Document:

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                            DISTRIBUTORSHIP AGREEMENT

           THIS AGREEMENT (the "Agreement"), is made and effective this 18th day
of January, 2001, by and between Quantech Ltd., a Minnesota Corporation having
its principal office at 815 Northwest Parkway, Suite 100 Eagan, Minnesota, the
United States of America ("QUANTECH") and Mitsubishi Chemical Corporation, a
Japanese corporation having its principal office at 5-2, Marunouchi 2-chome,
Chiyoda-ku, Tokyo, Japan ("Distributor").

                                WITNESSETH THAT;

           WHEREAS, QUANTECH has developed and is now engaged in the manufacture
and sale of the FasTraQ System (the "Products") and QUANTECH is desirous to
increase its sales of the Products in Japan (the "Territory"); and

           WHEREAS, Distributor wishes to distribute and resell the Products in
the Territory;

           NOW THEREFORE, the parties hereto agree as follows:

ARTICLE 1       APPOINTMENT

           Subject to the terms and conditions set forth herein, QUANTECH hereby
appoints Distributor as QUANTECH's exclusive distributor to distribute and
resell the Products for the Medical Diagnostics Field in the Territory
(collectively, the "Customers"), for the term set out below, and Distributor
hereby accepts such appointment.

ARTICLE 2       RELATIONSHIP

           The relationship hereby established between the parties hereto shall
be solely that of seller and buyer, and either party hereto shall be in no way
the agent or representative of the other party for any purposes whatsoever.
Either party hereto shall have no right to enter into any agreement, commitment
or understanding, or to incur any obligation or liability in the name of or on
behalf of the other party hereto, except as expressly permitted herein.

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ARTICLE 3       SALES AND PURCHASE

3.1        Under the terms and conditions set forth herein, QUANTECH shall sell
           to Distributor, and Distributor shall purchase from QUANTECH, the
           Products for the purpose of distribution and resale of the Products
           to the Customers in the Territory by Distributor hereunder. Unless
           otherwise specifically provided for herein, detailed terms and
           conditions applicable to each individual transaction of the Products
           between the parties, including the prices payable by Distributor to
           QUANTECH, commission from QUANTECH to Distributor, minimum yearly
           purchase requirements by Distributor and the terms of payment
           (inclusive of the provision of letter of credit), shall be separately
           agreed upon between the parties hereto.

3.2        Distributor shall not distribute or sell the Products to anyone
           outside the Territory, nor to anyone in the Territory who,
           Distributor knows or has reason to know, intends to resell the
           Products outside the Territory. Without prior written consent of
           QUANTECH, Distributor shall not distribute or sell the Products to
           anyone other than Customers in the Territory, nor to anyone in the
           Territory who, Distributor knows or has reason to know, intends to
           use the Products for any purpose other than the Medical Diagnostics
           Field in the Territory.

3.3        Distributor shall not alter or remodel the Products without the prior
           written consent of QUANTECH.

3.4        QUANTECH shall have the right, at any time without compensation to
           Distributor, to discontinue manufacturing the Products or change the
           Specifications as defined in Article 9 hereof, at its sole
           discretion, by giving ninety (90) days' prior written notice to
           Distributor.

3.5        Distributor shall submit the orders for the purchase of the Products
           to QUANTECH in writing in such format as may be required by QUANTECH
           at least one (1) month prior to the delivery date requested by the
           Distributor.

3.6        Formal acceptance of orders by QUANTECH shall be evidenced by the
           delivery to Distributor of written confirmation of receipt of such
           orders by QUANTECH.

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ARTICLE 4       SHIPMENT AND DELIVERY

           Except as otherwise expressly set forth herein, delivery terms for
the Products shall be FOB Minneapolis St. Paul International Airport and shall
be governed and construed in accordance with INCOTERMS 2000 and any amendments
thereto.

ARTICLE 5       SALES PROMOTION AND AFTER-SALES SERVICES

5.1        Distributor shall, at its own cost and expenses, diligently and
           adequately advertise and promote the sale of the Products in the
           Territory and perform technical services or any other after-sales
           services relating to the Products (the "After-Sales Services").

5.2        When Distributor requests After-Sales Services to QUANTECH and
           QUANTECH agrees with the necessity of such Distributor's request,
           QUANTECH shall, at its own cost and expense, collect data related to
           such After-Sales Service and send its employee(s) for such
           After-Sales Services.

5.3        QUANTECH shall, free of charge, provide Distributor with its
           reasonable requirements for translation of QUANTECH's promotional and
           advertising material in English for marketing of the Products, such
           as pamphlets, leaflets and catalogs.

5.4        Distributor agrees that any of its publication or advertisement with
           respect to the Products shall be based on and strictly consistent
           with the promotional and advertising material or any other
           information or data furnished by QUANTECH and shall be subject to
           QUANTECH's approval to be obtained prior to its release thereof.

ARTICLE 6       INVENTORY

           Distributor shall maintain adequate inventory of the Products so as
to keep them available for the prompt response to orders from its customers and
for the After-Sales Services.

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ARTICLE 7       DISTRIBUTOR'S PERSONNEL

           Distributor shall employ a sufficient number of sales staff and
engineers so as to promote the sale of the Products and render the After-Sales
Services. Upon reasonable request of the Distributor, QUANTECH shall furnish
training to one or more of such sales staff and/or engineers acceptable by
QUANTECH in order to have such person(s) master the proper handling, and
technical services of the Products. The expenses incurred for such training
except for QUANTECH's specialist's cost and expense for the operation of
QUANTECH's equipment for such training shall be borne by Distributor.

ARTICLE 8       REPORTS

8.1        Distributor shall provide QUANTECH at least monthly during the term
           hereof with written reports indicating information on the performance
           of its business activities, including the sales results of the
           Products, purchase volume forecast of the Products per each customer
           and other matters as may be reasonably requested by QUANTECH.

8.2        In the event of any change in Distributor's management, organization
           or sales staff, distributor shall immediately notify QUANTECH of such
           change.

ARTICLE 9       SPECIFICATIONS

           The specifications of the Products to be sold by QUANTECH and
purchased by Distributor hereunder shall be those to be agreed to by the parties
and thereafter as specified in EXIHIBIT B attached to be agreed to by the
parties and thereafter hereto and made a part hereof (the "Specifications").

ARTICLE 10      WARRANTY

10.1       QUANTECH warrants to Distributor that the Products sold and delivered
           to Distributor hereunder shall conform, at the time of delivery
           thereof, to the Specifications.

10.2       QUANTECH's warranty under this Article shall be valid and available
           on the condition that Distributor shall send a written notice to
           QUANTECH of the alleged defect or non-conformity of the Products in
           question with the Specifications within six (6) months from the date
           of delivery thereof from

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           QUANTECH to Distributor hereunder and send QUANTECH immediately such
           allegedly defective or non-conforming Products at Distributor's cost
           for the purpose of QUANTECH's inspection, if requested by QUANTECH.
           In the event that such defect or non-conformity should be found
           attributable to QUANTECH, QUANTECH shall bear the cost paid by
           Distributor for sending the Products back to QUANTECH and provide
           Distributor with refund of the price for the defective or
           non-conforming Products, or, at prior consent between Distributor and
           QUANTECH, with replacement of said Products at QUANTECH's cost
           without unreasonable delay.

10.3       In the event that Distributor should receive any claim relating to
           the Products from its customers (a "Claim"), during the six (6)
           months referred to in Article 10.2 above, Distributor and QUANTECH
           shall discuss and examine, in good faith, the cause of such Claim and
           cooperate with each other to settle it.

10.4       If the cause of a Claim, within the thirty (30) days after the date
           of such Distributor's receipt of such Claim, should be proven to have
           been attributable to the negligence of QUANTECH, QUANTECH shall be
           responsible for losses or damages as suffered or incurred by such
           Distributor arising out of or in connection with such Claim.

10.5       THE WARRANTIES AND REMEDIES PROVIDED IN THIS ARTICLE ARE EXCLUSIVE
           AND THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
           WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN
           NO EVENT SHALL QUANTECH BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
           LOSSES OR DAMAGES SUFFERED OR INCURRED BY DISTRIBUTOR AS A RESULT OF
           OR IN CONNECTION WITH DEFECT OR NON-CONFORMITY OF THE PRODUCTS.

ARTICLE 11      INDEMNIFICATION

           Distributor shall indemnify and hold QUANTECH harmless from any and
all claims, demands, suits or actions for any kind of damages, losses or costs
which may be sustained by itself, its employees or agents, or any third party,
caused by any reasons occurred after the completion of shipment of the Products
hereunder, unless otherwise specifically provided for in this Agreement.

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ARTICLE 12      TRADEMARKS AND TRADE NAME, OTHER INTELLECTUAL PROPERTY RIGHTS

12.1       Distributor may use certain trademarks and/or trade name owned and
           designated by QUANTECH (collectively, the "Trademark") in advertising
           and selling the Products in the Territory in accordance with
           QUANTECH's instructions, and shall neither use the Trademark for any
           other purpose nor use any other trademark or trade names for the
           Products. Upon request from QUANTECH, Distributor shall supply sample
           of label, catalogues, leaflets of the Products to QUANTECH and shall
           fully cooperate with QUANTECH for necessary procedure to maintain and
           renew the Trademark.

12.2       The use of the Trademark by Distributor under Article 12.1 above
           shall not be construed as granting a license to Distributor of any
           proprietary rights owned by QUANTECH.

12.3       Distributor shall sell the Products in the same condition as they are
           received and shall not alter, remove or in any way tamper with any of
           QUANTECH's marks or numbers on the Products without prior written
           consent of QUANTECH.

12.4       Distributor shall at no time acquire any proprietary interest in the
           intellectual property rights in the Products owned by QUANTECH other
           than a right to distribute them subject to the terms and conditions
           hereof.

12.5       Distributor shall promptly notify QUANTECH of any suspected
           infringement or threat of infringement of QUANTECH's intellectual
           property rights when Distributor becomes aware of it and cooperate
           fully with QUANTECH in all legal actions or proceedings taken by
           QUANTECH to protect its said intellectual proprietary rights in the
           Products.

ARTICLE 13      CONFIDENTIALITY

13.1       Distributor shall keep confidential and shall not disclose, without
           prior written consent of QUANTECH, in any manner to any third party
           nor use for any purpose other than distribution and sales of the
           Products hereunder any technical or business information disclosed by
           or acquired from QUANTECH in connection with or in the course of
           performance of this Agreement ("Confidential Information"). The
           following information shall not be treated as a part of the
           Confidential Information;

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           (i)        information owned by the Distributor before receiving the
                      Confidential Information,

           (ii)       information known to the public at the time of receipt of
                      the Confidential Information,

           (iii)      information that becomes known to the public after the
                      receipt of the Confidential Information through no fault
                      of the Distributor, or

           (iv)       information lawfully disclosed by third party without a
                      confidentiality obligation.

13.2       Notwithstanding the foregoing Article 13.1, Distributor may disclose
           any part of the Confidential Information only to the potential
           customers of the Product in the Medical Diagnostics Field to the
           extent such disclosure is reasonably necessary for the advertisement
           and promotion of the Products in the Territory. In such case,
           Distributor shall notify QUANTECH of such disclosure in advance and
           execute appropriate confidentiality agreement approved by QUANTECH
           with such potential customer.

13.3       This Article 13 shall survive expiration or termination of this
           Agreement.

ARTICLE 14      TERM AND TERMINATION

14.1       This Agreement shall be valid and in force for a period of five (5)
           years commencing on the execution date appearing on the first page of
           this Agreement (the "Initial Term"), and thereafter shall be
           automatically renewed on a year-to-year basis, unless either party
           hereto gives the other party hereto a written notice not to renew
           this Agreement at least ninety (90) days prior to the expiration of
           the Initial Term or any extended term.

14.2       Notwithstanding the provision of Article 14.1 above, either party
           hereto may terminate forthwith this Agreement and/or an individual
           contract pursuant to Article 3 by giving a written notice to the
           other party hereto in the event that such other party;

     (1)      initiates dissolution or liquidation proceedings whether
              compulsorily or voluntarily or makes an arrangement with its
              creditors generally or has a receiver or manager appointed or
              takes or suffers any similar action in consequence of debts; or
              becomes bankrupt or insolvent;

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     (2)      has all or any substantial portion of its capital stock, assets or
              any other property transferred by it to any third party or
              expropriated by any government;

     (3)      becomes unable to make payments or stop making payments to third
              parties within thirty (30) days of being notified in writing of
              payment; or

     (4)      commits any breach or fails to perform any provision of this
              Agreement, and such breach or failure shall not have been cured
              within thirty (30) days after the date of a written notice of such
              breach or failure given by the non-defaulting party.

14.3       No expiration or termination hereof shall release QUANTECH or
           Distributor from any liability which at such time already accrued to
           the other party, or in any way affect the survival of any right, duty
           or obligation of QUANTECH or Distributor which is intended to survive
           expiration or termination.

14.4       Immediately after expiration or termination of this Agreement,
           Distributor shall return to QUANTECH any unused promotional and
           advertising material provided by QUANTECH pursuant to Article 5
           hereof.

14.5       Notwithstanding the provisions in Articles 14.1 through 14.4 above,
           QUANTECH shall have the right to terminate this Agreement forthwith
           by a written notice to Distributor in the following circumstances:

     (1)      if  Distributor purports to assign the burden or benefit of this
              Agreement without the written consent of QUANTECH;

     (2)      if Distributor engages in any conduct prejudicial to the business,
              goodwill, reputation, activities or other interests of QUANTECH;
              or

     (3)      if Distributor's ownership, constitution or control is
              significantly changed, which QUANTECH considers will adversely
              affect the business, goodwill, reputation, activities or other
              interests of QUANTECH.

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14.6       If this Agreement terminates for any reason whatsoever, QUANTECH may
           without any liability towards Distributor or any other party
           whatsoever cancel all or any orders for the Products which have not
           been delivered. Alternatively, at the sole discretion of QUANTECH,
           they may supply the Products to the customers or third parties
           directly.

ARTICLE 15      NOTICE

           All notices, statements, reports, requests or other communications to
a party required or permitted hereunder shall be in writing and shall be deemed
effective and properly given when sent by registered or certified mail, or by
confirmed facsimile transmission to the person as indicated below or such other
person as may be designated by MCC or Quantech by such notice;

           if to MCC, to:

           Mitsubishi Chemical Corporation.
           5-2, Marunouchi 2-chome,
           Chiyoda-ku, Tokyo 100-0005 Japan
           Attention:  General Manager, Life Science Business Initiatives
                       Department
           Facsimile number:  (03) 3283-5809

           and, if to Quantech, to:

           Quantech, Ltd.,
           815 Northwest Parkway, Suite 100
           Eagan, Minnesota 55121 U.S.A.
           Attention:  President
           Facsimile number:  (651) 647-6370

MCC and Quantech may change their respective above-specified recipient and/or
mailing address by notice to the other party given in the manner herein
prescribed. All notices shall be deemed given on the day when actually delivered
as provided above (if delivered by facsimile) or on the day shown on the return
receipt (if delivered by mail).

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ARTICLE 16      FORCE MAJEURE

           Neither party hereto shall be responsible for failure or delay to
perform its obligation hereunder in case such failure or delay is caused by
fire, flood, earthquake, heavy snowfall, strikes, inevitable accident, war,
riots, civil commotion, governmental laws, order or regulations, embargoes,
blockades or any other causes beyond the control of such party; provided,
however, that the party failing to perform shall inform the other party of such
cause with reasonable evidence, such as newspaper articles and TV reports, and
make its best efforts to remove such cause of non-performance promptly.

ARTICLE 17      ASSIGNMENT

           Neither party hereto shall assign or transfer all or part of its
rights and obligations under this Agreement to any third party without the prior
written consent of the other party hereto.

ARTICLE 18      WAIVER

           No waiver by either party hereto of its right to enforce any
provisions of this Agreement shall constitute a waiver of such party's right to
enforce such provisions thereafter or to enforce any other provisions of this
Agreement.

ARTICLE 19      GOVERNING LAW

           This Agreement shall be construed in accordance with the laws of the
State of New York, excluding its choice of law provisions. The Parties further
agree to submit themselves to the non-exclusive jurisdiction of the state and
federal courts of the State of New York in the event that any dispute arises
under this Agreement.

ARTICLE 20      ARBITRATION

           All disputes, controversies or differences which may arise between
the parties hereto, out of or in connection with this Agreement or the breach
thereof, shall be finally settled by arbitration to be held in Tokyo, Japan in
the English language under the rules of Conciliation and Arbitration of
International Chamber of Commerce. The award thereof shall be final and binding
on the parties hereto.

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ARTICLE 21      ENTIRE AGREEMENT

           This Agreement contains the entire and final agreement of the parties
hereto with respect to the subject matter of this Agreement. Any and all prior
memorandum of understanding, letter of intent, promises, undertakings,
representations, agreements and understandings, written or oral, with respect to
the subject matter of this Agreement are hereby terminated. This Agreement shall
not be altered, amended or modified in any way except by an instrument in
writing executed by the parties hereto.

ARTICLE 22      SEVERABILITY

           In the event that any provision of this Agreement is deemed to be
unlawful or invalid, then such provision shall be severed from this Agreement,
but the remaining provisions of this Agreement and this Agreement as a whole
shall remain in effect and be binding on the parties hereto.

           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives.

                                       MITSUBISHI CHEMICAL CORPORATION

                                       -----------------------------------------
                                       By:  Kiyoshi Nakayama
                                       Its: General Manager,
                                            Life Science Business Initiatives
                                            Department

                                       QUANTECH LTD.

                                       -----------------------------------------
                                       By:  Robert Case
                                       Its: Chief Executive Officer<PAGE>   1

                              EMPLOYMENT AGREEMENT

PARTIES:

         Quantech Ltd.                                        (the "Company")
         815 Northwest Parkway
         Eagan, MN 55121

         Edward L. Zeman                                      (the "Employee")
         6504 Turnbridge Place
         Prospect, KY 40059

DATE:    REVISED- March 22, 2001                              ("Effective Date")

RECITALS:

         A. The Company is engaged in the business of developing and
commercializing certain patents, technology, associated proprietary data and
existing operating prototypes related to medical diagnostics based upon Surface
Plasmon Resonance.

         B. The Employee seeks to be employed, and the Company seeks to employ,
Employee under the terms of this Agreement.

         C. The Employee agrees that as a condition to employment with the
Company the Employee will abide by the terms of this Agreement.

         D. The Employee desires to be employed by the Company in a capacity in
which he may contribute to, or receive confidential information, and
acknowledges that the Company will suffer irreparable harm if Employee uses
confidential information outside his employment or makes any unauthorized
disclosure of such confidential information to any third party or uses such
confidential information wrongfully or in competition with the Company.

         E. Employee further recognizes that execution of this Agreement is an
express condition of employment.

AGREEMENTS:

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other benefits now or hereafter paid or made available to
Employee by the Company, the parties hereby agree as follows:

1. At-Will Employment. Subject to the provisions of Section 5 below, Employee's
employment with the Company is for no specified period and constitutes at-will
employment. As a result, Employee is free to resign at any time, for any reason
or for no reason. Similarly, the Company is free to conclude

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<PAGE>   2

its employment relationship with Employee at any time, with or without Cause
(defined below). Notwithstanding anything to the contrary in this Agreement, if
the Company terminates Employee's employment for Cause (as defined below), the
Company shall provide written notice ("Notice") of such termination to Employee.
The Notice shall specify the ground or grounds for termination and shall be
supported by a statement of all relevant facts.

2. Duties and Supervision.

         A. Employee shall serve as the Company's Chief Financial Officer.
During the term of this Agreement, Employee agrees to devote his best efforts to
the business and affairs of the Company and agrees to perform such reasonable
services and duties as may, from time to time, be assigned to him by the
Company's Chief Executive Officer that are consistent with Employee's position.
While Employee is employed by the Company, Employee will not perform services
for any other person, firm or corporation that is or may be competitive with the
Company, either as an executive or as an agent or independent contractor without
the express consent of the Chief Executive Officer of the Company. Employee
agrees to comply in every respect with the general standards and policies of the
Company as in effect from time to time during Employee's employment, all of
which the Company reserves the right to change in its sole discretion.

         B. Notwithstanding the foregoing, Employee may (i) participate in
professional, civic, charitable, and governmental organizations and activities
that do not materially affect his ability to carry out his duties hereunder, and
(ii) manage and invest his personal assets; provided, however, Employee shall
not sell or market, either directly or indirectly, point of care devices for any
person or entity other than the Company during the term of this Agreement.

         C. It is acknowledged that Employee's duties may require travel. When
required to travel, Employee's reasonable traveling and temporary living
expenses shall be paid directly by the Company, upon submittal of vouchers in
accordance with the general reimbursement policies of Company. Notwithstanding
the foregoing, Employee shall be required to work at the Company's headquarters
in Eagan, Minnesota.

3. Compensation.

         A. Base Salary. The Company shall pay Employee an initial annual salary
of One Hundred Seventy Thousand Dollars ($170,000) (the "Base Salary"), payable
in accordance with the Company's normal payroll practices in effect from time to
time, but in no event less frequently than semi-monthly. The Employee's
compensation shall be subject to discretionary upward adjustments by the
Company's Chief Executive Officer. The Employee's compensation package will be
reviewed no less than annually either on the Employee's anniversary date of
employment or at such time as other Company employees are reviewed.

         B. Bonus. As additional compensation for the services rendered under
this Agreement, Employee shall be eligible to receive an amount equal to no more
than forty percent (40%) of Employee's annual salary, based on Employee's
meeting certain performance targets to be mutually agreed upon by Employee and
the Company's Chief Executive Officer. The performance targets described in this
Section 3B shall be agreed upon not later than January 30 of each year during
the term of this Agreement. In addition, the Employee will be eligible for any
senior management incentive programs that may be established.

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<PAGE>   3

4. Other Employee Benefits.

         A. Benefits. During the term of Employee's employment by the Company
("Term"), Employee shall be entitled, to the extent that he is otherwise
eligible, to participate fully in all benefits provided by the Company for its
Employees in general, including, but not limited to, any profit-sharing or
401(k) plan or program, any medical, dental, long-term disability, life or other
group insurance or any other benefit plan which the Company elects, in its sole
discretion, to maintain from time to time. The Company will cover 100% of the
cost of health plans for the Employee and the Employee's immediate family
members.

         B. Reimbursement of Expenses. The Company will reimburse Employee
promptly for all of Employee's out-of-pocket expenses related to the Company
business. The Company understands and agrees that expenses for business-class
travel and business-class accommodations while Employee is traveling on Company
business are "reasonable" for the purposes of this Agreement.

         C. Options. Employee shall be entitled to an incentive stock option to
acquire one hundred forty seven thousand seven hundred eighty-three (147,783)
shares of the Common Stock of the Company pursuant to the terms of the Stock
Option Agreement and the Company's existing 1998 Stock Option Plan (a copy of
which will be provided to the Employee on the Employee's start date), as amended
December 1, 1999.

         Employee shall be also be entitled to a non-qualified stock option to
acquire two hundred forty two thousand two hundred-seventeen (242,217) shares of
the Common Stock of the Company pursuant to the terms of the Stock Option
Agreement and the Company's existing 1998 Non-Qualified Stock Option Plan (a
copy of which will be provided to the Employee on the Employees start date), as
amended December 1, 1999.

         E. Vacations. Employee shall be entitled to four (4) weeks' paid
         vacation each calendar year commencing on the Effective Date, subject
         to Company's generally applicable policies relating to vacations.
         Employee shall also be entitled to all paid holidays given by the
         Company to its Employees and six (6) paid sick days.

         F. Relocation: Employee shall be eligible for relocation allowance of
         $38,000 to cover expenses associated with a relocation to the Twin
         Cities area. The relocation must be completed within twelve (12) months
         of the hire date. In addition, the Company will provide reimbursement
         of temporary living expenses (travel, lodging, auto rental and meals)
         until the Employee's family relocates to the Twin Cities at the end of
         the 2000-2001 school year. During this time period the Employee agrees
         to work in the Company's Eagan location for four (4) days per week, and
         work at home on the fifth day. The temporary living expenses should not
         exceed $10,000.

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<PAGE>   4

5. Payments Upon Termination Employment.

         A. Accrued Compensation. Upon termination of Employee's employment with
the Company for any reason, Employee shall be entitled to receive all
compensation accrued and unpaid as of the date of termination, including Base
Salary and bonuses earned through the date of termination. The Company shall
continue to provide Employee with all profit sharing, pension, life, disability,
accident, health insurance, and other Employee benefit and fringe benefit plans
and programs through the date of termination in accordance with the terms and
provisions of such plans and programs in effect at the time that notice of
termination is given.

         B. Severance. If the Company terminates Employee's employment with the
Company for any reason other than Cause (defined below), or Employee terminates
his employment with the Company for Good Reason (defined below), then in
addition to the compensation set forth in Section 5A above, Employee shall be
entitled to a lump-sum payment equal to twelve (12) months' Base Salary.

         Notwithstanding the foregoing, Employee shall be entitled to a lump-sum
payment of twelve (12) months' Base Salary and applicable bonuses for that year,
immediate vesting of all options in Employee's favor to acquire shares of the
Company's common stock, and twelve (12) months' healthcare coverage if (i) there
is a Change in Control, and (ii) Employee's employment with the successor
entity, if any ("Successor"), is terminated for any reason by the Company or
Successor. For purposes of this Agreement, "Change in Control" shall mean the
happening of any of the following:

                  (a) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

                  (b) the shareholders of the Company approve an agreement for
the sale or disposition by the Company of all or substantially all the Company's
assets.

         C. Definitions of "Cause" and "Good Reason".

         (1) For purposes of this Agreement, "Cause" shall mean: (i) Employee's
conviction of or entry of a plea of guilty or nolo contendere to any felony
against him in connection with any allegation against him of fraud,
misrepresentation or misappropriation of property; (ii) Employee's theft or
misappropriation of the Company's property; (iii) Employee knowingly making
material false statements to the Company's Senior Executives or Board of
Directors regarding the affairs of the Company; or (iv) upon written notice by
the Company if Employee willfully and materially fails to perform his duties in
a reasonable and timely manner and does not correct such failure within a period
of fifteen (15) business days after written notice thereof from the Company
specifying the nature of such failure of performance and demanding that it be
cured.

         (2) For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following circumstances without the prior written
consent of Employee: (a) the requirement that Employee report to any officer,
consultant or committee, other than the Chief Executive Officer or the Board of
Directors of the Company or Successor, as applicable; (b) the removal of any
titles of Employee specified in Section 2A (whether employed by the Company or
the Successor); (c) any significant change

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<PAGE>   5

in the Employee's duties and responsibilities (whether employed by the Company
or the Successor); (d) the failure of the Company or the Successor, as
applicable, to maintain and to continue Employee's participation in its benefit
plans as in effect from time to time on a basis substantially equivalent to the
participation of Employees similarly situated to Employee; (e) a material breach
of the Company's or Successor's, as applicable, obligations under this
Agreement; (f) a Change of Control (as hereinafter defined); or (g) any
Successor's failure to accept an assignment of or assume all of Company's
obligations under, this Agreement.

         D. Disability. Notwithstanding anything to the contrary in this
Agreement, if Employee becomes unable to perform the duties specified hereunder
due to partial or total disability or incapacity resulting from a mental or
physical illness, injury or any other cause, Company will continue the payment
of Employee's Base Salary at its then current rate for a period of six (6)
months following the date Employee is first unable to perform such duties due to
such disability or incapacity. Thereafter, Company shall have no obligation for
Base Salary or other compensation payments to Employee during the continuance of
such disability or incapacity.

6. General Provisions.

         A. Injunctive Relief. In addition to any other relief afforded by law,
the Company shall have the right to enforce the covenants contained in this
Agreement by seeking injunctive relief against Employee and any other person
concerned thereby, it being understood that both damages and injunctive relief
shall be proper modes of relief and are not to be considered as alternative
remedies.

         B. Severability and Interpretation. In the event that a provision of
this Agreement is held invalid by a court of competent jurisdiction, the
remaining provisions shall nonetheless be enforceable according to their terms.
Further, in the event that any provision is held to be overbroad as written,
such provision shall be deemed amended to narrow its application to the extent
necessary to make the provision enforceable according to applicable law and
shall be enforced as amended.

         C. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any and all prior oral or written
understandings between the parties relating to the subject matter hereof, except
for the Confidentiality and Invention Agreement entered into between the Company
and Employee of even date with this Agreement. To the extent that the practices,
policies or procedures of Company, now or in the future, are inconsistent with
the terms of this Agreement, the provisions of this Agreement shall control.

         D. Modification and Waiver. No purported amendment, modification or
waiver of any provision hereof shall be binding unless set forth in a written
document signed by all parties (in the case of amendments or modifications) or
by the party to be charged thereby (in the case of waivers). Any waiver shall be
limited to the provisions hereof and the circumstances or event specifically
made subject thereto, and shall not be deemed a waiver of any other term hereof
or of the same circumstance or event upon any reoccurrence thereof.

         E. Assignment. This Agreement shall be binding on Employee's heirs,
assigns and legal representatives and may be transferred by the Company to its
successors and assigns.

                                       5
<PAGE>   6

         F. Governing Law. This Agreement is governed by and shall be construed
in accordance with the laws of the State of Minnesota, without regard to
principles of conflicts of laws.

         G. No Mitigation; No Offset. In the event of any termination of
Employee's employment under this Agreement, Employee shall be under no
obligation to seek other employment, and there shall be no offset against
amounts due under this Agreement on account of any remuneration attributable to
any subsequent employment that Employee may obtain.

         H. Attorneys' Fees. If any litigation or arbitration is commenced
between the parties concerning this Agreement, or the rights and duties of the
parties in relation to this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for
attorneys' fees in connection with such litigation or arbitration.

         I. Interpretation. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any party. By way
of example and not in limitation, this Agreement shall not be construed in favor
of the party receiving a benefit nor against the party responsible for any
particular language in this Agreement.

         J. Notice. Any and all notices required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered by hand, sent by a recognized overnight carrier such as Federal
Express or when deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, as follows:

           If to the Company:   To the address first specified above,
                                Attn.: Chief Executive Officer, or to such other
                                address Company may from time to time give
                                by written notice to Employee.

           If to the Employee:  To the address first specified above,
                                Attn.: Edward L. Zeman, or to such other
                                address Employee may from time to
                                time give by written notice to Company.

         K. Nature of Payments. Any amounts due Employee under this Agreement in
the event of any termination of Employee's employment with Company are in the
nature of severance payments, or liquidated damages which contemplate both
direct damages and consequential damages that may be suffered as a result of the
termination of Employee's employment, or both, and are not in the nature of aK.
penalty. Employee shall be entitled to interest at ten percent (10%) per annum
simple interest for any payments under this Agreement that are overdue.

                                       6
<PAGE>   7

         IN WITNESS WHEREOF, the parties have signed this Agreement on the date
first written above and each of the individuals signing below warrants that he
or he has the authority to sign for and on behalf of the respective parties.

                                       "Company"

                                       QUANTECH LTD.

                                       By:      ___________________________
                                                Robert Case, CEO

                                       "Employee"

                                                ___________________________
                                                Edward L. Zeman

                                       7

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