FORM 10-Q
UNITED STATES
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: September 30, 1996
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: 0-14617
RHEOMETRIC SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
New Jersey 61-0708419
________________________________ _____________________
_____
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) fication Number)
One Possumtown Road, Piscataway, NJ 08854
_________________________________________
_____________
(Address of principal executive offices) (Zip Code)
(908) 560-8550
____________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
_____ _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at November 1, 1996
__________________________ ______________________________
Common Stock, no par value 13,161,739
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RHEOMETRIC SCIENTIFIC, INC.
FORM 10-Q
INDEX
Page
PART I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30,
1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6-9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations 10-11
Liquidity and Capital Resources 11-14
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signature 15
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RHEOMETRIC SCIENTIFIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
(Unaudited)
September December
30, 1996 31, 1995
________ ________
<S> <C> <C>
ASSETS
Current Assets
Cash $ 370 $ 1,364
Net receivables 14,257 14,492
Net inventories
Finished goods 2,118 2,071
Work in process 2,031 1,366
Assembled Components, materials,
and parts 6,592 5,142
______ ______
10,741 8,579
Prepaid expenses and other assets 707 1,564
______ ______
Total current assets 26,075 25,999
______ ______
Property, Plant, and Equipment 15,928 21,348
Less accumulated depreciation and
amortization 8,699 11,505
______ ______
Net property, plant, and equipment 7,229 9,843
Goodwill, net 1,788 2,074
Other Assets 3,017 2,177
______ ______
Total Assets $38,109 $40,093
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term bank borrowings $ 7,162 $ 6,424
Short-term debt - affiliate -- 375
Current maturities of long-term debt 54 497
Accounts payable 4,642 3,780
Payable to affiliate 576 818
Accrued liabilities 4,931 4,975
______ ______
Total current liabilities 17,365 16,869
______ ______
Lease obligation 4,925 --
Long-term debt -- 5,233
Long-term debt - affiliate 6,258 5,740
Other long-term liabilities 1,138 1,363
______ ______
Total liabilities 29,686 29,205
______ ______
Commitments and Contingencies
Shareholders' Equity
Common stock, stated value of $.001,
authorized 20,000 shares; issued and
outstanding 13,162 shares 13 13
Additional paid-in capital 25,492 24,759
Accumulated deficit (16,980) (13,871)
Cumulative translation adjustment (102) (13)
______ ______
Total shareholders' equity 8,423 10,888
______ ______
Total Liabilities & Shareholders'
Equity $38,109 $40,093
====== ======
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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<TABLE>
RHEOMETRIC SCIENTIFIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Sales $10,438 $ 9,056 $29,260 $29,532
Cost of sales 5,723 5,379 15,664 15,996
Gross profit 4,715 3,677 13,596 13,536
General and administrative expenses 859 628 2,200 2,371
Marketing and selling expenses 2,506 2,458 7,657 7,390
Research and development expenses 875 739 2,338 2,213
Goodwill and intangible amortization 163 163 488 488
Loss on sale/leaseback -- -- 2,368 --
______ ______ ______ ______
Total Operating Expenses 4,403 3,988 15,051 12,462
______ ______ ______ ______
Operating income (loss) 312 (311) (1,455) 1,074
Interest (expense) - Banks (394) (326) (974) (860)
Interest (expense) - Affiliate (189) (191) (565) (478)
Interest income 9 7 15 23
Foreign currency loss (38) (541) (115) (276)
______ ______ ______ ______
Loss before income taxes (300) (1,362) (3,094) (517)
Income tax expense (8) -- (15) (57)
______ ______ ______ ______
Net loss $ (308)$(1,362) $(3,109)$ (574)
______ ______ ______ ______
Net loss per share $(0.02)$ (0.10) $ (0.24)$ (0.04)
====== ====== ====== ======
Average number of shares
outstanding 13,162 13,162 13,162 13,162
====== ====== ====== ======
See Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
RHEOMETRIC SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1996 1995
________ _________
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (3,109) $ (574)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization of plant and
equipment 643 770
Amortization of goodwill and intangibles 488 488
Provision for slow moving inventory 122 308
Loss on sale/leaseback financing 2,301 --
Loss on sale/retirement of property, plant,
and equipment 6 87
Unrealized currency loss 77 438
Changes in assets and liabilities:
Receivables (207) (1,965)
Inventories (2,386) (327)
Prepaid expenses and other current
assets 843 (630)
Accounts payable and accrued
liabilities 1,178 310
Other assets (189) 279
Other non-current liabilities (96) (47)
______ ______
Net cash used in operating activities
(329) (863)
______ ______
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment (373) (302)
______ ______
Net cash used in investing activities (373) (302)
______ ______
Cash Flows from Financing Activities:
Net borrowings (repayments) under line of
credit agreements 935 (491)
Repayment of long-term debt/lease obligation (5,751) (165)
Proceeds from short-term debt - affiliate -- 2,400
Repayment short-term debt to affiliate (375) --
Net proceeds from sale/leaseback arrangement 5,734 --
Mortgage participation (866) --
______ _______
Net cash (used in) provided by financing
activities (323) 1,744
______ ______
Effect of exchange rate changes on cash 31 (336)
______ ______
Net (decrease) increase in cash (994) 243
Cash at beginning of period 1,364 747
______ ______
Cash at end of period $ 370 $ 990
====== ======
Cash payments for interest $1,597 $ 935
====== ======
Cash payments for income taxes $ 24 $ 31
====== ======
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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RHEOMETRIC SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
The information included in the foregoing interim financial
statements is unaudited. In the opinion of management, all
adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of financial position and
results of operations for the interim periods presented have
been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results
to be expected for the entire year.
2. Liquidity
Management believes that the cash generated from operations,
funds available under the lines of credit, Axess's debt
financing and funds received under its current loan agreement,
should be sufficient to meet the Company's working capital
through 1997. On February 23, 1996 the Company entered into a
three-year Loan and Security Agreement (the "Loan Agreement").
This agreement provides a working capital revolving credit facility
with a maximum credit amount of $11,500,000. The amount of available
credit is determined by the level of certain eligible receivables and
inventories. Adequacy of cash flows generated beyond 1996
will depend on the Company's ability to achieve expected sales
volumes to support profitable operations.
3. Financing
On February 23, 1996, the Company entered into a
sale/leaseback arrangement which is recorded as a
financing whereby the Company sold the Company's
corporate headquarters and main manufacturing facility,
and the 19 acres of real property on which the facility
is located (the facility and the real estate being
referred to herein as the "Facility") for $6,300,000.
Simultaneously with the sale to the Landlord, the Company
entered into a long-term lease of the Facility from the
Landlord. The initial term of the lease is 15 years,
subject to automatic five-year extensions through 2026.
Under the terms of the lease, the Company has certain
rights of first refusal to purchase the Facility and the
right to acquire up to 11 acres of undeveloped real
estate constituting a portion of the facility (the
"Excess Land") under certain circumstances.
Simultaneously with the consummation of the
sale/leaseback arrangement, the Company entered into a
Loan and Security Agreement providing for a working
capital revolving credit facility in the amount of
$11,500,000. The amount of available credit is
determined by the level of certain
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eligible receivables and inventory. The Company's
obligations under the Loan Agreement are collateralized
by substantially all of the Company's assets.
The Landlord financed the acquisition of the Facility in
part through a $3,300,000 mortgage loan. The Company
purchased a participating interest in the Landlord's
mortgage loan (the "Mortgage Loan") in the amount of
$865,000. The Company's interest in the Mortgage Loan
will be repaid with yearly interest of 9.625% upon the
maturity of the Mortgage Loan in five years or upon
refinancing.
Further, in connection with the sale/leaseback
arrangement, the Company issued the following three
warrants to acquire shares of its Common Stock, all
having an exercise price of $2.00 per share: (1) a
warrant to the Landlord to purchase 132,617 shares of
Common Stock of the Company, exercisable during the term
of the lease; (2) a conditional warrant to the Landlord
to purchase 331,543 shares of Common Stock of the Company
which shall only be exercisable if the indebtedness owed
by Landlord under the Mortgage Loan is repaid prior to
February 23, 1997; or if the Landlord is unable to
refinance the indebtedness owed under the Mortgage Loan
prior to February 23, 1997, solely as a result of
environmental contamination relating to the 11 acres of
undeveloped real estate constituting a portion of the
facility (the "Excess Land"); and (3) a conditional
warrant to the Landlord's Lender (the "Lender") to
purchase 331,543 shares of Common Stock which shall only
be exercisable if the indebtedness owed under the
Mortgage Loan by Landlord to Lender is not refinanced
prior to February 23, 1997.
A portion of the proceeds from the sale of the Facility
and the Loan Agreement were used to provide the funds
necessary to repay the Company's mortgage indebtedness of
approximately $5,700,000 and existing line of credit of
approximately $3,000,000.
As a result of the sale/leaseback arrangement of the
Facility, the Company recognized a loss of $2,368,000 in
the first quarter because the proceeds of the financing
were less than the carrying value of the Facility. The
issuance of $733,373 of warrants and the recording of the
lease obligation of $5,001,000 are considered non-cash
transactions for cash flow statement purposes.
The Loan Agreement is for a term of three years. Under
this agreement the most restrictive financial covenants
are (a) maintain, on a consolidated basis, working capital
of not less than $6,000,000 through December 31, 1996,
$6,500,000 through December 31, 1997 and $7,000,000 after
January 1, 1998; (b) the maintenance of minimum adjusted
tangible net worth, as defined of at least $8,750,000
through May 31, 1996,
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$9,000,000 through December 31, 1996, $9,500,000 through
December 31, 1997 and $10,000,000 after January 1, 1998;
(c) achieve domestic cash flow, as defined, of not less
than ($250,000) for the six months ending June 30, 1996,
($1,000,000) for the nine months ending September 30,
1996, and $0 for the 12 months ending December 31, 1996
and for the 12 months ending on the last day of each
subsequent month; (d) achieve consolidated cash flow, as
defined, of not less than $250,000 for the six months
ended June 30, 1996, $500,000 for the nine months ended
September 30, 1996 and $750,000 for the 12 months ending
December 31, 1996 and for the 12 months ending on the last
day of each subsequent month. At September 30, 1996, the
Company was in compliance with all the financial covenants
in the Loan Agreement and the lease except with respect to
consolidated cash flow, which failure the lender and the
Landlord waived.
Effective October 28, 1996, the lender agreed to make
certain Overadvances in excess of the amount available
under the Loan Agreement to the Company subject to the
following terms and conditions: (a) The aggregate amount
of all such Overadvances outstanding at any time shall
not exceed the sum of (i) $750,000 during the period
ending December 1, 1996, or (ii) $500,000 during the
period ending December 31, 1996; (b) All such
Overadvances shall be collateralized by the Company's
receivables and inventory, (c) bear interest as provided
in the Loan Agreement, and (d) shall be repaid in full on
or before January 3, 1997.
The Loan Agreement also provides certain letters of
credit facilities for operations of the Company's foreign
subsidiaries.
The Company's 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 lender impairs the lender's collateral or
increases its risk so as to jeopardize the repayment of
the obligations.
4. Loss Per Share
Loss per share is computed based on the weighted average
number of common shares outstanding during each period. The
loss per share calculation does not include shares reserved
for stock options and convertible securities since the effects
are immaterial or antidilutive.
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5. Long-term Debt and Short-term Borrowings
Long-term debt consists of the following:
September 30, December 31,
1996 1995
Lease obligation from sale/leaseback
arrangement, 15 year term with interest
imputed at 21% $ 4,979,000 --
Mortgage loans payable through
November 1997, with interest at
prime plus 1/2% 9.0% at
December 31, 1995 and fixed
interest at 9.6%. Mortgage loan
was settled February 23, 1996
as part of financing arrangement
See Item 2 "Financing" -- $ 5,730,000
__________ ___________
4,979,000 5,730,000
Less current maturities 54,000 497,000
__________ __________
$ 4,925,000 $ 5,233,000
=========== ===========
6. Long-term Debt and Short-term borrowings - Affiliate
The Company and Axess executed various subordinated term
loans during the years ended December 31, 1993, 1994,
and 1995 aggregating $5,740,000. On February 23, 1996,
Axess and the Company consolidated all of the
outstanding notes and deferred interest amounting to
$517,972 into a new subordinated note for an aggregate
amount of $6,257,972. The new note bears interest at
12% payable monthly and is due February 28, 1999.
On March 7 and 25, 1994, Axess and the Company's UK
subsidiary executed subordinated term notes of $150,000
and $225,000, respectively, due January 1, 1996, bearing
interest at a rate equal to the British Prime Rate plus
1.5% (7.75% and 8.25% at December 31, 1995 and 1994,
respectively). On March 6, 1996, these subordinated
term notes were paid in full, including interest of
$27,417, for an aggregate amount of $402,417.
7. 1996 Stock Option Plan
At the 1996 Annual Meeting of Shareholders, the
Shareholders approved the 1996 Stock Option Plan (the
"Plan") as adopted by the Board of Directors. Pursuant
to the Plan, 250,000 shares of Common Stock have been
reserved for issuance. Options will have a maximum term
of 10 years and will be granted and exercisable at such
time or times as the Compensation Committee shall
determine as set forth in the Plan. At September 30,
1996, 145,900 Options were outstanding.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Sales for the three and nine months ended September 30, 1996
increased $1,382,000 and decreased $272,000 (or 15.2% and -
0.9%), respectively, as compared to the corresponding periods
in 1995. The increase in revenues for the three-month period
represents an increase in the Americas and Europe of
$1,286,000 and $394,000 respectively, offset by a decrease in
the Far East of$298,000. The decline in revenues for the
nine-month period resulted from a decrease in Europe and the
Far East of $854,000 and $1,166,000 respectively, offset by
an increase of $1,748,000 in the Americas. For the third
quarter international sales equaled $6,043,000 or 58% of
total sales compared to last year's third quarter sales of
$5,948,000 or 66%. For the nine-month period total
international sales of $17,981,000 represented 62% of total
sales compared to 1995's international sales of $20,001,000
which amounted to 68% of total sales. For both the three-
and nine-month periods unfavorable foreign currency trends
severely depressed international sales as compared to the
corresponding periods last year, particularly in the Far East
where currency has reduced the reported level of dollar sales
by 19%.
The gross profit percentages for the three and nine months
ended September 30, 1996 were 45.2% and 46.5%, respectively,
compared to 40.6% and 45.8%, respectively, for the same
periods in the prior year.
Operating expenses for the three and nine months ended
September 30, 1996 were up $415,000 and $2,589,000 compared
to the corresponding periods in the prior year. Included in
the nine-month increase is a loss of $2,368,000 on the sale
and subsequent leaseback of the Piscataway facility. Both
the three- and nine-month period operating expenses were
favorably affected by foreign currency trends. These
favorable currency trends have helped offset increased
levels of advertising, promotion, and development costs
associated with new product introductions scheduled in the
fourth quarter of this year.
Net interest expense for the three and nine months ended
September 30, 1996 increased by $64,000 and $209,000,
respectively, compared to the corresponding periods in the
prior year. These increases can be attributed to the
imputed interest associated with the sale/leaseback
arrangement entered into earlier in the year.
The foreign currency adjustments for the three and nine
months ended September 30, 1996 were a loss of $38,000 and
$115,000, respectively. The adjustments were primarily due
to unrealized translation losses resulting from the: German
Mark, Japanese Yen and British Pound against the U.S.
Dollar, which were offset by unrealized gains in the French
Franc, as well as in Swiss
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Francs resulting from the Mettler agreement. Foreign
currency losses for the three and nine months ended
September 30, 1995 were $541,000 and $276,000, respectively.
The gains were primarily due to unrealized translation gains
resulting from the French Franc, German Mark, Japanese Yen
and British Pound against the U.S. Dollar, which were
offset by an unrealized loss in Swiss Francs resulting from
the Mettler agreement.
Inherent in the Company's business is the potential for
inventory obsolescence for older products as the Company
develops new products. Obsolescence has historically
related to parts inventory. The company continuously
monitors its exposure relating to excess and obsolete
inventory and establishes appropriate valuation reserves.
The Company's development efforts generally enhance existing
products or relate to new markets for existing technology
and, therefore, existing products are generally not rendered
obsolete.
The Financial Accounting Standards Board issued Statement of
Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" ("FAS 121") in March 1995. FAS 121 requires
companies to review their long-lived assets and certain
identifiable intangibles (collectively, "Long-Lived Assets")
for impairment whenever events or changes in circumstances
indicate that the carrying value of a Long-Lived asset may
not be recoverable. Impairment is measured using the lower
of a Long-Lived Asset's book value or fair value, as
defined. The adoption of FAS 121 did not have a material
impact on the Company's financial position or results of
operations.
Liquidity and Capital Resources
Management believes that cash generated from operations,
funds available under lines of credit, and funds received
from Axess's investments, and funds received under its
current loan agreement should be sufficient to meet the
Company's working capital needs through 1997. Adequacy of cash
flows beyond 1996 will depend upon the Company's ability to achieve
expected sales volumes to support profitable operations.
Cash Flows from Operations. Net cash used in operating
activities during the nine months ended September 30, 1996
was $329,000 a decrease of $534,000 over the same period
last year. Net loss for the nine months ended September 30,
1996 was $3,109,000 compared to a loss of $574,000 during
the same period last year. The nine month loss includes a
non-cash charge of $2,301,000 resulting from the
sale/leaseback of the Piscataway facility along with non-
cash depreciation and amortization charges of $1,131,000.
During the nine months, accounts receivable increased by
$207,000. Prepaid expenses decreased $843,000, primarily
due to restricted cash of $1,000,000 required by the
Company's previous lender being released. These funds were
primarily used to purchase a participating interest in the
mortgage on the Company's Piscataway facility, as
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discussed below. In addition, inventories and accounts
payable increased by $2,386,000 and $1,178,000 respectively
as inventory levels were replenished to meet forecasted
demand. Management continuously monitors inventory levels
on a world-wide basis in order to insure that excess
inventory is kept to a minimum.
Cash Flows From Investing. Net cash used in investing
activities, primarily the purchase of equipment, during the
nine months ended September 30, 1996 was $373,000 as
compared to $302,000 during the same period in 1995.
Cash Flows From Financing. Net cash used in financing
activities during the nine-month period ended September 30,
1996 was $323,000 as compared to $1,744,000 provided during
the same period in the prior year. During the nine months
the company purchased a participating interest in the
mortgage of the Piscataway facility amounting to $866,000
and also repaid $375,000 of short-term debt due to Axess.
The Company's net borrowings under its line of credit
agreements increased by $935,000 to offset the higher
investment in inventory, net of the increase in accounts
payable.
The Company and Axess executed various subordinated term
loans during the years ended December 31, 1993, 1994, and
1995 aggregating $5,740,000. On February 23, 1996, Axess
and the Company consolidated all of the outstanding notes
and deferred interest amounting to $517,972 into a new
subordinated note for an aggregate amount of $6,257,972.
The new note bears interest at 12% payable monthly and is
due February 28, 1999.
On March 7 and 25, 1994, Axess and the Company's UK
subsidiary, executed subordinated term notes of $150,000
and $225,000, respectively, due January 1, 1996, bearing
interest at a rate equal to the British Prime Rate plus
1.5% (7.75% and 8.25% at December 31, 1995 and 1994,
respectively). On March 6, 1996, these subordinated term
notes were paid in full, including interest of $27,417, for
an aggregate amount of $402,417.
The Company has working capital lines of credit with
certain domestic and foreign banks aggregating $9,295,000
of which approximately $1,170,000 was available at
September 30, 1996.
Financing
On February 23, 1996, the Company entered into a
sale/leaseback arrangement which is recorded as a financing
whereby the Company sold the Company's corporate
headquarters and main manufacturing facility, and the 19
acres of real property on which the facility is located (the
facility and the real estate being referred to herein as the
"Facility") for $6,300,000. Simultaneously with the sale to
the Landlord, the Company entered into a long-term lease of
the Facility from the Landlord. The initial term of the
lease is 15 years, subject to automatic five-year extensions
through 2026. Under the terms of the lease, the Company has
certain rights of first refusal to
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purchase the Facility and the right to acquire up to 11
acres of undeveloped real estate constituting a portion of
the facility (the "Excess Land") under certain
circumstances.
Simultaneously with the consummation of the sale/leaseback
arrangement, the Company entered into a Loan and Security
Agreement providing for a working capital revolving credit
facility in the amount of $11,500,000. The amount of
available credit is determined by the level of certain
eligible receivables and inventory. The Company's
obligations under the Loan Agreement are collateralized by
substantially all of the Company's assets.
The Landlord financed the acquisition of the Facility in
part through a $3,300,000 mortgage loan. The Company
purchased a participating interest in the Landlord's
mortgage loan (the "Mortgage Loan") in the amount of
$865,000. The Company's interest in the Mortgage Loan will
be repaid with yearly interest of 9.625% upon the maturity
of the Mortgage Loan in five years or upon refinancing.
Further, in connection with the sale/leaseback arrangement,
the Company issued the following three warrants to acquire
shares of its Common Stock, all having an exercise price of
$2.00 per share: (1) a warrant to the Landlord to purchase
132,617 shares of Common Stock of the Company, exercisable
during the term of the lease; (2) a conditional warrant to
the Landlord to purchase 331,543 shares of Common Stock of
the Company which shall only be exercisable if the
indebtedness owed by Landlord under the Mortgage Loan is
repaid prior to February 23, 1997; or if the Landlord is
unable to refinance the indebtedness owed under the Mortgage
Loan prior to February 23, 1997, solely as a result of
environmental contamination relating to the 11 acres of
undeveloped real estate constituting a portion of the
facility (the "Excess Land"); and (3) a conditional warrant
to the Landlord's Lender (the "Lender") to purchase 331,543
shares of Common Stock which shall only be exercisable if
the indebtedness owed under the Mortgage Loan by Landlord to
Lender is not refinanced prior to February 23, 1997.
A portion of the proceeds from the sale of the Facility and
the Loan Agreement were used to provide the funds necessary
to repay the Company's mortgage indebtedness of
approximately $5,700,000 and existing line of credit of
approximately $3,000,000.
As a result of the sale/leaseback arrangement of the
Facility, the Company recognized a loss of $2,368,000 in the
first quarter because the proceeds of the financing were
less than the carrying value of the Facility. The issuance
of $733,373 of warrants and the recording of the lease
obligation of $5,001,000 are considered non-cash
transactions for cash flow statement purposes.
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The Loan Agreement is for a term of three years. Under this
agreement the most restrictive financial covenants are (a)
maintain, on a consolidated basis, working capital of not
less than $6,000,000 through December 31, 1996, $6,500,000
through December 31, 1997 and $7,000,000 after January 1,
1998; (b) the maintenance of minimum adjusted tangible net
worth, as defined of at least $8,750,000 through May 31,
1996, $9,000,000 through December 31, 1996, $9,500,000
through December 31, 1997 and $10,000,000 after January 1,
1998; (c) achieve domestic cash flow, as defined, of not
less than ($250,000) for the six months ending June 30,
1996, ($1,000,000) for the nine months ending September 30,
1996, and $0 for the 12 months ending December 31, 1996 and
for the 12 months ending on the last day of each subsequent
month; (d) achieve consolidated cash flow, as defined, of
not less than $250,000 for the six months ended June 30,
1996, $500,000 for the nine months ended September 30, 1996
and $750,000 for the 12 months ending December 31, 1996 and
for the 12 months ending on the last day of each subsequent
month. At September 30, 1996, the Company was in compliance
with all the financial covenants in the Loan Agreement and
the lease except with respect to consolidated cash flow,
which failure the lender and the Landlord waived.
Effective October 28, 1996, the lender agreed to make
certain Overadvances in excess of the amount available under
the Loan Agreement to the Company subject to the following
terms and conditions: (a) The aggregate amount of all such
Overadvances outstanding at any time shall not exceed the
sum of (i) $750,000 during the period ending December 1,
1996, or (ii) $500,000 during the period ending December 31,
1996; (b) All such Overadvances shall be collateralized by
the Company's receivables and inventory, and bear interest
as provided in the Loan Agreement, and (c) shall be repaid
in full on or before January 3, 1997.
The Loan Agreement also provides certain letters of credit
facilities for operations of the Company's foreign
subsidiaries.
The Company's 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 lender impairs the lender's collateral or increases its
risk so as to jeopardize the repayment of the obligations.
14 of 15
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Amended and Restated Employment Agreement dated
September 12, 1996 between Alan R. Eschbach and the
Registrant
10.2 Employment Agreement dated September 9, 1996
between John C. Fuhrmeister and the Registrant
10.3 Amended and Restated Employment Agreement dated
September 11, 1996 between Ronald F. Garritano and the
Registrant
10.4 Employment Agreement dated September 9, 1996
between Matthew Bilt and the Registrant
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
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.
RHEOMETRIC SCIENTIFIC, INC.
(Registrant)
November 14, 1996 By /s/ J C Fuhrmeister
_______________________
John C. Fuhrmeister
Vice President and
Chief Financial Officer
15 of 15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000779164
<NAME> RHEOMETRIC SCIENTIFIC
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 370
<SECURITIES> 0
<RECEIVABLES> 14,257
<ALLOWANCES> 0
<INVENTORY> 10,741
<CURRENT-ASSETS> 26,075
<PP&E> 15,928
<DEPRECIATION> 8,699
<TOTAL-ASSETS> 38,109
<CURRENT-LIABILITIES> 17,365
<BONDS> 4,925
0
0
<COMMON> 13
<OTHER-SE> 8,410
<TOTAL-LIABILITY-AND-EQUITY> 38,109
<SALES> 29,260
<TOTAL-REVENUES> 29,260
<CGS> 15,664
<TOTAL-COSTS> 15,664
<OTHER-EXPENSES> 15,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,524
<INCOME-PRETAX> (3,094)
<INCOME-TAX> 15
<INCOME-CONTINUING> (3,109)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,109)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is entered into on September 12, 1996, by and between
Rheometric Scientific, Inc., a New Jersey corporation ("Company") and
Alan R. Eschbach, a New Jersey resident ("Executive").
Background
A. Executive is currently the Chief Operating Officer and Senior
Vice President of the Company.
B. Executive and the Company are parties to an Employment
Agreement dated May 26, 1992 ("1992 Agreement"), which they now wish to
amend and restate.
C. Each of the Company and Executive acknowledge that it is to
their mutual and respective benefit to enter into this Amended and
Restated Employment Agreement ("Agreement").
Now, therefore, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the
Company and Executive hereby agree as follows:
1. Employment and Term..
(a) The Company hereby agrees to continue to employ Executive and
the Executive hereby agrees to continue to serve the Company, subject to
and upon the terms and conditions set forth below.
(b) Subject to the provisions of Section 6 hereof, the period of the
Executive's employment by the Company under
<PAGE>
this Agreement (the "Employment Term") will commence on the date of this
Agreement and will continue through June 30, 1997. The Employment Term
will continue thereafter on a year-to-year basis, unless the Company
provides Executive notice (at least 3 months prior to June 30, 1997 or
the first anniversary of the continuation then in effect) that the
Company has elected not to continue the Employment Term for the next
year. The last day of the Employment Term, without regard to any early
termination pursuant to Section 6, is herein referred to as the
"Expiration Date."
2. Executive Position and Duties and Responsibilities.
During the Employment Term, the Executive will continue to serve as
the Chief Operating Officer and Senior Vice President of the Company,
with such management and executive duties and responsibilities as may be
assigned to him from time to time by the Company's Board of Directors and
the Company's Chief Executive Officer, provided that such duties and
responsibilities are consistent with the current duties and
responsibilities of the Executive's positions.
3. Compensation and Reimbursement of Expenses.
During the Employment Term, Executive will receive the following
compensation and benefits from the Company:
(a) Base Salary. The Executive will receive an annual base salary,
payable no less frequently than bi-weekly, at the annual rate of $
149,100.12, subject to any increase the Board of
2
<PAGE>
Directors may provide in its sole discretion (the "Base Salary").
(b) Bonus. Executive will be entitled to receive incentive
compensation based on the performance of the Executive and the Company in
accordance with and subject to the terms and conditions of the Management
Incentive Bonus Program of the Company.
(c) Reimbursement of Expenses. The Executive will be reimbursed for
all reasonable expenses incurred by him in performing services hereunder
upon presentation to the Company by the Executive of documentation
acceptable to the Company under its standard policies.
(d) Benefits. The Executive will be entitled to participate in or
receive the benefits he currently receives (as listed on Schedule A) and
such other benefits as the Company may generally grant to its executive
officers.
(e) Vacation and Leave. The Executive will be entitled to
four (4) weeks annually of vacation during which his compensation
pursuant to this Section 3 will be paid in full, provided that the
Executive will give reasonable notice to the Chief Executive Officer of
the Company of desired vacation periods and no more than two (2) weeks of
vacation will be taken within any thirty (30) day period. Vacation time
not taken by the Executive in any given year will not accrue to
succeeding years unless the standard policies of the Company provide
otherwise. Leaves of absence may be granted by the Board of
3
<PAGE>
Directors in its sole discretion. The Company shall pay the Executive
for past unused vacation time accrued prior to December 31, 1995 at the
time of a Change in Control or approval by the president and/or CEO (as
defined in Section 12).
4. Performance of Duties.
During the Employment Term the Executive will devote his entire
business time and attention to the performance of his duties under this
Agreement and will serve the Company diligently and to the best of his
abilities and will not engage in any other business activity without the
prior written approval of the Board of Directors, provided that the
Executive may, with the prior approval of the Board of Directors, serve
on boards of directors of other corporations or institutions, if such
service, in the opinion of the Board of Directors, presents no conflict
with the Company.
5. Restrictive Covenants.
(a) Acknowledgments. The Executive acknowledges that:
(i) His position with the Company requires the performance of services
that are special, unique and intellectual in character and he is and will
be in a position of confidence and trust with the employees and customers
of the Company and its subsidiaries and their joint venture partners,
through which he has obtained or will obtain, among other things,
knowledge of such organizations and their customers, in which those
organizations have a proprietary interest, and
4
<PAGE>
(ii) The restrictive covenants set forth in this Agreement are
necessary in order to protect such proprietary information and other
legitimate business interests of the Company and its subsidiaries and
their joint venture partners and that the Company would not have entered
into this Agreement unless those restrictive covenants were included, and
(iii) The business and sales efforts of the Company are
conducted on a worldwide basis and that he has personally supervised or
engaged in such business and will continue to do so pursuant and subject
to the terms of this Agreement, and
(iv) The enforcement of the restrictive covenants set forth in
this Agreement will not prevent him from maintaining a livelihood.
(b) Noncompetition and Nonsolicitation.
(i) Mandatory Restrictions during Employment. Subject to the
further provisions of this Section 5, for so long as the Executive is
employed pursuant to the terms of this Agreement and without any
requirement of further payment therefor, Executive shall not take any of
the actions set forth in Section 5(b)(iii) hereof anywhere in the world
without the prior express written consent of the Company.
(ii) Mandatory Restrictions following term of Employment. (A)
Subject to the further provisions of this Section 5, in the event of
Voluntary Termination (as defined
5
<PAGE>
hereinafter) by the Executive or in the event of Company Termination for
Cause (as defined hereinafter) and without any requirement of further
payment therefor, Executive shall not take any of the actions set forth
in Section 5(b)(iii)(A)or 5(b)(iii)(B)(I)hereof anywhere in the world
for one (1) year following termination of employment hereunder and
Executive shall not take any of the actions set forth in Section
5(b)(iii)(B)(II) or Section 5(b)(iii)(B)(III) hereof anywhere in the
world for two(2) years following termination of employment hereunder.
(B) Subject to the further provisions of this Section 5, in
the event of an Involuntary Termination by Executive (as defined
hereinafter); Company Termination Without Cause (as defined hereinafter);
or Termination Upon Disability (as defined hereinafter), the Executive
shall not, without the prior written consent of the Company take any of
the actions set forth in Section 5(b)(iii)(A)or 5(b)(iii)(B)(I) within
the "Restricted Period" (as defined below)and shall not take any of the
actions set forth in Section 5(b)(iii)(B)(II) or Section
5(b)(iii)(B)(III)for a period of two (2) years following the termination
of employment hereunder anywhere in the world. For purposes of this
Agreement "Restricted Period" means the period of time in which Executive
is entitled to receive payments and benefits under Section 7(a), 7(b) or
7(c), as the case may be, notwithstanding any reduction or elimination of
those payments and benefits pursuant to the second sentence of Section
7(d).
6
<PAGE>
(iii) Prohibited Actions. To the extent that this Section
5(b)(iii) is expressly made applicable by other provisions of this
Agreement, the Executive shall not:
(A) directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal, partner, officer, employee,
trustee, director, shareholder, consultant or in any other capacity, own,
manage, operate, control, or participate in the ownership, management,
operation or control of any business which competes with the business of
the Company or its subsidiaries or their joint venture partners as it may
be conducted at the time of termination of employment provided, however
that nothing in this Section 5(b)(iii)(A) will prohibit the Executive
from acquiring or holding not greater than one percent of any class of
publicly traded securities of any business; or
(B) directly or indirectly (I) approach or solicit for
business or otherwise deal with any customer of the Company or its
subsidiaries or their joint venture partners other than on behalf of the
Company, (II) approach or attempt to induce any employee of the Company
or its subsidiaries or their joint venture partners to leave the employ
of the Company or its subsidiaries or their joint venture partners, (III)
employ any person who is an employee of the Company or its subsidiaries
or their joint venture partners on the date of, or within the six months
preceding, the termination of the employment of
7
<PAGE>
Executive, or (IV) aid or counsel any other person to undertake any
action listed in (I),(II) or (III) above.
For the purposes of this Section 5, "customer" means any customer of the
Company during the last two years of the Executive's employment with the
Company or any prospective customer to whom the Company made a
presentation (or similar offering of services) during the last year of
Executive's employment with the Company.
(c) Confidentiality. Executive shall comply with the terms of a
certain agreement containing (a) restrictions of confidential information
and (b) inventions and discoveries by executive (among other provisions)
(the "Confidentiality Agreement") as attached hereto as Exhibit A.
(d) The parties hereby agree that the restrictions contained in
this Section 5 and the Confidentiality Agreement are reasonable in scope
and duration. However, in the event a court of competent jurisdiction
determines finally that the duration or scope of any provision of this
Section 5 and the Confidentiality Agreement is unreasonable or
unenforceable in part, then this Section 5 and the Confidentiality
Agreement will be deemed to be amended so as to contain such provisions
as the court will deem reasonable and enforceable.
(e) Notwithstanding any provision to the contrary in Section 5 (b),
the restrictions contained in subsections (A) and (B) of Section
5(b)(iii) will continue for any period in excess
8
<PAGE>
of the applicable period following termination of employment in which
Executive continues to receive compensation under Section 7 of this
Agreement.
6. Termination of Employment. Subject to the further provisions
of this Agreement, the Company and Executive may terminate the employment
of Executive under this Agreement prior to the Expiration Date as
follows:
(a) Voluntary Termination by the Executive. The Executive may
terminate his employment under this Agreement at any time (a "Voluntary
Termination by Executive").
(b) Involuntary Termination by Executive. The Executive may
terminate his employment under this Agreement at any time for good
reason. "Good reason" means (i) the assignment to the Executive of any
duties inconsistent with his present duties and responsibilities or any
reduction or elimination of those duties or responsibilities as Chief
Operating Officer and Senior Vice President, (ii) the withdrawal by the
Company of the title of Chief Operating Officer and Senior Vice President
from the Executive without his consent; (iii) the Company's requirement
that the Executive maintain his principal office or conduct his
principal activities (other than business trips) from anywhere other than
the present principal executive offices of the Company in Piscataway, New
Jersey; (iv) the failure by the Company to obtain the assumption and
agreement to perform this Agreement on the terms described in Section 12;
or (v) the breach by the
9
<PAGE>
Company of any material obligation of the Company under this Agreement,
provided that any breach of a payment obligation to the Executive under
this Agreement will constitute "good reason" only if the breach is not
cured within five days of notice by Executive.
(c) Termination Without Cause. The Company may, at any time,
terminate the Executive's employment under this Agreement without cause
(a "Company Termination Without Cause").
(d) Termination for Cause. Notwithstanding anything to the
contrary contained in this Agreement, the Company may terminate the
Executive's employment under this Agreement at any time for cause (a
"Company Termination for Cause"). As used herein, the term "for cause"
means (1) the Executive's conviction for a felony under the laws of the
United States or any state or political subdivision, (2) misappropriation
by the Executive of company funds or other misconduct materially
injurious to the Company, (3) breach of the Executive's fiduciary duty to
the Company involving personal profit or (4) material breach of this
Agreement by the Executive.
(e) Termination Upon Death or Disability of the Executive. In the
event that the Executive dies, his employment hereunder will be deemed
terminated without further action ("Termination Upon Death"). In the
event that the Executive is declared incompetent by a court of
appropriate jurisdiction, or is unable to perform his duties hereunder
for a continuous period
10
<PAGE>
exceeding six (6) months by reason of illness or disability, then, upon
at least thirty (30) days' advance notice following the event giving rise
to the power to terminate hereunder, the Company may terminate the
Executive's employment under this Agreement ("Termination Upon
Disability"). Executive agrees to take such reasonable actions
(including providing full and accurate information requested by insurers)
as may be necessary to allow the Company to obtain and maintain, for its
own benefit, life and disability insurance covering the Executive.
(f) Notice of Termination. Except for a Termination Upon Death,
any purported termination of employment under Sections 6(a) through 6(e)
of this Agreement will be communicated by a written notice of termination
from the party exercising its right to terminate ("Notifying Party") to
the other party ("Responding Party"). For the purposes of this
Agreement, a "Notice of Termination" will indicate the specific
termination provision in this Agreement relied upon and will set forth in
reasonable detail the facts and circumstances then known to the Notifying
Party which are claimed to provide a basis for termination under the
provision so indicated, provided, however, that no recitation of facts
and circumstances will be required in respect to a Company Termination
Without Cause or a Voluntary Termination by Executive.
7. Payments and Benefits Following Termination Pursuant to Section
6.
11
<PAGE>
(a) Before a Change in Control. Following a Company Termination
Without Cause, an Involuntary Termination by Executive, a Termination for
Death or a Termination for Disability, to the extent such a termination
occurs before a Change in Control (as defined in Section 12 hereof), the
Executive (or his personal representative) will receive until the
Expiration Date:
(i) One hundred percent of the salary set forth in Section
3(a) as the same may have been increased from time to time, payment of
which will be at the time provided for in this Agreement as if the
Executive's employment under this Agreement had not terminated, minus, in
the event of a Termination for Disability, the amount of any disability
benefits provided for the Executive under any sickness, retirement or
other benefit plans provided by the Company,
(ii) Health (as to the Executive and his dependents who are
covered as of the termination), life and disability insurance coverage
substantially comparable to those furnished to the Executive by the
Company immediately prior to the termination of employment hereunder,
(iii) the full amount of reimbursement of expenses incurred
through the date of termination of employment in accordance with Section
3(d), and
(iv) the full amount which would have been due under any bonus
or profit-sharing plan, or similar arrangement, under
12
<PAGE>
which the Executive was eligible prior to termination for the full fiscal
year (or other applicable period) during which the termination occurred,
subject to a prorated reduction in the event of a Section 6(e)
Termination for the period of time in such fiscal year (or other
applicable period) following the termination.
(b) Within Three Months Following a Change in Control. Following a
Company Termination Without Cause, a Voluntary Termination by Executive,
Involuntary Termination by Executive, a Termination for Death or a
Termination for Disability, to the extent such a termination occurs on a
Change in Control (as defined in Section 12 hereof) or within the three
months following such Change in Control, the Executive (or his personal
representative) will receive the salary, payments and benefits described
in Section 7(a) above until the first annual anniversary of the
termination.
(c) Following the Three Month Anniversary of a Change in Control.
Following a Company Termination Without Cause, an Involuntary Termination
by Executive, a Termination for Death or a Termination for Disability, to
the extent such a termination occurs on or after the three month
anniversary of a Change in Control (as defined in Section 12 hereof), the
Executive (or his personal representative) will receive the salary,
payments and benefits described in Section 7(a) above until the later of
the sixth month anniversary of the termination or the Expiration
13
<PAGE>
Date.
(d) In the event of a Company Termination Without Cause, an
Involuntary Termination by Executive, or a Voluntary Termination by
Executive under Section 7(b), the above payments and benefits will
constitute the sole damages to which Executive will be entitled as a
result of such termination. Executive will not be required to mitigate
his damages under this Agreement by seeking employment or otherwise;
provided, however, that in the event the Executive does provide personal
services to a third party in exchange for compensation or benefits, or
both, the payments and benefits hereunder, to the extent they have not
yet been paid or received, will be appropriately reduced to reflect the
compensation and benefits that result to Executive from such other
employment. In addition, in the event Executive is paid under Section
7(b) following a Voluntary Termination by Executive or if an Involuntary
Termination by Executive occurs for the reason described in (iii) of
Section 6(b), the Executive will provide from time to time though the
Expiration Date and at the request of the Company, notwithstanding such
termination, part-time (i.e., no more than 10 hours per week)
consultation and advice on such executive and technical matters as are
consistent with the Executive's background at mutually convenient times
and places without interference with the Executive's ability to perform
employment elsewhere and he shall be reimbursed for reasonable expenses
in accordance with this Agreement.
14
<PAGE>
(e) The Executive will have no right to receive compensation or any
other benefits for any period after a Company Termination for Cause or a
Voluntary Termination by Executive (except as provided in Section 7(b)
above), other than the reimbursement or expenses pursuant to Section 3(c)
incurred through the date of termination or as required by law.
8. Reserved.
9. Survival. This Agreement (except for Sections 1, 2, 3, and 4)
will remain in full force and effect notwithstanding any termination of
Executive's employment prior to the Expiration Date. This Agreement
(except for Sections 1, 2, 4 and 3 (other than in respect to compensation
and expense reimbursements earned but not paid)) will remain in full
force and effect notwithstanding the termination of Executive's
employment under this Agreement on the Expiration Date. Nothing in this
Agreement will be construed (i) to provide the Executive any continued
right to employment with the Company or its affiliates following the
Employment Term or (ii) to provide the Company or its affiliates any
continued right to employ the Executive following the Employment Term.
10. Withholding of Taxes. The Company may withhold from any
payments under this Agreement all applicable taxes, as will be required
pursuant to any law or governmental regulation or ruling.
11. Prior Agreements.This Agreement constitutes the
15
<PAGE>
entire agreement and understanding between the parties with respect to
the subject matter hereof. This Agreement amends and restates the 1992
Agreement and supersedes all other prior agreements and understandings
with respect to such subject matter between and among the Company and the
Executive.
12. Consolidation or Merger, Change in Control. Nothing in this
Agreement will preclude the Company from consolidating or merging into or
with, or transferring all or substantially all of the Company's assets to
(any of the foregoing, a "Purchase Transaction")any person or entity
("Purchaser"). In the event such person or entity assumes all obligations
of the Company hereunder by written agreement reasonably acceptable to
the Executive, then upon the closing of the Purchase Transaction the
terms "Company" will refer to the Purchaser and this Agreement will
continue in full force and effect. For purposes of this Agreement,
"Change in Control" means:
(a) any event by which (i) an "Acquiring Person"(as defined
below)has become such, or (ii) "Continuing Directors (as defined below)
cease to comprise a majority of the members of the board of directors of
the Company (the "Board"). For purposes of this definition an "Acquiring
Person" means any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder as in effect on the date of this
Agreement (the "Exchange Act")) who or which, together with all
affiliates and
16
<PAGE>
associates (as defined in Rule 12b-2 under the Exchange Act) becomes the
beneficial owner of shares of the Company having 50% or more of the total
number of votes that may be cast for the election of directors of the
Company; and "Continuing Director" means any member of the Board, while
such person is a member of the Board, who is not an Acquiring Person, or
an affiliate or associate of an Acquiring Person or a representative of
an Acquiring Person or of any such affiliate or associate and who (i) was
a member of the Board prior to the date of this Agreement, or (ii)
subsequently becomes a member of such Board and whose nomination for
election or election to the Board is recommended or approved by
resolution of a majority of the Continuing Directors or who is included
as a nominee in a proxy statement of the Company distributed when a
majority of the Board consists of Continuing Directors, or
(b) The consolidation or merger of the Company with, or the transfer
of all or substantially all of the Company's assets to, any person or
entity not controlled by the Company or by an affiliate or affiliates of
the Company (as defined in Rule 12b-2 under the Exchange Act).
13. Arbitration; Availability of Equitable Relief.
(a) Except as provided in subsection (b) of this Section, any
dispute, controversy or claim arising under or in connection with this
Agreement will be settled by arbitration in the City of Newark, State of
New Jersey, conducted in accordance with the
17
<PAGE>
rules of the American Arbitration Association, and judgment upon the
award rendered in such arbitration may be entered in any court of
competent jurisdiction. The hearing or any such claim, controversy or
dispute will be heard with 60 days of written notice of the same, and
such hearing will not exceed five business days. Each party will pay its
own expenses.
(b) Executive acknowledges that the remedy at law for any breach or
threatened breach of Section 5 of this Agreement will be inadequate, and
that the Company will, in addition to all other available remedies, be
entitled to injunctive relief restraining the Executive from such breach
without being required to post bond or other security and without having
to prove the inadequacy of the available remedies at law.
14. General Provision.
(a) Non-Assignability. In the event of the Executive's death, this
Agreement and the Executive's rights hereunder will inure to the benefit
of his personal representatives and heirs. Except as set forth in the
preceding sentence and in Section 12, neither this Agreement nor any
right or interest hereunder will be assignable by the Company or the
Executive.
(b) No Attachment. Except as otherwise required by law, including
the laws of descent and distribution, no right to receive payments under
this Agreement will be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution,
18
<PAGE>
attachment, levy or similar process or assignment by operation of law,
and any attempt, voluntary or involuntary, to effect any such action will
be null, void and of no effect.
15. Amendment. No amendment or modification of this Agreement
will be deemed effective unless executed in writing by the parties
hereto, and approved by the Board of Directors of the Company.
16. Severability. If for any reason any provision of this
Agreement will be held invalid, such invalidity will not affect any other
provision of this Agreement not held so invalid, and all other such
provisions will to the full extent consistent with law continue in full
force and effect. If any such provision will be held invalid in part,
such invalidity will in no way affect the rest of such provision not held
so invalid, and the rest of such provision, together with all other
provisions of this Agreement, will likewise to the full extent consistent
with law continue in full force and effect.
17. Headings. The headings are included solely for convenience of
reference and will not control the meaning or interpretation of any of
the provisions of this Agreement.
18. Governing Law. This Agreement has been executed and delivered
in the State of New Jersey and its validity, interpretation, performance
and enforcement will be governed by and construed in accordance with the
laws thereof applicable to contracts executed and to be wholly performed
in the State of New
19
<PAGE>
Jersey.
19. Consent to Jurisdiction. The Executive hereby irrevocably
consents to the exclusive jurisdiction of the courts of the State of New
Jersey and of any federal courts located within the State of New Jersey
for all purposes in connection with any action or proceeding which arises
out of or relates to this Agreement and agrees that service of summons,
complaint or process in connection therewith may be made as set forth in
this Agreement with respect to giving notices and that service so made
will be as effective as if personally made.
20. Notices. All notices, requests, demands and other
communications hereunder will be in writing and will be deemed to have
been duly given if delivered by hand or mailed, certified or registered
mail, return receipt requested, with postage prepaid, to the following
addresses or to such other address as any party hereto may designated by
like notice:
A. If to Executive, to:
Alan R. Eschbach
31 Stonebridge Road
Hampton, NJ 08827
B. With a copy to:
_________________________________
_________________________________
_________________________________
C. If to the Company, to:
20
<PAGE>
Rheometric Scientific, Inc.
One Possumtown Road
Piscataway NJ 08854
D. With copies to:
Thomas Lyons, Esquire
Crummy Del Deo Dolan Griffinger
& Vecchione
1 Riverfront Plaza
Newark NJ 07102
and
R. Michael Hendricks, President
Axess Corporation
100 Interchange Blvd.
Newark DE 19711
and to such other or additional person or persons (but no more than two
persons) as either party will have designated to the other party in
writing by like notice.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, and the Executive has signed
this Agreement, all as of the day and year first above written.
RHEOMETRIC SCIENTIFIC, INC.
By: /s/ R. E. Davis
____________________
Title: CEO
EXECUTIVE
WITNESS:
/s/ Charlene A. Federowicz /s/ Alan R. Eschbach
__________________________ _____________________
Alan R. Eschbach
21
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Schedule A
Current Benefits
1. Medical and dental insurance as per the company's overall plan.
2. Reimbursement of medical and dental expenses in excess of the
company plan for officers and their dependents in an amount not to exceed
$10,000,00 per year.
3. Company vacation policy with option to take pay in lieu of vacation
days, as limited by policy.
4. Provided company car or appropriate car allowance as per present
company policy.
5. Long term disability policy.
Life insurance as per company policy.
Accidental death and business travel coverage as per Company
provided plan.
Company provided plan
6. 401(k) as per the Company ERISA qualified plan.
7. Stock option plan or equivalent.
8. Membership in one health club.
9. Severance: Greater of contract amount or company policy
<PAGE>
EXHIBIT A
CONFIDENTIALITY AGREEMENT
<PAGE>
TO: Rheometric Scientific, Inc.
Piscataway, New Jersey
RE: Employee Confidential and Proprietary Information Agreement
In consideration of my employment with Rheometric Scientific, Inc.
("Company") and of the salary or wages paid for my services in the course
of such employment, I agree as follows:
(A) to communicate to the Company promptly and fully and to assign to
the Company all inventions or significant technical or business
innovations developed or conceived solely by me or jointly with others
from the time of entering the Company's employ until any termination of
my employment, (1) which are along the lines of the business, work or
investigations of the Company, of (2) which result from or are suggested
by any work which I may do for or on behalf of the Company;
(B) to execute all necessary papers and otherwise to assist the Company
during and subsequent to such employment in every proper way (entirely at
its expense) to obtain for its own benefit patents, copyrights or other
legal protection for such inventions, or for publications pertaining to
them, in any and all countries, said inventions and innovations to be the
exclusive property of the Company, whether or not patented or
copyrighted;
(C) to make and maintain adequate and current written records of all
such inventions or innovations, in the form of notes, sketches, drawings,
or reports relating thereto, which records shall be and remain the
property of and available to the Company at all times;
(D) upon any termination of my employment, promptly to deliver to the
Company, all drawings, blueprints, manuals, letters, notes, notebooks,
reports, models and other materials (including all copies) which are of a
secret or confidential nature relating to the business of the Company,
and which are in my possession or under my control;
(E) except as the Company may otherwise consent in writing, not to
publish or otherwise disclose (except as my Company duties may require)
either during or subsequent to my employment, any information, knowledge,
or data of the Company or its customers which I may reveive or develop
during the course of my employment relating to inventions, discoveries,
formulas, processes, machines, manufactures, compositions, computer
programs, accounting methods, information systems or business or
financial plans or reports, or relating to other matters which are of a
secret or confidential nature;
(F) to notify the Company in writing before I make any disclosure or
perform or cause to be performed any work for or on behalf of the Company
which appears to threaten conflict with (1) rights I claim in any
invention or idea (a) conceived by me or others prior to my employment of
(b) otherwise outside the scope of this agreement, or (2) rights of
others arising out of obligations incurred by me (d) prior to this
agreement or (b) otherwise outside the scope of this agreement. In the
event of my failure to give notice under the circumstances specified in
(1) of the foregoing, the Company may assume that no such conflicting
invention or idea exists, and I agree that I will make no claim against
the Company with respect to the use of any such invention or idea in any
work or the product of any work which I perform or cause to be performed
for or on behalf of the Company.
Discharge of my undertakings in this agreement shall be an
obligation of my executors, administrators, or other legal
representatives of assigns.
This agreement may not on behalf of or in respect to the Company be
changed or modified or released, discharged, abandoned, or otherwise
terminated, in while or in part, except by an instrument in writing
signed by an officer or other authorized executive of the Company.
I represent that except as stated on the reverse side of this
agreement, I have no agreements with or obligations to others in conflict
with the foregoing.
Discharge of my undertakings to the Company in this agreement shall
apply with equal vigor to any present or future subsidiaries or
affiliates of the Company and to any successor(s) interest to the
business and/or assets of the Company by way of acquisition, merger,
consolidation or liquidation at any time in the future and shall be
enforceable by any of the foregoing entities. I recognize that the
remedies provided to Rheometrics, Inc. (and to any other entities in
whose favor this agreement shall run) are inadequate at law and this
undertaking on my part
<PAGE>
shall be enforceable to the extent of all forms of equitable relief
permitted by the laws of the State of New Jersey or any other
jurisdiction in which this agreement may become enforceable.
(Signed) /s/ Alan R. Eschbach
______________________
Alan R. Eschbach
(Date) 9/12/96
________________________
WITNESS: /s/ Charlene A. Federowicz
___________________________
/s/ R. E. Davis
_____________________________________
President, Rheometric Scientific, Inc.
21
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is entered into on September 9 1996, by and
between Rheometric Scientific, Inc., a New Jersey corporation
("Company") and John C. Fuhrmeister, a Pennsylvania resident
("Executive").
Background
A. Executive is currently the Vice President, Finance &
Administration, of the Company.
B. Each of the Company and Executive acknowledge that it
is to their mutual and respective benefit to enter into this
Employment Agreement ("Agreement").
Now, therefore, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein
contained, the Company and Executive hereby agree as follows:
1. Employment and Term..
(a) The Company hereby agrees to continue to employ
Executive and the Executive hereby agrees to continue to serve
the Company, subject to and upon the terms and conditions set
forth below.
(b) Subject to the provisions of Section 6 hereof, the
period of the Executive's employment by the Company under this
Agreement (the "Employment Term") will commence on the date of
this Agreement and will continue through June 30, 1997. The
Employment Term will continue thereafter on a year-to-year basis,
unless the Company provides Executive notice (at least 3 months
<PAGE>
prior to June 30, 1997 or the first anniversary of the
continuation then in effect) that the Company has elected not to
continue the Employment Term for the next year. The last day of
the Employment Term, without regard to any early termination
pursuant to Section 6, is herein referred to as the "Expiration
Date."
2. Executive Position and Duties and Responsibilities.
During the Employment Term, the Executive will continue to
serve as the Vice President, Finance & Administration, of the
Company, with such management and executive duties and
responsibilities as may be assigned to him from time to time by
the Company's Board of Directors and the Company's Chief
Executive Officer, provided that such duties and responsibilities
are consistent with the current duties and responsibilities of
the Executive's positions.
3. Compensation and Reimbursement of Expenses.
During the Employment Term, Executive will receive the
following compensation and benefits from the Company:
(a) Base Salary. The Executive will receive an annual
base salary, payable no less frequently than bi-weekly, at the
annual rate of $ 110,249.88, subject to any increase the Board of
Directors may provide in its sole discretion (the "Base Salary").
(b) Bonus. Executive will be entitled to receive incentive
compensation based on the performance of the Executive and the
Company in accordance with and subject to the terms and
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<PAGE>
conditions of the Management Incentive Bonus Program of the
Company.
(c) Reimbursement of Expenses. The Executive will be
reimbursed for all reasonable expenses incurred by him in
performing services hereunder upon presentation to the Company by
the Executive of documentation acceptable to the Company under
its standard policies.
(d) Benefits. The Executive will be entitled to participate
in or receive the benefits he currently receives (as listed on
Schedule A) and such other benefits as the Company may generally
grant to its executive officers.
(e) Vacation and Leave. The Executive will be entitled
to four (4) weeks annually of vacation during which his
compensation pursuant to this Section 3 will be paid in full,
provided that the Executive will give reasonable notice to the
Chief Executive Officer of the Company of desired vacation
periods and no more than two (2) weeks of vacation will be taken
within any thirty (30) day period. Vacation time not taken by
the Executive in any given year will not accrue to succeeding
years unless the standard policies of the Company provide
otherwise. Leaves of absence may be granted by the Board of
Directors in its sole discretion. The Company shall pay the
Executive for past unused vacation time accrued prior to December
31, 1995 at the time of a Change in Control or approval by
president and/or CEO (as defined in Section 12).
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<PAGE>
4. Performance of Duties.
During the Employment Term the Executive will devote his
entire business time and attention to the performance of his
duties under this Agreement and will serve the Company diligently
and to the best of his abilities and will not engage in any other
business activity without the prior written approval of the Board
of Directors, provided that the Executive may, with the prior
approval of the Board of Directors, serve on boards of directors
of other corporations or institutions, if such service, in the
opinion of the Board of Directors, presents no conflict with the
Company.
5. Restrictive Covenants.
(a) Acknowledgments. The Executive acknowledges that:
(i) His position with the Company requires the
performance of services that are special, unique and intellectual
in character and he is and will be in a position of confidence
and trust with the employees and customers of the Company and its
subsidiaries and their joint venture partners, through which he
has obtained or will obtain, among other things, knowledge of
such organizations and their customers, in which those
organizations have a proprietary interest, and
(ii) The restrictive covenants set forth in this
Agreement are necessary in order to protect such proprietary
information and other legitimate business interests of the
Company and its subsidiaries and their joint venture partners and
4
<PAGE>
that the Company would not have entered into this Agreement
unless those restrictive covenants were included, and
(iii) The business and sales efforts of the Company are
conducted on a worldwide basis and that he has personally
supervised or engaged in such business and will continue to do so
pursuant and subject to the terms of this Agreement, and
(iv) The enforcement of the restrictive covenants set
forth in this Agreement will not prevent him from maintaining a
livelihood.
(b) Noncompetition and Nonsolicitation.
(i) Mandatory Restrictions during Employment. Subject
to the further provisions of this Section 5, for so long as the
Executive is employed pursuant to the terms of this Agreement and
without any requirement of further payment therefor, Executive
shall not take any of the actions set forth in Section 5(b)(iii)
hereof anywhere in the world without the prior express written
consent of the Company.
(ii) Mandatory Restrictions following term of
Employment. (A) Subject to the further provisions of this
Section 5, in the event of Voluntary Termination (as defined
hereinafter) by the Executive or in the event of Company
Termination for Cause (as defined hereinafter) and without any
requirement of further payment therefor, Executive shall not take
any of the actions set forth in Section 5(b)(iii)(A)or
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<PAGE>
5(b)(iii)(B)(I)hereof anywhere in the world for one (1) year
following termination of employment hereunder and Executive shall
not take any of the actions set forth in Section 5(b)(iii)(B)(II)
or Section 5(b)(iii)(B)(III) hereof anywhere in the world for
two(2) years following termination of employment hereunder.
(B) Subject to the further provisions of this
Section 5, in the event of an Involuntary Termination by
Executive (as defined hereinafter); Company Termination Without
Cause (as defined hereinafter); or Termination Upon Disability
(as defined hereinafter), the Executive shall not, without the
prior written consent of the Company take any of the actions set
forth in Section 5(b)(iii)(A)or 5(b)(iii)(B)(I) within the
"Restricted Period" (as defined below)and shall not take any of
the actions set forth in Section 5(b)(iii)(B)(II) or Section
5(b)(iii)(B)(III)for a period of two (2) years following the
termination of employment hereunder anywhere in the world. For
purposes of this Agreement "Restricted Period" means the period
of time in which Executive is entitled to receive payments and
benefits under Section 7(a), 7(b) or 7(c), as the case may be,
notwithstanding any reduction or elimination of those payments
and benefits pursuant to the second sentence of Section 7(d).
(iii) Prohibited Actions. To the extent that this
Section 5(b)(iii) is expressly made applicable by other
provisions of this Agreement, the Executive shall not:
(A) directly or indirectly (whether for
6
<PAGE>
compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder,
consultant or in any other capacity, own, manage, operate,
control, or participate in the ownership, management, operation
or control of any business which competes with the business of
the Company or its subsidiaries or their joint venture partners
as it may be conducted at the time of termination of employment
provided, however that nothing in this Section 5(b)(iii)(A) will
prohibit the Executive from acquiring or holding not greater than
one percent of any class of publicly traded securities of any
business; or
(B) directly or indirectly (I) approach or
solicit for business or otherwise deal with any customer of the
Company or its subsidiaries or their joint venture partners other
than on behalf of the Company, (II) approach or attempt to induce
any employee of the Company or its subsidiaries or their joint
venture partners to leave the employ of the Company or its
subsidiaries or their joint venture partners, (III) employ any
person who is an employee of the Company or its subsidiaries or
their joint venture partners on the date of, or within the six
months preceding, the termination of the employment of
Executive, or (IV) aid or counsel any other person to undertake
any action listed in (I),(II) or (III) above.
For the purposes of this Section 5, "customer" means any customer
7
<PAGE>
of the Company during the last two years of the Executive's
employment with the Company or any prospective customer to whom
the Company made a presentation (or similar offering of services)
during the last year of Executive's employment with the Company.
(c) Confidentiality. Executive shall comply with the
terms of a certain agreement containing (a) restrictions of
confidential information and (b) inventions and discoveries by
executive (among other provisions) (the "Confidentiality
Agreement") as attached hereto as Exhibit A.
(d) The parties hereby agree that the restrictions
contained in this Section 5 and the Confidentiality Agreement are
reasonable in scope and duration. However, in the event a court
of competent jurisdiction determines finally that the duration or
scope of any provision of this Section 5 and the Confidentiality
Agreement is unreasonable or unenforceable in part, then this
Section 5 and the Confidentiality Agreement will be deemed to be
amended so as to contain such provisions as the court will deem
reasonable and enforceable.
(e) Notwithstanding any provision to the contrary in
Section 5 (b), the restrictions contained in subsections (A) and
(B) of Section 5(b)(iii) will continue for any period in excess
of the applicable period following termination of employment in
which Executive continues to receive compensation under Section 7
of this Agreement.
6. Termination of Employment. Subject to the further
8
<PAGE>
provisions of this Agreement, the Company and Executive may
terminate the employment of Executive under this Agreement prior
to the Expiration Date as follows:
(a) Voluntary Termination by the Executive. The Executive
may terminate his employment under this Agreement at any time (a
"Voluntary Termination by Executive").
(b) Involuntary Termination by Executive. The Executive
may terminate his employment under this Agreement at any time for
good reason. "Good reason" means (i) the assignment to the
Executive of any duties inconsistent with his present duties and
responsibilities or any reduction or elimination of those duties
or responsibilities as Vice President, Finance & Administration,
(ii) the withdrawal by the Company of the title of Vice
President, Finance & Administration, from the Executive without
his consent; (iii) the Company's requirement that the Executive
maintain his principal office or conduct his principal
activities (other than business trips) from anywhere other than
the present principal executive offices of the Company in
Piscataway, New Jersey; (iv) the failure by the Company to obtain
the assumption and agreement to perform this Agreement on the
terms described in Section 12; or (v) the breach by the Company
of any material obligation of the Company under this Agreement,
provided that any breach of a payment obligation to the Executive
under this Agreement will constitute "good reason" only if the
breach is not cured within five days of notice by Executive.
9
<PAGE>
(c) Termination Without Cause. The Company may, at any
time, terminate the Executive's employment under this Agreement
without cause (a "Company Termination Without Cause").
(d) Termination for Cause. Notwithstanding anything to
the contrary contained in this Agreement, the Company may
terminate the Executive's employment under this Agreement at any
time for cause (a "Company Termination for Cause"). As used
herein, the term "for cause" means (1) the Executive's conviction
for a felony under the laws of the United States or any state or
political subdivision, (2) misappropriation by the Executive of
company funds or other misconduct materially injurious to the
Company, (3) breach of the Executive's fiduciary duty to the
Company involving personal profit or (4) material breach of this
Agreement by the Executive.
(e) Termination Upon Death or Disability of the Executive.
In the event that the Executive dies, his employment hereunder
will be deemed terminated without further action ("Termination
Upon Death"). In the event that the Executive is declared
incompetent by a court of appropriate jurisdiction, or is unable
to perform his duties hereunder for a continuous period exceeding
six (6) months by reason of illness or disability, then, upon at
least thirty (30) days' advance notice following the event giving
rise to the power to terminate hereunder, the Company may
terminate the Executive's employment under this Agreement
("Termination Upon Disability"). Executive agrees to
10
<PAGE>
take such reasonable actions (including providing full and
accurate information requested by insurers) as may be necessary
to allow the Company to obtain and maintain, for its own benefit,
life and disability insurance covering the Executive.
(f) Notice of Termination. Except for a Termination Upon
Death, any purported termination of employment under Sections
6(a) through 6(e) of this Agreement will be communicated by a
written notice of termination from the party exercising its right
to terminate ("Notifying Party") to the other party ("Responding
Party"). For the purposes of this Agreement, a "Notice of
Termination" will indicate the specific termination provision in
this Agreement relied upon and will set forth in reasonable
detail the facts and circumstances then known to the Notifying
Party which are claimed to provide a basis for termination under
the provision so indicated, provided, however, that no recitation
of facts and circumstances will be required in respect to a
Company Termination Without Cause or a Voluntary Termination by
Executive.
7. Payments and Benefits Following Termination Pursuant to
Section 6.
(a) Before a Change in Control. Following a Company
Termination Without Cause, an Involuntary Termination by
Executive, a Termination for Death or a Termination for
Disability, to the extent such a termination occurs before a
Change in Control (as defined in Section 12 hereof), the
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Executive (or his personal representative) will receive until the
Expiration Date:
(i) One hundred percent of the salary set forth in
Section 3(a) as the same may have been increased from time to
time, payment of which will be at the time provided for in this
Agreement as if the Executive's employment under this Agreement
had not terminated, minus, in the event of a Termination for
Disability, the amount of any disability benefits provided for
the Executive under any sickness, retirement or other benefit
plans provided by the Company,
(ii) Health (as to the Executive and his dependents who
are covered as of the termination), life and disability insurance
coverage substantially comparable to those furnished to the
Executive by the Company immediately prior to the termination of
employment hereunder,
(iii) the full amount of reimbursement of expenses
incurred through the date of termination of employment in
accordance with Section 3(d), and
(iv) the full amount which would have been due under
any bonus or profit-sharing plan, or similar arrangement, under
which the Executive was eligible prior to termination for the
full fiscal year (or other applicable period) during which the
termination occurred, subject to a prorated reduction in the
event of a Section 6(e) Termination for the period of time in
such fiscal year (or other applicable period) following the
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termination.
(b) Within Three Months Following a Change in Control.
Following a Company Termination Without Cause, a Voluntary
Termination by Executive, Involuntary Termination by Executive, a
Termination for Death or a Termination for Disability, to the
extent such a termination occurs on a Change in Control (as
defined in Section 12 hereof) or within the three months
following such Change in Control, the Executive (or his personal
representative) will receive the salary, payments and benefits
described in Section 7(a) above until the first annual
anniversary of the termination.
(c) Following the Three Month Anniversary of a Change in
Control. Following a Company Termination Without Cause, an
Involuntary Termination by Executive, a Termination for Death or
a Termination for Disability, to the extent such a termination
occurs on or after the three month anniversary of a Change in
Control (as defined in Section 12 hereof), the Executive (or his
personal representative) will receive the salary, payments and
benefits described in Section 7(a) above until the later of the
sixth month anniversary of the termination or the Expiration
Date.
(d) In the event of a Company Termination Without Cause, an
Involuntary Termination by Executive, or a Voluntary Termination
by Executive under Section 7(b), the above payments and benefits
will constitute the sole damages to which Executive will be
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entitled as a result of such termination. Executive will not be
required to mitigate his damages under this Agreement by seeking
employment or otherwise; provided, however, that in the event the
Executive does provide personal services to a third party in
exchange for compensation or benefits, or both, the payments and
benefits hereunder, to the extent they have not yet been paid or
received, will be appropriately reduced to reflect the
compensation and benefits that result to Executive from such
other employment. In addition, in the event Executive is paid
under Section 7(b) following a Voluntary Termination by Executive
or if an Involuntary Termination by Executive occurs for the
reason described in (iii) of Section 6(b), the Executive will
provide from time to time though the Expiration Date and at the
request of the Company, notwithstanding such termination, part-
time (i.e., no more than 10 hours per week) consultation and
advice on such executive and technical matters as are consistent
with the Executive's background at mutually convenient times and
places without interference with the Executive's ability to
perform employment elsewhere and he shall be reimbursed for
reasonable expenses in accordance with this Agreement.
(e) The Executive will have no right to receive
compensation or any other benefits for any period after a Company
Termination for Cause or a Voluntary Termination by Executive
(except as provided in Section 7(b) above), other than the
reimbursement or expenses pursuant to Section 3(c) incurred
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through the date of termination or as required by law.
8. Reserved.
9. Survival. This Agreement (except for Sections 1, 2, 3,
and 4) will remain in full force and effect notwithstanding any
termination of Executive's employment prior to the Expiration
Date. This Agreement (except for Sections 1, 2, 4 and 3 (other
than in respect to compensation and expense reimbursements earned
but not paid)) will remain in full force and effect
notwithstanding the termination of Executive's employment under
this Agreement on the Expiration Date. Nothing in this Agreement
will be construed (i) to provide the Executive any continued
right to employment with the Company or its affiliates following
the Employment Term or (ii) to provide the Company or its
affiliates any continued right to employ the Executive following
the Employment Term.
10. Withholding of Taxes. The Company may withhold from
any payments under this Agreement all applicable taxes, as will
be required pursuant to any law or governmental regulation or
ruling.
11. Prior Agreements. This Agreement constitutes the
entire agreement and understanding between the parties with
respect to the subject matter hereof. This Agreement supersedes
all other prior agreements and understandings with respect to
such subject matter between and among the Company and the
Executive.
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<PAGE>
12. Consolidation or Merger, Change in Control. Nothing in
this Agreement will preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of
the Company's assets to (any of the foregoing, a "Purchase
Transaction")any person or entity ("Purchaser"). In the event
such person or entity assumes all obligations of the Company
hereunder by written agreement reasonably acceptable to the
Executive, then upon the closing of the Purchase Transaction the
terms "Company" will refer to the Purchaser and this Agreement
will continue in full force and effect. For purposes of this
Agreement, "Change in Control" means:
(a) any event by which (i) an "Acquiring Person"(as defined
below)has become such, or (ii) "Continuing Directors (as defined
below) cease to comprise a majority of the members of the board
of directors of the Company (the "Board"). For purposes of this
definition an "Acquiring Person" means any person or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder as in effect on the date of this Agreement (the
"Exchange Act")) who or which, together with all affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act)
becomes the beneficial owner of shares of the Company having 50%
or more of the total number of votes that may be cast for the
election of directors of the Company; and "Continuing Director"
means any member of the Board, while such person is a member of
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<PAGE>
the Board, who is not an Acquiring Person, or an affiliate or
associate of an Acquiring Person or a representative of an
Acquiring Person or of any such affiliate or associate and who
(i) was a member of the Board prior to the date of this
Agreement, or (ii) subsequently becomes a member of such Board
and whose nomination for election or election to the Board is
recommended or approved by resolution of a majority of the
Continuing Directors or who is included as a nominee in a proxy
statement of the Company distributed when a majority of the Board
consists of Continuing Directors, or
(b) The consolidation or merger of the Company with, or the
transfer of all or substantially all of the Company's assets to,
any person or entity not controlled by the Company or by an
affiliate or affiliates of the Company (as defined in Rule 12b-2
under the Exchange Act).
13. Arbitration; Availability of Equitable Relief.
(a) Except as provided in subsection (b) of this Section,
any dispute, controversy or claim arising under or in connection
with this Agreement will be settled by arbitration in the City of
Newark, State of New Jersey, conducted in accordance with the
rules of the American Arbitration Association, and judgment upon
the award rendered in such arbitration may be entered in any
court of competent jurisdiction. The hearing or any such claim,
controversy or dispute will be heard with 60 days of written
notice of the same, and such hearing will not exceed five
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<PAGE>
business days. Each party will pay its own expenses.
(b) Executive acknowledges that the remedy at law for any
breach or threatened breach of Section 5 of this Agreement will
be inadequate, and that the Company will, in addition to all
other available remedies, be entitled to injunctive relief
restraining the Executive from such breach without being required
to post bond or other security and without having to prove the
inadequacy of the available remedies at law.
14. General Provision.
(a) Non-Assignability. In the event of the Executive's
death, this Agreement and the Executive's rights hereunder will
inure to the benefit of his personal representatives and heirs.
Except as set forth in the preceding sentence and in Section 12,
neither this Agreement nor any right or interest hereunder will
be assignable by the Company or the Executive.
(b) No Attachment. Except as otherwise required by law,
including the laws of descent and distribution, no right to
receive payments under this Agreement will be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any
such action will be null, void and of no effect.
15. Amendment. No amendment or modification of this
Agreement will be deemed effective unless executed in writing by
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the parties hereto, and approved by the Board of Directors of the
Company.
16. Severability. If for any reason any provision of this
Agreement will be held invalid, such invalidity will not affect
any other provision of this Agreement not held so invalid, and
all other such provisions will to the full extent consistent with
law continue in full force and effect. If any such provision
will be held invalid in part, such invalidity will in no way
affect the rest of such provision not held so invalid, and the
rest of such provision, together with all other provisions of
this Agreement, will likewise to the full extent consistent with
law continue in full force and effect.
17. Headings. The headings are included solely for
convenience of reference and will not control the meaning or
interpretation of any of the provisions of this Agreement.
18. Governing Law. This Agreement has been executed and
delivered in the State of New Jersey and its validity,
interpretation, performance and enforcement will be governed by
and construed in accordance with the laws thereof applicable to
contracts executed and to be wholly performed in the State of New
Jersey.
19. Consent to Jurisdiction. The Executive hereby
irrevocably consents to the exclusive jurisdiction of the courts
of the State of New Jersey and of any federal courts located
within the State of New Jersey for all purposes in connection
19
<PAGE>
with any action or proceeding which arises out of or relates to
this Agreement and agrees that service of summons, complaint or
process in connection therewith may be made as set forth in this
Agreement with respect to giving notices and that service so made
will be as effective as if personally made.
20. Notices. All notices, requests, demands and other
communications hereunder will be in writing and will be deemed to
have been duly given if delivered by hand or mailed, certified or
registered mail, return receipt requested, with postage prepaid,
to the following addresses or to such other address as any party
hereto may designated by like notice:
A. If to Executive, to:
John C. Fuhrmeister
8 Woods End Road
Doylestown, PA 18901
B. With a copy to:
_________________________________
_________________________________
_________________________________
C. If to the Company, to:
Rheometric Scientific, Inc.
One Possumtown Road
Piscataway NJ 08854
D. With copies to:
Thomas Lyons, Esquire
Crummy Del Deo Dolan Griffinger
& Vecchione
20
<PAGE>
1 Riverfront Plaza
Newark NJ 07102
and
R. Michael Hendricks, President
Axess Corporation
100 Interchange Blvd.
Newark DE 19711
and to such other or additional person or persons (but no more
than two persons) as either party will have designated to the
other party in writing by like notice.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers, and the Executive
has signed this Agreement, all as of the day and year first above
written.
RHEOMETRIC SCIENTIFIC, INC.
By: /s/ R. E. Davis
_______________________
Title: CEO
EXECUTIVE
WITNESS:
/s/ Charlene A. Federowicz /s/ J. C. Fuhrmeister
___________________________ __________________________
John C. Fuhrmeister
21
<PAGE>
Schedule A
Current Benefits
1. Medical and dental insurance as per the company's overall
plan.
2. Reimbursement of medical and dental expenses in excess of
the company plan for officers and their dependents in an amount
not to exceed $10,000,00 per year.
3. Company vacation policy with option to take pay in lieu of
vacation days, as limited by policy.
4. Provided company car or appropriate car allowance as per
present company policy.
5. Long term disability policy.
Life insurance as per company policy.
Accidental death and business travel coverage as per Company
provided plan.
Company provided plan
6. 401(k) as per the Company ERISA qualified plan.
7. Stock option plan or equivalent.
8. Membership in one health club.
9. Severance: Greater of contract amount or company policy
<PAGE>
EXHIBIT A
CONFIDENTIALITY AGREEMENT
<PAGE>
TO: Rheometric Scientific, Inc.
Piscataway, New Jersey
RE: Employee Confidential and Proprietary Information Agreement
In consideration of my employment with Rheometric
Scientific, Inc. ("Company") and of the salary or wages paid for
my services in the course of such employment, I agree as follows:
(A) to communicate to the Company promptly and fully and to
assign to the Company all inventions or significant technical or
business innovations developed or conceived solely by me or
jointly with others from the time of entering the Company's
employ until any termination of my employment, (1) which are
along the lines of the business, work or investigations of the
Company, of (2) which result from or are suggested by any work
which I may do for or on behalf of the Company;
(B) to execute all necessary papers and otherwise to assist the
Company during and subsequent to such employment in every proper
way (entirely at its expense) to obtain for its own benefit
patents, copyrights or other legal protection for such
inventions, or for publications pertaining to them, in any and
all countries, said inventions and innovations to be the
exclusive property of the Company, whether or not patented or
copyrighted;
(C) to make and maintain adequate and current written records of
all such inventions or innovations, in the form of notes,
sketches, drawings, or reports relating thereto, which records
shall be and remain the property of and available to the Company
at all times;
(D) upon any termination of my employment, promptly to deliver
to the Company, all drawings, blueprints, manuals, letters,
notes, notebooks, reports, models and other materials (including
all copies) which are of a secret or confidential nature relating
to the business of the Company, and which are in my possession or
under my control;
(E) except as the Company may otherwise consent in writing, not
to publish or otherwise disclose (except as my Company duties may
require) either during or subsequent to my employment, any
information, knowledge, or data of the Company or its customers
which I may reveive or develop during the course of my employment
relating to inventions, discoveries, formulas, processes,
machines, manufactures, compositions, computer programs,
accounting methods, information systems or business or financial
plans or reports, or relating to other matters which are of a
secret or confidential nature;
(F) to notify the Company in writing before I make any
disclosure or perform or cause to be performed any work for or on
behalf of the Company which appears to threaten conflict with (1)
rights I claim in any invention or idea (a) conceived by me or
others prior to my employment of (b) otherwise outside the scope
of this agreement, or (2) rights of others arising out of
obligations incurred by me (d) prior to this agreement or (b)
otherwise outside the scope of this agreement. In the event of
my failure to give notice under the circumstances specified in
(1) of the foregoing, the Company may assume that no such
conflicting invention or idea exists, and I agree that I will
make no claim against the Company with respect to the use of any
such invention or idea in any work or the product of any work
which I perform or cause to be performed for or on behalf of the
Company.
Discharge of my undertakings in this agreement shall be an
obligation of my executors, administrators, or other legal
representatives of assigns.
This agreement may not on behalf of or in respect to the
Company be changed or modified or released, discharged,
abandoned, or otherwise terminated, in while or in part, except
by an instrument in writing signed by an officer or other
authorized executive of the Company.
I represent that except as stated on the reverse side of
this agreement, I have no agreements with or obligations to
others in conflict with the foregoing.
Discharge of my undertakings to the Company in this
agreement shall apply with equal vigor to any present or future
subsidiaries or affiliates of the Company and to any successor(s)
interest to the business and/or assets of the Company by way of
acquisition, merger, consolidation or liquidation at any time in
the future and shall be enforceable by any of the foregoing
entities. I recognize that the remedies provided to Rheometrics,
Inc. (and to any other entities in whose favor this agreement
shall run) are inadequate at law and this undertaking on my part
shall be enforceable to the extent of all forms of equitable
relief permitted by the laws of the State of New Jersey or any
other jurisdiction in which this agreement may become
enforceable.
(Signed /s/ John C. Fuhrmeister
_______________________
John C. Fuhrmeister
(Date) 9/9/96
___________________________
WITNESS:/s/ Charlene A. Federowicz
___________________________
/s/ R. E. Davis
__________________________
President, Rheometrics, Inc.
23
EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is entered into on September 11, 1996, by and
between Rheometric Scientific, Inc., a New Jersey corporation
("Company") and Ronald F. Garritano, a New Jersey resident
("Executive").
Background
A. Executive is currently the Vice President, Technology,
of the Company.
B. Executive and the Company are parties to an Employment
Agreement dated May 26, 1992 ("1992 Agreement"), which they now
wish to amend and restate.
C. Each of the Company and Executive acknowledge that it
is to their mutual and respective benefit to enter into this
Amended and Restated Employment Agreement ("Agreement").
Now, therefore, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein
contained, the Company and Executive hereby agree as follows:
1. Employment and Term..
(a) The Company hereby agrees to continue to employ
Executive and the Executive hereby agrees to continue to serve
the Company, subject to and upon the terms and conditions set
forth below.
(b) Subject to the provisions of Section 6 hereof, the
period of the Executive's employment by the Company under this
<PAGE>
Agreement (the "Employment Term") will commence on the date of
this Agreement and will continue through June 30, 1997. The
Employment Term will continue thereafter on a year-to-year basis,
unless the Company provides Executive notice (at least 3 months
prior to June 30, 1997 or the first anniversary of the
continuation then in effect) that the Company has elected not to
continue the Employment Term for the next year. The last day of
the Employment Term, without regard to any early termination
pursuant to Section 6, is herein referred to as the "Expiration
Date."
2. Executive Position and Duties and Responsibilities.
During the Employment Term, the Executive will continue to
serve as the Vice President, Technology, the Company, with such
management and executive duties and responsibilities as may be
assigned to him from time to time by the Company's Board of
Directors and the Company's Chief Executive Officer, provided
that such duties and responsibilities are consistent with the
current duties and responsibilities of the Executive's positions.
3. Compensation and Reimbursement of Expenses.
During the Employment Term, Executive will receive the
following compensation and benefits from the Company:
(a) Base Salary. The Executive will receive an annual
base salary, payable no less frequently than bi-weekly, at the
annual rate of $ 131,082.12, subject to any increase the Board of
Directors may provide in its sole discretion (the "Base Salary").
2
<PAGE>
(b) Bonus. Executive will be entitled to receive incentive
compensation based on the performance of the Executive and the
Company in accordance with and subject to the terms and
conditions of the Management Incentive Bonus Program of the
Company.
(c) Reimbursement of Expenses. The Executive will be
reimbursed for all reasonable expenses incurred by him in
performing services hereunder upon presentation to the Company by
the Executive of documentation acceptable to the Company under
its standard policies.
(d) Benefits. The Executive will be entitled to participate
in or receive the benefits he currently receives (as listed on
Schedule A) and such other benefits as the Company may generally
grant to its executive officers.
(e) Vacation and Leave. The Executive will be entitled
to four (4) weeks annually of vacation during which his
compensation pursuant to this Section 3 will be paid in full,
provided that the Executive will give reasonable notice to the
Chief Executive Officer of the Company of desired vacation
periods and no more than two (2) weeks of vacation will be taken
within any thirty (30) day period. Vacation time not taken by
the Executive in any given year will not accrue to succeeding
years unless the standard policies of the Company provide
otherwise. Leaves of absence may be granted by the Board of
Directors in its sole discretion. The Company shall pay the
3
<PAGE>
Executive for past unused vacation time accrued prior to December
31, 1995 at the time of a Change in Control or approval by the
president and/or CEO (as defined in Section 12).
4. Performance of Duties.
During the Employment Term the Executive will devote his
entire business time and attention to the performance of his
duties under this Agreement and will serve the Company diligently
and to the best of his abilities and will not engage in any other
business activity without the prior written approval of the Board
of Directors, provided that the Executive may, with the prior
approval of the Board of Directors, serve on boards of directors
of other corporations or institutions, if such service, in the
opinion of the Board of Directors, presents no conflict with the
Company.
5. Restrictive Covenants.
(a) Acknowledgments. The Executive acknowledges that:
(i) His position with the Company requires the
performance of services that are special, unique and intellectual
in character and he is and will be in a position of confidence
and trust with the employees and customers of the Company and its
subsidiaries and their joint venture partners, through which he
has obtained or will obtain, among other things, knowledge of
such organizations and their customers, in which those
organizations have a proprietary interest, and
(ii) The restrictive covenants set forth in this
4
<PAGE>
Agreement are necessary in order to protect such proprietary
information and other legitimate business interests of the
Company and its subsidiaries and their joint venture partners and
that the Company would not have entered into this Agreement
unless those restrictive covenants were included, and
(iii) The business and sales efforts of the Company are
conducted on a worldwide basis and that he has personally
supervised or engaged in such business and will continue to do so
pursuant and subject to the terms of this Agreement, and
(iv) The enforcement of the restrictive covenants set
forth in this Agreement will not prevent him from maintaining a
livelihood.
(b) Noncompetition and Nonsolicitation.
(i) Mandatory Restrictions during Employment. Subject
to the further provisions of this Section 5, for so long as the
Executive is employed pursuant to the terms of this Agreement and
without any requirement of further payment therefor, Executive
shall not take any of the actions set forth in Section 5(b)(iii)
hereof anywhere in the world without the prior express written
consent of the Company.
(ii) Mandatory Restrictions following term of
Employment. (A) Subject to the further provisions of this
Section 5, in the event of Voluntary Termination (as defined
hereinafter) by the Executive or in the event of Company
5
<PAGE>
Termination for Cause (as defined hereinafter) and without any
requirement of further payment therefor, Executive shall not take
any of the actions set forth in Section 5(b)(iii)(A)or
5(b)(iii)(B)(I)hereof anywhere in the world for one (1) year
following termination of employment hereunder and Executive shall
not take any of the actions set forth in Section 5(b)(iii)(B)(II)
or Section 5(b)(iii)(B)(III) hereof anywhere in the world for
two(2) years following termination of employment hereunder.
(B) Subject to the further provisions of this
Section 5, in the event of an Involuntary Termination by
Executive (as defined hereinafter); Company Termination Without
Cause (as defined hereinafter); or Termination Upon Disability
(as defined hereinafter), the Executive shall not, without the
prior written consent of the Company take any of the actions set
forth in Section 5(b)(iii)(A)or 5(b)(iii)(B)(I) within the
"Restricted Period" (as defined below)and shall not take any of
the actions set forth in Section 5(b)(iii)(B)(II) or Section
5(b)(iii)(B)(III)for a period of two (2) years following the
termination of employment hereunder anywhere in the world. For
purposes of this Agreement "Restricted Period" means the period
of time in which Executive is entitled to receive payments and
benefits under Section 7(a), 7(b) or 7(c), as the case may be,
notwithstanding any reduction or elimination of those payments
and benefits pursuant to the second sentence of Section 7(d).
(iii) Prohibited Actions. To the extent that this
6
<PAGE>
Section 5(b)(iii) is expressly made applicable by other
provisions of this Agreement, the Executive shall not:
(A) directly or indirectly (whether for
compensation or otherwise), alone or as an agent, principal,
partner, officer, employee, trustee, director, shareholder,
consultant or in any other capacity, own, manage, operate,
control, or participate in the ownership, management, operation
or control of any business which competes with the business of
the Company or its subsidiaries or their joint venture partners
as it may be conducted at the time of termination of employment
provided, however that nothing in this Section 5(b)(iii)(A) will
prohibit the Executive from acquiring or holding not greater than
one percent of any class of publicly traded securities of any
business; or
(B) directly or indirectly (I) approach or
solicit for business or otherwise deal with any customer of the
Company or its subsidiaries or their joint venture partners other
than on behalf of the Company, (II) approach or attempt to induce
any employee of the Company or its subsidiaries or their joint
venture partners to leave the employ of the Company or its
subsidiaries or their joint venture partners, (III) employ any
person who is an employee of the Company or its subsidiaries or
their joint venture partners on the date of, or within the six
months preceding, the termination of the employment of
Executive, or (IV) aid or counsel any other person to undertake
7
<PAGE>
any action listed in (I),(II) or (III) above.
For the purposes of this Section 5, "customer" means any customer
of the Company during the last two years of the Executive's
employment with the Company or any prospective customer to whom
the Company made a presentation (or similar offering of services)
during the last year of Executive's employment with the Company.
(c) Confidentiality. Executive shall comply with the
terms of a certain agreement containing (a) restrictions of
confidential information and (b) inventions and discoveries by
executive (among other provisions) (the "Confidentiality
Agreement") as attached hereto as Exhibit A.
(d) The parties hereby agree that the restrictions
contained in this Section 5 and the Confidentiality Agreement are
reasonable in scope and duration. However, in the event a court
of competent jurisdiction determines finally that the duration or
scope of any provision of this Section 5 and the Confidentiality
Agreement is unreasonable or unenforceable in part, then this
Section 5 and the Confidentiality Agreement will be deemed to be
amended so as to contain such provisions as the court will deem
reasonable and enforceable.
(e) Notwithstanding any provision to the contrary in
Section 5 (b), the restrictions contained in subsections (A) and
(B) of Section 5(b)(iii) will continue for any period in excess
of the applicable period following termination of employment in
8
<PAGE>
which Executive continues to receive compensation under Section 7
of this Agreement.
6. Termination of Employment. Subject to the further
provisions of this Agreement, the Company and Executive may
terminate the employment of Executive under this Agreement prior
to the Expiration Date as follows:
(a) Voluntary Termination by the Executive. The Executive
may terminate his employment under this Agreement at any time (a
"Voluntary Termination by Executive").
(b) Involuntary Termination by Executive. The Executive
may terminate his employment under this Agreement at any time for
good reason. "Good reason" means (i) the assignment to the
Executive of any duties inconsistent with his present duties and
responsibilities or any reduction or elimination of those duties
or responsibilities as Vice President, Technology, (ii) the
withdrawal by the Company of the title of Vice President,
Technology, from the Executive without his consent; (iii) the
Company's requirement that the Executive maintain his principal
office or conduct his principal activities (other than business
trips) from anywhere other than the present principal executive
offices of the Company in Piscataway, New Jersey; (iv) the
failure by the Company to obtain the assumption and agreement to
perform this Agreement on the terms described in Section 12; or
(v) the breach by the Company of any material obligation of the
Company under this Agreement, provided that any breach of a
9
<PAGE>
payment obligation to the Executive under this Agreement will
constitute "good reason" only if the breach is not cured within
five days of notice by Executive.
(c) Termination Without Cause. The Company may, at any
time, terminate the Executive's employment under this Agreement
without cause (a "Company Termination Without Cause").
(d) Termination for Cause. Notwithstanding anything to
the contrary contained in this Agreement, the Company may
terminate the Executive's employment under this Agreement at any
time for cause (a "Company Termination for Cause"). As used
herein, the term "for cause" means (1) the Executive's conviction
for a felony under the laws of the United States or any state or
political subdivision, (2) misappropriation by the Executive of
company funds or other misconduct materially injurious to the
Company, (3) breach of the Executive's fiduciary duty to the
Company involving personal profit or (4) material breach of this
Agreement by the Executive.
(e) Termination Upon Death or Disability of the Executive.
In the event that the Executive dies, his employment hereunder
will be deemed terminated without further action ("Termination
Upon Death"). In the event that the Executive is declared
incompetent by a court of appropriate jurisdiction, or is unable
to perform his duties hereunder for a continuous period exceeding
six (6) months by reason of illness or disability, then, upon at
least thirty (30) days' advance notice following
10
<PAGE>
the event giving rise to the power to terminate hereunder, the
Company may terminate the Executive's employment under this
Agreement ("Termination Upon Disability"). Executive agrees to
take such reasonable actions (including providing full and
accurate information requested by insurers) as may be necessary
to allow the Company to obtain and maintain, for its own benefit,
life and disability insurance covering the Executive.
(f) Notice of Termination. Except for a Termination Upon
Death, any purported termination of employment under Sections
6(a) through 6(e) of this Agreement will be communicated by a
written notice of termination from the party exercising its right
to terminate ("Notifying Party") to the other party ("Responding
Party"). For the purposes of this Agreement, a "Notice of
Termination" will indicate the specific termination provision in
this Agreement relied upon and will set forth in reasonable
detail the facts and circumstances then known to the Notifying
Party which are claimed to provide a basis for termination under
the provision so indicated, provided, however, that no recitation
of facts and circumstances will be required in respect to a
Company Termination Without Cause or a Voluntary Termination by
Executive.
7. Payments and Benefits Following Termination Pursuant to
Section 6.
(a) Before a Change in Control. Following a Company
Termination Without Cause, an Involuntary Termination by
11
<PAGE>
Executive, a Termination for Death or a Termination for
Disability, to the extent such a termination occurs before a
Change in Control (as defined in Section 12 hereof), the
Executive (or his personal representative) will receive until the
Expiration Date:
(i) One hundred percent of the salary set forth in
Section 3(a) as the same may have been increased from time to
time, payment of which will be at the time provided for in this
Agreement as if the Executive's employment under this Agreement
had not terminated, minus, in the event of a Termination for
Disability, the amount of any disability benefits provided for
the Executive under any sickness, retirement or other benefit
plans provided by the Company,
(ii) Health (as to the Executive and his dependents who
are covered as of the termination), life and disability insurance
coverage substantially comparable to those furnished to the
Executive by the Company immediately prior to the termination of
employment hereunder,
(iii) the full amount of reimbursement of expenses
incurred through the date of termination of employment in
accordance with Section 3(d), and
(iv) the full amount which would have been due under
any bonus or profit-sharing plan, or similar arrangement, under
which the Executive was eligible prior to termination for the
full fiscal year (or other applicable period) during which the
12
termination occurred, subject to a prorated reduction in the
event of a Section 6(e) Termination for the period of time in
such fiscal year (or other applicable period) following the
termination.
(b) Within Three Months Following a Change in Control.
Following a Company Termination Without Cause, a Voluntary
Termination by Executive, Involuntary Termination by Executive, a
Termination for Death or a Termination for Disability, to the
extent such a termination occurs on a Change in Control (as
defined in Section 12 hereof) or within the three months
following such Change in Control, the Executive (or his personal
representative) will receive the salary, payments and benefits
described in Section 7(a) above until the first annual
anniversary of the termination.
(c) Following the Three Month Anniversary of a Change in
Control. Following a Company Termination Without Cause, an
Involuntary Termination by Executive, a Termination for Death or
a Termination for Disability, to the extent such a termination
occurs on or after the three month anniversary of a Change in
Control (as defined in Section 12 hereof), the Executive (or his
personal representative) will receive the salary, payments and
benefits described in Section 7(a) above until the later of the
sixth month anniversary of the termination or the Expiration
Date.
(d) In the event of a Company Termination Without Cause, an
13
<PAGE>
Involuntary Termination by Executive, or a Voluntary Termination
by Executive under Section 7(b), the above payments and benefits
will constitute the sole damages to which Executive will be
entitled as a result of such termination. Executive will not be
required to mitigate his damages under this Agreement by seeking
employment or otherwise; provided, however, that in the event the
Executive does provide personal services to a third party in
exchange for compensation or benefits, or both, the payments and
benefits hereunder, to the extent they have not yet been paid or
received, will be appropriately reduced to reflect the
compensation and benefits that result to Executive from such
other employment. In addition, in the event Executive is paid
under Section 7(b) following a Voluntary Termination by Executive
or if an Involuntary Termination by Executive occurs for the
reason described in (iii) of Section 6(b), the Executive will
provide from time to time though the Expiration Date and at the
request of the Company, notwithstanding such termination, part-
time (i.e., no more than 10 hours per week) consultation and
advice on such executive and technical matters as are consistent
with the Executive's background at mutually convenient times and
places without interference with the Executive's ability to
perform employment elsewhere and he shall be reimbursed for
reasonable expenses in accordance with this Agreement.
(e) The Executive will have no right to receive
compensation or any other benefits for any period after a Company
14
<PAGE>
Termination for Cause or a Voluntary Termination by Executive
(except as provided in Section 7(b) above), other than the
reimbursement or expenses pursuant to Section 3(c) incurred
through the date of termination or as required by law.
8. Reserved.
9. Survival. This Agreement (except for Sections 1, 2, 3,
and 4) will remain in full force and effect notwithstanding any
termination of Executive's employment prior to the Expiration
Date. This Agreement (except for Sections 1, 2, 4 and 3 (other
than in respect to compensation and expense reimbursements earned
but not paid)) will remain in full force and effect
notwithstanding the termination of Executive's employment under
this Agreement on the Expiration Date. Nothing in this Agreement
will be construed (i) to provide the Executive any continued
right to employment with the Company or its affiliates following
the Employment Term or (ii) to provide the Company or its
affiliates any continued right to employ the Executive following
the Employment Term.
10. Withholding of Taxes. The Company may withhold from
any payments under this Agreement all applicable taxes, as will
be required pursuant to any law or governmental regulation or
ruling.
11. Prior Agreements. This Agreement constitutes the
entire agreement and understanding between the parties with
respect to the subject matter hereof. This Agreement amends and
15
<PAGE>
restates the 1992 Agreement and supersedes all other prior
agreements and understandings with respect to such subject matter
between and among the Company and the Executive.
12. Consolidation or Merger, Change in Control. Nothing in
this Agreement will preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of
the Company's assets to (any of the foregoing, a "Purchase
Transaction")any person or entity ("Purchaser"). In the event
such person or entity assumes all obligations of the Company
hereunder by written agreement reasonably acceptable to the
Executive, then upon the closing of the Purchase Transaction the
terms "Company" will refer to the Purchaser and this Agreement
will continue in full force and effect. For purposes of this
Agreement, "Change in Control" means:
(a) any event by which (i) an "Acquiring Person"(as defined
below)has become such, or (ii) "Continuing Directors (as defined
below) cease to comprise a majority of the members of the board
of directors of the Company (the "Board"). For purposes of this
definition an "Acquiring Person" means any person or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder as in effect on the date of this Agreement (the
"Exchange Act")) who or which, together with all affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act)
becomes the beneficial owner of shares of the Company having 50%
16
<PAGE>
or more of the total number of votes that may be cast for the
election of directors of the Company; and "Continuing Director"
means any member of the Board, while such person is a member of
the Board, who is not an Acquiring Person, or an affiliate or
associate of an Acquiring Person or a representative of an
Acquiring Person or of any such affiliate or associate and who
(i) was a member of the Board prior to the date of this
Agreement, or (ii) subsequently becomes a member of such Board
and whose nomination for election or election to the Board is
recommended or approved by resolution of a majority of the
Continuing Directors or who is included as a nominee in a proxy
statement of the Company distributed when a majority of the Board
consists of Continuing Directors, or
(b) The consolidation or merger of the Company with, or the
transfer of all or substantially all of the Company's assets to,
any person or entity not controlled by the Company or by an
affiliate or affiliates of the Company (as defined in Rule 12b-2
under the Exchange Act).
13. Arbitration; Availability of Equitable Relief.
(a) Except as provided in subsection (b) of this Section,
any dispute, controversy or claim arising under or in connection
with this Agreement will be settled by arbitration in the City of
Newark, State of New Jersey, conducted in accordance with the
rules of the American Arbitration Association, and judgment upon
the award rendered in such arbitration may be entered in any
17
<PAGE>
court of competent jurisdiction. The hearing or any such claim,
controversy or dispute will be heard with 60 days of written
notice of the same, and such hearing will not exceed five
business days. Each party will pay its own expenses.
(b) Executive acknowledges that the remedy at law for any
breach or threatened breach of Section 5 of this Agreement will
be inadequate, and that the Company will, in addition to all
other available remedies, be entitled to injunctive relief
restraining the Executive from such breach without being required
to post bond or other security and without having to prove the
inadequacy of the available remedies at law.
14. General Provision.
(a) Non-Assignability. In the event of the Executive's
death, this Agreement and the Executive's rights hereunder will
inure to the benefit of his personal representatives and heirs.
Except as set forth in the preceding sentence and in Section 12,
neither this Agreement nor any right or interest hereunder will
be assignable by the Company or the Executive.
(b) No Attachment. Except as otherwise required by law,
including the laws of descent and distribution, no right to
receive payments under this Agreement will be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any
18
<PAGE>
such action will be null, void and of no effect.
15. Amendment. No amendment or modification of this
Agreement will be deemed effective unless executed in writing by
the parties hereto, and approved by the Board of Directors of the
Company.
16. Severability. If for any reason any provision of this
Agreement will be held invalid, such invalidity will not affect
any other provision of this Agreement not held so invalid, and
all other such provisions will to the full extent consistent with
law continue in full force and effect. If any such provision
will be held invalid in part, such invalidity will in no way
affect the rest of such provision not held so invalid, and the
rest of such provision, together with all other provisions of
this Agreement, will likewise to the full extent consistent with
law continue in full force and effect.
17. Headings. The headings are included solely for
convenience of reference and will not control the meaning or
interpretation of any of the provisions of this Agreement.
18. Governing Law. This Agreement has been executed and
delivered in the State of New Jersey and its validity,
interpretation, performance and enforcement will be governed by
and construed in accordance with the laws thereof applicable to
contracts executed and to be wholly performed in the State of New
Jersey.
19. Consent to Jurisdiction. The Executive hereby
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<PAGE>
irrevocably consents to the exclusive jurisdiction of the courts
of the State of New Jersey and of any federal courts located
within the State of New Jersey for all purposes in connection
with any action or proceeding which arises out of or relates to
this Agreement and agrees that service of summons, complaint or
process in connection therewith may be made as set forth in this
Agreement with respect to giving notices and that service so made
will be as effective as if personally made.
20. Notices. All notices, requests, demands and other
communications hereunder will be in writing and will be deemed to
have been duly given if delivered by hand or mailed, certified or
registered mail, return receipt requested, with postage prepaid,
to the following addresses or to such other address as any party
hereto may designated by like notice:
A. If to Executive, to:
Ronald F. Garritano
6 Osage Court
Flemington, NJ 08822
B. With a copy to:
_________________________________
_________________________________
_________________________________
C. If to the Company, to:
Rheometric Scientific, Inc.
One Possumtown Road
Piscataway NJ 08854
20
<PAGE>
D. With copies to:
Thomas Lyons, Esquire
Crummy Del Deo Dolan Griffinger
& Vecchione
1 Riverfront Plaza
Newark NJ 07102
and
R. Michael Hendricks, President
Axess Corporation
100 Interchange Blvd.
Newark DE 19711
and to such other or additional person or persons (but no more
than two persons) as either party will have designated to the
other party in writing by like notice.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers, and the Executive
has signed this Agreement, all as of the day and year first above
written.
RHEOMETRIC SCIENTIFIC, INC.
By: /s/ R. E. Davis
__________________________
Title: CEO
EXECUTIVE
WITNESS:
/s/ Charlene A. Federowicz /s/ Ronald F. Garritano
_____________________ ________________________
Ronald F. Garritano
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<PAGE>
Schedule A
Current Benefits
1. Medical and dental insurance as per the company's overall
plan.
2. Reimbursement of medical and dental expenses in excess of
the company plan for officers and their dependents in an amount
not to exceed $10,000,00 per year.
3. Company vacation policy with option to take pay in lieu of
vacation days, as limited by policy.
4. Provided company car or appropriate car allowance as per
present company policy.
5. Long term disability policy.
Life insurance as per company policy.
Accidental death and business travel coverage as per Company
provided plan.
Company provided plan
6. 401(k) as per the Company ERISA qualified plan.
7. Stock option plan or equivalent.
8. Membership in one health club.
9. Severance: Greater of contract amount or company policy
<PAGE>
EXHIBIT A
CONFIDENTIALITY AGREEMENT
<PAGE>
TO: Rheometric Scientific, Inc.
Piscataway, New Jersey
RE: Employee Confidential and Proprietary Information Agreement
In consideration of my employment with Rheometric
Scientific, Inc. ("Company") and of the salary or wages paid for
my services in the course of such employment, I agree as follows:
(A) to communicate to the Company promptly and fully and to
assign to the Company all inventions or significant technical or
business innovations developed or conceived solely by me or
jointly with others from the time of entering the Company's
employ until any termination of my employment, (1) which are
along the lines of the business, work or investigations of the
Company, of (2) which result from or are suggested by any work
which I may do for or on behalf of the Company;
(B) to execute all necessary papers and otherwise to assist the
Company during and subsequent to such employment in every proper
way (entirely at its expense) to obtain for its own benefit
patents, copyrights or other legal protection for such
inventions, or for publications pertaining to them, in any and
all countries, said inventions and innovations to be the
exclusive property of the Company, whether or not patented or
copyrighted;
(C) to make and maintain adequate and current written records of
all such inventions or innovations, in the form of notes,
sketches, drawings, or reports relating thereto, which records
shall be and remain the property of and available to the Company
at all times;
(D) upon any termination of my employment, promptly to deliver
to the Company, all drawings, blueprints, manuals, letters,
notes, notebooks, reports, models and other materials (including
all copies) which are of a secret or confidential nature relating
to the business of the Company, and which are in my possession or
under my control;
(E) except as the Company may otherwise consent in writing, not
to publish or otherwise disclose (except as my Company duties may
require) either during or subsequent to my employment, any
information, knowledge, or data of the Company or its customers
which I may reveive or develop during the course of my employment
relating to inventions, discoveries, formulas, processes,
machines, manufactures, compositions, computer programs,
accounting methods, information systems or business or financial
plans or reports, or relating to other matters which are of a
secret or confidential nature;
(F) to notify the Company in writing before I make any
disclosure or perform or cause to be performed any work for or on
behalf of the Company which appears to threaten conflict with (1)
rights I claim in any invention or idea (a) conceived by me or
others prior to my employment of (b) otherwise outside the scope
of this agreement, or (2) rights of others arising out of
obligations incurred by me (d) prior to this agreement or (b)
otherwise outside the scope of this agreement. In the event of
my failure to give notice under the circumstances specified in
(1) of the foregoing, the Company may assume that no such
conflicting invention or idea exists, and I agree that I will
make no claim against the Company with respect to the use of any
such invention or idea in any work or the product of any work
which I perform or cause to be performed for or on behalf of the
Company.
Discharge of my undertakings in this agreement shall be an
obligation of my executors, administrators, or other legal
representatives of assigns.
This agreement may not on behalf of or in respect to the
Company be changed or modified or released, discharged,
abandoned, or otherwise terminated, in while or in part, except
by an instrument in writing signed by an officer or other
authorized executive of the Company.
I represent that except as stated on the reverse side of
this agreement, I have no agreements with or obligations to
others in conflict with the foregoing.
Discharge of my undertakings to the Company in this
agreement shall apply with equal vigor to any present or future
subsidiaries or affiliates of the Company and to any successor(s)
interest to the business and/or assets of the Company by way of
acquisition, merger, consolidation or liquidation at any time in
the future and shall be enforceable by any of the foregoing
entities. I recognize that the remedies provided to Rheometrics,
Inc. (and to any other entities in whose favor this agreement
shall run) are inadequate at law and this undertaking on my part
shall be enforceable to the extent of all forms of equitable
relief permitted by the laws of the State of New Jersey or any
other jurisdiction in which this agreement may become
enforceable.
(Signed) /s/ Ronald F. Garritano
________________________
Ronald F. Garritano
(Date) 9/11/96
___________________________
WITNESS:/s/ Charlene A. Federowicz
__________________________
/s/ R. E. Davis
_____________________________________
President, Rheometric Scientific, Inc.
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Agreement is entered into on September 9, 1996, by and between
Rheometric Scientific, Inc., a New Jersey corporation ("Company") and
Matthew Bilt, a New Jersey resident ("Executive").
Background
A. Executive is currently the Vice President, Human Resources, of
the Company.
B. Each of the Company and Executive acknowledge that it is to
their mutual and respective benefit to enter into this Employment
Agreement ("Agreement").
Now, therefore, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the
Company and Executive hereby agree as follows:
1. Employment and Term..
(a) The Company hereby agrees to continue to employ Executive and
the Executive hereby agrees to continue to serve the Company, subject to
and upon the terms and conditions set forth below.
(b) Subject to the provisions of Section 6 hereof, the period of
the Executive's employment by the Company under this Agreement (the
"Employment Term") will commence on the date of this Agreement and will
continue through June 30, 1997. The Employment Term will continue
thereafter on a year-to-year basis, unless the Company provides Executive
notice (at least 3 months
<PAGE>
prior to June 30, 1997 or the first anniversary of the continuation then
in effect) that the Company has elected not to continue the Employment
Term for the next year. The last day of the Employment Term, without
regard to any early termination pursuant to Section 6, is herein referred
to as the "Expiration Date."
2. Executive Position and Duties and Responsibilities.
During the Employment Term, the Executive will continue to serve as
the Vice President, Human Resources, of the Company, with such management
and executive duties and responsibilities as may be assigned to him from
time to time by the Company's Board of Directors and the Company's Chief
Executive Officer, provided that such duties and responsibilities are
consistent with the current duties and responsibilities of the
Executive's positions.
3. Compensation and Reimbursement of Expenses.
During the Employment Term, Executive will receive the following
compensation and benefits from the Company:
(a) Base Salary. The Executive will receive an annual base
salary, payable no less frequently than bi-weekly, at the annual rate of
$ 101,920.00, subject to any increase the Board of Directors may provide
in its sole discretion (the "Base Salary").
(b) Bonus. Executive will be entitled to receive incentive
compensation based on the performance of the Executive and the Company in
accordance with and subject to the terms and conditions of the Management
Incentive Bonus Program of the
2
<PAGE>
Company.
(c) Reimbursement of Expenses. The Executive will be reimbursed for
all reasonable expenses incurred by him in performing services hereunder
upon presentation to the Company by the Executive of documentation
acceptable to the Company under its standard policies.
(d) Benefits. The Executive will be entitled to participate in or
receive the benefits he currently receives (as listed on Schedule A) and
such other benefits as the Company may generally grant to its executive
officers.
(e) Vacation and Leave. The Executive will be entitled to
four (4) weeks annually of vacation during which his compensation
pursuant to this Section 3 will be paid in full, provided that the
Executive will give reasonable notice to the Chief Executive Officer of
the Company of desired vacation periods and no more than two (2) weeks of
vacation will be taken within any thirty (30) day period. Vacation time
not taken by the Executive in any given year will not accrue to
succeeding years unless the standard policies of the Company provide
otherwise. Leaves of absence may be granted by the Board of Directors in
its sole discretion. The Company shall pay the Executive for past unused
vacation time accrued prior to December 31, 1995 at the time of a Change
in Control or approval by president and/or CEO (as defined in Section
12).
4. Performance of Duties.
3
<PAGE>
During the Employment Term the Executive will devote his entire
business time and attention to the performance of his duties under this
Agreement and will serve the Company diligently and to the best of his
abilities and will not engage in any other business activity without the
prior written approval of the Board of Directors, provided that the
Executive may, with the prior approval of the Board of Directors, serve
on boards of directors of other corporations or institutions, if such
service, in the opinion of the Board of Directors, presents no conflict
with the Company.
5. Restrictive Covenants.
(a) Acknowledgments. The Executive acknowledges that:
(i) His position with the Company requires the performance of
services that are special, unique and intellectual in character and he is
and will be in a position of confidence and trust with the employees and
customers of the Company and its subsidiaries and their joint venture
partners, through which he has obtained or will obtain, among other
things, knowledge of such organizations and their customers, in which
those organizations have a proprietary interest, and
(ii) The restrictive covenants set forth in this Agreement are
necessary in order to protect such proprietary information and other
legitimate business interests of the Company and its subsidiaries and
their joint venture partners and that the Company would not have entered
into this Agreement
4
<PAGE>
unless those restrictive covenants were included, and
(iii) The business and sales efforts of the Company are
conducted on a worldwide basis and that he has personally supervised or
engaged in such business and will continue to do so pursuant and subject
to the terms of this Agreement, and
(iv) The enforcement of the restrictive covenants set forth in
this Agreement will not prevent him from maintaining a livelihood.
(b) Noncompetition and Nonsolicitation.
(i) Mandatory Restrictions during Employment. Subject to the
further provisions of this Section 5, for so long as the Executive is
employed pursuant to the terms of this Agreement and without any
requirement of further payment therefor, Executive shall not take any of
the actions set forth in Section 5(b)(iii) hereof anywhere in the world
without the prior express written consent of the Company.
(ii) Mandatory Restrictions following term of Employment. (A)
Subject to the further provisions of this Section 5, in the event of
Voluntary Termination (as defined hereinafter) by the Executive or in the
event of Company Termination for Cause (as defined hereinafter) and
without any requirement of further payment therefor, Executive shall not
take any of the actions set forth in Section 5(b)(iii)(A)or
5(b)(iii)(B)(I)hereof anywhere in the world for one (1) year
5
<PAGE>
following termination of employment hereunder and Executive shall not
take any of the actions set forth in Section 5(b)(iii)(B)(II) or Section
5(b)(iii)(B)(III) hereof anywhere in the world for two(2) years following
termination of employment hereunder.
(B) Subject to the further provisions of this Section 5, in
the event of an Involuntary Termination by Executive (as defined
hereinafter); Company Termination Without Cause (as defined hereinafter);
or Termination Upon Disability (as defined hereinafter), the Executive
shall not, without the prior written consent of the Company take any of
the actions set forth in Section 5(b)(iii)(A)or 5(b)(iii)(B)(I) within
the "Restricted Period" (as defined below)and shall not take any of the
actions set forth in Section 5(b)(iii)(B)(II) or Section
5(b)(iii)(B)(III)for a period of two (2) years following the termination
of employment hereunder anywhere in the world. For purposes of this
Agreement "Restricted Period" means the period of time in which Executive
is entitled to receive payments and benefits under Section 7(a), 7(b) or
7(c), as the case may be, notwithstanding any reduction or elimination of
those payments and benefits pursuant to the second sentence of Section
7(d).
(iii) Prohibited Actions. To the extent that this Section
5(b)(iii) is expressly made applicable by other provisions of this
Agreement, the Executive shall not:
(A) directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal,
6
<PAGE>
partner, officer, employee, trustee, director, shareholder, consultant
or in any other capacity, own, manage, operate, control, or participate
in the ownership, management, operation or control of any business which
competes with the business of the Company or its subsidiaries or their
joint venture partners as it may be conducted at the time of termination
of employment provided, however that nothing in this Section 5(b)(iii)(A)
will prohibit the Executive from acquiring or holding not greater than
one percent of any class of publicly traded securities of any business;
or
(B) directly or indirectly (I) approach or solicit for
business or otherwise deal with any customer of the Company or its
subsidiaries or their joint venture partners other than on behalf of the
Company, (II) approach or attempt to induce any employee of the Company
or its subsidiaries or their joint venture partners to leave the employ
of the Company or its subsidiaries or their joint venture partners, (III)
employ any person who is an employee of the Company or its subsidiaries
or their joint venture partners on the date of, or within the six months
preceding, the termination of the employment of Executive, or (IV) aid or
counsel any other person to undertake any action listed in (I),(II) or
(III) above.
For the purposes of this Section 5, "customer" means any customer of the
Company during the last two years of the Executive's
7
<PAGE>
employment with the Company or any prospective customer to whom the
Company made a presentation (or similar offering of services) during the
last year of Executive's employment with the Company.
(c) Confidentiality. Executive shall comply with the terms of a
certain agreement containing (a) restrictions of confidential information
and (b) inventions and discoveries by executive (among other provisions)
(the "Confidentiality Agreement") as attached hereto as Exhibit A.
(d) The parties hereby agree that the restrictions contained in
this Section 5 and the Confidentiality Agreement are reasonable in scope
and duration. However, in the event a court of competent jurisdiction
determines finally that the duration or scope of any provision of this
Section 5 and the Confidentiality Agreement is unreasonable or
unenforceable in part, then this Section 5 and the Confidentiality
Agreement will be deemed to be amended so as to contain such provisions
as the court will deem reasonable and enforceable.
(e) Notwithstanding any provision to the contrary in Section 5 (b),
the restrictions contained in subsections (A) and (B) of Section
5(b)(iii) will continue for any period in excess of the applicable period
following termination of employment in which Executive continues to
receive compensation under Section 7 of this Agreement.
6. Termination of Employment. Subject to the further provisions
of this Agreement, the Company and Executive may
8
<PAGE>
terminate the employment of Executive under this Agreement prior to the
Expiration Date as follows:
(a) Voluntary Termination by the Executive. The Executive may
terminate his employment under this Agreement at any time (a "Voluntary
Termination by Executive").
(b) Involuntary Termination by Executive. The Executive may
terminate his employment under this Agreement at any time for good
reason. "Good reason" means (i) the assignment to the Executive of any
duties inconsistent with his present duties and responsibilities or any
reduction or elimination of those duties or responsibilities as Vice
President, Human Resources, (ii) the withdrawal by the Company of the
title of Vice President, Human Resources, from the Executive without his
consent; (iii) the Company's requirement that the Executive maintain his
principal office or conduct his principal activities (other than
business trips) from anywhere other than the present principal executive
offices of the Company in Piscataway, New Jersey; (iv) the failure by the
Company to obtain the assumption and agreement to perform this Agreement
on the terms described in Section 12; or (v) the breach by the Company of
any material obligation of the Company under this Agreement, provided
that any breach of a payment obligation to the Executive under this
Agreement will constitute "good reason" only if the breach is not cured
within five days of notice by Executive.
(c) Termination Without Cause. The Company may, at any
9
<PAGE>
time, terminate the Executive's employment under this Agreement without
cause (a "Company Termination Without Cause").
(d) Termination for Cause. Notwithstanding anything to the
contrary contained in this Agreement, the Company may terminate the
Executive's employment under this Agreement at any time for cause (a
"Company Termination for Cause"). As used herein, the term "for cause"
means (1) the Executive's conviction for a felony under the laws of the
United States or any state or political subdivision, (2) misappropriation
by the Executive of company funds or other misconduct materially
injurious to the Company, (3) breach of the Executive's fiduciary duty to
the Company involving personal profit or (4) material breach of this
Agreement by the Executive.
(e) Termination Upon Death or Disability of the Executive. In the
event that the Executive dies, his employment hereunder will be deemed
terminated without further action ("Termination Upon Death"). In the
event that the Executive is declared incompetent by a court of
appropriate jurisdiction, or is unable to perform his duties hereunder
for a continuous period exceeding six (6) months by reason of illness or
disability, then, upon at least thirty (30) days' advance notice
following the event giving rise to the power to terminate hereunder, the
Company may terminate the Executive's employment under this Agreement
("Termination Upon Disability"). Executive agrees to take such
reasonable actions (including providing full and
10
<PAGE>
accurate information requested by insurers) as may be necessary to allow
the Company to obtain and maintain, for its own benefit, life and
disability insurance covering the Executive.
(f) Notice of Termination. Except for a Termination Upon Death,
any purported termination of employment under Sections 6(a) through 6(e)
of this Agreement will be communicated by a written notice of termination
from the party exercising its right to terminate ("Notifying Party") to
the other party ("Responding Party"). For the purposes of this
Agreement, a "Notice of Termination" will indicate the specific
termination provision in this Agreement relied upon and will set forth in
reasonable detail the facts and circumstances then known to the Notifying
Party which are claimed to provide a basis for termination under the
provision so indicated, provided, however, that no recitation of facts
and circumstances will be required in respect to a Company Termination
Without Cause or a Voluntary Termination by Executive.
7. Payments and Benefits Following Termination Pursuant to Section
6.
(a) Before a Change in Control. Following a Company Termination
Without Cause, an Involuntary Termination by Executive, a Termination for
Death or a Termination for Disability, to the extent such a termination
occurs before a Change in Control (as defined in Section 12 hereof), the
Executive (or his personal representative) will receive until the
11
<PAGE>
Expiration Date:
(i) One hundred percent of the salary set forth in Section
3(a) as the same may have been increased from time to time, payment of
which will be at the time provided for in this Agreement as if the
Executive's employment under this Agreement had not terminated, minus, in
the event of a Termination for Disability, the amount of any disability
benefits provided for the Executive under any sickness, retirement or
other benefit plans provided by the Company,
(ii) Health (as to the Executive and his dependents who are
covered as of the termination), life and disability insurance coverage
substantially comparable to those furnished to the Executive by the
Company immediately prior to the termination of employment hereunder,
(iii) the full amount of reimbursement of expenses incurred
through the date of termination of employment in accordance with Section
3(d), and
(iv) the full amount which would have been due under any bonus
or profit-sharing plan, or similar arrangement, under which the Executive
was eligible prior to termination for the full fiscal year (or other
applicable period) during which the termination occurred, subject to a
prorated reduction in the event of a Section 6(e) Termination for the
period of time in such fiscal year (or other applicable period) following
the termination.
12
<PAGE>
(b) Within Three Months Following a Change in Control. Following a
Company Termination Without Cause, a Voluntary Termination by Executive,
Involuntary Termination by Executive, a Termination for Death or a
Termination for Disability, to the extent such a termination occurs on a
Change in Control (as defined in Section 12 hereof) or within the three
months following such Change in Control, the Executive (or his personal
representative) will receive the salary, payments and benefits described
in Section 7(a) above until the first annual anniversary of the
termination.
(c) Following the Three Month Anniversary of a Change in Control.
Following a Company Termination Without Cause, an Involuntary Termination
by Executive, a Termination for Death or a Termination for Disability, to
the extent such a termination occurs on or after the three month
anniversary of a Change in Control (as defined in Section 12 hereof), the
Executive (or his personal representative) will receive the salary,
payments and benefits described in Section 7(a) above until the later of
the sixth month anniversary of the termination or the Expiration Date.
(d) In the event of a Company Termination Without Cause, an
Involuntary Termination by Executive, or a Voluntary Termination by
Executive under Section 7(b), the above payments and benefits will
constitute the sole damages to which Executive will be entitled as a
result of such termination. Executive will not be
14
<PAGE>
required to mitigate his damages under this Agreement by seeking
employment or otherwise; provided, however, that in the event the
Executive does provide personal services to a third party in exchange for
compensation or benefits, or both, the payments and benefits hereunder,
to the extent they have not yet been paid or received, will be
appropriately reduced to reflect the compensation and benefits that
result to Executive from such other employment. In addition, in the
event Executive is paid under Section 7(b) following a Voluntary
Termination by Executive or if an Involuntary Termination by Executive
occurs for the reason described in (iii) of Section 6(b), the Executive
will provide from time to time though the Expiration Date and at the
request of the Company, notwithstanding such termination, part-time
(i.e., no more than 10 hours per week) consultation and advice on such
executive and technical matters as are consistent with the Executive's
background at mutually convenient times and places without interference
with the Executive's ability to perform employment elsewhere and he shall
be reimbursed for reasonable expenses in accordance with this Agreement.
(e) The Executive will have no right to receive compensation or any
other benefits for any period after a Company Termination for Cause or a
Voluntary Termination by Executive (except as provided in Section 7(b)
above), other than the reimbursement or expenses pursuant to Section 3(c)
incurred through the date of termination or as required by law.
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<PAGE>
8. Reserved.
9. Survival. This Agreement (except for Sections 1, 2, 3, and 4)
will remain in full force and effect notwithstanding any termination of
Executive's employment prior to the Expiration Date. This Agreement
(except for Sections 1, 2, 4 and 3 (other than in respect to compensation
and expense reimbursements earned but not paid)) will remain in full
force and effect notwithstanding the termination of Executive's
employment under this Agreement on the Expiration Date. Nothing in this
Agreement will be construed (i) to provide the Executive any continued
right to employment with the Company or its affiliates following the
Employment Term or (ii) to provide the Company or its affiliates any
continued right to employ the Executive following the Employment Term.
10. Withholding of Taxes. The Company may withhold from any
payments under this Agreement all applicable taxes, as will be required
pursuant to any law or governmental regulation or ruling.
11. Prior Agreements. This Agreement constitutes the entire
agreement and understanding between the parties with respect to the
subject matter hereof. This Agreement supersedes all other prior
agreements and understandings with respect to such subject matter between
and among the Company and the Executive.
12. Consolidation or Merger, Change in Control. Nothing in
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<PAGE>
this Agreement will preclude the Company from consolidating or merging
into or with, or transferring all or substantially all of the Company's
assets to (any of the foregoing, a "Purchase Transaction")any person or
entity ("Purchaser"). In the event such person or entity assumes all
obligations of the Company hereunder by written agreement reasonably
acceptable to the Executive, then upon the closing of the Purchase
Transaction the terms "Company" will refer to the Purchaser and this
Agreement will continue in full force and effect. For purposes of this
Agreement, "Change in Control" means:
(a) any event by which (i) an "Acquiring Person"(as defined
below)has become such, or (ii) "Continuing Directors (as defined below)
cease to comprise a majority of the members of the board of directors of
the Company (the "Board"). For purposes of this definition an "Acquiring
Person" means any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder as in effect on the date of this
Agreement (the "Exchange Act")) who or which, together with all
affiliates and associates (as defined in Rule 12b-2 under the Exchange
Act) becomes the beneficial owner of shares of the Company having 50% or
more of the total number of votes that may be cast for the election of
directors of the Company; and "Continuing Director" means any member of
the Board, while such person is a member of the Board, who is not an
Acquiring Person, or an affiliate or
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<PAGE>
associate of an Acquiring Person or a representative of an Acquiring
Person or of any such affiliate or associate and who (i) was a member of
the Board prior to the date of this Agreement, or (ii) subsequently
becomes a member of such Board and whose nomination for election or
election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or who is included as a nominee in a
proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors, or
(b) The consolidation or merger of the Company with, or the transfer
of all or substantially all of the Company's assets to, any person or
entity not controlled by the Company or by an affiliate or affiliates of
the Company (as defined in Rule 12b-2 under the Exchange Act).
13. Arbitration; Availability of Equitable Relief.
(a) Except as provided in subsection (b) of this Section, any
dispute, controversy or claim arising under or in connection with this
Agreement will be settled by arbitration in the City of Newark, State of
New Jersey, conducted in accordance with the rules of the American
Arbitration Association, and judgment upon the award rendered in such
arbitration may be entered in any court of competent jurisdiction. The
hearing or any such claim, controversy or dispute will be heard with 60
days of written notice of the same, and such hearing will not exceed five
business days. Each party will pay its own expenses.
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(b) Executive acknowledges that the remedy at law for any breach or
threatened breach of Section 5 of this Agreement will be inadequate, and
that the Company will, in addition to all other available remedies, be
entitled to injunctive relief restraining the Executive from such breach
without being required to post bond or other security and without having
to prove the inadequacy of the available remedies at law.
14. General Provision.
(a) Non-Assignability. In the event of the Executive's death, this
Agreement and the Executive's rights hereunder will inure to the benefit
of his personal representatives and heirs. Except as set forth in the
preceding sentence and in Section 12, neither this Agreement nor any
right or interest hereunder will be assignable by the Company or the
Executive.
(b) No Attachment. Except as otherwise required by law, including
the laws of descent and distribution, no right to receive payments under
this Agreement will be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any such
action will be null, void and of no effect.
15. Amendment. No amendment or modification of this Agreement
will be deemed effective unless executed in writing by the parties
hereto, and approved by the Board of Directors of the
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Company.
16. Severability. If for any reason any provision of this
Agreement will be held invalid, such invalidity will not affect any other
provision of this Agreement not held so invalid, and all other such
provisions will to the full extent consistent with law continue in full
force and effect. If any such provision will be held invalid in part,
such invalidity will in no way affect the rest of such provision not held
so invalid, and the rest of such provision, together with all other
provisions of this Agreement, will likewise to the full extent consistent
with law continue in full force and effect.
17. Headings. The headings are included solely for convenience of
reference and will not control the meaning or interpretation of any of
the provisions of this Agreement.
18. Governing Law. This Agreement has been executed and delivered
in the State of New Jersey and its validity, interpretation, performance
and enforcement will be governed by and construed in accordance with the
laws thereof applicable to contracts executed and to be wholly performed
in the State of New Jersey.
19. Consent to Jurisdiction. The Executive hereby irrevocably
consents to the exclusive jurisdiction of the courts of the State of New
Jersey and of any federal courts located within the State of New Jersey
for all purposes in connection with any action or proceeding which arises
out of or relates to
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this Agreement and agrees that service of summons, complaint or process
in connection therewith may be made as set forth in this Agreement with
respect to giving notices and that service so made will be as effective
as if personally made.
20. Notices. All notices, requests, demands and other
communications hereunder will be in writing and will be deemed to have
been duly given if delivered by hand or mailed, certified or registered
mail, return receipt requested, with postage prepaid, to the following
addresses or to such other address as any party hereto may designated by
like notice:
A. If to Executive, to:
Matthew Bilt
26 Stephens Drive
New Brunswick, NJ 08816
B. With a copy to:
_________________________________
_________________________________
_________________________________
C. If to the Company, to:
Rheometric Scientific, Inc.
One Possumtown Road
Piscataway NJ 08854
D. With copies to:
Thomas Lyons, Esquire
Crummy Del Deo Dolan Griffinger
& Vecchione
1 Riverfront Plaza
Newark NJ 07102
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and
R. Michael Hendricks, President
Axess Corporation
100 Interchange Blvd.
Newark DE 19711
and to such other or additional person or persons (but no more than two
persons) as either party will have designated to the other party in
writing by like notice.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, and the Executive has signed
this Agreement, all as of the day and year first above written.
RHEOMETRIC SCIENTIFIC, INC.
By: /s/ R. E. Davis
____________________
Title: CEO
EXECUTIVE
WITNESS:
/s/ Charlene A. Federowicz /s/ Matthew Bilt
__________________
Matthew Bilt
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Schedule A
Current Benefits
1. Medical and dental insurance as per the company's overall plan.
2. Reimbursement of medical and dental expenses in excess of the
company plan for officers and their dependents in an amount not to exceed
$10,000,00 per year.
3. Company vacation policy with option to take pay in lieu of vacation
days, as limited by policy.
4. Provided company car allowance as per present company policy.
5. Long term disability policy.
Life insurance as per company policy.
Accidental death and business travel coverage as per Company
provided plan.
Company provided plan
6. 401(k) as per the Company ERISA qualified plan.
7. Stock option plan or equivalent.
8. Membership in one health club.
9. Severance: Greater of contract amount or company policy
10. Company provided car phone (for security). Executive pays for
personal calls
<PAGE>
EXHIBIT A
CONFIDENTIALITY AGREEMENT
<PAGE>
TO: Rheometric Scientific, Inc.
Piscataway, New Jersey
RE: Employee Confidential and Proprietary Information Agreement
In consideration of my employment with Rheometric Scientific, Inc.
("Company") and of the salary or wages paid for my services in the course
of such employment, I agree as follows:
(A) to communicate to the Company promptly and fully and to assign to
the Company all inventions or significant technical or business
innovations developed or conceived solely by me or jointly with others
from the time of entering the Company's employ until any termination of
my employment, (1) which are along the lines of the business, work or
investigations of the Company, of (2) which result from or are suggested
by any work which I may do for or on behalf of the Company;
(B) to execute all necessary papers and otherwise to assist the Company
during and subsequent to such employment in every proper way (entirely at
its expense) to obtain for its own benefit patents, copyrights or other
legal protection for such inventions, or for publications pertaining to
them, in any and all countries, said inventions and innovations to be the
exclusive property of the Company, whether or not patented or
copyrighted;
(C) to make and maintain adequate and current written records of all
such inventions or innovations, in the form of notes, sketches, drawings,
or reports relating thereto, which records shall be and remain the
property of and available to the Company at all times;
(D) upon any termination of my employment, promptly to deliver to the
Company, all drawings, blueprints, manuals, letters, notes, notebooks,
reports, models and other materials (including all copies) which are of a
secret or confidential nature relating to the business of the Company,
and which are in my possession or under my control;
(E) except as the Company may otherwise consent in writing, not to
publish or otherwise disclose (except as my Company duties may require)
either during or subsequent to my employment, any information, knowledge,
or data of the Company or its customers which I may reveive or develop
during the course of my employment relating to inventions, discoveries,
formulas, processes, machines, manufactures, compositions, computer
programs, accounting methods, information systems or business or
financial plans or reports, or relating to other matters which are of a
secret or confidential nature;
(F) to notify the Company in writing before I make any disclosure or
perform or cause to be performed any work for or on behalf of the Company
which appears to threaten conflict with (1) rights I claim in any
invention or idea (a) conceived by me or others prior to my employment of
(b) otherwise outside the scope of this agreement, or (2) rights of
others arising out of obligations incurred by me (d) prior to this
agreement or (b) otherwise outside the scope of this agreement. In the
event of my failure to give notice under the circumstances specified in
(1) of the foregoing, the Company may assume that no such conflicting
invention or idea exists, and I agree that I will make no claim against
the Company with respect to the use of any such invention or idea in any
work or the product of any work which I perform or cause to be performed
for or on behalf of the Company.
Discharge of my undertakings in this agreement shall be an
obligation of my executors, administrators, or other legal
representatives of assigns.
This agreement may not on behalf of or in respect to the Company be
changed or modified or released, discharged, abandoned, or otherwise
terminated, in while or in part, except by an instrument in writing
signed by an officer or other authorized executive of the Company.
I represent that except as stated on the reverse side of this
agreement, I have no agreements with or obligations to others in conflict
with the foregoing.
Discharge of my undertakings to the Company in this agreement shall
apply with equal vigor to any present or future subsidiaries or
affiliates of the Company and to any successor(s) interest to the
business and/or assets of the Company by way of acquisition, merger,
consolidation or liquidation at any time in the future and shall be
enforceable by any of the foregoing entities. I recognize that the
remedies provided to Rheometrics, Inc. (and to any other entities in
whose favor this agreement shall run) are inadequate at law and this
undertaking on my part
shall be enforceable to the extent of all forms of equitable relief
permitted by the laws of the State of New Jersey or any other
jurisdiction in which this agreement may become enforceable.
(Signed) /s/ Matthew Bilt
_____________________
Matthew Bilt
(Date) 9/9/96
______________________
WITNESS: /s/ Charlene A. Federowicz
___________________________
/s/ R. E. Davis
_____________________________________
President, Rheometric Scientific, Inc.
