RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
May 30, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders of Rheometric Scientific, Inc., to be held on June 20, 1996,
at 10:00 a.m. at the Company's headquarters, One Possumtown Road,
Piscataway, New Jersey. Your Board of Directors and Management look
forward to greeting personally those shareholders able to attend and to
respond to any questions you may have concerning your Company.
The matters to be acted upon at the meeting, as well as other
important information, are set forth in the accompanying Notice of Annual
Meeting and Proxy Statement which you are urged to review carefully.
Regardless of your plans for attending in person, it is important that
your shares be represented and voted at the meeting. Accordingly, you are
requested to complete, sign, date, and return the enclosed proxy card in
the enclosed postage paid envelope. Signing this proxy will not prevent
you from voting in person should you be able to attend the meeting, but
will assure that your vote is counted, if, for any reason, you are unable
to attend.
Your interest and support in the affairs of Rheometric Scientific are
appreciated.
Sincerely,
Robert E. Davis
Chairman of the Board
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
(908) 560-8550
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To: The Shareholders of Rheometric Scientific, Inc.
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders
(the "Annual Meeting") of Rheometric Scientific, Inc. ("RSI") will be held
on June 20, 1996, at 10:00 a.m. at RSI's headquarters, One Possumtown Road,
Piscataway, New Jersey, to consider and act upon the following proposals:
1. To elect six directors to the Board of Directors, each to serve
for a one-year term;
2. To consider and act upon a proposal to approve the Company's 1996
Stock Option Plan;
3. To approve the appointment by the Board of Directors of the firm
of Coopers & Lybrand L.L.P. as independent auditors of RSI for the
fiscal year ending December 31, 1996; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Pursuant to RSI's Bylaws, the Board of Directors has fixed the close
of business on May 15, 1996, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of Rheometric Scientific's Common Stock of record at the close of
business on that date will be entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
Piscataway, New Jersey
May 30, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN, AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE
PROVIDED TO YOU. YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT ANY TIME PRIOR
TO THE TIME IT IS VOTED.
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
(908) 560-8550
PROXY STATEMENT
Annual Meeting of Shareholders
June 20, 1996
This Proxy Statement ("Proxy Statement") is being furnished to
shareholders of Rheometric Scientific, Inc. (the "Company" or "RSI") in
connection with the solicitation by the Board of Directors of RSI of
proxies to be used at the annual meeting of shareholders of RSI (the
"Annual Meeting") to be held on June 20, 1996, at 10:00 a.m. at the
Company's headquarters, One Possumtown Road, Piscataway, New Jersey, and at
any adjournments thereof. This Proxy Statement and the accompanying form
of proxy are first being mailed to the shareholders of RSI on or about May
30, 1996.
At the Annual Meeting, shareholders will be asked to (i) elect six
directors to the Board of Directors, each for a one-year term (Proposal 1,
see page 5); (ii) consider and approve the Company's 1996 Stock Option Plan
(Proposal 2, see page 12) (iii) approve the appointment of Coopers &
Lybrand L.L.P. as independent auditors of RSI for the fiscal year ending
December 31, 1996 (Proposal 3, see page 14); and (iv) transact such other
business as may properly come before the Annual Meeting or any adjournments
thereof.
Axess Corporation ("Axess"), which currently owns 76.6% of outstanding
common stock of the Company ("Common Stock"), intends to vote its shares in
favor of all Proposals.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Each outstanding share of Common Stock entitles its owner to one vote
on all matters as to which a vote is taken at the Annual Meeting. The
close of business on May 15, 1996, has been fixed by the Board of Directors
of RSI as the record date for determination of shareholders entitled to
vote at the Annual Meeting (the "RSI Record Date"). The number of shares
of Common Stock issued and outstanding and entitled to vote on the RSI
Record Date was 13,161,739. The presence, in person or by proxy, of at
least a majority of the shares of Common Stock issued and outstanding and
entitled to vote on the RSI Record Date (6,580,870 shares) is necessary to
constitute a quorum at the Annual Meeting. The affirmative vote of the
holders of at least a majority of the votes cast by the holders of Common
Stock entitled to vote at the Annual Meeting is required for the approval
of all matters other than the election of directors. Abstentions and
broker non-votes are not included as votes cast and accordingly will be
excluded from the total number of votes upon which a majority is based.
Thus, votes to abstain and broker non-votes will have no effect on the vote
tabulation for such proposals. Directors shall be elected by a plurality
<PAGE>
vote of the outstanding shares of Common Stock present and entitled to vote
at the Annual Meeting. According to the Company's Bylaws, unless otherwise
provided by the New Jersey Business Corporation Act or the Company's
Certificate of Incorporation, any other matter put to a shareholder vote
will be decided by the affirmative vote of a majority of the votes cast on
the matter.
All proxies in the enclosed form of proxy that are properly executed
and returned to RSI prior to commencement of voting at the Annual Meeting
will be voted at the Annual Meeting or any adjournments or postponements
thereof in accordance with the instructions thereon. All executed but
unmarked RSI proxies will be voted FOR approval of the Proposals set forth
in this Proxy Statement. A proxy may be revoked by any shareholder who
attends the Annual Meeting and gives notice of his or her intention to vote
in person without compliance with any other formalities. In addition, any
RSI shareholder may revoke a proxy at any time before it is voted by
executing and delivering a subsequent proxy or by delivering a written
notice to the Secretary of RSI, stating that the proxy is revoked. At the
Annual Meeting, shareholders' votes cast, either in person or by proxy,
will be tabulated by First Interstate Bank, the RSI transfer agent.
The management of RSI does not know of any matters other than those
set forth herein which may come before the Annual Meeting. If any other
matters are properly presented to the Annual Meeting for action, it is
intended that the persons named in the applicable form of proxy will vote
the shares represented by proxies on such matters as determined by a
majority of the Board of Directors.
The expense of printing this Proxy Statement and the proxies solicited
hereby and any filing fees incurred in connection with the Proxy Statement
and certain other filings will be borne entirely by RSI. In addition to
the use of the mails, proxies may be solicited by officers and directors
and regular employees of RSI, without additional remuneration, by personal
interviews, telephone, telegraph or otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHARE-HOLDERS VOTE FOR APPROVAL
OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of May 15, 1996, with
respect to persons known by RSI to be the beneficial owners of more than 5%
of outstanding Common Stock.
No. of Shares
Beneficially
Name and Address Owned (1) Percent
Axess Corporation
3801 Kennett Pike
Greenville, Delaware 19807 10,076,257 76.6%
2
<PAGE>
Mary M. Diehl
13 Beverly Drive
Belle Mead, New Jersey 08502 780,236 (2) 5.9%
Dr. Joseph M. Starita
16 Deerfield Court
Basking Ridge, New Jersey 07920 774,235 (3) 5.9%
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended ("1934 Act"), a person is deemed to be the beneficial
owner, for purposes of this table, of any shares of Common Stock
(1) over which he or she has or shares voting or investment power, or
(2) of which he or she has the right to acquire beneficial ownership
at any time within 60 days from May 15, 1996. "Voting power" is the
power to vote or direct the voting of shares and "investment power" is
the power to dispose or direct the disposition of shares. All persons
shown in the table above have sole voting and investment power, except
as otherwise indicated.
(2) Generally, the Company relies upon written representations of its
Directors, executive officers and 5% shareholders and copies of the
reports they have filed with the Securities and Exchange Commission.
The share information for Ms. Mary M. Diehl is as of May 3, 1996
pursuant to a Form 13(d) filed with the Securities and Exchange
Commission on May 22, 1996.
(3) The share information for Dr. Starita is as of May 20, 1996, pursuant
to a Form 13(d) filed with the Securities and Exchange Commission on
May 22, 1996. Excludes beneficial ownership of shares held by close
family members.
Security Ownership in Axess of Certain Beneficial Owners
The following table sets forth information as of May 15, 1996, with
respect to shares of Axess common stock beneficially owned by directors and
executive officers of RSI.
No. of Shares
Name and Title with RSI Beneficially Owned (1) Percent
Robert E. Davis, Chief Executive
Officer and Chairman of the Board 469,565 21.6%
Alexander F. Giacco, Director 469,565 (2) 21.6%
Richard J. Giacco, Director 46,957 2.6%
R. Michael Hendricks, Director 187,826 (3) 8.6%
3
<PAGE>
(1) See footnote (1) in "Security Ownership of Certain Beneficial
Owners."
(2) 446,087 shares (20.3%) are held by a revocable trust for which Mr.
Giacco is the settlor, a beneficiary and a trustee. 23,478 shares
(1.3%) are held by a company in which Mr. Giacco has sole voting power.
(3) Held by a revocable trust for which Mr. Hendricks is the settlor, a
beneficiary and a trustee.
Security Ownership of Management
The following table sets forth information as of May 15, 1996, with
respect to shares of Common Stock beneficially owned by each director,
director nominee and Named Executive Officer (see "EXECUTIVE COMPENSATION")
of RSI and by all directors and executive officers as a group.
No. of Shares
Name and Title Beneficially Owned(1) Percent
Robert E. Davis, Chief Executive
Officer, Chairman of the Board 5,000 *
Leonard Bogner, Director -- --
Alexander F. Giacco, Director 35,000 (2) *
Richard J. Giacco, Director 3,000 (3) *
R. Michael Hendricks, Director 3,000 *
Robert K. Prud'homme, Director -- --
Matthew Bilt, Vice President,
Human Resources 2,000 *
Alan R. Eschbach, Executive
Vice President 2,240 *
John C. Fuhrmeister, Vice
President, Finance &
Administration -- --
Ronald F. Garritano, Vice
President, Technology 3,735 *
All directors and executive officers
as a group (10 persons) 53,975 *
* Denotes less than 1% of the outstanding shares of Common Stock.
4
<PAGE>
(1) See footnote (1) in "Security Ownership of Certain Beneficial Owners."
(2) Includes beneficial ownership of 10,000 shares held as custodian for
grandchildren.
(3) Includes beneficial ownership of 1,000 shares held in an investment
partnership for the benefit of his children and managed by Mr. Giacco.
Compliance With Section 16(a) of the 1934 Act
Section 16(a) of the 1934 Act requires the Company's officers,
directors, and beneficial owners of more than 10% of the outstanding Common
Stock to file reports of their ownership of Common Stock and changes in
such ownership with the Securities and Exchange Commission. The Company
believes that during 1995 all such filings were made on a timely basis.
ELECTION OF DIRECTORS
(Proposal 1)
The Bylaws of RSI provide that the number of directors shall not be
fewer than three nor more than 15. The Board of Directors by resolution
has established the number of directors to be seven. Under the Company's
Certificate of Incorporation, the directors shall all be of one class.
Although the size of the Board is seven, six directors are currently
being nominated for election. The Board has elected at this time to leave
one seat vacant.
Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named in the
table below as nominees. If any such director should become unavailable
for any reason, which the Board of Directors has no reason to anticipate,
the proxy holders will vote for the election of such other person or
persons as the Board of Directors may recommend.
Information as to Nominees
The following table sets forth the names of the Board of Directors'
nominees for election as directors. Also set forth is certain biographical
information with respect to each nominee, including age, principal
occupation or employment during the past five years, positions held with
RSI, the periods during which he has served as a director and any other
directorships held.
5
<PAGE>
Principal Occupation or Employment
During the Past Five Years and Director
Name Age Office (if any) Held in the Company Since
Robert E. Davis 64 Chairman of the Board since 1992
April 27, 1995, President and Chief
Executive Officer since September 20,
1993. Managing Director, Axess
Corporation since its inception in
1991; prior thereto served as
president and chief operating
officer (1983-1991) of Sequa
Corporation, a diversified,
multinational, manufacturing
company formerly known as Sun
Chemical Corporation; and a
Director of USF&G Corp. a
surety company, and a Director
of H&R Block Corp., a personal
services company.
Leonard Bogner 55 President, Bogner Business 1995
Consultants, Inc. since its formation
in November 1994; prior thereto,
Senior Chemicals Research Department
Analyst, Prudential Securities
Brokerage Firm, from May 1986 to
October 1994.
Alexander F. 76 Managing Director, Axess Corpora- 1993
Giacco tion since its inception in 1991;
prior thereto Chairman of the Board
of Directors of HIMONT Incorporated,
a plastics manufacturing company,
since its formation (1983-1991), and
served as CEO (1987-1990); and a
Director of Marvin & Palmer Associates,
Inc., a portfolio management firm.
Mr. Giacco is the father of Richard
J. Giacco.
Richard J. Giacco 43 Vice President and General Counsel, 1992
Axess Corporation since its inception
in 1991; prior thereto served as
associate general counsel for Safeguard
Scientifics, Inc., a computer software
and electronics company since 1985.
Mr. Giacco is the son of Alexander
F. Giacco.
6
<PAGE>
R. Michael 58 President, Axess Corporation since 1992
Hendricks its inception in 1991; prior thereto
served as president and chief operating
officer of HIMONT Incorporated, a
plastics manufacturing company, since
1983.
Robert K. 48 Professor of Chemical Engineering at 1981
Prud'homme Princeton University since 1978;
Consultant to FMC, Inc., Dow Chemical
Company and DuPont, Inc.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation paid or
accrued by the Company for services rendered during the 12-month periods
ended December 31, 1993, 1994, and 1995, to the Company's chief executive
officer and the four most highly compensated executives of the Company
whose aggregate salary exceeded $100,000 for the 12-month period ended
December 31, 1995 (the "Named Executive Officers"):
Summary Compensation Table
Annual Compensation
All other
Name and Salary Bonus(1) Compensation
Principal Position Year ($) ($) ($) (2)
Robert E. Davis (3) 1995 150,000 0 0
Chief Executive Officer 1994 150,000 0 0
and President 1993 0 0 0
Alan R. Eschbach 1995 153,948 4,996 3,150
Executive Vice President, 1994 140,627 0 2,728
Chief Operating Officer 1993 120,242 0 2,648
Ronald F. Garritano 1995 140,658 3,293 2,809
Vice President, Technology 1994 137,314 0 2,731
1993 128,994 0 2,696
John C. Fuhrmeister, Vice 1995 121,047 2,770 1,986
President, Finance & 1994 98,434 0 2,086
Administration (5)
Matthew Bilt, Vice President, 1995 114,423 2,585 1,386
Human Resources (6) 1994 102,537 0 1,830
(1) The 1995 incentive bonus pool was distributed to the Named Executive
Officers in May 1996.
(2) Company contributions under the Savings and Investment Retirement Plan.
(3) Mr. Davis became president and CEO of the Company on September 20, 1993
and received no compensation from RSI for services rendered for the
balance of 1993. Effective January 1, 1994, RSI and Axess agreed that
7
<PAGE>
RSI will pay to Axess a management fee equal to $150,000 per year for
said services. All of Mr. Davis's compensation is paid by Axess.
(4) Mr. Eschbach became Chief Operating Office effective November 10, 1994.
(5) Mr. Fuhrmeister became an officer of the Company on May 3, 1994.
(6) Mr. Bilt became an officer of the Company on May 3, 1994.
Option Grants, Exercises, and Year-End Value
During the 12-month period ended December 31, 1995, no stock options
were granted to or exercised by any Named Executive Officers. At December
31, 1995, no Named Executive Officer had any outstanding stock options.
Board Committees
The Board of Directors has a Stock Option and Compensation Committee
(the "Compensation Committee"), which is responsible for administering the
Option Plan. The members of the Compensation Committee are Messrs. Bogner,
Hendricks, and R. Giacco. During the 12-month period ended December 31,
1995, the Compensation Committee held one meeting.
The Board of Directors has an Audit Committee which reviews the scope
and procedures of the audit activities of the independent auditors and
their reports on their audits. It also reviews reports from RSI's
financial management and independent auditors on compliance with corporate
policies and the adequacy of RSI's internal accounting controls. The
members of the Audit Committee are Messrs. Giacco, Hendricks, Bogner, and
Dr. Prud'homme. It held one meeting during the 12-month period ended
December 31, 1995.
Attendance at Meetings
During the 12-month period ended December 31, 1995, the Board of
Directors held four meetings, two of which were special telephonic
meetings. No director attended fewer than 75% of the meetings.
Compensation of Directors
Non-employee directors of the Company are paid an annual retainer fee
of $3,000, plus $1,000 per Board meeting attended in person and
reimbursement of their travel expenses. No fees are paid for committee
meetings or special telephone meetings.
Employment Agreements
The Company has employment agreements with Messrs. Eschbach, and
Garritano under which base annual salary for 1996 is $159,150 for Mr.
Eschbach and $141,900 for Mr. Garritano. Messrs. Eschbach's and Garritano's
agreements are one year agreements and subject to automatic annual renewal
absent Board action.
8
<PAGE>
Compensation Committee Report on Executive Compensation
Decisions on compensation of RSI's executives generally are made by
the three-member Compensation Committee. Each member of the Compensation
Committee is a non-employee director. All decisions by the Compensation
Committee relating to the compensation of RSI's executive officers are
approved by the full Board of Directors.
Executive Compensation Policies. The Compensation Committee's
executive compensation policies are designed to provide competitive levels
of compensation that integrate compensation with the Company's annual and
long-term performance goals, reward above-average corporate performance,
recognize individual initiative and achievements, and assist RSI in
attracting and retaining qualified executives. Target levels of the
executive officers' overall compensation are intended to be consistent with
others in the Company's industry, but are increasingly being steered toward
programs contingent upon the Company's performance. Compensation paid to
RSI's Named Executive Officers in 1995 consisted of base salary and an
incentive bonus which was distributed in May 1996.
Alan R. Eschbach and Ronald F. Garritano are employed pursuant to
written employment agreements which establish their base annual salary.
The terms of the agreements in the judgment of the Compensation Committee
are standard and appropriate for these executives and accordingly were
endorsed by the Compensation Committee and ratified by the remaining
members of the Board.
Compensation increases for all the executive officers will be based
upon the achievement of specific operating objectives assignable to the
executive officers as a group and/or individually. These objectives will
include, but are not limited to, the successful accomplishment of
milestones in RSI's long-term strategic plan and the achievement of each
year's operating budget.
All executive officers are entitled to receive incentive compensation
based on the performance of such officer. In this regard, on January 27,
1994, the Compensation Committee approved an incentive pay system (the
"Incentive System"). The Incentive System has been designed to motivate
job performance and increase organizational productivity. Under the
Incentive System, the Company will establish and fund an incentive pool
based on achievement by the Company of performance objectives relating to
profit, cash flow, revenue and cost reduction. Participation in this
program will be limited to select key positions to be designated by the
Compensation Committee. Participants must be in the program for an entire
calendar year before being eligible for a bonus, subject to exceptions made
for newly hired employees. The incentive pool will be distributed to
designated participants proportionately based on the relationship that an
individual's base pay has to the aggregate base pay of all participants.
The 1995 incentive pool was established on a restrictive level based
upon profitability forecasts. Although the 1995 financial results did not
trigger a pay-out under the program guidelines, management had made
substantial progress in that they had been able to both increase revenues
9
<PAGE>
and return the Company to profitability. It was determined that a bonus
pool of approximately $26,200 would be distributed to the participants. A
similar incentive pool was established in 1996 to be funded based on a
formula of performance objectives relating to revenue, operating income,
cash management, and cost reductions.
The Compensation Committee also endorses the position that stock
ownership by management and stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders'
interests in the enhancement of shareholder value. Thus, the Compensation
Committee may increasingly utilize these elements in compensation packages
for its executive officers.
Named Executive Officers, other than Mr. Davis, may be granted options
to purchase Common Stock and are eligible to participate on the same terms
as non-executive employees in the Company's Savings and Investment
Retirement Plan (the "Savings Plan"), a broad-based plan which accords
benefits based on pre-established formulas and eligibility criteria, as
well as Company group life and health insurance plans. All decisions with
respect to option grants will be made solely by the Compensation Committee.
President and CEO Compensation. As chief executive officer of RSI,
Mr. Davis did not receive any compensation from the Company. The Company
agreed to pay Axess a management fee of $150,000 per year for services to
be rendered by Mr. Davis. Mr. Davis has devoted substantially all of his
time on behalf of Axess to RSI. Mr. Davis is compensated well in excess of
$150,000 by Axess.
Respectfully submitted,
Stock Option and Compensation Committee
Leonard Bogner
R. Michael Hendricks
Richard J. Giacco
Stock Performance Chart
The following table sets forth comparative information regarding RSI's
cumulative shareholder return on Common Stock over the last five fiscal
years ended December 31, 1995. Total shareholder return is measured by
dividing total dividends (assuming dividend reinvestment) plus share price
change for a period by the share price at the beginning of the measurement
period. RSI's cumulative shareholder return based on an investment of $100
at the beginning of the five-year period beginning January 1, 1991 is
compared to the cumulative total return of the Nasdaq Market Index and an
index comprised of public companies whose securities have been trading
publicly since January 1, 1991 and which report under the standard
industrial classification code 3826 (20 companies excluding RSI) (the "Peer
Group Index").
10
Comparison of Cumulative Total
Return Among RSI,
NASDAQ Market Index and Peer Group Index
for the Five Years Ended December 31, 1995
[GRAPH]
<TABLE>
<CAPTION>
December 31,
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
RSI 100 157.14 114.29 78.57 71.43 85.71
Peer Group 100 126.12 133.17 138.73 124.54 199.59
Nasdaq Market 100 128.38 129.64 155.50 163.26 211.77
</TABLE>
Source: Media General Financial Services
Certain Relationships and Related Transactions
In 1994 the Company acquired the Polymer Laboratories Thermal Sciences
Business (the "PL Thermal Sciences Business") through a series of
transactions involving Axess. These transactions were fully described in
the Company's Proxy Statement dated October 26, 1994. As part of the
Acquisition, the Company and Axess entered into a series of term notes to
be used for working capital, and in April 1994, the Company acquired the
accounts receivables and inventory of United States Division of the Thermal
Sciences Division of Polymer Laboratories Ltd. ("Polymer Labs"). In
November 1994, the Company closed the transactions whereby it issued stock
to Axess in exchange for the contribution by Axess of all the outstanding
capital stock of its two wholly-owned subsidiaries and the exercise by
Axess of a convertible subordinated promissory note. These transactions
represent the transfer by Axess to RSI of all of the PL Thermal Sciences
Business. As a result, Axess owns 76.6% of the outstanding shares of the
Company's Common Stock.
11
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% at December 31, 1995).
In 1995, Axess provided $2,400,000 in additional working capital to
the Company in the form of subordinated debt. The subordinated debt was to
mature on April 30, 1996 and bore interest at 12% payable monthly. In
addition, Axess agreed that it would extend the maturities on all debt
obligations ($3,715,000 at December 31, 1994) of the Company to Axess until
April 30, 1996. At the same time, Axess also agreed to defer interest
payments on all debt obligations through September 30, 1995. On September
30, 1995, Axess agreed that it would continue the deferral of interest on
all debt obligations, including the notes with the UK subsidiary, totaling
$6,115,000 through December 31, 1995.
On February 23, 1996, Axess and the Company consolidated all of the
outstanding notes described above (except for the notes with the UK
subsidiary), totaling $5,740,000, along with 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 6, 1996, the Company paid to Axess $375,000, in payment of
the Company's two UK Subsidiary notes, plus interest in the amount of
$27,417, for an aggregate amount of $402,417.
APPROVAL OF 1996 STOCK OPTION PLAN
(Proposal 2)
The Board of Directors of the Company has adopted and is proposing for
stockholder approval the 1996 Stock Option Plan (the "Plan"). The purpose
of the Plan is to encourage eligible employees of the Company to acquire
shares of Common Stock, to create an added incentive to improve Company
performance and to encourage continued employment of employees. The
summary of the Plan set forth in this Proxy Statement is qualified in its
entirety by reference to the Plan. Any shareholder wishing a full copy of
the plan may request a copy by contacting the Secretary at RSI's corporate
headquarters. The affirmative vote of the holders of at least a majority
of the votes cast by holders of Common Stock entitled to vote at the Annual
Meeting is required for approval of the Plan. Unless otherwise indicated,
properly executed proxies will be voted in favor of approving the Plan.
The following is a brief summary of the Plan.
The Plan is administered by the Compensation Committee. 250,000 shares
of Common Stock have been reserved for issuance under the Plan. Options
will have a maximum term of 10 years and will be exercisable at such time
or times as the Compensation Committee shall determine and set forth in the
option agreement relating thereto. Options granted under the Plan are
intended to be "incentive stock options" under the Internal Revenue Code of
12
1986, as amended (the "Code"), unless otherwise specified in the option
agreement or unless the option would exceed certain limitations for
incentive stock options in the Code.
Options granted under the Plan are not transferable and may be
exercised only by the optionee during his or her lifetime (or by the
optionee's estate in the case of death). If an optionee's employment with
the Company terminates by reason of death or permanent and total
disability, his or her options may be exercised, to the extent such options
were exercisable immediately prior to such termination of employment,
within one year after such termination of employment unless otherwise
provided in the option agreement (but not later than the date the option
would otherwise expire). Provisions for the exercise of options following
termination of employment for any reason other than death or disability
will be determined by the Compensation Committee and set forth in the
option agreement.
The purchase price of each share of stock subject to an option under
the Plan will be fixed by the Compensation Committee in the respective
option agreement. In the case of an option that is intended to be an
incentive stock option, the exercise price of an option granted to any
employee who owns more than 10% of the total combined voting power of the
Company must be at least equal to 110% of the fair market value of the
Common Stock on the date of grant, and any such option must expire within
five years from the date of grant. Payment for shares granted under the
Plan may be made in cash, or, if permitted by the option agreement, by
exchanging shares of Common Stock having a fair market value equal to the
option exercise price, or by a combination of the foregoing.
The Board of Directors may amend the Plan with respect to shares of
Common Stock as to which options have not been granted. However,
stockholders must approve any amendment that would (1) materially change
the requirements as to eligibility to receive options; (2) increase the
maximum number of shares of Common Stock in the aggregate that can be sold
pursuant to options granted under the Plan (except for adjustments upon
changes in capitalization); or (3) cause the Plan to not comply with Rule
16b-3 under the Exchange Act (or any successor rule or other regulatory
requirements) of the Code.
The grant of an option will not be a taxable event for an optionee or
the Company as long as the exercise price of the option is substantial in
relation to the fair market value of the Common Stock on the date of grant.
Upon the exercise of nonincentive options, optionees will recognize income
equal to the difference between the exercise price and the fair market
value of the stock. If the Company complies with applicable withholding
requirements, it will generally be entitled to a business expense deduction
in the same amount and will generally be entitled to a business expense
deduction in the same amount and at the same time as the optionee
recognizes any ordinary income on exercise (subject to certain
limitations). Upon a subsequent sale or exchange of shares acquired
13
pursuant to the exercise of an option, the optionee will have a taxable
gain or loss, measured by the difference between the amount realized on the
disposition and the tax basis of the shares (generally, the amount paid for
the shares plus the amount treated as ordinary income at the time the
option was exercised).
If the optionee surrenders shares of Common Stock in payment of part
or all of the exercise price for nonincentive options, no gain or loss will
be recognized with respect to the shares surrendered (regardless of whether
the shares were acquired pursuant to the exercise of an incentive stock
option) and the optionee will be treated as receiving an equivalent number
of shares pursuant to the exercise of the option in a nontaxable exchange.
The basis of the shares surrendered will be treated as the substituted tax
basis for an equivalent number of option shares received, and the new
shares will be treated as having been held for the same holding period as
had expired with respect to the transferred shares. The difference between
the aggregate option exercise price and the aggregate fair market value of
the shares received pursuant to the exercise of the option will be taxed as
ordinary income.
In the case of an incentive stock option, an optionee who satisfies
certain requirements will not recognize income at the time the option is
exercised (except that the alternative minimum tax may apply) and will
recognize long term capital gain upon a subsequent disposition of the
shares if the optionee holds the shares for at least two years after the
date of grant and for one year after the date of exercise. To qualify for
the foregoing tax treatment, the optionee generally must be an employee of
the Company from the date of the option is granted through a date within
three months before the date of exercise of the option. The three-month
period is extended if the optionee's termination of employment results from
death or disability.
If all of the foregoing requirements are met except for the one-year
or two-year holding period mentioned above, the optionee will recognize
ordinary income upon the disposition of the stock in an amount equal to the
excess of the fair market value of the stock at the time the option was
exercised over the option exercise price. The balance of the realized
gain, if any, will be capital gain. The Company will be allowed a business
expense deduction to the extent the optionee recognizes ordinary income.
If an optionee exercises an incentive stock option by tendering of
shares of Common Stock with a fair market value equal to part or all of the
option exercise price, the exchange of shares will be treated as a
nontaxable exchange (except that this treatment would not apply if the
optionee had acquired the shares being transferred pursuant to the exercise
of an incentive stock option and had not satisfied the special holding
period requirements summarized above).
Under Section 162(m) of the Code, which was enacted in 1993, if the
optionee is one of certain specified executive officers of a publicly held
corporation, then, unless certain exceptions apply, the employer is not
entitled to deduct compensation with respect to the optionee, including
compensation related to the exercise of stock options, to the extent such
14
compensation in the aggregate exceeds $1,000,000 for the taxable year. If
options granted pursuant the Plan are exercised by any of certain senior
executive officers in an amount such that, given the then prevailing value
of the Common Stock, the officer realizes total compensation for the
taxable year in excess of $1,000,000, Section 162(m) may limit the total
deduction allowable.
The Board of Directors recommends a vote "FOR" Proposal 2.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors of RSI has appointed Coopers & Lybrand L.L.P.
as independent auditors to audit the books and accounts of RSI for the year
ending December 31, 1996, and recommends that the appointment of such
auditors be ratified by the shareholders. Coopers & Lybrand L.L.P.
completed the audit of the books and accounts of RSI for the fiscal year
ended December 31, 1995, and has been RSI's independent auditor since
September 13, 1993. The Board of Directors believes that the selection of
an independent auditor to audit the books and accounts of RSI prepared by
management is an appropriate matter for shareholder consideration. If the
shareholders do not ratify the selection of Coopers & Lybrand L.L.P. , the
Board of Directors will consider the selection of another firm of
independent certified public accountants to audit the books and accounts
for RSI for the year ending December 31, 1996. Representatives of Coopers
& Lybrand L.L.P. are expected to be present at the meeting and will have
the opportunity to make a statement (if they so desire) and to be available
to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" Proposal 3.
SHAREHOLDER PROPOSALS
Any proposals by shareholders of RSI to be considered for inclusion in
RSI's Proxy Statement relating to RSI's 1997 Annual Meeting of Shareholders
must be in writing and received by RSI, at its principal office, no later
than December 30, 1996.
GENERAL
The Board of Directors knows of no other matters to be presented for
consideration at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting, it is intended that the persons
named in the accompanying form of proxy will vote on such other matters in
accordance with their judgment of the best interests of RSI.
RSI HAS PROVIDED TO SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON
MAY 15, 1996, WITHOUT CHARGE, RSI'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995. ADDITIONAL COPIES WILL BE PROVIDED, WITHOUT CHARGE,
UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
May 30, 1996
15
[Side one]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RHEOMETRIC SCIENTIFIC, INC.
The undersigned hereby appoints Robert E. Davis, Richard J. Giacco,
and each of them, with power of substitution, to represent and to vote on
behalf of the undersigned all of the shares of Rheometric Scientific, Inc.
which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the Company's Headquarters, One Possumtown Road,
Piscataway, New Jersey, on Thursday, June 20, 1996, at 10:00 A.M., and at
any adjournment or adjustments thereof, hereby revoking all proxies
heretofore given with respect to such stock, upon the following proposals
more fully described in the notice of and proxy statement for the meeting
(receipt of which is hereby acknowledged).
(Continued, and to be marked, dated, and signed, on the other side)
[Side two]
Please mark [ Box ]
your votes as [ with ]
indicated in [ X ]
this example
The Board of Directors recommends a vote FOR Proposals 1, 2, and 3.
1. ELECTION OF DIRECTORS
Nominees: WITHHELD
Robert E. Davis Richard J. Giacco FOR FOR ALL
Leonard Bogner R. Michael Hendricks [ BLANK] [ BLANK ]
Alexander F. Giacco Robert K. Prud'homme [ BOX ] [ BOX ]
WITHHELD FOR: (Write that nominee's name in the space provided below).
__________________________________________________
FOR AGAINST ABSTAIN
2. APPOINTMENT [ BLANK ] [BLANK] [ BLANK ]
OF INDEPENDENT [ BOX ] [ BOX ] [ BOX ]
ACCOUNTANTS
3. APPROVAL OF 1996 [ BLANK ] [BLANK] [ BLANK ]
STOCK OPTION PLAN [ BOX ] [ BOX ] [ BOX ]
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned Shareholder. If no direction is
made, this proxy will be voted FOR Proposals 1, 2, and 3.
Signature(s)______________________________________________________________
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
