Document:

Form of Warrant to Purchase Common Stock

 Exhibit 4.1 
  
 THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR APPLICABLE
BLUE SKY LAWS, AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND SUCH APPLICABLE BLUE SKY LAWS,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 
  
 OPTICAL SENSORS INCORPORATED 
  
 WARRANT TO PURCHASE COMMON STOCK 
  
                     , 2006 
  
 THIS CERTIFIES THAT, for good and valuable consideration received,
                    or its registered assigns, is entitled to subscribe for and purchase from Optical Sensors Incorporated, a Delaware
corporation d/b/a väsamed (the “Company”),                 
(            ) fully paid and nonassessable shares of the Common Stock, $.01 par value, of the Company, or such greater or lesser number of such shares as may be determined by the
anti-dilution provisions of this Warrant, at a Warrant exercise price of $2.25 per share, or such greater or lesser Warrant exercise price as may be determined by the anti-dilution provisions of this Warrant (the “Exercise Price”).
This Warrant is one of a series of warrants to purchase up to an aggregate amount of Four Hundred Fifty Thousand (450,000) shares of Common Stock the (“Bridge Warrants”) issued pursuant to Note and Warrant Purchase Agreements
with the Company to raise Four Million Five Hundred Thousand Dollars ($4,500,000) to fund its operation until such time as it is able raise additional equity capital (the “Bridge Financing”). 
  
 This Warrant (the “Warrant”) may be exercised in whole or in
part at any time or from time to time until 5:00 p.m., Minneapolis, Minnesota time, on                         , 2011.

  
 This Warrant is subject to the following provisions, terms and
conditions. 
  
 1. Exercise. The rights represented by this
Warrant may be exercised by the holder hereof, in whole or in part, by written notice of exercise delivered to the Company and by the surrender of this Warrant (properly endorsed if required) at the principal office of the Company and upon payment
to it by check of the aggregate Exercise Price for such shares. 
  
 2. Issuance of Common Stock. The Company agrees that the shares of Common Stock purchased hereby shall be and are deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Certificates for the shares of Common Stock so purchased shall be promptly delivered to the holder hereof and in no event later than five (5) business
days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of shares of Common Stock, if any, with respect to which this Warrant shall not then have
been exercised shall also be delivered to the holder hereof within such time. 

 3. Covenants of Company. The Company covenants and agrees that all shares of Common Stock that may
be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized and issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, the Company covenants and agrees that it will from time to time take all such action as may be required to assure that the par value per share of the Common Stock is at all times equal to or less than the
then current Exercise Price. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 
  
  
 4. Anti-dilution Adjustments. The above provisions are, however, subject to the following: 
  
 (a) The Exercise Price shall be subject to adjustment from time to time as hereinafter provided. Upon each adjustment of the Exercise
Price, the holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant to this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. 
  
 (b) In the event the outstanding shares of Common Stock shall be subdivided (split), or combined (reverse
split), by reclassification or otherwise, or in the event of any dividend or other distribution payable on the Common Stock in shares of Common Stock, the applicable Exercise Price in effect immediately prior to such subdivision, combination,
dividend or other distribution shall, concurrently with the effectiveness of such subdivision, combination, dividend or other distribution, be proportionately adjusted. 
  
 (c) If any capital reorganization or reclassification of the capital stock of the Company, or consolidation
or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for shares of Common Stock (such stock, securities or assets being hereinafter referred to as “substituted property”) with respect to or in exchange for such Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the holder hereof shall have the right to purchase and receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of this Warrant, such substituted property as may be issued or payable with respect to or in exchange for a number of outstanding 

  

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shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of this Warrant
had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions
hereof (including without limitation provisions for adjustments of the Exercise Price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be practicable, in relation to any
substituted property thereafter purchasable and receivable upon the exercise of this Warrant. 
  
 (d) In the event the Company at any time makes, or fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company (other than dividends or distributions described in Section 4(b) of this Warrant), then and in each such event thereafter the holder of this Warrant upon the
exercise thereof will be entitled to receive the number of shares of Common Stock purchased at the Exercise Price then in effect, and, in addition and without payment therefor, the amount of securities of the Company that such holder would have
received had such holder exercised this Warrant on the date of such event. 
  
 (e) If at any time or from time to time the Company shall issue or sell any Additional Shares (as defined below) of Common Stock for an Effective Price (as defined below) per share less than the applicable Exercise
Price of the Warrant then in effect, then and in each such case, the then applicable Exercise Price of the Warrant shall be reduced to an adjusted Exercise Price, as of the opening of business on the date of such issue or sale, equal to such
Effective Price. 
  
 “Additional
Shares” shall mean any shares of Common Stock issued after the date of this Warrant, other than (i) shares of Common Stock issued upon conversion of Series A preferred stock, Series B preferred stock or Series C preferred stock of the
Company, (ii) shares issuable upon the exercise of warrants issued to Fleming Securities, Inc. in connection with the Bridge Financing and the Bridge Warrants; (iii) shares of Common Stock issued upon exercise of options, warrants or other
rights to acquire Common Stock outstanding as of the date of this Warrant; (iv) shares of Common Stock (x) issued to employees, directors or officers of, or advisors or consultants to, the Corporation pursuant to stock-based compensation
plans or arrangements approved by the Board, (y) issuable upon exercise of stock options granted to such employees, directors or officers, or advisors or consultants pursuant to the Corporation’s stock option pool or other stock-based
compensation plans approved by the Board, or (z) issued in any registered public offering, (v) shares of Common Stock issued or issuable (by means of stock options, warrants and the like) upon authorization of the Board (as approved by
unanimous consent of all directors) in connection with strategic alliances or business conducted by the Company with vendors, lessors or financial institutions, (vi) shares issued in connection with any merger, acquisition or other
reorganization approved by the Board, in transactions in which stockholder approval is not required under applicable law, and (vi) shares issued or issuable by way of stock split, stock dividend or similar capitalization modification.
“Effective Price” shall mean the price per share for Additional Shares of Common Stock, determined by dividing the total number of 

  

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Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold by the Company under Section 4(f), into the aggregate
consideration received, or deemed to have been received by the Company for such issue or sale under such Section 4(f), for such Additional Shares of Common Stock. 
  
 (f) For the purpose of paragraph (e) above, the following provisions shall be applicable: 

 
 (i) If at any time on or after the date of this Warrant
the Company shall issue or sell any evidences of indebtedness, shares of capital stock or other securities that are at any time, directly or indirectly, convertible into or exchangeable for Additional Shares of Common Stock (“Convertible
Securities”), there shall be determined as of the date of issue the Effective Price per share for which Additional Shares of Common Stock are issuable upon the conversion or exchange thereof, such determination to be made by dividing
(x) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (y) the maximum number of Additional Shares of Common Stock issuable upon conversion or exchange of all of such Convertible Securities; and such issue or sale shall be deemed to be an issue or sale for cash (as of the
date of issue or sale of such Convertible Securities) of such maximum number of Additional Shares of Common Stock at the price per share so determined. 
  
 If such Convertible Securities shall by their terms provide for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of exchange, upon the conversion or exchange thereof the adjusted Exercise Price shall, forthwith upon any such increase becoming effective, be readjusted (but to no greater
extent than originally adjusted) to reflect the same. 
  
 If any rights of conversion or exchange evidenced by such Convertible Securities shall expire without having been exercised, any adjusted Exercise Price shall forthwith be readjusted to be the adjusted Exercise Price which would have been
in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock issued or sold were those actually issued upon the conversion or exchange of such Convertible Securities, and that they were issued or sold for the
consideration actually received by the Company upon such conversion or exchange, plus the consideration, if any, actually received by the Company for the issue or sale of such Convertible Securities as were actually converted or exchanged.

  
 No adjustment shall be made under this
Section 4(f)(i) with respect to the issuance of any Convertible Securities that are subject to any right, warrant or option with respect to which an adjustment for the issuance of such Convertible Securities was previously made under
Section 4(f)(iii). 
  

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 (ii) If at any time on or after the date of this Warrant the Company shall grant any
rights, warrants or options to subscribe for, purchase or otherwise acquire Additional Shares of Common Stock, there shall be determined as of the date of issue the Effective Price per share for which Additional Shares of Common Stock are issuable
upon the exercise of such rights, warrants or options, such determination to be made by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the exercise of such rights or options, by (y) the maximum number of Additional Shares of Common Stock of the Company issuable upon the exercise of such rights or options;
and the granting of such rights, warrants or options shall be deemed to be an issue or sale for cash (as of the date of the granting of such rights, warrants or options) of such maximum number of Additional Shares of Common Stock at the price per
share so determined. 
  
 If such rights, warrants
or options shall by their terms provide for an increase or increases, with the passage of time, in the amount of additional consideration payable to the Company upon the exercise thereof, the adjusted Exercise Price shall, forthwith upon any such
increase becoming effective, be readjusted (but to no greater extent than originally adjusted) to reflect the same. 
  
 If any such rights, warrants or options shall expire without having been exercised, any adjusted Exercise Price shall forthwith be
readjusted to be the adjusted Exercise Price which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued or sold were those actually issued or sold upon the exercise of such
rights, warrants or options and that they were issued or sold for the consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the Company for the granting of all such rights, warrants
or options, whether or not exercised. 
  
 (iii)
If at any time on or after the date of this Warrant the Company shall grant any rights, warrants or options to subscribe for, purchase or otherwise acquire Convertible Securities, there shall be determined as of the date of issue the Effective Price
per share for which Additional Shares of Common Stock are issuable upon the exercise of such rights, warrants or options for such Convertible Securities or upon conversion or exchange of such Convertible Securities, such determination to be made by
dividing (x) the total amount, if any, received or receivable by the Company as consideration for the granting of such rights, warrants or options, plus the minimum aggregate amount of additional consideration payable to the Company upon the
exercise of such rights, warrants or options, plus the minimum aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the maximum
number of Additional Shares of Common Stock of the Company issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of all such Convertible Securities; and the granting of such rights, warrants or options
shall 

  

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be deemed to be an issue or sale for cash (as of the date of the granting of such rights, warrants or options) of such maximum number of Additional Shares of
Common Stock at the price per share so determined. 
  
 If such rights, warrants or options for Convertible Securities shall by their terms provide for an increase or increases, with the passage of time, in the amount of additional consideration payable to the Company upon the exercise thereof,
any adjusted Exercise Price shall, forthwith upon any such increase becoming effective, be readjusted (but to no greater extent than originally adjusted) to reflect the same. 
  
 If any such rights, warrants or options for Convertible Securities shall expire without having been
exercised, the adjusted Exercise Price shall forthwith be readjusted to be the adjusted Exercise Price which would have been in effect had an adjustment been made on the basis that the only Convertible Securities so issued or sold were those
actually issued or sold upon the exercise of such rights, warrants or options and that they were issued or sold for the consideration actually received by the Company upon such exercise plus the consideration, if any, actually received by the
Company for the granting of all such rights, warrants or options, whether or not exercised. 
  
 (iv) Upon any issuance or sale for a consideration other than cash, or a consideration part of which is other than cash, of any Additional
Shares of Common Stock or Convertible Securities or any rights, warrants or options to subscribe for, purchase or otherwise acquire any Additional Shares of Common Stock or Convertible Securities, the amount of the consideration other than cash
received by the Corporation shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors. In case any Additional Shares of Common Stock or Convertible Securities or any rights, warrants or options
to subscribe for, purchase or otherwise acquire any Additional Shares of Common Stock or Convertible Securities shall be issued or sold together with other stock or securities or other assets of the Corporation for a consideration that covers two or
more thereof, the consideration for the issue or sale of such Additional Shares of Common Stock or Convertible Securities or such rights, warrants or options shall be deemed to be the portion of such consideration allocated thereto in good faith by
the Board of Directors. 
  
 (v) Following each
computation or readjustment of an adjusted Exercise Price as provided above in this Section 4, the new adjusted Exercise Price shall remain in effect until a further computation or readjustment thereof is required by this Section 4.

  
 (g) Upon any adjustment of the Exercise
Price, then and in each such case, the Company shall promptly give written notice thereof, by first-class mail, postage prepaid, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, which notice
shall state the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. 
  

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 (h) In the event of any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, any capital reorganization of
the Company, any reclassification or recapitalization of the Company’s capital stock, any consolidation or merger with or into another Company, any transfer of all or substantially all of the assets of the Company or any dissolution,
liquidation or winding up of the Company, the Company shall mail to the Warrant holder at least twenty (20) days prior to the date specified for the taking of a record, a notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution or any of the other events listed above. 
  
 (i) No fractional shares of Common Stock shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which any
holder would otherwise be entitled upon exercise of this Warrant, the Company shall pay cash equal to such fraction multiplied by the then effective Exercise Price. 
  
 5. Common Stock. As used herein, the term “Common Stock” shall mean and include the Company’s
presently authorized shares of Common Stock and shall also include any capital stock of any class of the Company hereafter authorized that shall not be limited to fixed sum or percentage of par value in respect of the rights of the holders thereof
to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company; provided that the shares purchasable pursuant to this Warrant shall include shares designated as
Common Stock of the Company on the date of original issue of this Warrant or, in the case of any reorganization, reclassification, consolidation or merger provided for in paragraph 4(c) above, the stock, securities or assets provided for in such
paragraph. 
  
 6. No Voting Rights. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder of the Company. 
  
 7. Transfer of Warrant or Resale of Common Stock. 
  
 (a) The holder of this Warrant, by acceptance hereof, acknowledges that neither this Warrant nor any of the shares of Common Stock
issuable upon exercise hereof have been registered under the Securities Act of 1933 (the “Securities Act”) or any applicable state securities or blue sky laws and that this Warrant or such shares may only be transferred in
accordance with this Section 7. The holder of this Warrant, by acceptance hereof, represents that it has acquired this Warrant for investment and not with a view to distribution of this Warrant or the shares of Common Stock issuable upon
exercise hereof within the meaning of the Securities Act and the rules and regulations thereunder. 
  

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 (b) The holder of this Warrant, by acceptance hereof, agrees to give written notice to
the Company before exercising or transferring this Warrant, in whole or in part, or transferring any shares of Common Stock issued upon the exercise hereof, of such holder’s intention to do so, describing briefly the manner of any proposed
exercise or transfer. If in the opinion of counsel reasonably acceptable to the Company the proposed exercise or transfer may be effected without registration or qualification (under federal and any applicable state securities or blue sky laws), the
Company, as promptly as practicable, shall notify such holder of such opinion, whereupon such holder shall be entitled to exercise or transfer this Warrant or to dispose of the shares of Common Stock received upon the previous exercise of this
Warrant, all in accordance with the terms of the notice delivered by such holder to the Company, provided that an appropriate legend may be endorsed on this Warrant or the certificates for shares of Common Stock issued upon the exercise hereof
respecting restrictions upon transfer thereof necessary or advisable in the opinion of such counsel to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities or blue sky laws. If
in the opinion of such counsel, the proposed exercise or transfer of this Warrant or of the shares of Common Stock issued upon exercise hereof (as described in the written notice given pursuant to this Section 7) may not be effected without
registration or qualification of this Warrant or such shares, the Company shall promptly given written notice thereof to the holder hereof, and such holder will limit its activities in respect to such as, in the opinion of such counsel, are
permitted by law. 
  
  
 8. Miscellaneous. 
  
 (a) Subject to the provisions of paragraph 7 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Each holder of this Warrant, by taking or holding the same, consents and agrees that the bearer of this
Warrant, when endorsed, may be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant, or to the transfer
hereof on the books of the Company, any notice to the contrary notwithstanding; but until such transfer on such books, the Company may treat the registered holder hereof as the owner for all purposes. 
  
 (b) This Warrant is exchangeable, upon the surrender hereof
by the holder hereof at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the number of shares of Common Stock that may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holder hereof at the time of such surrender. 
  
 (c) This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota. 
  
 IN WITNESS
WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer and to be dated as of the date set forth above. 
  

			
	 OPTICAL SENSORS INCORPORATED

		
	By	 	  

	 	 	Paulita LaPlante - President and CEO

  

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 FORM OF ASSIGNMENT 
 (To Be Signed Only Upon Assignment) 
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                      this Warrant, and appoints the
Secretary of the Company or other authorized officer to transfer this Warrant on the books of the Company with the full power of substitution in the premises. 
  

					
	Dated:	 	  

  
 In
the presence of: 
  

			
	 Signature:
	 	  

	Note: The signature must conform in all respects to the name of the holder as written on the face of this Warrant without alteration, enlargement or any change whatsoever, and the
signature must be guaranteed in the usual manner.

  

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 SUBSCRIPTION FORM 
  
 To be Executed by the Holder of this Warrant if such Holder 
 Desires to Exercise this Warrant in Whole or in Part: 
  

			
	 To:
	  	Optical Sensors Incorporated (the “Company”)
		
	 	  	The undersigned
                            
		
	 	  	Please insert Social Security or other identifying number of Subscriber:

  

  
 hereby irrevocably elects to exercise the right of purchase represented by this Warrant for, and to purchase thereunder,
                     shares of the Common Stock provided for therein and tenders payment herewith to the order of the Company in the amount of
$                    , such payment being made as provided on the face of this Warrant. 
  
 The undersigned requests that certificates for such shares of Common Stock be issued as
follows: 
  

			
	 Name:
	 	  

		
	 Address:
	 	  

	 	 	  

		
	 Deliver to:
	 	  

		
	 Address:
	 	  

  
 and, if such number of shares of
Common Stock shall not be all the shares of Common Stock purchasable hereunder, that a new Warrant for the balance remaining of the shares of Common Stock purchasable under this Warrant be registered in the name of, and delivered to, the undersigned
at the address stated above. 
  

					
	Dated:	 	  

  

			
	 Signature:
	 	  

	Note: The signature must conform in all respects to the name of the holder as written on the face of this Warrant without alteration, enlargement or any change
whatsoever.

  

 10Form of Note and Warrant Purchase Agreement

 Exhibit 10.1 
  
 NOTE AND WARRANT PURCHASE AGREEMENT 
  
 THIS NOTE AND WARRANT PURCHASE AGREEMENT (“Agreement”) is made and entered into effective as of
                    , 2006, by and among Optical Sensors Incorporated, a Delaware corporation d/b/a väsamed
(the ”Company”), with its principal place of business at 7615 Golden Triangle Drive, Suite A, Eden Prairie, Minnesota 55344, and
                (the “Investor”). Investor resides at the address set forth on the signature page hereto. 
  
 A. The Company currently needs up to an aggregate of Four Million Five
Hundred Thousand Dollars ($4,500,000) to fund its operation until such time as it is able raise additional equity capital (the “Bridge Financing”). 
  
 B. The Investor desires to participate in the Bridge Financing with other investors (the “Other Investors”)
and purchase a convertible promissory note and warrant from 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.    (a)	Purchase of Convertible Promissory Note. Upon the terms and subject to the 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 principal amount of
                 Dollars ($            ) (the ”Note” and
collectively, with the other notes issued in the Bridge Financing to the Other Investors, the “Notes”). The Note shall bear interest at the rate of ten percent (10%) per annum from the date of the Note until paid in full and
shall be due and payable in full eighteen (18) months from the date of issuance (the “Maturity Date”) unless converted into shares of Series C Preferred Stock (“Series C Stock”) of the Company prior to the
Maturity Date. The Company shall have the right to prepay the Note, in whole or in part, without premium or penalty, at any time or from time to time, on ten (10) days’ prior written notice to the Investor. The Note, along with the other
Notes, shall be secured by a lien on the assets of the Company, except for patents and other rights to intellectual property and regulatory approvals held by the Company. The terms of such lien and exceptions are set forth in the Security Agreement
attached hereto as Exhibit D, which will be executed by the Investor together with the Other Investors. 

  

	 	(b)	 Issue of Warrants. As part of this transaction, Company will issue to Investor a warrant to purchase 10,000 shares of the Company’s common stock
(“Common Stock”) for every One Hundred Thousand Dollars ($100,000) in principal of the Note or portion thereof, pro-rata, which warrant (the “Warrant”) will be in substantially the form attached hereto as Exhibit
B and will have an initial exercise price equal to $2.25 per share, subject to adjustment of the exercise price 

	 	 
and number of shares purchasable as set forth in the Warrant. The Warrant issued to the Investor, along with warrants issued to Other Investors, are a part
of a series of warrants for rights to purchase up to Four Hundred Fifty Thousand (450,000) shares of Common Stock (the “Warrants”) The Warrant shall be exercisable for a period of five (5) years from the date of issuance.
The shares issuable upon the exercise of the Warrant are referred to as the “Warrant Shares”. The Note and Warrant, collectively, are referred to herein as the “Securities”. 

  

	2.    (a)	Voluntary Conversion. The Investor shall have the right to convert all or any portion of principal balance of the Note, at the option of the Investor, into shares of the
Series C Stock at any time, and from time to time. All accrued and unpaid interest on any principal so converted shall, at the Company’s option, be paid (i) in shares of Series C Stock at the time of conversion, or (ii) in cash in
accordance with the interest provisions of the Note. The conversion price of the Note shall be $90.00 per share of Series C Stock. A copy of the Certificate of Designation for the Series C Stock is attached hereto as Exhibit C. The shares of
Series C Stock issuable upon conversion of the Note are referred to as the “Conversion Securities”. 

  

	 	(b)	Automatic Conversion. All outstanding principal under the Note will automatically convert into shares of Series C Preferred stock, at the $90.00 per share conversion price,
upon (i) the closing of a private placement of equity securities of the Company in one or more transactions with gross proceeds to the Company totaling at least $5 million, before deduction of agent’s commissions and expenses, or
(ii) upon an acquisition of the Company or of all or substantially all of its assets. All accrued and unpaid interest on any principal so converted shall, at the Company’s option, be paid (i) in shares of Series C Stock at the time of
conversion, or (ii) in cash in accordance with the interest provisions of the Note. 

  

	3.	Representations and Warranties of the Investor. The Investor represents and warrants to, and covenants with the Company as follows: 

  
 (a) The Investor qualifies as an “accredited investor,” as defined
in Rule 501 of Regulation D under the Securities Act. Specifically, (check all that apply): 
  
 INDIVIDUALS 
  

	 	            A.    	The undersigned is an individual with a net worth, or a joint net worth together with his or her spouse, in excess of $1,000,000. (In calculating net worth, you may include equity
in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Equity in personal property and real estate should be based on the fair market value of such property minus debt secured by
such property.) 

  

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	 	            B.    	The undersigned is an individual (not a partnership, corporation, etc.) with income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess
of $200,000 in the current year. 

  

	 	            C.    	The undersigned is an individual (not a partnership, corporation, etc.) who, with his or her spouse, had joint income in excess of $300,000 in each of the prior two years and
reasonably expects joint income in excess of $300,000 in the current year. 

  

	 	            D.    	The undersigned is a director or executive officer of the Company. 

  
 ENTITIES 
  

	 	            E.    	The undersigned, if other than an individual, is an entity all of whose equity owners meet one of the tests set forth in (a) through (d) above (if relying on this category
alone, each equity owner must complete a separate copy of this Agreement). 

  

	 	            F.    	The undersigned is an entity, and is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Act. This representation is based on the following (check
one or more, as applicable): 

  

	 	            1.    	The undersigned (or, in the case of a trust, the undersigned trustee) is a bank or savings and loan association as defined in Sections (a)(2) and 3(a)(5)(A), respectively, of the
Act acting either in its individual or fiduciary capacity. 

  

	 	            2.    	The undersigned is an insurance company as defined in Section 2(13) of the Act. 

  

	 	            3.    	The undersigned is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act.

  

	 	            4.    	The undersigned is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958. 

  

	 	            5.    	The undersigned is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and either (check all
that apply): 

  

	 	            a.    	the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or
registered investment adviser; or 

  

 3 

	 	            b.    	the employee benefit plan has total assets in excess of $5,000,000; or 

  

	 	            c.    	the plan is a self-directed plan with investment decisions made solely by persons who are “Accredited Investors” as defined under the Act. 

  

	 	            6.    	The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. 

  

	 	            7.    	The undersigned has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring securities of the Company and is one or more of the following
(check one or more, as appropriate): 

  

	 	            a.    	an organization described in Section 501(c)(3) of the Internal Revenue Code; or 

  

	 	            b.    	a corporation; or 

  

	 	            c.    	a Massachusetts or similar business trust; or 

  

	 	            d.    	a partnership. 

  

	 	            8.    	The undersigned is a trust with total assets exceeding $5,000,000 which was not formed for the specific purpose of acquiring securities of the Company and whose purchase is directed
by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the investment in the Securities. 

  
 Paragraph 3(a) is required in connection with the exemptions from the Act
and State Laws being relied on by the Company with respect to the offer and sale of the Securities. 
  
 The undersigned agrees to furnish any additional information which the Company or its legal counsel deem necessary in order to verify the responses set
forth above. 
  

	 	(b)	 The Note and Warrant are 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, the Warrant, the Warrant Shares nor the Conversion Securities have been registered under the Securities Act or any state securities laws by reason of their

  

 4 

	 	 
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, the Warrant, the Warrant Shares 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. 

 

	 	(c)	The Investor acknowledges that the Company has made available to the Investor prior to the execution of this Agreement the materials listed in Exhibit E attached hereto; the
Investor has received all materials that have been requested by Investor and Investor has had 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 understands the risks of an investment in the Company as proposed herein and is able to bear such
risks, including the loss of its entire investment in the Note, the Warrant, the Warrant Shares and the Conversion Securities. The Investor 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. 

  

	 	(d)	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. 

  

	4.	Representations and Warranties of the Company. The Company represents and warrants to the Investor 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 Securities and the Conversion Securities and to
perform its obligations hereunder and thereunder. This Agreement, the Securities, the Warrant Shares and the Conversion Securities have been duly authorized by all necessary corporate action on behalf of the Company, have been duly executed 

  

 5 

	 	 
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 and the Warrant Shares has been taken. The Conversion
Securities and the Warrant Shares when issued pursuant to conversion of the Note or the exercise of the Warrant 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 Securities, the Warrant Shares and the Conversion Securities 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 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 

  

 6 

	 	 
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) those liabilities that are required to be set forth in the Financial Statements, the notes thereto or the SEC Reports pursuant to generally accepted accounting principles, and
(ii) liabilities that have been incurred in the ordinary course of business since September 30, 2005. 

  

	 	(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 and (ii) the Company’s continued operating losses and
negative cash flow. 

  

	 	(g)	Authorized Capital Stock. The authorized capital stock of the Company is 30,000,000 shares of Common Stock, $0.01 par value per share, and 5,000,000 shares of preferred
stock, $0.01 par value per share. 4,333,334 preferred shares have been designated as Series A Convertible Preferred Stock, 250,000 preferred shares have been designated as Series B Convertible Preferred Stock, 166,666 preferred shares have been
designated as Series C Convertible Preferred Stock and 250,000 preferred shares have been designated as Series A Junior Preferred Stock. There are currently issued and outstanding 3,808,289 shares of Common Stock, 4,333,334 shares of Series A
Preferred, 236,934 shares of Series B Preferred and 100,021 shares of Series C Preferred. Collectively, the preferred shares are convertible into 5,907,732 shares of Common Stock. 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 842,588 shares and 488,419 shares, respectively, of Common Stock. 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 Conversion Securities issued upon conversion of the Notes, the Warrant Shares issued
upon the exercise of the Warrants, the warrant (and related underlying shares of common stock) issued to Fleming Securities, Inc. issued in connection with this Bridge Financing 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. 

  

	 	(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; the Company has not received 

  

 7 

	 	 
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 Investor in Section 3, 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, the Warrant, the Warrant Shares
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 Securities and the issuance of the Conversion Securities and Warrant Shares. 

  

	 	(j)	Litigation. 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. 

  

	5.	Registration Rights. The Company shall register the Warrant Shares and the Common Stock underlying the Conversion Securities with the Securities and Exchange Commission on
any registration statement filed by the Company pursuant to Section 6 of the Stock Purchase Agreement, dated as of May 6, 2005, between the Company and the Series C Investors listed therein. 

  

	6.	Miscellaneous. 

  

	 	(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 by the Investor, in whole or in part, except by operation of law.

  

 8 

	 	 
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.

  

	 	(c)	Neither this Agreement nor any provision hereof may be amended, modified, waived or discharged without the written consent of the parties hereto. 

  

	 	(d)	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. 

  

	 	(e)	All representations and warranties contained herein shall survive after the execution and delivery of this Agreement for a period of one (1) year 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.

  

	 	(f)	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 address 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. 

  

	 	(g)	This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota. 

  

	 	(h)	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] 
  

 9 

 IN WITNESS WHEREOF, the Company and the Investor have executed this Agreement effective as of the date
first written above. 
  
 Principal Amount of Note Being Purchased:
$                 
 (Aggregate Purchase Price of the Note is the
Principal Amount of the Note) 
  

	
	
 Print Name of Investor

	
	  

 Signature of Investor

	
	IMPORTANT - INVESTOR MUST INITIAL THE APPROPRIATE REPRESENTATION IN SECTION 3(a) ABOVE BEFORE THE COMPANY WILL CONSIDER THIS SUBSCRIPTION.
	
	 Social Security Number/ Taxpayer

	 Identification Number:

	
	  

			
		
	 Address:
	 	  

	  

	  

	
	
	If the Note will be held as joint tenants, tenants in common or community property, please complete the following:
	
	  

	 Print name of spouse or other co-subscriber

	
	  

	 Signature of spouse or other co-subscriber

	
	  

	 Print the manner in which securities to be held

	
	  

	 Social Security number of co-subscriber

  

 10 

 ACCEPTED BY: 
  

							
	OPTICAL SENSORS INCORPORATED	 	 Date:
	 	  

				
	By	 	  

	 	 	 	 
	 	 	Paulita LaPlante, President and CEO	 	 	 	 

  
 Exhibits: 
  

					
	A	 	–	 	Promissory Note
			
	B	 	–	 	Warrant to purchase Series C Stock
			
	C	 	–	 	Security Agreement
			
	D	 	–	 	Certificate of Designation -Series C Preferred Stock
			
	E	 	–	 	List of materials delivered to Investor

  

 11

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