INSTRUMENTS SECURITY AGREEMENT
DATE: January 15, 1998
DEBTOR SECURED PARTY
Xxxx X. Xxxxxx Oxboro Medical International, Inc.
00000 Xxxxxxx Xxxxxx X.X. 00000 Xxxxxxx Xxxxxx X.X.
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
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1. SECURITY INTEREST AND COLLATERAL. To secure the debt, liability or
obligation of the Debtor to secured party evidenced by the following: that
certain Promissory Note dated January 15, 1998, and any extensions, renewals
or replacements thereof (herein referred to as the "Obligations"), Debtor
hereby grants Secured Party a security interest (herein called the "Security
Interest") in the property owned by Debtor and held by Secured Party that is
described as follows: Share Certificate No. A-10010 of Oxboro Medical
International, Inc., representing 40,000 shares, together with all rights in
connection with such property (herein called the "Collateral").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Debtor represents,
warrants and covenants that:
(a) Debtor will duly endorse, in blank, each and every instrument
constituting Collateral by signing on said instrument or by signing a
separate document of assignment or transfer, if required by Secured
Party.
(b) Debtor is the owner of the Collateral free and clear of all
liens, encumbrances, security interests and restrictions, except the
Security Interest and any restrictive legend appearing on any instrument
constituting Collateral.
(c) Debtor will keep the Collateral free and clear of all liens,
encumbrances and security interests, except the Security Interest.
(d) Debtor will pay when due all taxes and other governmental
charges levied or assessed upon or against any Collateral.
(e) At any time, upon request by Secured Party, Debtor will deliver
to Secured Party all notices, financial statements, reports or other
communications received by Debtor as an owner or holder of the Collateral.
(f) Debtor will upon receipt deliver to Secured Party in pledge as
additional Collateral all securities distributed on account of the
Collateral such as stock dividends and securities resulting from stock
splits, reorganizations and recapitalizations.
3. RIGHTS OF SECURED PARTY. Debtor agrees that Secured Party may at
any time, whether before or after the occurrence of an Event of Default and
without notice or demand of any kind, (a) notify the obligor on or issue of
any Collateral to make payment to Secured Party of any amounts due or
distributable thereon, (b) in Debtor's name or Secured Party's name enforce
collection of any Collateral by suit or otherwise, or surrender, release or
exchange all or any part of it, or compromise, extend or renew for any period
any obligation evidenced by the Collateral, (c) receive all proceeds of the
Collateral, and (d) hold any increase or profits received from the Collateral
as additional security for the Obligations, except that any money received
from the Collateral shall, at Secured Party's option, be applied in reduction
of the Obligations, in such order of application as Secured Party may
determine, or be remitted to Debtor.
4. EVENTS OF DEFAULT. Each of the following occurrences shall
constitute an event of default under this Agreement (herein called "Event of
Default"); (a) Debtor shall fail to observe or perform any covenant or
agreement herein binding on him; (b) any representation or warranty by Debtor
set forth in this Agreement shall prove materially false or misleading; (c) a
garnishment summons or a writ of attachment shall be issued against or served
upon the secured Party for the attachment of any property of the Debtor or
any indebtedness owing to Debtor; or (d) Debtor shall (i) be or become
insolvent (however defined); (ii) voluntarily file, or have filed against him
involuntarily, a petition under the United States Bankruptcy Code; or (iii)
die.
5. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise any one or
more of the following rights or remedies: (a) if any interest hereon or any
principal amount hereof is not paid when due, then, in such event, the holder
hereof may, at its option, transfer a number of shares held as Collateral
equal to $8,640.00 plus interest accrued to the installment payment date
divided by the per-share market value of the Stock as of the close of trading
on the installment payment date, as payment therefore; (b) on January 15,
2003, declare all unmatured Obligations to be immediately due and payable,
and the same shall thereupon be immediately due and payable, without
presentment or other notice or demand; (c) exercise all voting and other
rights as a holder of the Collateral; (d) exercise and enforce any or all
rights and remedies available upon default to a secured party under the
Uniform Commercial Code, including the right to offer and sell the Collateral
privately to purchasers who will agree to take the Collateral for investment
and not with a view to distribution and who will agree to the imposition of
restrictive legends on the certificates representing the
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Collateral, and the right to arrange for a sale which would otherwise qualify
as exempt from registration under the Securities Act of 1933; and if notice
to Debtor of any intended disposition of the Collateral or any other intended
action is required by law in a particular instance, such notice shall be
deemed commercially reasonable if given at lease 10 calendar days prior to
the date of intended disposition or other action; (e) exercise or enforce any
or all other rights or remedies available to Secured Party by law or
agreement against the Collateral, against Debtor or against any other person
or property. Upon the occurrence of the Event of Default described in
Section 4(d)(ii), all Obligations shall be immediately due and payable
without demand or notice thereof. Any disposition of the Collateral in the
manner provided in this Section 5 shall be deemed commercially reasonable.
In the event Debtor fails to pay the remaining principal and accrued interest
outstanding on January 15, 2003, then the sole remedy of the Secured Party
shall be to cancel the Certificate or Certificates representing the remaining
Collateral or to sell said Collateral to a third party and, in either event,
such cancelation or sale shall be in full and complete satisfaction of said
outstanding principal and accrued interest and Debtor shall have no further
obligation or liability to Secured Party under the Obligations.
6. MISCELLANEOUS. This Agreement can be waived, modified, amended,
terminated or discharged, and the Security Interest can be released, only
explicitly in a writing signed by Secured Party. A waiver signed by Secured
Party shall be effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise
or enforcement of any of Secured Party's rights or remedies. All rights and
remedies of Secured Party shall be cumulative and may be exercised singularly
or concurrently, at Secured Party's option, and the exercise or enforcement
of any one such right or remedy shall neither be a condition to nor bar the
exercise or enforcement of any other.
All notices to be given to Debtor shall be deemed sufficiently given if
delivered or mailed b registered or certified mail, postage prepaid, to
Debtor at its address set forth above or at the most recent address shown on
Secured Party's records.
Secured Party's duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if Secured Party
exercises reasonable care in physically safekeeping such Collateral or, in
the case of Collateral in the custody of possession of a bailee or other
third person, exercises reasonable care in the selection of the bailee or
other third person, and Secured Party need not otherwise preserve, protect,
insure or care for any Collateral. Secured Party shall not be obligated to
preserve any rights Debtor may have against prior parties, to exercise at all
or in any particular manner any voting rights which may be available with
respect to any Collateral, to realize on the Collateral at all or in any
particular manner or order, or to apply any cash proceeds of Collateral in
any particular order of application. Debtor will reimburse Secured Party for
all expenses (including reasonable attorneys' fees and legal expenses)
incurred by Secured Party in the protection, defense or enforcement of the
Security Interest, including expenses incurred in any litigation or
bankruptcy or insolvency proceedings.
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This Agreement shall be binding upon and inure to the benefit of Debtor
and Secured Party and their respective heirs, representatives, successors and
assigns and shall take effect when signed by Debtor and delivered to Secured
Party, and Debtor waives notice of Secured Party's acceptance hereof.
This Agreement shall be governed by the substantive law of the State of
Minnesota and, unless the context otherwise requires, all terms used herein
which are defined in Articles 1 and 9 of the Uniform Commercial Code, as in
effect in Minnesota, shall have the meanings therein stated. If any
provision or application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not affect other
provisions or applications which can be given effect, and this Agreement
shall be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby.
All representations and warranties contained in this Agreement shall
survive the execution, delivery and performance of this Agreement and the
creation and payment of the Obligations. The Debtor hereby irrevocably
submits to the jurisdiction of the Minnesota District Court, Fourth Division,
and the Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx of Minnesota, Fourth Divisions, over
any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court.
SECURED PARTY DEBTOR
OXBORO MEDICAL INTERNATIONAL, INC.
By /s/Xxxxx X. Xxxxxxxxx /s/Xxxx X. Xxxxxx
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Xxxxx X. Xxxxxxxxx Xxxx X. Xxxxxx
Title: Chief Executive Officer
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