UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

~~July 7~~January 1, ~~2005~~2006

OPTICAL SENSORS INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

0-27600

41-164359

(State or other jurisdiction

of incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

7615 Golden Triangle Drive, Suite C

Minneapolis, Minnesota

55344-3733

(Address of Principal Executive Offices)

(Zip Code)

(952) 944-5857

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1 5.02 ~~TERMINATION~~DEPARTURE OF ADIRECTORS ~~MATERIAL~~OR ~~DEFINITIVE~~PRINCIPAL ~~AGREEMENT.~~OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

OnEffective ~~July 7~~January 1, ~~2005~~2006, the Board of Directors of Optical Sensors Incorporated, d.b.a. väsamed, ~~(the~~promoted ~~“Company”) entered~~Victor ~~into~~Kimball ato ~~termination~~Chief ~~agreement~~Operating ~~and~~Officer ~~mutual~~of ~~release (~~the ~~”Termination~~company. ~~Agreement”)~~As ~~with~~Chief ~~Nellcor~~Operating ~~Puritan Bennett Incorporated (“Nellcor”)~~Officer, ~~pursuant~~Mr. Kimball towill ~~which~~be ~~the~~responsible ~~parties~~for ~~terminated~~management ~~the~~of ~~Development~~all ~~and~~operations ~~License~~of ~~Agreement, dated September 28, 2001, between~~ the ~~parties~~business ~~(the “Development~~ and ~~License~~will ~~Agreement”)~~report ~~and~~to ~~reaffirmed~~Paulita LaPlante, the ~~prior~~company’s ~~termination~~Chief ofExecutive ~~the Supply Agreement, dated September 28, 2001, between the parties~~Officer.

~~The license agreement made Nellcor the exclusive~~Mr. Kimball, ~~worldwide manufacturer and distributor of~~age ~~CapnoProbe~~42, ~~and~~has ~~resulted~~been inthe ~~payments~~company’s toVice ~~the~~President ~~Company~~ of ~~over~~Business $3Development ~~million~~and inResearch ~~license,~~since ~~development~~December ~~and~~2003. ~~supply~~From ~~fees~~December ~~from~~1998 ~~2001~~to ~~through~~December 2003, Mr. Kimball Inserved ~~late~~as ~~2003,~~ the ~~Company~~company’s ~~transferred~~Vice ~~CapnoProbe~~President, ~~manufacturing~~Strategic toPlanning ~~Nellcor’s~~and ~~manufacturing~~Product ~~facility in Mexico~~Development. ~~The~~From ~~license~~June ~~agreement~~1997 ~~provided~~to ~~that~~October ~~the~~1998, ~~Company~~Mr. Kimball ~~receive~~was ~~royalties~~Director ~~on net sales~~ of ~~the~~Engineering ~~disposable~~and ~~components~~Business Development and onfrom ~~aggregate~~January ~~gross~~1995 ~~margins~~to ~~for~~June ~~the~~1997, ~~CapnoProbe~~he ~~instrument.~~was InDirector ~~August~~of ~~2004,~~Engineering. ~~Nellcor~~From ~~initiated~~June a1992 ~~voluntary~~to ~~recall~~January of1995 ~~the~~he ~~CapnoProbe Sublingual~~was ~~Sensor~~Engineering Manager.

~~The~~Mr. Kimball ~~Termination~~is ~~Agreement~~not ~~provides~~party ~~for~~to ~~the~~any ~~transfer~~arrangement ~~of certain~~or ~~tooling~~understanding ~~and~~with ~~unused~~any ~~monitoring~~person ~~devices~~pursuant ~~from Nellcor~~ to which ~~the~~Mr. Kimball ~~Company,~~was ~~subject~~selected toas ~~certain~~an ~~restrictions~~officer; onnor ~~their~~is ~~use~~Mr. Kimball ~~Subject~~a party to ~~certain~~any ~~exclusions~~transaction, ~~the~~or ~~parties~~series ~~have~~of ~~also~~transactions, ~~agreed~~required to ~~release~~be ~~each~~disclosed ~~other~~pursuant ~~from any and all claims related~~ to, ~~among other~~Item 404(a) ~~things,~~of ~~the~~Regulation ~~Development~~S-B. ~~and~~Mr. Kimball ~~License~~is ~~Agreement,~~not ~~the~~a ~~Supply~~party ~~Agreement~~to ~~and~~any ~~the~~written employment ~~recall~~agreement. ~~of the CapnoProbe~~Mr. Kimball’s Assalary ~~consideration~~will ~~for~~be ~~the Termination Agreement~~$139,650 ~~the~~for ~~Company has agreed to issue 175,000 shares of~~ the ~~Company’s~~2006 ~~common~~calendar ~~stock to Nellcor~~year.

ITEM 8.01 OTHER EVENTS.

On July 7, 2005, Optical Sensors Incorporated, d.b.a. väsamed (the “Company”), entered into a settlement agreement with the Institute of Critical Care Medicine (“ICCM”) relating to the Patent License Agreement, dated July 20, 1998, between the parties (the “License Agreement”). Under the settlement agreement, ICCM withdrew its prior purported termination of the License Agreement, the parties agreed to dismiss with prejudice an arbitration proceeding that the Company initiated in response to ICCM’s purported termination of the License Agreement, and the parties released each other from all claims through the date of the settlement agreement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	OPTICAL SENSORS INCORPORATED
Dated: July 8, 2005	By:	/s/ Paulita M. LaPlante
Dated: January 6, 2006	By:	/s/ Paulita M. LaPlante
		Paulita M. LaPlante
		President and Chief Executive Officer

Filing Compare · OPTICAL SENSORS INC