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                                                                    Exhibit 10.1

                                November 21, 2005

CONFIDENTIAL

Ocean Park Advisors, LLC
5710 Crescent Park East, Suite #334
Playa Vista, CA 90094

Ladies and Gentlemen:

          In connection with the sale, assignment, and transfer (the
"Assignment") of securities (the "Securities") of Diametrics Medical, Inc.
("DMED") held by BCC Acquisition II, LLC ("BCCAII") to Ocean Park Advisors, LLC
("OPA") and M.A.G. Capital, LLC ("MAG", and together with OPA, the "Purchasers")
as described in the letter agreement, dated as of November 22, 2005 a copy of
which is attached hereto as Exhibit A (the "Master Letter Agreement"), BCCAII
hereby agrees to deposit with OPA (the "Escrow Agent") an aggregate of $148,929
(the "Escrow Deposit"), to be held in escrow as set forth below:

     1.   $75,000 pursuant to a letter agreement, dated as of November 22, 2005
          between BCCAII and DMED, a copy of which is attached hereto as Exhibit
          B;

     2.   $7,000 pursuant to a letter agreement, dated as of November 22, 2005
          between BCCAII and DMED, in connection with the settlement of a claim
          by Merchant & Gould a copy of which is attached hereto as Exhibit C;

     3.   $34,500 in connection with the General Release delivered to DMED by W.
          Glen Winchell, a copy of which is attached hereto as Exhibit D;

     4.   $18,429 pursuant to a letter agreement, dated as of November 22, 2005
          between BCCAII and OPA, a copy of which is attached hereto as Exhibit
          E, in connection with the full amount of principal and accrued
          interest, through December 31, 2005, that may be owed to an investor
          who acquired a participation in the DMED Convertible Note due 2005
          that is held by BCCAII, which note is being transferred to the
          Purchasers pursuant to the Master Letter Agreement;

     5.   $11,000, in respect of one-half of the legal fees and expenses of
          Dorsey & Whitney LLP and Zimmerman, Koomer, Connolly & Finkel LLP
          related to DMED's securities exchange act filings related to the
          contemplated transactions; and

     6.   $3,000, in respect of one-half of the cost of extending the DMED D&O
          policy for a two week period.

          The Escrow Deposit shall be deposited by the Escrow Agent in fully
insured, interest-bearing accounts, and shall not be commingled with any other
funds. The Escrow Deposit shall not be used for any other purpose except as
described in and pursuant to this letter

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agreement, and no portion of the Escrow Deposit, except for items 5 and 6 above,
shall be disbursed prior to the closing of the transfer of the Securities by
BCCAII to the Purchasers (the "Closing"). For items 5 and 6 above, amounts are
to be disbursed directly by the Escrow Agent upon receipt of the relevant
invoices by OPA or by DMED.

          In the event that DMED wishes to discharge one or more of the
liabilities described in items 1 through 4 above (each a "Liability" and
collectively, the "Liabilities"), DMED shall provide the Escrow Agent and BCCAII
with a written notification for disbursement of such portion of the Escrow
Deposit necessary to satisfy, compromise and/or discharge such Liability,
together with documentation reasonably necessary to establish that the Liability
DMED proposes to discharge is a Liability and is due and owing.

          Upon written request of BCCAII, the Escrow Agent promptly shall
account to BCCAII for the Escrow Deposit and each disbursement therefrom (though
OPA shall not be required to maintain more than one escrow account for the
entire Escrow Amount). To the extent that any Liability described above is fully
satisfied, discharged or compromised for an amount less than the amount set
aside therefor, the Escrow Agent shall return the remainder of the Escrow
Deposit with respect to such Liability to BCCAII within 3 business days of the
date such Liability is so satisfied. Upon full satisfaction, compromise or
discharge of each of the Liabilities, the Escrow Agent shall return the
remaining Escrow Deposit, if any, together with accrued interest thereon, to
BCCAII within 3 business days.

          OPA, for itself and not in its capacity as Escrow Agent, and DMED
hereby acknowledge and agree that, as among such entities and BCCAII, following
delivery of the Escrow Deposit by BCCAII to the Escrow Agent as described above,
BCCAII shall have no liability of any kind or nature whatsoever to the
Purchasers, DMED or any third party in respect of the Liabilities. This
acknowledgement will in no way affect any claim that any of the parties hereto
may have against each other with respect to matters unrelated to the
Liabilities.

          This letter agreement shall be interpreted in accordance with and
governed by the laws of the State of California applicable to agreements made
and to be performed wholly within that jurisdiction, without reference to the
conflicts of laws principles thereof.

                            [SIGNATURE PAGE FOLLOWS]


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          This letter agreement may be executed in counterparts, each one of
which shall be deemed an original and all of which taken together shall
constitute one and the same document.

                                        Sincerely,

                                        BCC ACQUISITION II, LLC

                                        By: Bay City Capital Fund I, L.P.,
                                            its Manager

                                        By: Bay City Capital Management LLC,
                                            its general partner


                                        By: /s/ Fred Craves
                                            ------------------------------------
                                        Title: Manager and Managing Director

Accepted and agreed to this
21st day of November, 2005

OCEAN PARK ADVISORS, LLC


By: /s/ W. Bruce Comer III
    ---------------------------------
Name: W. Bruce Comer III
Title: Managing


M.A.G. CAPITAL, LLC


By: /s/ David Firestone
    ---------------------------------
Name: David Firestone
Title: Managing Member


DIAMETRICS MEDICAL, INC.


By: /s/ W. Glen Winchell
    ---------------------------------
Name: W. Glen Winchell
Title: Sr. Vice President of Finance
       and CFO


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