UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 1997
RESEARCH, INCORPORATED
(Exact name of Registrant as specified in its charter)
Minnesota 41-0908058
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
0-2387
(Commission File Number)
6425 Flying Cloud Drive
Eden Prairie, Minnesota 55344
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 829-8311
Not Applicable
(Former name or former address, if changed, since last report)
ITEM 5. OTHER INFORMATION.
On May 28, 1997, Research, Incorporated (the "Company") entered into a
Stock Redemption Agreement ("Agreement") with Mary Ellen Abramson and the Estate
of Andrew E. Abramson (the "Shareholders"). The Company acquired under the
Agreement all right, title and interest of the Shareholders in 237,519 shares of
the Company's common stock for a per share price of $6.45 (the "Shares"). As a
result of the redemption, the Company now has 968,424 shares of common stock
outstanding.
The total consideration for the redemption of the Shares was
$1,531,997.50. Of the total consideration, $765,997.50 was paid in cash and
$766,000 will be paid on or about January 15, 1998 pursuant to the terms of a
Promissory Note which provides for an interest rate of 8.5% per annum. As
security for the payment of the remaining consideration, the Company executed a
Security Agreement in favor of Mary Ellen Abramson and pledged all of its
accounts receivable, intangibles and inventory as collateral.
ITEM 7. EXHIBITS
Exhibit 1 Stock Redemption Agreement Dated May 28, 1997 between
the Company and the Shareholders.
Exhibit 2 Promissory Note Dated May 28, 1997 between the
Company and Mary Ellen Abramson
Exhibit 3 Security Agreement Dated May 28, 1997, between the
Company and Mary Ellen Abramson
Exhibit 4 Press Release Dated May 28, 1997
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.
RESEARCH, INCORPORATED
By /s/ Claude C. Johnson
Claude C. Johnson
President
Dated: June 3, 1997
EXHIBIT 1
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the "Agreement") is made this 28th day
of May, 1997 by and among Research, Incorporated, a Minnesota corporation (the
"Company"), Mary Ellen Abramson and Mary Ellen Abramson, as personal
representative for the Estate of Andrew E. Abramson (individually, the "Seller"
and collectively, the "Selling Shareholders").
RECITALS
WHEREAS, the Selling Shareholders collectively own 237,519 shares of
common stock, $.50 par value, of the Company (the "Shares");
WHEREAS, the Selling Shareholders are willing to sell the Shares to the
Company; and
WHEREAS, the Company's Board of Directors has unanimously determined
that a purchase price of $6.45 per share is fair and that it is in the best
interests of the Company that the Company redeem the Shares, and that the offer
of the Selling Shareholders should be accepted upon the terms and conditions set
forth herein.
WITNESSETH
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, conditions and agreements herein contained, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
REDEMPTION OF SHARES
1.1. REDEMPTION OF COMMON STOCK. Each Seller hereby sells, conveys,
transfers, assigns and delivers to the Company on the date of this Agreement all
right, title and interest in the number of Shares set forth opposite each
Seller's name on the signature page hereof, free and clear of all liens,
encumbrances, purchase rights, claims, pledges, mortgages, security interests,
or other limitations or restrictions whatsoever.
1.2. REDEMPTION PRICE. In reliance upon the representations, warranties
and covenants of each Seller contained herein and in full consideration of such
sale, conveyance, transfer, assignment and delivery of the Shares to the
Company, the Company hereby delivers to each Seller an aggregate redemption
price set forth opposite each Seller's name on the signature page hereof (the
"Redemption Price"). The per share price for the Shares is $6.45. The Redemption
Price paid to each Seller shall be paid at the Closing by: (i) Company check
payable to each Seller in the amounts set forth on the signature page hereof,
receipt of which is hereby acknowledged; and (ii) the remainder, as applicable,
by Promissory Note in the form attached hereto as Exhibit A (the "Promissory
Note"). The Promissory Note shall be secured by certain assets of the Company as
provided in the Security Agreement in the form attached as Exhibit B (the
"Security Agreement").
1.3. CLOSING. The closing of the redemption of the Shares (the
"Closing") is taking place simultaneous with the signing of this Agreement at
the offices of the Company on May 28, 1997 (the "Closing Date"). At the Closing,
(i) the Selling Shareholders shall convey, assign, transfer and deliver to the
Company stock certificates representing the Shares, together with an executed
stock power or other form of conveyance or transfer as may be reasonably
requested by the Company, including broker instruction letters; and (ii) the
Company shall deliver the cash Redemption Price, Promissory Note and Security
Agreement as provided in Section 1.2 above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS
2.1. OWNERSHIP OF THE SHARES. Each Seller is the record and beneficial
owner of the Shares set forth opposite such Selling Shareholder's name on the
signature page hereof, free and clear of all liens, encumbrances, purchase
rights, claims, pledges, mortgage purchase rights, security interests, or other
limitations or restrictions whatsoever. The Shares represent the Selling
Shareholders' entire equity interest in the Company. Seller is not subject to,
or a party to, any articles of incorporation or bylaws provisions, shareholder
voting or control agreements, buy-sell agreements, contracts, instruments or
other restrictions of any kind or character which, directly or indirectly,
restrict or otherwise limit in any manner the sale of the Shares pursuant to
this Agreement.
2.2 AUTHORITY OF SELLER. Each Seller has full and unrestricted legal
right, power and authority to enter into this Agreement, and to sell, convey,
assign, transfer and deliver to the Company valid, lawful and marketable title
to the Shares to be sold, conveyed, assigned, transferred and delivered by such
Seller pursuant to this Agreement.
2.3. TITLE. Upon delivery to the Company of certificates representing
all of the Selling Shareholders' Shares, the Company will acquire lawful, valid
and marketable title to the Shares, free and clear of all liens, encumbrances,
purchase rights, claims, pledges, mortgages, security interests or other
limitations or restrictions whatsoever.
2.4. LITIGATION. Neither Seller is presently a party to, or subject to,
or bound by, any agreement or any judgment, order, writ, injunction or decree of
any court or any governmental body which contains any provision or requirement
which would or could operate to prevent the carrying out of this Agreement or
the transactions contemplated hereby. There is no litigation, proceeding or
governmental investigation pending or, so far as known to the Selling
Shareholders, or threatened against either Seller which would adversely affect
the transactions contemplated by this Agreement.
2.5. ACCESS TO INFORMATION AND OPPORTUNITY TO EVALUATE. Each Seller has
been represented by independent legal counsel and has been afforded reasonable
access, and the opportunity, to inspect the Company's books, records, documents,
financial statements, public filings and other information. Each Seller has been
provided with all financial and other information regarding the Company which
has been requested and has been afforded the opportunity to discuss the same
with the management of the Company, as well as his or her legal counsel,
accountants or other representatives prior to the Closing.
2.6 CONSENTS. No consent is required in connection with the sale by the
Selling Shareholders of the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
3.1. ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota.
3.2. AUTHORITY OF COMPANY. No provision of the Company's Articles of
Incorporation or Bylaws, or of any agreement, instrument or understanding, or
any judgment, order, decree, rule or regulation to which the Company is a party
or by which it is bound, has been or will be violated by the execution by the
Company of this Agreement, or the performance or satisfaction of any agreement,
term or condition herein upon its part to be performed or satisfied.
3.3. AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action by the Company and its Board of Directors. This Agreement will,
upon execution and delivery, be the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
3.4. CONSENTS. Any material consent required by the Company in
connection with the transactions provided for or contemplated by this Agreement
has been obtained by the Company.
ARTICLE IV
INDEMNIFICATION
4.1. INDEMNIFICATION. The Selling Shareholders shall jointly and
severally indemnify, defend and hold harmless the Company from and against any
and all loss, liability, damage or expense (including interest paid to third
parties, penalties, accountants' expense and attorneys' fees) due to a breach of
any of the representations and warranties of the Selling Shareholders contained
in Sections 2.1, 2.2 or 2.3 of this Agreement.
ARTICLE V
MISCELLANEOUS
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements set forth in this Agreement will survive
the date of this Agreement and the consummation of the transactions contemplated
hereby.
5.2. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the internal laws (and not the law of conflicts) of the State of
Minnesota.
5.3. ENTIRE AGREEMENT. This Agreement, including the other documents or
instruments referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein. There are no restrictions, promises, warranties, covenants or
undertakings other than those expressly provided for herein. This Agreement
supersedes all prior agreements and undertakings between the parties with
respect to the subject matter. No waiver, modification or amendment of any
provision of this Agreement shall be effective unless specifically made in
writing and duly signed by the party to be bound thereby.
5.4. SEVERABILITY OF INVALID PROVISION. If any one or more covenants or
agreements provided in this Agreement should be determined to be contrary to law
by a court of competent jurisdiction, then such covenant or covenants, agreement
or agreements shall be null and void and shall in no way affect the validity of
other provisions of this Agreement.
5.5. SUCCESSORS AND ASSIGNS. Subject to the transfer restrictions
contained in this Agreement, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement.
5.6. SECTION HEADINGS. Section headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions hereof.
5.7. GENERAL RELEASE. Each Seller does, for and on behalf of himself or
herself and his or her heirs, administrators, executors, agents, successors and
assigns, agree to and hereby does release and forever discharge the Company, its
directors, officers, shareholders, employees, agents, successors and assigns,
and each and all thereof, of and from any and all obligations and claims which
have arisen or might arise out of facts or actions existing or taken on or prior
to the date hereof, except for claims which may be made against the Company
under this Agreement or the Promissory Note for its failure to fulfill its
obligations hereunder or thereunder, and any indemnification rights, if any,
which are available to Sellers under the Minnesota Business Corporation Act or
the Company's Articles or Bylaws.
5.8. TERMINATION OF OTHER AGREEMENTS. The Company and the Selling
Shareholders agree that the rights of the Selling Shareholders with respect to
the Shares being redeemed under this Agreement shall be governed solely under
the terms of this Agreement, which shall supersede any other agreement, bylaw
provision or buy-sell agreement with respect to the Shares. The Selling
Shareholders waive any and all rights they may have under such provisions and
agreements, if any, with respect to the Shares; provided the Selling
Shareholders do not waive any claims which are not released under Section 5.7
above.
5.9. SPECIFIC PERFORMANCE. In addition to other relief provided by law,
the parties hereby acknowledge and agree that damages may not be an appropriate
remedy and that the Company may enforce the covenants and the terms of this
Agreement and that damages, specific performance and an injunction shall all be
proper modes of relief and are not considered as alternative remedies.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
RESEARCH, INCORPORATED
By: /s/ Claude C. Johnson
Its: President
/s/ Mary Ellen Abramson
MARY ELLEN ABRAMSON
THE ESTATE OF ANDREW E. ABRAMSON
By: /s/ Mary Ellen Abramson
Mary Ellen Abramson
Its: Personal Representative
NUMBER OF
SELLER SHARES SOLD REDEMPTION PRICE CASH PORTION
------ ----------- ---------------- ------------
MARY ELLEN ABRAMSON 124,189 $801,019.05 $ 35,019.05
THE ESTATE OF ANDREW E. ABRAMSON 113,330 $730,978.50 $ 730,978.50
EXHIBIT 2
PROMISSORY NOTE
$766,000 May 28, 1997
Minneapolis, MN
FOR VALUE RECEIVED, the undersigned, Research, Incorporated, promises
to pay to Mary Ellen Abramson (the "Holder"), at such place as the Holder of
this Note shall specify by notice in writing to the undersigned, on January 15,
1998, the principal sum of $766,000, together with interest, as provided below.
Interest shall accrue from the date hereof at a rate of interest equal to 8.5%
per annum.
The undersigned shall have the right to prepay this Note, in whole or
in part, at any time without premium or penalty. The Holder may demand payment
at any time prior to January 15, 1998 in the event a third party (including the
officers and directors acting as a group) becomes the beneficial owner of 50% or
more of the stock of the undersigned, or substantially all of the assets of the
undersigned are sold to a third party.
Presentment or other demand for payment, notice of dishonor or protest
are expressly waived by the undersigned. This Note shall be governed by the laws
of the State of Minnesota.
RESEARCH, INCORPORATED
By /s/ Claude C. Johnson
Its President
EXHIBIT 3
SECURITY AGREEMENT
This Security Agreement, dated May 28, 1997 (the "Effective Date"), is
by and between Research, Incorporated, a Minnesota corporation (the
"Corporation") and Mary Ellen Abramson ("Secured Party").
W I T N E S S E T H:
WHEREAS, the Secured Party and the Corporation have entered into a
Stock Redemption Agreement dated May 28, 1997 providing for the purchase by the
Corporation of shares of common stock of the Corporation owned by the Secured
Party (the "Redemption Agreement"); and
WHEREAS, the Corporation delivered to the Secured Party its Promissory
Note in the original principal amount of $766,000; and
WHEREAS, the Note is to be secured by certain assets of the Corporation
as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Definitions. For all purposes of this Agreement, the terms
set forth below shall be defined as follows:
(a) "Agreement" shall mean this Agreement.
(b) "Collateral" shall mean (i) all accounts receivable,
intangibles and inventories of every kind; (ii) substitutions and
replacements of the foregoing; and (iii) all proceeds from any of the
foregoing.
(c) "Event of Default" shall have the meaning given that term
in the Note.
(d) "Note" shall mean the Promissory Note dated May 28, 1997
in the original principal amount of $766,000 issued by the Corporation
to the Secured Party.
(e) "Liabilities" shall mean all amounts now or hereafter
owing under the Note.
1.02 Other. Any term used in this Agreement which is not defined herein
but which is defined in the Uniform Commercial Code, as adopted in the State of
Minnesota (the "Code"), shall have the same meaning for purposes of this
Agreement as the meaning given to such term in the Code.
ARTICLE II
SECURITY
2.01 Grant. As security for the payment, satisfaction, performance and
discharge of all Liabilities, the Corporation hereby grants to the Secured Party
a security interest in the Collateral. The Corporation will, concurrently with
the execution, delivery, and issuance to the Secured Party of this Agreement,
execute and deliver financing statements and such other instruments and
documents as the Secured Party may reasonably request in order to perfect the
Secured Party's security interest granted in this section. The Secured Party
agrees to subordinate her security interest in the Collateral to Norwest Bank
Minnesota, N.A. (the "Bank") and to execute and deliver to the Bank a
Subordination Agreement as may be reasonably required to evidence such
subordination.
2.02 Further Assurances. Until all Liabilities are fully paid and
satisfied, Buyer will at all times make, execute, deliver, record, register, or
file all such financing statements and other instruments, and take such action,
as the Secured Party may request which are reasonably necessary to assure the
Secured Party of the continued perfection of the security interest granted to it
pursuant to this Agreement. The Corporation makes no representation regarding
priority of security interests in the Collateral.
ARTICLE III
REMEDIES UPON DEFAULT
3.01 Remedies. Upon the occurrence of an Event of Default, the Secured
Party may, subject to the terms of any Subordination Agreement with the Bank:
(a) Require the Corporation to deliver to the Secured Party a
schedule of the Collateral, identifying each item of Collateral and
stating the cost and value thereof. Any such schedule shall be
certified by a duly authorized officer of the Corporation to be
accurate, true, and complete in all material respects and shall be in
such form and detail as the Secured Party may specify.
(b) Instruct the Corporation to assemble the Collateral at the
Corporation's expense and make the Collateral available to the Secured
Party at a place designated by the Secured Party which is reasonably
convenient to both the Corporation and the Secured Party. Should the
Secured Party decide to dispose of any of the Collateral, any
notification of intended disposition by the Secured Party shall be
deemed reasonably and properly given if given at least ten days before
such disposition. Any proceeds of any disposition of any of the
Collateral may be applied by the Secured Party to the payment of
expenses in connection with the repossession or disposition of the
Collateral, including reasonable attorneys' fees and legal expenses,
and any balance of such proceeds may be applied by the Secured Party
toward the payment, satisfaction, performance, or discharge of such of
the Liabilities, and in such order of application, as the Secured Party
may elect.
(c) Exercise from time to time any rights and remedies
available to it under the Code or any other applicable law.
3.02 Rights; Liabilities. All rights and remedies of the Secured Party
hereunder shall be cumulative. Nothing herein shall be construed as limiting the
liability of the Corporation to the value of the Collateral, and in the event
that, upon default, such Collateral is insufficient to satisfy all Liabilities,
the Corporation shall remain fully liable for any deficiency resulting
therefrom.
ARTICLE IV
MISCELLANEOUS
4.01 Notices. All notices, demands, and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when personally delivered,
or three business days after being mailed by first class certified mail, return
receipt requested or on the next business day after being deposited with a
nationally recognized overnight courier service addressed as hereinafter set
forth. Notices, demands, and communications to the Corporation and the Secured
Party will, unless another address is specified in writing, be sent to the
addresses indicated below:
If to the Corporation: Research, Incorporated
6425 Flying Cloud Drive
Eden Prairie MN 55344
Notices to the Secured Party: Mary Ellen Abramson
c/o Irving C. MacDonald, Esq.
601 Carlson Parkway
Suite 1050
Minnetonka MN 55305
4.02 Waiver. No waiver by the Secured Party of any breach of any
provision of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any provision of this Agreement. The failure of the Secured Party at any time
or times to require performance of any provision of this Agreement shall in no
manner affect its right to enforce the same at a later time.
4.03 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements. No representations, promises, understandings,
or agreements, oral or otherwise, not herein contained shall be of any force and
effect.
4.04 Amendment. No modification or amendment of any provision of this
Agreement shall be effective unless made in a written instrument, duly executed
by the party to be bound thereby, which refers specifically to this Agreement
and states that a modification or amendment is being made in the respects set
forth in such instrument.
4.05 Severability. Whenever possible each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. If any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
4.06 Governing Law. This Agreement shall be governed by, and construe
in accordance with, the laws of the State of Minnesota, as applicable to
agreements executed and wholly performed therein.
IN WITNESS WHEREOF, the parties have entered into this Security
Agreement as of the date first above written.
/s/ Mary Ellen Abramson
Mary Ellen Abramson
RESEARCH, INCORPORATED
By /s/ Claude C. Johnson
Its President
EXHIBIT 4
FOR IMMEDIATE RELEASE May 28, 1997
RESEARCH, INCORPORATED Contact: Richard L. Grose
6425 Flying Cloud Drive Research, Inc. Treasurer
Eden Prairie, Minnesota 55344 (612) 829-8311
NASDAQ SYMBOL: RESR
Research, Inc. announced today the repurchase of 237,519 shares of Research,
Inc. common stock from Mary Ellen Abramson and the Estate of Andrew (Ed) E.
Abramson for a per share price of $6.45. After this repurchase, the Company now
has 968,424 shares outstanding. The Company paid half of the purchase price in
cash today and will pay the remaining amount in early 1998. Ed Abramson was a
founder of the Company, CEO and a Director for many years. Mr. Abramson passed
away in June 1996.
"The Company acquired these shares because of its belief that a sale of
a block this size had the potential to significantly depress the price
of the Company's common stock in the market. I expect the redemption to
have a favorable effect on earnings per share and book value per share,
which is consistent with the Company's commitment to enhancing
shareholder value," said Claude Johnson, Research, Inc.'s President and
CEO.
Research, Inc. is located in Eden Prairie, Minnesota and manufactures industrial
electronic controls and radiant heating equipment. A subsidiary, Research,
Incorporation, Ltd., operates as a manufacturing site and European Sales Office
in Humberside, England.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN
THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE RISKS AND UNCERTAINTIES THAT HAVE AN IMPACT ON EARNINGS PER
SHARE AND BOOK VALUE PER SHARE INCLUDE THE EFFECTIVENESS OF NEW PRODUCT
INTRODUCTIONS, THE PRODUCT MIX OF SALES, THE AMOUNT OF SALES GENERATED OR
VOLATILITY IN THE MAJOR MARKETS, COMPETITION AND GENERAL ECONOMIC CONDITIONS.
