[OSI LETTERHEAD]
September 15, 1998
Mr. Xxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Dear Xxx:
This letter will confirm the agreement between Optical Sensors Incorporated
("OSI") and you regarding the Non-Recourse Promissory Note, dated September 1,
1995, in the original principal amount of $245,000 executed by you in favor of
OSI (the "Note"). OSI hereby forgives $36,750 principal amount of the Note.
Accordingly, the new principal balance due under the Note is $208,250. On or
before September 30, 1998, you will pay in full the new principal amount of the
Note of $208,250, plus accrued interest. As of August 31, 1998, accrued
interest under the Note was $9,639.81, and interest will accrue thereafter at
the rate of $39.76 per day. Upon receipt of such payment, OSI will deliver to
you the original Note.
As you know, the forgiveness of $36,750 of indebtedness under the Note will
constitute income to you and will be reported by OSI on your 1998 Form W-2. On
or before September 30, 1998, the Company will make a cash payment to you equal
to an amount such that after payment by you of all taxes owed by you with
respect to such debt forgiveness, including any tax imposed on such gross-up
payment, you would retain an amount equal to the tax imposed upon such debt
forgiveness. For purposes of the foregoing determination, your tax rate will be
deemed to be the highest statutory marginal state and federal tax rate (on a
combined basis) currently in effect. We have calculated the amount of the
gross-up payment to be $33,250.
As you are also aware, an aggregate of 40,833 shares of Common Stock purchased
by you pursuant to the Non-Statutory Stock Option Agreement, dated August 2,
1995 between OSI and you, will be automatically forfeited and returned to the
Company due to the fact that you resigned your position as an employee of the
Company prior to August 2, 1999. On or before September 30, 1998, you will
surrender to OSI one or more stock certificates representing an aggregate of
40,833 shares of Common Stock.
This letter will also confirm that you have resigned as President and Chief
Executive Officer of OSI effective September 11, 1998.
Mr. Xxx X. Xxxxxxxxx
September 14, 1998
Page 2
On behalf of OSI, I look forward to continuing to work with you as a member of
the Board of Directors.
Very truly yours,
/s/ Xxxxxxx X. XxXxxxxx
Xxxxxxx X. XxXxxxxx
President
ACKNOWLEDGED AND AGREED TO
AS OF SEPTEMBER 22, 1998
/s/ Xxx X. Xxxxxxxxx
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Xxx X. Xxxxxxxxx
