STOCK OPTION EXERCISE AND LOAN AGREEMENT
THIS STOCK PURCHASE AGREEMENT, by and between Oxboro Medical International,
Inc., a Minnesota corporation (the "Company"), and Xxxxxx X. Xxxxxxxxx, an
individual residing in the State of Minnesota ("Xxxxxxxxx"), effective the 15th
day of January, 1998.
RECITALS
WHEREAS, Xxxxxxxxx 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 $1.125 per Share; and
WHEREAS, the Company has agreed to lend funds to Xxxxxxxxx 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 Xxxxxxxxx $45,000
to purchase from the Company 40,000 shares of the Company's Common Stock for
$1.125 per share.
2. EXERCISE OF OPTION. Concurrently with the execution of this
Agreement, Xxxxxxxxx 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 $45,000, 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 XXXXXXXXX. Xxxxxxxxx hereby
represents and warrants to the Company as follows:
(a) INFORMATION ABOUT THE COMPANY. Xxxxxxxxx has received and is
familiar with the Company's Annual Report for the year ended September 30,
1997. Xxxxxxxxx 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 Xxxxxxxxx'x current and
reasonably foreseeable future economic circumstances, Xxxxxxxxx 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.
(c) BUSINESS SOPHISTICATION. Xxxxxxxxx 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. Xxxxxxxxx is a consultant to the
Company and is a member of its Board of Directors.
(e) HOLDING PERIOD UNDER RULE 144. Xxxxxxxxx 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 Xxxxxxxxx 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. Xxxxxxxxx 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 Xxxxxxxxx'x 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. Xxxxxxxxx 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 Xxxxxxxxx in reliance on exemptions from the
registration requirements of the Act and of applicable state securities laws and
in reliance on Xxxxxxxxx'x representations and agreements contained herein.
Xxxxxxxxx is acquiring the Shares for his own account for investment purposes
only and not with a view to their resale or distribution. Xxxxxxxxx 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, Xxxxxxxxx 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
Xxxxxxxxx, Xxxxxxxxx has in
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mind merely acquiring the Shares for resale upon the occurrence or
nonoccurrence of some predetermined event.
6. COMPLIANCE WITH SECURITIES ACT. Xxxxxxxxx agrees that if the Shares
or any part thereof are sold or distributed in the future, Xxxxxxxxx shall sell
or distribute them pursuant to the requirements of the Act and of appropriate
state securities laws. Xxxxxxxxx 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. Xxxxxxxxx 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. Xxxxxxxxx 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 Xxxxxxxxx may have to serve as a director of the Company.
10. BINDING EFFECT. Neither this Agreement nor any interest herein shall
be assignable by Xxxxxxxxx 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 Xxxxxxxxx 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.
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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
Xxxxxxxxx: 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/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
Print Name: Xxxxxx X. Xxxxxxxxx
Address: 0000 - 000xx Xxxxxx XX
Xxxxxx, Xxxxxxxxx 00000
OXBORO MEDICAL INTERNATIONAL, INC.
By /s/Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx
Its Chief Executive Officer
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