Document:

EX-10.13

Exhibit 10.13

Dated 15 December, 2004

(1) DIAMETRICS MEDICAL, INC

(as the Chargor)

- and -

(2) BCC ACQUISITION II LLC

(as the Agent)

Charge Over Shares

This Charge is subject to the terms and conditions of the Subordination Agreement (as

defined herein)

London

99 Bishopsgate

London EC2M 3XF

(44) 020 7710 1000 (Tel)

(44) 020 7374 4460 (Fax)

www.lw.com

1

CONTENTS

Clause Page

2

THIS CHARGE is made by way of deed on 15 December, 2004

BETWEEN

	 	(1)	 	DIAMETRICS MEDICAL, INC a corporation incorporated in the State of Minnesota, United States
of America and whose registered office is at 3050 Centre Point Drive, Suite 150, St. Paul,
Minnesota 55113, United States of America (the “Chargor”); and

	 	(2)	 	BCC ACQUISITION II LLC, acting through its office at 750 Battery, Suite 600, San Francisco,
CA 94111, United States of America for itself and as agent for each of the Beneficiaries (as
defined below) (together with its successors and assigns, the “Agent”)

BACKGROUND

	 	(A)	 	The Chargor and the Beneficiaries are parties to the Note Purchase Agreement (as defined
below).

	 	(B)	 	The Beneficiaries have, among other matters, agreed to (i) grant certain consents under the
Note Purchase Agreement and (ii) amend certain provisions of the Note Purchase Agreement, in
each case pursuant to the terms of the Consent and Amendment (as defined below).

	 	(C)	 	In consideration of the Beneficiaries entering into the Consent and Amendment, the Chargor
hereby agrees that it is in its own best interests to enter into this Charge.

IT IS AGREED as follows:

1. INTERPRETATION

1.1 Definitions

Save as otherwise provided in this Charge, the following words and phrases have the
following meanings throughout this Charge:

	 	 	 
	“Act”

	 	means the Law of Property Act 1925
	 
	 	 
	“Active Person”

	 	has the meaning set forth in Clause 4(b)
	 
	 	 
	“Additional Interests”

	 	has the meaning set forth in Clause 4(b)
	 
	 	 
	“Beneficiaries”

	 	means each of BCC Acquisition II LLC, the

Gerald L.Cohn Revocable Trust, the Hannah

S. and Samuel A. Cohn Memorial Foundation

and AEOW 96, LLC in their capacity as

holders of the Notes
	 
	 	 
	“Collateral Agency

Agreement”

	 	means the collateral agency agreement

between the Agent and the Beneficiaries

dated 13 August, 2003
	 
	 	 
	“Company”

	 	means TGC Research Limited a company

incorporated under the laws of England and

Wales (registered number 05273708)
	 
	 	 
	“Consent and Amendment”

	 	means the consent and amendment dated on

or before the date hereof between the

Chargor and the Beneficiaries
	 
	 	 
	“Default Rate”

	 	means a rate of interest determined in

accordance with Article 3 of the Notes
	 
	 	 
	“English General

Security Agreement”

	 	means the general security agreement

governed by the internal law of the State

of Illinois dated on or before the date

hereof and entered into between the

Company and the Agent
	 
	 	 
	“English Patent Security

Agreement”

	 	means the patent security agreement dated

on or before the date hereof entered into

between the Company and the Agent
	 
	 	 
	“English Trademark

Security Agreement”

	 	means the trademark security agreement

dated on or before the date hereof entered

into between the Company and the Agent
	 
	 	 
	“Event of Default”

	 	means the occurrence or existence of any

Event of Default under the Note Purchase

Agreement or any other Finance Document, a

material default under the Note Purchase

Agreement or the breach of any

representation, warranty or covenant under

this Charge
	 
	 	 
	“Finance Documents”

	 	means this Charge, the Note Purchase

Agreement, the Notes, the Collateral

Agency Agreement, the Security Documents

and such other security agreements as may

be executed by the Chargor
	 
	 	 
	“First Ranking Share

Charge”

	 	means a share charge dated on or about the

date hereof between the Chargor as chargor

and Barbara R. Mittman as agent
	 
	 	 
	“Note Purchase Agreement”

	 	means the note purchase agreement made

between the Chargor and the Beneficiaries

dated August 4, 1998, as amended by a

first amendment dated April 7, 2003, the

second amendment dated August 13, 2003 and

as further amended by the Consent and

Amendment
	 
	 	 
	“Obligors”

	 	means the Chargor and the Company
	 
	 	 
	“Related Rights”

	 	means in relation to any Share:
	
 
	 	(a) all assets deriving from such Share

including all allotments, accretions,

offers, rights, dividends, distributions,

interest, income, benefits and advantages

whatsoever at any time accruing, offered

or otherwise derived from or incidental to

such Share;

(b) all stocks, shares, rights, money or

property accruing or offered at any time

by way of conversion, redemption, bonus,

preference, exchange, purchase,

substitution, option, interest or

otherwise in respect thereof; and

(c) any dividend, interest or other income

in respect of any asset referred to in

paragraph (b) above
	 
	 	 
	“Secured Obligations”

	 	means all obligations or liabilities of

the Chargor or the Company which may arise

under or in connection with this Charge or

any other Finance Document, in any manner

whether on account of guarantee

obligations, reimbursement obligations,

fees, indemnities, costs, expenses or

otherwise whether actual or contingent,

whether incurred solely or jointly with

any other person and whether as principal

or surety
	 
	 	 
	“Security”

	 	means the security created by (or

purported to be created by) this Charge
	 
	 	 
	“Security Assets”

	 	means all assets of the Chargor the

subject of any security created by this

Charge
	 
	 	 
	“Security Documents”

	 	means this Charge, the English General

Security Agreement, the English Trademark

Security Agreement, the English Patent

Security Agreement and each of the US

Security Agreements
	 
	 	 
	“Shares”

	 	means all the shares specified in Schedule

1 together with all other stocks, shares,

debentures, debenture stock, bonds,

warrants, options, coupons or other

securities and investments of any kind

(including rights to subscribe for,

convert into or otherwise acquire the

same) whether marketable or otherwise and

all other interests (including loan

capital) now or in the future owned by the

Chargor from time to time in the Company
	 
	 	 
	“Subordination Agreement”

	 	means the subordination agreement dated on

or before the date hereof between, amongst

others BCC Acquisition II LLC, Barbara R.

Mittman, the Chargor and the Company
	 
	 	 
	“UK”

	 	means the United Kingdom of Great Britain

and Northern Ireland
	 
	 	 
	“US Security Agreements”

	 	means the General Security Agreement,

Patent Security Agreement and Trademark

Security Agreement each dated 13 August

2003 and entered into between the Chargor

and the Agent

1.2 Interpretation

Any reference in this Charge to (or to any specified provision of) this “Charge”, the “Note
Purchase Agreement” or any other “Finance Document” or to any other agreement or document
shall, unless the context otherwise requires, be construed as a reference to this Charge,
the Note Purchase Agreement or such other Finance Document or such other agreement or
document (or that provision) as the same may from time to time be amended, varied,
supplemented, novated or replaced (but excluding for this purpose any amendment, variation,
supplement, novation or replacement which is contrary to any provision of any Finance
Document). The reference shall include any document which is supplemental to, is expressed
to be collateral with, or is entered into pursuant to or in accordance with, and any
certificate, instrument, notification or document which is entered into or delivered in
connection with or pursuant to or in accordance with, the terms of this Charge, the Note
Purchase Agreement or such other Finance Document or, as the case may be, such other
agreement or document.

Any reference in this Charge to the “Agent” or any “Beneficiary” shall be construed so as to
include its and any subsequent successors, transferees and assigns in accordance with their
respective interests.

1.3 Incorporation of Terms by Reference

Unless the context requires otherwise, words and expressions defined or construed in the
Note Purchase Agreement, the Act or the Insolvency Act 1986 and which are not defined or
construed in this Charge shall bear the same meanings when used in this Charge.

1.4 Use of Lists and Examples

In construing this Charge general words introduced by the word “other” shall not be given a
restrictive meaning by reason of the fact that they are preceded by words indicating a
particular class of acts, matters or things and general words shall not be given a
restrictive meaning by reason of the fact that they are followed by particular examples
intended to be embraced by the general words.

1.5 Whole Agreement

This Charge supersedes any previous agreement, whether written or oral, express or implied,
between the Chargor and the Agent in relation to the subject matter of this Charge.

1.6 Headings

The headings in this Charge are for convenience only and shall not affect its meaning and
references to a Clause or Schedule are (unless otherwise stated) to a Clause of, or the
Schedule to, this Charge.

1.7 Counterparts

This Charge may be signed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. Any party may enter into this Charge by signing any
such counterpart.

1.8 Singular/Plural

Save where the context otherwise requires, the plural of any term includes the singular and
vice versa.

1.9 No Partnership

Nothing in this Charge or envisaged hereby shall operate, whether directly or indirectly, to
constitute a partnership between the Chargor and any Beneficiary or the Agent.

1.10 Amount of Secured Obligations

A certificate of the Agent as to the amount of any Secured Obligations due at any time will,
in the absence of manifest error, be conclusive and binding on the Chargor.

1.11 Security Enforceable

The security constituted by, and the rights of the Agent and the Beneficiaries under, this
Charge shall be enforceable notwithstanding any change in the constitution of the Agent or
any Beneficiary or its absorption in or amalgamation with any other person or the
acquisition of all or part of its undertaking by any other person.

1.12 Statutory References

Unless the context otherwise requires, a reference to a statute or any provision thereof is
to be construed as a reference to that statute or such provision thereof as it may be
amended or re-enacted from time to time.

	 	 	 
	1.13

1.14

	 	Deed

The parties intend that this document shall take effect as a deed.

Priority

Each of the parties hereto (on its own behalf and on behalf of each other person, if any, on
whose behalf it is entering into this Charge) acknowledges the existence of the first
ranking security granted in accordance with the terms of the First Ranking Share Charge and
that all of the provisions of this Charge, including without limitation all rights and
obligations of the Agent and the Chargor hereunder, are subject to, and shall only be
exercised in accordance with and if permitted by, the terms of the Subordination Agreement.

1.15 First Ranking Share Charge

The Agent hereby acknowledges the existence and the terms of the First Ranking Share Charge
and acknowledges that, notwithstanding any provision of this Charge, the Chargor shall not
be deemed to be in breach of any such provision if failure to comply with the terms thereof
is a direct result of the Chargor complying with its obligations in the First Ranking Share
Charge.

2. PAYMENT OF THE SECURED OBLIGATIONS

2.1 Covenant

The Chargor hereby unconditionally and irrevocably, as primary obligor and not merely as
surety, covenants with the Beneficiaries that it will pay or discharge the Secured
Obligations on the due date for payment thereof in the manner provided in the relevant
Finance Document.

2.2 Interest

Save to the extent otherwise agreed, interest may be added by the Agent to any amount which
shall remain unpaid on the due date for payment therefor from such due date until payment in
full at the Default Rate applicable to the relevant outstanding Secured Obligations under
the Finance Documents.

2.3 Costs and Expenses

Immediately upon demand, the Chargor shall pay all fees, costs and expenses (including legal
fees and any value added tax) incurred from time to time in connection with the enforcement
of or preservation of rights under this Charge by the Agent, or attorney, manager, trustee
or any other person appointed by the Agent under this Charge or by statute.

3. CHARGING CLAUSE

The Chargor with full title guarantee and as a continuing security for the payment,
performance and discharge of the Secured Obligations hereby:

	 	(a)	 	mortgages and charges and agrees to mortgage and charge to the Agent all of
the Shares held now or in the future by it and/or any nominee on its behalf, the same
to be a security by way of first equitable mortgage; and

	 	(b)	 	mortgages, charges and assigns and agrees to mortgage, charge and assign to
the Agent all Related Rights accruing to all or any of the Shares held now or in the
future by it and/or any nominee on its behalf, the same to be a security by way of
first equitable mortgage.

4. REPRESENTATIONS AND WARRANTIES

The Chargor makes the representations and warranties set out in this Clause 4 to the Agent.

(a) Ownership of Security Assets and ranking

	 	(i)	 	It is the registered holder and the unfettered legal and beneficial
owner of the Shares which it purports to charge pursuant to this Charge;

	 	(ii)	 	The Shares are all duly authorised, validly issued, fully paid and
are not subject to any Lien (other than the security interest created pursuant
to the First Ranking Share Charge), option to purchase, pre-emption or similar
right other than the Security; and

	 	(iii)	 	The Shares listed in Schedule 1 represent all of the shares of the
Company issued and outstanding as of the date of this Charge.

(b) Ownership of Additional Interests

With the exception of the Shares, the Chargor has no other direct ownership interest
in any other shares or capital stock of any person that is organised or incorporated
in England and Wales (any such person, an “Active Person” and any such interests in
an Active Person, “Additional Interests”).

The representations and warranties set out in this Clause 4 are made on the date of this
Charge and are deemed to be repeated on each date on which any of the representations and
warranties set out in the Note Purchase Agreement are repeated, with reference to the facts
and circumstances then existing.

5. NEGATIVE PLEDGE

The Chargor undertakes in favour of the Agent that it will not, save as permitted pursuant
to the terms of the Finance Documents:

(a) Liens

create, incur, assume or permit to subsist any Lien over all or any part of the
Security Assets (other than the First Ranking Share Charge and the Security) or any
interest therein ranking in priority to, pari passu with or after the Security, nor
enter into any agreement to do any of the same;

(b) Disposal

sell, transfer, assign, lease out, lend or otherwise dispose of (whether outright,
by a sale and repurchase, sale and leaseback arrangement or otherwise), or grant any
rights (whether of pre-emption or otherwise) over, all or any part of the Security
Assets or any interest therein, nor enter into any agreement to do any of the same;
or

(c) Material prejudice

do or cause or permit to be done anything which may depreciate, jeopardize or
otherwise materially prejudice the market value or collateral value of any Security
Asset or the rights of the Agent under this Charge.

6. INFORMATION UNDERTAKINGS

	 	(a)	 	Subject always to Clause 5, the Chargor shall promptly inform the Agent of any
material additions to or deletions from the Security Assets and shall agree to any
consequential amendments to Schedule 1 with the Agent.

	 	(b)	 	If the Chargor becomes aware of any action, event or circumstance which could
adversely affect the value, saleability or use of any of the Security Assets, it will
promptly notify the Agent in writing and provide details of the same.

7. COVENANTS

7.1 Undertakings Relating to Security Assets

The Chargor covenants with the Agent for the benefit of the Beneficiaries that it will,
without prejudice to the generality of the provisions of Clause 8:

(a) Deposit of documents of title

deposit with the Agent (or as it shall direct) immediately upon execution of this
Charge (in relation to the Shares listed in Schedule 1), and immediately upon
receipt following its acquisition of any Security Assets and at any other time upon
the Agent’s request, all stock and share certificates or other documents evidencing
an entitlement to such Security Assets together with stock transfer forms duly
stamped and executed in blank and left undated in respect of all such Shares on the
basis that the Agent shall be able to hold such documents of title and stock
transfer forms until the Secured Obligations have been irrevocably and
unconditionally discharged in full and shall be entitled, at any such time that it
is permitted to do so in accordance with the terms of this Charge, to complete
(under its power of attorney given by Clause 12 below) the stock transfer forms on
behalf of the Chargor in favour of itself or such other person as it shall select;
provided that, in the event of any such transfer being effected, neither the Agent
nor any of its nominees shall be liable for any loss occasioned by any exercise or
non-exercise of rights attached to such Security Assets or by any failure to report
to the Chargor any notice or other communication received in respect of such
Security Assets;

(b) Conversion

immediately on conversion of any Shares from certificated to uncertificated form,
and on the creation or conversion of any other securities which are for the time
being comprised in the Related Rights in or into uncertificated form, comply with
such instructions or directions as the Agent may give in order to protect, perfect
or preserve the Security;

(c) No restriction on transfer

ensure that the Security Assets are at all times free from any restriction on
transfer by the Agent or its nominee to perfect or enforce the Security and procure
that the board of directors of the Company approves any transfer of any of the
Security Assets desired to be made by the Agent or its nominee in the exercise of
the rights, powers and remedies conferred upon it by this Charge or by law;

(d) Related Rights

unless it is permitted to retain such Related Rights in accordance with the terms of
this Charge, upon the accrual, offer or issue of any Related Rights deriving from
the Shares, deliver to the Agent (or procure the delivery to the Agent of) all such
Related Rights and the certificates and documents of title to or representing the
same together with each of the documents required to be duly executed, completed and
delivered under and in accordance with the terms of this Clause 7;

(e) Calls

duly and promptly pay or procure the payment of all calls, instalments and other
payments when due in respect of any of the Shares, provided that if it defaults in
making any such payment, the Agent may (but shall not be obliged to) pay such
amounts on behalf of it and shall be reimbursed by it immediately on demand;

(f) Communication

notify the Agent of the contents of any communication or document received by it in
relation to any of the Shares and/or the Related Rights;

(g) Variation of rights

not, without the prior written consent of the Agent, by the exercise of any voting
rights or otherwise, permit or agree to any proposed compromise, capital
reorganisation, conversion, exchange or repayment offer affecting or in respect of
any of the Shares or to any variation of the rights attaching to or conferred by any
of the Shares or to any conversion of any of the Shares into an uncertificated
security; and

(h) Registration

shall make all such filings and registrations and take all such other steps as may
be necessary or desirable in connection with the creation, perfection or protection
of the Security and pay all application, registration, renewal and other fees
necessary or desirable for effecting, protecting, maintaining or renewing
registrations in respect of any of the Security Assets.

7.2 Voting Rights and Dividend Entitlement

	 	(a)	 	At any time when the Security is enforceable in accordance with the terms of
this Charge, all dividends and other distributions paid or payable in connection with
the Security Assets shall be paid directly to the Agent (or its nominee) for
application in or towards the payment or discharge of the Secured Obligations in
accordance with the terms of the Note Purchase Agreement but before such time the
Chargor shall be entitled to receive and retain all such dividends and other
distributions;

	 	(b)	 	Unless the Security is enforceable in accordance with the terms of this
Charge, the Agent or its nominee shall use its reasonable endeavours promptly to
forward to the Chargor all notices, correspondence and/or other communications it
receives in relation to the Security Assets; and

	 	(c)	 	Subject to Clause 7.3, unless the Security is enforceable in accordance with
the terms of this Charge, all voting rights attached to the Shares may be exercised by
the Chargor or, where the Shares have been registered in the name of the Agent or its
nominee, as the Chargor may direct in writing, and the Agent or its nominee shall
execute any form of proxy or other document reasonably required in order for the
Chargor to do so, provided that the Chargor may not exercise voting rights inconsistent
with the terms of this Charge or the Note Purchase Agreement or in any manner
prejudicial to the interests of the Beneficiaries under this Charge.

7.3 Default Powers

At any time while the Security is enforceable in accordance with the terms of this Charge
and without any further consent or authority on the part of the Chargor, the Agent or its
nominee may exercise (or refrain from exercising) at its discretion in the name of the
Chargor (or the registered holder thereof) in respect of any of the Security Assets any
voting rights and any powers or rights which may be exercised by the person or persons in
whose name or names the Shares are registered or who is the holder or bearer of them.

7.4 Continuing Liabilities

Subject to due notification thereof by the Agent where the Shares are registered in the
Agent’s name (or that of its nominee) in accordance with the terms of this Charge, it is
expressly agreed that the Chargor shall remain liable to observe and perform all of the
conditions and obligations attaching to any of the Shares including the payment of any sum
due in respect of the Shares.

7.5 No Obligation

The Agent shall not be required to perform or fulfil any obligation of the Chargor in
respect of the Security Assets or to make any payment, or to make any enquiry as to the
nature or sufficiency of any payment received by it or the Chargor, or to present or file
any claim or take any other action to collect or enforce the payment of any amount to which
it may have been or to which it may be entitled under this Charge at any time or times.

7.6 Retention of Documents

The Agent may retain any document delivered to it under this Charge until the Security is
released in accordance with the terms of this Charge and, if for any reason it ceases to
hold any such document before that time, it may by notice to the Chargor require that the
relevant document be redelivered to it and the Chargor shall promptly comply (or procure
compliance) with that notice.

8. FURTHER ASSURANCE AND PERFECTION OF SECURITY

8.1 Further Assurance

	 	(a)	 	The Chargor shall, at its own expense, promptly following written request by
the Agent execute and do all such acts, deeds and things (including, without
limitation, payment of all stamp duties and registration fees) the Agent may reasonably
require for:

	 	(i)	 	perfecting or better perfecting or protecting the security created (or
intended to be created) by this Charge over any Security Asset (including for
the avoidance of doubt arranging for any Security Assets which are in
registered form to be registered in the name of the Agent for the benefit of
the Beneficiaries or a nominee of the Agent); and

	 	(ii)	 	after the security constituted by this Charge has become enforceable
in accordance with the terms of this Charge, facilitating the realization of
any Security Asset or the exercise of any right, power or discretion
exercisable by the Agent in respect of any Security Asset, including, without
limitation, the conversion of equitable security to legal security, the
execution of any transfer, conveyance, assignment or assurance of any property,
whether to the Agent or its nominees, and the giving of any notice, order or
direction and the making of any registration, which in any case, the Agent may
think necessary or desirable.

	 	(b)	 	In the event that the Chargor acquires any Additional Interests, it shall
execute in favour of the Agent, or as the Agent may otherwise direct, such assignments,
transfers, mortgages, charges or other encumbrances as the Agent shall stipulate over
such Additional Interests including, without limitation, a charge over shares and
related rights on terms no more onerous than this Charge.

8.2 Security in Jeopardy

If at any time it shall appear to the Agent that any of the Security Assets is in danger of
seizure, distress, attachment, execution, diligence or other legal process, or that the
Security shall for any other reason be in jeopardy, the Agent shall be entitled without
notice to the Chargor to take possession of and hold the same. The Chargor shall, at its
own expense, promptly execute such deeds and other agreements and otherwise take whatever
action the Agent may require (acting reasonably) in order to enable the Agent to exercise
its rights contained in this Clause 8.2.

9. CONTINUATION AND PRESERVATION OF SECURITY

9.1 Subsequent Liens

If the Agent or any other Beneficiary receives, or is deemed to be affected by, notice,
whether actual or constructive, of:

(a) any Lien affecting the Security Assets and/or the proceeds of sale thereof; or

	 	(b)	 	the occurrence of any insolvency event specified as an Event of Default under
the Note Purchase Agreement,

the Agent or such other Beneficiary may open a new account or accounts for the Chargor in
its books. If the Agent or such other Beneficiary does not open a new account, it shall
nevertheless be treated as if it had done so at the time when it received or was deemed to
have received notice (unless it gives express notice to the contrary to the Chargor). As
from that time all payments made to the Agent or such other Beneficiary will (in the absence
of any express appropriation to the contrary) be credited or be treated as having been
credited to the new account and will not operate to reduce the Secured Obligations.

9.2 Waiver of Defences

The Chargor shall be deemed to be a principal debtor and the sole, original and independent
obligor for the Secured Obligations and the Security Assets shall be deemed to be a
principal security for the Secured Obligations. The liability of the Chargor under this
Charge shall not be discharged, impaired or otherwise affected by any circumstance, act,
omission, matter or thing which but for this provision might operate to reduce, release,
prejudice or otherwise exonerate the Chargor from its obligations under the Finance
Documents in whole or in part, including without limitation and whether or not known to any
Obligor, the Agent or any other person:

	 	(a)	 	the winding-up, dissolution, administration, re-organisation, amalgamation,
merger or reconstruction of the Chargor or any other person or any change in its
status, function, control or ownership; or

	 	(b)	 	any time, indulgence, concession, waiver or consent granted to, or composition
with, the Chargor or any other person; or

	 	(c)	 	the release of the Chargor or any other person under the terms of any
composition or arrangement with any creditor of the Chargor or any of its Affiliates;
or

	 	(d)	 	the taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take-up or enforce, any rights against, or security over, the
assets of the Chargor or any other person or any non-presentation or non-observance of
any formality or other requirement in respect of any instrument or any failure to
release or to realise the full value of any security; or

	 	(e)	 	any legal limitation, disability, incapacity or lack of power, authority or
legal personality of or dissolution or change in the members or status of, or other
circumstance relating to, the Chargor or any other person; or

	 	(f)	 	any variation (however fundamental and whether or not involving any increase
in the liability of the Chargor or any other Obligor thereunder) or replacement of any
Finance Document or any other document or security; or

	 	(g)	 	any unenforceability, illegality, invalidity or frustration of any obligation
of the Chargor or any other person under any Finance Document or any other document or
security, or any failure of the Chargor or any other Obligor to become bound by the
terms of any other Finance Document, in each case whether through any want of power or
authority or otherwise; or

	 	(h)	 	any postponement, discharge, reduction, non-provability or similar
circumstances affecting any obligation of the Chargor or any other Obligor under a
Finance Document resulting from any insolvency, liquidation or dissolution proceedings
or from any law, regulation or order,

so that the Chargor’s obligations under this Charge remain in full force and effect and that
this Charge shall be construed accordingly as if there were no such circumstance, act,
omission, matter or thing.

9.3 Immediate Recourse

The Chargor waives any right it may have of first requiring the Agent (or any trustee or
agent on its behalf) to proceed against or enforce any other rights or security in respect
of the Secured Obligations or claim payment from any person before enforcing the Security.
This waiver applies irrespective of any law or provision of the Finance Documents to the
contrary.

9.4 Non-competition

Subject as provided below, until the Agent is satisfied that all of the Secured Obligations
have been unconditionally and irrevocably paid and discharged in full, the Chargor shall
not, by virtue of any payment made, security realised or moneys received or recovered under
any of the Finance Documents for or on account of the liability of any Obligor:

	 	(a)	 	be subrogated to any rights, security or moneys held, received or receivable
by the Agent or any other Beneficiary or be entitled to any right of contribution or
indemnity; or

	 	(b)	 	claim, rank, prove or vote as a creditor of any Obligor or its estate in
competition with the Agent or any other Beneficiary; or

	 	(c)	 	receive, claim or have the benefit of any payment, distribution or security
from or on account of any Obligor, or exercise any right of set-off against any
Obligor.

The Chargor shall hold in trust for and forthwith pay or transfer to the Agent for the
benefit of the Beneficiaries any payment or distribution or benefit of security received by
it contrary to the above. If the Chargor exercises any right of set-off contrary to the
above it will forthwith pay an amount equal to the amount set off to the Agent for the
benefit of the Beneficiaries. Notwithstanding the foregoing, following any enforcement of
the Security by the Agent under this Charge, the Chargor will (at its own cost) promptly
take such steps or actions as are referred to above as the Agent may from time to time
stipulate.

9.5 Security held by the Chargor

The Chargor warrants that it has not taken, and agrees that it will not take, from any other
Obligor or any person party to any related security any Lien, guarantee, indemnity, bond or
other assurance in respect of or in connection with its obligations under this Charge. If
the Chargor takes any such Lien, guarantee, indemnity, bond or other assurance in
contravention of this Clause, it shall hold it on trust for the Beneficiaries until such
time as all of the Secured Obligations have been satisfied in full (and the Beneficiaries
are not under any further obligation, actual or contingent, to any Obligor) and shall on
request promptly deposit the same with and/or charge the same to the Beneficiaries in such
manner as the Agent may require as security for the due and punctual payment, performance
and discharge by the Chargor of the Secured Obligations.

9.6 Continuing Security

The Security constituted by this Charge shall be a continuing security and will extend to
the ultimate balance of the Secured Obligations notwithstanding any interim or intermediate
payment, discharge or settlement of account or other matter whatsoever and is in addition to
and shall not merge with or otherwise prejudice or affect (or be prejudiced or affected by)
the security constituted by any Lien, guarantee or other assurance now or hereafter held by
the Agent or any right or remedy of the Agent in respect of the same and shall not be in any
way prejudiced or affected by the invalidity thereof, or by the Agent now or hereafter
dealing with, exchanging, releasing, modifying or abstaining from perfecting or enforcing
any of the same, or any rights which it may now or hereafter have, or giving time for
payment or indulgence or compounding with any other person liable.

9.7 Reinstatement

	 	(a)	 	Where any discharge (whether in respect of the obligations of the Chargor or
any security for those obligations or otherwise) is made in whole or in part or any
arrangement is made on the faith of any payment, security or other disposition which is
avoided or must be restored on insolvency, liquidation or otherwise, the liability of
the Chargor under this Charge shall continue as if the discharge or arrangement had not
occurred.

	 	(b)	 	The Agent or any other Beneficiary may concede or compromise any claim that
any payment, security or other disposition is liable to avoidance or restoration.

10. ENFORCEABILITY OF SECURITY

	 	(a)	 	The Security and the power of sale and other powers conferred by Section 101
of the Act, as varied or amended by this Charge, shall be enforceable and exercisable
upon and at any time after the occurrence of an Event of Default which is continuing
and which has not been remedied or waived in accordance with the Note Purchase
Agreement.

	 	(b)	 	If the Security is enforceable, the Agent may in its absolute discretion, but
subject to the provisions of the Note Purchase Agreement and this Charge, enforce all
or any part of the Security in any manner it sees fit.

	 	(c)	 	If the Security is enforceable, the Agent shall, subject to the provisions of
the Note Purchase Agreement, be entitled to appropriate moneys and/or assets to
discharge any outstanding Secured Obligations in such manner or order as it sees fit.

11. ENFORCEMENT OF SECURITY

11.1 General

For the purposes of all rights and powers implied or granted by statute, the Secured
Obligations are deemed to have become due and payable on the date of this Charge and the
restriction on the consolidation of mortgages and on power of sale imposed by Sections 93
and 103 of the Act do not apply to the Security.

11.2 Protection of Third Parties

No person (including a purchaser) dealing with the Agent or any of its agents or nominees
will be concerned to enquire:

(a) whether the Secured Obligations have become payable; or

	 	(b)	 	whether any power which the Agent is purporting to exercise has become
exercisable; or

(c) whether any money remains due under the Finance Documents; or

(d) how any money paid to the Agent is to be applied.

In the absence of bad faith on the part of such purchaser or other person, such dealings
shall be deemed, so far as regards the safety and protection of such purchaser or other
person, to be within the powers conferred by this Charge and to be valid accordingly. The
remedy of the Chargor in respect of any impropriety or irregularity in the exercise of such
power shall be in damages only.

11.3 Delegation

The Agent may at any time delegate by power of attorney or in any other manner to any person
or persons any of the powers (including the power of attorney contained in Clause 12),
authorities and discretions which are for the time being exercisable by the Agent under this
Charge in relation to the Security Assets. Any such delegation may be made upon such terms
(including power to sub-delegate) and subject to such regulations as the Agent may think
fit. The Agent shall not be in any way liable or responsible to the Chargor for any loss or
damage arising from any act, default, omission or misconduct on the part of any such
delegate or sub-delegate.

11.4 Suspense Accounts

The Agent may at any time and from time to time place and keep (for such time as it shall
consider prudent) any monies received, recovered or realised from the Chargor or in relation
to any Security Assets of the Chargor in a separate suspense account (to the credit of
either the Chargor or the Agent as the Agent shall think fit) without any intermediate
obligation on its part to apply the same or any part thereof in or towards the discharge of
the Secured Obligations provided that if such monies are at any time sufficient to discharge
the Secured Obligations in full, they shall be promptly so applied.

11.5 Agent’s Power to Remedy Breaches

If at any time the Chargor fails to perform any of the covenants contained in this Charge it
shall be lawful for the Agent, but the Agent shall have no such obligation, to take such
action on behalf of the Chargor (including, without limitation, the payment of money) as may
in the Agent’s opinion be required to ensure that such covenants are performed. Any losses,
costs, charges and expenses incurred by the Agent in taking such action shall be reimbursed
by the Chargor immediately on written demand.

12. POWER OF ATTORNEY

12.1 Appointment

The Chargor, by way of security, hereby irrevocably appoints the Agent to be its attorney
(with full power of substitution and delegation) to take any action which it is obliged to
take under this Charge following the occurrence of an Event of Default which is continuing
and generally in its name and on its behalf to exercise all or any of the powers,
authorities and discretions conferred by this Charge or by statute on the Agent, and
(without limiting the foregoing) to seal, deliver (using the company seal where appropriate)
and otherwise perfect and do any deed, assurance, agreement, instrument, act or thing which
it may deem proper for the purpose of exercising such powers, authorities and discretions.

12.2 Ratification

The Chargor covenants with the Agent that, on request, it will ratify and confirm all
security agreements, documents and acts and all transactions entered into by the Agent (or
by the Chargor at the instance of the Agent) in the exercise or purported exercise of its
powers set out in this Charge and the Chargor irrevocably acknowledges and agrees that the
power of attorney contained in this Clause 12 is given to secure the proprietary interest
of, and the performance of obligations owed to, the respective donees within the meaning of
the Powers of Attorney Act 1971.

13. INDEMNITIES

13.1 General

The Chargor hereby unconditionally and irrevocably agrees as primary obligor and not merely
as surety to indemnify and hold harmless the Agent (and its nominees) and each other
Beneficiary from time to time on demand against all losses, actions, claims, expenses,
demands or liabilities whether in contract, tort, pursuant to breach of statute or otherwise
now or hereafter incurred by it or any of them or by any of their respective managers,
agents, officers or employees occasioned by any breach by the Chargor of any of its
covenants or other obligations under this Charge or otherwise arising out of or in
connection with the Security Assets or the Security.

13.2 Taxes

The Chargor agrees to indemnify the Agent and each other Beneficiary on demand against all
present or future stamp, withholding or other taxes or duties and any penalties or interest
with respect thereto which may be imposed by any competent authority in connection with the
execution or enforcement of this Charge, repayment and discharge of the Secured Obligations
or in consequence of any payment made pursuant to this Charge being impeached or declared
void for any reason whatsoever.

14. WAIVERS AND REMEDIES

14.1 Waivers

No failure or delay by any Beneficiary (or by Agent on their behalf) in exercising any right
or remedy shall operate as a waiver thereof, nor shall any single or any partial exercise or
waiver of any right or remedy preclude its further exercise or the exercise of any other
right or remedy as though no waiver had been made and no relaxation or indulgence granted.
The rights and remedies provided in this Charge are cumulative and not exclusive of any
rights or remedies provided by law.

14.2 Severability

If any provision of this Charge shall be prohibited, illegal, invalid or unenforceable under
applicable law, it shall be ineffective only to such extent and in the relevant
jurisdiction, without invalidating or otherwise detrimentally affecting the remainder of
this Charge.

15. REINSTATEMENT AND RELEASE

15.1 Reinstatement

Any settlement or discharge under this Charge between the Chargor and the Agent or the
Beneficiaries (or any of them) shall be conditional upon no security or payment to the Agent
or the Beneficiaries (or any of them) by any Obligor or the Chargor or any other person on
behalf of any Obligor or, as the case may be, the Chargor being avoided or set aside or
ordered to be refunded or reduced by or pursuant to any applicable law or regulation and, if
such condition is not satisfied, the Agent and/or the Beneficiaries shall be entitled to
recover from the Chargor on demand the value of any such security or the amount of any such
payment as if such settlement or discharge had not occurred.

15.2 Release

Once all the Secured Obligations have been paid in full and neither the Agent nor any other
Beneficiary has any contingent liability to advance further monies to, or incur liability on
behalf of any Obligor, the Agent and each other Beneficiary shall, at the request and cost
of the Chargor promptly, take any action which may be necessary to release, discharge and
reassign the Security Assets from the Security.

16. DECLARATION OF TRUST

The Agent hereby declares that it holds the security constituted by this Charge as a trustee
for and on behalf of the Beneficiaries on the basis of the duties, obligations and
responsibilities set out in the Collateral Agency Agreement and shall have no implied
duties, obligations or responsibilities (including without limitation but only to the extent
permitted by law any duties, obligations or responsibilities provided for pursuant to the
terms of the Trustee Act 2000 or otherwise). The proceeds of any enforcement of the
security constituted by this Charge shall be applied in accordance with the provisions of
the Note Purchase Agreement and the Collateral Agency Agreement.

17. MISCELLANEOUS

17.1 No Liability

In the execution or purported execution of the trusts and powers conferred on it under this
Charge, the Agent shall not have any liability for any loss or damage arising by reason of
any mistake or omission made in good faith or of any other act or omission, matter or thing
whatever except for breach of trust arising from fraud, gross negligence or wilful
misconduct on the part of the Agent. Without prejudice to the foregoing, if the Agent
enters into possession of the Security Assets, it will not be liable to account as mortgagee
in possession and may at any time at its discretion go out of such possession.

17.2 Powers of Agent

The powers, trusts, authorities and discretion conferred upon the Agent by this Charge shall
be in addition to any which may from time to time be vested in it by any applicable law.

17.3 Currency

Any amount received or recovered by the Agent in respect of any sum expressed to be due to
it from the Chargor under this Charge in a currency other than the currency (the
“contractual currency”) in which such sum is so expressed to be due (whether as a result of,
or the enforcement of, any judgement or order of a court or tribunal of any jurisdiction,
the winding-up of the Chargor or otherwise) shall only constitute a discharge to the Chargor
to the extent of the amount of the contractual currency that the Agent is able, in
accordance with its usual practice, to purchase with the amount of the currency so received
or recovered on the date of receipt or recovery (or, if later, the first date on which such
purchase is practicable). If the amount of the contractual currency so purchased is less
than the amount of the contractual currency so expressed to be due the Chargor shall
indemnify the Agent against any loss sustained by it as a result, including the cost of
making any such purchase.

17.4 Set Off

	 	(a)	 	Any Beneficiary may at any time after an Event of Default has occurred
(without giving notice to the Chargor):

	 	(i)	 	set off or otherwise apply sums standing to the credit of the
Chargor’s accounts with that Beneficiary (irrespective of the terms applicable
to those accounts and whether or not those sums are then due for repayment to
that Beneficiary); and

	 	(ii)	 	set off any other obligations (whether or not then due for
performance) owed by that Beneficiary to the Chargor, in each case against any
liability of the Chargor to the relevant Beneficiary under the Finance
Documents.

	 	(b)	 	A Beneficiary may exercise its rights under Clause 17.4(a) notwithstanding
that the amounts concerned may be expressed in different currencies and each
Beneficiary is authorised to effect any necessary conversions at a market rate of
exchange selected by it (in its absolute discretion).

	 	(c)	 	If the relevant obligation or liability is unliquidated or unascertained, the
Beneficiary may set off the amount which it estimates (in good faith) will be the final
amount of that obligation or liability once it becomes liquidated or ascertained.

18. NOTICES

18.1 General

Any demand, notice or other communication or document to be made on or delivered to the
Chargor under this Charge or in respect of the Secured Obligations shall be made or
delivered by fax or otherwise in writing and shall be treated as having been served if
served in accordance with Clause 18.2. Each demand, notice, communication or other document
to be made on or delivered to any party to this Charge may (unless that party has by 10
working days’ written notice to the other party or parties specified another address or fax
number) be made or delivered to that other person at the address or fax number set out under
its name at the end of this Charge. For the purpose of this Clause 18 the term “working
day” shall mean a day (other than a Saturday or a Sunday or bank or public holiday) upon
which the recipient of any demand, notice, communication or other document is normally open
for business in the country of its address for service referred to in this Clause 18.1 and
references to any time of day shall be construed as references to the time of day in such
country.

18.2 Mode of Service

Service of any demand, notice, communication or other document to be made or delivered under
this Charge may be made:

(a) by leaving it at the relevant address for service referred to in Clause 18.1;

	 	(b)	 	by sending it by pre-paid first class letter (or by airmail if to or from an
address outside the UK) through the post to the relevant address for service referred
to in Clause 18.1; or

	 	(c)	 	by fax to the relevant fax number referred to in Clause 18.1 and so that any
fax shall be deemed to be in writing and, if it bears the signature of the server or
its authorised representative or agent, to have been signed by or on behalf of the
server.

18.3 Deemed Service

Any demand, notice, communication or other document from the Chargor shall be irrevocable
and shall not be effective until its actual receipt by the Agent. Any other demand, notice,
communication or other document shall be served or treated as served at the following times:

	 	(a)	 	in the case of service personally or in accordance with Clause 18.2(a), at the
time of such service;

	 	(b)	 	in the case of service by post, at 9.00am on the working day next following
the day on which it was posted or, in the case of service to or from an address outside
the UK, at 9.00am on the fourth working day following the day on which it was posted;
and

	 	(c)	 	in the case of service by fax, if sent before 9.00am on a working day, at
11.00 am on the same day, if sent between 9.00am and 5.30pm on a working day, two hours
after the time of such service or, if sent after 5.30pm on a working day, or if sent on
a day other than a working day, at 9.00am on the next following working day.

18.4 Proof of Service

In proving service of a demand, notice, communication or other document served:

	 	(a)	 	by post, it shall be sufficient to prove that such demand, notice,
communication or other document was correctly addressed, full postage paid and posted;
and

	 	(b)	 	by fax, it shall be sufficient to prove that the fax was followed by such
machine record as indicates that the entire fax was sent to the relevant number.

19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

	 	(a)	 	Except as expressly provided in this Charge, the parties do not intend that
any term of this Charge shall be enforceable by virtue of the Contracts (Rights of
Third Parties) Act 1999 or otherwise by any person who is not a party.

	 	(b)	 	The parties may rescind, vary, waive, restore, assign, novate or otherwise
dispose of all or any of their respective rights or obligations under this Charge
without the consent of any person who is not a party.

20. ASSIGNMENTS AND TRANSFERS

	 	(a)	 	The Chargor shall not be entitled to assign or transfer all or any of its
rights or obligations under this Charge.

	 	(b)	 	The Agent may at any time assign or otherwise transfer all or any part of its
rights under this Charge in accordance with the Finance Documents and the Chargor
authorises the Agent to execute on its behalf any document required to effect the
necessary transfer of rights and obligations.

21. GOVERNING LAW AND JURISDICTION

21.1 Governing Law

This Charge and the rights and obligations of the parties to this Charge are governed by and
to be construed in accordance with English law.

21.2 Jurisdiction

(a) Submission

The Chargor agrees for the benefit of the Agent that the courts of England shall
have jurisdiction to hear and determine, any suit, action or proceeding, and to
settle any dispute, which may arise out of or in connection with this Charge and,
for such purposes, irrevocably submits to the jurisdiction of such courts.

(b) Forum

The Chargor irrevocably waives any objection which it might now or hereafter have to
the courts referred to in Clause 21.2(a) being nominated as the forum to hear and
determine any suit, action or proceeding, and to settle any dispute, which may arise
out of or in connection with this Charge and agrees not to claim that any such court
is not a convenient or appropriate forum.

(c) Service of process

The Chargor agrees that the process by which any suit, action or proceeding is begun
may be served on it by being delivered to the Company as its registered office from
time to time. If the appointment of such person ceases to be effective in respect
of the Chargor, the Chargor shall immediately appoint a further person in England to
accept service of process on its behalf in England and, failing such appointment
within 15 days, the Agent shall be entitled to appoint such a person by notice to
the Chargor. Nothing contained in this Charge shall affect the right to serve
process in any other manner permitted by law.

(d) Other competent jurisdictions

The submission to the jurisdiction of the courts referred to in Clause 21.2(a) shall
not (and shall not be construed so as to) limit the right of the Agent to take
proceedings against the Chargor in any other court of competent jurisdiction nor
shall the taking of proceedings in any one or more jurisdictions preclude the taking
of proceedings in any other jurisdiction, whether concurrently or not.

(e) Consent to enforcement

The Chargor hereby consents generally in respect of any legal action or proceeding
arising out of or in connection with this Charge to the giving of any relief or the
issue of any process in connection with such action or proceeding including, without
limitation, the making, enforcement or execution against any property whatsoever of
the Chargor (irrespective of its use or intended use) of any order or judgment which
may be made or given in such action or proceeding.

IN WITNESS of which the Chargor has duly executed this Charge as a deed and intends to deliver and
hereby delivers the same on the date first above written and, before such delivery, this Charge has
been duly signed on behalf of the Agent, in the manner appearing below.

3

SCHEDULE 1

The Shares

	 	 	 	 	 	 	 
	Name of company	 	Number of Shares	 	Class
	TGC RESEARCH LIMITED

	 	 	100	 	 	Ordinary
	 
	 	 	 	 	 	 

4

SIGNATORIES

THE CHARGOR

EXECUTED as a DEED

by DIAMETRICS MEDICAL, INC

acting by DAVID B. KAYSEN

(CHIEF EXECUTIVE OFFICER)

/s/ David B. Kaysen

Address: 3050 Centre Point Drive, Suite 150

St. Paul

Minnesota 55113

United States of America

	 	 	 	 	 
	Fax:

Attention:

	 	+1 651 639 8549

Chief Executive Officer
	 	

	 
	 	 	 	 

5

	 	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	THE AGENT

SIGNED for

BCC ACQUISITION II LLC

	 	

	 	

/s/ Fred Craves
	 
	 	 	 	 
	By:THE BAY CITY CAPITAL FUND I, L.P.
	 	 
	 
	 	 	 	 
	Its:Manager

	 	

	 	

	 
	 	 	 	 
	By:Bay City Capital Management LLC
	 	 
	 
	 	 	 	 
	Its:General Partner

	 	

	 	

	 
	 	 	 	 
	Address:

	 	C/O Bay City Capital LLC
	 	

	 	750	 	Battery, Suite 600

San Francisco, CA 94111

United States of America

	 	 	 
	Fax:

Attention:

	 	+1 415 837 0996

Fred Craves
	 
	 	 
	With a copy to Latham & Watkins LLP:

	 
	 	 
	Address:

	 	Sears Tower, Suite 5800

Chicago, Illinois 6060

United States of America

	 	 	 
	Fax:

Attention:

	 	+1 312 993 9767

Michael A. Pucker
	 
	 	 

6EX-10.14

EXHIBIT 10.14

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (this “Agreement”) made as of December 15, 2004, is
entered into by and between Gerald L. Cohn Revocable Trust (“Cohn Trust”), Hannah S. and
Samuel A. Cohn Memorial Foundation (“Cohn Foundation”), AEOW 96, LLC (“AEOW”) and
BCC Acquisition II LLC (“Bay City” and, in its capacity as collateral agent on behalf of
Cohn Trust, Cohn Foundation, AEOW, and Bay City “Junior Collateral Agent”) (collectively and
solely in their capacity as lenders and not as equityholders, the “Junior Creditor”),
Diametrics Medical, Inc., a Minnesota corporation (“Domestic”), TGC Research Limited, a
company incorporated in United Kingdom with registered number 5273708 (“TGC”) and Barbara
R. Mittman, acting on behalf of certain obligees of Domestic and TGC (“Collateral Agent”),
namely Longview Equity Fund, LP, Longview Fund L.P., Longview International Equity Fund L.P.,
Mercator Momentum Fund III L.P., Mercator Momentum Fund L.P., Monarch Pointe Fund, Ltd., and Camden
International (collectively with Collateral Agent, “Senior Creditor”), who have been issued
from Domestic certain secured convertible Notes issued as of December 15, 2004, pursuant to a
Subscription Agreement dated as of December 14, 2004 (“the Senior Credit Agent”), and who have also
been issued a Guaranty from TGC of all obligations owing to Senior Creditor from Domestic.

RECITALS

WHEREAS, Domestic and Diametrics Medical Ltd., as predecessor to TGC have entered into with
the Senior Creditor those certain Secured Promissory Notes in the aggregate principal amount of
$1,800,000 (which may be increased by an additional principal amount of $1,200,000) issued as of
December 15, 2004, and have received the Guaranty from TGC, all of which may be amended,
supplemented, refinanced or otherwise modified from time to time; and

WHEREAS, Domestic and Junior Creditor are parties to that certain Note Purchase Agreement,
dated as of August 4, 1998 (as heretofore amended, restated, supplemented and modified, the
“Domestic Note Purchase Agreement”); and

WHEREAS, Domestic and Junior Creditor are parties to (i) that certain General Security
Agreement dated as of August 13, 2003, (ii) that certain Trademark Security Agreement dated as of
August 13, 2003 and (iii) that certain Patent Security Agreement dated as of August 13, 2003 as
amended at or prior to the date hereof (collectively, the “Domestic Security Agreements”);
and

WHEREAS, Diametrics Medical Ltd., as predecessor to TGC and Junior Collateral Agent have
entered into (i) that certain Security Agreement dated as of August 13, 2003, (ii) that certain
Trademark Security Agreement dated as of August 13, 2003, (iii) that certain Patent Security dated
as of August 13, 2003, (iv) that certain Debenture dated August 27, 2003, and (v) that certain
General Security Agreement and ancillary documents among TGC and Junior Collateral Agent dated at
or about the date of this Agreement (collectively, the “TGC Security Agreements” and
together with the Domestic Note Purchase Agreement and Domestic Security Agreement as amended and
supplemented at or prior to the date hereof, the “Junior Credit Documents”).

WHEREAS, the Credit Party has requested that the Senior Creditor enter into the Senior Credit
Documents, and in order to induce the Senior Creditor to enter into the Senior Credit Documents,
the Credit Party and the Junior Creditor have agreed to execute and deliver this Agreement to the
Senior Creditor; and

WHEREAS, the Senior Indebtedness will be secured by a first priority continuing Lien on all
Collateral. Following the execution of this Agreement, the Junior Indebtedness will be secured by
a second priority continuing Lien on all Collateral, (the “Junior Collateral”); and

WHEREAS, the Senior Creditor and the Junior Creditor desire to enter into this Agreement in
order to set forth, among other things, the relative priority of their respective Liens on the
Collateral between the Senior Creditor and the Junior Creditor with respect to the Senior
Indebtedness and the Junior Indebtedness.

NOW, THEREFORE, in consideration of the foregoing, together with other good and valuable
consideration, the receipt and sufficiency of which are each hereby acknowledged, the Senior
Creditor and the Junior Creditor hereby agree as follows:

SECTION 1. Certain Definitions. The following terms shall have the following meanings
for purposes of this Agreement (including the premises and background recitals hereof):

“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code (11
U.S.C. § 101 et seq.), as amended from time to time, and any successor
statute, and all rules and regulations promulgated thereunder. References to specific
Sections of the Bankruptcy Code includes references to successor sections.

“Collateral” means any and all property pledged by the Credit Party to either
the Senior Creditor or the Junior Creditor under both the Senior Credit Documents and/or the
Junior Credit Documents, together will all accessions, attachments, proceeds and products
thereunder.

“Credit Party” means Domestic and TGC and their successors and assigns.

“Junior Credit Documents” includes the Junior Creditor Note and all security
agreements, guaranties, pledge agreements and all other agreements, documents and
instruments now or at any time hereafter entered into or delivered by the Credit Party or
other Person pursuant thereto and relating to any indebtedness, or evidencing any
replacement, substitution, refunding, renewal or refinancing of or for all or any part of,
the Junior Indebtedness in each case as amended, restated, supplemented or otherwise
modified and in effect from time to time, to the extent permitted pursuant to the terms
hereof.

“Junior Enforcement Action” means any of the following: (a) acceleration by the
Junior Creditor of all or any part of the Junior Indebtedness; (b) commencement of any
Proceeding with respect to the Credit Party; (c) initiation of any suit or action, including
any Proceeding, against or with respect to the Credit Party or other Person to enforce
payment of or to collect the whole or any part of the Junior Indebtedness, or to enforce any
other rights, powers, privileges or remedies under the Junior Credit Documents; or (d) the
taking by the Junior Creditor of any action under the provisions of any state or federal or
local law, including, without limitation, the Bankruptcy Code or the UCC, to enforce,
foreclose upon, take possession of or appoint a Receiver in respect of or sell any Property
of the Credit Party or any other Person on account of all or any part of the Junior
Indebtedness, including, without limitation, any Collateral.

“Junior Indebtedness” means all Indebtedness now existing or hereafter arising,
contingent or otherwise, of the Credit Party to the Junior Creditor under, in connection
with, or evidenced by or secured by any Junior Credit Documents, in each case including,
without limitation, obligations to pay (i) principal, (ii) interest or premium (including
interest accruing after the commencement of any Proceeding, whether or not constituting an
allowed claim in such Proceeding), (iii) fees, (iv) costs, expenses and other amounts
related to any indemnity against loss, damage or liability and (v) any other monetary
obligation.

“Proceeding” means, with respect to any Person, any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition, or other similar
proceeding relating to such person or its Property or creditors in such capacity, (b)
proceeding for any liquidation, dissolution or other winding-up of such Person, voluntary or
involuntary, whether or not involving insolvency or proceedings under the Bankruptcy Code,
whether partial or complete and whether by operation of law or otherwise, (c) assignment for
the benefit of creditors of such Person or (d) other marshalling of the assets of such
Person.

“Property” means, with respect to any Person, all property and interests in
property of such Person, whether real, personal or mixed, whether now owned or existing or
hereafter acquired or arising and wheresoever located.

“Receiver” means any receiver, manager, administrator or administrative receiver which
either the Senior Creditor or the Junior Creditor may have the right to appoint pursuant to
the Senior Security Documents or the Junior Security Documents (as the case may be).

“Senior Credit Documents” means and includes the Senior Credit Agreement, the
note issued thereunder or in connection therewith and all security agreements, guaranties
including the Guaranty given by TGC to Senior Creditor, pledge agreements and other
agreements, documents and instruments now or at any time hereafter entered into or delivered
by the Credit Party or other Person pursuant thereto, or evidencing any replacement,
substitution, refunding, renewal or refinancing of or for all or any part of, the Senior
Indebtedness, in each case as amended, restated, supplemented or otherwise modified and in
effect from time to time, to the extent permitted pursuant to the terms hereof.

“Senior Enforcement Action” means any of the following: (a) acceleration by the
Senior Creditor of all or any part of the Senior Indebtedness; (b) commencement of any
Proceeding with respect to the Credit Party; (c) initiation of any suit or action, including
any Proceeding, against or with respect to the Credit Party or other Person to enforce
payment of or to collect the whole or any part of the Senior Indebtedness, or to enforce any
other rights, powers, privileges or remedies under the Senior Credit Documents; or (d) the
taking by the Senior Creditor of any action under the provisions of any state or federal or
local law, including, without limitation, the Bankruptcy Code or the UCC, to enforce,
foreclose upon, take possession of or appoint a Receiver in respect of or sell any Property
of the Credit Party or any other Person on account of all or any part of the Senior
Indebtedness, including, without limitation, any Collateral.

“Senior Indebtedness” means all Indebtedness now existing or hereafter arising,
contingent or otherwise, of the Credit Party to the Senior Creditor under, in connection
with, or evidenced or secured by the Senior Credit Agreement and the other Senior Credit
Documents to the Senior Creditor, in each case including, without limitation, obligations to
pay (i) principal, (ii) interest or premium (including interest accruing after the
commencement of any Proceeding, whether or not constituting an allowed claim in such
Proceeding), (iii) fees, (iv) costs, expenses and other amounts related to any indemnity
against loss, damage or liability and (v) any other monetary obligation; provided that in no
event shall the principal amount of Senior Indebtedness exceed $4,000,000.

“UCC” means the Uniform Commercial Code, as in effect from time to time in any
applicable jurisdiction.

All terms used but not otherwise defined herein but defined in the UCC shall have the
respective meanings provided in the UCC. Other capitalized terms used herein without definition
shall have the meanings given to such terms in the Senior Credit Agreement.

SECTION 2. Payment Priorities.

2.1 Interests. The Junior Creditor hereby agrees that the Junior Indebtedness shall
at all times be wholly subordinate and junior in right of payment to any and all Senior
Indebtedness in the manner set forth herein.

2.2 Payment Blockage. Until the Senior Indebtedness shall have been paid in full in
cash, stock or property acceptable to Senior Creditor and the Senior Indebtedness shall have been
terminated pursuant to the respective terms and provisions thereof, no payments (in cash, other
property, by set-off or otherwise) or other distributions whatsoever in respect of any Junior
Indebtedness shall be made.

	 	 	 
	SECTION 3.Lien Priorities.

	 
	 	 
	 

	 
	 	 
	3.1

	 	Acknowledgment of Liens; Subordination.
	
 
	 	 

( The Junior Creditor hereby acknowledges that the Senior Creditor has been granted
Liens upon the Collateral pursuant to the Senior Credit Documents. The Senior Creditor
hereby acknowledges that the Junior Creditor has been granted Liens upon the Junior
Collateral pursuant to the Junior Credit Documents.

( Notwithstanding the date, manner or order of grant, attachment or perfection of the
Liens on all or any part of the Collateral granted to the Senior Creditor and the Junior
Creditor, and notwithstanding the provisions of the UCC or any other applicable law or
decision, or any other circumstance whatsoever, the Junior Creditor hereby agrees that (i)
the Senior Creditor shall have a first, prior, senior and continuing Lien on all of the
Collateral to secure the prompt and complete payment, performance and observance of all
Senior Indebtedness and (ii) any Lien on all or any part of the Collateral hereafter held by
or on behalf of the Junior Creditor, regardless of when or how acquired, whether by grant,
statute, operation of law, subrogation or otherwise, shall be in all respects and for all
purposes subject to, junior to and subordinate to all Liens on all or any part of the
Collateral granted to or held by the Senior Creditor to secure the Senior Indebtedness.

( The relative priorities of the respective Liens described in this Section 3.1
shall not be altered or otherwise affected by any amendment, modification, supplement,
extension, renewal, restatement, replacement or refinancing of the Senior Indebtedness or
Junior Indebtedness, respectively, or by any action or inaction which either the Senior
Creditor or Junior Creditor may take or fail to take in respect of the Collateral.

( So long as the Senior Indebtedness remains outstanding, all decisions with respect to
the Collateral, including the time and method of disposition, will be made by the Senior
Creditor.

3.2 Prohibition on Contesting Liens. The Junior Creditor agrees not to seek to
challenge, to avoid, to subordinate or to contest or directly or indirectly to support any other
Person in challenging, avoiding, subordinating or contesting in any judicial or other proceeding,
including, without limitation, any Proceeding, the priority, validity, extent, perfection or
enforceability of any Lien held by the Senior Creditor to secure the Senior Indebtedness, in all or
any part of the Collateral. As between the Senior Creditor and the Junior Creditor, the terms of
this Agreement shall govern even if part or all of the Junior Indebtedness or Senior Indebtedness,
as the case may be or the respective Liens securing payment, observance and performance thereof are
avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

SECTION 4. Enforcement.

4.1 No Exercise of Remedies. Unless and until the Senior Creditor shall have
received payment in full in cash, stock or property acceptable to the Senior Creditor of all Senior
Indebtedness and the Senior Indebtedness shall have terminated pursuant to the respective terms and
provisions thereof, the Junior Creditor shall not (a) accelerate the maturity of the Junior
Indebtedness or exercise any of its default remedies or otherwise take any Junior Enforcement
Action or (b) ask, demand or sue for any right or remedy in respect of all or any part of the
Junior Indebtedness or the Collateral, and the Junior Creditor agrees not to take or receive from
the Credit Party, directly or indirectly, in cash or other Property or by set-off or in any other
manner, whether pursuant to any enforcement, collection, execution, levy or foreclosure proceeding
or otherwise, any part of the Collateral. Without limiting the generality of the foregoing, unless
and until the Senior Creditor shall have received payment in full in cash, stock or property
acceptable to the Senior Creditor of all Senior Indebtedness and the Senior Indebtedness shall have
terminated pursuant to the respective terms and provisions thereof: (i) the Junior Creditor shall
not exercise or otherwise assert any right or remedy in respect of any part of the Collateral or
the Lien of the Senior Creditor thereon; (ii) the sole right of the Junior Creditor with respect to
the Collateral shall be to hold a Lien thereon to the extent granted pursuant to the Junior Credit
Documents (as subordinated herein) and to receive proceeds thereof remaining after such payment and
termination and (iii) without the prior written consent of the Senior Creditor, the Junior Creditor
shall not exercise any right the Junior Creditor may have under the Junior Credit Documents under
the UCC or other applicable law to deliver any notice to account debtors informing them of the
Junior Creditor’s interest in any accounts of the Credit Party or directing such account debtors to
make payments in any particular manner of amounts due in respect of any such account.

4.2 Cooperation. The Junior Creditor agrees that, unless and until the Senior
Creditor shall have received payment in full in cash, stock or property acceptable to the Senior
Creditor of all Senior Indebtedness and the Senior Indebtedness shall have terminated pursuant to
the respective terms and provisions thereof, the Junior Creditor will not commence, or join with
any creditor other than the Senior Creditor in commencing, any enforcement, collection, execution,
levy or foreclosure proceeding with respect to any Lien held by it in, or otherwise with respect
to, all or any part of the Collateral, including, without limitation, petitioning, filing or
joining in any involuntary Proceeding pursuant to Section 303 of the Bankruptcy Code or pursuant to
any other applicable law or appointing or purporting to appoint any Receiver.

4.3 Certain Exercises. The provisions of this Section 4 are intended to limit
the enforcement of the Junior Creditor’s rights and remedies with respect to the Credit Party and
the Collateral or any Lien thereon for so long and to the extent set forth in Sections 4.1
and 4.2 hereof.

SECTION 5. Liquidation; Dissolution; Bankruptcy. In the event of any Proceeding
involving the Credit Party, or any sale, transfer or other disposition of all or substantially all
of the assets of the Credit Party:

(a) The Junior Creditor agrees that the Senior Creditor may consent to the use of cash
collateral or the provision of financing by the Senior Creditor to the Credit Party on such
terms and conditions and in such amounts as the Senior Creditor, in its sole discretion, may
decide and that, in connection with such use of cash collateral or such financing, as the
case may be, the Credit Party (or a trustee appointed for the estate of the Credit Party)
may grant to the Senior Creditor, Liens on all of such Credit Party’s Property, which Liens:
(i) shall secure payment, performance and observance of all Senior Indebtedness (whether
such Senior Indebtedness arose prior to the commencement of any Proceeding or at anytime
thereafter); and (ii) shall be superior in priority to the Liens in favor of the Junior
Creditor on any Property of the Credit Party. Each Junior Creditor agrees that it will not
object to or oppose a sale or other disposition of any Property of any Credit Party securing
all or any part of the Senior Indebtedness free and clear of Liens or other claims of the
Junior Creditor under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code or other applicable law if the Senior Creditor has consented to such sale or
disposition and the respective interests of the Senior Creditor and the Junior Creditor
attach to the proceeds thereof, subject in any event to the provisions hereof. The Junior
Creditor agrees that to the extent it receives any “adequate protection” for any interest it
may have in any Collateral in any Proceeding, it will (A) if such “adequate protection” is
in the form of cash or cash equivalents, deliver such “adequate protection” to the Senior
Creditor to be applied to, or held as collateral for (and, if liquidated, applied against),
the Senior Indebtedness and (B) if such “adequate protection” is in any other form, assign
such “adequate protection” to the Senior Creditor to be held as collateral for (and, if
liquidated, applied against) the Senior Indebtedness, in each case until all Senior
Indebtedness has been fully satisfied or is no longer outstanding. The Junior Creditor
agrees that it will not seek to have the automatic stay lifted with respect to any
Collateral, to appoint a Chapter 11 trustee under Section 1104 of the Bankruptcy Code or to
convert or dismiss such Proceeding under Section 1112 of the Bankruptcy Code, in each case
without the prior written consent of the Senior Creditor.

(b) The Senior Creditor and the Junior Creditor agree not to, directly or indirectly,
take any action or vote in any way that would be in violation of, or inconsistent with, or
result in a breach of, this Agreement or challenge or contest (i) the validity, perfection,
priority or enforceability of any Lien held by the Senior Creditor, or by the Junior
Creditor as the case may be, to secure the payment, performance or observance of all or any
part of the Senior Indebtedness or Junior Indebtedness, respectively, (ii) the rights of the
Senior Creditor, or the Junior Creditor as the case may be, set forth in this Agreement with
respect to any such Lien, or (iii) the validity or enforceability of any of the Senior
Credit Documents or Junior Credit Documents or any term, condition or provision of this
Agreement; provided, that nothing in this Section 5(b) is intended or shall be
deemed or construed to limit in any way the ability of the Senior Creditor or the Junior
Creditor, as the case may be, to enforce all of the terms and provisions of this Agreement.

(c) The Senior Indebtedness shall first be paid in full in cash, stock or property
acceptable to the Senior Creditor before the Junior Creditor shall be entitled to receive
and to retain any payment or distribution in respect of the Junior Indebtedness, and, in
order to implement the foregoing, all payments and distributions of any kind or character in
respect of the Junior Indebtedness to which the Junior Creditor would otherwise be entitled
if the Junior Indebtedness were not subordinated pursuant to this Agreement shall be made
directly to the Senior Creditor. Subject to the limitation set forth in the next sentence,
the Junior Creditor may be permitted to file proofs of claim. The Junior Creditor agrees to
and hereby irrevocably authorizes, empowers and appoints the Senior Creditor as its agent
and attorney-in-fact to (i) execute, verify, deliver and file all proofs of claim (upon the
failure of the Junior Creditor to do so prior to 15 days before the expiration of time to
file such proof of claim) and other pleadings and motions with respect to the Credit Party
and the Collateral in any Proceeding for the full outstanding amount of the Junior
Indebtedness; (ii) vote any such claim in any such Proceeding that adversely affects the
Senior Creditor; and (iii) execute and deliver any document or instrument that the Junior
Creditor is required to deliver pursuant to this Section 5(c). In the event that
the Senior Creditor votes any claim in accordance with the authority granted hereby, the
Junior Creditor shall not be entitled to change or withdraw such vote. The Junior Creditor
also agrees that it shall at no time hereunder authorize the formation, become a member or
participate in the activities, either directly or indirectly, of any creditor’s committee in
the Proceeding.

(d) The Junior Creditor agrees that it shall not commence, file or cause to be filed or
otherwise support any insolvency proceeding (which shall include the appointment of any
Receiver) under the provisions of any local, state or federal law or in the jurisdiction of
any domestic or foreign court against or with respect to the Credit Party until ninety (90)
days have lapsed from the date the Senior Indebtedness is paid in full in cash, stock or
property acceptable to the Senior Creditor. Nothing contained herein shall be construed to
prohibit Junior Creditor from filing proofs of claim or participating in an insolvency
proceeding commenced by the Credit Party or other creditors of the Credit Party. In the
event the Junior Creditor violates this provision and files or causes to be filed or
otherwise supports or becomes involved in any such insolvency proceeding prior to the
ninety-first (91) day after the Senior Indebtedness is paid in full, the Junior Creditor
agrees to indemnify the Senior Creditor for any liability or damage incurred as a result of
such Proceeding.

(e) The Junior Creditor shall execute and deliver to the Senior Creditor all such
instruments and other documentation confirming the above authorizations and all such proofs
of claim, assignments of claim and other instruments and documentation, and shall take all
such other action as may be reasonably requested by the Senior Creditor to enforce such
claims and carry out the intent of this Section 5.

SECTION 6. Insurance and Condemnation. Unless and until the Senior Creditor shall
have received payment in full in cash, stock or property acceptable to the Senior Creditor of all
Senior Indebtedness and the Senior Indebtedness shall have terminated pursuant to the respective
terms and provisions thereof, (i) as between the Junior Creditor and the Senior Creditor, the
Junior Creditor agrees that the Senior Creditor shall have the sole and exclusive right to adjust
settlement with respect to any insurance coverage for any Collateral and (ii) all proceeds of any
insurance policy, and proceeds of any condemnation or similar proceeding, covering all or any part
of the Collateral shall be paid to the Senior Creditor for application to the Senior Indebtedness
pursuant to the Senior Credit Documents. If the Senior Creditor allows any portion of any proceeds
of any insurance, condemnation or similar award with respect to any Collateral to be used by any
Credit Party to repair or replace the Collateral affected, the Junior Creditor agrees to take
promptly all action reasonably requested by the Senior Creditor to permit such use.

SECTION 7. When Proceeds Must Be Paid Over.

(a) In the event the Junior Creditor receives any payment or other distribution of any
kind or character from the Credit Party or from any other source whatsoever in respect of
the Junior Indebtedness in contravention of this Agreement or in the event any proceeds of
Collateral are received by the Junior Creditor for application to the Junior Indebtedness
other than as expressly permitted by the terms of this Agreement, such proceeds shall be
received by the Junior Creditor in trust for the benefit of the Senior Creditor and the
Junior Creditor shall promptly turn over such proceeds to the Senior Creditor (in the same
form as received, with any necessary endorsement), for application (in the case of cash) to,
or as Collateral (in the case of non-cash Property or securities) for, the payment or
prepayment of the Senior Indebtedness remaining unpaid to the extent necessary to pay such
Senior Indebtedness in full in cash in accordance with its terms. In the event the Junior
Creditor fails to provide any endorsement, as contemplated by the immediately preceding
sentence, the Senior Creditor, or any of its officers or employees, is hereby irrevocably
authorized to make the same (which authorization, being coupled with an interest, is
irrevocable).

(b) Following the payment in full in cash, stock or property acceptable to the Senior
Creditor of the Senior Indebtedness, in the event the Senior Creditor receives any payment
or other distribution of any kind or character from the Credit Party or from any other
source whatsoever or in the event any proceeds of Collateral are received by the Senior
Creditor for application to the Senior Indebtedness in excess of the Senior Indebtedness,
such proceeds shall be received by the Senior Creditor in trust for the benefit of the
Junior Creditor and the Senior Creditor shall promptly turn over such proceeds to the Junior
Creditor (in the same form as received, with any necessary endorsement), for application (in
the case of cash) to, or as Collateral (in the case of non-cash Property or securities) for,
the payment or prepayment of the Junior Indebtedness remaining unpaid to the extent
necessary to pay such Junior Indebtedness in full in cash in accordance with its terms. In
the event the Senior Creditor fails to provide any endorsement, as contemplated by the
immediate preceding sentences, the Junior Creditor, or any of its officers or employees, is
hereby irrevocably authorized to make the same (which authorization, being coupled with an
interest, is irrevocable).

SECTION 8. Subrogation. The Junior Creditor hereby waives all rights of subrogation
to the claims of the Senior Creditor against any Credit Party, and waives all rights of recourse to
any security for any Senior Indebtedness, until such time as all Senior Indebtedness shall have
been paid in full in cash, stock or property acceptable to the Senior Creditor and the Senior
Indebtedness shall have terminated pursuant to the respective terms and provisions thereof;
provided, that if any payment to the Senior Creditor is rescinded as a result of a Proceeding or
otherwise, the subrogation of the Junior Creditor as provided herein shall likewise be rescinded
until all of the Senior Indebtedness is indefeasibly paid in full in cash, stock or property
acceptable to the Senior Creditor and the Senior Indebtedness shall have terminated.

SECTION 9. No Impairment of Subordination. No right of the Senior Creditor to enforce
the subordination of the Liens on Collateral securing all or any part of the Junior Indebtedness
shall be impaired by any act or failure to act by any Credit Party or by its failure to comply with
this Agreement. Without limiting the generality of the foregoing, the rights of the Senior
Creditor under this Agreement shall remain in full force and effect without regard to, and shall
not be impaired by: (i) any act or failure to act of the Credit Party or the Junior Creditor, or
any noncompliance by any Credit Party or the Junior Creditor with any agreement or obligation,
regardless of any knowledge thereof which the Senior Creditor may have or with which any Senior
Creditor may be charged, (ii) the validity or enforceability of any of the Senior Credit Documents,
(iii) any extension or indulgence in respect of any payment or prepayment of the Senior
Indebtedness or any part thereof or in respect of any other amount payable to the Senior Creditor,
(iv) any amendment, modification or waiver of any of the terms of the Senior Credit Documents or
the Junior Credit Documents, consistent with the respective applicable terms of such documents and
this Agreement, (v) any exercise, delayed exercise or non-exercise by the Senior Creditor of any
right, power, privilege or remedy under or in respect of any Senior Indebtedness, the Collateral or
this Agreement, (vi) any other action of the Senior Creditor permitted under the Senior Credit
Documents and this Agreement or (vii) the absence of any notice to, or knowledge by, the Junior
Creditor of the existence, creation or non-payment of all or any part of the Senior Indebtedness,
or the occurrence of any of the matters or events set forth in the foregoing clauses (i)
through (vi), except such notice as shall be specifically required pursuant to the terms
hereof.

SECTION 10. Waivers and Consents of Junior Creditor.

(a) All of the Senior Indebtedness shall be deemed to have been made or incurred in
reliance upon this Agreement and the Junior Creditor expressly waives, to the extent
permitted by applicable law but subject to the terms of this Agreement, (i) notice of
acceptance by the Senior Creditor of this Agreement, (ii) notice of the existence or
creation or non-payment of all or any part of the Senior Indebtedness, (iii) all diligence
in collection or protection of or realization upon all or any part of the Senior
Indebtedness or any security therefore and any requirement that the Senior Creditor protect,
secure, perfect or insure any Lien or any Property subject thereto or exhaust any right or
take any action against any Credit Party or any other Person or any such Property and (iv)
promptness, diligence, notice of acceptance and any other notice with respect to any of the
Senior Indebtedness (except such notice as shall be specifically required pursuant to the
terms hereof).

(b) Subject to the terms of this Agreement, the Junior Creditor agrees that the Senior
Creditor may, at any time and from time to time, in its sole discretion, without the consent
of or notice to the Junior Creditor, without incurring responsibility to the Junior
Creditor, and without impairing or releasing the subordination provided for herein or the
obligations of the Junior Creditor to the Senior Creditor hereunder, amend, restate,
supplement or otherwise modify the Senior Credit Agreement or any of the other Senior Credit
Documents (in accordance with the respective terms of such documents) in any way whatsoever,
including, without limitation, the following: (i) shorten the final maturity of all or any
part of the Senior Indebtedness, (ii) modify the amortization of the principal amount of all
or any part of the Senior Indebtedness, (iii) increase the principal amount of Senior
Indebtedness, or otherwise provide for additional advances, in an amount not to exceed
$4,000,000 (iv) raise the standard or default per annum interest rates applicable to all or
any part of the Senior Indebtedness, (v) impose any additional fee or penalty upon any
Credit Party or increase the amount of or rate for any fee or penalty provided for in the
Senior Credit Documents, (vi) retain or obtain a Lien on any Property to secure any of the
Senior Indebtedness, (vii) enter into new Senior Credit Documents with any Credit Party or
any of its direct or indirect subsidiaries, (viii) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, all or any of the Senior
Indebtedness or otherwise amend, restate, supplement or otherwise modify in any manner, or
grant any waiver or release with respect to, all or any part of the Senior Indebtedness or
any of the Senior Credit Documents, (ix) retain or obtain the primary or secondary
obligation of any other Person with respect to any of the Senior Indebtedness, (x) release
any Person liable in any manner under or in respect of Senior Indebtedness or release or
compromise any obligation of any nature of any Person with respect to any of the Senior
Indebtedness, (xi) sell, exchange, not perfect or otherwise deal with any Property at any
time pledged, assigned or mortgaged to secure or otherwise securing all or any part of the
Senior Indebtedness, (xii) release its security interest in, or surrender, release or permit
any substitution or exchange for, all or any part of any Property securing any Senior
Indebtedness, or release, compromise, alter or exchange any obligations of any nature of any
Person with respect to any such Property, (xiii) amend, or grant any waiver or release with
respect to, or consent to any departure from, any guaranty for all or any of the Senior
Indebtedness, (xiv) exercise or refrain from exercising any rights against, and release from
obligations of any type, any Credit Party or any other Person, (xv) apply any sums from time
to time received to the Senior Indebtedness in such manner such as the Senior Creditor shall
determine and (xvi) otherwise manage and supervise the Senior Indebtedness in accordance
with the Senior Creditor’s usual practices, modified from time to time as the Senior
Creditor deems appropriate under the circumstances.

(c) In the event the Senior Creditor releases or agrees to release any of its Liens on
all or any part of the Collateral (i) in connection with the sale thereof, provided Junior
Creditor receives any proceeds thereof following payment in full of the Senior Indebtedness
or (ii) pursuant to any Senior Enforcement Action, the Senior Creditor agrees to notify the
Junior Creditor in advance in writing thereof with such notice stating the portion of the
Collateral to be released and further stating that such Collateral will be sold or financed
free and clear of the Liens of the Senior Creditor and the Junior Creditor (“Release
Notice”). Each Junior Creditor acknowledges, confirms and agrees that upon the Senior
Creditor giving such a Release Notice to the Junior Creditor, the Junior Creditor shall be
deemed to consent to such sale or other disposition and the Lien of the Junior Creditor on
such Collateral shall be deemed to be, and shall be, automatically released and terminated
contemporaneously with the release by the Senior Creditor of its Lien thereon; provided that
nothing in this Section shall limit the right of the Junior Creditor to receive excess
proceeds of Collateral after the repayment of the Senior Indebtedness in full in cash, stock
or property acceptable to the Senior Creditor. The Junior Creditor agrees that no further
act or documentation shall be necessary to evidence the release and termination by the
Junior Creditor of such Lien and the delivery of the Release Notice to the Junior Creditor
and the release by the Senior Creditor of its Lien on the Collateral shall be prima
facie evidence of the Junior Creditor’s release and termination of its Lien upon
such Collateral. In the event that the Senior Creditor gives a Release Notice to the Junior
Creditor and requests the Junior Creditor to execute and deliver any formal release or
termination of its Lien upon such Collateral, the Junior Creditor agrees to execute the same
forthwith. In furtherance of the foregoing, the Junior Creditor hereby appoints the Senior
Creditor as its attorney-in-fact, with full authority in the place and stead of the Junior
Creditor and full power of substitution and in the name of the Junior Creditor or otherwise,
to execute and deliver any document or instrument which the Junior Creditor is required to
deliver pursuant to this Section 10(c), such appointment being coupled with an
interest and irrevocable.

(d) The Junior Creditor and the Senior Creditor hereby agree to use their commercially
reasonable efforts to give written notice to the other of any event of default declared in
writing by it or, in the case of the Senior Creditor, (i) declaration of acceleration and
(ii) commencement of any Senior Enforcement Action under the Senior Credit Documents;
provided, that failure to give any such notice shall not result in liability to the Junior
Creditor or the Senior Creditor, as the case may be, or modify in any way the terms and
provisions of this Agreement and the obligations of the respective parties hereunder. No
party hereto shall have any obligation to cure any such default and any payment made or act
done by any such party to cure any such default shall not constitute an assumption of any of
the obligations thereunder.

(e) Notwithstanding anything to the contrary contained herein, in the event that the
Senior Creditor releases its Liens on the Collateral as a result of the prior or concurrent
payment in full in cash, stock or property acceptable to the Senior Creditor of the Senior
Indebtedness and termination of the Senior Indebtedness thereunder, the Junior Creditor
shall not be obligated to release its Liens (nor be deemed to release its Liens as
contemplated in Section 10(c)) on any Collateral remaining after giving effect to
such payment and termination (and any sale, transfer or other disposition of Collateral
occurring in connection therewith).

SECTION 11. Marshalling. The Junior Creditor hereby waives, to the fullest extent
permitted by applicable law, any rights it may have under applicable law to assert the doctrine of
marshalling or otherwise to require the Senior Creditor to marshal any Property of any Credit Party
for the benefit of the Junior Creditor.

SECTION 12. Expenses. The Credit Party agrees to reimburse the Senior Creditor and
Junior Creditor for its expenses incurred in complying with this Agreement.

SECTION 13. Waiver of Rights. The Junior Creditor hereby waives, to the fullest
extent permitted by applicable law, any rights it may have to enjoin or otherwise obtain a judicial
or administrative order preventing the Senior Creditor from taking, or refraining from taking, any
action with respect to all or any part of the Collateral to the extent consistent with the terms of
this Agreement.

SECTION 14. Continuation of Subordination; Termination of Agreement. This Agreement
shall in all respects be a continuing agreement and shall remain in full force and effect until the
Senior Creditor shall have received payment in full in cash, stock or property acceptable to the
Senior Creditor of all Senior Indebtedness and the Senior Indebtedness shall have terminated
pursuant to the respective terms and provisions thereof; provided that this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time any payment of any
Senior Indebtedness is rescinded, avoided or must otherwise be returned by the Senior Creditor upon
the insolvency, bankruptcy or reorganization of the Credit Party, all as though such payment had
not been made.

SECTION 15. Specific Performance. The Senior Creditor, on the one hand, and the
Junior Creditor, on the other hand, are hereby authorized to demand specific performance of the
provisions of this Agreement, at any time when the Junior Creditor, on the one hand, or the Senior
Creditor, on the other hand, shall have failed to comply with any term or provision hereof. The
Senior Creditor and the Junior Creditor hereby irrevocably waive any defense based on the adequacy
of a remedy at law that might be asserted as a bar to such remedy of specific performance.

SECTION 16. Further Assurances. Each party hereto will, upon the written request of
the other party, from time to time execute and deliver or cause to be executed and delivered such
further instruments and agreements and do or cause to be done such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of this Agreement and
to effectuate the terms of the Lien subordination and other provisions contemplated hereby.
Without limiting the generality of the foregoing, the Junior Creditor will mark its books and
records, so as to clearly indicate that the Junior Indebtedness is subordinated in accordance with
the terms of this Agreement, and will cause to be clearly inserted in any documents, instruments or
agreements evidencing the Junior Indebtedness a statement to the effect that the payment thereof,
and the liens on the Collateral securing the Junior Indebtedness are subordinated in accordance
with the terms of this Agreement.

SECTION 17. Notices. All notices or other communications under or in respect of this
Agreement to any party to it shall be in writing (including by fax) and shall be deemed to have
been duly given or made when delivered (including by courier), or in the case of fax notice, when
received, addressed as follows:

	 	 	 	 	 
	(a)

	 	in the case of the Senior Creditor:
	 	Barbara R. Mittman, Esq.

Grushko & Mittman, P.C.

551 Fifth Avenue, Suite 1601

New York, NY 10176

Telephone: (212) 697-9500

Facsimile: (212) 697-3575
	 
	 	 	 	 
	(b)

	 	in the case of the Junior Creditor:

with a copy to:
	 	BCC Acquisition II LLC

C/O Bay City Capital LLC

750 Battery, Suite 600

San Francisco, CA 94111

Attn: Fred Craves

Telephone: (415)

Facsimile: (415) 837-0996

Latham & Watkins LLP

Sears Tower, Suite 5800

Chicago, Illinois 60606

Attn: Michael A. Pucker

Facsimile: (312) 993-9767

(c) in the case of Domestic

	 	 	 
	or TGC:

	 	Diametrics Medical, Inc.

TGC Research Limited

3050 Centre Pointe Drive, Suite 150

St. Paul, MN 55113

Attn: David B. Kaysen, President & CEO

Facsimile: (651) 639-8549
	 
	 	 
	with a copy to:

	 	Kenneth L. Cutler, Esq.

Dorsey & Whitney LLP

50 South Sixth Street, Suite 1500

Minneapolis, MN 55402

Facsimile: (612) 340-7800

or to such other address as may be hereafter designated in writing by the respective parties
hereto. A notice or other communication received on a non-business day in the place of receipt or
after business hours in the place of receipt shall be deemed to be served on the next following
business day in such place.

SECTION 18. CHOICE OF LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ITS CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). IN RELATION TO ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
AND FOR THE EXCLUSIVE BENEFIT OF THE SENIOR CREDITOR, AND THE JUNIOR CREDITOR, EACH OF THE SENIOR
CREDITOR AND THE JUNIOR CREDITOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES SITTING IN NEW YORK
CITY, AND ANY APPELLATE COURT THEREOF. EACH OF THE SENIOR CREDITOR AND THE JUNIOR CREDITOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT,
ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM AND ANY OBJECTION BASED ON PLACE OF RESIDENCE OR DOMICILE. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY.

SECTION 19. Successors and Assigns.

(a) This Agreement shall be binding upon and inure to the benefit of the Senior Creditor, the
Junior Creditor and each of their respective successors and permitted assigns.

(b) Subject to the terms of the Senior Creditor Agreement, the Senior Creditor may, from time
to time, without notice to or consent of the Junior Creditor, assign or transfer to any Person any
or all of the Senior Indebtedness or any interest therein, and notwithstanding any such assignment
or transfer, or any subsequent assignment or transfer thereof, the Senior Indebtedness shall be and
remain Senior Indebtedness for purposes of this Agreement, and every immediate and successive
assignee or transferee of any of the Senior Indebtedness or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Senior Indebtedness, be entitled to
the benefits of this Agreement to the same extent as if such assignee or transferee were an
original party to the Senior Credit Agreement provided that such assignee agrees in writing,
reasonably satisfactory to the Junior Creditor, to be bound by this Agreement.

(c) Subject to the terms of the Junior Creditor Agreement, the Junior Creditor may, from time
to time, upon ten business days prior written notice to Senior Creditor, assign or transfer to any
Person any or all of the Junior Indebtedness or any interest therein, and notwithstanding any such
assignment or transfer, or any subsequent assignment or transfer thereof, the Junior Indebtedness
shall be and remain Junior Indebtedness for purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Junior Indebtedness or any interest therein shall,
to the extent of the interest of such assignee or transferee in the Junior Indebtedness, be
entitled to the benefits of this Agreement to the same extent as if such assignee or transferee
were an original party to the Junior Credit Agreement; provided that such assignee agrees in a
writing, reasonably satisfactory to the Senior Creditor, to be bound by this Agreement.

SECTION 20. Entire Agreement; Amendments and Waivers. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter hereof. There are no
other agreements between the parties hereto in connection with the subject matter hereof except as
specifically set forth herein or contemplated hereby. No amendment, modification or waiver of any
of the provisions of this Agreement shall be binding unless in writing and executed by the
Collateral Agent and the Junior Collateral Agent. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly
provided. No delay on the part of the Senior Creditor in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Senior Creditor of any right
or remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. For the purposes of this Agreement, Senior Indebtedness shall include all obligations of
Credit Party, their successors and assigns to the Senior Creditor under the Senior Credit
Documents, notwithstanding any right or power of any Credit Party or other Person to assert any
claim or defense as to the invalidity or unenforceability of all or any part of the Senior
Indebtedness, and no such claim or defense shall affect or impair the agreements and obligations of
the respective parties hereto. For the purposes of this Agreement, Junior Indebtedness shal
include all obligations of Credit Party, their successors and assigns to the Junior Creditor under
the Junior Credit Documents, notwithstanding any right or power of any Credit Party or other Person
to assert any claim or defense as to the invalidity or unenforceability of all or any part of the
Junior Indebtedness, and no such claim or defense shall affect or impair the agreements and
obligations of the respective parties hereto.

SECTION 21. Counterparts. 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. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 22. Severable Provisions. 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 or invalid under such 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.

SECTION 23. Headings. The headings of the several sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.

SECTION 24. Representation. The Junior Collateral Agent represents and warrants to
the Collateral Agent that the Junior Collateral Agent has all necessary power and authority to
enter into and perform this Agreement, that its execution, delivery and performance of this
Agreement have been duly and validly authorized by all required corporate action and do not
contravene or breach any applicable law or contract binding on the Junior Collateral Agent and that
this Agreement is binding on the Junior Collateral Agent in accordance with its terms. The
Collateral Agent represents and warrants to the Junior Collateral Agent that the Collateral Agent
has all necessary power and authority to enter into and perform this Agreement, that its execution,
delivery and performance of this Agreement have been duly and validly authorized by all required
corporate action and do not contravene or breach any applicable law or contract binding on the
Collateral Agent and that this Agreement is binding on the Collateral Agent in accordance with its
terms.

[SIGNATURE PAGES FOLLOW]

1

IN WITNESS WHEREOF, the Senior Creditor, the Credit Party and the Junior Creditor have
caused this Subordination Agreement to be duly executed and delivered by its respective officers
thereunto duly authorized as of the date first above written.

BCC ACQUISITION II LLC,

As Junior Collateral Agent

By: The Bay City Capital I, L.P.

Its: General Partner

By: Bay City Capital Management LLC

Its: General Partner

By: /s/ Fred Craves

	 	 	 	Name: Fred Craves

Title: Managing Director

	 	 	 
	DIAMETRICS MEDICAL, INC.

	 	TGC RESEARCH LIMITED
	 
	 	 
	/s/ David B. Kaysen

Name: David B. Kaysen

Title: President and CEO

	 	/s/ David B. Kaysen

Name: David B. Kaysen

Title: Director
	 
	 	 
	
 
	 	BARBARA R. MITTMAN

as Collateral Agent
	 
	 	 
	
 
	 	/s/ Barbara R. Mittman
	 
	 	 

2

The Senior Creditor agrees and acknowledges to the terms hereof and authorizes the Collateral Agent
to execute this Agreement on their behalf as their Collateral Agent:

	 
	 

	SENIOR CREDITOR

	 

	/s/ Barbara R. Mittman

Barbara R. Mittman, as Collateral Agent

	 
	LONGVIEW EQUITY FUND, L.P.	 	LONGVIEW FUND L.P.
	By: /s/ Wayne H. Coleson	 	By: /s/ S. Michael Rudolph
	Its: Investment Advisor	 	Its: Investment Advisor
	LONGVIEW INTERNATIONAL EQUITY	 	CAMDEN INTERNATIONAL
	FUND, L.P.	 	 
	By: /s/ Wayne H. Colemen	 	By: /s/ Deirdre M. McCoy
	Its: Investment Advisor	 	Its: Director
	MERCATOR MOMENTUM FUND III L.P.	 	MERCATOR MOMENTUM FUND L.P.
	By: Mercator Advisory Group, LLC	 	By: Mercator Advisory Group, LLC
	Its: General Partner	 	Its: General Partner
	By: /s/ David Firestone	 	By: /s/ David Firestone
	Its: Managing Member	 	Its: Managing Member
	MONARCH POINTE FUND, LTD.
	By: /s/ David Firestone

Its: Managing Member

3

The Junior Creditor agrees and acknowledges to the terms hereof and authorizes the Junior
Collateral Agent to execute this Agreement on their behalf as their Collateral Agent:

GERALD L. COHN REVOCABLE TRUST

By: /s/ Gerald L. Cohn

Name: Gerald L. Cohn

Title:

HANNAH S. AND SAMUEL A.

COHN MEMORIAL FOUNDATION

By: /s/ Thomas L. Burns

Name: Thomas L. Burns

Title: President

AEOW 96, LLC

By: Will K. Weinstein Revocable Trust DTD 2/27/90

Its: Member Manager

By: /s/ Will K. Weinstein

Its: Trustee

BCC ACQUISITION II LLC,

As Junior Collateral Agent

By: The Bay City Capital I, L.P.

Its: General Partner

By: Bay City Capital Management LLC

Its: General Partner

By: /s/ Fred Craves

Name: Fred Craves

Title: Managing Director

4

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