<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 1999
REGISTRATION NO. 333-83469
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
OXBORO MEDICAL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MINNESOTA 41-1391803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
(612) 755-9516
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
Matthew E. Bellin, President
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
(612) 755-9516
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
Girard P. Miller, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
(612) 371-3211
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO PER WARRANT AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED(1) OR SHARE(2) OFFERING PRICE(2)
<S> <C> <C> <C>
Rights to purchase common stock(4)................................. 445,412 Rights N/A N/A
Common stock, $.01 par value, underlying rights to purchase........ 890,824 Shares $1.225 $1,091,260
Warrants to purchase one share of common stock..................... 445,412 Warrants $.05 $22,271
Common stock, $.01 par value, issuable upon exercise of
warrants(6)...................................................... 445,412 Shares $2.75 $1,224,883
<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF REGISTRATION
SECURITIES TO BE REGISTERED FEE(2)(3)
<S> <C>
Rights to purchase common stock(4)................................. N/A(5)
Common stock, $.01 par value, underlying rights to purchase........ $11
Warrants to purchase one share of common stock..................... N/A(5)
Common stock, $.01 par value, issuable upon exercise of
warrants(6)...................................................... (7)
</TABLE>
(1) Securities amounts reflect a 1-for-5 reverse stock split on the shares of
common stock, effective August 13, 1999.
(2) Estimated in accordance with Rule 457(o) solely for the purpose of
determining the amount of the registration fee.
(3) Additional fee payable for the additional 7,981 shares of common stock
registered hereunder. A fee of $633 was previously paid for the other
437,431 shares registered on the initial Form S-3.
(4) One non-transferable right to purchase two shares of common stock and one
warrant for purchase of one additional share of common stock will be issued
for each share of common stock outstanding.
(5) Pursuant to Rule 457(g)(3), no separate registration fee is required with
respect to the rights or the warrants.
(6) The shares of common stock listed in the above table are being registered
for issuance and sale upon exercise of the warrants included in the rights
to purchase.
(7) Included in registration fee for common stock underlying rights to purchase.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 1999
PROSPECTUS
[LOGO]
OXBORO MEDICAL INTERNATIONAL, INC.
13828 LINCOLN STREET NE
HAM LAKE, MINNESOTA 55304
(612) 755-9516
RIGHTS OFFERING OF 890,824 SHARES OF COMMON STOCK
AND 445,412 WARRANTS
EACH RIGHT CONSISTING OF THE RIGHT TO PURCHASE TWO SHARES OF COMMON STOCK
AND ONE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK
------------------------
- Oxboro Medical International, Inc. is offering a right to purchase for
each outstanding share held by our shareholders of record at August 20,
1999. Each right permits the shareholder to purchase two shares of Oxboro
common stock and one warrant to purchase one additional share of common
stock for a total purchase price of $2.50. The term of the warrant is one
year and the exercise price of the warrant is $2.75.
- The price of the securities in this rights offering may not reflect the
market price of our shares after the rights offering.
- Shareholders who exercise all of their purchase rights may be entitled to
purchase additional shares of common stock and warrants to the extent
purchase rights are not exercised by other shareholders.
- Shareholders must exercise their purchase rights according to a rights
subscription certificate accompanied by payment. A shareholder's
investment decision is not revocable after payment is received by Norwest
Bank Minnesota, N.A., who is acting as our subscription agent for this
offering.
- Our board of directors has approved a 1-for-5 reverse stock split,
effective August 13, 1999, for shares outstanding on the same date. All
share amounts shown in this prospectus and the registration statement of
which it is a part reflect post-split share amounts.
- Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"OMED." For a brief period of time following our reverse stock split, our
shares were traded under the symbol "OMEDD." On August 30, 1999 the
closing bid price for our common stock was $3.25.
- Although there is no minimum purchase requirement in connection with this
rights offering, two of our directors have severally advised us that they
intend to exercise their rights in connection with this offering.
- The purchase rights will begin on the date of this prospectus and
terminate at 12:00 midnight, central time, on October 31, 1999. The
warrants expire one year from the date of issuance, and are expected to
expire on either September 30, 2000 or October 31, 2000.
------------------------------
THIS INVESTMENT IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE
"RISK FACTORS" BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This prospectus is dated September 1, 1999
<PAGE>
PROSPECTUS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
About this Prospectus...................................................................................... 2
Where You Can Find More Information........................................................................ 2
Summary.................................................................................................... 4
Risk Factors............................................................................................... 7
Business................................................................................................... 13
Use of Proceeds............................................................................................ 14
Determination of Offering Price............................................................................ 14
Dividend Policy............................................................................................ 14
Capitalization............................................................................................. 15
Dilution................................................................................................... 16
Material United States Federal Income Tax Considerations................................................... 17
Plan of Distribution....................................................................................... 18
Related Party Transactions................................................................................. 18
Subsequent Events.......................................................................................... 18
Legal Opinions............................................................................................. 19
Experts.................................................................................................... 19
Indemnification............................................................................................ 19
</TABLE>
------------------------
ABOUT THIS PROSPECTUS
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the Securities and Exchange Commission web site or at
the SEC offices mentioned under the heading "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You can also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference facilities.
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We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. Information that we file subsequently with
the SEC will automatically update this prospectus. We incorporate by reference
the documents listed below, and any filings we make with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the
initial filing of the registration statement that contains this prospectus and
before the time that we sell all the securities offered by this prospectus:
- Annual report on Form 10-KSB for the year ended September 30, 1998;
- Quarterly reports on Form 10-QSB for the quarters ended December 31, 1998,
March 31, 1999 and June 30, 1999;
- Definitive notice and proxy statement for our annual meeting of
shareholders held on March 4, 1999; and
- Current report on Form 8-K, filed on July 8, 1999 with respect to the sale
of Oxboro Outdoors, Inc.
You may request a copy of these filings at no cost, by writing to or
telephoning us at the following address.
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
(612) 755-9516
Attention: President
You should rely only on the information included or incorporated by
reference in this prospectus. We have not authorized anyone else to provide you
with different information. We are only offering these securities in states
where the offer is permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the dates on the front of the
document. Information on our Web site is not a part of this prospectus.
3
<PAGE>
SUMMARY
Information provided in this summary has been adjusted to reflect a 1-for-5
reverse stock split approved by our board of directors for shareholders of
record at August 13, 1999 and effective as of the same date. Because this is a
summary, it does not contain all of the information that may be important to
you. Please read the entire prospectus carefully before you decide to invest.
THE BUSINESS
Oxboro Medical International, Inc. develops, assembles, markets and sells
medical and surgical devices, including silicone loops, silicone and fabric
clamp covers, instrument guards, suture aid booties, identification sheet and
roll tape, and various holders and organizers for instruments used in the
operating room. We sell our products, both through our own direct sales force
and through independent distributors, primarily to hospitals, clinics and
extended care facilities and home healthcare agencies. Our products are
available throughout the United States and in selected international markets.
Until June 30, 1999, we also developed, assembled and sold products for the
fishing, hunting and related outdoor recreational market through our
wholly-owned subsidiary, Oxboro Outdoors, Inc. Oxboro Outdoors sold products
licensed by professional sports organizations and miscellaneous fishing and
hunting products such as tackle products, fishing tools and equipment and
related accessory products. After reviewing our current financial condition, our
board of directors determined this year that the operation of Oxboro Outdoors
was creating significant and unnecessary losses for our core business. On June
30, 1999, we sold all of the issued and outstanding shares of Oxboro Outdoors to
a group of unrelated private investors. The purchase price for the shares was
$650,000, including $385,000 in cash and $265,000, subject to adjustments, in
the form of a 90-day, 9% promissory note. The sale of Oxboro Outdoors will
permit us to once again focus our efforts on our core business of selling
medical and surgical devices.
Our executive offices are located at 13828 Lincoln Street NE, Ham Lake,
Minnesota 55304. Our telephone number is (612) 755-9516.
RIGHTS OFFERING
We are offering to each of our shareholders of record at August 20, 1999 the
right to purchase, at a price of $2.50 per right, two shares of our common stock
and one warrant to purchase one additional share of common stock, at a warrant
exercise price of $2.75, for each share of common stock currently held by the
shareholder. The offering period began on the date of this prospectus and will
continue until 12:00 midnight, central time, on the termination date of October
31, 1999, unless extended by us. Shareholders exercising their rights in full
will also have an oversubscription privilege as described below.
SECURITIES OFFERED. We will distribute to our current shareholders rights
to purchase an aggregate 890,824 shares of common stock and 445,412 warrants on
the basis of one right to purchase two shares of common stock and one warrant
for each share of common stock held. Upon exercise of the warrants, if any, we
expect to issue approximately 445,412 additional shares of common stock to our
shareholders for a total of approximately 1,336,236 shares of common stock
issued as a result of this offering and an aggregate 1,781,648 shares of common
stock outstanding after this offering.
SHARES OF COMMON STOCK AUTHORIZED AND OUTSTANDING. We have 2,000,000 shares
of common stock authorized, $.01 par value, of which approximately 445,412
shares are issued and outstanding at the date of this offering. The number of
outstanding shares reflects a 1-for-5 reverse stock split that we effected on
August 13, 1999. We also have granted 9 options that entitle the holders to
purchase a total
4
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of 50,400 shares of common stock at prices ranging from $5.00 to $7.50 per
share. These options vest at varying rates and expire on various dates during
the period from May 2000 through June, 2005.
BASIC SUBSCRIPTION PRIVILEGE. Shareholders receiving purchase rights are
entitled to purchase two shares of our common stock and one warrant to purchase
one additional share of common stock for each right held at a total subscription
price of $2.50 per right. Each warrant entitles its holder to purchase one share
of common stock, at an exercise price of $2.75 per share, at any time prior to
one year from the date of issuance. The warrants are expected to expire on
either September 30, 2000 or October 31, 2000 depending upon the date of
issuance. Eligible shareholders may exercise their purchase rights in the
offering only by executing a rights subscription certificate.
OVERSUBSCRIPTION PRIVILEGE. Shareholders who exercise their entire purchase
rights will have the right to subscribe for additional shares of common stock
and warrants, if any, to the extent that other shareholders do not exercise
their rights in this offering. Shareholders who wish to subscribe for additional
shares must complete the appropriate "Oversubscription Privilege" provision of
the rights subscription certificate for this offering and may exercise their
oversubscription privilege for up to the total number of shares remaining
unissued, if any, in this offering. To the extent that the exercise of
oversubscription privileges exceeds the shares remaining unissued, we will fill
oversubscriptions on a pro rata basis according to the number of shares
purchased by subscribing shareholders pursuant to their basic subscription
privileges.
PURPOSE OF OFFERING; STANDBY SUBSCRIPTION GUARANTEES. One of the purposes
of this offering is to raise funds to increase our net tangible asset level to
the minimum $2,000,000 required for listing on the Nasdaq SmallCap Market. Our
Form 10-QSB for the quarter ended June 30, 1999 shows our current net tangible
assets at $1,627,963, or approximately $372,000 less than Nasdaq's SmallCap
minimum listing requirement. To ensure compliance with this requirement, two of
our directors, Gary W. Copperud and Kenneth W. Brimmer, have severally agreed to
exercise their purchase rights and subscribe for shares in this offering at the
subscription price, and to purchase additional shares remaining unissued, if
any, in an amount sufficient to provide the proceeds necessary to raise our net
tangible asset level to the required minimum. The guarantees of Messrs. Copperud
and Brimmer are applicable only to this offering.
USE OF PROCEEDS. We intend to use the proceeds of this offering, in order
of priority, for working capital, purchases of equipment, products or product
lines, possible acquisitions of companies selling products or product lines
similar to ours, research and development, repayment of debt and other general
corporate purposes.
RECORD DATE. Shareholders of record on August 20, 1999 are eligible to
receive purchase rights in this offering.
EXPIRATION DATE. Beginning on the date of this prospectus, shareholders may
exercise their initial rights to purchase shares in this offering for a period
of thirty days and then may exercise their oversubscription privilege during an
additional thirty-day period until 12:00 midnight, central time, on October 31,
1999, unless extended by our board of directors. After the expiration of this
rights offering, the rights will expire and have no value.
NASDAQ SYMBOL. Our stock is listed on the Nasdaq SmallCap Market under the
symbol "OMED." For a brief period of time following our reverse stock split, our
stock was listed under the symbol "OMEDD."
TRANSFERABILITY OF RIGHTS. The purchase rights are not transferable. The
warrants issued as part of this offering are transferable.
5
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SUBSCRIPTION AGENT. Norwest Bank Minnesota, N.A. is our transfer agent and
will act as our subscription agent for this offering.
PARTICIPATION OF ADDITIONAL SHAREHOLDERS IN THE OFFERING. In determining
the number of shareholders eligible to participate in this offering, we have
included those current and former employees who participated in our Employee
Stock Ownership Plan. The Oxboro board of directors has approved the
participation of these employees in the rights offering and, solely for purposes
of the rights offering, will consider them to be shareholders of record as of
the August 20, 1999 record date.
SHARES OUTSTANDING AFTER RIGHTS OFFERING. If all of the 890,824 shares of
our common stock and 445,412 warrants are purchased in this offering, we will
have 1,336,236 shares outstanding after the offering and 1,781,648 shares
outstanding upon full exercise of all of the warrants.
FEDERAL INCOME TAX CONSEQUENCES OF THE RIGHTS OFFERING. Holders of our
common stock will not recognize taxable income for federal income tax purposes
in connection with receipt of the rights in this offering. See "MATERIAL UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS."
RISK FACTORS. Please see "RISK FACTORS" for a discussion of certain risks
that you should consider when determining whether to invest in this offering.
6
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information contained in this prospectus
before deciding to invest in shares of our common stock.
RISKS RELATED TO OUR BUSINESS
WE HAVE SUSTAINED LOSSES IN THE PAST DUE TO SUBSIDIARY OPERATIONS
We have incurred substantial losses in recent years that have depleted our
working capital and reduced our stockholders' equity. Our business incurred a
net loss of $1,209,281 for the nine months ended June 30, 1999 and $1,453,544
for the year ended September 30, 1998. These losses have resulted principally
from expenses incurred in the development of our subsidiary, Oxboro Outdoors,
and expenses due to payment of severance packages to our former officers in
connection with related proxy litigation. On June 30, 1999, we completed the
sale of Oxboro Outdoors. However, prior to the sale and as a result of losses in
Oxboro Outdoors, we incurred significant operating losses. Although we have
taken measures to increase our sales revenues and profit margins and expect to
show further improvement following the sale of Oxboro Outdoors, there can be no
assurance that our core business will operate profitably in the future.
IF WE CANNOT MAINTAIN ADEQUATE OPERATING CAPITAL AND BANK FINANCING, OUR
BUSINESS WILL SUFFER
Our most recent bank examination indicates that we currently have the
minimum qualifying inventory and receivables, excluding the assets of Oxboro
Outdoors, to cover our existing loan balance. The sale of Oxboro Outdoors will
permit us, if needed, to pay down approximately 50% of our loan balance.
However, there can be no assurance that we will have sufficient inventory and
accounts receivable in the future to pay our remaining loan balance. Failure to
meet our loan obligations would have a material adverse effect on our business.
We recently negotiated an extension of a credit line with our bank through March
31, 2000. The credit line consists of $550,000 for general corporate purposes
and $150,000 for equipment acquisition. As of August 30, 1999, the outstanding
balance on the line of credit was $145,593. Additionally, we have a mortgage on
our 30,000 square foot building with an outstanding balance of $380,834. The
mortgage has a balloon payment due June 1, 2001. There can be no assurance that
the line of credit will be extended after expiration of the current term, nor
can there be any assurance that we will be able to refinance the building at the
time the balloon payment is due.
IF WE DO NOT REMAIN COMPETITIVE IN THE MARKETS WE SERVE, OUR BUSINESS WILL BE
ADVERSELY AFFECTED
There is growing pressure on healthcare providers in general, and the
surgical area in particular, to reduce costs. The trend is towards hospitals
purchasing through buying groups and other large distributors, which generally
occurs at lower prices than selling direct to the customer. This trend will make
it difficult to maintain and grow sales at our historic profit margins. If we
are not able to introduce new products into such an economic environment and
compete at lower prices than other larger distributors, our business will be
adversely affected.
WE ARE DEPENDENT ON OUR MANAGEMENT AND KEY PERSONNEL TO SUCCEED
Our principal executive officers and key personnel have extensive experience
in sales of medical products, which requires research and development efforts to
bring our products to market. Our success also depends on our development of a
marketing and sales program to implement and close the sales. Competition for
qualified sales and marketing personnel is intense. The loss of the services of
any of our executive officers or other key personnel, or our failure to attract
and retain other skilled
7
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and experienced personnel on acceptable terms, could impede the achievement of
our business objectives and have a material adverse effect on our business.
THE PRICING STRATEGIES OF OUR COMPETITORS AND OUR RESPONSE TO THOSE STRATEGIES
MAY RESULT IN A DECLINE IN OUR REVENUES
The medical products market is extremely competitive. We believe that the
principal competitive factors in our market are selection, price, customer
service, convenience, product quality, reliability and speed of order
fulfillment. We believe that among our direct competitors are firms with longer
operating histories, larger customer bases, greater financial and marketing
capability, and greater resources and experience than we have. We compete with
companies including Scanlon Instruments, Key Surgical and Healthmark. In
addition, our competitors are often able to offer lower prices than we can and
thus can limit our penetration and market share. These factors may have an
adverse impact upon our business.
IF WE DO NOT PREVAIL IN A LICENSE DISPUTE WITH A FORMER OFFICER, OUR REVENUES
AND PROFITS COULD DECLINE
Larry A. Rasmusson, our former Chief Executive Officer and a former director
of Oxboro, has notified us that he believes we are currently in default on
exclusive license agreements that we executed with him relating to some of our
medical products, including bulldogs, fabric ties, Radiopaque fabric clamp
covers, bulk and fabric tape, loops, surgical booties, various types of
instrument and specialty guards, a tape stripper, patient hangars and patient
care holders. As a result, Mr. Rasmusson has taken the position that the rights
to these medical products have reverted back to him. We believe we are not in
default and, moreover, that the agreements may be legally invalid. If necessary
and appropriate, we will seek to terminate such agreements and take whatever
other actions may be appropriate, including commencing litigation, to terminate
the agreements or have them declared invalid or both. If, however, the royalty
agreements are found valid, and any resulting litigation is determined adversely
to us, we may lose the right to manufacture and distribute products related to
the royalty agreements. This would have a substantial negative impact on our
revenues and profits until we were able to acquire or develop alternate
products.
THE SUCCESS OF COMPETITIVE PRODUCTS COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS
The medical products industry is intensely competitive and hospitals have a
wide variety of product choices and technologies from which to choose. The
success of any competing alternative product to those provided by Oxboro could
have a material adverse effect on our business, financial condition and results
of operations. We believe that our competitors include companies that have
substantially greater financial capabilities for product development and
marketing than we do and can therefore market their products or procedures to
hospitals and the medical community in a more effective manner. In addition,
companies having proprietary rights to the products we sell could choose to
market their products directly to our customers and competitors selling the same
or similar products may duplicate our marketing methods and reduce our ability
to effectively sell our product lines. In either event, our business would be
materially adversely affected by these actions.
IF WE FAIL TO ACQUIRE PRODUCTS OR DEVELOP NEW PRODUCTS, OUR BUSINESS WILL BE
ADVERSELY AFFECTED
Part of the proceeds of this offering will be used to acquire product lines
and develop new products. Although we have no present plans to include new
product lines, it is likely that the focus of new product development will
center on the surgical products market. There can be no assurance that we will
be able to acquire or successfully develop new products. Failure to do so would
have a materially adverse effect on our business.
8
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FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY NEGATIVELY AFFECT OUR STOCK
PRICE
We may experience variability in our net sales and operating profit on a
quarterly basis as a result of many factors, including, among other things, the
buying habits of our customers, size and timing of orders by certain customers,
shifts in demand for types of products, technological changes and industry
announcements of new products. If revenues do not meet expectations in any given
quarter, operating results may be materially adversely affected.
THE FAILURE OF KEY SUPPLIERS AND OUR REPORTING SYSTEM TO BE YEAR 2000 COMPLIANT
COULD NEGATIVELY AFFECT OUR BUSINESS
We may realize exposure and risk if the systems on which we are dependent to
conduct our operations are not Year 2000 compliant. Our potential areas of
exposure include products purchased from third parties, computers, software,
telephone systems and other equipment used internally. If our present efforts to
address Year 2000 compliance issues are not successful, or if distributors,
suppliers and other third parties with whom we conduct business, which includes
approximately 3,800 hospitals, do not successfully address these issues, we
could be unable to receive, process, or ship orders to customers on a timely
basis, which would materially adversely affect our business.
We are currently installing a new financial computer system that is Year
2000 compliant and expect the system to be operational prior to December 31,
1999. We anticipate that we will complete all of our reprogramming efforts by
September 30, 1999, allowing adequate time for testing of the new reporting
system. There can be no assurance, however, that the systems of other companies,
on which our systems rely, will also be converted in a timely manner. Moreover,
we cannot be certain that any such failure to convert by another company would
not have a material adverse effect on our business, financial conditions or
results of operations.
We are not expecting to have a material accounts receivable exposure or
significant amount of revenues with any one customer after December 31, 1999.
Therefore, we are not pursuing verification of customer Year 2000 compliance at
this time. Any failure to pay in a timely manner, or place orders for our
products, by a significant number of individual customers or by a customer with
a material accounts receivable balance, due to Year 2000 compliance issues would
have material adverse effects on our business, financial condition or results of
operations.
At this time, we do not believe it is necessary to develop a contingency
plan for the possibility that assessments and potential corrections will not be
completed in a timely manner. However, we will continue to assess the need for a
contingency plan, particularly as it relates to the capabilities of our
customers.
WE DEPEND UPON THIRD PARTY SUPPLIERS
We currently purchase our component materials from several sources.
Alternative suppliers for these materials exist should the current suppliers
discontinue production or distribution. However, we would need to investigate
the materials obtained from any new suppliers for quality and performance.
Additionally, limited notice of the need to switch suppliers for any reason
could affect on our ability to fulfill customer orders, which would have a
material adverse effect on our profitability. We have not experienced any
difficulty with suppliers to date. However, there can be no assurance that
delays in the distribution or sale of our products will not occur in the future.
IF A PRODUCT WE SELL INJURES A USER, WE COULD BE SUBJECT TO A PRODUCT LIABILITY
EXPOSURE
We sell medical products which may involve product liability risk. We carry
general casualty insurance, including coverage for product liability claims up
to $1 million per incident and $2 million aggregate per year. We also carry
liability umbrella coverage of $3 million. However, there can be no
9
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assurance that this coverage will be adequate for any claims that may be raised.
We are not aware of any pending product liability claims against us. However, a
successful product liability suit could materially adversely affect our business
operations.
RISKS RELATED TO THIS OFFERING
THE PRICE OF THIS OFFERING HAS NOT BEEN DETERMINED BY AN INVESTMENT BANK AND MAY
NOT REFLECT THE MARKET PRICE OF OUR COMMON STOCK
We have not employed an investment bank or other similar party in connection
with this offering. The purchase price determined for this offering is based
upon management's review of our current financial condition and prospects. There
can be no assurance that the purchase price in this offering will adequately
reflect the current market price of the shares of our common stock on completion
of this offering.
AFTER THIS OFFERING, SOME OF OUR DIRECTORS WILL HAVE THE ABILITY TO INFLUENCE
CORPORATE ACTIONS
Prior to this offering, three of our shareholders owned greater than 10%
each of the outstanding shares of our common stock and may continue to hold
these percentages if they elect to exercise their full purchase rights under
this offering. In addition, Kenneth W. Brimmer, one of our current directors,
holds greater than 5% of the outstanding shares of our common stock and Gary E.
Copperud, another director, controls greater than 10% of the outstanding shares
through a privately owned company. Each of these shareholders and directors has
the ability to influence our management and affairs. In connection with this
offering, Directors Brimmer and Copperud, have individually agreed to exercise
their respective purchase rights and also to exercise their respective stock
options in order to purchase a number of shares to generate sufficient proceeds
for us to meet the net capital requirement for our continued listing on the
Nasdaq SmallCap Market. Messrs. Brimmer and Copperud are also entitled and may
elect to purchase additional shares and warrants in this offering pursuant to
the oversubscription privilege and, as a result, may increase their respective
percentages of share ownership. As a result, each of the shareholders and named
directors, by virtue of their share ownership, will have the ability to
influence our management and affairs. In connection with state governmental
approvals necessary to proceed with this offering, the California Department of
Corporations required that our board of directors recommend to our shareholders
the approval of two amendments to our articles of incorporation. The amendments
will reduce the number of affirmative votes required on matters to be voted upon
by shareholders, relating to the number of directors and removal of directors,
and in some cases will eliminate voting restrictions on shareholders who hold
more than 10% of our shares. Our board will comply with the Department of
Corporation's requirement. If approved by our shareholders, these amendments may
have the effect of increasing the ability of shareholders who hold more than 10%
of our shares to influence on our management and affairs.
IF WE ARE UNABLE TO CONTINUE OUR NASDAQ LISTING, OUR STOCK PRICE AND OUR
BUSINESS COULD SUFFER
We are currently listed on the Nasdaq SmallCap Market System. Our net
tangible assets were $1,627,963 as of June 30, 1999, or approximately $372,000
below the minimum capital requirements for continued listing on the Nasdaq
SmallCap Market. We received a notice, dated May 21, 1999, from the Nasdaq Stock
Market, Inc. notifying us of this deficiency and requiring us to develop and
execute a plan, satisfactory to Nasdaq, that would within approximately 60 days
bring our net tangible assets up to the required $2,000,000 minimum. We provided
Nasdaq with a compliance plan including, among other things, the sale of Oxboro
Outdoors, the execution of this rights offering and the commitment of two of our
directors to purchase a sufficient number of shares in this offering to provide
proceeds to enable us to meet the minimum capital requirement. Following the
sale of Oxboro Outdoors on June 30, 1999, we filed a Current Report on Form 8-K
indicating that, as of March 31, 1999, our net
10
<PAGE>
tangible assets on a pro forma basis were $1,653,108, or approximately $347,000
below the $2,000,000 minimum capital requirement for continued listing on the
Nasdaq SmallCap Market. Nasdaq subsequently extended our deadline for compliance
to September 30, 1999, subject to our demonstrating at that date that we are in
compliance with all other applicable SmallCap listing requirements. If we are
unable to execute our compliance plan, including this offering, in order to meet
the minimum capital requirement, our stock will be delisted by Nasdaq. Although
our stock may then be eligible to trade on the OTC Bulletin Board, the delisting
would have a materially adverse effect on the price and liquidity of our common
stock. In addition to this offering, on August 13, 1999 we effected a 1-for-5
reverse stock split that caused the number of our outstanding shares of common
stock to temporarily fall below the Nasdaq SmallCap minimum listing requirement.
We intend to correct this deficiency through sales of shares in this rights
offering. However, there can be no assurance that we will be able to sell a
sufficient number of shares of common stock to restore the total number of
outstanding shares to the required minimum or that we will be able to
consistently maintain compliance with all of the other applicable Nasdaq
SmallCap listing requirements. Failure to do so will cause our shares to be
delisted from Nasdaq.
A SIGNIFICANT NUMBER OF OUR SHARES ARE ELIGIBLE FOR SALE AND THEIR SALE COULD
DEPRESS THE MARKET PRICE OF OUR STOCK AND REDUCE OUR LIQUIDITY
As of August 13, 1999, there were 445,412 (2,187,155 pre-split) shares of
our common stock issued and outstanding and 50,400 shares reserved for issuance
upon exercise of outstanding options. Assuming all rights in this offering are
exercised and all of the underlying shares are purchased and that all of the
warrants purchased are fully exercised, we expect to issue 1,336,236 shares of
common stock as a result of this offering and will have a total of 1,781,648
shares outstanding after the offering. However, there can be no assurance that
all of the rights in this offering will be exercised and all of the shares
issued. The overall reduction in our issued and outstanding shares from
2,187,155 shares to 445,412 shares as a result of the 1-for-5 reverse stock
split, effected on August 13, 1999, even assuming all shares are sold in the
offering, could depress the market price of our common stock and otherwise
reduce our liquidity.
SHAREHOLDERS WHO HOLD LESS THAN 100 SHARES MAY PAY DISPROPORTIONATE COMMISSIONS
ON SALE OF THEIR SHARES
Partially as a result of our 1-for-5 reverse stock split, we have a number
of shareholders who hold fewer than 100 shares. It is our understanding that the
minimum unit for our common stock traded by broker-dealers in the Nasdaq
SmallCap market is a round lot of 100 shares. Because of this, and the fact that
a number of brokerage firms have minimum commission amounts, shareholders
holding fewer than 100 shares of our common stock might pay a disproportionately
high level of commissions upon sale of their shares.
THERE IS NO ASSURANCE THAT FUTURE CAPITAL WILL BE AVAILABLE TO US, AND
ADDITIONAL CAPITAL WILL DILUTE THE HOLDINGS OF OUR STOCKHOLDERS
Our shareholders have no preemptive rights. If we:
1. commence a subsequent public or private offering of common stock,
convertible debt, or preferred stock; or
2. issue preferred stock or shares of common stock upon exercise of
warrants to consultants or other parties providing goods or services to us
in lieu of or in addition to cash consideration,
our shareholders, who may not participate in any future stock issuance, will
experience dilution of their equity investment. At this time, we cannot
determine the potential dilution to our shareholders.
11
<PAGE>
We cannot assure that additional financing will be available, or if
available, that it will be available on terms favorable to our shareholders. If
funds are not available to satisfy our short-term and long-term operating
requirements, we may limit or suspend our operations in the entirety or, under
certain circumstances, seek protection from creditors. We believe that future
financing undertaken may contain terms that could result more substantial
dilution than we now have, which would adversely affect our business.
OUR STOCK PRICE MAY BE MATERIALLY AFFECTED BY MARKET VOLATILITY
The stock market has, from time to time, experienced significant price and
volume fluctuations that have affected the market prices of companies similar to
ours and these fluctuations often have been unrelated to the operating
performance of such companies. Factors not directly related to our performance,
such as negative industry reports or disappointing earnings announcements by
publicly traded competitors, may have an adverse impact on the market price of
our common stock. In the past, following periods of volatility in the market
price of a company's securities, securities class action claims have often been
brought against that company. This litigation could result in substantial costs
and a diversion of management's attention and resources.
WE MAY BE ADVERSELY AFFECTED BY STATUTORY ANTI-TAKEOVER PROVISIONS
As a Minnesota corporation, we are subject to certain anti-takeover
provisions of the Minnesota Business Corporation Act. The authority of the Board
with regard to the anti-takeover provisions of the Act could have the effect of
delaying, deferring or preventing a change in control of the Company, may
discourage bids for our common stock at a premium over the then prevailing
market price, and may adversely affect the market price of, and the voting and
other rights of the holders of our common stock. If we issue additional shares,
whether for purposes of raising additional capital or otherwise, it could have
the effect of making a takeover more difficult.
RISKS RELATED TO GOVERNMENT REGULATION AND LEGAL UNCERTAINTY
CHANGES IN GOVERNMENT REGULATION OF THE PRODUCTS WE SELL MAY NEGATIVELY AFFECT
OUR BUSINESS
Our products are regulated by government agencies in the United States and
foreign countries. In the United States, our products are regulated by the Food
and Drug Administration. The FDA regulates, among other things, (1) the content
of our products, (2) the product labels, (3) the claims in our product
literature and advertising, and (4) the manufacture of the products. The FDA and
other government agencies may in the future issue new regulations, or issue new
interpretations of existing regulations, which affect the manufacture, marketing
and sale of our products. Our operations may also be affected if Congress passes
new legislation or if courts issue new rulings with respect to existing
legislation. We can offer no assurance that we will not be adversely affected by
new, or newly interpreted, regulatory requirements.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. When used in this prospectus, the words or phrases "believes,"
"anticipates," "expects," "intends," "estimates" or similar expressions are
intended to identify forward-looking statements, but are not the exclusive means
of identifying such statements. These forward-looking statements involve risks
and uncertainties that may cause our actual results to differ materially from
those expressed or implied by the forward-looking statements. Important factors
that could cause our actual results to differ materially from projections
include, but are not limited to, those discussed in "Risk Factors," and
"Business," as well as those discussed elsewhere in this prospectus. Given these
uncertainties, you should not place undue reliance on the forward-looking
statements. We do not intend to update any forward-looking statements.
12
<PAGE>
BUSINESS
GENERAL
Oxboro Medical International, Inc. develops, assembles, and markets medical
and surgical devices. Until June 30, 1999, Oxboro also developed, assembled and
marketed products for the fishing, hunting, and related outdoor recreational
markets through a wholly-owned subsidiary, Oxboro Outdoors, Inc. Effective June
30, 1999, we sold all of the outstanding shares of Oxboro Outdoors to a group of
private investors. See "RELATED PARTY TRANSACTIONS."
PRODUCTS. Principal medical products produced and sold by Oxboro include
silicone loops, silicone and fabric clamp covers, instrument guards, suture aid
booties, identification sheet and roll tape, and various holders and organizers
for instruments used in the operating room.
OXBORO'S STRATEGY. Following the sale of Oxboro Outdoors, our general
strategy is to focus on our sale of medical products. Oxboro's strength is its
base of approximately 3,000 customers who purchase our surgical devices and
instrument reprocessing accessories. We will attempt to capitalize on this base
through efforts to increase the breadth of our currently very limited product
line, through acquisitions, license agreements, distribution agreements and
through the development of new products.
MARKETING, SALES AND DISTRIBUTION. Approximately 75% of our sales of
medical products are direct to over 3,000 medical centers throughout the United
States. We accomplish direct sales through an in-house telemarketing sales
force. In recent years, an increasing proportion of our sales have been effected
through foreign distributors and distributors and kit packers in the United
States. We expect this trend to continue.
RESEARCH AND DEVELOPMENT. Historically, we have not spent a substantial
amount on research or development of new products. As a result of recent changes
in management, however, we now have a new focus on medical products sales with a
goal of expanding our product lines. We anticipate that research and development
expenditures will grow rapidly in the future, should attractive opportunities
arise.
COMPETITION. We operate in a highly competitive industry in which there are
many established companies, including Scanlon Instruments, Key Surgical and
Healthmark, among others. Companies with stronger financial resources may be
able to develop and market similar or competing products and reduce or negate
any competitive advantage that we may have due to the proprietary nature of
their products or their ability to more successfully market those products.
GOVERNMENT REGULATION. Because we manufacture and sell medical products,
both the products and the manufacturing procedures are subject to regulation in
the United States by the Food and Drug Administration and in the European
Community by the Medical Device Directives. As a result, we are subject to
extensive rules and regulations, compliance with which may require expenditure
of material amounts. In addition, should Oxboro fail to comply with these
regulations, we would be subject to administrative and criminal actions, which
could have a material adverse effect on our business. Oxboro is also subject to
CE Mark Certification, which we must adhere to in order to continue to sell our
products in certain international markets. Our continued compliance with all
regulatory requirements may require significant expenditures.
PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS. Many of the products we
currently market are not unique. Accordingly, we believe that the effect of
patents on other than a few select products would be negligible. If we
substantially develop and test any new unique products, patent protection could
be important. However, it may not be available. Also, we may incur substantial
costs in attempting to secure patent protection for any new products. Prior to
its recent sale, Oxboro Outdoors had applied for and received trademark
registrations for licensed products it marketed and sold. Oxboro Outdoors
13
<PAGE>
also manufactured and marketed several products pursuant to license agreements
with professional sports organizations. These trademark registrations and
license agreements were transferred upon sale of the subsidiary. See "RELATED
PARTY TRANSACTIONS."
EMPLOYEES. We currently have 47 full-time employees, including 1 in
management, 7 in sales, 33 in production and shipping, and 6 in general
administration. We also employ approximately 2 or 3 persons part-time. Eight
persons were also employed with Oxboro Outdoors until its sale effective June
30, 1999.
USE OF PROCEEDS
The net proceeds that we will receive from this rights offering depend upon
the number of rights exercised. The net proceeds from the sale of an aggregate
890,824 shares of our common stock and 445,412 warrants underlying this rights
offering, assuming a purchase price of $2.50 per right, are estimated to be
approximately $1,007,155 if all of the rights being offered are exercised. There
can be no assurance, however, that any of the rights will be exercised. Although
there is no minimum purchase requirement in connection with this rights
offering, two of our directors, Kenneth W. Brimmer and Gary W. Copperud, have
severally provided us with verbal standby subscription guarantees and have
advised us that they intend to exercise their rights in connection with this
offering. There can be no assurance that all of the rights offered will be
exercised and that all of the shares, including shares underlying the warrants,
will be issued in this offering.
We intend to use the proceeds from this rights offering, in order of
priority, for working capital, purchases of equipment and products or product
lines, possible acquisitions of companies selling products or product lines
similar to ours, research and development, repayment of debt and other general
corporate purposes. If substantially less than the maximum proceeds are obtained
in this offering, we will apply those proceeds to working capital. Pending the
uses specified above, we will invest any balance of the proceeds in short-term,
high quality interest bearing investments.
DETERMINATION OF OFFERING PRICE
In determining the offering price of the rights and warrants and the
exercise price of the warrants, we considered various factors, including a
review of our current and historical financial position and our short and
long-term business plans. We also analyzed the benefits to our continued listing
on the Nasdaq SmallCap Market and concluded that a rights offering to all
shareholders would be the most equitable method to raise capital in order to
maintain our listing. We believe that the recapitalization effected by our
1-for-5 reverse stock split and repricing is necessary to ensure a successful
offering.
DIVIDEND POLICY
We have not declared or paid a cash dividend on our common stock. We
currently intend to retain any earnings for use in the operation and expansion
of our business and, therefore, do not anticipate paying any cash dividends in
the foreseeable future.
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<PAGE>
CAPITALIZATION
We are offering purchase rights to our shareholders without reliance upon an
independent investment banker. Effective August 13, 1999, our board of directors
approved a 1-for-5 reverse stock split of the outstanding shares of our common
stock to shareholders of record on the same date. The information and share
amounts in this prospectus and the registration statement of which it is a part
reflect the 1-for-5 reverse stock split as well as our estimate of the value of
our common stock on a post-split basis, based upon current market conditions.
As reported in our Form 10-QSB for the quarter ended June 30, 1999, we had a
net tangible book value of $1,627,963, or $3.72 per share of common stock
outstanding. The following table sets forth capitalization as of June 30, 1999,
as adjusted to reflect the 1-for-5 reverse stock split, as adjusted to reflect
the sale by Oxboro of the required number of rights to achieve capitalization of
$2 million, and as adjusted to reflect the sale by Oxboro of the maximum 890,824
shares of its common stock pursuant to this rights offering at a subscription
price of $2.50 per purchase right exercised, excluding the exercise of the
warrants. There is no minimum purchase requirement in this offering. See "Use of
Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1999
---------------------------------
<S> <C> <C> <C>
AS ADJUSTED AS ADJUSTED
ACTUAL (MINIMUM)(1)(2) (MAXIMUM)(1)(3)
------------ --------------- ----------------
Shareholders' Equity:
Common stock, $0.01 par value; 2,000,000 shares authorized;
437,431 shares issued and outstanding; 796,160 shares and
1,336,255 shares as adjusted................................ $ 4,374 $ 7,962 $ 13,363
Additional paid-in capital...................................... 1,513,429 1,881,878 2,551,596
Retained earnings............................................... 329,466 329,466 329,466
Stock Subscription Agreements................................... (219,306) (219,306) (219,306)
------------ --------------- ----------------
Total shareholders' equity.................................... 1,627,963 2,000,000 2,675,119
------------ --------------- ----------------
Total capitalization.......................................... $ 1,627,963 $ 2,000,000 $ 2,675,119
------------ --------------- ----------------
------------ --------------- ----------------
</TABLE>
- ------------------------
(1) Includes the investment of an aggregate $40,000 by Messrs. Copperud and
Brimmer on exercise of their respective options to purchase an aggregate
8,000 shares, at a purchase price of $5.00 per share, which will occur prior
to the distribution record date, as defined herein.
(2) Assumes the exercise of purchase rights by directors Gary W. Copperud and
Kenneth W. Brimmer, severally, at a price of $2.50 per purchase right
exercised, in accordance with their respective subscription guarantees and
assumes that the number of shares purchased will be determined by the
difference between the Nasdaq $2,000,000 minimum net tangible asset
requirement for listing of SmallCap companies and the net tangible assets as
reported by us on our most current report filings with the Securities and
Exchange Commission filed prior to the effective date of this offering. See
"DILUTION."
(3) Assumes the issuance of the maximum of 890,824 shares of common stock
pursuant to this rights offering at a price of $2.50 per purchase right
exercised, excluding exercise of the warrants.
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<PAGE>
DILUTION
As of June 30, 1999, the pro forma net tangible book value of Oxboro, which
is made up of total assets, excluding intangible assets, less total liabilities,
was $1,627,963, or $3.38 per share of common stock outstanding, without giving
effect to the sale of shares of common stock offered in this rights offering.
Assuming the sale of the maximum 890,824 shares of common stock in the
rights offering, excluding the exercise of warrants, the pro forma net tangible
book value of Oxboro common stock purchased as a result of this rights offering
would be increased by $.78 per share without any additional investment
(excluding the exercise of rights) and all existing shareholders would
experience an immediate dilution of $1.72 per share for those shares previously
held. Assuming the sale of 350,729 shares of common stock in the rights offering
to achieve capitalization of $2 million, the pro forma net tangible book value
of our common stock purchased in this rights offering would be increased by
$1.29 per share without any additional investment (excluding the exercise of
rights) and all existing shareholders would experience an immediate dilution of
$1.21 per share for those shares previously held. There is no minimum purchase
requirement in this offering.
The following table illustrates the changes in pro forma net tangible book
value of Oxboro common stock outstanding immediately following the distribution
and the anti-dilution that would be experienced by persons exercising the
rights, without giving effect to the results of operations after June 30, 1999:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
----------- -----------
<S> <C> <C> <C> <C>
Price paid per share in the rights offering........................................ $ 1.225 $ 1.225
Net tangible book value per share before offering.................................. 3.72 3.72
Decrease in net tangible book value per share resulting from offering.............. 1.21 1.72
--------- ---------
Pro forma net tangible book value per share after offering......................... 2.51 2.00
----------- -----------
Anti-dilution per share to investors in this offering.............................. $ 1.29 $ .78
----------- -----------
----------- -----------
</TABLE>
COMMITMENT OF EXISTING DIRECTORS
Two of our directors, Gary W. Copperud and Kenneth W. Brimmer, have
independently advised us that they each intend to exercise their purchase rights
in connection with this offering, and purchase additional rights if necessary
and to the extent available, to ensure that we have sufficient proceeds from
this offering to raise our net tangible assets to the minimum level required for
listing on the Nasdaq SmallCap Market.
COMMITMENT TO PURCHASE BY EXISTING DIRECTORS
Set forth below are the number of shares beneficially owned as of the record
date by Messrs. Copperud and Brimmer, the maximum number of shares each would be
entitled to purchase on exercise of their rights in this offering and the
aggregate consideration payable for those shares. However, the deficiency in
Oxboro's minimum capitalization, as reflected in its June 30, 1999 financial
statements, cannot be satisfied solely by Messrs. Copperud and Brimmer
exercising all of their purchase rights in the initial round of this offering.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
PURCHASABLE PURSUANT
CURRENT SHARES TO EXERCISE OF AGGREGATE
NAME OWNED RIGHTS(1) CONSIDERATION(1)
- --------------------------------------------------------- --------------- --------------------- --------------
<S> <C> <C> <C>
Gary W. Copperud, as President
of CMM Properties, LLC................................. 60,709 121,418 $ 151,773
Kenneth W. Brimmer....................................... 34,000 68,000 $ 85,000
</TABLE>
- ------------------------
(1) Assumes a purchase price for each right exercised of $2.50.
(2) Includes 20,000 shares as to which Mr. Brimmer has shared voting and
dispositive power and 2,000 shares beneficially owned by his wife.
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<PAGE>
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes some of the material U.S.
Federal Income Tax consequences to shareholders relating to this rights
offering. This discussion is a summary for general information purposes only,
and is based upon the Internal Revenue Code of 1986, as amended, applicable
Treasury Regulations, and judicial and administrative interpretations of the
Code and Regulations, all as in effect on the date of this prospectus. Each
shareholder should be aware that the Code, the Regulations and any
interpretation thereof are subject to change and that any change could be
applied retroactively. This summary does not discuss all aspects of federal
income taxation that may be relevant to particular shareholders in light of
their personal investment circumstances or to certain types of shareholders
subject to special treatment under the federal income tax laws (for example,
banks, insurance companies, tax-exempt entities and foreign taxpayers). This
discussion is limited to those Oxboro shareholders who have held their Oxboro
common stock as a capital asset within the meaning of the Code.
This summary also does not discuss any aspects of state, local or foreign
tax laws. Shareholders are urged to consult their own tax advisors to determine
the tax consequences that may be relevant to each of them in connection with the
distribution of the rights and the acquisition of shares in this offering.
RECEIPT OF THE RIGHTS. No gain or loss will be recognized by the Oxboro
shareholders upon receipt of the rights or the related oversubscription
privilege.
SHAREHOLDER BASIS AND HOLDING PERIOD OF THE RIGHTS. Except as provided in
the following sentence, the basis of the rights received by an Oxboro
shareholder as a distribution with respect to the shareholder's common stock
will be zero. If, however, either (i) the fair market value of the rights on the
date that the rights are distributed is 15% or more of the fair market value of
the shares of Oxboro common stock with respect to which they are received or
(ii) the shareholder properly elects, as part of the shareholder's Federal
Income Tax return for the taxable year in which the rights are received, to
allocate basis, then part of the shareholder's basis in shares of Oxboro common
stock will be allocated between the Oxboro common stock and the rights in
proportion to the fair market value of each on the date of this rights offering.
The holding period of an Oxboro shareholder with respect to the rights
received as a distribution on the shareholder's Oxboro common stock will include
the shareholder's holding period for the Oxboro common stock with respect to
which the rights were issued.
LAPSE OF THE RIGHTS. Oxboro shareholders who allow the rights received by
them to lapse will not recognize any gain or loss, and no adjustment will be
made to the basis of Oxboro common stock, if any, owned by those shareholders.
EXERCISE OF THE RIGHTS; BASIS AND HOLDING PERIOD OF SHARES. Oxboro
shareholders will not recognize any gain or loss upon the exercise of the
rights. The basis of the Oxboro common stock acquired through exercise of the
rights will be equal to the sum of the price paid therefor and the shareholder's
basis in such rights, if any. A shareholder's holding period for the Oxboro
common stock acquired through exercise of the rights will begin on the date the
rights are exercised.
SALE OF SHARES. A sale of the shares of Oxboro common stock acquired through
the exercise of the rights will result in the recognition of capital gain or
loss in an amount equal to the difference between the amount realized on the
sale and the shareholder's adjusted basis in the Oxboro common stock. The gain
or loss will be classified as long-term capital gain or loss if the shareholder
held the shares for more than twelve months. If the shares were held for less
than twelve months, the gain or loss will be a short-term gain or loss.
17
<PAGE>
PLAN OF DISTRIBUTION
We have not engaged an underwriter in connection with this offering. We
intend to distribute the purchase rights in this offering and copies of this
prospectus to our shareholders of record on a date promptly following the
effective date of the registration statement of which this prospectus forms a
part. Holders of rights who desire to subscribe for the purchase of our common
stock and warrants in this offering are urged to complete, date and sign the
attached subscription agreement and return it to the subscription agent on or
before the expiration date, together with payment in full of $2.50 for each
right exercised.
Our employees, officers or directors may solicit responses from shareholders
receiving rights to purchase, but these persons will not receive any commissions
or compensation for their services other than their normal employment
compensation.
RELATED PARTY TRANSACTIONS
OPTION EXERCISES; SUBSCRIPTION GUARANTEES. In connection with this
offering, two of our directors, Kenneth W. Brimmer and Gary W. Copperud, have
individually and severally agreed to exercise their respective options to
purchase an aggregate 8,000 shares of our common stock, at an exercise price of
$5.00 per share, for an aggregate purchase price of $40,000. Messrs. Brimmer and
Copperud have also independently agreed to exercise their rights to purchase
shares and have agreed to purchase additional shares, if necessary, sufficient
to enable us to restore our net tangible assets to at least the minimum required
for continued listing on the Nasdaq SmallCap Market System.
SUBSEQUENT EVENTS
SALE OF OXBORO OUTDOORS, INC. On June 30, 1999 we sold all of the
outstanding shares of our wholly-owned subsidiary, Oxboro Outdoors, Inc., to a
group of private investors. The transaction was effected pursuant to the terms
of a stock purchase agreement at a purchase price of $650,000. The purchase
price was paid $385,000 in cash and $265,000, subject to adjustments, in the
form of a 90-day, 9% promissory note. The purchase price is subject to offsets
in the event current licenses with Oxboro Outdoors are discontinued by the
licensor within 90 days of execution of the promissory note. The stock purchase
agreement also provides, among other things, that we will enter into a lease
agreement with the purchasers for lease of space we currently use.
Oxboro Outdoors develops, assembles and markets products for the fishing,
hunting and related outdoors recreational markets. Its sales include specific
products licensed by professional sports organizations, such as fishing lures
earrings and key chains, as well as miscellaneous fishing and hunting related
products.
AMENDMENTS TO ARTICLES OF INCORPORATION. On July 28, 1999, we filed an
application with the California Department of Corporations for permission to
distribute rights to purchase in this offering to our shareholders who are
California residents. The Department of Corporations required us to recommend to
our shareholders that they adopt two amendments to our Articles of
Incorporation: first, amend Article IX to reduce the voting requirement from 75%
to 66 2/3% for approval of changes in the number of directors, removal of
directors, and amendments to Article IX, and second, delete Article XII, which
was adopted to make Oxboro subject to the Minnesota Business Combination
Statute. The effect of these amendments will be to lower the voting requirement
for changes in the number and removal of directors and to permit shareholders
owning 10% or more of our outstanding shares, who are currently prevented from
voting on certain matters, to vote on all matters that require a shareholder
vote. Our board of directors has approved these amendments and will recommend
them for adoption by the shareholders at our annual meeting to be held in 2000.
There can be no assurance that the shareholders will approve these amendments.
However, if we do not recommend approval of the amendments, we will not be
permitted to offer rights to purchase to our shareholders in California.
18
<PAGE>
LEGAL OPINIONS
Lindquist & Vennum P.L.L.P. will issue an opinion about the legality of the
securities offered by this prospectus.
EXPERTS
Grant Thornton LLP, independent certified public accountants, has audited
our consolidated financial statements included in our Annual Report on Form
10-KSB for the year ended September 30, 1998, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement in reliance upon their authority as experts in accounting
and auditing.
INDEMNIFICATION
The Oxboro Articles of Incorporation eliminate or limit certain liabilities
of its directors and the Oxboro bylaws provide for indemnification of directors,
officers and employees of Oxboro in certain instances. Insofar as exculpation
of, or indemnification for, liabilities arising under the Securities Act of 1933
may be permitted to directors, officers or persons controlling Oxboro pursuant
to the foregoing provisions, Oxboro has been informed that in the opinion of the
Securities and Exchange Commission such exculpation or indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING MADE
HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
RIGHTS TO PURCHASE
UP TO 890,824 SHARES
OF COMMON STOCK
AND
445,412 WARRANTS
TO PURCHASE COMMON STOCK
OXBORO MEDICAL
INTERNATIONAL, INC.
PROSPECTUS
AUGUST 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the registrant in connection with the issuance and
distribution of the securities being registered:
<TABLE>
<S> <C>
Registration Fee............................................... $ 645.00
NASD Fee....................................................... 730.00
Accounting Fees and Expenses*.................................. 15,000.00
Legal Fees and Expenses*....................................... 60,000.00
Blue Sky Expenses*............................................. 3,000.00
Printing Expenses*............................................. 20,000.00
Transfer Agent and Registrar Fees*............................. 5,000.00
Miscellaneous*................................................. 2,000.00
----------
Total.................................................... $106,375.00
----------
----------
</TABLE>
- ------------------------
* Estimated pursuant to instruction to Item 511 of Regulation S-K.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes requires, among other things, the
indemnification of persons made or threatened to be made a party to a proceeding
by reason of acts or omissions performed in their official capacity as an
officer, director, employee or agent of the corporation against judgments,
penalties and fines (including attorneys' fees) if such person is not otherwise
indemnified, acted in good faith, received no improper benefit, reasonably
believed that such conduct was in the best interests of the corporation, and, in
the case of criminal proceedings, had no reason to believe the conduct was
unlawful. In addition, Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment by the corporation, upon written request, of reasonable
expenses in advance of final disposition in certain instances if a decision as
to required indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a designated committee of the Board, by special legal counsel, by the
shareholders or by a court.
The Oxboro Articles of Incorporation provide for the indemnification of
directors, and the Oxboro bylaws provide for the indemnification of its
directors, officers, employees, and agents, in accordance with, and to the
fullest extent permitted by, the provisions of the Minnesota Business
Corporation Act, as amended from time to time.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------- -----------------------------------------------------------------------------------------------------
<C> <S>
3(a) Articles of Incorporation of the registrant, as amended
3(b) Bylaws of the registrant, as amended
4(a) Form of Rights Subscription Certificate
4(b) Form of Common Stock Certificate
4(c) Letter to Shareholders
4(d) Form of Warrant Agreement
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------- -----------------------------------------------------------------------------------------------------
<C> <S>
4(e) Form of Warrant Certificate
5 Opinion of Lindquist & Vennum P.L.L.P., counsel to Oxboro Medical International, Inc.
23(a) Consent of Lindquist & Vennum P.L.L.P., counsel to Oxboro Medical International, Inc. (included as
part of Exhibit 5)
23(b) Consent of Grant Thornton LLP
24* Power of Attorney (included with signature page)
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) That, for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(e) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Ham Lake, State of
Minnesota, on the 31st day of August, 1999.
<TABLE>
<S> <C> <C>
OXBORO MEDICAL INTERNATIONAL, INC.
By: /s/ MATTHEW E. BELLIN
-----------------------------------------
Matthew E. Bellin
President and Chief Operating Officer
(PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL
FINANCIAL AND ACCOUNTING OFFICER)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment has been signed below on the 31st day of August, 1999 by the following
persons in the capacities indicated:
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
*
- ------------------------------ Chairman of the Board and
Robert S. Garin Director
President and Chief
Operating Officer
/s/ MATTHEW E. BELLIN (PRINCIPAL EXECUTIVE
- ------------------------------ OFFICER AND PRINCIPAL
Matthew E. Bellin FINANCIAL AND ACCOUNTING
OFFICER)
*
- ------------------------------ Director
Kenneth W. Brimmer
*
- ------------------------------ Director
Gary W. Copperud
*
- ------------------------------ Director
John E. Sayer
</TABLE>
* Signatures on this Amendment are supplied by Power of Attorney as follows:
<TABLE>
<S> <C> <C> <C>
By: /s/ MATTHEW E. BELLIN
-------------------------
Matthew E. Bellin
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------------- --------------------------------------------------------------------------------------------------------
<C> <S>
3(a) Articles of Incorporation of the registrant, as amended
3(b) Bylaws of the registrant, as amended
4(a) Form of Rights Subscription Certificate
4(b) Form of Common Stock Certificate
4(c) Letter to Shareholders
4(d) Form of Warrant Agreement
4(e) Form of Warrant Certificate
5 Opinion of Lindquist & Vennum P.L.L.P., counsel to the registrant
23(b) Consent of Grant Thornton LLP
</TABLE>
<PAGE>
EXHIBIT 3(a)
COMPOSITE ARTICLES OF INCORPORATION, AS AMENDED
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
OXBORO MEDICAL INTERNATIONAL, INC.
The undersigned, Harley Haase and Dennis L. Mikkelson, being of full
age, do hereby certify that they are the president and secretary, respectively,
of Oxboro Medical International, Inc., that Oxboro Medical International, Inc.,
is organized under the Minnesota Business Corporation Act, Minnesota Statutes,
Chapter 302A; and that, in accordance with Chapter 302A, at a regular meeting of
the Board of Directors of Oxboro Medical held on March 3, 1994, the majority of
the directors adopted the following amendment, and that the amendment correctly
sets forth without change the corresponding provisions of the Articles of
Incorporation as previously amended:
ARTICLE I
The name of this corporation shall be Oxboro Medical International,
Inc.
ARTICLE II
This corporation has been formed for general business purposes.
ARTICLE III
The corporation shall have all of the powers granted or
available under the laws of the state of Minnesota and laws amendatory
thereof and supplementary thereto, including but not limited to the
following:
1. The power to establish and operate life centers for
the control of smoking and for weight loss.
2. The power to acquire, own, pledge, dispose of and
deal in real and personal property, tangible and intangible, shares of
capital stock, rights, bonds, debentures, notes, trust receipts and
other securities, obligations, choses in action and evidences of
indebtedness or interest issued or created by any corporations
(including this corporation), associations, firms, trusts or persons,
public or private, or by the government of the United States of
America, or by any foreign government or by any state, territory,
province, municipality or other political subdivision or by any
governmental agency, domestic or foreign, and as owner thereof to
possess and exercise all the rights, powers and privileges of
ownership, including the right whenever applicable, to execute consents
and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement
in value thereof.
3. The power to aid in any manner any corporation,
association, firm or individual, any of whose securities, evidences of
indebtedness, obligations or stock are held by the corporation directly
or indirectly, or in which, or in the welfare of which, the corporation
shall have any interest, and to guarantee securities, evidences of
indebtedness and obligations of other persons, firms, associations and
corporations.
4. The power to carry out all or any part of the
purposes of this corporation as a principal or agent, or in
conjunction, or as a partner or member of a partnership, syndicate or
joint venture or otherwise, and in any part of the world to the same
extent as fully as natural persons might or could do.
<PAGE>
ARTICLE IV
The duration of this corporation shall be perpetual.
ARTICLE V
The location and post office address of this corporation's
registered office in this state shall be 13828 Lincoln Street, N. E.,
Ham Lake, Minnesota 55304.
ARTICLE VI
The minimum amount of stated capital with which this
corporation will begin business shall not be less than One Thousand and
no/100 Dollars ($1,000.00).
ARTICLE VII
The aggregate number of shares this corporation has the
authority to issue shall be Two Million (2,000,000) shares, which shall
consist of One Million (1,000,000) shares of Common Stock, with a par
value of $.01 per share, and One Million (1,000,000) undesignated
shares, with a par value of $.01 per share. The Board of Directors is
authorized to establish from the undesignated shares, by resolution
adopted and filed in the manner provided by law, one or more classes or
series and to set forth the designation of each such class or series
and fix the relative rights and preferences of each such class or
series, including, but not limited to, fixing the relative voting
rights, if any, of each such class or series to the full extent
permitted by law. The Board of Directors shall be authorized to issue
shares of Common Stock to holders of Common Stock and to holders of any
class or series of undesignated shares and to issue shares of any class
or series of undesignated shares to holders of Common Stock and to
holders of any class or series of undesignated shares, in any case, for
any purpose.
All shares of Common Stock shall be equal in every respect. At
all meetings of the shareholders, each shareholder of record entitled
to vote thereat shall be entitled to one (1) vote for each share (and a
fractional vote for and equal to each fractional share) of Common Stock
standing in his name and entitled to vote at such meetings.
Shareholders shall have no rights of cumulative voting. Shareholders
shall not be entitled, as a matter of right, preemptive or otherwise,
to subscribe or apply for a purchase or receive any part of any
unissued stock or other securities of this corporation, or of any stock
or other securities issued and thereafter acquired by this corporation.
ARTICLE VIII
The name and post office address of the incorporator of
this corporation are as follows:
Steven R. Hedges
2850 Metro Drive, Suite 800
Minneapolis, MN 55420
ARTICLE IX
The business and affairs of this corporation shall be managed
by or under the direction of a Board of Directors consisting of not
less than two persons, who need not be shareholders. The number of
directors may be increased by the shareholders or by a 2/3 vote of the
entire Board of Directors or decreased by the shareholders to not less
than three; provided, however, that any change in the number of
directors on the Board of Directors (including, without limitation,
changes at annual meetings of shareholders) shall be approved by the
affirmative vote of not less than 75% of the voting power of this
corporation's shares outstanding and
-2-
<PAGE>
entitled to vote, voting together as a single class, unless such
change shall have been approved by a majority of the entire Board of
Directors. If such change shall not have been so approved, the number
of directors shall remain the same. For purposes of this Article IX,
the shares of this corporation entitled to vote shall be those shares
of this corporation's capital stock entitled to vote generally in the
election of directors of this corporation.
The directors shall be divided into three classes, designated
Class I, Class II, and Class III, except as otherwise provided pursuant
to this Article IX. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting
the entire Board of Directors. At the 1990 annual meeting of
shareholders two directors shall be elected, one of whom shall be a
Class I director elected for a one-year term and one of whom shall be a
Class III director elected for a three-year term. Any Class II director
elected by the shareholders or appointed by the Board of Directors
prior to the 1992 annual meeting of shareholders shall serve until the
1992 annual meeting of shareholders. At each succeeding annual meeting
of shareholders beginning in 1991, successors to the class of directors
whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as possible, and any
additional director of any class elected or appointed to fill a vacancy
resulting from an increase in such class shall hold office initially
for a term that shall coincide with the remaining term of that class.
In no case will a decrease in the number of directors shorten the term
of any incumbent director. A director shall hold office until the
annual meeting for the year in which the director's term expires and
until a successor shall be elected and qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. Removal of a director from office by the shareholders, with or
without cause, shall require the affirmative vote of the greater of (1)
a majority of the voting power of this corporation's shares outstanding
and entitled to vote, voting together as a single class, or (2) at
least 75% of the voting power of this corporation's shares present and
entitled to vote, voting as a single class. Any vacancy on the Board of
Directors that results from an increase in the number of directors
shall be filled by a majority of the entire Board of Directors then in
office, and any other vacancy occurring in the Board of Directors shall
be filled by a majority of the directors then in office, although less
than a quorum, or by a sole remaining director. Any director elected or
appointed to fill a vacancy not resulting from an increase in the
number of directors shall have the same remaining term as such
director's predecessor. In addition to the authority of the
shareholders to remove directors as described above, any director
appointed by the Board of Directors to fill a vacancy, however created,
may be removed prior to such director's initial election by the
shareholders, with or without cause, by the vote of a majority of the
other members of the Board of Directors then in office.
Notwithstanding the foregoing, whenever the holders of any one
or more classes of capital stock (other than common stock) issued by
this corporation shall have the right, voting separately by class or
series, to elect directors at an annual or special meeting of
shareholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by or pursuant
to the applicable terms of the certificate of designation or other
instrument creating such class or series of capital stock, and such
directors so elected shall not be divided into classes pursuant to this
Article IX unless expressly provided by such terms.
Only persons who are nominated in accordance with the
procedures set forth in this Article IX shall be eligible for election
as Directors. Nominations of persons for election to the Board of
Directors of this corporation may be made at a meeting of shareholders
(a) by or at the direction of the Board of Directors or (b) by any
shareholder of this corporation entitled to vote for the election of
Directors at the meeting who complies with the notice procedures set
forth in this Article IX. Nominations by shareholders shall be made
pursuant to timely notice in writing to the Secretary of this
corporation. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of this
corporation not less than 50 days prior to the meeting; provided,
however, that in the event that less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 10th day following
the day on which such notice
-3-
<PAGE>
of the date of the meeting was mailed or such public disclosure was
made. Such shareholder's notice shall set forth (a) as to each
person whom the shareholder proposes to nominate for election or
re-election as a director, all information relating to such person
that is required (or would be required if this corporation were
subject to Regulation 14A under the Securities Exchange Act of 1934,
as amended) to be disclosed in solicitations of proxies or otherwise
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a
director if elected); and (b) as to the shareholder giving the
notice (i) the name and address, as they appear on the corporation's
books, of such shareholder and (ii) the class and number of shares
of this corporation which are beneficially owned by such
shareholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a director shall
furnish to the Secretary of this corporation that information
required to be set forth in a shareholder's notice of nomination
which pertains to the nominee. No person shall be eligible for
election as a director of this corporation unless nominated in
accordance with the procedures set forth in this Article IX. The
Chairman of the meeting shall, if the facts warrant, determine that
a nomination was not made in accordance with the procedures
prescribed in this Article IX and, if he should so determine, he
shall so declare to the meeting and the defective nomination shall
be disregarded.
At any regular or special meeting of the shareholders, only
such business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board of Directors or (b) by
any shareholder of this corporation who complies with the notice
procedures set forth in this Article IX. For business to be properly
brought before any regular or special meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the
Secretary of this corporation. To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 50 days prior to the meeting,
provided, however, that in the event that less than 60 days' notice or
prior public disclosure of the date of the meeting is given or made to
the shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the 10th day following
the day on which such notice of the date of the regular or special
meeting was mailed or such public disclosure was made. A shareholder's
notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the regular or special meeting (a)
a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting,
(b) the name and address, as they appear on this corporation's books,
of the shareholder proposing such business, (c) the class and number of
shares of this corporation which are beneficially owned by the
shareholder and (d) any material interest of the shareholder in such
business. Notwithstanding anything in this corporation's Bylaws to the
contrary, no business shall be conducted at any regular or special
meeting except in accordance with the procedures set forth in this
Article IX. The Chairman of the meeting shall, if the facts warrant,
determine that business was not properly brought before the meeting in
accordance with the provisions of this Article IX and, if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Notwithstanding any other provisions of these Articles of
Incorporation (and notwithstanding the fact that a lesser percentage or
separate class vote may be specified by law or these Articles of
Incorporation), the affirmative vote of the holders of the greater of
(1) a majority of the voting power of this corporation's shares
outstanding and entitled to vote or (2) at least 75% of the voting
power of this corporation's shares present and entitled to vote, in
each case voting together as a single class, shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article IX.
ARTICLE X
The authority to make and alter the By-Laws of this
corporation is hereby vested in the Board of Directors of this
corporation is hereby vested in the Board of Directors of this
corporation to the full extent permitted by law, subject, however, to
the power of the shareholders of this corporation to repeal or alter
such By-Laws.
-4-
<PAGE>
Authority is hereby conferred upon and vested in the Board of
Directors of this corporation to accept or reject subscriptions for
shares of its capital stock, whether such subscriptions be made before
or after its incorporation. The Board of Directors shall have the
authority to issue shares of stock and securities of this corporation
to the full amount authorized by these Articles of Incorporation, and
shall have the authority to grant and issue rights to convert
securities of the corporation into shares of stock of the
corporation, options to purchase shares or securities convertible
into shares, warrants, and other such rights or options, and to fix
the terms, provisions and conditions of such rights, options and
warrants, including the option price or prices at which shares may
be purchased or subscribed for and the conversion basis or bases of
such rights, options and warrants.
ARTICLE XI
The shareholders of this corporation may, by a majority vote
of all shares issued, outstanding and entitled to vote:
1. Authorize the Board of Directors to sell, lease,
exchange or otherwise dispose of all, or substantially all, of its
property and assets, including its goodwill, upon such terms and
conditions and for such consideration, which may be money, shares,
bonds, or other instruments for the payment of money or other property,
as the Board of Directors deems expedient and in the best interests of
the corporation;
2. Amend the Articles of Incorporation of this
corporation for any reason or lawful purpose, and in the event that any
such amendment adversely affects the rights of holders of shares of
different classes, the affirmative vote of a majority of each such
class shall be sufficient to adopt the amendment; and
3. Adopt and approve an agreement of merger of
consolidation presented to them by the Board of Directors.
ARTICLE XII
The corporation shall be subject to and governed by Section
302A.673 of Minnesota Statutes, as currently in effect and as may be
amended from time to time.
ARTICLE XIII
To the fullest extent permitted by the Minnesota Business
Corporation Act as the same exists or may hereafter be amended, a
director of this corporation shall not be liable to this corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director.
-5-
<PAGE>
OXBORO MEDICAL INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATION OF
RIGHTS AND PREFERENCES OF
COMMON STOCK
Pursuant to Section 302A.401 of the Minnesota Business Corporation Act:
I, the undersigned officer of Oxboro Medical International, Inc., a
Minnesota corporation (the "Company"), in accordance with the provisions of
Section 302A.401, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Company, the Board of Directors on August
3, 1999 adopted the following resolution designating all remaining authorized
but undesignated shares of the Company's capital stock as Common Stock:
"RESOLVED, that pursuant to the authority granted to this Board of
Directors in Article VII of the Articles of Incorporation, the
remaining 1,000,000 shares of authorized but undesignated capital stock
of the Company, $.01 par value per share, shall hereby be designated as
Common Stock, $.01 par value per share, which shares shall be entitled
to vote and shall have such other rights and preferences equal to the
currently authorized shares of Common Stock of the Company."
IN WITNESS WHEREOF, I have executed this Certificate and do affirm the
foregoing as true under the penalties of perjury this 12th day of August, 1999.
OXBORO MEDICAL INTERNATIONAL, INC.
By: /s/ Matthew E. Bellin
-----------------------------
Matthew E. Bellin
Its: President
-----------------------------
-6-
<PAGE>
EXHIBIT 3(b)
BYLAWS OF OXBORO MEDICAL INTERNATIONAL, INC., AS AMENDED
AMENDED AND RESTATED BYLAWS
OF
OXBORO MEDICAL INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I: OFFICES; CORPORATE SEAL................................................ 1
Section 1.1. Registered Office............................................... 1
Section 1.2. Corporate Seal
ARTICLE II: MEETINGS OF SHAREHOLDERS............................................... 1
Section 2.1 Place of Meeting................................................ 1
Section 2.2. Annual Meeting.................................................. 1
Section 2.3. Special Meetings................................................ 1
Section 2.4. Meetings Held upon Shareholder Demand........................... 2
Section 2.5. Notice of Meetings.............................................. 2
Section 2.6. Waiver of Notice................................................ 3
Section 2.7. Quorum; Adjourned Meetings...................................... 3
Section 2.8. Vote Required .................................................. 3
Section 2.9. Voting Rights................................................... 3
Section 2.10. Proxies......................................................... 4
Section 2.11. Action Without a Meeting........................................ 4
Section 2.12. Record Date..................................................... 4
ARTICLE III: DIRECTORS.............................................................. 4
Section 3.1. General Powers.................................................. 5
Section 3.2. Number; Term of Office; Qualifications.......................... 5
Section 3.3. Meetings; Place and Notice...................................... 5
Section 3.4. Electronic Communications....................................... 5
Section 3.5. Waiver of Notice................................................ 5
Section 3.6. Quorum; Acts of Board........................................... 5
Section 3.7. Vacancies....................................................... 6
Section 3.8. Removal......................................................... 6
Section 3.9. Resignation..................................................... 6
Section 3.10. Committees...................................................... 6
Section 3.11. Special Litigation Committee.................................... 6
Section 3.12. Absent Directors................................................ 6
Section 3.13. Presumption of Assent........................................... 6
Section 3.14. Action Without a Meeting........................................ 7
Section 3.15. Compensation of Directors....................................... 7
Section 3.16 Limitation of Directors' Liabilities............................ 7
ARTICLE IV: OFFICERS............................................................... 7
Section 4.1 Number and Designation.......................................... 7
Section 4.2 Chief Executive Officer......................................... 8
Section 4.3 Chief Financial Officer......................................... 8
Section 4.4 Chairman of the Board........................................... 8
Section 4.5 President....................................................... 8
Section 4.6 Vice Presidents................................................. 8
Section 4.7 Secretary....................................................... 9
</TABLE>
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Section 4.8 Treasurer....................................................... 9
Section 4.9 Treasurer's Bond............................................... 9
Section 4.10 Authority and Duties........................................... 9
Section 4.11 Term; Resignation; Removal; Vacancies.......................... 9
Section 4.12 Salaries....................................................... 10
ARTICLE V: SHARES AND THEIR TRANSFER............................................. 10
Section 5.1. Certificates for Shares........................................ 10
Section 5.2. Uncertificated Shares.......................................... 10
Section 5.3. Transfer of Shares............................................. 10
Section 5.4. Lost, Destroyed, or Stolen Certificates........................ 11
Section 5.5. Transfer Agent and Registrar................................... 11
Section 5.6. Facsimile Signature............................................ 11
Section 5.7. Closing of Transfer Books; Record Date......................... 11
Section 5.8. Registered Shareholders........................................ 11
ARTICLE VI: INDEMNIFICATION....................................................... 12
Section 6.1. Indemnification................................................ 12
Section 6.2. Insurance...................................................... 12
ARTICLE VII: GENERAL CORPORATE MATTERS............................................. 12
Section 7.1. Distributions.................................................. 12
Section 7.2. Reserves....................................................... 12
Section 7.3. Deposits....................................................... 12
Section 7.4. Loans.......................................................... 12
Section 7.5. Advances....................................................... 13
ARTICLE VIII: BOOKS OF RECORD; AUDIT; FISCAL YEAR................................... 13
Section 8.1. Share Register................................................. 13
Section 8.2. Books, Records, and Other Documents............................ 13
Section 8.3. Financial Statements........................................... 14
Section 8.4. Audit.......................................................... 14
Section 8.5. Fiscal Year.................................................... 14
ARTICLE IX: AMENDMENTS............................................................ 14
Section 9.1. Amendments..................................................... 14
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AMENDED AND RESTATED BYLAWS
OF
OXBORO MEDICAL INTERNATIONAL, INC.
ARTICLE I
OFFICES; CORPORATE SEAL
Section 1.1. REGISTERED OFFICE. The registered office of the Corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or in a statement of the
Board of Directors filed with the Secretary of State of the State of Minnesota
changing the registered office in the manner prescribed by law. The Corporation
may have such other offices, within or without the State of Minnesota, as the
Board of Directors shall, form time to time, determine.
Section 1.2. CORPORATE SEAL. If so directed by the Board of Directors,
the Corporation may use a corporate seal. The failure to use such seal, however,
shall not affect the validity of any documents executed on behalf of the
Corporation. The seal need only include the word "seal," but it may also
include, at the discretion of the Board, such additional wording as is permitted
by law.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1 PLACE OF MEETING. Each meeting of the shareholders shall be
held at the principal executive office of the Corporation or such other place as
may be designated by the Board of Directors or the chief executive officer;
provided, however, that any meeting called by or at the demand of a shareholder
or shareholders shall be held in the county where the principal executive office
of the Corporation is located.
Section 2.2. ANNUAL MEETING. An annual meeting of the shareholders shall
be held at such date and at such place as shall be determined by the Board of
Directors. At such meeting the shareholders shall conduct such business of the
Corporation as may properly come before the meeting.
Section 2.3. SPECIAL MEETINGS. A special meeting of the shareholders may
be called for any purpose or purposes at any time by the chief executive officer
or the chief financial officer, by the Board of Directors, or any two or more
members thereof, or by one or more shareholders holding not less than ten
percent (10%) of the voting power of all shares of the Corporation entitled to
vote as provided in Section 2.4(b) hereof, except that a special meeting for the
purpose of considering any action to directly or indirectly facilitate or effect
a business combination, including any action to change or otherwise affect the
composition of the Board of Directors for that purpose, must be called by
twenty-five percent (25%) or more of the voting power of all shares entitled to
vote. The chief executive officer or the Board of Directors shall be authorized
to fix the time and date of any special meeting of the shareholders. Notice of
any special meeting shall state the purpose for which the meeting has been
called, and the business transacted at any special meeting shall be limited to
the purpose stated in the notice, unless all of the shareholders are present in
person or by proxy and none of them objects to the consideration of additional
business.
Section 2.4. MEETINGS HELD UPON SHAREHOLDER DEMAND. Annual or special
meetings of the shareholders may be demanded by a shareholder under the
following circumstances:
(a) If an annual meeting of shareholders has not been
held during the immediately preceding fifteen (15) months, a
shareholder or shareholders holding three percent (3%) or more of all
voting shares may demand an annual meeting of shareholders by written
notice of demand given to the chief executive officer or chief
financial officer of the Corporation. If the Board fails to cause an
annual meeting to be called and held as required by law, the
shareholder or shareholders making the demand may call the meeting by
giving notice as required by law, all at the expense of the
Corporation.
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(b) To demand a special meeting of the shareholders a
shareholder, or shareholders shall give written notice to the chief
executive officer or the chief financial officer of the Corporation
specifying the purposes of such meeting. Upon receipt by the chief
executive officer or chief financial officer of the Corporation of a
demand for a special meeting of shareholders from any shareholder or
shareholders entitled to call such a meeting, the Board of Directors
shall cause such meeting to be called and held in compliance with the
timing requirements of Minnesota Statutes 302A.433, Subd. 2, as amended
from time to time.
Section 2.5. NOTICE OF MEETINGS.
(a) Notice of all meetings of shareholders shall be given
to every shareholder entitled to vote, except where the meeting is an
adjourned meeting and the date, time, and place of the meeting were
announced at the time of adjournment. The notice shall be given at
least ten (10) days but not more than sixty (60) days prior to the
meeting; provided, however, that at least fourteen (14) days' notice
must be given of a meeting at which the adoption of an agreement of
merger or plan of exchange is to be considered.
(b) Notice of meetings shall be given to each shareholder
entitled thereto by oral communication, by mailing a copy thereof to
such shareholder at the address he has designated or to the last known
address of such shareholder, by handing a copy thereof to such
shareholder, or by any other delivery that conforms to law. Notice by
mail shall be deemed given when deposited in the United States mail
with sufficient postage affixed.
Section 2.6. WAIVER OF NOTICE. A shareholder may waive notice of any
meeting of shareholders. A waiver of notice by a shareholder entitled to notice
is effective whether given before, at, or after the meeting and whether given in
writing, orally, or by attendance. Attendance by a shareholder at a meeting
shall constitute waiver of notice of that meeting, except where the shareholder
objects at the beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened or objects before a vote on an
item of business because the item may not lawfully be considered at the meeting
and the shareholder does not participate in consideration of the item at the
meeting.
Section 2.7. QUORUM; ADJOURNED MEETINGS. The presence either in person
or by proxy of the holders of a majority of the voting power of the shares
entitled to vote at the meeting shall constitute a quorum for the transaction of
business. If, however, a quorum shall not be present in person or by proxy at
any meeting of the shareholders, those present shall have the power to adjourn
the meeting from time to time, without notice other than by announcement at the
meeting of the date, time, and location of the reconvening of the adjourned
meeting, until the requisite number of voting shares shall be represented. At
any such adjourned meeting at which the required number of voting shares shall
be represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. If a quorum is present when a duly called
or held meeting is convened, the shareholders may continue to transact business
until adjournment even though the withdrawal of shareholders originally present
leaves less than the proportion or number otherwise required for a quorum.
Section 2.8. VOTE REQUIRED. The shareholders shall take action by the
affirmative vote of the holders of the greater of (a) a majority of the voting
power of the shares present and entitled to vote on that item of business or (b)
a majority of the voting power of the minimum number of the shares entitled to
vote that would constitute a quorum for the transaction of business at the
meeting, except where a larger proportion or number is required by statute or
the Articles of Incorporation. If the Articles of Incorporation require a larger
proportion or number than is required by statute for a particular action, the
Articles of Incorporation shall control.
Section 2.9. VOTING RIGHTS.
(a) At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either
in person or by proxy. Unless otherwise provided by the Articles of
Incorporation or
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resolution of the Board of Directors filed with the Secretary of State,
each shareholder shall have one vote for each share held. Shares owned
by two or more shareholders may be voted by any one of them unless the
Corporation receives written notice, addressed to the Board of
Directors at the address of the registered office, from any one of them
denying the authority of any other person or persons to vote those
shares. Upon demand of any shareholder, the vote upon any question
before the meeting shall be by ballot.
(b) There shall be no cumulative voting for the election
of directors.
Section 2.10. PROXIES. At any meeting of the shareholders, any
shareholder may be represented and vote by a proxy or proxies appointed by an
instrument in writing and filed with an officer of the Corporation at or before
the meeting. An appointment of a proxy or proxies for shares held jointly by two
or more shareholders is valid if signed by any one of them, unless and until the
Corporation receives from any one of those shareholders written notice denying
the authority of such other person or persons to appoint a proxy or proxies or
appointing a different proxy or proxies, in which case no proxy shall be
appointed unless all joint owners sign the appointment. In the event that any
instrument shall designate two or more persons to act as proxies, a majority of
such persons present at the meeting, or if only one shall be present then that
one, shall have and may exercise all of the proxies so designated unless the
instrument shall otherwise provide. If the proxies present at the meeting are
equally divided on an issue, the shares represented by such proxies shall not be
voted on such issue. No proxy shall be valid after the expiration of eleven (11)
months from the date of its execution unless coupled with an interest or unless
the person executing it specifies therein the length of time for which it is to
continue in force, which in no case shall exceed three (3) years from the date
of its execution. Subject to the above, any duly executed proxy shall continue
in full force and effect and shall not be revoked unless written notice of its
revocation or a duly executed proxy bearing a later date is filed with an
officer of the Corporation.
Section 2.11. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting, if authorized in writing or writings signed by all shareholders who
would be entitled to vote on that action. The written action is effective when
it has been signed by all such shareholders, unless a different effective date
is provided in the written action.
Section 2.12. RECORD DATE. The Board of Directors may fix a date, not
exceeding sixty (60) days preceding the date of any meeting of shareholders, as
a record date for the determination of the shareholders entitled to notice of
and to vote at such meeting, and in such case only shareholders of record on the
date so fixed, or their legal representatives, shall be entitled to notice of
and to vote at such meeting, notwithstanding any transfer of any shares on the
books of the Corporation after any record date so fixed. The Board of Directors
may close the books of the Corporation against transfer of shares during the
whole or any part of such period. If the Board of Directors fails to fix a
record date for determination of the shareholders entitled to notice of and to
vote at any meeting of shareholders, the record date shall be the twentieth
(20th) day preceding the date of such meeting.
ARTICLE III
DIRECTORS
Section 3.1. GENERAL POWERS. The property, affairs, and business of the
Corporation shall be managed by the Board of Directors. The Board of Directors
may exercise all powers of the Corporation and do all lawful acts not required
by the Articles of Incorporation, these Bylaws, or law to be done by the
shareholders.
Section 3.2. NUMBER; TERM OF OFFICE; QUALIFICATIONS. The number of
directors which shall constitute the whole Board of Directors and the term of
office of each director shall be fixed in the manner provided in the Articles of
Incorporation of the Corporation. Directors need not be shareholders of the
Corporation.
Section 3.3. MEETINGS; PLACE AND NOTICE. Meetings of the Board of
Directors may be held from time to time at any place within or without the State
of Minnesota that the Board of Directors may designate. In the absence of
designation by the Board Of Directors, Board meetings shall be held at the
principal executive office of the Corporation, except as may be otherwise
unanimously agreed orally or in writing or by attendance. Board
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meetings may be called by the chairman of the Board, the chief executive
officer, or any director on three (3) days notice to each director. Every such
notice shall state the date, time, and place of the meeting. Notice of a meeting
called by a director other than a director who is the chairman of the board or
chief executive officer shall state the purpose of the meeting. Notice may be
given by mail, telephone, telegram, or in person. If a meeting schedule is
adopted by the Board, or if the date and time of a Board meeting has been
announced at a previous meeting, no notice is required.
Section 3.4. ELECTRONIC COMMUNICATIONS. A conference among directors by
any means of communication through which the directors may simultaneously hear
one another during the conference constitutes a Board meeting if the notice
required by Section 3.3 of these Bylaws is given of the conference and if the
number of directors participating in the conference would be sufficient to
constitute a quorum. Participation in a meeting by such means constitutes
presence in person at the meeting.
Section 3.5. WAIVER OF NOTICE. A director may waive notice of a meeting
of the Board. Waiver of notice is effective, whether given before, at, or after
the meeting and whether given in writing, orally, or by attendance. Attendance
by a director at a meeting constitutes waiver of notice for that meeting, except
where the director objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and does not
participate thereafter in the meeting.
Section 3.6. QUORUM; ACTS OF BOARD. A majority of the directors
currently holding office shall be a quorum for the transaction of business;
provided, however, that it any vacancies exist by reason of death, resignation,
or otherwise, a majority of the remaining directors (provided such majority
consists of not less than two directors) shall constitute a quorum. In the
absence of a quorum, a majority of the directors present may adjourn the meeting
from time to time until a quorum is present. If a quorum is present when a duly
called or held meeting is convened, the directors present may continue to
transact business until adjournment, even though the withdrawal of a number of
directors originally present leaves less than the proportion or number otherwise
required for a quorum. Except as otherwise required by law or the Articles of
incorporation or these Bylaws, the acts of a majority of the directors present
at a meeting at which a quorum is present shall be the acts of the Board of
Directors.
Section 3.7. VACANCIES. Vacancies on the Board shall be filled as
provided in the Articles of Incorporation of the Corporation.
Section 3.8. REMOVAL. Except as otherwise provided by law, removal of a
director from office shall be governed by the Articles of Incorporation of the
Corporation.
Section 3.9. RESIGNATION. Any director may resign at any time by giving
written notice to the Corporation. Such resignation shall take effect on the
date of the Corporation's receipt of such notice or at any later date or time
specified therein, and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make the resignation effective.
Section 3.10. COMMITTEES.
(a) A resolution approved by the affirmative vote of a
majority of the Board may establish committees having the authority of
the Board in the management of the business of the Corporation to the
extent provided in the resolution. Except for any special litigation
committee established under Section 3.11 hereof, committees shall be
subject at all times to the direction and control of the Board.
(b) A committee shall consist of one or more natural
persons, who need not be directors, appointed by the affirmative vote
of a majority of the directors present at a duly held meeting of the
Board.
(c) Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
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Section 3.11. SPECIAL LITIGATION COMMITTEE. Pursuant to the procedure
set forth in Section 3.10, the Board may establish a committee composed of one
or more independent directors or other independent persons to consider legal
rights or remedies of the Corporation and whether those rights or remedies
should be pursued.
Section 3.12. ABSENT DIRECTORS. A director may give written consent or
opposition to a proposal to be acted on at a Board meeting by giving a written
statement to the chairman of the board or acting chairman of the board setting
forth a summary of the proposal to be voted on and containing a statement from
the director on how he votes on such proposal. If the director is not present at
the meeting, consent or opposition to a proposal does not constitute presence
for purposes of determining the existence of a quorum, but consent or opposition
shall be counted as a vote in favor of, or against, the proposal and shall be
entered in the minutes or other record of action of the meeting if the proposal
acted on at the meeting is substantially the same or has substantially the same
effect as the proposal to which the director has consented or objected.
Section 3.13. PRESUMPTION OF ASSENT. A director who is present at a
meeting of the Board when an action is approved by the affirmative vote of a
majority of the directors present is presumed to have assented to the action
approved, unless the director:
(a) objects at the beginning of the meeting to the
transaction of the business because the meeting is not lawfully called
or convened and does not participate thereafter in the meeting, in
which case the director shall not be considered to be present at the
meeting for any purpose; and
(b) votes against the action at the meeting; or
(c) is prohibited by law from voting on the action.
Section 3.14. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at a Board meeting may be taken by written consent of the
number of directors that would be required to take the same action at a meeting
of the Board of Directors at which all directors were present, provided that the
proposed action need not be approved by the shareholders and that the Articles
of Incorporation so provide. The written action is effective when signed by the
necessary number of directors unless a different effective date is stated in the
written action.
Section 3.15. COMPENSATION OF DIRECTORS. By resolution of the Board of
Directors, each director may be paid his or her expenses, if any, of attendance
at each Board meeting and may be paid a stated amount as a director or a fixed
sum for attendance at each Board meeting, or both. No such payment shall
preclude a director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 3.16. LIMITATION OF DIRECTORS' LIABILITIES. A director shall
not be liable to the Corporation or its shareholders for dividends illegally
declared, distributions illegally made to shareholders, or any other action
taken in good faith reliance upon financial statements of the Corporation
represented to him to be correct by the chief executive officer of the
Corporation or the officer having charge of its books of account or certified by
an independent or certified public accountant to fairly reflect the financial
condition of the Corporation; nor shall any director be liable if in good faith
in determining the amount available for dividends or distribution the Board
values the assets in a manner allowable under applicable law.
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ARTICLE IV
OFFICERS
Section 4.1. NUMBER AND DESIGNATION. The officers of the Corporation
shall be elected or appointed by the Board of Directors. The Corporation shall
have one or more natural persons exercising the functions of the offices of
chief executive officer and chief financial officer. The Board of Directors may
elect or appoint such other officers or agents as it deems necessary for the
operation and management of the Corporation, with such powers, rights, duties,
and responsibilities as may be determined by the Board, including, without
limitation, a chairman of the Board (who shall be a director), a president, a
secretary, and a treasurer, each of whom shall have the powers, rights, duties,
and responsibilities set forth in these Bylaws, unless otherwise determined by
the Board. Any of the offices or functions of those offices may be held or
performed by the same person.
Section 4.2. CHIEF EXECUTIVE OFFICER. Unless provided otherwise by a
resolution adopted by the Board of Directors, the chief executive officer (a)
shall be responsible for the general active management of the business of the
Corporation; (b) shall, when present, preside at all meetings of the
shareholders; (c) shall be responsible for implementing all orders and
resolutions of the Board; (d) shall sign and deliver in the name of the
Corporation any deeds, mortgages, bonds, contracts, or other instruments
pertaining to the business of the Corporation, except where authority to sign
and deliver is required or permitted by law to be exercised by another person
and except where such authority is expressly delegated by these Bylaws or by the
Board to some other officer or agent of the Corporation; (a) may maintain
records of and certify proceedings of the Board and shareholders; and (f) shall
perform such other duties as may from time to time be assigned by the Board.
Section 4.3. CHIEF FINANCIAL OFFICER. Unless provided otherwise by a
resolution adopted by the Board of Directors, the chief financial officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts, and checks in the name of and to the credit of the Corporation
in such banks and depositories as the Board of Directors shall designate from
time to time; (c) shall endorse for deposit all notes, checks, and drafts
received by the Corporation as ordered by the Board, making proper vouchers
therefor; (d) shall disburse the funds of the Corporation as may be ordered by
the Board of Directors or the chief executive officer, making proper vouchers
therefor; (e) shall render to the chief executive officer and the Board of
Directors, whenever requested, an account of all of his transactions as chief
financial officer and of the financial condition of the Corporation; and (f)
shall perform such other duties as may be assigned by the Board of Directors or
the chief executive officer from time to time.
Section 4.4. CHAIRMAN OF THE BOARD. The chairman of the Board of the
Corporation shall preside at all meetings of the Board of Directors and shall
perform such other functions as may be determined from time to time by the
Board.
Section 4.5. PRESIDENT. Unless otherwise determined by the Board of
Directors, the president shall be the chief executive officer of the
Corporation. If an officer other than the president is designated chief
executive officer, the president shall perform such duties as may from time to
time be assigned to him by the Board or, if authorized by the Board, such duties
as are assigned to him by the chief executive officer.
Section 4.6. VICE PRESIDENTS. Any one or more vice presidents, if any,
may be appointed by the Board of Directors. During the absence or disability of
the president, it shall be the duty of the highest ranking vice president to
perform the duties of the president. The determination of who is the highest
ranking of two or more persons holding the same office shall, in the absence of
specific designation of order or rank by the Board of Directors, be made on the
basis of the earliest date of appointment or election, or, in the event of
simultaneous appointment or election, on the basis of the longest continuous
employment by the Corporation.
Section 4.7. SECRETARY. The secretary, unless otherwise determined by
the Board, shall attend all meetings of the shareholders and all meetings of the
Board of Directors, shall record or cause to be recorded all proceedings thereof
in a book to be kept for that purpose, and may certify such proceedings. Except
as otherwise required or permitted by law or by these Bylaws, the secretary
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors.
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Section 4.8. TREASURER. Unless otherwise determined by the Board, the
treasurer shall be the chief financial officer of the Corporation. If an officer
other than the treasurer is designated chief financial officer, the treasurer
shall perform such duties as may from time to time be assigned to him by the
Board.
Section 4.9. TREASURER'S BOND. If required by the Board of Directors,
the person or persons performing the duties of the chief financial officer or
treasurer shall each give the Corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 4.10. AUTHORITY AND DUTIES. In addition to the foregoing
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
Section 4.11. TERM; RESIGNATION; REMOVAL; VACANCIES.
(a) All officers of the Corporation shall hold office
until their respective successors are chosen and have qualified or
until their earlier death, resignation, or removal.
(b) An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without
acceptance when the notice is given to the Corporation, unless a later
effective date is specified in the notice.
(c) An officer may be removed at any time, with or
without cause, by a resolution approved by an affirmative vote of the
majority of the directors present at a duly held Board meeting.
(d) A vacancy in an office because of death, resignation,
removal, disqualification, or other cause may, or in the case of a
vacancy in the office of chief executive officer or chief financial
officer shall, be filled by the Board.
Section 4.12. SALARIES. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors or by the chief executive officer, if
authorized by the Board.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.1. CERTIFICATES FOR SHARES.
(a) Certificates of shares, if any, of the Corporation
shall be in such form as shall be prescribed by law and adopted by the
Board of Directors, certifying the number of shares of the Corporation
owned by each shareholder. The certificates shall be numbered in the
order in which they are issued and shall be signed, in the name of the
Corporation, by the chief executive officer or the chief financial
officer or secretary or by such officers as the Board of Directors may
designate. Such signatures may be by facsimile if authorized by the
Board of Directors or these Bylaws. Such certificates shall also have
such legends as may be required by any shareholder agreement or other
agreement.
(b) A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of
more than one class or series, set forth upon the face or back of the
certificate, or shall state that the Corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations, and relative rights of the
shares of each class or
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series authorized to be issued, so far as they have been determined,
and the authority of the Board to determine the relative rights and
preferences of subsequent classes or series.
Section 5.2. UNCERTIFICATED SHARES. Some or all of any or all classes
and series of the shares of stock of this Corporation, upon a resolution
approved by the Board of Directors, may be uncertificated shares. Within twenty
(20) calendar days after the issuance or transfer of uncertificated shares, the
chief executive officer shall send to the shareholder such notice as may be
required by law.
Section 5.3. TRANSFER OF SHARES. Transfer of certificated shares on the
books of the Corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares therefor properly endorsed. The Corporation may
treat, as the absolute owner of shares of the Corporation, the person or persons
in whose name or names the shares are registered on the books of the
Corporation. The transfer of uncertificated shares, if any, shall be made by the
means determined by the Board of Directors. Every certificate surrendered to the
Corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled.
Section 5.4. LOST, DESTROYED, OR STOLEN CERTIFICATES. Any shareholder
claiming that a certificate for shares has been lost, destroyed, or stolen shall
make an affidavit of that fact in such form as the Board of Directors may
require and shall, if the Board of Directors so requires, give the Corporation a
sufficient indemnity bond, in form, in an amount, and with one or more sureties
satisfactory to the Board of Directors, to indemnify the Corporation against any
claims that may be made against it on account of the reissue of such
certificate. A replacement certificate shall then be issued for the same number
of shares as represented by the certificate alleged to have been lost,
destroyed, or stolen.
Section 5.5. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents or transfer clerks and one or more
registrars and may require all certificates for shares to bear the signature or
signatures of any of them.
Section 5.6. FACSIMILE SIGNATURE. Where any certificate is manually
signed by a transfer agent, a transfer clerk, or a registrar appointed by the
Board of Directors to perform such duties, a facsimile or engraved signature of
the chief executive officer or other proper officer of the Corporation
authorized by the Board of Directors may be inscribed on the certificate in lieu
of the actual signature of the officer. The fact that a certificate bears the
facsimile signature of an officer who no longer holds office shall not affect
the validity of the certificate, and such certificate, if otherwise validly
issued, shall have the same effect as if the former officer held that office at
the date the certificate was issued.
Section 5.7. CLOSING OF TRANSFER BOOKS; RECORD DATE. The Board of
Directors may close the stock transfer books of the Corporation for a period not
exceeding sixty (60) days preceding the date of any meeting of shareholders, the
date for payment of any dividend or distribution, or the date any change,
conversion, or exchange of capital stock shall become effective. In lieu of
closing the stock transfer books, the Board of Directors may fix in advance a
date, not exceeding sixty (60) days preceding the date for payment of any
dividend or distribution, or the date any change, conversion, or exchange of
capital stock shall become effective, as a record date for the determination of
the shareholders entitled to receive payment of any such dividend or
distribution, or to exercise the rights in respect of any such change,
conversion, or exchange of capital stock, and in such case such shareholders and
only such shareholders shall be shareholders of record on the date so fixed and
shall be entitled to receive payment of such dividend or distribution, or to
exercise such rights, notwithstanding any transfer of any stock on the books of
the Corporation after any such record date. If the Board of Directors fails to
fix such a record date the record date shall be the twentieth (20th) day
preceding the date of payment or the date the change, conversion, or exchange
becomes effective.
Section 5.8. REGISTERED SHAREHOLDERS. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends and to vote as such owner, and shall be
-8-
<PAGE>
entitled to hold liable for calls and assessments a person so registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by applicable law.
ARTICLE VI
INDEMNIFICATION
Section 6.1. INDEMNIFICATION. The Corporation shall indemnify such
persons, for such expenses and liabilities, in such manner, under such
circumstances, and to such extent, as required or permitted by Minn. Stat.
Section 302A.521, as amended from time to time, or as required or permitted
by other provisions of law.
Section 6.2. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.
ARTICLE VII
GENERAL CORPORATE MATTERS
Section 7.1. DISTRIBUTIONS. Subject to the Articles of Incorporation
and these Bylaws, the Board of Directors may declare dividends payable in either
cash, property, or shares, acquire or exchange shares, or make other
distributions with respect to shares of the Corporation whenever and in such
amounts as, in its opinion, the condition and affairs of the Corporation shall
render advisable
Section 7.2. RESERVES. Before payment of any dividend, the Board of
Directors may set aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors form time to time deems
proper as a reserve or reserves to meet contingencies, for equalizing dividends,
for repairing or maintaining any property of the Corporation, or for such other
purses as the Board of Directors deems conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
Section 7.3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select.
Section 7.4. LOANS.
(a) is in the usual and regular course of business of the
Corporation;
(b) is with, or for the benefit of, a related
corporation, and organization in which the Corporation has a financial
interest, an organization with which the Corporation has a business
relationship, or an organization to which the Corporation has the power
to make donations;
(c) is with, or for the benefit of, an officer of other
employee of the Corporation or a subsidiary, including an officer or
employee who is a director of the Corporation or a subsidiary, and may
reasonably be expected, in the judgment of the Board of Directors, to
benefit the Corporation; or
(d) has been approved by the affirmative vote of the
holders of two-thirds of the outstanding shares, including both voting
and nonvoting shares.
Section 7.5. ADVANCES. The Corporation may, without a vote of the
directors, advance money to its directors, officers, or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
-9-
<PAGE>
ARTICLE VIII
BOOKS OF RECORD; AUDIT; FISCAL YEAR
Section 8.1. SHARE REGISTER. The Board of Directors of the Corporation
shall cause to be kept at its principal executive office, or such other place or
places within the United States as determined by the Board, a share register not
more than one year old, containing the names and addresses of the shareholders
and the number and classes of the shares held, and the dates on which the
certificates therefor were issued.
Section 8.2. BOOKS, RECORDS, AND OTHER DOCUMENTS. The board of
directors shall cause to be kept at its principal executive office, originals or
copies of:
(a) records of all proceedings of the shareholders and
directors for the last three years;
(b) Articles of Incorporation of the Corporation and all
amendments thereto currently in effect;
(c) Bylaws of the Corporation and all amendments thereto
currently in effect;
(d) financial statements as described in Section 8.3
hereof, if such statements have been prepared by or for the
Corporation;
(e) reports made to shareholders generally within the
immediately preceding three years;
(f) a statement of the names and usual business addresses
of the directors and principal officers of the Corporation;
(g) voting trust agreements, if any; and
(h) shareholder control agreements, if any.
Section 8.3. FINANCIAL STATEMENTS. To the extent that they have been
prepared by or for the Corporation, the financial statements required to be kept
at the principal executive or registered office of the Corporation pursuant to
Section 8.2(d). hereof are as follows:
(a) annual financial statements, including at least a balance
sheet as of the end of, and a statement of income for, each fiscal
year; and
(b) financial statements for the most recent interim period
prepared in the course of the operations of the Corporation for
distribution to the shareholders or submission to a governmental agency
as a matter of public record.
Section 8.4. AUDIT. The Board of Directors may cause the records and
books of account of the Corporation to be audited each fiscal year.
Section 8.5. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
ARTICLE IX
AMENDMENTS
Section 9.1. AMENDMENTS. Except as limited by the Articles of
Incorporation, these Bylaws may be altered, amended, or repealed by the
affirmative vote of a majority of the members of the Board of Directors.
-10-
<PAGE>
This authority of the Board of Directors is subject to the power of the
shareholders to change or repeal such Bylaws, and the Board of Directors
shall not make aor alter any Bylaws fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling
vacancies on the Board, or fixing the number of directors or their
classifications, qualifications, or terms of office.
-11-
<PAGE>
EXHIBIT 4(a)
FORM OF RIGHTS SUBSCRIPTION CERTIFICATE
- -------------------- --------------------
NUMBER RIGHTS
- -------------------- --------------------
THIS SUBSCRIPTION CERTIFICATE WILL BE VALUELESS IF NOT
RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M., CENTRAL STANDARD TIME
ON SEPTEMBER 30, 1999
RIGHTS SUBSCRIPTION CERTIFICATE
OXBORO MEDICAL INTERNATIONAL, INC.
CUSIP NO. 691 1384 11 9
THIS RIGHTS CERTIFICATE IS NOT TRANSFERABLE.
The terms and conditions of this Rights Offering are set forth in the
Prospectus relating to 445,412 rights to purchase ("Rights") up to 890,824
shares of Common Stock, $.01 par value per share ("Shares") and 445,412
Warrants each for purchase of one share of Common Stock ("Warrants"), of
Oxboro Medical International, Inc. (the "Company") dated September 1, 1999
(the "Prospectus") and are incorporated herein by reference. Copies of the
Prospectus are available upon request from the Company and Norwest Bank
Minnesota, N.A. (the "Subscription Agent"). Capitalized terms used herein
without definition shall have the meanings set forth in the Prospectus.
- -------------------------------------------------------------------------------
SUBSCRIPTION PRICE: $2.50 PER RIGHT
(The number of rights you are entitled to is listed on the label below.
You may over or under subscribe as detailed in the Prospectus.)
REGISTERED HOLDER:
- -------------------------------------------------------------------------------
The Rights represented by this Rights Subscription Certificate, in whole or in
part, may be exercised by completing Sections 1 and 2. Before exercising Rights,
Rights holders are urged to read the Prospectus carefully and in its entirety.
Copies of the Prospectus are available from the Company and the Subscription
Agent.
IMPORTANT - Complete the appropriate SECTION and delivery instructions, and SIGN
on reverse side. Subject to the provisions of the Prospectus, if the
instructions of the registered holder named above are insufficient to delineate
the proper action to be taken with respect to all of the Rights evidenced
hereby, such action as is clearly delineated in such holder's instructions will
be taken.
The registered holder of Rights whose name is set forth herein, or assigns,
is entitled to subscribe for two shares of Common Stock of the Company and
one Warrant for purchase of one share of Common Stock of the Company at a
Subscription Price of $2.50 per Share (the "Subscription Price") for each
Right evidenced hereby under the terms and subject to the conditions set
forth in the Prospectus. Payment of the full Subscription Price for all
Shares and Warrants subscribed for pursuant to the exercise of Rights must
accompany this properly completed and duly executed Rights Subscription
Certificate, payable in United States currency by personal check, cashier's
check,
<PAGE>
bank draft or money order drawn on a bank located in the United States,
payable to "Norwest Bank Minnesota, N.A., as Subscription Agent." PLEASE
WRITE YOUR RIGHTS CERTIFICATE NUMBER, SET FORTH ABOVE, ON YOUR CHECK, BANK
DRAFT OR MONEY ORDER.
Dated: September 1, 1999
COUNTERSIGNED: OXBORO MEDICAL INTERNATIONAL, INC.
NORWEST BANK MINNESOTA N.A. BY: /s/ Matthew E. Bellin
---------------------------------
Matthew E. Bellin, President
BY: /s/ Robert S. Garin
- --------------------------------- ---------------------------------
AUTHORIZED OFFICER Robert S. Garin, Secretary
INSTRUCTIONS: To exercise all or part of the Rights evidenced by this Rights
Subscription Certificate, please complete Section 1. In order to have the
Subscription Agent deliver Shares and Warrants issued upon the exercise of
Rights to another person or delivered to an address other than the one listed on
the face of this Rights Subscription Certificate, please complete Section 2 and
obtain the required signature guarantee by a medallion institution.
ANY EXERCISE OF RIGHTS EVIDENCED HEREBY IS IRREVOCABLE.
Section 1 - EXERCISE AND SUBSCRIPTION: The undersigned hereby exercises Rights
to subscribe for Shares and Warrants as indicated below, on the terms and
subject to the conditions specified in the Prospectus, receipt of which is
hereby acknowledged.
(PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY)
(i) IF YOU WISH TO EXERCISE ALL OF YOUR RIGHTS:
(Shareholders who fully-subscribe are entitled to the
Oversubscription Privilege described in paragraph (b) below after
September 30, 1999)
(a) I subscribe for my full entitlement of Shares and Warrants:
______________________________________ X $2.50 = $__________________
(Number of shares held - whole number only)
TOTAL BASIC SUBSCRIPTION PRICE: $______________________________
(Total number of Shares and Warrants subscribed for pursuant to
the Basic Subscription Privilege, times the Subscription Price of
$2.50 per right exercised)
(b) OVERSUBSCRIPTION PRIVILEGE: (For use only after September 30, 1999)
I subscribe for additional Shares pursuant to my Oversubscription
Privilege:
_______________________________________ X $2.50 = $__________________
(Number of shares - whole number only; may not
exceed the number of Rights represented by this
Rights Subscription Certificate)
TOTAL OVERSUBSCRIPTION PRICE: $______________ (Total number of Shares
and Warrants subscribed for pursuant to the Oversubscription
Privilege, times the Subscription Price of $2.50 per right exercised)
Method of Payment (check one)
[ ] Check, Bank Draft or Money Order Payable to Norwest Bank Minnesota, N.A.,
as Subscription Agent.
[ ] Wire Transfer Directly to the Escrow Account Maintained by Norwest Bank
-2-
<PAGE>
Minnesota, N.A., as Subscription Agent, at Norwest Bank Minnesota, N.A.,
ABA ROUTING #___________, for Credit Account #________, Further credit:
OXBORO RIGHTS OFFERING, Attn: Suzanne M. Swits: (651) 450-4120.
(ii) IF YOU DO NOT WISH TO EXERCISE ALL OF YOUR RIGHTS:
(a) I subscribe for only
_______________________________________ X $2.50 = $____________
(Number of shares - whole number only)
TOTAL SUBSCRIPTION PRICE: $____________
(Total number of Shares and Warrants subscribed for pursuant
to the Basic Subscription Privilege, times the Subscription
Price of $2.50 per right exercised)
Method of Payment (check one)
[ ] Check, Bank Draft or Money Order Payable to Norwest Bank Minnesota, N.A.,
as Subscription Agent.
[ ] Wire Transfer Directly to the Escrow Account Maintained by Norwest Bank
Minnesota, N.A., as Subscription Agent, at Norwest Bank Minnesota, N.A.,
ABA ROUTING #___________, for Credit Account #________, Further credit:
OXBORO RIGHTS OFFERING, Attn: Suzanne Swits: (651) 450-4120.
SECTION 2 - SPECIAL INSTRUCTIONS [ ] CHECK HERE FOR SPECIAL ISSUANCE,
OR DELIVERY INSTRUCTIONS. Unless otherwise indicated below, the Subscription
Agent is hereby authorized to issue and deliver Certificates for the Shares and
Warrants subscribed for to the undersigned at the address appearing on the face
of this Rights Subscription Certificate. If this section is completed, the
Holder's signature must be guaranteed by a medallion guarantor.
Name: _____________________________________
Address: _____________________________________
_____________________________________
Taxpayer Identification or Social Security Number: _________________
IMPORTANT: RIGHTS HOLDER SIGN HERE
____________________________________________________________________________
(Signature(s) of Holder(s) exactly as appears on the face of this Certificate)
Dated: ____________, 1999
SIGNATURE GUARANTEE (to be executed if Section 2 is completed)
The undersigned, an eligible guarantor institution pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended, and a
participant in a Securities Transfer Association recognized signature program,
does hereby guarantee that the signature of the Holder hereinabove is genuine.
Dated: ____________, 1999
____________________________________
-3-
<PAGE>
Firm Name (If applicable)
____________________________________
Authorized Signature
____________________________________
Name and Title
____________________________________
Address
____________________________________
____________________________________
Area Code and Telephone Number:
-4-
<PAGE>
EXHIBIT 4(b)
FORM OF COMMON STOCK CERTIFICATE
Common Stock Common Stock
NW-NUMBER OXBORO MEDICAL INTERNATIONAL, INC. SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 691 1384 20 0
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01 EACH OF
THE COMMON STOCK OF
------------------OXBORO MEDICAL INTERNATIONAL, INC.-----------------
transferable on the books of the Corporation in person or by duly
authorized attorney on surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer
Agent and Registered by the Registrar.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
SECRETARY PRESIDENT
Countersigned and Registered:
NORWEST BANK MINNESOTA, N.A.
(Minneapolis, Minneapolis) Transfer Agent and Registrar
By:
Authorized Signature
<PAGE>
THE BOARD OF THIS CORPORATION HAS THE AUTHORITY TO CREATE AND DETERMINE THE
RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK
OTHER THAN COMMON STOCK. THIS CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON
WRITTEN REQUEST SENT TO ITS PRINCIPAL EXECUTIVE OFFICES, AND WITHOUT CHARGE, A
FULL STATEMENT OF THE BOARD'S AUTHORITY TO CREATE AND DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK AS WELL
AS THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES
OF EACH CLASS OR SERIES THEN OUTSTANDING OR AUTHORIZED TO BE ISSUED.
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - - as tenants in common UNIF GIFT MIN ACT -___
Custodian ___
(Cust) (Minor)
UNDER UNIFORM GIFTS TO MINORS
TEN ENT - - as tenants by the entireties
JT TEN - - as joint tenants with right of
survivorship and not as tenants in common Act._________
(State)
Additional abbreviations may also be used though not
in the above list.
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND TRANSFER UNTO
----------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHARES
- --------------------------------------------------------------------------
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
--------------------------------------------
ATTORNEY TO TRANSFER THE SAID
- --------------------------------------------------
STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION WITH FULL POWER OF
SUBSTITUTION IN THE PREMISSES.
DATED
------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACT OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED
<PAGE>
EXHIBIT 4(c)
LETTER TO SHAREHOLDERS
September 1, 1999
[GRAPHIC]
[shareholder name]
[shareholder address -1]
[shareholder address -2]
Dear Shareholder:
Oxboro Medical International, Inc. has commenced a Rights Offering to its
shareholders. Under the terms of the Rights Offering, each shareholder of
record is being given the right to purchase two shares of Oxboro Common Stock
plus one warrant for purchase of one additional share of Common Stock, for
each share owned as of the Record Date of August 20, 1999. The total purchase
price for each right is $2.50 (the allocation of which has been arbitrarily
determined at $1.225 for each two shares of Common Stock and $0.05 for the
Warrant). In addition, each shareholder is being given the additional right,
called the Oversubscription Privilege, to buy additional shares of Common
Stock, subject to availability.
The proceeds of the Rights Offering are being used for two purposes: (i) to
raise our level of net tangible assets to the minimum level required by the
Nasdaq SmallCap Market for continued listing on Nasdaq, and (ii) for working
capital, purchases of equipment, purchase of additional products and product
lines, possible acquisitions and other general corporate purposes.
Enclosed is a Prospectus dated September 1, 1999, together with a Rights
Subscription Certificate. The Rights Subscription Certificate must be
completed and returned by the end of the initial offering period on September
30, 1999. Following this period, shares not subscribed to may be purchased by
exercising shareholders on a pro rata basis pursuant to the Oversubscription
Privilege described in the Prospectus. Subscription Certificates for those
purchases will be distributed after September 30, 1999 to shareholders who
have fully-exercised their rights in the initial offering.
To subscribe to the Offering, please read the Prospectus and the enclosed
instructions and then complete and return the Rights Subscription Certificate
with payment to Matthew E. Bellin, President, at Oxboro Medical International,
Inc., 13828 Lincoln Street NE, Ham Lake, Minnesota 55304. Please also contact us
if you have questions concerning your rights to purchase under this offering.
Very truly yours,
Matthew E. Bellin
President
<PAGE>
EXHIBIT 4(d)
FORM OF WARRANT AGREEMENT
WARRANT AGREEMENT
AGREEMENT, dated as of September 1, 1999, by and between Oxboro Medical
International, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, N.A., as Warrant Agent (the "Warrant Agent").
W I T N E S E T H
WHEREAS, in connection with a public offering pursuant to a
registration statement (the "Registration Statement") on Form S-3 declared
effective by the Securities and Exchange Commission on September 1, 1999, of
445,412 rights to purchase ("Rights"), each Right consisting of two shares of
the Company's Common Stock, $.01 par value ("Common Stock") and one Common
Stock Purchase Warrant (the "Warrants"), the Company will issue a minimum of
_______________ and a maximum of 445,412 Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the following meanings,
unless the context shall otherwise require:
(a) "Common Stock" shall mean the authorized stock of the Company
of any class, whether now or hereafter authorized, which has the right
to participate in the distribution of earnings and assets of the
Company without limit as to amount or percentage, which at the date
hereof consists of 2,000,000 shares of Common Stock, $.01 par value,
(b) "Corporate Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its principal
business shall be administered, which office is located on the date
hereof at 161 North Concord Exchange, South St. Paul, MN 55075.
(c) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (i) the Warrant
Certificate representing such Warrant, with
<PAGE>
the exercise form thereon duly executed by the Registered Holder
thereof or such Holder's attorney duly authorized in writing, and
(ii) payment in cash, official bank or certified check or wire
transfer made payable to the Company, of an amount in lawful money
of the United States of America equal to the applicable Purchase
Price.
(d) "Initial Warrant Exercise Date" shall mean, as to each
Warrant, the original issuance date of the Warrants.
(e) "Purchase Price" shall mean the price to be paid upon exercise
of each Warrant in accordance with the terms hereof, which price shall
be $2.75, subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's right to
reduce the Purchase Price upon notice to all Warrantholders.
(f) "Registered Holder" shall mean the person in whose name any
certificate representing a Warrant shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(g) "Transfer Agent" shall mean Norwest Bank Minnesota, N.A., as
the Company's transfer agent, or its authorized successor, as such.
(h) "Warrant Expiration Date" shall mean 5:00 p.m. (Minneapolis
time) on either September 30, 2000, or October 31, 2000, depending
upon the date of issuance; provided that if such date shall in the
State of Minnesota be a holiday or a day on which banks are authorized
to close, then 5:00 p.m. (Minneapolis time) on the next following day
which in the State of Minnesota is not a holiday or a day on which
banks are authorized to close. Upon notice to all Warrantholders, the
Company shall have the right to extend the Warrant Expiration Date.
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) Each Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase one share
of Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section
9.
(b) Upon execution of this Agreement and designation to the
Warrant Agent that the Company has sold the minimum number of Rights,
Warrant Certificates representing the number of Warrants sold shall be
executed by the Company and delivered to the Warrant Agent. Upon
written order of the Company signed by its President or a Vice
President and by its Secretary or an Assistant Secretary, the Warrant
Certificates shall be countersigned, issued and delivered by the
Warrant Agent as part of the Rights. Upon designation to the Warrant
Agent by the Company that it has sold additional Rights, additional
Warrants shall be executed by the Company and delivered by the Warrant
Agent. Upon written order of the Company signed by its President or a
Vice President and by its Secretary or an Assistant Secretary, the
Warrant Certificates shall be countersigned, issued and delivered by
the Warrant Agent as part of the Rights.
-2-
<PAGE>
(c) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in
required whole number denominations representing up to an aggregate of
890,824 shares of Common Stock, subject to adjustment as described
herein, upon the exercise of Warrants in accordance with this
Agreement.
(d) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this
Agreement; provided that no Warrant Certificates shall be issued except
(i) those initially issued hereunder or pursuant to Company
instructions; (ii) those issued on or after the Initial Warrant
Exercise Date, upon the exercise of fewer than all Warrants represented
by any Warrant Certificate, to evidence any unexercised Warrants held
by the exercising Registered Holder; (iii) those issued upon any
transfer or exchange pursuant to Section 6; (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7; and (v) at the option of the
Company, in such form as may be approved by its Board of Directors, to
reflect any adjustment or change in the Purchase Price, the number of
shares of Common Stock purchasable upon exercise of the Warrants
therefor made pursuant to Section 9 hereof.
SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of
this Agreement or as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of
issuance thereof (whether upon initial issuance, transfer, exchange or
in lieu of mutilated, lost, stolen, or destroyed Warrant Certificates)
and issued in registered form. Warrants shall be numbered serially with
the letter W on the Warrants.
(b) Warrant Certificates shall be executed on behalf of the
Company by its President or any Vice President and by its Secretary or
an Assistant Secretary, by manual signatures or by facsimile signature
printed thereon. Warrant Certificates shall be manually countersigned
by the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer of the
Company before the date of issuance of the Warrant Certificates or
before countersignature by the Warrant Agent and issue and delivery
thereof, such Warrant Certificates may nevertheless be countersigned by
the Warrant Agent, issued and delivered with the same force and effect
as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company. After countersignature by the
Warrant Agent, Warrant Certificates shall be delivered by the Warrant
Agent to the Registered Holder without further action by the Company,
except as otherwise provided by Section 4(a) hereof.
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SECTION 4. EXERCISE.
(a) Each Warrant may be exercised by the Registered Holder thereof
at any time on or after the Initial Warrant Exercise Date, but not
after the Warrant Expiration Date, upon the terms and subject to the
conditions set forth herein and in the applicable Warrant Certificate.
A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the Exercise Date and the person entitled to
receive the securities deliverable upon such exercise shall be treated
for all purposes as the holder upon exercise thereof as of the close of
business on the Exercise Date. As soon as practicable on or after the
Exercise Date the Warrant Agent shall deposit the proceeds received
from the exercise of a Warrant and shall notify the Company in writing
of the exercise of the Warrants. The Warrant Agent, on behalf of the
Company, shall cause to be issued and delivered by the Transfer Agent,
to the person or persons entitled to receive the same, a certificate or
certificates for the securities deliverable upon such exercise, plus a
Warrant Certificate for any remaining unexercised Warrants of the
Registered Holder, unless prior to the date of issuance of such
certificates the Company shall instruct the Warrant Agent to refrain
from causing such issuance of certificates pending clearance of checks
received in payment of the Purchase Price pursuant to such Warrants.
Notwithstanding the foregoing, in the case of payment made in the form
of a check drawn on an account of such investment banks and brokerage
houses as the Company shall approve in writing to the Warrant Agent,
certificates shall immediately be issued without prior notice to the
Company or any delay. Upon the exercise of any warrant and clearance of
the funds received, the Warrant Agent shall promptly remit the payment
received for the Warrant to the Company or as the Company may direct in
writing.
SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES;
ETC.
(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of Warrants, such number of shares of
Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of Common
Stock which shall be issuable upon exercise of the Warrants shall, at
the time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect
to the issue thereof (other than those which the Company shall promptly
pay or discharge) and that upon issuance such shares shall be listed on
each national securities exchange or trading system, if any, on which
the other shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of Warrants hereunder require registration
with, or approval of, any governmental authority under any federal
securities law before such securities may be validly issued or
delivered upon such exercise, then the Company will in good faith and
as expeditiously as reasonably possible, endeavor to secure such
registration or approval. The Company will use reasonable efforts to
obtain appropriate approvals or registrations under state "blue sky"
securities laws with respect to any such securities. The Company
reserves the right not to accept exercise of warrants in any state in
which such exercise would be unlawful.
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(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance or delivery of any shares upon
exercise of the Warrants; provided, however, that if the shares of
Common Stock are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any Warrant
being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of
transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for
certificates representing shares of Common Stock required upon exercise
of the Warrants, and the Company will authorize the Transfer Agent to
comply with all such proper requisitions. The Company will file with
the Warrant Agent a statement setting forth the name and address of the
Transfer Agent of the Company for shares of Common Stock issuable upon
exercise of the Warrants, unless the Warrant Agent and the Transfer
Agent are the same entity.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the
same class or may be transferred in whole or in part. Warrant
Certificates to be exchanged shall be surrendered to the Warrant Agent
at its Corporate Office, and upon satisfaction of the terms and
provisions hereof, the Company shall execute and the Warrant Agent
shall countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof in accordance
with its regular practice. Upon due presentment for registration of
transfer of any Warrant Certificate at such office, the Company shall
execute and the Warrant Agent shall issue and deliver to the transferee
or transferees a new Warrant Certificate or Certificates representing
an equal aggregate number of Warrants of the same class.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription
form or the assignment form on the reverse thereof shall be duly
endorsed, or be accompanied by a written instrument or instruments of
transfer and subscription, in form satisfactory to the Company and the
Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates. In
addition, the Company may require payment by such holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
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(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly
canceled by the Warrant Agent and thereafter retained by the Warrant
Agent until termination of this Agreement or resignation as Warrant
Agent, or, at the direction of the Company.
(f) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of
each Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary. The
Warrants, which are being publicly offered as Rights together with two
shares of Common Stock, will be immediately detachable from the Common
Stock and transferable separately therefrom.
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired by a bona
fide purchaser) countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal aggregate number
of Warrants. Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. REDEMPTION. The Warrants to be issued pursuant to the terms
of this Agreement shall not be redeemable.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK WARRANTS.
(a) Subject to the exceptions referred to in Section 9 (g) below,
in the event the Company shall, at any time or from time to time after
the date hereof, issue any shares of Common Stock as stock dividend to
the holders of Common Stock, or subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number of shares (any
such sale, issuance, subdivision or combination being herein called a
"Change of Shares"), then, and thereafter upon each further Change of
Shares, the applicable Purchase Price in effect immediately prior to
such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Purchase
Price in effect immediately prior thereto by a fraction, the numerator
of which shall be the sum of (a) the total number of shares of Common
Stock outstanding immediately prior to such Change of Shares and (b)
the number of shares of Common Stock which the aggregate consideration
received by the Company upon such sale, issuance, subdivision or
combination (determined in accordance with subsection (f) below) could
have purchased at the then current Purchase Price, and the denominator
of which shall be the total number of shares of Common Stock
outstanding immediately after such Change of Shares.
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Upon each adjustment of the applicable Purchase Price pursuant to
this Section 9, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall (subject to the
provisions contained in Section 9(b) hereof) be such number of
shares (calculated to the nearest tenth) purchasable at the
applicable Purchase Price immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the
applicable Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the applicable
Purchase Price in effect immediately after such adjustment.
(b) The Company may elect, upon any adjustment of the
applicable Purchase Price hereunder, to adjust the number of
Warrants outstanding, in lieu of adjusting the number of shares of
Common Stock purchasable upon the exercise of each Warrant as
hereinabove provided, so that each Warrant outstanding after such
adjustment shall represent the right to purchase one share of Common
Stock. Each Warrant held of record prior to such adjustment of the
number of Warrants shall become that number of Warrants (calculated
to the nearest tenth) determined by multiplying the number by a
fraction, the numerator of which shall be the applicable Purchase
Price in effect immediately prior to such adjustment and the
denominator of which shall be the applicable Purchase Price in
effect immediately after such adjustment. Upon each such adjustment
of the number of Warrants, the Redemption Price in effect
immediately prior to such adjustment also shall be adjusted by
multiplying such Redemption Price by a fraction, the numerator of
which shall be the Purchase Price in effect immediately after such
adjustment and the denominator of which shall be the Purchase Price
in effect immediately prior to such adjustment. Upon each adjustment
of the number of Warrants pursuant to this Section 9, the Company
shall, as promptly as practicable, cause to be distributed to each
Registered Holder of Warrant Certificates on the date of such
adjustment, Warrant Certificates evidencing, subject to Section 10
hereof, the number of additional Warrants, if any, to which such
Holder shall be entitled as a result of such adjustment or, at the
option of the Company, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates held by
him prior to the date of adjustment (and upon surrender thereof, if
required by the Company) new Warrant Certificates evidencing the
number of Warrants to which such Holder shall be entitled after such
adjustment.
(c) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of
any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in
any reclassification, capital reorganization or other change of
outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as,
or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause
effective provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or other
securities or property (including cash) receivable upon such
reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number
of shares of Common Stock that might have been purchased upon
exercise of such Warrant,
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<PAGE>
immediately prior to such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. Any such
provision shall include provision for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided
for in this Section 9. The foregoing provisions shall similarly
apply to successive reclassification, capital reorganizations and
other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(d) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by
the President, and by the Secretary or an Assistant Secretary, of the
Company setting forth: (i) the applicable Purchase Price as so
adjusted, (ii) the number of shares of Common Stock purchasable upon
exercise of each Warrant after such adjustment, and, if the Company
shall have elected to adjust the number of Warrants, the number of
Warrants to which the registered holder of each Warrant shall then be
entitled, and the adjustment in Redemption Price resulting therefrom,
and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the
Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to Norwest and to each registered holder of Warrants
at his last address as it shall appear on the registry books of the
Warrant Agent. No failure to mail such notice nor any defect therein or
in the mailing thereof shall affect the validity thereof except as to
the holder to whom the Company failed to mail such notice, or except as
to the holder whose notice was defective. The affidavit of an officer
of the Warrant Agent or the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(e) For purposes of Section 9(a) and 9(b) hereof, the following
provisions (A) to (F) shall also be applicable:
(A) The number of shares of Common Stock outstanding at
any given time shall include shares of Common Stock owned or held by or
for the account of the Company and the sale or issuance of such
treasury shares or the distribution of any such treasury shares shall
not be considered a Change of Shares for purposes of said sections.
(B) No adjustment of the Purchase Price shall be made
unless such adjustment would require an increase or decrease of at
least $.05 in such price; provided that any adjustments which by reason
of this clause (B) are not required to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment(s) so carried forward,
shall require an increase or decrease of at least $.05 in the Purchase
Price then in effect hereunder.
(C) In case of (1) the sale by the Company solely for
cash of any rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or any securities convertible
into or exchangeable for Common Stock without the payment of any
further consideration other than cash, if any (such convertible or
exchangeable securities being herein called "Convertible Securities"),
or (2) the issuance by the Company, without the receipt by the Company
of any consideration therefor, of any rights or warrants to subscribe
for or purchase, or any options for the purchase of,
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<PAGE>
Common Stock or Convertible Securities, in each case, if (and only
if) the consideration payable to the Company upon the exercise of
such rights, warrants or options shall consist solely of cash,
whether or not such rights, warrants or options, or the right to
convert or exchange such Convertible Securities, are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration
payable to the Company upon the exercise of such rights, warrants or
options, plus the consideration received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the
case of such Convertible Securities, the minimum aggregate amount of
additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by (y)
the total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities issuable upon the
exercise of such rights, warrants or options) is less than the then
Purchase Price immediately prior to the date of the issuance or sale
of such rights, warrants or options, then the total maximum number
of shares of Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of
such rights, warrants or options) shall be deemed to be outstanding
shares of Common Stock for purposes of Sections 9(a) and 9(b) hereof
and shall be deemed to have been sold for cash in an amount equal to
such price per share.
(D) In case of the sale by the Company solely for cash of
any Convertible Securities, whether or not the right of conversion or
exchange thereunder is immediately exercisable, and the price per share
for which Common Stock is issuable upon the conversion or exchange of
such Convertible Securities (determined by dividing (x) the total
amount of consideration received by the Company for the sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, other than such Convertible Securities, payable
upon the conversion or exchange thereof, by (y) the total maximum
number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than the then Purchase
Price immediately prior to the date of the sale of such Convertible
Securities, then the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities
(as of the date of the sale of such Convertible Securities) shall be
deemed to be outstanding shares of Common Stock for purposes of
Sections 9(a) and 9(b) hereof and shall be deemed to have been sold for
cash in an amount equal to such price per share.
(E) If the exercise or purchase price provided for in any
right, warrant or option referred to in (c) above, or the rate at which
any Convertible Securities referred to in (c) or (D) above are
convertible into or exchangeable for Common Stock, shall change at any
time (other than under or by reason of provisions designed to protect
against dilution), the Purchase Price then in effect hereunder shall
forthwith be readjusted to such Purchase Price as would have been
obtained (1) had the adjustments made upon the issuance or sale of such
rights, warrants, options or Convertible Securities been made upon the
basis of the issuance of only the number of shares of Common Stock
theretofore
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<PAGE>
actually delivered (and the total consideration received therefor) upon
the exercise of such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities, (2) had adjustments been
made on the basis of the Purchase Price as adjusted under clause (1)
for all transactions (which would have affected such adjusted Purchase
Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities, and (3) had any such rights,
warrants, options or Convertible Securities then still outstanding been
originally issued or sold at the time of such change on the expiration
of any such right, warrant or option or the termination of any such
right to convert or exchange any such Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be readjusted
to such Purchase Price as would have been obtained (a) had the
adjustments made upon the issuance or sale of such rights, warrants,
options or Convertible Securities been made upon the basis of the
issuance of only the number of shares of Common Stock theretofore
actually delivered (and the total consideration received therefor) upon
the exercise of such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities and (b) had adjustments been
made on the basis of the Purchase Price as adjusted under clause (a)
for all transactions (which would have affected such adjusted Purchase
Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(F) In case of the sale for cash of any shares of Common
Stock, any Convertible Securities, any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or
Convertible Securities, the consideration received by the Company
therefore shall be deemed to be the gross sales price therefor without
deducting therefrom any expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions paid or allowed by
the Company in connection therewith.
(f) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of each
Warrant will be made, however,
(i) upon the grant or exercise of any other options which
may hereafter be granted or exercised under any employee benefit plan
of the Company as described in the Registration Statement; or
(ii) upon the sale or exercise of the Warrants; or
(iii) upon the issuance or sale of Common Stock or
Convertible Securities upon the exercise of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common
Stock or Convertible Securities, whether or not such rights, warrants
or options were outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; or
(iv) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, whether or not
any adjustment in the Purchase Price was made or required to be made
upon the issuance or sale of such Convertible
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Securities and whether or not such Convertible Securities were
outstanding on the date of the original sale of the Warrants or were
thereafter issued or sold; or
(v) upon any amendment to or change in the terms of any
rights or warrants to subscribe for or purchase, or options for the
purchase of, Common Stock or Convertible Securities or in the terms of
any Convertible Securities, including, but not limited to, any
extension of any expiration date of any such right, warrant or option,
any change in any exercise or purchase price provided for in any such
right, warrant or option, any extension of any date through which any
Convertible Securities are convertible into or exchangeable for Common
Stock or any change in the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock (other than rights,
warrants, options or Convertible Securities issued or sold after the
close of business on the date of the original issuance of the Rights
(i) for which an adjustment in the Purchase Price then in effect was
theretofore made or required to be made, upon the issuance or sale
thereof, or (ii) for which such an adjustment would have been required
had the exercise or purchase price of such rights, warrants or options
at the time of the issuance or sale thereof or the rate of conversion
or exchange of such Convertible Securities, at the time of the sale of
such Convertible Securities, or the issuance or sale of rights or
warrants to subscribe for or purchase, or options for the purchase of,
such Convertible Securities, been the price or rate as changed, in
which case the provisions of Section 9(f)(E) hereof shall be applicable
if, but only if, the exercise or purchase price thereof, as changed or
the rate of conversion or exchange thereof, as changed, consists solely
of cash or requires the payment of additional consideration, if any,
consisting solely of cash and the Company did not receive any
consideration other than cash, if any, in connection with such change).
(g) As used in this Section 9, the term "Common Stock" shall mean
and include the Company's Common Stock authorized on the date of the
original issue of the Rights and shall also include any capital stock
of any class of the Company thereafter authorized which shall not be
limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends and in the distribution of
assets upon the voluntary liquidation, dissolution or winding up of the
Company; provided, however, that the shares issuable upon exercise of
the Warrants shall include only shares of such class designated in the
Company's Articles of Incorporation as Common Stock on the date of the
original issue of the Rights or (i), in the case of any
reclassification, change, consolidation, merger, sale or conveyance of
the character referred to in Section 9(c) hereof, the stock, securities
or property provided for in such section or (ii), in the case of any
reclassification or change in the outstanding shares of Common Stock
issuable upon exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par value
to no par value, or from no par value to par value, such shares of
Common Stock as so reclassified or changed.
(h) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 9, or as to
the amount of any such adjustment, if required, shall be binding upon
the holders of the Warrants and the Company if made in good faith by
the Board of Directors of the Company.
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<PAGE>
(i) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to
purchase, or any options for the purchase of, Common Stock or
securities convertible into or exchangeable for or carrying a right,
warrant or option to purchase Common Stock, the Company shall
concurrently therewith grant to each of the then Registered Holders of
the Warrants all of such rights, warrants or options to which each such
holder would have been entitled if, on the date of determination of
stockholders entitled to the rights, warrants or options being granted
by the Company, such holder were the holder of record of the number of
whole shares of Common Stock then issuable upon exercise (assuming, for
purposes of this Section 9(i), that exercise of Warrants is permissible
during periods prior to the Initial Warrant Exercise Date) of his
Warrants. Such grant by the Company to the holders of the Warrants
shall be in lieu of any adjustment which otherwise might be called for
pursuant to this Section 9.
SECTION 10. FRACTIONAL WARRANTS AND SHARES.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 9 hereof, the
Company shall nevertheless not be required to issue fractions of
shares, upon exercise of the Warrants or otherwise, or to distribute
certificates that evidence fractional shares. With respect to any
fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction
multiplied by the market price of such fractional share, determined as
follows:
(1) If the Common Stock is listed on a National
Securities Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market or
SmallCap Market, the market price shall be the last reported sale price
of the Common Stock on such exchange on the last business day prior to
the date of exercise of the Warrant or if no such sale is made on such
day, the average of the closing bid and asked prices for such day on
such exchange; or
(2) If the Common Stock is not listed or admitted to
unlisted trading privileges or traded on the Nasdaq system, the market
price shall be the mean of the last reported bid and asked prices
reported by the Nasdaq Bulletin Board on the last business day prior to
the date of the exercise of the Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the market price shall be an amount determined in such
reasonable manner as may be prescribed by the Board of Directors of the
Company.
SECTION 11. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of Warrants, as such, any of the rights
of a stockholder of the Company or any right to vote for the
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election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
SECTION 12. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificates and
this Agreement.
SECTION 13. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by
his acceptance thereof, consents and agrees with the Company, the Warrant Agent
and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of
the Warrant Agent by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the Warrant
Certificates representing such Warrants are surrendered at the office
of the Warrant Agent, duly endorsed or accompanied by a proper
instrument of transfer satisfactory to the Warrant Agent and the
Company in their sole discretion, together with payment of any
applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the
holder and as the absolute, true and lawful owner of the Warrants
represented thereby for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice or knowledge to the
contrary, except as otherwise expressly provided in Section 7 hereof.
SECTION 14. CANCELLATION OF WARRANT CERTIFICATES. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be delivered to the Warrant
Agent and canceled by it and retired. The Warrant Agent shall also cancel Common
Stock following exercise of any or all of the Warrants represented thereby or
delivered to it for transfer, split-up, combination or exchange.
SECTION 15. CONCERNING THE WARRANT AGENT. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its duties
shall be determined solely by the provisions hereof. The Warrant Agent shall
not, by issuing and delivering Warrant Certificates or by any other act
hereunder be deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants represented thereby or
of any securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
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<PAGE>
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such adjustment,
when made, or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained herein or for
any action taken, suffered or omitted by it in reliance on any Warrant
Certificate or other document or instrument believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties,
(ii) be responsible for any failure on the part of the Company to comply with
any of its covenants and obligations contained in this Agreement or in any
Warrant Certificate, or (iii) be liable for any act or omission in connection
with this Agreement except for its own negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
President, any Vice President, its Secretary, or Assistant Secretary, (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments, costs
and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or willful
misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or wilful misconduct), after giving 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court shall be a bank or trust company having a capital
and surplus as shown by its last published report to its stockholders, of not
less than $10,000,000, or a stock transfer company. After acceptance in writing
of such appointment by the new warrant agent is received by the Company, such
new warrant agent shall be vested with the same powers, rights, duties and
responsibilities
-14-
<PAGE>
as if it had been originally named herein as the Warrant Agent, without any
further assurance, conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning
warrant Agent. Not later than the effective date of any such appointment the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder
of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent may
be converted or merged or any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 16. MODIFICATION OF AGREEMENT. Subject to the provisions of
Section 4(b), the Warrant Agent and the Company may by supplemental agreement
make any changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii) that they may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Warrant Certificates provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders of Warrant Certificates
representing not less than 50% of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed.
SECTION 17. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at 13828 Lincoln Street NE, Ham Lake, Minnesota 55304,
Attention: President, or at such other address as may have been furnished to the
Warrant Agent in writing by the Company; if to the Warrant Agent, at 161 North
Concord Exchange, South St. Paul, Minnesota 55075.
-15-
<PAGE>
SECTION 18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without
reference to principles of conflict of laws.
SECTION 19. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
SECTION 20. TERMINATION. This Agreement shall terminate at the close of
business on the Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it and the provisions of Section, 15
hereof shall survive such termination.
SECTION 21. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
OXBORO MEDICAL INTERNATIONAL, INC.
By:
--------------------------------
Matthew E. Bellin, President
NORWEST BANK MINNESOTA, N.A.
By:
--------------------------------
-16-
<PAGE>
<TABLE>
<S> <C> <C>
EXHIBIT 4(e)
FORM OF WARRANT CERTIFICATE
NUMBER THIS WARRANT CERTIFICATE MAY BE WARRANTS
TRANSFERRED SEPARATELY FROM THE CERTIFICATE
W- WITH WHICH IT IS INITIALLY ISSUED
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M.,
MINNEAPOLIS TIME, ON , 1999 SHALL BECOME VOID
OXBORO MEDICAL INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
WARRANT CERTIFICATE
THIS CERTIFIES THAT
, OR REGISTERED ASSIGNS, WARRANTS CUSIP 691384 12
IS THE REGISTERED HOLDER OF 7
</TABLE>
*** ***
(the "Warrants"), expiring at 5:00 p.m., Minneapolis time, on ,
1999 (the "Expiration Date"), to purchase Common Stock, $.01 par value per share
(the "Common Stock"), of OXBORO MEDICAL INTERNATIONAL, INC., a Minnesota
corporation (the "Company"). The Warrants may be exercised at any time from 9:00
a.m., Minneapolis time, on , 1999 to 5:00 p.m., Minneapolis
time, on the Expiration Date. Each Warrant entitles the holder upon exercise to
receive from the Company, if exercised before 5:00 p.m., Minneapolis time, on
the Expiration Date, one fully paid an nonassessable share of Common Stock (a
"Warrant Share") at the Exercise Price (as defined in the Warrant Agreement
referred to below), payable in lawful money of the United States of America,
upon surrender of this Warrant Certificate and payment of the Exercise Price at
the office or agency of the Warrant Agent but only subject to the conditions set
forth herein and in the Warrant Agreement. The Exercise Price and number of
Warrant Shares issuable upon exercise of the Warrants are subject to adjustment
upon the occurrence of certain events as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the Expiration Date entitling the
holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of September 1,
1999 (the "Warrant Agreement'), duly executed and delivered by the Company to
NORWEST BANK MINNESOTA, N.A., a national banking association, as Warrant Agent
(the "Warrant Agent"), which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company. By accepting initial delivery,
transfer or exchange of this Warrant, the duly registered holder shall be deemed
to have agreed to the terms of the Warrant Agreement as it may be in effect from
time to time, including any amendments or supplements duly adopted in accordance
therewith.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the Purchase Form on the
reverse side hereof properly completed and executed, together with payment of
the Exercise Price in the manner described below at the office of the Warrant
Agent. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or its assignee a
new Warrant Certificate evidencing the number of Warrants not exercised.
Payment of the Exercise Price may be made in cash by wire transfer to the
Warrant Agent for the account of the Company or by certified or official bank
check or checks to the order to the Company or by any combination thereof.
The Warrant Agreement provides that upon the occurrence of certain events
the number of shares of Common Stock issuable upon the exercise of each Warrant,
and the Exercise Price of each Warrant, may, subject to certain conditions, be
adjusted. No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange of this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
WITNESS the facsimile seal of the Company and the facsimile signatures of
the Company's duly authorized officers.
Dated:
<TABLE>
<S> <C> <C>
COUNTERSIGNED AND REGISTERED: OXBORO MEDICAL INTERNATIONAL, INC.
NORWEST BANK MINNESOTA, N.A. By
AS WARRANT AGENT
Its PRESIDENT
BY Attest:
Authorized Signature Its SECRETARY
</TABLE>
<PAGE>
THE ARTICLES OF INCORPORATION OF THE CORPORATION GRANT TO THE BOARD OF DIRECTORS
THE POWER TO ESTABLISH MORE THAN ONE CLASS OR SERIES OF SHARES AND TO FIX THE
RELATIVE RIGHTS AND PREFERENCES OF ANY SUCH DIFFERENT CLASS OR SERIES. THE
CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE A
FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS
OF THE SHARES OF EACH CLASS OR SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY
HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR SERIES.
TO: Oxboro Medical International, Inc.
Norwest Bank Minnesota, N.A.
Warrant Agent
PURCHASE FORM
(To be executed by the Registered Holder in Order to Exercise Warrant
Certificates)
The undersigned hereby irrevocably elects to exercise _______________* of
the Warrants represented by the Warrant Certificate and to purchase for cash the
Shares issuable upon exercise of said Warrants, and herewith makes payment of
$_______________ therefor, and requests that certificates for such Shares be
issued in the name of:
<TABLE>
<S> <C>
Please insert social security ------------------------------
or other identifying number or (Name--Please Print)
registered holder of certificate ( ---------------) ------------------------------
(Address)
------------------------------
</TABLE>
Dated:____________ ______________________________
(Signature)
- ------------------------------
* Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial exercise, the portion thereof
being exercised) without making any adjustment for additional Common Stock
or any other securities or property or cash which, pursuant to the
adjustment provisions of the Warrant Certificate, may be deliverable upon
exercise.
* * * *
ASSIGNMENT FORM
(To be Executed By the Registered Holder in Order to Transfer the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
________________________** of the Warrants represented by the attached Warrant
Certificate unto ____________________________________________________________
(Please print or type name and address including postal zip
code of assignee)
(Social Security or other identifying number of assignee:
(________________________) and does irrevocably constitute and appoint
_____________________________________________ attorney to transfer the Warrant
Certificate on the records of the Company with full power of substitution in the
premises.
Date: ________________________ , _________.
Signature(s) _____________________________________________
_____________________________________________
______________________________ _____________________________________________
Signatures Guaranteed:_____________________________________________
- ------------------------------
** Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial assignment, the portion thereof
being assigned) without making any adjustment for additional Common Stock or
any other securities or property or cash which, pursuant to the adjustment
provisions referred to in this Warrant Certificate, may be deliverable upon
exercise.
* * * *
NOTICE-- The signature(s) to the Purchase Form or the Assignment Form must
correspond to the name as written upon the face of the Warrant
Certificate in every particular without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT 5
LETTERHEAD OF LINDQUIST & VENNUM P.L.L.P.
August 31, 1999
Oxboro Medical International, Inc.
13828 Lincoln Street NE
Ham Lake, Minnesota 55304
Ladies and Gentlemen:
We have acted as counsel to Oxboro Medical International, Inc., a
Minnesota corporation (the "Company"), in connection with the preparation of its
Registration Statement on Form S-3 under the Securities Act of 1933, as amended,
for the issuance and sale by the Company of up to 1,336,236 shares of the
Company's Common Stock (the "Shares"), including shares to be issued on exercise
of warrants, and the issuance by the Company of 445,412 rights to purchase
shares of the Company's Common Stock (the "Rights"). You have asked that we
provide our opinion of certain matters respecting the Company. Except as
otherwise indicated herein, terms used in this Opinion Letter are defined in the
Prospectus contained in the Registration Statement, or in the Accord (defined
below).
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing
in good standing under the laws of the State of Minnesota and has the
requisite corporate power to own, lease and operate its properties and
conduct its businesses as described in the Prospectus.
2. The Company has the number of authorized, issued and
outstanding shares of capital stock of the Company as set forth under
the caption "Capitalization" of the Prospectus, and all issued and
outstanding capital stock of the Company has been duly authorized and
is validly issued, fully paid and nonassessable. To our Actual
Knowledge, no preemptive rights, contractual or otherwise, of
securities holders of the Company exist with respect to the issuance or
sale of the Shares or the issuance of the Rights by the Company
pursuant to the Prospectus, and no rights to require registration of
shares of Common Stock or other securities of the Company because of
the filing of the Registration Statement exist.
3. The Shares and the Rights have been duly authorized. The
Shares, upon delivery against payment therefor, will be validly issued,
fully paid and nonassessable. The rights, upon delivery, will be
validly issued.
4. The certificates evidencing the Shares and the Rights comply
as to form with the applicable provisions of the laws of the State of
Minnesota.
<PAGE>
Lindquist & Vennum P.L.L.P.
Oxboro Medical International, Inc.
Page 2
August 31, 1999
5. The Registration Statement has become effective under the Act
and, to our Actual Knowledge, no stop orders suspending the
effectiveness of the Registration Statement have been issued and no
proceedings for that purpose have been instituted or are pending or, to
our Actual Knowledge, contemplated under the Act.
6. To our Actual Knowledge, there are no contracts, agreements or
documents of a character required to be disclosed in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement or required to be incorporated by reference into the
Prospectus which are not disclosed or filed or incorporated by
reference, as required.
7. The Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and supporting financial and statistical data
and information included or incorporated therein, as to which we
express no opinion) conform in all material respects with the
requirements of the Act and the rules and regulations promulgated
thereunder.
We are not passing upon and do not guarantee the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus. On the basis of the information that we obtained in the course of
our representation, investigation and inquiry of the Company in connection with
the preparation of the Registration Statement and the Prospectus nothing has
come to our attention which causes us to believe that the Registration Statement
or the Prospectus (except as to the financial statements and schedules and
supporting financial and statistical data and information included or
incorporated therein, as to which we express no opinion) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading.
We hereby consent to the reference to this firm under the heading
"Legal Opinions" in the Registration Statement and the Prospectus. Subject to
the foregoing, this Opinion Letter may be relied upon by you only in connection
with the transactions contemplated by the Prospectus and it Lindquist & Vennum
P.L.L.P. may not be used or relied upon by you or any other person for any
purpose whatsoever, except to the extent authorized in the Accord, without in
each instance our prior written consent.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
- 22 -
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated November 24, 1998 accompanying the
consolidated financial statements of Oxboro Medical International, Inc. and
subsidiary included in the Annual Report on Form 10-KSB for the year ended
September 30, 1998 which is incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in the Registration
Statement of the aforementioned report and to the use of our name as it appears
under the caption "Experts."
/s/ GRANT THORNTON LLP
Minneapolis, Minnesota
August 30, 1999
