Document:

Amendment to Amended and Restated Credit Agreement (Second)

 EXHIBIT 10.13 
  
 AMENDMENT TO AMENDED 
 AND 
 RESTATED CREDIT AGREEMENT 
 (SECOND) 
  
 This AMENDMENT (“Amendment”) dated as of October 30, 2003 is by and between WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank), as an individual Lender and as Lead Arranger and Administrative Agent
(“Wachovia”), FLEET NATIONAL BANK (formerly known as Fleet Bank, N.A.), as an individual Lender and as Documentation Agent, (“Fleet”), BROWN BROTHERS HARRIMAN & CO., as an individual Lender (“Brown Brothers”,
Wachovia, Fleet and Brown Brothers in their capacity as individual Lenders are hereinafter, collectively the “Lenders”, Wachovia in its capacity as the Lead Arranger and Administrative Agent is hereinafter the “Agent”, and Fleet
in its capacity as the Documentation Agent is hereinafter the “Documentation Agent”) and HOOPER HOLMES, INC., a New York corporation, (“Borrower”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, the Borrower, Lenders, Agent and the Documentation Agent are
parties to a certain Amended and Restated Revolving Credit Agreement dated as of October 29, 1999 (said agreement, as amended by a certain Amendatory Letter Agreement dated as of July 10, 2000, as further amendment by a certain Amendment thereto
dated as of May 15, 2001, as further amended by an Amendatory Letter dated October 16, 2002, and as further amended and modified from time to time, the “Credit Agreement”) and certain other Credit Documents executed and delivered in
connection therewith; and 
  
 WHEREAS, the Borrower has requested
certain modifications to certain covenants set forth in the Credit Agreement and an extension of the Revolving Credit Expiration Date from October 31, 2003 to October 31, 2006; 
  
 WHEREAS, the Lenders are agreeable to the requests of the Borrower on the terms and conditions set forth herein. 

 
 NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows: 
  
 1. Defined Terms; Effect of Amendment. 
  
 (a) Unless otherwise modified hereby, all capitalized terms used herein which are defined in the Credit Agreement, and not otherwise defined herein, are
used herein as defined in the Credit Agreement. All capitalized terms used herein which are defined in the Credit Agreement and modified herein shall have the meaning assigned to such terms in the Credit Agreement as so modified. 
  

 1 

 (b) This Amendment is an amendment to the Credit Agreement. Unless the context of this Amendment
otherwise requires, the Credit Agreement and this Amendment shall be read together and shall have effect as if the provisions of the Credit Agreement and this Amendment were contained in one agreement. After the effective date of this Amendment, all
references in the Credit Agreement to the “Credit Agreement”, “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Credit Agreement shall mean the Credit
Agreement as amended by this Amendment, and all references in the Notes and the other Credit Documents to the Credit Agreement shall mean the Credit Agreement as amended by this Amendment. 
  
 2. Amendments to Credit Agreement. 
  
 (a) The table set forth in the definition of “Applicable Margin”
set forth in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  

									
	Level

	  	 If Such Ratio Is:

	  	 Applicable Margin for
 Prime Rate Loans

	  	 Applicable Margin for
 LIBOR Loans

	  	 Applicable Margin
 for Commitment
 Fees

	I	  	Equal to or less than 2.50:1.00 but greater or equal to 2.25:100	  	plus 25 basis points (.25%)	  	plus 175 basis points (1.75%)	  	plus 30 basis points (.30%)
					
	II	  	Less than 2.25:100 but greater or equal to 1.75:100	  	0 basis points (0.00%)	  	plus 1371⁄2 basis points (1.375%)	  	plus 25 basis points (.25%)
					
	III	  	Less than 1.75:100 but greater or equal to 1.25	  	minus 25 basis points (.25%)	  	plus 100 basis points (1.00%)	  	plus 20 basis points (.20%)
					
	IV	  	Less than 1.25:00	  	minus 50 basis points (.50%)	  	plus 75 basis points (.75%)	  	plus 15 basis points (.15%)

  
 (b) The definition of
“Consolidated Fixed Charge Coverage Ratio” set forth in Section 1.01of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “Consolidated Fixed Charge Coverage Ratio shall mean the ratio of (A) the Borrower=s net income
(excluding non-cash extraordinary items or non-cash post-tax non-operating earnings adjustments) plus amounts (without duplication) deducted from net income in respect of income tax expense, interest expense, depreciation and amortization
expense and lease and rental expense to (B) the sum of (x) the Current Maturities on Long Term Indebtedness (excluding, however, in all cases any current maturities in respect of Borrower’s Obligations under the Revolving Credit Loans)
plus (y) the interest expense and lease and rental expense otherwise added back into the Borrower’s net income pursuant to clause (A) above plus (z) dividends or any other form of cash distribution made by the Borrower on account
of any class of stock of the Borrower, in each case determined for the relevant Test Period on a Consolidated basis in accordance with GAAP, consistently applied.” 
  
  

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 (c) The definition of “Letter of Credit Sublimit” set forth in Section 1.01 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “Letter of Credit Sublimit shall mean an amount determined by the Lenders (in their sole and absolute discretion) to be made available to the Borrower for the issuance of Letters of Credit hereunder.”

  
 (d) The defined term “Revolving Credit Expiration
Date” set forth in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “Revolving Credit Expiration Date shall mean October 31, 2006, as the same may be extended for an additional one (1) year
period in accordance with Section 2.02 hereof.” 
  
 (e)
Clause (x) of the definition of “Permitted Investments” set forth in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “(x) any other form of investment in any Person so long as the consideration paid or exchanged by the
Borrower for such investment (whether in cash or the value of payment-in-kind) does not exceed in the aggregate for all such investments $5,000,000 minus the aggregate outstanding amount actually advanced to officers of the Borrower as
permitted pursuant to Section 8.11 hereto.” 
  
 (f) Clause
(f) of Section 8.02 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “(f) Liens in favor of any Person (whether or not the seller of such assets) upon property or assets of the Borrower or any of its
Subsidiaries incurred solely for the purpose of financing the acquisition of any such assets, provided, no such Lien shall extend to or over any property or asset other than the property being acquired and provided, further that (i)
the aggregate principal amount of the Indebtedness at any one time outstanding secured by such Liens shall not exceed $5,000,000.00 and (ii) the incurrence of any such Indebtedness shall not otherwise be prohibited by the terms of this Agreement;
and” 
  
 (g) Section 8.05 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows: 
  
 “8.05 Dividends. Declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of stock of the
Borrower, except that the Borrower may declare and pay quarterly cash dividends in respect of its capital stock so long as immediately after giving effect to any such proposed dividend payment, a Default or Event of Default would exist.
Anything to the contrary in this Section 8.05 notwithstanding, the Borrower shall be permitted to distribute additional shares of its capital stock in respect of any issued and outstanding shares of its capital stock in connection with stock splits
effected by the Borrower from time to time.” 
  

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 (h) Section 8.05A of the Credit Agreement is hereby amended and restated in its entirety to read as
follows: 
  
 “8.05A Special Stock
Purchase Provisions. Purchase, redeem or otherwise acquire the value (or permit any Subsidiary to do so) any share of any class of stock of the Borrower or any warrants, rights or options to acquire any such shares, now or hereafter outstanding;
except purchases of shares of its publicly traded common stock on the American Stock Exchange for an aggregate gross purchase price not to exceed $25,000,000 at any time prior to the Revolving Credit Expiration Date. The stock purchases
permitted pursuant to this Section 8.05A shall be further restricted as follows: (y) no such purchases shall be permitted if immediately after giving effect to any such proposed purchase, a Default or Event of Default would exist, and (z) in no
event shall the Borrower be permitted to borrow under the Revolving Credit Facility to fund, directly or indirectly, any stock purchases contemplated in this Section 8.05A. With delivery of the quarterly financial statement required pursuant to
Section 7.03(ii) hereof, the Borrower shall provide to the Agent and the Lenders a statement itemizing the number of share purchased pursuant to this Section 8.05A, and the purchase price paid for such stock, during the immediately preceding fiscal
quarter.” 
  
 (i) Section 8.08 of the Credit Agreement is
hereby deleted in its entirety and the following shall be inserted in its place: 
  
 “8.08 [INTENTIONALLY DELETED]” 
  

(j) Section 8.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “8.10 Loans and Advances Generally. Other than
as permitted pursuant to Section 8.11 hereof, loan or make advances, or other forms of extensions of credit, to any Subsidiary or Affiliate of the Borrower, or any other Person (other than as permitted under Section 8.9 hereof); provided,
however, that the Borrower shall be permitted to make loans, advances and other forms of extensions of credit to any of its Subsidiaries so long as such Subsidiary is also a Guarantor of the Obligations.” 
  
 (k) Section 8.16 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows: 
  
 “8.16
Consolidated Funded Debt to EBITDA Ratio. Permit its Consolidated Funded Debt to EBITDA Ratio to exceed at any time 2.50 to 1.00, measured on a quarterly basis for the relevant Test Period.” 
  

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 4. Full Force and Effect. Except as expressly modified by this Amendment, all of the terms and
conditions of the Credit Agreement shall continue in full force and effect, and all parties hereto shall be entitled to the benefits thereof. This Amendment is limited as written and shall not be deemed (i) to be an amendment of or a consent under
or waiver of any other term or condition of the Credit Agreement or (ii) to prejudice any right or rights which the Lenders now have or may have in the future under or in connection with the Credit Agreement or such other agreements. 
  
 5. Representations and Warranties. In order to induce the Lenders to
enter into this Amendment, the Borrower makes the following representations and warranties to the Lenders, which shall survive the execution and delivery hereof: 
  

	 	(i)	The execution and delivery of this Amendment has been authorized by all necessary corporate action on its part, this Amendment has been duly executed and delivered by it, and this
Amendment and the Credit Agreement, as amended hereby, constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization and other laws
affecting creditors’ rights generally, moratorium laws from time to time in effect and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); 

  

	 	(ii)	No Event of Default has occurred and is continuing under the Credit Agreement, and no event has occurred which, with notice, lapse of time or both, would constitute such an Event of
Default; and 

  

	 	(iii)	The representations and warranties set forth in the Credit Agreement and the other Credit Documents are true and correct as of the date hereof in all material respects.

  
 6. Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all which when taken together shall constitute one and the same agreement. 
  
 7. Governing Law. This Amendment, including the validity thereof and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the laws of the State of New Jersey. 
  
 8. Conditions Precedent. This Amendment shall not be effective until (1) the Agent shall have received counterparts of this Amendment, duly
executed by all of the parties hereto, (2) the Agent shall have received a Guaranty substantially in the term of EXHIBIT D to the Credit Agreement duly executed by each of the following Subsidiaries of the Borrower: Medicals Direct Group,
Inc., 684 Associates Limited (trading as D&D Associates), Heritage Labs International LLC, and Hooper Distribution Services, Inc. (the “New Guarantors”), (3) the Agent shall have received secretary certificates, incumbency certificates
and good standing certificates for each New Guarantor substantially the same as the like items delivered by the 
  

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 Borrower pursuant to Section 5.01(a)(iv), (vi) and (vii) of the Credit Agreement, (4) the Borrower shall have paid to the
Agent for the ratable account of the Lenders a modification and extension fee equal to .15% of the aggregate amount of the Revolving Credit Commitments (or $52,500 = $35,000,000 X .15%), and (5) the Borrower shall have paid all reasonable fees and
expenses of the Agent’s counsel incurred in connection with the preparation, negotiation, execution and delivery and review of this Amendment. 
  
 9. Execution Certification. The parties hereto certified that this Amendment was executed and delivered in the State of New Jersey. 
  

 6 

 IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and year first
above written. 
  
  

									
	 	 	 	 	 Borrower:

			
	 WITNESS OR ATTEST
	 	 	 	HOOPER HOLMES, INC.
					
	By:	 	 /s/ Robert W. Jewett
	 	 	 	By:	 	 /s/ Fred Lash

	 	 	
	 	 	 	 	 	

	 	 	 Name: Robert W. Jewett
	 	 	 	 	 	 Name: Fred Lash

	 	 	 Title: Senior Vice President, General Counsel & Secretary
	 	 	 	 	 	 Title: Senior Vice President, CFO & Treasurer

				
	 	 	 	 	 	 	Lenders:
				
	 	 	 	 	 	 	WACHOVIA BANK, NATIONAL BANK,
	 	 	 	 	 	 	 (formerly known as First Union National Bank)
 As Agent and Lender

					
	 	 	 	 	 	 	By:	 	 /s/ Eugene S. Smith

	 	 	 	 	 	 	 	 	 Name: Eugene S. Smith
 Title: Vice
President

				
	 	 	 	 	 	 	FLEET NATIONAL BANK
	 	 	 	 	 	 	 (formerly known as Fleet Bank, N.A.),
 As
Documentation Agent and Lender

					
	 	 	 	 	 	 	By:	 	 /s/ Laura H. McAulay

	 	 	 	 	 	 	 	 	 Name: Laura H. McAulay
 Title: Senior Vice President

				
	 	 	 	 	 	 	 BROWN BROTHERS HARRIMAN & CO.
 As Lender

					
	 	 	 	 	 	 	By:	 	 /s/ Gregory S. Pachus

	 	 	 	 	 	 	 	 	 Name: Gregory S. Pachus
 Title: Vice President

				
	THIS AMENDMENT IS	 	 	 	 	 	 
	ACKNOWLEDGED AND CONSENTED TO	 	 	 	 	 	 
	 WITNESS OR ATTEST
	 	 	 	HOOPER INFORMATION SERVICES, INC.
	 	 	 	 	 	 	 As Guarantor

					
	By:	 	 /s/ Robert W. Jewett
	 	 	 	By:	 	 /s/ Fred Lash

	 	 	
	 	 	 	 	 	

	 	 	Name: Robert W. Jewett	 	 	 	 	 	Name: Fred Lash
	 	 	Title: Senior Vice President, General Counsel & Secretary	 	 	 	 	 	Title: Senior Vice President, CFO & Treasurer

  

 7<PAGE>

                                                                     Exhibit 4.2
                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES F CONVERTIBLE PREFERRED STOCK
                                       OF
                            DIAMETRICS MEDICAL, INC.
                             a Minnesota corporation

     The undersigned, being the duly elected and acting Chief Executive Officer
of Diametrics Medical, Inc., a Minnesota corporation (the "Corporation"), hereby
certifies that pursuant to the authority contained in Article 3 of the
Corporation's Amended and Restated Articles of Incorporation, as amended, and in
accordance with the provisions of Minnesota Statutes, Section 302A.401, Subd.
3(b), the Corporation's Board of Directors has adopted the following resolutions
creating a series of its Preferred Stock designated as Series F Convertible
Preferred Stock:

     WHEREAS, the Corporation's Amended and Restated Articles of Incorporation
provides for a class of shares known as Preferred Stock, issuable from time to
time in one or more series; and

     WHEREAS, the Board of Directors of the Corporation is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued shares of Preferred Stock, to fix the
number of shares constituting any such series, and to determine the designation
thereof, or any of any of them.

     NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes
and determines the designations of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, a new series of
Preferred Stock as follows:

     (a)  Designation. The series of Preferred Stock is hereby designated Series
F Convertible Preferred Stock (the "Series F Preferred Stock").

     (b)  Authorized Shares. The number of authorized shares constituting the
Series F Preferred Stock shall be 30,000 shares of such series.

     (c)  Dividends. Subject to the prior rights of holders of all classes of
stock at the time outstanding having prior rights as to dividends, the holder of
the Series F Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.

     (d)  Liquidation Preference.

          (i)    Preference upon Liquidation, Dissolution or Winding Up. In the
event of any dissolution or winding up of the Corporation, whether voluntary or
involuntary, holders of each outstanding share of Series F Preferred Stock shall
be entitled to be paid first out of the assets of the Corporation available for
distribution to shareholders, whether such assets are capital, surplus or
earnings, an amount equal to $100 (the "Series F Purchase Price") per share of
Series F Preferred Stock held (as adjusted for any stock splits, stock dividends
or

<PAGE>

recapitalizations of the Series F Preferred Stock) and any declared but unpaid
dividends on such share, before any payment shall be made to the holders of the
Common Stock, or any other stock of the Corporation ranking junior to the Series
F Preferred Stock with regard to any distribution of assets upon liquidation,
dissolution or winding up of the Corporation. The holders of the Series F
Preferred Stock shall be entitled to share ratably, in accordance with the
respective preferential amounts payable on such stock, in any distribution which
is not sufficient to pay in full the aggregate of the amounts payable thereon.
If, upon any liquidation, dissolution or winding up of the Corporation, the
assets to be distributed to the holders of the Series F Preferred Stock shall be
insufficient to permit payment to such shareholders of the full preferential
amounts aforesaid, then all of the assets of the Corporation available for
distribution to shareholders shall be distributed to the holders of Series F
Preferred Stock. Each holder of the Series F Preferred Stock shall be entitled
to receive that portion of the assets available for distribution as the number
of outstanding shares of Series F Preferred Stock held by such holder bears to
the total number of shares of Series F Preferred Stock. Such payment shall
constitute payment in full to the holders of the Series F Preferred Stock upon
the liquidation, dissolution or winding up of the Corporation. After such
payment shall have been made in full, or funds necessary for such payment shall
have been set aside by the Corporation in trust for the account of the holders
of Series F Preferred Stock, so as to be available for such payment, such
holders of Series F Preferred Stock shall be entitled to no further
participation in the distribution of the assets of the Corporation.

          (ii)   Consolidation, Merger and Other Corporate Events. A
consolidation or merger of the Corporation (except into or with a subsidiary
corporation) or a sale, lease, mortgage, pledge, exchange, transfer or other
disposition of all or substantially all of the assets of the Corporation or any
reclassification of the stock of the Corporation (other than a change in par
value or from no par to par, or from par to no par or as the result of an event
described in subsections (iv) through (vii) of paragraph (f)), shall be regarded
as a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this paragraph (d). In no event shall the issuance of new
classes of stock, whether senior, junior or on a parity with the Series F
Preferred Stock, be deemed a "reclassification" under or otherwise limited by
the terms hereof.

          (iii)  Distribution of Cash and Other Assets. In the event of a
liquidation, dissolution or winding up of the Corporation resulting in the
availability of assets other than cash for distribution to the holders of the
Series F Preferred Stock, the holders of the Series F Preferred Stock shall be
entitled to a distribution of cash and/or assets equal to the value of the
liquidation preference stated in subsection (i) of this paragraph (d), which
valuation shall be made solely by the Board of Directors, and provided that such
Board of Directors was acting in good faith, shall be conclusive.

          (iv)   Distribution to Junior Security Holders. After the payment or
distribution to the holders of the Series F Preferred Stock of the full
preferential amounts aforesaid, the holders of the Common Stock then
outstanding, or any other stock of the Corporation ranking as to assets upon
liquidation, dissolution or winding up of the Corporation junior to the Series F
Preferred Stock, shall be entitled to receive ratably all of the remaining
assets of the Corporation.

                                        2

<PAGE>

          (v)    Preference; Priority. References to a stock that is "senior"
to, on a "parity" with or "junior" to other stock as to liquidation shall refer,
respectively, to rights of priority of one series or class of stock over another
in the distribution of assets on any liquidation, dissolution or winding up of
the Corporation. The Series F Preferred Stock shall be senior to the Common
Stock of the Corporation and senior to any subsequent series of Preferred Stock
issued by the Corporation.

     (e)  Voting Rights. Except as otherwise required by law, the holder of
shares of Series F Preferred Stock shall not have the right to vote on matters
that come before the shareholders.

     (f)  Conversion Rights. The holders of Series F Preferred Stock will have
the following conversion rights:

          (i)    Right to Convert. Subject to and in compliance with the
provisions of this paragraph (g), any issued and outstanding shares of Series F
Preferred Stock may, at the option of the holder, be converted at any time or
from time to time into fully paid and nonassessable shares of Common Stock at
the conversion rate in effect at the time of conversion, determined as provided
herein; provided, that a holder of Series F Preferred Stock may at any given
time convert only up to that number of shares of Series F Preferred Stock so
that, upon conversion, the aggregate beneficial ownership of the Corporation's
Common Stock (calculated pursuant to Rule 13d-3 of the Securities Exchange Act
of 1934, as amended) of such holder and all persons affiliated with such holder
is not more than 9.99% of the Corporation's Common Stock then outstanding.

          (ii)   Mechanics of Conversion. Before any holder of Series F
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Common Stock, and shall give written notice to the Corporation at such office
that he elects to convert the same and shall state therein the number of shares
of Series F Preferred Stock being converted. Thereupon, the Corporation shall
promptly issue and deliver at such office to such holder of Series F Preferred
Stock a certificate or certificates for the number of shares of Common Stock to
which he shall be entitled. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series F Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.

          (iii)  Conversion Price. The number of shares into which one share of
Series F Preferred Stock shall be convertible shall be determined by dividing
$100 (the "Series F Purchase Price") by the then existing Conversion Price (as
set forth below), which shall be subject to adjustment from time to time in
certain instances, as provided below in this paragraph (g)(iii) (the "Conversion
Ratio"). The "Conversion Price" per share for the Series F Preferred Stock shall
be equal to 75% of the Market Price (as defined below and subject to adjustment
as described below), rounded to the nearest penny; provided, however, that in no
event shall the Conversion Price be less than $0.20 per share (subject to
adjustment as provided below) (the "Floor Price") or exceed the lower of (x)
$0.25 per share or (y) the average of the last 20 closing

                                        3

<PAGE>

prices of the Common Stock on the trading days immediately preceding the
Original Issue Date, as defined below (the "Ceiling Price"). Both the Floor
Price and Ceiling Price shall be further adjusted upon the occurrence of any
event in paragraph (f)(iv)-(x).

     For purposes of determining the Conversion Price, the "Market Price" shall
equal the volume weighted average trading price of the lowest 3 inter-day
trading prices of the Common Stock, as obtained from Bloomberg Financial
Services or another similar service, for the five consecutive trading days
immediately preceding the conversion date (which may include trading days prior
to the date the Series F Preferred Stock is first issued (the "Original Issue
Date")).

     For purposes of illustration only, if the Market Price is $0.27 and the
Ceiling Price is in excess of $0.2025 at time of conversion, the Conversion
Ratio will be $100/$0.2025 = 493.83 to 1, allowing the 30,000 shares of Series F
Preferred Stock to be converted into 14,814,900 shares of Common Stock. On the
other hand, if the Market Price is $1.00 and the Ceiling Price is in excess of
$0.25 at time of conversion, the Conversion Ratio will be $100/$0.25 = 400 to 1,
allowing the 30,000 shares of Preferred Stock to be converted into 12,000,000
shares of Common Stock. Similarly, if the Market Price is $0.05 at time of
conversion, the Conversion Ratio will be $100/$0.20 = 500 to 1, allowing the
30,000 shares of Preferred Stock to be converted into 15,000,000 shares of
Common Stock, the maximum number of shares of Common Stock into which the Series
F Preferred Stock may be converted.

          (iv)   Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time, or from time to time after the Original Issuance
Date, effect a subdivision of the outstanding Common Stock, the Conversion Price
in effect immediately prior thereto shall be proportionately decreased, and
conversely, if the Corporation shall at any time or from time to time after the
Original Issuance Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph (f)(iv) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

          (v)    Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the Original
Issuance Date, shall make or issue, or fix a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Conversion Price for the Series F Preferred Stock then in effect shall be
decreased as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date, by
multiplying the Conversion Price for such Series F Preferred Stock then in
effect by a fraction:

                      (A)  the numerator of which shall be the total number of
     shares of Common Stock issued and outstanding immediately prior to the time
     of such issuance or the close of business on such record date, and

                      (B)  the denominator of which shall be the total number of
     shares of Common Stock issued and outstanding immediately prior to the time
     of such issuance or the close of business on such record date plus the
     number of shares of Common Stock issuable in payment of such dividend or
     distribution;

                                        4

<PAGE>

provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for the Series F Preferred Stock shall be
recomputed accordingly as of the close of business on such record date and
thereafter, the Conversion Price for the Series F Preferred Stock shall be
adjusted pursuant to this paragraph (f)(v) as of the time of actual payment of
such dividends or distributions.

          (vi)   Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Original Issuance
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of such Series F
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series F Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period giving application to all adjustments called for during such period under
this paragraph (f) with respect to the rights of the holders of the Series F
Preferred Stock.

          (vii)  Adjustment for Reclassification Exchange or Substitution. If
the Common Stock issuable upon the conversion of the Series F Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of assets
provided for elsewhere in this paragraph (f)), then and in each such event the
holder of each share of Series F Preferred Stock shall have the right thereafter
to convert such share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification or
other change, by holders of the number of shares of Common Stock into which such
shares of Series F Preferred Stock might have been converted immediately prior
to such reorganization, reclassification, or change, all subject to further
adjustment as provided herein.

          (viii) Adjustment for Event of Default. Upon (A) commencement by the
Corporation of a voluntary case or proceeding under the bankruptcy laws, (B) the
Corporation's failure to discharge or stay a bankruptcy proceeding within 60
days of such action being taken against the Corporation, (C) the Corporation's
failure to file the First Registration Statement with the SEC within 30 days of
the Closing Date, other than due to a delay not caused by the Corporation or (D)
the de-listing of the Corporation's Common Stock from the OTC Bulletin Board (as
such terms are defined in that certain Subscription Agreement dated January 14,
2004 by and among the Corporation and the purchasers named therein), the
Conversion Price shall be adjusted to 65% of the Market Price, rounded to the
nearest penny.

          (ix)   Adjustment of Floor Price. If the Corporation's cash flow is at
least 20% lower than the six month forward cash flow plan provided to the
purchasers of the Series F Preferred Stock on the Closing Date, the Floor Price
will be decreased from $0.20 to $0.15.

                                        5

<PAGE>

          (x)    Reorganization, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this paragraph (f)) or a merger or
consolidation of the Corporation with or into another corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person, then, as a part of such reorganization, merger, consolidation or
sale, provision shall be made so that the holders of the Series F Preferred
Stock shall thereafter be entitled to receive upon conversion of such Series F
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation or sale. In any such case, appropriate adjustment shall be made in
the application of the provisions of this paragraph (f) with respect to the
rights of the holders of the Series F Preferred Stock after the reorganization,
merger, consolidation or sale to the end that the provisions of this paragraph
(f) (including adjustment of the Conversion Price then in effect and the number
of shares purchasable upon conversion of the Series F Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.

          (xi)   Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the number of shares of Common Stock or
other securities issuable upon conversion of the Series F Preferred Stock, the
Corporation shall compute such adjustment or readjustment in accordance herewith
and the Corporation's Chief Financial Officer shall prepare and sign a
certificate showing such adjustment or readjustment, and shall mail such
certificate by first class mail, postage prepaid, to each registered holder of
the Series F Preferred Stock at the holder's address as shown in the
Corporation's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.

          (xii)  Notices of Record Date. In the event of (A) any taking by the
Corporation of a record of the holders of any class or series of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (B) any reclassification or recapitalization
of the capital stock of the Corporation, any merger or consolidation of the
Corporation or any transfer of all or substantially all of the assets of the
Corporation to any other corporation, entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series F Preferred Stock at least 10
days prior to the record date specified therein, a notice specifying (1) the
date on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (2) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (3) the time, if any is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares,
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.

          (xiii) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of the Series F Preferred Stock. In lieu of any
fractional shares to which the

                                        6

<PAGE>

holder would otherwise be entitled, the Corporation shall pay cash equal to the
product of such fraction multiplied by the fair market value of one share of the
Corporation's Common Stock on the date of conversion, as determined in good
faith by the Board of Directors.

          (xiv)  Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series F Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series F Preferred Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series F Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.

          (xv)   Notices. Any notice required by the provisions of this
paragraph (f) to be given to the holders of shares of Series F Preferred Stock
shall be deemed given (A) if deposited in the United States mail, postage
prepaid, or (B) if given by any other reliable or generally accepted means
(including by facsimile or by a nationally recognized overnight courier
service), in each case addressed to each holder of record at his address (or
facsimile number) appearing on the books of the Corporation.

          (xvi)  Payment of Taxes. The Corporation will pay all transfer taxes
and other governmental charges that may be imposed in respect of the issue or
delivery of shares of Common Stock upon conversion of shares of Series F
Preferred Stock.

          (xvii) No Dilution or Impairment. The Corporation shall not amend its
Articles of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, without the approval of a majority of the then
outstanding Series F Preferred Stock.

     (g)  No Reissuance of Preferred Stock. Any shares of Series F Preferred
Stock acquired by the Corporation by reason of purchase, conversion or otherwise
shall be canceled, retired and eliminated from the shares of Series F Preferred
Stock that the Corporation shall be authorized to issue. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth in the Articles of
Incorporation or in any certificate of designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

     (h)  Severability. If any right, preference or limitation of the Series F
Preferred Stock set forth herein is invalid, unlawful or incapable of being
enforced by reason of any rule, law or public policy, all other rights,
preferences and limitations set forth herein that can be given effect without
the invalid, unlawful or unenforceable right, preference or limitation shall
nevertheless

                                        7

<PAGE>

remain in full force and effect, and no right, preference or limitation herein
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.

     IN WITNESS WHEREOF, Diametrics Medical, Inc. has caused this Certificate of
Designations of Series F Preferred Stock to be executed by David B. Kaysen, its
Chief Executive Officer, this 14th day of January, 2004.

                                          /s/ David B. Kaysen
                                        ----------------------------------------
                                        David B. Kaysen, Chief Executive Officer

                                        8

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