SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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| No fee required
|_| 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:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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| _| 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:
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<PAGE>
[LOGO]
RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
October 8, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual
Meeting of Shareholders of Rheometric Scientific, Inc., to
be held on November 5, 1998 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
responding 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,
Alexander F. Giacco
Chairman of the Board
<PAGE>
RHEOMETRIC SCIENTIFIC, INC.
One Possumtown Road
Piscataway, New Jersey 08854
(732) 560-8550
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To: The Shareholders of Rheometric Scientific, Inc.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of
Shareholders of Rheometric Scientific, Inc. ("RSI") will be
held on November 5, 1998, at 10:00 a.m. at RSI's
headquarters, One Possumtown Road, Piscataway, New Jersey,
to consider and act upon the following proposals:
1. To elect seven directors to the Board of
Directors, each to serve for a one-year term;
2. To consider and act upon a proposal to approve the
Amendment to the Company's 1996 Stock Option Plan to
increase the number of authorized shares from 250,000
to 500,000 shares of common stock;
3. To consider and act upon a proposal to approve the
Amendment to the Company's 1996 Stock Option Plan to
allow Options to be granted to "Outside" Directors;
4. To ratify the appointment by the Board of
Directors of the firm of PricewaterhouseCoopers L.L.P.
as independent auditors of RSI for the fiscal year
ending December 31, 1998; and
5. 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 September 28, 1998, 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
October 8, 1998
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
(732) 560-8550
PROXY STATEMENT
Annual Meeting of Shareholders
November 5, 1998
This 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 to be held on November 5, 1998, 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 October 8, 1998.
At the annual meeting, shareholders will be asked
to (i) elect seven directors to the Board of Directors, each
for a one-year term (Proposal 1, see page 4); (ii) consider
and approve the amendment to the Company's 1996 Stock Option
Plan to increase the number of authorized shares from
250,000 to 500,000 shares of common stock (Proposal 2, see
page 12); (iii) consider and approve the amendment to the
Company's 1996 Stock Option Plan to allow options to be
granted to "Outside Directors" (Proposal 3, see page 12);
(iv) ratify the appointment of PricewaterhouseCoopers
L.L.P. as independent auditors of RSI for the fiscal year
ending December 31, 1998 (Proposal 4, see page 13); and
(v) 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, 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 September
28, 1998, 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 number of shares of
common stock issued and outstanding and entitled to vote on
the 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
record date (6,580,870 shares) is necessary to constitute a
quorum at the annual meeting. The affirmative vote of the
holders of at least a majority of the votes cast by the
holders of common stock entitled to vote at the annual
meeting is required for the approval of all matters other
than the election of directors. Abstentions and broker non-
votes are not included as votes cast and accordingly will be
excluded from the total number of votes upon which a
majority is based. Thus, votes to abstain and broker non-
votes will have no effect on the vote tabulation for such
proposals. Directors shall be elected by a plurality vote
of the outstanding shares of common stock present and
entitled to vote at the annual meeting. According to the
Company's Bylaws, unless otherwise provided by the New
Jersey Business Corporation Act or the Company's Certificate
of Incorporation, any other matter put to a shareholder vote
will be decided by the affirmative vote of a majority of the
votes cast on the matter.
1
<PAGE>
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 Registrar and Transfer Company, 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 August
1, 1998, with respect to persons known by RSI to be the
beneficial owners of more than 5% of outstanding common
stock.
Axess Corporation
100 Interchange Boulevard
Newark, Delaware 19711 10,076,257 76.6%
Dr. Joseph M. Starita
20553 State Route 245
Marysville, Ohio 43040-0648 674,635 5.1%
(1) For the purpose of this table, a person is the
beneficial owner 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 August 1, 1998.
"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
<PAGE>
Security Ownership in Axess of RSI Board and Management
The following table sets forth information as of
August 1, 1998, with respect to shares of Axess common stock
beneficially owned by RSI directors, director nominees, Named
Executive Officers (see "EXECUTIVE COMPENSATION"), and all
directors and executive officers as a group. Individuals in each
group who are not listed own no shares of Axess.
<TABLE>
<CAPTION>
No. of Shares
Name and Title with RSI Beneficially Owned (1) Percent
______________________________ ___________________ _______
<S> <C> <C>
Robert E. Davis, Ex-Chief Executive
Officer and Ex-Director (2) 469,565 21.6%
Alexander F. Giacco, President,
Chief Executive Officer and
Chairman of the Board 469,565 (3) 21.6%
Richard J. Giacco, Vice President
and Director 46,957 2.6%
R. Michael Hendricks, Director 187,826 (4) 8.6%
All RSI directors and executive
Officers as a group (3 persons) 704,348 32.8%
______________________
(1) See footnote (1) in "Security Ownership of Certain
Beneficial Owners."
(2) Robert E. Davis retired effective August 31, 1997.
(3) 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.
(4) Held by a revocable trust for which Mr. Hendricks is the
settlor, a beneficiary and a trustee.
</TABLE>
Security Ownership of Board and Management
The following table sets forth information as of August 1,
1998, 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.
<TABLE>
<CAPTION>
No. of Shares
Name and Title Beneficially Owned (1) Percent
_____________________ _________________ _______
<S> <C> <C>
Alexander F. Giacco, President,
Chief Execu-tive Officer and
Chairman of the Board 81,000 *
Alan R. Eschbach, Director (2) 2,240 *
Robert E. Davis, Ex-CEO, Ex-Director 5,000 *
Leonard Bogner, Director (2) -- --
Walter M. Bromm, Director (2) -- --
Richard J. Giacco, Vice President
and Director 3,000 (3) *
R. Michael Hendricks, Director 3,000 *
Robert K. Prud'homme, Director (2) -- --
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
Name and Title Beneficially Owned (1) Percent
_____________________ _________________ _______
<S> <C> <C>
Matthew Bilt, Vice President,
Human Resources & Administration 6,800 *
Ronald F. Garritano, Vice President,
Technology 12,735 *
Joseph Musanti, Vice President,
Finance & Materials 3,250 *
John C. Fuhrmeister, Ex-Vice President,
Finance & Administration -- --
All directors and executive officers as
a group (10 persons)(4) 112,025 *
___________________
* Denotes less than 1% of the outstanding shares of
Common stock.
(1) See footnote (1) in "Security Ownership of Certain
Beneficial Owners."
(2) Does not include 25,000 shares underlying options
granted subject to shareholder approval.
(3) Includes beneficial ownership of 1,000 shares held in
an investment partnership for the benefit of his children
and managed by Mr. Giacco.
(4) Does not include 100,000 shares underlying options
granted subject to shareholder approval.
</TABLE>
Compliance With Section 16(a) of the 1934 Act
Section 16(a) of the Securities Exchange Act of 1934
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 1997 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.
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.
4
<PAGE>
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 Office Director
Name Age (if any) Held in the Company Since
<S> <C> <C> <C>
Alexander F. Giacco 78 Chairman of the Board since August 1993
31, 1997, President and Chief
Executive Officer since February 6,
1998. Managing Director, Axess
Corporation, since its inception
in 1991; prior thereto Chairman 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.
Leonard Bogner 57 President, Bogner Business Consultants, 1995
Inc. since its formation in
November 1994; prior thereto,
Senior Chemicals Research
Department Analyst, Prudential
Securities Brokerage Firm, from May
1986 to October 1994.
Walter M. Bromm 63 Retired; prior thereto, Senior Vice 1998
President, Montell, Inc., a
polyolefin materials company, from
1993 to 1997, and Senior Vice
President, HIMONT Incorporated, a
plastics manufacturing company from
1987 to 1993.
Alan R. Eschbach 51 President, Flow Technology, Inc., 1997
an instrumentation company
specializing in flow measurement
products since February 1998; prior
thereto President and Chief
Executive Officer, Rheometric
Scientific, Inc. from August 31,
1997 to February 6, 1998 and
Director since August 31, 1997;
Executive Vice President, Chief
Operating Officer from November
1994 to August 1997; and Vice
President, Domestic & International
Sales & Marketing from October 1988
to November 1994.
Richard J. Giacco 46 Vice President, Rheometric Scientific, 1992
Inc. since February 19, 1998; Vice
President and General Counsel,
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 Office Director
Name Age (if any) Held in the Company Since
<S> <C> <C> <C>
R. Michael Hendricks 60 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 50 Professor of Chemical Engineering 1981
at Princeton University since
1978; Consultant to Dow Chemical
Company, Block Drug, Helene Curtis,
and Rhodia Incorporated.
</TABLE>
5
<PAGE>
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,
1997, 1996, and 1995, to the Company's chief executive
officer and the four most highly compensated executives of
the Company, each of whose aggregate salary and bonus
exceeded $100,000 for the 12-month period ended December 31,
1997 (the "Named Executive Officers"):
<TABLE>
Summary Compensation Table
<CAPTION> Long Term
Annual Compensation Compensation
______________________________________ __________
Awards
_________
Name and Other (1) Securities
Principal Position Year Salary Bonus Compensation Underlying
Options
__________________ ____ ________ ______ ________ _______
<S> <C> <C> <C> <C> <C>
Alan R. Eschbach (2) 1997 $165,614 0 $2,235 0
President, Chief Executive 1996 161,313 0 3,289 28,000
Officer, and Director 1995 153,948 $4,996 3,150 0
Robert E. Davis (3) 1997 100,000 0 0 0
Chief Executive Officer 1996 150,000 0 0 0
and President 1995 150,000 0 0 0
Ronald F. Garritano 1997 146,506 0 2,672 0
Vice President, Technology 1996 144,687 0 2,889 18,000
1995 140,658 3,293 2,809 0
Matthew Bilt 1997 116,693 0 1,660 0
Vice President, Human 1996 115,582 0 1,425 9,400
Resources & Administration 1995 114,423 2,585 1,386 0
John Fuhrmeister (4) 1997 120,383 0 2,235 0
Vice President, Finance & 1996 124,363 0 2,430 0
Administration 1995 121,047 2,770 1,986 0
</TABLE>
6
<PAGE>
Summary Compensation Table - continued
(1) Company contributions under the Savings and Investment
Retirement Plan.
(2) Mr. Eschbach resigned on February 6, 1998. Mr.
Alexander F. Giacco became president and chief executive
officer effective that date.
(3) Mr. Davis served as president and CEO of the Company
from September 20, 1993 to August 31, 1997. Rheometric and
Axess verbally agreed that Rheometric would pay to Axess a
management fee, equal to $150,000 per year, for said
services. See Item 13. Certain Relationships and Related
Transactions.
(4) Mr. John Fuhrmeister left the Company effective May 23,
1997.
Options Exercises and Holdings
The following table sets forth information with respect
to the Named Executive Officers concerning unexercised
options held as of the end of the last fiscal year, none of
which was in-the-money. No Named Executive Officer exercised
any options during the last year.
Number of Securities Underlying
Unexercised Options at 12-31-97 (#)
Exercisable Unexercisable
Alan R. Eschbach (1) 7,000 21,000
Ronald F. Garritano 4,500 13,500
Matthew Bilt 2,350 7,050
______________
(1) Mr. Eschbach's options terminated on May 7, 1998.
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, 1997, 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, 1997.
Attendance at Meetings
During the 12-month period ended December 31, 1997, the
Board of Directors held four meetings. No director attended
fewer than 75% of the aggregate of the meetings of the board
and committees to which such directors was assigned.
7
<PAGE>
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 amended and restated written employment
agreements with Mr. Bilt in September 1996 and with Mr.
Garritano in March 1998. In addition, the Company entered
into a written employment agreement with Mr. Musanti in
March 1998. Under these agreements, base annual salary is
$150,000 for Mr. Garritano, $115,000 for Mr. Bilt, and
$120,000 for Mr. Musanti, all subject to discretionary
increase by the Board of Directors. Messrs. Bilt and
Musanti's employment agreements have an initial term of one
year and can be continued from year to year thereafter. Mr.
Garritano's agreement, which was amended in March 1998, has
an initial term of three years and can be continued from
year to year thereafter.
The employment agreements contain a provision that
provides for the executives to be compensated should their
employment be terminated upon a change of control. Messrs.
Bilt and Musanti's agreements indicate that they would be
entitled to receive one year's base pay, plus any bonus
participation or other benefit that the executive may be
entitled to for up to one year. Upon a termination due to
a change of control, Mr. Garritano's employment agreement
provides for the greater of the term of the agreement or one
year's base pay, plus any bonus participation or other
benefit to which he may be entitled to in that period. If a
change of control were to occur today and Mr. Garritano's
employment was terminated, Mr. Garritano would be entitled
to receive $416,538, as of September 1, 1998.
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 1997 consisted of base salary.
All the Named Executive Officers, other than Messrs.
Davis and A. Giacco, 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.
8
<PAGE>
All executive officers are entitled to receive
incentive compensation based on their performance. 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
is limited to select key positions 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 1997 incentive pool was based on a formula of
performance objectives relating to revenues, operating
income, cash management, and cost reductions after a minimum
operating income is achieved. The 1997 financial results did
not trigger a pay-out under the program guidelines, and no
bonus pool was distributed.
The 1998 Plan under the Incentive System is based on
achieving a minimum of $1.5 million in operating profits
after deduction of interest (the "1998 Target"). If the
Company achieves the 1998 Target, the 1998 Plan provides for
payment of $100,000. If the Company exceeds the 1998
Target, the 1998 Plan provides for an additional payment of
15% of the first $1.0 million in operating profits after
deduction of interest above the 1998 Target, and for an
additional payment of 20% of each additional $1.0 million in
operating profits after deduction of interest in excess of
$1 million above the 1998 Target. Payments under the 1998
Plan shall be made into a pool in which each management
participant has been awarded a percentage interest.
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. A. Giacco, 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.
President and CEO Compensation. As chief executive
officer of RSI until August 31, 1997, 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 had
devoted substantially all of his time on behalf of Axess to
RSI during his tenure. Mr. Davis retired on August 31,
1997. The management fee for the fiscal year ended December
31, 1997 was $100,000.
Mr. Eschbach became president and chief executive
officer on August 31, 1997 when Mr. Davis retired. During
Mr. Eschbach's tenure as president and chief executive
officer (August 31, 1997 to February 6, 1998), he was
compensated pursuant to his
9
<PAGE>
employment agreement with the Company and received no
additional compensation upon becoming president and CEO.
On February 6, 1998, Mr. Alexander F. Giacco became
president and chief executive officer. Mr. A. Giacco
receives no compensation from the Company, and Axess has
elected not to require the Company to pay a management fee
for said services.
Respectfully submitted,
Leonard Bogner, R. Michael Hendricks, and 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, 1997. 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, 1993
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,
1993 and which report under the standard industrial
classification code 3826 (34 companies excluding RSI) (the
"Peer Group Index").
Comparison of Cumulative Total
Return Among RSI,
Peer Group Index, and NASDAQ Market Index
for the Five Years Ended December 31, 1997
[ GRAPH showing return among
RSI Peer Group Index
and NASDAQ Market Index]
10
<PAGE>
<TABLE>
Data Points Used in Comparison of Cumulative Total Graph
<CAPTION>
December 31,
_______________________________________
1993 1994 1995 1996 1997
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
RSI 100 68.75 62.50 75.00 96.88 46.88
Peer Group 100 104.17 93.52 149.87 179.35 212.77
Nasdaq Market 100 119.95 125.94 163.35 202.99 248.30
Source: Media General Financial Services
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Robert E. Davis was president and CEO of the
Company from September 20, 1993 to August 31, 1997. In
January 1994, the Company and Axess verbally agreed that the
Company would pay to Axess a management fee, equal to
$150,000 per year. Included in accrued liabilities at
December 31, 1997 is $517,000 for said services.
On February 23, 1996, Axess and the Company
consolidated all outstanding debt of the Company to Axess,
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. The maturity of the note was extended in 1998 until
February 28, 2002.
At December 31, 1997, the Company owed to Axess
$148,088.20 for insurance premium advances.
AMENDMENTS TO STOCK OPTION PLAN
The Board of Directors is proposing two amendments
(Proposals 2 and 3 below) to the Company's 1996 Stock Option
Plan (the "Plan"). The first amendment involves an increase
in the authorized shares that may be issued under the Plan.
The second amendment involves expanding the eligibility
provision of the plan to permit grants of options to certain
non-employees directors. If the amendments are approved,
the Plan, which was approved at the Company's annual meeting
of shareholders on May 30, 1996, will remain unchanged in
all other respects.
Proposals 2 and 3 each require approval by the majority
of the votes cast. Common stock votes that are cast against
a proposal will be counted for purposes of determining the
total number of votes cast with respect to the proposal.
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, abstentions
and broker non-votes will have no effect on the vote
tabulation for Proposals 2 and 3.
11
<PAGE>
AMENDMENT TO INCREASE NUMBER OF AUTHORIZED SHARES
(Proposal 2)
On February 19, 1998, the Board of Directors approved
and is proposing for shareholder approval an amendment of
the Plan to increase the number of shares of common stock
reserved for issuance pursuant to options granted thereunder
by 250,000 shares (from 250,000 to 500,000 shares).
Currently, there are 303,400 options outstanding under the
Plan. At the February meeting the Board granted options
with respect to 125,000 shares to key employees and 100,000
shares to Outside Directors (see Proposal 3 below), subject
to approval of this proposal. Options granted that exceed
the current authorized shares will not be effective if
shareholders fail to approve this proposal. Management
believes that stock options have been and will continue to
be one of the most important methods of attracting and
retaining key personnel responsible for the development and
growth of the Company's business. In order to permit the
Company to continue to use stock options as an incentive to
its officers and key personnel and as a means to promote
increased shareholder value, the Plan needs to be amended to
increase the number of shares reserved for issuance.
The Board of Directors recommends that shareholders vote
"FOR" this amendment to the Plan to increase authorized
shares reserved for issuance from 250,000 to 500,000 shares.
AMENDMENT TO ALLOW OPTIONS TO BE GRANTED TO "OUTSIDE"
DIRECTORS
(Proposal 3)
On September 25, 1997, the Board of Directors approved
and is proposing for shareholder approval an amendment of
the Plan that would allow option grants thereunder to
"Outside Directors." An Outside Director is a member of the
Board of Directors who is not: (a) an officer or key
employee of the Company or one of its subsidiaries; or (b)
an officer or director of any 10% or greater shareholder of
the Company. Currently, options may be granted under the
Plan to any officer or key employee of the Company or any
"subsidiary corporation" thereof (as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended (the
"Code")). The Compensation Committee granted 25,000 options
with exercise prices equal to the fair market value of the
Company's common stock on the date of grant ($1.375), to
each of the following Outside Directors: (i) Mr. Bogner and
Dr. Prud'homme on September 25, 1997; and (ii) Messrs. Bromm
and Eschbach on February 19, 1998, pending shareholder
approval. As of the date of this proxy statement, there has
been no determination by the Compensation Committee with
respect to future awards to Outside Directors, officers or
key employees under the Plan. Accordingly, future awards
are not determinable. At the present time, the Company has
four Outside Directors. Any options granted to Outside
Directors will not be classified as incentive stock options
within the meaning of Section 422 of the Code.
By expanding option grants to include Outside
Directors, the Company will be better able to attract and
retain the best available personnel to serve on its Board of
Directors. Moreover, such option grants will create a
greater incentive for non-employee directors to further
maximize shareholder value.
The Board of Directors recommends that shareholders vote
"FOR" this amendment to the Plan to allow options to be
granted to Outside Directors.
12
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 4)
The Board of Directors of RSI has appointed
PricewaterhouseCoopers L.L.P. as independent auditors to
audit the books and accounts of RSI for the year ending
December 31, 1998, and recommends that the appointment of
such auditors be ratified by the shareholders.
PricewaterhouseCoopers L.L.P. completed the audit of the
books and accounts of RSI for the fiscal year ended December
31, 1997, 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 PricewaterhouseCoopers
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, 1998. Representatives of
PricewaterhouseCoopers 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 4.
DEADLINES FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR
CONSIDERATION AT 1999 ANNUAL MEETING
Any proposals that a shareholder wishes to submit for
inclusion in the Company's proxy statement for the 1999
annual meeting of shareholders pursuant to SEC Rule 14a-8
must be received by the Company no later than February 1,
1999. In addition, notice of any proposal that a
shareholder wishes to propose for consideration at the 1999
annual meeting of shareholders, but does not seek to include
in the Company's 1999 proxy statement pursuant to Rule 14a-
8, must be delivered to the Company no later than April 15,
1999 if the proposing shareholder wants the Company to
describe the nature of the proposal in its 1999 proxy
statement as a condition to the Company's exercising
discretionary authority to vote proxies on the proposal.
Any shareholder proposals or notices submitted to the
Company in connection with the 1999 annual meeting of
shareholders should be addressed to: Richard J. Giacco,
Secretary, Rheometric Scientific, Inc., One Possumtown Road,
Piscataway, NJ 08854.
13
<PAGE>
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 SEPTEMBER 28, 1998, WITHOUT CHARGE, RSI'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997. 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
October 8, 1998
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RHEOMETRIC SCIENTIFIC, INC.
The undersigned hereby appoints Alexander F. Giacco,
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, November 5, 1998, at 10:00 A.M., and at any
adjournment or adjustments thereof, hereby revoking all
proxies heretofore given with respect to such stock, upon
the following proposals more fully described in the notice
of and proxy statement for the meeting (receipt of which is
hereby acknowledged).
The Board of Directors recommends a vote "FOR" Proposals 1,
2, 3 and 4.
1. ELECTION OF DIRECTORS
Nominees: Alexander F. Giacco, Leonard Bogner, Walter M.
Bromm, Alan R. Eschbach,Richard J. Giacco, R. Michael
Hendricks, Robert K. Prud'homme
WITHHELD FOR: (Write that nominee's name in the space
provided below).
___
/__ / FOR all nominees listed above (except as marked
to the contrary).
___
/__/ WITHHOLD AUTHORITY to vote for all nominees
listed above.
FOR AGAINST ABSTAIN
___ ___ ___
2. APPROVAL OF AMENDMENT TO THE /___/ /___/ /___/
COMPANY'S 1996 STOCK OPTION
PLAN TO INCREASE THE NUMBER
OF AUTHORIZED SHARES FROM
250,000 TO 500,000
___ ___ ___
3. APPROVAL OF AMENDMENT TO THE /___/ /___/ /___/
COMPANY'S 1996 STOCK OPTION
PLAN TO ALLOW OPTIONS TO
BE GRANTED TO "OUTSIDE" DIRECTORS
___ ___ ___
4. APPOINTMENT OF INDEPENDENT /___/ /___/ /___/
ACCOUNTANTS
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, 3 and 4.
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.
