<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Colorado MEDtech, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF COLORADO MEDTECH, INC.
TO BE HELD NOVEMBER 20, 1998
To the Shareholders of Colorado MEDtech, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Colorado
MEDtech, Inc., a Colorado corporation (the "Company"), will be held on
November 20, 1998 at 3:00 p.m. at the Hotel Boulderado, 2115 13th Street,
Boulder, Colorado for the following purposes:
1. To elect seven directors to serve until the next Annual
Meeting of Shareholders or until their respective successors
are elected and qualified;
2. To transact any other business as may properly come before
the Annual Meeting or any adjournment thereof.
The close of business on October 7, 1998, has been fixed as the record date
for the determination of holders of Colorado MEDtech, Inc. Common Stock
entitled to notice of, and to vote at, the Annual Meeting, and only
shareholders of record at such time will be so entitled to vote.
In order for the proposals listed above to be approved, each proposal must be
approved by the affirmative vote of holders of a majority of shares, voting
as a group.
Whether or not you expect to attend the Annual Meeting, holders of Colorado
MEDtech, Inc. Common Stock should complete, date, and sign the enclosed form
of proxy card and mail it promptly in the enclosed envelope.
By Order of the Board of Directors
Bruce L. Arfmann
Secretary of the Corporation
Date: October 16, 1998
PLEASE SIGN AND RETURN THE ENCLOSED FORM OF PROXY PROMPTLY WHETHER OR NOT YOU
INTEND TO BE PRESENT AT THE ANNUAL MEETING. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
COLORADO MEDTECH, INC.
6175 Longbow Drive
Boulder, CO 80301
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 20, 1998
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Colorado MEDtech, Inc., a Colorado
Corporation ("CMED" or the "Company"), for use at the Annual Meeting of
Shareholders of the Company to be held on November 20, 1998 at 3:00 p.m. at
the Hotel Boulderado, 2115 13th Street, Boulder, Colorado, and at any and all
adjournments of such meeting.
If the enclosed Proxy Card is properly executed and returned in time to be
voted at the meeting, the shares of Common Stock represented will be voted in
accordance with the instructions contained therein. Executed proxies that
contain no instructions will be voted FOR each of the proposals described
herein. Abstentions (proxies not returned) and broker non-votes will be treated
as shareholders absent from the Annual Meeting. The Proxies will be tabulated
and votes counted by American Securities Transfer & Trust, Inc. It is
anticipated that this Proxy Statement and the accompanying Proxy will be mailed
to the Company's shareholders on or about October 16, 1998.
SHAREHOLDERS WHO EXECUTE PROXIES FOR THE ANNUAL MEETING MAY REVOKE THEIR
PROXIES AT ANY TIME PRIOR TO THEIR EXERCISE BY DELIVERING WRITTEN NOTICE OF
REVOCATION TO THE COMPANY, BY DELIVERING A DULY EXECUTED PROXY CARD BEARING A
LATER DATE, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
The costs of the meeting, including the costs of preparing and mailing
the Proxy Statement and Proxy, will be borne by the Company. Additionally,
the Company may use the services of its Directors, officers and employees to
solicit proxies, personally or by telephone, but at no additional salary or
compensation. The Company will also request banks, brokers, and others who
hold shares of Common Stock of the Company in nominee names to distribute
proxy soliciting materials to beneficial owners, and will reimburse such
banks and brokers for reasonable out-of-pocket expenses which they may incur
in so doing.
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to vote at the Annual Meeting
is October 7, 1998. At the close of business on that day there were
10,740,846 shares of no par value Common Stock (the "Common Stock") of the
Company outstanding and entitled to vote at the meeting.
<PAGE>
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Stock is necessary to constitute a quorum for each matter
voted upon at the Annual Meeting. In deciding all questions, a holder of
Common Stock is entitled to one vote, in person or by proxy, for each share
held in his or her name on the record date. Abstentions and broker
non-votes, if any, will not be included in vote totals and, as such, will
have no effect on any proposal.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies in
the proxy, will be voted (i) FOR the election of each of the seven nominees
named herein for the office of director, and (ii) at the discretion of the
proxy holders, on any other matter that may properly come before the meeting
or any adjournment thereof.
Where shareholders have appropriately specified how their proxies are to
be voted, they will be voted accordingly. If any other matter of business is
brought before the meeting, the proxy holders may vote the proxies at their
discretion. The directors do not know of any such other matter or business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock, as of October 7, 1998, by
each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, certain executive officers, each director and
director nominee of the Company, and all directors and executive officers as
a group. Except as provided in the following paragraph or as may be indicated
in the footnotes to the table and subject to applicable community property
laws, the Company believes that each of such persons has the sole voting and
dispositive power over the shares held by him except as otherwise indicated.
Vencor, Inc. (with its subsidiary Vencor Operating, Inc., collectively,
"Vencor") has announced its intention to sell all shares of the Company's
Common Stock it beneficially owns to selected institutional investors. The
Company has filed a registration statement on Form S-3 with the Securities
and Exchange Commission to facilitate such sale. Such sale may occur prior
to the annual meeting, and if it does Vencor will deliver its proxy to any
investors who purchase its shares. None of the officers or directors of the
Company intend to purchase any of such shares. If Vencor sells all of its
shares, the beneficial ownership of Michael R. Barr, Vencor and Frank W.
Anastasio will be as follows: Michael R. Barr: -0- shares (less than 1%);
Vencor Operating, Inc.: -0- shares; Frank W. Anastasio: -0- shares. The
Company announced that it may repurchase up to 1,000,000 of the shares to be
sold by Vencor. At the date of this proxy statement the Company has not
determined whether it will repurchase any of such shares. If it does not,
the beneficial ownership and percentages of the other persons in the
following table should not be affected by the sale of the Vencor shares. If
Vencor sells fewer shares, or if the Company or an officer or director of the
Company purchases any of such shares, actual beneficial ownership at the time
of the annual meeting will be different than as set forth in the beneficial
ownership table and in this paragraph.
-2-
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
------------------- ----------------- ----------------
<S> <C> <C>
Vencor Operating, Inc. 3,575,000(1) 33.05%
3300 Aegon Tower
400 W. Market Street
Louisville, KY 40202
John V. Atanasoff II 948,453(2) 8.33%
6175 Longbow Drive
Boulder, CO 80301
Clifford W. Mezey 490,232(3) 4.55%
6175 Longbow Drive
Boulder, CO 80301
Dean A. Leffingwell 465,999(4) 4.32%
6175 Longbow Drive
Boulder, CO 80301
John E. Wolfe 180,500(5) 1.67%
6175 Longbow Drive
Boulder, CO 80301
Lockett E. Wood, Ph.D. 152,661(6) 1.42%
6175 Longbow Drive
Boulder, CO 80301
Bruce L. Arfmann 135,105(7) 1.25%
6175 Longbow Drive
Boulder, CO 80301
Jonathan Kagan 126,130(8) 1.17%
6175 Longbow Drive
Boulder, CO 80301
John M. Turner, Ph.D. 109,873(9) 1.02%
6175 Longbow Drive
Boulder, CO 80301
Robert L. Sullivan 105,413(10) *
6175 Longbow Drive
Boulder, CO 80301
Ira M. Langenthal 31,600(11) *
6175 Longbow Drive
Boulder, CO 80301
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C>
Michael R. Barr 75,000(12) *
6175 Longbow Drive
Boulder, CO 80301
Frank W. Anastasio -0- *
3300 Aegon Tower
400 W. Market Street
Louisville, KY 40202
All Directors and 6,461,674(14) 54.24%
Executive
Officers as a group (13
persons)
</TABLE>
- ----------------
* Less than one percent (1%)
(1) Such figure includes warrants to acquire 75,000 shares, which are currently
exercisable or become exercisable within 60 days, issued to Michael R.
Barr, Vencor's representative on the Company's Board of Directors. As
indicated in a Schedule 13D filed by Vencor, Inc., the voting and
investment control over such shares and any economic benefits derived by
Mr. Barr from such shares belong to Vencor. Mr. Barr is a former director
of Vencor, Inc. and has announced he will resign as an officer of Vencor
effective October 31, 1998.
(2) Includes 1,000 shares owned by Mr. Atanasoff's wife and 33,000 shares that
are owned by other relatives of Mr. Atanasoff as to which he disclaims
beneficial ownership. Also includes options to purchase 650,000 shares,
which are currently exercisable or become exercisable within 60 days.
(3) Includes 341,932 shares held by the Petsy G. Mezey Trust, of which Mr.
Mezey is a trustee. Also includes 58,300 shares that are held by the
Clifford W. Mezey Trust, of which Mr. Mezey is a trustee. Also includes
17,000 shares owned by Mr. Mezey's wife for the benefit of grandchildren,
as to which shares Mr. Mezey disclaims beneficial ownership. Also includes
8,000 shares owned by children of Mr. and Mrs. Mezey, as to which shares
Mr. Mezey disclaims beneficial ownership. Also includes warrants to
acquire 45,000 shares, which are currently exercisable or become
exercisable within 60 days.
(4) Includes warrants to acquire 45,000 shares, which are currently exercisable
or become exercisable within 60 days.
(5) Includes warrants to acquire 45,000 shares, which are currently exercisable
or become exercisable within 60 days.
(6) Includes 14,965 shares held by various relatives of Dr. Wood. Dr. Wood
disclaims beneficial ownership of all such shares. Also includes options
to purchase 10,500 shares, which are currently exercisable or become
exercisable within 60 days.
(7) Includes 15,449 shares owned by Mr. Arfmann's wife, as to which he
disclaims beneficial ownership. Also includes options to purchase 37,917
shares, which are currently exercisable or become exercisable within 60
days.
(8) Includes warrants to acquire 56,130 shares, which are currently exercisable
or become exercisable within 60 days.
(9) Includes warrants to acquire 83,333 shares, which are currently exercisable
or become exercisable within 60 days.
(10) Includes warrants to acquire 45,000 shares, which are currently exercisable
or become exercisable within 60 days.
(11) Includes warrants to acquire 31,600 shares, which are currently exercisable
or become exercisable within 60 days.
(12) Mr. Barr has served as Vencor's representative on the Company's Board of
Directors. Mr. Barr is a former director of Vencor and has announced he
will resign as an officer of Vencor effective October 31, 1998. The
beneficial ownership figure includes warrants issued to Mr. Barr to acquire
75,000 shares, which are currently exercisable or become exercisable within
60 days. Because Mr. Barr serves as Vencor's representative on the
-4-
<PAGE>
Board of Directors, the voting and investment control over such shares and
any economic benefits derived by Mr. Barr from such shares belong to
Vencor. Mr. Barr disclaims beneficial ownership of all such shares.
(13) Mr. Anastasio, an officer of Vencor, is being nominated to the Board of
Directors as a representative of Vencor. Mr. Anastasio does not have
investment or voting control over the Common Stock held by Vencor and
disclaims beneficial ownership of all such shares.
(14) Includes warrants and options to acquire 1,172,880 shares, which are
currently exercisable or become exercisable within 60 days.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Bylaws, the authorized number of directors of the
Company has been set at seven, and seven directors are to be elected at the
meeting. each nominee will be elected to hold office until the next annual
meeting of shareholders or until his successor is elected and qualified.
proxy holders will not be able to vote the proxies held by them for more than
seven persons. If a quorum is present, the seven nominees having the highest
number of votes cast in favor of their election will be elected. should any
nominee become unable or unwilling to accept nomination or election, the
proxy holders may vote the proxies for the election, in his stead, of any
other person the board of directors may recommend. Except as detailed in the
following paragraphs, each nominee has expressed his intention to serve the
entire term for which election is sought.
Pursuant to agreements with Vencor, Inc., the Company agreed to take steps
necessary to elect a representative of Vencor, Inc. to the Board of Directors
for so long as Vencor, Inc. or its wholly-owned subsidiaries (collectively,
"Vencor") own at least 500,000 shares of Company Common Stock, with an
additional Vencor representative to be elected for so long as Vencor owns at
least 1,500,000 shares of Common Stock. In accordance with such agreements, the
Board of Directors is nominating Frank W. Anastasio, an officer of Vencor, to
serve as a director. Vencor has waived its right to the second Board seat for
fiscal years 1995-1999.
Vencor has announced its plans to sell all shares of Company Common stock
it holds. If such sale results in Vencor holding fewer than 500,000 shares of
common stock at the annual meeting, Mr. Anastasio will withdraw his name from
nomination and will not be elected. In such event, six directors will be
elected and one Board seat will be vacant. The Company's bylaws give the Board
of Directors the power to elect a person to fill a vacant Board seat, and the
person chosen to fill such vacancy is elected to hold office until the next
annual meeting of shareholders or until his successor is elected and qualified.
No person has been identified to fill such vacancy if it does occur. As an
alternative to leaving the Board seat vacant, proxy holders may vote the proxies
for the election of any other person the board of directors may recommend. If
Mr. Anastasio is elected and after the election Vencor's holdings of Common
Stock fall below 500,000 shares, Mr. Anastasio has agreed to resign if so
requested. In such event the Board of Directors would anticipate filling the
resulting vacancy prior to the next annual meeting.
-5-
<PAGE>
THE BOARD OF DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE FOR EACH NOMINEE
FOR THE BOARD OF DIRECTORS.
The Board of Directors' nominees for the office of director are as
follows:
<TABLE>
<CAPTION>
Year First
Became a
Name Age Director
- ---- --- ----------
<S> <C> <C>
John V. Atanasoff II 63 1993
(C)(N)(S)
Dean A. Leffingwell 49 1977(1)
(N)(S)
Robert L. Sullivan 61 1985
(A)(C)(S)
Clifford W. Mezey 69 1989(1)
(A)(C)(S)
John E. Wolfe 59 1993
(A)(S)
Ira M. Langenthal 61 1996
(N)(S)
Frank W. Anastasio 53 --(2)
</TABLE>
- -------------
(A) Member of the Audit Committee
(C) Member of the Compensation Committee
(N) Member of the Nominating Committee
(S) Member of the Strategic Planning Committee
(1) Date became a director of RELA, Inc. ("RELA"). Became a director of the
Company in October 1992 in connection with the merger of RELA and the
Company.
(2) Nominated for first term.
Mr. Atanasoff has been the Chief Executive Officer of the Company since
June 1993. From 1989 until January 1993, Mr. Atanasoff served as Chief
Executive Officer of Cybernetics Products, Inc., a publicly-traded company
that develops and manufactures computer controlled equipment for the
electronics industry and computer graphic scanners and cameras for the motion
picture and audio visual markets. For more than five years prior to 1989,
Mr. Atanasoff held various senior management positions with the Fluid
Technology Group of EG&G, Inc. and Textron Systems (formerly AVCO Systems).
Since February 1997, Mr. Leffingwell has been Vice President of Rational
Software Corporation ("Rational"), Santa Clara, CA, a publicly held company
that develops and markets tools for software application development. From
1993 to 1997, he was Chief Executive Officer of Requisite, Inc., which
developed and marketed software tools for requirements management, and which
was purchased by Rational in 1997. From 1992 to 1993, Mr. Leffingwell served
as Chairman and Vice President of Business
-6-
<PAGE>
Development of the Company. He also served as the Chief Executive Officer of
RELA which he co-founded in 1977.
Mr. Sullivan has served as Senior Vice President-Finance since 1985 of
Chiron Diagnostic Corporation, a manufacturer and marketer of medical
diagnostic equipment and supplies. From 1962 to 1985, Mr. Sullivan held
several operating and financial positions with Corning Glass Works.
Prior to his retirement in 1994, Mr. Mezey was the majority owner and
Chief Executive Officer of Mezey-Puroll Automotive, Inc., an automotive
manufacturer's representative company in Michigan, for more than five years.
From 1981 to 1994 he was the owner and Chief Executive Officer of Interstate
Industries, Inc., a manufacturer of truck wiring harnesses in Michigan.
Mr. Wolfe has served as President and Chief Executive Officer since 1986
of Metrisa, Inc., a manufacturer and marketer of on-line liquid and gas
analyzers to the process and environmental industries. Prior to 1986, he
held various senior management positions with EG&G Sealol, Inc., Masoneilan
International, Inc. (Division of Studebaker Worthington), Litton Industries
and General Electric Company. Mr. Wolfe is a member of the board of
directors of Metrisa, Inc.
Dr. Langenthal has been a corporate consultant and private investor
since 1991. He joined Honeywell, Inc. in 1972 as a result of Honeywell's
acquisition of Signal Analysis Industries, a public company he co-founded.
Dr. Langenthal held various senior management positions at Honeywell, and
from 1986 to 1990 he was Vice President/General Manager of Honeywell's Test
Instruments Division, a manufacturer of information storage products and
systems. In 1990 this business was part of a corporate spin-off forming a
new company, Alliant Techsystems, Inc. at which Dr. Langenthal continued to
serve as Vice President/General Manager until his departure in 1991.
Mr. Anastasio has held several positions with Vencor, Inc. since August
1988. He is currently Group Vice President, Vencare Health Services, a
position he has held since February 1996. From December 1994 to January
1996, Mr. Anastasio was Regional Vice President of Operations for Vencor,
Inc., and from December 1992 to December 1994 was Regional Director of
Operations. Prior to joining Vencor, Mr. Anastasio held various management
positions at several hospital and health care organizations from November
1970 to August 1988.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee, a Compensation Committee, a
Nominating Committee and a Strategic Planning Committee. The Audit Committee
is responsible for (i) reviewing the scope of the annual audit, (ii)
reviewing with the independent auditors the corporate accounting practices
and policies, (iii) reviewing with the independent auditors their final
report, and (iv) being available to the independent auditors during the year
for consultation purposes. The Audit Committee met four times in the fiscal
year ended June 30, 1998. The Compensation Committee determines the
compensation of the officers of the Company and performs other similar
functions. The Compensation Committee met four times in the fiscal year
ended June 30, 1998. The Nominating Committee is responsible for reviewing
potential candidates for director and for the recommendation of candidates to
the Board. The Nominating Committee will accept director nominations from
shareholders at the Annual Meeting. The Nominating Committee met once during
the fiscal year ended June 30, 1998. The Strategic Planning Committee is
responsible for reviewing new product, licensing and acquisition, as well as
other strategic issues. The Strategic Planning Committee met four times in
the fiscal year ended June 30, 1998.
-7-
<PAGE>
Directors are reimbursed for expenses incurred for attending any Board
or committee meeting. There is no family relationship between any current or
prospective director of the Company and any other current or prospective
executive officer of the Company.
During the fiscal year ended June 30, 1998, there were four regular
meetings and two special meetings of the Board of Directors. With the
exception of director Michael Barr, all directors attended at least 75% of
the meetings of the Board and committees of the Board on which they were
members.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more than
10% of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of Common Stock of the Company. Except as stated below, based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company
during the fiscal year ended June 30, 1998 and Forms 5 and amendments thereto
furnished to the Company with respect to the fiscal year ended June 30, 1998,
to the best of the Company's knowledge, the Company's directors, officers and
holders of more than 10% of its Common Stock complied with all Section 16(a)
filing requirements. Dean Leffingwell, a director of the Company, filed a
Form 5 in October 1998 to report a gift of stock he made in December 1997.
EXECUTIVE OFFICERS
The following persons are the executive officers of the Company:
Name Position
- ---- --------
John V. Atanasoff II Chairman, Chief Executive Officer and President
Bruce L. Arfmann Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
Lee Erb Vice President - Technology
G. Neil Holland President of Erbtec Engineering Division
Jonathan Kagan President of Novel Biomedical, Inc., a subsidiary
of the Company
John M. Turner, Ph.D. President of RELA Division
Lockett E. Wood, Ph.D. Vice President
Information concerning the business experience of Mr. Atanasoff is
provided under the section entitled "Election of Directors."
BRUCE L. ARFMANN, AGE 51. Mr. Arfmann has served as Chief Financial
Officer, Secretary and Treasurer of the Company since January 1991. He was
appointed Senior Vice President in November 1996.
-8-
<PAGE>
Prior to joining the Company, he was a partner with Arthur Andersen & Co.
from 1982 to 1990, in its Denver and Phoenix offices.
LEE ERB, AGE 54. Mr. Erb became Vice President - Technology of the
Company in October 1997, in connection with the Company's acquisition of
Erbtec Engineering, Inc. ("Erbtec"), a manufacturer of high power radio
frequency (RF) amplifiers and systems for Magnetic Resonance Imaging (MRI)
equipment. Mr. Erb founded Erbtec in 1979 and served as its President until
the acquisition.
G. NEIL HOLLAND, AGE 46. Mr. Holland has served as President of the
Erbtec Engineering Division of the Company since June 1998. Prior to joining
Erbtec, from 1997 to June 1998 he was General Manager, Global MR Engineering
for General Electric Medical Systems. From 1992 to 1997 he was General
Manager of Elscint MR, Inc., a subsidiary of Elscint Ltd. He held
engineering and program management positions with Picker International from
1981 to 1992.
JONATHAN KAGAN, AGE 42. Mr. Kagan has served as President of Novel
Biomedical, Inc. ("Novel"), a subsidiary of the Company, since 1986. The
Company acquired Novel in February 1997. Novel designs and manufactures
unique disposable medical devices, primarily catheters used in angioplasty,
minimally invasive surgery, electrophysiology, and infertility treatment.
JOHN M. TURNER, PH.D., AGE 45. Mr. Turner has served as President of
the RELA Division of the Company since August 1997. From 1991 to August
1997, Mr. Turner was Vice President-Technology of Baxter Healthcare IV
Systems, a division of Baxter International, Inc. ("Baxter") involved in the
development and manufacture of medical products for the hospital, pain
therapy and home care markets. From April 1996 to August 1997, Mr. Turner
was Acting General Manager of Medication Delivery Devices after its
acquisition by Baxter. Prior to Baxter, Dr. Turner had a successful career in
three high technology, start-up companies and in academics.
LOCKETT E. WOOD, PH.D., AGE 58. Dr. Wood has served as a director of
the Company since its inception in 1977 through 1993. Dr. Wood also served
as President from the Company's inception through April 1986, at which time
he became Chairman of the Board of Directors, serving in that capacity
through September 1987. Dr. Wood again became President from April 1991
until October 1992, at which time he was appointed President of the former
Cybermedic Division of the Company. Prior to founding the Company, Dr. Wood
was with the National Bureau of Standards of the U.S. Department of Commerce
for 14 years.
The Chief Executive Officer is appointed by the Board of Directors and
serves at the Board's discretion. The Board of Directors, and such other
officers as the Board of Directors may authorize from time to time, may
appoint as additional officers one or more vice presidents, assistant
secretaries, assistant treasurers, and such other subordinate officers as the
Board of Directors or such other appointing officers deem necessary or
appropriate. The Chief Executive Officer shall have the right to reject the
appointment of any other officer appointed by the Board of Directors. If an
additional officer is appointed by an appointing officer, such additional
officer serves at the discretion of the appointing officer and the Board of
Directors.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the cash
compensation earned for the fiscal years ended June 30, 1998, 1997 and 1996
by the Company's Chief Executive Officer and by the highest compensated
executive officers who were serving as executive officers at the end of the
1998 fiscal year whose individual total cash compensation for the 1998 fiscal
year exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
--------------------- -----------------------
Securities
Restricted Underlying
Stock Options/ All Other
Name and Principal Salary Bonus Awards SARS Compensation(2)
Position(1) Year ($) ($) ($) (#) ($)
- --------------------- ---- ------ ----- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
John V. Atanasoff II 1998 $170,000 $81,396 -0- -0- $5,231
Chief Executive Officer, 1997 145,000 70,563 -0- -0- 4,977
President and Chairman 1996 140,000 45,006 -0- 560,000 4,828
John M. Turner(3) 1998 123,750 77,356 -0- 250,000 -0-
President-RELA
Bruce L. Arfmann 1998 122,000 60,848 -0- 25,000 4,476
Senior Vice President 1997 110,000 60,306 -0- 25,000 4,222
Chief Financial Officer 1996 105,000 46,029 -0- 100,000 3,265
Lockett E. Wood 1998 95,800 35,039 -0- 60,000 4,028
Vice President 1997 95,800 44,260 -0- 12,000 3,553
1996 93,488 30,054 -0- -0- 2,723
Jonathan Kagan(4) 1998 86,912 24,770 -0- -0- 1,596
President-Novel 1997 42,500 37,463 -0- 100,000 665
Biomedical, Inc.
</TABLE>
- -----------------
(1) G. Neil Holland became President of the Erbtec Engineering division of the
Company in June 1998. His current base salary is $125,000.
(2) Contributions to 401(k) Plan and payments of life insurance premiums on
behalf of the Named Executive Officers.
(3) John M. Turner, Ph.D. became President of the RELA division of the Company
in August 1997. His current base salary is $142,000.
(4) Mr. Kagan has served as President of Novel Biomedical, Inc. since 1986.
The Company acquired Novel in February 1997.
-10-
<PAGE>
The following table presents information concerning individual grants of
options to purchase Common Stock of the Company made during the fiscal year
ended June 30, 1998 to each of the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options/SARs Exercise
Underlying Granted to or
Options/SARs Employees Base Price Grant Date
Name Granted (#) in Fiscal Year ($/Sh.) Expiration Date Value ($)(4)
---- ------------ ---------------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C>
John V. Atanasoff II -0- -0- N/A N/A N/A
John M. Turner 250,000(1) 28.6% $5.47 8/4/02 $677,500
Bruce L. Arfmann 25,000(2) 2.9% 6.41 11/21/02 97,500
Lockett E. Wood 10,000(2) 1.1% 6.41 11/21/02 39,000
50,000(3) 5.8% 8.00 2/13/04 239,500
Jonathan Kagan -0- -0- N/A N/A N/A
</TABLE>
- -------------
(1) Options vests one-sixth in each of February and August, 1998, and one-third
each year commencing August 4, 1999.
(2) Options vest equally one-fourth each year commencing November 21, 1998.
(3) Options vest equally one-fifth each year commencing February 13, 1998 with
earlier vesting in December 1998 and June 1999 should certain performance
criteria be met.
(4) Discounted present value of the option grant calculated on the date of
grant using the Black-Scholes option pricing model. The following
assumptions were used in such model:
- expected volatility of the common stock -- 67.4% (based upon the closing
market price at the end of each month since October 1992);
- risk-free rate of return -- 5.84%;
- dividend yield -- 0%; and
- time of exercise/average adjusted lives -- 3.5 years (assumes options
will be exercised upon becoming fully vested).
-11-
<PAGE>
The following table sets forth information concerning the number and value
of options exercised during the fiscal year ended June 30, 1998 and the year-end
value of unexercised options to purchase Common Stock of the Company for each
Named Executive Officer.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)(1)
----------------------------- -----------------------------
Shares
Acquired on Value Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John V. Atanasoff II 80,000 $440,000 650,000 360,000 $4,578,100 $2,031,000
John M. Turner -0- -0- 41,666 208,334 126,248 631,252
Bruce L. Arfmann 58,835 310,812 15,000 75,001 108,750 352,923
Lockett E. Wood -0- -0- 4,000 68,000 21,880 89,660
Johnathan Kagan -0- -0- 56,130 143,870 309,259 791,741
</TABLE>
- ---------------
(1) Based upon the difference between the fair market value of Company Common
Stock on June 30, 1998 and the exercise price. The fair market value of Company
Common Stock at June 30, 1998 was $8.50 per share, the closing price of Common
Stock on such date.
DIRECTOR COMPENSATION
Directors of the Company who are not also employees of the Company are
reimbursed all out-of-pocket expenses incurred in attending each meeting or
committee meeting of the Board of Directors. In consideration of their
service as directors, non-employee directors receive warrants periodically to
purchase Common Stock of the Company, which warrants generally vest 15,000
shares per year, subject to continued service on the Board, and have an
exercise price equal to the fair market value of the Common Stock on the date
of grant. In November 1997, non-employee directors Michael Barr, Dean
Leffingwell, Clifford Mezey, Robert Sullivan, John Wolfe and Ira Langenthal
were granted warrants to purchase an aggregate of 90,000 shares of Common
Stock at $6.41 per share. These warrants vest in November 1998. In August
1998, non-employee directors Michael Barr, Dean Leffingwell, Clifford Mezey,
Robert Sullivan, John Wolfe and Ira Langenthal were granted warrants to
purchase an aggregate of 180,000 shares of Common Stock at $7.00 per share.
These warrants vest one-half in June 1999, and one-half in June 2000. All
director warrants have a five-year term from their grant date. In the
aggregate, director warrants to purchase 465,000 shares of Common Stock are
outstanding, and of such amount, warrants to purchase 30,000 shares expire in
November 1998, warrants to purchase 150,000 shares expire in June 2000,
warrants to purchase 15,000 shares expire in November 2001, warrants to
purchase 90,000 shares expire in November 2002 and warrants to purchase
180,000 shares expire in November 2003.
-12-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of
directors Clifford W. Mezey, Robert L. Sullivan and John V. Atanasoff II.
Mr. Atanasoff is Chief Executive Officer and President of the Company.
The Compensation Committee Report on Executive Compensation and the Stock
Performance Graph which follows shall not be deemed to be soliciting material
or to be filed with or incorporated by reference into any filing by the
Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates such
report or graph by reference.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report has been submitted by the Compensation Committee of
the Board of Directors:
The Compensation Committee of the Board of Directors and the Company's
Chief Executive Officer have furnished the following joint report on
executive compensation. The Company's executive compensation is determined
by the Compensation Committee, which is comprised of two non-employee members
of the Board of Directors and the Company's Chief Executive Officer. Messrs.
Mezey, Sullivan and Atanasoff are members of the Compensation Committee.
The Company's executive compensation program is based on the philosophy
that compensation of executive officers should be directly and materially
linked to the operating performance of the Company, to the interests of
shareholders and to the competitive marketplace. In implementing this
philosophy, the Company's policies integrate annual base compensation with
cash bonuses and incentive stock option awards based upon the Company's
overall performance. Annual cash compensation, together with incentive cash
bonus compensation and grants of stock options, is designed to attract and
retain qualified executives and to ensure that such executives have a
continuing stake in the long-term success of the Company.
With respect to compensation for Mr. Atanasoff, the Company's Chief
Executive Officer, in 1993 the Board of Directors approved an arrangement
intended to provide Mr. Atanasoff with the opportunity to own approximately
5-10% of the Company's outstanding shares. The arrangement included the
issuance of 300,000 incentive stock options which vested over a three-year
period at 100,000 shares per year, which are exercisable for five years after
the date each portion has vested. In 1995 and 1996, the Board of Directors,
as a result of excellent Company performance, granted Mr. Atanasoff a total
of 560,000 additional incentive stock options. These options vest at 100,000
shares per year for the first 300,000 shares and the remaining 260,000 shares
vest after seven years; however, the 260,000 shares may vest earlier if the
Company achieves certain targeted stock prices in September 2000. The
Compensation Committee believes that these arrangements provide assurance
that Mr. Atanasoff's personal financial interests and financial commitments
are aligned with the interests of all shareholders.
The Compensation Committee has increased Mr. Atanasoff's annual
compensation on two occasions in recognition of the Company's continued
improvements in overall performance, including substantial increases in
revenues, profitability and number of employees and the achievement of key
strategic initiatives and related measurements of growth. In addition, the
Compensation Committee has authorized cash bonuses for Mr. Atanasoff in
recognition of Mr. Atanasoff's achievements and leadership of the Company.
-13-
<PAGE>
Compensation for executive officers is a combination of base salary,
incentive bonus and stock option grants. With respect to Mr. Atanasoff and
the other executive officers, the Compensation Committee evaluates their
compensation based on the level of job responsibility, the individual's level
of performance and Company performance. The Committee also takes into
consideration the value of the job in the marketplace. The Compensation
Committee has not used compensation consultants but has relied on
compensation surveys in comparable industries and publicly available
information for other public companies of comparable size. A significant
portion of executive officer compensation is comprised of incentive bonus and
stock option grants. The size of incentive bonus for each executive is tied
in part to each executive's performance and the extent to which the Company
and each executive meet revenue and net income goals. To retain its highly
skilled executive officers, the Compensation Committee expects to place
increasing emphasis on incentive compensation and to set base salaries near
the median for comparable companies.
Members of the Compensation Committee
Clifford W. Mezey, Chairman
Robert L. Sullivan, Director
and by John V. Atanasoff, II, Director
and Chief Executive Officer
-14-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return for
the period June 30, 1993 to June 30, 1998 between the Company's common stock,
the Russell 2000 Stock Index and a self-determined Peer Group Composite Index
selected by the Company. Returns are based on a $100 investment on June 30,
1993 and are calculated assuming reinvestment of dividends during the period
presented. The Company has not paid any dividends.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Total Stockholder Return Analysis
for the Period June 30, 1993 to
June 30, 1998 JUN-93 JUN-94 JUN-95 JUN-96 JUN-97 JUN-98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Colorado MEDtech, Inc. 100.00 123.08 130.77 246.15 482.05 697.44
- ----------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 102.97 121.55 148.54 169.86 196.01
- ----------------------------------------------------------------------------------------------
Peer Group Composite 100.00 100.31 141.87 188.09 252.77 294.87
- ----------------------------------------------------------------------------------------------
</TABLE>
The members of the self-selected peer group are: Analogic Corporation,
ACT Manufacturing, Inc., Altron, Inc., Applied Science and Technology, Inc.,
Benchmark Electronics, Inc., Flextronics International LTD, Plexus
Corporation, SeaMED Corporation and Zevex International, Inc. In selecting a
peer group, the Company sought similar-sized companies with a mix of
outsourcing services and proprietary products. While the Company is
primarily a medical device outsourcing company, a significant portion of its
business is the manufacture of proprietary medical products, principally MRI
accessories. This unique combination of outsourcing services and proprietary
products made the selection of a peer group difficult. Certain of the Peer
Group Composite companies produce competing medical products and others
provide similar outsourcing or contract manufacturing services, but none of
the peer group companies provide a combination of outsourcing services and
proprietary products directly comparable to those of the Company. Such
-15-
<PAGE>
differences may limit the comparability of the performance between the
Company's stock and the Peer Group Composite.
The returns of each component issuer of the Peer Group Composite index
are weighted according to the respective issuer's stock market capitalization
at the beginning of each period for which a return is indicated. The Russell
2000 Stock Index is an index of U.S. small company stocks. Returns for the
following companies in the Peer Group Composite index are only for the
periods following their initial public offerings: ACT Manufacturing (IPO -
March 30, 1995); Applied Science and Technology, Inc. (IPO - November 10,
1993); Flextronics International LTD (IPO - March 31, 1994; SeaMED
Corporation (IPO - November 19, 1996). To construct the index, the Frank
Russell Company first constructs the Russell 3000 index by selecting the
3,000 largest companies headquartered in the United States. The 1,000 largest
stocks become the Russell 1000 and the remaining stocks become the Russell
2000 index.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In June 1993, the Company entered into an employment agreement with John
V. Atanasoff II, Chief Executive Officer of the Company, which has a
three-year term. The Company and Mr. Atanasoff amended the employment
agreement in November 1995 and May 1996 to extend the term through June 2002.
As of July 1, 1998, Mr. Atanasoff's compensation pursuant to the agreement
is $200,000. The agreement also provides for incentive compensation in the
form of an annual bonus, calculated as a percentage of annual salary, which
is based on the overall profitability of the Company. In connection with and
as a condition of the employment agreement, Mr. Atanasoff executed a
noncompetition agreement in which he agreed not to engage in competitive
activities for a period of two years after his employment with the Company is
terminated, whether voluntarily or involuntarily. The Company also agreed to
grant a nonqualified stock option to purchase up to 300,000 shares of the
Company's common stock at a purchase price of $1.25 per share. In April
1994, the nonqualified option was converted to an incentive stock option
under identical price, terms and conditions. The option vested 100,000
shares per year over three years and became fully exercisable in June 1996.
In consideration for and at the time of the November 1995 extension of the
employment agreement, the Company granted Mr. Atanasoff an incentive stock
option to purchase up to 300,000 shares of the Company's Common Stock at a
purchase price of $1.84 per share (the "300,000 Share Option"). The 300,000
Share Option vests in 100,000 share increments per year over three years. On
May 31, 1996, pursuant to the extended employment agreement, the Company
granted Mr. Atanasoff an incentive stock option to purchase 260,000 shares of
Common Stock at a purchase price of $3.25 per share (the "260,000 Share
Option"; and with the 300,000 Share Option, the "Options"). The 260,000
Share Option vests in June 2002, subject to earlier vesting if the Company
achieves certain stock prices by September 2000. If the Company terminates
the employment of Mr. Atanasoff at any time prior to June 2002, no vesting of
the Options shall occur after the date of termination, but if Mr. Atanasoff
is terminated for a reason other than cause, Mr. Atanasoff will be entitled
to receive a severance payment amounting to all compensation remaining under
the agreement; however, such payment shall not be less than one year's base
salary if termination occurs after June 21, 2001. The agreement provides for
severance pay equal to two years' base salary if termination at any time is
the result of a change in Company ownership greater than 30%. If Mr.
Atanasoff terminates his employment prior to June 1999, no further vesting of
the Options shall occur, and the unexercised portion of the Options, whether
or not vested, shall terminate. Subject to these restrictions, each portion
of the vested Options shall be exercisable for five years after the date such
portion has vested.
In February 1994, the Company entered into employment agreements with
two of the Company's other officers, which fixes Mr. Arfmann's and Mr. Wood's
compensation (at July 1, 1998: $130,000 for Mr.
-16-
<PAGE>
Arfmann and $100,000 for Mr. Wood). The agreements provide for a severance
payment equal to one year's salary if the officer's employment is terminated
as a result of loss of officer status, relocation of the Company or for
reasons other than cause. The agreements provide for a severance payment
equal to two years' salary if within two years from the closing date of an
acquisition of the Company, the officer is terminated without cause. The
agreement has no fixed term and may be terminated by either party at any
time.
In February 1997, the Company entered into an employment agreement with
Jonathan Kagan, President of Novel Biomedical, Inc., a subsidiary of the
Company. The agreement is for a term ending December 31, 2001. Mr. Kagan's
annual compensation pursuant to the agreement is currently $91,000. Pursuant
to the agreement, the Company granted Mr. Kagan an incentive stock option to
acquire 100,000 shares of Common Stock at an exercise price of $3.02, the
fair market value of the Common Stock on the date of grant. The option may
vest annually if certain performance targets are achieved during such years,
as follows: up to 10,000 shares on June 30, 1997, and up to an additional
30,000 shares on each of June 30, 1998, 1999 and 2000. To the extent options
do not vest pursuant to such schedule upon meeting the performance targets,
all unvested options will become vested on June 30, 2001, subject to
continued employment with the Company. The agreement provides for a
severance payment equal to one year's salary if Mr. Kagan's employment is
terminated for a reason other than cause. In connection with the employment
agreement Mr. Kagan entered into a Non-Competition Agreement, which prohibits
certain activities during the term of his employment and for a period of two
years after termination of employment if termination is for cause, and for
one year if termination is for any other reason. In the non-competition
agreement, Mr. Kagan agreed not to become involved with any company which
competes with any business engaged in by the Company or any subsidiary of the
Company in the field of contract development or OEM manufacturing of medical
devices for diagnostics or therapeutics on which Mr. Kagan worked during the
term of his employment with the Company, and agreed not to compete with the
Company in relation to any product or device the Company is actively pursuing
at the time of his termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; LEGAL PROCEEDINGS
On October 1, 1997, the Company completed the acquisition (the "Erbtec
Acquisition") of substantially all of the assets of Erbtec Engineering, Inc.
("Erbtec") pursuant to an Asset Purchase Agreement dated October 1, 1997 (the
"Agreement"). Pursuant to the Agreement, Erbtec sold substantially all of
its assets to the Company for cash consideration in the amount of $3,850,000,
additional cash consideration in the amount of $1,500,000 to be held in
escrow, and 88,708 shares of Common Stock of the Company. The number of
shares of Common Stock issued by the Company was determined based upon a
share value of $5.64, the average closing price, reported by Nasdaq, of the
Company's Common Stock over the thirty (30) days prior to July 28, 1997. Of
the $1,500,000 escrow referred to above, $1,000,000 was related to the
performance of certain development and new business development criteria
outlined in the Agreement. In June 1998, the Company was notified that
certain of the criteria would not be met and the seller has agreed to refund
$750,000 of the escrowed purchase price. Prior to the Erbtec Acquisition, Lee
Erb, Vice President--Technology of the Company, was President and the sole
shareholder of Erbtec.
During the fiscal year ended June 30, 1994, the Company sold 1,500,000
shares of Common Stock to a wholly-owned subsidiary of Vencor, Inc.
("Vencor"), in two private placement transactions involving the sale of
500,000 and 1,000,000 shares, respectively. Pursuant to an Agreement to
Purchase and Sell Stock between the Company and Vencor dated December 3, 1993
(the "Purchase Agreement"), the Company agreed to take steps necessary to
elect a representative of Vencor to the Company's Board of Directors and to
use its best efforts to obtain such election for so long as Vencor owns at
least 500,000 shares of the common stock of the Company. In the second
private placement transaction, the Company issued to Vencor
-17-
<PAGE>
warrants to purchase 2,000,000 shares of Company Common Stock. In May 1997,
Vencor exercised all of the warrants and acquired 2,000,000 shares of Company
Common Stock. In connection with the second sale of stock to Vencor, the
Company entered into a Standstill Agreement with Vencor dated June 30, 1994
pursuant to which Vencor will not acquire more than 40% of the Company's
common stock for a period of five years. In addition, the Company agreed to
take steps necessary to elect an additional representative of Vencor to the
Company's Board of Directors and, for so long as Vencor owns at least
1,500,000 shares of the common stock of the Company, to use its best efforts
to obtain the election of two Vencor representatives (including the Vencor
representative provided for in the Purchase Agreement). Vencor waived its
right to a second board seat for the 1995 - 1999 fiscal years. In June 1994,
the Company entered into a product development agreement with Vencor, which
provides for the Company to expend $800,000 over a two-year period to develop
mutually agreed upon products that Vencor will purchase exclusively from the
Company, while the Company will be unrestricted in its rights to sell the
products. The Company had sales to Vencor of approximately $67,000 and
$1,473,000 in 1998 and 1997, respectively. As of June 30, 1998, the Company
had an accounts receivable balance of $-0- related to these sales. Michael
R. Barr, a director of the Company, is a former director of Vencor and has
announced his resignation as Executive Vice President and Chief Operating
Officer of Vencor effective October 31, 1998.
Vencor has announced its intention to sell all shares of the Company's
Common Stock it owns to selected institutional investors, and the Company has
filed a registration statement on Form S-3 with the Securities and Exchange
Commission to facilitate such sale. If such sale results in Vencor holding
fewer than 500,000 shares of Common Stock at the annual meeting, Vencor will
no longer have a representative on the Company's Board of Directors. See
"Security Ownership of Certain Beneficial Owners and Management" above.
SHAREHOLDER PROPOSALS
Any proposals from shareholders to be presented for consideration for
inclusion in the proxy material in connection with the 1999 annual meeting of
shareholders of the Company must be submitted in accordance with the rules of
the Securities and Exchange Commission and received by the Secretary of the
Company at the Company's principal executive offices no later than the close
of business on June 17, 1999. In connection with shareholder proposals that
are not presented for inclusion in the proxy materials, proxies solicited in
connection with the 1999 annual meeting may confer discretionary voting
authority on Company management with respect to certain types of shareholder
proposals unless the proposing shareholder notifies the Company at least 45
days prior to the date of mailing the prior year's proxy that such proposal
will be made at the meeting. The deadline for such notices in connection
with the Company's 1999 annual meeting of shareholders is August 31, 1999.
OTHER MATTERS
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers
of the Company and their relationship and transactions with the Company is
based upon information received from the individual directors and officers.
All information relating to any beneficial owner of more than 5% of the
Company's Common Stock is based upon information contained in reports filed
by such owner with the Securities and Exchange Commission.
The Company's independent public accountants for the fiscal years 1996,
1997 and 1998 are Arthur Andersen LLP. Representatives of such firm are
expected to be present at the annual meeting, will have the
-18-
<PAGE>
opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
The Annual Report to Shareholders of the Company for the fiscal year
ended June 30, 1998, which includes financial statements and accompanies this
Proxy Statement, does not form any part of the material for the solicitation
of proxies.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, FOR THE FISCAL YEAR ENDED JUNE
30, 1998 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TO ANY SHAREHOLDER
(INCLUDING ANY BENEFICIAL OWNER) UPON WRITTEN REQUEST TO BRUCE L. ARFMANN,
CHIEF FINANCIAL OFFICER, 6175 LONGBOW DRIVE, BOULDER, COLORADO 80301. A COPY
OF THE EXHIBITS TO SUCH REPORT WILL BE FURNISHED TO ANY SHAREHOLDER UPON
WRITTEN REQUEST THEREFOR AND PAYMENT OF A NOMINAL FEE.
-19-
<PAGE>
COLORADO MEDTECH, INC. PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 20, 1998
The undersigned hereby constitutes, appoints, and authorizes John V.
Atanasoff II and Bruce L. Arfmann, and each of them, as the true and lawful
attorney and Proxy of the undersigned, with full power of substitution and
appointment, for and in the name, place and stead of the undersigned to act for
and vote as designated below, all of the undersigned's shares of the no par
value Common Stock of Colorado MEDtech, Inc., a Colorado corporation, at the
Annual Meeting of the Shareholders to be held November 20, 1998, at Hotel
Boulderado, 2115 13th Street, Boulder, Colorado, at 3:00 p.m., and at any and
all adjournments thereof, with respect to the matters set forth below and
described in the Notice of Annual Meeting dated October 16, 1998, receipt of
which is hereby acknowledged.
1. Approval of the election of each of the seven nominees named herein for the
office of director to serve until the next Annual Meeting of Shareholders or
until their respective successors are elected and qualified.
For all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY to vote for all listed below / /
BELOW) / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
F. Anastasio, J. Atanasoff II, I. Langenthal, D. Leffingwell, C. Mezey, R.
Sullivan, and J. Wolfe
2. The Proxy is authorized to vote upon any other business as may properly come
before the Annual Meeting or any adjournments thereof.
________________________________________________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COLORADO MEDTECH,
INC.
PLEASE SIGN AND RETURN THIS PROXY USING THE ENCLOSED PRE-PAID ENVELOPE.
THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING.
<PAGE>
The undersigned hereby revokes any Proxies as to said shares heretofore
given by the undersigned, and ratifies and confirms all that said attorney and
Proxy may lawfully do by virtue hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN
RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
<TABLE>
<S> <C>
DATED: ------------------------------ , 1998 ----------------------------------------------
Signature(s) of Shareholder(s)
----------------------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s)
shown hereon. Executors, administrators,
trustees, guardians and attorneys should
indicate their capacity when signing. Attorneys
should submit powers of attorney. When shares
are held by joint tenants, both should sign. If
a corporation, please sign in full corporate
name by President or other authorized officer.
If a partnership, please sign in partnership
name by authorized person.
</TABLE>
