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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: June 10, 1996
RESOURCE GENERAL CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Ohio 0-8115 31-0737351
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
2365 Scioto Harper Drive, Columbus, Ohio 43204
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (614) 279-8774
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a) (1) PROPOSED ACQUISITIONS OF STOCK
NAMES OF PERSONS WHO WILL ACQUIRE CONTROL
At a Special Meeting of the Shareholders of Resource General
Corporation held on May 28, 1996, pursuant to Ohio Revised Code Section
1701.831, the Ohio Control Share Acquisition Law, the shareholders authorized
two acquisitions of the outstanding common stock of the Registrant (the "Stock")
by the following individuals after which such individuals will own a majority or
more of the Stock: (i) Bob Binsky; (ii) Michael W. Gardner; (iii) Theodore P.
Schwartz; (iv) Charles T. Sherman; and (v) Kenneth J. Warren (collectively the
"Acquiring Group").
DESCRIPTION OF TRANSACTIONS WHICH WILL RESULT IN CHANGE OF CONTROL
On April 3, 1996, Mr. Schwartz and Mr. Sherman entered into an
agreement to purchase 200,000 shares of Stock from Paul M. Gillmor (the "Gillmor
Agreement"), which agreement superseded an earlier agreement dated March 25,
1996. The total purchase price for the shares is $250,000 ($1.25 per share).
40,000 of the shares were purchased and transferred with a down payment of
$50,000 which occurred on June 6, 1996. Mr. Schwartz and Mr. Sherman executed a
promissory note payable to Mr. Gillmor providing for repayment of the remaining
$200,000 in 16 quarterly payments. Under the note, the quarterly payment for the
first year is $6,250, the quarterly payments for the second and third years are
$12,500 and the quarterly payment for the fourth year is $18,750. Interest on
the unpaid balance of the note will accrue at the rate of four percent per
annum. Upon receipt of each quarterly payment, 5,000 shares are to be
transferred during the first year, 10,000 shares are to be transferred during
the second and third years and 15,000 shares are to be transferred during the
fourth year. The power to vote all of the remaining shares was transferred to
Mr. Schwartz and Mr. Sherman when the downpayment of $50,000 was made and the
promissory note for the remaining shares was executed, which occurred on June 6,
1996. In addition, Mr. Schwartz and Mr. Sherman have agreed to grant Mr. Gillmor
an option to purchase 20,000 shares owned by the Acquiring Group on terms yet to
be determined.
On April 2, 1996, Mr. Schwartz and Mr. Sherman also entered into
an agreement to purchase 110,000 shares of Stock from Lyman Brownfield, Candace
Brownfield and Charlotte Huddle (the "Brownfield Agreement"), which agreement
superseded an earlier agreement dated March 28, 1996. No shares have yet been
purchased under the Brownfield Agreement. The total purchase price for the
shares is $137,500 ($1.25 per share). 20,000 shares are to be purchased and
transferred with a downpayment of $25,000 which is expected to occur before June
20, 1996. The remaining 90,000 shares are to be purchased over a five-year
period, with 9,000 shares being purchased in year one, 18,000 shares being
purchased in each of years two, three and four and 27,000 shares being purchased
in year five. Mr. Schwartz and Mr. Sherman have agreed to execute a promissory
note payable to Mr. Brownfield in the amount of $112,500 for the purchase price
of the remaining 90,000 shares of Stock. The promissory note is to be repayable
in quarterly installments at an interest rate of four percent per annum. As each
quarterly payment is made, 25 percent of the shares allocable to the year in
which the shares are purchased are to be transferred to Mr. Schwartz and Mr.
Sherman. Upon execution of the promissory note and payment of the $25,000
downpayment, Mr. Brownfield has agreed to transfer voting power for the
remaining 90,000 shares to Mr. Schwartz and Mr. Sherman, subject to cancellation
upon 45 days default. The Acquiring Group anticipates that definitive documents
providing for the purchases under the Brownfield Agreement will be formalized
and executed by June 20, 1996.
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SOURCE AND AMOUNT OF CONSIDERATION
All payments required by the Gillmor Agreement and the Brownfield
Agreement ($387,500) will be financed with the personal funds of the members of
the Acquiring Group. Each of the members has agreed to contribute a percentage
of the total payments required by the Gillmor Agreement and the Brownfield
Agreement and, in turn, each of the members will acquire a corresponding
percentage of the total shares being acquired (310,000 shares). Mr. Binsky will
finance approximately 30.08% of the total payments ($116,560), Mr. Gardner will
finance approximately 5% of the total payments ($19,375), Mr. Schwartz will
finance approximately 31.665% of the total payments ($122,702), Mr. Sherman will
finance approximately 31.665% of the total payments ($122,702), and Mr. Warren
will finance approximately 1.59% of the total payments ($6,161). Each of the
members will be responsible for the amounts due under the Gillmor Agreement and
the Brownfield Agreement on a several, but not joint, basis.
In addition to using funds derived from personal resources, the
Acquiring Group is contemplating paying the promissory notes executed in
connection with the Gillmor Agreement and the Brownfield Agreement with the
proceeds of:
(1). The sale of a portion of the Stock acquired under the
agreements to an employee stock ownership plan which may be
formed for the Registrant. The employee stock ownership plan
would fund the purchase of the stock with bank debt.
(2). The sale of a portion of the Stock acquired under the
agreements to third parties including, but not limited to,
directors, officers, employees and shareholders of the
Registrant.
BENEFICIAL OWNERSHIP OF SECURITIES
The aggregate number and percentage (based on 1,086,020 shares of
Stock outstanding as reported in the Registrant's definitive Proxy Statement for
the 1996 Annual Meeting of Shareholders) of Stock beneficially owned by and as
to which there is a right to acquire with respect to each of the members of the
Acquiring Group and the Acquiring Group as a whole are as follows:
<TABLE>
<CAPTION>
CURRENTLY BENEFICIALLY OWNED(1) RIGHT TO ACQUIRE(2) AGGREGATE
NAME NUMBER OF PERCENT OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
SHARES OUTSTANDING SHARES OUTSTANDING SHARES OUTSTANDING
<S> <C> <C> <C> <C> <C> <C>
Bob Binsky 159,874(3) 14.5% 93,248 8.6% 253,122 22.9%
Michael W. 1,000 .1% 15,500 1.4% 16,500 1.5%
Gardner
Theodore P. 12,148 1.1% 98,161.5 9.0% 110,309.5 10.2%
Schwartz
Charles T. 89,798(4) 8.1% 98,161.5 9.0% 187,959.5 17.0%
Sherman
Kenneth J. 0 -- 4,929 .4% 4,929 .4%
Warren
Reporting Group 262,820 23.4% 310,000 28.5% 572,820 50.9%
<FN>
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1 Excludes the 40,000 shares purchased and transferred under the Gillmor
Agreement on June 6, 1996, which are included in the column "Right to
Acquire."
2 Pursuant to the Gillmor Agreement and the Brownfield Agreement. The 310,000
shares have been allocated in accordance with the agreement among the
Reporting Persons.
3 Includes 20,000 shares subject to existing, unexercised options.
4 Includes 19,000 shares subject to existing, unexercised options.
</TABLE>
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(a) (2) CHANGES IN MANAGEMENT
The Board of Directors of the Registrant is comprised of eight individuals.
At the Annual Meeting of the Shareholders of the Registrant held on May 28,
1996, Mr. Sherman, a member of the Acquiring Group was reelected as a Director.
In addition, Mr. Gardner and Mr. Schwartz, also members of the Acquiring Group,
were elected to the Board of Directors. Mr. Gardner and Mr. Schwartz also serve
as Vice President of Manufacturing and Senior Vice President, respectively, of
PH Hydraulics and Automation, Inc., the sole operating subsidiary of the
Registrant. The directors that were not reelected were Robert S. Ryan, the
former President of the Registrant, and Howard Daniel Smith.
The Board of Directors is now comprised of the following individuals: Bob
Binsky, Lyman Brownfield, Donald S. Boston, Jr., Richard R. Corna, Michael W.
Gardner, Terry L. Sanborn, Theodore P. Schwartz and Charles T. Sherman. Four
individuals, Mr. Binsky, Mr. Gardner, Mr. Schwartz and Mr. Sherman, are members
of the Acquiring Group. In addition, Mr. Brownfield is a party selling his Stock
to the Acquiring Group as described above.
At the annual meeting of the Board of Directors of the Registrant, which
was held on May 28, 1996, Mr. Sherman, a member of the Acquiring Group, was
elected President of the Registrant. Mr. Sherman succeeded Robert S. Ryan. Mr.
Sherman also serves as the President of PH Hydraulics and Automation, Inc., the
sole operating subsidiary of the Registrant.
ITEM 7. EXHIBITS.
2.1. Plan of Stock Acquisition between Charles T. Sherman, Theodore P.
Schwartz and Paul M. Gillmor dated April 3, 1996.
2.2. Plan of Stock Acquisition between Charles T. Sherman, Theodore P.
Schwartz, Lyman Brownfield, Candace Brownfield and Charlotte Huddle dated April
2, 1996.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf of the undersigned
hereunto duly authorized.
RESOURCE GENERAL CORPORATION
Date: June 10, 1996 /s/ Charles T. Sherman
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Name: Charles T. Sherman
Title: President
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EXHIBITS INDEX
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<TABLE>
<CAPTION>
EXHIBIT PAGE NUMBER
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<S> <C> <C>
2.1. Plan of Stock Acquisition between Charles T. Sherman, Theodore P. Schwartz and
Paul M. Gillmor dated April 3, 1996..............................................................7
2.2. Plan of Stock Acquisition between Charles T. Sherman, Theodore P. Schwartz,
Lyman Brownfield, Candace Brownfield and Charlotte Huddle dated April 2, 1996....................8
</TABLE>
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EXHIBIT 2.1
Mr. Paul Gillmore
PO Box 123
Old Fort, OH 44861
Dear Mr. Gillmore,
Thank you for your quick response to our letter of March 14, 1996. I would ask
you to sign the following letter agreement so Ted and I can start to firm up our
financing.
I believe the following points convey our morning discussion.
1. A down payment of $50,000 for 40,000 shares at $1.25. The shares to be
transferred upon presentation of the check.
2. The remaining 160,000 shares are to be purchased at $1.25 per share. A note
will be signed to allow 16 quarterly payments starting 180 days after the
initial payment of $50,000.
Year one quarterly payment of $6,250
Year two quarterly payment of $12,500
Year three quarterly payment of $12,500
Year four quarterly payment of $18,750
Interest will be paid on the unpaid balance at the rate of 4% per annum.
When the note is signed and down payment is made you will transfer voting
power of your remaining shares to us.
3. Upon the payment of each quarterly payment, the following shares of stock
will be transferred.
Year one 5,000 shares per quarter
Year two 10,000 shares per quarter
Year three 10,000 shares per quarter
Year four 15,000 shares per quarter
4. For additional consideration, for signing the agreement we will give you an
option for 20,000 shares of RGI stock.
5. We would ask that you give us a 90 day exclusivity to put together our
financing for the down payment.
6. Both parties will keep the agreement confidential until the proper
documents are filed with the SEC.
The above agreement is subject to modifications by legal counsel.
Sincerely,
/s/ C.T. Sherman 4/2/96
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C.T. Sherman
/s/ T.P. Schwartz 4/2/96
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T.P. Schwartz
Concur
/s/ Paul M. Gillmor Date: 4/3/96
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Paul Gillmore
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EXHIBIT 2.2
April 2, 1996
Mr. Lyman Brownfield
Brownfield Law Offices
341 S. 3rd St.
Suite 10
Columbus, OH 43215
Dear Lyman,
Ted Schwartz and Chuck Sherman (buyers) are pleased to offer the Brownfield
family (sellers) the following offer to purchase the approximately 110,000
shares of Resource General stock for $1.25 per share. We would structure the
transaction as follows:
1. A down payment of $25,000 for 20,000 shares, the selection of which will be
made by seller. The shares to be transferred upon presentation of the
check.
2. The remaining approximately 90,000 shares will be purchased over five years
at the following rate:
<TABLE>
<S> <C> <C>
Year One 9,000 shares @ $1.25 = $11,200
Year Two 18,000 shares @ $1.25 = $22,500
Year Three 18,000 shares @ $1.25 = $22,500
Year Four 18,000 shares @ $1.25 = $22,500
Year Five Approximately remaining 27,000 shares @ $1.25 = $33,750
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90,000 shares $112,500
</TABLE>
3. Payments will be made quarterly, interest on unpaid balances will be paid
quarterly at the rate of 4% per annum. When the note is signed and the down
payment made you will transfer voting power of the remaining shares to us
subject to cancellation upon 45 days default. Quarterly payments will start
180 days after the execution of the note. When each quarterly payment is
made, 25% of the years shares will be transferred to buyers.
4. Buyer gives seller a 90 day exclusivity to put together our financing for
the down payment.
5. Both parties will keep the agreement confidential until proper documents
are filed with the SEC.
The above document is subject to non-substantive modification of legal counsel.
/s/ C.T. Sherman
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C.T. Sherman
/s/ T.P. Schwartz
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T.P. Schwartz
Concur:
/s/ Lyman Brownfield
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Lyman Brownfield
/s/ Candace Brownfield
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Candace Brownfield
/s/ Charlotte Huddle
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Charlotte Huddle
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