SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File No. 0-25406
TECHNICAL CHEMICALS AND PRODUCTS, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 65-0308922
- ------------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3341 S.W. 15th STREET
POMPANO BEACH, FLORIDA 33069
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (954) 979-0400
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to section 12(g) of the Exchange Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
As of March 27, 2000, the aggregate market value of the voting stock of
the Registrant held by non-affiliates of the Registrant was $39,411,432.
As of March 27, 2000, the number of outstanding shares of Common Stock,
par value $.001 per share, of the Registrant was 29,541,258.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
Part I
Previously Filed
Part II
Previously Filed
Part III
Item 10. Directors And Executive Officers Of The Registrant .................................................... 3
Item 11. Executive Compensation ............................................................................... 7
Item 12. Security Ownership of Certain Beneficial Owners and Management ....................................... 11
Item 13. Certain Relationships and Related Transactions ....................................................... 12
Part IV
Previously Filed
Signatures
</TABLE>
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<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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 and directors as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
<S> <C> <C>
Jack L. Aronowitz 60 Chairman, President and Chief 1992
Technical Officer (Class I - term
expiring in 2002)
Elliott Block, Ph.D. 55 Chief Executive Officer and Director 1999
(Class III - term expiring 2001)
Noel Buterbaugh(1)(2)(3) 66 Director (Class I - term expiring in 1998
2002)
Martin Gurkin, 67 Director (Retired as Senior Vice 1996
Ph.D.(1)(2)(3) President and Chief Operating
Officer effective March 5, 1999)
(Class III - term expiring in 2001)
Clayton Rautbord(1)(2)(3) 72 Director (Class II - nominee for a 1996
term expiring in 2003)
Stanley M. Reimer, Ph.D. 69 Director (Class II - nominee for a 1998
(1)(2)(3) term expiring in 2003)
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>
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(1) Member of the Company's Audit Committee
(2) Member's of the Company's Compensation and Stock Option Committee
(3) Member of the Company's Board Organization and Governance Committee
JACK L. ARONOWITZ, Chairman of the Board, President and Chief Technical
Officer, founded Technical Chemicals and Products, Inc. in January 1992. 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 ("TechniMed") 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
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<PAGE>
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., 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 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., ("BioWhittaker") 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 for the
Maryland Health Care Development Corporation and Director for the High
Technology Council of Maryland. His previous outside service included posts as a
Director of the Health Industry Manufacturers Association (HIMA) and Chairman of
the HIMA Science and Technology Steering Committee, as well as a member of the
U.S. Department of Commerce Technical Advisory Committee on Biotechnology
(BIOTAC).
MARTIN GURKIN, Ph.D. has been a Director of the Company since January
1996. Dr. Gurkin retired from the Company as of March 5, 1999, at which time he
was Senior Vice President, Chief Operating Officer and a Director. 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.
CLAYTON L. RAUTBORD has been a Director of the Company since August
1996. Mr. Rautbord is presently the Secretary and Treasurer of Wenk Aviation
Insurance Corporation. From 1980-1989, he was the founder and President of Photo
Con-X-Ion, Inc., a manufacturer of photographic chemicals, and was the President
and CEO of APECO, a company listed on the NYSE, from 1963 to 1974. In addition
to the Company's Board of Directors, Mr. Rautbord also serves on the Board of
Directors of Albany Bank and Trust Company in Chicago.
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<PAGE>
STANLEY M. REIMER, Ph.D. has been a Director of the Company since
September 1998. Dr. Reimer has more than 30 years of diverse experience in the
healthcare industry, including basic and applied research and technical,
clinical and public health management. Since 1988, Dr. Reimer has been President
of Laboratory Management Associates, which provides direction and consultation
to the clinical laboratory and healthcare industry. He also served as Assistant
Commissioner of Health and Director of the Public Health Laboratories for the
City of New York from 1991 to 1996. In addition, Dr. Reimer previously was Vice
President and General Manager of Allied Clinical Laboratories from 1985 to 1988,
and Vice President and Area Manager with Bio-Science Laboratories from 1971 to
1985. Dr. Reimer holds Bachelor of Science degrees in chemistry and physiology
from Allegheny College and both his Master of Science degree and Ph.D. in
biochemistry from Rutgers University. His research and teaching affiliations
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's licenses in Florida
and New York State.
JAY E. ECKHAUS, Vice President, General Counsel and Secretary, 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 Doctorate 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, 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 a
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, 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. Recently, he was CFO of
BuyMatrix, Inc., an e-commerce store serving the needs of physicians, where he
was successful in securing the initial venture capital funding. Previously, 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 CFO 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 a M.B.A. degree from New York University and a B.S. degree in Finance from
Lehigh University.
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<PAGE>
There is no family relationship between any executive officer or
director of the Company.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company is paid an annual fee of
$5,000. Each non-employee director acting as a Committee Chair receives an
additional $500 per year. In addition, each non-employee director receives $500
for each Committee and Board meeting attended, provided that the Committee
meeting is other than on a day when a Board Meeting is held. Non-employee
directors are also reimbursed for their travel expenses to meetings of the Board
of Directors. On April 2, 1999, each non-employee director received 1,000 shares
of the Company's stock as additional compensation. 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 equal to that day's closing price,
as quoted by The Nasdaq Stock Market. 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 Mr. 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.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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. Officers, directors and greater than 10%
shareholders are also required 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, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% shareholders were complied with.
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<PAGE>
Item 11. 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 $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSA-
ANNUAL COMPENSATION TION AWARDS
------------------- -------------
Securities
Name and Principal Other Annual Underlying Other
Position Year(a) Salary($) Bonus($) Compensation($) Options(#) Compensation
-------- ------ -------- ------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Jack L. Aronowitz 1999 $167,512 -- $ 13,267(b) --
President, Chief 1998 160,864 -- 13,076(b) --
Technical Officer, and 1997 151,938 -- 24,644(b) --
Chairman of the Board
Elliott Block, Ph.D. 1999 106,298 -- 988(b) 250,000
Chief Executive 1998 (a) -- -- --
Officer and Director 1997 (a) -- -- --
Jay E. Eckhaus 1999 131,750 -- 2,185(b) 5,000
Vice President, 1998 97,116 18,750 1,113(b) 15,000
General Counsel and 1997 (a) -- -- --
Secretary
Robert M. Morrow 1999 114,250 -- 2,638(b) 30,000
Vice President of 1998 (a) -- -- --
Sales and Marketing 1997 (a) -- -- --
Stuart R. Streger 1999 99,429 -- 2,569(b) --
Vice President 1998 134,514 25,000 3,085(b) 1,000
and Chief Financial 1997 127,625 35,000 2,216(b) 11,000
Officer (Through
September 1999)(c)
</TABLE>
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(a) Not employed by the Company at that time.
(b) Includes the cost of an automobile and/or health insurance.
(c) Mr. Streger resigned from the Company effective in September 1999.
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<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.
OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
TERM(a)
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(#) FISCAL YEAR SHARE ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
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 $ 1,377 $ 3,490
Robert M. Morrow 10,000 2.38% $1.375 2/15/05 $ 4,676 $ 10,609
10,000 2.38% $1.375 2/15/06 $ 5,598 $ 13,045
10,000 2.38% $1.375 2/15/07 $ 6,565 $ 15,724
</TABLE>
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(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>
SHARES VALUE OF UNEXERCISED
ACQUIRED ON VALUE NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
NAME EXERCISE(#) REALIZED($) UNEXERCISED OPTION AT YEAR-END(#) YEAR-END($)(1)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
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>
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(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.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee consisted of Mr.
Buterbaugh, Dr. Gurkin (effective September 1999), Dr. Harrigan (through
September 1999), Mr. Rautbord and Dr. Reimer during 1999. 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 has ever been an officer or employee of
the Company, except Dr. Gurkin who served as the Company's Senior Vice President
and Chief Operating Officer until his retirement from the Company effective
March 5, 1999.
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with Jack L.
Aronowitz, as of January 1, 1993, as amended on September 27, 1996 and October
9, 1998, pursuant to which Mr. Aronowitz serves as President of the Company. The
agreement provides that Mr. Aronowitz receive: (i) a current base salary of
$175,900, increased annually by a minimum of 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 10, 1999, pursuant to which Dr. Block serves as a 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) Upon achieving defined goals, an annual bonus of not less than $10,000
nor more than fifty per cent of Dr. Block's salary in effect for the period
applicable to such Bonus Award; and an annual bonus equal to 3% of the Company's
after tax net income 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
240,000 Incentive Stock Options and 10,000 Non-Qualified Stock Options and 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) during and after the term of the agreement, 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 other than for cause (as that
phrase is defined in the agreement) or due to the death or disability of Dr.
Block, the Company must pay Dr. Block an amount equal to two times his then base
salary. Dr. Block is also a director of the Company. The agreement provides that
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).
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<PAGE>
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. 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. 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 employment agreements for Messrs.
Block, Eckhaus, Morrow and Usinowicz also provide for share appreciation rights
being granted to such persons.
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<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP
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 M. Morrow ................................................. 30,000(d) *
Clayton L. Rautbord .............................................. 24,200(d) *
Stanley M. Reimer, PH.D .......................................... 23,600(d) *
Stuart R. Streger ................................................ 33,200(d) *
All directors and executive officers
as a group (9 persons)............................................ 4,878,050 16.5%
</TABLE>
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* Does not exceed one percent.
(a) The address of each of Messrs. Aronowitz, Block, Buterbaugh, Eckhaus,
Gurkin, Morrow, Rautbord and Reimer 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 options that are currently exercisable 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. Streger - 32,000.
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Item 13. 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
(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 3/4% 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, an additional
extension of eighteen months commencing on September 1, 2000 was authorized by
the Board of Directors, with payments 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 is $51,738.99.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TECHNICAL CHEMICALS AND PRODUCTS, INC.
Dated: April 28, 2000 By: /s/Elliott Block, Ph.D.
-------------------------------------
Elliott Block, Ph.D.
Chief Executive Officer
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