SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. __)
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material under Rule 14a-12
TECHNICAL CHEMICALS AND PRODUCTS, INC.
--------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
May 31, 2000
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 East Room of the Clubhouse of the Palm-Aire Country Club, 555 S. Powerline
Road, Pompano Beach, Florida (approximately 1/4 mile south of Atlantic Boulevard
on the west side of Powerline Road), on Friday, June 16, 2000, 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
---------------------
Jack L. Aronowitz
Chairman of the Board of Directors,
President and Chief Technical Officer
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 16, 2000
The Annual Meeting of Shareholders of Technical Chemicals and Products,
Inc. (the "Company") will be held at the East Room of the Clubhouse of the
Palm-Aire Country Club, 555 S. Powerline Road, Pompano Beach, Florida
(approximately 1/4 mile south of Atlantic Boulevard on the west side of
Powerline Road) on Friday, June 16, 2000, at 10:00 a.m., local time, for the
following purposes:
1. To elect two Class II directors for a three-year term
expiring in 2003;
2. To amend to the Company's Amended and Restated Articles of
Incorporation to change the Company's name to TCPI, Inc.;
3. To adopt the TCPI 2000 Stock Option Plan;
4. To approve the potential issuance of shares of Common Stock
in excess of 20% of the total number of Common Stock
outstanding in connection with an equity financing transaction
of the Company; and
5. 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 l, 2000
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.
Last year over 90% of the outstanding shares were represented at the
annual meeting. It is important that your shares are represented this year
whether or not you are personally able to attend the Annual Meeting. We urge you
to vote your shares by signing and returning the enclosed proxy promptly. Your
cooperation is appreciated since a majority of the Company's common stock must
be represented, either in person or by proxy, to constitute a quorum for the
conduct of business.
By Order of the Board of Directors,
/s/ Jay E. Eckhaus
------------------
Jay E. Eckhaus
Secretary
Pompano Beach, Florida
May 31, 2000
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This proxy statement is first being sent to shareholders on or about
May 31, 2000, 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 16, 2000, and
at any adjournment thereof (the "Meeting"). The close of business on May 1,
2000, 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 29,541,258 shares of $.001 par
value common stock ("Common Stock"), entitled to one vote per share. There are
no other securities of the Company that are entitled to vote at the Meeting.
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
1. FOR the election of the directors listed on the proxy card,
2. FOR the amendment to the Company's Amended and Restated
Articles of Incorporation (the "Charter") to change the
Company's name to TCPI, Inc. (the "Charter Amendment"),
3. FOR the adoption of the TCPI 2000 Stock Option Plan (the
"Plan"), and
4. FOR the approval of the potential issuance of shares of Common
Stock in excess of 20% of the total number of Common Stock
outstanding in connection with an equity financing transaction
of the Company (the "Share Issuance").
In addition, if there is not a quorum at the meeting, the proxy holders
may vote the shares in favor of an adjournment of the meeting in order to
solicit sufficient additional proxies to constitute a quorum. 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.
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 CHARTER AMENDMENT REQUIRES THE AFFIRMATIVE VOTE OF 60
PERCENT OF THE OUTSTANDING SHARES OF THE CORPORATION ENTITLED TO VOTE AT THE
ANNUAL MEETING. THEREFORE, YOUR VOTE IS EXTREMELY IMPORTANT.
<PAGE>
Voting Information
The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy at the Meeting is required for the
approval of the election of directors. The affirmative vote of the holders of 60
percent of the shares of Common Stock outstanding as of the record date is
required for the approval of the Charter Amendment. The affirmative vote of a
majority of the shares of Common Stock present in person or represented by proxy
at the Meeting is required for the adoption of the Plan, the approval of the
Share Issuance and any other matter to be voted on at the Meeting or any
adjournment thereof (other than any proposed amendment to the Charter or bylaws,
which requires the same vote as the Charter Amendment).
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. Brokers who hold
shares in street name for customers have the authority under the rules of the
various stock exchanges to vote on certain items when they have not received
instructions from beneficial owners. Brokers that do not receive instructions
are entitled to vote those shares with respect to the election of directors,
Proposal 1, but may not vote on Proposals 2, 3 or 4 (which is commonly referred
to as a "broker non-vote").
Quorum
A majority of the outstanding shares of Common Stock of the Company
represented at the meeting in person or by proxy shall constitute a quorum for
the conduct of business.
Effect of Abstentions and Broker Non-Votes
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. Under Florida law and the Company's bylaws,
abstentions and broker non-votes have the effect of a vote against Proposals 2,
3 and 4, but have no effect on Proposal 1.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes of
directors. The board members and classifications are as follows:
<TABLE>
<CAPTION>
Class I Class II Class III
------- -------- ---------
<S> <C> <C> <C>
Jack L. Aronowitz Clayton Rautbord Elliott Block, Ph.D.
Noel Buterbaugh Stanley M. Reimer, Ph.D. Martin Gurkin, Ph.D.
</TABLE>
The Company's Charter provides 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 2000 (Class II directors), 2001 (Class III
directors) and 2002 (Class I directors). Two director nominees are to be elected
at the Meeting as Class II directors for a term ending in 2003, or until their
respective successors shall have been elected and qualified. The Board of
Directors has adopted a policy that directors retire at age 73.
Each of the nominees has consented to being named in this Proxy
Statement and to serve as a director of the Company if elected. In the event
that any nominee withdraws or for any reason is not able to serve as a director,
the proxy will be voted for such other person as may be designated by the Board
of Directors, but in no event will the proxy be voted for more than two
nominees. Management of the Company has no reason to believe that any nominee
will not serve if elected.
The following persons have been nominated by the Board for election to
the Board of Directors as Class II directors to succeed themselves for a term of
three years, expiring at the 2003 Annual Meeting of Shareholders, and until
their successors are elected and qualified.
CLAYTON L. RAUTBORD, 72, has been a Director of the Company since
August 1996. Mr. Rautbord is presently the Secretary and Treasurer of Wenk
Aviation & Marine Insurance, Inc. Corporation since 1990. 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 the Company'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., 70, 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 1998, Dr. Reimer has served as the
Director of Laboratories of PAR Toxicology Laboratories. 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 have 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 licenses in Florida and New York.
The Board of Directors recommends a vote "FOR" the election of the
nominees for Class II directors.
2
<PAGE>
Directors
Each of the following persons is a member of the Board of Directors who
is not standing for election to the Board this year and whose term will continue
after the 2000 Annual Meeting of Shareholders.
JACK L. ARONOWITZ, 60, Chairman of the Board and President since 1972
and Chief Technical Officer since May, 1999, founded Technical Chemicals and
Products, Inc. in 1992, and has been a Director since January 1992. He also
served as Chief Executive Officer from 1972 to May 1999. Mr. Aronowitz has been
involved in the development and commercialization of medical diagnostic products
for more than 35 years. Prior to founding the Company, he was Executive Vice
President, Technical Director and Director of Operations of TechniMed
Corporation from May 1985 to October 1991 and President from January 1983 to
April 1985. TechniMed was engaged in the medical diagnostic and biochemical
businesses. From 1974 to 1983 he was the founder, Chairman and President of Leon
Laboratories, which developed and manufactured diagnostic and research reagents
for numerous life science companies on a worldwide basis. From 1970 to 1974, Mr.
Aronowitz was a founder and Executive Vice President of Reliable Chemicals,
which developed and manufactured diagnostic and research reagents for numerous
life science companies on a worldwide basis. From 1968 to 1970, he was Director
of Laboratories for Sigma Chemicals, Inc. Prior to that he was the founder,
Chairman and President of Hall Laboratory Products Corp.
ELLIOTT BLOCK, Ph.D., 55, Chief Executive Officer since May 1999 and a
Director of the Company since September 1999, has responsibility for the
Company's strategic direction and day-to-day business operations. Dr. Block has
more than 28 years of senior level experience in the research, manufacturing and
international marketing of over-the-counter and clinical diagnostic products, as
well as the operation of licensed clinical laboratories. Dr. Block was the
President, CEO and a director of Medicorp Inc., a privately held biomedical
company headquartered in Montreal, Canada from its inception in 1986 to 1999.
Medicorp is involved in the research, manufacturing and international marketing
of clinical diagnostic tests, the distribution of research kits and reagents in
Canada and the operation of a licensed clinical laboratory. He was also
instrumental in forming Decision Diagnostics LLC, a joint venture with Dianon
Systems, Inc. (Nasdaq: DIAN), to license new technology for the improved
diagnosis of prostate cancer. From 1981 through 1985, Dr. Block served as a
director and the first President and CEO of Hygeia Sciences, Inc. Hygeia
developed and manufactured the First Response (R) over-the-counter pregnancy
and ovulation kits marketed by Tambrands, Inc. (the manufacturer of Tampax" (R)
products), which subsequently purchased Hygeia. These same assays were
manufactured for Hoffmann-La Roche, which sold them to the professional market.
From 1972 through 1981, he held positions of increasing responsibility at Becton
Dickinson Immunodiagnostics, a division of Becton, Dickinson & Co., including
Vice President, Operations and Vice President, Research & Development.
Previously, he worked in clinical diagnostics research at Syva Company. Dr.
Block has a Ph.D. from Brandeis University and was an Alexander von Humboldt
Fellow at the University of Cologne, Germany. He has a B.A. degree from Queens
College.
NOEL BUTERBAUGH, 67, has been a Director of the Company since April
1998. He has 45-plus years of experience in biotechnology and medical
technology. Until his retirement in 1999, Mr. Buterbaugh was President and Chief
Executive Officer of BioWhittaker, Inc. which was acquired by Cambrex
Corporation (NYSE: CMB) in 1997. He was 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 of Kirkegaard
& Perry Laboratories, Inc., Maryland Health Care Development Corporation and 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).
MARTIN GURKIN, Ph.D., 67, has been a Director of the Company since
January 1996. Dr. Gurkin served as Senior Vice President and Chief Operating
Officer of the Company from 1996 to March 5, 1999. Prior to joining the Company,
he 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.
3
<PAGE>
MANAGEMENT
Executive officers of the Company are elected by the Board of Directors
to hold office until their successors have been chosen and qualified or until
earlier resignation or removal. Set forth below are the names, positions and
ages of the Company's executive officers (who were not also directors) directors
as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jay E. Eckhaus 56 Vice President, General Counsel and
Secretary
Robert M. Morrow 62 Vice President of Sales and Marketing
Walter V. Usinowicz, Jr. 52 Vice President of Finance and Chief
Financial Officer
</TABLE>
JAY E. ECKHAUS, Vice President, General Counsel and Secretary since
1998, has more than 25 years of extensive corporate and commercial legal
experience. From 1990 to 1998, Mr. Eckhaus was in private practice focusing on
corporate and commercial law. He held senior level positions at General Foods
Corporation from 1973 to 1989, including vice president and chief counsel of its
baking operations as well as assignments in both domestic and international food
operations. Mr. Eckhaus also served as vice president, general counsel and
secretary for the U.S. operations of Alfa-Laval, Inc., a leading European
technology company. He received his Juris Doctor degree from The Ohio State
University and his B.S. degree in Business Administration from Bowling Green
State University.
ROBERT M. MORROW, Vice President of Sales and Marketing since 1999, has
more than 33 years of senior management experience in various industries that
include over-the-counter diagnostics, prescription pharmaceuticals, medical
devices, food products and services and hospitality with a strong emphasis on
sales and marketing. He was President and Acting Chief Executive Officer of
Thames Pharmacal Co. from 1997 to 1999. From 1982 to 1997, Mr. Morrow served in
numerous executive assignments with Nutmeg Consultants that include: Vice
President and General Manager of TurboChef, Inc.; Executive Vice President,
Chief Operating Officer and Director of Veriden Corporation; President, Chief
Executive Officer, Co-Founder and Director of Kushi Macrobiotics Corp.;
President and Chief Operating Officer for Culinar Sales Corp.; President and
Chief Operating Officer for RIM Industries, Inc.; Executive Vice President and
Chief Operating Officer for Savoy Industries, Inc.; and Senior Vice President
and General Manager of Hicks & Greist Advertising Agency. In addition, from 1974
to 1982, Mr. Morrow was Group Vice President of Marketing and Development/Food
Group of International Telephone & Telegraph Corp. He also served as Director of
Marketing and Sales for Revlon, Inc. and Almay Cosmetics Co. Mr. Morrow has an
M.B.A. degree from Long Island University and a B.S. degree in chemistry and
marketing research from The Ohio State University.
WALTER V. USINOWICZ, JR., Vice President of Finance and Chief Financial
Officer since November 1999, is responsible for the Company's financial
reporting and treasury functions, as well as support of the Company's strategic
planning and business development activities. Mr. Usinowicz has more than 25
years of senior management experience in the life sciences and medical
technology industries that includes financial management, business development
and general management experience. From 1990 to 1999, Mr. Usinowicz was
primarily engaged in the management of start-ups and turnaround situations.
During 1999, he was Chief Financial Officer of BuyMatrix, Inc., an e-commerce
store serving the needs of physicians, where he was successful in securing the
initial venture capital funding. Previously, from 1991 to 1999, Mr. Usinowicz
held executive management positions in several biotechnology companies, where he
was successful in establishing strategic alliances, conducting financial
turnaround activities and raising capital. From 1991 to 1994, Mr. Usinowicz was
the Chief Operating Officer of Rocky Mountain Instrument Co., a manufacturer of
precision optics. From 1984 to 1990, he served as Chief Financial Officer of
Mountain Medical Equipment, Inc., a publicly held manufacturer of respiratory
therapy equipment. From 1974 to 1984, he held positions of increasing
responsibility at Becton, Dickinson & Company, including Director of Business
Planning-Laboratory Group and controller at a diagnostics division. Prior to
that, he held positions in manufacturing cost accounting and production control
systems at W. R. Grace & Co. and at General Foods Corporation. Mr. Usinowicz
holds an M.B.A. degree from New York University and a B.S. degree in Finance
from Lehigh University.
There is no family relationship between any executive officer or
director of the Company.
4
<PAGE>
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 of Directors 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 at a price of
$1.406 per share. On June 18, 1999, each non-employee director was granted an
option to purchase 19,600 shares of the Company's Common Stock at an exercise
price of $1.25 per share. No director who is an employee of the Company receives
separate compensation for services rendered as a director.
Meetings of the Board of Directors and Standing Committees
The Board of Directors held nine meetings during the year ended
December 31, 1999. Each director attended at least 75% or more of the aggregate
number of meetings held by the Board of Directors and the committees on which he
or she served. Dr. Kathryn Harrigan resigned from the Board of Directors in
September of 1999. At a meeting of the Board of Directors held on September 27,
1999, Elliott Block, Ph.D. was elected a director to fill the vacancy.
The Company's Board of Directors has three standing committees: the
Audit Committee, the Compensation and Stock Option Committee and the Board
Organization and Governance Committee. All such Committees consisted of
non-employee directors: Dr. Harrigan (until September 1999), Mr. Rautbord, Mr.
Buterbaugh and Dr. Reimer. Dr. Gurkin replaced Dr. Harrigan as member of such
Committees upon her resignation.
The Audit Committee held one meeting during the year ended December 31,
1999. The primary functions of the Audit Committee are to assist the Board of
Directors in fulfilling its responsibilities with respect to the accounting and
financial reporting practices of the Company (including its system of internal
controls and financial management practices), to select the Company's
independent accountants and to meet with the Company's independent accountants
to address and review the scope and results of the audit and other services
performed by the Company's independent accountants.
The Compensation and Stock Option Committee held three meetings during
the year ended December 31, 1999. The primary functions of the Compensation and
Stock Option Committee are to review and approve the Company's compensation
policies and practices, to propose compensation levels for executive officers
and other key employees and to administer the Company's Amended and Restated
1992 Stock Option Plan.
The Board Organization and Governance Committee held three meetings
during the year ended December 31, 1999. The Board Organization and Governance
Committee is responsible for corporate governance and also serves as the
Nominating Committee for the Company. The Committee will consider nominees for
director recommended by shareholders. Any shareholder who wishes to submit a
recommendation for director of the Company should send it to Jay E. Eckhaus,
Secretary, at the Company's address on the front of this Proxy Statement.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company,
during the fiscal years ended December 31, 1999, 1998, and 1997, 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
1999, 1998 and 1997 in excess of $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
Other Annual Securities Underlying
Name and Principal Position Year(a) Salary($) Bonus($) Compensation($) Options(#)
--------------------------- ------- --------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Jack L. Aronowitz 1999 $167,512 -- * --
President, Chief 1998 160,864 -- * --
Technical Officer, and 1997 151,938 -- $24,644 --
Chairman of the Board
Elliott Block, Ph.D.(1) 1999 106,298 -- * 250,000
Chief Executive
Officer and Director
Jay E. Eckhaus 1999 131,750 $18,750 * 5,000
Vice President, 1998 99,716 -- * 15,000
General Counsel and 1997 -- -- -- --
Secretary
Robert M. Morrow(1) 1999 114,250 -- * 30,000
Vice President of
Sales and Marketing
</TABLE>
* Value of perquisites and other personal benefits paid does not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported for
the executive officer.
(1) Executive officer was not employed by the Company prior to 1999.
6
<PAGE>
Stock Option Grants and Exercises; Long-Term Incentive Plans in 1999
The following table sets forth the stock options granted to the
executive officers named in the Summary Compensation Table during the fiscal
year ended December 31, 1999.
<TABLE>
<CAPTION>
Number Of Percent of Potential Realizable Value
Securities Total Options at Assumed
Underlying Granted To Exercise Annual Rate of
Options Employees In Price Per Stock Price Appreciation
Name Granted(#) Fiscal Year Share($/SH) Expiration Date For Option Term(a)
---- ---------- ----------- ----------- --------------- -------------------------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Jack L. Aronowitz -- -- -- -- -- --
Elliott Block, Ph.D. 250,000 59.41% $ 1.250 5/10/09 $196,530 $498,045
Jay E. Eckhaus 5,000 1.19% $ 0.438 11/04/09 $196,530 $3,490
Robert M. Morrow 10,000 2.38% $ 1.375 2/15/05 $196,530 $10,609
10,000 2.38% $ 1.375 2/15/06 $196,530 $13,045
10,000 2.38% $ 1.375 2/15/07 $196,530 $15,724
</TABLE>
(a) The potential realizable values set forth under these columns result
from calculations assuming 5% and 10% annualized stock price growth
rates from grant dates to expiration dates and are not intended to
forecast future price appreciation of the Company's Common Stock
based upon growth at these prescribed rates. The Company is not aware
of any formula which will determine with reasonable accuracy a
present value based on future unknown factors. Actual gains, if any,
on stock option exercises are dependent on the future performance of
the Company. There can be no assurance that the amounts reflected in
this table will be achieved.
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Value Of Unexercised
Number Of Securities Underlying In-The-Money Options At Year
Name Unexercised Option At Year End(#) End($)(Q)
---- --------------------------------- ---------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jack L. Aronowitz -- -- -- --
Elliott Block, Ph.D. 83,334 166,666 -- --
Jay E. Eckhaus 10,000 10,000 -- $310
Robert M. Morrow 10,000 20,000 -- --
Stuart R. Streger 32,000 -- -- --
</TABLE>
(1) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price for the Common Stock of $0.50
as reported by The Nasdaq Stock Market on December 31, 1999 and the
exercise price of the options.
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee consisted of Mr.
Buterbaugh, Ms. Harrigan, Mr. Rautbord and Dr. Reimer during 1999. (Dr. Gurkin
replaced Ms. Harrigan on the committee upon her resignation.) During 1999, there
were no interlocking relationships of the Compensation and Stock Option
Committee. Each member serving on the Compensation and Stock Option Committee
was an outside director and no member, other than Dr. Gurkin, has ever been an
officer or employee of the Company. Dr. Gurkin served as the Company's Senior
Vice President and Chief Operating Officer until March 5, 1999.
Compliance With Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and Exchange
Commission reports of changes in ownership of the Common Stock of the Company
held by such persons and to furnish the Company with copies of all forms they
file under this regulation. To the Company's knowledge, based solely on a review
of the copies of such reports furnished to the Company and representations that
no other reports were required, during the year ended December 31, 1999, the
officers, directors and greater than 10% shareholders of the Company complied
with all applicable Section 16(a) filing requirements.
7
<PAGE>
Employment Contracts
The Company entered into an employment agreement with Jack L.
Aronowitz, dated 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 current base
salary of $175,900, 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 (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 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).
The Company entered into an employment agreement with Elliott Block,
Ph.D., dated September 9, 1999, pursuant to which Dr. Block serves as the Chief
Executive Officer of the Company. The agreement provides that Dr. Block receive:
(i) a current base salary of $173,250, increased annually by a minimum of 5%;
and (ii) an annual bonus equal to 3% of the Company's after-tax net income, in a
minimum amount of $10,000 and not to exceed 50% of his base salary. Dr. Block is
also entitled to a one-time bonus of $25,000 upon the attainment of certain net
income goals. Upon execution of this agreement, the Company granted Dr. Block
250,000 stock options at an exercise price of $1.25 per share, which have vested
with respect to two-thirds of the shares underlying such options and will vest
with respect to one-third of such shares on May 10, 2001. The Company also made
a loan to Dr. Block in the amount of $50,000, which shall be deemed repaid with
respect to 50% of the amount due and owing on each of the first two anniversary
dates of this agreement as long as Dr. Block remains an employee of the Company
or is not terminated for cause (as defined). Dr. Block receives health
insurance, other fringe benefits, and, at the Board of Directors' discretion,
reimbursement for various expenses. In addition, the agreement prohibits Dr.
Block: (i) from disclosing confidential information relating to the Company
during the term of the agreement and for five years after. Notwithstanding the
foregoing, if Dr. Block's employment is terminated by the Company without cause
(as defined), if he is constructively discharged, or if he terminates his
employment for good reason (as defined), the Company must pay Dr. Block the
greater of the amounts due for the unexpired term of employment or two times his
then base salary plus an amount equal to any bonuses paid or accrued to him
during the 12 months prior to such termination. Dr. Block is also entitled to
receive an amount equal to two times base salary plus two times bonuses paid or
accrued in the last 12 months in the event of termination following a change of
control (as defined). The agreement also provides for the grant of share
appreciation rights to Dr. Block. Dr. Block is also a director of the Company.
On October 9, 1998, the Company entered into an employment agreement
with Jay E. Eckhaus, pursuant to which he serves as Vice President and General
Counsel. Mr. Eckhaus' current base salary is $136,500, which may be increased at
the discretion of the Board of Directors. On May 27, 1999, the Company entered
into an employment agreement with Robert M. Morrow, pursuant to which he serves
as Vice President of Sales and Marketing. Mr. Morrow's current base salary is
$135,200, which may be increased at the discretion of the Board of Directors.
The Company also granted Mr. Morrow 30,000 options upon execution of the
agreement at an exercise price of $1.375 per share, which have vested with
respect to one-third of the shares underlying such options and will vest with
respect to one-third of such shares on each of February 23, 2001 and 2002. On
November 22, 1999, the Company entered into an employment agreement with Walter
V. Usinowicz, Jr., pursuant to which he serves as Vice President and Chief
Financial Officer of the Company. Mr. Usinowicz's current base salary is
$135,000, which may be increased at the discretion of the Board of Directors.
The Company also granted Mr. Usinowicz 35,000 options upon execution of the
agreement at an exercise price of $0.4375 per share, which will vest with
respect to one-third of the shares underlying such options on each of December
7, 2000, 2001 and 2002. The agreements also provide that Messrs. Eckhaus, Morrow
and Usinowicz may receive yearly bonuses at the discretion of the Board of
Directors. Messrs. Eckhaus, Morrow and Usinowicz also receive health insurance,
other fringe benefits and reimbursement for business expenses. In addition, the
agreements prohibit Messrs. Eckhaus, Morrow and Usinowicz 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 any 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 (but at least six
months' base salary) plus an amount equal to the bonus paid to such employee in
the previous fiscal year (two times salary plus two times bonus paid or accrued
in the last year in the event of termination following a "change if control" as
defined in the agreement.) The agreements also provide for the grant of share
appreciation rights to Messrs. Eckhaus, Morrow and Usinowicz.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 (the
"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 was a six-month note payable on demand and bears interest at
the rate of interest charged by the brokerage house (7"% at December 31, 1999).
In February 1999, accrued interest was paid and the note was extended an
additional three months. After becoming due on May 26, 1999, interest was paid
and an additional extension of one year was authorized by the Board of
Directors. The balance of funds advanced under the note was approximately
$647,000 at December 31, 1999, and was included in due from related party in the
balance sheets based on the Company's understanding that such amounts will be
repaid during 2000. At the Board meeting on April 27, 2000, the Board of
Directors granted an additional eighteen-month extension of the note commencing
on September 1, 2000. The principal amount of the note is unchanged. The
interest on the note is unchanged. Payments on the note begin on September 1,
2000 and are due quarterly.
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 1999, 1998, 1997 and 1996, Mr. Aronowitz earned
approximately $149,000, $161,000, $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."
The Company made a loan to Dr. Block in the amount of $50,000 pursuant
to his Employment Agreement with the Company, which shall be deemed repaid with
respect to 50% of the amount due and owing on each of the first two anniversary
dates of this agreement as long as Dr. Block remains an employee of the Company
or is not terminated for cause (as defined). The principal amount of this loan
bears interest at the London Interbank (LIBOR) rate, as adjusted quarterly, with
such principal and accrued interest due on September 1, 2001, subject to such
loan being deemed repaid as provided above. As of March 31, 2000, the
outstanding principal and interest was $51,738.99.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 19, 2000
with respect to the Common Stock of the Company 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.
On April 19, 2000, there were 29,541,258 shares of Common Stock
outstanding. Unless indicated, each of the persons in the table below has sole
voting power and sole dispositive power as to all of the shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner(a) Beneficial Ownership(b) Percent
--------------------------------------- ----------------------- -------
<S> <C> <C>
Jack L. Aronowitz...................................................... 4,607,316(c) 15.6%
Elliott Block, Ph.D.................................................... 96,934(d) *
Noel Buterbaugh........................................................ 20,600(d) *
Jay E. Eckhaus......................................................... 22,200(d) *
Martin Gurkin, Ph.D.................................................... 20,000(d) *
Robert Morrow.......................................................... 30,000(d) *
Clayton Rautbord....................................................... 24,200(d) *
Stanley M. Reimer, Ph.D................................................ 23,600(d) *
Walter Usinowicz, Jr................................................... 25,000(d) *
All directors and executive officers
as a group (9 persons)................................................. 4,869,850 16.5%
</TABLE>
* Does not exceed 1 percent.
(a) The address of each of Messrs. Aronowitz, Block, Buterbaugh, Eckhaus,
Gurkin, Morrow, Rautbord, Reimer and Usinowicz is c/o Technical Chemicals
and Products, Inc., 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 shares that may be acquired upon exercise of options that are
currently exercisable or will become exercisable within 60 days in the
following amounts: Dr. Block - 83,334; Mr. Buterbaugh - 19,600; Dr. Gurkin
- 19,600; Mr. Eckhaus - 20,000; Mr. Morrow - 20,000; Mr. Rautbord - 22,600;
Dr. Reimer - 20,600; and Mr. Usinowicz - 25,000.
10
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option 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 1999 were made with respect to the executive
officers of the Company.
The Compensation and Stock Option 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 and Stock Option 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 consists 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 1999, 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"). When selecting a new Chief
Executive Officer, the Board of Directors generated a list of possible
candidates and interviewed several of them before narrowing the selection to Dr.
Block. The Board then entered into arm's-length-negotiations with Dr. Block
concerning his compensation and benefits. The Compensation and Stock Option
Committee determined that Dr. Block's compensation package is competitive with
compensation paid to executive officers of similar companies in the industry who
have similar experience to Dr. Block.
The Compensation and Stock Option 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,
Compensation and Stock Option Committee
---------------------------------------
Martin Gurkin
Noel Buterbaugh
Clayton Rautbord
Stanley Reimer
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the Company's cumulative total return to
shareholders compared to the Russell 2000 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 1999, 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.
<TABLE>
<CAPTION>
February 2, December 31, December 31, December 31, December 31, December 31,
Name 1995 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
TCPI $100 $500 $228 $284 $37 $13
Russell 2000 $100 $130 $152 $206 $193 $190
Nasdaq Health Services $100 $121 $121 $123 $105 $86
</TABLE>
12
<PAGE>
PROPOSAL 2
CORPORATE NAME CHANGE TO TCPI, INC.
The Board of Directors has unanimously adopted, subject to shareholder
approval, a proposal to amend the Company's Amended and Restated Articles of
Incorporation in order to change the Company's name to "TCPI, Inc."
The Board of Directors has determined that it would be in the best
interest of the Company and its shareholders to change the name of Technical
Chemicals and Products, Inc. to TCPI, Inc. The Board of Directors and management
believe that the proposed new name will simplify our corporate identity and more
accurately reflect how the Company is presently known to the investment
community (by its stock trading symbol) as well as by its customers, vendors,
employees and others, who more commonly refer to the Company as TCPI. The
proposed new name also will eliminate the potential for confusion that the
Company's primary business is related to the chemical industry.
If the Charter Amendment is approved, the Common Stock of the Company
will continue to trade on the Nasdaq National Market under the symbol "TCPI."
The Board of Directors recommends a vote "FOR" approval of the Charter
Amendment.
PROPOSAL 3
APPROVAL OF THE COMPANY'S 2000 STOCK OPTION PLAN
The Company's Board of Directors has approved the TCPI 2000 Stock
Option Plan (the "Plan"), which authorizes the Company to grant stock options
and other awards to the Company's employees, officers, directors and
consultants. By providing such individuals with an opportunity to acquire or
increase a proprietary interest in the Company, the Board of Directors intends
to create a stronger incentive to expend maximum effort for the growth and
success of the Company and to encourage such individuals to remain employed by
the Company. A copy of the Plan is attached hereto as Annex A, and a description
of the material features of the Plan follows.
The Board of Directors recommends a vote "FOR" the adoption of the
Plan.
Administration of the Plan. The Plan will be administered by the
Compensation and Stock Option Committee, which consists of at least two
non-employee directors who are outside directors within the meaning of section
162(m) of the Internal Revenue Code and non-employee directors within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The Compensation
and Stock Option Committee is authorized to determine the persons to whom awards
or grants will be made, to determine the term, exercise price, settlement terms,
forfeiture provisions and other terms and conditions of each award or grant, to
interpret the Plan, to establish, amend or rescind any rules and regulations
relating to the Plan, to prescribe the form of any agreement or instrument
executed in connection with the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
Eligibility for Participation. Participants in the Plan are selected by
the Compensation and Stock Option Committee from the employees and directors of
the Company and its subsidiaries and from independent contractors and
consultants providing services to the Company and its subsidiaries. As of March
31, 2000 there were 77 employees and directors eligible for the Plan. No
Participant may receive awards with respect to more than 200,000 shares of
Common Stock during any calendar year.
Awards under the Plan. The Plan provides that the Committee may grant
or issue stock options and other stock-based awards, including stock
appreciation rights, to any employee or director of the Company or its
subsidiaries and to any independent contractor or consultant providing services
to the Company or its subsidiaries. The total number of shares of Common Stock
that may be issued pursuant to awards granted pursuant to the Plan is four
million (4,000,000) shares. Each such award will be set forth in a separate
agreement with the person receiving the award and will indicate the type, terms
and conditions of the award. Shares subject to options, awards or rights which
expire or are forfeited become available to be granted again under the Plan.
Nonqualified Stock Options, which we also refer to as NQSOs, will
provide for the right to purchase Common Stock at a specified price which,
except with respect to NQSOs intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code, may be less than
fair market value on the date of grant (but not less than par value), and
usually will become exercisable (in the discretion of the committee) in one or
more installments after the grant date, subject to the participant's continued
employment with us and/or subject to the satisfaction of individual performance
targets established by the committee. NQSOs may be granted for any term
specified by the committee.
13
<PAGE>
Incentive Stock Options, which we also refer to as ISOs, will be
designed to comply with certain restrictions contained in the Internal Revenue
Code. Among such restrictions, ISOs (1) must have an exercise price not less
than the fair market value of a share of Common Stock on the date of grant (not
less than 110% of the fair market value if granted to any person who owns more
than 10% of the Common Stock), (2) may only be granted to employees, (3) must
expire within a specified period of time following the optionee's termination of
employment, and (4) must be exercised within ten years after the date of grant
(five years if granted to any person who owns more than 10% of the Common
Stock), but may be subsequently modified to disqualify them for treatment as
ISOs.
Options, Term and Exercise Price. The exercise price of the Common
Stock subject to an option and the option exercise period for each option is
determined by the Compensation and Stock Option Committee on the date the option
is granted (subject to the restrictions on ISOs as described above). In no event
will the exercise period for an option exceed ten years.
Termination of Employment. Upon the termination of employment with the
Company for any reason other than cause, death or disability, an individual
holding an option may exercise any vested portion of such option for a period
not to exceed ninety (90) days after such termination, or a shorter period if
determined by the Compensation and Stock Option Committee. Upon termination of
employment with the Company for death or disability, an individual holding an
option granted under the Plan, or such person's heirs, may exercise an option
for a period not to exceed one (1) year after such termination. Upon termination
of employment with the Company for cause, the options held by the individual
terminated will expire immediately upon the date of such termination.
Transferability of Options. ISOs granted under the Plan are not
transferable, except by will or the laws of decent or distribution. Unless
otherwise permitted by the Compensation and Stock Option Committee in its sole
and absolute discretion, NQSOs are not transferable except by will or the laws
of decent or distribution.
Amendment and Termination of the Plan. The Compensation and Stock
Option Committee may amend or terminate the Plan at any time, provided that
shareholder approval is required for any amendment that requires shareholder
approval in accordance with the regulations issued under Section 16 of the
Securities Exchange Act of 1934 and any amendment that would impair the rights
of a grantee requires the grantee's consent. The Plan will terminate on July 1,
2010 unless terminated earlier by the Compensation and Stock Option Committee.
Adjustment Provisions. If there is any change in the Common Stock as a
result of a change in the capitalization of the Company, including but not
limited to, a stock dividend, recapitalization, stock split, or combination or
exchange of the Common Stock, or a merger, reorganization or consolidation of
the Company or any other change in the capital structure made without the
receipt of consideration, then unless such event results in the termination of
all outstanding grants under the Plan, the number of and class of shares
available for grants and the number and class of such shares covered by
outstanding grants, and the price per share or the applicable market value of
such grants, will be proportionately adjusted by the Compensation and Stock
Option Committee to reflect any increase or decrease in the number or kind of
issued shares of Common Stock.
Federal Income Tax Consequences. Set forth below is a general
description of the federal income tax consequences relating to grants of options
under the Plan.
Nonqualified Stock Options. There are no federal income tax
consequences to grantees or to the Company upon the grant of an NQSO under the
Plan. Upon the exercise of NQSOs, grantees will recognize ordinary compensation
income in an amount equal to the excess of the fair market value of the shares
at the time of exercise over the exercise price of the NQSO, and the Company
generally will be entitled to a corresponding federal income tax deduction. Upon
the sale of shares acquired by exercise of an NQSO, a grantee will have a
capital gain or loss in an amount equal to the difference between the amount
realized upon the sale and the grantee's adjusted tax basis in the shares (the
exercise price plus the amount of ordinary income recognized by the grantee at
the time of exercise of the NQSO).
Incentive Stock Options. Grantees will not be subject to federal income
taxation upon the grant or exercise of ISOs granted under the Plan, and the
Company will not be entitled to a federal income tax deduction by reason of such
grant or exercise. However, the amount by which the fair market value of the
shares at the time of exercise exceeds the stock option price (or the grantee's
other tax basis in the shares) is an item of tax preference subject to the
alternative minimum tax applicable to the person exercising the ISO. A sale of
shares acquired by exercise of an ISO that does not occur within one year after
the exercise or within two years after the grant of the ISO generally will
result in the recognition of long-term capital gain or loss in the amount of the
difference between the amount realized on the sale and the stock option price
(or the grantee's other tax basis in the shares), and the Company will not be
entitled to any tax deduction in connection with the sale.
14
<PAGE>
If the sale occurs within one year from the date of exercise of the ISO
or within two years from the date of grant (a "disqualifying disposition") and
is a transaction in which a loss, if sustained, would be recognized, the grantee
generally will recognize ordinary compensation income equal to the lesser of (i)
the excess of the fair market value of the shares on the date of exercise over
the exercise price (or the grantee's other tax basis in the shares), or (ii) the
excess of the amount realized on the sale of the shares over the exercise price
(or the grantee's other tax basis in the shares). In the case of a disqualifying
disposition where a loss, if sustained, would not be recognized, the grantee
will recognize ordinary income equal to the excess of the fair market value of
the shares on the date of exercise over the stock option price (or the grantee's
other tax basis in the shares). Any amount realized on a disqualifying
disposition in excess of the amount treated as ordinary compensation income (or
any loss realized) will be a long-term or a short-term capital gain (or loss),
depending upon the length of time the shares were held. The Company generally
will be entitled to a tax deduction on a disqualifying disposition corresponding
to the ordinary compensation income recognized by the grantee.
PROPOSAL 4
APPROVAL OF ISSUANCE OF COMMON STOCK
TO SWARTZ PRIVATE EQUITY, LLC
In order to provide a source of future capital for ongoing research and
development of the Company's products and general working capital, on May 3,
2000, the Company entered into an Investment Agreement (the "Investment
Agreement") with Swartz Private Equity, LLC ("Swartz"). Under the Investment
Agreement, the Company has the option to sell up to $25 million of Common Stock
to Swartz, subject to certain conditions contained in the Investment Agreement.
In addition, the Company issued to Swartz a warrant to purchase 625,000 shares
of Common Stock at a price of $1.9063 per share, subject to adjustment, and may
issue additional warrants to Swartz pursuant to the terms of the Investment
Agreement. A more detailed description of this transaction is set forth below
under the caption "Investment Agreement."
The Company's Common Stock trades on the Nasdaq National Market. The Nasdaq
corporate governance standards require shareholder approval of the sale or
issuance of Common Stock in a private transaction at a price less than the
greater of book or market value, if the number of new shares would equal 20% or
more of the number of shares outstanding at the time the Company enters into the
transaction. Under the Investment Agreement, as of May 3, 2000, the Company may
not sell more than 5,908,251 shares (the "Equity Line Nasdaq Share Limit") to
Swartz unless shareholder approval of this transaction is obtained. As described
below, because the number of shares which may be sold to Swartz under the
Investment Agreement may exceed the Equity Line Nasdaq Share Limit, the Company
seeks the approval of such potential issuances in order to comply with the
Nasdaq standards. As of May 15, 2000, no shares of Common Stock had been issued
and sold to Swartz under the Investment Agreement, other than 625,000 shares of
Common Stock issuable upon exercise of the warrant entered in connection with
the Investment Agreement. As of May 3, 2000, the Company will be able to sell
5,908,251 shares of Common Stock under the Investment Agreement without
shareholder approval.
The Board of Directors Recommends that the Shareholders vote "FOR"
approval of this proposal.
Summary of Investment Agreement
This summary is qualified in its entirety by reference to the
Investment Agreement, the related Registration Rights Agreement and warrants.
Copies of such documents can be obtained by writing to the Secretary, Technical
Chemicals and Products, Inc., 3341 S.W. 15th Street, Pompano Beach, Florida
33069. These documents are also available as exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, which is
accessible at the Securities and Exchange Commission's web site at
(www.sec.gov).
Pursuant to the requirements of the Investment Agreement, the Company
is required to file a registration statement with the Securities and Exchange
Commission in order to permit Swartz to resell to the public any shares that it
acquires pursuant to the Investment Agreement. Beginning on the date the
registration statement is declared effective by the Securities and Exchange
Commission and continuing for three years thereafter, the Company may from time
to time at its sole discretion, and subject to certain restrictions set forth in
the Investment Agreement, sell shares of its Common Stock to Swartz at a price
determined under the Investment Agreement. Accordingly, funds under the
Investment Agreement will not be available, at a minimum, until such a
registration statement becomes effective. Each election by the Company to sell
stock to Swartz is referred to as a "put."
In order to exercise a put, the Company must give at least ten, but not
more than 20, business days advance notice to Swartz of the date on which it
intends to exercise a particular put right. The notice must indicate the date
the Company intends to exercise the put (the "Put Date") and the maximum number
of shares of Common Stock the Company intends to sell to Swartz. At the
Company's option, the notice may also specify a maximum dollar amount of Common
Stock that it will sell under the put and/or a minimum purchase price per share
at which the Company is willing to sell the shares. The maximum dollar amount
specified by the Company cannot exceed $2,000,000. The minimum purchase price
specified by the Company may not exceed 80% of the closing bid price of the
Company's Common Stock on the date on which it gives Swartz notice of the
exercise of a put right.
15
<PAGE>
The maximum number of common shares the Company will be obligated to
sell to Swartz pursuant to a put equals the lesser of:
(i) the number of shares specified by the Company in the notice
of the put;
(ii) the number of shares which, when multiplied by the price
Swartz is obligated to pay for the shares, as described below,
equals the lesser of:
(A) the maximum dollar amount specified by the Company in the
notice; and
(B) $2,000,000;
(iii) 15% of the aggregate daily reported trading volume of the
common shares during the 20 business days after the Put Date;
(iv) 15% of the aggregate daily reported trading volume of the
common shares during the 20 business days before the Put Date;
or
(v) a number of shares that will result in the aggregate number of
shares held by Swartz upon completion of the put exceeding
9.99% of the total number of outstanding shares of Common
Stock.
The market price of the shares of Common Stock during the 20 business
days immediately following the Put Date are used to determine the actual amount
of money Swartz will provide and the number of shares the Company will issue in
return. For each share of Common Stock, Swartz will pay the Company the lesser
of:
(i) the market price for each share, minus $.10; or
(ii) 92% of the market price for each share.
Notwithstanding the above amount, Swartz must pay at least the
designated minimum per share price, if any, that the Company indicates in its
notice. Market price is defined as the lowest closing bid price for the
Company's Common Stock on its principal market during the 20 business days
immediately following the Put Date (the "Pricing Period").
Limitations and Conditions Precedent to the Company's Put Rights
Puts can be made 5 days after the end of the Pricing Period for the
prior put. The Company's ability to put shares of its Common Stock, and Swartz's
obligation to purchase the shares, is conditioned upon the satisfaction of
certain conditions. These conditions include:
(i) the Company shall have satisfied all obligations under the
Registration Rights Agreement entered into between the Company
and Swartz in connection with the Investment Agreement,
including the filing of a registration statement with the
Securities and Exchange Commission with respect to the resale
of the securities the Company will issue to Swartz and the
requirement that such registration statement be declared
effective by the Securities and Exchange Commission, and the
Company shall have satisfied all obligations under the
Investment Agreement and the Warrant;
(ii) the Company's Common Stock shall be listed and trading on
Nasdaq, the O.T.C. Bulletin Board, or an exchange;
(iii) the representations and warranties of the Company set forth in
the Investment Agreement must be accurate as of the date of
each put;
(iv) the Company shall have reserved for issuance a sufficient
number of shares of Common Stock to satisfy its obligations to
issue shares pursuant to any put and upon exercise of
warrants;
(v) the registration statement for the sale of shares the Company
will be issuing to Swartz must remain effective as of the put
date and no stop order with respect to the registration
statement is in effect;
(vi) if the number of shares to be put to Swartz, together with any
shares then held by Swartz, would equal 20% of all shares of
Common Stock of the Company that would be outstanding upon
completion of the put, the Company must obtain shareholder
approval of such excess issuance; and
(vii) other than continuing losses described in an attachment to the
Investment Agreement, at the time of a put, there shall have
been no material adverse change in the Company's business
prospects or financial condition.
16
<PAGE>
Swartz is not required to acquire and pay for any shares of the
Company's Common Stock once it has acquired $25 million worth of Common Stock.
Additionally, Swartz is not required to acquire and pay for any shares of Common
Stock with respect to any particular put for which, between the date the Company
gives advance notice of an intended put and the date the particular put closes:
(i) the Company announced or implemented a stock split or
combination of its Common Stock;
(ii) the Company paid a Common Stock dividend;
(iii) the Company made a distribution of all or any portion of its
assets or evidences of indebtedness to the holders of its
Common Stock; or
(iv) the Company consummated a major transaction, such as a sale of
all or substantially all of its assets or a merger or tender
or exchange offer that results in a change in control of the
Company.
The Company's right to require Swartz to purchase any subsequent put
shares shall terminate upon the occurrence of any of the following:
(i) the Company or any director or executive officer of the
Company has engaged in a transaction or conduct related to the
Company that resulted in (a) a Securities and Exchange
Commission enforcement action, administrative proceeding or
civil lawsuit, or (b) a civil judgment or criminal conviction
or for any other offense that, if prosecuted criminally, would
constitute a felony under applicable law;
(ii) the aggregate number of days which the registration statement
for the resale of shares issued to Swartz is not effective and
the Common Stock is not listed and traded on Nasdaq, the
O.T.C. Bulletin Board, or an exchange exceeds 120 days;
(iii) the Company files for bankruptcy or any other proceeding for
the relief of debtors;
(iv) the earlier of (a) three years following the effectiveness of
the Investment Agreement (May 3, 2003), or (b) the date Swartz
acquires shares worth $25 million.
(v) the Company breaches covenants contained in the Investment
Agreement; or
(vi) the registration statement for the resale of shares of Common
Stock issued to Swartz is not effective by May 3, 2001.
Commitment and Termination Fees
If the Company does not put at least $1,000,000 worth of Common Stock
to Swartz during each six month period following the effective date of the
Investment Agreement, in consideration of Swartz's commitment costs, the Company
must pay Swartz a semi-annual non-usage fee. This fee equals the difference
between $100,000 and 10% of the value of the shares of Common Stock put to
Swartz during the six month period.
If the Investment Agreement is terminated, the Company must pay Swartz
the greater of (i) the non-usage fee described above, or (ii) the difference
between $200,000 and 10% of the value of the shares of Common Stock put to
Swartz during all puts to date.
Warrants
Within five business days after the end of each Pricing Period, the
Company is required to issue and deliver to Swartz a warrant to purchase a
number of shares of its Common Stock equal to 10% of the common shares issued to
Swartz in the applicable put. Each such warrant will be exercisable at a price
that will initially equal 110% of the market price for the applicable put, and
shall have semi-annual reset provisions. Each warrant will be immediately
exercisable and have a term beginning on the date of issuance and ending five
years thereafter.
Short Sales
Swartz and its affiliates are prohibited from engaging in short sales
of the Company's Common Stock unless Swartz has received a put notice under
which shares have not yet been issued and the amount of shares involved in the
short sale does not exceed the number of shares specified in the put notice.
Cancellation of Puts
The Company must cancel a particular put between the date of the
advance put notice and the last day of the Pricing Period if the Company
discovers an undisclosed material fact relevant to Swartz's investment decision,
the registration statement registering resales of the common shares becomes
ineffective or the Company's shares are delisted from the then primary exchange.
If a put is canceled, it will continue to be effective, but the Pricing Period
for the put will terminate on the date notice of cancellation of the put is
given to Swartz. Because the pricing period will be shortened, the number of
shares Swartz will be required to purchase in the canceled put may be smaller
than it would have been had the put not been canceled.
17
<PAGE>
Termination of Investment Agreement
The Company may terminate its right to initiate further puts or
terminate the Investment Agreement at any time by providing Swartz with notice
of such intention to terminate; provided, however, any such termination will not
affect any other rights or obligations the Company has concerning the Investment
Agreement or any related agreement.
Restrictive Covenants
During the term of the Investment Agreement and for a period of one
year after the Investment Agreement is terminated, the Company is prohibited
from engaging in certain transactions. These include the issuance of any of its
equity securities, or debt securities convertible into equity securities, for
cash in a private transaction without obtaining the prior written approval of
Swartz. The Company is also prohibited during such one-year period from entering
into any private equity line agreements similar to the Investment Agreement
without obtaining Swartz's prior written approval.
Right of First Refusal
Swartz has a right of first refusal to participate in any private
capital raising transaction of equity securities that closes at any time during
the period from the date of the Investment Agreement, May 3, 2000, until one
year after the Investment Agreement is terminated.
Swartz's Right of Indemnification
The Company has agreed to indemnify Swartz, including its shareholders,
officers, directors, employees, investors and agents, from all liability and
losses resulting from any misrepresentations or breaches the Company makes in
connection with the Investment Agreement, the registration rights agreement,
other related agreements, or the registration statement. The Company has also
agreed to indemnify such persons for any claims based on violation of Section 5
of the Securities Act of 1933, as amended, caused by the integration of the
private sale of Common Stock to Swartz and the public offering pursuant to the
registration statement.
Effect on Outstanding Common Stock
The issuance of Common Stock under the Investment Agreement will have
no effect on the rights or privileges of existing holders of Common Stock except
that the economic and voting interests of each shareholder will be diluted as a
result of such issuance.
As noted above, the exact number of shares of Common Stock issuable
under the Investment Agreement, and the resulting dilution to existing holders
of Common Stock, cannot currently be determined, and will vary with the extent
to which the Company utilizes the Investment Agreement, the market price of the
Common Stock, and exercise of the related warrant. The potential effects of any
such dilution on the existing shareholders of the Company include the
significant dilution of the current shareholders' economic and voting interests
in the Company.
Consequences if Shareholder Approval is not Obtained
The terms of the Investment Agreement provide that the Company will not
be permitted to issue shares of Common Stock thereunder in excess of the Equity
Line Nasdaq Share Limit unless and until shareholder approval of the issuance of
Common Stock sought hereby is obtained. If the shareholder approval sought
hereby is not obtained, the Nasdaq rules will prohibit the Company from issuing
under the Investment Agreement more than 5,908,251 shares of Common Stock (as of
May 3, 2000). As a result, the Company would not be able to draw down a
significant portion of the funds available under the equity line, which are
currently needed for working capital. In addition, if the Company issued the
shares in excess of the Equity Line Nasdaq Share Limit without obtaining
shareholder approval, Nasdaq could delist the Company's Common Stock on the
Nasdaq National Market, which could adversely affect the marketability of the
Company's shares of Common Stock.
Interests of Certain Persons
Neither Swartz, nor any of its affiliates, is a director or executive
officer of the Company. To the Company's knowledge, neither Swartz nor any of
its affiliates is a 5% shareholder of the Company.
18
<PAGE>
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, 2000. 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 2001 annual
meeting must be received by the Company on or before January 31, 2001, 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. If such notice is not timely provided, then persons
named on the proxies solicited by management may exercise discretionary voting
authority with respect to such proposal.
In addition to the matters required to be set forth by the rules of the
Securities and Exchange Commission, a shareholder's notice with respect to a
proposal to be brought before the annual meeting must set forth (a) the text of
the proposal to be presented and a brief written statement of the reasons why
such shareholder favors the proposal, (b) the name and address of such
shareholder, (c) the class and number of shares of the Company that are
beneficially owned by such shareholder on the date of such shareholder notice
and (d) any material interest of the shareholder in such proposal.
A shareholder's notice with respect to a director nomination must set
forth (a) the name of the person to be nominated, (b) the number and class of
all shares of each class of stock of the Company beneficially owned by such
person, (c) the information regarding such person required by paragraphs (a) and
(d) of Item 401 of Regulation S-K adopted by the Securities and Exchange
Commission, (d) such person's signed consent to serve as a director of the
Company if elected, (e) such shareholder's name and address and (f) the number
and class of all shares of each class of stock of the Corporation beneficially
owned by such shareholder.
The complete bylaw provisions governing these requirements are
available to any shareholder without charge upon request from the Secretary of
the Company.
OTHER MATTERS
Annual Report. 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, 1999, 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.
Expenses. 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.
By Order of the Board of Directors,
/s/ Jay E. Eckhaus
------------------
Jay E. Eckhaus
Secretary
Pompano Beach, Florida
May 31, 2000
19
<PAGE>
TECHNICAL CHEMICALS AND PRODUCTS, INC.
3341 S.W. 15th Street
Pompano Beach, Florida 33069
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jack L. Aronowitz and Elliott Block, Ph.D., and
each of them, with full power of substitution, proxies of the undersigned, to
attend and vote all the shares of common stock, $0.001 par value, of Technical
Chemicals and Products, Inc., a Florida corporation ("TCPI"), which the
undersigned would be entitled to vote at the Annual Meeting of Shareholders to
be held at the East Room of the Clubhouse of the Palm-Aire Country Club, 555 S.
Powerline Road, Pompano Beach, Florida (approximately 1/4 mile south of Atlantic
Boulevard on the west side of Powerline Road), at 10:00 a.m., local time, on
Friday, June 16, 2000, or any adjournment or postponement thereof, or to vote to
adjourn or postpone the Annual Meeting, according to the number of votes the
undersigned would be entitled to cast if personally present upon the matters
referred to on this proxy and, in their discretion, upon any other business as
may come before the meeting.
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
<S> <C>
1. Proposal 1 - Election of the following persons as Directors of TCPI: Nominees: Clayton Rautbord, Stanley M. Reimer, Ph.D.
[ ] FOR all nominees except as indicated [ ] WITHHOLD authority to vote for all nominees
(INSTRUCTION: To withhold authority to vote for an individual nominee,
strike a line through that nominee's name in the list above.)
2. Proposal 2 - An Amendment to TCPI's Amended and Restated Articles of
Incorporation to change the name of TCPI from Technical Chemicals and
Products, Inc. to "TCPI, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal 3 - Approval of the TCPI 2000 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal 4 - Approval of the potential issuance of shares of Common
Stock in excess of 20% of the total number of Common Stock outstanding
in connection with an equity financing transaction of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Continued and to be signed on other side)
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the proposals as set forth herein. In addition, if there is not a quorum at
the meeting, the proxy holders may vote the shares in favor of an adjournment of
the meeting in order to solicit sufficient additional proxies to constitute a
quorum.
<PAGE>
The undersigned acknowledges receipt of Notice of Annual Meeting of Shareholders
dated May 31, 2000, and the accompanying Proxy Statement.
Date: ______________________ , 2000.
Number of Shares of Common Stock held: ____________
_______________________________
Signature
_______________________________
Name(s) (typed or printed)
_______________________________
Address(es)
Please sign exactly as name appears on this proxy card. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE>
ANNEX A
TCPI
2000 STOCK OPTION PLAN
1 ESTABLISHMENT, EFFECTIVE DATE AND TERM
TECHNICAL CHEMICALS AND PRODUCTS, INC, a Florida corporation (the
"Company") hereby establishes the "TCPI 2000 Stock Option Plan" (the "Plan").
The effective date of the Plan shall be July 1, 2000 (the "Effective Date").
Unless earlier terminated pursuant to Section 17 hereof, the Plan shall
terminate on July 1, 2010.
2. PURPOSE
The purpose of the Plan is to advance the interests of the Company by
providing Eligible Individuals (as defined in Section 6 below) with an
opportunity to acquire or increase a proprietary interest in the Company, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of the Company, any parent and the Company's subsidiaries, and will
encourage such individuals to remain in the employ of the Company, any parent or
one or more of its subsidiaries.
3. TYPE OF OPTIONS
Each stock option granted under the Plan (an "Option") may be
designated by the Committee (as defined below), in its sole discretion, either
as (i) an "incentive stock option" ("Incentive Stock Options") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), or (ii) as a nonqualified stock option that is not
intended to meet the requirements of Section 422 of the Code; provided that
Incentive Stock Options may only be granted to employees of the Company, any
"subsidiary corporation" as defined in Section 424 of the Code (a "Subsidiary")
or any "parent corporation" as defined in Section 424 of the Code (a "Parent").
In the absence of any designation, Options granted under the Plan will be deemed
to be nonqualified stock options. The Plan shall be administered and interpreted
so that all Incentive Stock Options granted under the Plan will qualify as
incentive stock options under Section 422 of the Code. Options designated as
Incentive Stock Options that fail to continue to meet the requirements of
Section 422 of the Code shall be redesignated as nonqualified stock options
automatically on the date of such failure to continue to meet such requirements
without further action by the Committee.
4. ADMINISTRATION.
The Plan shall be administered by a stock option committee
("Committee") appointed by the Board of Directors of the Company (the "Board").
The Committee shall consist of not less than three members of the Board, none of
whom shall be an officer or other salaried employee of the Company or any Parent
or Subsidiary, and each of whom shall qualify in all respects as a "non-employee
director" as defined in Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and an "outside director" for purposes
of Section 162(m) of the Code. The Committee shall be responsible for the
administration of the Plan including, without limitation, determining which
Eligible Individuals receive Awards, what kind of Awards are made under the Plan
and for what number of shares, and the other terms and conditions of such
Awards. Determinations by the Committee under the Plan including, without
limitation, determinations of the Awards, the form, amount and timing of Awards,
the terms and provisions of Awards and the agreements evidencing Awards, need
not be uniform and may be made selectively among Eligible Individuals who
receive, or are eligible to receive Awards hereunder, whether or not such
Eligible Individuals are similarly situated.
The Committee shall have the responsibility of construing and
interpreting the Plan and of establishing and amending such rules and
regulations as it may deem necessary or desirable for the proper administration
of the Plan. Any decision or action taken or to be taken by the Committee,
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan and of its rules and regulations, shall,
to the maximum extent permitted by applicable law, be within its absolute
discretion (except as otherwise specifically provided herein) and shall be
conclusive and binding upon the Company, all Eligible Individuals and any person
claiming under or through any Eligible Individual.
The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or other senior member of management as
the Committee deems appropriate; provided, however, that the Committee may not
delegate its authority with regard to any matter or action affecting an officer
subject to Section 16 of the Securities Exchange Act of 1934.
No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
or Option Agreement entered into hereunder.
<PAGE>
5. COMMON STOCK
The capital stock of the Company that may be issued pursuant to
Options and Stock Based Awards (as defined in Section 19 below) (Options and
Stock Based Awards are collectively referred to as "Awards") granted under the
Plan shall be shares of common stock, $0.001 par value, of the Company (the
"Common Stock"), which shares may be treasury shares or authorized but unissued
shares. The total number of shares of Common Stock that may be issued pursuant
to Options granted under the Plan shall be four million (4,000,000) shares,
subject to adjustment as provided in Section 18 below. The total number of
shares of Common Stock that may be issued pursuant to all Awards (including
Options) granted under the Plan shall be four million (4,000,000) shares,
subject to adjustment as provided in Section 18 below. If any Award expires,
terminates, or is terminated or canceled for any reason, the shares of Common
Stock that were subject to such Award shall be available for future Options
granted under the Plan.
6. ELIGIBILITY
Options may be granted under the Plan to (i) any employee, officer,
or director (employee and non-employee directors) of the Company or any Parent
or Subsidiary, and (ii) any independent contractor or consultant performing
services for the Company or any Parent or Subsidiary as determined by the
Committee from time to time on the basis of their importance to the business of
the Company (collectively, "Eligible Individuals"), provided that Incentive
Stock Options may only be granted to employees of the Company or any Parent or
Subsidiary. An individual may hold more than one Option, subject to such
restrictions as are provided herein.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may,
at any time and from time to time, prior to the date of termination of the Plan,
grant to such Eligible Individuals as the Committee may determine ("Optionees"),
Options to purchase such number of shares of Common Stock on such terms and
conditions as the Committee may determine. The date on which the Committee
approves the grant of an Option (or such later date as is specified by the
Committee) shall be considered the date on which such Option is granted. The
maximum number of shares of Common Stock subject to Awards that may be granted
during any calendar year under the Plan to any Optionee shall be 200,000 shares.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
(a) Ten Percent Stockholder. Notwithstanding any other
provision of this Plan to the contrary, no individual
may receive an Incentive Stock Option under the Plan
if such individual, at the time the award is granted,
owns (after application of the rules contained in
Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any
Parent or Subsidiary, unless (i) the purchase price
for each share of Common Stock subject to such
Incentive Stock Option is at least 110 percent (110%)
of the fair market value of a share of Common Stock
on the date of grant (as determined in good faith by
the Committee) and (ii) such Incentive Stock Option
is not exercisable after the date which is five (5)
years from the date of grant.
(b Limitation on Grants. Except as may otherwise be
permitted by the Code, the Committee shall not grant
to an Eligible Individual Incentive Stock Options
that, in the aggregate, are first exercisable during
any one calendar year to the extent that the
aggregate fair market value of the Common Stock at
the time the Incentive Stock Options are granted,
exceeds $100,000 or such other amount as the Internal
Revenue Service may decide from time to time (the
"Annual Dollar Limit"). If an Incentive Stock Option
is granted pursuant to which the Annual Dollar Limit
is exceeded, the portion of such Option which is in
excess of the Annual Dollar Limit, and any Options
issued subsequently in the same calendar year, shall
be treated as a nonqualified stock option pursuant to
Section 422(d)(1) of the Code. In the event that an
individual is eligible to participate in any other
stock option plan of the Company or any Parent or
Subsidiary which is also intended to comply with the
provisions of Section 422 of the Code, the Annual
Dollar Limit shall apply to the aggregate number of
shares for which Incentive Stock Options may be
granted under this Plan and all such other plans.
2
<PAGE>
9 OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Company and by the
Optionee, in such form or forms as the Committee shall from time to time
determine. Option Agreements covering Options granted from time to time or at
the same time need not contain similar provisions; provided, however, that all
such Option Agreements shall comply with all terms of the Plan.
10 OPTION PRICE
The purchase price of each share of Common Stock subject to an Option
(the "Option Price") shall be fixed by the Committee and stated in each Option
Agreement, and subject to the provisions of Section 8(a) above, shall be not
less than 100 percent (100%) of the fair market value of a share of Common Stock
on the date the Option is granted, unless otherwise determined by the Committee;
provided however that the Option Price shall not be set below fair market value
in the case of an Option which is designated as an Incentive Stock Option. If
the Common Stock is then listed on any national securities exchange, the fair
market value shall be the closing price of a share of Common Stock on such
exchange on the last trading day immediately prior to the date of grant;
provided, however, that when granting Incentive Stock Options, the Committee
shall determine fair market value in accordance with the provisions of Section
422 of the Code. If the Common Stock is not listed on any such exchange, the
fair market value shall be determined in good faith by the Committee.
11. TERM AND VESTING OF OPTIONS
(a) Option Period. Subject to the provisions of
Sections 8(a) and Section 14 hereof, each
Option granted under the Plan shall
terminate and all rights to purchase shares
thereunder shall cease upon the expiration
of ten (10) years from the date such Option
is granted, or on such date prior thereto as
may be fixed by the Committee and stated in
the Option Agreement relating to such
Option. Notwithstanding the foregoing, the
Committee may in its discretion, at any time
prior to the expiration or termination of
any Option, extend the term of any such
Option for such additional period as the
Committee in its discretion may determine;
provided, however, that in no event shall
the aggregate option period with respect to
any Option, including the initial term of
such Option and any extensions thereof,
exceed ten (10) years.
(b) Vesting.
(i) Incentive Stock Options. Each Option
Agreement will specify the vesting
schedule applicable to Incentive Stock
Options. Notwithstanding the
foregoing, the Committee may in its
discretion provide that any vesting
requirement or other such limitation
on the exercise of an Option may be
rescinded, modified or waived by the
Committee, in its sole discretion, at
any time and from time to time after
the date of grant of such Option, so
as to accelerate the time at which the
Option may be exercised.
(ii) Nonqualified Stock Options. Each
Option Agreement will specify the
vesting schedule applicable to
nonqualified stock options. The
Committee may in its discretion
provide that any vesting requirement
or other such limitation on the
exercise of a nonqualified stock
option may be rescinded, modified or
waived by the Committee, in its sole
discretion, at any time and from time
to time after the date of grant of
such nonqualified stock option, so as
to accelerate the time at which the
nonqualified stock option may be
exercised.
(c) Change in Control. In the event of a Change
in Control (as defined below), the Committee
may, in its sole and absolute discretion,
provide on a case by case basis that some or
all outstanding Options pursuant to an
Option Agreement may become immediately
exercisable, without regard to any
limitation on exercise imposed pursuant to
Section 11(b). For purposes of the Plan,
unless otherwise provided for in a written
agreement or contract between the Company
and an Optionee, a "Change in Control" shall
be deemed to occur if any person shall
acquire direct or indirect beneficial
ownership (whether as a result of stock
ownership, revocable or irrevocable proxies
or otherwise) of more than 20% of the total
combined voting power with respect to the
election of directors of the issued and
outstanding capital stock of the Company
(except that no Change in Control shall be
deemed to have occurred if the stockholders
of the
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Company immediately before such acquisition
own more than 20%, directly or indirectly,
of all or substantially all of the voting
stock or other interests of such acquiring
person immediately after such transaction).
For purposes of the Plan, a "person" shall
mean any person, corporation, partnership,
joint venture or other entity or any group
(as such term is defined for purposes of
Section 13(d) of the Exchange Act) and
"beneficial ownership" shall be determined
in accordance with Rule 13d-3 under the
Exchange Act.
12. MANNER OF EXERCISE AND PAYMENT
(a) Exercise. An Option that is exercisable
hereunder may be exercised by delivery to
the Company on any business day, at its
principal office, addressed to the attention
of the Stock Option Administrator, of
written notice of exercise, which notice
shall specify the number of shares with
respect to which the Option is being
exercised, and shall be accompanied by
payment in full of the Option Price of the
shares for which the Option is being
exercised, by one or more of the methods
provided below. The minimum number of shares
of Common Stock with respect to which an
Option may be exercised, in whole or in
part, at any time shall be the lesser of
(100) shares or the maximum number of shares
available for purchase under the Option at
the time of exercise.
(b) Payment. No Common Stock shall be issued
until full payment of the option price has
been made. The option prices may be paid in
cash or, if the Committee determines, in
shares of Common Stock or a combination of
cash and shares. If the Committee approves
the use of shares of Common Stock as a
payment method, the Committee shall
establish such conditions as it deems
appropriate for the use of Common Stock to
exercise a stock option. Stock options
awarded under the Plan may be exercised
through a broker- assisted stock option
exercise program, provided such program is
available at the time of the option
exercise, or by such other means as the
Committee may determine from time to time.
The Committee may establish rules and
procedures to permit an option holder to
defer recognition of gain upon exercise of a
stock option.
(c) Issuance of Certificates. Promptly after the
exercise of an Option, the individual
exercising the Option shall be entitled to
the issuance of a certificate or
certificates evidencing his ownership of
such shares of Common Stock. An individual
holding or exercising an Option shall have
none of the rights of a stockholder until
the shares of Common Stock covered thereby
are fully paid and issued to him and, except
as provided in Section 18 below, no
adjustment shall be made for dividends or
other rights for which the record date is
prior to the date of such issuance.
13. TRANSFERABILITY OF OPTIONS
(a) Incentive Stock Options. No Incentive Stock
Option shall be assignable or transferable
by the Optionee to whom it is granted, other
than by will or the laws of descent and
distribution.
(b) Nonqualified Stock Options. Unless otherwise
permitted by the Committee in its sole and
absolute discretion, no nonqualified stock
option shall be assignable or transferable
by the Optionee to whom it is granted, other
than by will or the laws of descent and
distribution.
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14. TERMINATION OF EMPLOYMENT, DEATH, OR DISABILITY
(a) General. Unless otherwise provided in an
Option Agreement, upon the termination of
the employment or other service of an
Optionee with the Company or any Parent or
Subsidiary, other than by reason of Cause
(as defined in Section 14(b)), death or
"permanent and total disability (as defined
in Section 22(e)(3) of the Code, any Option
granted to such Optionee that has vested as
of the date upon which the termination
occurs shall be exercisable for a period not
to exceed ninety (90) days after such
termination. Upon such termination the
Optionee's unvested Options shall expire and
the Optionee shall have no further right to
purchase shares of Common Stock pursuant to
such unvested Option. Notwithstanding the
foregoing provisions of this Section 14, the
Committee may provide, in its discretion,
that following the termination of employment
or service of an Optionee with the Company
or any Parent or Subsidiary, an Optionee may
exercise an Option, in whole or in part, at
any time subsequent to such termination of
employment or service and prior to
termination of the Option pursuant to
Section 11(a) above, either subject to or
without regard to any vesting or other
limitation on exercise imposed pursuant to
Section 11(b) above. Unless otherwise
determined by the Committee, temporary
absence from employment or service because
of illness, vacation, approved leaves of
absence, military service and transfer of
employment shall not constitute a
termination of employment or service with
the Company or any Parent or Subsidiary.
(b) Cause. If the Company or any Parent or
Subsidiary terminates the Optionee's
employment for Cause (as defined below), all
Options granted to Optionee shall terminate
upon the date of such termination of
employment or service and Optionee shall
have no further right to purchase Shares
pursuant to such Options. For purposes of
this Agreement, "Cause@ means (i) gross
negligence or willful misconduct by the
Optionee in the performance of his duties,
(ii) commission by the Optionee of an act of
dishonesty affecting the Company or any
Parent or Subsidiary, or the commission of
an act constituting common law fraud or a
felony, or (iii) the Optionee's commission
of an act (other than the good faith
exercise of his business judgment in the
exercise of his responsibilities) resulting
in material damages to the Company or any
Parent or Subsidiary. The Committee shall
determine whether Cause exists for purposes
of this Agreement and such determination
shall be final, conclusive and binding on
the Optionee.
(c) Death. If an Optionee dies while in the
employ or service of the Company or any
Parent or Subsidiary, the Optionee's estate
or the devisee named in the Optionee's valid
last will and testament or the Optionee's
heir at law who inherits an Option has the
right, at any time within a period not to
exceed one (1) year after the date of such
Optionee's death and prior to termination of
the Option pursuant to Section 11(a) above,
to exercise, in whole or in part, any vested
portion of the Option (in accordance with
Section 11(b) above) held by such Optionee
at the date of such Optionee's death. Any
unvested portion of the Option shall
terminate upon the Optionee's death, unless
the Committee shall, in its discretion,
provide on a case by case basis that any
unvested portion of the Option shall not
terminate upon the Optionee's death.
(d) Disability. If an Optionee terminates
employment or service with the Company or
any Parent or Subsidiary by reason of the
"permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of
such Optionee, the Optionee has the right at
any time within a period not to exceed one
(1) year after such termination of
employment or service and prior to
termination of the Option pursuant to
Section 11(a) above, to exercise, in whole
or in part, any vested portion of the Option
(in accordance with Section 11(b) above)
held by such Optionee at the date of such
termination of employment or service.
Whether a termination of employment or
service is to be considered by reason of
"permanent and total disability" for
purposes of this Plan shall be determined by
the Committee, which determination shall be
final and conclusive. Any unvested portion
of the Option shall terminate upon the
Optionee's termination of employment or
service with the Company or any Parent or
Subsidiary by reason of "permanent and total
disability," unless the Committee shall, in
its discretion, provide on a case by case
basis that any unvested portion of the
Option shall not terminate upon the
"permanent and total disability" of the
Optionee.
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15. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Company.
16. REQUIREMENTS OF LAW
(a) Violations of Law. The Company shall not be
required to sell or issue any shares of
Common Stock under any Option if the sale or
issuance of such shares would constitute a
violation by the individual exercising the
Option or the Company of any provisions of
any law or regulation of any governmental
authority, including without limitation any
federal or state securities laws or
regulations. Any determination in this
connection by the Committee shall be final,
binding, and conclusive. The Company shall
not be obligated to take any affirmative
action in order to cause the exercise of an
Option or the issuance of shares pursuant
thereto to comply with any law or regulation
of any governmental authority.
(b) Registration. At the time of any exercise of
any Option, the Company may, if it shall
determine it necessary or desirable for any
reason, require the
Optionee (or his or her heirs, legatees or
legal representative, as the case may be),
as a condition to the exercise thereof, to
deliver to the Company a written
representation of present intention to
purchase the shares for their own account as
an investment and not with a view to, or for
sale in connection with, the distribution of
such shares, except in compliance with
applicable federal and state securities laws
with respect thereto. In the event such
representation is required to be delivered,
an appropriate legend may be placed upon
each certificate delivered to the Optionee
(or his or her heirs, legatees or legal
representative, as the case may be) upon his
or her exercise of part or all of the Option
and a stop transfer order may be placed with
the transfer agent. Each Option shall also
be subject to the requirement that, if at
any time the Company determines, in its
discretion, that the listing, registration
or qualification of the shares subject to
the Option upon any securities exchange or
under any state or federal law, or the
consent or approval of any governmental
regulatory body is necessary or desirable as
a condition of or in connection with, the
issuance or purchase of the shares
thereunder, the Option may not be exercised
in whole or in part unless such listing,
registration, qualification, consent or
approval shall have been effected or
obtained free of any conditions not
acceptable to the Company in its sole
discretion. The Company shall not be
obligated to take any affirmative action in
order to cause the exercisability or vesting
of an Option or to cause the exercise of an
Option or the issuance of shares pursuant
thereto to comply with any law or regulation
of any governmental authority.
(c) Withholding. The Committee may make such
provisions and take such steps as it may
deem necessary or appropriate for the
withholding of any taxes that the Company is
required by any law or regulation of any
governmental authority, whether federal,
state or local, domestic or foreign, to
withhold in connection with the exercise of
any Option, including, but not limited to:
(i) the withholding of delivery of shares of
Common Stock upon exercise of Options until
the holder reimburses the Company for the
amount the Company is required to withhold
with respect to such taxes, (ii) the
canceling of any number of shares of Common
Stock issuable upon exercise of such Options
in an amount sufficient to reimburse the
Company for the amount it is required to so
withhold, (iii) withholding the amount due
from any such person's wages or compensation
due to such person, or (iv) requiring the
Optionee to pay the Company cash in the
amount the Company is required to withhold
with respect to such taxes.
(d) Governing Law. This Plan shall be governed
by, and construed and enforced in accordance
with, the laws of the State of Florida.
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<PAGE>
17. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Common Stock as to which Options have not
been granted; provided, however, that the approval by a majority of the votes
present and entitled to vote at a duly held meeting of the stockholders of the
Company at which a quorum representing a majority of all outstanding voting
stock is, either in person or by proxy, present and voting on the amendment, or
by written consent in accordance with applicable state law and the Articles of
Incorporation and By-Laws of the Company shall be required for any amendment (i)
that changes the requirements as to Eligible Individuals to receive Options
under the Plan, (ii) that increases the maximum number of shares of Common Stock
in the aggregate that may be sold pursuant to Options that are granted under the
Plan (except as permitted under Section 18 hereof), or (iii) if approval of such
amendment is necessary to comply with federal or state law (including without
limitation Rule 162(m) of the Code and Rule 16b-3 under the Exchange Act) or
with the rules of any stock exchange or automated quotation system on which the
Common Stock may be listed or traded. Except as permitted under Section 18
hereof, no amendment, suspension or termination of the Plan shall, without the
consent of the holder of the Option, alter or impair rights or obligations under
any Option theretofore granted under the Plan.
18. EFFECT OF CHANGES IN CAPITALIZATION
(a) Recapitalization. If the outstanding shares of Common
Stock are increased or decreased or changed into or
exchanged for a different number or kind of shares or
other securities of the Company by reason of any
recapitalization, reclassification, reorganization
(other than as described in Section 18(b), stock
split, reverse split, combination of shares, exchange
of shares, stock dividend or other distribution
payable in capital stock of the Company, or other
increase or decrease in such shares effected without
receipt of consideration by the Company, occurring
after the Effective Date, an appropriate and
proportionate adjustment shall be made by the
Committee (i) in the aggregate number and kind of
shares of Common Stock available under the Plan, (ii)
in the number and kind of shares of Common Stock
issuable upon exercise of outstanding Options granted
under the Plan, and (iii) in the Option Price per
share of outstanding Options granted under the Plan.
(b Reorganization. In connection with a merger,
consolidation, reorganization or other business
combination of the Company with one or more other
entities in which the Company is not the surviving
entity, each then outstanding Option shall upon
exercise thereafter entitle the holder thereof to
such number of shares of Common Stock or other
securities or property to which a holder of shares of
Common Stock would have been entitled to upon such
merger, consolidation, reorganization or other
business combination.
(c) Dissolution or Liquidation. Upon the dissolution or
liquidation of the Company, the Plan and all Options
outstanding hereunder shall terminate. In the event
of any termination of the Plan under this Section
18(c), each individual holding an Option shall have
the right, immediately prior to the occurrence of
such termination and during such reasonable period as
the Committee in its sole discretion shall determine
and designate, to exercise such Option in whole or in
part, whether or not such Option was otherwise
exercisable at the time such termination occurs and
without regard to any vesting or other limitation on
exercise imposed pursuant to Section 11(b) above.
(d) Adjustments. Adjustments under this Section 18
related to stock or securities of the Company shall
be made by the Committee, whose determination in that
respect shall be final, binding, and conclusive. No
fractional shares of Common Stock or units of other
securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
(e) No Limitations. The grant of an Option pursuant to
the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
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19. OTHER STOCK-BASED AWARDS
Awards of shares of Common Stock, restricted stock, stock appreciation
rights and other awards ("Stock Based Awards") that are valued in whole or in
part by reference to, or otherwise based on, Common Stock, may also be made,
from time to time, to Eligible Individuals as may be selected by the Committee.
Such awards may be made alone or in addition to or in connection with any Option
other award granted hereunder. The Committee may determine the terms and
conditions of any such award. Each award shall be evidenced by an agreement
between the Eligible Individual and the Company which shall specify the number
of shares of Common Stock subject to the award, any consideration therefor, any
vesting or performance requirements and such other terms and conditions as the
Committee shall determine.
20. NO LIMITATION ON COMPENSATION
Nothing in the Plan shall be construed to limit the right of the
Company to establish other plans or to pay compensation to its employees, in
cash or property, in a manner which is not expressly authorized under the Plan.
21 NO IMPACT ON BENEFITS
Except as may otherwise be stated under any employee benefit plan,
policy or program, no amount payable in respect of any Award shall be treated as
compensation for purposes of calculating an employee's right under any such plan
policy or program
22. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Company or any Parent or
Subsidiary or to interfere in any way with the right and authority of the
Company or any Parent or Subsidiary either to increase or decrease the
compensation of any individual, including any Option holder, at any time, or to
terminate any employment or other relationship between any individual and the
Company or any Parent or Subsidiary. A holder of an Option shall not be deemed
for any purpose to be a stockholder of the Company with respect to such Option
except to the extent that such Option shall have been exercised with respect
thereto and, in addition, a stock certificate shall have been issued theretofore
and delivered to the holder. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 18
hereof.
23. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations upon the right and authority of the Board or Committee to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board or Committee in its
discretion determines desirable, including, without limitation, the granting of
stock options or stock appreciation rights other than under the Plan.
24. SEVERABILITY
If any provision of the Plan or any Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
25. NOTICES
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and if to the holder of an Option, to the address as
appearing on the records of the Company.
8
