QUAD CITY HOLDINGS, INC.
September 9, 1998
Dear Stockholder:
On behalf of the Board of Directors and management of Quad City
Holdings, Inc., we cordially invite you to attend the Annual Meeting of
Stockholders of Quad City Holdings, Inc. to be held at 10:00 a.m. on October 21,
1998, at the Jumer's Castle Lodge located at 900 Spruce Hills Drive, Bettendorf,
Iowa. The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement discuss the business to be conducted at the meeting. We have also
enclosed a copy of the Company's 1998 Annual Report to Stockholders for your
review. At the meeting we shall report on Company operations and the outlook for
the year ahead.
Your Board of Directors has nominated two persons to serve as Class II
directors, each of whom are incumbent directors. Your Board of Directors also
proposes to amend Article IV of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 2,500,000 to
5,000,000 shares. If the proposed amendment to increase the authorized shares is
approved, the Company expects to declare a three-for-two stock split in the form
of a stock dividend in the near future. We recommend you vote your shares for
the director nominees and in favor of the proposed amendment.
We encourage you to attend the meeting in person. Whether or not you
plan to attend, however, please complete, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD in the enclosed envelope. This will assure that your shares are
represented at the meeting.
We look forward with pleasure to seeing and visiting with you at the
meeting.
Very truly yours,
/s/ Michael A. Bauer /s/ Douglas M. Hultquist
- --------------------- ---------------------------
Michael A. Bauer Douglas M. Hultquist
Chairman of the Board President
<PAGE>
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 21, 1998
To the stockholders of
QUAD CITY HOLDINGS, INC.
The Annual Meeting of Stockholders of Quad City Holdings, Inc., a
Delaware corporation (the "Company"), will be held at the Jumer's Castle Lodge,
900 Spruce Hills Drive, Bettendorf, Iowa on Wednesday, October 21, 1998, at
10:00 a.m., local time, for the following purposes:
1. to elect two (2) Class II directors for a term of three years.
2. to amend Article IV of the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock, $1.00 par value per share, from 2,500,000 to
5,000,000 shares. If the proposed amendment is approved, the
Company expects to declare a three-for-two stock split in the
form of a stock dividend in the near future.
3. to transact such other business as may properly be brought
before the meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on September 2,
1998, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
By order of the Board of Directors
/s/ Richard R. Horst
----------------------------------
Richard R. Horst
Secretary
Moline, Illinois
September 9, 1998
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Quad City Holdings, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Stockholders to be held at the Jumer's
Castle Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa, 52722, on Wednesday,
October 21, 1998, at 10:00 a.m., local time, and at any adjournments or
postponements thereof.
If you do not expect to be present at this meeting, please sign and
date the enclosed proxy and return it in the accompanying postage paid return
envelope as promptly as possible. You have the power to revoke your proxy at any
time before it is voted by giving written notice to the Secretary of the
Company, provided such written notice is received by the Secretary prior to the
annual meeting or any adjournments or postponements thereof, by submitting a
later dated proxy or by attending the annual meeting and choosing to vote in
person. The giving of a proxy will not affect your right to vote in person if
you attend the meeting.
The Company's principal executive office is located at 3551-7th Street,
Moline, Illinois 61265. This Proxy Statement and the accompanying proxy card are
being mailed to stockholders on or about September 9, 1998. The Company's 1998
Annual Report to Stockholders is enclosed.
The Company, a Delaware corporation, is the holding company for Quad
City Bank and Trust Company, an Iowa banking association located in Bettendorf,
Iowa (the "Bank"), with banking locations in Davenport and Bettendorf, Iowa and
in Moline, Illinois. Quad City Bancard, Inc. ("Bancard"), is a wholly owned
subsidiary which functions as a credit card center that provides merchant
acquiring services. The Bank and Bancard are collectively referred to as the
"Subsidiaries".
Only holders of the Company s Common Stock, par value $1.00 per share
(the "Common Stock"), of record at the close of business on September 2, 1998,
will be entitled to vote at the annual meeting or any adjournments or
postponements of such meeting. On September 2, 1998, the Company had 1,520,474
shares of Common Stock issued and outstanding. For all matters to be voted upon
at the annual meeting, each issued and outstanding share is entitled to one
vote.
All shares of Common Stock represented at the annual meeting by
properly executed proxies received prior to or at the annual meeting, and not
revoked, will be voted at the annual meeting in accordance with the instructions
thereon. If no instructions are indicated, properly executed proxies will be
voted for the nominees and for adoption of the proposal set forth in this Proxy
Statement.
A majority of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the annual
meeting. Abstentions and broker non-votes will be counted for purposes of
determining a quorum. Directors shall be elected by a plurality of the votes
present in person or represented by proxy. Approval of the amendment to the
Company's Certificate of Incorporation requires the approval of a majority of
the outstanding shares of Common Stock. In all other matters, the affirmative
vote of the majority of shares present in person or represented by proxy at the
annual meeting and entitled to vote on the subject matter shall be required to
constitute stockholder approval. Abstentions will be treated as votes against a
proposal and broker non-votes will have no effect on the vote.
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders to be held on October 21, 1998,
stockholders will be entitled to elect two (2) Class II directors for a term
expiring in 2001. The Board has nominated Douglas M. Hultquist and John W.
Schricker to continue to serve as Class II directors. The directors of the
Company are divided into three classes having staggered terms of three years.
The Company has no knowledge that any of the nominees will refuse or be unable
to serve, but if any becomes unavailable for election, the holders of the
proxies reserve the right to substitute another person of their choice as a
nominee when voting at the meeting. Set forth below is information concerning
the nominees for election and for each of the other persons whose terms of
office will continue after the meeting, including age, year first elected a
director and business experience during the previous five years. The nominees,
if elected at the Annual Meeting of Stockholders, will serve as Class II
directors for a three year term expiring in 2001. The Board of Directors
recommends that stockholders vote FOR each of the nominees for director.
<TABLE>
NOMINEES
Name Director Positions with the Company
(Age) Since and the Subsidiaries
- -------------------------- -------- --------------------------------------------------
<S> <C> <C>
CLASS II
(Term Expires 2001)
Douglas M. Hultquist 1993 President, Chief Executive and Financial
(Age 43) Officer and Treasurer of the Company; Chairman
of the Board and Chief Financial Officer of the
Bank; Secretary and Treasurer of Bancard;
Director of the Company, the Bank and Bancard
John W. Schricker 1993 President of Bancard; Director of the Company
(Age 52) and Bancard
CONTINUING DIRECTORS
CLASS III
(Term Expires 1999)
Richard R. Horst 1993 Secretary of the Company; Director of the
(Age 47) Company and the Bank
Ronald G. Peterson 1993 Director of the Company and the Bank
(Age 54)
CLASS I
(Term Expires 2000)
Michael A. Bauer 1993 Chairman of the Board of the Company; President
(Age 49) and Chief Executive Officer of the Bank;
Chairman of the Board of Bancard; Director of
the Company, the Bank and Bancard
James J. Brownson 1997 Secretary of the Bank; Director of the Company
(Age 53) and the Bank
Robert A.Van Vooren 1997 Director of the Company and the Bank
(Age 65)
</TABLE>
All of the Company s directors will hold office for the terms
indicated, or until their earlier death, resignation, removal or
disqualification, and until their respective successors are duly elected and
qualified. All of the Company's executive officers hold office for a term of one
year. There are no arrangements or understandings between any of the directors,
executive officers or any other person pursuant to which any of the Company s
directors or executive officers have been selected for their respective
positions.
<PAGE>
The business experience of each of the nominees and continuing
directors for the past five years is as follows:
Michael A. Bauer, prior to co-founding the Company, was employed from
1971 to 1992 by the Davenport Bank and Trust Company ("DB&T"), a bank located in
Davenport, Iowa with assets as of December 31, 1992 of approximately $1.4
billion. In January, 1992 he was named DB&T's President and Chief Operating
Officer, while from 1989 to 1992, he served as Senior Vice President in charge
of all lending. Mr. Bauer served as Vice President in charge of Correspondent
Banking for DB&T from 1981 to 1989. Mr. Bauer has served as a director and past
President of Junior Achievement of the Quad Cities Area, director and past
President of the Illowa Council for the Boy Scouts of America, director and past
President of the Friendly House in Davenport, and past director and Vice
Chairman of United Way. He is a director of St. Ambrose University and the Quad
City Sports Center, and a director and Vice President of Genesis Health Services
Foundation. Mr. Bauer is also a member of Crow Valley Golf Club and the Rotary
Club of Davenport, a director and President-elect of the Iowa Independent
Bankers Association and a director of the Kahl Home for the Aged and Infirm in
Davenport.
James J. Brownson is the President of W.E. Brownson Co., a
manufacturers' representative agency located in Davenport, Iowa, and has been in
that position since 1978. Mr. Brownson began his career in 1967 as a staff
auditor with Arthur Young & Co., CPA's, of Chicago, Illinois. From 1969 until
1978 Mr. Brownson was employed by DB&T, where he left as Senior Vice President
and Cashier. Mr. Brownson has been Director and Secretary of the Bank since
October, 1993. He also serves on the National Sales Representative Council of
Crane Plastics, Columbus, Ohio, and is a past member of the National Sales
Representative Council of Dayton Rogers Manufacturing Co., Minneapolis,
Minnesota.
Richard R. Horst has been a portfolio manager with Thompson, Plumb &
Associates since March, 1994. He was the Executive Vice President of Electronic
Exchange and Transfer Corporation, an on-line transaction processing business
headquartered in Rock Island, Illinois, from November, 1992 to August, 1993.
From 1981 to 1992, Mr. Horst was the Senior Vice President and Cashier of DB&T,
having joined DB&T in 1980 as a correspondent banking officer. Prior to such
time he was with the Farmers Savings Bank of Princeton, Iowa. Mr. Horst is the
President of the Scott Community College Foundation.
Douglas M. Hultquist is a certified public accountant and previously
served as a tax partner with two major accounting firms. He began his career
with KPMG Peat Marwick in 1977 and was named a partner in 1987. In 1991, the
Quad Cities office of KPMG Peat Marwick merged with McGladrey & Pullen. Mr.
Hultquist served as a tax partner in the Illinois Quad Cities office of
McGladrey & Pullen from 1991 until co-founding the Company in 1993. During his
public accounting career, Mr. Hultquist specialized in bank taxation and mergers
and acquisitions. Mr. Hultquist serves on the Board of Directors of the PGA John
Deere Classic and is its Vice Chairman of Finance. He is a member of the
Augustana College Board of Trustees and serves on its Planned Giving Council. He
recently served on the Board of Directors of Short Hills Country Club and Junior
Achievement of the Quad Cities. Mr. Hultquist is also a member of the American
Institute of CPAs, the Iowa Society of CPAs and the Quad City Estate Planning
Council.
Ronald G. Peterson is the President and Chief Executive Officer of the
First State Bank of Western Illinois, located in La Harpe, Illinois, and has
served in that position since 1982. He is currently a member of the Board of
Directors of the Illinois Bankers Association, and serves on its Federal
Legislative Committee. He has served as the President of the Hancock County
Bankers Association, President of the Western Illinois Bank Management
Association and President of the Western Illinois University Foundation. Mr.
Peterson is also a director of Lamoine Bancorp, Inc.
John W. Schricker has been the President of Bancard since March, 1995.
From April, 1994, until Bancard was organized in March, 1995, he was the manager
of the Bank's Credit Card Division. Prior to that, he was a Vice President with
Electronic Exchange and Transfer Corporation. Mr. Schricker was with DB&T from
1975 to 1992 as Vice President in charge of the Credit Card Division.
Robert A. Van Vooren is a senior partner with the law firm of Lane and
Waterman, which has offices in Davenport, Iowa and Rock Island, Illinois. Mr.
Van Vooren graduated from Marquette University and the Northwestern University
School of Law. He is admitted to the Bar in both Iowa and Illinois, and is a
past President of the Iowa State Bar Association. Mr. Van Vooren is a Fellow of
the American College of Trial Lawyers and is listed in the 'Best Lawyers of
America' publication. He is very active in community affairs and has held
leadership positions in many of the civic organizations of the Quad Cities.
<PAGE>
Board Committees and Meetings
The committees of the Board of Directors of the Company are the Audit
Committee, the Board Affairs Committee, the Compensation and Benefits Committee
and the Technology Committee.
The Audit Committee consists of directors Horst and Peterson, and Joyce
E. Bawden and John Lawson, directors of the Bank. The Audit Committee is
responsible for overseeing the internal and external audit functions. The
committee reviews and approves the scope of the annual external audit and
consults with independent auditors regarding the results of their auditing
procedures. During the year ended June 30, 1998 the committee met twice.
The Board Affairs Committee consists of directors Bauer, Hultquist and
Brownson, and Mark Kilmer and Marc Slivken, directors of the Bank. The committee
reviews Board policies and various corporate governance issues.
During the year ended June 30, 1998, the Board Affairs Committee met twice.
The Compensation and Benefits Committee consists of directors Bauer,
Hultquist and Van Vooren, and Joyce E. Bawden and John H. Harris, directors of
the Bank. The Compensation and Benefits Committee has authority to perform
policy reviews and to oversee and direct the compensation and personnel
functions. Messrs. Bauer and Hultquist do not participate in any decisions
involving their own compensation. During the year ended June 30, 1998, the
committee met two times.
The Technology Committee consists of directors Bauer and Hultquist and
Bank directors John Lawson and John H. Harris. The Technology Committee reviews
the technology plans of the Company and the Bank for the next several years,
including with respect to Year 2000 issues. During the year ended June 30, 1998,
the committee met twice.
A total of 11 regularly scheduled and special meetings were held by the
Board of Directors of the Company during the year ended June 30, 1998. During
that time, all directors attended at least 75 percent of the meetings of the
Board and the committees on which they served during the period they served on
the Board.
Outside directors of the Company receive fees of $300 for attendance at
each meeting of the Board of Directors of the Company and $150 per committee
meeting attended. Prior to January 1, 1998, outside directors of the Bank
received fees of $300 per meeting for attendance at meetings of the Board of
Directors of the Bank and $150 for attendance at meetings of committees.
Beginning January 1, 1998, outside directors of the Bank receive quarterly fees
of $625, and receive $100 for attendance at meetings of committees.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or granted to the Company's Chief Executive Officer and the other executive
officers of the Company who had an aggregate salary and bonus which exceeded
$100,000 for the fiscal year ended June 30, 1998.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
============================================================================================================
(a) (b) (c) (d) (g) (i)
Fiscal
Year Securities All Other
Name and Ended Underlying Compensation
Principal Position June 30th Salary($)(1) Bonus($)(2) Options/SARs(#) ($)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Douglas M. Hultquist 1998 $125,000 $50,000 5,000 $ 8,643(3)
President and Chief Executive 1997 $110,000 $40,000 5,000 $ 6,667(4)
Officer of the Company and 1996 $104,000 $30,000 --- $ 7,796(5)
Chairman of the Bank
============================================================================================================
Michael A. Bauer 1998 $125,000 $50,000 5,000 $ 8,643(3)
Chairman of the Company, 1997 $110,000 $40,000 5,000 $ 6,667(4)
President and Chief Executive 1996 $104,000 $30,000 --- $ 7,796(5)
Officer of the Bank
============================================================================================================
John W. Schricker 1998 $ 50,000 $74,140 75 $178,434(3)
President of Bancard 1997 $ 50,000 $96,467 150 $ 7,552(4)
1996 $ 30,000 $65,636 50 $ 4,777(5)
============================================================================================================
<FN>
(1) Includes amounts deferred under the Quad City Holdings, Inc.
401(k)/Profit Sharing Plan (the "401(k) Plan").
(2) Mr. Schricker's annual bonus compensation is based upon the annual net
income of Bancard, and is intended to comprise a substantial portion of Mr.
Schricker's annual compensation.
(3) Messrs. Hultquist, Bauer and Schricker had contributions made to the
401(k) Plan for their benefit for the plan year ended June 30, 1998 in the
amounts of $7,803, $7,803 and $8,179, respectively, and received term life
insurance which had a per person premium cost of $840 for Messrs. Bauer and
Hultquist, and $957 for Mr. Schricker. Mr. Schricker also received a
one-time payment of $169,298 in connection with the revenue received as a
result of the restructuring of the agreement with Bancard's independent
sales organization.
(4) Messrs. Hultquist, Bauer and Schricker had contributions made to the
401(k) Plan for their benefit for the plan year ended June 30, 1997 in the
amounts of $5,827, $5,827 and $7,216, and received term life insurance
which had a per person premium cost of $840, $840 and $336, respectively.
(5) Messrs. Hultquist, Bauer and Schricker had contributions made to the
401(k) Plan for their benefit for the plan year ended June 30, 1996 in the
amounts of $7,096, $7,096 and $4,575, and received term life insurance
which had a per person premium cost of $699, $699 and $202, respectively.
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information concerning the
number and value of stock options and stock appreciation rights ("SARs") granted
in the last fiscal year to the individuals named in the Summary Compensation
Table.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
==================================================================================================
(a) (b) (c) (d) (e)
% of Total
Options/SARs Options/SARs
Granted Granted to Exercise or Base Expiration
Name (#)(1) Employees in Fiscal Price ($/Sh) Date
Year
=================================================================================================
<S> <C> <C> <C> <C>
Michael A. Bauer 5,000(2) 20% $32.00 June 30, 2008
=================================================================================================
Douglas M. Hultquist 5,000(2) 20% $32.00 June 30, 2008
=================================================================================================
John W. Schricker 75 .3% $32.00 June 30, 2008
=================================================================================================
<FN>
(1) Options and SARs vest in five equal annual portions beginning one year from
the June 30, 1998 date of grant.
(2) Represents SARs.
</FN>
</TABLE>
The following table sets forth certain information concerning the
number of stock options at June 30, 1998 held by the individuals named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying in-the-money
Unexercised Options/SARs
Options/SARs at at
FY-End (#) FY-End ($)
===========================================================
Shares Acquired
Name on Exercise (#) Value Realized Exercisable Unexercisable Exercisable Unexercisable
($)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Michael A. Bauer --- $--- 30,000 10,000 $648,500 $67,750
=====================================================================================================================
Douglas M. Hultquist --- $--- 30,000 10,000 $648,500 $67,750
=====================================================================================================================
John W. Schricker --- $--- 530 545 $ 11,340 $ 9,022
=====================================================================================================================
</TABLE>
<PAGE>
Employment Agreements. The Company entered into employment agreements
with Messrs. Bauer and Hultquist dated July 1, 1993. These agreements each have
a three year term and in the absence of notice from either party to the
contrary, the employment term under each agreement extends for an additional one
year on the anniversary of each agreement. Under these agreements, Messrs. Bauer
and Hultquist will each receive minimum salaries of $100,000. The agreements
include provisions for the increase of the officer's salary, performance
bonuses, membership in a Quad Cities country club, an automobile allowance and
participation in the Company's benefit plans. The Company has also entered into
an employment agreement with John W. Schricker, the President of Bancard, dated
July 1, 1997. Under the agreement, Mr. Schricker receives a base annual salary
of $50,000, plus an annual bonus equal to 12% of Bancard's first $200,000 of
annual net income, 10.5% of the next $300,000, 9% of the next $500,000 and 7.5%
of any annual net income in excess of $1,000,000. Mr. Schricker is also entitled
to participate in the Company's benefit plans.
All of the agreements are terminable at any time by either the
Company's Board of Directors or the respective officer. The Company may
terminate the agreements at any time for cause without incurring any
post-termination obligation to the terminated officer. Each agreement provides
severance benefits in the event the officer is terminated without cause,
including severance compensation equal to one year of the officer's salary for
Messrs. Bauer and Hultquist, and six months for Mr. Schricker. The Company also
must pay the officer all accrued salary, vested deferred compensation and other
benefits then due the officer. If the officer is terminated upon a change in
control, the officer is to be paid severance compensation equal to three times
his salary for Messrs. Bauer and Hultquist, and two times salary for Mr.
Schricker, at the rate then in effect at the time of termination. Each of
Messrs. Hultquist and Bauer is prohibited from competing with the Company or its
subsidiaries within a 20-mile radius of the Company's main office for a period
of two years following the termination of his employment agreement. In the case
of Mr. Schricker, the radius is 200 miles and the term is one year.
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Subsidiaries and their
associates were customers of and had transactions with the Company and the Bank
during the fiscal year ended June 30, 1998. Additional transactions are expected
to take place in the future. All outstanding loans, commitments to loan, and
certificates of deposit and depository relationships, in the opinion of
management, were made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
From July 1, 1997 through June 30, 1998, Bancard paid approximately $1,800,000
to Nobel Electronic Transfer, LLC ("Nobel"), for merchant credit card processing
services. John W. Schricker, a director of the Company and the President and a
director of Bancard, is a principal of Nobel. Management of the Company believes
that the terms on which Nobel provides such services to Bancard were no less
favorable to the Company than would have been obtained from unaffiliated third
parties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
Company s Common Stock beneficially owned on September 2, 1998, by each
director, by each executive officer named in the Summary Compensation Table and
by all directors and executive officers of the Company as a group. To the best
of the Company's knowledge, no person was the beneficial owner of more than five
percent of the Company s Common Stock as of September 2, 1998.
<PAGE>
Name of Individual and Amount and Nature of Percent
Number of Persons in Group Beneficial Ownership(1) of Class
- -------------------------- ----------------------- --------
Directors and Nominees
Michael A. Bauer 47,471(2) 3.1%
James J. Brownson 10,285(3) *
Douglas M. Hultquist 47,491(4) 3.1%
Richard R. Horst 12,920(5) *
Ronald G. Peterson 2,800(6) *
John W. Schricker 10,265(7) *
Robert A. Van Vooren 8,720(8) *
All directors and executive officers 141,941(9) 8.9%
as a group (8 persons)
- ------------------------------------
* Less than 1%.
(1) Amounts reported include shares held directly, including certain
shares subject to warrants and options, as well as shares held in retirement
accounts, by certain members of the named individuals' families or held by
trusts of which the named individual is a trustee or substantial beneficiary.
Inclusion of shares shall not constitute an admission of beneficial ownership or
voting and sole investment power over included shares. The nature of beneficial
ownership for shares listed in this table is sole voting and investment power,
except as set forth in the following footnotes.
(2) Includes 30,250 shares subject to warrants or options which are
presently exercisable and over which Mr. Bauer has no voting and sole investment
power and 3,050 shares held in an IRA account, over which Mr. Bauer has shared
voting and investment power. Excludes 1,000 option shares which vest next year.
(3) Includes 2,780 shares subject to warrants or options which are
presently exercisable and over which Mr. Brownson has no voting and sole
investment power. Also includes 1,260 shares held jointly by Mr. Brownson and
his spouse and 900 shares held by his spouse, over which shares Mr. Brownson has
shared voting and investment power. Excludes 520 option shares which will vest
over the next five years.
(4) Includes 30,250 shares subject to warrants or options which are
presently exercisable and over which Mr. Hultquist has no voting and sole
investment power and 2,900 shares held by his spouse or for the benefit of his
children, over which Mr. Hultquist has shared voting and investment power.
Excludes 1,000 option shares which vest next year.
(5) Includes 540 shares subject to warrants or options which are
presently exercisable and over which Mr. Horst has no voting and sole investment
power, 100 shares held in an IRA account, over which shares Mr. Horst has shared
voting and investment power, and 1,300 shares held by his spouse, over which he
has shared voting and no investment power. Excludes 760 option shares which will
vest over the next five years.
(6) Includes 540 shares subject to options which are presently
exercisable and over which Mr. Peterson has no voting and sole investment power.
Also includes 300 shares held in joint tenancy by Mr. Peterson and his spouse,
over which shares Mr. Peterson has shared voting and investment power. Excludes
760 option shares which vest over the next five years.
(7) Includes 530 shares subject to warrants or options which are
presently exercisable and over which Mr. Schricker has no voting and sole
investment power. Also includes 133 shares held in an IRA account, over which
shares Mr. Schricker has shared voting and investment power. Excludes 545 option
shares which will vest over the next five years.
(8) Includes 220 shares subject to options which are presently
exercisable and over which Mr. Van Vooren has no voting and sole investment
power. Excludes 480 option shares which will vest over the next five years.
<PAGE>
(9) Excludes 6,805 option shares not presently exercisable.
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company s executive officers and directors and persons who own more than 10% of
the Company s Common Stock file reports of ownership and changes in ownership
with the Securities and Exchange Commission and with the exchange on which the
Company s shares of Common Stock are traded. Such persons are also required to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the Company s review of the copies of such forms, the Company is not
aware that any of its directors, executive officers or 10% stockholders failed
to comply with the filing requirements of Section 16(a) during the period
commencing July 1, 1997 through June 30, 1998.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has unanimously approved an
amendment (the "Amendment") to Article IV of the Company's Certificate of
Incorporation (the "Certificate") that would increase the number of authorized
shares of the Company's Common Stock, $1.00 par value per share, from 2,500,000
shares to 5,000,000 shares. The Board of Directors has also approved a
resolution providing for a three-for-two stock split of the Common Stock in the
form of a stock dividend if the Amendment is approved. No distribution date for
any such stock split has yet been determined. As of September 2, 1998, the
Company had 1,520,474 shares of Common Stock issued and outstanding.
The Board of Directors has proposed adoption of the Amendment for
several reasons, including those set forth below. First, the Amendment will
provide for the additional shares of Common Stock necessary to effectuate the
proposed stock split. As a result of the stock split, the number of shares of
Common Stock owned by each of the Company's stockholders as of the record date
for the stock split will increase by 50%, and each such share will have
approximately two-thirds of the per share value of Common Stock prior to the
stock split. The decrease in the per share value of Common Stock should also
lead to a commensurate decrease in the per share market price, thus making an
investment in Common Stock by existing or potential stockholders of the Company
more readily possible.
Second, the additional shares authorized by the Amendment will provide
management with enough shares of Common Stock to enter into certain transactions
involving the use of Common Stock that may be advisable from time to time. Such
transactions could include, but are not limited to, the acquisition by the
Company of additional branch locations, subsidiaries or bank or thrift holding
companies. Although no such transactions are planned for the immediate future,
management and the Board of Directors believe that it is in the Company's best
interests to have available a sufficient number of authorized shares of Common
Stock if such transactions become advisable.
Third, the additional shares of Common Stock authorized by the
Amendment could be used to raise additional working capital for the Company or
the Subsidiaries. The Board of Directors does not currently have any plans to
raise capital through the issuance of additional shares or otherwise, but these
shares would be available for that purpose.
The increase in the number of shares of Common Stock authorized by the
Amendment will allow for the possibility of substantial dilution of the voting
power of current stockholders of the Company, although no dilution will occur as
a direct result of the proposed stock split. The degree of any such dilution
which would occur following the issuance of any additional shares of Common
Stock, including any newly authorized Common Stock, would depend upon the number
of shares of Common Stock that are actually issued in the future, which number
cannot be determined at this time. Issuance of a large number of such shares
could significantly dilute the voting power of existing stockholders.
The existence of a substantial number of authorized and unissued shares
of Common Stock could also impede an attempt to acquire control of the Company
because the Company would have the ability to issue additional shares of Common
Stock in response to any such attempt. The Company is not aware of any such
attempt to acquire control at this time, and no decision has been made as to
whether any or all newly authorized but unissued shares of Common Stock would be
issued in response to any such attempt.
To be approved by the Company's stockholders, the Amendment must
receive the affirmative vote of a majority of shares present in person or
represented by proxy and entitled to vote on the Amendment at the annual
meeting. The Board of Directors recommends that you vote your shares FOR the
Amendment.
<PAGE>
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposals of stockholders intended to be presented at the 1999
Annual Meeting of Stockholders must be received by the Secretary of the Company
at its principal executive offices at 3551-7th Street, Moline, Illinois 61265,
on or before May 12, 1999, to be considered for inclusion in the Company's Proxy
Statement and proxy relating to such meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of McGladrey & Pullen, LLP, the Company's independent
public accountants since 1993, are expected to be present at the meeting and
will be given the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
GENERAL
Your proxy is solicited by the Board of Directors and the cost of
solicitation will be paid by the Company. In addition to the solicitation of
proxies by use of the mails, officers, directors and regular employees of the
Company or the Subsidiaries, acting on the Company s behalf, may solicit proxies
by telephone, facsimile or personal interview. The Company will, at its expense,
upon the receipt of a request from brokers and other custodians, nominees and
fiduciaries, forward proxy soliciting materials to the beneficial owners of
shares held of record by such persons.
OTHER BUSINESS
It is not anticipated that any action will be asked of the stockholders
on any matters other than as set forth above, but if other matters properly are
brought before the meeting, the persons named in the proxy will vote in
accordance with their best judgment.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice in items (1) or (2) on
the proxy card, the shares of such stockholder shall be voted (FOR) each
instance.
<PAGE>
REPORT ON FORM 10-KSB
THE COMPANY'S REPORT ON FORM 10-KSB (WITHOUT EXHIBITS) WILL BE INCLUDED AS PART
OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS, WHICH WILL BE MAILED TO EACH
STOCKHOLDER OF RECORD AS OF THE RECORD DATE FOR THE ANNUAL MEETING. THE COMPANY
WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED, AND TO EACH
PERSON REPRESENTING THAT HE OR SHE WAS A BENEFICIAL OWNER OF THE COMPANY S
COMMON STOCK AS OF THE RECORD DATE FOR THE MEETING, UPON WRITTEN REQUEST, A COPY
OF THE COMPANY S ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, TOGETHER WITH THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO. SUCH WRITTEN REQUEST SHOULD BE SENT TO MR. DOUGLAS M. HULTQUIST, QUAD
CITY HOLDINGS, INC., 3551-7th STREET, MOLINE, ILLINOIS 61265.
By order of the Board of Directors
/s/ Michael A. Bauer /s/ Douglas M. Hultquist
- ---------------------------- ---------------------------
Michael A. Bauer Douglas M. Hultquist
Chairman President
Moline, Illinois
September 9, 1998
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
<PAGE>
PROXY QUAD CITY HOLDINGS, INC. PROXY
Proxy is Solicited By the Board of Directors
For the Annual Meeting of Stockholders -- October 21, 1998
The undersigned hereby appoints Michael A. Bauer, James J. Brownson and
Douglas M. Hultquist, or any of them acting in the absence of the others, with
power of substitution, attorneys and proxies, for and in the name and place of
the undersigned, to vote the number of shares of Common Stock that the
undersigned would be entitled to vote if then personally present at the Annual
Meeting of Stockholders of Quad City Holdings, Inc., to be held at the Jumer's
Castle Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa 52722, on Wednesday,
October 21, 1998, at 10:00 a.m., local time, or any adjournments or
postponements thereof, upon the matters set forth in the Notice of Annual
Meeting and Proxy Statement (receipt of which is hereby acknowledged) as
designated on the reverse side, and in their discretion, the proxies are
authorized to vote upon such other business as may come before the meeting.
|_| Check here for address change. |_| Check here if you plan to attend the
New Address: meeting.
(Continued and to be signed on reverse side.)
<PAGE>
1. Nominees: Douglas M. Hultquist and
John W. Schricker
2. Amendment to the Certificate of
Incorporation to increase the number
of authorized shares of Common Stock
from 2,500,000 to 5,000,000
This proxy when properly executed will be
voted in the manner directed herein by
the undersigned stockholder. If no
direction is made, this proxy will be
voted FOR Proposals 1 and 2.
Dated: ____________________________, 1998
Signature(s) ____________________________
_________________________________________
Please date proxy and sign it exactly as
name appears hereon. Joint owners should
each sign personally. Executors,
trustees, etc., should indicate their
titles when signing.
