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 ss.240.14a-11(c) or ss.240.14a-12
QUANTECH LTD.
(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>
QUANTECH LTD.
1419 ENERGY PARK DRIVE
ST. PAUL, MINNESOTA 55108
TELEPHONE (612) 647-6370
FAX (612) 647-6369
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 1996
--------------------
TO THE SHAREHOLDERS OF QUANTECH LTD.
Please take notice that the Annual Meeting of Shareholders of Quantech Ltd.
(the "Meeting") will be held, pursuant to due call by the Board of Directors of
the Company, at the Minneapolis Hilton and Towers, 1001 Marquette Avenue,
Minneapolis, Minnesota on November 25, 1996, at 3:30 p.m., or at any adjournment
or adjournments thereof, for the purpose of considering and taking appropriate
action with respect to the following:
1. To elect one (1) director for a term of three years;
2. To adopt an amendment to the Articles of Incorporation to increase the
number of authorized shares; and
3. To transact any other business as may properly come before the Meeting
or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record on
October 23, 1996, will be entitled to vote at the Meeting or any adjournments
thereof.
A Proxy for the Meeting is enclosed herewith. You are requested to fill in
and sign the Proxy, which is solicited by the Board of Directors, and mail it
promptly in the enclosed envelope.
Saint Paul, Minnesota R.H. Joseph Shaw
October 28, 1996 Chief Executive Officer
<PAGE>
QUANTECH LTD.
1419 ENERGY PARK DRIVE
ST. PAUL, MINNESOTA 55108
TELEPHONE (612) 647-6370
FAX (612) 647-6369
--------------------
PROXY STATEMENT
--------------------
Annual Meeting of Shareholders - November 25, 1996
INFORMATION CONCERNING SOLICITATION OF VOTING
This Proxy Statement is furnished by the Board of Directors of Quantech
Ltd. (the "Company") in connection with the solicitation of proxies to be used
at the Annual Meeting of Shareholders (the "Meeting") of the Company to be held
on Monday, November 25, 1996, at 3:30 p.m. Central Time, at the Minneapolis
Hilton and Towers, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, and at
all adjournments thereof for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. ANY PROXY IN WHICH NO
DIRECTION IS SPECIFIED WILL BE VOTED IN FAVOR OF EACH OF THE MATTERS TO BE
CONSIDERED AND IN FAVOR OF THE DIRECTOR NOMINEE LISTED HEREIN. This Proxy
Statement and the accompanying Annual Report, Notice and Proxy are being mailed
to shareholders on or about October 28, 1996.
The close of business on October 23, 1996 has been fixed as the record date
for the determination of shareholders entitled to receive notice of, and to vote
at, the Meeting. At that date, the Company's outstanding voting securities
consisted of 47,080,759 shares of common stock, $.01 par value per share (the
"Common Stock"). On all matters which will come before the Meeting, each
shareholder or his proxy will be entitled to one vote for each share of Common
Stock of which such shareholder was the holder of record on the record date. The
aggregate number of votes cast by all shareholders present in person or by proxy
at the Meeting will be used to determine whether a motion is carried. Thus, an
abstention from voting on a matter by a shareholder, while included for purposes
of calculating a quorum for the Meeting, has no effect on the item on which the
shareholder abstained from voting. In addition, although broker "non-votes" will
be counted for purposes of attaining a quorum, they will have no effect on the
vote.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time prior to its use by: (I) delivering to the principal
office of the Company a written notice of revocation; or (II) filing with the
Company a duly executed Proxy bearing a later date.
The costs of this solicitation will be borne by the Company. The Company
will request brokerage houses and other nominees, custodians and fiduciaries to
forward soliciting material to beneficial owners of the Company's Common Stock.
The Company will reimburse brokerage firms and other persons representing
beneficial owners for their expenses in forwarding solicitation materials to
beneficial owners. Proxies are being solicited primarily by mail, but, in
addition, officers and regular employees of the Company may solicit proxies
personally, by telephone, by telegram or by special letter.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND EXECUTIVE MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 23, 1996: (I) by each of
the executive officers of the Company; (II) by each director and director
nominee; (III) by all directors and executive officers of the Company as a
group; and (IV) by each person known to the Company to be the beneficial owner
of more than 5% of the outstanding shares of the Company's Common Stock. Except
as otherwise indicated, each shareholder has sole voting and investment power
with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Number of Shares Percent of Shares
Officers and Directors(1) Beneficially Owned Beneficially Owned
- --------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Robert Case 83,334(2) 0.2%
Gregory G. Freitag 605,500(3) 1.3%
James G. Lyons 683,334(4) 1.4%
Robert R. McKiel 881,330(5) 1.8%
Richard W. Perkins 683,334(4) 1.4%
R. H. Joseph Shaw 1,335,855(6) 2.8%
Edward E. Strickland 683,334(4)(7) 1.4%
All directors and executive officers as a
group (7 persons) 4,956,021(8) 9.7%
5% Shareholder
- ---------------------------------------------
David S. Goldsteen, M.D. 3,025,056(9) 6.4%
</TABLE>
(1) The address of such person is 1419 Energy Park Drive, St. Paul,
Minnesota 55108.
(2) Includes options to purchase 83,334 shares that are currently
exercisable.
(3) Includes options to purchase 600,000 shares that are currently
exercisable or exercisable within 60 days of the record date.
(4) Includes options to purchase 333,334 shares that are currently
exercisable.
(5) Includes options to purchase 830,841 shares that are currently
exercisable.
(6) Includes 1,246,262 shares issuable upon exercise of warrants and
37,925 shares held by Mr. Shaw's wife. Also includes 11,168 shares
held by Spectrum Diagnostics, Inc. ("SDI"), of which company Mr. Shaw
is an officer and director, but not a shareholder, and by such
position has voting and dispositive power over such shares.
(7) Includes 100,000 shares held by the Strickland Family Limited
Partnership of which entity Mr. Strickland is a general partner.
(8) Includes options to purchase 3,760,439 shares that are currently
exercisable or exercisable within 60 days of the record date. Includes
11,168 shares held by SDI, of which company Mr. Shaw is an officer and
director, but not a shareholder, and by such position has voting and
dispositive power over such shares and 37,925 shares held by Mr.
Shaw's wife. Also includes 100,000 shares held by the Strickland
Family Limited Partnership of which entity Mr. Strickland is a general
partner.
(9) Dr. Goldsteen's address is IDS Center, Suite 2332, 80 South 8th
Street, Minneapolis, MN 55402.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
General
The Company's Bylaws provide that the Board of Directors consist of three
or more persons and be divided into three classes of directors of as nearly
equal size as possible. Directors are elected for a term of three years and the
terms are staggered so that the class of directors whose term expires is elected
each year by the shareholders of the Company. There are currently six persons
serving as directors. The Company is proposing that one director be elected at
the Meeting to serve as a Class 1 director with a term of three years expiring
in 1999, or until his successor is elected and qualifies. The Board of Directors
has nominated for election Mr. Robert Case. Mr. Case is currently a Class 1
director of the Company and does not have any family relationship with any of
the Company's directors.
Board Recommendation
The Board of Directors recommends that the nominee Mr. Case be elected as a
Class 1 director to hold office for a term of three years and until his
successor is duly elected and qualified.
Proxies and Voting
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect the nominee. The affirmative vote of the greater of
(I) a majority of shares of Common Stock present and entitled to vote at the
Meeting or (II) a majority of the voting power of the minimum number of shares
that would constitute a quorum for the transaction of business at the Meeting is
necessary to elect the nominee. A shareholder submitting a Proxy may vote for
the nominee for election to the Board of Directors or may withhold his or her
vote. The nominee, Mr. Case, has consented to being named as a nominee. Should
Mr. Case become unable to serve if elected, the Proxy Agents named in the Proxy
will exercise their voting power in favor of such other person as the Board of
Directors of the Company may recommend. The Company's Articles of Incorporation
prohibit cumulative voting.
Nominee, Directors and Executive Officers
Class 1 Nominee (Term Expiring 1999).
Robert Case, age 52, has been a director of the Company since October 1996.
He founded Case + Associates, Inc. in 1978 and has been its President since such
time. Case + Associates is a leading consultant in the research, design,
development and engineering of medical products. Its consulting activities
include work for major multinational, as well development stage, medical
companies in the design of products from diagnostic instrumentation and
implantable devices to surgical instruments. Mr. Case is also a director of
CaseBauer and Associates, a medical industry strategy consultancy. He has served
as a Chairman of the Industrial Designers Society of America, and was a member
of its national Board of Directors. Mr. Case has also been a long-time member of
the Biomedical Marketing Association. In addition, Mr. Case conducts both U.S.
and European seminars in product definition and development for Frost &
Sullivan, the Society of Plastics Engineers, the Society for the Advancement of
Medical Packaging Institute and Northwestern University. His educational
background includes product design, engineering and marketing at Syracuse
University, the Illinois Institute of Technology and DePaul University.
<PAGE>
Class 2 Directors (Term Expiring 1997)
Richard W. Perkins, age 64, has been a director of the Company since
September 7, 1995. Since 1985, Mr. Perkins has been President, Chief Executive
Officer and a director of Perkins Capital Management, Inc., Wayzata, Minnesota.
Prior thereto he was a Senior Vice President of Piper Jaffray Inc., Minneapolis,
Minnesota. He is also a director of Bio-Vascular, Inc., Eagle Pacific
Industries, Inc., Children's Broadcasting Corporation, Discus Acquisition Corp.,
Garment Graphics, Inc., Lifecore Biomedical, Inc., Nortech Systems, Inc., and
CNS, Inc.
Edward E. Strickland, age 67, has been a director of the Company since
September 7, 1995. Mr. Strickland has been an independent financial consultant
for more than seven years. From October 1990 to January 1991, he performed the
duties of Chief Executive Officer while serving on the Executive Committee of
the Board of Directors of Reuter, Inc. Mr. Strickland also serves as a director
of Bio-Vascular, Inc., Hector Communications Corp., Communication Systems, Inc.,
and AVECOR Cardiovascular Inc.
Class 3 Directors (Term Expiring 1998)
R. H. Joseph Shaw, age 50, has been President, Chief Executive Officer and
Chairman of the Board of the Company and its predecessor entities since their
inception. Mr. Shaw is an honors science graduate with postgraduate work in the
area of medical science. He has taught at McMaster University and Simon Fraser
University in Canada, has served on the Le Dain Royal Commission investigating
the nonmedical use of drugs and was a guest speaker to the U.S. Senate Committee
on Small Business. He has an extensive background in the medical industry and in
1971 started his career with McNeil Laboratories, Ltd., a subsidiary of Johnson
& Johnson ("J&J") in the position of Manager of Scientific Affairs. In that
capacity he monitored clinical programs and interfaced with the Canadian
equivalent of the FDA. Subsequently, he served as Canadian General Manager of
another J&J company. In 1973, Mr. Shaw joined K-Vet/KVL, a privately owned
medical company, as Executive Vice President, in which capacity he was
responsible for all aspects of the corporate organization. In 1978, Mr. Shaw
purchased the Human Diagnostics Division from this group, which he renamed
Cathra International ("Cathra"). Mr. Shaw remained with Cathra as President
until it was sold in 1985 and coordinated the integration of Cathra and the
purchaser's medical groups into a single operating entity, MCT Medical, Inc. Mr.
Shaw was the President of MCT Medical, Inc. through April 1987. From April 1987
until joining the Company, Mr. Shaw was Vice President and head of diagnostics
of Quadra Logic Technologies, Inc., a company listed on NASDAQ and the Toronto
Stock Exchange. Mr. Shaw has extensive experience in both national and
international markets and has managed the scientific and commercial development
of a number of diagnostic products. He also has experience in establishing and
managing strategic alliances in Canada, the United States, Japan and Europe.
James F. Lyons, age 64, has served as a director of the Company since
September 7, 1995. From September 1993 through October 1994, when he retired,
Mr. Lyons was Chief Executive Officer of Bio-Vascular, Inc., a cardiovascular
medical products company. From 1977 through 1990, Mr. Lyons was President and
Chief Executive Officer of Bio-Medicus, Inc., a cardiovascular medical products
company. Mr. Lyons has been employed in the health care industry for more than
30 years. He is also a director and Chairman of the Board of Bio-Vascular, Inc.,
and a director of ATS Medical, Inc. and Spine-Tech, Inc.
<PAGE>
Executive Officers
Robert R. McKiel, Ph.D., age 53, has been Executive Vice President-Research
and Development since 1992 and has served as a director from May 1995 with the
expiration of his term as a director occurring at the Meeting. From 1984 to
1987, Dr. McKiel served as Vice President of Amersham International, a large
medical company based in the United Kingdom. From 1987 until joining the Company
he served as a consultant to various companies in the medical diagnostics
industry, including Ares-Serono and Boehringer Mannheim Corporation. In that
capacity, he has been involved in a variety of projects including the design of
a clinical immunochemistry analyzer, implementation of a GMP (Good Manufacturing
Practices) program for a clinical device manufacturer and a redesign of a
pharmaceutical quality control program. He earned his baccalaureate degree in
organic chemistry at the University of Notre Dame and a doctorate in biological
chemistry at the University of Illinois. After completion of his post-doctoral
residency in clinical chemistry at the University of Illinois Medical Center, he
joined the Illinois Medical Center staff. From 1973 to 1979, he served as an
Assistant Director of the University of Illinois Hospital Laboratories and as
head of the Radioimmunoassay Laboratory, held various faculty appointments, and
taught in the departments of Biological Chemistry and Pathology. In 1979, Dr.
McKiel joined Amersham Corporation to establish a U.S. based technical support
system for the company's products, and to enhance Amersham's effectiveness in
the design and marketing of new products in the U.S.
Gregory G. Freitag, age 34, has been Chief Financial Officer and
Secretary of the Company since December 1, 1995 and Executive Vice President of
Corporate Development since October 1996. From 1987 until joining the Company
Mr. Freitag was a lawyer with the Minneapolis, Minnesota law firm of Fredrikson
& Byron, P.A. As a shareholder with Fredrikson & Byron he practiced in the
corporate, securities and merger and acquisition areas of law. Mr. Freitag has
his J.D. and CPA, has served on securities advisory committees to the Minnesota
Commissioner of Commerce and is included in the Minnesota Business Guide to Law
& Leading Attorneys.
Director Compensation
The Company does not currently compensate its directors. The Company has,
however, granted options to its directors from time to time. Additional
directors' options may be granted in the future to attract and retain qualified
personnel to its Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to, or earned by, the Chief Executive
Officer of the Company and to all executive officers whose compensation exceeded
$100,000 for fiscal 1996.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
All Other
Other Annual Securities Compensation
Name and Fiscal Salary Bonus Compensation Underlying
Principal Position Year ($) ($) ($) Options (#) ($)
- -------------------- ------- --------- ------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
R.H. Joseph Shaw, 1996 $150,000 0 $7,800 0 0
Chief Executive 1995 $150,000 0 $7,800 0 0
Officer 1994 $150,000 0 $7,800 0 0
Robert R. McKiel, 1996 $117,500 0 0 0 0
Executive Vice 1995 $110,000 0 0 0 0
President of R & D 1994 $ 85,000 0 0 0 0
No individuals named in the Summary Compensation Table received stock
options during the year ended June 30, 1996.
</TABLE>
<PAGE>
Option Exercises and Value of Options at End of Fiscal 1996
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table above, the year-end value of unexercised options.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at End In-the-Money Options
Acquired of Fiscal 1996 (1) at End of Fiscal 1996 (1)(2)
on Value ----------------------------- -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------- --------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
R.H. Joseph
Shaw 0 N/A 1,246,262 $0 $510,967 $0
Robert R.
McKiel 0 N/A 830,841 $0 $340,645 $0
- ------------------------
</TABLE>
(1) The shares represented for Messrs. Shaw and McKiel were granted as warrants
to purchase Common Stock and not options. As such, these shares are not
included in the Company's Nonqualified Stock Option Plan described below.
(2) Value based on market value of the Company's Common Stock on September 30,
1996 ($.66 per share closing price) less the exercise price.
Employment Agreements
In May 1995, the Company entered into three-year employment agreements with
Messrs. Shaw and McKiel and in December of 1995 entered into a two year
employment agreement with Mr. Freitag (the "Employment Agreements"), which
provide for annual base salaries of $150,000, $110,000 (subsequently raised to
$125,000) and $125,000, respectively, and further provide that Messrs. Shaw,
McKiel and Freitag are entitled to certain severance benefits in the event that
their employment is terminated by the Company "without cause" or by such
executive following a "change of control" (both as defined in the Employment
Agreements). In the event the employment agreements are terminated for any
reason by the Company, other than for cause as defined in the agreements,
Messrs. Shaw and McKiel would receive the salary due under the remaining term of
the agreement plus one year's salary, and Mr. Freitag would receive two year's
salary and bonus. Messrs. Shaw and McKiel also have the right upon termination
without cause to "put" any shares they own or have the right to receive pursuant
to options back to the Company at fair market value. Each of the Employment
Agreements contains a covenant not to compete with the Company: (1) for Messrs.
Shaw and McKiel for twelve months following termination, except in the event of
their termination by the Company "without cause" or at their election upon a
"change of control"; and (2) for such period as Mr. Freitag is paid termination
benefits. Finally, Mr. Shaw is provided an automobile allowance.
Nonqualified Stock Options
On September 3, 1996 the Company's Board of Directors adopted the Quantech
Ltd. Nonqualified Stock Option Plan (the "Plan"). The Plan provides for the
granting of nonqualified options to purchase Common Stock of the Company to
employees, directors and members of the Company's Scientific Advisory Board. A
total of 4,313,500 shares of the Company's Common Stock have been reserved for
issuance upon exercise of options granted under the Plan. Options issued to
employees, directors and members of the Company's Scientific Advisory Board
prior to the adoption of the Plan for the purchase of up 4,278,500 shares have
been included in the Plan. The Company's Compensation Committee has complete
discretion to determine the persons to whom options are granted under the Plan
and to set the terms of such options including, but not limited to, terms
relating to price (which generally will be the fair market value of the
Company's Common Stock on the date of grant), duration, vesting, termination and
the number of shares subject to such option. The Plan will continue for an
indefinite period until terminated by the Board of Directors or Compensation
Committee.
<PAGE>
Certain Transactions
R. H. Joseph Shaw and Robert McKiel, officers and directors of the Company,
from time to time over the last three years have either been indebted to the
Company for funds advanced pursuant to authorization by the Board of Directors
or owed money by the Company for services rendered by them which the Company was
unable to pay on a current basis. At the present time, the Company is not
indebted to such persons, does not intend to be in the future and none of the
officers and directors of the Company is indebted to the Company.
The Company has authorized 60,000,000 shares of its Common Stock. The
Company as of October 23, 1996 had 47,080,759 shares of Common Stock outstanding
and 16,173,603 shares issuable upon the exercise of options and warrants.
Because the total number of shares outstanding and issuable upon exercise of
options and warrants exceeds the Company's authorized shares, Messrs. Freitag,
Perkins, Strickland and Lyons have amended their stock options for the purchase
of up to 500,000 shares each and Mr. Shaw his warrant for up to 346,262 shares
to provide that they are not exercisable for such number of shares until the
shareholders of the Company approve an increase in the aggregate number of
authorized shares of Company Common Stock. Proposal Two of this Proxy Statement
seeks such increase.
PROPOSAL TWO
ADOPTION OF AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED SHARES
Article 3.1 of the Company's Articles of Incorporation provides that the
aggregate number of shares of all classes of stock which the Company shall have
the authority to issue is Sixty Million (60,000,000) shares. The Board of
Directors recommends to the shareholders that Article 3.1 of the Company's
Articles of Incorporation be amended to increase the number of authorized shares
of the Common Stock to One Hundred and Twenty Million (120,000,000) shares. Of
the 120 million shares 90 million shares have been deemed Common Stock and 30
million shares deemed undesignated shares.
The undesignated shares allow the Board of Directors of the Company to
designate the shares and issue them upon such terms and at such times as it
considers appropriate without further shareholder approval. This flexibility
allows for a greater ability to structure future financings or transactions, if
required. However, in the event of a proposed merger, tender offer or other
attempt to gain control of the Company of which the Board does not approve, the
unissued Common Stock, through the dilution of percentage ownership, and the
undesignated shares, through the issuance of a series of stock with certain
rights and preferences, could allow the Board to impede the completion of such a
transaction. An effect of the proposed amendment, therefore, may be to deter a
future takeover attempt. The Board does not intend to issue any shares except on
terms which the Board deems to be in the best interests of the Company and its
then existing shareholders. Neither the Board of Directors nor management of the
Company is aware of any specific effort to accumulate the Company's securities
or to obtain control of the Company by means of a merger, tender offer or
solicitation of proxies in opposition to management.
<PAGE>
Of the 60 million shares of the Common Stock now authorized for issuance,
as of October 23, 1996, 47,080,759 shares were issued and outstanding and an
additional 16,173,603 shares of Common Stock were reserved for issuance pursuant
to stock options and warrants. Currently, the total number of shares issued or
subject to issuance pursuant to options and warrants exceeds the authorized
shares by 3,254,362 shares. Certain directors and employees of the Company have
entered into agreements to provide that all or a portion of their options or
warrants are not exercisable until the shareholders of the Company approve an
increase in the aggregate number of authorized shares of Company Common Stock so
as to cause an improper issuance of unauthorized shares.
Management and the Board of Directors believe that it is desirable to
increase the number of authorized shares of Common Stock available for issuance
as recommended to enable the Company to issue Common Stock in the future to
finance its business, for issuance pursuant to stock options so as to continue
to retain and obtain qualified employees, directors and scientific advisors, and
for possible issuance in connection with acquisitions or other business
combinations. The Company has no present plans, understandings or agreements for
issuance or use of the proposed additional shares in connection with any
acquisitions or business combinations. However, the Board of Directors believes
that the proposed increase is desirable so that, as the need may arise, the
Company will have more financial flexibility and be able to issue shares of
equity securities, without the expense and delay of a special shareholders'
meeting, in connection with possible equity financing, future opportunities for
expanding the business through investments or acquisitions and employee benefit
plans or other purposes.
Accordingly, the Board of Directors recommends that Article 3.1 of the
Articles of Incorporation of the Company be amended as follows:
ARTICLE 3.1
CAPITAL STOCK
The aggregate number of shares the corporation has the authority to
issue shall be 120,000,000, which shall have a par value of $.01 per share
solely for the purpose of a statute or regulation imposing a tax or fee
based upon the capitalization of the corporation, and which shall consist
of 90,000,000 common shares and 30,000,000 undesignated shares. The Board
of Directors of the corporation is authorized to establish from the
undesignated shares, by resolution adopted and filed in the manner provided
by law, one or more classes or series of shares, to designate each such
class or series (which may include, but is not limited to, designation as
additional common shares), and to fix the relative rights and preferences
of each such class or series.
Board Recommendation and Shareholder Vote Required
The Board of Directors recommends a vote FOR an amendment to Article 3.1 of
the Articles of Incorporation. Approval of the adoption of the amendment to the
Articles of Incorporation requires the affirmative vote of the greater of (I) a
majority of shares of Common Stock present and entitled to vote at the Meeting
or (II) a majority of the voting power of the minimum number of shares that
would constitute a quorum for the transaction of business at the Meeting.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's next
Annual Meeting of Shareholders must be received by the Company at its office
located at 1419 Energy Park Drive, St. Paul, Minnesota 55108 on or before June
26, 1997 to be considered for inclusion in the Company's Proxy Statement and
form of Proxy relating to such meeting.
<PAGE>
OTHER MATTERS
Board of Directors and Committees
The Board of Directors held four meetings during the fiscal year ended June
30, 1996. Each director attended all of these meetings. The directors also meet
informally from time to time to discuss issues concerning the Company and take
action through unanimous written consent. The Company has Audit and Compensation
Committees, but does not have a Nominating Committee of the Board of Directors.
The Audit Committee is comprised of directors Perkins, Lyons and Strickland
with Mr. Strickland as Chairman. The Audit Committee has the responsibility of
selecting Quantech's independent auditors and communicating with such auditors
on matters of auditing and accounting. The Audit Committee did not meet during
the fiscal year ended June 30, 1996, but informally met throughout the year with
the Company's Chief Financial Officer to discuss auditing and accounting
matters.
The Compensation Committee is also comprised of directors Perkins, Lyons
and Strickland with Mr. Lyons as Chairman. The Compensation Committee has the
responsibility of reviewing on an annual basis all officer compensation and
administering any employee options and plans related thereto. The Compensation
Committee met once during the fiscal year ended June 30, 1996 and all members
were present. The Compensation Committee also meets informally to discuss
compensation issues and takes action through unanimous written consent.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that during the fiscal year ended June 30, 1996,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were satisfied except with respect to
Mr. Shaw who filed one Form 4 late reporting three transactions, and Messrs.
Lyons, Strickland, Perkins, Freitag and McKiel, each of whom filed his Form 3
late.
Independent Auditors
McGladrey & Pullen, LLP served as independent auditors for the fiscal year
ended June 30, 1996 and has been selected to serve for the current year.
Representatives of McGladrey & Pullen, LLP will be present at the Meeting, will
be given an opportunity to make a statement regarding financial and accounting
matters of the Company if they so desire, and will be available to respond to
appropriate questions from shareholders.
<PAGE>
Form 10-KSB
The Company will furnish without charge to each person whose proxy is being
solicited, upon written request of any such person, a copy of the Company's
Annual Report on From 10-KSB for the fiscal year ended June 30, 1996, as filed
with the Securities and Exchange Commission, including the Financial Statements
and the Financial Statement Schedules thereto. The Company will furnish to any
such person any exhibit described in the list accompanying the Form 10-KSB upon
the payment, in advance, of reasonable fees related to the Company's furnishing
such exhibit(s). Requests for copies of such report and/or exhibit(s) should be
directed to Gregory Freitag, Chief Financial Officer, at the Company's principal
address.
Other Business
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Meeting in accordance with the directions
given. In voting by proxy in regards to the matters presented, shareholders may
vote in favor of the item, against the item or abstain from voting. Shareholders
should specify their choices on the enclosed Proxy. Any Proxy on which no
direction is specified will be voted in favor of each of the matters to be
considered.
The Board of Directors does not intend to bring any matters before the
Meeting other than as stated in this Proxy Statement and is not aware that any
other matters will be presented for action at the Meeting. Should any other
matters be properly presented, the persons named in the enclosed form of Proxy
will vote the Proxy with respect thereto in accordance with their best judgment,
pursuant to the discretionary authority granted by the Proxy.
Dated: October 28, 1996 R.H. Joseph Shaw
Chief Executive Officer
<PAGE>
Quantech Ltd.
----------------------------------------
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 25, 1996
--------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.H. Joseph Shaw and Gregory G. Freitag,
officers of the Company, with full power of substitution, his or her Proxy to
represent and vote, as designated below, all shares of Quantech Ltd. registered
in the name of the undersigned, with the powers the undersigned would possess if
personally present at the Company's 1996 Annual Meeting of Shareholders to be
held on Monday, November 25, 1996, at 3:30 p.m. Central Time, at the Minneapolis
Hilton and Towers, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, and at
any adjournment thereof, hereby revoking all proxies previously given with
respect to the meeting.
The Board of Directors recommends that you vote "FOR" each proposal
1. ELECT ROBERT CASE AS A DIRECTOR OF THE COMPANY:
[ ] FOR nominee [ ] WITHHOLD AURTHORITY to vote for nominee
2. AMEND ARTICLES OF INCORPORATION to increase the number of authorized shares
to 120,000,000 shares consisting of 90,000,000 Common Shares and 30,000,000
undesignated shares:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER MATTERS: In their discretion, the appointed Proxies are
[ ] Authorized [ ] Not Authorized
to vote upon such other business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR PROPOSALS #1 AND #2 AND WILL BE
DEEMED TO GRANT AUTHORITY UNDER PROPOSAL #3.
Dated: ______, 1996 _________________________________________
------------------------------------------
PLEASE DATE AND SIGN ABOVE exactly
as name(s) appear at the left.
Executors, administrators, trustees,
guardians, etc., should indicate
capacity when signing. For stock
held in Joint Tenancy, each joint
owner should sign.
