SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 240.14a-11(c) or [ ] 240.14a-12
Oxboro Medical International, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
OXBORO MEDICAL INTERNATIONAL, INC.
13828 Lincoln Street N.E.
Ham Lake, Minnesota 55304
--------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 13, 1997
---------------------------------------------------
TO OUR SHAREHOLDERS:
Please take notice that the Annual Meeting of the Shareholders of
Oxboro Medical International, Inc., a Minnesota corporation (the "Company"),
will be held at the Company's offices, 13828 Lincoln Street N.E., Ham Lake,
Minnesota 55304, on Thursday, March 13, 1997, at 4:00 p.m. Minneapolis time, to
consider and vote upon the following matters:
1. Election of one director for a three-year term; and
2. Such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
The Board of Directors of the Company has fixed the close of business
on January 13, 1997, as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting. The transfer books of
the Company will not be closed.
Shareholders who do not expect to be present personally at the Annual
Meeting are urged to complete, date, sign, and return the accompanying Proxy in
the enclosed, self-addressed envelope. The Board of Directors of the Company
sincerely hopes, however, that all shareholders who can attend the Annual
Meeting will do so.
It is important that your shares be represented and voted at the Annual
Meeting. If you are not able to attend the Annual Meeting, please return your
completed Proxy at your earliest convenience.
BY THE ORDER OF THE BOARD OF DIRECTORS
Dennis L. Mikkelson
Secretary
Dated: January 22, 1997
OXBORO MEDICAL INTERNATIONAL, INC.
13828 Lincoln Street N.E.
Ham Lake, Minnesota 55304
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 13, 1997
SOLICITATION AND REVOCATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of Oxboro
Medical International, Inc. (the "Company") in connection with the Annual
Meeting of the Shareholders of the Company, which will be held on March 13,
1997, and any adjournments thereof.
The person giving the enclosed Proxy has the power to revoke it at any
time prior to the convening of the Annual Meeting. Revocation must be in
writing, signed in exactly the same manner as the Proxy, and dated. Revocations
of Proxy will be honored if received at the offices of the Company, addressed to
Dennis L. Mikkelson, Secretary, on or before March 12, 1997. In addition, on the
day of the meeting, prior to the convening thereof, revocations may be delivered
to the tellers, who will be seated at the door of the meeting room. Revocation
may also be effected by delivery of an executed, later dated Proxy. Unless
revoked, all properly executed Proxies received in time will be voted.
Proxies not revoked will be voted in accordance with the choice
specified by shareholders on the Proxies. Proxies which are signed but which
lack any such specification will, subject to the following, be voted FOR the
director nominated by the Board of Directors and listed herein. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. Abstentions, therefore, as
to any proposal will have the same effect as votes against such proposal. If a
broker turns in a "non-vote" Proxy, indicating a lack of voting instruction by
the beneficial holder of the shares and lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote Proxy shall be deemed present at the meeting for purposes of
determining a quorum but shall not be deemed to be represented at the meeting
for purposes of calculating the vote required for approval of such matter.
The Company will pay for costs of soliciting Proxies, including the
costs of preparing and mailing the Notice of Annual Meeting of Shareholders and
this Proxy Statement. Solicitation will be primarily by mailing this Proxy
Statement to all shareholders entitled to vote at the meeting. Proxies may be
solicited by officers or other employees of the Company who will receive no
special compensation for their services. The Company may reimburse brokers,
banks, and others holding shares in their names for others for the costs of
forwarding proxy material to, and obtaining Proxies from, beneficial owners.
The Annual Report of the Company, including financial statements, for
the fiscal year ended September 30, 1996 is being mailed with this Proxy
Statement. Copies of this Proxy Statement and Proxies will first be mailed to
shareholders on or about January 22, 1997.
VOTING RIGHTS
Only shareholders of record at the close of business on January 13,
1997 are entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of that date, there were issued and outstanding
2,712,278 shares of Common Stock of the Company, the only class of securities of
the Company entitled to vote at the meeting. Each shareholder of record is
entitled to one vote for each share registered in his or her name as of the
record date. The Articles of Incorporation of the Company do not grant the
shareholders the right to vote cumulatively for the election of directors. No
shareholder will have appraisal rights or similar dissenter's rights as a result
of any matters expected to be voted on at the meeting. The presence in person or
by proxy of holders of a majority of shares of the Common Stock entitled to vote
at the Annual Meeting will constitute a quorum for the transaction of business.
COMMON STOCK OWNERSHIP
The following table sets forth certain information as of January 13,
1997 with respect to the stock ownership of all persons known by the Company to
be beneficial owners of more than five percent of its outstanding Common Stock,
all directors and nominees to become directors, all Named Executive Officers (as
defined herein) and all officers and directors of the Company as a group. Except
where otherwise indicated, all persons have sole voting power and sole
investment power with respect to the shares indicated:
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE
BENEFICIAL OWNER OWNED OF CLASS
- -------------------- ---------------- ----------
Larry Rasmusson 619,827(l) 22.5%
1485 - 139th Lane N.W
Andover, Minnesota 55304
Keith A. Olson 240,000 8.8%
2531 West 90th Street
Bloomington, Minnesota 55431
Harley Haase 239,336(2) 8.8%
13828 Lincoln Street N.E
Ham Lake, Minnesota 55304
Employee Stock Ownership Plan 225,000(3) 8.3%
13828 Lincoln Street N.E
Ham Lake, Minnesota 55304
Dennis L. Mikkelson 40,000(4) 1.5%
John R. Walter 40,000(4) 1.5%
All officers and directors
as a group (5 persons) 939,163(5) 33.2%
- -------------------
(1) Includes 383,500 shares issued to Mr. Rasmusson under the terms of a stock
award agreement, 40,364 shares subject to a currently exercisable option,
and 6,693 shares allocated to Mr. Rasmusson under the Employee Stock
Ownership Plan (ESOP) (of which 2,677 shares have vested). See "Certain
Relationships and Related Transactions."
(2) Includes 28,274 shares allocated to Mr. Haase under the ESOP; all of such
shares have vested.
(3) Larry Rasmusson, trustee of the Employee Stock Ownership Plan, disclaims
beneficial ownership of shares owned by the Plan. Each participant in the
Plan has voting rights with regard to shares allocated to his or her
account in which the participant has vested. As of September 30, 1996,
83,526 shares have been allocated to participants, of which 73,970 shares
have vested. See "Executive Compensation -- Employee Stock Ownership Plan."
(4) Includes 40,000 shares that may be acquired pursuant to a currently
exercisable option.
(5) Includes 120,364 shares that may be acquired pursuant to currently
exercisable options and 34,967 shares allocated under the ESOP.
Change in Control Agreement
Under the terms of an employment agreement effective April 1, 1993, in
the event any person (as such term is defined in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended), shall become the beneficial
owner of 30% or more of the Company's outstanding Common Stock, Harley Haase,
the Company's chief executive officer, will be granted an option to purchase, at
a price equal to the fair market value of the Common Stock on the date of grant,
a number of shares of the Company's Common Stock sufficient to reduce the
ownership of such person to less than 30%.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that directors are
divided into three classes, with each class serving a three-year term and
approximately one-third of the Board of Directors to be elected each year. At
the 1997 Annual Meeting, one Class I director will be elected to hold office for
a term expiring at the Annual Meeting of shareholders to be held in 2000, and
until his successor has been elected and qualified, or until his death,
resignation, or removal, if earlier.
The director in Class I whose term is expiring, John R. Walter, has
been nominated by the Board of Directors for reelection. Keith A. Olson, whose
term expires at the 1997 Annual Meeting, has notified management that he intends
to retire at the end of his term. The Company plans to fill the vacancy created
by Mr. Olson's retirement following the Annual Meeting.
Unless instructed not to vote for the election of the nominee, the
Proxies will vote to elect the nominee named above. If the nominee is not a
candidate for election at the meeting, which is not currently anticipated, the
Proxies may vote for such other person as they, in their discretion, may
determine.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE
ABOVE NOMINEE BE ELECTED.
Certain information regarding the nominee and the other current
directors of the Company is set forth below:
Nominee for Election as Class I Director (term expiring in 2000)
JOHN R. WALTER, 56, has been a director since 1992. For the
past 35 years, he has worked as a financial planner. Mr. Walter serves
as a consultant to Oxboro Outdoors, Inc. in connection with marketing.
Continuing Class II Directors (terms expiring in 1998)
DENNIS L. MIKKELSON, 53, has been a director of the Company
since 1990. Prior to 1990, Mr. Mikkelson spent 18 years with Control
Data Corporation in various positions related to computer software
development. Since leaving Control Data Corporation, he has worked as
an independent consultant in information engineering and data base
consulting.
LARRY A. RASMUSSON, 53, has been a director since April 1993.
Since that time he has also served as Chairman of the Board and chief
financial officer of the Company. Mr. Rasmusson also serves as
president of the Company's wholly-owned subsidiary, Oxboro Outdoors,
Inc. Prior to April 1993, he had served as a consultant to the Company
on various financial and other matters since 1982. Mr. Rasmusson also
serves as trustee of the Company's ESOP and is the sole shareholder of
the general partner of a limited partnership in which the Company has
made an investment as a limited partner. See "Certain Relationships and
Related Transactions."
Continuing Class III Director (term expiring in 1999)
HARLEY HAASE, 50, has been a director of the Company since
1987. He has been president of the Company since June 1988.
Meetings and Committees of the Board of Directors
During fiscal 1996, the Board of Directors held ten meetings. All
directors except Mr. Olson attended at least 75% of the meetings held.
The Board had no standing audit, compensation, or nominating committee
in fiscal 1996. A compensation committee consisting of nonmanagement directors
has been appointed for fiscal 1997.
Compensation to Directors
Directors' Fees and Bonuses. For services rendered in fiscal 1995, each
member of the Company's Board of Directors who is not an employee of the Company
received a monthly fee of $600. The aggregate compensation paid to nonmanagement
directors for services rendered in fiscal 1996 was $21,600.
Stock Options to Directors. Effective June 8, 1992, the Company granted
to John R. Walter an option to purchase 40,000 shares of Common Stock at an
exercise price of $2.75 per share. The option is exercisable until June 8, 1997.
Effective October 30, 1996, the Company granted to Dennis L. Mikkelson an option
to purchase 40,000 shares of Common Stock at an exercise price of $1.125 per
share. The option is exercisable until October 30, 2001.
Consulting Fees to Director. The Company paid approximately $60,000
during each of fiscal 1996 and 1995 to Dennis L. Mikkelson, a director, for
general consulting and for development and enhancement of the Company's computer
capabilities.
Commissions/Consulting Fees to Director. John R. Walter, a director,
received approximately $10,000 during each of fiscal 1996 and 1995 as
commissions for the sale to the Company of various investment and insurance
products. In addition, Mr. Walter received $30,000 during each of fiscal 1996
and 1995 for consulting services related to Oxboro Outdoors, Inc.
Compliance with Reporting Requirements of Exchange Act
Section 16 of the Securities Exchange Act of 1934, and the rules
promulgated thereunder, requires the Company's officers, directors, and holders
of 10% or more of its outstanding Common Stock to file certain reports with the
Securities and Exchange Commission. To the Company's best knowledge, based
solely on information provided to it by the reporting individuals, all of the
reports required to be filed by these individuals have been filed.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's chief executive officer and the one other executive officer whose
total annual compensation in fiscal 1996 (based on salary and bonus) exceeded
$100,000 (the "Named Executive Officers").
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES ALL
NAME AND FISCAL ------------ UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- ------------------- ------ ------------------ ------------ ------------
Harley Haase 1996 $148,226 $ 50,000 -- $ 48,667(1)
Chief Executive 1995 128,830 175,620 -- 48,895
Officer 1994 110,884 204,795 -- 56,456
Larry A. Rasmusson 1996 $181,220 $ 50,000 -- 75,810(2)
Chief Financial 1995 161,798 175,620 80,364 70,109
Officer 1994 143,884 204,795 -- 124,876
- ----------------------
(1) All other compensation for Mr. Haase for fiscal 1996 includes $45,755 of
premiums paid on a split dollar life insurance policy and the market value
at September 30, 1996 of 2,588 shares allocated to Mr. Haase under the
Company's Employee Stock Ownership Plan ($2,912). See "Split Dollar
Insurance" and "Employee Stock Ownership Plan."
(2) All other compensation for Mr. Rasmusson for fiscal 1996 includes $45,898
of premiums paid on a split dollar life insurance policy, $27,000 in
royalties, and the market value at September 30, 1996 of 2,588 shares
allocated to Mr. Rasmusson under the Company's Employee Stock Ownership
Plan ($2,912). See "License Agreements," "Split Dollar Insurance," and
"Employee Stock Ownership Plan."
Options Granted During Fiscal 1996
No options were granted to Named Executive Officers during fiscal 1996.
Aggregated Option Exercises During Fiscal 1996 and Fiscal Year-End Option Values
The following table provides information related to options exercised
by the Named Executive Officers during fiscal 1996 and the number and value of
options held at fiscal year-end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FISCAL YEAR-END FISCAL YEAR-END
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE (1)
- ------------------ ------------ ------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
Harley Haase - 0 - - 0 - -0-/-0- $ -0-/-0-
Larry A. Rasmusson - 0 - - 0 - 80,364/-0- $ -0-/-0-
</TABLE>
- ---------------------
(1) Value is calculated by multiplying the excess of the closing price of the
Common Stock on September 30, 1996 ($1.125) over the option exercise price
($1.50) by the number of shares.
Employment Agreements
Effective April 1, 1993, the Company entered into five-year employment
agreements with Harley Haase, the Company's chief executive officer, and Larry
A. Rasmusson, its chief financial officer, whereby each is to be paid an annual
salary determined each fiscal year, a bonus, the amount of which will be based
upon achievement by the Company of certain financial goals, and other benefits.
The agreement further provides that if the employment of either individual is
terminated without "cause" (as defined in the agreement), he will be entitled to
be paid his then current salary, bonus and other benefits through the remaining
term of the agreement, and under certain circumstances the Company will be
obligated to provide health and life insurance for the balance of the
individual's life. In addition, in the event that either individual's employment
is terminated in connection with a "change in control" of the Company (as
defined), he will be entitled to receive as severance pay an amount equal to two
and one-half times his "annualized includable compensation for the base period"
(as defined in Section 28OG(d) of the Internal Revenue Code of 1986, as
amended), payable in a lump sum, in cash, on the fifth day following such
termination.
License Agreements
The Company has entered into an exclusive license agreement with Larry
Rasmusson pursuant to which Mr. Rasmusson, as licensor, granted the Company, as
licensee, the exclusive right to make, use, and sell certain medical products
and to receive information and assistance from Mr. Rasmusson to make, use and
sell the products. Mr. Rasmusson is to receive royalties in the amount of 4% of
the "net sales price" (as defined) of all licensed products sold. Royalties
continue for the life of the product. If at any time a product covered by the
agreement is no longer sold by the Company (defined as a reduction by 50% in
sales from the previous calendar year), the license will no longer be exclusive
as to that product. The agreement contains a provision for increasing the
royalty amount if royalty rates paid by the Company to others for similar
products are higher than 4%. During fiscal 1996, 1995 and 1994, Mr. Rasmusson
earned $27,000, $21,669, and $16,447, respectively, in royalties under this
agreement. Effective November 8, 1995, the Company and Mr. Rasmusson amended the
agreement to provide that upon the retirement of Harley Haase, the royalty will
be increased from 4% to 6% on certain products, and the Company will pay Mr.
Rasmusson royalties of 3% and pay Mr. Haase royalties of 3% on sales of such
products.
Oxboro Outdoors, Inc., a wholly owned subsidiary of the Company
("Outdoors"), has entered into an exclusive license and royalty agreement with
Mr. Rasmusson pursuant to which Mr. Rasmusson, as licensor, granted Outdoors, as
licensee, the exclusive right to make, use, and sell certain outdoor
recreational products and to receive information and assistance from Mr.
Rasmusson to make, use and sell the products. Mr. Rasmusson is to receive an
advance royalty payment of $1,500 for each product accepted for development by
Outdoors and continuing royalties in the amount of 8% of the "net sales price"
(increased to 9% when the cumulative aggregate "net sales price" exceeds
$1,000,000) of all such products sold after the cumulative "net sales price" of
all products sold multiplied by the applicable royalty percentage exceeds the
total of all royalty advances. Royalties continue for the life of the products.
During fiscal 1994, Outdoors paid to Mr. Rasmusson $52,500 in advance royalties.
No advance royalties were paid during fiscal 1995 or 1996. Outdoors has also
been granted a royalty-free license to use the name "Larry A. Rasmusson" and the
picture of Mr. Rasmusson in connection with the advertising, merchandising,
promotion, manufacture, sale and distribution of certain Outdoors products.
Effective November 8, 1995, the Company entered into a product
development incentive agreement with Mr. Haase pursuant to which Mr. Haase, as
licensor, granted the Company, as licensee, the exclusive right to make, use and
sell certain products and to receive information and assistance from Mr. Haase
to make, use and sell the products. Additional products may become subject to
the agreement if accepted by the Board of Directors of the Company. Following
termination of his employment with the Company, Mr. Haase will receive incentive
payments equal to 4% of the net sales price of all products subject to the
agreement sold by the Company following Mr. Haase's termination. Royalties
continue for the life of the products.
Effective November 21, 1995, the Company and Outdoors entered into a
royalty sharing agreement with Mr. Rasmusson and Mr. Haase pursuant to which Mr.
Haase and Mr. Rasmusson will share royalties on products that they jointly
develop that are covered under the exclusive license agreement and/or exclusive
license and royalty agreement, with respect to Mr. Rasmusson, and under the
product development incentive agreement, with respect to Mr. Haase. Upon Mr.
Haase's termination of employment, 50% of royalties on the products jointly
developed by Mr. Haase and Mr. Rasmusson will be paid to Mr. Haase and 50% to
Mr. Rasmusson.
Consulting Agreements
Effective November 1, 1995, the Company entered into consulting
agreements with Harley Haase, the Company's chief executive officer, and Larry
A. Rasmusson, its chief financial officer, whereby each is to be paid an annual
consulting fee in the amount of $150,000 for a period of five years commencing
upon retirement. The agreements prohibit the consultants from engaging in any
activity that competes with either the Company or Outdoors and provide that the
consultants shall not be required to provide services for more than five days
per month without additional compensation. If either Mr. Rasmusson or Mr. Haase
voluntarily terminates his employment with the Company prior to age 55, the
agreement will not be binding on the Company. If the Company does not renew
either individual's employment agreement on April 1, 1998, for reasons other
than good cause, then the agreement shall commence on that date.
Split Dollar Insurance
The Company has adopted split dollar life insurance plans (the "Plans")
for the benefit of its chief executive officer, Harley Haase, and Larry A.
Rasmusson, its chief financial officer. Under the terms of the Plans, the
Company pays the annual premiums on a $1 million insurance policy (the "Policy")
on the life of each individual. The Policy is a whole life policy on which all
premiums are paid by the Company and income is imputed to the insured in an
amount equal to the term rate for his insurance as established by the insurer.
The Policy is owned by the individual. The Plans are designed so that the
Company will recover all premium payments, interest, and advances made by it on
account of the Policy. The Company's interest in the premium payments, interest,
and advances made with respect to the Policy is secured by a collateral
assignment of the Policy. Upon the death of the individual, the Company will be
reimbursed from the insurance proceeds paid to the beneficiaries in an amount
equal to the total premiums, interest, and advances made by the Company with
respect to the Policy. In the event the individual surrenders the Policy for its
cash surrender value at some date in the future, the Company will be reimbursed
for the premiums it has paid on the Policy, plus interest. Premiums paid in
fiscal 1996, 1995, and 1994 on behalf of Mr. Haase totalled $45,755, $45,467,
and $43,679, respectively. Premiums paid in fiscal 1996, 1995, and 1994, on
behalf of Mr. Rasmusson totalled $45,898, $45,012, and $43,979, respectively.
Employee Stock Ownership Plan
The Company has established an Employee Stock Ownership Plan and Trust
(the "Plan") The Company advanced $150,000 to the Plan, which was used to
purchase 225,000 shares of newly issued Common Stock from the Company at a price
of $.67 per share. The loan is evidenced by a promissory note in the initial
principal amount of $150,000, bearing interest at 9% per annum. The note
provides for annual principal payments of $7,500, together with annual interest
payments. In accordance with legal requirements, as the loan is repaid, the
shares are allocated to participants in the Plan. The Company contributed
approximately $19,992 to the Plan for fiscal 1996. For fiscal 1996, 1995, and
1994, 2,588 shares, 2,285 shares, and 3,638 shares, respectively, were credited
to the account of Harley Haase, and, for fiscal 1996, 1995 and 1994, 2,588
shares, 2,285 shares and 1,820 shares, respectively, were credited to the
account of Larry Rasmusson.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Purchase of Shares by Officer
Effective January 25, 1994, Harley Haase, an officer and director of
the Company, exercised an option to purchase 90,000 shares of the Company's
Common Stock for an aggregate purchase price of $168,750. The purchase price was
paid by delivery of $8,750 in cash and a promissory note in the principal amount
of $160,000. The note provides that the principal be paid in five equal annual
installments, commencing in January 1995, together with all interest accrued and
unpaid as of the date of payment, and that interest be accrued at an annual rate
equal to the stated Applicable Federal Rate as in effect from time to time, each
change in the interest rate to become effective on the day the corresponding
change in the Federal rate becomes effective. Such rate was 6.38% as of
September 30, 1996. Mr. Haase pledged 70,200 shares of Common Stock previously
owned by him as security for the note. As of September 30, 1996, $80,000 had
been paid on the note, leaving an outstanding principal balance of $80,000.
Limited Partnership: Project Heart
The Company has invested $142,000 cash for a 30% limited partnership
interest in the Project Heart Limited Partnership, a Minnesota limited
partnership (the "Limited Partnership"). The Limited Partnership was formed to
pursue the development of a device to be used in connection with organ
transplants and organ transportation. The proposed product to be developed by
the Limited Partnership is only in the conceptual planning stage and, in
addition to the usual uncertainties of product development, carries a
substantial risk of failure because of the nature of the product and the
significant amounts of additional financing that may be required.
The Company intends that its involvement with the Limited Partnership
will be solely as a long-term, high-risk investment, and it does not intend to
actively participate in the development of the product. Further, the Company has
no present intention to supply any additional financing. If a successful product
is developed by the Limited Partnership, the Company has no present belief that
it would, or any assurances that it could, have any involvement in the
manufacturing or marketing of the product.
The general partner of the Limited Partnership is LexTen, Inc., a
Minnesota corporation, of which Larry Rasmusson is the sole shareholder. LexTen
owns a 67.7% interest in the Limited Partnership. Larry Rasmusson is an officer
and a director of the Company and also is deemed to be the beneficial owner of
approximately 22.5% of the Common Stock of the Company. Harley Haase, president
and a director of the Company, purchased a 1.2% limited partnership interest in
the Limited Partnership for $10,000 cash.
In conjunction with the Limited Partnership, the Company entered into a
stock award agreement (the "Stock Award Agreement") with Larry Rasmusson,
pursuant to which the Company issued to Mr. Rasmusson 383,500 shares of its
Common Stock, currently held in an escrow account. These shares are to be
released to Mr. Rasmusson in various installments upon the reaching of defined
milestones set forth in the Stock Award Agreement. Mr. Rasmusson will assist the
Limited Partnership in the development of the concept.
The escrow agent for the escrow account is Norwest Bank - Riverdale,
Coon Rapids, Minnesota. The stock awards to be received by Mr. Rasmusson are
subject to a substantial risk of forfeiture such that some or all of the stock
awards may be forfeited by Mr. Rasmusson if certain of the designated milestones
under the Stock Award Agreement are not reached prior to the termination of the
Stock Award Agreement. The Stock Award Agreement was amended by the Board of
Directors for the Company effective October 31, 1995 to extend the term of the
agreement from October 31, 1995 to October 31, 1998 in consideration of Mr.
Rasmusson's waiving, on his own behalf and on behalf of LexTen, Inc., the right
to receive any cash distribution from the Limited Partnership.
The milestones and the number of shares to be awarded upon attainment
of each milestone are as follows:
Milestones Number of Shares
---------- ----------------
Complete mock-up prototype 76,700 shares
Complete prototype 57,525 shares
Begin testing for blood flow 57,525 shares
Begin testing device externally
with animal heart 95,875 shares
Begin testing device internally with
animal, using animal's (host) organ 95,875 shares
Until the termination of the Stock Award Agreement, Mr. Rasmusson is
entitled to vote the escrowed stock, including all shares not yet awarded to Mr.
Rasmusson because the milestones described above have not been reached.
OTHER MATTERS
The Board of Directors is not aware that any matter other than that
described in the Notice will be presented for action at the meeting. If,
however, other matters do properly come before the meeting, it is the intention
of the persons named in the enclosed Proxy to vote the proxied shares in
accordance with their best judgment on such matters.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
On June 9, 1995, Price Waterhouse LLP, the Company's principal
independent accountant, advised the Company that it was resigning. The reports
by Price Waterhouse LLP on the Company's financial statements for the fiscal
years 1993 and 1994 did not contain any adverse opinion or disclaimer of opinion
nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles. During fiscal years 1993 and 1994, and the period from
October 1, 1994 to June 9, 1995, there were no disagreements with Price
Waterhouse LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure that, if not resolved to
the satisfaction of Price Waterhouse LLP, would have caused it to make a
reference to the subject matter of such disagreement in its reports, nor was
there any matter required to be reported pursuant to Item 304(a)(1)(iv)(B) of
Regulation S-B.
On August 1, 1995, the Company engaged Grant Thornton LLP as the
issuer's principal independent accountant to audit the Company's financial
statements. Representatives of Grant Thornton LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement, if they
desire to do so, and to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
All shareholder proposals intended to be presented at the 1998 Annual
Shareholders' Meeting must be received by the Company at its offices on or
before September 25, 1997.
REPORT ON FORM 10-KSB
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1996, accompanies the Notice of Annual Meeting and Proxy
Statement. A copy of the Company's Report on Form 10-KSB for the fiscal year
ended September 30, 1996, as filed with the Securities and Exchange Commission,
is available upon request from the Company.
It is important that Proxies be returned promptly. Shareholders who do
not plan to attend the meeting in person are urged to sign, date, and forward
the Proxy by return mail.
BY THE ORDER OF THE BOARD OF DIRECTORS
Dennis L. Mikkelson
January 22, 1997 Secretary
OXBORO MEDICAL INTERNATIONAL, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 13, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harley Haase and Dennis L. Mikkelson,
or either of them, proxies or proxy, with full power of substitution, to vote
all shares of Common Stock of Oxboro Medical International, Inc. (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held on March 13, 1997, 4:00 p.m. Minneapolis time, at the Company's
offices, 13828 Lincoln Street N.E., Ham Lake, Minnesota, and at any adjournment
thereof, as directed below with respect to the proposals set forth below, all as
more fully described in the Proxy Statement, and in their discretion upon any
other matter that may properly come before the meeting or any adjournment
thereof.
1. ELECTION OF DIRECTOR (for a term ending in 2000):
John R.Walter |_| FOR |_| WITHHOLD AUTHORITY
2. Upon such other matters as may properly come before the
meeting.
The power to vote granted by this proxy may be exercised by Harley
Haase and Dennis L. Mikkelson, jointly or singly, or their substitute(s), who
are present and acting at said Annual Meeting or any adjournment of said Annual
Meeting. The undersigned hereby revokes any and all prior proxies given by the
undersigned to vote at this Annual Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDER'S
(SHAREHOLDERS') INSTRUCTIONS. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE PROPOSED NOMINEE.
IT IS IMPORTANT THAT EACH SHAREHOLDER COMPLETE, DATE, SIGN AND MAIL
THIS PROXY AS SOON AS POSSIBLE.
Dated and Signed _________________________, 1997
________________________________________________
Signature of Shareholder(s)
________________________________________________
Signature of Shareholder(s)
IMPORTANT: Please date and sign exactly as
your name or names appear hereon. When
signing as attorney, executor, trustee,
guardian, or authorized officer of a
corporation or partner of a partnership,
please give your title as such.
PLEASE DO NOT FORGET TO DATE THIS PROXY
OXBORO MEDICAL INTERNATIONAL, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS -- MARCH 13, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harley Haase and Dennis L. Mikkelson,
or either of them, proxies or proxy, with full power of substitution, to vote
all shares of Common Stock of Oxboro Medical International, Inc. (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held on March 13, 1997, 4:00 p.m. Minneapolis time, at the Company's
offices, 13828 Lincoln Street N.E., Ham Lake, Minnesota, and at any adjournment
thereof, as directed below with respect to the proposals set forth below, all as
more fully described in the Proxy Statement, and in their discretion upon any
other matter that may properly come before the meeting or any adjournment
thereof.
1. ELECTION OF DIRECTOR (for a term ending in 2000):
John R.Walter |_| FOR |_| WITHHOLD AUTHORITY
2. Upon such other matters as may properly come before the
meeting.
The power to vote granted by this proxy may be exercised by Harley
Haase and Dennis L. Mikkelson, jointly or singly, or their substitute(s), who
are present and acting at said Annual Meeting or any adjournment of said Annual
Meeting. The undersigned hereby revokes any and all prior proxies given by the
undersigned to vote at this Annual Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SHAREHOLDER'S
(SHAREHOLDERS') INSTRUCTIONS. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE PROPOSED NOMINEE.
IT IS IMPORTANT THAT EACH SHAREHOLDER COMPLETE, DATE, SIGN AND MAIL
THIS PROXY AS SOON AS POSSIBLE.
Dated and Signed __________________________, 1997
________________________________________________
Signature of Shareholder(s)
________________________________________________
Signature of Shareholder(s)
IMPORTANT: Please date and sign exactly as
your name or names appear hereon. When
signing as attorney, executor, trustee,
guardian, or authorized officer of a
corporation or partner of a partnership,
please give your title as such.
PLEASE DO NOT FORGET TO DATE THIS PROXY
The Company's stock records indicate that you have not presented your stock
certificate(s) for exchange following the 1-for-10 reverse stock split in April
1987. Giving effect to such reverse split, and to subsequent stock splits of
3-for-2 (January 1990) and 2-for-1 (March 1991), each 10 shares listed on this
proxy card as held of record by you will be entitled to 3 votes on all matters
to be presented to the shareholders at the 1997 Annual Meeting.
