<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)*
OXBORO MEDICAL INTERNATIONAL, INC.
(NAME OF ISSUER)
COMMON STOCK $.01 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
691384 10 1
(CUSIP NUMBER)
Larry A. Rasmusson
1485 - 139th Lane NW
Andover, MN 55304
(612) 757-9738
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(Name, Address and Telephone Number of Person Authorized to Receive Notice and
Communications)
February 25, 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- I (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-I(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).
1
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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)
Larry A. Rasmusson
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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*
PF, OO (See Item 3)
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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
1,175,099
--------------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
-0-
--------------------------------------------------
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
1,175,099
--------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 955,503
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /x/
219,596 held by the Employee Stock Ownership Plan over which Ms. Rasmusson,
as Trustee, has sole voting and sole dispositive power.
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.15 percent. Based upon 3,168,942 shares outstanding, including the
shares reported in Row 11.
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14 TYPE OF REPORTING PERSON*
IN
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2
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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 officers
of the issuer of such securities.
Common Stock, $.01 par value
Oxboro Medical International, Inc.
13818 Lincoln Street N.E.
Ham Lake, Minnesota 55304
ITEM 2. IDENTITY AND BACKGROUND
(a) Name:
Larry A. Rasmusson
(b) Business address:
13828 Lincoln Street NE, Ham Lake, Minnesota 55304
(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:
CEO & CFO of Oxboro Medical International, Inc., 13828 Lincoln
Street NE, Ham Lake, Minnesota 55304
(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
the terms of such judgment, decree or final order:
N/A
(f) Citizenship: United States
3
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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. Rasmusson purchased 5,000 shares of Common Stock of the Issuer on
the open market. The purchase price of $10,223.75 was paid from Mr. Rasmusson's
private funds.
Pursuant to the terms of a Third Amendment to Exclusive License and
Royalty Agreement, Mr. Rasmusson received 150,000 shares of Common Stock of the
Issuer, valued for purposes of the Third Amendment at $2.00 per share. To
relieve a portion of the royalty expense of Issuer's subsidiary, Oxboro
Outdoors, Inc., and to improve the subsidiary's profit margin, Mr. Rasmusson
agreed to a temporary reduction of the royalties from 9% to 4-1/2% for a
period of four years. In consideration of the temporary reduction of the
royalties, the Issuer issued to Mr. Rasmusson 150,000 shares of Common Stock
of the Issuer to be held in escrow. As royalties are earned by Mr. Rasmusson
on the sale of products of Oxboro Outdoors, Inc. during the term of the
agreement, one-half of the royalties shall be paid in cash and one-half of
the royalties shall be paid by the release of an "equivalent value"
represented by the Common Stock held in escrow. The equivalent value shall
be determined by dividing the cash amount of the royalties payable to Mr.
Rasmusson under the agreement by $2.00, rounded to the nearest whole number,
which shall be the number of shares to be released to Mr. Rasmusson following
the end of each fiscal quarter. Any shares not earned and released at the
end of the escrow term shall be canceled and returned to the Issuer. While
held in escrow, Mr. Rasmusson has the right to vote such shares.
Under the terms of an Employment Agreement Mr. Rasmusson has with the
Issuer dated April 1, 1993, as amended, the severance obligations represent a
substantial economic burden to Issuer and if triggered, could threaten the
ability of the Issuer to continue business in the ordinary course. Pursuant to
the terms of a Third Amendment to the Employment Agreement effective February
25, 1998, Mr. Rasmusson has agreed to the deletion of Section V(b)(iii) of the
Employment Agreement in return for 360,000 shares of Common Stock of the Issuer
being deposited into an escrow account which will expire on February 25, 2002.
In consideration of the achievement of certain performance criteria by Mr.
Rasmusson, the escrow agent will deliver shares to Mr. Rasmusson as set forth in
the agreement in increments of 90,000 shares each. At the end of the escrow
term, any shares not previously earned and released will be released to Mr.
Rasmusson. For purposes of the agreement, the Common Stock of the Issuer has
been valued at $2.00 per share. While held in escrow, Mr. Rasmusson has the
right to vote such shares.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the acquisition was as set forth in Item 3. In
addition, the shares will be voted in favor of proposals or nominees proposed
by Mr. Rasmusson.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Aggregate number and percentage of the class of securities
beneficially owned:
955,503 shares of Common Stock, representing 30.15% of the
total shares of the Issuer outstanding as of February 25,
1998. In addition, under Section 13d-3(b) (under some
interpretations) Mr. Rasmusson may be deemed to be the
beneficial owner of 219,596 shares of the Issuer's common
stock held by the Company's Employee Stock Ownership Plan over
which Mr. Rasmusson, as Trustee, has sole voting power. If
combined. such shares would equal 37.08% of the Issuer's
outstanding shares as of February 25, 1998.
4
<PAGE>
SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 5 of _ pages, including
exhibits
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(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. Rasmusson has sole power to vote and dispose of 1,175,099
shares (including 219,596 shares held in the Employee Stock
Ownership Plan of which Mr. Rasmusson is Trustee).
(c) Transactions in the securities effected during the past sixty
days:
<TABLE>
<CAPTION>
-------------------------------------------------------
NUMBER
DATE OF PURCHASE
SHARES PRICE
-------------------------------------------------------
<S> <C> <C>
February 20, 1998 300 1.975
-------------------------------------------------------
February 23, 1998 500 1.9375
-------------------------------------------------------
February 24, 1998 1,600 2.0625
-------------------------------------------------------
February 24, 1998 2,600 2.0625
-------------------------------------------------------
February 25, 1998 150,000 2.00
-------------------------------------------------------
February 25, 1998 360,000 2.00
-------------------------------------------------------
</TABLE>
(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
beneficial owner of more than five percent of the class of
securities:
N/A.
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.
5
<PAGE>
SCHEDULE 13D
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CUSIP No. 691384 10 1 Page 6 of _ pages, including
exhibits
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Third Agreement to Exclusive License and Royalty Agreement
effective February 25, 1998
2. Third Amendment to Employment Agreement effective February 25,
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.
March 13, 1998 /s/ Larry A. Rasmusson
- ------------------------- ------------------------------
Date Signature
6
<PAGE>
THIRD AMENDMENT TO
EXCLUSIVE LICENSE AND ROYALTY AGREEMENT
THIS THIRD AMENDMENT ("Amendment") to the Exclusive License and Royalty
Agreement ("Agreement") dated as of April 17, 1993, by and between LARRY A.
RASMUSSON, residing at 1485 - 139th Lane Northwest, Andover, Minnesota
(hereinafter referred to as "Rasmusson") and OXBORO OUTDOORS, INC., a Minnesota
corporation having its principal place of business at 13828 Lincoln Street, Ham
Lake, Minnesota 55304 (hereinafter referred to as the "Company"), is made
effective this 25th day of February, 1998.
RECITALS
WHEREAS, the Company is currently obligated to pay Rasmusson Royalties of
up to nine (9%) percent on all Products, as defined and as provided in the
Agreement;
WHEREAS, in order to relieve the Company of a portion of the Royalties
expense for a period of time, thereby improving the Company's profit margin and
hopefully allowing the Company to contribute to the earnings per share of its
parent company, Oxboro Medical International, Inc. (the "Parent");
WHEREAS, the Company and Rasmusson have agreed that during the start-up
period of the Company that a reduction in the Royalties and allowing the Company
to improve its profit margins and, hopefully, earnings is in the best interest
of the Company and the Parent;
WHEREAS, the Company, Rasmusson and Parent have agreed that, in
consideration of Rasmusson's agreement to reduce the Royalties for a period of
time as set forth herein, Parent will issue on behalf of the Company shares of
stock of the Parent pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the recitals set forth above and in
further consideration of the terms and conditions set forth below, Rasmusson,
Company and Parent agree to amend the Agreement as follows:
1. TEMPORARY REDUCTION OF ROYALTIES. For a period of four (4) years
beginning on the effective date of this Agreement and ending on the fourth
(4th) anniversary of the effective date of this Agreement, the Royalties
paid under the Agreement, as specifically set forth in Section 4 thereof
entitled "Payment of Royalties," shall be reduced from nine (9%) percent to
four and one-half (4 1/2%) percent. Upon expiration of the term, the
Royalties shall immediately be increased to the nine (9%) percent level.
All other terms of the Agreement, as amended, shall remain unchanged,
except as specifically provided herein or in a subsequent amendment signed
by the parties hereto. The temporary reduction in royalties shall apply to
all Products, Additional Products and Other Products, as defined in the
Agreement, as amended.
<PAGE>
2. ISSUANCE OF SHARES OF PARENT. In consideration of the temporary
reduction of the royalties as provided in Paragraph 1, above, the Company
through its Parent, shall issue to Rasmusson in escrow 150,000 shares of
the Parent's Common Stock ("Shares") to be held in escrow, released and/or
returned, all as provided herein.
3. CONDITIONS OF ESCROW. On execution of this Agreement, Rasmusson,
the Company and, if required, the Parent shall enter into an Escrow
Agreement with Norwest Bank, as Escrow Agent, or with such other entity as
the parties may agree to act as Escrow Agent, regarding the Shares issued
pursuant to the terms of this Agreement, which Escrow Agreement shall be in
the form attached hereto as Exhibit A which is hereby incorporated by
reference and made a part of this Agreement.
4. TERM OF ESCROW. Except as otherwise provided herein, the term
during which the Shares may be released to Rasmusson hereunder, or his
estate, as the case may be, shall commence on the date hereof and shall
expire on midnight, February 15, 2002. The death of Rasmusson during the
term of the Escrow shall not terminate the Escrow. Any Share Release
Criteria (as defined in Paragraph 5) attained after Rasmusson's death and
any Shares released pursuant thereto shall inure to the benefit of
Rasmusson's heirs, legal representatives, devisees, successors and assigns.
5. SHARE RELEASE CRITERIA. With respect to the Shares issued to
Rasmusson in escrow, such Shares shall be released to Rasmusson as
Royalties in lieu of the payment of cash with respect to one-half (or
4 1/2%) of the Royalties earned by Rasmusson on the sale of All Products
during the term of the escrow. As Royalties are earned by Rasmusson on the
sale of All Products, one-half of such Royalties shall be paid in cash
pursuant to the terms of the Agreement and one-half of such Royalties shall
be paid by the release of an "equivalent value" represented by the Shares.
The Shares shall be valued at $2.00 per share as of the date of this
Agreement. The "equivalent value" shall be determined by dividing cash
amount of the Royalties payable to Rasmusson under this Amendment by $2.00,
rounded to the nearest whole number, which shall be the number of Shares to
be released to Rasmusson hereunder following the end of each fiscal
quarter. If, at the end of the term of the escrow there are Shares which
have not been earned and released hereunder, such remaining shares shall be
cancelled and returned to the Parent. If the Shares earned exceed the
number of Shares specified in Paragraph 2, above, then the escrow term
shall be deemed to have terminated, no more Shares shall be earned under
this Amendment than the number of Shares specified in Paragraph 2 above,
and Rasmusson's Royalties shall remain at 4 1/2% until the fourth
anniversary of the date of this Amendment, on which date Rasmusson's
Royalties shall be restored to 9% from and after such date.
For purposes of this Agreement, an achievement of Net Sales as of a
date earlier than the calendar year end would entitle Rasmusson to receive
the specified number of Shares as provided above prior to the release date
at Rasmusson's option. Except as otherwise provided herein, Shares not
acquired prior to the termination of the Escrow, shall be canceled and
returned to the Company.
2
<PAGE>
6. RISK OF FORFEITURE. The Shares to be received by Rasmusson under
the terms of this Agreement are conditioned upon the achievement of the Net
Sales of All Products as set forth above during the term of the Escrow. If
Net Sales volume is not reached in any given calendar year, then the Shares
allocated to that year shall be cancelled and shall revert to the Company.
7. DEFERRAL OF SHARE RELEASE. Prior to the end of each fiscal year
during the term of the escrow, Rasmusson may elect in writing to the Escrow
Agent to defer the receipt of said Shares until (a) the termination of this
Escrow or (b) twelve (12) months from the attainment of the specified Net
Sales.
The election to defer the receipt of said Shares must be made in
writing by Rasmusson and delivered to the Company and to the Escrow Agent
prior to the end of a fiscal year in which the Net Sales occur.
8. RIGHTS WITH RESPECT TO VOTING AND DISTRIBUTIONS. Rasmusson shall
be entitled to vote the escrowed Shares held by the Escrow Agent hereunder,
including all Shares which (a) have not yet been released to Rasmusson
because said Share Release Criteria described in Paragraph 5 above have not
been attained or (b) have been deferred by Rasmusson under Paragraph 7
above.
During the term of this Agreement, any cash dividends paid with
respect to the escrowed Shares held hereunder shall be paid to the Escrow
Agent and shall only be released by the Escrow Agent to Rasmusson when the
Shares to which the cash dividends relate are in fact received by Rasmusson
under the terms of this Agreement.
9. RELEASE OF SHARES. The Escrow Agent shall only release Shares
held by it under this Agreement upon receiving written notice from the
Board of Directors of the Company that the Net Sales requirements described
in Paragraph 5 have been satisfied. In the event the Board of Directors of
the Company fails to provide written notice to the Escrow Agent directing
it to release shares within thirty (30) days following the end of any
fiscal quarter during the term of the escrow or within ten (10) days after
the Company's receipt of written notice from Rasmusson of its failure to
provide written notice to the Escrow Agent following such thirty (30) day
period, then Rasmusson may provide written notice to the Escrow Agent, in
the form of a sworn affidavit, that the Company has failed to provide
written notice as required under this Amendment, the amount of Net All
Product Sales for the most recently ended quarter and the number of Shares
to be released. Said written notice must specify the number of Shares to
be delivered to Rasmusson and that the Escrow Agent is authorized to
transfer such Shares to Rasmusson. In the event of a dispute as to whether
the Net Sales requirements described in Paragraph 5 have been attained, the
parties agree that said dispute shall be resolved pursuant to the terms and
conditions of Paragraph 15 hereafter.
10. SCOPE OF AGREEMENT. This Agreement shall be binding upon and
inure to the obligations of (a) the Company and the Parent and their
respective successors in interest, whether by sale, merger, consolidation,
liquidation, or otherwise, and (b) Rasmusson and his heirs, successors,
legal representatives, devisees and assigns.
3
<PAGE>
11. RECAPITALIZATION. Subject to the risk of forfeiture under this
Agreement, the Shares held by the Escrow Agent hereunder are duly
authorized and issued shares of Common Stock of the Parent. In the event
of an increase or decrease in the number of shares resulting from a
subdivision or consolidation of shares or the payment of a stock dividend
or any other increase or decrease in the number of Shares affected without
receipt of consideration by the Parent, the number of shares reserved for
awarding to Rasmusson under this Agreement shall be adjusted to reflect
such change. The award of Shares pursuant to this Agreement shall not
limit in anyway the right or power of the Parent to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets or to issue additional
shares of its Common Stock for any purpose.
12. INVESTMENT PURPOSE IN ACQUIRING THE SHARES. Rasmusson and the
Parent 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 be issued to Rasmusson in
reliance on exemptions from the registration requirements of the Act and of
applicable state securities law. Rasmusson is acquiring the Shares for his
own account for investment purposes only and not with a view to their
resale or distribution.
13. COMPLIANCE WITH SECURITIES ACT. Rasmusson agrees that if the
Shares awarded under this Agreement or any part thereof are sold or
distributed in the future, Rasmusson shall sell or distribute them pursuant
to the requirements of the Act and of appropriate state securities laws.
14. RESTRICTIVE LEGEND. Rasmusson agrees that the Parent 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.
15. ARBITRATION. Any controversy or dispute arising under the terms
of this Agreement shall be determined by arbitration in Minneapolis,
Minnesota, according to the then current Rules and Regulations of the
American Arbitration Association and the decision of the arbitrator or
arbitrators shall be final and binding upon all parties and may be entered
as a final judgment in any court of competent jurisdiction. The costs and
arbitrators fees of the prevailing party shall be paid by the
non-prevailing party.
4
<PAGE>
16. NOTICES. All notices required under this Agreement shall be
given in writing and shall be sufficiently given if delivered to the
addressee in person or, if mailed, by certified mail, return receipt
requested, and addressed as follows:
If to Parent: The Board of Directors
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
If to Company: Oxboro Outdoors, Inc.
c/o The Board of Directors
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
If to Rasmusson: Larry A. Rasmusson
1485 - 139th Lane N.W.
Andover, MN 55304
If to Escrow Agent:
----------------------------
Norwest Bank
----------------------------
----------------------------
Any notice shall be deemed effective (i) when delivered if delivered
personally and (ii) five (5) days after deposit in the mail, return receipt
requested.
17. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
18. RELEASE OF ESCROW AGENT. Rasmusson and the Company and the
Parent agree that the Escrow Agent assumes no liability for and is
expressly released from any claim or claims in connection with, but not
limited to, its reception, retention or delivery (or redelivery as the case
may be) of any Shares subject to this Agreement. Rasmusson and the Company
and the Parent, jointly and severally, agree to indemnify and hold harmless
the Escrow Agent from any and all claims that arise in connection with this
Agreement including, but not limited to, its reception, retention, or
delivery (or redelivery, as the case may be) of any Shares subject to this
Agreement.
19. ENTIRE AGREEMENT. This Agreement, together with the exhibits
attached hereto, sets forth all (and is intended by all parties to be an
integration of all) of the agreements, conditions and understandings among
the parties hereto with regard to all matters set forth herein, and there
are no promises, agreements or understandings, oral or written, express or
implied, between them other than as set forth or incorporated herein.
All other terms and conditions of the Employment Agreement, as amended,
shall remain unchanged, subject to future amendment by written agreement of the
parties hereto.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY: RASMUSSON:
OXBORO OUTDOORS, INC.
By /s/ Larry Rasmusson /s/ Larry A. Rasmusson
--------------------------------- ---------------------------------
Its President Larry A. Rasmusson
------------------------------
PARENT:
Consented and Agreed to this 25th day of February, 1998.
---- --------
OXBORO MEDICAL INTERNATIONAL, INC.
By /s/ Dennis L. Mikkelson
----------------------------
Its Secretary and Director
----------------------
6
<PAGE>
THIRD AMENDMENT
TO EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into effective as of
the 25th day of February, 1998, by and between Oxboro Medical International,
Inc., a Minnesota corporation (the "Company"), and Larry A. Rasmusson
("Rasmusson").
RECITALS
WHEREAS, the Company and Rasmusson have entered into an Employment
Agreement as of April 1, 1993 and, subsequently, entered into a First Amendment
to Employment Agreement as of December 21, 1993, and Employment Agreement as of
January 4, 1996, and a Second Amendment to Employment Agreement as of October 1,
1997 (the "Employment Agreement");
WHEREAS, the Employment Agreement provides at Section V(b)(iii) that, in
the event there is a Change in Control of the Company and in the further event
that Rasmusson terminates the Employment Agreement for Good Reason, as defined
in the Employment Agreement, the Company shall have to pay severance pay
compensation to Rasmusson in a lump sum, in cash, on the fifth day following the
Date of Termination, in an amount equal to two and one-half (2 1/2) times
Rasmusson's "annualized includable compensation for the base period" (as defined
in Section 280G(d) of the Internal Revenue Code of 1986, as amended);
WHEREAS, the severance obligation represents a substantial economic burden
to the Company and, if triggered, would test, if not threaten, the ability of
the business to continue in the ordinary course;
WHEREAS, the Company and Rasmusson desire to amend the Employment Agreement
to eliminate the severance pay obligation pursuant to the terms and conditions
set forth below:
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained, the parties hereto agree as follows:
1. ISSUANCE OF SHARES IN CONSIDERATION OF ELIMINATION OF SEVERANCE
COMPENSATION OBLIGATIONS. Subject to the terms and conditions hereinafter
set forth and in consideration of the deletion of Section V(b)(iii) of the
Employment Agreement entitled "Severance Compensation Upon Termination of
Contract," the Company hereby issues to Rasmusson a total of 360,000 shares
of Common Stock of the Company ("Shares"). The Company concurrently
herewith has deposited with Norwest Bank, Minnesota, as its Escrow Agent,
all of the Shares issued hereunder, duly endorsed for transfer in
compliance with the terms of this Agreement, pursuant to the Escrow
Agreement attached hereto and made a part hereof. For purposes of this
Agreement,
<PAGE>
"Escrow Agent" shall mean Norwest Bank, or such other person or entity as
may be designated by the Company and Rasmusson to act as its escrow agent
under the terms of this Agreement.
2. TERM OF ESCROW. Except as otherwise provided herein, the term
during which the Shares may be released to Rasmusson hereunder, or to his
estate as the case may be, shall commence on the date hereof and shall
expire on midnight, February 1, 2002. The death of Rasmusson during the
term of the escrow shall not terminate the Escrow. Any Share Release
Criteria (as defined in paragraph 3) attained after Rasmusson's death and
the Shares released pursuant thereto shall inure to the benefit of
Rasmusson's heirs, legal representatives, devisees, successors and assigns.
3. SHARE RELEASE CRITERIA. In consideration of the achievement of
certain performance criteria by Rasmusson, the Escrow Agent shall be
instructed and authorized to deliver said Shares to Rasmusson (or to his
estate, as the case may be) as set forth below:
<TABLE>
<CAPTION>
Release No. of Shares
Performance Criteria Date to be Released
----------------------------------- ------------ --------------
<S> <C> <C>
a. Oxboro Outdoors, Inc. Net Sales Feb. 1, 1999 90,000
increase of 50% compared to 1997
FYE Net Sales and 1998 FYE EPS
for the Company of at least $0.10
or 1998 FYE closing market value
of $3.00/share
b. Oxboro Outdoors, Inc. Net Sales Feb. 1, 2000 90,000
increase of 50% compared to 1998
FYE Net Sales and 1999 FYE EPS for
the Company of at least $0.20 or
1999 FYE closing market value of
$3.50/share
c. Oxboro Outdoors, Inc. Net Sales Feb. 1, 2001 90,000
increase of 50% compared to 1999
FYE Net Sales and 2000 FYE EPS for
the Company of at least $0.30 or
2000 FYE closing market value of
$4.00/share
d. Oxboro Outdoors, Inc. Net Sales Feb. 1, 2002 90,000
increase of 50% compared to 2000
FYE Net Sales and 2001 FYE EPS for
the Company of at least $0.40 or
2001 FYE closing market value of
$5.00/share
</TABLE>
2
<PAGE>
For purposes of this Agreement, an achievement of the Share Release
Criteria as of a certain date would entitle Rasmusson to receive the
specified number of Shares as provided above. Except as otherwise provided
herein, Shares not acquired prior to the termination of the Escrow shall be
released to Rasmusson on the first business day following the termination
of the Escrow Agreement.
4. EXTRAORDINARY EVENTS. The Company and Rasmusson agree that there
may be extraordinary events in the course of the Company's business which
could reduce the earnings per share and/or market value set forth above.
Such events may result from steps voluntarily undertaken by the Company
and/or Rasmusson in the best interest of the shareholders, either short
term or long term, but may prevent the Company from achieving the earnings
per share set forth in Paragraph 3, above, and/or may not be perceived, at
least on an immediate basis, as adding value to the shares, such as the
investments by the Company in Oxboro Outdoors, Inc., a wholly owned
subsidiary of the Company, in prior years. Such events could include, but
are not limited to, further investment in Oxboro Outdoors, Inc. or another
subsidiary or business activity, an acquisition requiring shares and/or
capital of the Company, the acquisition of a product or product lines for
either the Company or Oxboro Outdoors, Inc., a material business venture,
and/or issuing additional shares for extraordinary purposes which would
dilute or lower the earnings per share of the Company, and similar kinds of
events. The parties hereto agree that such events will be considered to be
extraordinary and the performance criteria set forth in Paragraph 3, above,
will be adjusted to account for the extraordinary financial impact such
events would otherwise have had on the performance criteria.
5. RISK OF FORFEITURE. The Shares to be released to Rasmusson under
the terms of this Agreement are conditioned upon the performance of
services and the attainment of certain designated criteria during the term
of the Escrow. If Rasmusson terminates his employment for other than good
reason attributable to the Company, then all unreleased Shares shall be
forfeited by Rasmusson and shall revert to the Company.
6. DEFERRAL OF SHARE RELEASE. Prior to each fiscal year end during
the escrow term, Rasmusson may elect to defer the receipt of the Shares
until (a) the termination of this Escrow or (b) twelve (12) months from the
attainment of the specified Share Release Criteria, whichever option
Rasmusson elects to choose.
The election to defer the receipt of said Shares must be made in
writing by Rasmusson and delivered to the Company and to the Escrow Agent
prior to each fiscal year end.
7. RIGHTS WITH RESPECT TO VOTING AND DISTRIBUTIONS. Rasmusson shall
be entitled to vote the Shares held by the Escrow Agent hereunder,
including all Shares which (a) have not yet been awarded to Rasmusson
because said Share Release Criteria described in Paragraph 3 above have not
been attained, or (b) the receipt of which has been deferred by Rasmusson
under Paragraph 6 above.
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<PAGE>
During the term of this Agreement, any cash dividends paid with
respect to the escrowed Shares held hereunder shall be paid to the Escrow
Agent and shall only be released by the Escrow Agent to Rasmusson when the
Shares to which the cash dividends relate are, in fact, received by
Rasmusson under the terms of this Agreement.
8. ACCELERATION OF RELEASE OF SHARES. In the event the Company
sells all or substantially all of its assets, in the event of a tender
offer for more than 30% of the Company's outstanding shares of Common
Stock, in the event of a change in control of the Company's Board of
Directors, as defined in the Employment Agreement, in the event of the
termination of the Employment Agreement by the Company without good cause
or in the event of termination of the Employment Agreement by Rasmusson for
good cause attributable to the Company, prior to the expiration of the
terms of the Escrow, then the Company shall instruct the Escrow Agent to
deliver to Rasmusson all Shares of Common Stock of the Company subject to
this Agreement, including (a) all Shares previously deferred by Rasmusson
under Paragraph 6 and (b) all unreleased Shares.
9. DELIVERY OF SHARES. The Escrow Agent shall only deliver Shares
held by it under this Agreement upon (a) receiving written notice from the
Board of Directors of the Company that either (i) the requirements for the
specific Share Release Criteria have been satisfied or (ii) an event
described in Paragraph 8, above, has occurred, or (b), if the Board of
Directors fails to provide written notice by the end of the fiscal quarter
following the quarter in which the release criteria or the event has
occurred, then upon receiving a copy of (i) the Company's Form 10-KSB with
respect to the achievement of Share Release Criteria for the fiscal year
just ended or (ii) the Company's Form 8-KSB with respect to an event
described in Paragraph 8, above, or (c) the term of the Escrow has expired.
Said written notice must specify the number of Shares to be delivered to
Rasmusson and that the Escrow Agent is authorized to transfer such Shares
to Rasmusson. In the event of a dispute as to whether one or more of the
Share Release Criteria described in Paragraph 3 been attained, the parties
agree that said dispute shall be resolved pursuant to the terms and
conditions of Paragraph 15 hereafter. In the event that the Company and
Rasmusson engage in arbitration regarding the Company's failure to provide
notice or the Company's contest with respect to the release of Shares and
the arbitrator finds in favor of Rasmusson with respect to such failure or
contest, then all Shares shall be released to Rasmusson within five (5)
business days of such finding upon the Escrow Agent's receipt of a
certified copy of such finding.
10. SCOPE OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of (a) the Company and its successors in interest,
whether by sale, merger, consolidation, liquidation, or otherwise, and (b)
Rasmusson and his heirs, successors, legal representatives, devisees and
assigns.
4
<PAGE>
11. RECAPITALIZATION. Subject to the risk of forfeiture under this
Agreement, the Shares held by the Escrow Agent hereunder are duly
authorized and issued shares of Common Stock of the Company. In the event
of an increase or decrease in the number of Shares resulting from a
subdivision or consolidation of shares or the payment of a stock dividend
or any other increase or decrease in the number of Shares affected without
receipt of consideration by the Company, the number of shares reserved for
awarding to Rasmusson under this Agreement shall be adjusted to reflect
such change.
12. INVESTMENT PURPOSE IN ACQUIRING THE SHARES. Rasmusson 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 be issued to Rasmusson in
reliance on exemptions from the registration requirements of the Act and of
applicable state securities law. Rasmusson is acquiring the Shares for his
own account for investment purposes only and not with a view to their
resale or distribution.
13. COMPLIANCE WITH SECURITIES ACT. Rasmusson agrees that if the
Shares awarded under this Agreement or any part thereof are sold or
distributed in the future, Rasmusson shall sell or distribute them pursuant
to the requirements of the Act and of appropriate state securities laws.
14. RESTRICTIVE LEGEND. Rasmusson 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.
15. ARBITRATION. Any controversy or dispute arising under the terms
of this Agreement shall be determined by arbitration in Minneapolis,
Minnesota, according to the then current Rules and Regulations of the
American Arbitration Association and the decision of the arbitrator or
arbitrators shall be final and binding upon all parties and may be entered
as a final judgment in any court of competent jurisdiction. The costs and
arbitrators fees shall be divided equally between the Company and
Rasmusson.
5
<PAGE>
16. NOTICES. All notices required under this Agreement shall be
given in writing and shall be sufficiently given if delivered to the
addressee in person or, if mailed, by certified mail, return receipt
requested, and addressed as follows:
If to Company: The Board of Directors
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
If to Rasmusson: Larry A. Rasmusson
1485 - 139th Lane N.W.
Andover, MN 55304
If to Escrow Agent:
----------------------------
Norwest Bank
----------------------------
----------------------------
Any notice shall be deemed effective (i) when delivered if delivered
personally and (ii) five (5) days after deposit in the mail, return receipt
requested.
17. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
18. RELEASE OF ESCROW AGENT. Rasmusson and the Company agree that
the Escrow Agent assumes no liability for and is expressly released from
any claim or claims in connection with, but not limited to, its reception,
retention or delivery (or redelivery, as the case may be) of any Shares of
the Company subject to this Agreement. Rasmusson and the Company, jointly
and severally, agree to indemnify and hold harmless the Escrow Agent from
any and all claims that arise in connection with this Agreement including,
but not limited to, its reception, retention, or delivery (or redelivery,
as the case may be) of any Shares subject to this Agreement.
19. ENTIRE AGREEMENT. This Agreement, together with the exhibits
attached hereto, sets forth all (and is intended by all parties to be an
integration of all) of the agreements, conditions and understandings among
the parties hereto with regard to all matters set forth herein, and there
are no promises, agreements or understandings, oral or written, express or
implied, between them other than as set forth or incorporated herein.
All other terms and conditions of the Employment Agreement, as amended,
shall remain unchanged, subject to future amendment by written agreement of the
parties hereto.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY: RASMUSSON:
OXBORO MEDICAL
INTERNATIONAL, INC.
/s/ Larry A. Rasmusson
------------------------------
By /s/ Dennis L. Mikkelson Larry A. Rasmusson
---------------------------------
Its Secretary and Director
------------------------------
7