SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-25406
TECHNICAL CHEMICALS AND PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0308922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3341 S.W. 15th Street, Pompano Beach, Florida 33069
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954)979-0400
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past 12
months (or 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
--- ---
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class Outstanding As Of November 9, 1998
----- -----------------------------------
Common Stock $ .001 par value 10,006,316
Transitional Small Business Disclosure Format (check one):
YES NO x
--- ---
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
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September 30, December 31,
1998 1997
---------------------------------------------
ASSETS (Unaudited) *(Audited)
Current assets:
Cash and cash equivalents $ 11,690 $ 3,316
Investments 1,115 4,021
Accounts receivable, net 1,757 2,055
Inventory 2,504 1,852
Other 1,288 226
---------------------------------------------
Total current assets 18,354 11,470
---------------------------------------------
Property and equipment, net 2,645 2,831
Patents and trademarks, net 12,344 12,912
Goodwill, net 2,023 2,151
Deferred tax asset, net 4,140 4,140
Other assets 108 93
---------------------------------------------
Total assets $ 39,614 $33,597
=============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 452 $ 1,729
Accrued expenses 367 340
---------------------------------------------
Total current liabilities 819 2,069
---------------------------------------------
Other liabilities 173 170
Stockholders' equity:
Preferred stock, $.001 par value:
Authorized shares--25,000,000;
Series A 6% Convertible Preferred stock,
$.001 par value:
Issued and outstanding shares--15,000
at 9/30/98 15,331 --
Common stock, $.001 par value:
Authorized shares--100,000,000;
Issued and outstanding shares--
9,927,075 and 10,015,036 at
9/30/98 and 12/31/97, respectively 10 10
Additional paid-in capital 39,110 39,807
Accumulated deficit (15,829) (8,459)
---------------------------------------------
Total stockholders' equity 38,622 31,358
---------------------------------------------
Total liabilities and $ 39,614 $33,597
stockholders' equity =============================================
*Note: The Balance Sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Continued)
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share data)
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Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ ------------------------------------
1998 1997 1998 1997
------------------------------------ ------------------------------------
Gross product sales $ 1,506 $ 1,735 $ 4,292 $ 4,544
Returns and allowances (49) (10) (49) (30)
------------------------------------ ------------------------------------
Net product sales 1,457 1,725 4,243 4,514
Cost of product sales 829 1,034 2,139 2,608
------------------------------------ ------------------------------------
Gross profit 628 691 2,104 1,906
R&D contract revenue 113 100 270 310
Operating expenses:
Selling, general and administrative 2,012 1,960 6,125 4,723
Research and development 615 797 2,057 1,947
Depreciation and amortization 463 427 1,372 1,274
------------------------------------ ------------------------------------
3,090 3,184 9,554 7,944
------------------------------------ ------------------------------------
(2,349) (2,393) (7,180) (5,728)
Other income (expense):
Interest income 217 94 461 586
Interest expense (5) (3) (13) (10)
------------------------------------ ------------------------------------
Loss before income tax benefit (2,137) (2,302) (6,732) (5,152)
Income tax benefit -- 852 -- 1,906
------------------------------------ ------------------------------------
Net loss (2,137) (1,450) (6,732) (3,246)
------------------------------------ ------------------------------------
Accrued preferred redemption
accretion and dividends 417 -- 613 --
------------------------------------ ------------------------------------
Loss attributable to common stock $ (2,554) $ (1,450) $ (7,345) $ (3,246)
==================================== ====================================
Net loss per common share -
basic and diluted $ (.26) $ (.14) $ (.73) $ (.32)
==================================== ====================================
Weighted average number of
common shares outstanding 9,975,923 10,005,036 10,001,855 9,984,325
==================================== ====================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Continued)
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
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<S> <C> <C>
Nine Months Ended September 30,
-------------------------------------------
1998 1997
-------------------------------------------
OPERATING ACTIVITIES
Net loss $ (6,732) $ (3,246)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,372 1,274
Deferred income taxes -- (1,906)
Changes in operating assets and liabilities:
Accounts receivable 298 (347)
Inventory (652) (629)
Accounts payable and accrued expenses (1,250) 760
Other current assets (1,127) 93
-------------------------------------------
Net cash used in operating activities (8,091) (4,001)
INVESTING ACTIVITIES
Net proceeds from issuance of Preferred Stock 14,427 --
Purchase of property and equipment (311) (492)
Investment in patents and trademarks (194) --
Purchase of investments (1,108) (16)
Proceeds from sale of investments 3,990 3,493
Buyback of TCPI common stock (339) --
-------------------------------------------
Net cash provided by investing activities 16,465 2,985
FINANCING ACTIVITIES
Proceeds from stock options exercised -- 199
-------------------------------------------
Net cash provided by financing activities 0 199
-------------------------------------------
Net increase (decrease) in cash and cash equivalents 8,374 (817)
Cash and cash equivalents at beginning of period 3,316 1,607
-------------------------------------------
Cash and cash equivalents at end of period $ 11,690 $ 790
===========================================
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements (the
"Financial Statements") of Technical Chemicals and Products, Inc. and
Subsidiaries (the "Company" or "TCPI") are unaudited, and in the opinion of
management, include all normal and recurring adjustments which are necessary for
a fair presentation. The Financial Statements should be read in conjunction with
more complete disclosures contained in the Company's audited consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997. The results of operations for interim periods
are not necessarily indicative of the results of operations for the entire year.
RECLASSIFICATIONS
Certain amounts in the 1997 consolidated financial statements have been
reclassified to conform to the current period's presentation.
INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, "Accounting
for Income Taxes". Deferred income tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
In evaluating whether or not an increase to the prior year valuation
allowance for deferred tax assets was required in the third quarter of 1998, the
Company established that all elements of evidence required to recognize the
third quarter of 1998 net operating loss tax benefits were not present.
Accordingly, the Company increased the valuation allowance related to the
deferred tax asset in the amount of $2.5 million for the nine months ended
September 30, 1998.
INVENTORIES
Inventories, consisting of raw materials and finished goods, are valued
at the lower of cost (computed on the first-in, first-out method) or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets.
The cost of maintenance and repairs are charged to operations as incurred.
Significant renewals and betterments are capitalized and depreciated over their
estimated useful lives.
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTANGIBLE ASSETS
Purchased patents and trademarks are amortized using the straight-line
method over a composite life of 15 years based on the shorter of their legal
life or estimated useful life of the individual patents and trademarks, which
range from 11 to 17 years. Goodwill is amortized using the straight-line method
over 15 years. The realizability of patents, trademarks and goodwill is
evaluated periodically as events or circumstances indicate a possible inability
to recover their carrying amount. At this time, the Company believes that no
significant impairment of these intangible assets has occurred and that no
reduction of the estimated useful lives is warranted.
2. DETAILS OF BALANCE SHEET
Details of selected balance sheet accounts are as follows (in thousands):
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September 30, 1998 December 31, 1997
-----------------------------------------------------
Accounts receivable
Accounts receivable $ 1,863 $ 2,073
Allowance for doubtful accounts (106) (18)
-----------------------------------------------------
$ 1,757 $ 2,055
=====================================================
Property and equipment
Furniture, fixtures and equipment $ 3,157 $ 2,849
Real property 217 217
Leasehold improvements 907 904
-----------------------------------------------------
4,281 3,970
Accumulated depreciation (1,636) (1,139)
-----------------------------------------------------
$ 2,645 $ 2,831
=====================================================
Patents and trademarks
Patents and trademarks $ 15,203 $ 15,025
Accumulated amortization (2,859) (2,113)
-----------------------------------------------------
$ 12,344 $ 12,912
=====================================================
Goodwill
Goodwill $ 2,494 $ 2,494
Accumulated amortization (471) (343)
-----------------------------------------------------
$ 2,023 $ 2,151
=====================================================
</TABLE>
3. STOCKHOLDERS' EQUITY
In May 1998, the Company completed a private placement of 15,000 shares
of Series A Convertible Preferred Stock (the "Preferred Stock") to a single
institutional investor (the "Investor"). To date, the Investor has converted 300
shares of Preferred Stock and received 79,241 shares of the Company's common
stock. See the Company's Report on Form 8-K filed on May 21, 1998 for additional
information related to the Preferred Stock transaction.
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. STOCKHOLDERS' EQUITY (Continued)
Stock Repurchase Program
On July 28, 1998, TCPI's Board of Directors authorized a stock
repurchase program to buy-back up to 10 percent of the Company's outstanding
common stock. Purchases of common stock by the Company may be made from
time-to-time in the open market and/or through privately negotiated transactions
at prevailing market prices depending on market conditions. To date, the Company
has repurchased 87,961 shares of common stock.
4. RELATED PARTY TRANSACTION
During August 1998, the Company's outside directors unanimously
approved the Company's guarantee for a period of up to 90 days of $750,000 of
the collateral obligations of the Company's Chairman, President and Chief
Executive Officer's ("Chairman") family limited partnership ("Partnership") to a
brokerage house. Under the terms of the Company's agreement with the
Partnership, the brokerage house called on the Company's guarantee, the
Partnership then executed and delivered to the Company a promissory note
personally guaranteed by the Chairman in an amount equal to the amount of the
guarantee. The note is payable on demand (but in no event later than six months
after the guarantee was called) and bears interest at the rate of interest
charged by the brokerage house. The promissory note has not yet been called for
payment.
Subsequently, on September 2, 1998, the Company's Chairman of the Board
announced the planned purchase of approximately $250,000 of the Company's common
stock in the open market from time-to-time over the next 30-60 day period to
partially offset the involuntary sale of a small portion of TCPI shares held by
his family limited partnership due to a margin call situation. Such shares were
subsequently purchased. See the corresponding Form 4's filed for the monthly
periods ended August 31, 1998 and September 30, 1998.
5. LEGAL PROCEEDINGS
On October 8, 1998, the Company was granted its Motion to Dismiss
certain counts of the Complaint against TCPI related to its non-invasive TD
GlucoseTM Monitoring System (Americare Diagnostics, Inc., et al. vs. Technical
Chemicals and Products, Inc.) This Order issued by the United States District
Court Southern District of Florida dismissed six of nine counts of the lawsuit.
The Plaintiffs have filed an amended Complaint which contains some of the same
counts based on substantially the same facts as in the original Complaint. The
Company believes it will again be successful in having such counts dismissed.
Related to this legal matter, in August 1997, the Company filed a
lawsuit against Americare and D'Angelo for trade libel and slander of title
(Technical Chemicals and Products, Inc. vs. Joseph P. D'Angelo, et al.) related
to TCPI's non-invasive glucose monitoring technology. This lawsuit is ongoing as
a counter-claim in the matter before the United States District Court Southern
District of Florida.
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6. LEGAL PROCEEDINGS (Continued)
In a separate lawsuit filed against the Company in 1994 by Americare
and D'Angelo related to an HIV saliva collector test kit, this legal matter
recently began being heard by the Circuit Court in Broward County, Florida
(Joseph P. D'Angelo, et al. vs.Technical Chemicals and Products, Inc., et al.)
and is ongoing.
Management believes, after consultation with counsel, that each of the
allegations against the Company included in these lawsuits is without merit, and
is defending each of the allegations vigorously. At this time, it is not
possible to estimate the ultimate loss, if any, related to these lawsuits.
In addition to the above, the Company is subject to claims and suits
arising in the ordinary course of business. In the opinion of management, the
ultimate resolution of such pending legal proceedings, including those described
above, will not have a material adverse effect on the Company's results of
operations or financial position.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
STRATEGIC DIRECTION AND COMPANY BACKGROUND
The Company is in the midst of completing a transition. TCPI was
formerly a developmental company that manufactured and sold a narrow range of
medical diagnostic products and specialty chemicals on an Original Equipment
Manufacture ("OEM") basis. TCPI is now approaching its goal of being a designer,
developer, manufacturer and global marketer of a wide range of point-of-care
medical diagnostic products for use at home, in physician offices, and other
healthcare locations with growing distribution channels for its products. In
addition, through its Pharmetrix Division located in Menlo Park, California, the
Company is also focused on the research and development and commercialization of
transdermal and dermal drug delivery technologies and skin permeation enhancers.
TCPI also manufactures high purity specialty biochemicals.
TCPI or its founder have developed more than 330 medical diagnostic and
pharmaceutical products which have received marketing clearance by the United
States Food and Drug Administration (the "FDA") - including those related to its
patented membrane-based technology platform - and also has manufactured OEM
products for leading multinational pharmaceutical and medical diagnostic
companies. The Company presently holds 22 U.S. and 29 foreign patents, and has
seven pending patent applications in the U.S. and more than 30 foreign patent
applications pending.
TCPI is currently scaling-up the manufacture of more than 47 patented
membrane-based diagnostic tests in the U.S. and internationally, 29 of which
have received 510(k) clearance from the FDA. In addition, the Company has over
20 other diagnostic and transdermal drug delivery products in various stages of
development and governmental approval. Foremost in TCPI's product portfolio is
its TD GlucoseTM Monitoring System (the "TD Glucose Monitoring System") - an
innovative non-invasive glucose testing technology for diabetics presently in
clinical trials. In addition, TCPI's new diagnostic screening products for Total
and HDL (good) cholesterol are also currently in clinical trials. The Company's
present portfolio of diagnostic products also include tests and screens for
cholesterol monitoring, pregnancy, ovulation timing, urinary glucose levels,
urinary tract infection, skin cancer, deteriorating vision, infectious diseases,
drugs of abuse, cardiac markers and certain types of cancer. TCPI's portfolio of
transdermal drug delivery technology focuses on smoking addiction, hormone
replacement therapy, cardiovascular disease and other areas.
The Company's products are distributed worldwide under OEM marketing
relationships with multinational pharmaceutical and diagnostic companies, and
also are directly marketed for over-the-counter use by consumers. In the OEM
sector, most of TCPI's tests were sold through the Company's alliance with
Boehringer Mannheim Italia. This alliance also extended to the marketing and
distribution of certain other products, including the Company's Serum Dilution
Reagent (hCG Test) and its One Step LH Ovulation Tests. In February 1998, the
Company established a new agreement to supply finished and packaged family
planning products directly to Boehringer Mannheim distributors. This replaced an
earlier worldwide marketing and distribution agreement where the Company's
family planning products utilizing TCPI's technology were packaged in Europe.
Over-the-counter products are marketed to consumers in the U.S. and
Canada for at-home use under TCPI's proprietary HealthCheck(R) and private-label
brands. These over-the-counter products are sold in pharmacies, supermarkets and
mass merchandise retail stores. The HealthCheck line consists of testing and
screening products for cholesterol, diabetes, urinary tract infection,
pregnancy, ovulation, skin cancer, deteriorating vision and a series of health
journals. TCPI distributes its private label family planning products to
approximately 20 leading drug, discount and supermarket chains and catalog
retailers. The Company's at-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
STRATEGIC DIRECTION AND COMPANY BACKGROUND (continued)
home diagnostics products are available through such leading consumer outlets as
Walgreen Drug Stores, Eckerd Corp., CVS, Rite Aid, Thrifty Payless, Wal-Mart
Stores, and Kroger, as well as leading drug wholesale distributors McKesson
Corp., AmeriSource Health Corp., Bindley Western Industries, Bergen Brunswig
Drug Company, and featured in Amway Corporation's Personal Shopper catalog.
International expansion of the Company's OEM family planning and
HealthCheck diagnostic testing and screening products is ongoing. Sales of these
products have recently begun in Argentina, Australia, Austria, Bangladesh,
Canada, Chile, Cyprus, Denmark, Egypt, Germany, Hong Kong, Malaysia,
Netherlands, Norway, Oman, Philippines, Portugal, South Africa, Spain, Sweden,
Switzerland, Thailand, Tunisia, and Turkey.
The Company expects to continue developing its medical diagnostic
products internally and also intends to enter into strategic alliances with
major international diagnostic and pharmaceutical companies for the marketing
and distribution of certain of its products. With respect to the development and
commercialization of its transdermal drug delivery technologies and skin
permeation enhancers, the Company intends to enter into strategic alliances with
third parties that may, in some cases, fund a portion of the product development
costs, participate in clinical testing, obtain regulatory approvals and market
the product.
In September 1998, the Board of Directors appointed Stanley M. Reimer,
Ph.D. to the Company's Board. Dr. Reimer has more than 30 years of diverse
experience in the healthcare industry, including basic and applied research and
technical, clinical and public health management. Since 1988, he has been
President of Laboratory Management Associates, which provides direction and
consultation to the clinical laboratory and healthcare industry. He also served
as Assistant Commissioner of Health and Director of Public Health Laboratories
for the City of New York from 1991 to 1996. In addition, Dr. Reimer previously
was Vice President and General Manager of Allied Clinical Laboratories from 1985
to 1988, and Vice President and Area Manger with Bio-Science Laboratories from
1971 to 1985. He holds Bachelor of Science degrees in chemistry and physiology
from Allegheny College and both his Master of Science and Ph.D. in biochemistry
from Rutgers University.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the information
incorporated by reference herein, includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended, and is subject to the
safe-harbor created by such sections. The Company's actual results may differ
significantly from the results discussed in such forward-looking statements. See
Item 2 "Management's Discussion And Analysis of Financial Condition And Results
Of Operations" for further information relating to forward-looking statements.
Statements regarding future products, future prospects, business plans
and strategies, future revenues and revenue sources, future liquidity and
capital resources, health care market directions, future acceptance of the
Company's products, possible recommendations of health care professionals or
governmental agencies regarding use of diagnostic products, possible growth in
markets for at-home diagnostic testing, as well as other statements contained in
this report that address activities, events or developments that the Company
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS (Continued)
expects, believes or anticipates will or may occur in the future, and similar
statements are forward looking statements. These statements are based upon
assumptions and analyses made by the Company in light of current conditions,
future developments and other factors the Company believes are appropriate in
the circumstances, or information obtained from third parties and are subject to
a number of assumptions, risks and uncertainties. Readers are cautioned that
forward-looking statements are not guarantees of future performance and that
actual results might differ materially from those suggested or projected in the
forward-looking statements. Some of the factors that may cause actual future
events to differ from those predicted or assumed include: future advances in
technologies and medicine; the uncertainties of health care reform; risks
related to the early stage of the Company's existence and its products'
development; the Company's ability to execute on its business plans; the
Company's dependence on outside parties such as its key customers and alliance
partners; competition from major pharmaceutical, medical and diagnostic
companies; risks and expense of government regulation and affects of changes in
regulation; the limited experience of the Company in manufacturing and marketing
products; uncertainties connected with product liability exposure and insurance;
risks associated with growth and expansion; risks associated with obtaining
patents and other protections on intellectual property; uncertainties in
availability of expansion capital in the future and other risks associated with
capital markets. The Company may determine to discontinue or delay the
development of any or all of its products under development at any time.
For a complete description of the Company's products and business, see
Part I, Item 1 of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's operations during the first nine months of 1998 continued
to reflect the ongoing manufacturing scale-up, build-up of inventory, and
expansion of facilities necessary to expand existing products as well as
introduce more than 20 new diagnostic testing and screening products for
infectious diseases, drug of abuse and certain types of cancer which are planned
for future distribution worldwide.
PRODUCT SALES. The Company's net product sales for the nine months and
third quarter ended September 30, 1998 were $4.2 million and $1.5 million,
respectively, and reflected a decrease of approximately $270,000 from the
comparable periods a year earlier. During these periods, the Company experienced
higher sales of its drug of abuse and infectious disease testing and screening
products. However, these gains were offset by lower than expected worldwide
sales associated with the ongoing transition of the Company's OEM family
planning business as well as a slight decline in private label product sales
from the prior year periods. Further, the backlog of orders for OEM customers in
Europe created during the second quarter of 1998 continue to be shipped during
the third and fourth quarter of the current year, although at a slower pace than
earlier anticipated.
Overall, the acquisition of Boehringher-Mannehim by Roche Holdings AG
continues to impact the Company's product sales in 1998 due to (1) the ongoing
transition of the Company's OEM family planning business and slower sales due to
seasonal factors and changes in worldwide distribution, the build-up of
inventory, and the shipment and installation of necessary equipment from outside
suppliers, and (2) cessation of the marketing and distribution program with
Boehringer Mannheim Argentina related to the Company's infectious disease
testing products, despite having products in registration in various South
American countries and build-up of product inventory.
GROSS PROFIT. TCPI's gross profit on product sales for the first nine
months of 1998 increased by 10% to $2.1 million and was $628,000 in the third
quarter of 1998 as compared to $691,000 in the third quarter of 1997. Gross
profit as a percent of net sales for both the nine month and three month periods
advanced over the comparable prior year periods to 50% and 43%, respectively.
These gains were achieved principally due to increased in-house manufacturing
which provided various economies of scale-up, a change in product mix and market
introduction of new diagnostic testing and screening products such as the
HealthCheck line, drug of abuse and infectious diseases screening products, as
well as a more favorable packaging and distribution program related to the
Company's OEM family planning products. The gross margin for the third quarter
decreased from prior quarterly periods in the current year due to a shift in the
mix of OEM products sold outside the United States.
SELLING, GENERAL AND ADMINISTRATIVE. Selling general and administrative
("SG&A") expenses for the third quarter of 1998 and 1997 remained constant at
$2.0 million and increased to $6.1 million for the nine months ended September
30, 1998 from $4.7 million in the same period 1997. This increase was primarily
due to the ongoing implementation of strategic marketing programs, including
those related to the initial market introduction of three new products thus far
in 1998. Through the first nine months of 1998, TCPI also continued to hire
operating personnel for the further scale-up of in-house manufacturing as well
as ongoing facility expansion at its Pompano Beach, Florida manufacturing,
laboratory, warehouse, and office space. This increase included the payment of
significantly higher than usual nonrecurring legal fees, for the filing of
certain patents associated with the TCPI's non-invasive glucose monitoring
system, participation in
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
the successful appeal connected to patents utilized in the Company's family
planning products, as well as the pursuit of certain litigation matters.
RESEARCH AND DEVELOPMENT. The Company continued to advance its various
diagnostic testing products and transdermal drug delivery technologies through
development towards commercialization. The Company's investment in R&D has
contributed to the development of several new products including its TD Glucose
Monitoring System, HealthCheck family of at home diagnostics, and meter and
visual-read Total and HDL cholesterol monitoring products, infectious diseases
and drug of abuse, as well as several other products. The future level of R&D
expenditures will depend on, among other things, the outcome of clinical testing
of products under development (including the TD Glucose Monitoring System and
Total and HDL cholesterol monitoring products), delays or changes in government
required testing and approval procedures, technological and competitive
developments and strategic marketing decisions. For the first nine months of
1998, the Company's R&D expenses held a constant going rate of approximately
$2.0 million as compared to the same period a year ago. For the three month
period ended September 30, 1998 the Company's R&D expenses were $615,000 as
compared to $797,000 in the same period of 1997.
NET LOSS. The Company posted a loss from operations of $7.2 million for
the first nine months of 1998, which increased from a loss of $5.7 million in
the same period a year earlier. For the third quarter ended September 30, 1998,
the loss from operations declined to $2.3 million from $2.4 million in the third
quarter of 1997. These increases resulted from expenses associated with the
planned scale-up of manufacturing and certain start-up expenses connected with
the new Boehringer Mannheim Italia program; ongoing investment in personnel,
research and development and facility expansion; expenses for ongoing testing of
TCPI's non-invasive glucose monitoring system and its cholesterol monitoring
products; and substantially higher than usual nonrecurring legal fees for the
period which relate to the filing of certain patents associated with TCPI's
non-invasive glucose monitoring system, participation in the successful appeal
related to patents utilized in the Company's family planning products, as well
as the pursuit of certain other litigation matters.
The net loss attributable to common stock was $7.3 million for the nine
months and $2.6 million loss for the quarter ended September 30, 1998, as
compared to $3.2 million and $1.5 million for the comparable periods of 1997.
The increase in loss attributable to common stock for the quarter and nine month
periods over the same periods in 1997 was also due to the increase in the
valuation allowance related to the tax deferred asset and the accrued redemption
accretion and accrued dividends of the preferred stock.
FINANCIAL CONDITION
The Company had cash and investments of $12.8 million at September 30,
1998, as compared to $7.3 million at December 31, 1997. The increase is due
primarily to proceeds from the Company's sale to a single institutional investor
of 15,000 shares of the Company's Series A Convertible Preferred Stock during
the second quarter of 1998. See Notes to Condensed Consolidated Financial
Statements. Working capital at the end of the third quarter was $17.5 million,
as compared to $9.4 million at December 31, 1997. This increase is due primarily
to the preferred stock transaction described above.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION (Continued)
The Company expects to continue to draw upon its working capital to
purchase production equipment, develop and manufacture the TD Glucose Monitoring
System, engage in research and development related to transdermal drug delivery
technology, develop new diagnostic products, conduct clinical trials, continue
its investment in personnel and facility expansion, and continue its day-to-day
business. In addition, on July 28, 1998, TCPI's Board of Directors authorized a
stock repurchase program to buy-back up to 10 percent of the Company's
outstanding common stock. Purchases of common stock by the Company may be made
from time-to-time in the open market and/or through privately negotiated
transactions at prevailing market prices depending on market conditions. To
date, the Company has repurchased 87,961 shares.
LIQUIDITY AND CAPITAL RESOURCES
TCPI's future long-term capital expenditure requirements and its
ability to ultimately return to profitability will depend on the following
factors: (i) the time required to obtain regulatory approvals; (ii) the progress
of the Company's research and development program; (iii) the ability of the
Company to develop additional marketing and distribution alliances, and (iv) the
Company's ability to develop and obtain regulatory approval to market new and
improved products. The Company anticipates that it will continue to incur net
losses until such time, if any, as the Company is able to generate sufficient
revenues from product sales to sustain its operations and cover expenses related
to its growth. There is no assurance that the Company will generate sufficient
cash to fund operations and the necessary cash requirements thereof.
Consequently, there can be no assurance that the Company will be able to fund
all of its cash requirements and operating losses or that any additional
financing will be available to the Company on acceptable terms or at all.
The Company's future working capital and capital expenditure
requirements may vary materially from those now planned depending on numerous
factors, including additional manufacturing scale-up for the Company's current
and future products, possible future acquisitions, the focus and direction of
the Company's research and development programs, competitive and technological
advances, future relationships with corporate marketing partners, the FDA
regulatory process and the Company's marketing and distribution strategy.
YEAR 2000
During 1997, the Company added to its existing computer capabilities
and began installation of new computer systems and programs to accommodate
anticipated future growth of TCPI's business and internal operations. Due to the
recent nature of any computer-related additions, as well as preliminary
discussions with certain vendors and customers, the Company believes the Year
2000 computer issue will not have a material impact on its business, operations
or financial condition.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to claims and suits arising in the ordinary
course of business. Other than described below, there has been no material
change in pending legal matters. In the opinion of management, the ultimate
resolution of such pending legal proceedings will not have a material adverse
effect on the Company's results of operations or financial position.
On October 8, 1998, the Company was granted its Motion to Dismiss
certain counts of the Complaint against TCPI related to its non-invasive TD
GlucoseTM Monitoring System (Americare Diagnostics, Inc., et al. vs. Technical
Chemicals and Products, Inc.) This Order issued by the United States District
Court Southern District of Florida dismissed six of nine counts of the lawsuit
brought against TCPI in November of 1997 by Americare Diagnostics, Inc. and its
president, Joseph P. D'Angelo. The Company sought and was granted an Order to
Dismiss all of the counts alleging misappropriation of trade secrets, breach of
fiduciary duty, breach of confidential relations, breach of trust, unfair
competition and conversion. The Company did not seek to dismiss the remaining
counts - including the patent infringement count - as it expects to prevail on
these counts which management believes are without merit. The Company believes
the patent infringement matter is essentially a response to the Libel and
Slander action TCPI filed against D'Angelo and his Americare companies in August
of 1997. The Plaintiffs have filed an amended Complaint which contains some of
the same counts based on substantially the same facts as in the original
Complaint. The Company believes it will again be successful in having such
counts dismissed.
Related to this legal matter, in August 1997, the Company filed a
lawsuit against Americare and D'Angelo for trade libel and slander of title
(Technical Chemicals and Products, Inc. vs. Joseph P. D'Angelo, et al.) related
to TCPI's non-invasive glucose monitoring technology. This lawsuit is ongoing as
a counter-claim in the matter before the United States District Court Southern
District of Florida.
In a separate lawsuit filed against the Company in 1994 by Americare
and D'Angelo related to an HIV saliva collector test kit, this legal matter
recently began being heard by the Circuit Court in Broward County, Florida
(Joseph P. D'Angelo, et al. vs.Technical Chemicals and Products, Inc., et al.)
and is ongoing.
Management believes, after consultation with counsel, that each of the
allegations against the Company included in these lawsuits is without merit, and
is defending each of the allegations vigorously. At this time, it is not
possible to estimate the ultimate loss, if any, related to these lawsuits.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 28, 1998, the Company held a Special Meeting of its
shareholders for the purpose of approving the issuance of shares of the
Company's common stock upon the conversion of the outstanding shares of its
Series A Convertible Preferred Stock. The proposal was approved at such meeting,
with an aggregate of 8,413,018 votes cast. There were 8,162,845 votes cast in
favor of the proposal, 224,583 votes cast against and 25,590 abstentions.
<PAGE>
PART II OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Stock Repurchase Program
On July 28, 1998, TCPI's Board of Directors authorized a stock
repurchase program to buy-back up to 10 percent of the Company's outstanding
common stock. Purchases of common stock by the Company may be made from
time-to-time in the open market and/or through privately negotiated transactions
at prevailing market prices depending on market conditions. To date, the Company
has repurchased 87,961 shares of common stock.
Employment Agreements
On October 9, 1998 the Company and Jack L. Aronowitz, the Company's
Chairman, President and Chief Executive Officer, amended Mr. Aronowitz's
Employment Agreement with the Company. As amended, Mr. Aronowitz's employment
agreement has a term of five years and provides that it shall automatically
extend on December 31st of each year to hold constant a five year employment
period thereafter unless sooner terminated as provided for in the Agreement.
Additionally, on October 9, 1998, the Company entered into Employment Agreements
with Jay E. Eckhaus, the Company's Vice President and General Counsel, and
Stuart R. Streger, the Company's Vice President and Chief Financial Officer.
Each of these Employment Agreements has a term of three years that expire on
December 31, 2001 and automatically renew for one year periods thereafter unless
sooner terminated as provided for in the Agreement. Each of these Employment
Agreements provides customary provisions concerning the termination of the
executive's employment with the Company following a change in control. Each
Employment Agreement also contains other customary terms and conditions.
<PAGE>
PART II OTHER INFORMATION (Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Exhibit Description
Number
3.1 ** Amended and Restated Articles of Incorporation of the Company.
3.2 ** Amended and Restated Bylaws of the Company.
4.1 * Form of Common Stock Certificate of the Company.
10.1 Joint Venture Agreement dated July 27, 1998 between the
Company and MicroWeiss Electronics
10.2 Amended Employment Agreement dated October 9, 1998 between the
Company and Jack L. Aronowitz
10.3 Employment Agreement dated October 9, 1998 between the Company
and Jay E. Eckhaus
10.4 Employment Agreement dated October 9, 1998 between the Company
and Stuart R. Streger
27 Financial Data Schedule
* Incorporated by reference to exhibit of the same number in
Amendment No. 4 to the Registration Statement on Form S-1
filed April 23, 1996 (No. 333-1272).
** Incorporated by reference to exhibit of same number
filed in the Company's Registration Statement on Form S-1
on February 12, 1996 (No. 333-1272).
(b) Reports On Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is being filed.
<PAGE>
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.
TECHNICAL CHEMICALS AND PRODUCTS, INC.
Date: November 12, 1997 By: /s/
-----------------------------------
Stuart R. Streger
Vice President and Chief Financial Officer
(Duly authorized officer and principal
accounting officer)
<PAGE>
EXHIBIT 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to a certain Employment Agreement between JACK L.
ARONOWITZ ("Employee") and TECHNICAL CHEMICALS AND PRODUCTS, INC. (sometimes
hereinafter referred to as the "Corporation" or "TCPI") made on the 27th day of
September, 1996 is hereby executed this 9th day of October, 1998.
RECITALS
The Corporation and Employee entered into a certain Employment
Agreement on the 27th day of September, 1996, a copy of which is annexed hereto
as Exhibit A ("1996 Employment Agreement"). The parties to the 1996 Employment
Agreement now desire to amend such 1996 Employment Agreement only as to certain
provisions of such 1996 Employment Agreement.
NOW THEREFORE, in consideration of the mutual promises, terms and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
FIRST: Paragraph a. of Article 5 is hereby amended only as to the annual
base salary specified therein and the first salary adjustment contained therein.
Accordingly, such salary and adjustment provisos are amended to state:
(i) ONE HUNDRED AND FIFTY-NINE THOUSAND FIVE HUNDRED AND
THITY-FIVE ($159,535) DOLLARS.
(ii) The first adjustment pursuant to the formula contained in
Paragraph a.(i) of the 1996 Employment Agreement shall be on
October 31, 1998 effective November 1, 1998.
SECOND: Paragraph c of Article 9 is amended only with respect to adding a
new subparagraph (5) to state that "Good Reason" as used in such Paragraph (c)
shall also include:
(5) reduction in Employee's Base Salary in effect on the date
a Change in Control occurs
THIRD: Paragraph b. of Article 10 of the 1996 Employment Agreement
defining "Change in Control" is hereby amended in its entirety to now
provide as follows:
b. Change in Control. For purposes of this Agreement, the term "Change
in Control" shall mean:
(1) The acquisition by any individual, entity or group (within
the meaning of ss. 13(d)(3) or ss. 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (any of
the foregoing described in this Section 7.2.1 hereafter a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of Capital Stock of
TCPI (the "Outstanding Capital Stock") or (b) the combined
voting power of the then outstanding voting securities of TCPI
entitled to vote generally in the election of directors (the
"Voting Securities"), provided, however, that any acquisition
by (x) TCPI or any of its subsidiaries, or any Employee
benefit plan (or related trust) sponsored or maintained by
TCPI or any of its subsidiaries or (y) any Person that is
eligible, pursuant to Rule 13d-1(b) under the Exchange Act, to
file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such
Person shall have filed a statement on Schedule 13G, unless
such Person shall have filed a statement on Schedule 13D with
respect to beneficial ownership of 20% or more of the Voting
Securities or (z) any corporation with respect to which,
following such acquisition, more than 20% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the
Outstanding Capital Stock and Voting Securities, as the case
may be, shall not constitute a Change of Control; or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof
whose election or nomination for election by TCPI's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of TCPI (as such terms are used in
Rule 14a-11 of Regulation 14A, or any successor section,
promulgated under the Exchange Act); or
(3) Approval by the shareholders of TCPI of a reorganization,
merger or consolidation (a "Business Combination"), in each
case, with respect to which all or substantially all holders
of the Outstanding Capital Stock and Voting Securities
immediately prior to such Business Combination do not,
following such Business Combination, beneficially own,
directly or indirectly, more than 20% of, respectively, the
then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from Business
Combination; or
(4) A complete liquidation or dissolution of TCPI or the sale
or other disposition of all or substantially all of the assets
of TCPI other than to a corporation with respect to which,
following such sale or disposition, more than 20% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately
prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock
and Voting Securities, as the case may be, immediately prior
to such sale or disposition.
(5) In the event that the beneficial ownership attributable to
Jack L. Aronowitz's ownership of the Outstanding Capital Stock
or Voting Securities of TCPI ("Aronowitz Shares") is reduced
to less than 20%, then the 20% threshold number contained in
the foregoing paragraphs of this Article 10 shall be reduced
in direct proportion to such reduction, but in no event, less
than 15%. By way of example, if the Aronowitz Shares are
reduced to 18% of the Outstanding Capital Stock or Voting
Securities, then the 20% provisos contained in the other
paragraphs of Article VII shall be reduced to 18%.
FOURTH: Paragraph d. of Article 12 of the 1996 Employment Agreement is
hereby amended in its entirety to now provide as follows:
28 Arbitration. Any controversy or claim arising out of, or relating
to, this Agreement, or the breach hereof, shall be settled by
arbitration in the City of Fort Lauderdale, in accordance with the
Commercial Rules of Arbitration of the American Arbitration Association
in the State of Florida, and any judgment upon the award rendered may
be entered in any court having jurisdiction thereof.
The Employee shall be entitled to receive Employee's salary
and other benefits in effect on the last date of Employee's Employment
("Termination Date") upon the commencement of Arbitration for the
period of the earliest to occur of (i) the termination of the
Arbitration, (ii) Employee's employment by a third party or (iii) one
(1) year from the Termination Date, provided, however, that the
Employee would be obligated to repay the Employer such salary (without
interest) in the event that the Arbitrators determine that the
termination of Employee's employment was proper pursuant to the
provisions of this Employment Agreement and such Arbitrator(s) find
such repayment justified and equitable.
FIFTH: In all other respects, the 1996 Employment Agreement remains
unmodified and in full force and effect as originally executed.
IN WITNESS WHEREOF, TCPI and Employee have caused this Agreement to be
executed on the day and year first above written.
TECHNICAL CHEMICALS AND
PRODUCTS, INC.
By
- -----------------------------------
Witness ______________________________
- ---------------------------------- ------------------------------
Witness Title
- ----------------------------------- ------------------------------
Witness JACK L. ARONOWITZ
- -----------------------------------
Witness
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS Agreement is made and entered into this 9th day of October, 1998
("Agreement"), between TECHNICAL CHEMICALS AND PRODUCTS, INC., a Florida
corporation ("TCPI"), with its principal place of business at 3341 SW 15 Street,
Pompano Beach, FL 33069 and JAY E. ECKHAUS, having an address of 23108 Post
Gardens Way, Apartment 202, Boca Raton, FL 33403 ("Employee").
R E C I T A L S:
WHEREAS, Employee is currently employed by TCPI as its Vice President
and General Counsel;
WHEREAS, Employee and TCPI are desirous of entering into an agreement
to memorialize the employment relationship. and
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually agree
as follows:
ARTICLE I
TERM
1.1 Initial Term. The initial term (the "Initial Term") of this
Agreement shall commence on the date this Agreement is executed and shall end on
the 31st day of December, 2001 ("Initial Term Termination Date") unless
terminated earlier as provided herein.
1.2 Extension of Initial Term.The Initial Term shall be extended for
successive one (1) year periods ("Extended Term") commencing on January 1, 2002,
unless either party gives the other one hundred eighty (180) days' prior written
notice of its intent not to renew prior to the expiration of the then current
term.
ARTICLE II
SCOPE OF RESPONSIBILITIES
OFFER AND ACCEPTANCE OF EMPLOYMENT
2.1 Offer of Employment. Upon the terms and subject to the conditions
of this Agreement, and upon the acceptance by Employee as signified by
Employee's execution of this Agreement, TCPI hereby employs Employee for the
term of this Agreement as its Vice President and General Counsel. Employee shall
have the powers and duties as Vice President and General Counsel of TCPI as
directed by the President and the Board of Directors, which direction shall be
pursuant to reasonable policies adopted from time to time and communicated to
Employee. Employee's duties shall include the management of TCPI's business
interests ("Businesses") and such other duties as are consistent with his
position (the "Duties"). During the term of this Agreement and except for
illness, disability, reasonable vacation periods and reasonable leaves of
absence, Employee shall devote his entire business time, attention, skill and
efforts as is necessary for the faithful performance of the Duties.
2.2 Acceptance By Employee. Employee hereby accepts such employment
and, consistent with fiduciary standards which exist between an employer and an
employee, Employee shall perform the Duties in an efficient, trustworthy and
businesslike manner.
2.3 Delegation. Notwithstanding anything to the contrary contained in
this Agreement, Employee shall have the right and authority to delegate
responsibility to one or more personnel if Employee and the President deem such
delegation appropriate.
2.4 Other Activities. Employee shall use Employee's best efforts for
the benefit of TCPI by whatsoever activities Employee deems appropriate to
maintain and improve TCPI's standing in the community generally and among other
members of the industries in which TCPI is from time to time engaged, including
such entertaining for business purposes as Employee considers appropriate
consistent with TCPI's policies.
ARTICLE III
COMPENSATION
3.1 Base Salary, Bonus, Options and Employee Benefit Plans. For all
services rendered by Employee in any capacity during his employment under this
Agreement (including any renewals hereof), TCPI shall pay Employee as
compensation the sum of the amounts set forth below:
3.1.1 Base Salary. During the term of this Agreement, Employee
shall be paid the sum of One Hundred and Twenty-Five Thousand
Dollars ($125,000) on an annualized basis, payable in
installments at such periodic intervals as TCPI pays its other
Employees but not less than on a monthly basis. On January 1,
1999 and continuing on each January 1st thereafter during the
term of this Agreement and any extensions thereof, and for
each subsequent year during the term of this Agreement,
Employee shall be entitled to an annual salary review of
Employee's base salary and such base salary may be increased
but not decreased at the discretion of the Board of Directors
of TCPI.
3.1.2. Bonus. Employee shall be entitled to such bonuses as
are awarded by the Board of Directors from time to time and
shall participate in all bonus plans established for senior
executives of TCPI.
3.1.3. Stock Options. TCPI has previously granted the options
(the "Options") to Employee specified in Exhibit A annexed
hereto and made a part hereof pursuant to and under the terms
of TCPI's Amended and Restated 1992 Stock Option Plan
3.2 Share Appreciation Rights Plan. TCPI will grant Employee share
appreciation rights, and Employee will be entitled to participate in TCPI's
share appreciation rights plan, on the same basis as other senior executives of
TCPI. Employee shall be entitled to the highest and most favorable treatment
afforded any Employee of TCPI, other than Jack L. Aronowitz or another officer
senior to Employee, under such plan.
ARTICLE IV
BUSINESS EXPENSES AND BENEFITS
4.1 Business Expenses. Employee is authorized to incur reasonable
expenses to execute and/or promote the Businesses of TCPI, including, but not
limited to, expenses related to maintenance of professional licenses and
expenses in accordance with TCPI's policies and procedures as same are in effect
from time to time, for entertainment, travel, and similar items, in the same
manner or basis, as other senior executives of TCPI. TCPI will reimburse
Employee for all reasonable travel or other expenses incurred while on business.
4.2. Employee Benefit Plans. Employee shall be entitled to participate
in any and all plans, arrangements or distributions by TCPI pertaining to or in
connection with any pension, bonus, profit sharing, stock options and/or similar
benefits and/or health benefits for its regular Employees and/or for its
Employees and/or for its senior level executives, as determined by the Board of
Directors or committees, pursuant to the governing instruments which establish
and/or determine eligibility and other rights of the participants and
beneficiaries under such plans or other benefit programs.
4.3 Health Insurance and Other Plans. TCPI will provide for Employee
medical insurance and Employee will be entitled to participate in all other
benefit plans and receive perquisites on the same basis as other senior
executives of TCPI.
4.4 Vacation and Sick Days. Employee shall be entitled to such
reasonable paid vacation time and paid and unpaid sick days and personal days in
accordance with TCPI's policies and procedures applicable to senior level
executives or as may be agreed to by the parties hereto from time to time;
provided, however, that Employee shall be entitled to at least two (2) weeks
paid vacation during each year of the term of this Agreement, or such greater
amount generally provided to senior executives of TCPI.
4.4.1 Should TCPI adopt a policy of accruing vacations from
year to year or paying senior executives the amount equaling
such unused vacation time, then the Employee shall have the
right to either (i) apply such accrued and unused vacation
time toward additional paid vacation time during subsequent
years of this Agreement; or (ii) receive a lump-sum payment
equal to Employee's base salary for said accrued and unused
vacation time.
<PAGE>
ARTICLE V
DEATH OR DISABILITY DURING EMPLOYMENT
5.1 If Employee dies or becomes permanently and totally disabled during
the term of the Agreement, TCPI shall pay to Employee or Employee's estate, as
the case may be, the base salary which would otherwise be payable to Employee,
for a period of four (4) months after the date on which Employee's death or
disability occurred. TCPI shall have no further financial obligations to
Employee or his estate, except as otherwise provided in Articles III and IV
hereof. For purposes of this Agreement, "disability" is defined to mean that, as
a result of Employee's incapacity due to physical or mental illness:
5.1.1 Employee shall have been absent from his duties as an
officer of TCPI on a substantially full-time basis for four
(4) consecutive months; and
5.1.2 Within thirty (30) days after TCPI notifies Employee in
writing that it intends to replace him, Employee shall not
have returned to the performance of the duties as an officer
of TCPI on a full-time basis.
5.2 Death or Disability. This Agreement shall terminate upon the death
or the disability of Employee. Termination for death or disability shall not be
termination for Cause. Employee or his heirs or estate (as the case may be)
shall be entitled to the compensation provided for in Paragraph 5.1 of this
Agreement.
ARTCLE VI
TERMINATION OF EMPLOYMENT
6.1 Termination by TCPI for Cause. Termination by Employee Without Good
Reason. If Employee's employment is terminated by (i) TCPI for Cause (as
hereinafter defined); or (ii) by Employee without Good Reason (as hereinafter
defined), then Employee shall be entitled to:
6.1.1 Base salary pursuant to Paragraph 3.1.1 earned through
the last day of employment ("Termination Date"); and
6.1.2 Accrued vacation under Paragraph 4.4 hereof; and
6.1.3 All applicable reimbursements from TCPI due pursuant to
this Agreement.
6.2. Termination by TCPI Without Cause or Termination by Employee For
Good Reason. Except as provided below with respect to a Change of Control (as
hereinafter defined), if there is a termination of this Agreement by (i) TCPI
without Cause (as hereinafter defined); or (ii) Employee for Good Reason (as
hereinafter defined), Employee shall be entitled to:
6.2.1 Receive, in one lump sum payment on Termination Date,
that amount which is equal to (a) Employee's base salary for
the remainder of the Initial term (or Extended Term as the
case may be) plus (b) an amount equal to the bonus paid
Employee in the previous fiscal year.
6.2.2 In the event that termination pursuant to Paragraph 6.2
occurs during the last six (6) months of the Initial Term or
the first six (6) months of any Extended Term, then, in such
event, the base salary payable under Paragraph 6.2.1, shall
not be less than the total of six (6) months base salary plus
one month's of base salary for each year of employment to a
maximum base salary under paragraph 6.2.1 and 6.2.2 of one (1)
year; and
6.2.3 Accrued vacation under Paragraph 4.4 hereof; and
6.2.4 All reimbursements due Employee through the Termination
Date under Article IV; and
6.2.5 All benefits described in Article IV shall be extended
for the period of one year after the Termination Date or
expiration of the Initial Term (or Extended Term as the case
may be), whichever is later.
6.2.6 Employer shall arrange and pay for outplacement services
with a recognized outplacement company who specializes in
executives of Employee's position for a period of six months
following the Termination Date.
6.3. Non-Renewal of Agreement. If there is a termination of this
Agreement as a result of notification by TCPI of its intent not to renew this
Agreement prior to one hundred eighty (180) days of the Initial Term Expiration
Date or prior to one hundred eighty (180) days of the last day of any Extended
Term as specified in Article I (other than for Cause), Employee shall be
entitled to receive on the Termination Date:
6.3.1 Base salary and all benefits described in Article 4.3
through the end of the Initial Term or Extended Term as
provided for in Paragraph 1.2 and,
6.3.2 One (1) month of base salary for each year of employment
to a maximum base salary under this paragraph 6.3.2 of ten
(10) months base salary; and
6.3.3 All reimbursements due Employee through the Termination
Date under Article IV;
6.3.4 All benefits as required under COBRA or similar
legislation and applicable Unemployment Compensation Laws.
6.4 Termination of Employment For Cause by TCPI. Employee's employment
may be terminated by TCPI at any time upon notice to Employee for "Cause." For
this purpose, the term "Cause" means:
6.4.1. Employee's material breach of any provision of this
Agreement; provided, however, that in the event TCPI believes
that this Agreement has been breached, it shall provide
Employee with written notice of such breach and provide
Employee with a thirty (30) day period in which to cure or
remedy such breach;
6.4.2 An adjudication by a court of competent jurisdiction
that Employee committed an injurious act of fraud or
dishonesty against TCPI, its subsidiaries or affiliates; and
6.4.3. The use by Employee of an illegal substance, including,
but not limited to, marijuana, cocaine, heroin, and all other
illegal substances, and/or the dependence by Employee upon the
use of alcohol, which, in any case, materially impairs
Employee's ability to perform his Duties hereunder, which
dependence is not cured or rehabilitated within three (3)
months of receipt of written notice from TCPI to Employee.
6.5 Termination of Employment by Employee: Employee may terminate his
employment with TCPI:
6.5.1 Without Good Reason at any time upon thirty (30) days
prior written notice to TCPI.
6.5.2 At any time upon written notice to TCPI with Good
Reason. "Good Reason" shall mean:
(a) A material breach of the provisions of this
Agreement by TCPI and Employee provides at least
thirty (30) days' prior written notice to at the
President and least two members of TCPI's Board of
Directors of the existence of such breach and his
intention to terminate this Agreement (no such
termination shall be effective if such breach is
cured during such period); or
(b) The failure of TCPI meet its financial
obligations to Employee after (10) day written notice
to the President and least two members of TCPI's
Board of Directors of such failure and Employee's
intention to terminate this Agreement.
6.6 Effect of Termination/References. Any termination of employment
under this Agreement, whether or not voluntary, will automatically constitute a
resignation of Employee as an officer of TCPI and all subsidiaries of TCPI. In
the event that TPCI is contacted by persons seeking information concerning the
status of Employee or the circumstances surrounding such termination of
Employment, TCPI will only furnish to such persons the dates that Employee was
employed, Employee's title, by TCPI, Employee's last salary and that Employee
resigned.
ARTICLE VII
CHANGE IN CONTROL
7.1 Change in Control. In the event that within twenty-four (24) months
following the occurrence of a "Change of Control" there occurs a "Change of
Control Event" (as defined below), then Employee shall be entitled to receive
from TCPI the following:
7.1.1 Employee's annual Base Salary as in effect at the date
of termination, multiplied by two;
7.1.2 Base Salary then in effect earned through the date of
termination;
7.1.3 Accrued vacation pursuant to this Agreement;
7.1.4 All applicable reimbursements from TCPI due Employee
under this Agreement;
7.1.5 All Options previously granted Employee shall become
immediately vested and exercisable at the option of Employee
for a one (1) year period following the Termination Date;
provided that any incentive stock options must be exercised
with three months of the Termination Date;
7.1.6 An amount equal to the amount of any bonuses paid to, or
accrued by Employee during the twelve month period preceding
the date of termination, multiplied by two; and
7.1.7 All benefits described in Paragraph 4.3 hereof, shall be
extended for a period of two years after the Termination Date
at TCPI's expense.
7.1.8 An amount that, on an after-tax basis (including federal
income and excise taxes, and state and local income taxes)
equals the federal income and excise taxes, and state and
local income taxes imposed upon Employee by reason of amounts
payable under this Article VII. For purposes of this clause
7.1.8, the Employee shall be deemed to pay federal, state and
local income taxes at the highest marginal rate of taxation.
7.1.9 Employer shall arrange and pay for outplacement services
with a recognized outplacement company who specializes in
executives of Employee's position for a period of six months
following the Termination Date.
7.2 Change in Control. For purposes of this Agreement, the term "Change
in Control" shall mean:
7.2.1 The acquisition by any individual, entity or group
(within the meaning of ss. 13(d)(3) or ss. 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") (any of the foregoing described in this Section 7.2.1
hereafter a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (a) the then outstanding shares of
Capital Stock of TCPI (the "Outstanding Capital Stock") or (b)
the combined voting power of the then outstanding voting
securities of TCPI entitled to vote generally in the election
of directors (the "Voting Securities"), provided, however,
that any acquisition by (x) TCPI or any of its subsidiaries,
or any Employee benefit plan (or related trust) sponsored or
maintained by TCPI or any of its subsidiaries or (y) any
Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect
to its beneficial ownership of Voting Securities, whether or
not such Person shall have filed a statement on Schedule 13G,
unless such Person shall have filed a statement on Schedule
13D with respect to beneficial ownership of 20% or more of the
Voting Securities or (z) any corporation with respect to
which, following such acquisition, more than 20% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the
Outstanding Capital Stock and Voting Securities, as the case
may be, shall not constitute a Change of Control; or
7.2.2 Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof
whose election or nomination for election by TCPI's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of TCPI (as such terms are used in
Rule 14a-11 of Regulation 14A, or any successor section,
promulgated under the Exchange Act); or
7.2.3 Approval by the shareholders of TCPI of a
reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all holders of the Outstanding Capital Stock and
Voting Securities immediately prior to such Business
Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 20% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from Business Combination; or
7.2.4 A complete liquidation or dissolution of TCPI or the
sale or other disposition of all or substantially all of the
assets of TCPI other than to a corporation with respect to
which, following such sale or disposition, more than 20% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately
prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock
and Voting Securities, as the case may be, immediately prior
to such sale or disposition.
7.2.5 In the event that the beneficial ownership attributable
to Jack L. Aronowitz's ownership of the Outstanding Capital
Stock or Voting Securities of TCPI ("Aronowitz Shares") is
reduced to less than 20%, then the 20% threshold number
contained in the foregoing paragraphs of this Article VII
shall be reduced in direct proportion to such reduction, but
in no event, less than 15%. By way of example, if the
Aronowitz Shares are reduced to 18% of the Outstanding Capital
Stock or Voting Securities, then the 20% provisos contained in
the other paragraphs of Article VII shall be reduced to 18%.
7.3 For purposes of Article VII, a "Change of Control Event" shall
mean: (i) Employee's employment with TCPI is terminated by TCPI for any reason
whatsoever or (ii) Employee terminates this Agreement with Good Reason or (iii)
the assignment to Employee of any duties inconsistent with the position of
Employee pursuant to Article II of this Agreement or a reduction or alteration
in the nature or status of Employee's responsibilities from those specified in
Article II or(iv) reduction in Employee's Base Salary in effect on the date a
Change in Control occurs or (v) Employee is required to perform his duties at a
location greater than twenty-five (25) miles from the current headquarters of
TCPI for a period exceeding thirty (30) days during a twelve month period.
7.4 The provisions of this paragraph 7.4 shall apply only within the
twenty-four month period immediately following a Change of Control. TCPI's
obligation to pay Employee the compensation and to make the arrangements
provided in this Article VII herein shall be absolute and unconditional and
shall not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense, duty to mitigate, or other right
that the TCPI may have against him or anyone else. The amount shall not be
reduced by reason of Employee's securing other employment or for any other
reason. All amounts payable by TCPI hereunder shall be paid without notice or
demand, and in no event later that seven business days after such payments
become due. Except as expressly provided herein, TCPI waives all rights that it
may now have or may hereafter have conferred upon it, by statute or otherwise,
to terminate, cancel or rescind this Agreement in whole or in part. Each and
every payment made hereunder by TCPI shall be final and TCPI will not seek to
recover all or any part of such payment from Employee or from whomsoever may be
entitled thereto, for any reason whatsoever. TCPI may withhold for income tax
purposes any amounts required to be withheld under applicable tax statutes and
regulations.
ARTICLE VIII
NOTICES
8.1 Any notice, request, demand, offer, payment or communication
required or permitted to be given by any provision of this Agreement shall be
deemed to have been delivered and given for all purposes if written and if (a)
delivered personally or by courier or delivery service, at the time of such
delivery; or (b) directed by registered or certified United States mail, postage
and charges prepaid, addressed to the intended recipient, at the address
specified below, at such time that the intended recipient or its agent signs or
executes the receipt:
If to TCPI:
Technical Chemicals and Products, Inc.
Attention: President
3341 Southwest 15th Street
Pompano Beach, Florida 33069
If to Employee:
Jay E. Eckhaus
23108 Post Gardens Way
Apartment 202
Boca Raton, FL 33433
8.2 Any party may change the address to which notices are to be mailed
by giving written notice as provided herein to the other party. Commencing
immediately after the receipt of such notice, such newly designated address
shall be such person's address for purposes of all notices or other
communications required or permitted to be given pursuant to this Agreement.
ARTICLE IX
CONFIDENTIAL BUSINESS INFORMATION
DUTY TO RETURN INFORMATION AND CONFLICT OF INTEREST
9.1 Employee represents and agrees that all documents and other
information, including, but not limited to client lists, prospective client
lists, vendors and vendees, research protocols, market research results,
reports, questionnaires, video and audio tapes, memorandum, drawings, data,
notes, financial information and all other information including copies thereof
produced by photocopy machines, computer programs, facsimile or otherwise
(collectively, the "Information") furnished to Employee or to which Employee is
exposed or obtains pursuant to this Agreement is confidential and proprietary to
TCPI and the disclosure by Employee of such Information to any third party will
cause irreparable injury to TCPI. Accordingly, Employee expressly agrees that:
9.1.1 Any Information which Employee receives is exposed to or
obtains pursuant to this Agreement, either in writing,
verbally or through computer software or otherwise, is highly
confidential and that disclosure of such information will
cause TCPI irreparable damage.
9.1.2 All such Information shall be treated by Employee as
Strictly Confidential.
9.1.3 During the term of this Agreement and for a period of
five (5) years from the termination or other expiration of
this Agreement, Employee shall maintain all such Information
in strictest confidence and will not, directly or indirectly,
disclose or cause to be disclosed, such Information to any
third party, person or entity and will not use such
Information except as specifically authorized by this
Agreement.
9.1.4 During the term of this Agreement and any extensions
thereof, Employee shall be in compliance with TCPI's Conflict
of Interest policy as it may exist from time-to-time.
9.1.5 Immediately upon the termination or expiration of this
Agreement, Employee shall deliver to TCPI all Information
(regardless of the format which such Information takes) and
Employee shall not retain any copies of such Information. Upon
request, the Employee shall sign a statement prepared by TCPI
acknowledging that Employee has surrendered all such
Information to TCPI.
<PAGE>
ARTICLE X
OWNERSHIP OF WORK PRODUCT
FREEDOM OF USE
10.1 Employee recognizes and agrees that all right, title and interest
to all information, inventions, methods, procedures, inventions, designs, ideas
and programs ("Discoveries") developed by Employee in connection with or
resulting in whole or in part from Employee's work pursuant to the Agreement
shall belong solely to TCPI and TCPI shall be free to use all such Discoveries
without any obligation to Employee.
10.2 If any patentable inventions or improvements, copyrights or
trademarks result in whole or in part from Employee's services under this
Agreement, all rights to apply for such patents and trademarks and any patents
and trademarks issued therefrom and copyrights ownership shall belong solely to
TCPI and Employee shall do whatever is reasonably necessary to aid TCPI in
securing such intellectual property rights.
ARTICLE XI
MISCELLANEOUS
11.1 Florida Law. This Agreement shall be considered for all purposes a
Florida document and shall be construed pursuant to the laws of the State of
Florida, and all of its provisions shall be administered according to and its
validity shall be determined under the laws of the State of Florida without
regard to any conflict or choice of law issues.
11.2 Gender and Number. Whenever appropriate, references in this
Agreement in any gender shall be construed to include all other genders,
references in the singular shall be construed to include the plural, and
references in the plural shall be construed to include the singular, unless the
context clearly indicates to the contrary.
11.3 Certain Words. The words "hereof," "herein," "hereunder," and
other similar compounds of the word "here" shall mean and refer to the entire
Agreement and not to any particular article, provision or paragraph unless so
required by the context.
11.4 Captions. Paragraph titles or captions contained in this Agreement
are inserted only as a matter of convenience and/or reference, and they shall in
no way be construed as limiting, extending, defining or describing either the
scope or intent of this Agreement or of any provision hereof.
11.5 Counterparts. This Agreement may be executed in one or more
counterparts, including facsimile counterparts, and any such counterpart shall,
for all purposes, be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
11.6 Severability. The invalidity or unenforceability of any provision
hereunder (or any portion of such a provision) shall not affect the validity or
enforceability of the remaining provisions (or remaining portions of such
provisions) of this Agreement.
11.7 Entire Agreement. This Agreement (and all other documents executed
simultaneously herewith or pursuant hereto) constitutes the entire agreement
among the parties pertaining to the subject matter hereof, and supersedes and
revokes any and all prior or existing agreements, written or oral, relating to
the subject matter hereof, and this Agreement shall be solely determinative of
the subject matter hereof.
11.8 Waiver. Either TCPI or Employee may, at any time or times, waive
(in whole or in part) any rights or privileges to which he or it may be entitled
hereunder. However, no waiver by any party of any condition or of the breach of
any term, covenant, representation or warranty contained in this Agreement, in
any one or more instances, shall be deemed to be or construed as a further
continuing waiver of any other condition or of any breach of any other terms,
covenants, representations or warranties contained in this Agreement, and no
waiver shall be effective unless it is in writing and signed by the waiving
party.
11.9 Attorneys' Fees. In the event that either party shall be required
to retain the services of an attorney to enforce any of his or its rights
hereunder, the prevailing party in any arbitration or court action shall be
entitled to receive from the other party all costs and expenses including (but
not limited to) court costs and attorneys' fees (whether in the arbitration or
in a court of original jurisdiction or one or more courts of appellate
jurisdiction) incurred by his or it in connection therewith. The parties hereby
expressly confer on the arbitrator the right to award costs and attorneys' fees
in the arbitration.
11.10 Venue. Any arbitration or other litigation arising hereunder
shall be instituted only in Broward County, Florida or in the county where TCPI
has its principal place of business.
11.11 Assignment. The rights and obligations of the parties under this
Agreement shall inure to the benefit of and shall be binding upon their
successors, assigns, and/or other legal representatives. This Agreement shall
not be assignable by TCPI. The services of Employee are personal and his
obligations may not be delegated by his except as otherwise provided herein.
11.12 Amendment. This Agreement may not be amended, modified,
superseded, cancelled, or terminated, and any of the matters, covenants,
representations, warranties or conditions hereof may not be waived, except by a
written instrument executed by TCPI and Employee or, in the case of a waiver, by
the party to be charged with such waiver.
11.13 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person,
other than TCPI and Employee and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
ARTICLE XII
ARBITRATION
12.1 Arbitration. Any controversy or claim arising out of, or relating
to, this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Fort Lauderdale, in accordance with the Commercial Rules of Arbitration
of the American Arbitration Association in the State of Florida, and any
judgment upon the award rendered may be entered in any court having jurisdiction
thereof.
12.2 Continuation of Salary. The Employee shall be entitled to receive
Employee's salary and other benefits in effect at the Termination Date upon the
commencement of Arbitration for the period of the earliest to occur of (i) the
termination of the Arbitration, (ii) Employee's employment by a third party or
(iii) one (1) year from the Termination Date, provided, however, that the
Employee would be obligated to repay TCPI such salary (without interest) in the
event that the Arbitrators determine that the termination of Employee's
employment was proper pursuant to the provisions of this Employment Agreement
and such Arbitrator(s) find such repayment justified and equitable.
IN WITNESS WHEREOF, TCPI and Employee have caused this Agreement to be
executed on the day and year first above written.
TECHNICAL CHEMICALS AND
PRODUCTS, INC.
___________________________________ By
Witness
------------------------------
- ---------------------------------- ------------------------------
Witness Title
- ----------------------------------- ------------------------------
Witness JAY E. ECKHAUS
- -----------------------------------
Witness
<PAGE>
EXHIBIT `A'
<TABLE>
<S> <C> <C> <C> <C>
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
DATE OF NUMBER OF OPTION
GRANT SHARES VESTING EXPIRATION PRICE
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
9/23/98 5th anniversary of vesting date
3/4/98 5,000 $9 1/16
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
5th anniversary of vesting date
3/4/98 5,000 3/23/2000 $9 1/16
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
5th anniversary of vesting date
3/4/98 5,000 3/23/2001 $9 1/16
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
</TABLE>
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS Agreement is made and entered into this 9th day of October, 1998
("Agreement"), between TECHNICAL CHEMICALS AND PRODUCTS, INC., a Florida
corporation ("TCPI"), with its principal place of business at 3341 SW 15 Street,
Pompano Beach, FL 33069 and STUART R. STREGER, having an address of 300 Galen
Drive, Apartment 405, Key Biscayne, FL 33149 ("Employee").
R E C I T A L S:
WHEREAS, Employee is currently employed by TCPI as its Vice President
and Chief Financial Officer;
WHEREAS, Employee and TCPI are desirous of entering into an agreement
to memorialize the employment relationship. and
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually agree
as follows:
ARTICLE I
TERM
1.1 Initial Term. The initial term (the "Initial Term") of this
Agreement shall commence on the date this Agreement is executed and shall end on
the 31st day of December, 2001 ("Initial Term Termination Date") unless
terminated earlier as provided herein.
1.2 Extension of Initial Term.The Initial Term shall be extended for
successive one (1) year periods ("Extended Term") commencing on January 1, 2002,
unless either party gives the other one hundred eighty (180) days' prior written
notice of its intent not to renew prior to the expiration of the then current
term.
ARTICLE II
SCOPE OF RESPONSIBILITIES
OFFER AND ACCEPTANCE OF EMPLOYMENT
2.1 Offer of Employment. Upon the terms and subject to the conditions
of this Agreement, and upon the acceptance by Employee as signified by
Employee's execution of this Agreement, TCPI hereby employs Employee for the
term of this Agreement as its Vice President and Chief Financial Officer.
Employee shall have the powers and duties as Vice President and Chief Financial
Officer of TCPI as directed by the President and the Board of Directors, which
direction shall be pursuant to reasonable policies adopted from time to time and
communicated by written notice to Employee. Employee's duties shall include the
management of TCPI's business interests ("Businesses") and such other duties as
are consistent with his position (the "Duties"). During the term of this
Agreement and except for illness, disability, reasonable vacation periods and
reasonable leaves of absence, Employee shall devote his entire business time,
attention, skill and efforts as is necessary for the faithful performance of the
Duties.
2.2 Acceptance By Employee. Employee hereby accepts such employment
and, consistent with fiduciary standards which exist between an employer and an
employee, Employee shall perform the Duties in an efficient, trustworthy and
businesslike manner.
2.3 Delegation. Notwithstanding anything to the contrary contained in
this Agreement, Employee shall have the right and authority to delegate
responsibility to one or more personnel if Employee and the President deem such
delegation appropriate.
2.4 Other Activities. Employee shall use Employee's best efforts for
the benefit of TCPI by whatsoever activities Employee deems appropriate to
maintain and improve TCPI's standing in the community generally and among other
members of the industries in which TCPI is from time to time engaged, including
such entertaining for business purposes as Employee considers appropriate
consistent with TCPI's policies.
ARTICLE III
COMPENSATION
3.1 Base Salary, Bonus, Options and Employee Benefit Plans. For all
services rendered by Employee in any capacity during his employment under this
Agreement (including any renewals hereof), TCPI shall pay Employee as
compensation the sum of the amounts set forth below:
3.1.1 Base Salary. During the term of this Agreement, Employee
shall be paid the sum of One Hundred and Thirty-One Thousand
Two Hundred and Fifty Dollars ($131,250) on an annualized
basis, payable in installments at such periodic intervals as
TCPI pays its other Employees but not less than on a monthly
basis. On January 1, 1999 and continuing on each January 1st
thereafter during the term of this Agreement and any
extensions thereof, and for each subsequent year during the
term of this Agreement, Employee shall be entitled to an
annual salary review of Employee's base salary and such base
salary may be increased but not decreased at the discretion of
the Board of Directors of TCPI.
3.1.2. Bonus. Employee shall be entitled to such bonuses as
are awarded by the Board of Directors from time to time and
shall participate in all bonus plans established for senior
executives of TCPI.
3.1.3. Stock Options. TCPI has previously granted the options
(the "Options") to Employee specified in Exhibit A annexed
hereto and made a part hereof pursuant to and under the terms
of TCPI's Amended and Restated 1992 Stock Option Plan
3.2 Share Appreciation Rights Plan. TCPI will grant Employee share
appreciation rights, and Employee will be entitled to participate in TCPI's
share appreciation rights plan, on the same basis as other senior executives of
TCPI. Employee shall be entitled to the highest and most favorable treatment
afforded any Employee of TCPI, other than Jack L. Aronowitz, or another officer
senior to Employee under such plan.
ARTICLE IV
BUSINESS EXPENSES AND BENEFITS
4.1 Business Expenses. Employee is authorized to incur reasonable
expenses to execute and/or promote the Businesses of TCPI, including, but not
limited to, expenses related to maintenance of professional licenses and
expenses in accordance with TCPI's policies and procedures as same are in effect
from time to time, for entertainment, travel, and similar items, in the same
manner or basis, as other senior executives of TCPI. TCPI will reimburse
Employee for all reasonable travel or other expenses incurred while on business.
4.2. Employee Benefit Plans. Employee shall be entitled to participate
in any and all plans, arrangements or distributions by TCPI pertaining to or in
connection with any pension, bonus, profit sharing, stock options and/or similar
benefits and/or health benefits for its regular Employees and/or for its
Employees and/or for its senior level executives, as determined by the Board of
Directors or committees, pursuant to the governing instruments which establish
and/or determine eligibility and other rights of the participants and
beneficiaries under such plans or other benefit programs.
4.3 Health Insurance and Other Plans. TCPI will provide for Employee
medical insurance and Employee will be entitled to participate in all other
benefit plans and receive perquisites on the same basis as other senior
executives of TCPI.
4.4 Vacation and Sick Days. Employee shall be entitled to such
reasonable paid vacation time and paid and unpaid sick days and personal days in
accordance with TCPI's policies and procedures applicable to senior level
executives or as may be agreed to by the parties hereto from time to time;
provided, however, that Employee shall be entitled to at least two (2) weeks
paid vacation during each year of the term of this Agreement, or such greater
amount generally provided to senior executives of TCPI.
4.4.1 Should TCPI adopt a policy of accruing vacations from
year to year or paying senior executives the amount equaling
such unused vacation time, then the Employee shall have the
right to either (i) apply such accrued and unused vacation
time toward additional paid vacation time during subsequent
years of this Agreement; or (ii) receive a lump-sum payment
equal to Employee's base salary for said accrued and unused
vacation time.
<PAGE>
ARTICLE V
DEATH OR DISABILITY DURING EMPLOYMENT
5.1 If Employee dies or becomes permanently and totally disabled during
the term of the Agreement, TCPI shall pay to Employee or Employee's estate, as
the case may be, the base salary which would otherwise be payable to Employee,
for a period of four (4) months after the date on which Employee's death or
disability occurred. TCPI shall have no further financial obligations to
Employee or his estate, except as otherwise provided in Articles III and IV
hereof. For purposes of this Agreement, "disability" is defined to mean that, as
a result of Employee's incapacity due to physical or mental illness:
5.1.1 Employee shall have been absent from his duties as an
officer of TCPI on a substantially full-time basis for four
(4) consecutive months; and
5.1.2 Within thirty (30) days after TCPI notifies Employee in
writing that it intends to replace him, Employee shall not
have returned to the performance of the duties as an officer
of TCPI on a full-time basis.
5.2 Death or Disability. This Agreement shall terminate upon the death
or the disability of Employee. Termination for death or disability shall not be
termination for Cause. Employee or his heirs or estate (as the case may be)
shall be entitled to the compensation provided for in Paragraph 5.1 of this
Agreement.
ARTCLE VI
TERMINATION OF EMPLOYMENT
6.1 Termination by TCPI for Cause. Termination by Employee Without Good
Reason. If Employee's employment is terminated by (i) TCPI for Cause (as
hereinafter defined); or (ii) by Employee without Good Reason (as hereinafter
defined), then Employee shall be entitled to:
6.1.1 Base salary pursuant to Paragraph 3.1.1 earned through
the last day of employment ("Termination Date"); and
6.1.2 Accrued vacation under Paragraph 4.4 hereof; and
6.1.3 All applicable reimbursements from TCPI due pursuant
to this Agreement.
6.2. Termination by TCPI Without Cause or Termination by Employee For
Good Reason. Except as provided below with respect to a Change of Control (as
hereinafter defined), if there is a termination of this Agreement by (i) TCPI
without Cause (as hereinafter defined); or (ii) Employee for Good Reason (as
hereinafter defined), Employee shall be entitled to:
6.2.1 Receive, in one lump sum payment on Termination Date,
that amount which is equal to (a) Employee's base salary for
the remainder of the Initial term (or Extended Term as the
case may be) plus (b) an amount equal to the bonus paid
Employee in the previous fiscal year.
6.2.2 In the event that termination pursuant to Paragraph 6.2
occurs during the last six (6) months of the Initial Term or
the first six (6) months of any Extended Term, then, in such
event, the base salary payable under Paragraph 6.2.1, shall
not be less than the total of six (6) months base salary plus
one month's of base salary for each year of employment to a
maximum base salary under paragraph 6.2.1 and 6.2.2 of one (1)
year; and
6.2.3 Accrued vacation under Paragraph 4.4 hereof; and
6.2.4 All reimbursements due Employee through the
Termination Date under Article IV; and
6.2.5 All benefits described in Article IV shall be extended
for the period of one year after the Termination Date or
expiration of the Initial Term (or Extended Term as the case
may be), whichever is later.
6.2.6 Employer shall arrange and pay for outplacement services
with a recognized outplacement company who specializes in
executives of Employee's position for a period of six months
following the Termination Date.
6.3. Non-Renewal of Agreement. If there is a termination of this
Agreement as a result of notification by TCPI of its intent not to renew this
Agreement prior to one hundred eighty (180) days of the Initial Term Expiration
Date or prior to one hundred eighty (180) days of the last day of any Extended
Term as specified in Article I (other than for Cause), Employee shall be
entitled to receive on the Termination Date:
6.3.1 Base salary and all benefits described in Article 4.3
through the end of the Initial Term or Extended Term as
provided for in Paragraph 1.2 and,
6.3.2 One (1) month of base salary for each year of employment
to a maximum base salary under this paragraph 6.3.2 of ten
(10) months base salary; and
6.3.3 All reimbursements due Employee through the Termination
Date under Article IV;
6.3.4 All benefits as required under COBRA or similar
legislation and applicable Unemployment Compensation Laws.
6.4 Termination of Employment For Cause by TCPI. Employee's employment
may be terminated by TCPI at any time upon notice to Employee for "Cause." For
this purpose, the term "Cause" means:
6.4.1. Employee's material breach of any provision of this
Agreement; provided, however, that in the event TCPI believes
that this Agreement has been breached, it shall provide
Employee with written notice of such breach and provide
Employee with a thirty (30) day period in which to cure or
remedy such breach;
6.4.2 An adjudication by a court of competent jurisdiction
that Employee committed an injurious act of fraud or
dishonesty against TCPI, its subsidiaries or affiliates; and
6.4.3. The use by Employee of an illegal substance, including,
but not limited to, marijuana, cocaine, heroin, and all other
illegal substances, and/or the dependence by Employee upon the
use of alcohol, which, in any case, materially impairs
Employee's ability to perform his Duties hereunder, which
dependence is not cured or rehabilitated within three (3)
months of receipt of written notice from TCPI to Employee.
6.5 Termination of Employment by Employee: Employee may terminate his
employment with TCPI:
6.5.1 Without Good Reason at any time upon thirty (30) days
prior written notice to TCPI.
6.5.2 At any time upon written notice to TCPI with Good
Reason. "Good Reason" shall mean:
(a) A material breach of the provisions of this
Agreement by TCPI and Employee provides at least
thirty (30) days' prior written notice to at the
President and least two members of TCPI's Board of
Directors of the existence of such breach and his
intention to terminate this Agreement (no such
termination shall be effective if such breach is
cured during such period); or
(b) The failure of TCPI meet its financial
obligations to Employee after (10) day written notice
to the President and least two members of TCPI's
Board of Directors of such failure and Employee's
intention to terminate this Agreement.
6.6 Effect of Termination/References. Any termination of employment
under this Agreement, whether or not voluntary, will automatically constitute a
resignation of Employee as an officer of TCPI and all subsidiaries of TCPI. In
the event that TPCI is contacted by persons seeking information concerning the
status of Employee or the circumstances surrounding such termination of
Employment, TCPI will only furnish to such persons the dates that Employee was
employed, Employee's title, by TCPI, Employee's last salary and that Employee
resigned.
ARTICLE VII
CHANGE IN CONTROL
7.1 Change in Control. In the event that within twenty-four (24) months
following the occurrence of a "Change of Control" there occurs a "Change of
Control Event" (as defined below), then Employee shall be entitled to receive
from TCPI the following:
7.1.1 Employee's annual Base Salary as in effect at the date
of termination, multiplied by two;
7.1.2 Base Salary then in effect earned through the date of
termination;
7.1.3 Accrued vacation pursuant to this Agreement;
7.1.4 All applicable reimbursements from TCPI due Employee
under this Agreement;
7.1.5 All Options previously granted Employee shall become
immediately vested and exercisable at the option of Employee
for a one (1) year period following the Termination Date;
provided that any incentive stock options must be exercised
with three months of the Termination Date;
7.1.6 An amount equal to the amount of any bonuses paid to, or
accrued by Employee during the twelve month period preceding
the date of termination, multiplied by two; and
7.1.7 All benefits described in Paragraph 4.3 hereof, shall be
extended for a period of two years after the Termination Date
at TCPI's expense.
7.1.8 An amount that, on an after-tax basis (including federal
income and excise taxes, and state and local income taxes)
equals the federal income and excise taxes, and state and
local income taxes imposed upon Employee by reason of amounts
payable under this Article VII. For purposes of this clause
7.1.8, the Employee shall be deemed to pay federal, state and
local income taxes at the highest marginal rate of taxation.
7.1.9 Employer shall arrange and pay for outplacement services
with a recognized outplacement company who specializes in
executives of Employee's position for a period of six months
following the Termination Date.
7.2 Change in Control. For purposes of this Agreement, the term "Change in
Control" shall mean:
7.2.1 The acquisition by any individual, entity or group
(within the meaning of ss. 13(d)(3) or ss. 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") (any of the foregoing described in this Section 7.2.1
hereafter a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (a) the then outstanding shares of
Capital Stock of TCPI (the "Outstanding Capital Stock") or (b)
the combined voting power of the then outstanding voting
securities of TCPI entitled to vote generally in the election
of directors (the "Voting Securities"), provided, however,
that any acquisition by (x) TCPI or any of its subsidiaries,
or any Employee benefit plan (or related trust) sponsored or
maintained by TCPI or any of its subsidiaries or (y) any
Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect
to its beneficial ownership of Voting Securities, whether or
not such Person shall have filed a statement on Schedule 13G,
unless such Person shall have filed a statement on Schedule
13D with respect to beneficial ownership of 20% or more of the
Voting Securities or (z) any corporation with respect to
which, following such acquisition, more than 20% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the
Outstanding Capital Stock and Voting Securities, as the case
may be, shall not constitute a Change of Control; or
7.2.2 Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof
whose election or nomination for election by TCPI's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of TCPI (as such terms are used in
Rule 14a-11 of Regulation 14A, or any successor section,
promulgated under the Exchange Act); or
7.2.3 Approval by the shareholders of TCPI of a
reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all holders of the Outstanding Capital Stock and
Voting Securities immediately prior to such Business
Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 20% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from Business Combination; or
7.2.4 A complete liquidation or dissolution of TCPI or the
sale or other disposition of all or substantially all of the
assets of TCPI other than to a corporation with respect to
which, following such sale or disposition, more than 20% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately
prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock
and Voting Securities, as the case may be, immediately prior
to such sale or disposition.
7.2.5 In the event that the beneficial ownership attributable
to Jack L. Aronowitz's ownership of the Outstanding Capital
Stock or Voting Securities of TCPI ("Aronowitz Shares") is
reduced to less than 20%, then the 20% threshold number
contained in the foregoing paragraphs of this Article VII
shall be reduced in direct proportion to such reduction, but
in no event, less than 15%. By way of example, if the
Aronowitz Shares are reduced to 18% of the Outstanding Capital
Stock or Voting Securities, then the 20% provisos contained in
the other paragraphs of Article VII shall be reduced to 18%.
7.3 For purposes of Article VII, a "Change of Control Event" shall
mean: (i) Employee's employment with TCPI is terminated by TCPI for any reason
whatsoever or (ii) Employee terminates this Agreement with Good Reason or (iii)
the assignment to Employee of any duties inconsistent with the position of
Employee pursuant to Article II of this Agreement or a reduction or alteration
in the nature or status of Employee's responsibilities from those specified in
Article II or(iv) reduction in Employee's Base Salary in effect on the date a
Change in Control occurs or (v) Employee is required to perform his duties at a
location greater than twenty-five (25) miles from the current headquarters of
TCPI for a period exceeding thirty (30) days during a twelve month period.
7.4 The provisions of this paragraph 7.4 shall apply only within the
twenty-four month period immediately following a Change of Control. TCPI's
obligation to pay Employee the compensation and to make the arrangements
provided in this Article VII herein shall be absolute and unconditional and
shall not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense, duty to mitigate, or other right
that the TCPI may have against him or anyone else. The amount shall not be
reduced by reason of Employee's securing other employment or for any other
reason. All amounts payable by TCPI hereunder shall be paid without notice or
demand, and in no event later that seven business days after such payments
become due. Except as expressly provided herein, TCPI waives all rights that it
may now have or may hereafter have conferred upon it, by statute or otherwise,
to terminate, cancel or rescind this Agreement in whole or in part. Each and
every payment made hereunder by TCPI shall be final and TCPI will not seek to
recover all or any part of such payment from Employee or from whomsoever may be
entitled thereto, for any reason whatsoever. TCPI may withhold for income tax
purposes any amounts required to be withheld under applicable tax statutes and
regulations.
ARTICLE VIII
NOTICES
8.1 Any notice, request, demand, offer, payment or communication
required or permitted to be given by any provision of this Agreement shall be
deemed to have been delivered and given for all purposes if written and if (a)
delivered personally or by courier or delivery service, at the time of such
delivery; or (b) directed by registered or certified United States mail, postage
and charges prepaid, addressed to the intended recipient, at the address
specified below, at such time that the intended recipient or its agent signs or
executes the receipt:
If to TCPI:
Technical Chemicals and Products, Inc.
Attention: President
3341 Southwest 15th Street
Pompano Beach, Florida 33069
If to Employee:
Stuart R. Streger
300 Galen Drive, Apt. 405
Key Biscayne, FL 33149
8.2 Any party may change the address to which notices are to be mailed
by giving written notice as provided herein to the other party. Commencing
immediately after the receipt of such notice, such newly designated address
shall be such person's address for purposes of all notices or other
communications required or permitted to be given pursuant to this Agreement.
ARTICLE IX
CONFIDENTIAL BUSINESS INFORMATION
DUTY TO RETURN INFORMATION AND CONFLICT OF INTEREST
9.1 Employee represents and agrees that all documents and other
information, including, but not limited to client lists, prospective client
lists, vendors and vendees, research protocols, market research results,
reports, questionnaires, video and audio tapes, memorandum, drawings, data,
notes, financial information and all other information including copies thereof
produced by photocopy machines, computer programs, facsimile or otherwise
(collectively, the "Information") furnished to Employee or to which Employee is
exposed or obtains pursuant to this Agreement is confidential and proprietary to
TCPI and the disclosure by Employee of such Information to any third party will
cause irreparable injury to TCPI. Accordingly, Employee expressly agrees that:
9.1.1 Any Information which Employee receives is exposed to or
obtains pursuant to this Agreement, either in writing,
verbally or through computer software or otherwise, is highly
confidential and that disclosure of such information will
cause TCPI irreparable damage.
9.1.2 All such Information shall be treated by Employee as
Strictly Confidential.
9.1.3 During the term of this Agreement and for a period of
five (5) years from the termination or other expiration of
this Agreement, Employee shall maintain all such Information
in strictest confidence and will not, directly or indirectly,
disclose or cause to be disclosed, such Information to any
third party, person or entity and will not use such
Information except as specifically authorized by this
Agreement.
9.1.4 During the term of this Agreement and any extensions
thereof, Employee shall be in compliance with TCPI's Conflict
of Interest policy as it may exist from time-to-time.
9.1.5 Immediately upon the termination or expiration of this
Agreement, Employee shall deliver to TCPI all Information
(regardless of the format which such Information takes) and
Employee shall not retain any copies of such Information. Upon
request, the Employee shall sign a statement prepared by TCPI
acknowledging that Employee has surrendered all such
Information to TCPI.
<PAGE>
ARTICLE X
OWNERSHIP OF WORK PRODUCT
FREEDOM OF USE
10.1 Employee recognizes and agrees that all right, title and interest
to all information, inventions, methods, procedures, inventions, designs, ideas
and programs ("Discoveries") developed by Employee in connection with or
resulting in whole or in part from Employee's work pursuant to the Agreement
shall belong solely to TCPI and TCPI shall be free to use all such Discoveries
without any obligation to Employee.
10.2 If any patentable inventions or improvements, copyrights or
trademarks result in whole or in part from Employee's services under this
Agreement, all rights to apply for such patents and trademarks and any patents
and trademarks issued therefrom and copyrights ownership shall belong solely to
TCPI and Employee shall do whatever is reasonably necessary to aid TCPI in
securing such intellectual property rights.
ARTICLE XI
MISCELLANEOUS
11.1 Florida Law. This Agreement shall be considered for all purposes a
Florida document and shall be construed pursuant to the laws of the State of
Florida, and all of its provisions shall be administered according to and its
validity shall be determined under the laws of the State of Florida without
regard to any conflict or choice of law issues.
11.2 Gender and Number. Whenever appropriate, references in this
Agreement in any gender shall be construed to include all other genders,
references in the singular shall be construed to include the plural, and
references in the plural shall be construed to include the singular, unless the
context clearly indicates to the contrary.
11.3 Certain Words. The words "hereof," "herein," "hereunder," and
other similar compounds of the word "here" shall mean and refer to the entire
Agreement and not to any particular article, provision or paragraph unless so
required by the context.
11.4 Captions. Paragraph titles or captions contained in this Agreement
are inserted only as a matter of convenience and/or reference, and they shall in
no way be construed as limiting, extending, defining or describing either the
scope or intent of this Agreement or of any provision hereof.
11.5 Counterparts. This Agreement may be executed in one or more
counterparts, including facsimile counterparts, and any such counterpart shall,
for all purposes, be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
11.6 Severability. The invalidity or unenforceability of any provision
hereunder (or any portion of such a provision) shall not affect the validity or
enforceability of the remaining provisions (or remaining portions of such
provisions) of this Agreement.
11.7 Entire Agreement. This Agreement (and all other documents executed
simultaneously herewith or pursuant hereto) constitutes the entire agreement
among the parties pertaining to the subject matter hereof, and supersedes and
revokes any and all prior or existing agreements, written or oral, relating to
the subject matter hereof, and this Agreement shall be solely determinative of
the subject matter hereof.
11.8 Waiver. Either TCPI or Employee may, at any time or times, waive
(in whole or in part) any rights or privileges to which he or it may be entitled
hereunder. However, no waiver by any party of any condition or of the breach of
any term, covenant, representation or warranty contained in this Agreement, in
any one or more instances, shall be deemed to be or construed as a further
continuing waiver of any other condition or of any breach of any other terms,
covenants, representations or warranties contained in this Agreement, and no
waiver shall be effective unless it is in writing and signed by the waiving
party.
11.9 Attorneys' Fees. In the event that either party shall be required
to retain the services of an attorney to enforce any of his or its rights
hereunder, the prevailing party in any arbitration or court action shall be
entitled to receive from the other party all costs and expenses including (but
not limited to) court costs and attorneys' fees (whether in the arbitration or
in a court of original jurisdiction or one or more courts of appellate
jurisdiction) incurred by his or it in connection therewith. The parties hereby
expressly confer on the arbitrator the right to award costs and attorneys' fees
in the arbitration.
11.10 Venue. Any arbitration or other litigation arising hereunder
shall be instituted only in Broward County, Florida or in the county where TCPI
has its principal place of business.
11.11 Assignment. The rights and obligations of the parties under this
Agreement shall inure to the benefit of and shall be binding upon their
successors, assigns, and/or other legal representatives. This Agreement shall
not be assignable by TCPI. The services of Employee are personal and his
obligations may not be delegated by his except as otherwise provided herein.
11.12 Amendment. This Agreement may not be amended, modified,
superseded, cancelled, or terminated, and any of the matters, covenants,
representations, warranties or conditions hereof may not be waived, except by a
written instrument executed by TCPI and Employee or, in the case of a waiver, by
the party to be charged with such waiver.
11.13 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person,
other than TCPI and Employee and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
ARTICLE XII
ARBITRATION
12.1 Arbitration. Any controversy or claim arising out of, or relating
to, this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Fort Lauderdale, in accordance with the Commercial Rules of Arbitration
of the American Arbitration Association in the State of Florida, and any
judgment upon the award rendered may be entered in any court having jurisdiction
thereof.
12.2 Continuation of Salary. The Employee shall be entitled to receive
Employee's salary and other benefits in effect at the Termination Date upon the
commencement of Arbitration for the period of the earliest to occur of (i) the
termination of the Arbitration, (ii) Employee's employment by a third party or
(iii) one (1) year from the Termination Date, provided, however, that the
Employee would be obligated to repay TCPI such salary (without interest) in the
event that the Arbitrators determine that the termination of Employee's
employment was proper pursuant to the provisions of this Employment Agreement
and such Arbitrator(s) find such repayment justified and equitable.
IN WITNESS WHEREOF, TCPI and Employee have caused this Agreement to be
executed on the day and year first above written.
TECHNICAL CHEMICALS AND
PRODUCTS, INC.
___________________________________ By
Witness
------------------------------
- ---------------------------------- ------------------------------
Witness Title
- ----------------------------------- ------------------------------
Witness STUART R. STREGER
- -----------------------------------
Witness
<PAGE>
EXHIBIT `A'
<TABLE>
<S> <C> <C> <C> <C>
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
DATE OF NUMBER OF OPTION
GRANT SHARES VESTING EXPIRATION PRICE
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
5th anniversary of vesting date
6/20/96 20,000 33 1/3 over $15.00
3 yrs.
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
5th anniversary of vesting date
9/4/97 10,000 9/4/97 $8 7/8
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
Earlier of 1 yr. from termination or 5yrs
9/4/97 1,000 9/4/97 from Vesting date $8 7/8
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
5/22/98 1,000 5/22/98 Earlier of 1 yr. from termination or 5yrs $10 3/8
from Vesting date
- ------------------ -------------------- ------------------ ----------------------------------------------- ------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(The Company's Quarterly Report on Form 10-Q for the Period Ending
September 30, 1998)
</LEGEND>
<CIK> 0000924921
<NAME> STU STREGER
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 11,690
<SECURITIES> 1,115
<RECEIVABLES> 1,863
<ALLOWANCES> 106
<INVENTORY> 2,504
<CURRENT-ASSETS> 18,354
<PP&E> 4,281
<DEPRECIATION> 1,636
<TOTAL-ASSETS> 39,614
<CURRENT-LIABILITIES> 819
<BONDS> 173
0
15,331
<COMMON> 10
<OTHER-SE> 23,281
<TOTAL-LIABILITY-AND-EQUITY> 39,614
<SALES> 4,243
<TOTAL-REVENUES> 4,513
<CGS> 2,139
<TOTAL-COSTS> 2,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> (6,732)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,732)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,345)
<EPS-PRIMARY> (0.73)
<EPS-DILUTED> (0.73)
</TABLE>
