Exhibit 10.1
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT ("Agreement") is made and entered into this
26th day of July 2001 and made effective as of May 1, 2001 (the "Effective
Date"), by and among Optical Sensors Incorporated, a Delaware corporation (the
"Company"), with its principal place of business at 0000 Xxxxxx Xxxxxxxx Xxxxx,
Xxxxx X, Xxxx Xxxxxxx, Xxxxxxxxx 00000, and Circle F Ventures LLC ("Circle F").
A. The Company currently needs capital to fund its operations until
such time as it is able raise additional equity capital.
B. Circle F and/or one or more of its affiliates has advanced cash
funds to the Company and may, in its sole discretion, advance additional funds
to the Company on the terms and conditions set forth in this Agreement.
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan Amount.
(a) Maximum Amount. On the terms and subject to the conditions
hereof, Circle F and/or one or more of its Affiliates (as such
term if defined in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) may advance, from time to time
in one or more installments, up to an aggregate of $1,500,000
to the Company. The parties acknowledge that Circle F or its
Affiliates have advanced an aggregate of $669,000 from the
Effective Date through and including the date hereof, which
such advances shall be subject to this Agreement. The party
making such an advance (an "Advance") is hereinafter referred
to as the "Investor." Advances may be made by an Investor at
such dates and in such amounts as the Company and the Investor
may agree.
(b) No Minimum Commitment. Notwithstanding any other provision in
this Agreement to the contrary, neither Circle F nor its
Affiliates shall have any obligation to make any minimum
number or amount of Advances to the Company.
2. Issue of Convertible Promissory Note. Upon the execution of this
Agreement, the Company agrees to issue, upon the receipt of an Advance,
a convertible promissory note made payable to the order of Circle F in
the form attached hereto as Exhibit A in the maximum principal amount
of $1,500,000. The Note shall not bear interest and shall be due and
payable in installments, with each installment becoming due one (1)
year from the date of each Advance (the "Maturity Date") unless
converted into shares of Common Stock of the Company prior to the
applicable Maturity Date, and each installment payment being equal to
the amount of the applicable Advance. After the thirtieth day
after a Note is issued, the Company shall have the right to prepay the
Note, in whole or in part, at any time or from time to time, on ten
(10) days' prior written notice to the applicable Investor, without
premium or penalty pursuant to Section 1 of the Note.
3. Conversion. The Investor shall have the right to convert all or any
portion of principal balance under the Note, at the option of the
Investor, into shares of Common Stock of the Company at any time after
the date hereof, and from time to time after the date hereof. The
conversion price of the Note shall be equal to $.25 per share;
provided, however, that the conversion price for the portion of the
principal amount of the Note, if any, representing Advances made after
the date hereof and during thirty (30) day period preceding the date on
which the Company completes a private placement of equity securities (a
"Financing") shall be equal to the per share price of the securities
sold in such Financing. Any principal payments made by the Company on
the Note shall be applied against the Advances in the order in which
the Advances were made. The shares of Common Stock issuable upon
conversion of the Note are referred to as the "Conversion Securities."
4. Representations and Warranties of the Company. The Company represents
and warrants to Circle F as follows:
(a) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and
authority to own, lease or operate its properties and to carry
on its business as it is now being conducted and as it is
proposed to be conducted. The Company has no subsidiaries or
direct or indirect ownership in any firm, corporation or
business which either, individually or in the aggregate, is
material to the business of the Company. The Company is
qualified to do business and is in good standing as a foreign
corporation in every jurisdiction in which its ownership of
property or conduct of business requires it so to be qualified
and in which the failure to so qualify would have a material
adverse effect on the financial condition or business of the
Company.
(b) Authorization. The Company has the corporate power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder and thereunder, including the
issuance of the Notes and the Conversion Securities. This
Agreement has been duly authorized by all necessary corporate
action on behalf of the Company, has been duly executed and
delivered by authorized officers of the Company, is valid and
binding agreement on the part of the Company and is
enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors rights
generally and to judicial limitations on the enforcement of
the remedy of specific performance and other equitable
remedies. The Notes, when issued pursuant to this Agreement,
will be duly authorized and represent valid and binding
agreements on the part of the Company enforceable against it
in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws
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affecting the enforcement of creditors rights generally and to
judicial limitations on the enforcement of the remedy of
specific performance and other equitable remedies. All
corporate actions necessary for reservation and issuance of
the Conversion Securities has been taken. The Conversion
Securities when issued pursuant to conversion of the Notes
will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of any and all liens, charges,
claims, encumbrances and preemptive rights.
(c) No Violation. Neither the execution and delivery of this
Agreement or any Notes by the Company, nor the performance by
the Company of its obligations hereunder or thereunder, nor
the consummation of the transactions contemplated hereby or
thereby will: (a) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-Laws of
the Company; (b) result in a default (or give rise to any
right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, lease,
mortgage, license, agreement or other instrument or obligation
to which the Company is a party or by which any of its assets
may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which, in
the aggregate, would not result in a material adverse effect
on the Company; (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company
or any of its assets, except for violations which would not
result in a material adverse effect on the Company; or (d)
result in the creation or imposition of any liens, charges or
encumbrances upon any assets of the Company.
(d) SEC Reports. The Company has filed all reports, registration
statements and other filings with the Securities and Exchange
Commission (the "Commission") required to be filed by it
pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act. All such reports,
registration statements and other filings (including all
notes, exhibits and schedules thereto, all documents
incorporated by reference therein, and any amendments thereto)
are collectively referred to herein as the "SEC Reports." As
of their respective dates of filing with the Commission, the
SEC Reports complied in all material respects with all of the
rules and regulations of the Commission and did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(e) Financial Statements. The financial statements of the Company
included in the SEC Reports (the "Financial Statements") have
been prepared in accordance with United States generally
accepted accounting principles consistently applied and fairly
present the financial position of the Company at the dates
thereof and the results of the Company's operations and cash
flows for the periods then ended (subject, in the case of
unaudited statements, to normal adjustments and the omission
of footnotes). The Company has no material liabilities, known
or unknown, absolute, contingent or otherwise, except for (i)
liabilities that are set forth in the Financial Statements,
the notes thereto or the SEC Reports and (ii)
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liabilities that have been incurred in the ordinary course of
business since the date of the most recent Financial
Statements.
(f) No Material Adverse Change. There have not been any changes in
the assets, properties, liabilities, financial condition,
business or operations of the Company from that reflected in
the Financial Statements except for (i) changes in the
ordinary course of business which have not been, either
individually or in the aggregate, materially adverse and (ii)
the Company's continued operating losses, negative cash flow
and negative stockholders' equity.
(g) Authorized Capital Stock. The authorized capital stock of the
Company is as set forth in the SEC Reports. The issued and
outstanding shares of capital stock of the Company have been
duly authorized, validly issued and are fully paid and
nonassessable. As of the date hereof, the Company has
outstanding options and warrants to purchase 1,824,084 shares
of Common Stock, convertible promissory notes in the aggregate
principal amount of One Million Six Hundred Fifty Thousand
Dollars ($1,650,000) (exclusive of Advances made prior to the
date hereof) and warrants to purchase an aggregate of
1,050,000 shares of Common Stock that are issuable upon
conversion of the foregoing convertible promissory notes.
Except as set forth in the preceding sentence, there are no
other outstanding warrants, options or other rights to acquire
any shares of capital stock of the Company, except for the
shares issued upon conversion of the Note and as disclosed in
the SEC Reports. All of the above securities of the Company
were issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe
for or purchase securities. Except for Instrumentation
Laboratory Company ("IL"), no holder of any security of the
Company is entitled -- to any preemptive or similar rights to
purchase any securities of the Company.
(h) Intellectual Property. The Company owns or possesses adequate
rights to use all patents, patent rights, inventions,
trademarks, trade names, copyrights, licenses, domain names,
governmental authorizations, trade secrets and know-how that
are used or necessary for the conduct of its business; the
Company has not received any notice of, and has no knowledge
of, any infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions,
trademarks, trade names, copyrights, licenses, governmental
authorizations, trade secret or know-how that, individually or
in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), earnings, operations or
business of the Company and its subsidiaries considered as a
whole.
(i) Securities Laws. Subject to the accuracy of the
representations of Circle F in Section 5, no consent,
authorization, approval, permit or order of or filing with any
governmental or regulatory authority is required under current
laws and regulations in connection with the execution and
delivery of this Agreement or the offer, issuance, sale or
delivery to the Investors of the Notes or the Conversion
Securities other than the filing with the Commission of a Form
D pursuant to
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Regulation D under the Securities Act, and the qualification
thereof, if required, under applicable state securities laws,
which qualification has been or will be effected as a
condition of the sale of the Shares and the issuance of the
Conversion Securities. Under the circumstances contemplated by
this Agreement, the offer, issuance, sale and delivery of the
Note will not, under current laws and regulations, require
compliance with the prospectus delivery or registration
requirements of the Securities Act.
(j) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Company's
knowledge, threatened against the Company or any of its
properties before or by any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable likelihood (in the judgment of the Company) of an
adverse decision that (a) would have a material adverse effect
on the Company's properties or assets or the business of the
Company as presently conducted or proposed to be conducted or
(b) would impair the ability of the Company to perform in any
material respect its obligations under this Agreement. The
Company is not in default with respect to any judgment, order
or decree of any court or governmental agency or
instrumentality which, individually or in the aggregate, would
have a material adverse effect on the assets, properties or
business of the Company.
(k) Properties. The Company has good and marketable title to all
the properties and assets reflected as owned in the Financial
Statements, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in
such Financial Statements, or (ii) those which are not
material in amount and do not adversely affect the use made
and promised to be made of such property by the Company. The
Company holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant
in relation to the business of the Company. The Company owns
or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted.
(l) Brokers or Finders. To the knowledge of the Company, no
person, firm or corporation has or will have, as a result of
any act or omission of the Company, any right, interest or
valid claim against the Investor for any commission, fee or
other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement. The Company
shall indemnify and hold the Investor harmless for any claims
made for any commission, fee or other compensation concerning
the transactions contemplated by this Agreement.
5. Representations and Warranties of the Investor. Circle F represents and
warrants to the Company as follows:
(a) Any Notes will purchased for investment for Circle F's own
account and not with the view to, or for resale in connection
with, any distribution or public offering thereof. Circle F
understands that neither the Note nor the Conversion
Securities have been registered under the Securities Act or
any state securities laws by
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reason of their contemplated issuance in transactions exempt
from the registration requirements of the Securities Act and
applicable state securities laws and that the reliance of the
Company and others upon these exemptions is predicated in part
upon this representation by Circle F. Circle F further
understands that the Notes and the Conversion Securities may
not be transferred or resold without registration under the
Securities Act and any applicable state securities laws, or
pursuant to an exemption from the requirements of the
Securities Act and applicable state securities laws.
(b) Circle F's principal place of business is located at the
address set forth on the signature page hereto. Circle F
qualifies as an "accredited investor," as defined in Rule 501
of Regulation D under the Securities Act. Circle F
acknowledges that the Company has made available to Circle F
at a reasonable time prior to the execution of this Agreement
the opportunity to ask questions and receive answers
concerning the business, operations and financial condition of
the Company and the terms and conditions of the sale of
securities contemplated by this Agreement and to obtain any
additional information requested by such Investor. Circle F is
able to bear the loss of its entire investment in the Shares
and the Conversion Securities and has such knowledge and
experience of financial and business matters that he is
capable of evaluating the merits and risks of the investment
to be made pursuant to this Agreement. However, neither the
foregoing nor any other due diligence investigation conducted
by Circle F or on its behalf shall limit, modify or affect the
representations and warranties of the Company set forth in
Section 4 of this Agreement or the right of Circle F to rely
thereon.
(c) This Agreement has been duly authorized by all necessary
action on the part of Circle F, has been duly executed and
delivered by Circle F and is a valid and binding agreement of
Circle F.
(d) Circle F will not permit any of its Affiliates to become an
Investor pursuant to this Agreement unless and until such
Affiliate agrees to be bound by the terms of this Agreement,
including without limitation the representations and
warranties contained in this Section 5, which such
representations and warranties shall be true and accurate with
respect to such Affiliate at the time such Affilate makes an
Advance hereunder.
6. Registration Rights. The Company shall register the Conversion
Securities with Securities and Exchange Commission on any registration
statement filed by the Company pursuant to Section 7 of the Securities
Purchase Agreement, dated as of August 11, 2000, between the Company
and the Investor.
7. Miscellaneous.
(a) The Company will file with the Commission, on a timely basis,
all SEC Reports required to be filed under the Exchange Act
and any other documents required to meet the public
information requirements of Rule 144(c) under the Securities
Act.
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(b) This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by the
Company without the prior written consent of the Investor.
This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by the
Investor without the prior written consent of the Company,
except that the Investor may assign its rights under this
Agreement to any affiliate without the prior written consent
of the Company. This Agreement shall inure to the benefit of
and be binding upon and be enforceable by the successors and
permitted assigns of the parties hereto. Neither this
Agreement nor any provision hereof may be amended, modified,
waived or discharged without the written consent of the
parties hereto.
(c) This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to
the subject matter hereof and supersedes any and all other
agreements and understanding, whether written or oral,
relative to the matters discussed herein.
(d) All representations and warranties contained herein shall
survive after the execution and delivery of this Agreement for
a period of two (2) years from the Effective Date. All
covenants and agreements which by their terms are to be
performed after the Effective Date will survive indefinitely,
unless such covenants and agreements by their terms expire at
an earlier date, in which case they will expire on such
earlier date.
(e) All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall
be given in writing by personal delivery, facsimile,
commercial air delivery service or by registered or certified
mail, postage prepaid, return receipt requested, addressed to
the Company at the address set forth in the introductory
paragraph to this Agreement and to the Investor at the
addresses set forth on the signature page hereto, or at such
other address as the respective parties may designate by like
notice from time to time. Notices so given shall be effective
upon the earlier of: (a) receipt by the party to which notice
is given (which, in the instance of a facsimile, shall be
deemed to have occurred at the time that the machine
transmitting the facsimile verifies a successful transmission
of the facsimile); (b) on the fifth business day following the
date such notice was deposited in the mail; or (c) on the
second business day following the date such notice was
delivered to a commercial air delivery service.
(f) This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.
(g) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This
Agreement may be executed by facsimile.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Company and the Investor have executed this
Agreement effective as of the date first written above.
OPTICAL SENSORS INCORPORATED
By
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Xxxxxxx XxXxxxxx,
President and Chief Executive Officer
CIRCLE F VENTURES LLC
By
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Its
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Address:
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
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