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                                                                    Exhibit 10.8

                       AMENDMENT No. 3 TO RIGHTS AGREEMENT

         This Amendment No. 3 to Rights Agreement (this "Amendment") is between
Optical Sensors Incorporated, a Delaware corporation (the "Company"), and Wells
Fargo Bank, N.A., a national banking association (the "Rights Agent"), effective
as of April 19, 2001.

         A. The Company and the Rights Agent have entered into a Rights
Agreement, dated as of December 3, 1996, as amended by Amendment No. 1
("Amendment No. 1") to Rights Agreement effective as of March 9, 2000 and
Amendment No. 2 ("Amendment No. 2") to Rights Agreement effective as of August
8, 2000 (as amended, the "Rights Agreement"). Capitalized terms used and not
otherwise defined herein will have the meaning given in the Rights Agreement.

         B. Section 27 of the Rights Agreement provides that, prior to the
Distribution Date, the Company may amend the Rights Agreement, including without
limitation the definition of an Acquiring Person (as amended by Amendment No. 1
and Amendment No. 2) as set forth in Section 1(a) thereof, upon the approval of
at least a majority of the Continuing Directors, and that, upon any such
amendment, the Rights Agent shall amend the Rights Agreement as the Company
directs.

         C. The Company desires, and hereby directs the Rights Agent, to amend
the Rights Agreement as set forth herein and the Rights Agent agrees to such
amendments, on the terms and conditions hereof.

         Accordingly, the Company and the Rights Agent agree as follows:

1.       Representations and Warranties. The Company represents and warrants to
         the Rights Agent that:

         (a) to the best knowledge of the Company, the Distribution Date has not
         occurred prior to the effective date hereof; and

         (b) this Amendment is authorized pursuant to the requirements of
         Section 27 of the Rights Agreement, having been approved by a majority
         of the Company's Continuing Directors.

2.       Amendment of Section 1(a). Section 1(a) of the Rights Agreement is
         hereby amended by deleting Section 1(a) in its entirety and
         substituting the following therefor:

         "Acquiring Person" shall mean any Person, who or which, alone or
         together with all Affiliates and Associates of such Person, shall be
         the Beneficial Owner of 15% or more of the Common Shares then
         outstanding (the "Acquiring Person Trigger Amount") (other than as a
         result of a Permitted Offer (as hereinafter defined)), but shall not
         include (a) the Company or any Subsidiary of the Company, (b) any
         employee benefit plan of the Company or of any Subsidiary of the
         Company or any Person organized, appointed or established by the
         Company for or pursuant to the terms of any such plan or (c) Hayden R.
         Fleming ("Fleming") or Circle F
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         Ventures, LLC, a Georgia limited liability company ("Circle F")
         (Fleming and Circle F are collectively referred to as the "Circle F
         Group") or any Affiliate or Associate of the Circle F Group.
         Notwithstanding the foregoing, no Person shall become an "Acquiring
         Person": (i) as the result of an acquisition of Common Shares by the
         Company which, by reducing the number of Common Shares outstanding,
         increases the proportionate number of Common Shares beneficially owned
         by such Person to the Acquiring Person Trigger Amount; provided,
         however, that if a Person shall become the Beneficial Owner of the
         Acquiring Person Trigger Amount by reason of Common Share purchases by
         the Company and shall thereafter become the Beneficial Owner of any
         additional Common Shares, other than pursuant to the receipt of stock
         dividends or stock splits on a pro rata basis on Common Shares already
         beneficially owned by such Person, then such Person shall be deemed to
         be an "Acquiring Person" or (ii) who is a Person who is the Beneficial
         Owner of the Acquiring Person Trigger Amount but who acquired
         Beneficial Ownership of Common Shares without any plan or intention to
         seek or affect control of the Company, if such Person promptly enters
         into an irrevocable commitment promptly to divest, and thereafter
         promptly divests (without exercising or retaining any power, including
         voting, with respect to such shares), sufficient shares of Common
         Shares (or securities convertible into, exchangeable into or
         exercisable for Common Shares) so that such Person ceases to be the
         Beneficial Owner of the Acquiring Person Trigger Amount or (iii) who
         beneficially owns Common Shares consisting solely of one or more (A)
         Common Shares beneficially owned pursuant to the grant for exercise of
         an option granted to such Person by the Company in connection with an
         agreement to merge with, or acquire, the Company entered into prior to
         a Section 11(a)(ii) Trigger Date, (B) Common Shares (or securities
         convertible into, exchangeable into or exercisable for Common Shares),
         beneficially owned by such Person or its Affiliates or Associates at
         the time of grant of such option or (C) Common Shares (or securities
         convertible into, exchangeable into or exercisable for Common Shares)
         acquired by Affiliates or Associates of such Person after the time of
         such grant which, in the aggregate, amount to less than 1% of the
         outstanding Common Shares. For purposes of the definition of "Acquiring
         Person", the Acquiring Person Trigger Amount for Special Situations
         Fund III, L.P., a Delaware limited partnership ("SSF III"), MGP
         Advisers Limited Partnership, a Delaware limited partnership ("MGP"),
         Special Situations Cayman Fund, L.P., a Cayman Islands limited
         partnership (SS Cayman"), AWM Investment Company, Inc., a Delaware
         corporation ("AWM"), Austin W. Marxe ("Marxe") or David Greenhouse
         ("Greenhouse") (SSF III, MGP, SS Cayman, AWM, Marxe and Greenhouse are
         collectively referred to as "Special Situations Group"), shall be 24%
         or more of the Common Shares then outstanding (the "Special Situations
         Trigger Amount") which shall be applicable if any member of the Special
         Situations Group has, or, together with any Affiliates and Associates
         of such member, shall be the Beneficial Owner of, such Special
         Situations Trigger Amount.

3.       Amendment of Section 3(a). Subpart (ii) of the first sentence of
         Section 3(a) of the Rights Agreement is hereby amended by deleting such
         subpart in its entirety and substituting the following therefor:
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         (ii)     the close of business on the tenth Business Day (or such later
                  date as may be determined by the Board, acting by a majority
                  of the Continuing Directors, prior to such time as any Person
                  has become an Acquiring Person) after the date that a tender
                  or exchange offer (other than a Permitted Offer) by any Person
                  (other than (a) the Company or any Subsidiary of the Company,
                  (b) any employee benefit plan of the Company or of any
                  Subsidiary of the Company or any Person organized, appointed
                  or established by the Company for or pursuant to the terms of
                  any such plan or (c) the Circle F Group or any Affiliate or
                  Associate of the Circle F Group) is first published or sent or
                  given within the meaning of the Rule 14d-2(a) of the General
                  Rules and Regulations under the Exchange Act (or any
                  comparable or successor rule), if upon consummation thereof,
                  such Person would be the Beneficial Owner of the Acquiring
                  Person Trigger Amount; provided, however, if such an offer is
                  made by a member of the Special Situations Group (a "Special
                  Situations Offer"), which, upon consummation thereof, would
                  result in any member of the Special Situations Group having
                  or, together with any Affiliates and Associates of such
                  member, becoming the Beneficial Owner of, less than the
                  Special Situations Trigger Amount, then such Special
                  Situations Offer shall not be considered to be a Distribution
                  Date, but if the consummation of such Special Situations Offer
                  would result in any member of the Special Situations Group
                  having, or, together with any Affiliates and Associates of
                  such member, becoming the Beneficial Owner of, the Special
                  Situations Trigger Amount, then such Special Situations Offer
                  shall be considered a Distribution Date, or

4.       No Other Changes. Except as specifically amended by this Amendment, all
         other provisions of the Rights Agreement shall remain in full force and
         effect. This Amendment shall not constitute or operate as a waiver of,
         or estoppel with respect to, any provisions of the Rights Agreement by
         any party hereto.

5.       Counterparts. This Amendment may be executed in one or more
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same agreement.

         The Company and the Rights Agent have caused this Amendment to be duly
executed on their behalf by their respective duly authorized representatives as
of the date first written above.


OPTICAL SENSORS INCORPORATED               WELLS FARGO BANK, N.A.

By: /s/ Paulita M. LaPlante                By: /s/ Susan J. Roeder
    -----------------------------------        ---------------------------------
    Paulita M. LaPlante                        Susan J. Roeder
    Its: President and Chief Executive         Its:  Vice President
          Officer