[GRAPHIC OMITTED]
April 18, 1997
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Technical
Chemicals & Products, Inc. (the "Company"), which will be held at the Doubletree
Guest Suites Hotel, 555 N.W. 62nd Street, Fort Lauderdale, Florida 33309, on
Friday, May 23, 1997, at 10:00 a.m., local time.
The notice of meeting and proxy statement on the following pages cover the
formal business of the meeting. Whether or not you expect to attend the meeting,
please sign, date, and promptly return your proxy in the enclosed envelope to
assure your shares will be represented at the meeting. If you decide to attend
the annual meeting and vote in person, you will, of course, have that
opportunity.
The continuing interest of the shareholders in the business of the Company
is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
/s/
Jack L. Aronowitz
President, Chief Executive Officer
and Chairman of the Board of Directors
- --------------------------------------------------------------------------------
TECHNICAL CHEMICALS & PRODUCTS, INC. o P.O. Box 8726 o Fort Lauderdale, Florida
33310 o (954) 979-0400 o (954)979-0009 - 3341 S.W. 15th St. (W. McNab Rd.)
o Pompano Beach, Florida 33069
- --------------------------------------------------------------------------------
<PAGE>
TECHNICAL CHEMICALS & PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
--------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 23, 1997
The Annual Meeting of Shareholders of Technical Chemicals & Products, Inc.
will be held at the Doubletree Guest Suites Hotel, 555 N.W. 62nd Street, Fort
Lauderdale, Florida 33309, on Friday, May 23, 1997, at 10:00 a.m., local time,
for the following purposes:
To elect one Class II director for a three-year term expiring in 2000; and
To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 10, 1997 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting.
Shareholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors,
/s/
Martin Gurkin
Secretary
Pompano Beach, Florida
April 18, 1997
<PAGE>
TECHNICAL CHEMICALS & PRODUCTS, INC.
--------------------------------------
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This proxy statement is first being sent to shareholders on or about April
18, 1997, in connection with the solicitation of proxies by the Board of
Directors of Technical Chemicals & Products, Inc. (the "Company"), to be voted
at the Annual Meeting of Shareholders to be held on Friday, May 23, 1997, and at
any adjournment thereof (the "Meeting"). The close of business on April 10,
1997, has been fixed as the record date of the determination of shareholders
entitled to notice of and to vote at the Meeting. At the close of business on
the record date, the Company had outstanding 9,974,162 shares of $.001 par value
common stock ("Common Stock"), entitled to one vote per share.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting. If
shareholders specify in the proxy a choice with respect to any matter to be
acted upon, the shares represented by such proxies will be voted as specified.
If a proxy card is signed and returned without specifying a vote or an
abstention on any proposal, it will be voted according to the recommendation of
the Board of Directors on that proposal. The Board of Directors recommends a
vote FOR the election of the director listed on the proxies. The Board of
Directors knows of no other matters that may be brought before the Meeting.
However, if any other matters are properly presented for action, it is the
intention of the named proxies to vote on them according to their best judgment.
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A shareholder who
signs and returns a proxy may revoke it at any time before it is voted by taking
one of the following three actions: (i) giving written notice of the revocation
to the Secretary of the Company; (ii) executing and delivering a proxy with a
later date; or (iii) voting in person at the Meeting.
Approval of the election of directors will require a plurality of the votes
cast at the Meeting, provided a quorum is present. Votes cast by proxy or in
person at the Meeting will be tabulated by one or more inspectors of election
appointed at the Meeting, who will also determine whether a quorum is present
for the transaction of business. Abstentions and broker non-votes will be
counted as shares present in the determination of whether shares of the
Company's common stock represented at the Meeting constitute a quorum. With
respect to matters to be acted upon at the Meeting, abstentions and broker
non-votes will not be counted for the purpose of determining whether a proposal
has been approved.
The expense of preparing, printing and mailing proxy materials to
shareholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
reimburse brokerage houses and other nominees for their expenses in forwarding
proxy material to beneficial owners of the Common Stock.
The executive offices of the Company are located at 3341 S.W. 15th Street,
Pompano Beach, Florida 33069. The Company's telephone number is (954) 979-0400.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes of
directors. The Company's Articles of Incorporation provide that at each annual
election, directors shall be chosen by class for a term of three years, to
preserve, as evenly as practicable, the division of directors into classes. The
current terms of the three classes of directors expire in 1999 (Class I
directors), 1997 (Class II directors) and 1998 (Class III directors). One
director nominee is to be elected at the Meeting as a Class II director for a
term ending in 2000, or until his respective successor shall have been elected
and qualified.
The Board of Directors has nominated Clayton Rautbord to stand for election
at the Meeting for the Class II director seat. See "Management-Directors and
Executive Officers" for information regarding Mr. Rautbord. The nominee's
current term will expire on the date of the Meeting. Unless otherwise indicated,
votes will be cast pursuant to the accompanying proxy FOR the election of Mr.
Rautbord. Should Mr. Rautbord become unable or unwilling to accept nomination or
election for any reason, it is intended that votes will be cast for a substitute
nominee designated by the Board of Directors, which has no reason to believe Mr.
Rautbord will be unable or unwilling to serve if elected.
2
<PAGE>
SECURITY AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 18, 1997
with respect to the Common Stock owned by (1) any person who is known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities, (2) each director and director nominee of the
Company, (3) each executive officer named in the Summary Compensation Table and
(4) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Name and Address of Beneficial Owner(a) Ownership(b) Percent
<S> <C> <C> <C>
Jack L. Aronowitz................................................ 4,561,666(c) 43.6%
Capital Group Companies, Inc.
Capital Research and Management Company
333 South Hope Street, 52nd Floor
Los Angeles, California 90071................................ 600,000 6.02%
Cleve Laird...................................................... 66,000 0.7%
Martin Gurkin.................................................... 4,000(d) *
John Pippert..................................................... 30,000 *
Clayton Rautbord................................................. 200 *
Kathryn R. Harrigan.............................................. - -
All directors and executive
officers as a group (10 persons)................................. 4,661,866 44.1%
<FN>
_______________________
(a) The business address for Messrs. Aronowitz, Laird, Gurkin, Pippert, Rautbord and Ms. Harrigan is 3341
S.W. 15th Street, Pompano Beach, FL 33069.
(b) Beneficial ownership of shares, as determined in accordance with applicable Securities and Exchange
Commission rules, includes shares as to which a person has or shares voting power and/or investment
power.
(c) Includes 500,000 shares that may be acquired upon exercise of a currently exercisable warrant and
370,000 shares as to which Mr. Aronowitz holds a voting proxy.
(d) Represents shares that may be acquired upon exercise of currently outstanding stock options.
* Less than 0.5%
</FN>
</TABLE>
3
<PAGE>
MANAGEMENT
Directors and Executive Officers
Set forth below is certain information as of April 18, 1997, concerning the
Company's executive officers, current directors, and nominee for director.
<TABLE>
<CAPTION>
Year First
Became a
Name Position(s) Age Director
<S> <C> <C> <C>
Jack L. Aronowitz President, Chief Executive Officer, and Chairman of 57 1992
the Board of Directors (Class I-term expiring in
1999)
Martin Gurkin, Ph.D. Senior Vice President, Chief Operating Officer and 64 1996
Director (Class III-term expiring in 1998)
John E. Pippert Senior Vice President, Marketing and Sales 64
Stuart R. Streger, C.P.A. Vice President and Chief Financial Officer 46
Kathryn R. Harrigan, M.B.A., Director (Class III-term expiring in 1998) 45 1996
D.B.A.
Clayton Rautbord Director (Class II-nominee for a term expiring in 69 1996
2000)
Cleve W. Laird, Ph.D. Director (Class II-term expires at this annual 58 1992
Meeting)
Colin A. Morris Vice President, Transdermal Manufacturing and Chief 56
Operating Officer of the Pharmetrix Division
Thomas S. Spencer, Ph.D. Vice President, Pharmetrix Division 51
</TABLE>
JACK L. ARONOWITZ, the founder of the Company, has been President and
Chairman of the Board of Directors since January 1992 and Chief Executive
Officer since January 1996. Prior to founding the Company, Mr. Aronowitz served
as Executive Vice President, Technical Director and Director of Operations of
TechniMed Corporation. TechniMed was engaged in the medical diagnostic and
biochemical businesses. Mr. Aronowitz has been involved in the development and
commercialization of medical diagnostic products for over 35 years. Mr.
Aronowitz is the President of the Florida Institute of Chemists.
MARTIN GURKIN, Ph.D. has been Senior Vice President, Chief Operating
Officer and a Director of the Company since January 1996. Prior to joining the
Company, Dr. Gurkin served from October 1989 to December 1995 as Vice President
of ISCO, Inc., a company engaged in the manufacture of scientific analytical
instrumentation. Prior to joining ISCO, Inc., Dr. Gurkin was employed in various
capacities for over 17 years by E. M. Science (an affiliate of E. Merck KGAA), a
company engaged in the manufacturing of laboratory reagents and chromatography
supplies.
JOHN E. PIPPERT has been Senior Vice President, Marketing and Sales of the
Company since March 1995. Prior thereto, Mr. Pippert served from January 1990 to
February 1995 as Director of Marketing for Western Biomedical Enterprises, Inc.,
a company engaged in the manufacture of medical diagnostic products. During that
period, Mr. Pippert also served as a senior consultant to Drial Consultants,
4
<PAGE>
Inc. Mr. Pippert was Vice President and Chief Operating Officer of Clovis
Laboratory Software, Inc. and Director of Marketing and Sales for Laboratory
Consulting, Inc., companies engaged in the development of laboratory computer
software, from January 1987 to December 1990. Mr. Pippert also worked in various
capacities for the Medical Diagnostics Division of E.I. Dupont de Nemours & Co.,
Inc. from 1972 to 1984.
STUART R. STREGER, C.P.A. has been Vice President and Chief Financial
Officer of the Company since April 1996. Prior to joining the Company, Mr.
Streger served from September 1994 to March 1996 as Chief Financial Officer of
Carfel, Inc., an auto parts manufacturing and after-market distribution company.
From August 1993 to September 1994, Mr. Streger was Chief Financial Officer of
Chick Master International, a global manufacturer and distributor of poultry
equipment. From August 1980 to August 1993, Mr. Streger was the Chief Financial
Officer of Rosco Laboratories, Inc., a worldwide distributor and manufacturer of
television and film production products. From 1973 to 1977, Mr. Streger was
employed as a senior auditor and served in many other capacities with the
accounting firm of KPMG Peat Marwick LLP.
KATHRYN R. HARRIGAN, M.B.A., D.B.A., has been a Director of the Company
since April, 1996. Ms. Harrigan has been a professor at Columbia Business School
since 1981 and was named the Henry L. Kravis Professor of Business Leadership at
Columbia Business School in 1993. Since 1994, Professor Harrigan has served on
the Board of Directors of Cambrex Corporation, a company engaged in the
international specialty chemicals business. In 1995, Professor Harrigan joined
the Board of Directors of Schuller Corporation (formerly Manville Corporation),
an international building and filtration company.
CLAYTON L. RAUTBORD has been a Director of the Company since August 1996.
Mr. Rautbord is presently the Secretary and Treasurer of Wenk Aviation Insurance
Corporation. From 1980-1989 he was the founder and President of Photo Con-X-Ion,
Inc., a manufacturer of photographic chemicals, and was the President and CEO of
APECO, a company listed on the NYSE, from 1963-1974. Mr. Rautbord has previously
served on the boards of Ozark Airlines, Metropolitan Bank of Chicago,
Amalgamated Bank of Chicago, and Euclid Equipment Company of Long Island, New
York. In addition to TCPI's Board of Directors, Mr. Rautbord also serves on the
Board of Directors of Albany Bank and Trust Company in Chicago.
CLEVE W. LAIRD, Ph.D. was Executive Vice President of the Company from
February 1992 until December 1996 and a Director of the Company since January
1992. Since 1986, Dr. Laird has also served as President and Chief Executive
Officer of Drial Consultants, Inc., a consulting and advisory firm to the
medical, pharmaceutical and diagnostic device industries to which endeavor he
returned full-time during December 1996. Under a consulting agreement with the
Company dated as of January 1997, Dr. Laird continues to provide regulatory
counsel to the Company.
COLIN A. MORRIS has been Vice President of Transdermal Manufacturing since
February 1997. He has operating responsibilities for TCPI's portfolio of
transdermal drug delivery products and related contract services, and directs
all activities at the Company's R & D facility in Menlo Park, California,
operated by its Pharmetrix Division. In addition, Mr. Morris is involved in the
ongoing development of the Company's TD Glucose Monitoring System. Before
joining the Company, Mr. Morris worked as Vice President of Operations and later
as Vice President of Corporate Planning with Noven Pharmaceuticals, which
operates of one of the most advanced transdermal R & D and manufacturing
facilities in the world. Mr. Morris also has held senior-level positions with
Rhone-Poulenc Rorer, Inc. as Senior Director of World Wide Engineering, Director
of Process Engineering with Sterling Drug, Inc., and international and domestic
positions with Johnson & Johnson.
5
<PAGE>
THOMAS S. SPENCER, Ph.D. has been a Vice President of the Company's
Pharmetrix Division since November 1995. Prior to joining the Company, Dr.
Spencer served as Executive Vice President and Chief Technical Officer of Pharma
Patch Public Limited Liability Company ("Pharma Patch") from August 1994 to
November 1995. Prior to joining Pharma Patch, Dr. Spencer was Vice President of
Research and Development at Cygnus from May 1998 until January 1994. While at
Cygnus, he was in charge of a research and development organization consisting
of over 90 members, responsible for the commercialization of Cygnus' products.
There is no family relationship between any executive officer or director
of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
During 1996, the Company's Board of Directors held six meetings. Each
incumbent director attended each meeting.
In 1996, the Company's Board of Directors established a Compensation
Committee, an Audit Committee, and a Stock Option Committee. The Compensation
Committee consists of Messrs. Aronowitz and Rautbord and Ms. Harrigan. The
Compensation Committee recommends to the Board both base salary levels and
bonuses for the Chief Executive Officer and reviews the compensation levels of
the other officers of the Company. The Compensation Committee also reviews and
makes recommendations with respect to the Company's existing and proposed
compensation plans.
The members of the Audit Committee are Messrs. Aronowitz and Rautbord and
Ms. Harrigan. The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent certified public accountants, to meet
with the Company's independent certified public accountants to review the scope
and results of the audit, and to consider various accounting and auditing
matters related to the Company, including its system of internal controls and
financial management practices.
The Company's Stock Option Committee consists of Mr. Rautbord and Ms.
Harrigan. The Stock Option Committee is responsible for administering the
Company's 1992 Incentive Stock Option Plan.
The Company does not have a nominating committee. That function is
performed by the Board of Directors.
COMPENSATION OF DIRECTORS
Each non-employee director of the company is paid a fee of $500 for each
meeting of the Board of Directors attended and $250 for each committee meeting
attended (if the committee meeting occurs on a day other than a scheduled
meeting of the Board of Directors). Non-employee directors are also reimbursed
for their travel expenses to meetings of the Board of Directors. No director who
is an employee of the Company receives separate compensation for services
rendered as a director.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company, during
the fiscal years ended December 31, 1996, 1995 and 1994 to the officers whose
names appear in the table below. No restricted stock awards, long-term incentive
plan payouts or other types of compensation other than the compensation
identified in the chart below were paid to these officers. No other executive
officer of the Company earned a total annual salary and bonus during 1996, 1995
and 1994 in excess of $100,000.
6
<PAGE>
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------------------
Name and Other Annual Securities
Principal Position Year(a) Salary($) Bonus($) Compensation($) Underlying
Options(#)
<S> <C> <C> <C> <C> <C> <C>
Jack L. Aronowitz 1996 $144,703 -- $13,937(b) 500,000
President, Chief 1995 137,813 -- 17,209(b)(c) --
Executive Officer and 1994 36,000 -- 15,310(b) --
Chairman of the Board
Cleve Laird 1996 87,341 $20,000 6,454(b) 30,000
Executive Vice 1995 53,623 -- 3,023(b)
President and Director
(d)
John Pippert 1996 78,923 32,000 5,207(b) 30,000
Senior Vice President 1995 40,833 2,917 2,590(b)
Thomas S. Spencer 1996 145,833 2,925 8,332(b) --
Vice President, Chief 1995 17,500 -- 1,215(b)
Operating
Officer-Pharmetrix Division
<FN>
(a) No amounts are shown for Messrs. Laird, Pippert or Spencer for 1994 because they were not employed
by the Company at that time.
(b) Includes the cost of an automobile and/or health insurance.
(c) Does not include $256,920 paid as a dividend by the Company to Mr. Aronowitz soon after the
Company's initial public offering. The dividend represented Mr. Aronowitz's pro rata share of the
Company's retained earnings that were distributed to all of the Companys shareholders prior to the
revocation of the Company's S election and was not intended as a form of compensation.
(d) Dr. Laird resigned as an officer of the Company during December 1996.
</FN>
</TABLE>
Option Grants and Exercises; Long-Term Incentive Plans in 1996
The following table shows the grants of stock options by the Company during
the fiscal year ended December 31, 1996 to the executive officers named in the
Summary Compensation Table.
7
<PAGE>
<TABLE>
<CAPTION>
Individual Grants
----------------------- Potential Realizable Value at
Number of Percent of Assumed Annual Rate of Stock
securities Total Price Appreciation For Option
underlying Options/Grants Term(a)
Options to Employees Exercise Expiration -----------------------------
Name Granted in Fiscal Year Price Date 5% 10%
<S><C> <C> <C> <C> <C> <C> <C>
Jack Aronowitz 500,000 77.82% $15.00 3/30/01 $2,072,112 $4,578,825
Cleve Laird 6,000 0.93% $15.00 6/20/99 $19,396 $41,769
Cleve Laird 6,000 0.93% $15.00 6/20/00 $24,865 $54,946
Cleve Laird 6,000 0.93% $15.00 6/20/01 $30,609 $69,440
Cleve Laird 6,000 0.93% $15.00 6/20/02 $36,639 $85,385
Cleve Laird 6,000 0.93% $15.00 6/20/03 $42,971 $102,923
John Pippert 6,000 0.93% $15.00 6/20/99 $19,396 $41,769
John Pippert 6,000 0.93% $15.00 6/20/00 $24,865 $54,946
John Pippert 6,000 0.93% $15.00 6/20/01 $30,609 $69,440
John Pippert 6,000 0.93% $15.00 6/20/02 $36,639 $85,385
John Pippert 6,000 0.93% $15.00 6/20/03 $42,971 $102,923
<FN>
(a) The potential realizable values set forth under these columns result from calculations assuming 5% and
10% annualized stock price growth rates from grant dates to expiration dates and are not intended to
forecast future price appreciation of the Company's Common Stock based upon growth at these prescribed
rates. The Company is not aware of any formula which will determine with reasonable accuracy a present
value based on future unknown factors. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Company. There can be no assurance that the amounts reflected in this
table will be achieved.
</FN>
</TABLE>
OPTION EXERCISES AND PERIOD-END VALUES
The following table provides information as to the number and value of
options exercised during 1996 by the executive officers named in the Summary
Compensation Table to purchase the Company's common stock.
<TABLE>
<CAPTION>
Number of Securities
Underlying
Shares Acquired on Unexercised Options
Name Exercise Value Realized at Fiscal Year End(a)
<S> <C> <C> <C> <C>
Cleve Laird 66,000 $965,250 500,000
John Pippert 20,000 $265,000 30,000
<FN>
(a) None of such officers held stock options that were "in-the-money" as of the end of the Company's
1996 fiscal year.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Mr. Aronowitz participated in deliberations of the Company's
Board of Directors concerning executive officer compensation.
The Company and Mr. Aronowitz are parties to an exclusive, worldwide
license agreement dated January 31, 1996 ("License Agreement") under which the
Company has the right to manufacture, promote, market and sell all medical,
pharmaceutical and health care products and devices created by Mr. Aronowitz on
or before the date of the License Agreement. The License Agreement is for a term
of twenty years with automatic renewals and requires annual fees equal to the
greater of (i) 3% of net collected sales revenues from products based upon
8
<PAGE>
certain technology or (ii) $10,000, with an aggregate maximum limitation of
$10,000,000. The License Agreement replaces an earlier license agreement with
similar provisions. During 1996, Mr. Aronowitz earned $114,417 pursuant to the
License Agreement. Mr. Aronowitz waived all licensing fees due him for the years
ended December 31, 1995 and 1994.
Mr. Aronowitz is also party to an employment contract with the Company. See
"-Employment Contracts."
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with Jack L. Aronowitz, as
of January 1, 1993, as amended on September 27, 1996, pursuant to which Mr.
Aronowitz serves as President of the Company. The agreement provides that Mr.
Aronowitz receive: (i) a base salary of $144,800, increased annually by 5%; and
(ii) an annual bonus of 5% of the Company's consolidated pre-tax income. The
agreement also provides that Mr. Aronowitz is entitled to health insurance, a
car allowance of $10,000 per year, other fringe benefits, and, at the Board's
discretion, further bonuses and reimbursement for various expenses. In addition,
the agreement prohibits Mr. Aronowitz (x) during and after the term of the
agreement, from disclosing confidential information relating to the Company and
(y) during the term of the agreement and for a period of two years after
termination thereof, from competing with the Company anywhere in the United
States where the Company is engaged in business or has evidenced an intention to
engage in business. Notwithstanding the foregoing, if Mr. Aronowitz's employment
is terminated by the Company for any reason other than Mr. Aronowitz having
engaged in any material act of dishonesty, disloyalty, negligence and/or fraud
which is, or may be, damaging to the Company's business, the Company must pay
Mr. Aronowitz two times his then base salary plus an amount equal to two times
the last bonus paid to or accrued for him pursuant to the agreement (three times
base salary plus bonus in the event of termination a "change of control," as
defined in the agreement).
The Company entered into an employment agreement with John E. Pippert, as
of January 31, 1996, pursuant to which Mr. Pippert serves as a Senior Vice
President of the Company. Under the agreement, Mr. Pippert's current base salary
is $95,000, which may be increased at the Board of Directors' discretion. The
agreement also provides that Mr. Pippert receive a bonus based on a percentage
of forecasted net sales agreed upon as the Company's annual target. Mr. Pippert
also receives health insurance, other fringe benefits, and, at the Board of
Directors' discretion, reimbursement for various expenses. In addition, the
agreement prohibits Mr. Pippert: (i) during and after the term of the agreement,
from disclosing confidential information relating to the Company; and (ii)
during the term of the agreement and for a period of two years after the
termination thereof, from competing with the Company anywhere in the United
States where the Company is engaged in business or has taken steps to engage in
business. Notwithstanding the foregoing, if Mr. Pippert's employment is
terminated by the Company other than "for cause" (as that phrase is defined in
the agreement) or due to the death or disability of Mr. Pippert, the Company
must pay Mr. Pippert an amount equal to two times his then base salary as
liquidated damages.
The Company entered into an employment agreement with Martin Gurkin, dated
as of February 26, 1996, pursuant to which Dr. Gurkin serves as a Senior Vice
President of the Company. Under the Agreement Dr. Gurkin's current base salary
is $125,000, which may be increased at the Board of Directors' discretion. The
agreement also provides that Dr. Gurkin receive a bonus based on a percent of
forecasted net sales agreed upon as the Company's annual target. Dr. Gurkin also
receives health insurance, other fringe benefits, and, at the Board of
Directors' discretion, reimbursement for various expenses. In addition, the
agreement prohibits Dr. Gurkin: (i) during and after the term of the agreement,
from disclosing confidential information relating to the Company; and (ii)
9
<PAGE>
during the term of the agreement and for a period of two years after the
termination thereof, from competing with the Company anywhere in the United
States where the Company is engaged in business or has taken steps to engage in
business. Notwithstanding the foregoing, if Dr. Gurkin's employment is
terminated by the Company other than for cause (as that phrase is defined in the
agreement) or due to the death or disability of Dr. Gurkin, the Company must pay
Dr. Gurkin an amount equal to two times his then base salary as liquidated
damages.
During fiscal year 1996, the Company and Dr. Laird entered into an
employment agreement that was terminated upon his termination as an employee of
the Company.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is pleased to present its report on executive
compensation. This report describes the components of the Company's executive
officer compensation programs and the basis on which compensation determinations
for 1996 were made with respect to the executive officers of the Company. The
1996 fiscal year was the first full year of employment with the Company for each
of the Company's executives other than the Chief Executive Officer.
The Compensation Committee believes that the objectives of executive
compensation are to attract, motivate and retain the highest quality executives,
to align the interests of these executives with those of the Company
shareholders and to motivate the Company executives to increase shareholder
value by improving corporate performance and profitability. To meet these
objectives, the Compensation Committee will seek to provide a competitive total
compensation package that enables the Company to attract and retain key
personnel; to provide variable compensation opportunities, primarily on an
annual basis, that are linked to corporate performance goals; and to provide
long-term compensation opportunities, through stock options, that align
executive compensation with value received by stockholders. The compensation
program for executive officers is comprised of the following components: base
salary, annual incentive compensation and stock options. Base salaries for
executives are determined initially by evaluating the responsibilities of the
position, the experience of the individual, internal comparability
considerations, as appropriate, the competition in the marketplace for
management talent, and the compensation practices among public companies of the
size of, or in businesses similar to, the Company.
For 1996, compensation, including salary, bonuses and stock option grants,
for the executives other than the Chief Executive Officer was set based
principally upon the factors described in the previous sentence. Compensation
for the Chief Executive Officer was set based upon the Chief Executive's
employment agreement (see "Employment Contracts").
The Compensation Committee intends to periodically review the Company's
compensation programs to ensure that pay levels and incentive opportunities are
competitive and reflect the performance of the Company. Salary adjustments
ordinarily will be determined and made at 12-month intervals.
Respectfully submitted,
Jack L. Aronowitz
Kathryn R. Harrigan
Clayton Rautbord
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the Company's cumulative total return to
shareholders compared to the Russell 2,000 Index and a peer group consisting of
healthcare stock (excluding biotechnology companies) identified below as
"Hambrecht & Quist Healthcare." The graph shows cumulative total return over the
period from February 2, 1995, the first day that the Company was traded
publicly, and the end of the fiscal 1996, based on an initial investment of
$100. Total shareholder return assumes dividend reinvestment. The stock
performance shown on the following graph is not indicative of future price
performance.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
--------------------------- ---------------------- ------------------------- ---------------------------
Name February 2, 1995 December 31, 1995 December 31, 1996
--------------------------- ---------------------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
TCPI $100 $500 $228
--------------------------- ---------------------- ------------------------- ---------------------------
Russell 2000 $100 $130 $152
--------------------------- ---------------------- ------------------------- ---------------------------
Hambrecht & Quist $100 $157 $174
Healthcare (excluding
biotechnology)
--------------------------- ---------------------- ------------------------- ---------------------------
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
11
<PAGE>
ten percent shareholders are required by the SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it,
the Company believes that during 1996, Forms 3, 4 and 5 filings appear to have
been made when due.
INFORMATION CONCERNING INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed Ernst & Young LLP as
independent certified public accountants to audit the consolidated financial
statements of the Company for the year ending December 31, 1997. Representatives
of Ernst & Young LLP are expected to be present at the Meeting with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions posed by shareholders.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the 1997 annual
meeting must be received by the Company on or before December 19, 1997, in order
to be included in the Company's proxy statement and form of proxy for that
meeting.
The Company's bylaws also require advance notice to the Company of any
shareholder proposal and of any nominations by shareholders of persons to stand
for election as directors at a shareholders' meeting. Notice of shareholder
proposals and of director nominations must be timely given in writing to the
Secretary of the Company prior to the meeting at which the directors are to be
elected. To be timely, notice must be received at the principal executive office
of the Company not less than 60 days, nor more than 90 days, prior to the
meeting of shareholders; provided, however, that in the event that less than 70
days' notice prior to public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder, in order to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual meeting was made,
whichever first occurs.
In addition to the matters required to be set forth by the rules of the
Securities and Exchange Commission, a shareholder's notice with respect to a
proposal to be brought before the annual meeting must set forth (a) the text of
the proposal to be presented and a brief written statement of the reasons why
such shareholder favors the proposal, (b) the name and address of such
shareholder, (c) the class and number of shares of the Company that are
beneficially owned by such shareholder on the date of such shareholder notice
and (d) any material interest of the shareholder in such proposal.
A shareholder's notice with respect to a director nomination must set forth
(a) the name of the person to be nominated, (b) the number and class of all
shares of each class of stock of the Company beneficially owned by such person,
(c) the information regarding such person required by paragraphs (a) and (d) of
Item 401 of Regulation S-K adopted by the Securities and Exchange Commission,
(d) such person's signed consent to serve as a director of the Company if
elected, (e) such shareholder's name and address and (f) the number and class of
all shares of each class of stock of the Corporation beneficially owned by such
shareholder.
The complete Bylaws provisions governing these requirements are available
to any shareholder without charge upon request from the Secretary of the
Company.
12
<PAGE>
OTHER MATTERS
The Company will provide to any shareholder, upon the written request of
any such person, a copy of the Company's Annual Report on Form 10-K, including
the financial statements and the schedules thereto, for its fiscal year ended
December 31, 1996, as filed with the Securities and Exchange Commission. All
such requests should be directed to Technical Chemicals and Products, Inc.,
Corporate Communications, P.O. Box 8726, Ft. Lauderdale, Florida 33310. No
charge will be made for copies of such annual report; however, a reasonable
charge for exhibits, if requested, will be made.
By Order of the Board of Directors,
/s/
MARTIN GURKIN
Secretary
Pompano Beach, Florida
April 18, 1997
13
