<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 1-7399
TCC INDUSTRIES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 74-1366626
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
816 Congress Avenue, Suite 1250, Austin, TX 78701
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
(512) 320-0976
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(Registrant's telephone number, including area code)
-----------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 2,762,115 shares as
of May 9, 1997.
<PAGE> 2
Part I. Contents of Consolidated Financial Information:
<TABLE>
<CAPTION>
Page Number(s)
--------------
<S> <C>
Consolidated Balance Sheet 1 - 2
Consolidated Statement of Operations 3
Condensed Consolidated Statement of Cash Flows 4
Consolidated Statement of Shareholders' Equity 5
Notes to Consolidated Financial Statements 6 - 7
Management's Discussion and Analysis 8 - 9
Part II. Other Information 10 - 11
Signatures 12
</TABLE>
<PAGE> 3
TCC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
Current assets: --------------- ---------------
<S> <C> <C>
Cash and cash equivalents $ 2,201 $ 2,723
Receivables:
Trade receivables, net
of allowance of
$107 and $104, respectively 3,649 2,518
Other, including
interest 68 48
--------------- ---------------
3,717 2,566
--------------- ---------------
Inventories:
Raw materials 1,007 877
Work in progress 227 90
Finished goods 5,465 5,664
--------------- ---------------
6,699 6,631
--------------- ---------------
Other 668 185
--------------- ---------------
Total current assets 13,285 12,105
--------------- ---------------
Property, plant and
equipment 9,954 9,879
Accumulated depreciation (5,749) (5,652)
--------------- ---------------
4,205 4,227
--------------- ---------------
Intangible assets:
Goodwill 1,170 1,181
Patents and trademarks 79 57
--------------- ---------------
1,249 1,238
Accumulated amortization (454) (443)
--------------- ---------------
795 795
--------------- ---------------
Other assets 600 602
--------------- ---------------
Total assets $18,885 $17,729
=============== ===============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
-1-
<PAGE> 4
TCC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - continued
(Unaudited)
(In Thousands, except share amounts)
<TABLE>
<CAPTION>
LIABILITIES AND March 31, December 31,
SHAREHOLDERS' EQUITY 1997 1996
--------------- ---------------
<S> <C> <C>
Current liabilities:
Notes payable $ 3,230 $ 2,033
Current maturities of
long-term debt 204 225
Accounts payable 898 565
Accrued expenses 1,052 971
Customer deposits 349 432
--------------- ---------------
Total current
liabilities 5,733 4,226
--------------- ---------------
Long-term debt, less
current maturities 1,683 1,755
Deferred liabilities 219 224
--------------- ---------------
Total liabilities 7,635 6,205
--------------- ---------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, authorized
2,000,000 shares, no par
value, no shares issued -- --
Common stock, authorized
10,000,000 shares, par
value $1 per share,
2,841,601 shares issued 2,842 2,842
Additional paid-in capital 8,744 8,746
Cumulative foreign currency
translation adjustment 12 54
Retained earnings (accumulated
deficit) (89) 144
--------------- ---------------
11,509 11,786
Less treasury stock,
79,486 and 80,486 shares,
respectively, at cost (259) (262)
--------------- ---------------
Total shareholders'
equity 11,250 11,524
--------------- ---------------
Total liabilities
and shareholders'
equity $18,885 $17,729
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-2-
<PAGE> 5
TCC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Revenue $ 4,537 $ 5,312
Cost of goods sold 2,907 3,679
--------------- ---------------
Gross profit 1,630 1,633
Selling, general and administrative
expenses 1,760 1,771
--------------- ---------------
Operating loss (130) (138)
--------------- ---------------
Other income (expense):
Interest income 20 29
Interest expense (155) (131)
Other, net 39 45
--------------- ---------------
(96) (57)
--------------- ---------------
Loss before provision (benefit)
for income taxes (226) (195)
Provision (benefit) for income taxes:
Federal 0 0
State 7 (2)
--------------- ---------------
7 (2)
--------------- ---------------
Net loss $ (233) $ (193)
=============== ===============
Weighted average number of common and
common equivalent shares outstanding 2,762 2,759
=============== ===============
Loss per common and common
equivalent share: $ (0.08) $(0.07)
=============== ===============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
-3-
<PAGE> 6
TCC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In Thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
1997 1996
--------------- ---------------
<S> <C> <C>
Net cash used by operating activities $(1,497) $(1,435)
-------------- --------------
Cash flows from investing activities:
Additions to property, plant and equipment (138) (47)
Proceeds from sale of assets 10 110
Other, net (22) 2
-------------- --------------
Net cash provided (used) by investing
activities (150) 65
-------------- --------------
Cash flows from financing activities:
Net borrowings of short-term debt 1,197 1,697
Long-term debt paid (73) (140)
Other, net 1 (11)
-------------- --------------
Net cash provided by financing activities 1,125 1,546
-------------- --------------
Net increase (decrease) in cash and
cash equivalents (522) 176
Cash and cash equivalents at beginning
of period 2,723 2,224
-------------- --------------
Cash and cash equivalents at end
of period $2,201 $2,400
============== ==============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-4-
<PAGE> 7
TCC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Cumulative
Foreign Retained
Par Value Addt'l Currency Earnings
Number of of Common Paid-in Translation (Accumulated Treasury
Shares Shares Capital Adjustment Deficit) Stock Total
--------- ---------- ------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
January 1, 1997 2,842 $ 2,842 $ 8,746 $ 54 $ 144 $ (262) $ 11,524
Net loss (233) (233)
Exercise of stock
options -- -- (2) -- -- 3 1
Foreign currency
translation
adjustment (42) (42)
------- ------- ------- --------- -------- ---------- --------
Balances,
March 31, 1997 2,842 $ 2,842 $ 8,744 $ 12 $ (89) $ (259) $ 11,250
======= ======= ======= ========= ======== ========== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-5-
<PAGE> 8
TCC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of
TCC Industries, Inc. and Subsidiaries ("the Company"), and have been presented
in accordance with the reporting requirements for interim financial statements.
Such requirements do not include all of the disclosures normally required by
generally accepted accounting principles or those normally made in an Annual
Report on Form 10-K. Certain amounts have been reclassified for consistency in
presentation. In connection therewith readers are referred to the Company's
most recent Annual Report on Form 10-K filed for the year ended December 31,
1996. The information furnished herein reflects all adjustments which, in the
opinion of management, are of a normal recurring nature and necessary for a
fair statement of the results of interim periods. Such results for interim
periods are not necessarily indicative of the results to be expected for a full
year, principally due to seasonal fluctuations in wholesale distribution
revenue.
Income Taxes
The Company and its wholly owned domestic subsidiaries join in
filing a consolidated federal income tax return. The provision (benefit) for
income taxes for interim financial reporting is determined utilizing the
estimated annual effective tax rate method of allocation. Separate state and
foreign income tax returns are filed by subsidiaries where required.
Statement of Cash Flows
For purposes of the condensed consolidated statement of cash
flows, the Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Foreign Currency Translation
The consolidated financial statements of Meyer Europe, Ltd.
are translated into U.S. dollars in accordance with SFAS 52, "Foreign Currency
Translation". SFAS 52 requires the foreign operations to be translated using
current exchange rates for balance sheet items, historical rates for capital
accounts, and average exchange rates for income statement items. The resulting
translation adjustments are recorded directly into a separate component of
shareholders' equity.
Note 2 Restrictions on Net Assets:
Certain of the Company's subsidiaries have bank loan agreements which
contain provisions that can limit or restrict the transfer of funds to the
parent company in the form of cash dividends, loans or advances. Such
restrictions are based on each subsidiaries' income and other formulas
contained in the respective loan agreements. Substantially all of the Company's
net assets are restricted by the loan agreements, except as to the
aforementioned transfers of funds allowed under the loan agreements.
-6-
<PAGE> 9
TCC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Note 3 Commitments and Contingencies
There are sundry claims pending against certain of the
Company's subsidiaries, all of which are incidental to the ordinary course of
business and, in the opinion of Company management, should not result in any
significant liability.
Note 4 Shareholders' Equity
The loss per share for the three months ended March 31, 1997 and 1996
is calculated using the weighted average number of common shares outstanding.
Common share equivalents would have diluted the loss per share and were
therefore excluded from the computation.
Note 5 Pending Matters
On February 26, 1997, the Board of Directors of the Company decided to
expand the scope of the engagement of Rauscher Pierce Refsnes, the Company's
investment banking firm, for the purpose of evaluating all strategic
alternatives for enhancing shareholder value, including having the firm assist
with such alternatives as a material acquisition of or merger with another
company, the sale of all or part of the Company, or a leveraged buyout by
management and/or new investors.
-7-
<PAGE> 10
TCC INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is management's discussion and analysis of the results
of operations and financial condition of TCC Industries, Inc. and Subsidiaries
("the Company") during the periods included in the accompanying consolidated
financial statements. The discussion below relates to material changes in the
results of operations for the three months ended March 31, 1997 as
compared to the same period ended March 31, 1996 and to material changes
in the financial condition of the Company occurring since the prior fiscal year
end of December 31, 1996. The reader is invited to review Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 for further details regarding the significant factors
affecting the results of operations and financial condition of the Company.
COMPARISONS OF THE RESULTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
Revenue
Consolidated revenue decreased $774,000 (14.6%) to $4.5 million in the
first quarter of 1997, as compared to revenue of $5.3 million for the first
quarter of 1996. The decrease in revenue is primarily attributable to a
decrease at the wholesale distribution segment.
Manufacturing revenue decreased 4.9% to $2.4 million in the first
quarter of 1997, down from $2.5 million in the same quarter in 1996. This
decrease results from a $309,000 (16.3%) increase at Meyer Machine, the
manufacturing segment's U.S. based operation, and a $434,000 (67.2%) decrease
at Meyer Vi-Tech, the European based operation. The increase at Meyer Machine
is primarily the result of a 32.3% increase in sales of equipment. The increase
in equipment sales primarily resulted from the higher backlog at December 31,
1996 ($1,471,000) when compared to December 31, 1995 ($779,000). The increased
backlog at Meyer Machine at December 31, 1996 as compared to December 31, 1995
primarily resulted from increased demand for equipment from customers in the
company's traditional core markets as well as increases in orders from new
markets Meyer Machine has been developing. The decrease in revenue at Meyer
Vi-tech is primarily attributable to a decrease in sales of equipment of 78.2%
partially offset by 124.3% increase in parts and service sales when compared to
the first quarter of 1996. The decrease in equipment sales at Meyer Vi-Tech
primarily resulted form the lower backlog at December 31, 1996 ($32,000) when
compared to December 31, 1995 ($559,000). The decreased backlog at Meyer
Vi-Tech primarily resulted from timing differences of shipments. The increase
in Meyer Vi-Tech parts and service sales resulted from an overall increase in
the installed base of equipment.
Wholesale distribution revenue decreased 23.6% during the first quarter
of 1997 to $2.1 million, when compared to the same quarter in 1996. The decrease
in revenue is primarily the result of increased competition for the higher
volume, lower margin customers.
Gross Profit
During the first quarter of 1997, higher gross profit margins
substantially offset the impact of lower sales resulting in consolidated gross
profit remaining virtually the same in the first quarter of 1997, $1,630,000
when compared to $1,633,000 for the same period in 1996. The consolidated gross
profit margin in the first quarter of 1997 was 35.9% as compared to 30.7% for
the same period in 1996. Gross profit margins improved at both the manufacturing
and wholesale distribution segments. The gross profit margin at the
manufacturing segment improved seven percentage points for the first quarter of
1997 when compared to the same period in 1996. The improvement is primarily
attributable to a reduction in material costs, as a percentage of sales,
resulting from steps taken in 1996 to reduce certain component costs. In
addition, while information is not readily available to determine the impact of
each item, gross profit margins at the manufacturing segment were also
positively impacted by price increases and an improved product sales mix. The
gross profit margin at the wholesale distribution segment improved three point
four percentage points due to an improved product sales mix towards fewer sales
qualifying for quantity discounts.
Selling, General and Administrative
Consolidated selling, general and administrative expenses decreased
$11,000 in the first quarter of 1997, when compared to the first quarter of
1996, in spite of the fact that there was a first quarter 1997 charge of
approximately $80,000 attributable to the costs of a proxy contest. Selling,
general and administrative expenses at the manufacturing segment increased
$73,000 during the first quarter of 1997 when compared to the first quarter of
1996 primarily due to a $41,000 increase in selling and marketing expenses.
Selling, general and administrative expenses at the wholesale distribution
segment were down $104,000 during the first quarter of 1997 when compared to the
first quarter of 1996, primarily due to lower selling and marketing expenses,
and lower wages and wage related costs. Overhead expense at the parent company
level, except for the $80,000 in expenses related to the proxy contest,
decreased $61,000, primarily due to lower salary and related expenses.
Other Income (Expense)
Interest expense increased $24,000 during the first quarter of 1997
when compared to the same period in 1996 due to a higher effective interest
rate on borrowings.
-8-
<PAGE> 11
TCC INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS -- (Continued)
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of $7.6 million and
a current ratio of 2.3 to 1. This compares to working capital of $7.9 million
and a current ratio of 2.9 to 1 at December 31, 1996. Cash for the three
months ended March 31, 1997 decreased $522,000 while total liabilities
increased $1,430,000. The increase in liabilities is primarily the result of an
increase in notes payable to fund the growth in receivables that occurs during
the first quarter of each year from the seasonal surge in product sales at the
wholesale distribution segment.
At March 31, 1997 Meyer Machine maintained a $1,200,000 bank line of
credit, of which approximately $1,000,000 was available after a reduction of
$162,000 to support a letter of credit issued by the bank as partial collateral
for the real estate lien note payable to a bank by Meyer Vi-Tech. Meyer Machine
has a commitment from its primary bank lender to provide a line of credit for up
to $500,000, if needed, for equipment purchases. This commitment expires in June
1998.
At March 31, 1997, Allen-Lewis maintained a line of credit with a bank
that provided maximum borrowing capabilities of $4.0 million, subject to a
borrowing base calculation, for working capital purposes and letters of credit.
At March 31, 1997, Allen-Lewis had approximately $130,000 available under this
line of credit. This commitment expires in July 1997 at which time, management
believes the credit facility will be renewed.
TCC Industries, Inc. (parent company) has an $85,000 line of credit and
a $500,000 line of credit, both of which are used to supplement the short-term
cash needs of the parent company. Neither of these lines of credit had balances
outstanding at March 31, 1997.
Each of the subsidiaries' bank lines of credit agreements contain
provisions that limit or restrict the transfer of funds to the parent company
in the form of cash dividends, loans or advances, based on each such
subsidiaries' income and other formulas contained in the respective loan
agreements. Management does not believe the restrictions will have a
significant effect on the parent company's ability to meet ordinary cash
obligations in 1997. However, these restrictions could negatively impact the
Company's ability to pay cash dividends in the future, if the respective banks
do not waive such restrictions. Management anticipates that each subsidiary
will be able to finance the current installments on its debt agreements through
their own cash flows from operations during 1997.
-9-
<PAGE> 12
TCC INDUSTRIES, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 to the financial statements included elsewhere
herein for a discussion of legal proceedings.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of TCC Industries, Inc. was
held on May 7, 1997, for the purpose of electing two directors
to the board of Directors and approving the appointment by the
Board of Directors of Coopers & Lybrand L.L.P. as the firm of
independent accountants to audit the accounts of the Company
for the fiscal year ended December 31, 1997. During the
meeting, proxies and ballots were delivered to an independent
election judge for review and tabulation, and the meeting was
recessed until May 23, 1997, at which time it is anticipated
the meeting will be reconvened to announce the election
judge's tabulation of the proxies and ballots if final
results are then available.
-10-
<PAGE> 13
TCC INDUSTRIES, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART II - OTHER INFORMATION (CONTINUED)
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits:
3.21 1997 Amendment No. 2 to the Third Amended and
Restated Bylaws of TCC Industries, Inc.
10.10.2 Amendment to Employment Agreement by and among the
Company and Lawrence W. Schumann dated as of
January 9, 1997.
10.11.2 Amendments to Employment Agreement by and among A.L.
Investors, Inc. and Larry T. Marek through January 9,
1997.
10.22 Employment Agreement by and among Eugene W. Teeter and
Meyer Machine Company dated as of January 9, 1997.
11 The computation of fully diluted earnings per share
would be the same as primary earnings per share,
which is easily discernable on the face of the
statements of operations included elsewhere herein.
27 Financial Data Schedules:
(i) For the quarterly period ended March 31, 1997.
6(b) Reports on Form 8-K:
The following is the date and description of the events
reported on Forms 8-K filed during the first quarter of 1997:
Date of Earliest Event
Reported on Form 8-K Description
None.
-11-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TCC INDUSTRIES, INC.
----------------------------------------
(Registrant)
/s/ LAWRENCE W. SCHUMANN
----------------------------------------
LAWRENCE W. SCHUMANN
President, Duly Authorized Officer,
and Principal Financial Officer
of Registrant
Date: May 14, 1997
-12-
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NO.
- -------
3.21 1997 Amendment No. 2 to the Third Amended and Restated Bylaws of TCC
Industries, Inc.
10.10.2 Amendment to Employment Agreement by and among the Company and
Lawrence W. Schumann dated as of January 9, 1997.
10.11.2 Amendments to Employment Agreement by and among A.L. Investors, Inc.
and Larry T. Marek through January 9, 1997.
10.22 Employment Agreement by and among Eugene W. Teeter and Meyer Machine
Company dated as of January 9, 1997.
11 The computation of fully diluted earnings per shares would be the same
as primary earnings per share, which is easily discernable on the face
of the statements of operations included elsewhere herein.
27 Financial Data Schedules:
(i) For the quarterly period ended March 31, 1997.
<PAGE> 1
Exhibit 3.21
1997 AMENDMENT NO. 2 TO THE
THIRD AMENDED AND RESTATED BYLAWS OF
TCC INDUSTRIES, INC.
Sections 2.03 and 9.01 of the Third Amended and Restated Bylaws, as
amended, of TCC Industries, Inc., a Texas Corporation (the "Corporation") were
amended at a board meeting held May 6, 1997, by deleting such provisions and
inserting the following:
"2.03 Special Meetings. Special Meetings of the shareholders may be
called by the chairman of the board, the president, the board of directors or
the holders of not less than one-tenth (1/10th) of all shares entitled to vote
at the meeting; provided that when a meeting is to be called by the holders of
not less than one-tenth (1/10th) of all shares entitled to vote at the meeting
for a purpose other than the removal of one or more directors in accordance
with these Bylaws, prior notice of such meeting and the purposes therefor must
be set forth in writing to, and timely filed with, the secretary of the
corporation. To be considered timely, such prior notice must be delivered
either in person or by United States Certified Mail, postage prepaid, and
received at the principal executive offices of the corporation not less than
120 days nor more than 150 days before the proposed date of the special meeting
of shareholders. Business transacted at any special meeting shall be confined
to the purposes stated in the prior notice provided to the secretary of the
corporation and in the notice of the meeting provided to shareholders. A
meeting called by the holders of not less than one-tenth (1/10th) of all shares
entitled to vote at the meeting for a purpose other than the removal of one or
more directors, may be canceled or rescheduled by the board of directors if
such meeting would occur within 60 days of the corporation's annual meeting.
9.01 General. These Bylaws may be altered, amended or repealed, or new
bylaws may be adopted at any meeting of the board of directors at which a
quorum is present, by the affirmative vote of not less than sixty percent (60%)
of the entire board of directors, provided notice of the proposed alteration,
amendment or repeal is contained in the notice of the meeting. The Bylaws may
also be altered, amended or repealed or new bylaws may be adopted at any
meeting of the shareholders at which a quorum is present, by the affirmative
vote of the holders of a majority of the shares outstanding and entitled to
vote thereon, provided notice of the proposed alteration, amendment or repeal
or new bylaws is contained in the notice of the meeting. Any action not
permitted under these Bylaws as in effect on the date of the giving of notice
of a meeting of shareholders regarding a proposal to alter, amend, repeal or
adopt new bylaws in a manner to permit such action, may not be submitted for a
vote by the shareholders at, nor may it be the subject of a prior notice of
special meeting to the secretary of the corporation pursuant to these Bylaws
prior to, the meeting at which the Bylaws are altered, amended or repealed or
new bylaws are adopted."
<PAGE> 2
The undersigned Secretary of the Corporation hereby certifies that the
foregoing is true and correct.
/s/ FRANK W. DENIUS
-------------------------------------
Frank W. Denius, Secretary
<PAGE> 1
Exhibit 10.10.2
As of January 9, 1997
Mr. Lawrence W. Schumann
3208 Riva Ridge Road
Austin, TX 78746
Dear Mr. Schumann:
Reference is made to that certain letter agreement ("Termination
Agreement") dated March 24, 1993, as amended by the letter agreement dated as
of April 14, 1993, between you and TCC Industries, Inc., which makes certain
provisions in the event of the termination of your employment with the Company
(the "Company"). To provide you with further incentive to continue serving as
chief executive officer of the Company, the Board of Directors of the Company
has authorized certain modifications to the Termination Agreement, which are as
follows:
A. Paragraph numbered 1 of the Termination Agreement is amended so as to
read as follows:
"1. In the event that you terminate your employment with the Company
as a result of one or more of the following events (collectively, the
"Terminating Events" and each a "Terminating Event"): (i) a Change in
Control of the Company as defined in paragraph 6, below; (ii) a Change of
Circumstances of either you or the Company as defined in paragraph 7,
below; (iii) the Company ceases to do business; (iv) in the event (an
"Insolvency Event") of the Company's bankruptcy, insolvency or any
assignment for the benefit of creditors, or any other act by the Company
to take advantage of any law providing for relief to debtors, provided
that you terminate your employment with the Company within one year of the
occurrence of one or more of the Terminating Events, you will be entitled
to: (x) a lump-sum payment (the "Special Severance Payment") equal to the
sum of (A) the highest one month's base salary in effect during the three
year period immediately preceding such termination, multiplied by the
number of full years you have then been employed by the Company or any
affiliate of the Company, (B) any bonuses accrued but unpaid as of the
effective date of termination, including, without limitation, an amount
equal to (i) the amount that would have been earned under the TCC
Industries, Inc. Annual Incentive Plan, as amended from time to time (the
"AIP"), for the fiscal year in which such termination occurs had the
Incentive Award (as defined in the AIP) for that year not been subject to
being forfeited due to termination, i.e., you will be considered to have
been employed for the entire such year, (ii) multiplied by a fraction the
numerator of which is the number of days elapsed in such calendar year as
of the date of such termination, and the denominator of which is 365 (such
amount to be paid in the first quarter of the calendar year following the
year in which such termination occurs), and (C) any other compensation
owed to you by the Company as of the effective date of termination, and (y)
fringe benefits for a period of one year following
<PAGE> 2
such termination, such as health insurance, auto allowance, any premiums
becoming due during such one year period with respect to any life
insurance policy on your life for which the Company or an affiliate of the
Company has previously made the premium payments, and payment for any
unpaid vacation not taken and accrued as of such termination. Upon any
such termination the Company shall take such action and otherwise
cooperate with you in promptly causing the (1) beneficiary of such life
insurance policy to be changed from the Company to someone designated by
you, and (2) ownership of any such life insurance policy to be transferred
to you, including the right to designate the beneficiary. In addition, any
portion of any stock options granted by the Company which have not then
vested shall become exercisable in full for a period of six months
following the effective date of termination, or such lesser period as the
option would have been exercisable had your employment with the Company
not been terminated. Notwithstanding the foregoing, if the only
Terminating Event that occurs is a Terminating Event specified in clause
(iv) (relating to an Insolvency Event), then upon the voluntary
termination by you of your employment as a result of such Insolvency
Event, you shall be entitled to only one-half of the payments and benefits
provided for in clauses (x) and (y) above. To the extent necessary, this
letter shall constitute an amendment to any stock options granted to you
by the Company such that the vesting and exercise provisions thereof shall
be consistent with the first sentence of this paragraph 1. In the event of
the occurrence of any of the Terminating Events and the voluntary
termination of your employment by you within one (1) year of such
Terminating Event you shall be deemed to have terminated your employment
as a result of such Terminating Event; provided that if the Terminating
Event specified in clause (iv) (being an Insolvency Event) occurs and one
of the other Terminating Events specified in clauses (i), (ii) or (iii)
also occurs, you shall be deemed to have terminated your employment as a
result of such clause (i), (ii) or (iii), and not clause (iv)."
B. Paragraph numbered 2 of the Termination Agreement is amended so as to
read as follows:
"2. In the event that your employment with the Company is terminated by or
at the instance of the Company at any time and for any reason other than for
Cause, as defined in paragraph numbered 8 below, you will be entitled to the
Special Severance Payment, together with (a) fringe benefits for a period of
one (1) year following any termination as referenced in (y) in paragraph
numbered 1 above, (b) the assignment of life insurance policies and benefits
described in paragraph 1 above, and (c) the acceleration of vesting and
extension of date for exercise of stock options as described in paragraph
numbered 1 above."
C. Paragraph numbered 3 of the Termination Agreement is amended so as to
read as follows:
"3. The Company shall pay the Special Severance Payment to you within
fifteen calendar days of the effective date of your termination pursuant to
paragraph numbered 1 or paragraph numbered 2, whichever is applicable."
2
<PAGE> 3
D. Paragraph numbered 4 of the Termination Agreement is amended so as to
read as follows:
"4. As a condition to the Company's obligation to pay the Special
Severance Payment in the event of the voluntary termination by you of your
employment with the Company pursuant to paragraph numbered 1, you shall provide
written notice to the Company specifying the (i) effective date of the
termination, and (ii) which of the Terminating Events constitutes a reason for
your voluntary termination."
E. Paragraph numbered 5 of the Termination Agreement is amended so as to
read as follows:
"5. The obligations of the Company under this letter agreement are
undertaken in consideration of your many years of service to the Company and in
order to induce you to continue those services to the Company, and shall not
expire until the Company shall have paid and performed each of its obligations
to you following any termination of your employment, regardless of when such
termination occurs. The parties acknowledge that this letter agreement is
intended to be construed broadly and liberally in order to confer upon you the
specified benefits in the event of the termination of your employment."
F. Paragraph numbered 6 of the Termination Agreement is amended so as to
read as follows:
"6. Change in Control means: (i) the election of one or more individuals
to the Board of Directors of the Company which results in one-third or
more of the Directors of the Company being individuals who have not served
as Directors for at least two years, unless such individuals have been
elected or nominated as Directors by at least two-thirds of the Directors
of the Company who have served for at least two years (or if you serve on
the Board, by a simple majority, along with your vote in favor); (ii) the
election of one or more individuals to the Board of Directors of the
Company which results in a majority of the Directors of the Company being
persons who are not Directors of the Company on January 9, 1997, (iii) the
sale or other disposition (whether directly or indirectly, and whether by
way of merger, consolidation, sale of assets or sale of stock of any
entity affiliated with the Company) by the Company of both A.L. Investors,
Inc. and Meyer Machine Company (subsidiaries of the Company), or the sale
of all or substantially all of the assets of the Company, to any person
(as such term is defined in the Securities Exchange Act of 1934), the
consolidation of the Company with any person, or the merger of the Company
with any person, as a result of which consolidation or merger the Company
or an affiliate of the Company, as of the date of this letter agreement,
is not the surviving entity; (iv) the sale or transfer of the common
stock of the Company and/or any one or more of its shareholders, in one or
more related or unrelated transactions, to one or more persons under
circumstances whereby any person and its "affiliates" (as hereinafter
defined) shall together own, after such
3
<PAGE> 4
sales and transfers, at least one-fourth of the outstanding shares, unless
such sale or transfer has been approved in advance by three-fourths of the
Directors of the Company who have been Directors of the Company for at
least two years (or if you serve on the Board, by a simple majority of
such Directors, along with your vote in favor); (v) the sale or transfer
by the Company and/or one or more of its shareholders, in one or more
related or unrelated transactions, to one or more persons under
circumstances whereby any person and its affiliates shall own, after such
sale or transfer, in excess of one-half of the outstanding shares of the
Company; (vi) the issuance by the Company, in a single transaction or a
series of related transactions including a merger or consolidation in
which the Company is the surviving entity, of shares which constitute more
than one-half of the shares of the Company, outstanding immediately prior
to the first such transaction; or (vii) the liquidation of the Company. As
used in this letter, an "affiliate" shall mean any person that, directly
or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, any other person or who,
by agreement (whether written or oral), is acting in concert with any such
person."
G. Paragraph numbered 7 of the Termination Agreement is amended so that
the reference in said Paragraph to the "Dallas metropolitan area" shall
instead be to the "Austin metropolitan area".
H. The Termination Agreement is amended by adding thereto a new paragraph
numbered 11, which reads as follows:
"11. The obligations of the Company to you under this letter agreement
shall be independent of, and shall not be subject to, any condition,
obligation or offset except as expressly set forth in this letter
agreement. In particular, any obligation of the Company to pay any amount
of money to you shall not be subject to offset against any liability or
amount owed by you to the Company, except to the extent that either (i)
you consent to the offset in writing at the time of the offset, (ii) the
amount so offset has been reduced to final, nonappealable, judgment in
favor of the Company against you in a court having jurisdiction or (iii)
such liability or amount is owed by you to the Company as a result of a
breach by you of any of your fiduciary duties to the Company. If any legal
action or other proceeding, including an arbitration proceeding instituted
pursuant to the next succeeding sentence, is brought for the enforcement
of this letter agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of
this letter agreement, the successful or prevailing party will be entitled
to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or he
may be entitled. Except in connection with seeking injunctive relief to
which any party hereto may reasonably believe it or he is entitled
hereunder, or as otherwise expressly provided for by this letter
agreement, any dispute, controversy or claim arising out of or relating to
this letter agreement, or the breach, termination or invalidity thereof,
shall be settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association as then in
effect; provided, that the place of the arbitration shall
4
<PAGE> 5
be Austin, Texas. Any award or determination entered in any arbitration
initiated pursuant to this letter agreement shall be binding and
conclusive on the parties, and shall be enforceable in any court having
jurisdiction with respect to the matter. If it is ultimately determined in
any such proceeding that the Company wrongfully withheld payment of any
portion of the Special Severance Payment or other obligation of the
Company to you under this letter agreement prior to such determination,
then you shall be entitled to recover from the Company an amount equal to
18% per annum on such amount, from the date such amount should have been
paid until it is paid, and such recovery shall be in addition to such
other sums to which you are entitled hereunder. Unless otherwise provided
above, each Party shall pay its or his own expenses incurred in connection
with a proceeding pursuant to this paragraph numbered 11."
If you are in agreement with the foregoing, please so indicate by signing
the enclosed copy of this letter and returning the same to the undersigned.
TCC Industries, Inc.
By: /s/ FRANK W. DENIUS
-----------------------------------
Its: Secretary
----------------------------------
Agreed to as of the date of this letter.
/s/ LAWRENCE W. SCHUMANN
- -----------------------------
Lawrence W. Schumann
5
<PAGE> 1
Exhibit 10.11.2
As of January 9, 1997
Mr. Larry T. Marek
2003 Tournament Court
Denver, CO 80439
Dear Mr. Marek:
Reference is made to that certain letter agreement ("Termination
Agreement") dated November 27, 1996 between you and A. L. Investors, Inc., a
Texas corporation (the "Company") and joined therein for limited purposes by
TCC Industries, Inc. (the parent company of the Company, formerly named TeleCom
Corporation and being referred to herein as "TCC"), which makes certain
provisions in the event of the termination of your employment with the Company
and also terminates that certain letter agreement dated March 24, 1993, as
amended by the letter agreement dated as of April 14, 1993, both of which were
between you and TCC. To provide you with further incentive to continue serving
as chief executive officer of the Company, the Board of Directors of the
Company and of TCC have authorized certain modifications to the Termination
Agreement, which are as follows:
A. Paragraph numbered 1 of the Termination Agreement is amended
so as to read as follows:
"1. In the event that you terminate your employment with
the Company as a result of one or more of the following events
(collectively, the "Terminating Events" and each a "Terminating
Event"): (i) a change in control of the Company as defined in
paragraph 6, below; (ii) a Change of Circumstances of either you or
the Company as defined in paragraph 7, below; (iii) the Company ceases
to do business; (iv) in the event (an "Insolvency Event") of the
Company's bankruptcy, insolvency or any assignment for the benefit of
creditors, or any other act by the Company to take advantage of any
law providing for relief to debtors, provided that you terminate your
employment with the Company within one year of the occurrence of one
or more of the Terminating Events, you will be entitled to: (x) a
lump-sum payment (the "Special Severance Payment") equal to the sum of
(A) the highest one month's base salary in effect during the three
year period immediately preceding such termination, multiplied by the
number of full years you have then been employed by the Company or any
affiliate of the Company (including without limitation, TCC), (B) any
bonuses accrued but unpaid as of the effective date of termination,
including without limitation an amount equal to (i) the amount that
would have been earned under the TCC Industries, Inc. Annual Incentive
Plan, as amended from time to time (the "AIP"), for the fiscal year
in which such termination occurs had the Incentive Award (as defined
in the AIP) for that year not been subject to being forfeited due
to termination, i.e., you will be considered to have been employed for
the entire such year, (ii) multiplied by a fraction the numerator of
which is the number of days elapsed in such calendar year as of the
date of such
<PAGE> 2
termination, and the denominator of which is 365 (such amount to be
paid in the first quarter of the calendar year following the year in
which such termination occurs), and (C) any other compensation owed to
you by the Company as of the effective date of termination, and (y)
fringe benefits for a period of one year following such termination,
such as health insurance, auto allowance, any premiums becoming due
during such one year period with respect to any life insurance policy
on your life for which the Company, TCC or an affiliate of TCC has
previously made the premium payments, and payment for any unpaid
vacation not taken and accrued as of such termination. Upon such
termination the Company shall take such action and otherwise cooperate
with you in promptly causing the (1) beneficiary of such life
insurance policy to be changed from the Company to someone designated
by you, and (2) ownership of any such life insurance policy to be
transferred to you, including the right to designate the beneficiary.
In addition, any portion of any stock options granted by TCC which
have not then vested shall become exercisable in full for a period of
six months following the effective date of termination, or such lesser
period as the option would have been exercisable had your employment
with the Company not been terminated. Notwithstanding the foregoing,
if the only event specified in clauses (i) through (iv) above that
occurs is an event specified in clause (iv) (relating to an Insolvency
Event), then upon the voluntary termination by you of our
employment, you shall be entitled to only one-half of the payments and
benefits provided for in clauses (x) and (y) above. To the extent
necessary, this letter shall constitute an amendment to any stock
options granted to you by TCC such that the vesting and exercise
provisions thereof shall be consistent with the first sentence of this
paragraph 1. In the event of the occurrence of any of the Terminating
Events and the voluntary termination of your employment by you within
one (1) year of such Terminating Event you shall be deemed to have
terminated your employment as a result of such Terminating Event;
provided that if the Terminating Event specified in clause (iv) (being
an Insolvency Event) occurs and one of the other Terminating Events
specified in clauses (i), (ii) or (iii) also occurs, you shall be
deemed to have terminated your employment as a result of such clause
(i), (ii) or (iii), and not clause (iv)."
B. Paragraph numbered 2 of the Termination Agreement is amended
so as to read as follows:
"2. In the event that your employment with the Company is terminated
by or at the instance of the Company at any time and for any reason other than
for Cause, as defined in paragraph numbered 8 below, you will be entitled to
the Special Severance Payment, together with (a) fringe benefits for a period
of one (1) year following any termination as referenced in (y) in paragraph
numbered 1 above, (b) the assignment of life insurance policies and benefits
described in paragraph 1 above, and (c) the acceleration of vesting and
extension of date for exercise of stock options as described in paragraph
numbered 1 above."
2
<PAGE> 3
C. Paragraph numbered 3 of the Termination Agreement is amended so as
to read as follows:
"3. The Company shall pay the Special Severance Payment to you
within fifteen calendar days of the effective date of your termination pursuant
to paragraph numbered 1 or paragraph numbered 2, whichever is applicable."
D. Paragraph numbered 4 of the Termination Agreement is amended so as
to read as follows:
"4. As a condition to the Company's obligation to pay the Special
Severance Payment in the event of the voluntary termination by you of your
employment with the Company pursuant to paragraph numbered 1, you shall provide
written notice to the Company specifying the (i) effective date of the
termination, and (ii) which of the Terminating Events constitutes a reason for
your voluntary termination."
E. Paragraph numbered 5 of the Termination Agreement is amended so as
to read as follows:
"5. The obligations of the Company under this letter agreement are
undertaken in consideration of your many years of service to the Company and in
order to induce you to continue those services to the Company, and shall not
expire until the Company shall have paid and performed each of its obligations
to you following any termination of your employment, regardless of when such
termination occurs. The parties acknowledge that this letter is intended to be
construed broadly and liberally in order to confer upon you the specified
benefits in the event of the termination of your employment."
F. Paragraph numbered 6 of the Termination Agreement is amended
so as to read as follows:
"6. Change in Control means: (i) the sale or other disposition of
the Company or TCC (whether directly or indirectly, and whether by way
of merger, consolidation, sale of assets or sale of stock of the
Company or TCC), or the sale by the Company or TCC of all or
substantially all of the assets of the Company or TCC to any person (as
such term is defined in the Securities Exchange Act of 1934), the
consolidation of the Company or TCC with any person, or the merger of
the Company or TCC with any person, as a result of which consolidation
or merger the Company, TCC or an affiliate of TCC as of the date of
this letter agreement, is not the surviving entity; (ii) the sale or
transfer by (A) the Company and/or TCC, and/or any subsidiary of or
affiliate of TCC then in control, directly or indirectly, of the
Company (whether one or more, a "Control Affiliate"), or (B) TCC and/or
one or more of its shareholders, in one or more related or unrelated
transactions, to one or more persons under circumstances whereby any
person and its "affiliates" (as hereinafter defined) shall
3
<PAGE> 4
own, after such sale or transfer, in excess of one-half of the
outstanding shares of the Company or TCC, as the case may be; (iii)
the issuance by the Company, TCC and/or any Control Affiliate, in a
single transaction or a series of related transactions including a
merger or consolidation in which the Company, TCC and/or any Control
Affiliate, as the case may be, is the surviving entity, of shares
which constitute more than one-half of the shares of the Company, TCC
or such Control Affiliate, as the case may be, outstanding immediately
prior to the first such transaction, (iv) the liquidation of the
Company, TCC or any Control Affiliate, as the case may be, or (v) the
election of one or more individuals to the Board of Directors of TCC
which results in a majority of the Directors of TCC being persons who
are not Directors of TCC on January 9, 1997. As used in this letter,
an "affiliate" shall mean any person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or
is under common control with, any other person or who, by agreement
(whether written or oral), is acting in concert with any such person.
G. The Termination Agreement is amended by adding thereto a new
paragraph numbered 12, which reads as follows:
"12. The obligations of the Company to you under this letter
agreement shall be independent of, and shall not be subject to, any condition,
obligation or offset except as expressly set forth in this letter agreement. In
particular, any obligation of the Company to pay any amount of money to you
shall not be subject to offset against any liability or amount owed by you to
the Company, except to the extent that either (i) you consent to the offset in
writing at the time of the offset, (ii) the amount so offset has been reduced
to final, nonappealable, judgment in favor of the Company against you in a
court having jurisdiction or (iii) such liability or amount is owed by you to
the Company as a result of a breach by you of any of your fiduciary duties to
the Company. If any legal action or other proceeding, including an arbitration
proceeding instituted pursuant to the next succeeding sentence, is brought for
the enforcement of this letter agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions
of this letter agreement, the successful or prevailing party will be entitled
to recover reasonable attorney's fees and other costs incurred in that action
or proceeding, in addition to any other relief to which it or he may be
entitled. Except in connection with seeking injunctive relief to which any
party hereto may reasonably believe it or he is entitled hereunder, or as
otherwise expressly provided for by this letter agreement, any dispute,
controversy or claim arising out of or relating to this letter agreement, or
the breach, termination or invalidity thereof, shall be settled by arbitration
in accordance with the commercial arbitration rules of the American Arbitration
Association as then in effect; provided, that the place of the arbitration
shall be Denver, Colorado. Any award or determination entered in any
arbitration initiated pursuant to this letter agreement shall be binding and
conclusive on the parties, and shall be enforceable in any court having
jurisdiction with respect to the matter. If it is ultimately determined in any
such proceeding that the Company wrongfully withheld payment of any portion of
the Special Severance Payment or other obligation of the Company to you under
this letter agreement prior to such determination, then you shall be entitled
to recover from the Company an amount equal to 18% per annum on such amount,
from the date such amount should have been paid until it is paid, and such
recovery shall be in addition to such other
4
<PAGE> 5
sums to which you are entitled hereunder. Unless otherwise provided above, each
Party shall pay its or his own expenses incurred in connection with a
proceeding pursuant to this paragraph numbered 12."
If you are in agreement with the foregoing, please so indicate by
signing the enclosed copy of this letter and returning the same to the
undersigned.
A. L. Investors, Inc.
By: /s/ FRANK W. DENIUS
--------------------------
Its: Assistant Secretary
--------------------------
Agreed to as of the date of this letter.
/s/ LARRY T. MAREK
- -------------------------------------------
Larry T. Marek
Agreed to as of the date of this letter.
TCC Industries, Inc.
By: /s/ FRANK W. DENIUS
---------------------------------------
Its: Secretary
---------------------------------------
5
<PAGE> 6
November 27, 1996
Mr. Larry T. Marek
2003 Tournament Court
Denver, CO 80439
Dear Mr. Marek:
You have recently assumed responsibilities as chief executive officer
of A. L. Investors, Inc., a Texas corporation doing business as "Allen Lewis
Manufacturing Company" (the "Company"). As a result, you and TCC Industries,
Inc. (the parent company of the Company, formerly named TeleCom Corporation and
being referred to herein as "TCC") have agreed that the letter agreement dated
March 24, 1993, as amended by the letter agreement dated as of April 14, 1993,
both of which are between you and TCC (said two letter agreements being
referred to collectively herein as the "TCC Severance Letter Agreements"),
should be terminated and a new agreement entered into between you and the
Company. The Board of Directors of the Company has approved an agreement
between the Company and you in order to provide to you a severance payment as
additional incentive to continue your employment with the Company. Accordingly,
the Board has authorized such an agreement, and the terms thereof follow:
1. In the event that you terminate your employment with the Company as
a result of one or more of the following: (i) a change in control of the
Company as defined in paragraph 6, below; (ii) a Change of Circumstances
of either you or the Company as defined in paragraph 7, below; (iii) the
Company ceases to do business; (iv) in the event of the Company's
bankruptcy, insolvency or any assignment for the benefit of creditors,
or any other act by the Company to take advantage of any law providing
for relief to debtors, provided that you terminate your employment with
the Company within twelve months of the occurrence of one or more of the
foregoing events, you will be entitled to: (x) a lump-sum payment equal
to the sum of (A) one month's base salary as in effect on the effective
date of termination for each full year you have then been employed by
the Company or any affiliate of the Company (including without
limitation, TCC), (B) any bonuses accrued but unpaid during the twelve
month period immediately preceding the effective date of termination,
including an amount equal to (i) the amount, if any, that would have
been earned under the Annual Incentive Plan, as amended from time to
time (the "AIP"), of TCC for the fiscal year in which such termination
occurs had the Incentive Award (as defined in the AIP) for that year not
been subject to being forfeited due to termination, i.e., you will be
considered to have been employed for the entire such year, (ii)
multiplied by a fraction the numerator of which is the number of days
elapsed in such calendar year as of the date of such termination, and
the denominator of which is 365 (such amount to be paid in the first
quarter of the calendar year following the year in which such
termination occurs), and (C) any other compensation owed to you by the
Company as of the effect date of termination (the "Special Severance
Payment"), and (y) one year's fringe benefits, such as health insurance
and auto allowance.
<PAGE> 7
In addition, any portion of any stock options granted by TCC which have
not then vested shall become exercisable in full for a period of six
months following the effective date of termination, or such lesser
period as the option would have been exercisable if your employment
with the Company had not been terminated. Notwithstanding the
foregoing, if the only event specified in clauses (i) through (iv)
above that occurs is an event specified in clause (i), then upon the
voluntary termination by your of your employment, you shall be entitled
to only one-half of the payments and benefits provided for in clauses
(x) and (y) above. To the extent necessary, this letter shall
constitute an amendment to any stock options granted to you by TCC such
that the vesting and exercise provisions thereof shall be consistent
with the first sentence of this paragraph 1.
2. In the event that the Company terminates your Employment for
any reason other than for Cause as defined in paragraph 8, below,
after the date of this letter, you will be entitled to the Special
Severance Payment.
3. The Company shall pay the Special Severance Payment to you
within fifteen calendar days of the effective date of your termination.
4. As a condition to the Company's obligation to pay the Special
Severance Payment, you shall provide written notice to the Company
specifying (i) the effective date of the termination, and (ii) the
reason for the termination.
5. The provisions of this letter shall be in effect until
March 24, 1998, at which time this letter agreement will terminate.
6. Change in Control means: (i) the sale by the Company of all or
substantially all of its assets to any person (as such term is defined
in Sections 12(d) and 14(d) of the Securities Exchange Act of 1934),
the consolidation of the company with any person, or the merger of the
Company with any person as a result of which the Company is not
surviving entity; (ii) the sale or transfer by the Company and/or one
or more of its shareholders, in one or more related or unrelated
transactions, to one or more persons under circumstances whereby any
person and its affiliates shall own, after such sale or transfer, in
excess of one-half of the outstanding shares; or (iii) the issuance by
the Company, in a single transaction or a series of related
transactions including a merger or consolidation in which the Company
is the surviving entity, of shares which constitute more than one-half
of the shares outstanding immediately prior to the first such
transaction. As used in this letter, an "affiliate" shall mean any
person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, any other person.
7. A Change of Circumstances shall be deemed to have occurred if,
in your sole judgment, there has been: (i) a material reduction or
change in your duties or reporting responsibilities or a removal from
or failure to be elected to a previously held position, including
without limitation a removal from an officer position in the department
in which
<PAGE> 8
you are now employed or a relocation of your employment outside of the
Denver metropolitan area; (ii) a breach by the Company of any provision
of this letter; (iii) a material reduction in your salary or the fringe
benefits of employment made available to you by the Company, which
reduction is not also applicable to all Company employees; (iv) a
material diminution in your status, working conditions or economic
benefits; or (v) any action which substantially impairs your prestige
in relation to any other employee of the Company.
8. Cause means conduct which, in the Company's sole opinion,
constitutes; (i) fraud or dishonesty; (ii) inability to perform due to
alcoholism; (iii) inability to perform due to improper and illegal use
of drugs; (iv) excessive absenteeism other than for major illness or
similar serious situations; or (v) inattention to your duties and
responsibilities to the Company, after prior written warning by the
Company.
9. This letter shall be construed and enforced in accordance with, and
the validity and performance hereof shall be governed by the laws of
the State of Texas.
10. This letter constitutes the entire agreement between you and the
Company regarding the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings in connection
herewith.
11. To induce the undersigned to enter into this letter agreement, you
and TCC agree that the TCC Severance Letter Agreement is hereby
terminated, and any amendment to any stock options granted to you by
TCC effected pursuant to the TCC Severance Letter Agreement in
rescinded, canceled and terminated.
If you are in agreement with the foregoing, please so indicate by
signing the enclosed copy of this letter and returning the same to the
undersigned.
A.L. Investors, Inc.
By: /s/ LAWRENCE W. SCHUMANN
------------------------------
Its: Chairman of the Board
Agreed to as of the date of
this letter.
/s/ LARRY T. MAREK
- ----------------------------------
Larry T. Marek
<PAGE> 9
Agreed to as of the date of this letter
for purposes of Paragraph numbered
11 only.
TCC Industries, Inc.
By: /s/ LAWRENCE W. SCHUMANN
------------------------
Its: President
<PAGE> 10
[TCC INDUSTRIES, INC. LOGO]
November 27, 1996
Mr. Larry T. Marek
2003 Tournament Court
Evergreen, CO 80439
Dear Mr. Marek:
Reference is made to that certain letter agreement ("ALI Letter
Agreement") of even date herewith between you and A.L. Investors, Inc. ("ALI"),
a subsidiary of the undersigned corporation, providing among other things for
certain payments and benefits in the event of your termination of employment
with ALI under certain circumstances. To induce you to (i) enter into the ALI
Letter Agreement, and (ii) agree to the termination of the TCC Severance Letter
Agreements (as that term is defined in the ALI Letter Agreement), the
undersigned corporation agrees that in the event of the breach or default by
ALI upon or with respect to any of its covenants and obligations (collectively,
the "ALI Obligations") under the ALI Agreement, the undersigned corporation
will pay and discharge or cause to be paid and discharged any and all such ALI
Obligations in a timely manner.
Please indicate your acceptance of this letter agreement by signing the
enclosed copy hereof and returning the same to the undersigned corporation.
TCC INDUSTRIES, INC.
By: /s/ LAWRENCE W. SCHUMANN
------------------------
President
Agreed to as of the date of this letter.
/s/ LARRY T. MAREK
--------------
Larry T. Marek
<PAGE> 1
Exhibit 10.22
As of January 9, 1997
Mr. Eugene W. Teeter
15814 Rothbury Lane
San Antonio, Texas 78232
Dear Mr. Teeter:
The Board of Directors of Meyer Machine Company, a Delaware
corporation (the "Company"), which is an indirect wholly-owned subsidiary of
TCC Industries, Inc., a Texas corporation ("TCC"), has approved an agreement
between the Company and you in order to provide to you a severance payment as
additional incentive to continue your employment with the Company. Accordingly,
the Board has authorized such an agreement, and the terms thereof follow:
1. In the event that you terminate your employment with the
Company as a result of one or more of the following events
(collectively, the "Terminating Events" and each a "Terminating
Event"): (i) a Change in Control of the Company as defined in
paragraph 5, below; (ii) a Change of Circumstances as defined in
paragraph 6, below; (iii) the Company ceases to do business; (iv) in
the event (an "Insolvency Event") of the Company's bankruptcy,
insolvency or any assignment for the benefit of creditors, or any
other act by the Company to take advantage of any law providing for
relief to debtors, provided that you terminate your employment with
the Company within one (1) year of the occurrence of one or more of
the Terminating Events, you will be entitled to: (x) a lump-sum
payment (the "Special Severance Payment") equal to the sum of (A) the
highest one month's base salary in effect during the three year period
immediately preceding such termination, multiplied by the number of
full years you have then been employed by the Company or any affiliate
of the Company (including without limitation, TCC), (B) any bonuses
accrued but unpaid as of the effective date of termination, including,
without limitation, an amount equal to (i) the amount that would have
been earned under the TCC Industries, Inc. Annual Incentive Plan, as
amended from time to time (the "AIP"), for the fiscal year in which
such termination occurs had the Incentive Award (as defined in the AIP)
for that year not been subject to being forfeited due to termination,
i.e., you will be considered to have been employed for the entire such
year, (ii) multiplied by a fraction the numerator of which is the
number of days elapsed in such calendar year as of the date of such
termination, and the denominator of which is 365 (such amount to be
paid in the first quarter of the calendar year following the year in
which such termination occurs), and (C) any other compensation owed
to you by the Company as of the effective date of termination, and (y)
fringe benefits for a period of one year following such termination,
such as health insurance, auto allowance, any premiums becoming due
during such one year period with respect to any life insurance policy
on your life for which the Company, TCC or an affiliate of TCC has
previously made the premium payments, and payment for any unpaid
vacation not taken and accrued as of such termination, but excluding
any employer contribution under the Meyer Machine Company Profit
Sharing Plan for the
1
<PAGE> 2
year in which such termination occurs. Upon any such termination the
Company shall take such action and otherwise cooperate with you in
promptly causing the (1) beneficiary of such life insurance policy to
be changed from the Company to someone designated by you, and (2)
ownership of any such life insurance policy to be transferred to you,
including the right to designate the beneficiary. In addition, any
portion of any stock options granted by TCC which have not then vested
shall become exercisable in full for a period of six months following
the effective date of termination, or such lesser period as the option
would have been exercisable had your employment with the Company not
been terminated. Notwithstanding the foregoing, if the only
Terminating Event that occurs is a Terminating Event specified in
clause (iv) (relating to an Insolvency Event), then upon the voluntary
termination by you of your employment as a result of such Insolvency
Event, you shall be entitled to only one-half of the payments and
benefits provided for in clauses (x) and (y) above. To the extent
necessary, this letter shall constitute an amendment to any stock
options granted to you by TCC such that the vesting and exercise
provisions thereof shall be consistent with the first sentence of this
paragraph 1. In the event of the occurrence of any of the Terminating
Events and the voluntary termination of your employment by you within
one (1) year of such Terminating Event you shall be deemed to have
terminated your employment as a result of such Terminating Event;
provided that if the Terminating Event specified in clause (iv) (being
an Insolvency Event) occurs and one of the other Terminating Events
specified in clauses (i), (ii) or (iii) also occurs, you shall be
deemed to have terminated your employment as a result of such clause
(i), (ii) or (iii), and not clause (iv)."
2. In the event that your employment with the Company is
terminated by or at the instance of the Company at any time and for
any reason other than for Cause, as defined in paragraph numbered 7
below, you will be entitled to the Special Severance Payment, together
with (a) fringe benefits for a period of one (1) year following any
termination as referenced in (y) in paragraph numbered 1 above, (b)
the assignment of life insurance policies and benefits described in
paragraph 1 above, and (c) the acceleration of vesting, and extension
of date for exercise of stock options as described in paragraph
numbered 1 above.
3. The Company shall pay the Special Severance Pay Payment to you
within fifteen calendar days of the effective date of your termination
pursuant to paragraph numbered 1 or paragraph numbered 2, whichever is
applicable.
4. As a condition to the Company's obligation to pay the Special
Severance Payment in the event of the voluntary termination by you of
your employment with the Company pursuant to paragraph numbered 1, you
shalt provide written notice to the Company specifying (i) the
effective date of the termination, and (ii) which Terminating Event
constitutes a reason for your voluntary termination.
5. Change in Control means: (i) the sale or other disposition of
the Company or TCC (whether directly or indirectly, and whether by way
of merger, consolidation, sale of assets or sale of stock of the
Company or TCC), or the sale by the Company or TCC of all or
2
<PAGE> 3
substantially all of the assets of the Company or TCC to any person
(as such term is defined in the Securities Exchange Act of 1934), the
consolidation of the Company or TCC with any person, or the merger of
the Company or TCC with any person, as a result of which consolidation
or merger the Company, TCC or an affiliate of TCC as of the date of
this letter agreement, is not the surviving entity; (ii) the sale or
transfer by (A) the Company and/or TCC, and/or any subsidiary of or
affiliate of TCC then in control, directly or indirectly, of the
Company (whether one or more, a "Control Affiliate"), or (B) TCC
and/or one or more of its shareholders, in one or more related or
unrelated transactions, to one or more persons under circumstances
whereby any person and its "affiliates" (as hereinafter defined) shall
own, after such sale or transfer, in excess of one-half of the
outstanding shares of the Company or TCC, as the case may be; (iii)
the issuance by the Company, TCC and/or any Control Affiliate, in a
single transaction or a series of related transactions including a
merger or consolidation in which the Company, TCC and/or any Control
Affiliate, as the case may be, is the surviving entity, of shares
which constitute more than one-half of the shares of the Company, TCC
or such Control Affiliate, as the case may be, outstanding immediately
prior to the first such transaction, (iv) the liquidation of the
Company, TCC or any Control Affiliate, as the case may be, or (v) the
election of one or more individuals to the Board of Directors of TCC
which results in a majority of the Directors of TCC be in a persons
who are not Directors of TCC on January 9, 1997. As used in this
letter, an "affiliate" shall mean any person that, directly or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, any other person or
who, by agreement (whether written or oral), is acting in concert
with any such person.
6. A Chance of Circumstances shall be deemed to have occurred if,
in your sole judgment, there has been: (i) a material reduction or
change in your duties or reporting responsibilities or a removal from
or failure to be elected to a previously held position, including
without limitation a removal from an officer position in the
department in which you are now employed or a relocation of your
employment outside of the San Antonio metropolitan area; (ii) a breach
by the Company of any provision of this letter; (iii) a material
reduction in your salary or the fringe benefits of employment made
available to you by the Company, which reduction is not also
applicable to all Company employees; (iv) a material diminution in
your status, working conditions or economic benefits; or (v) any
action which substantially impairs your prestige in relation to any
other employee of the Company.
7. Cause means conduct which, in the Company's sole opinion,
constitutes; (i) fraud or dishonesty; (ii) inability to perform due to
alcoholism; (iii) inability to perform due to improper and illegal use
of drugs; (iv) excessive absenteeism other than for major illness or
similar serious situations; or (v) inattention to your duties and
responsibilities to the Company, after prior written warning by the
Company.
8. This letter shall be construed and enforced in accordance
with, and the validity and performance hereof shall be governed by the
laws of the State of Texas.
3
<PAGE> 4
9. This letter constitutes the entire agreement between you and
the Company regarding the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings in connection
herewith.
10. The obligations of the Company under this letter agreement are
undertaken in consideration of your many years of service to the
Company and in order to induce you to continue those services to the
Company, and shall not expire until the Company shall have paid and
performed each of its obligations to you following any termination of
your employment, regardless of when such termination occurs. The
parties acknowledge that this letter is intended to be construed
broadly and liberally in order to confer upon you the specified
benefits in the event of the termination of your employment.
11. The obligations of the Company to you under this letter
agreement shall be independent of, and shall not be subject to, any
condition, obligation or offset except as expressly set forth in this
letter agreement. In particular, any obligation of the Company to pay
any liability or amount of money to you shall not be subject to offset
against any amount owed by you to the Company, except to the extent
that either (i) you consent to the offset in writing at the time of
the offset, (ii) the amount so offset has been reduced to final,
nonappealable, judgment in favor of the Company against you in a court
having jurisdiction or (iii) such liability or amount is owed by you
to the Company as a result of a breach by you of any of your fiduciary
duties to the Company. If any legal action or other proceeding,
including, an arbitration proceeding instituted pursuant to the next
succeeding sentence, is brought for the enforcement of this letter
agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
letter agreement, the successful or prevailing, party will be entitled
to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or
he may be entitled. Except in connection with seeking injunctive
relief to which any party hereto may reasonably believe it or he is
entitled hereunder, or as otherwise expressly provided for by this
letter agreement, any dispute, controversy or claim arising, out of or
relating to this letter agreement, or the breach, termination or
invalidity thereof, shall be settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration
Association as then in effect; provided, that the place of the
arbitration shall be San Antonio, Texas. Any award or determination
entered in any arbitration initiated pursuant to this letter agreement
shall be binding, and conclusive on the parties, and shall be
enforceable in any court having jurisdiction with respect to the
matter. If it is ultimately determined in any such proceeding that the
Company wrongfully withheld payment of any portion of the Special
Severance Payment or other obligation of the Company to you under this
letter agreement prior to such determination, then you shall be
entitled to recover from the Company an amount equal to 18% per annum
on such amount, from the date such amount should have been paid until
it is paid, and such recovery shall be in addition to such other sums
to which you are entitled hereunder. Unless otherwise provided above,
each Party shall pay its or his own expenses incurred in connection
with a proceeding pursuant to this paragraph numbered 11.
4
<PAGE> 5
If you are in agreement with the foregoing, please so indicate by
signing the enclosed copy of this letter and returning the same to the
undersigned.
Meyer Machine Company
By: /s/ FRANK W. DENIUS
----------------------------------
Its: Assistant Secretary
----------------------------------
Agreed to as of the date of this letter.
/s/ EUGENE W. TEETER
- ----------------------------------------
Eugene W. Teeter
Agreed to as of the date of this letter.
TCC Industries, Inc.
By: /s/ FRANK W. DENIUS
-------------------------------------
Its: Secretary
-------------------------------------
5
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