Document:

EXHIBIT 10

	
EXHIBIT 10.14

FIRST AMENDED EMPLOYMENT AGREEMENT

This First Amended Employment Agreement ("Agreement") is made and entered into on April 6, 2000 effective as of September 1, 1999, by and between Equity One, Inc., a Maryland corporation (the "Company"), and Howard Sipzner (hereinafter
called the "Executive").

R E C I T A L S

A.The Board has determined that this Agreement will encourage the Executive's attention and dedication to the Company.

B.The Executive is willing to make his services available to the Company and on the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties agree as follows:

1.Employment.

1.1Employment and Term. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company on the terms and conditions set forth herein.

1.2Duties of Executive. During the Term of Employment under this Agreement, the Executive shall serve as the Chief Financial Officer and Treasurer of the Company, shall diligently perform all services as may be assigned to him by the Chief
Executive Officer of the Company and shall exercise such power and authority as may from time to time be delegated to him by the Chief Executive Officer, all as customary for the chief financial officer in a corporation of the size and nature of the
Company. The Executive shall devote his full time and attention to the business and affairs of the Company, render such services to the best of his ability, and use his best efforts to promote the interests of the Company, the foregoing being subject to
illness, vacation periods as set forth hereinafter, reasonable sick leave, and a five (5) day work week, excluding state, federal and religious holidays observed.

2.Term.

2.1Review Period. For a period of sixty days following the Commencement Date (as defined below) of this Agreement (the "Review Period"), the Executive or the Company may terminate this Agreement for any reason, or for no reason. Upon
termination by the Executive or by the Company during the Review Period, the Company shall pay to the Executive his Base Salary to the date of termination, plus $20,000 of the amount payable in accordance with Section 3.1(a)(ii) hereof and all expenses
(as such term is defined in Section 4.1) incurred to the date of termination.

2.2Initial Term. The initial Term of Employment under this Agreement, and the employment of the Executive hereunder, shall commence as of September 1, 1999 (the "Commencement Date") and shall expire on August 31, 2003, unless sooner
terminated in accordance with Section 5 hereof (the "Initial Term"). The Initial Term of Employment may be extended pursuant to Section 2.3 below.

2.3Renewal Terms. At the end of the Initial Term, the Term of Employment automatically shall renew for successive one-year terms (subject to earlier termination as provided in Section 5 hereof), unless the Company or the Executive delivers
written notice to the other at least 90 calendar days prior to the Expiration Date of its or his election not to renew the Term of Employment.

2.4Term of Employment and Expiration Date. The period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement is sometimes referred to in this Agreement as the "Term of Employment", and the date on
which the Term of Employment shall expire, is sometimes referred to in this Agreement as the "Expiration Date". 

3.Compensation.

3.1Sign-On Bonus. Sixty (60) days after the Commencement Date and provided that the Executive was not terminated pursuant to Section 2.1 hereof, the Executive shall receive, at the Executive's election, to be evidenced by (i) 5,000 shares of
restricted stock of the Company, which shares of restricted stock will be subject to the terms and conditions of the restricted stock agreement attached hereto as Exhibit A (the "Restricted Stock Agreement"), or (ii) at Executive's election, with
written notice to the Company, a cash payment of $40,000, of which $20,000 is payable on each of January 1, 2000 and June 1, 2000 (the "Sign-On Bonus").

3.2Base Salary. The Executive shall receive a base salary at the annual rate of $170,000 during the first twelve month period following the Commencement Date, and a base salary at the annual rate of $187,000 from the first anniversary of the
Commencement Date until the second anniversary of the Commencement Date (the "Base Salary"), with such Base Salary payable in quarterly installments, in advance, subject to applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, and may, by action and in the sole discretion of the Board, be increased at any time or from time to time. In addition, on each anniversary of the Commencement Date following the second anniversary of the Commencement Date, the Base Salary
shall be increased, but shall not be decreased, by that percentage by which the Consumer Price Index, for the Miami-Dade County, Florida area published by the United States government (the "Index") for the immediately preceding twelve-month period exceeds
such index for the next preceding twelve-month period. If publication of the Index is discontinued, the parties hereto shall accept comparable statistics on the cost of living for the Miami-Dade County, Florida area as published by an agency of the United
States government, or if no such agency computes and publishes such statistics, by any regularly published national financial periodical that does compute and publish such statistics.

3.3Bonuses.

a.During each fiscal year of the Company, the Executive shall be eligible to receive a bonus in an amount equal to twenty-five percent of the Executive's Base Salary (the "Minimum Bonus Payment"); provided that the Executive shall only be
entitled to the Minimum Bonus Payment in any year of the Term of Employment if the percentage by which the Company's funds from operations per share exceeds the Company's funds from operations per share for the preceding year (the "Company FFO Growth") is
equal to the percentage by which the aggregate average funds from operations per share of the companies represented on Schedule A attached hereto (the "Peer Group") for such fiscal year exceeds the aggregate average funds from operations per share of the
Peer Group for the immediately preceding fiscal year (the "Peer Group FFO Growth").

b.If for any fiscal year, the Company FFO Growth exceeds the Peer Group FFO Growth, the Minimum Bonus Payment will be increased by a percentage equal to the percentage by which Company FFO Growth for such fiscal year exceeds the Peer Group FFO
Growth for such fiscal year (the "Adjusted Bonus Payment"); provided, however, that any Adjusted Bonus Payment shall not exceed seventy-five percent of the Executive's Base Salary for such fiscal year. An example of the calculation of the Adjusted Bonus
Payment for illustrative purposes is provided below:

Peer Group FFO Growth:7%

Company FFO Growth:10.5%

Adjusted Bonus Payment:

Minimum Bonus Payment + (Minimum Bonus Payment x (Company FFO Growth -Peer Group FFO Growth))

Peer Group FFO Growth

or

25% of Base Salary + (25% of Base Salary x10.5-7) = 

7

25% of Base Salary + (25% of Base Salary x 0.5) = 37.5% of Base Salary

c.The Executive may elect to receive all or any portion of the Minimum Bonus Payment or the Adjusted Bonus Payment, as the case may be (the "Cash Compensation"), in a number of shares of restricted stock of the Company which shall be equal to the
Cash Compensation, divided by 85% of the fair market value of the common stock of the Company at such fiscal year end; provided, however, that if the Executive elects to receive a portion of the Cash Compensation in shares of restricted stock, the
Executive must elect to receive the restricted stock so elected in rounds lots of one hundred shares of restricted stock. The restricted stock granted under this Section 3.3(c) will be subject to the terms and conditions of the Restricted Stock Agreement.

d.During each year of the Term of Employment, the Executive shall be eligible to receive 6,000 shares of restricted stock (the "Minimum Restricted Stock Bonus Payment"); provided that the Executive shall only be entitled to the Minimum Restricted
Stock Bonus Payment in any year of the Term of Employment if the Company FFO Growth is equal to the Peer Group FFO Growth for such fiscal year.

e.If for any fiscal year the Company FFO Growth exceeds the Peer Group FFO Growth, the number of shares granted as the Minimum Restricted Stock Bonus Payment will be increased by a percentage equal to the percentage by which the Company FFO
Growth for such fiscal year exceeds the Peer Group FFO Growth for such fiscal year (the "Adjusted Restricted Stock Bonus Payment") in the same manner as the calculation of the Adjusted Bonus Payment pursuant to Section 3.3(b) hereof. Any restricted stock
granted under Sections 3.3(d) or (e) (the "Long-Term Compensation") will be subject to the terms and conditions of the Restricted Stock Agreement.

f.The "Cash Compensation" or "Long-Term Compensation" payable pursuant to Sections 3.3(a), (b), (c), (d) or (e) are sometimes hereinafter referred to as "Incentive Compensation." Each period for which Incentive Compensation is payable is
sometimes hereinafter referred to as a Bonus Period. Unless otherwise specified by the Board, the Bonus Period shall be the fiscal year of the Company.

g.For the Bonus Period in which the Executive's employment with the Company terminates for any reason, the Company shall pay the Executive a pro rata portion (based upon the period ending on the date on which the Executive's employment with the
Company terminates) of the bonus otherwise payable under Sections 3.3(a), (b), (c), (d) or (e) for the Bonus Period in which such termination of employment occurs; provided, however, that (i) the Bonus Period shall be deemed to end on the last day of the
fiscal quarter of the Company in which the Executive's employment so terminates in the event of a termination in accordance with Sections 5.2, 5.3, 5.4 or 5.6 and (ii) the calculation of the Company FFO Growth and the Peer Group FFO Growth used to
determine the bonus for this short Bonus Period shall be annualized and shall be determined based upon unaudited financial information prepared in accordance with generally accepted accounting principles, applied consistently with prior periods, and
reviewed and approved by the Compensation Committee of the Board (the "Termination Quarter"). The Incentive Compensation for this Bonus Period is sometimes hereinafter referred to as the "Termination Year Bonus". Any shares of restricted stock that would
otherwise be granted to the Executive pursuant to Sections 3.3(c), 3.3(d) or 3.3(e) hereof in the event of a termination during any Bonus Period pursuant to Section 5 hereof will be paid in cash in an amount equal to the fair market value of the common
stock of the Company. "Fair market value", for purposes of this Section, shall mean the average of the closing price on the New York Stock Exchange of the common stock for the last ten (10) days of trading immediately preceding the date of Termination.

h.For the Bonus Period ended December 31, 1999, the Company shall pay to the Executive a pro rata portion (based upon the period commencing on the Commencement Date) of the bonus otherwise payable under Sections 3.3(a), (b), (c), (d) or (e)
for such Bonus Period; provided, however, that the calculation of the Company FFO Growth and the Peer Group FFO Growth used to determine the Bonus Period shall be annualized and shall be determined based upon unaudited financial information prepared in
accordance with generally accepted accounting principles, applied consistently with prior periods, and reviewed and approved by the Compensation Committee of the Board.

i.The Executive shall receive such additional bonuses, if any, as the Board may in its sole and absolute discretion determine.

j.Any Cash Compensation payable pursuant to Sections 3.3(a) or (b) shall be paid by the Company to the Executive within 2 1/2 months after the end of the Bonus Period for which it is payable, except as otherwise provided for in this Agreement.
Any restricted stock granted pursuant to Sections 3.3(c), (d) or (e) shall be granted by the Company to the Executive in accordance with the Restricted Stock Agreement, and in accordance with Section 5 hereof.

4.Expense Reimbursement and Other Benefits.

4.1Reimbursement of Expenses. Upon the submission of proper substantiation by the Executive, and subject to such rules and guidelines as the Company may from time to time adopt, the Company shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company. The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and
shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company.

4.2Compensation/Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all medical and hospitalization insurance plans, and any and all other plans, as are presently and hereinafter offered by the
Company to its executives and shall be reimbursed for reasonable costs of the Executive for the purchase of disability insurance with the amount of such reimbursement not to exceed $3,000.

4.3Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, secretarial help, cellular phone, laptop computer and home fax machine and such other facilities and services suitable to his
position and adequate for the performance of his duties hereunder.

4.4Automobile. During the Term of Employment, the Company shall provide the Executive with an automobile, together with reimbursement of the reasonable operating expenses thereof.

4.5Stock Options. On the Commencement Date, the Executive shall be granted options (the "Stock Options") to purchase 175,000 shares of common stock (the "Common Stock") at an exercise price of $9.90 under (and therefore subject to all terms
and conditions of) the Company's 1995 Stock Option Plan, as amended, and any successor plan thereto (the "Stock Option Plan") and all rules of regulation of the Securities and Exchange Commission applicable to stock option plans then in effect. The terms
and conditions of the Stock Options shall be determined in accordance with the Stock Option Agreement attached hereto as Exhibit B and pursuant to the Stock Option Plan.

4.6Other Benefits. The Executive shall be entitled to twenty-one days of vacation each calendar year during the Term of Employment, to be taken at such times as the Executive and the Company shall mutually determine and provided that no
vacation time shall interfere with the duties required to be rendered by the Executive hereunder. Any vacation time not taken by Executive during any calendar year may not be carried forward into any succeeding calendar year. The Executive shall receive
such additional benefits, if any, as the Board of the Company shall from time to time determine.

5.Termination.

5.1Termination for Cause. On or after the expiration of the Review Period, the Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause. For purposes of this Agreement, the
term "Cause" shall mean (i) an action or omission of the Executive which constitutes a willful and material breach of, or failure or refusal (other than by reason of his disability) to perform his duties under, this Agreement which is not cured within
thirty (30) days after receipt by the Executive of written notice of same, (ii) fraud, embezzlement, misappropriation of funds or breach of trust in connection with his services hereunder, (iii) conviction of any crime which involves dishonesty or a
breach of trust, or (iv) gross negligence or willful misconduct in connection with the performance of the Executive's duties hereunder. Any termination for Cause shall be made in writing to the Executive, which notice shall set forth in detail all acts or
omissions upon which the Company is relying for such termination. Upon any termination pursuant to this Section 5.1, within seventy-five (75) days of the end of the fiscal quarter in which the termination is effected, the Company shall pay to the
Executive his accrued but unpaid Cash Compensation, if any, for any Bonus Period ending on or before the date of the termination of Executive's employment with the Company in accordance with Section 3.3(g), and the Executive shall remit to the Company
that pro rata portion of his Base Salary for any remaining period of the fiscal quarter for which the Executive received his Base Salary in advance pursuant to Section 3.2. The Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1). Upon termination of the Executive's employment pursuant to this Section 5.1, any unvested portion of the
restricted stock granted to the Executive pursuant to Sections 3.1, 3.3(c), 3.3(d) and 3.3(e) shall terminate. All of the Stock Options granted to the Executive pursuant to Section 4.5 which are vested at the time of the termination of the Executive's
employment pursuant to this Section 5.1 may be exercised until the earlier of (x) the three-month period immediately following the date of such termination of employment and (y) the expiration of the term specified in the Stock Option.

5.2Disability. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, if the Executive shall, as the result of mental or physical incapacity, illness or disability, become
unable to perform his obligations hereunder for a period of 90 days in any 12-month period. The Company shall have sole discretion based upon competent medical advice to determine whether the Executive continues to be disabled. Upon any termination
pursuant to this Section 5.2, within seventy-five (75) days of the end of the fiscal quarter in which the termination is effected, the Company shall pay to the Executive his accrued but unpaid Incentive Compensation, if any, for any Bonus Period ending on
or before the date on which the Executive first becomes disabled, calculated in accordance with Section 3.3(g) hereof, and the Executive shall remit to the Company that pro rata portion of his Base Salary for any remaining period of the fiscal quarter for
which the Executive received his Base Salary in advance pursuant to Section 3.2. Further, all Stock Options granted to the Executive pursuant to Section 4.5, whether or not then vested, may be exercised until the earlier of: (x) the end of the 12-month
period following the date of such termination of employment, or (y) the expiration of the term specified in the Stock Option. Further, any unvested portion of the restricted stock granted to the Executive pursuant to Sections 3.1, 3.3(c), 3.3(d) and
3.3(e) shall immediately vest. The Company shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section 4.1, and (y)
payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs).

5.3Death. Upon the death of the Executive during the Term of Employment, the Company shall pay to the estate of the deceased Executive his accrued but unpaid Incentive Compensation, if any, for any Bonus Period ending on or before the
Executive's date of death, calculated in accordance with Section 3.3(g) hereof. Each Stock Option held by the Executive at the time of death, whether or not vested, may be exercised by the person or persons to whom the Stock Options shall pass by will or
by the laws of descent and distribution (but by no other persons) until the earlier of (x) the end of the 12-month period immediately following the date of death (or such longer period as is permitted by the Committee); and (y) the expiration of the term
specified in the Stock Option; provided, however, that in no event is the term of the Stock Option to be deemed to expire prior to the end of three months from the date of death of the Executive. Further, any unvested portion of the restricted stock
granted to the Executive pursuant to Sections 3.1, 3.3(c), 3.3(d) and 3.3(e) shall immediately vest. The Company shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of the
Executive's death, subject, however to the provisions of Section 4.1, and (y) payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs).

5.4Termination Without Cause. At any time the Company shall have the right to terminate the Term of Employment by written notice to the Executive. Upon any termination pursuant to this Section 5.4 (that is not a termination under any of
Sections 5.1, 5.2 or 5.3), the Company shall (i) continue to pay the Executive's Base Salary for a period (the "Continuation Period") which is 180 days following the termination of the Executive's employment with the Company, in the manner and at such
time as the Base Salary otherwise would have been payable to the Executive, (ii) continue to calculate the Incentive Compensation and continue to provide the Executive with the benefits he was receiving under Sections 4.2, 4.4 and 4.6 hereof (the
"Benefits") through the end of the Continuation Period in the manner and at such times as the Incentive Compensation or Benefits otherwise would have been payable or provided to the Executive, (iii) pay to the Executive the accrued but unpaid Incentive
Compensation, if any, for any Bonus Period ending on or before the end of the Continuation Period calculated in accordance with Section 3.3(g) hereof, and (iv) pay to the Executive a lump sum payment equal to the greater of (x) the sum of the Executive's
Base Salary plus the Incentive Compensation for the preceding fiscal year or (y) the sum of one-half of the Executive's Base Salary for any remaining portion of the Initial Term plus the Incentive Compensation for the preceding fiscal year, such amounts
to be paid to the Executive within fifteen (15) days of the end of the Continuation Period. Upon any termination pursuant to this Section 5.4, the Executive shall remit to the Company that pro rata portion of his Base Salary for any remaining period of
the fiscal quarter for which the Executive received his Base Salary in advance pursuant to Section 3.2.

In the event that the Company is unable to provide the Executive with any Benefits under any plans maintained by the Company by reason of the termination of the Executive's employment pursuant to this Section 5.4, then the Company shall pay the Executive
cash equal to the value of the Benefit that otherwise would have accrued for the Executive's benefit under the plan, for the period during which such Benefits could not be provided under the plans, said cash payments to be made within 45 days after the
end of the year for which such contributions would have been made or would have accrued. The Company's good faith determination of the amount that would have been contributed or the value of any Benefits that would have accrued under any plan shall be
binding and conclusive on the Executive. For this purpose, the Company may use as the value of any Benefit the cost to the Company of providing that Benefit to the Executive. Further, all of the Stock Options granted to the Executive pursuant to Section
4.5 which are vested at the time of the termination of the Executive's employment pursuant to this Section 5.4 may be exercised until the earlier of (x) the three-month period immediately following the date of such termination of employment and (y) the
expiration of the term specified in the Stock Option. Any unvested portion of the restricted stock granted to the Executive pursuant to Sections 3.1, 3.3(c), 3.3(d) and 3.3(e) shall immediately vest. The Company shall have no further liability hereunder
(other than for (x) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1, and (y) payment of compensation for unused vacation days that have accumulated during the
calendar year in which such termination occurs).

5.5Termination by Executive.

a.The Executive shall at all times have the right, upon sixty (60) days written notice to the Company, to terminate the Term of Employment.

b.Upon termination of the Term of Employment pursuant to this Section 5.5 (that is not a termination under Section 5.6) by the Executive, the Executive shall remit to the Company that pro rata portion of his Base Salary for any remaining period of
the fiscal quarter for which the Executive received his Base Salary in advance pursuant to Section 3.1 within seventy-five (75) days of the end of the fiscal quarter in which the termination is effected. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1). Upon termination of the Executive's employment pursuant to this Section 5.5, any
unvested portion of the restricted stock granted to the Executive pursuant to Section 3.1, 3.3(c), 3.3(d) and 3.3(e) shall terminate. All of the Stock Options granted to the Executive pursuant to Section 4.5 which are vested at the time of the termination
of the Executive's employment pursuant to this Section 5.5 may be exercised until the earlier of (x) the three-month period immediately following the date of such termination of employment and (y) the expiration of the term specified in the Stock Option.

5.6Change in Control of the Company.

a.In the event that (i) a Change in Control (as defined in paragraph (b) of this Section 5.6) in the Company shall occur during the Term of Employment, and (ii) prior to the earlier of the Expiration Date and one year after the date of the Change in
Control, the Term of Employment is terminated by the Company without Cause, pursuant to Section 5.4 hereof, the Company shall (i) continue to pay the Executive's Base Salary for a period (the "Continuation Period") which is 180 days following the termination of the Executive's employment with the Company, in the manner and at such time as the Base Salary
otherwise would have been payable to the Executive, (ii) continue to calculate the Incentive Compensation and continue to provide the Executive with the Benefits through the end of the Continuation Period in the manner and at such times as the Incentive
Compensation or Benefits otherwise would have been payable or provided to the Executive, (iii) pay to the Executive the accrued but unpaid Incentive Compensation, if any, for any Bonus Period ending on or before the end of the Continuation Period
calculated in accordance with Section 3.3(g) hereof, and (iv) pay to the Executive a lump sum payment equal to the greater of (x) the sum of the Executive's Base Salary for the year then in effect plus the Incentive Compensation for the preceding fiscal
year or (y) the sum of the Executive's Base Salary for any remaining portion of the Initial Term plus the Incentive Compensation for the preceding fiscal year, within fifteen (15) days of the end of the Continuation Period. Further, upon the Change in
Control, the Executive's Stock Options shall immediately vest. The Stock Options which become vested pursuant to this Section 5.6 may be exercised until the earlier of the (x) the three-month period immediately following the date of such termination of
employment and (y) the expiration of the term specified in the Stock Option. Any unvested portion of the restricted stock granted to the Executive pursuant to Sections 3.1, 3.3(c), 3.3(d) and 3.3(e) shall immediately vest. The Company shall have no
further liability hereunder (other than for (1) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1, and (2) payment of compensation for unused vacation days that
have accumulated during the calendar year in which such termination occurs).

b.For purposes of this Agreement, the term "Change in Control" shall mean:

(i)Approval by the shareholders of the Company of (x) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 30% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such reorganization, merger, consolidation or other transaction, or (y) a liquidation or dissolution of the Company or
(z) the sale of all or substantially all of the assets of the Company (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned); 

(ii)Individuals who, as of the Commencement Date of this Agreement, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided (i) that any person becoming a director subsequent to the
Commencement Date of this Agreement whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act) or (ii) any individual appointed to the Board by the Incumbent Board shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or

(iii)the acquisition (other than from the Company) by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of more than 30% of either the then outstanding shares of the Company's Common
Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors (hereinafter referred to as the ownership of a "Controlling Interest") excluding, for this purpose, any
acquisitions by (1) the Company or its Subsidiaries, or (2) any person, entity or "group" that as of the Commencement Date of this Agreement owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest or any affiliate of such person, entity or "group."

5.7Termination by Expiration. If, at the end of the Initial Term (or at the end of any one-year renewal term as provided in Section 2.3), the Company has delivered written notice to the Executive of its intention not to renew the Term of
Employment (other than for Cause, as defined in Section 5.1), all Restricted Stock granted to the Executive pursuant to Sections 3.3(c), (d) and (e) shall immediately vest.

5.8Survival. The provisions of this Section 5 shall survive the termination of this Agreement, as applicable.

6.Restrictive Covenants.

6.1Non-competition. At all times while the Executive is employed by the Company and for a one (1) year period after the termination of the Executive's employment with the Company for any reason (other than pursuant to Section 5.4 or 5.6
hereof), the Executive shall not, directly or indirectly, engage in or have any interest in any sole proprietorship, partnership, corporation or business or any other person or entity (whether as an employee, officer, director, partner, agent, security
holder, creditor, consultant or otherwise) that directly or indirectly (or through any affiliated entity) engages in competition with the Company (for this purpose, any business that engages in the ownership, management, acquisition and/or development of
shopping centers in the State of Florida shall be deemed to be in competition with the Company); provided that such provision shall not apply to the Executive's ownership of Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on
the National Association of Securities Dealers Automated Quotations System, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control or, more than five percent of any class of capital stock of such corporation; provided, further, that the employment of the Executive by a securities, financial services or investment
banking firm shall not be deemed to be a violation of this Section 6.1.

6.2Nondisclosure. The Executive shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information (as hereinafter defined)
pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company (which shall include, but not be limited to, information concerning the Company's
financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such information. For purposes of this Agreement, "Confidential Information" means information disclosed to the Executive or known by the Executive as a consequence of or through his
employment by the Company (including information conceived, originated, discovered or developed by the Executive) prior to or after the date hereof, and not generally known, about the Company or its business. Notwithstanding the foregoing, nothing herein
shall be deemed to restrict the Executive from disclosing Confidential Information to the extent required by law.

6.3Nonsolicitation of Employees and Clients. At all times while the Executive is employed by the Company and for a two (2) year period after the termination of the Executive's employment with the Company for any reason, for the Executive shall
not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (a) employ or attempt to employ or enter into any contractual arrangement with any employee or former employee of the
Company, unless such employee or former employee has not been employed by the Company for a period in excess of six months, and/or (b) call on or solicit any of the actual or targeted prospective clients of the Company on behalf of any person or
entity in connection with any business competitive with the business of the Company, nor shall the Executive make known the names and addresses of such clients or any information relating in any manner to the Company's trade or business relationships with
such customers, other than in connection with the performance of Executive's duties under this Agreement.

6.4Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company, whether prepared by the Executive or otherwise coming into the Executive's possession, shall be the exclusive property of
the Company and shall be returned immediately to the Company on termination of the Executive's employment hereunder or on the Company's request at any time.

6.5Definition of Company. Solely for purposes of this Article 6, the term "Company" also shall include any existing or future subsidiaries of the Company that are operating during the time periods described herein and any other entities that
directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with the Company during the periods described herein.

6.6Acknowledgment by Executive. The Executive acknowledges and confirms that (a) the restrictive covenants contained in this Article 6 are reasonably necessary to protect the legitimate business interests of the Company, and (b) the
restrictions contained in this Article 6 (including without limitation the length of the term of the provisions of this Article 6) are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful observance of each of the covenants contained in this Article 6 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants
contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the
needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company is such as would cause the Company serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Article 6. The Executive further acknowledges that the restrictions contained in this Article 6 are intended to be, and shall be, for the benefit of and shall be enforceable by, the
Company's successors and assigns.

6.7Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 6 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to
enforcement of this Article 6 within the jurisdiction of such court, such provision shall be interpreted and enforced as if it provided for the maximum restriction permitted under such governing law.

6.8Extension of Time. If the Executive shall be in violation of any provision of this Article 6, then each time limitation set forth in this Article 6 shall be extended for a period of time equal to the period of time during which such
violation or violations occur.

6.9Survival. The provisions of this Article 6 shall survive the termination of this Agreement, as applicable.

7.Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Article 6 of this Agreement will cause irreparable harm and damage to the Company, the monetary
amount of which may be virtually impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of
any or all of the covenants contained in Article 6 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to
whatever other remedies the Company may possess.

8.Mediation. Except to the extent the Company has the right to seek an injunction under Section 7 hereof, in the event a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through
negotiation, the parties hereby agree first to attempt in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Employment Mediation Rules before resorting to litigation or some other dispute
resolution procedure.

9.Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Broward or Miami-Dade Counties, Florida, in accordance with the Rules of the American Arbitration
Association then in effect (except to the extent that the procedures outlined below differ from such rules). Within thirty (30) days after written notice by either party has been given that a dispute exists and that arbitration is required, each party
must select an arbitrator and those two arbitrators shall promptly, but in no event later than thirty (30) days after their selection, select a third arbitrator. The parties agree to act as expeditiously as possible to select arbitrators and conclude the
dispute. The selected arbitrators must render their decision in writing. The cost and expenses of the arbitration and of enforcement of any award in any court shall be borne by the non-prevailing party. If advances are required, each party will advance
one-half of the estimated fees and expenses of the arbitrators. Judgment may be entered on the arbitrators' award in any court having jurisdiction. Although arbitration is contemplated to resolve disputes hereunder, either party may proceed to court to
obtain an injunction to protect its rights hereunder, the parties agreeing that either could suffer irreparable harm by reason of any breach of this Agreement. Pursuit of an injunction shall not impair arbitration on all remaining issues.

10.Section 162(m) Limits. Notwithstanding any other provision of this Agreement to the contrary, if and to the extent that any remuneration payable by the Company to the Executive for any year would exceed the maximum amount of remuneration
that the Company may deduct for that year under Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the "Code"), payment of the portion of the remuneration for that year that would not be so deductible under Section 162(m)
shall, in the sole discretion of the Board, be deferred and become payable at such time or times as the Board determines that it first would be deductible by the Company under Section 162(m), with interest at the "short-term applicable rate" as such term
is defined in Section 1274(d) of the Code. The limitation set forth under this Section 10 shall not apply with respect to any amounts payable to the Executive pursuant to Article 5 hereof.

11.Assignment. Neither party shall have the right to assign or delegate his rights or obligations hereunder, or any portion thereof, to any other person.

12.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

13.Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both
oral and written, between the Executive and the Company (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

14.Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission
addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt
by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be sent (i) if to the Company, addressed to Equity One, Inc., 1600 N.E. Miami Gardens Drive, Suite 200, North Miami Beach,
Florida 33179, Attention: Chaim Katzman, and (ii) if to the Executive, to his address as reflected on the payroll records of the Company, or to such other address as either party hereto may from time to time give notice of to the other.

15.Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where applicable, assigns, including,
without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.

16.Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of
which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such
invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered
to be reduced to a period or area which would cure such invalidity.

17.Waivers. The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

18.Damages. Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained by either or both of them as a result of its or his breach of any term or provision of
this Agreement. In the event that either party hereto brings suit for the collection of any damages resulting from, or the injunction of any action constituting, a breach of any of the terms or provisions of this Agreement, then the party found to be at
fault shall pay all reasonable court costs and attorneys' fees of the other.

19.Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

20.No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or remedies under or by reason of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

COMPANY:

	
EQUITY ONE, INC.

	
 

	
/s/ Chaim Katzman

	
Name: Chaim Katzman

	
Title: Chief Executive Officer and Chairman of the Board

	
 

	
EXECUTIVE:

	
 

	
/s/ Howard M. Sipzner

	
Name: Howard Sipzner

Schedule A

Peer Group

Bradley Real Estate Inc.

First Washington Realty Trust, Inc.

IRT Property Company

Konover Property Trust

Kranzco Realty Trust

Malan Realty Investors

Mid-Atlantic Realty Trust

Pan-Pacific Retail Properties, Inc.

Ramco Gershenson Properties, Inc.

Western Properties Trust

	
EXHIBIT A

RESTRICTED STOCK AGREEMENT

	
EXHIBIT B

STOCK OPTION AGREEMENT<PAGE>

                                                                   EXHIBIT 10.16

                              INVESTMENT AGREEMENT

     THIS INVESTMENT AGREEMENT ("Agreement") is made and entered into effective
as of March 10, 2000, by and among Optical Sensors Incorporated, a Delaware
corporation (the "Company"), with its principal place of business at 7615 Golden
Triangle Drive, Suite A, Eden Prairie, Minnesota 55344, and the investors listed
on Schedule I hereto (collectively, the "Investors").

     A. The Company desires to raise up to $3,000,000 of additional capital in
order to fund its operations.

     B. The Investors desire 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 Notes. Upon the terms and subject to the
     conditions set forth in this Agreement, the Company agrees to issue to each
     Investor, and each Investor agrees to purchase from the Company, a
     convertible promissory note in the form attached hereto as Exhibit A in the
     maximum principal amount set forth opposite such Investor's name on
     Schedule I (the "Notes"). The maximum aggregate principal amount of all of
     the Notes to be issued hereunder shall be Three Million Dollars
     ($3,000,000). The Notes shall not bear interest and shall be due and
     payable in full one (1) year from the date of issuance (the "Maturity
     Date") unless converted into Units pursuant to Section 3 prior to the
     Maturity Date; provided, however, if the Notes are not paid in full or
     converted into Units on or before the Maturity Date, any remaining unpaid
     principal balance shall bear interest at the rate of ten percent (10%) per
     year from the Maturity Date until paid in full. The Company shall have the
     right to prepay the Notes, 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. All partial payments
     of the Notes shall be made among the Investors on a pro rata basis. For
     purposes of this Agreement, "pro rata" shall mean with respect to any
     Investor the portion that the maximum principal balance of such Investor's
     Note bears to the aggregate maximum principal balance of all of the Notes.

2.   Advances Under Notes.

     (a)  Initial Advances. Upon execution of this Agreement, each Investor
          shall advance to the Company in immediately available funds, its pro
          rata share of One Million Four Hundred Thousand Dollars ($1,400,000).

     (b)  Additional Advances. At any time during the Advance Period (as defined
          below), the Company shall have the right to request up to two
          additional advances under the Notes in the amounts of Six Hundred
          Thousand Dollars ($600,000) and One
<PAGE>

          Million Dollars ($1,000,000) each, pursuant to this Section 2(b). The
          "Advance Period" shall mean the sixty (60) day period beginning on the
          first day after both of the following have occurred: (i) the Company
          executes a definitive distribution agreement (the "Distribution
          Agreement") for the Company's CapnoProbe product with a major medical
          company on terms no less favorable to the Company than those set forth
          in the letter of intent, dated January 4, 2000, between the Company
          and Baxter Healthcare Corporation ("Baxter"), and (ii) the
          shareholders of the Company have approved the conversion of any
          additional advances to be made under the Notes pursuant to this
          Section 2(b) into Units at the Company's 2000 Annual Meeting of
          Shareholders; provided, however, that in any case the Advance Period
          will expire on June 15, 2000, after which date the Company will not
          have any right to request any advance hereunder. Within five (5) days
          of a written request by the Company, each Investor shall advance to
          the Company its pro rata share of an aggregate of Six Hundred Thousand
          Dollars ($600,000). Within five (5) days of a written request by the
          Company, each Investor shall have the option to advance to the Company
          its pro rata share of an aggregate of an additional One Million
          Dollars ($1,000,000); provided, however, that the Investors will be
          required to make such advance if the Company notifies the Investors
          that the Company needs such funds as part of a plan to maintain its
          listing on the Nasdaq National Market or to assist in avoiding a going
          concern qualification with respect to its audited financial statements
          for the year ended December 31, 1999. If any Investor fails to advance
          its pro rata share of any advance request, the other Investors shall
          have the right, but not the obligation, to advance such amount to the
          Company.

3.   Conversion.

     (a)  Terms of Conversion. The Notes are convertible into units ("Units"),
          each unit consisting of 50,000 shares of the Company's common stock,
          $.01 par value (the "Common Stock"), and a warrant to purchase 12,500
          shares of Common Stock, at a conversion price equal to Fifty Thousand
          Dollars ($50,000) per Unit in accordance with this Section 3, subject
          to adjustment of the conversion price as set forth in the Notes. The
          warrant shall be in substantially the form attached hereto as Exhibit
          B ("Warrant"), have an initial exercise price equal to $1.00 per share
          and shall be exercisable for a period of five years from the date of
          issuance.

     (b)  Optional Conversion. Each Investor shall have the right to convert all
          or any portion of the principal balance under its Note, at the option
          of the Investor holding such Note, into Units at any time.

     (c)  Automatic Conversion. An aggregate of One Million Four Hundred
          Thousand Dollars ($1,400,000) of the principal balance of the Notes
          will automatically convert into Units, without any action of the
          Investors, thirty (30) days after written notice from the Company to
          the Investors that the Distribution Agreement has been executed by the
          Company and a major medical company. The principal balance under the
          Notes related to the $600,000 advance will automatically convert into
          Units, without any action of the Investors, thirty (30) days after the

                                       2
<PAGE>

          date of such $600,000 advance, and the principal balance under the
          Notes related to the $1,000,000 advance will automatically convert
          into Units, without any action of the Investors, thirty (30) days
          after the date of such $1,000,000 advance. Any conversion under this
          Section 3(c) shall be made on a pro rata basis among all holders of
          Notes.

4.   Representations and Warranties of the Company. The Company represents and
     warrants to the Investors 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 Notes and the Warrants and to
          perform its obligations hereunder and thereunder, including the
          issuance of the Notes, the Warrants, the Conversion Securities (as
          defined below) and the Warrant Securities (as defined below). This
          Agreement, the Notes and the Warrants 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 shares of Common Stock
          issuable upon conversion of the Notes ("Conversion Securities") and
          the Common Stock issuable upon exercise of the Warrants ("Warrant
          Securities") has been taken, except for shareholder approval
          contemplated by Section 3(c). The Conversion Securities and the
          Warrant Securities, when issued pursuant to the terms of the Notes and
          the Warrants, respectively, including the payment of any consideration
          required thereunder, 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 Notes or the Warrants by the Company, nor the performance by the
          Company of its obligations hereunder or thereunder, nor the
          consummation of the transactions

                                       3
<PAGE>

          contemplated hereby or thereby will: (a) conflict with or result in
          any breach of any provision of the Articles 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 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, (ii) liabilities that have been incurred in the
          ordinary course of business since September 30, 1999 and (iii)
          potential liability to Instrumentation Laboratory Company ("IL") in
          connection with the termination of the Private Label Reseller
          Agreement, dated as of January 7, 1998, between the Company and IL.

     (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, (ii) the Company's continued operating losses and

                                       4
<PAGE>

          negative cash flow, (iii) an anticipated write-down of inventory of
          approximately $400,000; and (iv) potential liability to IL in
          connection with the termination of the Private Label Reseller
          Agreement, dated as of January 7, 1998, between the Company and IL.

     (g)  Authorized Capital Stock. The authorized capital stock of the Company
          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 1,263,628
          shares of Common Stock, and there are no other outstanding warrants,
          options or other rights to acquire any shares of capital stock of the
          Company, except 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 IL, no holder of any
          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
          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; neither the Company nor any of its
          subsidiaries has received any notice of, or has any 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
          Investors in Section 5, 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 Investors of the Notes, the Warrants, the
          Conversion Securities or the Warrant Securities other than (i) 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 Notes and the Warrants
          and the issuance of the Conversion Securities and the Warrant
          Securities, and (ii) the filing of a registration statement or
          statements pursuant to Section 7. Under the circumstances contemplated
          by this Agreement, the offer, issuance, sale and delivery of the Notes
          and the Warrants will not, under current laws and regulations, require
          compliance with the prospectus delivery or registration requirements
          of the Securities Act.

                                       5
<PAGE>

     (j)  Litigation. Except for the pending arbitration proceeding with IL and
          an informal investigation by the Commission regarding recent trading
          in the Company's Common Stock, 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.

     (k)  Properties. The Company has good and marketable title to all the
          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.

     (l)  Brokers or Finders. To the knowledge of the Company, no person, firm
          or corporation has or will have, as a result of any act or omission of
          the Company, any right, interest or valid claim against any 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 each Investor harmless for any claims
          made for any commission, fee or other compensation concerning the
          transactions contemplated by this Agreement.

5.   Representations and Warranties of the Investors. Each Investor represents
     and warrants to the Company as follows:

     (a)  The Notes are being purchased for investment for such Investor's own
          account and not with the view to, or for resale in connection with,
          any distribution or public offering thereof. Each Investor understands
          that neither the Note, the Warrant, the Conversion Securities nor the
          Warrant 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. Each Investor
          further understands that its Note, the Warrant, the Conversion
          Securities and the Warrant Securities may not be

                                       6
<PAGE>

          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)  Each Investor's principal place of business is located at the address
          set forth on Schedule I. Each Investor qualifies as an "accredited
          investor," as defined in Rule 501 of Regulation D under the Securities
          Act. Each Investor acknowledges that the Company has made available to
          such 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. Each Investor is able to bear
          the loss of its entire investment in the Note, the Conversion
          Securities and the Warrant 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 4 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 each Investor, has been duly executed and delivered by such
          Investor and is a valid and binding agreement of such Investor.

6.   Use of Proceeds. The Company will use the proceeds from the sale of the
     Notes for general corporate purposes, including obtaining regulatory
     clearance for the Company's CapnoProbe monitor and disposable probe.

7.   Registration Rights.

     (a)  Filing of Registration Statement. Within thirty (30) days of the
          issuance of the Notes, the Company will file a registration statement
          with the Commission under the Securities Act covering the Conversion
          Securities and the Warrant Securities subject to Warrants issuable
          upon conversion of the principal balance of the Notes outstanding at
          the time of such filing. Within thirty (30) days of any additional
          advance under the Notes pursuant to Section 2(b), the Company will
          file a registration statement with the Commission under the Securities
          Act (or an amendment to any prior registration statement) covering any
          Conversion Securities and Warrant Securities issuable upon conversion
          of such advances and not previously registered. The Company may, on
          not more than one occasion, delay the filing of any registration
          statement required hereunder for a period of not more than 90 days in
          the event that the Company has furnished the Investor with a
          certificate executed by the Company's President or Chief Executive
          Officer stating that such delay is necessary in order to (i) not
          significantly adversely affect financing efforts then underway at the
          Company or (ii) avoid disclosure of material non-public information.
          Any registration of Conversion Securities and

                                       7
<PAGE>

          Warrant Securities hereunder shall cover any additional Conversion
          Securities or Warrant Securities issued or issuable pursuant to
          anti-dilution or other similar rights.

     (b)  Registration Procedures. If and whenever the Company is required by
          the provisions of Section 7(a) to effect the registration of any
          Conversion Securities or Warrant Securities under the Securities Act,
          the Company will:

          (i)  prepare and file with the Commission a registration statement (on
               any available form to effect registration) with respect to such
               securities, and use its best efforts to cause such registration
               statement to become and remain effective until such securities
               are sold pursuant to such registration statement or are eligible
               to be sold pursuant to Rule 144(k);

          (ii) prepare and file with the Commission such amendments to such
               registration statement and supplements to the prospectus
               contained therein as may be necessary to keep such registration
               statement effective until such securities are sold pursuant to
               such registration statement or are eligible to be sold pursuant
               to Rule 144(k);

          (iii)furnish to the Investors and to any underwriters of the
               securities being registered such reasonable number of copies of
               the registration statement, preliminary prospectus, final
               prospectus and such other documents as the Investors and
               underwriters may reasonably request in order to facilitate the
               public offering of such securities;

          (iv) use its best efforts to register or qualify the securities
               covered by such registration statement under such state
               securities or blue sky laws of such jurisdictions as the
               Investors may reasonably request, except that the Company shall
               not for any purpose be required to execute a general consent to
               service of process or to qualify to do business as a foreign
               corporation in any jurisdiction wherein it is not so qualified;

          (v)  prepare and promptly file with the Commission and promptly notify
               the Investors of the filing of such amendment or supplement to
               such registration statement or prospectus as may be necessary to
               correct any statements or omissions if, at the time when a
               prospectus relating to such securities is required to be
               delivered under the Securities Act, any event shall have occurred
               as the result of which any such prospectus or any other
               prospectus as then in effect would include an untrue statement of
               a material fact or omit to state any material fact necessary to
               make the statements therein, in the light of the circumstances in
               which they were made, not misleading; and

          (vi) use its best efforts to cause all securities covered by such
               registration statement to be listed on any securities exchange,
               quotation system,

                                       8
<PAGE>

               market or over-the-counter bulletin board, if any, on which the
               Common Stock shall then be listed and trading.

     (c)  Expenses. Except as set forth in the last sentence of this Section
          7(c), with respect to any registration of securities pursuant to
          Section 7(a), the Company shall bear all fees, costs and expenses,
          including, without limitation: all registration, filing and NASD fees,
          printing expenses, fees and disbursements of counsel and accountants
          for the Company, all internal Company expenses, the premiums and other
          costs of policies of insurance against liability arising out of the
          public offering, and all legal fees and disbursements and other
          expenses of complying with state securities or blue sky laws of any
          jurisdictions in which the securities to be offered are to be
          registered or qualified. Fees and disbursements of counsel and
          accountants for the Investors, underwriting discounts and commissions
          and transfer taxes for the Investors and any other expenses incurred
          by the Investors not expressly included above shall be borne by the
          Investors.

     (d)  Indemnification. In the event that any Conversion Securities or
          Warrant Securities owned by the Investors are included in a
          registration statement under Section 7(a):

          (i)  The Company will indemnify and hold harmless each Investor
               (including for this purpose its directors, officers and partners)
               and any underwriter (as defined in the Securities Act) from and
               against any and all loss, damage, liability, cost and expense
               (including, subject to Section 7(d)(iii), reasonable fees and
               expenses of counsel) to which any such Investor or any such
               underwriter may become subject under the Securities Act or
               otherwise, insofar as such losses, damages, liabilities, costs or
               expenses are caused by any untrue statement or alleged untrue
               statement of any material fact contained in such registration
               statement, any prospectus contained therein or any amendment or
               supplement thereto, or arise out of or are based upon the
               omission or alleged omission to state therein a material fact
               required to be stated therein or necessary to make the statements
               therein, in light of the circumstances in which they were made,
               not misleading; provided, however, that the Company will not be
               liable in any such case to the extent that any such loss, damage,
               liability, cost or expense arises out of or is based upon an
               untrue statement or alleged untrue statement or omission or
               alleged omission so made in conformity with written information
               furnished by such Investor or such underwriter.

          (ii) Each Investor, severally but not jointly, will indemnify and hold
               harmless the Company and any underwriter from and against any and
               all loss, damage, liability, cost or expense (including, subject
               to Section 7(d)(iii), reasonable fees and expenses of counsel) to
               which the Company or any underwriter may become subject under the
               Securities Act or otherwise, insofar as such losses, damages,
               liabilities, costs or expenses are caused by any untrue or
               alleged untrue statement of any material fact contained in such
               registration statement, any prospectus contained therein or any

                                       9
<PAGE>

               amendment or supplement thereto, or arise out of or are based
               upon the omission or the alleged omission to state therein a
               material fact required to be stated therein or necessary to make
               the statements therein, in light of the circumstances in which
               they were made, not misleading, in each case to the extent, but
               only to the extent, that such untrue statement or alleged untrue
               statement or omission or alleged omission was so made in reliance
               upon and in strict conformity with written information furnished
               by such Investor. Notwithstanding the provisions of this clause
               (ii), no Investor shall be required to indemnify any person
               pursuant to this Section 7 in an amount in excess of the amount
               of the aggregate net proceeds received by such Investor in
               connection with any such registration under the Securities Act.

          (iii) Promptly after receipt by an indemnified party pursuant to the
               provisions of paragraph (i) or (ii) of this Section 7(d) of
               notice of the commencement of any action involving the subject
               matter of the foregoing indemnity provisions, such indemnified
               party will, if a claim thereof is to be made against the
               indemnifying party pursuant to the provisions of said paragraph
               (i) or (ii), promptly notify the indemnifying party of the
               commencement thereof; but the omission to so notify the
               indemnifying party will not relieve the indemnifying party from
               any liability which it may have to any indemnified party
               otherwise than hereunder nor of its obligations or liabilities
               pursuant to this Agreement, except to the extent that the failure
               to so notify materially prejudices the indemnifying party. In
               case such action is brought against any indemnified party and it
               notifies the indemnifying party of the commencement thereof, the
               indemnifying party shall have the right to participate in, and,
               to the extent that it may wish, jointly with any other
               indemnifying party similarly notified, to assume the defense
               thereof, with counsel satisfactory to such indemnified party;
               provided, however, if the defendants in any action include both
               the indemnified party and the indemnifying party and there is a
               conflict of interest which would prevent counsel for the
               indemnifying party from also representing the indemnified party,
               the indemnified party or parties shall have the right to select
               one separate counsel to participate in the defense of such action
               on behalf of such indemnified party or parties, which counsel
               shall be reasonably satisfactory to the indemnifying party. After
               notice from the indemnifying party to such indemnified party of
               its election so to assume the defense thereof, the indemnifying
               party will not be liable to such indemnified party pursuant to
               the provisions of said paragraph (i) or (ii) for any legal or
               other expense subsequently incurred by such indemnified party in
               connection with the defense thereof other than reasonable costs
               of investigation, unless (x) the indemnified party shall have
               employed counsel in accordance with the proviso of the preceding
               sentence, (y) the indemnifying party shall not have employed
               counsel satisfactory to the indemnified party to represent the
               indemnified party within a reasonable time after the notice of
               the commencement of the action, or (z) the indemnifying party has
               authorized the employment of

                                       10
<PAGE>

               counsel for the indemnified party at the expense of the
               indemnifying party. No indemnifying party shall, without the
               prior written consent of the indemnified party, consent to entry
               of any judgment or enter into any settlement which does not
               include as an unconditional term thereof the giving by the
               claimant or the plaintiff to such indemnified party of a release
               from all liability in respect of such action, and no indemnified
               party shall consent to entry of any judgment or settle such
               action without the prior written consent of the indemnifying
               party.

     (e)  SEC Reports. 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.

8.   Nasdaq Covenants. The Company will use its best efforts to meet any
     requirements or take any action necessary to maintain listing of the
     Company's Common Stock on the Nasdaq National Market, including seeking
     shareholder approval at the Company's 2000 Annual Meeting of Shareholders
     for the conversion of the Notes into Units. The Company will use its best
     efforts to hold the 2000 Annual Meeting of Shareholders by May 15, 2000.
     Each Investor agrees to vote all shares of Common Stock of the Company
     beneficially owned by such Investor for the conversion of the Notes into
     Units at the Company's 2000 Annual Meeting of Shareholders

9.   Miscellaneous.

     (a)  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 Investors. This Agreement and the
          rights and obligations of the parties hereunder shall not be
          assignable, in whole or in part, by an Investor without the prior
          written consent of the Company, except that any 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.

     (b)  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.

     (c)  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.

                                       11
<PAGE>

     (d)  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 Investors at the
          addresses set forth on Schedule I, 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.

     (e)  This Agreement shall be construed and enforced in accordance with the
          laws of the State of New York.

     (f)  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]

                                       12
<PAGE>

     IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement effective as of the date first written above.

                                       OPTICAL SENSORS INCORPORATED

                                       By /s/ Paulita M. Laplante
                                          --------------------------------
                                          Paulita LaPlante,
                                          President and Chief Executive Officer

                                       CIRCLE F VENTURES LLC

                                       By /s/ Hayden R. Fleming
                                          --------------------------------------

                                       Its
                                          --------------------------------------

                                       SPECIAL SITUATIONS FUND III, L.P.

                                       By /s/ David Greenhouse
                                          --------------------------------------

                                       Its
                                          --------------------------------------

                                       13
<PAGE>

                                   SCHEDULE I

                                                          Maximum
Investors                                             Principal Amount

Circle F Ventures LLC                                     $1,500,000
17797 North Perimeter Drive
Suite 105
Scottsdale, Arizona 85255

Special Situations Fund III, L.P.                         $1,500,000
153 E. 53rd Street, 55th Floor
New York, New York 10022

Total                                                     $3,000,000

                                       14

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