Document:

EX-10.8

Exhibit 10.8

Dated 15 December, 2004

(1) DIAMETRICS MEDICAL, INC

(as the Chargor)

- and -

(2) BARBARA R. MITTMAN

(as the Agent)

Charge Over Shares

1

Moorhead James, Solicitors

Kildare House, 3 Dorset Rise,

London EC4Y 8EN

Tel: +44 (0)20 7831 8888

Fax: +44 (0)20 7936 3635

e: mail@moorheadjames.comCONTENTS

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)	 	BARBARA R. MITTMAN, of Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York,
New York 10176 as agent for each of the Beneficiaries (as defined below) (together with her
successors and assigns, the “Agent”)

BACKGROUND

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

(B) The Chargor is the holding company of the Company (as defined below).

	 	(C)	 	In consideration of the Beneficiaries entering into the Subscription Agreement, 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 Longview Equity Fund LP,

Longview Fund LP, Longview International

Equity Fund LP, Mercator, Momentum Fund

III LP, Mercator Momentum Fund LP, Monarch

Pointe,Ltd and Camden International in

their capacity as holders of the Notes
	 
	 	 
	“Collateral Agency

Agreement”

	 	means the collateral agency agreement

between the Agent and the Beneficiaries

dated on or about the date hereof
	 
	 	 
	“Company”

	 	means TGC Research Limited a company

incorporated under the laws of England and

Wales (registered number 05273708)
	 
	 	 
	“Debenture”

	 	means the debenture between the Company

and the Agent dated on or about the date

hereof
	 
	 	 
	“Default Rate”

	 	means a rate of interest determined in

accordance with the terms of the Notes
	 
	 	 
	“Event of Default”

	 	means the occurrence or existence of any

Event of Default under the terms of the

Notes or any other Finance Document, a

material default under the Subscription

Agreement or the breach of any

representation, warranty or covenant under

this Charge
	 
	 	 
	“Finance Documents”

	 	means this Charge, the Subscription

Agreement, the Notes, the Collateral

Agency Agreement, the Security Documents

and such other security agreements as may

be executed by the Chargor
	 
	 	 
	“Guaranty”

	 	means the guaranty subject to the laws of

the State of New York to be entered into

on or about the date hereof between the

Company and the Agent
	 
	 	 
	“Notes”

	 	means promissory notes of the Chargor

issued pursuant to the Subscription

Agreement
	 
	 	 
	“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 Guaranty, the

Debenture 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 about the date hereof between, amongst

others BCC Acquisition II LLC, the Agent,

the Chargor and the Company
	 
	 	 
	“Subordinated Share

Charge”

	 	means a share charge in a form approved by

the Agent dated on or about the date

hereof between the Chargor as chargor and

BCC Acquisition II LLC as agent
	 
	 	 
	“Subscription Agreement”

	 	means the subscription agreement in

relation to the Notes made between the

Chargor and the Beneficiaries dated on or

about the date hereof
	 
	 	 
	“UK”

	 	means the United Kingdom of Great Britain

and Northern Ireland
	 
	 	 
	“US Security Agreements”

	 	means the security and pledge agreement,

trademark security agreement and any other

document granting any form of security

each dated on or about the date hereof 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
“Subscription 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 Subscription 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
Subscription 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
Subscription 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 or identity 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 Deed

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

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 Subordinated Share Charge which is hereby permitted by the Chargor),
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 Subscription 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 Subscription 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 Subscription 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 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 Subscription Agreement,

the Agent or such Beneficiary may open a new account or accounts for the Chargor in its
books. If the Agent or such 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 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 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 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 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 Subscription
Agreement.

	 	(b)	 	If the Security is enforceable, the Agent may in its absolute discretion, but
subject to the provisions of the Subscription 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 Subscription 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 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 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
Beneficiary has any contingent liability to advance further monies to, or incur liability on
behalf of any Obligor, the Agent and each 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 Subscription 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 by BARBARA R. MITTMAN

/s/ Barbara R. Mittman

	 	 	 
	

       Address:              Barbara R. Mittman,
                             Grushko & Mittman, P.C.
                             551 Fifth Avenue, Suite 1601
                             New York, NY 10176, United States of America

       Fax:             +1 212 697-3575
       Attention:            Barbara R. Mittman
Address:	 	Barbara R. Mittman,	 	 
	 	 	Grushko & Mittman, P.C.	 	 
	 	 	551 Fifth Avenue, Suite 1601	 	 
	 	 	New York, NY 10176, United States of America	 	 
	 	 	 	 	 	 	 	 	 
	Fax:	 	+1	 	 	212	 	 	697-3575
	Attention:	 	Barbara R. Mittman

6EX-10.9

Exhibit 10.9

GENERAL SECURITY AGREEMENT

This General Security Agreement (“Agreement”), dated as of December 15, 2004, is
entered into by and among TGC Research Limited (a company incorporated in England and Wales with
registered number 05273708, “Grantor”) and BCC Acquisition II LLC (“Bay City”), as
agent (the “Secured Party”) for itself and Gerald L. Cohn Revocable Trust (“Cohn
Trust”), Hannah S. and Samuel A. Cohn Memorial Foundation (“Cohn Foundation”), and AEOW
96, LLC (“AEOW”), Bay City, Cohn Trust, Cohn Foundation and AEOW are collectively referred
to herein as the “Note Holders”.

W I T N E S S E T H

WHEREAS, Diametrics Medical, Inc. (“DMED”), Bay City, Cohn Trust, Cohn Foundation and
AEOW are parties to that certain Note Purchase Agreement, dated as of August 4, 1998, as amended by
that certain First Amendment to Note Purchase Agreement, dated as of April 7, 2003 and further
amended by that certain Second Amendment and Limited Waiver to Note Purchase Agreement, dated as of
August 13, 2003 (as further amended, restated, supplemented and otherwise modified from time to
time, the “Note Purchase Agreement”); and

WHEREAS, Grantor purchased certain assets formerly held by Diametrics Medical, Ltd. and, in
consideration for the Note Holders consenting to the liquidation of Diametrics Medical, Ltd. and
the sale of its assets, Grantor has agreed to enter into this Agreement;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:

1. DEFINITIONS

All terms used herein which are defined in Article 1 or Article 9 of the Uniform Commercial
Code shall have the meanings given therein unless otherwise defined in this Agreement. All
references to the plural herein shall also mean the singular and to the singular shall also mean
the plural unless the context otherwise requires. All references to Grantor or the Secured Party
pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall
include their respective successors and assigns. The words “hereof”, “herein”, “hereunder”, “this
Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as
a whole and not any particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. The word
“including” when used in this Agreement shall mean “including, without limitation”. Any accounting
term used herein unless otherwise defined in this Agreement shall have the meanings customarily
given to such term in accordance with GAAP. All other capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the Note Purchase Agreement (the Note
Purchase Agreement, the Notes, the Security Documents, and such other security agreements executed
by the Grantor, collectively the “Documents”). For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:

1.1 “Event of Default” shall have the meaning set forth in Section 4.1 hereof.

1.2 “Records” shall mean all of Grantor’s present and future books of account of every
kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Grantor with respect to the foregoing maintained with or by any
other person).

1.3 “Intellectual Property” shall mean Grantor’s now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights, works which are the subject
matter of copyrights, copyright registrations, trademarks, trade names, trade styles, corporate
names, business names, service marks, logos, internet domain names, other source of business
identifiers, prints and labels on which any of the foregoing have appeared or appear, trademark and
service mark applications, and licenses and rights to use any of the foregoing; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing;
all rights to sue for past, present and future infringement of any of the foregoing; inventions,
trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports,
manuals, and operating standards; goodwill (including any goodwill associated with any trademark or
the license of any trademark); customer and other lists in whatever form maintained; and trade
secret rights, copyright rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to software, in whatever form created or
maintained.

2. GRANT OF SECURITY INTEREST

To secure payment under, and performance of all obligations of DMED under the Notes, the Note
Purchase Agreement and other Documents, except for any obligation or liability which, if it were so
included, would cause the infringement of any of Sections 151 to 158 (inclusive) of the Companies
Act of 1985, Grantor hereby grants to the Secured Party, for the benefit of the Note Holders (but
subject to the rights of those certain Beneficiaries identified in that certain Debenture between
Grantor and Barbara R. Mittman as agent, dated as of December 15, 2004, to a first priority
security interest in all assets of Grantor), a continuing security interest in all of the Grantor’s
right, title and interest in and to all personal and real property and fixtures and interests in
such property and fixtures of the Grantor, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the Notes at any time granted to
or held or acquired by the Secured Party, collectively, the “Collateral”), including:

(a) all Accounts;

(b) all general intangibles, including, without limitation, all Intellectual Property;

(c) all goods, including, without limitation, Inventory and Equipment;

(d) all real property and fixtures;

(e) all chattel paper (including all tangible and electronic chattel paper);

(f) all instruments (including all promissory notes);

(g) all documents;

(h) all deposit accounts;

(i) all letters of credit, banker’s acceptances and similar instruments and including all
letter-of-credit rights;

(j) all supporting obligations and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other Collateral, including (i)
rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing
the obligations of account debtors;

(k) all (i) investment property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii)
monies, credit balances, deposits and other property of Grantor now or hereafter held or received
by or in transit to any Secured Party or its affiliates or at any other depository or other
institution from or for the account of Grantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise;

(l) all Records; and

(m) all products and proceeds of the foregoing, in any form, including insurance proceeds and
all claims against third parties for loss or damage to or destruction of or other involuntary
conversion of any kind or nature of any or all of the other Collateral;

Notwithstanding anything to the contrary, Collateral shall not include any of the foregoing
that are subject to any liens, pledges, security interests or other encumbrances specifically
listed on Schedule 1 hereto.

3. REPRESENTATIONS AND WARRANTIES

Grantor hereby represents and warrants to the Secured Party the following (which shall survive
the execution and delivery of this Agreement):

(a) Corporate Existence; Power and Authority. Grantor is duly organized and in good
standing under the laws the of the United Kingdom and is duly qualified as a foreign entity and in
good standing in all states or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material adverse effect on the
financial condition, results of operation or business of Grantor or the rights of the Secured Party
in or to any material portion of any other Collateral. The execution, delivery and performance of
this Agreement and the transactions contemplated hereunder and thereunder (a) are all within
Grantor’s powers, (b) have been duly authorized, (c) are not in contravention of law or the terms
of Grantor’s certificate of incorporation, by-laws, or other organizational documentation, or any
indenture, agreement or undertaking to which Grantor is a party or by which Grantor or its property
are bound and (d) will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance upon any property of
Grantor other than the security interest in favor of the Secured Party created hereby. This
Agreement constitutes legal, valid and binding obligations of the Grantor enforceable in accordance
with their respective terms subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditor’s rights generally and by equitable
principles of general applicability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

(b) Name; Jurisdiction of Organization.

(i) The exact legal name of Grantor is as set forth on the signature page of this Agreement.

(ii) Grantor is a company incorporated in England and Wales with registered number 05273708.

4. EVENTS OF DEFAULT AND REMEDIES

4.1 Events of Default. The occurrence or existence of any Event of Default under the
Note Purchase Agreement or any other Document or the breach of any material representation,
warranty or covenant hereunder shall be referred to herein individually as an “Event of
Default”, and collectively as “Events of Default”.

4.2 Remedies and Subordination of Subrogation and Other Rights.

(a) At any time an Event of Default exists or has occurred and is continuing, the Secured
Party shall have all rights and remedies provided in this Agreement, the Note Purchase Agreement or
any other Document, the Uniform Commercial Code and all other applicable law, all of which rights
and remedies may be exercised without notice to or consent by Grantor, except as such notice or
consent is expressly required by applicable law. All rights, remedies and powers granted to the
Secured Party hereunder, under the Note Purchase Agreement or any other Document, the Uniform
Commercial Code or other applicable law, are cumulative, not exclusive and enforceable, in the
Secured Party’s discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court of equity for an
injunction to restrain a breach or threatened breach by Grantor of this Agreement, the Note
Purchase Agreement or any other Document.

(b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and
is continuing, the Secured Party may, in its discretion and without limitation, (i) declare the
principal or and accrued interest on its Notes to be due and payable and demand immediate payment
thereof, (ii) with or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the Collateral, (iii)
require Grantor, at Grantor’s sole expense, to assemble and make available to the applicable
Secured Party any part or all of the Collateral at any reasonable place and time designated by the
Secured Party, (iv) collect, foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or in which the same may
be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for
any other purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or private sales at any
exchange, broker’s board, at any office of the Secured Party or elsewhere) at such prices or terms
as the Secured Party may deem commercially reasonable, for cash, upon credit or for future
delivery, with the applicable Secured Party having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any right or equity of
redemption of Grantor, which right or equity of redemption is hereby expressly waived and released
by Grantor to the extent permitted by applicable law. If any of the Collateral is sold or leased
by the Secured Party upon credit terms or for future delivery, the Notes shall not be reduced as a
result thereof until payment therefor is finally collected. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by the Secured Party to Grantor designating the time
and place of any public sale or the time after which any private sale or other intended disposition
of Collateral is to be made, shall be deemed to be reasonable notice thereof and Grantor waives any
other notice. In the event the Secured Party institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, Grantor waives the posting of any
bond which might otherwise be required.

(c) The Secured Party shall apply the cash proceeds of Collateral actually received from any
sale, lease, foreclosure or other disposition of the Collateral in accordance with Section 8.3 of
the Note Purchase Agreement. Grantor shall remain liable to the Secured Party for the payment of
any deficiency with interest at the highest rate provided for payment of interest under the Note
Purchase Agreement and any other Documents and all costs and expenses of collection or enforcement,
including reasonable attorneys’ fees and legal expenses.

5. MISCELLANEOUS

5.1 Governing Law; Service of Process.

(a) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAW OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLE.

(b) The Secured Party shall not have any liability to Grantor (whether in tort, contract,
equity or otherwise) for losses suffered by Grantor in connection with, arising out of, or in any
way related to the transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined that the losses were
the result of acts or omissions constituting gross negligence or willful misconduct. In any such
litigation, the Secured Party shall be entitled to the benefit of the rebuttable presumption that
it acted in good faith and with the exercise of ordinary care in the performance by it of the terms
of this Agreement and the other Documents.

5.2 Waiver of Notices. Grantor hereby expressly waives demand, presentment, protest
and notice of protest and notice of dishonor with respect to any and all instruments and commercial
paper, included in the Notes, the other Documents or the Collateral, and any and all other demands
and notices of any kind or nature whatsoever with respect to the Notes, the other Documents, the
Collateral and this Agreement, except such as are expressly provided for herein. No notice to or
demand on Grantor which the Secured Party may elect to give shall entitle Grantor to any other or
further notice or demand in the same, similar or other circumstances.

5.3 Amendments and Waivers. Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only by a written
agreement signed by the Secured Party, and as to amendments, as also signed by an authorized
officer of Grantor. The Secured Party shall not by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of their rights, powers and/or remedies unless such
waiver shall be in writing and signed by the Secured Party. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by the Secured Party of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such
right, power and/or remedy which the Secured Party would otherwise have on any future occasion,
whether similar in kind or otherwise.

5.4 Waiver of Counterclaims. Grantor waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any nature in any action or proceeding with respect to this
Agreement, the Notes, the other Documents, the Collateral or any matter arising therefrom or
relating hereto or thereto. Notwithstanding any provision herein to the contrary, nothing shall
prevent the assertion of any claim by Grantor by separate action, suit or compulsory counterclaim
or shall constitute a waiver by Grantor of any such claim or right.

5.5 Indemnification. Grantor shall indemnify and hold the Secured Party, and their
respective directors, agents, members, employees and counsel (the “Indemnified Party”),
harmless from and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this Agreement, any other
Documents, or any undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto, including amounts paid in
settlement, court costs, and the reasonable fees and expenses of counsel unless it is determined
that any such losses, claims, damages, liabilities, costs or expenses were the result of acts or
omissions constituting gross negligence or willful misconduct on the part of any such Indemnified
Party. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this
Section may be unenforceable because it violates any law or public policy, Grantor shall pay the
maximum portion which it is permitted to pay under applicable law to the Secured Party in
satisfaction of indemnified matters under this Section. The foregoing indemnity shall survive the
payment of the Notes, the termination of this Agreement and the termination of the Note Purchase
Agreement.

5.6 Notices. All notices, requests and demands hereunder shall be in writing and (a)
made to the Secured Party care of DMED and to Grantor at the addresses set forth in Section 13.2 of
the Note Purchase Agreement or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to have been given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after mailing.

5.7 Partial Invalidity. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable law.

5.8 Successors. This Agreement, the Note Purchase Agreement, the other Documents and
any other document referred to herein or therein shall be binding upon Grantor and its respective
successors and assigns and inure to the benefit of and be enforceable by the Secured Party and, as
permitted in accordance with the Note Purchase Agreement, its respective successors and assigns,
except that Grantor may not assign its rights under this Agreement, the Documents and any other
document referred to herein or therein without the prior written consent of the Secured Party. The
terms and provisions of this Agreement and the Documents are for the purpose of defining the
relative rights and obligations of Grantor and the Secured Party with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the Documents.

5.9 Entire Agreement. This Agreement, the Documents, any supplements hereto or
thereto, and any instruments or documents delivered or to be delivered in connection herewith or
therewith represents the entire agreement and understanding concerning the subject matter hereof
and thereof between the parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written. In the event of any
inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of
this Agreement shall govern.

5.10 Further Assurances. At the request of the Secured Party at any time and from
time to time, Grantor shall, at its expense, duly execute and deliver, or cause to be duly executed
and delivered, such further agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the Documents. Where permitted by law, Grantor hereby
authorizes the Secured Party to execute and file one or more UCC financing statements signed only
by the Secured Party or its representative.

5.11 Termination. This Agreement shall be terminated and of no further force and
effect upon DMED’s payment in full in cash of all obligations (including, without limitation,
principal, interest, fees and all other amounts) owing to the Note Holders.

[Signature Pages Follow]

1

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date and year first written above.

THE COMPANY

TGC RESEARCH LIMITED

By: /s/ David B. Kaysen

	 	 	 	Name: David B. Kaysen

Title: Director

THE SECURED PARTY:

BCC ACQUISITION II LLC, as agent

	 	 	 
	By:

Its:

By:

Its:

	 	THE BAY CITY CAPITAL FUND I, L.P.

Manager

Bay City Capital Management LLC

General Partner
	 
	 	 
	By:

Name:

Title:

	 	/s/ Fred Craves

Fred Craves

Managing Director

2

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