STOCK OPTION EXERCISE AND LOAN AGREEMENT
THIS STOCK PURCHASE AGREEMENT, by and between Oxboro Medical International,
Inc., a Minnesota corporation (the "Company"), and Xxxx X. Xxxxxx, an individual
residing in the State of Minnesota ("Xxxxxx"), effective the 15th day of
January, 1998.
RECITALS
WHEREAS, Xxxxxx desires to exercise an outstanding option to purchase
40,000 shares of the Company's Common Stock, $.01 par value (the "Shares"), for
a purchase price of $1.08 per Share; and
WHEREAS, the Company has agreed to lend funds to Xxxxxx to pay the purchase
price of the Shares upon the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, the parties hereto agree as follows:
1. AGREEMENT FOR LOAN. The Company agrees to lend to Xxxxxx $43,200 to
purchase from the Company 40,000 shares of the Company's Common Stock for $1.08
per share.
2. EXERCISE OF OPTION. Concurrently with the execution of this
Agreement, Xxxxxx will exercise the option to purchase the Shares by (a)
delivery of a notice of option exercise, (b) execution and delivery of a
promissory note substantially in the form attached hereto as Exhibit A (the
"Note"), in the aggregate amount of $43,200, and (c) execution and delivery of
the Instruments Security Agreement attached hereto as Exhibit B (the "Security
Agreement"), together with the Collateral (as defined in the Security
Agreement).
3. REPRESENTATION AND WARRANTIES OF XXXXXX. Xxxxxx hereby represents and
warrants to the Company as follows:
(a) INFORMATION ABOUT THE COMPANY. Xxxxxx has received and is
familiar with the Company's Annual Report for the year ended September 30,
1997. Xxxxxx has had the opportunity to receive any additional information
concerning the Company he considers necessary or advisable in order to form
a decision concerning this investment and has either received such
information or waived such opportunity.
(b) ABILITY TO BEAR THE RISK. Given Walter's current and reasonably
foreseeable future economic circumstances, Xxxxxx can, for an indefinite
period of time, bear the economic risk inherent in the acquisition of the
Shares and can afford to sustain a complete loss of such investment.
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(c) BUSINESS SOPHISTICATION. Xxxxxx is experienced and knowledgeable
in financial and business matters and capable of evaluating the merits and
risks of purchasing the Shares.
(d) AFFILIATION WITH THE COMPANY. Xxxxxx is a consultant to the
Company and is a member of its Board of Directors.
(e) HOLDING PERIOD UNDER RULE 144. Xxxxxx understands that his
ownership of the Shares for purposes of calculating the "holding period"
required for resales pursuant to Rule 144 under the Securities Act of 1933
may not commence until the consideration for the particular Shares has been
paid in full.
4. SECURITY FOR NOTE. The Note will be secured by Shares of the
Company's Common Stock purchased by Xxxxxx herein (the "Pledged Shares"). The
Pledged Shares delivered or transferred to the Company shall be referred to
herein as the "Collateral." To the extent that any portion of the Note is not
paid in accordance with the terms thereof, the Company shall have the right to
foreclose upon and redeem such portion of the Collateral as shall satisfy the
unpaid installment or portion of the Note. Xxxxxx agrees to execute and deliver
any documents that may be required to establish the Company's security interest
in the Collateral, including the certificates representing the Pledged Shares.
This security interest shall not affect Walter's rights to vote the Pledged
Shares or to receive dividends paid thereon. However, any dividends paid on
Pledged Shares subject to this security interest shall be applied to the amounts
due on the Note, in such order of application as shall be determined by the
Company. The Company agrees to release its security interest in the Collateral,
or the appropriate portion thereof, as the principal balance on the Note is
paid. For purposes of releasing Pledged Shares from this Security Agreement,
the Pledged Shares shall be valued at the then current market price.
5. INVESTMENT PURPOSE IN ACQUIRING THE SHARES. Xxxxxx and the Company
acknowledge that the Shares have not been registered under the Securities Act of
1933, as amended (the "Act"), or the securities laws of any state or foreign
jurisdiction and will b e issued to Xxxxxx in reliance on exemptions from the
registration requirements of the Act and of applicable state securities laws and
in reliance on Walter's representations and agreements contained herein. Xxxxxx
is acquiring the Shares for his own account for investment purposes only and not
with a view to their resale or distribution. Xxxxxx has no present intention to
divide his participation with others or to resell or otherwise dispose of all or
any part of the Shares. In making these representations, Xxxxxx understands
that in the view of the Securities and Exchange Commission, exemption of the
Shares from the registration requirements of the Act would not be available, if,
notwithstanding the representations of Xxxxxx, Xxxxxx has in mind merely
acquiring the Shares for resale upon the occurrence or nonoccurrence of some
predetermined event.
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6. COMPLIANCE WITH SECURITIES ACT. Xxxxxx agrees that if the Shares or
any part thereof are sold or distributed in the future, Xxxxxx shall sell or
distribute them pursuant to the requirements of the Act and of appropriate state
securities laws. Xxxxxx agrees that he will not transfer any part of the Shares
without either (a) obtaining an opinion of counsel satisfactory in form and
substance to counsel for the Company stating that the proposed transaction does
not require registration under the Act or applicable state securities laws or
(b) such registration.
7. RESTRICTIVE LEGEND. Xxxxxx agrees that the Company may place on the
certificates representing the Shares a restrictive legend containing
substantially the following language:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
have not been registered under the securities laws of any
state or foreign jurisdiction, and are subject to an
investment letter. They may not be sold, offered for sale,
or transferred in the absence of either an effective
registration under the Securities Act of 1933, as amended,
and under the applicable state securities laws or an opinion
of counsel for the Company that such transaction does not
require registration under the Act or applicable state
securities laws.
8. STOP TRANSFER ORDER. Xxxxxx agrees that the Company may place a stop
transfer order with its registrar and stock transfer agent (if any) covering all
certificates representing the Shares.
9. NO GUARANTEE OF CONTINUED SERVICE. This Agreement shall not enlarge
or diminish any rights Xxxxxx xxx have to serve as a director of the Company.
10. BINDING EFFECT. Neither this Agreement nor any interest herein shall
be assignable by Xxxxxx without the prior written consent of the Company. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors, and assigns.
11. REPRESENTATIONS TO SURVIVE DELIVERY. The representations, warranties,
and agreements of Xxxxxx contained in this Agreement will remain operative and
in full force and effect and will survive payment of the purchase price and
delivery of certificates representing the Shares.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
13. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service
if served personally on the party to whom it is given; or on the third day
after mailing if mailed to the party to whom notice is to be given, by
first-class mail, registered or certified, postage prepaid, and properly
addressed as follows:
The Company: 00000 Xxxxxxx Xxxxxx X.X.
Xxx Xxxx, XX 00000
Xxxxxx: 00000 Xxxxxxx Xxxxxx X.X.
Xxx Xxxx, XX 00000
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement on
the day and year first above written.
/s/Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Print Name: Xxxx X. Xxxxxx
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Address: 1920 - 1st Avenue South
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Xxxxx, Xxxxxxxxx 00000
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OXBORO MEDICAL INTERNATIONAL, INC.
By /s/Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
Its Chief Executive Officer
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