"). A copy of
the Note Purchase Agreement is attached to the Statement as Exhibit 7(4) and
a copy of the form of Notes is attached to the
<PAGE>
CUSIP NO. 252532 10 6 13D Page 7 of 15 pages
AMENDMENT NO. 1
Statement as Exhibit 7(5). The terms of the Note Purchase Agreement include
the rights of holders of the Notes to convert all or a portion of the
obligations evidenced thereby at any time into the Issuer's Common Stock at a
conversion price of $8.40 per share.
The Note Purchase Agreement contemplated that BCC Acquisition
would acquire Notes for $6.7 million and certain other purchasers listed on
the schedule attached to the Note Purchase Agreement would acquire Notes for
$600,000. If converted, in accordance with the proposed Note Purchase
Agreement, BCC Acquisition would acquire an additional 797,619 shares of
Common Stock.
On August 4, 1998, BCC Acquisition and the Issuer closed the
transactions contemplated by the Common Stock Purchase Agreement, the Warrant
Agreement and the Note Purchase Agreement. Pursuant to those agreements, all
of the following occurred at the Closing: (1) BCC Acquisition paid the cash
purchase price of $13,665,337 and received from the Issuer 1,952,191 Shares
and a Warrant to purchase 650,731 additional shares of Common Stock; (2) BCC
Acquisition paid $6.7 million to, and received from, the Issuer, Convertible
Senior Secured Fixed Rate Notes evidencing obligations of $6.7 million of
original principal amount; (3) the Issuer repaid the outstanding Howmedica,
Inc. note with the proceeds of the sale of the Notes to BCC Acquisition and
certain other purchasers; and (4) the Issuer's board of directors appointed
BCC Acquisition's nominee, David V. Milligan, as a director of the Issuer.
The number of shares of Common Stock issued by the Issuer to BCC
Acquisition constitutes approximately 8.4% (or approximately 10.9% if BCC
Acquisition were to exercise all of its Warrants to acquire an additional
650,731 shares of the Issuer's Common Stock) of the number of shares of the
Issuer's Common Stock outstanding immediately after the Closing. If,
immediately after the Closing, BCC Acquisition had converted all of the Note
obligations into shares of the Issuer's Common Stock as provided in the Note
Purchase Agreement, and had
<PAGE>
CUSIP NO. 252532 10 6 13D Page 8 of 15 pages
AMENDMENT NO. 1
exercised all of its Warrants, then the number of shares of Common Stock that
would have been issued by the Issuer to BCC Acquisition (3,400,541 shares)
would have constituted approximately 13.8% of the number of shares of the
Issuer's Common Stock outstanding immediately following the Closing.
Section 10.1 of the Common Stock Purchase Agreement provides that
the Issuer will file a registration statement covering the Shares issued or
issuable under the Common Stock Purchase Agreement, the Warrant Agreement,
and the Note Purchase Agreement within 45 days after the Closing.
Only those Items amended are reported herein.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended in its entirety by the following paragraphs:
On August 4, 1998, BCC Acquisition and the Issuer closed the
transactions contemplated by the Common Stock Purchase Agreement, the Warrant
Agreement and the Note Purchase Agreement. Pursuant to those agreements, all
of the following occurred at the Closing: (1) BCC Acquisition paid the cash
purchase price of $13,665,337 and received from the Issuer 1,952,191 Shares
and a Warrant to purchase 650,731 additional shares of Common Stock; (2) BCC
Acquisition paid $6.7 million to, and received from, the Issuer Convertible
Senior Secured Fixed Rate Notes evidencing obligations of $6.7 million of
original principal amount; (3) the Issuer repaid the outstanding Howmedica,
Inc. note with the proceeds of the sale of the Notes to BCC Acquisition and
certain other purchasers; and (4) the Issuer's board of directors appointed
BCC Acquisition's nominee, David V. Milligan, as a director of the Issuer.
<PAGE>
CUSIP NO. 252532 10 6 13D Page 9 of 15 pages
AMENDMENT NO. 1
The number of shares of Common Stock issued by the Issuer to BCC
Acquisition constitutes approximately 8.4% (or approximately 10.9% if BCC
Acquisition were to exercise all of its Warrants to acquire an additional
650,731 shares of the Issuer's Common Stock) of the number of shares of the
Issuer's Common Stock outstanding immediately after the Closing. If,
immediately after the Closing, BCC Acquisition had converted all of the Note
obligations into shares of the Issuer's Common Stock as provided in the Note
Purchase Agreement, and had exercised all of its Warrants, then the number of
shares of Common Stock that would have been issued by the Issuer to BCC
Acquisition (3,400,541 shares) would have constituted approximately 13.8% of
the number of shares of the Issuer's Common Stock outstanding immediately
following the Closing.
The total funds required by BCC Acquisition to purchase the Common
Stock and the Warrants, pursuant to the Common Stock Purchase Agreement, was
$13,665,337. An additional $6,700,000 was required for purchase of the Notes.
Therefore, the total funds required of BCC Acquisition at Closing was
$20,365,337.
Pursuant to the LLC Agreement for BCC Acquisition II LLC, attached
to the Statement as Exhibit 7(6) and the First Amendment to the LLC Operating
Agreement for BCC Acquisition II LLC, attached hereto as Exhibit 7(7), BCC
contributed $10,000,000 to BCC Acquisition and BIG contributed $10,047,004.
Under participation agreements entered into by BCC Acquisition with each of
two Swiss entities, Banca della Svizzera Italiana and Banca del Gottardo,
(collectively, "the Swiss Investors"), attached hereto as Exhibits 7(8) and
7(9) respectively, the Swiss Investors provided $318,334.80 toward BCC
Acquisition's purchase of the Notes.
<PAGE>
CUSIP NO. 252532 10 6 13D Page 10 of 15 pages
AMENDMENT NO. 1
Item 4. PURPOSE OF TRANSACTION.
Item 4 is amended by adding the following paragraph immediately
prior to the next to last paragraph thereof:
The Issuer's board of directors appointed BCC Acquisition's
nominee, David V. Milligan, to serve as a member of the board commencing
immediately after the Closing.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5, paragraphs (a) and (b), are amended and restated to read
as follows:
(a) and (b)
The aggregate number of shares and percentage of Common Stock of
the Issuer (based upon the representation of the Issuer in the Common Stock
Purchase Agreement that it had 21,189,923 shares of Common Stock outstanding
as of August 4, 1998 immediately prior to Closing) beneficially owned by each
person named in Item 2 of the Statement, as well as the number of shares of
Common Stock as to which such person is deemed to have sole power to vote or
to direct the vote, shared power to vote or to direct the vote, sole power to
dispose or to direct the disposition, or shared power to dispose or direct
the disposition, is set forth in the following table.
<PAGE>
CUSIP NO. 252532 10 6 13D Page 11 of 15 pages
AMENDMENT NO. 1
(This table shows the number of shares of Common Stock of the Issuer that
were acquired upon purchase and payment pursuant to the Common Stock Purchase
Agreement and Note Purchase Agreement, and includes the Warrant Shares that
would be received upon complete exercise of any Warrant or Warrants and
complete conversion of any Note or Notes.)
<TABLE>
<CAPTION>
Reporting Person No. of Shares Percentage Power to Vote Power to Dispose
Beneficially of Class Shared Sole Shared Sole
Owned(1)
- ---------------- ------------- ---------- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
BCC Acquisition 3,400,541 13.8% 3,400,541 3,400,541
BCC 3,400,541 13.8% 3,400,541 3,400,541
BCC Management 3,400,541 13.8% 3,400,541 3,400,541
BCC LLC 3,400,541 13.8% 3,400,541 3,400,541
</TABLE>
The information required by Item 5 with respect to persons with
whom voting or dispositive power is shared is set forth in Item 2 of the
Statement.
The Reporting Persons have been advised that: (a) certain trusts
primarily for the benefit of the lineal descendants of Nicholas J. Pritzker,
deceased (the "RA Trusts") own indirect interests in each of BCC Acquisition,
BCC, BCC Management and BCC LLC; (b) as of August 4, 1998, the RA Trusts owned
indirectly 25,319 shares of common stock of the Issuer; (c) as of August 4,
1998, a limited liability company, the members of which are other trusts
primarily for the benefit of the lineal descendants of Nicholas J. Pritzker,
deceased ("Amarfour"), owned 1,789,100 shares of common stock of the Issuer; (d)
as of August 4, 1998, other trusts primarily for the benefit of the lineal
descendants Nicholas J. Pritzker, deceased (the "Hoinfad Trusts")
- --------
(1) This filing shall not be deemed an admission that the Reporting
Persons presently are, for purposes of Section 13 of the Act, Beneficial
Owners of any shares that the Swiss Investors would be entitled to upon
conversion of the Notes. Upon their election to convert their Participation
in the Notes, the Swiss Investors would receive an aggregate of 37,897 shares.
<PAGE>
CUSIP NO. 252532 10 6 13D Page 12 of 15 pages
AMENDMENT NO. 1
owned less than a 10% interest in AEOW 96, LLC ("AEOW"), which is a party to
the Common Stock Purchase Agreement, and which owned 60,089 shares of common
stock of the Issuer; (e) different individuals serve as trustees of the RA
Trusts and the member trusts of Amarfour on the one hand and the Hoinfad
Trusts on the other hand, and there is no overlap in trusteeships between the
Hoinfad Trusts and the RA Trusts, but there is overlap in trusteeships
between the RA Trusts and the member trusts of Amarfour; (f) none of the RA
Trusts, the Hoinfad Trusts, Amarfour, AEOW or the Reporting Persons have any
express or implied agreement to act together for the purpose of acquiring,
holding, voting or disposing of the common stock or any other securities of
the Issuer; and (g) the RA Trusts expressly disclaim (i) the existence of any
group with any or all of Amarfour, the Hoinfad Trusts, AEOW or the Reporting
Persons, and (ii) beneficial ownership of the shares of common stock
currently or hereafter owned by any or all of Amarfour, the Hoinfad Trusts,
AEOW or the Reporting Persons.
A response to Item 5(c) is added as follows:
Other than the closing of the transactions contemplated by the
Common Stock Purchase Agreement, the Warrant Agreement and the Note Purchase
Agreement which are described in this Amendment, there have been no
transactions by the Reporting Persons in the Issuer's Common Stock since the
date of the filing of the Statement.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is amended by adding the following at the end thereof:
<PAGE>
CUSIP NO. 252532 10 6 13D Page 13 of 15 pages
AMENDMENT NO. 1
(d) FIRST AMENDMENT TO THE LLC OPERATING AGREEMENT.
The First Amendment to the LLC Operating Agreement by and between
BCC and BIG, provides that BCC's capital contribution and commitment will
remain at $10,000,000 and that the aggregate capital contribution and
commitment of BIG be increased from $9,047,004 to $10,047,004. The First
Amendment to the LLC Operating Agreement is attached hereto as Exhibit 7(7).
(e) SWISS PARTICIPATION AGREEMENTS.
Pursuant to the two participation agreements, BCC Acquisition
agreed to sell an undivided interest and participation in the Notes to the
Swiss Investors on the terms and conditions set forth therein. The
Participation Amount (as defined in the participation agreements attached
hereto as Exhibits 7(8) and 7(9)) was equal to an aggregate purchase price of
$318,334.80. At the Closing (as defined in Item 3 of this Amendment), the
Swiss Investors, Banca della Svizzera Italiana and Banca del Gottardo, paid
$159,171.60 and $159,163.20, respectively, to BCC Acquisition and received an
undivided interest and participation in the Notes (as more fully described in
Exhibits 7(8) and 7(9) attached hereto).
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 7(7). First Amendment to the LLC Operating Agreement
Exhibit 7(8). Participation Agreement by and between BCC Acquisition II and
Banca della Svizzera Italiana
Exhibit 7(9). Participation Agreement by and between BCC Acquisition II and
Banca del Gottardo
<PAGE>
CUSIP NO. 252532 10 6 13D Page 14 of 15 pages
AMENDMENT NO. 1
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No Description Page
- ---------- ----------- ----
<C> <S> <C>
7(7) First Amendment to the Limited Liability Operating
Agreement for BCC Acquisition II LLC
7(8) Participation Agreement by and between BCC
Acquisition II LLC and Banca della Svizzera
Italiana.
7(9) Participation Agreement by and between BCC Acquisition II LLC
and Banca del Gottardo.
</TABLE>
<PAGE>
CUSIP NO. 252532 10 6 13D Page 15 of 15 pages
AMENDMENT NO. 1
SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Dated: August __, 1998
BCC Acquisition II LLC
By: Its Manager
The Bay City Capital Fund I, L.P.
By: Its General Partner
Bay City Capital Management
LLC
By: /s/ Fred B. Craves
---------------------------------------------
Its: Manager
<PAGE>
FIRST AMENDMENT TO THE
LLC OPERATING AGREEMENT
FOR
BCC ACQUISITION II LLC
THIS FIRST AMENDMENT TO THE LLC OPERATING AGREEMENT ("First Amendment")
is made and entered into as of July __, 1998, by and between The Bay City
Capital Fund I, L.P. (the "MANAGER" and a "MEMBER") and Bay Investment Group,
L.L.C. ("BIG", a "MEMBER" and, with the Manager, the "MEMBERS"). This First
Amendment amends that certain LLC Operating Agreement, by and between the
Manager and BIG dated as of June 30, 1998 (the "LLC OPERATING AGREEMENT").
RECITAL
The Manager and BIG desire to modify the capital commitment and capital
contribution provisions of the LLC Operating Agreement.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1.1 SUBSECTION 2.1 CAPITAL COMMITMENT of the LLC Operating Agreement is
amended in its entirety to read as follows:
The Manager's aggregate capital commitment hereunder is
$10,000,000. BIG's aggregate capital commitment hereunder is $10,047,004.
1.2 SUBSECTION 2.2 CAPITAL CONTRIBUTION of the LLC Operating Agreement
is amended in its entirety to read as follows:
Upon the request of the Manager for capital contributions, each of
the Members shall make capital contributions to the Company up to such
Member's aggregate capital commitment, provided that no Member shall be
obligated to make a capital contribution other than related to the
Common Stock Purchase Agreement dated June 30, 1998 between the Company
and Diametrics Medical, Inc., the Note Purchase Agreement referred to
therein and the transactions contemplated by either of such documents or
operating expenses of the Company. All capital contributions shall be
made first by the Manager (up to $10,000,000 in the aggregate) and then
by BIG (up to $10,047,004 in the aggregate).
<PAGE>
IN WITNESS WHEREOF, each of the Members of BCC ACQUISITION II LLC have
executed this First Amendment, effective as of the date written above.
THE BAY CITY CAPITAL FUND I, L.P.
Address: c/o Bay City Capital LLC
750 Battery Street, Suite 600
San Francisco, CA 94111
By: Bay City Capital Management LLC
Its: General Partner
By: /s/ Roger H. Salquist
------------------------------------
Name: Roger H. Salquist
Title: Managing Partner
BAY INVESTMENT GROUP, L.L.C.
Address: 200 West Madison Street
Suite 3800
Chicago, IL 60606
By: /s/ Thomas J. Pritzker
------------------------------------
Name: Thomas J. Pritzker
Title: Co-Trustee of R.A. Trust No. 25,
a general partner of R.A.
Investment Group, a member of
Bay Investment Group, L.L.C.
By: /s/ Marshall E. Eisenberg
------------------------------------
Name: Marshall E. Eisenberg
Title: Co-Trustee of R.A. Trust No. 25,
a general partner of R.A.
Investment Group, a member of
Bay Investment Group, L.L.C.
2
<PAGE>
PARTICIPATION AGREEMENT
July __, 1998
Banca della Svizzera Italiana
via Peri, 23
6900 Lugano
Switzerland
Attn: A. De Angelis
Re: Diametrics Medical, Inc. Note or Notes
--------------------------------------
Ladies and Gentlemen:
We refer to the Note Purchase Agreement to be executed at the Closing
pursuant to the Common Stock Purchase Agreement dated June 30, 1998 between
Diametrics Medical, Inc. (the "BORROWER") and certain signatories thereto
identified as "Purchasers" (including us), a copy of which has been furnished
to you. That Note Purchase Agreement, as it may hereafter be amended or
otherwise modified from time to time, is sometimes referred to in this
participation agreement (the "PARTICIPATION AGREEMENT") as the "NPA" and the
terms defined in the NPA and not otherwise defined in this Participation
Agreement have the same meaning when used herein.
Pursuant to the NPA, we intend to purchase a Note or Notes from the
Borrower in an aggregate amount of US$6,700,000 (the "AGGREGATE NOTE
AMOUNT"). We hereby confirm that we will sell and transfer to you under this
Participation Agreement and you agree to buy and receive from us, an
undivided interest and participation (your "PARTICIPATION") in the total
amount of UNITED STATES DOLLARS ONE HUNDRED FIFTY NINE THOUSAND ONE HUNDRED
SEVENTY ONE AND 60/100THS (US$159,171.60) (the "PARTICIPATION AMOUNT") in our
Note or Notes, on the following terms and conditions:
1. PURCHASE OF PARTICIPATION. (a) At the Closing, you will pay to us,
at our account #07695-08132 at Bank of America, San Francisco, California
(ABA#121-000-358), as the purchase price for your Participation in our Note
or Notes, an amount equal to the Participation Amount in United States
dollars and in same day available funds. We will, promptly upon our receipt
of this purchase price from you, send you a participation certificate at your
address below, in substantially the form of Exhibit A, confirming and
evidencing your Participation.
(b) For purposes of this Participation Agreement, "PURCHASED INTEREST"
means the pro rata fractional interest, expressed as a percentage, of: (i)
the actual amount paid by you to us under Section 1(a) above as the purchase
price for your Participation, divided by (ii) the Aggregate Note Amount.
<PAGE>
(c) If, for any reason other than a failure to close under the NPA, you
fail to make timely payment to us of your Participation Amount, in addition
to other rights and remedies which we may have, we shall be entitled to
collect interest from you on the unpaid portion of your Participation Amount
for the period from the date when payment was due until payment is made at
the overnight rate for Federal funds transactions between member banks of the
Federal Reserve System, as published by the Federal Reserve Bank of New York
(the "FEDERAL FUNDS RATE"), for each day during that period.
(d) The rights of a Holder pursuant to the NPA and our Note or Notes
include the right to convert all or part of the Aggregate Note Amount into
Conversion Shares of the Borrower. If you give us irrevocable written notice
of your desire to convert all or part of your Participation into Conversion
Shares, we will promptly exercise our conversion rights in accordance with
the NPA with respect to your Purchased Interest in the Aggregate Note Amount
and cause the corresponding Conversion Shares or other securities to be
transferred to your name and delivered to you. Any costs or expenses
incidental thereto shall be reimbursed to us as set forth in Section 7 below.
2. PAYMENTS. (a) Whenever we receive a payment of principal,
interest, fees or other payment, or whenever we make an application of funds,
in connection with our Note or Notes (including, without limitation, any
payment or application from any property or deposit held or taken by us in
connection with our Note or Notes, whether as collateral or otherwise), we
will promptly pay over to you, in United States dollars (or, if another
currency was received or applied by us, in such other currency) and in the
kind of funds so received or applied by us, an amount equal to your Purchased
Interest of such payment or application.
(b) All computations of interest, fees, and other costs shall be made
as set forth in the NPA. Any determination made by us as to the allocation
of payments received or amounts applied to your Participation in our Note or
Notes shall be conclusive and binding for all purposes, absent manifest error.
(c) If, for any reason, we make any payment to you before we have
received the corresponding payment or made the corresponding application (it
being understood that we are under no obligation to do so), and we do not
receive the corresponding payment or make the corresponding application
within three business days of our payment to you, you will, at our request,
promptly return that payment to us (together with interest on that payment at
the Federal Funds Rate for each day from the making of that payment to you
until its return to us).
(d) If, after we have paid to you your Purchased Interest of any such
payment received by us or any such application made by us, such payment or
application is rescinded or must otherwise be returned or must be paid over
by us to any other person or entity, whether pursuant to any bankruptcy or
insolvency law or otherwise, you will, at
2
<PAGE>
our request, promptly pay back to us your Purchased Interest of the payment
or application so returned or paid over, together with your Purchased
Interest of any interest or other amount required to be paid by us with
respect to such payment or application.
3. RESPONSIBILITIES OF SELLER. We will administer our Note or Notes
with the same degree of care as is customary generally for the administration
of corporate loans in the San Francisco financial market, provided that, we
will not be liable for any error of judgment, or for any action taken or
omitted to be taken by us, except for our own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, we: (a)
may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by us and shall not
be liable for any action taken or omitted to be taken in good faith by us in
accordance with the advice of such counsel, accountants or experts; (b) make
no warranty or representation and shall not be responsible for any
statements, warranties or representations (whether written or oral) made in
or in connection with the NPA or any document relating thereto or for the
financial condition of the Borrower or for the value of any collateral; (c)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of the NPA or any
document relating thereto on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (d) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness sufficiency or value of the NPA, our Note or Notes, or any
document relating thereto or any collateral therefor; and (e) shall incur no
liability under, or in respect of, the NPA, our Note or Notes, the Conversion
Shares or any document or collateral related to the foregoing by acting upon
any notice, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by us to be genuine and signed
or sent by the proper party or parties.
4. AGREEMENTS OF PURCHASER. You acknowledge that you have,
independently and without reliance upon us, and based on your review of the
NPA and such other financial statements, documents, and information as you
have deemed appropriate, made your own credit analysis and decision to enter
into this Participation Agreement. You also acknowledge that you will,
independently and without reliance upon us, and based on such financial
statements, documents, and information as you shall deem appropriate at the
time, continue to make your own credit decisions in taking or not taking
action under this Participation Agreement. You acknowledge that we have
advised you that your interest in these transactions and your rights under
the NPA and its related documents may not be the same from your Participation
as they would be if you had executed such documents as a party. You
acknowledge that we may, in our sole discretion, assign or sell other
participations with respect to our Note or Notes. You agree to accept any
Conversion Shares or securities issued in lieu thereof subject to the terms
and restrictions set forth in the NPA and such other restrictions as may
apply to us with respect to our Conversion Shares.
3
<PAGE>
5. AGREEMENTS OF SELLER. (a) As of the date of your purchase of a
Participation in our Note or Notes hereunder and before giving effect
thereto, (i) we will be the legal owner of such Note or Notes and the
beneficial owner of such Note or Notes, free and clear of any adverse claim
(other than your and any other participations), and (ii) we will not have
actual knowledge of the existence of any Event of Default (as defined in the
NPA).
(b) We have furnished you with copies of the NPA and the other
documents delivered to us in connection with the NPA and requested by you.
Upon your request, we will furnish to you copies of the publicly-available
financial statements and other publicly-available documents, and (subject to
any duty of confidentiality to which we are subject) such other documents as
we shall receive pursuant to the NPA, but we assume no responsibility with
respect to the authenticity, validity, accuracy or completeness thereof. You
agree to maintain the confidentiality of any confidential information
included in this documentation.
(c) We will give you prompt notice of the occurrence of any Event of
Default under the NPA of which we shall have actual knowledge, but no failure
to give you any such notice shall result in any liability on our part to you.
6. ADMINISTRATION BY SELLER. (a) We will carry out our administrative
duties to you under this Participation Agreement in accordance with the terms
of this Participation Agreement and as otherwise required by applicable law.
(b) We shall not, without your prior written consent, agree to the
amendment, modification, or waiver of any of the terms of the NPA, our Note
or Notes, or any agreement or document relating thereto or any collateral
therefor, consent to any action or failure to act by the Borrower or any
other party, or exercise any rights we may have in respect thereof, if, in
any case, such amendment, modification, waiver, consent or exercise would:
(i) increase the amount of the Aggregate Note Amount, (ii) reduce the
principal amount of or rate of interest on our Note or Notes or any fee or
other charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iii) postpone any date
fixed for any payment of principal of or interest on our Note or Notes or any
fee or charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iv) release any
collateral, except as otherwise contemplated in any document relating thereto
or (v) amend the conversion rights set forth in the NPA or our Note or Notes.
If we shall request your written consent to any of the actions described in
this paragraph (b), and shall not receive your consent or a denial thereof in
writing within 10 days of the making of such request, you shall be deemed to
have given your consent.
(c) Except as otherwise expressly provided in this Section 6, we
reserve the right, in our sole discretion, in each instance, without prior
notice to you, to agree to the
4
<PAGE>
amendment, modification or waiver of any of the terms of the NPA, our Notes
or Notes, or any agreement or document relating thereto, to consent to any
action or failure to act by the Borrower or any other party, and to exercise
or refrain from exercising any powers or rights which we may have under or in
respect of the NPA, our Note or Notes, or any agreement or document relating
thereto or any collateral therefor, including, without limitation, the right
to enforce the obligations of the Borrower or any other party.
7. REIMBURSEMENT OF EXPENSES. You will on demand reimburse us to the
extent of your Purchased Interest for any and all reasonable costs, expenses
and disbursements (including, without limitation, reasonable attorneys' fees)
which may be incurred or made by us in connection with our Note or Notes, and
any action which may be taken by us to collect or enforce any obligation of
the Borrower or any other party in respect of our Note or Notes or the NPA,
for which we are not reimbursed at any time by or on behalf of the Borrower.
We shall be entitled to deduct from any payments to be made to you under this
Participation Agreement, and to retain, your Purchased Interest of, any and
all reasonable costs, expenses and disbursements which may be incurred or
made by us in connection with the enforcement of any obligation of the
Borrower or any other person in respect of our Note or Notes or the NPA.
8. SHARING OF PAYMENTS. If you shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of our Note or Notes which is in excess of your
Purchased Interest in payments on account of our Note or Notes obtained by
us, you shall forthwith purchase from us such additional Participation in our
Note or Notes as shall be necessary to cause you to share such excess payment
ratably with us, PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from you, such purchase from us shall be
rescinded and we shall repay to you the purchase price to the extent of such
recovery (together with interest on that amount at the Federal Funds Rate for
each day from the date of payment of such purchase price to us until the
return of such purchase price to you).
9. PROPERTY OR COLLATERAL. With respect to any and all property or
collateral taken by us, you shall have no interest in that property or
collateral, except that if that property or collateral, or the proceeds
thereof, shall be applied in reduction of amounts outstanding in connection
with our Note or Notes, then you shall be entitled to your Purchased Interest
therein (determined in accordance with Section 2).
10. TAXES. (a) With respect to any payment made to or by you
hereunder, you agree to pay (or, alternatively, to permit us to pay on your
behalf) any present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on net income and all income and franchise taxes of the United States
and any political subdivisions thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES").
5
<PAGE>
(b) In addition, you agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery, registration, or otherwise with respect to this Participation
Agreement or the transfer to you of your Conversion Shares or securities
issued in lieu thereof (hereinafter referred to as "OTHER TAXES").
(c) You will indemnify us for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 10) paid by us and any
liability (including penalties, interest or expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from
the date we make written demand therefor.
(d) You agree to provide to us, from time to time, completed and signed
copies of any forms that may be required by the United States Internal
Revenue Service in order to certify your exemption from United States
withholding taxes with respect to payments to be made to you under this
Participation Agreement.
11. SILENT PARTICIPATION; SUBPARTICIPATIONS. (a) You shall not,
without our prior written consent, notify or contact the Borrower with
respect to any Participation. Notwithstanding the foregoing, you shall have
the right to disclose this Participation, and the name of the Borrower with
respect thereto, in any filing, prospectus or other document made available
publicly or to your customers or otherwise as required by law.
(b) You shall not subparticipate, assign, or transfer your
Participation in our Note or Notes without our prior written consent, except
as provided in this Section 11. You may, upon prior written notice to us,
but without our consent, subparticipate all or any part of your Participation
in our Note or Notes, or for the benefit of, any of your subsidiaries or
affiliates, provided that: (i) your obligations under this Participation
Agreement shall remain unchanged and you shall remain solely responsible for
the performance of your obligations under this Participation Agreement, and
(ii) we shall continue to deal solely and directly with you in connection
with your rights and obligations under this Participation Agreement.
12. TERMINATION. This Participation Agreement is a continuing
agreement and shall remain in full force and effect until the indefeasible
payment in full of all amounts owing under our Note or Notes.
13. NOTICES AND PAYMENTS. All notices and other communications
provided for under this Participation Agreement shall be in writing
(including telecopier, telegram, cable or telex communications), unless
otherwise specified, and shall be sent to you at the
6
<PAGE>
address set forth above or to us at the address set forth below (or such
other address as you or we may designate in writing).
14. GOVERNING LAW. This Participation Agreement shall be governed by
and construed in accordance with the laws of the State of California.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
7
<PAGE>
Please confirm your agreement with the foregoing by executing the
enclosed copy hereof and returning the same to us by July 31, 1998.
Very truly yours,
BCC ACQUISITION II LLC
By: /s/ Roger H. Salquist
------------------------------------
Name:
Title:
Address:
Agreed and Accepted:
July 30 1998
- -------------------- --
BANCA DELLA SVIZZERA ITALIANA
By: /s/ B. Ripamonti /s/ A. De Angelis
-------------------------------- --------------------------------
Name: B. Ripamonti A. De Angelis
Title: Vice President First Vice-President
S-1
<PAGE>
EXHIBIT A
PARTICIPATION CERTIFICATE
[Date of Participation]
Banca della Svizzera Italiana
via Peri, 23
6900 Lugano
Switzerland
Re: Diametrics Medical, Inc. Note or Notes
----------------------------------------
Ladies and Gentlemen:
We hereby confirm that we have sold and transferred to you for your
account and risk, upon the terms and conditions of our Participation
Agreement with you, dated July__, 1998, an undivided interest and
participation (your "Participation") to the extent of _______% (your
"Purchased Interest") in and to our aggregate loan of US$6,700,000
("Aggregate Note Amount") made by us on August __, 1998, to Diametrics
Medical, Inc. (the "Borrower") pursuant to the Note Purchase Agreement, dated
as of August __, 1998, between the Borrower and the undersigned.
We acknowledge receipt from you of the sum of US$159,171.60 in payment
of your Participation in such Aggregate Note Amount.
Very truly yours,
BCC ACQUISITION II LLC
By
------------------------------------
Name:
Title:
<PAGE>
PARTICIPATION AGREEMENT
July __, 1998
Banca del Gottardo
via Francini, 8
6901 Lugano
Switzerland
Attn: A. Polli
Re: Diametrics Medical, Inc. Note or Notes
--------------------------------------
Ladies and Gentlemen:
We refer to the Note Purchase Agreement to be executed at the Closing
pursuant to the Common Stock Purchase Agreement dated June 30, 1998 between
Diametrics Medical, Inc. (the "BORROWER") and certain signatories thereto
identified as "Purchasers" (including us), a copy of which has been furnished
to you. That Note Purchase Agreement, as it may hereafter be amended or
otherwise modified from time to time, is sometimes referred to in this
participation agreement (the "PARTICIPATION AGREEMENT") as the "NPA" and the
terms defined in the NPA and not otherwise defined in this Participation
Agreement have the same meaning when used herein.
Pursuant to the NPA, we intend to purchase a Note or Notes from the
Borrower in an aggregate amount of US$6,700,000 (the "AGGREGATE NOTE
AMOUNT"). We hereby confirm that we will sell and transfer to you under this
Participation Agreement and you agree to buy and receive from us, an
undivided interest and participation (your "PARTICIPATION") in the total
amount of United States Dollars ONE HUNDRED FIFTY NINE THOUSAND ONE HUNDRED
SIXTY THREE AND 20/100THS (US$159,163.20) (the "PARTICIPATION AMOUNT") in our
Note or Notes, on the following terms and conditions:
1. PURCHASE OF PARTICIPATION. (a) At the Closing, you will pay to us,
at our account #07695-08132 at Bank of America, San Francisco, California
(ABA#121-000-358), as the purchase price for your Participation in our Note
or Notes, the Participation Amount in United States dollars and in same day
available funds. We will, promptly upon our receipt of this purchase price
from you, send you a participation certificate at your address below, in
substantially the form of Exhibit A, confirming and evidencing your
Participation.
<PAGE>
(b) For purposes of this Participation Agreement, "PURCHASED INTEREST"
means the pro rata fractional interest, expressed as a percentage, of: (i)
the actual amount paid by you to us under Section 1(a) above as the purchase
price for your Participation, divided by (ii) the Aggregate Note Amount.
(c) If, for any reason other than a failure to close under the NPA, you
fail to make timely payment to us of your Participation Amount, in addition
to other rights and remedies which we may have, we shall be entitled to
collect interest from you on the unpaid portion of your Participation Amount
for the period from the date when payment was due until payment is made at
the overnight rate for Federal funds transactions between member banks of the
Federal Reserve System, as published by the Federal Reserve Bank of New York
(the "FEDERAL FUNDS RATE"), for each day during that period.
(d) The rights of a Holder pursuant to the NPA and our Note or Notes
include the right to convert all or part of the Aggregate Note Amount into
Conversion Shares of the Borrower. If you give us irrevocable written notice
of your desire to convert all or part of your Participation into Conversion
Shares, we will promptly exercise our conversion rights in accordance with
the NPA with respect to your Purchased Interest in the Aggregate Note Amount
and cause the corresponding Conversion Shares or other securities to be
transferred to your name and delivered to you. Any costs or expenses
incidental thereto shall be reimbursed to us as set forth in Section 7 below.
2. PAYMENTS. (a) Whenever we receive a payment of principal,
interest, fees or other payment, or whenever we make an application of funds,
in connection with our Note or Notes (including, without limitation, any
payment or application from any property or deposit held or taken by us in
connection with our Note or Notes, whether as collateral or otherwise), we
will promptly pay over to you, in United States dollars (or, if another
currency was received or applied by us, in such other currency) and in the
kind of funds so received or applied by us, an amount equal to your Purchased
Interest of such payment or application.
(b) All computations of interest, fees, and other costs shall be made
as set forth in the NPA. Any determination made by us as to the allocation
of payments received or amounts applied to your Participation in our Note or
Notes shall be conclusive and binding for all purposes, absent manifest error.
(c) If, for any reason, we make any payment to you before we have
received the corresponding payment or made the corresponding application (it
being understood that we are under no obligation to do so), and we do not
receive the corresponding payment or make the corresponding application
within three business days of our payment to you, you will, at our request,
promptly return that payment to us (together
2
<PAGE>
with interest on that payment at the Federal Funds Rate for each day from the
making of that payment to you until its return to us).
(d) If, after we have paid to you your Purchased Interest of any such
payment received by us or any such application made by us, such payment or
application is rescinded or must otherwise be returned or must be paid over
by us to any other person or entity, whether pursuant to any bankruptcy or
insolvency law or otherwise, you will, at our request, promptly pay back to
us your Purchased Interest of the payment or application so returned or paid
over, together with your Purchased Interest of any interest or other amount
required to be paid by us with respect to such payment or application.
3. RESPONSIBILITIES OF SELLER. We will administer our Note or Notes
with the same degree of care as is customary generally for the administration
of corporate loans in the San Francisco financial market, provided that, we
will not be liable for any error of judgment, or for any action taken or
omitted to be taken by us, except for our own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, we: (a)
may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by us and shall not
be liable for any action taken or omitted to be taken in good faith by us in
accordance with the advice of such counsel, accountants or experts; (b) make
no warranty or representation and shall not be responsible for any
statements, warranties or representations (whether written or oral) made in
or in connection with the NPA or any document relating thereto or for the
financial condition of the Borrower or for the value of any collateral; (c)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of the NPA or any
document relating thereto on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (d) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness sufficiency or value of the NPA, our Note or Notes, or any
document relating thereto or any collateral therefor; and (e) shall incur no
liability under, or in respect of, the NPA, our Note or Notes, the Conversion
Shares or any document or collateral related to the foregoing by acting upon
any notice, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by us to be genuine and signed
or sent by the proper party or parties.
4. AGREEMENTS OF PURCHASER. You acknowledge that you have,
independently and without reliance upon us, and based on your review of the
NPA and such other financial statements, documents, and information as you
have deemed appropriate, made your own credit analysis and decision to enter
into this Participation Agreement. You also acknowledge that you will,
independently and without reliance upon us, and based on such financial
statements, documents, and information as you shall deem appropriate at the
time, continue to make your own credit decisions in taking or not taking
action under this Participation Agreement. You acknowledge that we have
advised you that your interest in these transactions and your rights under
the NPA and its related
3
<PAGE>
documents may not be the same from your Participation as they would be if you
had executed such documents as a party. You acknowledge that we may, in our
sole discretion, assign or sell other participations with respect to our Note
or Notes. You agree to accept any Conversion Shares or securities issued in
lieu thereof subject to the terms and restrictions set forth in the NPA and
such other restrictions as may apply to us with respect to our Conversion
Shares.
5. AGREEMENTS OF SELLER. (a) As of the date of your purchase of a
Participation in our Note or Notes hereunder and before giving effect
thereto, (i) we will be the legal owner of such Note or Notes and the
beneficial owner of such Note or Notes, free and clear of any adverse claim
(other than your and any other participations), and (ii) we will not have
actual knowledge of the existence of any Event of Default (as defined in the
NPA).
(b) We have furnished you with copies of the NPA and the other
documents delivered to us in connection with the NPA and requested by you.
Upon your request, we will furnish to you copies of the publicly-available
financial statements and other publicly-available documents, and (subject to
any duty of confidentiality to which we are subject) such other documents as
we shall receive pursuant to the NPA, but we assume no responsibility with
respect to the authenticity, validity, accuracy or completeness thereof. You
agree to maintain the confidentiality of any confidential information
included in this documentation.
(c) We will give you prompt notice of the occurrence of any Event of
Default under the NPA of which we shall have actual knowledge, but no failure
to give you any such notice shall result in any liability on our part to you.
6. ADMINISTRATION BY SELLER. (a) We will carry out our administrative
duties to you under this Participation Agreement in accordance with the terms
of this Participation Agreement and as otherwise required by applicable law.
(b) We shall not, without your prior written consent, agree to the
amendment, modification, or waiver of any of the terms of the NPA, our Note
or Notes, or any agreement or document relating thereto or any collateral
therefor, consent to any action or failure to act by the Borrower or any
other party, or exercise any rights we may have in respect thereof, if, in
any case, such amendment, modification, waiver, consent or exercise would:
(i) increase the amount of the Aggregate Note Amount, (ii) reduce the
principal amount of or rate of interest on our Note or Notes or any fee or
other charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iii) postpone any date
fixed for any payment of principal of or interest on our Note or Notes or any
fee or charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iv) release any
collateral, except as otherwise contemplated in any document relating thereto
or (v) amend the
4
<PAGE>
conversion rights set forth in the NPA or our Note or Notes. If we shall
request your written consent to any of the actions described in this
paragraph (b), and shall not receive your consent or a denial thereof in
writing within 10 days of the making of such request, you shall be deemed to
have given your consent.
(c) Except as otherwise expressly provided in this Section 6, we
reserve the right, in our sole discretion, in each instance, without prior
notice to you, to agree to the amendment, modification or waiver of any of
the terms of the NPA, our Notes or Notes, or any agreement or document
relating thereto, to consent to any action or failure to act by the Borrower
or any other party, and to exercise or refrain from exercising any powers or
rights which we may have under or in respect of the NPA, our Note or Notes,
or any agreement or document relating thereto or any collateral therefor,
including, without limitation, the right to enforce the obligations of the
Borrower or any other party.
7. REIMBURSEMENT OF EXPENSES. You will on demand reimburse us to the
extent of your Purchased Interest for any and all reasonable costs, expenses
and disbursements (including, without limitation, reasonable attorneys' fees)
which may be incurred or made by us in connection with our Note or Notes, and
any action which may be taken by us to collect or enforce any obligation of
the Borrower or any other party in respect of our Note or Notes or the NPA,
for which we are not reimbursed at any time by or on behalf of the Borrower.
We shall be entitled to deduct from any payments to be made to you under this
Participation Agreement, and to retain, your Purchased Interest of, any and
all reasonable costs, expenses and disbursements which may be incurred or
made by us in connection with the enforcement of any obligation of the
Borrower or any other person in respect of our Note or Notes or the NPA.
8. SHARING OF PAYMENTS. If you shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of our Note or Notes which is in excess of your
Purchased Interest in payments on account of our Note or Notes obtained by
us, you shall forthwith purchase from us such additional Participation in our
Note or Notes as shall be necessary to cause you to share such excess payment
ratably with us, PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from you, such purchase from us shall be
rescinded and we shall repay to you the purchase price to the extent of such
recovery (together with interest on that amount at the Federal Funds Rate for
each day from the date of payment of such purchase price to us until the
return of such purchase price to you).
9. PROPERTY OR COLLATERAL. With respect to any and all property or
collateral taken by us, you shall have no interest in that property or
collateral, except that if that property or collateral, or the proceeds
thereof, shall be applied in reduction of amounts outstanding in connection
with our Note or Notes, then you shall be entitled to your Purchased Interest
therein (determined in accordance with Section 2).
5
<PAGE>
10. TAXES. (a) With respect to any payment made to or by you
hereunder, you agree to pay (or, alternatively, to permit us to pay on your
behalf) any present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on net income and all income and franchise taxes of the United States
and any political subdivisions thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES").
(b) In addition, you agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery, registration, or otherwise with respect to this Participation
Agreement or the transfer to you of your Conversion Shares or securities
issued in lieu thereof (hereinafter referred to as "OTHER TAXES").
(c) You will indemnify us for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 10) paid by us and any
liability (including penalties, interest or expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from
the date we make written demand therefor.
(d) You agree to provide to us, from time to time, completed and signed
copies of any forms that may be required by the United States Internal
Revenue Service in order to certify your exemption from United States
withholding taxes with respect to payments to be made to you under this
Participation Agreement.
11. SILENT PARTICIPATION; SUBPARTICIPATIONS. (a) You shall not,
without our prior written consent, notify or contact the Borrower with
respect to any Participation. Notwithstanding the foregoing, you shall have
the right to disclose this Participation, and the name of the Borrower with
respect thereto, in any filing, prospectus or other document made available
publicly or to your customers or otherwise as required by law.
(b) You shall not subparticipate, assign, or transfer your
Participation in our Note or Notes without our prior written consent, except
as provided in this Section 11. You may, upon prior written notice to us,
but without our consent, subparticipate all or any part of your Participation
in our Note or Notes, or for the benefit of, any of your subsidiaries or
affiliates, provided that: (i) your obligations under this Participation
Agreement shall remain unchanged and you shall remain solely responsible for
the performance of your obligations under this Participation Agreement, and
(ii) we shall continue to deal solely and directly with you in connection
with your rights and obligations under this Participation Agreement.
6
<PAGE>
12. TERMINATION. This Participation Agreement is a continuing
agreement and shall remain in full force and effect until the indefeasible
payment in full of all amounts owing under our Note or Notes.
13. NOTICES AND PAYMENTS. All notices and other communications
provided for under this Participation Agreement shall be in writing
(including telecopier, telegram, cable or telex communications), unless
otherwise specified, and shall be sent to you at the address set forth above
or to us at the address set forth below (or such other address as you or we
may designate in writing).
14. GOVERNING LAW. This Participation Agreement shall be governed by
and construed in accordance with the laws of the State of California.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
7
<PAGE>
Please confirm your agreement with the foregoing by executing the
enclosed copy hereof and returning the same to us by July 31, 1998.
Very truly yours,
BCC ACQUISITION II LLC
By: /s/ Roger H. Salquist
-------------------------------
Name:
Title:
Address:
Agreed and Accepted:
July 30, 1998
BANCA DEL GOTTARDO
By: /s/ Fabio Testori /s/ Claudio Poli
------------------------------------- ------------------------------
Name: Fabio Testori Claudio Poli
Title: Member of the Executive Board Officer
S-1
<PAGE>
EXHIBIT A
PARTICIPATION CERTIFICATE
[Date of Participation]
Banca del Gottardo
via Francini, 8
6901 Lugano
Switzerland
Attn: A. Polli
Re: Diametrics Medical, Inc. Note or Notes
--------------------------------------
Ladies and Gentlemen:
We hereby confirm that we have sold and transferred to you for your
account and risk, upon the terms and conditions of our Participation
Agreement with you, dated July __, 1998, an undivided interest and
participation (your "Participation") to the extent of _______% (your
"Purchased Interest") in and to our aggregate loan of US$6,700,000
("Aggregate Note Amount") made by us on August __, 1998, to Diametrics
Medical, Inc. (the "Borrower") pursuant to the Note Purchase Agreement, dated
as of August __, 1998, between the Borrower and the undersigned.
We acknowledge receipt from you of the sum of US$159,163.20 in payment
of your Participation in such Aggregate Note Amount.
Very truly yours,
BCC ACQUISITION II LLC
By:
-------------------------------
Name:
Title:
