SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Rheometric Scientific, Inc.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-(i)(2)
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
- ---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it is determined):
- ---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
- ---------------------------------------------------------------
| _| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- ---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ---------------------------------------------------------------
(3) Filing Party:
- ---------------------------------------------------------------
(4) Date Filed:
- ---------------------------------------------------------------
<PAGE>
[ LOGO ]
RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
June 12, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Rheometric Scientific, Inc., to be held on July 17, 1997,
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 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Rheometric Scientific, Inc. ("RSI") will be
held on July 17, 1997, 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 ratify 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, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Pursuant to RSI's Bylaws, the Board of Directors has fixed the close
of business on May 29, 1997, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
Only holders of RSI's Common Stock of record at the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
Piscataway, New Jersey
June 12, 1997
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
July 17, 1997
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 July 17, 1997, at 10:00 a.m. at the
Company's headquarters, One Possumtown Road, Piscataway, New Jersey, and
at any adjournments thereof. This Proxy Statement and the accompanying
form of proxy are first being mailed to the shareholders of RSI on or
about June 12, 1997.
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 7); (ii) ratify the appointment of Coopers & Lybrand L.L.P.
as independent auditors of RSI for the fiscal year ending December 31,
1997 (Proposal 2, see page 15); and (iii) 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 29, 1997, has been fixed by the Board of
Directors of RSI as the record date for determination of shareholders
entitled to vote at the Annual Meeting (the "RSI Record Date"). The
number of shares of Common Stock issued and outstanding and entitled to
vote on the RSI Record Date was 13,161,739. The presence, in person or
by proxy, of at least a majority of the shares of Common Stock issued and
outstanding and entitled to vote on the RSI Record Date (6,580,870
shares) is necessary to constitute a quorum at the Annual Meeting. The
affirmative vote of the holders of at least a majority of the votes cast
by the holders of Common Stock entitled to vote at the Annual Meeting is
required for the approval of all matters other than the election of
directors. Abstentions and broker non-votes are not included as votes
cast and accordingly will be excluded from the total number of votes upon
which a majority is based. Thus, votes to abstain and broker non-votes
will have no effect on the vote tabulation for such proposals. Directors
shall be elected by a plurality vote of the outstanding shares of Common
Stock present and
<PAGE>
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 ChaseMellon Shareholder
Services, the RSI transfer agent.
The management of RSI does not know of any matters other than those
set forth herein which may come before the Annual Meeting. If any other
matters are properly presented to the Annual Meeting for action, it is
intended that the persons named in the applicable form of proxy will vote
the shares represented by proxies on such matters as determined by a
majority of the Board of Directors.
The expense of printing this Proxy Statement and the proxies
solicited hereby and any filing fees incurred in connection with the
Proxy Statement and certain other filings will be borne entirely by RSI.
In addition to the use of the mails, proxies may be solicited by officers
and directors and regular employees of RSI, without additional
remuneration, by personal interviews, telephone, telegraph or otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of May 29, 1997, with
respect to persons known by RSI to be the beneficial owners of more than 5% of
outstanding Common Stock.
<TABLE>
<CAPTION>
No. of
Shares
Beneficially
Name and Address Owned (1) Percent
________________ ___________ _______
<S> <C> <C>
Axess Corporation
100 Interchange Boulevard
Newark, Delaware 19711 10,076,257 76.6%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
No. of
Shares
Beneficially
Name and Address Owned (1) Percent
________________ ___________ _______
<S> <C> <C>
Mary M. Diehl
13 Beverly Drive
Belle Mead, New Jersey 08502 723,236 5.5%
Dr. Joesph M. Starita
20553 State Route 245
Marysville, Ohio 43040-05648 751,635 5.7%
</TABLE>
(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 29, 1997. "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.
Security Ownership in Axess of Certain Beneficial Owners
The following table sets forth information as of May 29, 1997,
with respect to shares of Axess common stock beneficially owned by directors
and executive officers of RSI.
<TABLE>
<CAPTION>
No. of Shares
Name and Title with RSI Beneficially Owned (1) Percent
_______________________ _____________________ _______
<S> <C> <C>
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%
</TABLE>
(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 29, 1997, 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.
3
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
Name and Title Beneficially Owned (1) Percent
______________ ______________________ _______
<S> <C> <C>
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 *
Ronald F. Garritano, Vice President,
Technology 3,735 *
All directors and executive
officers as a group (9 persons) 53,975 *
</TABLE>
* Denotes less than 1% of the outstanding shares of Common Stock.
(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 1996 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
4
<PAGE>
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.
<TABLE>
<CAPTION>
Principal Occupation or Employment
During the Past five Years and Director
Name Age Office (if any) Held in the Company Since
_____ ____ ___________________________________ ________
<S> <C> <C> <C>
Robert E. Davis 65 Chairman of the Board since April 1992
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 56 President, Bogner Business 1995
Consultants, Inc. since its
formation in November 1994; prior
thereto, Senior Chemicals
Research Department Analyst,
Prudential Securities, a
brokerage firm, from May 1986 to
October 1994.
Alexander F. Giacco 77 Managing Director, Axess 1993
Corporation 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. Mr.
Giacco is the father of Richard
J. Giacco.
Richard J.Giacco 44 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.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation or Employment
During the Past five Years and Director
Name Age Office (if any) Held in the Company Since
_____ ____ ___________________________________ ________
<S> <C> <C> <C>
R. Michael Hendricks 59 President, Axess Corporation since 1992
its inception in 1991; prior
thereto served as president and
chief operating officer of HIMONT
Incorporated, a plastics
manufacturing company, since
1983.
Robert K. Prud'homme 49 Professor of Chemical Engineering 1981
at Princeton University since
1978; Consultant to FMC, Inc.,
Dow Chemical Company and DuPont,
Inc.
</TABLE>
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, 1994, 1995, and 1996, to the Company's chief executive
officer and the four most highly compensated executives of the Company
whose aggregate salary exceeded $100,000 for the 12-month period ended
December 31, 1996 (the "Named Executive Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
_______________________________ __________
All other Securities
Salary Compensation Underlying
Name and Principal Position Year ($) Bonus ($) (1) Options
___________________________ _____ _______ ______ _____________ __________
<S> <C> <C> <C> <C> <C>
Robert E. Davis (2) 1996 150,000 0 0 0
Chief Executive Officer 1995 150,000 0 0 0
And President 1994 150,000 0 0 0
Alan R. Eschbach 1996 161,313 0 3,289 28,000
Executive Vice President, 1995 153,948 4,996 3,150
Chief Operating Officer 1994 140,627 0 2,728
Ronald F. Garritano 1996 144,687 0 2,889 18,000
Vice President, 1995 140,658 3,293 2,809
Technology 1994 137,314 0 2,731
John C. Fuhrmeister (3) 1996 124,363 0 2,430 18,000
Vice President, Finance 1995 121,047 2,770 1,986
& Administration 1994 98,434 0 2,086
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
_______________________________ __________
All other Securities
Salary Compensation Underlying
Name and Principal Position Year ($) Bonus ($) (1) Options
___________________________ _____ _______ ______ _____________ __________
<S> <C> <C> <C> <C> <C>
Matthew Bilt 1996 115,582 0 1,425 9,400
Vice President, Human 1995 114,423 2,585 1,386
Resources 1994 102,537 0 1,830
</TABLE>
(1) Company contributions under the Savings and Investment Retirement
Plan.
(2) 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 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.
(3) Effective May 23, 1997, Mr. Fuhrmeister was no longer employed by
the Company.
Option Grants, Exercises, and Year-End Value
The following table contains information concerning the grant of stock
options under the 1996 Plan to the Named Executive Officers during the last
fiscal year.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR - INDIVIDUAL GRANTS
<CAPTION>
Number of
Securities Percent of
Underlying Total Options Grant
Options Granted to Exercise Date
Granted Employees in Price Expiration Present
Name (#) (1) Fiscal Year $/Sh) (2) Date Value(3)
_____ _________ _________ ______ ________ _______
<S> <C> <C> <C> <C> <C>
Alan R. Eschbach 28,000 19.2% $1.75 06-20-2006 $22,708
John C. Fuhrmeister(4) 18,000 12.3% $1.75 06-20-2006 $14,598
Ronald F. Garritano 18,000 12.3% $1.75 06-20-2006 $14,498
Matthew Bilt 9,400 6.4% $1.75 06-20-2006 $ 7,623
</TABLE>
______________
(1) Options become exercisable in four equal annual installments
beginning June 20, 1997.
(2) Based on the closing price of Common Stock reported on the Nasdaq
Stock Market on the day of grant, or if no sale of stock had been made on
such day, on the next preceding day on which any such sale shall have
been made.
(3) The dollar amounts under this column are the result of calculations
based on the Black-Scholes option pricing model with the following: risk-
free interest rate of 6.67%, expected volatility of 50.48%, and an
expected life of four years.
(4) Effective May 23, 1997, the Company no longer employed Mr.
Fuhrmeister. All of Mr. Fuhrmeister's options will terminate on August
21, 1997.
7
<PAGE>
Options Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last
fiscal year and unexercised options held as of the end of the last fiscal
year.
<TABLE>
Aggregated Option Exercises in Last Fiscal year and FY-End Option Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at 12-31-96 (#) 12-31-96 ($) (1)
Exercisable Unexercisable Exercisable Unexercisable
___________ _____________ __________ ____________
<S> <C> <C> <C> <C>
Alan R. Eschbach 0 28,000 0 $5,250
John C. Fuhrmeister (2) 0 18,000 0 $3,375
Ronald F. Garritano 0 18,000 0 $3,375
Matthew Bilt 0 9,400 0 $1,763
</TABLE>
______________
(1) Market value of in-the-money shares on December 31, 1996 ($1.94),
less option exercise price.
(2) Effective May 23, 1997, the Company no longer employed Mr.
Fuhrmeister. All of Mr. Fuhrmeister's options will terminate on August
21, 1997.
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, 1996, 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. Hendricks and
Bogner, and Dr. Prud'homme. The Audit Committee held one meeting during
the 12-month period ended December 31, 1996.
Attendance at Meetings
During the 12-month period ended December 31, 1996, the Board of
Directors held four 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.
8
<PAGE>
Employment Agreements
The Company amended and restated written employment agreements with
Messrs. Eschbach and Garritano in September 1996. Also in September
1996, the Company entered into written employment agreements with Messrs.
Bilt and Fuhrmeister. Under these agreements, base annual salary for
1996 is $149,100 for Mr. Eschbach, $131,082 for Mr. Garritano, and
$101,920 for Mr. Bilt, all subject to discretionary increase by the Board
of Directors. The employment agreements have an initial term of one year
and can be continued from year to year thereafter.
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 1996 consisted of
base salary.
All the Named Executive Officers, other than Mr. Davis, 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
9
<PAGE>
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 1996 incentive pool was established on a restrictive level based
upon profitability forecasts, to be funded based on a formula of
performance objectives relating to revenue, operating income, cash
management, and cost reductions. The 1996 financial results did not
trigger a pay-out under the program guidelines and no bonus pool was
distributed. A similar incentive pool was established in 1997. The 1997
incentive pool is based on a formula of performance objectives relating
to revenues, operating income, cash management, and cost reductions after
a minimum operating income is achieved. Based upon the 1997 incentive
bonus criteria, the pay-out range would be between $85,000 and $169,000,
providing all objectives are met.
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, subject to approval by the full board of
Directors. In June 1996, the Compensation Committee granted the Named
Executive Officers, other than Mr. Davis, stock options under the 1996
Stock Option Plan. (See Option Grants, Exercises, and Year-End Value.)
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.
Respectfully submitted,
Stock Option and Compensation Committee
Leonard Bogner
R. Michael Hendricks
Richard J. Giacco
10
<PAGE>
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, 1996. 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, 1992 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, 1992 and which report under
the standard industrial classification code 3826 (31 companies excluding
RSI) (the "Peer Group Index").
<TABLE>
COMPARISON OF CUMULATIVE TOTAL
Return Among RSI,
Peer Group Index, and NASDAQ Market Index
for the Five Years Ended December 31, 1996
<CHART>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<CAPTION>
December 31,
1992 1993 1994 1995 1996
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
RSI 100 72.73 50.00 45.45 54.55 70.45
Peer Group 100 105.59 109.99 98.75 158.25 189.37
Nasdaq Market 100 100.98 121.13 127.17 164.96 204.98
</TABLE>
Source: Media General Financial Services
11
<PAGE>
Certain Relationships and Related Transactions
Mr. Robert E. Davis became president and CEO of the Company on
September 20, 1993. He was compensated by Axess Corporation through
December 31, 1993. Effective January 1, 1994, the Company and Axess
verbally agreed that the Company will pay to Axess a management fee,
equal to $150,000 per year. Included in accrued liabilities at
December 31, 1996 is $450,000 for said services.
On March 7 and 25, 1994, Axess issued the Company's UK subsidiary
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 domestic notes described above, 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.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 2)
The Board of Directors of RSI has appointed Coopers & Lybrand L.L.P.
as independent auditors to audit the books and accounts of RSI for the
year ending December 31, 1997, 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, 1996, 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
12
<PAGE>
the year ending December 31, 1997. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the meeting and will have the
opportunity to make a statement (if they so desire) and to be available
to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" Proposal 2.
SHAREHOLDER PROPOSALS
Any proposals by shareholders of RSI to be considered for inclusion
in RSI's Proxy Statement relating to RSI's 1998 Annual Meeting of
Shareholders must be in writing and received by RSI, at its principal
office, no later than February 9, 1998.
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 29, 1997, WITHOUT CHARGE, RSI'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996. ADDITIONAL COPIES WILL BE PROVIDED,
WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
By Order of the Board of Directors
RICHARD J. GIACCO
Secretary
June 12, 1997
<PAGE>
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, July 17, 1997, 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)
^ FOLD AND DETATCH HERE ^
ADMIT ONE
Open House Tour
Please Join Us Early
Group Tours beginning 9:00, 9:15, and 9:30 a.m.
Before our Annual Meeting of Shareholders
Thursday, July 17, 1997
One Possumtown Road
Piscataway, NJ 08854
<PAGE>
Please mark your /X/
votes as indicated
in this example
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS
Nominees: Robert E. Davis, Leonard Bogner, Alexander F. Giacco, Richard
J. Giacco, R. Michael Hendricks, Robert K. Prud'homme
/_/ FOR all nominees listed to the right (except as marked to the contrary)
/_/ WITHHOLD AUTHORITY to vote for all nominees listed to the right.
WITHHELD FOR: (Write that nominee's name in the space provided below).
_____________________________________________________________________
2. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
/_/ FOR /_/ AGAINST /_/ ABSTAIN
I plan to attend the meeting /_/ Yes /_/ No
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Shareholder. If no direction is made, this
proxy will be voted FOR Proposals 1 and 2.
Signature: _____________ Signature: _____________ Date: _____________
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.
_________________________________________________________________________
^ FOLD AND DETACH HERE ^
One of the challenges we face as manufacturers today is to
remain competitive within an increasingly sophisticated market. Today's
customers demand quality. To ensure our products continue to meet our
customer's expectations, RSI began implementing an ISO 9001 program, an
international quality standard, during 1996. We anticipate becoming ISO
9001 certified before the end of 1997. Our Mission Statement below
expresses our commitment.
<LOGO> MISSION STATEMENT
We are...
* dedicated to developing and producing the highest quality
rheological and thermal analysis instrumentation to serve the needs of
the worldwide community in applications ranging from research to process
control and quality control.
* constantly striving to provide cost effective and technically
superior products that return a sound profit to our shareholders.
* committed to continuously improving the quality of our products and
services to our internal and external customers and to give priority and
attention to their concerns.
* dedicated to maintaining a work environment that is clean, safe, and
nondiscriminatory for all employees.
<PAGE>
