Exhibit 10.1
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT ("Agreement") is made and entered into effective
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as of April 5, 2001, by and among Optical Sensors Incorporated, a Delaware
corporation (the "Company"), with its principal place of business at 7615 Golden
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Xxxxxxxx Xxxxx, Xxxxx X, Xxxx Xxxxxxx, Xxxxxxxxx 00000, and Circle F Ventures
LLC (the "Investor").
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A. The Company currently needs up to $100,000 to fund its operation until
such time as it is able raise additional equity capital.
B. The Investor desires 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 Note. Upon the terms and subject to the
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conditions set forth in this Agreement, the Company agrees to issue to the
Investor, and the Investor agrees to purchase from the Company, a
convertible promissory note in the form attached hereto as Exhibit A in the
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principal amount of up to One Hundred Thousand Dollars ($100,000) (the
"Note"). The Note shall not bear interest and shall be due and payable in
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full one (1) year from the date of issuance (the "Maturity Date") unless
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converted into shares of Common Stock of the Company prior to the Maturity
Date. After April 30, 2001, 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 Investors, without premium or penalty
pursuant to Section 1 of the Note.
2. Conversion. The Investor shall have the right to convert all or any portion
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of principal balance and accrued interest under the Note, at the option of
the Investor, into shares of Common Stock of the Company at any time, and
from time to time. If the Company completes a private placement of equity
securities (the "Financing") by April 30, 2001, the conversion price of the
Note shall be equal to the per share price of the securities sold in the
Financing. If the Company does not complete the Financing by April 30,
2001, the conversion price of the Note shall be $.25 per share. The shares
of Common Stock issuable upon conversion of the Note are referred to as the
"Conversion Securities."
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3. Representations and Warranties of the Company. The Company represents and
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warrants to the Investor as follows:
(a) Organization. The Company is a corporation duly organized, validly
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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
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execute and deliver this Agreement and the Note and to perform its
obligations hereunder and thereunder, including the issuance of the
Note and the Conversion Securities. This Agreement and the Note 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 Conversion
Securities has been taken. The Conversion Securities when issued
pursuant to conversion of the Note 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
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the Note 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
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statements and other filings with the Securities and Exchange
Commission (the "Commission") required to be filed by it pursuant to
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the Securities Act of 1933, as amended (the "Securities Act"), and the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
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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
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as the "SEC Reports." As of their respective dates of filing with the
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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
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in the SEC Reports (the "Financial Statements") have been prepared in
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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) liabilities that have been incurred in the
ordinary course of business since December 31, 2000.
(f) No Material Adverse Change. There have not been any changes in the
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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
and negative cash flow.
(g) Authorized Capital Stock. The authorized capital stock of the Company
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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 Five Hundred Fifty Thousand Dollars
($1,550,000), 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
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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
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to use all patents, patent rights, inventions, trademarks, trade
names, copyrights, licenses,
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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 the
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Investor in Section 4, 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 Investor of the Note or the Conversion Securities
other than 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 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
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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
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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.
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(l) Brokers or Finders. To the knowledge of the Company, no person, firm
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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.
4. Representations and Warranties of the Investor. The Investor represents and
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warrants to the Company as follows:
(a) The Note is being purchased for investment for the Investor's own
account and not with the view to, or for resale in connection with,
any distribution or public offering thereof. The Investor understands
that neither the Note nor the Conversion 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. The Investor further understands that the Note 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) The Investor's principal place of business is located at the address
set forth on the signature page hereto. The Investor qualifies as an
"accredited investor," as defined in Rule 501 of Regulation D under
the Securities Act. The Investor acknowledges that the Company has
made available to the 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. The Investor 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 such Investor or on its behalf shall limit, modify or
affect the representations and warranties of the Company set forth in
Section 3 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 the Investor, has been duly executed and delivered by such
Investor and is a valid and binding agreement of such Investor.
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5. Registration Rights. The Company shall register the Conversion Securities
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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.
6. Miscellaneous.
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(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.
(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 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.
(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.
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(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 ______________________________________
Xxxxxxx XxXxxxxx,
President and Chief Executive Officer
CIRCLE F VENTURES LLC
By ______________________________________
Its______________________________________
Address:
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
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