<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission file number 0-18335
TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2148293
(State of incorporation) (I.R.S. Employer
Identification No.)
25025 I-45 NORTH, THE WOODLANDS, TEXAS 77380
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (713) 367-1983
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
------ ------
As of July 30, 1996 there were 12,874,054 shares of the Company's
common stock, $.01 par value per share, issued and outstanding.
<PAGE> 2
ITEM 1. Financial Statements
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ -----------------------------
1996 1995 1996 1995
------------------------------ -----------------------------
<S> <C> <C> <C> <C>
($ Thousands)
Revenues:
Product sales $29,287 $18,880 $55,765 $39,370
Services 7,111 6,828 14,293 11,311
Rentals 312 367 846 661
------------------------------ -----------------------------
Total Revenues 36,710 26,075 70,904 51,342
Cost of Revenues:
Cost of product sales 19,993 14,724 38,247 28,971
Cost of services 4,779 2,651 10,049 5,208
Cost of rentals 233 55 423 120
------------------------------ -----------------------------
Total Cost of Revenues 25,005 17,430 48,719 34,299
------------------------------ -----------------------------
Gross Profit 11,705 8,645 22,185 17,043
General and Administrative Expense 7,053 5,624 13,215 11,050
------------------------------ -----------------------------
Operating Income 4,652 3,021 8,970 5,993
Interest Expense 290 (10) 314 55
Interest Income 33 195 78 398
Equity in Earnings (losses) from Joint Ventures 182 (53) 237 (77)
Other (income) expense, net (62) (60) (181) (124)
------------------------------ -----------------------------
Income Before Income Taxes 4,639 3,233 9,152 6,383
Provision for Income Taxes 1,734 1,268 3,436 2,477
------------------------------ -----------------------------
Net Income $2,905 $1,965 $5,716 $3,906
============================== =============================
Net Income per Common and
Common Equivalent Share $0.22 $0.15 $0.43 $0.30
============================== =============================
Weighted Average Common and Common
Equivalent Shares Outstanding 13,492 13,030 13,410 12,983
============================== =============================
</TABLE>
See Notes to Consolidated Financial Statements
- 2 -
<PAGE> 3
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30 December 31,
($ Thousands) 1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,139 $ 7,510
Trade accounts receivable, net of allowance for doubtful
accounts of $1,277 in 1996 and $1,568 in 1995 34,330 33,042
Costs and estimated earnings in excess of billings
on incomplete contracts 1,459 1,443
Inventories 23,204 16,309
Current portion of notes receivable 102 89
Deferred tax assets 1,248 1,451
Prepaid expenses and other current assets 2,488 1,515
--------- ---------
Total Current Assets 63,970 61,359
Property, Plant and Equipment:
Land and building 8,086 7,890
Machinery and Equipment 36,502 33,465
Automobiles and trucks 4,352 4,099
Chemical plants 44,665 31,370
Construction in progress 3,352 3,255
--------- ---------
96,957 80,079
Less accumulated depreciation and amortization (31,988) (25,471)
--------- ---------
Net Property, Plant, and Equipment 64,969 54,608
Other Assets:
Patents and licenses, net of accumulated amortization
of $710 in 1996 and $673 in 1995 483 519
Investment in Joint Ventures 4,619 4,189
Cost in excess of net assets acquired, net of accumulated
amortization of $658 in 1996 and $552 in 1995 6,082 3,944
Notes receivable, less current portion 277 308
Other, net of accumulated amortization of $876 in 1996
and $669 in 1995 6,167 4,994
--------- ---------
Total Other Assets 17,628 13,954
--------- ---------
$ 146,567 $ 129,921
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
- 3 -
<PAGE> 4
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
($ Thousands) 1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ 2,199 $ 2,262
Trade accounts payable 18,231 18,554
Accrued expenses 7,732 8,811
Billings in excess of costs and estimated
earnings on incomplete contracts 224 44
Current portions of all long-term debt and capital
lease obligations 1,680 1,600
-------- --------
Total Current Liabilities 30,066 31,271
Long-term Debt, less current portion 7,040 3,377
Capital Lease Obligations, less current portion 743 502
Deferred Income Taxes 4,893 4,977
Other liabilities 8,371 508
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $.01 per share
40,000,000 shares authorized, with 12,869,821 shares
issued and outstanding in 1996 and 12,809,580 shares
issued and outstanding in 1995 128 128
Additional paid-in capital 63,216 62,691
Cumulative Translation Adjustment (160) (89)
Retained earnings 32,270 26,556
-------- --------
Total Stockholders' Equity 95,454 89,286
-------- --------
$146,567 $129,921
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
- 4 -
<PAGE> 5
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------
($ Thousands) 1996 1995
-------- --------
<S> <C> <C>
Operating Activities:
Net Income $ 5,715 $ 3,906
Adjustments to reconcile net income to net cash
provided by operating activities :
Depreciation and amortization 3,923 2,900
Undistributed (earnings) losses from joint venture (237) 77
Provision for deferred income taxes 307 127
Provision for doubtful accounts 345 (1)
(Gain) on sale of property, plant and equipment (15) (59)
Changes in operating assets and liabilities,
net of assets acquired :
Trade accounts receivable (287) 1,072
Costs and estimated earnings in excess
of billings on incomplete contracts (16) (897)
Inventories (5,773) (1,583)
Prepaid expenses and other current assets (972) 17
Trade accounts payable and accrued expenses (3,037) 1,847
Billings in excess of costs and estimated
earnings on incomplete contracts 181 37
Other (980) (841)
-------- --------
Net cash provided by operating activities (846) 6,602
-------- --------
Investing Activities:
Purchases of property, plant and equipment (6,394) (8,515)
Acquisition of businesses, net of cash acquired (1) (1,400) -
Payments from notes receivable 18 62
Proceeds from sale of property, plant and equipment 176 83
(Purchase) sale of marketable securities 4,854
-------- --------
Net cash used by investing activities (7,600) (3,516)
-------- --------
Financing Activities:
Net repayments and borrowings from short-term credit lines (63) -
Proceeds from long-term debt and capital
lease obligations 2,575 371
Principal payments on long-term debt and capital
lease obligations (962) (284)
Proceeds from sale of common stock and exercised stock options 525 -
-------- --------
Net cash used by financing activities 2,075 87
-------- --------
Increase (Decrease) in cash and cash equivalents (6,371) 3,173
Cash & Investments at Beginning of Period 7,510 8,403
-------- --------
Cash & Investments at End of Period $ 1,139 $ 11,576
======== ========
</TABLE>
(1) Acquisition note : See Note C to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
- 5 -
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. The Company's
investment in its joint ventures is stated at cost plus equity in undistributed
earnings. All significant intercompany balances and transactions have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange Commission and
do not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, the
information furnished reflects all normal recurring adjustments which are, in
the opinion of management, necessary to a fair statement of the results for the
interim periods.
The accompanying financial statements should be read in conjunction
with the audited financial statements for the year ended December 31, 1995.
For the purposes of the statements of cash flows, the Company
considers all highly liquid cash investments with a maturity of three months or
less to be cash equivalents.
Interest paid on debt during the six months ended June 30, 1996 and
1995 was $491,000 and $176,000, respectively.
Income tax payments made during the six months ended June 30, 1996 and
1995 were $2,191,000 and $1,636,000, respectively.
In March 1995, FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The adoption of Statement 121 in
the first quarter of 1996 had no effect on the operations of the Company.
NOTE B - COMMITMENTS AND CONTINGENCIES
The Company, its subsidiaries and other related companies are named
defendants in several other lawsuits and respondents in certain governmental
proceedings arising in the ordinary course of business. While the outcome of
lawsuits or other proceedings against the Company cannot be predicted with
certainty, management does not expect these matters to have a material adverse
impact on the Company.
NOTE C - ACQUISITIONS
In the second quarter, the Company acquired the outstanding stock of
Industrias Sulfamex, S.A. DE C.V. ("Sulfamex") for $8 million. The
acquisition was funded in July by the Company drawing $10 million from its
line-of- credit, $2 million of which was used to retire existing Sulfamex debt.
The accompanying financial statements include the assets and liabilities of
Sulfamex. The effect of borrowing the purchase price is included in other
long-term liabilities. The purchase price was allocated to the acquired assets
and liabilities based on a preliminary determination of their respective fair
values. The acquisition has been accounted for under the purchase method of
accounting. The excess of the purchase price over the book value of the net
assets acquired was approximately $2.1 million and is amortized for 20 years.
Pro forma information with respect to the acquisition has not been presented as
such amounts
- 6 -
<PAGE> 7
are not material. Sulfamex is a Mexican corporation that produces certain
manganese-based chemicals for distribution predominantly into U.S. markets.
During the quarter ended March 31, 1996, the Company purchased the
assets of Culberson Well Service, Inc. for approximately $1.4 million.
Culberson Well Service, Inc. is an oilfield service company providing services
along the Gulf Coast. The assets purchased consisted of machinery and
equipment. The transaction was accounted for under the purchase method of
accounting. Pro forma information with respect to the acquisition has not been
presented as such amounts are not material.
NOTE D - NET INCOME PER SHARE
The following is a reconciliation of the weighted average number of
common shares outstanding with the number of shares used in the computations of
net income per common and common equivalent share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 31 JUNE 31
---------------------- ---------------------
1996 1995 1996 1995
---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number
of common shares outstanding . . . . . . . . . . . 12,869,821 12,666,190 12,848,250 12,659,509
Assumed exercise of stock options . . . . . . . . . . 622,026 363,564 562,162 323,504
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding . . . . . . . . . . . 13,491,847 13,029,754 13,410,412 12,983,013
========== ========== ========== ==========
</TABLE>
In applying the treasury stock method to determine the dilutive effect
of the stock options outstanding during the second quarter of 1996, the average
market price of $18.84 was used.
- 7 -
<PAGE> 8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Three months ended June 30, 1996 compared with three months ended June 30,
1995.
Total revenues for the quarter ended June 30, 1996 were $36.7 million
compared to $26.1 million in the prior period, an increase of $10.6 million or
40.6%. Revenues from the Oil & Gas Services Division increased significantly
as activity in the Gulf Coast continues to be strong. The Division's plug and
abandon operations also improved by benefitting from the increased activity and
acquisitions. Specialty Chemicals Division revenues were also up due to
improved liquid calcium chloride sales and revenues from acquisitions.
Gross profits were $11.7 million in the 1996 quarter compared to $8.6
million in the 1995 quarter, for an improvement of $3.1 million or 36.0%.
Gross profit as a percentage of revenue decreased from 33.2% in 1995 to 31.9%
in 1996. Gross profit percentages in the Specialty Chemicals Division were
down due to lower than planned production levels, resulting in higher product
costs at the Company's new calcium chloride plant in Lake Charles, Louisiana
which was put into service April 1. Modifications were made to the plant during
the second quarter, which should enable it to operate at or above designed
capacity. Lower margin filtration and denitrification projects within the
Process Technologies area also contributed to this reduction.
General and administrative expenses were $7.1 million in 1996 compared
to $5.6 million in 1995. The inclusion of acquired operations accounted for a
significant portion of this increase as did settlements of long-standing legal
issues . General and administrative expenses as a percentage of revenues
continued to drop from 21.6% in 1995 to 19.2% in 1996.
Operating income for the quarter ended June 30, 1996 was $4.7 million,
up $1.7 million or 57% from $3.0 million in 1995. This increase is the
combined result of a gross margin increase of $3.5 million due to increased
revenue volume and a $0.4 decrease due to lower gross margin rates, offset by a
$1.4 increase in general and administrative expenses.
Interest expense increased during the current quarter due in part to
the capitalization of 1995 interest in conjunction with the Lake Charles plant
expansion. The Company has also incurred over $6.0 million of indebtedness in
the past twelve months as a result of its acquisition program. Interest income
is down as a result of lower levels of cash available from investment, due
principally to increased levels of capital improvements and acquisitions.
Net income after taxes for the three months ended June 30, 1996 was
$2.9 million versus $2.0 million in 1995, an increase of $0.9 million or 45%.
Net income per share was $0.22 in the 1996 quarter based on 13,492,000 weighted
average common and common equivalent shares outstanding compared to earnings in
1995 of $0.15 based on 13,030,000 weighted average common and common equivalent
shares outstanding.
Six months ended June 30, 1996 compared with Six months ended June 30, 1995.
For the six months ended June 30, 1996, total revenues were $70.9
million up $19.6 million or 38% over the 1995 period total of $51.3 million.
The Oil & Gas Services Division accounted for a substantial portion of this
increase, with revenues in both the Gulf Coast and plug and abandon operations
up considerably. Revenues from the Specialty Chemicals Division also improved
over the prior year, principally through the acquisition of two agriculture
businesses, American MicroTrace, Inc. and Industrias Sulfamex, S.A. CE C.V.
The sale of liquid and dry calcium chloride also increased in the 1996 period,
somewhat offsetting a decrease in performance chemical sales.
Gross profits were $22.2 million in 1996 compared to $17.0 million in
1995, an increase of $5.2 million or 31%. Gross profit as a percentage of
revenues was 31.3% in 1996 down from 33.2% in 1995. This decrease is
attributable to higher than anticipated distribution costs and lower margin
filtration and denitrification projects within
- 8 -
<PAGE> 9
the Specialty Chemicals Division. In addition, higher than planned product
costs from the new Lake Charles plant also contributed to this decrease.
General and administrative expenses were $13.2 million in 1996
compared to $11.1 million in 1995. Additional expenses from acquired operations
and settlements costs of several legal suits accounted for most of this
increase. As a percentage of revenues, 1996 expenses were 18.6% down
significantly from 21.5% in 1995.
Operating income for the six months ended June 30, 1996 was $9.0
million compared to $6.0 million in 1995, an increase of $3.0 million or 50%.
This increase is attributable to a gross margin improvement of $6.5 million
relating to increased volume less $1.3 million from lower gross margin rates,
offset by increased general and administrative expenses of $2.2 million.
Net income after taxes for the first six months of 1996 totaled $5.7
million versus $3.9 million in the comparable 1995 period. Net income per
share was $0.43 in the 1996 period based on 13,410,000 weighted average common
and common equivalent shares outstanding compared to earnings for the 1995
period of $0.30 based on 12,983,000 weighted average common and common
equivalent shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased from $30.1 million at December
31, 1995 to $33.4 million at June 30, 1996, an increase of $3.3 million. An
increase in borrowings under the Company's line-of-credit plus additional
working capital acquired from Sulfamex accounted for the majority of this
increase. Inventories were up $5.8 million reflecting increased operating
activities in both domestic and international oil and gas markets.
Additionally, within the Specialty Chemicals Division inventories of dry
calcium chloride were up as the new dry plant production came on-line and
agricultural product inventories also increased due to weak weather-related
sales activity. Other significant components of the Company's working capital
changes included a decrease in accounts payable and accrued expenses of $3.0
million resulting primarily from federal tax payments and an increase of $1.0
million in prepaids expenses reflecting annual payment of insurance premiums
for the year.
The Company has announced its intention to augment internal growth
with acquisitions. The emphasis of these purchases will be in areas where
TETRA has technological leadership or existing distribution channels such as
acids, metals, agricultural products or oil and gas services. To fund this
acquisition program, the Company will use existing cash and cash flow as well
as its general purpose, unsecured, prime rate $30 million line-of-credit with
NationsBank and Texas Commerce Bank. As of June 30, 1996, the Company has $4
million in letters of credit and $2 million in long-term debt outstanding,
leaving net availability of $24 million. The terms of the current line have
been extended until the Company concludes negotiations to increase this
line-of-credit to $60 million. In addition to this expanded line, the Company
has five million shares of TETRA common stock covered by a shelf registration
statement that are available to finance its acquisition program.
Major investing activities during the six months ended June 30, 1996
included the acquisition of Culberson Well Service, Inc. ("Culberson") for
approximately $1.4 million and the purchase of Industrias Sulfamex, S.A. DE
C.V. ("Sulfamex") for $8.0 million. Culberson is an oilfield service company
in the Gulf Coast market and was incorporated into the Oil & Gas Services
Division. Sulfamex is located in Tampico, Mexico where they manufacture
manganese-based chemicals for distribution principally into U.S. markets. The
transaction was funded in July by the Company drawing $10 million from its
line-of-credit, $2 million of which was used to retire existing Sulfamex debt.
Additionally, the Company has continued to lease significant additional bromine
reserves in close proximity to its Magnolia, Arkansas plant.
Capital expenditures during the six months ended June 30, 1996 totaled
approximately $6.4 million, a significant portion of which was associated with
the major expansion of the Lake Charles plant. The expanded dry calcium
chloride facility began start-up operations in late 1995 with de-bottlenecking
continuing during the first and
- 9 -
<PAGE> 10
second quarters of 1996. When fully operational, production from the new dry
calcium chloride plant is expected to approximate 105,000 tons per year.
Additional expenditures were incurred to acquire oil and gas blending and
filtration equipment, plug and abandon rig equipment and specialty chemicals
transportation and distribution equipment.
The Company believes that its existing funds, cash generated by
operations, funds available under its bank line of credit, as well as other
traditional financing arrangements, such as secured credit facilities, leases
with institutional leasing companies, and vendor financing will be sufficient
to meet its current and anticipated operations and its anticipated capital
expenditures through 1996 and thereafter.
- 10 -
<PAGE> 11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company, its subsidiaries and other related companies are named
defendants in numerous lawsuits and respondents in certain governmental
proceedings arising in the ordinary course of business. While the outcome of
lawsuits or other proceedings against the Company cannot be predicted with
certainty, management does not expect these matters to have a material adverse
impact on the Company.
ITEM 6. EXHIBITS
(a) Exhibits
(i) A statement of computation of per share earnings is included in
Note D of the Notes to Consolidated Financial Statements
included in this report and is incorporated by reference into
Part II of this report.
(ii) 10.29 Employment Agreement dated April 1, 1996 with Allen T.
McInnes.
10.30 Employment Agreement dated April 1, 1996 with
Michael L. Jeane.
27 Financial Data Schedule
(b) Reports on Form 8-K: None
- 11 -
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TETRA Technologies, Inc.
Date: August 12, 1996 By: [Geoffrey M. Hertel]
----------------------------------
Geoffrey M. Hertel
Executive Vice President -
Finance and Administration
(Principal Financial Officer)
Date: August 12, 1996 By: [Bruce A. Cobb]
----------------------------------
Bruce A. Cobb, Corporate Controller
(Principal Accounting Officer)
- 12 -
<PAGE> 13
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- - ------- -----------
<S> <C>
(i) A statement of computation of per share earnings is included in Note D of the Notes to Consolidated Financial
Statements included in this report and is incorporated by reference into Part II of this report.
(ii) 10.29 Employment Agreement dated April 1, 1996 with Allen T. McInnes.
10.30 Employment Agreement dated April 1, 1996 with Michael L. Jeane.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and entered into effective on the 1st day
of April, 1996 (the "Effective Date"), by and between TETRA Technologies, Inc.,
a Delaware corporation with its principal office at 25025 I-45 North, 6th
Floor, The Woodlands, Texas (the "Company"), and Allen T. McInnes
("Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to secure the services of
Executive subject to the contractual terms and conditions set forth herein; and
WHEREAS, Executive is willing to enter into this Agreement
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the parties hereto agree as follows:
1. Employment. During Executive's Term of Employment (as
hereinafter defined), the Company shall employ Executive, and Executive shall
serve, as Chief Executive Officer and President of the Company.
2. Term of Employment. Executive's "Term of Employment" as used
herein, shall be for a period of four years beginning as of the Effective Date
and ending on the fourth anniversary of the Effective Date (the "Primary
Term"), unless earlier terminated pursuant to the provisions of this Agreement.
The Term of Employment shall thereafter automatically renew from year to year
for additional one year terms (the "Renewal Term") unless either party shall
serve six months advance written notice upon the other party prior to the
beginning of any Renewal Term of its election not to extend the term of
employment for an additional one year term, whereupon the Term of Employment
shall terminate on the last day of the existing term.
3. Compensation.
A. Base Salary. The Company shall pay or cause to be
paid to Executive during his Term of Employment a base salary of $285,000 per
annum for his services under this Agreement (the "Base Salary") payable in
accordance with the Company's normal payroll practices and prorated for partial
years of employment. The Executive's Base Salary shall be subject to annual
review by the
-1-
<PAGE> 2
Compensation Committee of the Board of Directors of the Company and may be
increased (but not decreased) from time to time, depending upon the performance
of the Company and Executive.
B. Annual Bonus. During the Term of Employment,
Executive shall be eligible to participate in the annual bonus program
maintained by the Company in accordance with the terms of the bonus program.
The annual bonus program is determined and administered each year by the
Compensation Committee of the Board of Directors in its discretion. Executive
shall accrue no entitlement to a bonus until actual payment occurs.
C. Option Award. Effective as of the Effective Date, the
Company has awarded Executive, pursuant to the TETRA Technologies, Inc. 1990
Stock Option Plan (the "1990 Plan"), a stock option (the "Option") in the form
attached hereto as Exhibit A, to acquire a total of 284,977 shares of common
stock of the Company ("Stock") at an exercise price of $16.875 per share, with
100,000 shares of Stock subject to the Option to be purchasable as of the
Effective Date, 100,000 shares of Stock subject to the Option to be purchasable
as of the first anniversary of the Effective Date, and 84,977 shares of Stock
subject to the Option to be purchasable as of the second anniversary of the
Effective Date, subject to the terms and provisions of the 1990 Plan and the
option agreement attached hereto. The Option shall be treated as an incentive
stock option to the extent possible under applicable tax law. Subject to the
other terms and provisions of the 1990 Plan, the Option shall have a term of
ten years. Executive acknowledges that the Compensation Committee of the Board
of Directors has full discretionary authority to administer and interpret the
1990 Plan and to make option awards thereunder and has exercised that authority
to award the option described in this Section 4.B. and the option agreement
attached hereto.
4. Duties and Responsibilities of Executive. During the Term of
Employment, Executive shall devote his services full time to the business of
the Company and perform the duties and responsibilities assigned to him to the
best of his ability and with reasonable diligence. In determining Executive's
duties and responsibilities, the Board of Directors of the Company (the
"Board") shall act in good faith and shall not assign duties and
responsibilities to Executive that are not appropriate or customary with
respect to the position of Executive hereunder. Executive will not participate
in any planning, operation or management of any activity competitive with the
Company's interest and will not otherwise engage in any activity potentially in
conflict with the interest of the Company except as authorized in writing by
the Board; provided, however, that the Company hereby agrees (i) that Executive
may continue to serve in his capacity as Chairman of the Board of Directors of
TGC Industries, Inc. ("TGC") and of its subsidiary Tidelands Geophysical
Company, Inc. ("Tidelands") indefinitely, and (ii) that Executive may continue
to serve in his capacity as Chief Executive Officer of TGC for a reasonable
time until an appropriate transition can be effected. This paragraph 4 shall
not be construed as preventing Executive from engaging in reasonable volunteer
services for charitable, educational or civic organizations provided that such
activity is not competitive with the Company's interest, or from owning stock
in public corporations. Executive affirms that he is not subject to any
agreement, written or oral, with TGC, Tidelands or any other entity that would
conflict with or otherwise interfere with Executive's ability to carry out his
obligations under this Agreement.
-2-
<PAGE> 3
5. Termination of Employment.
A. Termination by the Company Without Cause. If
Executive's services hereunder shall be terminated by the Company during the
Primary Term or Renewal Term and prior to any "Change of Control" for any
reason other than "Cause" (as such terms are hereinafter defined), Executive
shall be entitled to receive, and the Company shall be obligated to pay, his
Base Salary as in effect on termination of employment for the remainder of the
Primary Term or Renewal Term, as applicable, as if there had been no
termination. The Company shall have no other obligation to Executive following
any termination by the Company without Cause, and Executive shall no longer
participate in any benefit plans or programs sponsored by the Company except to
the extent provided under the terms of such plans or programs.
B. Termination by the Company For Cause or Substantial
Cause.
(i) The Company may terminate Executive's employment for
Cause or Substantial Cause. In such event, all payments of
compensation under this Agreement shall cease forthwith and Executive
shall thereafter be entitled to only that Base Salary then being paid
to him that is earned through the date Executive is terminated for
Cause or Substantial Cause.
(ii) Termination shall be for "Cause" only if termination
occurs prior to a "Change of Control" (as hereinafter defined) and is
based on (i) a material act or acts of dishonesty on the part of
Executive that adversely affects the Company, (ii) a material breach
by Executive during the Primary Term or Renewal Term of the provisions
of paragraphs 4, 8 or 9, or (iii) the continuing and material failure
of Executive to fulfill his obligations under this Agreement.
(iii) Termination shall be for "Substantial Cause" only if
termination occurs on or after the date of a Change of Control and
because (a) the Executive is convicted of a felony involving moral
turpitude; (b) the Executive commits a willful serious act of fraud,
misappropriation or embezzlement intending to enrich himself at the
expense of the Company or any affiliated entity; or (c) the Executive,
in carrying out his duties and responsibilities under this Agreement,
is guilty of willful misconduct or gross neglect that results in
material harm to the Company or any affiliated entity, unless such
conduct was reasonably believed by the Executive in good faith to be
in the best interests of the Company. In each case, the existence of
Substantial Cause must be confirmed by written notice signed by a
majority of the Board prior to any termination therefor.
C. Termination Subsequent to Change of Control.
(i) If a Change of Control of the Company shall occur and
at any time on or after that date the Executive shall elect to
terminate his employment hereunder for "Good Reason" (as hereinafter
defined) or Executive's employment is terminated by the Company
without Substantial Cause, then the Executive shall be entitled to
receive, and the Company shall be obligated to pay, the Base Salary
then being paid to him until the stated expiration date of the
-3-
<PAGE> 4
Primary Term or Renewal Term in effect at the date of termination. The
Company shall have no other obligation to Executive following any
termination on or after a Change of Control by the Executive for Good
Reason or by the Company without Substantial Cause, and Executive
shall no longer participate in any benefit plans or programs sponsored
by the Company except to the extent provided under the terms of such
plans or programs.
(ii) A "Change of Control" shall be deemed to have
occurred on the first day following April 1, 1996 upon which any
person or group of persons or entity or group of entities acquires
either (i) direct or indirect voting power sufficient to elect a
majority of the directors of the Company or (ii) stock or assets of
some or all of the Company's business or operating units or affiliates
comprising 60% or more of the total assets of the Company and its
affiliates on a consolidated basis (as shown on the Company's
financial statements for the immediately preceding fiscal year).
(iii) A termination of employment is for "Good Reason" if
such termination of employment occurs on or after the date of a Change
of Control and follows either
(a) a significant diminution in the duties and
responsibilities of the Executive immediately prior to the
date of the Change of Control or the assignment to the
Executive of any duties materially inconsistent with the
Executive's duties immediately prior to the Change of Control
or a substantial change in the Executive's reporting
responsibilities as in effect immediately prior to the Change
of Control, without the Executive's express written consent;
or any removal of the Executive from or any failure to
re-elect the Executive to any office of the Company held by
the Executive immediately prior to the Change of Control,
except in connection with promotions to higher office;
(b) a reduction in the Executive's Base Salary
from that in effect immediately prior to the Change of
Control;
(c) the failure of the Company substantially to
maintain and to continue the Executive's relative level of
participation in or opportunities under the same or
substantially comparable bonus, stock incentive programs,
retirement and welfare benefit plans as provided immediately
prior to the Change of Control;
(d) the failure of the Company substantially to
provide and continue for the Executive the same or
substantially comparable fringe benefits as provided
immediately prior to the Change of Control;
(e) the Company's requiring the Executive to be
based anywhere other than in or within 50 miles of the
Executive's principal place of
-4-
<PAGE> 5
employment at the time of the Change of Control, except for
required travel on the Company's business to an extent
substantially consistent with the Executive's prior business
travel obligations or, in the event the Executive consents to
relocation, the failure of the Company to pay (or reimburse
the Executive for) all reasonable moving expenses incurred by
the Executive relating to a change in the Executive's
principal residence in connection with such relocation, and to
indemnify the Executive against any loss realized in the sale
of the Executive's principal residence in connection with any
such change of residence; or
(f) the failure of the Company to obtain the
assumption of this Agreement by any successor as contemplated
by Section 14 below.
D. Other Termination. If Executive's services hereunder
shall be terminated during the Term of Employment due to death, disability,
retirement or resignation other than for Good Reason after the date of a Change
of Control, his Base Salary shall cease as of the end of the month in which
such event occurs, and upon such termination the Company shall have no further
obligation to Executive and Executive shall no longer participate in any
benefit plans or programs sponsored by the Company except to the extent
provided under the terms of such plans and programs.
E. Effect of Termination. Notwithstanding any other
provision of this Agreement to the contrary, Executive agrees that he will
resign his position as a member of the Board upon his termination of employment
for any reason.
6. Reimbursement of Expenses. During Executive's Term of
Employment, the Company shall pay or reimburse Executive for all reasonable
travel, entertainment and other expenses paid or incurred by Executive in
performing his obligations hereunder. In addition, the Company shall, during
Executive's Term of Employment, pay or reimburse Executive for all reasonable
club dues in accordance with a reasonable and customary program established by
the Board for such purpose.
7. Other Benefits. During the Term of Employment, Executive
shall be entitled to participate and shall be included in any pension,
profit-sharing, deferred compensation, or similar plan or program of the
Company established by the Company, to the extent that he is eligible under the
provisions of each such plan or program. Executive shall also be entitled to
participate in any group insurance, hospitalization, medical, health and
accident, life, dental, disability or similar plan or program established by
the Company, to the extent that he is eligible under the provisions of each
such plan or program. Executive shall be eligible for vacation and sick leave
in accordance with standard Company policies. Executive agrees that the plans
and programs described under this Section 7 do not include any bonus programs
or stock option plans, such as the 1990 Plan.
8. Covenant Against Competition
-5-
<PAGE> 6
A. Restrictive Covenant. Executive agrees that during
the Restricted Period (as hereinafter defined), he will not in any manner,
directly or indirectly, invest in, own, engage in or be employed by or render
services or advice to any business or enterprise engaging in the Competitive
Activities (as hereinafter defined) within the United States or within one
hundred miles of any international location where the Company or any of its
affiliates is operating. Competitive Activities shall mean (i) researching,
developing, manufacturing, providing or marketing products or services of a
nature (as hereinafter defined for purposes of this Section 8) researched,
developed, manufactured, provided or marketed by the Company or any affiliated
entity; (ii) hiring, attempting to hire, or assisting any other person or
entity in hiring or attempting to hire any person employed by the Company or
any affiliated entity; or (iii) soliciting, in competition with the Company or
any affiliated entity, the business of any customer of the Company or any
affiliated entity on behalf of whom the Company or any affiliated entity
provided products or services at any time during the Executive's Term of
Employment hereunder. As used in this Section 8, a product or service shall be
deemed to be "of a nature" researched, developed, manufactured, provided or
marketed by the Company or any affiliated entity if it is of the same or
similar nature as a product or service of the Company or any affiliated entity
or is an adaptation, improvement or development thereof. The Restricted Period
is the period beginning as of the date of this Agreement and ending three years
after the end of the last month for which Executive shall have been scheduled
to receive any compensation in the form of Base Salary under this Agreement;
provided, however, that in the event of a Change of Control, the Restricted
Period shall end after the last month for which Executive shall have been
scheduled to receive any compensation in the form of Base Salary under this
Agreement. Ownership of stock in public corporations shall not be in violation
of this provision.
B. Covenant Not to Solicit. The Executive shall not,
directly or indirectly, during the Restricted Period, (a) take any action to
solicit or divert any business or customers (or potential customers) away from
the Company or any of its affiliates, (b) induce customers, potential
customers, suppliers, agents or other persons under contract or otherwise
associated or doing business with the Company or its affiliates to terminate,
reduce or alter any such association or business with or from the Company or
its affiliates and/or (c) induce any person in the employment of the Company or
its affiliates or any consultant to the Company or its affiliates to (i)
terminate such employment, or consulting arrangement, (ii) accept employment,
or enter into any consulting arrangement, with anyone other than the Company or
its affiliates, and/or (iii) interfere with the customers, suppliers, or
clients of the Company or its affiliates in any manner or the business of the
Company or its affiliates in any manner. For purposes of this Section 8.B, a
"potential customer" shall mean a person or entity that the Company or its
affiliates, as of the date the Executive's employment terminates, is actively
soliciting for or in respect of any current, actively pending or contemplated
business.
C. Reasonableness of Restrictions. Executive
acknowledges that he has carefully read and considered the provisions of
paragraphs 8.A and 8.B and agrees that the restrictions set forth in such
paragraphs including, but not limited to, the time period of restriction, the
geographical areas of restriction, and the scope of activity of restriction are
fair and reasonable and are reasonably required for the protection of the
interests of the Company, and that the Company has legitimate
-6-
<PAGE> 7
business interests deserving to be protected. Notwithstanding the foregoing,
in the event that any of the provisions of paragraphs 8.A or 8.B shall be held
to be invalid or unenforceable, the remaining provisions thereof, together with
any modification thereof made by a court of competent jurisdiction, shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. Without limiting the
foregoing, in the event that any provision of paragraph 8.A or 8.B relating to
time period or area of restriction shall be declared by a court of competent
jurisdiction to exceed the maximum time period or area such court deems
reasonable and enforceable, said time period or area of restriction shall be
deemed to become and thereafter be the maximum time period or area which such
court deems reasonable and enforceable.
9. Information and Inventions.
A. Confidential Information. Executive agrees that he
will not, except as permitted by the Company in writing, in any manner, at any
time during the Term of Employment or thereafter, directly or indirectly,
whether to the detriment of the Company or the benefit of Executive or any
third party or otherwise, disclose or use any confidential information except
in the good faith performance of his duties under this Agreement. In addition,
Executive agrees that he will not create any derivative work or other product
based upon or resulting from any confidential information except in the good
faith performance of his duties under this Agreement. Executive further agrees
that during the Restricted Period, he will not undertake any owner, consultant
or employment role competitive or in conflict with any interest of the Company
wherein the complete unhampered fulfillment of the duties of that employment
would inherently or inevitably cause him to reveal, to base judgments upon or
to use any such Company confidential information or trade secrets. As used in
this Agreement, the term "confidential information" means any and all
information disclosed to Executive or known by or acquired by Executive as a
consequence of or through his employment by an employer or which was acquired
during his employment with an employer which is not known to the general public
or in the industry in which the Company is engaged, about the Company's
products, customers, processes, financial condition, computer programs,
formulas, patents, techniques, improvements or know-how and services, and
including, without limitation, information relating to research, development,
inventions, manufacturing, merchandising and selling. Executive shall employ
all necessary safeguards and precautions in order to ensure that unauthorized
access to the Confidential Information is not afforded to any person, firm,
corporation or entity. Upon any expiration or termination of this Agreement,
upon Executive's termination of employment, or if the Board so requests at any
time, Executive shall promptly return to the Company all Confidential
Information in Executive's possession, whether in writing, on computer disks or
other media, without retaining any copies, extracts or other reproductions
thereof.
B. Inventions. Executive agrees to disclose promptly,
completely and in writing to the Company and thereafter to assign and to bind
his heirs, executors and administrators to assign to the Company or its
designee, successor, assignee or legal representative, any and all inventions,
processes, diagrams, methods, apparatuses or improvements (all of which are
hereinafter collectively called "Inventions") whatsoever, discovered, conceived
or developed, either individually or jointly with others, during the course of
Executive's employment with the Company (including all Inventions
-7-
<PAGE> 8
based wholly or in part upon ideas conceived during Executive's employment with
the Company), or using the Company's time, data, facilities and/or materials,
provided the subject matter is one within a field of interest of Company.
Executive's obligations under this Section apply without regard to whether the
idea for such Invention or solution to a problem occurs to Executive on the
job, at home or elsewhere. Executive further agrees that such Inventions are
the sole property of the Company, whether or not any patent application is ever
filed therefor. Executive agrees that he will cooperate fully in assisting the
Company in filing any patent, copyright or associated trademark application
with regard to any such Invention, if the Company elects to file such
application, including signing written assignments of the Executive's rights to
such Inventions.
10. Injunctive Relief. Executive acknowledges and agrees that the
Company will be irreparably harmed and will have no adequate remedy at law if
Executive breaches or threatens to breach any of the provisions of paragraph 8
or paragraph 9 of this Agreement. Executive agrees that the Company shall be
entitled to injunctive and other equitable relief to prevent any breach or
threatened breach of paragraph 8 or paragraph 9. Executive agrees that the
Company shall also be entitled to specific performance of each of the terms of
such paragraphs in addition to any other legal or equitable remedies that the
Company may have. Executive further agrees that, in any equity proceeding
relating to the enforcement of the terms of paragraph 8 or paragraph 9, he
shall waive and he agrees not to raise the defense that the Company has an
adequate remedy at law.
11. Notices. All notices and other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by registered or certified mail (return
receipt requested and with postage prepaid thereon) or by facsimile
transmission to the respective parties at the following addresses (or at such
other address as either party shall have previously furnished to the other in
accordance with the terms of this Section 11):
if to the Company:
TETRA Technologies, Inc.
c/o Chairman of the Board of Directors
25025 I-45 North
6th Floor
The Woodlands, Texas 77380
if to the Executive:
Allen T. McInnes
650 Shartle Circle
Houston, Texas 77024
12. Assistance with Litigation. For a period of two years after
the end of the last period for which Executive shall have received any
compensation under this Agreement and for as long
-8-
<PAGE> 9
thereafter as any litigation instituted within such period continues, Executive
shall furnish such information and proper assistance as may be reasonably
necessary in connection with any litigation in which the Company is then or may
become involved. The Company agrees to reimburse Executive for all expenses
reasonably incurred in furnishing such assistance.
13. Income Tax Withholding and Other Tax Considerations.
A. Withholding. The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city
or other taxes that shall be required pursuant to any law or governmental
regulation or ruling.
B. Certain Other Payments. If the Executive is liable
for the payment of any excise tax (the "Basic Excise Tax") because of Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor or similar provision, with respect to any payments or benefits
received or to be received from the Company or any successor to the Company,
whether provided under this Agreement or otherwise, the Company shall pay the
Executive an amount (the "Special Reimbursement") which, after payment by the
Executive (or on the Executive's behalf) of any federal, state and local taxes,
including, without limitation, any further excise tax under such Section 4999
of the Code, on, with respect to or resulting from the Special Reimbursement,
equals the net amount of the Basic Excise Tax.
14. Consolidation, Merger, or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or
with, or transferring all or substantially all of its assets to, another
corporation which assumes this Agreement and all obligations and undertakings
of the Company hereunder; provided, that no such action shall diminish
Executive's rights. Upon such a consolidation, merger, or transfer of assets
in assumption of the Company, the term the "Company" as used herein, shall mean
such other corporation, respectively.
15. General Provisions.
A. Assignability; Attachment and Effect. Neither this
Agreement nor any right or interest hereunder shall be assignable by Executive,
or his legal representatives without the prior written consent of the Company.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, hypothecation, execution, attachment, levy, or
similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to effect such action shall be null, void and of no effect.
This Agreement shall be binding upon and inure to the benefit of the Company,
its successors and assigns.
B. Waiver, Severability and Amendment of Agreement.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto. No term or condition of this Agreement
shall be deemed to have been waived, nor shall there be an estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party
-9-
<PAGE> 10
charged with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity
shall in no way affect the rest of such provision not held so invalid, and the
rest of such provision, together with all provisions of this Agreement, shall
to the full extent consistent with law continue in full force and effect.
Unless otherwise provided, if this Agreement or any portion thereof conflicts
with any law or regulation governing the activities of the Company, the
Agreement or appropriate portion thereof shall be deemed invalid and of no
force or effect.
C. Submission to Arbitration. Any controversy or claim
arising out of or relating to this contract or its alleged breach or any
matters arising, either directly or indirectly, out of Executive's employment
relationship with the Company shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), and any judgment on the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof. The arbitrator shall
be selected by mutual agreement of the parties, if possible. If the parties
fail to reach agreement upon appointment of an arbitrator within 30 days
following receipt by one party of the other party's notice of desire to
arbitrate, the arbitrator shall be selected from a panel or panels of persons
submitted by the AAA. The selection process shall be that which is set forth
in the AAA Commercial Arbitration Rules then prevailing, except that, if the
parties fail to select an arbitrator from one or more panels, AAA shall not
have the power to make an appointment but shall continue to submit additional
panels until an arbitrator has been selected. Demand for arbitration must be
made within one year after the accrual of the claim on which the demand is
based. If the claiming party fails to demand arbitration within one year, the
claim shall be deemed to be waived and shall be barred from either arbitration
or litigation.
D. Headings; Governing Law. The headings of paragraphs
herein are included solely for convenience and reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
-10-
<PAGE> 11
IN WITNESS THEREOF, the Company has caused this Agreement to
be executed by its officer thereunto duly authorized, and Executive has signed
this Agreement, all as of the day first above written.
TETRA Technologies, Inc.
By: [J. Taft Symonds, Chairman]
-----------------------------------
[Allen T. McInnes]
-------------------------------------
Allen T. McInnes, Executive
-11-
<PAGE> 1
EXHIBIT 10.30
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered
into effective as of April 1, 1996, by and between TETRA Technologies, Inc., a
Delaware corporation with its principal office at 25025 I-45 North, 6th Floor,
The Woodlands, Texas (the "Company"), and Michael L. Jeane, an individual
residing in The Woodlands, Texas ("Employee");
W I T N E S S E T H:
WHEREAS, Employee is a founder of the Company and has served
as Chief Executive Officer of the Company since its inception and as President
of the Company since 1984; and
WHEREAS, Employee has resigned the offices of Chief Executive
Officer and President of the Company effective as of April 1, 1996, and the
Company desires to secure the further employment of Employee as advisor to the
Company; and
WHEREAS, in consideration of such arrangements, the parties
hereto are willing to enter into this Agreement upon the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the mutual promises and
agreement set forth herein, the parties hereto agree as follows:
1. Appointment as Director: The Company agrees to cause
Employee to be nominated to an additional term as a Class III member of the
Board of Directors of the Company at the 1996 Annual Meeting of Stockholders of
the Company. Employee agrees that he will resign his position as a Director of
the Company (a) effective as of the date of the 1997 Annual Meeting of
Stockholders of the Company, if he is requested to do so by a majority of the
other members of the Board of Directors, or (b) effective as of his date of
termination of employment for "Cause" (as defined in paragraph 3 hereof) or his
termination of employment upon expiration of the "Employment Term" (as defined
in paragraph 3 hereof).
2. Engagement as Employee: The Company agrees to retain
Employee as an employee for the Employment Term upon the terms and conditions
herein provided. During the portion of the Employment Term ending March 31,
1997, Employee agrees to devote to the Company's affairs up to one-third of his
normal working hours, excluding customary vacation and holidays. Employee
shall at the request of the Board of Directors, or its Chairman or the Chief
Executive Officer or President of the Company, consult with the successor Chief
Executive Officer and President, continue with development projects with the
various divisions of "ICL" and Albemarle, and provide acquisition analysis and
negotiation support to the Company. During the portion of the Employment Term
beginning April 1, 1997 and ending March 31, 1999, Employee shall remain
available to perform such duties and responsibilities as shall be mutually
agreed by the Company or
-1-
<PAGE> 2
by a subsidiary of the Company that shall be designated by the Company as
Employee's employer; provided, however, that Employee shall not be obligated to
perform services to the extent such services would interfere with other
personal and professional responsibilities.
3. Employment Term: The "Employment Term" shall be a
period of three years beginning on April 1, 1996. The Employment Term and all
obligations of the Company under this Agreement shall terminate in the event
the Employee's employment is terminated for "Cause." Termination by the
Company for "Cause" shall mean termination by action of the Board of Directors
of the Company because (a) Employee has violated the provisions of paragraph 5
of this Agreement, (b) Employee has engaged in any action which is inconsistent
with fostering the good will of the Company or in direct conflict with the
written policies established by the management of the Company, or (c) Employee
has engaged in direct or indirect participation in any proxy solicitation of
Company's stockholders other than proxy solicitations approved by a majority of
the Board of Directors of the Company. In the event of Employee' s death or
disability during the Employment Term, the Company shall continue to provide to
Employee's estate the compensation described in paragraph 4.a. and 4.b. and the
options awarded under the 1990 Plan shall be exercisable in accordance with
their relevant terms.
4. Compensation:
a. Salary. During the Employment Term, Employee
shall be entitled to receive a base salary of $227,000 per annum through March
31, 1998, and $100 per annum for the period beginning April 1, 1998 through
March 31, 1999, payable in accordance with the normal payroll practices of the
Company and the employing subsidiary, or in such other manner as shall be
mutually agreeable.
b. Bonus. During the Employment Term, Employee
shall be entitled to continue to participate in the Company's bonus program
through December 31, 1997, as if he had continued to serve as the Chief
Executive Officer of the Company. In 1996, if the Company achieves $.95
earnings per share as identified in the plan established for purposes of
determining bonus amounts, Employee shall be entitled to a bonus of 37.5% of
base salary. In 1997, if the Company achieves the earnings per share plan
established in accordance with the bonus program, Employee shall be entitled to
a bonus of 25% of base salary. In no case will a bonus be paid to Employee in
excess of 37.5% or 25%, as applicable, unless it is approved by the
Compensation Committee of the Board of Directors. If the attained earnings per
share is at least 90% but less than 100% of the target earnings per share plan
for the applicable calendar year, the bonus payment for the calendar year shall
be reduced proportionately down to a minimum of 10% of the bonus that would
otherwise have been paid in the event the Company achieved 100% of the earnings
per share based on the established plan figure. In the event earnings per
share is less than 90% of the plan figure for the relevant year, Employee shall
receive no bonus for the calendar year. Any such bonus will be paid to
Employee at the same time bonuses are paid to other employees under the bonus
program.
-2-
<PAGE> 3
c. Option Award. All stock options awarded to
Employee under the TETRA Technologies, Inc. 1990 Stock Option Plan (the "1990
Plan") prior to the date of this Agreement (the "Old Options") shall become
vested and fully exercisable as of the date of this Agreement. In all other
respects, the terms of the Old Options awarded to Employee shall not be
affected by this Agreement. In addition, the Company shall award Employee,
pursuant to the 1990 Plan, a stock option to acquire 50,000 shares of common
stock of the Company at an exercise price of $16.875 per share, granted
effective April 1, 1996 (the "New Option"). The New Option shall be treated as
an incentive stock option to the extent possible under applicable tax law. The
New Option will become exercisable in a schedule of 4,167 shares per month,
commencing April 30, 1996, with the last installment of 4,163 shares becoming
exercisable on March 31, 1997. The Company agrees that with respect to both
the Old Options and the New Options, any termination of Employee's employment
other than a termination for Cause shall be considered a "Qualified
Termination" under the 1990 Plan and the Employee's stock option agreement
thereunder for purposes of determining the period during which the Option will
remain exercisable after such termination.
5. Noncompetition: Employee recognizes and acknowledges
that in the course of his employment with the Company and as a result of the
position of trust he holds under this Agreement he has or will obtain private
or confidential information and proprietary data relating to the Company and
its subsidiaries. Employee agrees that he will not, either directly or
indirectly, disclose or use confidential information acquired during his
employment with the Company except with the prior written consent of the
President and Chief Executive Officer of the Company or unless compelled to do
so by process of law. Employee agrees that until March 31, 1999, he will not
directly or indirectly (whether acting alone or through any of his affiliates,
as a member of a partnership or a joint venture or an investor in or a holder
of securities of or an employee of, any corporation or other entity, or
otherwise), engage in any business or enterprise in competition with the
Company or any of its affiliates, or their respective successors, within one
hundred miles of any location where the Company or any of its affiliates is
operating. In addition, Employee agrees that he shall not, directly or
indirectly, during the period ending March 31, 1999, (a) take any action to
solicit or divert any business (or potential business) or customers (or
potential customers), away from the Company or its affiliates, (b) induce
customers, potential customers, suppliers, agents or other persons under
contract or otherwise associated or doing business with the Company or its
affiliates to terminate, reduce or alter any such association or business with
or from the Company or its affiliates and/or (c) induce any person in the
employment of the Company or its affiliates or any consultant to the Company or
its affiliates to terminate such employment or consulting arrangement or accept
employment or enter into any consulting arrangement with anyone other than the
Company or its affiliates or interfere with customers, suppliers or clients of
the Company or its affiliates in any manner. If any of the provisions of this
paragraph 5 is found to be unreasonably broad, oppressive or unenforceable in
an action, suit or proceeding before any federal or state court, such court (i)
shall narrow the scope of the Agreement in order to insure that the application
thereof is not unreasonably broad, oppressive or unenforceable, and (ii) to the
fullest extent permitted by law, shall enforce such agreements as though
reformed. Employee hereby agrees that a violation of the provisions of this
paragraph 5 would cause irreparable injury to the Company and its affiliates
for which they would have no adequate remedy at law. Accordingly, in the event
of any such violation, the Company shall
-3-
<PAGE> 4
be entitled to preliminary and other injunctive relief without necessity of
complying with any requirement as to the posting of a bond or other security
(it being understood that Employee hereby waives any such requirement). Any
such injunctive relief shall be in addition to any other remedies to which the
Company may entitled at law or in equity or otherwise. The Company agrees to
give Employee written notice of any alleged violation of this paragraph and the
Employee shall have a period of 30 days within which to cure such alleged
violation.
6. Expenses: The Company shall reimburse Employee for
all out-of-pocket entertainment, travel and related expenses reasonably
incurred by Employee and properly documented in the course of performing his
duties hereunder. Additionally, during his Employment Term, but not after
March 31, 1998, Employee will continue to have the following expenses paid by
the Company: two business telephone lines at his home office, mobile telephone
bill, monthly dues to the Woodlands Country Club, and dues to the Woodlands
Athletic Center.
7. Benefits: Until the earlier of March 31, 1998 or his
death, Employee shall be entitled to participate in employee benefit plans that
are available to employees of the Company in accordance with the Company's
regular practices, including participation in the Company's 401(k) Plan, group
medical plan and other plans that the Company has in effect from time to time.
8. Office: Employee's primary office for purposes of
performing his duties under this Agreement will be at his home. Company agrees
to maintain a small office for Employee's use at the Company's headquarters.
The Company agrees to make a portable computer available for Employee's use
during the Employment Term but not after March 31, 1998.
9. Releases. In consideration of Employee's right to
the benefits set forth in this Agreement, the sufficiency of which is hereby
acknowledged, Employee hereby releases, acquits and forever discharges (i) the
Company and its affiliates from any and all "Claims" (as hereinafter defined)
against the Company and its affiliates including any and all Claims on account
of, related to, or arising out of the facts and circumstances surrounding
Employee's employment or termination of employment as an officer of the
Company or its affiliates which Employee ever had, now has or may have from the
date of his commencement of employment with the Company to the date of his
resignation as an officer of the Company and its affiliates, and (ii) the
officers, Directors and employees of the Company and its affiliates from any
and all Claims which Employee now has or may have on account of, related to, or
arising out of the facts ad circumstances surrounding Employee's resignation as
an officer of the Company. "Claims" shall mean any damages, losses, causes of
action, expenses, claims, demands and liability of whatever kind and character,
including, but not limited to, any claims, such as those of any federal, state,
or local law dealing with discrimination in employment. The Company agrees
that this release shall not affect any right or Claim that Employee has (i) for
breach of this Agreement by the Company, (ii) for indemnity by the Company (as
set forth below) or (iii) pursuant to any director's and officer's liability
insurance policy maintained by the Company or its affiliates to be indemnified
and insured, from and after the date of this Agreement, for any Claims arising
against Employee at any time as a result of his service as an officer and a
Director of the Company and its
-4-
<PAGE> 5
affiliates. The Company agrees to indemnify Employee to the fullest extent
permitted by the certificate of incorporation and bylaws of the Company.
10. Effect of Prior Agreements: This Agreement contains
the entire understanding between the parties hereto relating to the subject
matter hereof and supersedes any other prior agreement between the Company and
Employee, except that this Agreement shall not operate to reduce any benefit or
compensation inuring to Employee under the terms of the 1990 Plan.
11. General Provisions:
a. Nonassignability. Neither this Agreement nor
any right or interest hereunder shall be assignable by Employee without the
Company's prior written consent.
b. Submission to Arbitration. Any controversy
or claim arising out of or relating to this contract or its alleged breach
shall be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), and any judgment on the
award rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The arbitrator shall be selected by mutual agreement of
the parties, if possible. If the parties fail to reach agreement upon
appointment of an arbitrator within 30 days following receipt by one party of
the other party's notice of desire to arbitrate, the arbitrator shall be
selected from a panel or panels of persons submitted by the AAA. The selection
process shall be that which is set forth in the AAA Commercial Arbitration
Rules then prevailing, except that, if the parties fail to select an arbitrator
from one or more panels, AAA shall not have the power to make an appointment
but shall continue to submit additional panels until an arbitrator has been
selected.
12. Modification and Waiver:
a. Amendment of Agreement. This Agreement may
not be modified or amended except by an instrument in writing signed by the
parties hereto.
b. Waiver. No term or condition of this
Agreement shall be deemed to have been waived, nor shall there be an estoppel
against the enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel.
13. Notices: All notices or communications hereunder
shall be in writing, addressed as follows:
To the Company:
-5-
<PAGE> 6
TETRA Technologies, Inc.
25025 I-45 North,
6th Floor
The Woodlands, Texas 77380
Attention: Allen T. McInnes
To the Employee:
Michael L. Jeane
54 Waterford Bend
The Woodlands, Texas 77381
All such notices shall be conclusively deemed to be received and shall
be effective, (i) if sent by hand delivery, upon receipt, (ii) if sent
by telecopy or facsimile transmission, upon confirmation of receipt by
the sender of such transmission or (iii) if sent by registered or
certified mail, on the fifth day after the day on which such notice is
mailed.
14. Governing Law: This Agreement has been executed and
delivered in the State of Texas, and its validity, interpretation, performance,
and enforcement shall be governed by the laws of said State.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its officers thereunto duly authorized, and Employee has signed
this Agreement, all as of the day first above written.
TETRA Technologies, Inc.
By: [Allen T. McInnes]
--------------------------------------------
Allen T. McInnes,
President and Chief Executive Officer
[Michael L. Jeane]
-----------------------------------------------
Michael L. Jeane
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,139
<SECURITIES> 0
<RECEIVABLES> 35,709
<ALLOWANCES> 1,277
<INVENTORY> 23,204
<CURRENT-ASSETS> 63,970
<PP&E> 96,957
<DEPRECIATION> 31,988
<TOTAL-ASSETS> 146,567
<CURRENT-LIABILITIES> 30,066
<BONDS> 7,783
<COMMON> 128
0
0
<OTHER-SE> 95,326
<TOTAL-LIABILITY-AND-EQUITY> 146,567
<SALES> 55,765
<TOTAL-REVENUES> 70,904
<CGS> 38,247
<TOTAL-COSTS> 48,719
<OTHER-EXPENSES> 13,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 314
<INCOME-PRETAX> 9,152
<INCOME-TAX> 3,436
<INCOME-CONTINUING> 5,716
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,716
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
