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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
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OXBORO MEDICAL INTERNATIONAL, INC.
(NAME OF ISSUER)
COMMON STOCK $.01 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
691384 10 1
(CUSIP NUMBER)
John R. Walter
1920 - 1st Avenue South
Anoka, Minnesota 55303
(612) 421-5396
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(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications)
January 15, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's filing on this form with respect the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 2 of _____ pages,
including exhibits
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
John R. Walter
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
SC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e)
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES
40,000
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
-0-
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING
40,000
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PERSON 10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
N/A
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5 percent. Based upon 2,658,942 shares outstanding, including the
shares reported in Row 11.
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14 TYPE OF REPORTING PERSON*
IN
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SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 3 of _____ pages,
including exhibits
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ITEM 1. SECURITY AND ISSUER
State the title of the class of equity securities to which this
statement relates and the name and address of the principal executive offices
of the issuer of such securities.
Common Stock, $.01 par value
Oxboro Medical International, Inc.
13828 Lincoln Street N.E.
Ham Lake, Minnesota 55304
ITEM 2. IDENTITY AND BACKGROUND
(a) Name:
John R. Walter
(b) Business address:
1920 1st Avenue South, Anoka, Minnesota 55303
(c) Present principal occupation or employment and the name, principal
business and address of any corporation or other organization in
which such employment is conducted:
Financial Planner, John R. Walter & Associates, 1920 1st Avenue
South, Anoka, Minnesota 55303.
(d) Whether or not, during the last five years, such person has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and, if so, give the dates, nature of
conviction, name and location of court, and penalty imposed, or other
disposition of the case:
N/A
(e) Whether or not, during the last five years, such person was a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws; and, if so, identify and describe such
proceedings and summarize they terms of such judgment, decree or
final order:
N/A
(f) Citizenship:
United States
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SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 4 of _____ pages,
including exhibits
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Walter exercised an option to purchase 40,000 shares of Common Stock
of the Issuer effective January 15, 1998. The exercise price of $43,200 was
paid by delivery of a nonrecourse promissory note to the Issuer that provides
for payment of the principal amount in five equal annual installments,
commencing in January 1999, together with all interest accrued and unpaid as
of the date of payment, and interest at an annual rate of 6%. The shares
have been pledged to and are being held by the Issuer as security for the
repayment of the note.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the acquisition was for investment and, secondarily, in
response to the solicitation of proxies in opposition to management in
connection with the 1998 Annual Meeting. Mr. Walter intends to vote all
shares (including shares acquired after the record date for the meeting, to
the extent that he obtains proxies for such shares) in favor of management
proposals and nominees to the Board of Directors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Aggregate number and percentage of the class of securities
beneficially owned:
40,000 shares of Common Stock, representing 1.5% of the total
shares of the Issuer outstanding as of January 16, 1998, as
disclosed in the Issuer's Definitive Proxy Statement dated February
4, 1998. In addition, under Section 13d-3(b) (under some
interpretations), Mr. Walter may be deemed to be the beneficial
owner of 436,155 shares of the Issuer's Common Stock in which Larry
Rasmusson has a beneficial interests and 40,000 shares of Common
Stock in which Dennis L. Mikkelson has a beneficial interest.
(Each of the foregoing (also directors of the Issuer) has reported
his beneficial ownership on a Schedule 13D.) If combined, such
shares would represent 19.4% of the Issuer's outstanding shares as
of January 16, 1998.
(b) Number of shares as to which there is sole power to vote or to direct
the vote, shared power to vote or to direct the vote, sole power to
dispose or to direct the disposition, or shared power to dispose or
to direct the disposition:
Mr. Walter has sole power to vote and dispose of 40,000 shares.
(c) Transactions in the securities effected during the past sixty days:
Mr. Walter acquired 40,000 shares of the Common Stock of the Issuer
on January 15, 1998 for a purchase price of $1.08 per share.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, such
securities.
(e) The date on which the reporting person ceased to be the beneficiary
owner of more than five percent of the class of securities:
N/A
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SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 5 of _____ pages,
including exhibits
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named
in Item 2 and between such persons and any person with respect to any
securities of the issuer, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Stock Option Agreement dated June 19, 1997, filed as Exhibit
10.13 to and incorporated by reference from the Issuer's Report
on Form 10-KSB for the year ended September 30, 1997.
2. Stock Option Excercise and Loan Agreement dated January 15, 1998.
3. Secured Promissory Note dated January 15, 1998.
4. Instruments Security Agreement dated January 15, 1998.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
February 10, 1998 /s/John R. Walter
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Date Signature
5
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STOCK OPTION EXERCISE AND LOAN AGREEMENT
THIS STOCK PURCHASE AGREEMENT, by and between Oxboro Medical International,
Inc., a Minnesota corporation (the "Company"), and John R. Walter, an individual
residing in the State of Minnesota ("Walter"), effective the 15th day of
January, 1998.
RECITALS
WHEREAS, Walter 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 Walter 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 Walter $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, Walter 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 WALTER. Walter hereby represents and
warrants to the Company as follows:
(a) INFORMATION ABOUT THE COMPANY. Walter has received and is
familiar with the Company's Annual Report for the year ended September 30,
1997. Walter 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, Walter 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. Walter 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. Walter is a consultant to the
Company and is a member of its Board of Directors.
(e) HOLDING PERIOD UNDER RULE 144. Walter 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 Walter 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. Walter 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. Walter 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 Walter 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. Walter
is acquiring the Shares for his own account for investment purposes only and not
with a view to their resale or distribution. Walter 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, Walter 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 Walter, Walter 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. Walter agrees that if the Shares or
any part thereof are sold or distributed in the future, Walter shall sell or
distribute them pursuant to the requirements of the Act and of appropriate state
securities laws. Walter 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. Walter 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. Walter 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 Walter may have to serve as a director of the Company.
10. BINDING EFFECT. Neither this Agreement nor any interest herein shall
be assignable by Walter 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 Walter 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
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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: 13818 Lincoln Street N.E.
Ham Lake, MN 55304
Walter: 13818 Lincoln Street N.E.
Ham Lake, MN 55304
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement on
the day and year first above written.
/s/John R. Walter
--------------------------------
John R. Walter
Print Name: John R. Walter
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Address: 1920 - 1st Avenue South
-------------------------
Anoka, Minnesota 55303
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OXBORO MEDICAL INTERNATIONAL, INC.
By /s/Larry A. Rasmusson
-----------------------------
Larry A. Rasmusson
Its Chief Executive Officer
4
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SECURED PROMISSORY NOTE
$43,200.00 Due January 15, 2003
Minneapolis, Minnesota
January 15, 1998
The undersigned, for value received, promises to pay to the order of
Oxboro Medical International, Inc., a Minnesota corporation (the "Lender"),
at its main office in Ham Lake, Minnesota, in lawful money of the United
States of America the principal sum of Forty-Three Thousand Two Hundred and
No/100 Dollars ($43,200.00), together with interest (calculated on the basis
of actual days elapsed and a 360-day year) on the unpaid principal hereof
until this Note is fully paid at an annual rate of six (6%) percent.
One-fifth of the original principal amount of this Note ($8,640.00)
shall be paid on each of January 15, 1999, January 15, 2000, January 15,
2001, January 15, 2002 and January 15, 2003, together with all interest
accrued and unpaid as of each payment date.
This Note is initially secured by certain shares of Common Stock of the
Lender ("Collateral") pursuant to and is subject to the terms of a Stock
Option Exercise and Loan Agreement dated January 15, 1998, and an Instruments
Security Agreement of even date herewith.
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
thereof.
This Note may be prepaid without penalty.
This Note shall become automatically due and payable (including unpaid
interest accrued hereon) without notice or demand should the undersigned:
(i) fail to pay any or all of the Obligations (as defined in the Instruments
Security Agreement) when due or shall fail to observe or perform any covenant
or agreement herein or therein binding on it; (ii) any representation or
warranty by the undersigned made to the Lender in any financial statements or
reports submitted to the Lender by or on behalf of the undersigned shall
prove materially false or misleading; (iii) a garnishment summons or a writ
of attachment shall be issued against or served upon the Lender for the
attachment of any property of the undersigned or any indebtedness owing to
the undersigned; or (iv) the undersigned shall (A) be or become insolvent
(however defined); or (B)
<PAGE>
voluntarily file, or have filed against him involuntarily, a petition under
the United States Bankruptcy Code; or (C) die.
The undersigned agrees to pay all attorneys' fees and legal expenses as
a result of the undersigned unsuccessfully contesting actions taken by the
Lender hereunder in the event this Note is not paid. Presentment or other
demand for payment, notice of dishonor and protest are hereby waived by the
undersigned.
This Note shall be governed by the substantive laws of the State of
Minnesota, except insofar as the Lender may rely on the laws of the United
States to justify the interest rate charged hereunder in the event this Note
is not paid. The undersigned hereby irrevocably submits to the jurisdiction
of the Minnesota District Court, Fourth Division, and the Federal District
Court, District of Minnesota, Fourth Division, over any action or proceeding
arising our of or relating to this Note and agrees that all claims in respect
of such action or proceeding may be heard and determined in any such court.
/s/John R. Walter
-----------------------------
John R. Walter
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INSTRUMENTS SECURITY AGREEMENT
DATE: January 15, 1998
DEBTOR SECURED PARTY
John R. Walter Oxboro Medical International, Inc.
13828 Lincoln Street N.E. 13828 Lincoln Street N.E.
Ham Lake, MN 55304 Ham Lake, MN 55304
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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.
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(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 Federal District Court, District 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/Larry A. Rasmusson /s/John R. Walter
--------------------------- ----------------------------
Larry A. Rasmusson John R. Walter
Title: Chief Executive Officer
4
