NOTE CONVERSION AGREEMENT
AGREEMENT made as of the 24th day of October, 2005, by and
among Diasense, Inc., a Pennsylvania corporation ("Diasense") and
Dominion Assets, LLC ("Dominion").
W I T N E S S E T H:
WHEREAS, Diasense has issued a promissory note dated April
8, 2004 in the aggregate principal amount of $1,954,936.00 in
favor of BICO, Inc. (the "Note");
WHEREAS, the Note was assigned to Dominion pursuant to that
certain Assignment of Note, dated July 23, 2004 between BICO,
Inc. and Dominion;
WHEREAS, Diasense granted Dominion a security interest in
all of Diasense's assets pursuant to that certain Amendment
Number 1 to Demand Note, dated September 28, 2004;
WHEREAS, the current outstanding balance of the Note,
including interest through October 1, 2005, is $2,118,606.19; and
WHEREAS, the parties hereto seek to provide for the
conversion of the Note into the common stock of Diasense, $.01
par value (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements contained herein, the parties hereto
agree as follows:
1. If Diasense raises a minimum of $3,000,000 in gross
proceeds from the private offering and sale of its equity
securities on or before March 31, 2006, at a price per share of
at least $.10 (the "Qualified Offering"): Dominion hereby agrees
to convert the entire principal amount of the Note, including all
accrued and unpaid interest through the date of conversion, into
shares of Common Stock of Diasense at a conversion price of $.04
per share (the "Conversion Shares"), in full satisfaction of any
and all obligations of Diasense under the Note.
The conversion of the Note as provided herein shall be
deemed to occur automatically upon Diasense's completion of the
Qualified Offering. Diasense shall provide Dominion notice of
the completion of the Qualified Offering and within 10 days of
such notice Dominion shall surrender the Note in exchange for the
issuance of the Conversion Shares, which shall be validly issued,
fully paid and non assessable shares of Common Stock of Diasense.
2. Dominion represents, acknowledges and agrees that its
representatives have had an opportunity to review any financial
statements and data related to Diasense's operations and have had
an opportunity to ask questions of, and receive answers from,
Diasense or from any person acting on its behalf concerning
Diasense's financial and operating condition, and to obtain any
information necessary to verify the accuracy of the information
provided to such party.
3. Dominion acknowledges and agrees that the Conversion
Shares will be restricted and that Dominion may not sell, assign,
pledge, transfer, or otherwise dispose of the Conversion Shares
unless such sale, assignment, pledge, transfer, or other
disposition is either registered under the Securities Act of
1933, as amended (the "Act"), or is exempt from registration
under the Act and any applicable state securities laws.
4. As conditions to the obligations of Dominion hereunder:
(A) Diasense shall as soon as practicable, and at all
times thereafter, take all corporate action necessary to
amend its Articles of Incorporation to increase the number
of shares of authorized Common Stock so that there is a
sufficient number of authorized Common Stock available for
the issuance of the Conversion Shares in accordance with the
terms of this Agreement. Dominion agrees to vote in favor
of any such amendment to the Articles of Incorporation.
(B) Diasense agrees to take all corporate action
necessary to appoint Xxxxx Xxxxxxx as Chief Executive
Officer of Diasense as soon as practicable following the
execution of this Agreement.
(C) Diasense agrees to take all corporate action
necessary, as soon as practicable in a manner consistent
with any required regulatory filings, to (i) appoint Xxxxx
Xxxxxxx to the Diasense Board of Directors and (ii) appoint
two nominees of Dominion to the Diasense Board of Directors.
These appointments to the Diasense Board of Directors will
be deemed to be effective when all required regulatory
filings have been made.
5. The foregoing is the entire Agreement of the parties
with respect to the subject matter hereof and may not be amended,
supplemented, cancelled or discharged except by written
instrument executed by both parties hereto. This Agreement
supersedes any and all prior Agreements between the parties
hereto with respect to the matters covered hereby.
6. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
7. To facilitate execution, this Agreement may be executed
in counterparts, and it shall not be necessary that the
signatures of all parties appear on each counterpart. All
counterparts shall collectively constitute a single Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement on the day herein above written.
DIASENSE, INC.
By: \s\ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: CEO
DOMINION ASSETS, LLC
By: \s\ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
