May 1, 1999
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Technical
Chemicals and Products, Inc. (the "Company"), which will be held at The Weston
Hotel, 400 Corporate Drive, Fort Lauderdale, Florida (Cypress Creek Road East of
I-95), on Friday, June 18, 1999, at 10:00 a.m., local time.
The notice of meeting and proxy statement on the following pages covers the
formal business of the meeting. Whether or not you expect to attend the meeting,
please sign, date, and promptly return your proxy in the enclosed envelope to
assure your shares will be represented at the meeting. If you decide to attend
the annual meeting and vote in person, you will, of course, have that
opportunity.
The continuing interest of the shareholders in the business of the Company
is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
/s/
----------------------------------
Jack L. Aronowitz
President, Chief Executive Officer
and Chairman of the Board of Directors
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
--------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 18, 1999
The Annual Meeting of Shareholders of Technical Chemicals and Products,
Inc. will be held at The Westin Hotel, 400 Corporate Drive, Fort Lauderdale,
Florida (Cypress Creek Blvd. East of I-95) on Friday, June 18, 1999, at 10:00
a.m., local time, for the following purposes:
o To elect two Class I directors for a three-year term expiring in 2002; and
o To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 1, 1999 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting.
Shareholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors,
/s/
-----------------------------
Martin Gurkin, Ph.D.
Secretary
Pompano Beach, Florida
May 1, 1999
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
--------------------------------------
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This proxy statement is first being sent to shareholders on or about May
18, 1999, in connection with the solicitation of proxies by the Board of
Directors of Technical Chemicals and Products, Inc. (the "Company"), to be voted
at the Annual Meeting of Shareholders to be held on Friday, June 18, 1999, and
at any adjournment thereof (the "Meeting"). The close of business on May 1,
1999, has been fixed as the record date of the determination of shareholders
entitled to notice of and to vote at the Meeting. At the close of business on
the record date, the Company had outstanding 10,577,893 shares of $.001 par
value common stock ("Common Stock"), entitled to one vote per share.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting. If
shareholders specify in the proxy a choice with respect to any matter to be
acted upon, the shares represented by such proxies will be voted as specified.
If a proxy card is signed and returned without specifying a vote or an
abstention on any proposal, it will be voted according to the recommendation of
the Board of Directors on that proposal. The Board of Directors recommends a
vote FOR the election of the directors listed on the proxies. The Board of
Directors knows of no other matters that may be brought before the Meeting.
However, if any other matters are properly presented for action, it is the
intention of the named proxies to vote on them according to their best judgment.
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A shareholder who
signs and returns a proxy may revoke it at any time before it is voted by taking
one of the following three actions: (i) giving written notice of the revocation
to the Secretary of the Company; (ii) executing and delivering a proxy with a
later date; or (iii) voting in person at the Meeting.
Approval of the election of directors will require a plurality of the votes
cast at the Meeting, provided a quorum is present. Votes cast by proxy or in
person at the Meeting will be tabulated by one or more inspectors of election
appointed at the Meeting, who will also determine whether a quorum is present
for the transaction of business. Abstentions and broker non-votes will be
counted as shares present in the determination of whether shares of the
Company's common stock represented at the Meeting constitute a quorum. With
respect to matters to be acted upon at the Meeting, abstentions and broker
non-votes will not be counted for the purpose of determining whether a proposal
has been approved.
The expense of preparing, printing and mailing proxy materials to
shareholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
reimburse brokerage houses and other nominees for their expenses in forwarding
proxy material to beneficial owners of the Common Stock.
The executive offices of the Company are located at 3341 S.W. 15th Street,
Pompano Beach, Florida 33069. The Company's telephone number is (954) 979-0400.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes of
directors. The Company's Articles of Incorporation provide that at each annual
election, directors shall be chosen by class for a term of three years, to
preserve, as evenly as practicable, the division of directors into classes. The
current terms of the three classes of directors expire in 1999 (Class I
directors), 2000 (Class II directors) and 2001 (Class III directors). Two
director nominees are to be elected at the Meeting as a Class I director for a
term ending in 2002, or until their respective successors shall have been
elected and qualified.
The Board of Directors has nominated Jack L. Aronowitz and Noel Buterbaugh
to each stand for election at the Meeting for the Class I director seats. See
"Management-Directors and Executive Officers" for information regarding Messrs.
Aronowitz and Buterbaugh. The nominees' current terms will expire on the date of
the Meeting. Unless otherwise indicated, votes will be cast pursuant to the
accompanying proxy FOR the election of Mr. Aronowitz or Mr. Buterbaugh. Should
either Mr. Aronowitz or Mr. Buterbaugh become unable or unwilling to accept
nomination or election for any reason, it is intended that votes will be cast
for a substitute nominee designated by the Board of Directors, which has no
reason to believe Mr. Aronowitz or Mr. Buterbaugh will be unable or unwilling to
serve if elected.
<PAGE>
SECURITY AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 15, 1999
with respect to the Common Stock owned by (1) any person who is known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities, (2) each director and director nominee of the
Company, (3) each executive officer named in the Summary Compensation Table and
(4) all directors and executive officers as a group.
<TABLE>
<S> <C> <C>
Amount and Nature of
Name and Address of Beneficial Owner(a) Beneficial Ownership(b) Percent
Jack L. Aronowitz .......................................... 4,632,316(c) 43.8%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401.......................... 739,400 6.99%
Martin Gurkin............................................... 52,400(d) *
Stuart R. Streger........................................... 26,533(d) *
Jay E. Eckhaus.............................................. 5,200(d) *
Clayton Rautbord............................................ 4,600(d) *
Kathryn R. Harrigan......................................... 4,000(d) *
Stanley M. Reimer........................................... 2,000(d) *
Noel Buterbaugh............................................. 1,000 *
All directors and executive
Officers as a group (8 persons)............................. 4,657,399 44.0%
- ---------------
</TABLE>
(a) The business address for Messrs. Aronowitz, Gurkin, Streger, Eckhaus,
Rautbord, Buterbaugh, and Reimer, and Ms. Harrigan is 3341 S.W. 15th Street,
Pompano Beach, FL 33069.
(b) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as to which
a person has or shares voting power and/or investment power.
(c) Includes 500,000 shares that may be acquired upon exercise of a
currently exercisable warrant and 370,000 shares as to which Mr. Aronowitz holds
a voting proxy. With respect to such voting proxy, the Company has been informed
that, since the date of such proxy, the legal ownership of 345,000 shares may
have been transferred ("Transferred Shares"). The Company has been unable to
determine whether the beneficial ownership of such Transferred Shares has
changed as a result of the transfers, in which event Mr. Aronowitz would no
longer have the right to vote such shares.
(d) Includes options that are currently exerciseable in the following
amounts: Mr. Gurkin - 52,000; Mr. Streger - 25,333; Mr. Eckhaus - 5,000; Ms.
Harrigan - 3,000; Mr. Rautbord - 3,000; and Mr. Reimer - 1,000.
* Less than 0.5%
<PAGE>
MANAGEMENT
Directors and Executive Officers
Set forth below is certain information as of April 15, 1999, concerning the
Company's executive officers, current directors, and nominees for director.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year First
Became a
Name Position(s) Age Director
Jack L. Aronowitz President, Chief Executive Officer, and Chairman of 59 1992
the Board of Directors (Class I - nominee for a
term expiring in 2002)
Noel Buterbaugh Director (Class I - nominee for a term expiring in 66 1998
2002)
Martin Gurkin, Ph.D. Senior Vice President, Chief Operating Officer and 66 1996
Director (Class III - term expiring in 2001)
Kathryn R. Harrigan, M.B.A., Director (Class III - term expiring in 2001) 47 1996
D.B.A.
Clayton Rautbord Director (Class II - term expiring in 2000) 71 1996
Stanley M. Reimer, Ph.D. Director (Class II - term expiring in 2000) 69 1998
Jay E. Eckhaus Vice President and General Counsel 54
Stuart R. Streger, C.P.A. Vice President and Chief Financial Officer 48
</TABLE>
JACK L. ARONOWITZ, the founder of the Company, has been President and
Chairman of the Board of Directors since January 1992 and Chief Executive
Officer since January 1996. Prior to founding the Company, Mr. Aronowitz served
as Executive Vice President, Technical Director and Director of Operations of
TechniMed Corporation ("Technimed") from May 1985 to October 1991 and as
President from January 1983 to April 1985. TechniMed was engaged in the medical
diagnostic and biochemical businesses. Mr. Aronowitz has been involved in the
development and commercialization of medical diagnostic products for over 35
years. Mr. Aronowitz is the President of the Florida Institute of Chemists.
NOEL BUTERBAUGH has been a Director of the Company since April 1998. He has
45-plus years of experience in biotechnology and medical technology. Mr.
Buterbaugh is President and Chief Executive Officer of BioWhittaker, Inc.,
("BioWhittaker") which was acquired by Cambrex Corporation (NYSE: CMB) in 1997.
He has been with BioWhittaker since the early 1950s and became its President in
1979. BioWhittaker is a major supplier of cell cultures and related scientific
products to the biotechnology industry and the leading supplier worldwide of
these biological products to the medical and clinical diagnostics industry. He
holds a Bachelor of Science degree in Business Administration from American
University in Washington, D.C. In addition to his corporate responsibilities,
Mr. Buterbaugh presently is a Director for the Maryland Health Care Development
Corporation and Director for the High Technology Council of Maryland. His
previous outside service included posts as a Director of the Health Industry
Manufacturers Association (HIMA) and Chairman of the HIMA Science and Technology
Steering Committee, as well as a member of the U.S. Department of Commerce
Technical Advisory Committee on Biotechnology (BIOTAC).
<PAGE>
MARTIN GURKIN, Ph.D. has been Senior Vice President, Chief Operating
Officer and a Director of the Company since January 1996. As of March 5, 1999,
Dr. Gurkin retired as Senior Vice President and Chief Operating Officer. Prior
to joining the Company, Dr. Gurkin served as Vice President of ISCO, Inc., a
company engaged in the manufacture of scientific analytical instrumentation,
from October 1989 to December 1995. Prior to joining ISCO, Inc., Dr. Gurkin was
employed in various capacities for over 17 years by E. M. Science (an affiliate
of E. Merck KGAA), a company engaged in the manufacturing of laboratory reagents
and chromatography supplies.
KATHRYN R. HARRIGAN, M.B.A., D.B.A., has been a Director of the Company
since 1996. Dr. Harrigan has been a professor at Columbia Business School since
1981 and was named the Henry L. Kravis Professor of Business Leadership at
Columbia Business School in 1993. Since 1994, Professor Harrigan has served on
the Board of Directors of Cambrex Corporation (AMEX: CMB), a company engaged in
the international specialty chemicals business. She is also a Director of Johns
Manville Corp. (NYSE: JM), an international building and filtration company, as
well as a Director or advisor of various other privately-held companies.
CLAYTON L. RAUTBORD has been a Director of the Company since August 1996.
Mr. Rautbord is presently the Secretary and Treasurer of Wenk Aviation Insurance
Corporation. From 1980-1989, he was the founder and President of Photo
Con-X-Ion, Inc., a manufacturer of photographic chemicals, and was the President
and CEO of APECO, a company listed on the NYSE, from 1963 to 1974. In addition
to TCPI's Board of Directors, Mr. Rautbord also serves on the Board of Directors
of Albany Bank and Trust Company in Chicago.
STANLEY M. REIMER, Ph.D. has been a Director of the Company since September
1998. 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, Dr. Reimer 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 the 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 Manager with Bio-Science Laboratories from 1971 to
1985. Dr. Reimer holds Bachelor of Science degrees in chemistry and physiology
from Allegheny College and both his Master of Science degree and Ph.D. in
biochemistry from Rutgers University. His research and teaching affiliations
included Academy of Senior Professionals at Eckerd College; Harvard Medical
School; Beth Israel Hospital (Boston, MA); National Heart Institute; Downstate
Medical Center (Brooklyn, NY); Long Island University; and Woods Hole Marine
Biology Laboratories. He also holds Laboratory Director's Licenses in Florida
and New York State.
JAY E. ECKHAUS has been Vice President and General Counsel since March
1998. Mr. Eckhaus has more than 25 years of corporate and commercial legal
experience gained with one of the premiere consumer product companies in the
United States as well as the domestic operation of a prominent multinational
European technology company and in private practice. From 1973 to 1989, he held
various senior level positions at General Foods Corporation, including vice
president and chief counsel of its baking operations as well as assignments in
both domestic and international food operations. He also served as vice
president, general counsel and secretary for the U.S. operations of Alfa-Laval
AB, a leading European technology company. Since 1990, Mr. Eckhaus has been
practicing corporate and commercial law. He received his Juris Doctorate Degree
from The Ohio State University and his Bachelor of Science Degree in Business
Administration from Bowling Green State University.
STUART R. STREGER, C.P.A. has been Vice President and Chief Financial
Officer of the Company since April 1996. Prior to joining TCPI, Mr. Streger
served as Chief Financial Officer of Carfel, Inc., an auto parts manufacturer
and after-market distribution company from September 1994 to March 1996. From
August 1993 to September 1994, he was Chief Financial Officer of Chick Master
International, a global manufacturer and distributor of poultry equipment. From
August 1980 to August 1993, Mr. Streger was Chief Financial Officer of Rosco
Laboratories, Inc., a worldwide distributor and manufacturer of television and
film production products. From 1973 to 1977, Mr. Streger was employed as a
senior auditor and served in many other capacities with the accounting firm of
KPMG Peat Marwick LLP.
<PAGE>
There is no family relationship between any executive officer or director
of the Company.
Meetings of the Board of Directors and Standing Committees
During 1998, the Company's Board of Directors held nine meetings. Each
incumbent director attended each meeting.
During 1998, the Company had a Compensation Committee (which also served as
the administrator for the Company's 1992 Stock Option Plan), an Audit Committee,
and a Board Organization and Governance Committee. All such Committees consisted
of non-employee directors Ms. Harrigan, Mr. Rautbord and Mr. Reimer.
The Compensation Committee recommends to the Board of Directors base salary
levels, bonuses and stock option grants for the Chief Executive Officer and
reviews compensation levels of other officers of the Company. The Compensation
Committee also reviews and makes recommendations with respect to the Company's
existing and proposed compensation plans.
The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent certified public accountants, to meet
with the Company's independent certified accountants to review the scope and
results of the audit and to consider various accounting and auditing matters
related to the Company, including its system of internal controls and financial
management practices.
The Board Organization and Governance Committee is responsible for
corporate governance and also serves as the Nominating Committee.
Compensation of Directors
Each non-employee director of the Company is paid an annual fee of $5,000.
Each non-employee director acting as a Committee Chair receives an additional
$500 per year. In addition, each non-employee director receives $500 for each
Committee and Board meeting attended, provided that the Committee meeting is
other than on a day when a Board Meeting is held. Non-employee directors are
also reimbursed for their travel expenses to meetings of the Board of Directors.
On April 2, 1999, each non-employee director received 1,000 shares of the
Company's stock as additional compensation. No director who is an employee of
the Company receives separate compensation for services rendered as a director.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid by the Company, during
the fiscal years ended December 31, 1998, 1997and 1996 to the officers whose
names appear in the table below. No restricted stock awards, long-term incentive
plan payouts or other types of compensation other than the compensation
identified in the chart below were paid to these officers. No other executive
officer of the Company earned a total annual salary and bonus during 1998, 1997
and 1996 in excess of $100,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Long Term
Annual Compensation Compensation
----------------------------------------------------- --------------
Securities
Name and Other Annual Underlying
Principal Position Year(a) Salary($) Bonus($) Compensation($) Options(#)
Jack L. Aronowitz 1998 $ 160,864 -- $ 13,076(b) --
President, Chief Executive 1997 151,938 -- 24,644(b)
Officer and Chairman of 1996 144,703 -- 13,937(b)
the Board
Martin Gurkin 1998 139,550 $ 10,000 3,085(b) 1,000
Senior Vice President and 1997 131,156 25,000 3,236(b) 11,000
Chief Operating Officer 1996 88,042 -- 2,157(b)
and Director
Jay E. Eckhaus 1998 97,116 18,750 1,113(b) 15,000
Vice President 1997 --
and General Counsel 1996 --
Stuart R. Streger 1998 134,514 25,000 3,085(b) 1,000
Vice President and 1997 127,625 35,000 2,126(b) 11,000
Chief Financial Officer 1996 81,654 -- 886(b) 20,000
</TABLE>
(a) No amounts are shown for Mr. Eckhaus for 1997 and 1996 because he was not
employed by the Company at that time.
(b) Includes the cost of an automobile and/or health insurance.
<PAGE>
Option Grants and Exercises; Long-Term Incentive Plans in 1998
The following table shows the grants of stock options by the Company during
the fiscal year ended December 31, 1998 to the executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
<S>
Individual Grants <C> <C>
--------------------------
Number of Percent of Potential Realizable Value at
securities Total Assumed Annual Rate of Stock
underlying Options/Grants Price Appreciation For Option Term(a)
Options to Employees Exercise Expiration -------------------------------------
Name Granted in Fiscal Year Price Date 5% 10%
-----------------------------------------------------------------------------------------------------------------
Martin Gurkin 1,000 0.87% $10.375 3/05/00 $886 $1,802
Jay E. Eckhaus 5,000 4.33% $ 9.063 3/04/04 $12,519 $27,664
5,000 4.33% $ 9.063 3/04/05 $15,411 $34,961
5,000 4.33% $ 9.063 3/04/06 $18,447 $42,989
Stuart Streger 1,000 0.87% $10.375 7/01/03 $ 2,866 $ 6,334
</TABLE>
(a) The potential realizable values set forth under these columns result from
calculations assuming 5% and 10% annualized stock price growth rates from
grant dates to expiration dates and are not intended to forecast future
price appreciation of the Company's Common Stock based upon growth at
these prescribed rates. The Company is not aware of any formula which
will determine with reasonable accuracy a present value based on future
unknown factors. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Company. There can be no
assurance that the amounts reflected in this table will be achieved.
Option Exercises And Period-End Values
None.
Compensation Committee Interlocks and Insider Participation
During 1998, there were no interlocking relationships of the Compensation
Committee. Each member serving on the Compensation Committee was an outside
Director.
The Company and Mr. Aronowitz are parties to an exclusive, worldwide
license agreement dated January 31, 1996 ("License Agreement") under which the
Company has the right to manufacture, promote, market and sell all medical,
pharmaceutical and health care products and devices created by Mr. Aronowitz on
or before the date of the License Agreement. The License Agreement is for a term
of twenty years with automatic renewals and requires annual fees equal to the
greater of (i) 3% of net collected sales revenues from products based upon
certain technology or (ii) $10,000, with an aggregate maximum limitation of
$10,000,000. The License Agreement replaces an earlier license agreement with
similar provisions. During 1997 and 1996, Mr. Aronowitz earned approximately
$148,000 and $114,000, respectively, pursuant to the License Agreement. He
waived all licensing fees due him for the years ended December 31, 1995 and
1994. Mr. Aronowitz is also party to an employment contract with the Company.
See "- Employment Contracts."
Employment Contracts
The Company entered into an employment agreement with Jack L. Aronowitz, as
of January 1, 1993, as amended on September 27, 1996 and October 9, 1998,
pursuant to which Mr. Aronowitz serves as President of the Company. The
agreement provides that Mr. Aronowitz receive: (i) a base salary of $159,535,
increased annually by 5%; and (ii) an annual bonus of 5% of the Company's
consolidated pre-tax income. The agreement also provides that Mr. Aronowitz is
entitled to health insurance, a car allowance of $10,000 per year, other fringe
benefits, and, at the Board's discretion, further bonuses and reimbursement for
various expenses. In addition, the agreement prohibits Mr. Aronowitz (x) during
and after the term of the agreement, from disclosing confidential information
relating to the Company and (y) during the term of the agreement and for a
period of two years after termination thereof, from competing with the Company
anywhere in the United States where the Company is engaged in business or has
evidenced an intention to engage in business. Notwithstanding the foregoing, if
Mr. Aronowitz's employment is terminated by the Company for any reason other
than Mr. Aronowitz having engaged in any material act of dishonesty, disloyalty,
negligence and/or fraud which is, or may be, damaging to the Company's business,
the Company must pay Mr. Aronowitz two times his then base salary plus an amount
equal to two times the last bonus paid to or accrued for him pursuant to the
agreement (three times base salary plus bonus in the event of termination
following a "change of control," as defined in the agreement).
<PAGE>
The Company entered into an employment agreement with Martin Gurkin, dated
as of February 26, 1996, pursuant to which Dr. Gurkin serves as a Senior Vice
President of the Company. Under the Agreement Dr. Gurkin's current base salary
is $144,427, which may be increased at the Board of Directors' discretion. The
agreement also provides that Dr. Gurkin receive a bonus based on a percent of
forecasted net sales agreed upon as the Company's annual target. Dr. Gurkin also
receives health insurance, other fringe benefits, and, at the Board of
Directors' discretion, reimbursement for various expenses. In addition, the
agreement prohibits Dr. Gurkin: (i) during and after the term of the agreement,
from disclosing confidential information relating to the Company; and (ii)
during the term of the agreement and for a period of two years after the
termination thereof, from competing with the Company anywhere in the United
States where the Company is engaged in business or has taken steps to engage in
business. Notwithstanding the foregoing, if Dr. Gurkin's employment is
terminated by the Company other than for cause (as that phrase is defined in the
agreement) or due to the death or disability of Dr. Gurkin, the Company must pay
Dr. Gurkin an amount equal to two times his then base salary as liquidated
damages. Mr. Gurkin retired as an employee of the Company on March 5, 1999. He
remains a director of the Company.
On October 9, 1998, the Company entered into employment agreements with Jay
E. Eckhaus and Stuart R. Streger, Vice President and General Counsel and Vice
President and Chief Financial Officer, respectively. Under the Agreements,
Messrs. Eckhaus' and Streger's current base salaries are $131,250 and $137,812
respectively, which may be increased at the discretion of the Board of
Directors. The Agreements also provide that Messrs. Eckhaus and Streger may
receive yearly bonuses at the discretion of the Board of Directors. Messrs.
Eckhaus and Streger also receive health insurance, other fringe benefits and
reimbursement for business expenses. In addition, the agreements prohibit
Messrs. Eckhaus and Streger during and after the expiration of the agreement for
a period five years from disclosing confidential information relating to the
Company. Each of the aforementioned agreements provide that in the event that
the employment of either of them is terminated by the Company for any reason
other than for Cause (as defined in the agreement) or by the Employee without
Good Reason (as defined in the agreement), the aforementioned Employee receives
an amount equal to the Employee's base salary for the remainder of the term of
the respective agreement plus an amount equal to the bonus paid to such Employee
in the previous fiscal year (two times salary plus bonus in the event of
termination following a "change if control" as defined in the agreement.)
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 Mr. Aronowitz's 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 Mr. Aronowitz in an amount equal to the amount of the
guarantee. The note is a six month note payable on demand and bears interest at
the rate of interest charged by the brokerage house (7 3/4 % at December 31,
1998). In February 1999, accrued interest was paid and the note was extended an
additional three months. The balance of funds advanced under the note is
approximately $747,000 at December 31, 1998 and is included in due from related
party in the balance sheet based on the Company's understanding that such
amounts will be repaid during 1999.
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is pleased to present its report on executive
compensation. This report describes the components of the Company's executive
officer compensation programs and the basis on which compensation determinations
for 1998 were made with respect to the executive officers of the Company.
The Compensation Committee believes that the objectives of executive
compensation are to attract, motivate and retain the highest quality executives,
to align the interests of these executives with those of the Company
shareholders and to motivate the Company executives to increase shareholder
value by improving corporate performance and profitability. To meet these
objectives, the Compensation Committee will seek to provide a competitive total
compensation package that enables the Company to attract and retain key
personnel; to provide variable compensation opportunities, primarily on an
annual basis, that are linked to corporate performance goals; and to provide
long-term compensation opportunities, through stock options, that align
executive compensation with value received by stockholders. The compensation
program for executive officers is comprised of the following components: base
salary, annual incentive compensation and stock options. Base salaries for
executives are determined initially by evaluating the responsibilities of the
position, the experience of the individual, internal comparability
considerations, as appropriate, the competition in the marketplace for
management talent, and the compensation practices among public companies of the
size of, or in businesses similar to, the Company.
For 1998, compensation, including salary, bonuses and stock option grants,
for the executives other than the Chief Executive Officer was set based
principally upon the factors described in the previous sentence. Compensation
for the Chief Executive Officer was set based upon the Chief Executive's
employment agreement (see "Employment Contracts").
The Compensation Committee intends to periodically review the Company's
compensation programs to ensure that pay levels and incentive opportunities are
competitive and reflect the performance of the Company. Salary adjustments
ordinarily will be determined and made at 12-month intervals.
Respectfully submitted,
/s/
-----------------------
Kathryn R. Harrigan
Noel Buterbaugh
Clayton Rautbord
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the Company's cumulative total return to
shareholders compared to the Russell 2,000 Index and a peer group consisting of
healthcare stocks (excluding biotechnology companies) identified below as
"Nasdaq Health Services." The graph shows cumulative total return over the
period from February 2, 1995, the first day that the Company was traded
publicly, and the end of the fiscal year 1998, based on an initial investment of
$100. Total shareholder return assumes dividend reinvestment. The stock
performance shown on the following graph is not indicative of future price
performance.
[STOCK PERFORMANCE GRAPH NOT SHOWN]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
February 2, 1995 December 31, December 31, December 31, December 31,
Name 1995 1996 1997 1998
- ------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
TCPI $100 $500 $228 $284 $ 37
- ------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
Russell 2000 $100 $130 $152 $186 $184
- ------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
Nasdaq Health
Services $100 $121 $121 $123 $104
- ------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
</TABLE>
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
ten percent shareholders are required by the SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it,
the Company believes that during 1998, Forms 3, 4 and 5 filings appear to have
been made when due.
INFORMATION CONCERNING INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed Ernst & Young LLP as
independent certified public accountants to audit the consolidated financial
statements of the Company for the year ending December 31, 1999. Representatives
of Ernst & Young LLP are expected to be present at the Meeting with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions posed by shareholders.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the 2000 annual
meeting must be received by the Company on or before December 19, 1999, in order
to be included in the Company's proxy statement and form of proxy for that
meeting.
The Company's bylaws also require advance notice to the Company of any
shareholder proposal and of any nominations by shareholders of persons to stand
for election as directors at a shareholders' meeting. Notice of shareholder
proposals and of director nominations must be timely given in writing to the
Secretary of the Company prior to the meeting at which the directors are to be
elected. To be timely, notice must be received at the principal executive office
of the Company not less than 60 days, nor more than 90 days, prior to the
meeting of shareholders; provided, however, that in the event that less than 70
days' notice prior to public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder, in order to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual meeting was made,
whichever first occurs.
In addition to the matters required to be set forth by the rules of the
Securities and Exchange Commission, a shareholder's notice with respect to a
proposal to be brought before the annual meeting must set forth (a) the text of
the proposal to be presented and a brief written statement of the reasons why
such shareholder favors the proposal, (b) the name and address of such
shareholder, (c) the class and number of shares of the Company that are
beneficially owned by such shareholder on the date of such shareholder notice
and (d) any material interest of the shareholder in such proposal.
<PAGE>
A shareholder's notice with respect to a director nomination must set forth
(a) the name of the person to be nominated, (b) the number and class of all
shares of each class of stock of the Company beneficially owned by such person,
(c) the information regarding such person required by paragraphs (a) and (d) of
Item 401 of Regulation S-K adopted by the Securities and Exchange Commission,
(d) such person's signed consent to serve as a director of the Company if
elected, (e) such shareholder's name and address and (f) the number and class of
all shares of each class of stock of the Corporation beneficially owned by such
shareholder.
The complete Bylaws provisions governing these requirements are available
to any shareholder without charge upon request from the Secretary of the
Company.
OTHER MATTERS
The Company will provide to any shareholder, upon the written request of
any such person, a copy of the Company's Annual Report on Form 10-K, including
the financial statements and the schedule thereto, for its fiscal year ended
December 31, 1998, as filed with the Securities and Exchange Commission. All
such requests should be directed to Technical Chemicals and Products, Inc.,
Investor Relations, P.O. Box 9748, Ft. Lauderdale, Florida 33310. No charge will
be made for copies of such annual report; however, a reasonable charge for
exhibits, if requested, will be made.
By Order of the Board of Directors,
/s/
-----------------------------
Martin Gurkin, Ph.D.
Secretary
Pompano Beach, Florida
May 1, 1999
