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
EDITEK, 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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;1
4) Proposed maximum aggregate value of transaction:
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ X ] 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>
EDITEK, INC.
1238 Anthony Road
Burlington, North Carolina 27215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 8, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders
("Annual Meeting") of EDITEK, INC., a Delaware corporation (the "Company"), will
be held at the Sheraton Minneapolis Metrodome, located at 1330 Industrial Blvd.,
Minneapolis, Minnesota on Thursday, May 8, 1997 at 10:00 a.m. (CST) for the
following purposes:
1. To elect six directors to serve on the Board of Directors of the
Company (the "Board of Directors") for the ensuing year; and
2. To consider and act upon a proposal to ratify and approve an
amendment to Article FIRST of the Company's Certificate of Incorporation
to change the name of the Company from EDITEK, Inc. to MEDTOX Scientific,
Inc.; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Bylaws of the Company, the
Board of Directors has fixed the close of business on March 19, 1997 as the
record date for the determination of the holders of the shares of Common Stock
entitled to notice of, and to vote at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Stockholders are requested to date, sign and mail the enclosed Proxy as
promptly as possible, whether or not they expect to attend the meeting in
person.
By Order of the Board of Directors,
Harry G. McCoy
Chairman of the Board and President
Burlington, North Carolina
March 31, 1997
<PAGE>
EDITEK, INC.
1238 Anthony Road
Burlington, North Carolina 27215
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 8, 1997
PROXIES
The enclosed proxy (the "Proxy") is solicited by and on behalf of the
Board of Directors of EDITEK, INC., a Delaware corporation (the "Company"), for
use at the Company's 1996 annual meeting of stockholders (the "Annual Meeting")
and at any and all adjournments thereof. Any stockholder has the power to revoke
his or her Proxy at any time before it is voted. A Proxy may be revoked (1) by
delivery of written notice of revocation to the Secretary of the Company at its
principal office, 1238 Anthony Road, Burlington, North Carolina 27215, (2) by
the execution of a subsequent Proxy and presentment of such subsequent Proxy at
the Annual Meeting or (3) by attendance at the Annual Meeting and voting in
person. This solicitation is being made by use of the mails and the cost thereof
will be borne by the Company. Shares represented by valid Proxies will be voted
in accordance with the instructions indicated thereon. Unless otherwise
directed, votes will be cast FOR the election of the directors named, and FOR
Proposal 2 concerning the Amendment to the Company's Certificate of
Incorporation changing the name of the corporation.
The costs of solicitation of proxies will be borne by the Company. In
addition to use of mails, proxies may be solicited personally, or by telephone
by one or more of the regular personnel of the Company without additional
compensation. The Company expects to pay an independent proxy solicitor
approximately $15,000 as compensation for the solicitation of proxies. In
addition, the Company may reimburse brokers and other custodians, nominees and
fiduciaries for their expenses for sending proxy material to beneficial owners,
in accordance with Securities and Exchange Commission regulations.
The Company anticipates mailing proxy materials and the annual report
for its fiscal year ended December 31, 1996 (the "Annual Report") to
stockholders of record as of March 19, 1997 (the "Stockholders") on or about
April 4, 1997.
<PAGE>
OUTSTANDING VOTING STOCK
Only holders of record of the Company's Common Stock, par value $.15
per share (the "Common Stock"), at the close of business on March 19, 1997, are
entitled to vote on matters to be presented at the Annual Meeting. Each share of
Common Stock is entitled to one vote with respect to all such matters. The
number of shares of Common Stock outstanding and entitled to vote at the close
of business on March 19, 1997 was 48,692,775.
VOTE AND QUORUM REQUIREMENTS
The presence in person or by Proxy of Stockholders of a majority of the
outstanding shares of Common Stock is required for there to exist the quorum
needed to transact business at the Annual Meeting. If, initially, a quorum
should not be present, the Annual Meeting may be adjourned from time to time
until a quorum is obtained.
A plurality of the votes cast is required to elect the Directors. The
affirmative vote of a majority of the outstanding shares of common stock is
required for approval of the proposed amendment to the Certificate of
Incorporation of the Company. In the election of Directors, any action that
other than a vote for a nominee will have the practical effect of voting against
the nominee. Abstentions and "broker non-votes" (as defined below) are counted
for purposes of determining whether a quorum is present, but do not represent
votes cast with respect to any proposal. "Broker non-votes" are shares held by a
broker or nominee for which an executed proxy is received by the Company, but
are not voted as to one or more proposals because instructions have not been
received from the beneficial owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power.
An independent party will receive and tabulate all proxies and ballots,
and such independent party and certain other team members of the Company will
act as voting inspectors at the Annual Meeting.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as
of March 15, 1997 regarding the beneficial ownership of the Common Stock by (i)
each person known by the Company to beneficially own more than Five Percent (5%)
of the outstanding Common Stock, (ii) each of the Directors and nominees for
Director of the Company, (iii) the Chief Executive Officer and all executive
officers whose compensation was $100,000 or greater during 1996, and (iv) all
executive officers, Directors and nominees for Directors of the Company as a
group:
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of Common
Name Beneficially Owned Stock Outstanding
<S> <C> <C>
Morgan Capital, L.L.C. 3,308,727 6.8%
Executive Officers and Directors:
Harry G. McCoy, Pharm. D.
Chairman and President 1,792,364 (1) 3.7%
Richard J. Braun
Chief Executive Officer and Director -0- *
Samuel C. Powell, Ph.D., Director 489,979 (2) 1.0%
David Bistricer, Director (3) -0- *
Alex Bistricer, Director (4) -0- *
Louis Perlman, Director 910,000 1.9%
James W. Hansen, Director 10,000 *
Miles E. Efron, Director -0- *
Peter J. Heath
Vice President-Finance, CFO and
Secretary 166,109 (5) *
Michael A. Terretti
Vice President 262,206 (6) *
James D. Skinner (7) -0- *
Carole A. Golden (8) -0- *
All Directors and Executive Officers
As A Group (10 in number) 3,630,658 (9) 7.4%
</TABLE>
* Less than one percent (1%)
(1) Includes 1,274,069 shares issued in connection with the acquisition of
MEDTOX with contractually provided price protection.
(2) Includes 18,334 shares of Common Stock issuable under stock options and
32,679 shares of Common Stock issuable under Common Stock Purchase
Warrants which are or will become exercisable within the next 60 days.
(3) Mr. Bistricer is an officer and principal member of Morgan Capital
L.L.C. which owns 3,308,727 shares of Common Stock. See "Certain
Relationships and Related Transactions." Mr. Bistricer is not
standing for reelection to the Board of Directors.
(4) Mr. Bistricer is an officer and principal member of Morgan Capital
L.L.C. which owns 3,308,727 shares of Common Stock. See "Certain
Relationships and Related Transactions." Mr. Bistricer is not
standing for reelection to the Board of Directors.
(5) Includes 149,918 shares of Common Stock issuable under options which
are or which will become exercisable within the next 60 days.
<PAGE>
(6) Includes 132,280 shares of Common Stock issuable under options which
are or will become exercisable within the next 60 days.
(7) Mr. Skinner resigned as President and Chief Executive Officer on July
3, 1996.
(8) Dr. Golden resigned as Vice President of Research and Development on
November 2, 1996.
(9) Includes 300,532 shares issuable under stock options and 32,679 shares
of Common Stock issuable under Common Stock Purchase Warrants which are
or will become exercisable within the next 60 days.
ELECTION OF DIRECTORS
The Certificate of Incorporation provides that the Board of Directors
shall consist of not less than three nor more than twelve individuals, with the
exact number to be fixed from time to time by the majority vote of the Board of
Directors. The Board of Directors has fixed the number of Directors at six
individuals.
The Board of Directors intends to present for action at the Annual
Meeting the election of Harry G. McCoy, Pharm.D., Samuel C. Powell, Ph.D.,
Richard J. Braun, Louis Perlman, James W. Hansen, and Miles E. Efron to serve
for the ensuing year and until their respective successors are duly elected and
qualified. Two of the Company's current Directors, Messrs. Alex Bistricer and
David Bistricer, have not been nominated by the Board of Directors for election
as Directors at the Annual Meeting. On January 31, 1997, the Company filed suit
against Messrs. Alex and David Bistricer and Morgan Capital LLC, an entity in
which they are principals, alleging violation of Section 16b of the Securities
Exchange Act of 1934 and seeking recovery of more than $500,000 in short swing
profits. Unless otherwise instructed, the enclosed Proxy will be voted FOR the
election of the nominees listed below, except that the persons designated as
proxies reserve full discretion to cast their votes for another person
recommended by the Board of Directors in the unanticipated event that any
nominee is unable or declines to serve.
Directors will be elected by the plurality vote of the holders of
Common Stock entitled to vote at the Annual Meeting and present in person or by
Proxy.
The following table sets forth the name, age and the position with the
Company of the nominees for Directors:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Since Position with the Company
<S> <C> <C> <C>
Harry G. McCoy 45 1996 Chairman of the Board of Directors,
President and Director
Samuel C. Powell, Ph.D. 44 1986 Director
Richard J. Braun 52 1996 Chief Executive Officer and Director
Louis Perlman 63 1996 Director
James W. Hansen 41 1996 Director
Miles E. Efron 70 1997 Director
</TABLE>
<PAGE>
Harry G. McCoy, Pharm.D., was elected Chairman of the Board of Directors
and President in July 1996 and has served as a Director since January 1996. Dr.
McCoy founded MEDTOX in 1984, and served as both Clinical Director and member of
the MEDTOX Board of Directors until its acquisition by the Company in January
1996. Dr. McCoy continued as President of MEDTOX following its acquisition by
the Company. Dr. McCoy also has academic appointments with the University of
Minnesota and the University of North Dakota, and is Chairman and CEO of the
Nova Jazz Corporation, a Minnesota non-profit company.
Samuel C. Powell, Ph.D., served as Chairman of the Board of Directors
from November 1987 to June 1994 and has served as a Director of the Company
since September 1986. Dr. Powell served as Chairman of the Board and Chief
Executive Officer of Granite Technological Enterprises, from January 1984 until
its acquisition by the Company in June 1986. Since 1987, he has been President
of Powell Enterprises, Burlington, North Carolina, offering financial and
management services to a variety of businesses and real estate ventures.
Additionally, Dr. Powell has been involved in local politics since 1985 as
Councilman for the City of Burlington, N.C. Dr. Powell has also been appointed
to serve on the North Carolina Board of Science and Technology from 1989 to
1995, and as a Board Member and Chairman of the N.C. State Alcoholism Research
Authority.
Richard J. Braun was named as a Director and elected as Chief Executive
Officer in July, 1996. From 1994 until joining the Company, Mr. Braun acted as a
private investor and provided management consulting services to the health care
and technology industries. From 1992 until 1994, Mr. Braun served as Chief
Operating Officer and as a Director of EBP, Inc., a NYSE company engaged in
managed care. From 1989 through 1991, Mr. Braun served as Executive Vice
President, Chief Operating Officer and Director of Reich and Tang L.P., a NYSE
investment advisory and broker dealer firm. Mr. Braun currently is a Director of
North Star Universal, a public company with investments in health care, and
computer connectivity, and networking as well as Chairman and a Director of RSI
Systems, Inc., a public company with proprietary technology in video
conferencing.
Louis Perlman was named as a Director in July, 1996. Since 1987, Mr.
Perlman has served as a director of Alliance National, Inc., an executive office
suite company. Mr. Perlman is also the President of Amsterdam Industries, a
company which markets women's apparel, a position he has held since 1973. Since
1980, Mr. Perlman has been Executive Vice President and Director of House of
Ronnie, a manufacturer of women's and children's apparel.
James W. Hansen was named as a Director in September, 1996. Mr. Hansen
has, since November 1996, been Acting President, CEO and Treasurer of Videolabs,
Inc., a NASDAQ traded, technology company. From 1986 to 1992, Mr. Hansen was
Senior Vice President and General Manager of the Pension Division of Washington
<PAGE>
Square Capital, a Reliastar company which is a NYSE traded financial services
company. Since 1992, Mr. Hansen has served as an Investor, Director, President
or Vice President of several private companies in medical services and
technology. He serves as a Director of Kinnard Investments, Inc., a publicly
traded company and has taught in the MBA program at the University of St. Thomas
since 1984.
Miles E. Efron was named as a Director in January, 1997. From 1988 to 1993,
Mr. Efron served as Chief Executive Officer of North Star Universal, a holding
company with interests in health care, food products and computer connectivity
and networking. Since 1993, Mr. Efron has served as Chairman of North Star
Universal. Mr. Efron currently serves on the Board of Directors of several
companies, none of which are related to the Company.
Other Executive Officers
Peter J. Heath was appointed Vice President - Finance and Chief Financial
Officer on April 29, 1991. Mr. Heath was appointed Secretary and Chief
Accounting Officer effective October 31, 1990. Mr. Heath has held the position
of Controller of the Company since July 1986. Mr. Heath was employed as
Controller and Office Manager of Granite from January 1984 until its acquisition
by the Company in June 1986.
Michael A. Terretti was appointed Vice President in October 1995. Mr.
Terretti also served as Vice President and General Manager of the Company's
Princeton Diagnostic Laboratories, Inc. subsidiary from the time he joined the
Company in March, 1994 until the Company's acquisition of MEDTOX in January
1996. From April 1990 until October 1993, Mr. Terretti was Vice President, Sales
and Marketing of Genetic Design, Inc., a genetic testing laboratory company.
From October 1993 until joining the Company in March 1994, Mr. Terretti served
as a consultant to the Company.
Compliance With Section 16(a) Of The Securities Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's directors and executive officers, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, file with the Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten- percent beneficial owners are required
by Commission regulations to furnish the Company with copies of all reports they
file under Section 16(a).
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the fiscal year ended December 31, 1996.
During the fiscal year ended December 31, 1996, the Board of Directors
held eleven meetings (including regularly scheduled, telephonic and special
<PAGE>
meetings). During that time, all members of the Board attended at least
Seventy-Five Percent (75%) of the meetings held subsequent to their appointment.
The Company has a stock option committee (the "Stock Option Committee")
which, by the terms of the Company's Stock Option Plans, is to consist of not
less than two members of the Board of Directors appointed by the Board of
Directors. During 1996, the Stock Option Committee was comprised of Samuel C.
Powell, Gene E. Lewis and Robert J. Beckman. Mr. Lewis and Mr. Beckman resigned
as directors of the Company on July 3, 1996. For the period from July 3, 1996
until February 7, 1997, the Stock Option Committee consisted of Dr. Powell,
Louis Perlman, Alex Bistricer, David Bistricer and James Hansen (the "Outside
Directors"). Effective February 7, 1997, the Stock Option Committee consists of
the members of the Compensation Committee. The Stock Option Committee determines
the terms of options granted, including, but not limited to, the exercise price,
the number of shares subject to the option and the terms and conditions of the
option. During the fiscal year ended December 31, 1996, the Stock Option
Committee met one time and all members of the committee attended at least
Seventy-Five Percent (75%) of the meetings held subsequent to their appointment.
The Company has an Audit Committee which during 1996 was comprised of
Samuel C. Powell, Gene E. Lewis and Robert J. Beckman. Mr. Lewis and Mr. Beckman
resigned as directors of the Company on July 3, 1996. The Audit Committee's
purpose is to meet with the firm's independent public auditors to discuss
relevant auditing questions. During the fiscal year ended December 31, 1996, the
Audit Committee held one meeting. The Audit Committee is currently comprised of
James W. Hansen, Miles E. Efron, and Louis Perlman.
The Company has a Compensation Committee which, through July 3, 1996, was
comprised of Samuel C. Powell, Gene E. Lewis and Robert J. Beckman. Mr. Lewis
and Mr. Beckman resigned as Directors of the Company on July 3, 1996. For the
balance of 1996, the Compensation Committee consisted of the Outside Directors.
The Compensation Committee's purpose is to determine the compensation of the
Executive Officers of the Corporation. During the fiscal year ended December 31,
1996, the Compensation Committee held one meeting. The Compensation Committee is
currently comprised of James W. Hansen, Miles E. Efron, and Samuel C. Powell.
The Company does not have a Nominating Committee.
The Board of Directors recommends that Stockholders vote FOR the
election of the nominees to the Board of Directors.
<PAGE>
EXECUTIVE COMPENSATION
The following table and the narrative text discuss the compensation
paid during 1996 and the two prior fiscal years to the Company's President and
Chief Executive Officer and to the other executive officers whose annual salary
and bonuses exceeded $100,000 during 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
Other
Name and Principal Annual Restricted Options/ LTIP All Other
Position Year Salary Bonus Compen- Stock SAR's Payouts Compen-
sation (1) Awards(2) (#) (2) sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harry G. McCoy 1996 $166,648 -- -- -- -- -- --
Chairman of the Board 1995 -- -- -- -- -- -- --
and President (3) 1994 -- -- -- -- -- -- --
James D. Skinner (5) 1996 $125,424 $50,000 -- -- 100,000 -- $174,191(6)
1995 $183,136 -- -- -- 25,000 -- $ 4,785
1994 $176,153 $20,000 -- -- 68,326 -- $ 4,285
Richard J. Braun 1996 $ 72,696 -- -- -- -- -- --
Chief Executive 1995 -- -- -- -- -- -- --
Officer(4) 1994 -- -- -- -- -- -- --
Carole A. Golden (7) 1996 $127,857 -- -- -- 0 -- $23,333
1995 $131,940 -- -- -- 15,000 -- --
1994 $124,034 -- -- -- 36,666 -- --
Peter J. Heath 1996 $113,677 $30,000 -- -- 75,000 -- $1,400
Vice President of 1995 $101,541 -- -- -- 17,660 -- --
Finance 1994 $ 91,610 -- -- -- 28,332 -- --
and Chief Financial
Officer
Michael A. Terretti 1996 $144,354 $25,000 -- -- 50,000 -- $4,200
Vice President of 1995 $132,952 -- -- -- 3,910 -- --
Sales and Marketing 1994 $ 90,321 -- -- -- 80,000 -- --
</TABLE>
(1) Other Annual Compensation for executive officers is not reported as it
is less than the required reporting threshold of the Securities and
Exchange Commission.
(2) Not applicable. No compensation of this type received.
(3) Dr. McCoy was appointed Chairman of the Board and President on
July 3, 1996.
(4) Mr. Braun was appointed Chief Executive Officer on July 25, 1996.
(5) Mr. Skinner resigned as Director, President and C.E.O. on July 3, 1996.
(6) Includes $5,325 of premiums paid for by the Company for a life insurance
policy on Mr. Skinner for the benefit of his named beneficiary. Mr. Skinner
<PAGE>
resigned as President and Chief Executive Officer on July 3, 1996. In connection
with his resignation and settlement of his employment contract, Mr. Skinner is
to receive $320,000 from the Company. $100,000 was paid to Mr. Skinner effective
with his resignation. The remaining $220,000 will be paid in equal monthly
installments through December, 1997.
(7) Dr. Golden resigned as Vice President of Research and Development on
November 2, 1996. As part of Dr. Golden's resignation agreement she is to
receive $81,667 payable over seven months. During 1996 Dr. Golden received
$23,333 pursuant to the resignation agreement.
Stock Options Granted During Fiscal Year
The following table sets forth information about the stock options
granted to the named executive officers of the Company during 1996.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
% of Total
Options
Number Granted to
of Employees Exercise
Options in Fiscal Price Expiration 5%($) 10%($)
Name Granted(3) Year(1) ($/Sh) Date (2) (2)
<S> <C> <C> <C> <C> <C> <C>
James D.
Skinner (4) 100,000 44% $2.81 10/03/96 14,049 29,099
Peter J.
Heath 75,000 33% $2.81 01/24/06 132,538 335,880
Michael A.
Terretti 50,000 23% $2.81 01/24/06 88,359 223,919
</TABLE>
(1) Options to acquire an aggregate of 225,000 shares of Common Stock of
the Company were granted to all employees during 1996. 13,300 options
to acquire Common Stock were granted to a non-employee director of the
Company during 1996. No stock appreciation rights were granted to the
named executive officers during 1996.
(2) The potential realizable value of the options reported above was
calculated by assuming 5% and 10% annual rates of appreciation of the
Common Stock of the Company from the date of grant of the options until
the expiration of the options. These assumed annual rates of
appreciation were used in compliance with the rules of the Securities
<PAGE>
and Exchange Commission and are not intended to forecast future price
appreciation of the Common Stock of the Company. The Company chose not
to report the present value of the options, which is an alternative
under Securities and Exchange Commission rules, because the Company
does not believe any formula will determine with reasonable accuracy a
present value based on unknown or volatile factors. The actual value
realized from the options could be substantially higher or lower than
the values reported above, depending upon the future appreciation or
depreciation of the Common Stock during the option period and the
timing of exercise of the options.
(3) Options were granted on January 24, 1996. The options granted to
Mr.Skinner, Mr. Heath, and Mr. Terretti, became vested and
exercisable any time after January 24, 1996.
(4) Mr. Skinner resigned as Director, C.E.O. and President on July 3,
1996. The options granted to Mr. Skinner were canceled effective
September 30, 1996.
Stock Options Exercised During Fiscal Year and Year-End Values of
Unexercised Options
The following table sets forth information about the stock options held
by the named executive officers of the Company at December 31, 1996.
<TABLE>
<CAPTION>
Number of
Shares Number of Unexercised Value of Unexercised In-the
Acquired Value Options at FY-End Money Options at FY-End
Name on Exercise Realized (1) Exercisable/Unexercisable Exercisable/Unexercisable (2)
----------- ------------ --------------------------- -----------------------------
<S> <C> <C> <C> <C>
James D. Skinner(3) 46,640 $34,543 0/0 $0/$0
Carole A. Golden(4) 27,467 $18,044 64,310/0 $0/$0
Peter J. Heath - - 145,856/14,130 $0/$0
Michael A. Terretti - - 124,966/8,944 $0/$0
</TABLE>
(1) Upon exercise of the option an option holder does not receive the amount
reported under the column Value Realized. The amounts reported above under the
column Value Realized merely reflect the amount by which the value of the Common
Stock of the Company on the date the option was exercised exceeded the exercise
price of the option. The option holder does not realize any cash until the
shares of Common Stock issued upon exercise of the options are sold.
(2) The closing price of the Common Stock of the Company at December 31, 1996
was $.63 per share.
(3) Mr. Skinner resigned as Director, C.E.O. and President on July 3, 1996.
(4) Dr. Golden resigned as Vice President Research & Development on November
2, 1996.
<PAGE>
Long-Term Incentive Plans and Pension Plans
The Company does not contribute to any Long-Term Incentive Plan or
Pension Plan for its executive officers as those terms are defined in the rules
of the Securities and Exchange Commission. The Company relies on its stock
option plans to provide long-term incentives for executive officers. The Company
has three stock option plans, a 1983 Stock Option Plan for employees which
expired on June 23, 1993, the Equity Compensation Plan which was adopted by the
shareholders of the annual meeting in 1993 to replace the 1983 Incentive Stock
Option Plan, and a 1991 Non-Employee Director's Plan for members of the Board of
Directors who are not employees of the Company.
Compensation of Directors
All directors are also reimbursed for expenses incurred in attending
Board of Directors meetings and participating in other activities. In addition,
through July 3, 1996, those Directors who were not employees of the Company
received $6,082 for their service as a Director. Those directors who served from
July 3, 1996 through December 31, 1996 will receive $500 per month for their
service as a director.
Employment Contracts
Harry G. McCoy, Chairman of the Board of Directors and President of the
Company, has an employment agreement with the Company covering the period ending
January 30, 1998, which by its term is extended thereafter in one-year
increments unless either the Company or Dr. McCoy provides written notice to the
other party at least ninety (90) days prior to the end of the original term or
each renewal period or unless the agreement is otherwise terminated due to
death, permanent disability, change in control of the Company or for "cause."
The employment agreement provides for an annual salary of at least $167,000 and
certain fringe benefits. If Dr. McCoy's employment with the Company terminates
during the term of the agreement and within twelve (12) months following a
change in control for any of the following reasons (a) involuntarily, other than
an involuntary termination on account of misconduct or, (b) voluntarily,
following: (i) any reduction in base salary; (ii) any material reduction in
health care or retirement benefits; (iii) any relocation to which Dr. McCoy has
not agreed to greater than thirty (30) miles; or (iv) any material reduction in
the level of responsibility, position, authorities or duties; or (c) voluntarily
if the Company or any successor of the Company either announces it will not
honor or cause the Company not to honor the terms of the agreement, Dr. McCoy
will be entitled to a Severance Award. The Severance Award consists of the
following (a) if terminated during the initial two (2) year period of the
agreement, a lump sum equal to (i) twenty-four (24) months' base salary; and
(ii) two (2) times the most recent annual bonus paid or payable and, if
terminated during a one year renewal period, a lump sum equal the twelve (12)
months' base salary; (b) reasonable expenses up to $10,000 incurred in the
pursuit of subsequent employment; (c) a lump sum payment of an amount equal to
the cost of employee-only coverage for a period of eighteen (18) months under
the group health plan maintained by or on behalf of the Company; (d) to the
extent an equity award is not fully vested and exercisable on the termination
<PAGE>
date on account of the relevant change in control, a lump sum payment in an
amount equal to the value lost under the equity award; and (e) a lump sum
payment equivalent on an after tax basis to the additional amount Dr. McCoy
would have had in his 401(k) plan account had he: (i) continued as an employee
of the Company for an additional twelve (12) months and (ii) retired at his
early retirement date.
The employment agreement contains a Covenant Not to Compete whereby for
a period to terminate on the later of (i) January 30, 1998 or (ii) twelve (12)
months after the termination of employment with the Company, Dr. McCoy agrees
that he will not, directly or indirectly, either (a) have any interest in (b)
enter the employment of, (c) act as agent, broker, or distributor for or advisor
or consultant to, or (d) provide information useful in conducting the business
of the Company to solicit customers or employees on behalf of the Company to any
person, firm, corporation or business entity which is engaged, or which Dr.
McCoy reasonably knows is undertaking to become engaged, in the United States in
the business of the Company or outside the United States if sales are solicited
from customers located in the United States.
Peter J. Heath, Vice President-Finance, Chief Financial Officer and
Secretary of the Company, has an employment agreement with the Company covering
the period ending January 30, 1998, which by its term is extended thereafter in
one-year increments unless either the Company or Mr. Heath provides written
notice to the other party at least ninety (90) days prior to the end of the
original term or each renewal period or unless the agreement is otherwise
terminated due to death, permanent disability, change in control of the Company
or for "cause." The employment agreement provides for an annual salary of at
least $110,000 and certain fringe benefits. If Mr. Heath's employment with the
Company terminates during the term of the agreement for any of the following
reasons (a) involuntarily, other than an involuntary termination on account of
misconduct or, (b) voluntarily, if within ninety (90) days after the effective
date of a change in control, he will be entitled to a Severance Award. The
Severance Award consists of a lump sum equal to the balance of the base salary
for the remaining term of the agreement (without any renewal) and an additional
lump sum equal to twelve (12) months' base salary.
One other key employee of the Company, Gary Hemphill, Ph.D., who was a
former employee of MEDTOX has an employment agreement comparable to Dr. McCoy's
agreement.
Compensation Committee and Decision Making
The compensation (other than stock options) of executive officers of the
Company for 1996 was determined by the Compensation Committee which through July
3, 1996 consisted of Gene E. Lewis, Samuel C. Powell, and Robert J. Beckman. Mr.
Lewis and Mr. Beckman resigned as directors of the Company on July 3, 1996. Mr.
James D. Skinner, who was the Chairman, President and Chief Executive Officer of
the Company through July 3, 1996, participated in deliberations of the
Compensation Committee concerning compensation for executive officers other than
himself, but Mr. Skinner was not a member of the Compensation Committee. (Mr.
Powell has also entered into certain transactions with the Company. See "Certain
Relationships and Related Transactions.") The Compensation Committee is
currently comprised of James W. Hansen, Miles E. Efron, and Samuel C. Powell.
<PAGE>
Stock options are awarded under the Company's Equity Compensation Plan and
Non-Employee Director Plan by a stock option committee consisting of the then
non-employee members of the Board of Directors: Samuel C. Powell, Gene E. Lewis,
and Robert J. Beckman through July 3, 1996. All non-employee directors were
eligible to receive stock options under the Company's 1991 Non-Employee Director
Plan, which is a formula plan in accordance with the requirements of Rule 16b-3
under the Securities Act of 1934, as amended.
The number of shares issuable pursuant to options granted under the
Non-Employee Stock Option Plan is determined by dividing the aggregate award of
$10,000 by the exercise price of the options, which was the fair market value of
the Company's Common Stock on the date of the award.
Report of the Compensation Committee on Executive Compensation
In General
The Committee has three primary goals for executive compensation at the
Company.
o Retaining good performers,
o Rewarding executives appropriately for performance, and
o Aligning executives' interests with those of stockholders.
Currently, executive pay consists of three elements that are designed
to meet those objectives:
o Base salary is paid based primarily on job responsibilities and
industry job comparison. The Committee believes that base salaries at
approximately industry averages are essential to retaining good
performers.
o Stock options, which allow executives to benefit when the market
price of the Company's stock increases.
o Bonuses to be paid upon the attainment of certain financial objectives
and individual circumstances when warranted.
Following is additional information regarding each of the above elements.
Base Salary
Base salary increases for executive officers have been modest and
consistent with job performance and increases in responsibility.
<PAGE>
Bonus
In 1996, certain executive officers received bonus payments associated
with the completion of the acquisition of MEDTOX.
Stock Options
In 1996 certain of the executive officers received incentive stock
options to purchase a total of 225,000 shares. The number of options granted to
the executive officers represented one hundred percent (100%) of the total
options granted in 1996 to all employees.
Summary
Currently, the Company's executive compensation program rewards the
following elements of performance.
o Individual performance is rewarded through continued employment with
the Company.
o Stock price performance is rewarded through increases in the value of
previously granted stock options.
The Committee believes that the current program has been effective in
rewarding executives appropriately for performance, retaining good performers,
and aligning executives' interests with those of stockholders. While the
Committee is satisfied with the current compensation system, it reserves the
right to make changes to the program as are necessary to continue to meet its
stated goals in future years.
Benefits also are offered to officers that are not based on
performance. Such benefits provide a safety net of protection in the event of
illness, disability, death, retirement, etc. Such a safety net is provided to
all full time employees of the Company.
Chief Executive Officer Pay
Amounts earned during 1996 by the Chief Executive Officer, James D.
Skinner, who resigned on July 3, 1996, are shown in the Summary Compensation
Table. Achievements by the Company during 1996 which were deemed material to the
Chief Executive Officer's compensation include the completion of the acquisition
of MEDTOX in January 1996. For the year ended December 31, 1996 the Compensation
Committee used, in its deliberations on executive compensation, these criteria
and other accomplishments.
Submitted by the Compensation Committee of the Company's Board of Directors
Samuel C. Powell
Gene E. Lewis (1)
Robert J. Beckman (1)
(1) Mr. Lewis and Mr. Beckman resigned as Directors of the Company on
July 3, 1996.
<PAGE>
Performance Graph.
The graph shown below is a line presentation comparing the Company's
cumulative five-year shareholder returns on an indexed basis with the S&P 500
Index and the S&P Health Care Index for the five-year period commencing on
December 31, 1991 and ending on December 31, 1996. The total return assumes that
dividends were reinvested quarterly and is based on a $100 investment on
December 31, 1991.
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
EDITEK, INC., S&P 500, S&P HEALTH CARE
(Performance results through 12/31/96
(Comparative chart appears here. The plot points are below.)
1991 1992 1993 1994 1995 1996
EDI $100.00 $214.11 $ 71.80 $76.92 $58.98 $12.82
S&P 500 $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
S&P HCare $100.00 $83.76 $76.73 $86.83 $136.92 $165.27
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in EDITEK common stock, S&P 500
Index, and S&P Health Care Index.
* Cumulative total return assumes reinvestment of dividends.
Source: Frank Russell Company
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lease Agreement with Dr. Samuel C. Powell
In July 1986, the Company executed a lease agreement with Dr. Powell
providing for a lease to the Company of approximately 16,743 square feet of
space at 1238 Anthony Road, Burlington, North Carolina. Since 1986, the Company
has expanded the space rented under the lease to approximately 33,000 square
feet. Upon the expiration of the original lease, the Company entered into a new
lease with Dr. Powell for the same space and at the same base rental rate for a
term of one year ending on May 31, 1990. Effective June 1, 1990, the Company has
been leasing the space on a month-to-month basis. The Company is currently
leasing space at a rate of approximately $10,000 per month. The Company intends
to negotiate a new lease with Dr. Powell in the near future. The Company holds
certain rights of first refusal to lease additional space in the building if it
becomes available (the building contains a total of 42,900 square feet). The
total rent paid by the Company to Dr. Powell during the fiscal year ended
December 31, 1996 was approximately $122,000. The Company believes the rent
amount paid to Dr. Powell is consistent with market rates.
Product Sales to Carolina Biological Supply Company
During 1996, the Company sold approximately $1,000 of Conventional
Biodiagnostic Products to Carolina Biological Supply Company ("CBSC"), a company
in which Dr. Powell owns a Six Percent (6%) interest and the remainder of which
is owned by Dr. Powell's brother, step-brother and their respective families.
All sales of Conventional Biodiagnostic Products to CBSC were on an
"arms-length" basis.
Loan to Mr. James D. Skinner
The provisions of non-qualified stock options granted to Mr. Skinner
provide that the Company will lend the funds necessary to exercise such stock
options. The loans for this purpose will not exceed a term of 36 months and will
bear interest at a rate equal to the prime lending rate of Wachovia Bank & Trust
Company, N.A. and will be secured by a pledge of the shares purchased with the
proceeds of the loan. During 1988, Mr. Skinner exercised non-qualified stock
options exercisable into 13,334 shares of Common Stock at an exercise price of
$7.50 per share. At Mr. Skinner's request, the Company loaned $100,000 to Mr.
Skinner to be used to exercise such options. The loan was secured solely by a
pledge of, and as recourse only with respect to, the shares of Common Stock
purchased with the proceeds of the loan. Effective May 3, 1990, the Company
modified the loan agreement with Mr. Skinner to defer interest payments on such
loan until the date upon which the principal comes due. During 1995 the Company
modified the loan agreement with Mr. Skinner to extend the maturity date of the
loan to September 10, 1996. The outstanding balance of such loan as of December
31, 1995, was $100,000, excluding accrued interest thereon. On July 3, 1996, the
Company accepted the resignation of Mr. Skinner from his positions with the
Company. As part of the agreement reached with Mr. Skinner, the Company forgave
the principle and interest due on the loan. In return, the Company received the
13,334 shares that were issued to Mr. Skinner.
<PAGE>
Morgan Capital, LLC
David Bistricer and Alex Bistricer, two current Directors of the
Company, are principal partners in Morgan Capital, LLC ("Morgan") an investment
company. Morgan currently owns 3,308,727 shares of Common Stock of the Company
which represents 6.8% of the issued and outstanding Common Stock of the Company
at March 15, 1997. Morgan received the Common Stock upon the conversion of
shares of the Company's Series A Preferred Stock which Morgan purchased in
January 1996.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY FROM EDITEK, INC. TO MEDTOX SCIENTIFIC, INC.
The Board of Directors has approved an amendment to the Company's
Certificate of Incorporation to change the name of the Company. The Company
adopted the name of EDITEK, Inc. in 1992 to better recognize that the Company's
technology could be applied to a wide variety of markets rather than a specific
market as the former name of the Company, Environmental Diagnostics, Inc. would
suggest. As a result of the acquisition of MEDTOX in January, 1996, the
operations and revenues generated from MEDTOX now constitute approximately 90%
of the Company's total revenues. Accordingly, the Board of Directors has chosen
the name MEDTOX Scientific, Inc. for the Company. The Board of Directors
believes that the MEDTOX name has associated with it an excellent reputation in
its industry and in the investment community as a result of the Company's
acquisition of MEDTOX.
Accordingly, the Board of Directors has proposed that article FIRST of
the Company's Certificate of Incorporation be amended to reflect the name of the
Company as MEDTOX Scientific, Inc.
The affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock entitled to vote at the Annual Meeting is required to
approve the amendment.
The Board of Directors recommends a vote FOR the proposed amendment to
the Certificate of Incorporation.
RELATIONSHIPS WITH AUDITORS
The firm of Ernst & Young, LLP independent accountants, has audited the
financial statements of the Company for the year ending December 31, 1996. Ernst
& Young has audited the Company since 1984. It is expected that representatives
of Ernst & Young will be present at the Annual Meeting. Such representatives
will have any opportunity to make a statement at the meeting if they desire and
are expected to be available to respond to appropriate questions.
<PAGE>
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual
Meeting other than those stated in the Proxy Statement. However, inasmuch as
matters of which management is not now aware may come before the meeting or any
adjournment thereof, the Proxies confer discretionary authority with respect to
acting thereon, and the persons named in such properly executed Proxies intend
to vote, act and consent in accordance with their best judgment with respect
thereto. Upon receipt of such Proxies (in the form enclosed) in time for voting,
the shares represented thereby will be voted as indicated thereon and in the
Proxy Statement.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal, relating to a proper subject, which a Stockholder may
intend to present for action at the 1997 Annual Meeting of Stockholders, and
which such Stockholder may wish to have included in the company's proxy
materials for such meeting, in accordance with the provisions of Rule 14a-8
promulgated under the Exchange Act, must be received in proper form by the
Company addressed to Mr. Richard J. Braun, Chief Executive Officer, and sent by
registered mail, return receipt requested, and received at the Company's
principal executive office at 1238 Anthony Road, Burlington, North Carolina
27215, not later than December 1, 1997.
By order of the Board of Directors,
HARRY G. McCOY
Chairman of the Board
and President
Burlington, North Carolina
March 31, 1997
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1996 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THE PROXY
STATEMENT IS SENT, UPON WRITTEN REQUEST TO THE SECRETARY, EDITEK, INC., 1238
ANTHONY ROAD, BURLINGTON, NORTH CAROLINA 27215.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at its Regional Offices located at 75
<PAGE>
Park Place, New York, New York 10007, and the John C. Kluczynski Federal
Building, 230 South Dearborn Street, Chicago, Illinois 60604. Copies of such
material can be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 upon request and
payment of the prescribed fees. The Commission maintains a web site that
contains reports, proxy and information statements, and other information
regarding issues that are filed electronically with the Commission. The address
of the web site is HTTP://WWW.SEC.GOV.
The Company's Common Stock is listed on the American Stock Exchange
(the "AMEX"), and reports, proxy statements and other information filed by the
Company can be inspected at such exchange.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, each of which was previously filed by the
Company with the Commission pursuant to Section 13 of the Exchange Act, are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Proxy Statement
and prior to the Annual Meeting of Shareholders to which this Proxy Statement
relates shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in any accompanying Proxy Statement Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement.
The Company will provide without charge to each person to whom a Proxy
Statement is delivered upon written or oral request of each person, a copy of
any documents incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the documents that this Proxy Statement) incorporates. Requests for such copies
should be directed to EDITEK, Inc., Attention: Secretary, 1238 Anthony Road,
Burlington, North Carolina 27215, (910) 226-6311.
<PAGE>
APPENDIX A
EDITEK, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1997
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of EDITEK, Inc. (the "Company") hereby
appoints Harry G. McCoy and Richard J. Braun, and each or either one of them,
the true and lawful attorneys, agents, and proxies of the undersigned with full
power of substitution for and in the name of the undersigned, to vote all the
shares of Common Stock of EDITEK, Inc. which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders of the Company to be held at the
Sheraton Minneapolis Metrodome, located at 1330 Industrial Blvd. Minneapolis,
Minnesota on or about Thursday, May 8, 1997, at 10:00 A..M., Central Time, and
at any and all adjournments thereof, with all the powers which the undersigned
would possess if personally present, for the following purposes:
(Continued and to be signed on the other side)
<PAGE>
Please mark your
votes as in this
example
For Withheld FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
Nominees: Harry G. McCoy, Samuel 2. The adoption of an Amendment
C. Powell, Richard J. Braun, to the Certificate of Incorporation
James W. Hansen, Louis as set forth in the Proxy Statement.
Perlman, and Miles E. Efron
3. Considering and acting upon any
1. Election of other matters which may properly
Directors come before the meeting or any
adjournment thereof.
For, except vote withheld from the following nominees:
[ ] Please check box if you intend to attend the meeting in person.
This Proxy will be voted for the choices specified. If no choice is specified
with respect to the election of Directors, this Proxy will be voted FOR the
election of the Directors listed. If no choice is specified for Proposal 2, this
Proxy will be voted FOR Proposal 2.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated March 31, 1997.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
SIGNATURE(S) Dated:______, 1997
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, guardian,
please give your full title as such.
