PARTICIPATION AGREEMENT
July __, 1998
Banca della Svizzera Italiana
xxx Xxxx, 00
0000 Xxxxxx
Xxxxxxxxxxx
Attn: X. Xx Xxxxxxx
Re: Diametrics Medical, Inc. Note or Notes
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Ladies and Gentlemen:
We refer to the Note Purchase Agreement to be executed at the Closing
pursuant to the Common Stock Purchase Agreement dated June 30, 1998 between
Diametrics Medical, Inc. (the "BORROWER") and certain signatories thereto
identified as "Purchasers" (including us), a copy of which has been furnished
to you. That Note Purchase Agreement, as it may hereafter be amended or
otherwise modified from time to time, is sometimes referred to in this
participation agreement (the "PARTICIPATION AGREEMENT") as the "NPA" and the
terms defined in the NPA and not otherwise defined in this Participation
Agreement have the same meaning when used herein.
Pursuant to the NPA, we intend to purchase a Note or Notes from the
Borrower in an aggregate amount of US$6,700,000 (the "AGGREGATE NOTE
AMOUNT"). We hereby confirm that we will sell and transfer to you under this
Participation Agreement and you agree to buy and receive from us, an
undivided interest and participation (your "PARTICIPATION") in the total
amount of UNITED STATES DOLLARS ONE HUNDRED FIFTY NINE THOUSAND ONE HUNDRED
SEVENTY ONE AND 60/100THS (US$159,171.60) (the "PARTICIPATION AMOUNT") in our
Note or Notes, on the following terms and conditions:
1. PURCHASE OF PARTICIPATION. (a) At the Closing, you will pay to us,
at our account #00000-00000 at Bank of America, San Francisco, California
(ABA#121-000-358), as the purchase price for your Participation in our Note
or Notes, an amount equal to the Participation Amount in United States
dollars and in same day available funds. We will, promptly upon our receipt
of this purchase price from you, send you a participation certificate at your
address below, in substantially the form of Exhibit A, confirming and
evidencing your Participation.
(b) For purposes of this Participation Agreement, "PURCHASED INTEREST"
means the pro rata fractional interest, expressed as a percentage, of: (i)
the actual amount paid by you to us under Section 1(a) above as the purchase
price for your Participation, divided by (ii) the Aggregate Note Amount.
(c) If, for any reason other than a failure to close under the NPA, you
fail to make timely payment to us of your Participation Amount, in addition
to other rights and remedies which we may have, we shall be entitled to
collect interest from you on the unpaid portion of your Participation Amount
for the period from the date when payment was due until payment is made at
the overnight rate for Federal funds transactions between member banks of the
Federal Reserve System, as published by the Federal Reserve Bank of New York
(the "FEDERAL FUNDS RATE"), for each day during that period.
(d) The rights of a Holder pursuant to the NPA and our Note or Notes
include the right to convert all or part of the Aggregate Note Amount into
Conversion Shares of the Borrower. If you give us irrevocable written notice
of your desire to convert all or part of your Participation into Conversion
Shares, we will promptly exercise our conversion rights in accordance with
the NPA with respect to your Purchased Interest in the Aggregate Note Amount
and cause the corresponding Conversion Shares or other securities to be
transferred to your name and delivered to you. Any costs or expenses
incidental thereto shall be reimbursed to us as set forth in Section 7 below.
2. PAYMENTS. (a) Whenever we receive a payment of principal,
interest, fees or other payment, or whenever we make an application of funds,
in connection with our Note or Notes (including, without limitation, any
payment or application from any property or deposit held or taken by us in
connection with our Note or Notes, whether as collateral or otherwise), we
will promptly pay over to you, in United States dollars (or, if another
currency was received or applied by us, in such other currency) and in the
kind of funds so received or applied by us, an amount equal to your Purchased
Interest of such payment or application.
(b) All computations of interest, fees, and other costs shall be made
as set forth in the NPA. Any determination made by us as to the allocation
of payments received or amounts applied to your Participation in our Note or
Notes shall be conclusive and binding for all purposes, absent manifest error.
(c) If, for any reason, we make any payment to you before we have
received the corresponding payment or made the corresponding application (it
being understood that we are under no obligation to do so), and we do not
receive the corresponding payment or make the corresponding application
within three business days of our payment to you, you will, at our request,
promptly return that payment to us (together with interest on that payment at
the Federal Funds Rate for each day from the making of that payment to you
until its return to us).
(d) If, after we have paid to you your Purchased Interest of any such
payment received by us or any such application made by us, such payment or
application is rescinded or must otherwise be returned or must be paid over
by us to any other person or entity, whether pursuant to any bankruptcy or
insolvency law or otherwise, you will, at
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our request, promptly pay back to us your Purchased Interest of the payment
or application so returned or paid over, together with your Purchased
Interest of any interest or other amount required to be paid by us with
respect to such payment or application.
3. RESPONSIBILITIES OF SELLER. We will administer our Note or Notes
with the same degree of care as is customary generally for the administration
of corporate loans in the San Francisco financial market, provided that, we
will not be liable for any error of judgment, or for any action taken or
omitted to be taken by us, except for our own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, we: (a)
may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by us and shall not
be liable for any action taken or omitted to be taken in good faith by us in
accordance with the advice of such counsel, accountants or experts; (b) make
no warranty or representation and shall not be responsible for any
statements, warranties or representations (whether written or oral) made in
or in connection with the NPA or any document relating thereto or for the
financial condition of the Borrower or for the value of any collateral; (c)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of the NPA or any
document relating thereto on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (d) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness sufficiency or value of the NPA, our Note or Notes, or any
document relating thereto or any collateral therefor; and (e) shall incur no
liability under, or in respect of, the NPA, our Note or Notes, the Conversion
Shares or any document or collateral related to the foregoing by acting upon
any notice, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by us to be genuine and signed
or sent by the proper party or parties.
4. AGREEMENTS OF PURCHASER. You acknowledge that you have,
independently and without reliance upon us, and based on your review of the
NPA and such other financial statements, documents, and information as you
have deemed appropriate, made your own credit analysis and decision to enter
into this Participation Agreement. You also acknowledge that you will,
independently and without reliance upon us, and based on such financial
statements, documents, and information as you shall deem appropriate at the
time, continue to make your own credit decisions in taking or not taking
action under this Participation Agreement. You acknowledge that we have
advised you that your interest in these transactions and your rights under
the NPA and its related documents may not be the same from your Participation
as they would be if you had executed such documents as a party. You
acknowledge that we may, in our sole discretion, assign or sell other
participations with respect to our Note or Notes. You agree to accept any
Conversion Shares or securities issued in lieu thereof subject to the terms
and restrictions set forth in the NPA and such other restrictions as may
apply to us with respect to our Conversion Shares.
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5. AGREEMENTS OF SELLER. (a) As of the date of your purchase of a
Participation in our Note or Notes hereunder and before giving effect
thereto, (i) we will be the legal owner of such Note or Notes and the
beneficial owner of such Note or Notes, free and clear of any adverse claim
(other than your and any other participations), and (ii) we will not have
actual knowledge of the existence of any Event of Default (as defined in the
NPA).
(b) We have furnished you with copies of the NPA and the other
documents delivered to us in connection with the NPA and requested by you.
Upon your request, we will furnish to you copies of the publicly-available
financial statements and other publicly-available documents, and (subject to
any duty of confidentiality to which we are subject) such other documents as
we shall receive pursuant to the NPA, but we assume no responsibility with
respect to the authenticity, validity, accuracy or completeness thereof. You
agree to maintain the confidentiality of any confidential information
included in this documentation.
(c) We will give you prompt notice of the occurrence of any Event of
Default under the NPA of which we shall have actual knowledge, but no failure
to give you any such notice shall result in any liability on our part to you.
6. ADMINISTRATION BY SELLER. (a) We will carry out our administrative
duties to you under this Participation Agreement in accordance with the terms
of this Participation Agreement and as otherwise required by applicable law.
(b) We shall not, without your prior written consent, agree to the
amendment, modification, or waiver of any of the terms of the NPA, our Note
or Notes, or any agreement or document relating thereto or any collateral
therefor, consent to any action or failure to act by the Borrower or any
other party, or exercise any rights we may have in respect thereof, if, in
any case, such amendment, modification, waiver, consent or exercise would:
(i) increase the amount of the Aggregate Note Amount, (ii) reduce the
principal amount of or rate of interest on our Note or Notes or any fee or
other charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iii) postpone any date
fixed for any payment of principal of or interest on our Note or Notes or any
fee or charge of which you are entitled to receive a share under this
Participation Agreement and payable under the NPA, (iv) release any
collateral, except as otherwise contemplated in any document relating thereto
or (v) amend the conversion rights set forth in the NPA or our Note or Notes.
If we shall request your written consent to any of the actions described in
this paragraph (b), and shall not receive your consent or a denial thereof in
writing within 10 days of the making of such request, you shall be deemed to
have given your consent.
(c) Except as otherwise expressly provided in this Section 6, we
reserve the right, in our sole discretion, in each instance, without prior
notice to you, to agree to the
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amendment, modification or waiver of any of the terms of the NPA, our Notes
or Notes, or any agreement or document relating thereto, to consent to any
action or failure to act by the Borrower or any other party, and to exercise
or refrain from exercising any powers or rights which we may have under or in
respect of the NPA, our Note or Notes, or any agreement or document relating
thereto or any collateral therefor, including, without limitation, the right
to enforce the obligations of the Borrower or any other party.
7. REIMBURSEMENT OF EXPENSES. You will on demand reimburse us to the
extent of your Purchased Interest for any and all reasonable costs, expenses
and disbursements (including, without limitation, reasonable attorneys' fees)
which may be incurred or made by us in connection with our Note or Notes, and
any action which may be taken by us to collect or enforce any obligation of
the Borrower or any other party in respect of our Note or Notes or the NPA,
for which we are not reimbursed at any time by or on behalf of the Borrower.
We shall be entitled to deduct from any payments to be made to you under this
Participation Agreement, and to retain, your Purchased Interest of, any and
all reasonable costs, expenses and disbursements which may be incurred or
made by us in connection with the enforcement of any obligation of the
Borrower or any other person in respect of our Note or Notes or the NPA.
8. SHARING OF PAYMENTS. If you shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of our Note or Notes which is in excess of your
Purchased Interest in payments on account of our Note or Notes obtained by
us, you shall forthwith purchase from us such additional Participation in our
Note or Notes as shall be necessary to cause you to share such excess payment
ratably with us, PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from you, such purchase from us shall be
rescinded and we shall repay to you the purchase price to the extent of such
recovery (together with interest on that amount at the Federal Funds Rate for
each day from the date of payment of such purchase price to us until the
return of such purchase price to you).
9. PROPERTY OR COLLATERAL. With respect to any and all property or
collateral taken by us, you shall have no interest in that property or
collateral, except that if that property or collateral, or the proceeds
thereof, shall be applied in reduction of amounts outstanding in connection
with our Note or Notes, then you shall be entitled to your Purchased Interest
therein (determined in accordance with Section 2).
10. TAXES. (a) With respect to any payment made to or by you
hereunder, you agree to pay (or, alternatively, to permit us to pay on your
behalf) any present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on net income and all income and franchise taxes of the United States
and any political subdivisions thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES").
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(b) In addition, you agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder or from the execution,
delivery, registration, or otherwise with respect to this Participation
Agreement or the transfer to you of your Conversion Shares or securities
issued in lieu thereof (hereinafter referred to as "OTHER TAXES").
(c) You will indemnify us for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 10) paid by us and any
liability (including penalties, interest or expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from
the date we make written demand therefor.
(d) You agree to provide to us, from time to time, completed and signed
copies of any forms that may be required by the United States Internal
Revenue Service in order to certify your exemption from United States
withholding taxes with respect to payments to be made to you under this
Participation Agreement.
11. SILENT PARTICIPATION; SUBPARTICIPATIONS. (a) You shall not,
without our prior written consent, notify or contact the Borrower with
respect to any Participation. Notwithstanding the foregoing, you shall have
the right to disclose this Participation, and the name of the Borrower with
respect thereto, in any filing, prospectus or other document made available
publicly or to your customers or otherwise as required by law.
(b) You shall not subparticipate, assign, or transfer your
Participation in our Note or Notes without our prior written consent, except
as provided in this Section 11. You may, upon prior written notice to us,
but without our consent, subparticipate all or any part of your Participation
in our Note or Notes, or for the benefit of, any of your subsidiaries or
affiliates, provided that: (i) your obligations under this Participation
Agreement shall remain unchanged and you shall remain solely responsible for
the performance of your obligations under this Participation Agreement, and
(ii) we shall continue to deal solely and directly with you in connection
with your rights and obligations under this Participation Agreement.
12. TERMINATION. This Participation Agreement is a continuing
agreement and shall remain in full force and effect until the indefeasible
payment in full of all amounts owing under our Note or Notes.
13. NOTICES AND PAYMENTS. All notices and other communications
provided for under this Participation Agreement shall be in writing
(including telecopier, telegram, cable or telex communications), unless
otherwise specified, and shall be sent to you at the
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address set forth above or to us at the address set forth below (or such
other address as you or we may designate in writing).
14. GOVERNING LAW. This Participation Agreement shall be governed by
and construed in accordance with the laws of the State of California.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
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Please confirm your agreement with the foregoing by executing the
enclosed copy hereof and returning the same to us by July 31, 1998.
Very truly yours,
BCC ACQUISITION II LLC
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name:
Title:
Address:
Agreed and Accepted:
July 30 1998
-------------------- --
BANCA DELLA SVIZZERA ITALIANA
By: /s/ X. Xxxxxxxxx /s/ X. Xx Xxxxxxx
-------------------------------- --------------------------------
Name: X. Xxxxxxxxx X. Xx Xxxxxxx
Title: Vice President First Vice-President
S-1
EXHIBIT A
PARTICIPATION CERTIFICATE
[Date of Participation]
Banca della Svizzera Italiana
xxx Xxxx, 00
0000 Xxxxxx
Xxxxxxxxxxx
Re: Diametrics Medical, Inc. Note or Notes
----------------------------------------
Ladies and Gentlemen:
We hereby confirm that we have sold and transferred to you for your
account and risk, upon the terms and conditions of our Participation
Agreement with you, dated July__, 1998, an undivided interest and
participation (your "Participation") to the extent of _______% (your
"Purchased Interest") in and to our aggregate loan of US$6,700,000
("Aggregate Note Amount") made by us on August __, 1998, to Diametrics
Medical, Inc. (the "Borrower") pursuant to the Note Purchase Agreement, dated
as of August __, 1998, between the Borrower and the undersigned.
We acknowledge receipt from you of the sum of US$159,171.60 in payment
of your Participation in such Aggregate Note Amount.
Very truly yours,
BCC ACQUISITION II LLC
By
------------------------------------
Name:
Title:
