EXHIBIT 10.16
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT ("Agreement") is made and entered into effective
as of March 10, 2000, 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 the investors listed
on Schedule I hereto (collectively, the "Investors").
A. The Company desires to raise up to $3,000,000 of additional capital in
order to fund its operations.
B. The Investors desire to make an investment in 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. Purchase of Convertible Promissory Notes. Upon the terms and subject to the
conditions set forth in this Agreement, the Company agrees to issue to each
Investor, and each Investor agrees to purchase from the Company, a
convertible promissory note in the form attached hereto as Exhibit A in the
maximum principal amount set forth opposite such Investor's name on
Schedule I (the "Notes"). The maximum aggregate principal amount of all of
the Notes to be issued hereunder shall be Three Million Dollars
($3,000,000). The Notes shall not bear interest and shall be due and
payable in full one (1) year from the date of issuance (the "Maturity
Date") unless converted into Units pursuant to Section 3 prior to the
Maturity Date; provided, however, if the Notes are not paid in full or
converted into Units on or before the Maturity Date, any remaining unpaid
principal balance shall bear interest at the rate of ten percent (10%) per
year from the Maturity Date until paid in full. The Company shall have the
right to prepay the Notes, in whole or in part, at any time or from time to
time, on ten (10) days' prior written notice to the Investors, without
premium or penalty pursuant to Section 1 of the Note. All partial payments
of the Notes shall be made among the Investors on a pro rata basis. For
purposes of this Agreement, "pro rata" shall mean with respect to any
Investor the portion that the maximum principal balance of such Investor's
Note bears to the aggregate maximum principal balance of all of the Notes.
2. Advances Under Notes.
(a) Initial Advances. Upon execution of this Agreement, each Investor
shall advance to the Company in immediately available funds, its pro
rata share of One Million Four Hundred Thousand Dollars ($1,400,000).
(b) Additional Advances. At any time during the Advance Period (as defined
below), the Company shall have the right to request up to two
additional advances under the Notes in the amounts of Six Hundred
Thousand Dollars ($600,000) and One
Million Dollars ($1,000,000) each, pursuant to this Section 2(b). The
"Advance Period" shall mean the sixty (60) day period beginning on the
first day after both of the following have occurred: (i) the Company
executes a definitive distribution agreement (the "Distribution
Agreement") for the Company's CapnoProbe product with a major medical
company on terms no less favorable to the Company than those set forth
in the letter of intent, dated January 4, 2000, between the Company
and Xxxxxx Healthcare Corporation ("Xxxxxx"), and (ii) the
shareholders of the Company have approved the conversion of any
additional advances to be made under the Notes pursuant to this
Section 2(b) into Units at the Company's 2000 Annual Meeting of
Shareholders; provided, however, that in any case the Advance Period
will expire on June 15, 2000, after which date the Company will not
have any right to request any advance hereunder. Within five (5) days
of a written request by the Company, each Investor shall advance to
the Company its pro rata share of an aggregate of Six Hundred Thousand
Dollars ($600,000). Within five (5) days of a written request by the
Company, each Investor shall have the option to advance to the Company
its pro rata share of an aggregate of an additional One Million
Dollars ($1,000,000); provided, however, that the Investors will be
required to make such advance if the Company notifies the Investors
that the Company needs such funds as part of a plan to maintain its
listing on the Nasdaq National Market or to assist in avoiding a going
concern qualification with respect to its audited financial statements
for the year ended December 31, 1999. If any Investor fails to advance
its pro rata share of any advance request, the other Investors shall
have the right, but not the obligation, to advance such amount to the
Company.
3. Conversion.
(a) Terms of Conversion. The Notes are convertible into units ("Units"),
each unit consisting of 50,000 shares of the Company's common stock,
$.01 par value (the "Common Stock"), and a warrant to purchase 12,500
shares of Common Stock, at a conversion price equal to Fifty Thousand
Dollars ($50,000) per Unit in accordance with this Section 3, subject
to adjustment of the conversion price as set forth in the Notes. The
warrant shall be in substantially the form attached hereto as Exhibit
B ("Warrant"), have an initial exercise price equal to $1.00 per share
and shall be exercisable for a period of five years from the date of
issuance.
(b) Optional Conversion. Each Investor shall have the right to convert all
or any portion of the principal balance under its Note, at the option
of the Investor holding such Note, into Units at any time.
(c) Automatic Conversion. An aggregate of One Million Four Hundred
Thousand Dollars ($1,400,000) of the principal balance of the Notes
will automatically convert into Units, without any action of the
Investors, thirty (30) days after written notice from the Company to
the Investors that the Distribution Agreement has been executed by the
Company and a major medical company. The principal balance under the
Notes related to the $600,000 advance will automatically convert into
Units, without any action of the Investors, thirty (30) days after the
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date of such $600,000 advance, and the principal balance under the
Notes related to the $1,000,000 advance will automatically convert
into Units, without any action of the Investors, thirty (30) days
after the date of such $1,000,000 advance. Any conversion under this
Section 3(c) shall be made on a pro rata basis among all holders of
Notes.
4. Representations and Warranties of the Company. The Company represents and
warrants to the Investors 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, the Notes and the Warrants and to
perform its obligations hereunder and thereunder, including the
issuance of the Notes, the Warrants, the Conversion Securities (as
defined below) and the Warrant Securities (as defined below). This
Agreement, the Notes and the Warrants have been duly authorized by all
necessary corporate action on behalf of the Company, have been duly
executed and delivered by authorized officers of the Company, are
valid and binding agreements on the part of the Company and are
enforceable against the Company in accordance with their respective
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. All corporate actions
necessary for reservation and issuance of the shares of Common Stock
issuable upon conversion of the Notes ("Conversion Securities") and
the Common Stock issuable upon exercise of the Warrants ("Warrant
Securities") has been taken, except for shareholder approval
contemplated by Section 3(c). The Conversion Securities and the
Warrant Securities, when issued pursuant to the terms of the Notes and
the Warrants, respectively, including the payment of any consideration
required thereunder, 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,
the Notes or the Warrants by the Company, nor the performance by the
Company of its obligations hereunder or thereunder, nor the
consummation of the transactions
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contemplated hereby or thereby will: (a) conflict with or result in
any breach of any provision of the Articles 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
Securities Exchange Act of 1934, as amended (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, (ii) liabilities that have been incurred in the
ordinary course of business since September 30, 1999 and (iii)
potential liability to Instrumentation Laboratory Company ("IL") in
connection with the termination of the Private Label Reseller
Agreement, dated as of January 7, 1998, between the Company and IL.
(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, (ii) the Company's continued operating losses and
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negative cash flow, (iii) an anticipated write-down of inventory of
approximately $400,000; and (iv) potential liability to IL in
connection with the termination of the Private Label Reseller
Agreement, dated as of January 7, 1998, between the Company and IL.
(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 1,263,628
shares of Common Stock, and there are no other outstanding warrants,
options or other rights to acquire any shares of capital stock of the
Company, except 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 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; neither the Company nor any of its
subsidiaries has received any notice of, or has any 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 the
Investors 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, the Warrants, the
Conversion Securities or the Warrant Securities other than (i) the
filing with the Commission of a Form D pursuant to 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 Notes and the Warrants
and the issuance of the Conversion Securities and the Warrant
Securities, and (ii) the filing of a registration statement or
statements pursuant to Section 7. Under the circumstances contemplated
by this Agreement, the offer, issuance, sale and delivery of the Notes
and the Warrants will not, under current laws and regulations, require
compliance with the prospectus delivery or registration requirements
of the Securities Act.
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(j) Litigation. Except for the pending arbitration proceeding with IL and
an informal investigation by the Commission regarding recent trading
in the Company's Common Stock, 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 any 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 each 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 Investors. Each Investor represents
and warrants to the Company as follows:
(a) The Notes are being purchased for investment for such Investor's own
account and not with the view to, or for resale in connection with,
any distribution or public offering thereof. Each Investor understands
that neither the Note, the Warrant, the Conversion Securities nor the
Warrant Securities have been registered under the Securities Act or
any state securities laws by 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 the Investor. Each Investor
further understands that its Note, the Warrant, the Conversion
Securities and the Warrant Securities may not be
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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) Each Investor's principal place of business is located at the address
set forth on Schedule I. Each Investor qualifies as an "accredited
investor," as defined in Rule 501 of Regulation D under the Securities
Act. Each Investor acknowledges that the Company has made available to
such Investor 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. Each Investor is able to bear
the loss of its entire investment in the Note, the Conversion
Securities and the Warrant 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 such Investor 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
such Investor to rely thereon.
(c) This Agreement has been duly authorized by all necessary action on the
part of each Investor, has been duly executed and delivered by such
Investor and is a valid and binding agreement of such Investor.
6. Use of Proceeds. The Company will use the proceeds from the sale of the
Notes for general corporate purposes, including obtaining regulatory
clearance for the Company's CapnoProbe monitor and disposable probe.
7. Registration Rights.
(a) Filing of Registration Statement. Within thirty (30) days of the
issuance of the Notes, the Company will file a registration statement
with the Commission under the Securities Act covering the Conversion
Securities and the Warrant Securities subject to Warrants issuable
upon conversion of the principal balance of the Notes outstanding at
the time of such filing. Within thirty (30) days of any additional
advance under the Notes pursuant to Section 2(b), the Company will
file a registration statement with the Commission under the Securities
Act (or an amendment to any prior registration statement) covering any
Conversion Securities and Warrant Securities issuable upon conversion
of such advances and not previously registered. The Company may, on
not more than one occasion, delay the filing of any registration
statement required hereunder for a period of not more than 90 days in
the event that the Company has furnished the Investor with a
certificate executed by the Company's President or Chief Executive
Officer stating that such delay is necessary in order to (i) not
significantly adversely affect financing efforts then underway at the
Company or (ii) avoid disclosure of material non-public information.
Any registration of Conversion Securities and
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Warrant Securities hereunder shall cover any additional Conversion
Securities or Warrant Securities issued or issuable pursuant to
anti-dilution or other similar rights.
(b) Registration Procedures. If and whenever the Company is required by
the provisions of Section 7(a) to effect the registration of any
Conversion Securities or Warrant Securities under the Securities Act,
the Company will:
(i) prepare and file with the Commission a registration statement (on
any available form to effect registration) with respect to such
securities, and use its best efforts to cause such registration
statement to become and remain effective until such securities
are sold pursuant to such registration statement or are eligible
to be sold pursuant to Rule 144(k);
(ii) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective until such securities are sold pursuant to
such registration statement or are eligible to be sold pursuant
to Rule 144(k);
(iii)furnish to the Investors and to any underwriters of the
securities being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final
prospectus and such other documents as the Investors and
underwriters may reasonably request in order to facilitate the
public offering of such securities;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as the
Investors may reasonably request, except that the Company shall
not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) prepare and promptly file with the Commission and promptly notify
the Investors of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of
a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in
which they were made, not misleading; and
(vi) use its best efforts to cause all securities covered by such
registration statement to be listed on any securities exchange,
quotation system,
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market or over-the-counter bulletin board, if any, on which the
Common Stock shall then be listed and trading.
(c) Expenses. Except as set forth in the last sentence of this Section
7(c), with respect to any registration of securities pursuant to
Section 7(a), the Company shall bear all fees, costs and expenses,
including, without limitation: all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants
for the Company, all internal Company expenses, the premiums and other
costs of policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and
accountants for the Investors, underwriting discounts and commissions
and transfer taxes for the Investors and any other expenses incurred
by the Investors not expressly included above shall be borne by the
Investors.
(d) Indemnification. In the event that any Conversion Securities or
Warrant Securities owned by the Investors are included in a
registration statement under Section 7(a):
(i) The Company will indemnify and hold harmless each Investor
(including for this purpose its directors, officers and partners)
and any underwriter (as defined in the Securities Act) from and
against any and all loss, damage, liability, cost and expense
(including, subject to Section 7(d)(iii), reasonable fees and
expenses of counsel) to which any such Investor or any such
underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage,
liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with written information
furnished by such Investor or such underwriter.
(ii) Each Investor, severally but not jointly, will indemnify and hold
harmless the Company and any underwriter from and against any and
all loss, damage, liability, cost or expense (including, subject
to Section 7(d)(iii), reasonable fees and expenses of counsel) to
which the Company or any underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
9
amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance
upon and in strict conformity with written information furnished
by such Investor. Notwithstanding the provisions of this clause
(ii), no Investor shall be required to indemnify any person
pursuant to this Section 7 in an amount in excess of the amount
of the aggregate net proceeds received by such Investor in
connection with any such registration under the Securities Act.
(iii) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (i) or (ii) of this Section 7(d) of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said paragraph
(i) or (ii), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the
indemnifying party will not relieve the indemnifying party from
any liability which it may have to any indemnified party
otherwise than hereunder nor of its obligations or liabilities
pursuant to this Agreement, except to the extent that the failure
to so notify materially prejudices the indemnifying party. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party;
provided, however, if the defendants in any action include both
the indemnified party and the indemnifying party and there is a
conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party,
the indemnified party or parties shall have the right to select
one separate counsel to participate in the defense of such action
on behalf of such indemnified party or parties, which counsel
shall be reasonably satisfactory to the indemnifying party. After
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party pursuant to
the provisions of said paragraph (i) or (ii) for any legal or
other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation, unless (x) the indemnified party shall have
employed counsel in accordance with the proviso of the preceding
sentence, (y) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of
the commencement of the action, or (z) the indemnifying party has
authorized the employment of
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counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the
prior written consent of the indemnified party, consent to entry
of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or the plaintiff to such indemnified party of a release
from all liability in respect of such action, and no indemnified
party shall consent to entry of any judgment or settle such
action without the prior written consent of the indemnifying
party.
(e) SEC Reports. 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.
8. Nasdaq Covenants. The Company will use its best efforts to meet any
requirements or take any action necessary to maintain listing of the
Company's Common Stock on the Nasdaq National Market, including seeking
shareholder approval at the Company's 2000 Annual Meeting of Shareholders
for the conversion of the Notes into Units. The Company will use its best
efforts to hold the 2000 Annual Meeting of Shareholders by May 15, 2000.
Each Investor agrees to vote all shares of Common Stock of the Company
beneficially owned by such Investor for the conversion of the Notes into
Units at the Company's 2000 Annual Meeting of Shareholders
9. Miscellaneous.
(a) 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 Investors. This Agreement and the
rights and obligations of the parties hereunder shall not be
assignable, in whole or in part, by an Investor without the prior
written consent of the Company, except that any 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.
(b) 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.
(c) 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 date hereof. All covenants and agreements which by
their terms are to be performed after the date hereof 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.
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(d) 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 Investors at the
addresses set forth on Schedule I, 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.
(e) This Agreement shall be construed and enforced in accordance with the
laws of the State of New York.
(f) 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 Investors have executed this
Agreement effective as of the date first written above.
OPTICAL SENSORS INCORPORATED
By /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx XxXxxxxx,
President and Chief Executive Officer
CIRCLE F VENTURES LLC
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Its
--------------------------------------
SPECIAL SITUATIONS FUND III, L.P.
By /s/ Xxxxx Greenhouse
--------------------------------------
Its
--------------------------------------
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SCHEDULE I
Maximum
Investors Principal Amount
Circle F Ventures LLC $1,500,000
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Special Situations Fund III, L.P. $1,500,000
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Total $3,000,000
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