This Proxy Statement is being refiled as DEFA14A because the
original filing omitted the form of proxy and appendix II
RHEOMETRIC SCIENTIFIC, INC.
ONE POSSUMTOWN ROAD
PISCATAWAY, NJ 08854
June 1, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of
Shareholders of Rheometric Scientific, Inc., to be held on June 22,
1995, at 10:00 a.m. at the Company's headquarters, One Possumtown
Road, Piscataway, New Jersey. Your Board of Directors and
Management look forward to greeting personally those shareholders
able to attend and to respond to any questions you may have
concerning your Company.
The matters to be acted upon at the meeting, as well as other
important information, are set forth in the accompanying Notice of
Annual Meeting and Proxy Statement which you are urged to review
carefully.
Regardless of your plans for attending in person, it is
important that your shares be represented and voted at the meeting.
Accordingly, you are requested to complete, sign, date, and return
the enclosed proxy card in the enclosed postage paid envelope.
Signing this proxy will not prevent you from voting in person
should you be able to attend the meeting, but will assure that your
vote is counted, if, for any reason, you are unable to attend.
Your interest and support in the affairs of Rheometric
Scientific are appreciated.
Sincerely,
Robert E. Davis
Chairman of the Board
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
ONE POSSUMTOWN ROAD
PISCATAWAY, NEW JERSEY 08854
(908) 560-8550
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To: The Shareholders of Rheometric Scientific, Inc.
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of
Shareholders (the "Annual Meeting") of Rheometric Scientific, Inc.
("RSI") will be held on June 22, 1995, at 10:00 a.m. at RSI's
headquarters, One Possumtown Road, Piscataway, New Jersey, to
consider and act upon the following proposals:
1. To elect seven directors to the Board of Directors, each
to serve for a one-year term;
2. To approve the appointment by the Board of Directors of
the firm of Coopers & Lybrand L.L.P. as independent auditors
of RSI for the fiscal year ending December 31, 1995; and
3. To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Pursuant to RSI's Bylaws, the Board of Directors has fixed the
close of business on May 15, 1995, as the record date for the
determination of shareholders entitled to notice of and to vote at
the Annual Meeting. Only holders of Rheometric Scientific's Common
Stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
Piscataway, New Jersey
June 1, 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PAID ENVELOPE PROVIDED TO YOU. YOU MAY, IF YOU
WISH, REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
ONE POSSUMTOWN ROAD
PISCATAWAY, NEW JERSEY 08854
(908) 560-8550
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 22, 1995
This Proxy Statement ("Proxy Statement") is being furnished to
shareholders of Rheometric Scientific, Inc. (the "Company" or
"RSI") in connection with the solicitation by the Board of
Directors of RSI of proxies to be used at the annual meeting of
shareholders of RSI (the "Annual Meeting") to be held on June 22,
1994, at 10:00 a.m. at the Company's headquarters, One Possumtown
Road, Piscataway, New Jersey, and at any adjournments thereof.
This Proxy Statement and the accompanying form of proxy are first
being mailed to the shareholders of RSI on or about June 1, 1995.
At the Annual Meeting, shareholders will be asked to (i) elect
seven directors to the Board of Directors, each for a one-year term
(Proposal 1, see page 4); (ii) approve the appointment of Coopers &
Lybrand L.L.P. as independent auditors of RSI for the fiscal year
ending December 31, 1995 (Proposal 2, see page 12); and
(iii) transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Axess, which currently owns 76.6% of outstanding common stock
of the Company ("Common Stock"), intends to vote its shares in
favor of all Proposals.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Each outstanding share of Common Stock entitles its owner to
one vote on all matters as to which a vote is taken at the Annual
Meeting. The close of business on May 15, 1995, has been fixed by
the Board of Directors of RSI as the record date for determination
of shareholders entitled to vote at the Annual Meeting (the "RSI
Record Date"). The number of shares of Common Stock issued and
outstanding and entitled to vote on the RSI Record Date was
13,161,739. The presence, in person or by proxy, of at least a
majority of the shares of Common Stock issued and outstanding and
entitled to vote on the RSI Record Date (6,580,870 shares) is
necessary to constitute a quorum at the Annual Meeting. The
affirmative vote of the holders of at least a majority of the votes
cast by the holders of Common Stock entitled to vote at the Annual
Meeting is required for the approval of all matters other than the
election of directors. Abstentions and broker non-votes are not
included as votes cast and accordingly will be excluded from the
total number of votes upon which a majority is based. Thus, votes
to abstain and broker non-votes will have no effect on the vote
tabulation for such proposals. Directors shall be elected by a
plurality vote of the outstanding shares of Common Stock present
and entitled to vote at the Annual Meeting. According to the
Company's Bylaws, unless otherwise provided by the New Jersey
Business Corporation Act or the Company's Certificate of
Incorporation, any other matter put to a shareholder vote will be
decided by the affirmative vote of a majority of the votes cast on
the matter.
All proxies in the enclosed form of proxy that are properly
executed and returned to RSI prior to commencement of voting at the
Annual Meeting will be voted at the Annual Meeting or any
adjournments or postponements thereof in accordance with the
instructions thereon. All executed but unmarked RSI proxies will
be voted FOR approval of the Proposals set forth in this Proxy
Statement. A proxy may be revoked by any shareholder who attends
the Annual Meeting and gives notice of his or her intention to vote
in person without compliance with any other formalities. In
addition, any RSI shareholder may revoke a proxy at any time before
it is voted by executing and delivering a subsequent proxy or by
delivering a written notice to the Secretary of RSI, stating that
the proxy is revoked. At the Annual Meeting, shareholders' votes
cast, either in person or by proxy, will be tabulated by First
Interstate Bank, the RSI transfer agent.
The management of RSI does not know of any matters other than
those set forth herein which may come before the Annual Meeting.
If any other matters are properly presented to the Annual Meeting
for action, it is intended that the persons named in the applicable
form of proxy will vote the shares represented by proxies on such
matters as determined by a majority of the Board of Directors.
The expense of printing this Proxy Statement and the proxies
solicited hereby and any filing fees incurred in connection with
the Proxy Statement and certain other filings will be borne
entirely by RSI. In addition to the use of the mails, proxies may
be solicited by officers and directors and regular employees of
RSI, without additional remuneration, by personal interviews,
telephone, telegraph or otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of May 15, 1995,
with respect to persons known by RSI to be the beneficial owners of
more than 5% of outstanding Common Stock. Unless otherwise
indicated, each such person has sole voting and dispositive power
over the shares indicated.
No.of Shares
Beneficially
Name and Address Owned (1) Percent
Axess Corporation
3801 Kennett Pike
Greenville, Delaware 19807 10,076,257 76.6%
Dr. Joseph M. Starita
16 Deerfield Court
Basking Ridge, New Jersey 07920 1,573,971 (2) 12.0%
__________
(1) In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended ("1934 Act"), a person is deemed to be
the beneficial owner, for purposes of this table, of any shares
of Common Stock (1) over which he or she has or shares voting or
investment power, or (2) of which he or she has the right to
acquire beneficial ownership at any time within 60 days from May
15, 1995. "Voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose
or direct the disposition of shares.
(2) Includes beneficial ownership of 13,500 shares held by close
family members.
SECURITY OWNERSHIP IN AXESS OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of May 15,
1995, with respect to shares of Axess common stock beneficially
owned by directors and executive officers of RSI:
No. of Shares
Name and Title Beneficially Owned (1) Percent
Robert E. Davis, Chief Executive
Officer and 469,565 21.6%
Chairman of the BoarD
Alexander F. Giacco, Director 469,565 (2) 21.6%
Richard J. Giacco, Director 46,957 2.6%
R. Michael Hendricks, Director 187,826 (3) 8.6%
____________
(1) See footnote (1) in "Security Ownership of Certain
Beneficial Owners."
(2) 446,087 shares (20.3%) are held by a revocable trust for
which Mr. Giacco is the settlor, a beneficiary and a trustee.
23,478 shares (1.3%) are held by a company in which Mr. Giacco
has sole voting power.
(3) Held by a revocable trust for which Mr. Hendricks is the
settlor, a beneficiary and a trustee.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of May 15, 1995,
with respect to shares of Common Stock beneficially owned by each
director, director nominee and Named Executive Officer (see
"EXECUTIVE COMPENSATION") of RSI and by all directors and executive
officers as a group.
No. of Shares
Name and Title Beneficially Owned Percent
(1)
Robert E. Davis, Chief Executive
Officer, Chairman of the Board 5,000 *
Joseph M. Starita, (2) 1,573,971 12.0%
David C. Beehler, Director 200 *
Alexander F. Giacco, Director 35,000 (3) *
Richard J. Giacco, Director 3,000 (4) *
R. Michael Hendricks, Director 3,000 *
Robert K. Prud'homme, Director -- --
Matthew Bilt, Vice President,Human 3,650 (5) *
Resources
Alan R. Eschbach, Executive Vice 7,190 (5) *
President
Ronald F. Garritano, Vice *
President, 7,035 (5)
Technology
J. Glenward Holland, Senior Vice -- --
President
All directors and executive
officers as a group (11 persons) 1,638,046 12.4%
_____________________
SECURITY OWNERSHIP OF MANAGEMENT (CONTINUED)
* Denotes less than 1% of the outstanding shares of Common Stock.
(1) In accordance with Rule 13d-3 under the 1934 Act, a
person is deemed to be the beneficial owner, for purposes of this
table, of any shares of Common Stock (1) over which he or she has
or shares voting or investment power, or (2) of which he or she
has the right to acquire beneficial ownership at any time within
60 days from May 15, 1995. "Voting power" is the power to vote
or direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares. All
persons shown in the table above have sole voting and investment
power, except as otherwise indicated. This table includes shares
of Common Stock subject to outstanding options granted pursuant
to the Company's Non-Qualified Stock Option Plan. As of May 15,
1995, directors and executive officers as a group hold options to
purchase 8,250 shares.
(2) Dr. Starita resigned as Chairman of the Board on March
16, 1995, and no longer holds any positions with the Company.
(3) Includes beneficial ownership of 10,000 shares held as
custodian for grandchildren.
(4) Includes beneficial ownership of 1,000 shares held in an
investment partnership for the benefit of his children and
managed by Mr. Giacco.
(5) See "Executive Compensation - Option Exercises and Year-
End Value" for shares subject to options included in the table.
COMPLIANCE WITH SECTION 16(A) OF THE 1934 ACT
Section 16(a) of the 1934 Act requires the Company's officers
and directors to file reports of their ownership of Common Stock
and changes in such ownership with the Securities and Exchange
Commission. The Company believes that during 1994 all such filings
were made except that two Form 4 Statements of Changes in
Beneficial Ownership filed by J. Glenward Holland in March and
December 1994 were late by four days and 100 days, respectively;
and Matthew Bilt, who filed an Initial Form 3 in May 1995 late by
380 days.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Bylaws of RSI provide that the number of directors shall
not be fewer than three nor more than 15. The Board of Directors
by resolution has established the number of directors to be seven.
Under the Company's Certificate of Incorporation, the directors
shall all be of one class.
Unless otherwise specified on the proxy, it is the intention
of the persons named in the proxy to vote the shares represented by
each properly executed proxy for the election as directors of the
persons named in the table below as nominees. If any such director
should become unavailable for any reason, which the Board of
Directors has no reason to anticipate, the proxy holders will vote
for the election of such other person or persons as the Board of
Directors may recommend.
INFORMATION AS TO NOMINEES
The following table sets forth the names of the Board of
Directors' nominees for election as directors. Also set forth is
certain biographical information with respect to each nominee,
including age, principal occupation or employment during the past
five years, positions held with RSI, the periods during which he
has served as a director and any other directorships held.
Principal Occupation or Employment
During the Past Five Years and OfficeDirector
Name Age (if any) Held in the Since
Company
Robert E. Davis 63 Chairman of the Board since April 27, 1992
1995, President and Chief Executive
Officer since September 20, 1993.
Managing Director, Axess
Corporation since its inception in
1991; prior thereto served as
president and chief operating
officer (1983-1991) of Sequa
Corporation, a diversified,
multinational, manufacturing
company formerly known as Sun
Chemical Corporation; and a
Director of USF&G Corp. a surety
company, and a Director of H&R
Block Corp., a personal services
company.
David C. 55 Vice President, Axess Packaging , 1993
Beehler Inc. since 1991; prior thereto
Business Director, HERCULES
Incorporated, Packaging Films Group
(1990-1991) and Director of Sales
(1987-1990).
Leonard Bogner 54 President, Bogner Business 1995
Consultants, Inc. since its
formation in November 1994; prior
thereto, Senior Chemicals Research
Department Analyst, Prudential
Securities Broker-age Firm, from
May 1986 to October 1994.
Alexander F. 75 Managing Director, Axess Corporation 1993
Giacco since its inception in 1991; prior
thereto Chairman of the Board of
Directors of HIMONT Incorporated, a
plastics manufacturing company,
since its formation (1983-1991),
and served as CEO (1987-1990); and
a Director of Marvin & Palmer
Associates, Inc., a portfolio
management firm. Mr. Giacco is
the father of Richard J. Giacco.
Richard J. 42 Vice President and General Counsel, 1992
Giacco Axess Corporation since its
inception in 1991; prior thereto
served as associate general counsel
for Safeguard Scientifics, Inc., a
computer software and electronics
company since 1985. Mr. Giacco is
the son of Alexander F. Giacco.
R. Michael 57 President, Axess Corporation since 1992
Hendricks its inception in 1991; prior
thereto served as president and
chief operating officer of HIMONT
Incorporated, a plastics
manufacturing company, since 1983.
Robert K. 47 Professor of Chemical Engineering at 1981
Prud'homme Princeton University since 1978;
Consultant to FMC, Inc., Dow
Chemical Company and DuPont, Inc.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation
paid or accrued by the Company for services rendered during the 12-
month periods ended December 31, 1992, 1993, and 1994, to the
Company's chief executive officer and the four most highly
compensated executives of the Company whose aggregate salary
exceeded $100,000 for the 12-month period ended December 31, 1994
(the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation
All other
Salary Compensation
Name and Principal PositionYear ($) ($)
(1)
Robert E. Davis, President 1994 150,000 0
and Chief Executive 1993 0 0
Officer (2)
Joseph M. Starita (3) 1994 271,966
1993 280,381
1992 267,442
J. Glenward Holland, 1994 155,018 1,386
Senior Vice 1993 195,439 1,618
President (4) 1992 49,660
Alan R. Eschbach 1994 140,627 2,728
Executive Vice President,1993 120,242 2,648
Chief 1992 137,854 3,025
Operating Officer (5)
Ronald F. Garritano 1994 137,314 2,731
Vice President, Technology 1993 128,994 2,696
1992 138,180 3,112
Matthew Bilt 1994 102,537 1,830
Vice President, Human
Resources (6)
_______________________
(1) Company contributions under the Savings and Investment
Retirement Plan.
(2) Mr. Davis became president and CEO of the Company on September
20, 1993. He was compensated by Axess Corporation through December
31, 1993. Effective January 1, 1994, RSI and Axess verbally agreed
that RSI will pay to Axess a management fee, equal to $150,000 per
year, for said services. Payment of the fee for 1994 was deferred
into 1995. See "Certain Relationships and Related Transactions."
(3) Dr. Starita resigned as Chairman of the Board March 16, 1995,
and compensation by the Company will terminate on July 1, 1995.
(4) Mr. Holland was hired by the Company as of July 1, 1992 and
was Chief Operating Officer from July 1, 1992 until November 10,
1994. Mr. Holland's employment with the Company ended on December
31, 1994.
(5) Mr. Eschbach became Chief Operating Officer effective November
10, 1994.
(6) Mr. Bilt became an officer of the Company on May 3, 1994.
OPTION GRANTS
RSI currently has a Non-Qualified Stock Option Plan (the
"Option Plan"). The Option Plan was adopted by the Board of
Directors in September 1986 and approved by the shareholders in
October 1986. No stock options were granted during the 12-month
period ended December 31, 1994.
OPTION EXERCISES AND YEAR-END VALUE
To date, no options under the Option Plan have been exercised.
The following table sets forth the number of shares underlying
unexercised options held by the Named Executive Officers, none of
which were in the money options, as of December 31, 1994:
Number of Unexercised
Options at
Name December 31, 1994
Exercisable/ Unexercisable
Matthew Bilt 1,650 0
Alan R. Eschbach 4,950 0
Ronald F. Garritano 3,300 0
___________________
BOARD COMMITTEES
The Board of Directors has a Stock Option and Compensation
Committee (the "Compensation Committee"), which is responsible for
administering the Option Plan. The members of the Compensation
Committee are Messrs. Bogner, Hendricks, and R. Giacco. During the
12-month period ended December 31, 1994, the Compensation Committee
held one meeting.
The Board of Directors has an Audit Committee which reviews
the scope and procedures of the audit activities of the independent
auditors and their reports on their audits. It also reviews
reports from RSI's financial management and independent auditors on
compliance with corporate policies and the adequacy of RSI's
internal accounting controls. The members of the Audit Committee
in 1994 were Messrs. Giacco, Hendricks, John A. Ridley, and
Dr. Prud'homme. Mr. Bogner replaced Mr. Ridley in 1995. It held
one meeting during the 12-month period ended December 31, 1994.
The Board of Directors formed a Special Committee in January
1994 in connection with the acquisition of the PL Thermal Sciences
Business. Dr. Prud'homme and Mr. Ridley were the members of the
Special Committee.
ATTENDANCE AT MEETINGS
During the 12-month period ended December 31, 1994, the Board
of Directors held eight meetings, five of which were special
telephonic meetings. All directors attended at least 75% of the
total of such meetings.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company are paid an annual
retainer fee of $3,000, plus $1,000 per Board meeting attended in
person and reimbursement of their travel expenses. No fees are
paid for committee meetings or special telephone meetings.
However, at the Board of Directors Meeting on April 27, 1995, the
Board unanimously agreed that Mr. Ridley and Dr. Prud'homme, the
Special Committee formed in connection with the PL Thermal Sciences
Business acquisition, be compensated $7,000 and $6,500,
respectively, for their time. Certain non-employee directors also
provided professional services to the Company from time to time
during the year. See "Certain Relationships and Related
Transactions."
EMPLOYMENT AGREEMENTS
The Company entered into written employment agreements with
Dr. Starita and Messrs. Eschbach, and Garritano as of May 26, 1992.
Under these agreements, base annual salary is $250,250 for
Dr. Starita, $132,000 for Mr. Eschbach and $119,840 for Mr.
Garritano, all subject to discretionary increase by the Board of
Directors. Dr. Starita's agreement will expire on June 30, 1995.
Messrs. Eschbach's, and Garritano's agreements which had original
expiration dates of June 30, 1994 were continued for one year, and
can be continued from year to year thereafter.
Mr. M. Starita, father of Dr. Joseph M. Starita, past Chairman
of the Board, was party to a contract entered into in 1982, which
entitled him to be paid $15,000 per year for a period of 10 years
following his retirement. During fiscal year ended June 30, 1985,
Mr. M. Starita received an advance payment of $45,115 with respect
to such post-retirement payments. The amount so advanced will be
deducted from the post-retirement payments to be made to him. Mr.
M. Starita's post-retirement payments commenced during 1994.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of RSI's executives generally are
made by the three-member Compensation Committee. Each member of
the Compensation Committee is a non-employee director. All
decisions by the Compensation Committee relating to the
compensation of RSI's executive officers are reviewed by the full
Board of Directors.
Executive Compensation Policies. The Compensation Committee's
executive compensation policies are designed to provide competitive
levels of compensation that integrate compensation with the
Company's annual and long-term performance goals, reward above-
average corporate performance, recognize individual initiative and
achievements, and assist RSI in attracting and retaining qualified
executives. Target levels of the executive officers' overall
compensation are intended to be consistent with others in the
Company's industry, but are increasingly being steered toward
programs contingent upon the Company's performance. Compensation
paid to RSI's Named Executive Officers in 1994 consisted only of
base salary.
The Named Executive Officers, other than Mr. Davis and Mr.
Bilt, are employed pursuant to written employment agreements which
establish their base annual salary. The terms of the agreements
in the judgment of the Compensation Committee are standard and
appropriate for these executives and accordingly were endorsed by
the Compensation Committee and ratified by the remaining members of
the Board.
Compensation increases for all the executive officers will be
based upon the achievement of specific operating objectives
assignable to the executive officers as a group and/or
individually. These objectives will include, but are not limited
to, the successful accomplishment of milestones in RSI's long-term
strategic plan and the achievement of each year's operating budget.
Each employment agreement also provides that each executive
officer may be entitled to receive incentive compensation based on
the performance of such officer. In this regard, on January 27,
1994, the Compensation Committee approved an incentive pay system
(the "Incentive System"). The Incentive System has been designed
to motivate job performance and increase organizational
productivity. Under the Incentive System, the Company will
establish and fund an incentive pool based on achievement by the
Company of performance objectives relating to profit, cash flow,
revenue and cost reduction. Participation in this program will be
limited to select key positions to be designated by the
Compensation Committee. Participants must be in the program for an
entire calendar year before being eligible for a bonus, subject to
exceptions made for newly hired employees. The incentive pool will
be distributed to designated participants proportionately based on
the relationship that an individual's base pay has to the aggregate
base pay of all participants.
The 1994 incentive pool was established on a restrictive level
based upon profitability forecasts. Although performance
objectives relating to cost reductions were substantially on
target, the remaining criteria, consisting of profitability, cash
flow and revenue goals, were not met. The Company did not fund the
pool in 1994 and no incentive bonuses were distributed.
The Compensation Committee also endorses the position that
stock ownership by management and stock-based performance
compensation arrangements are beneficial in aligning management's
and shareholders' interests in the enhancement of shareholder
value. Thus, the Compensation Committee may increasingly utilize
these elements in compensation packages for its executive
officers.
Named Executive Officers, other than Dr. Starita and Mr.
Davis, may be granted options to purchase Common Stock under the
Option Plan and are eligible to participate on the same terms as
non-executive employees in the Company's Savings and Investment
Retirement Plan (the "Savings Plan"), a broad-based plan which
accords benefits based on pre-established formulas and eligibility
criteria, as well as Company group life and health insurance plans.
All decisions with respect to option grants under the Option Plan
are made solely by the Compensation Committee. No current member
of the Compensation Committee is eligible to participate in the
Option Plan.
President and CEO Compensation. As chief executive officer of
RSI, Mr. Davis did not receive any additional compensation from the
Company or Axess for services rendered to the Company. The
Company agreed to pay Axess a management fee of $150,000 per year
for services to be rendered by Mr. Davis. Mr. Davis has devoted
substantially all of his time on behalf of Axess to RSI. Mr. Davis
is compensated well in excess of $150,000 by Axess.
Respectfully submitted,
Stock Option and Compensation Committee
Leonard Bogner
R. Michael Hendricks
Richard J. Giacco
STOCK PERFORMANCE CHART
The following table sets forth comparative information
regarding RSI's cumulative shareholder return on Common Stock over
the last five fiscal years ended December 31, 1994. Total
shareholder return is measured by dividing total dividends
(assuming dividend reinvestment) plus share price change for a
period by the share price at the beginning of the measurement
period. RSI's cumulative shareholder return based on an investment
of $100 at the beginning of the five-year period beginning January
1, 1990 is compared to the cumulative total return of the Nasdaq
Market Index and an index comprised of public companies whose
securities have been trading publicly since January 1, 1990 and
which report under the standard industrial classification code 3826
(19 companies excluding RSI) (the "Peer Group Index").
COMPARISON OF CUMULATIVE TOTAL
RETURN AMONG RSI,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
December 31,
1990 1991 1992 1993 1994
RSI 100 38.89 61.11 44.44 30.56 27.78
Peer Group 100 105.93 133.60 141.06 146.95 131.93
Nasdaq Market 100 81.12 104.14 105.16 126.14 132.44
Source: Media General Financial Services
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John Ridley, a former director of the Company, is a partner at
the law firm of Crummy, Del Deo, Dolan, Griffinger & Vecchione, a
professional corporation. The Company has retained such law firm
in connection with certain matters during the 12-month period ended
December 31, 1994.
In 1994 the Company acquired the Thermal Sciences Division of
Polymer Laboratories Ltd. (the "PL Thermal Sciences Business")
through a series of transactions involving Axess. Axess acquired
the PL Thermal Sciences Business on March 3, 1994 pursuant to the
Agreement For Purchase of A Business and Shares (the "PL Purchase
Agreement") for an aggregate payment equal to $6,919,000. Axess
formed two wholly-owned subsidiary companies, Axess Thermal
Sciences Limited, a U.K. company ("ATS UK") and Axess Thermal
Sciences, Inc., a Delaware corporation ("ATS US"), through which
the PL Thermal Sciences Business was purchased. Axess's purchase
of the PL Thermal Sciences Business was executed in contemplation
of contributing such business to the Company upon the approval of
the contribution by the Company's shareholders. On November 10,
1994, at the Annual Meeting of Shareholders, the shareholders
approved the issuance by RSI of 4,226,348 shares of Common Stock to
Axess in exchange for the contribution by Axess of all the
outstanding capital stock of two wholly-owned subsidiaries of
Axess, ATS US and ATS UK. Shareholders also approved the issuance
of 1,023,652 shares of Common Stock to Axess in connection with the
exercise by Axess of the Convertible Note in the principal amount
of $1,339,000. These transactions represented the transfer by
Axess to RSI of all of the PL Thermal Sciences Business previously
acquired by Axess. These transactions were fully described in the
Company's Proxy Statement dated October 26, 1994. For additional
descriptions of the transactions, see also Notes 2 and 5 of Notes
to the Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources in the 1994 Annual
Report to Shareholders incorporated herein by reference.
In 1994, Axess made a number of short-term loans to the
Company, all of which were loans for working capital as follows:
On March 7, 1994, Axess and the Company's UK subsidiary, executed a
subordinated term note of $150,000 due January 1, 1996, bearing
interest at a rate equal to the British Prime Rate plus 1.5% (8.25%
at December 31, 1994). On March 25, 1994, Axess and the Company's
UK subsidiary executed a subordinated term note of $225,000 due
January 1, 1996, bearing interest at a rate equal to the British
Prime Rate plus 1.5% (8.25% at December 31, 1994).
On April 20, 1994, in connection with RSI's acquisition of the
PL Thermal Sciences Business from Axess described above, the
Company acquired from Axess the accounts receivable and inventories
of the United States operations of the PL Thermal Sciences
Business. In exchange for the assets acquired, Axess and the
Company executed a $1,339,000 convertible subordinated revolving
credit promissory note due November 1995, bearing interest at 12%
per annum.
The Company also entered into short-term loan arrangements
with Axess for working capital during 1994 on April 24, 1994,
September 23, 1994, October 7 and 21, 1994, and November 11, 1994
in the amounts of $500,000, $160,000, $300,000, $400,000, and
$300,000, respectively. These short-term loans bear interest at
12% per annum and were due November 1, 1995. However, pursuant to
a subsequent loan agreement (see below), said maturity dates were
extended to April 30, 1996.
On April 17, 1995, Axess provided $2,400,000 in additional
working capital to the Company in the form of subordinated debt.
The subordinated debt will mature on April 30, 1996 and will bear
interest at 12% annually, payable monthly. In addition, Axess
agreed that it would extend the maturities on all other debt
obligations ($3,715,000 at December 31, 1994) of the Company to
Axess until April 30, 1996. On April 13, 1995, Axess also agreed
to defer interest payments on all debt obligations through
September 30, 1995, at which time the Company shall pay in full all
outstanding deferred interest. The Company agreed to pay interest
on the deferred interest.
On June 14, 1994, the Company, ATS UK and Professor Raymond E.
Wetton (former Chairman of Polymer Labs) agreed to terminate the
Service Agreement which was entered into on March 2, 1994 for an
initial 36-month term between ATS UK, Professor Raymond E. Wetton,
and RSI, Inc. whereas Professor Wetton had agreed to act as
Managing Director of the European operations for a salary of
approximately $172,500. The termination agreement provided for
Professor Wetton's resignation of directorships and payment in lieu
of notice in the amount of $56,400. Contemporaneously, Rheometric
Scientific Limited and Professor Wetton entered into a consulting
agreement under which Professor Wetton will provide consultancy
services to Rheometric Scientific Limited commencing July 1, 1994
through December 31, 1995. Under the terms of the Consultancy
Agreement, Rheometric Scientific paid Professor Wetton $73,900
through December 31, 1994. Under the terms of the agreement,
Professor Wetton will receive $108,000 commencing January 1, 1995,
and through the end of the agreement, December 31, 1995.
Additionally, during 1994 the Company granted Professor Wetton an
option to purchase 300,000 shares of Common Stock, at an option
price of $1.03 per share (fair value at date of grant). The option
was to expire in seven years, was subject to vesting and the shares
were exercisable ratably over three years. On June 14, 1994, the
option was modified to reduce to 100,000 the number of shares
relating to the option.
Mr. Robert E. Davis became president and CEO of the
Company on September 20, 1993. He was compensated by Axess
Corporation through December 31, 1993. Effective January 1, 1994,
the Company and Axess verbally agreed that the company will pay to
Axess a management fee, equal to $150,000 per year included in
accrued liabilities at December 31, 1994, for said services.
Payment of the fee for 1994 has been deferred into 1995.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors of RSI has appointed Coopers & Lybrand
L.L.P. as independent auditors to audit the books and accounts of
RSI for the year ending December 31, 1995, and recommends that the
appointment of such auditors be ratified by the shareholders.
Coopers & Lybrand L.L.P. completed the audit of the books and
accounts of RSI for the fiscal year ended December 31, 1994, and
has been RSI's independent auditor since September 13, 1993. The
Board of Directors believes that the selection of an independent
auditor to audit the books and accounts of RSI prepared by
management is an appropriate matter for shareholder consideration.
If the shareholders do not ratify the selection of Coopers &
Lybrand L.L.P. , the Board of Directors will consider the selection
of another firm of independent certified public accountants to
audit the books and accounts for RSI for the year ending December
31, 1995. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the meeting and will have the opportunity
to make a statement (if they so desire) and to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
SHAREHOLDER PROPOSALS
Any proposals by shareholders of RSI to be considered for
inclusion in RSI's Proxy Statement relating to RSI's 1996 Annual
Meeting of Shareholders must be in writing and received by RSI, at
its principal office, no later than December 29, 1995.
GENERAL
The Board of Directors knows of no other matters to be
presented for consideration at the Annual Meeting. However, if any
other matters properly come before the Annual Meeting, it is
intended that the persons named in the accompanying form of proxy
will vote on such other matters in accordance with their judgment
of the best interests of RSI.
RSI HAS PROVIDED TO SHAREHOLDERS OF RECORD AT THE CLOSE OF
BUSINESS ON MAY 15, 1995, WITHOUT CHARGE, RSI'S ANNUAL REPORT FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1994. ADDITIONAL COPIES WILL BE
PROVIDED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
June 1, 1995
<PAGE>
APPENDIX 1 - Proxy Card
RHEOMETRIC SCIENTIFIC, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert E. Davis, Richard J. Giacco, and
each of them, with power of substitution, to represent and to vote on
behalf of the undersigned all of the shares of Rheometric Scientific, Inc.
which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the Company's Headquarters, One Possumtown Road,
Piscataway, New Jersey, on Thursday, June 22, 1995, at 10:00 A.M., and at
any adjournment or adjustments thereof, hereby revoking all proxies
heretofore given with respect to such stock, upon the following proposals
more fully described in the notice of and proxy statement for the meeting
(receipt of which is hereby acknowledged).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1) AND (2)
1. Proposal to elect seven Directors, each to serve a one year term.
___ FOR all nominees listed below ____WITHHOLD AUTHORITY
(except as marked to the contrary below to vote for all nominees
listed below
Robert E. Davis, David C. Beehler, Leonard Bogner,
Alexander F. Giacco,Richard J. Giacco, R. Michael Hendricks, and Robert K.
Prud'homme
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
__________________________________________________________________
(Continued and to be signed on the other side.)
2. Proposal to ratify the appointment of Coopers & Lybrand L.L.P. as the
independent auditors of the Company for the fiscal year ending December 31,
1995.
___FOR ___AGAINST ___ABSTAIN
3. In their discretion upon such other matters as may properly come before
the Annual Meeting.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Shareholder. If no direction is made, this proxy
will be voted FOR Proposals 1 and 2.
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature
Signature if held jointly
Dated , 1995
Please return in the enclosed postage-paid envelope.
___I will ___ I will not attend the Annual Meeting.
<PAGE>
APPENDIX 2 - Except from Annual Report incorporated in Proxy
Statement by Reference
LIQUIDITY AND CAPITAL RESOURCES
Management believes that the cash generated from operations, funds
available under the lines of credit, and funds received from Axess's
investments and debt financing, should be sufficient to meet the
Company's working capital needs for the next fiscal year. Adequacy of
cash flows generated beyond 1995 will depend upon continued
relationships with banks or other lenders and the Company's ability to
achieve expected sales volumes to support profitable operations.
Cash Flows from Operations
Net cash used in operating activities in the fiscal years ended December
31, 1994 and 1993 and the 12 months ended June 30, 1992 were $581,000,
$1,195,000 and $218,000, respectively. The negative cash flow from
operations in 1994 was comprised primarily of $1,463,000 of net loss
offset by non-cash depreciation and amortization charges of $1,301,000,
decreases in receivables, and prepaid expenses of $217,000, and
$469,000, respectively. These changes were offset by a decrease in
inventory of $118,000 and decreases in accounts payable and accrued
liabilities of $455,000 and the restructuring reserve of $823,000.
Cash Flows from Investing
Net cash used in investing activities in the fiscal years ended December
31, 1994 and 1993, and the 12 months ended June 30, 1992 were $212,000,
$322,000 and $78,000, respectively. During 1994 the Company's capital
expenditures of $230,000 were offset by equipment sales proceeds of
$18,000. Capital expenditures in 1995 are expected to approximate 1994
levels.
Cash Flows from Financing
Net cash provided by (used in) financing activities in the fiscal years
ended December 31, 1994 and 1993, and the 12 months ended June 30, 1992
were $1,172,000, $1,365,000 and $558,000, respectively. During 1994 the
Company's external debt payments of $862,000 were offset by the proceeds
of $2,035,000 in long-term notes extended by Axess to the Company.
Included in these proceeds is $375,000 provided to the Company's UK
subsidiary, part of the PL Thermal Sciences Business.
During 1991 and 1992, Axess purchased from the Company
subordinated convertible debentures for $2,800,000. The debentures were
converted into 1,773,390 shares of the Company's Common Stock on June
30, 1993 (see Note 7).
During 1993, Axess and the Company executed various
subordinated term loans aggregating $1,000,000. On November 1, 1993,
Axess and the Company consolidated the $1,000,000 of subordinated term
loans and the $340,000 then outstanding under the Platform Financing
Agreement (Axess canceled the remaining availability under this
facility) into a subordinated term loan of $1,340,000, due November 1,
1995, bearing interest at 12% per year. On April 13, 1995, Axess agreed
to extend the maturity date to April 30, 1996.
On November 18, 1993, Axess and the Company executed a short-
term capital loan of $340,000, payable on February 28, 1994. The note
bears interest at 12% per annum. On February 15, 1994, Axess and the
Company mutually agreed to extend the maturity date of the loan to
September 30, 1994. In September 1994, Axess agreed to extend the
maturity date of the loan to November 1, 1995.
On March 7, 1994, Axess and the Company's UK subsidiary,
executed a subordinated term note of $150,000 due January 1, 1996,
bearing interest at a rate equal to the British Prime Rate plus 1.5%
(8.25% at December 31, 1994).
On March 25, 1994, Axess and the Company's UK subsidiary
executed a subordinated term note of $225,000 due January 1, 1996,
bearing interest at a rate equal to the British Prime Rate plus 1.5%
(8.25% at December 31, 1994).
On April 20, 1994, Axess and the Company executed a
subordinated term loan of $500,000 due November 1, 1995, bearing
interest at 12% per annum.
On April 20, 1994, the Company acquired from Axess the
accounts receivable and inventories of the United States operations of
the Thermal Sciences Division of Polymer Laboratories Ltd. purchased by
Axess in March 1994. In exchange for the assets acquired, Axess and the
Company executed a $1,339,000 convertible subordinated revolving credit
promissory note due November 1995, bearing interest at 12% per annum.
On November 10, 1994, shareholders approved the issuance of 1,023,652
shares of Rheometrics Common Stock to Axess in connection with the
exercise by Axess of the conversion option.
On September 23, 1994, Axess and the Company executed a
$160,000 short-term loan; on October 7 and 21, 1994, Axess and the
Company executed $300,000 and $400,000 short-term loans, respectively;
and on November 11, 1994, Axess and the Company executed a $300,000
short-term loan. These short-term loans bear interest at 12% per annum
and are due November 1, 1995.
On April 13, 1995, Axess agreed that it would provide
$2,400,000 in additional working capital to the Company in the form of
subordinated debt. The subordinated debt will mature on April 30, 1996
and will bear interest at 12% payable monthly. In addition, Axess
agreed that it would extend the maturities on all debt obligations
($3,715,000 at December 31, 1994) of the Company to Axess until April
30, 1996, the interest of which would also be subject to deferral. On
April 17, 1995, Axess provided $2,400,000 of cash to the Company as
subordinated debt. On April 13, 1995, Axess also agreed to defer
interest payments on all debt obligations (including the $2,400,000)
through September 30, 1995.
The Company had working capital lines of credit with certain
domestic and foreign banks aggregating $6,929,000 of which approximately
$500,000 was available at December 31,1994.
On April 26, 1995, the Company and the domestic banks revised
and extended the existing line of credit agreements to April 30, 1996.
Additionally, on April 26, 1995, the domestic banks waived certain
covenant violations with respect to restrictive covenants as of the
December 31, 1994 fiscal period. Specifically, the waived covenant
violations were: the maintenance of minimum tangible net worth; the
maintenance of maximum debt to tangible net worth ratio; and the
maintenance of a minimum current ratio. Absent this waiver the Company
would have been in violation of these covenants as of December 31, 1994.
Under the terms of the commitment, the Company's domestic lines of
credit were extended to April 30, 1996, and will remain at $3,720,000
until September 30, 1995, and will be reduced to $3,545,000 on September
30, 1995, to $3,220,000 on December 31, 1995, and to $2,720,000 on March
31, 1996. Under the revised agreements (including the mortgage loans
payable), the most restrictive financial covenants are (a) the
maintenance of minimum tangible net worth, as defined, of at least
$4,753,000 as of March 31, 1995, $5,900,000 as of June 30, 1995,
$5,800,000 as of September 30, 1995 and $6,720,000 as of December 31,
1995; (b) the maintenance of a maximum debt to tangible net worth ratio,
as defined, of 5.56 to 1 as of March 31, 1995, 4.55 to 1 as of June 30,
1995, 4.37 to 1 as of September 30, 1995 and 3.66 to 1 as of December
31, 1995; (c) the maintenance of a current ratio, as defined, of at
least 0.98 to 1 as of March 31, 1995, 1.07 to 1 as of June 30, 1995,
1.08 to 1 as of September 30, 1995 and 1.13 to 1 as of December 31,
1995; (d) the limitation of annual capital expenditures, as defined, in
an amount aggregating less than $125,000 during any fiscal quarter and
aggregating less than $500,000 per fiscal year; (e) the prohibition of
cash dividends or cash distributions to shareholders; and (f) a
limitation on intercompany loans and advances shall not in the aggregate
exceed $6,000,000 as of March 31, 1995 and thereafter.
Additionally during 1994, the Company's letters of credit of
approximately $2,400,000 which partially collateralized its foreign bank
borrowings, were extended to June 1, 1995. On April 26, 1995, the
domestic banks have extended the letters of credit to April 30, 1996.
On April 26, 1995, the Company and the domestic banks agreed
to a moratorium on the mortgage loan principal payments from April 26,
1995 to September 29, 1995 (amounting to $41,416 per month), at which
time the Company shall pay in full the deferred principal payments.
Commencing on October 1, 1995, the Company will resume scheduled
principal payments.
The Company's mortgage loans, lines and letters of credit are
subject to acceleration in the event that there is a material and
adverse change in the condition or affairs, financial or otherwise, of
the Company which in the reasonable opinion of the domestic banks
impairs the banks' collateral or increases its risk so as to jeopardize
the repayment of the obligations.
See Statement of Cash Flows for further details of the Company's cash
flows.
See Footnote 4 and 5 for additional information.
2. Acquisition
Axess acquired the Polymer Laboratories Thermal Sciences Business (the
"PL Thermal Sciences Business") on March 3, 1994 pursuant to the
Agreement For Purchase of A Business and Shares (the "PL Purchase
Agreement") for an aggregate payment equal to $6,919,000. Additionally,
Axess incurred approximately $227,000 of transaction expenses in
connection with the negotiation and completion of the PL Purchase
Agreement. Axess formed two wholly-owned subsidiary companies, Axess
Thermal Sciences Limited, a U.K. company ("ATS UK") and Axess Thermal
Sciences, Inc., a Delaware corporation ("ATS US"), through which the PL
Thermal Sciences Business was purchased. Axess's purchase of the PL
Thermal Sciences Business was executed in contemplation of contributing
such business to the Company upon the approval of the contribution by
the Company's shareholders.
On April 20, 1994, the Company acquired from ATS US the
accounts receivable, inventories, and certain other assets and
liabilities of the United States operations of the Thermal Sciences
Division of Polymer Laboratories Ltd., purchased by Axess in March 1994.
In exchange for the assets acquired, Axess and the Company executed a
$1,339,000 convertible subordinated revolving credit promissory note
(the "Convertible Note") due November 1995, bearing interest at 12% per
annum.
On November 10, 1994, at the Annual Meeting of Shareholders,
the shareholders approved the issuance by Rheometrics of 4,226,348
shares of Rheometrics Common Stock to Axess in exchange for the
contribution by Axess of all the outstanding capital stock of two wholly-
owned subsidiaries of Axess, ATS US and ATS UK. Shareholders also
approved the issuance of 1,023,652 shares of Rheometrics Common Stock to
Axess in connection with the exercise by Axess of the Convertible Note
in the principal amount of $1,339,000. These transactions represent the
transfer by Axess to Rheometrics of all of the PL Thermal Sciences
Business previously acquired by Axess.
The acquisition of the PL Thermal Sciences Business by Axess
was accounted for as a purchase for accounting and financial reporting
purposes and the subsequent acquisition of the PL Thermal Sciences
Business by Rheometrics was accounted for as a transfer and exchange
between companies under common control in a manner similar to a pooling
of interests. The Company's consolidated financial statements reflect
the assets and the liabilities so transferred at historical cost
(representing Axess's cost of the PL Thermal Sciences Business). The
transfer from Axess to Rheometrics indicated above principally consisted
of accounts receivable of $2,576,000, inventory of $3,159,000, certain
other assets of $495,000, certain accounts payable and other liabilities
of $1,676,000 and goodwill of $2,592,000. The Company's consolidated
financial statements reflect the acquisition from March 3, 1994, since
at that date both the Company and the PL Thermal Sciences Business were
under the common control of Axess.
The previous owner of the PL Thermal Sciences Business did not
maintain separate financial statement records for its various business
lines. While sales and cost of sales are identifiable, the business
lines shared various administrative, marketing, and facility costs. The
following table is an unaudited pro forma summary of the combined PL
Thermal Sciences Business and Rheometric's sales, cost of sales, and
gross profit assuming the acquisition occurred at the beginning of each
year presented. The unaudited pro forma combined sales, cost of sales,
and gross profit are not necessarily indicative of the results that
would have occurred had the business actually been combined during the
periods presented; nor is this information indicative of future combined
results.
Unaudited
12 Months Ended December 31,
1994 1993
Sales $ 36,329 $ 38,988
Cost of Sales 19,939 21,399
________ ________
Gross Profit $ 16,390 $ 17,589
======== ========
The PL Thermal Sciences Business results indicated above were
translated at an exchange rate of $1.50 for both periods presented.
5. Long-term Debt and Short-term Borrowings - Affiliate
Long-term debt - affiliate consists of the following:
December 31, 1994 December 31, 1993
Two subordinated term notes
with interest equal to
the British Prime plus
1.5% (8.25% at December 31,
1994) due April 30, 1996 $ 375,000 --
Various subordinated term notes
due April 30, 1996 with
interest at 12% per annum 3,340,000 $ 1,340,000
3,715,000 1,340,000
Less current maturities -- --
___________ ___________
$ 3,715,000 $ 1,340,000
During 1991 and 1992 the Company issued to Axess subordinated
convertible debentures totaling $2,800,000. The debentures were
converted into 1,773,390 shares of the Company's Common Stock on June
30, 1993 (see Note 7).
On May 26, 1992, Axess and the Company entered into a Platform
Financing Agreement pursuant to which Axess agreed to advance to the
Company up to $1,000,000 in order to finance the construction for sale
or lease of three process monitoring platform systems. The Company's
indebtedness to Axess for the platform financing called for interest at
prime plus one percent. Axess had a first priority interest in the
platforms, and the Company was obligated to use the proceeds from any
sale or lease of the platforms to repay Axess for the advance.
During 1993, Axess and the Company executed various
subordinated term loans aggregating $1,000,000. On November 1, 1993
Axess and the Company consolidated the $1,000,000 of subordinated term
loans and the $340,000 then outstanding under the Platform Financing
Agreement (Axess canceled the remaining availability under this
facility) into a subordinated term loan of $1,340,000, due November 1,
1995, bearing interest at 12% per year.
On November 18, 1993, Axess and the Company executed a short-
term capital loan of $340,000, payable on February 28, 1994. The note
bears interest at 12% per annum. On February 15, 1994, Axess and the
Company mutually agreed to extend the maturity date of the loan to
September 30, 1994. In September 1994, Axess agreed to extend the
maturity date of the loan to November 1, 1995.
On March 7, 1994, Axess and the Company's UK subsidiary
executed a subordinated term note of $150,000 due January 1, 1996,
bearing interest at a rate equal to the British Prime Rate plus 1.5%
(8.25% at December 31, 1994).
On March 25, 1994, Axess and the Company's UK subsidiary,
executed a subordinated term note of $225,000 due January 1, 1996,
bearing interest at a rate equal to the British Prime Rate plus 1.5%
(8.25% at December 31, 1994).
On April 20, 1994, Axess and the Company executed a
subordinated term loan of $500,000 due November 1, 1995, bearing
interest at 12% per annum.
On April 20, 1994, the Company acquired from Axess the
accounts receivable and inventories of the United States operations of
the Thermal Sciences Division of Polymer Laboratories Ltd., purchased by
Axess in March 1994. In exchange for the assets acquired, Axess and the
Company executed a $1,339,000 convertible subordinated revolving credit
promissory note due November 1995, bearing interest at 12% per annum.
On November 10, 1994, shareholders approved the issuance of 1,023,652
shares of Rheometrics Common Stock to Axess in connection with the
exercise by Axess of the conversion option.
On September 23, 1994, Axess and the Company executed a
$160,000 short-term loan; on October 7 and 21, 1994, Axess and the
Company executed $300,000 and $400,000 of short-term loans,
respectively; and on November 11, 1994, Axess and the Company executed a
$300,000 short-term loan. These short-term loans bear interest at 12%
per annum and were due November 1, 1995.
Mr. Robert E. Davis became president and CEO of the Company on
September 20, 1993. He was compensated by Axess Corporation through
December 31, 1993. Effective January 1, 1994, the Company and Axess
verbally agreed that the Company will pay to Axess a management fee,
equal to $150,000 per year included in payable to affiliate at
December 31, 1994, for said services.
On April 13, 1995, Axess agreed that it would provide
$2,400,000 in additional working capital to the Company in the form of
subordinated debt. The subordinated debt will mature on April 30, 1996
and will bear interest at 12% payable monthly. In addition, Axess
agreed that it would extend the maturities on all debt obligations
($3,715,000 at December 31, 1994) of the Company to Axess until April
30, 1996. On April 13, 1995 Axess also agreed to defer interest
payments on all debt obligations through September 30, 1995, at which
time the Company shall pay in full all outstanding deferred interest.
On April 17, 1995, Axess provided $2,400,000 of cash to the
Company as subordinated debt. Interest on such debt will also be
deferred through September 30, 1995, at which time the Company shall pay
in full all outstanding deferred interest.
7. Capital Stock and Stock Option and Incentive Plans
On November 22, 1991, the Company and Axess consummated transactions as
defined by the 1991 Common Stock and Subordinated Convertible Debenture
Purchase Agreement ("1991 Purchase Agreement") between the Company and
Axess. The Company issued to Axess (i) 771,300 shares of the Company's
Common Stock in consideration for $1,500,000 and (ii) a $1,500,000
principal amount Subordinated Convertible Debenture (the "1991
Debenture") convertible into 551,471 newly-issued shares of Common
Stock, pursuant to the 1991 Purchase Agreement.
On August 21, 1992, the Company and Axess consummated
transactions as defined by the 1992 Common Stock and Subordinated
Convertible Debenture Purchase Agreement, whereby the Company sold
nearly $2,000,000 in newly-issued securities to Axess. Under the
Agreement, Axess purchased (i) 650,670 newly-issued shares of Common
Stock for approximately $692,000 and (ii) a $1,300,000 principal amount
Subordinated Convertible Debenture, convertible into 1,221,919 newly-
issued shares of Common Stock.
On June 17, 1993, the Company and Axess signed an Option
Agreement (the "1993 Option Agreement") whereby the Company granted
Axess an irrevocable option ("Option") to purchase 1,630,897 (or such
number that would increase by ten percent of the Common Stock of the
Company on a fully diluted basis), newly-issued shares of Common Stock
of the Company for $1,000,000. In addition, the 1993 Option Agreement
required Axess to convert the outstanding Convertible Debentures (the
"Debentures") dated November 22, 1991 and August 21, 1992 into shares of
Common Stock, in accordance with the terms of the Debentures.
On June 30, 1993, Axess exercised the Option and the Company
sold 1,630,897 shares of newly-issued Common Stock for $1,000,000. In
addition, Axess also converted $2,800,000 of Debentures into 1,773,390
newly-issued shares of Common Stock.
On November 10, 1994, at the Annual Meeting of Shareholders,
the shareholders approved the amendment to Rheometrics' Certificate of
Incorporation to increase the number of authorized shares of Rheometrics
Common Stock that the Company will have the authority to issue from
10,000,000 shares to 20,000,000 shares.
Also on November 10, 1994, the shareholders approved the
issuance by Rheometrics of 4,226,348 shares of Rheometrics Common Stock
to Axess in exchange for the contribution by Axess of all the
outstanding capital stock of two wholly-owned subsidiaries of Axess.
Shareholders also approved the issuance of 1,023,652 shares of
Rheometrics Common Stock to Axess in connection with the exercise by
Axess of a convertible subordinated promissory note in the principal
amount of $1,339,000. These transactions represent the transfer by
Axess to Rheometrics of all of the thermal sciences business recently
acquired by Axess.
As a result of the 1991, 1992, 1993, and 1994 Transactions,
Axess owns 76.6% of the outstanding shares of the Company's Common
Stock.
The Company had two stock option plans that provide for the
purchase of the Company's Common Stock by officers and key employees of
the Company and its subsidiaries. Under the 1982 Incentive Stock Option
Plan (Plan I), a maximum of 74,703 shares of Common Stock could have
been issued. Plan I terminated on October 20, 1992 and the options
outstanding expired on February 11, 1993. At December 31, 1993, all
options issued under Plan l have expired.
The 1986 Incentive and Non-Qualified Stock Option Plan (Plan
II) provides for the issuance of a maximum of 110,000 shares of Common
Stock as either "Incentive Stock Options" or "Non-Qualified Stock
Options." Incentive Stock Options are exercisable at not less than 100%
of the fair market value of the Common Stock on the date the option is
granted. Non-Qualified Stock Options, exercisable at a price specified
by the Stock Option and Compensation Committee of the Board of
Directors, may not be less than the greater of the par value of the
Common Stock or 50% of the fair market value of the Common Stock on the
date the option is granted. At December 31, 1994, stock options of
18,700 were already granted, net of cancellations, and 91,300 were
available for future grants. No stock options were granted at less than
their fair market values. Options outstanding are exercisable through
October 25, 1995.
Stock Options
Stock Options
Shares Price Range
Balance at June 30, 1991 89,509 $5.00-$8.53
Granted - Plan II Incentive
Stock Options 7,500 $1.75
Canceled - Plan I (2,241) $8.18
Canceled - Plan II (5,775) $5.00
Balance at June 30, 1992 88,993 $1.75-$8.53
Canceled - Plan II (550) $5.00
Expired - Plan I (18,377) $8.18
Balance at December 31, 1992 70,066 $1.75-$8.53
Canceled - Plan II (9,350) $5.00-$5.23
Expired - Plan I (1,791) $8.53
Expired - Plan II (9,900) $6.03
Balance at December 31, 1993 49,025 $1.75-$5.23
Canceled - Plan II (10,250) $1.75-$5.23
Expired - Plan II (20,075) $5.23
Exercisable at December 31, 1994 18,700 $5.00
Additionally, during 1994 the Company granted an option to purchase
300,000 shares of Common Stock to an employee, at an option price of
$1.03 per share (fair value at date of grant). The option was to expire
in seven years, was subject to vesting and the shares were exercisable
ratably over three years. On June 14, 1994, 200,000 shares were
canceled upon termination of employment. The employee's vested shares
of 100,000 are outstanding and reflected in a modified Share Option
Agreement.
