Document:

EX-10.17

EXHIBIT 10.17

AMENDMENT

Reference is made to (i) the Subscription Agreement, dated as of January 14, 2004 (the
“Series F Subscription Agreement”), among Diametrics Medical, Inc. (the “Company”) and Mercator
Momentum Fund, LP, Mercator Momentum Fund III LP and Long View Fund, LP (collectively, the
“Purchasers”), and (ii) the Common Stock Purchase Warrants of the Company dated January 14, 2004 as
amended May 28, 2004, issued to Mercator Advisory Group LLC (“MAG”) and the Purchasers (the “Series
F Warrants”). Schedule A hereto sets forth the number of Series F Warrants currently held
by MAG and the Purchasers.

This Amendment is being signed in connection with and as a condition precedent to the issuance
of up to $3,000,000 in aggregate principal amount of convertible notes (the “Convertible Notes”) to
be issued pursuant to that certain Subscription Agreement dated December 14, 2004 among the Company
and the purchasers parties thereto.

The Company, MAG and each Purchaser hereby agree as follows:

1. Paragraph 1.1 of the Series F Warrants is hereby amended in its entirety to read as
follows:

“This Warrant is exercisable in whole or in part (but not as to any fractional share of
Common Stock), at any time and from time to time, but prior to 6:00 p.m. on the Expiration
Date set forth above.”

2. Paragraph 1.2 of the Series F Warrants is hereby amended in its entirety to provide that
the exercise price shall be $0.025 per share.

3. Each Purchaser acknowledges and agrees that any pledge of assets by the Company in
connection the issuance of the Convertible Notes shall not be deemed as a liquidation pursuant to
paragraph (d)(iii) of the Certificate of Designations of Series F Convertible Preferred Stock of
the Company.

4. Except as hereby amended, all other terms of the Series F Subscription Agreement and the
Series F Warrants remain in full force and effect.

5. The validity, construction and enforceability of this Amendment shall be governed by the
internal law of the State of Minnesota, without regard to conflict of law principles.

6. This Amendment may be executed in any number of counterparts and by the different parties
on separate counterparts, and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same document.

7. This Amendment shall be binding upon the Company, the Purchasers and their respective
successors and assigns, and shall inure to the sole benefit of the Company, the Purchasers and the
successors and assigns of the Company and the Purchasers.

	 	 	 
	Dated: December 15, 2004

	 	DIAMETRICS MEDICAL, INC.

By: /s/ David B. Kaysen

Name: David B. Kaysen

Title: President and CEO
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND III, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	LONG VIEW FUND, LP

By: /s/ S. Michael Rudolph

Name: S. Michael Rudolph

Title: Investment Advisor
	 
	 	 
	
 
	 	MERCATOR ADVISORY GROUP, LLC

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member
	 
	 	 

1

Schedule A

Series F Warrants

	 	 	 	 	 
	Mercator Momentum Fund, LP
	 	 	1,020,892	 
	Mercator Momentum Fund III, LP
	 	 	1,895,833	 
	Long View Fund, LP
	 	 	583,275	 
	Mercator Advisory Group LLC
	 	 	2,500,000	 

2EX-10.18

EXHIBIT 10.18

AMENDMENT

Reference is made to the Common Stock Purchase Warrants of Diametrics Medical, Inc. (the
“Company”) dated May 12, 2003 as amended May 28, 2004 (the “Series E Warrants”) issued to Mercator
Advisory Group LLC, Mercator Momentum Fund, LP, Mercator Momentum Fund III LP and Mercator Focus
Fund, LP (collectively, the “Warrant Holders”). Schedule A hereto sets forth the number of
Series E Warrants currently held by the Warrant Holders.

This Amendment is being signed in connection with and as a condition precedent to the issuance
of up to $3,000,000 in aggregate principal amount of convertible notes to be issued pursuant to
that certain Subscription Agreement dated December 14, 2004 among the Company and the purchasers
parties thereto.

The Company and each Warrant Holder hereby agree as follows:

1. Paragraph 1.1 of the Series E Warrants is hereby amended in its entirety to read as
follows:

“This Warrant is exercisable in whole or in part (but not as to any fractional share of
Common Stock), at any time and from time to time, but prior to 6:00 p.m. on the Expiration
Date set forth above.”

2. Paragraph 1.2 of the Series E Warrants is hereby amended to provide that the exercise price
shall be $0.025 per share.

3. Except as hereby amended, all other terms of the Series E Warrants remain in full force and
effect.

4. The validity, construction and enforceability of this Amendment shall be governed by the
internal law of the State of Minnesota, without regard to conflict of law principles.

5. This Amendment may be executed in any number of counterparts and by the different parties
on separate counterparts, and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same document.

6. This Amendment shall be binding upon the Company, the Warrant Holders and their respective
successors and assigns, and shall inure to the sole benefit of the Company, the Warrant Holders and
the successors and assigns of the Company and the Warrant Holders.

	 	 	 
	Dated: December 15, 2004

	 	DIAMETRICS MEDICAL, INC.

By: /s/ David B. Kaysen

Name: David B. Kaysen

Title: President and CEO
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND III, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR FOCUS FUND, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR ADVISORY GROUP, LLC

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member
	 
	 	 

1

Schedule A

Series E Warrants

	 	 	 	 	 
	Mercator Momentum Fund, LP
	 	 	65,047	 
	Mercator Momentum Fund III, LP
	 	 	67,252	 
	Mercator Focus Fund, LP
	 	 	198,450	 
	Mercator Advisory Group LLC
	 	 	73,500	 

2EX-10.19

EXHIBIT 10.19

AMENDMENT

Reference is made to the Common Stock Purchase Warrants of Diametrics Medical, Inc. (the
“Company”) dated May 28, 2004 (the “Warrants”) issued to Mercator Advisory Group LLC, Mercator
Momentum Fund, LP, Mercator Momentum Fund III LP, Mercator Focus Fund, LP, Long View Fund, LP, and
Monarch Pointe, Ltd. (collectively, the “Warrant Holders”). Schedule A hereto sets forth
the number of Warrants currently held by the Warrant Holders.

This Amendment is being signed in connection with and as a condition precedent to the issuance
of up to $3,000,000 in aggregate principal amount of convertible notes to be issued pursuant to
that certain Subscription Agreement dated December 14, 2004 among the Company and the purchasers
parties thereto.

The Company and each Warrant Holder hereby agree as follows:

1. Paragraph 1.1 of the Warrants is hereby amended in its entirety to read as follows:

“This Warrant is exercisable in whole or in part (but not as to any fractional share of
Common Stock), at any time and from time to time, but prior to 6:00 p.m. on the Expiration
Date set forth above.”

2. Paragraph 1.2 of the Warrants is hereby amended to provide that the exercise price shall be
$0.025 per share.

3. Except as hereby amended, all other terms of the Warrants remain in full force and effect.

4. The validity, construction and enforceability of this Amendment shall be governed by the
internal law of the State of Minnesota, without regard to conflict of law principles.

5. This Amendment may be executed in any number of counterparts and by the different parties
on separate counterparts, and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same document.

6. This Amendment shall be binding upon the Company, the Warrant Holders and their respective
successors and assigns, and shall inure to the sole benefit of the Company, the Warrant Holders and
the successors and assigns of the Company and the Warrant Holders.

	 	 	 
	Dated: December 15, 2004

	 	DIAMETRICS MEDICAL, INC.

By: /s/ David B. Kaysen

Name: David B. Kaysen

Title: President and CEO
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR MOMENTUM FUND III, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR FOCUS FUND, LP

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 
	
 
	 	MERCATOR ADVISORY GROUP, LLC

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member
	 
	 	 
	
 
	 	LONG VIEW FUND, LP

By: /s/ S. Michael Rudolph

Name: S. Michael Rudolph

Title: Investment Advisor
	 
	 	 
	
 
	 	MONARCH POINTE, LTD.

By: /s/ David Firestone

Name: David Firestone

Title: Managing Member, Mercator Advisory

Group LLC
	 
	 	 

1

Schedule A

Warrants

	 	 	 	 	 
	Mercator Momentum Fund, LP
	 	 	2,632,150	 
	Mercator Momentum Fund III, LP
	 	 	3,896,708	 
	Mercator Focus Fund
	 	 	612,080	 
	Monarch Pointe, Ltd.
	 	 	1,560,402	 
	Mercator Advisory Group LLC
	 	 	1,500,000	 
	Long View Fund, LP
	 	 	2,040,268	 

2EX-10.2

Exhibit 10.2

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO DIAMETRICS MEDICAL, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED.

CONVERTIBLE NOTE

FOR VALUE RECEIVED, DIAMETRICS MEDICAL, INC., a Minnesota corporation (hereinafter called
“Borrower”), hereby promises to pay to LONGVIEW EQUITY FUND, LP, 600 Montgomery Street, 44th Floor,
San Francisco, CA 94111, Fax: 415-981-5300, (the “Holder”) or its registered assigns or successors
in interest or order, without demand, the sum of    Dollars
($   ) (“Principal Amount”), with simple and unpaid interest thereon, on December 15, 2007
(the “Maturity Date”), if not sooner paid.

This Note has been entered into pursuant to the terms of a subscription agreement between the
Borrower and the Holder, dated of even date herewith (the “Subscription Agreement”), and shall be
governed by the terms of such Subscription Agreement. Unless otherwise separately defined herein,
all capitalized terms used in this Note shall have the same meaning as is set forth in the
Subscription Agreement. The following terms shall apply to this Note:

ARTICLE I

INTEREST AND AMORTIZATION

 1.1. Interest Rate. Subject to Section 5.7 hereof, interest payable
on this Note shall accrue at a rate per annum (the “Interest Rate”) equal to the “prime rate”
published in The Wall Street Journal from time to time, plus four percent (4%). The Interest Rate
shall be increased or decreased as the case may be for each increase or decrease in the prime rate
in an amount equal to such increase or decrease in the prime rate; each change to be effective as
of the day of the change in such rate. The Interest Rate shall not be less than eight percent
(8%). Interest shall be calculated on the basis of a 360 day year. Interest on the Principal
Amount shall be payable monthly, in arrears, commencing on May 1, 2005 and on the first day of each
consecutive calendar month thereafter (each, a “Repayment Date”) and on the Maturity Date, whether
by acceleration or otherwise.

1.2. Minimum Monthly Principal Payments. Amortizing payments of the outstanding
Principal Amount of this Note shall commence on the first (1st) Repayment Date and shall
recur on each succeeding Repayment Date thereafter until the Principal Amount has been repaid in
full, whether by the payment of cash or by the conversion of such principal into Common Stock
pursuant to the terms hereof. Subject to Section 2.1 and Article 3 below, on each Repayment Date,
the Borrower shall make payments to the Holder in the amount of one-thirty-second
(1/32nd) of the initial Principal Amount (the “Monthly Principal Amount”), together with
any accrued and unpaid interest then due on such portion of the Principal Amount plus any and all
other amounts which are then owing under this Note that have not been paid (the Monthly Principal
Amount, together with such accrued and unpaid interest and such other amounts, collectively, the
“Monthly Amount”). Amounts of Conversions of Principal Amount made by the Holder or Borrower
pursuant to Section 2.1 or Article III, and Redemption Amounts actually paid to Borrower shall be
applied to Monthly Amounts commencing with the Monthly Amounts first payable and then Monthly
Amounts thereafter in chronological order. Any Principal Amount that remains outstanding on the
Maturity Date shall be due and payable on the Maturity Date.

1.3. Default Interest Rate. Following the occurrence and during the continuance of an
Event of Default, subject to Section 6.7, interest on this Note shall automatically be increased by
two percent (2%) per month, and all outstanding obligations under this Note, including unpaid
interest, shall continue to accrue interest from the date of such Event of Default at such interest
rate applicable to such obligations until such Event of Default is cured or waived.

ARTICLE II

CONVERSION REPAYMENT

2.1. (a) Payment of Monthly Amount in Cash or Common Stock. If the Monthly Amount
(or a portion thereof of such Monthly Amount if such portion of the Monthly Amount could have been
converted into shares of Common Stock but for Section 3.2) is required to be paid in cash pursuant
to Section 2.1(b), then the Borrower shall pay the Holder an amount equal to 105% of the Monthly
Amount due and owing to the Holder on the Repayment Date in cash. If the Monthly Amount (or a
portion of such Monthly Amount if not all of the Monthly Amount may be converted into shares of
Common Stock pursuant to Section 3.2) is required to be paid in shares of Common Stock pursuant to
Section 2.1(b), the number of such shares to be issued by the Borrower to the Holder on such
Repayment Date (in respect of such portion of the Monthly Amount converted into shares of Common
Stock pursuant to Section 2.1(b)), shall be the number determined by dividing (x) the portion of
the Monthly Amount converted into shares of Common Stock, by (y) the then applicable Fixed
Conversion Price. For purposes hereof, the initial “Fixed Conversion Price” means two cents
($0.02).

(b) Monthly Amount Conversion Guidelines. Subject to Sections 2.1(a), 2.2 and 3.2
hereof, the Holder shall convert into shares of Common Stock at the Fixed Conversion Price all or
the maximum portion of the Monthly Amount due on each Repayment Date provided that the average
closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market (as
defined below) for the twenty (20) consecutive trading days immediately preceding such Repayment
Date shall be greater than or equal to 15% above the Fixed Conversion Price (“Conversion
Criterion”). The Monthly Amount due on a Repayment Date that the Holder has not been able to
convert into shares of Common Stock due to failure to meet the Conversion Criterion shall be paid
by the Borrower at the Borrower’s election (i) in cash at the rate of 105% of such Monthly Amount
otherwise due on such Repayment Date within three (3) business days of the applicable Repayment
Date, or (ii) in shares of Common Stock registered for resale pursuant to Section 11 of the
Subscription Agreement at an applied conversion rate equal to seventy-five percent (75%) of the
average of the five (5) lowest closing bid prices of the Common Stock as reported by Bloomberg L.P.
for the twenty (20) trading days preceding such Repayment Date. Such shares of Common Stock must
be delivered to the Holder not later than three (3) business days of the applicable Repayable Date.
Whichever of the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National
Market System, American Stock Exchange, or New York Stock Exchange or such other principal market
or exchange where the Common Stock is listed or traded is the principal trading exchange or market
for the Common Stock is the Principal Market.

(c) Application of Conversion Amounts. Any amounts converted by the Holder pursuant
to Section 2.1(b) shall be deemed to constitute payments of, or applied against, (i) first,
outstanding fees, (ii) second, accrued interest on the Principal Amount, and (iii) third, the
Principal Amount.

2.2. No Effective Registration. Notwithstanding anything to the contrary herein, no
amount payable hereunder may be converted into Common Stock by the Borrower without the Holder’s
consent unless (a) either (i) an effective current Registration Statement covering the shares of
Common Stock to be issued in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144(k) of the Securities Act, and
(b) no Event of Default hereunder exists and is continuing, unless such Event of Default is cured
within any applicable cure period or is otherwise waived in writing by the Holder in whole or in
part at the Holder’s option.

2.3. Optional Redemption of Principal Amount. Provided an Event of Default has not
occurred, whether or not such Event of Default has been cured, the Borrower will have the option of
prepaying the outstanding Principal Amount (“Optional Redemption”), in whole or in part, by paying
to the Holder a sum of money equal to one hundred twenty percent (120%) of the Principal Amount to
be redeemed, together with accrued but unpaid interest thereon and any and all other sums due,
accrued or payable to the Holder arising under this Note, the Subscription Agreement or any
Transaction Document through the Redemption Payment Date as defined below (the “Redemption
Amount”). Borrower’s election to exercise its right to prepay must be by notice in writing
(“Notice of Redemption”). The Notice of Redemption shall specify the date for such Optional
Redemption (the “Redemption Payment Date”), which date shall be not less than thirty (30) business
days after the date of the Notice of Redemption (the “Redemption Period”). A Notice of Redemption
shall not be effective with respect to any portion of the Principal Amount for which the Holder has
a pending election to convert pursuant to Section 3.1, or for conversions initiated or made by the
Holder pursuant to Section 3.1 during the Redemption Period. On the Redemption Payment Date, the
Redemption Amount less any portion of the Redemption Amount against which the Holder has exercised
its rights pursuant to Section 3.1 shall be paid in good funds to the Holder. In the event the
Borrower fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein,
then (i) such Notice of Redemption will be null and void, (ii) Borrower will have no right to
deliver another Notice of Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a
non-curable Event of Default.

ARTICLE III

CONVERSION RIGHTS

3.1. Holder’s Conversion Rights. Subject to Section 3.2 and Section 2.1(b) and the
mandatory conversion provisions therein, the Holder shall have the right, but not the obligation,
to convert all or any portion of the then aggregate outstanding Principal Amount of this Note,
together with interest and fees due hereon, into shares of Common Stock, subject to the terms and
conditions set forth in this Article III. The Holder may exercise such right by delivery to the
Borrower of a written Notice of Conversion pursuant to Section 3.3.

3.2. Conversion Limitation. Notwithstanding anything contained herein to the
contrary, the Holder shall not be entitled to convert pursuant to the terms of this Note nor may
this Note be converted in whole or in part into an amount of Common Stock that would be convertible
into that number of Common Stock which would exceed the difference between the number of shares of
Common Stock beneficially owned by such Holder and its affiliates and 9.99% of the outstanding
shares of Common Stock. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation
13d-3 thereunder. The foregoing limitation shall be calculated as of each Conversion Date.
Aggregate Conversions over time shall not be limited to 9.99%. The Holder may void the Conversion
Share limitation described in this Section 3.2 upon 61 days prior notice to the Borrower. The
Holder may allocate which of the equity of the Borrower deemed beneficially owned by the Holder
shall be included in the 9.99% amount described above and which shall be allocated to the excess
above 9.99%.

3.3. Mechanics of Holder’s Conversion.

(a) In the event that the Holder elects to convert any amounts outstanding under this Note
into Common Stock, the Holder shall give notice of such election by delivering an executed and
completed notice of conversion (a “Notice of Conversion”) to the Borrower, which Notice of
Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest
and fees being converted. The original Note is not required to be surrendered to the Borrower
until all sums due under the Note have been paid. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to
the Principal Amount, accrued interest and fees as entered in its records and shall provide written
notice thereof to the Borrower within three (3) business days after the Conversion Date. Each date
on which a Notice of Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a “Conversion Date”. A form of Notice of Conversion to be
employed by the Holder is annexed hereto as Exhibit A.

(b) Pursuant to the terms of a Notice of Conversion, the Borrower will issue instructions to
the transfer agent accompanied by an opinion of counsel, if so required by the Borrower’s transfer
agent, within one (1) business day after the date of the delivery to Borrower of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates representing the
Conversion Shares to the Holder by crediting the account of the Holder’s designated broker with the
Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”)
system within three (3) business days after receipt by the Borrower of the Notice of Conversion
(the “Delivery Date”). In the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon
such conversion shall be deemed to have been issued upon the date of receipt by the Borrower of the
Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such
shares of Common Stock, unless the Holder provides the Borrower written instructions to the
contrary.

3.4. Conversion Mechanics.

(a) The number of shares of Common Stock to be issued upon each conversion of this Note
pursuant to this Article III shall be determined by dividing that portion of the Principal Amount
and interest and fees to be converted, if any, by the then applicable Fixed Conversion Price.

(b) The Fixed Conversion Price and number and kind of shares or other securities to be issued
upon conversion shall be subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:

A. Merger, Sale of Assets, etc. If the Borrower at any time shall consolidate with or merge
into or sell or convey all or substantially all its assets to any other corporation, this Note, as
to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or other securities and property as
would have been issuable or distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the conversion or purchase right
immediately prior to such consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such successor or purchaser.
Without limiting the generality of the foregoing, the anti-dilution provisions of this Section
shall apply to such securities of such successor or purchaser after any such consolidation, merger,
sale or conveyance.

B. Reclassification, etc. If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of securities of any class
or classes, this Note, as to the unpaid principal portion thereof and accrued interest thereon,
shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other change.

C. Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on
the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced
in case of subdivision of shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total number of shares of Common
Stock outstanding immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.

D. Share Issuance. So long as this Note is outstanding, if the Borrower shall issue any
Common Stock except for the Excepted Issuances (as defined in the Subscription Agreement), prior to
the complete conversion of this Note for a consideration less than the Fixed Conversion Price that
would be in effect at the time of such issue, then, and thereafter successively upon each such
issuance, the Fixed Conversion Price shall be reduced to such other lower issue price. For
purposes of this adjustment, the issuance of any security or debt instrument of the Borrower
carrying the right to convert such security or debt instrument into Common Stock or of any warrant,
right or option to purchase Common Stock shall result in an adjustment to the Fixed Conversion
Price upon the issuance of the above-described security, debt instrument, warrant, right, or option
and again upon the issuance of shares of Common Stock upon exercise of such conversion or purchase
rights if such issuance is at a price lower than the then applicable Fixed Conversion Price. The
reduction of the Fixed Conversion Price described in this paragraph is in addition to the other
rights of the Holder described in the Subscription Agreement.

(c) Whenever the Conversion Price is adjusted pursuant to Section 3.4(b) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a statement of the facts requiring such adjustment.

3.5. Reservation. During the period the conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock not less than the number of shares set forth
in the Subscription Agreement to provide for the issuance of Common Stock upon the full conversion
of this Note. Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Borrower agrees that its issuance of this Note shall constitute
full authority to its officers, agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue the necessary certificates for shares
of Common Stock upon the conversion of this Note.

3.6 Issuance of Replacement Note. Upon any partial conversion of this Note, a
replacement Note containing the same date and provisions of this Note shall, at the written request
of the Holder, be issued by the Borrower to the Holder for the outstanding Principal Amount of this
Note and accrued interest which shall not have been converted or paid.

ARTICLE IV

EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”) shall, at the
option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon
and all other amounts payable hereunder immediately due and payable, upon demand, without
presentment, or grace period, all of which hereby are expressly waived, except as set forth below:

4.1 Failure to Pay Principal or Interest. The Borrower fails to pay any installment
of Principal Amount, interest or other sum due under this Note or any Transaction Document when due
and such failure continues for a period of five (5) business days after the due date.

4.2 Breach of Covenant. The Borrower breaches any material covenant or other term or
condition of the Subscription Agreement, this Note or Transaction Document in any material respect
and such breach, if subject to cure, continues for a period of ten (10) business days after written
notice to the Borrower from the Holder.

4.3 Breach of Representations and Warranties. Any material representation or warranty
of the Borrower made herein, in the Subscription Agreement, Transaction Document or in any
agreement, statement or certificate given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect as of the date made and a Closing
Date.

4.4 Receiver or Trustee. The Borrower or any Subsidiary of Borrower shall make an
assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for them or for a substantial part of their property or business; or such a receiver or
trustee shall otherwise be appointed.

4.5 Judgments. Any money judgment, writ or similar final process shall be entered or
filed against Borrower or any Subsidiary of Borrower or any of their property or other assets for
more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of forty-five (45)
days.

4.6 Non-Payment. A default by the Borrower under any one or more obligations in an
aggregate monetary amount in excess of $100,000 for more than twenty days after the due date.

4.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or against the Borrower or
any Subsidiary of Borrower and if instituted against them are not dismissed within 45 days of
initiation.

4.8 Delisting. Delisting of the Common Stock from the OTC Bulletin Board (“Bulletin
Board”) or such other principal exchange on which the Common Stock is listed for trading; failure
to comply with the requirements for continued listing on the Bulletin Board for a period of seven
consecutive trading days; or notification from the Bulletin Board or any Principal Market that the
Borrower is not in compliance with the conditions for such continued listing on the Bulletin Board
or other Principal Market.

4.9 Stop Trade. An SEC or judicial stop trade order or Principal Market trading
suspension with respect to the Common Stock that lasts for five or more consecutive trading days.

4.10 Failure to Deliver Common Stock or Replacement Note. Borrower’s failure to
timely deliver Common Stock to the Holder pursuant to and in the form required by this Note of the
Subscription Agreement, or, if requested by Borrower, a replacement Note.

4.11 Non-Registration Event. The occurrence of a Non-Registration Event as described
in the Subscription Agreement that is not cured within five (5) business days after notice from
Holder.

4.12 Reverse Splits. The Borrower effectuates a reverse split of its Common Stock
without the prior written consent of the Holder.

4.13 Change in Management. Any of the President, Chief Executive Officer, or Chief
Financial Officer no longer holding such position with the Company without prior notice to and
approval of a replacement thereof by the Holder of this Note (which approval shall not be
unreasonably withheld).

4.14 Cross Default. A default by the Borrower of a material term, covenant, warranty
or undertaking of any Transaction Document or other agreement to which the Borrower and Holder are
parties, or the occurrence of a material event of default under any such other agreement which is
not cured after any required notice and/or cure period.

4.15 Approval Default. The occurrence of an Approval Default as defined in Section
7.8 of the Subscription Agreement.

ARTICLE V

SECURITY INTEREST

5. Security Interest/Waiver of Automatic Stay. This Note is secured by a security
interest granted to the Collateral Agent for the benefit of the Holder pursuant to a Security
Agreement, as delivered by Borrower to Holder. The Borrower acknowledges and agrees that should a
proceeding under any bankruptcy or insolvency law be commenced by or against the Borrower, or if
any of the Collateral (as defined in the Security Agreement) should become the subject of any
bankruptcy or insolvency proceeding, then the Holder should be entitled to, among other relief to
which the Holder may be entitled under the Transaction Documents and any other agreement to which
the Borrower and Holder are parties (collectively, “Loan Documents”) and/or applicable law, an
order from the court granting immediate relief from the automatic stay pursuant to 11 U.S.C.
Section 362 to permit the Holder to exercise all of its rights and remedies pursuant to the Loan
Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT
NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR
INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE
LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby consents to any motion for relief from
stay that may be filed by the Holder in any bankruptcy or insolvency proceeding initiated by or
against the Borrower and, further, agrees not to file any opposition to any motion for relief from
stay filed by the Holder. The Borrower represents, acknowledges and agrees that this provision is
a specific and material aspect of the Loan Documents, and that the Holder would not agree to the
terms of the Loan Documents if this waiver were not a part of this Note. The Borrower further
represents, acknowledges and agrees that this waiver is knowingly, intelligently and voluntarily
made, that neither the Holder nor any person acting on behalf of the Holder has made any
representations to induce this waiver, that the Borrower has been represented (or has had the
opportunity to he represented) in the signing of this Note and the Loan Documents and in the making
of this waiver by independent legal counsel selected by the Borrower and that the Borrower has
discussed this waiver with counsel.

ARTICLE VI

MISCELLANEOUS

6.1 Failure or Indulgence Not Waiver. No failure or delay on the part of Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

6.2 Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be: (i) if to the Borrower to: Diametrics Medical, Inc., 3050 Centre Pointe Drive, Suite 150,
St. Paul, MN 55113, Attn: David B. Kaysen, President & CEO, telecopier number: (651) 639-8549, with
a copy by telecopier only to: Kenneth L. Cutler, Esq., Dorsey & Whitney LLP, 50 South Sixth Street,
Suite 1500, Minneapolis, MN 55402, telecopier number: (612) 340-7800, and (ii) if to the Holder, to
the name, address and telecopy number set forth on the front page of this Note, with a copy by
telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
telecopier number: (212) 697-3575.

6.3 Amendment Provision. The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented.

6.4 Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and assigns.

6.5 Cost of Collection. If default is made in the payment of this Note, Borrower
shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

6.6 Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individual signing this Note on behalf of the Borrower
agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs. In the event that any
provision of this Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower in any other
jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or
any other security for such obligations, or to enforce a judgment or other court in favor of the
Holder.

6.7 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

6.8. Construction. Each party acknowledges that its legal counsel participated in
the preparation of this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied in the
interpretation of this Note to favor any party

against the other.

6.9 Redemption. This Note may not be redeemed or called without the consent of the
Holder except as described in this Note.

6.10 Shareholder Status. The Holder shall not have rights as a shareholder of the
Borrower with respect to unconverted portions of this Note. However, the Holder will have the
right of a shareholder of the Borrower with respect to the Shares of Common Stock to be received
after delivery by the Holder of a Conversion Notice to the Borrower.

[THIS SPACE INTENTIONALLY LEFT BLANK]

1

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized
officer as of the 15th day of December, 2004.

DIAMETRICS MEDICAL, INC.

By:   

Name: David B. Kaysen

Title: President & CEO

WITNESS:

   

2

NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $   of the principal and $   of the
interest due on the Note issued by Diametrics Medical, Inc. on December 15, 2004 into Shares of
Common Stock of Diametrics Medical, Inc. (the “Borrower”) according to the conditions set forth in
such Note, as of the date written below.

Date of Conversion:   

Conversion Price:   

Shares To Be Delivered:   

Signature:   

Print Name:   

Address:   

   

3

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