<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
RESOURCE GENERAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
761210 103
- --------------------------------------------------------------------------------
(CUSIP Number)
KENNETH J. WARREN
2109 WEST FIFTH AVENUE, SUITE C
COLUMBUS, OHIO 43212
(614) 487-1966
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
FEBRUARY 12, 1997 *
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
(Continued on following pages)
(Page 1 of 95 Pages)
* This Amendment No. 4 is being filed to report the changes in facts arising out
of occurrences taking place after the filing of Amendment No. 3 on June 7, 1996,
any one of which by itself may not be deemed material but may when taken
together be considered material.
<PAGE> 2
SCHEDULE 13D
<TABLE>
<CAPTION>
CUSIP NO. 761210 103 Page 2 of 95 Pages
- ------------------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Phoenix Management, Ltd. 31-1470733
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF; WG; SC
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- --------------------------- -------- -----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 160,000
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
74,500
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
74,500 (owned outright); 85,500 (power to vote); 150,000 (right to acquire); 310,000 (Aggregate)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.6%
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO (Limited Liability Company)
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 761210 103 Page 3 of 95 Pages
<TABLE>
<CAPTION>
- ---------- -------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bob Binsky ###-##-####
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canadian
- --------------------------- -------- -----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 139,874 (individually)
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
160,000 (by virtue of membership in Phoenix)
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
139,874 (individually)
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
74,500 (by virtue of membership in Phoenix)
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
139,874 (individually); 160,000 (by virtue of membership in Phoenix); 299,874 (Aggregate)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.6%
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D
CUSIP NO. 761210 103 Page 4 of 95 Pages
<TABLE>
<CAPTION>
- ---------- -------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael W. Gardner ###-##-####
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------- -------- -----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
1,000 (individually); 160,000 (by virtue of membership in Phoenix)
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,000 (individually); 74,500 (by virtue of membership in Phoenix)
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000 (individually); 160,000 (by virtue of membership in Phoenix); 161,000 (Aggregate)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
SCHEDULE 13D
CUSIP NO. 761210 103 Page 5 of 95 Pages
<TABLE>
<CAPTION>
- ---------- -------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Theodore P. Schwartz ###-##-####
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ---------- -------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 12,148 (individually)
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 160,000 (by virtue of membership in Phoenix); 150,000
(shared with Mr. Sherman pursuant to proxy)
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
12,148 (individually)
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
74,500 (by virtue of membership in Phoenix)
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,148 (individually); 160,000 (by virtue of membership in Phoenix); 150,000
(voting power shared with Mr. Sherman); 322,148 (Aggregate)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.7%
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
SCHEDULE 13D
CUSIP NO. 761210 103 Page 6 of 95 Pages
<TABLE>
<CAPTION>
- ---------- -------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charles T. Sherman ###-##-####
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ---------- -------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 70,598 (individually)
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 160,000 (by virtue of membership in Phoenix); 150,000
(shared with Mr. Schwartz)
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
70,598 (individually)
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
74,500 (by virtue of membership in Phoenix)
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
70,598 (individually); 160,000 (by virtue of membership in Phoenix);
150,000 (voting power shared with Mr. Schwartz); 200 (owned by
Spouse); 380,798 (Aggregate)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.1%
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 7
SCHEDULE 13D
CUSIP NO. 761210 103 Page 7 of 95 Pages
<TABLE>
<CAPTION>
- ---------- -------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF PERSON REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kenneth J. Warren ###-##-####
- ---------- -------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
- ---------- -------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------- -------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ---------- -------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------- -------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------- -------- -----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
-------- -----------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
160,000 (by virtue of membership in Phoenix)
OWNED BY
-------- -----------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON
-------- -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
74,500 (by virtue of membership in Phoenix)
- --------------------------- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
160,000 (by virtue of membership in Phoenix)
- ---------- -------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
14.7%
- ---------- -------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
- ---------- -------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------- -------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 8
Page 8 of 95 Pages
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, without par value (the
"Stock"), of Resource General Corporation, whose principal executive
office is located at 2365 Scioto Harper Drive, Columbus, Ohio 43204
("Resource General").
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Phoenix Management, Ltd., an Ohio
limited liability company ("Phoenix" or the "Filing Person" herein)
formed by a group (the "Reporting Group") consisting of Bob Binsky,
Michael W. Gardner, Theodore P. Schwartz, Charles T. Sherman and
Kenneth J. Warren (collectively, the "Reporting Persons").
FILING PERSON:
Name: Phoenix Management, Ltd.
State of Organization: Organized as a limited liability company in
Ohio
Principal Business: Acquisition of Stock of Resource General
(as described herein)
Address of Principal Office: 2365 Scioto Harper Drive, Columbus,
Ohio 43204
REPORTING PERSONS:
The (a) name, (b) business address, (c) present principal occupation
or employment and the name, principal business and address of any
corporation or organization in which such employment is conducted of
each of the Reporting Persons are as follows:
Bob Binsky
Chief Executive Officer
Cable Link, Inc.
280 Cozzins Street
Columbus, OH 43215-2379
(Telecommunications refurbishing and marketing)
Michael W. Gardner
Vice President of Manufacturing
Resource General Corporation
2365 Scioto Harper Drive
Columbus, OH 43204
(Manufacturer of hydraulic presses and plastic injection
molding machines)
<PAGE> 9
Page 9 of 95 Pages
SCHEDULE 13D
Theodore P. Schwartz
Senior Vice President
Resource General Corporation
2365 Scioto Harper Drive
Columbus, OH 43204
(Manufacturer of hydraulic presses and plastic injection
molding machines)
Charles T. Sherman
President
Resource General Corporation
2365 Scioto Harper Drive
Columbus, OH 43204
(Manufacturer of hydraulic presses and plastic injection
molding machines)
Kenneth J. Warren, Esq.
2109 West Fifth Avenue, Suite C
Columbus, OH 43212
(Attorney at Law)
(d) Neither Phoenix nor any Reporting Person has, during the last
five years been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) Neither Phoenix nor any Reporting Person has, during the last
five years, been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to
such laws.
(f) Phoenix is a limited liability company formed under the laws
of the State of Ohio. Michael W. Gardner, Theodore P.
Schwartz, Charles T. Sherman and Kenneth J. Warren are
citizens of the United States of America. Bob Binsky is a
citizen of Canada.
<PAGE> 10
Page 10 of 95 Pages
SCHEDULE 13D
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The aggregate amount of funds required to purchase the shares
currently beneficially owned by Phoenix and each Reporting Person is
as follows:
<TABLE>
<CAPTION>
NAME SHARES CURRENTLY BENEFICIALLY OWNED(1): AGGREGATE AMOUNT OF FUNDS REQUIRED TO
PURCHASE:
<S> <C> <C>
Phoenix 74,500 $100,101.13 (includes interest)
Bob Binsky 139,874 $98,015
Michael W. Gardner 1,000 $1,250
Theodore P. Schwartz 12,148 $1,800 (estimate)
Charles T. Sherman 70,798 $68,337 (estimate)
Kenneth J. Warren 0 NA
</TABLE>
PHOENIX. The 74,500 shares owned outright by Phoenix have been
purchased using (i) the working capital of Phoenix derived from the
capital contributions of personal funds of its members, the Reporting
Persons; and (ii) funds obtained by virtue of a loan obtained by
Phoenix from PH Hydraulics and Automation, Inc., a former
wholly-owned subsidiary of Resource General that was merged into
Resource General on October 31, 1996. The total amount of the loan,
$59,000 (the "Loan"), is evidenced by a Promissory Note dated
September 16, 1996, between Phoenix and PH Hydraulics and Automation,
Inc. $17,500 of the Loan was disbursed to Phoenix on September 12,
1996, $27,500 of the Loan was disbursed to Phoenix on October 15,
1996, and the remaining $14,000 of the Loan was disbursed to Phoenix
on February 1, 1997. The Loan bears interest at prime plus 1 1/4%.
Interest is due on the first day of November, February, May and
August commencing November 1, 1996. The interest payments for
November 1996 and February 1997 have been made. Installments of
principal are due on the first day of March, June, September and
December commencing April 1, 1997. The Loan is due to be repaid in
full by March, 2000. A copy of the note evidencing the Loan is
attached as Exhibit H.
All remaining payments required by the Gillmor Agreement and the
Brownfield Agreements will be financed by Phoenix through any funds
remaining from the proceeds of the Loan and the capital contributions
to Phoenix of the Reporting Persons derived from personal funds. Mr.
Binsky will contribute approximately 28.50% of the capital, Mr.
Gardner will contribute approximately 5% of the capital, Mr. Schwartz
will contribute approximately 31.667% of the capital, Mr. Sherman
will contribute approximately 31.667% of the capital, and Mr. Warren
will contribute approximately 3.167% of the capital.
- --------
1 Exclusive of (i) Shares issuable under existing options not yet exercised,
(ii) Shares reported as beneficially owned because of the right to vote such
Shares, and (iii) Shares yet to be purchased under the Gillmor Agreement and the
Brownfield Agreements as described herein.
<PAGE> 11
Page 11 of 95 Pages
SCHEDULE 13D
In addition to using funds derived from personal resources, the
Reporting Persons are contemplating the following to fund the
purchases of the shares contemplated by the Gillmor Agreement and the
Brownfield Agreement:
(1). The sale of a portion of the Stock acquired under the
agreements to an employee stock ownership plan which may be
formed for Resource General. 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 Resource
General.
The following sections disclose the source of funds used by the
Reporting Persons to acquire Stock owned by such persons individually
and not by virtue of their membership in Phoenix.
MR. BINSKY. 109,234 of the shares of Stock reported as beneficially
owned by Mr. Binsky individually were purchased with the personal
funds of Mr. Binsky. 30,640 of the shares of Stock reported as
beneficially owned by Mr. Binsky individually , as to which he has
sole voting and dispositive power and as to which he is the record
owner, were purchased, and are owned, by Michael Tsao. 20,000 shares
of Stock reported as beneficially owned by Mr. Binsky individually
are shares issuable under existing options not yet exercised.
MR. GARDNER. All of the shares of Stock beneficially owned by Mr.
Gardner individually were purchased with the personal funds of Mr.
Gardner.
MR. SCHWARTZ. 2,148 of the shares of Stock beneficially owned by Mr.
Schwartz individually were purchased with the personal funds of Mr.
Schwartz and 10,000 of the shares of Stock beneficially owned by Mr.
Schwartz individually were given to him by Resource General as part
of a compensation package.
MR. SHERMAN. 60,598 of the shares of Stock beneficially owned by Mr.
Sherman individually were purchased with the personal funds of Mr.
Sherman and 10,000 of the shares of Stock beneficially owned by Mr.
Sherman individually were given to him by Resource General as part of
a compensation package. 200 of the shares of Stock reported as
beneficially owned by Mr. Sherman individually are directly owned by
Mr. Sherman's wife, and as to which Mr. Sherman has no voting or
dispositive power, were purchased with the personal funds of Mrs.
Sherman. 19,000 shares of Stock reported as beneficially owned by Mr.
Sherman individually are shares issuable under existing options not
yet exercised.
<PAGE> 12
Page 12 of 95 Pages
SCHEDULE 13D
ACQUISITIONS OF STOCK UNDER THE GILLMOR AGREEMENT AND THE
BROWNFIELD AGREEMENTS
GILLMOR AGREEMENT
On June 6, 1996, Mr. Schwartz and Mr. Sherman entered into an
agreement to purchase 200,000 shares of Stock from Paul Gillmor (the
"Gillmor Agreement"), which agreement superseded earlier agreements
dated April 3, and March 25, 1996. A copy of the Gillmor Agreement
is attached as Exhibit A. The total purchase price for the shares is
$250,000 ($1.25 per share). 40,000 of the shares were purchased with
a down payment of $50,000, which occurred on June 6, 1996. The
purchase of the remaining 160,000 shares has been financed by Mr.
Gillmor. 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, a copy of which is attached as
Exhibit B. The quarterly payment for the first year will be $6,250,
the quarterly payments for the second and third years will be
$12,500 and the quarterly payment for the fourth year will be
$18,750. Interest will be paid on the unpaid balance of the note at
the rate of four percent per annum. Upon receipt of each quarterly
payment, 5,000 shares per quarter will be transferred the first
year, 10,000 shares per quarter will be transferred in the second
and third years and 15,000 shares per quarter will be transferred in
the fourth year. However, the power to vote all of the remaining
shares was transferred to Mr. Schwartz and Mr. Sherman on June 6,
1996. A copy of the Proxy transferring such voting power is attached
as Exhibit C. In addition, Mr. Schwartz and Mr. Sherman have agreed
to grant Mr. Gillmor an option for 20,000 shares owned by the
Reporting Group. As of the date of this Fourth Amendment, the
following shares have been acquired under the Gillmor Agreement.
<TABLE>
<CAPTION>
DATE PAYMENT (INCLUDING INTEREST) NUMBER OF SHARES
---- ---------------------------- ----------------
<S> <C> <C>
June 6, 1996 $50,000 40,000
November 1, 1996 $10,250 5,000
February 1, 1997 $8,187.50 5,000
</TABLE>
BROWNFIELD AGREEMENTS
On April 2, 1996, Mr. Schwartz and Mr. Sherman also entered into an
agreement to purchase 110,000 shares of Stock from Mr. Lyman
Brownfield, Ms. Candace Brownfield and Ms. Charlotte Huddle, which
agreement superseded an earlier agreement dated March 28, 1996. On
September 11, 1996, Mr. Schwartz and Mr. Sherman entered into
separate agreements with each of Mr. Lyman Brownfield, Ms. Candace
Brownfield, Mrs. Charlotte Huddle and Ms. Diane McBee (the daughter
of Mr. Brownfield and Ms. Huddle) to purchase, in the aggregate,
110,000 shares of Stock, which agreements superseded the earlier
agreements. A copy of the Brownfield
<PAGE> 13
Page 13 of 95 Pages
SCHEDULE 13D
Agreements are attached as Exhibit D. The total purchase price for
the shares is $137,500 ($1.25 per share). 20,000 shares were
purchased with a downpayment of $25,000. The remaining 90,000 shares
will 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.
The purchase of the 90,000 shares of Stock will be financed by the
sellers. Payments for the shares will be made 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 will be transferred to
Phoenix. Voting power for all of the shares owned by the sellers was
transferred to Mr. Schwartz and Mr. Sherman on September 11, 1996. A
copy of the Proxies transferring such voting power is attached as
Exhibit E. Mr. Schwartz and Mr. Sherman transferred the power to vote
to Phoenix. A copy of such Assignment of Proxy Power is attached as
Exhibit F. As of the date of this Fourth Amendment, the following
shares have been acquired under the Brownfield Agreements:
<TABLE>
<CAPTION>
DATE PAYMENT (INCLUDING INTEREST) NUMBER OF SHARES
---- ---------------------------- ----------------
<S> <C> <C>
September 11, 1996 $25,000 20,000
September 11, 1996 $2,756.25 2,250
February 1, 1997 $3,909.38 2,250
</TABLE>
AUTHORIZATION OF PROPOSED ACQUISITIONS
The purchases under the Gillmor Agreement and the Brownfield
Agreements are subject to, and were submitted for, shareholder
approval at the Special Meeting of the Shareholders of Resource
General held on May 28, 1996, as required by Ohio's Control Share
Acquisition Law. A quorum was present at the Special Meeting, in
person or by proxy, and a sufficient number of shares were voted in
favor of the proposed acquisitions to permit them to proceed.
ITEM 4. PURPOSE OF TRANSACTION
The acquisition of the Stock is being made for the following
purposes:
(a) The Reporting Persons plan to attempt to acquire control of
Resource General.
(b) An original purpose was to explore the benefits of eliminating
Resource General as a holding company. Effective October 31,
1996, PH Hydraulics and Automation, Inc., Resource General's
only subsidiary, was merged into Resource General.
<PAGE> 14
SCHEDULE 13D
Page 14 of 95 Pages
(c) The Reporting Persons plan to attempt to increase shareholder
value.
(d) Mr. Sherman, a member of the Reporting Group, nominated Mr.
Gardner and Mr. Schwartz, also members of the Reporting Group,
for election to the board of directors of Resource General at
the Annual Meeting of the shareholders of Resource General
held on May 28, 1996. Mr. Sherman was reelected and Mr.
Gardner and Mr. Schwartz were elected to the board of Resource
General at the Annual Meeting. In addition, Mr. Sherman was
elected as President of Resource General at the Annual Meeting
of the Board of Directors of Resource General held on May 28,
1996. Mr. Warren has since been elected Secretary of the
Company.
The Reporting Persons may implement a strategy to reduce the
number of directors on the board of Resource General to five.
(e) [Not applicable]
(f) [Not applicable]
(g) [Not applicable]
(h) [Not applicable]
(i) [Not applicable]
(j) [Not applicable]
<PAGE> 15
Page 15 of 95 Pages
SCHEDULE 13D
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number and percentage (based on 1,085,820 shares
of Stock outstanding as reported in Resource General's
Quarterly Report on Form 10-Q for the Quarter Ended September
30, 1996) of Stock beneficially owned by and as to which there
is a right to acquire with respect to each of the Reporting
Persons and the Reporting Group as a whole are as follows:
NOTE: The shares listed as beneficially owned by the individual Reporting
Persons are exclusive of shares that such Reporting Persons
beneficially own by virtue of their membership interest in Phoenix.
Item 5(b) provides a narrative description of each Reporting Person's
interest in Phoenix with respect to the voting or disposition of such
shares.
<TABLE>
<CAPTION>
CURRENTLY BENEFICIALLY OWNED 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>
Phoenix 160,000(3) 14.8% 235,500 21.7% 310,000 28.6%
Bob Binsky 159,874(4) 14.7% --- 159,874 14.7%
Michael W. Gardner 1,000 .1% --- 1,000 .1%
Theodore P. Schwartz 162,148(5) 14.9% --- 162,148 14.9%
Charles T. Sherman 239,798(6) 22.1% --- 239,798 22.1%
Kenneth J. Warren 0 --- --- 0 ---
Reporting Group 572,820(7) 52.8 235,500 21.7% 572,820 52.8%
<FN>
- ----------
2 Phoenix has assumed all of Mr. Sherman's and Mr. Schwartz's obligations under
the Gillmor Agreement and the Brownfield Agreements. The 235,500 shares of Stock
as to which Phoenix has a right to acquire represent the remaining shares of
Stock yet to be purchased under the Gillmor and Brownfield Agreements. Such
shares are already reported as beneficially owned by the Reporting Group by
virtue of the rights of Phoenix, Mr. Schwartz or Mr. Sherman to vote the Stock
by power of proxy.
3 Includes 74,500 shares of Stock owned outright by Phoenix as of February 1,
1997, and 85,500 shares of Stock yet to be purchased from the Brownfields as to
which Phoenix has the power to vote by proxy. Each of the Reporting Persons
shares the power to vote or direct the voting and to dispose or direct the
disposition of the 160,000 shares of Stock beneficially owned by Phoenix by
virtue of each of the Reporting Persons being a member in Phoenix.
4 Includes 20,000 shares subject to existing, unexercised options.
5 Includes 150,000 shares of Stock yet to be acquired from Mr. Gillmor with
respect to which Mr. Schwartz and Mr. Sherman share the power to vote by virtue
of a proxy granted by Mr. Gillmor. Such shares are also reported as beneficially
owned by Mr. Sherman and Phoenix.
6 Includes 19,000 shares subject to existing, unexercised options. Also includes
150,000 shares of Stock yet to be acquired from Mr. Gillmor with respect to
which Mr. Sherman and Mr. Schwartz share the power to vote by virtue of a proxy
granted by Mr. Gillmor. Such shares are also reported as beneficially owned by
Mr. Schwartz and Phoenix.
7 The 150,000 shares of Stock as to which Mr. Schwartz and Mr. Sherman share the
power to vote are only counted once in determining the aggregate number of
shares beneficially owned by the Reporting Group.
</TABLE>
<PAGE> 16
Page 16 of 95 Pages
SCHEDULE 13D
(b) PHOENIX. Phoenix has the sole power to vote or direct the
voting of and to dispose or direct the disposition of the
74,500 shares of Stock owned outright by Phoenix. Phoenix has
the sole power to vote or direct the voting of the 85,500
shares of Stock yet to be purchased under the Brownfield
Agreements as to which Phoenix has the power to vote by proxy.
See Item 6 for a discussion of the manner in which shares
owned or voted by Phoenix will be voted.
MR. BINSKY. Mr. Binsky has the sole power to vote or direct
the voting and to dispose or direct the disposition of the
30,640 shares of the Stock reported as beneficially owned by
Mr. Binsky which are owned, and were purchased, by Michael
Tsao but are owned of record by Mr. Binsky. Mr. Binsky has the
sole power to vote or direct the voting and to dispose or
direct the disposition of the remaining 109,234 shares of
Stock currently beneficially owned by him (exclusive of 20,000
unissued shares reported as beneficially owned by Mr. Binsky
which are the subject of currently issued but unexercised
options). Mr. Binsky shares the power to vote or direct the
voting of and the power to dispose or direct the disposition
of the 74,500 shares of Stock owned outright by Phoenix by
virtue of his 28.5% membership interest in Phoenix. Also by
virtue of his membership interest in Phoenix, Mr. Binsky
shares the power to vote or direct the voting of 85,500 of the
shares of Stock reported as beneficially owned by Phoenix as
to which Phoenix has the right to vote under proxies granted
by the Brownfields.
The name, business address, present principal occupation
or employment and the name, principal business and address
of any corporation or organization in which such
employment is conducted of Michael Tsao are as follows:
Michael Tsao
President
Kahiki Food, Inc.
3583 E. Broad Street
Columbus, OH 43213
(Restaurant)
Mr. Tsao has not, during the last five years, been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors).
Mr. Tsao has not, during the last five years, been a party
to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting
or mandating activities subject to,
<PAGE> 17
Page 17 of 95 Pages
SCHEDULE 13D
Federal or State securities laws or finding any violation
with respect to such laws.
Michael Tsao is a citizen of the United States of America.
MR. GARDNER. Mr. Gardner shares the power to vote or direct
the voting and to dispose or direct the disposition of 1,000
shares of Stock currently beneficially owned by him with his
wife as joint tenant owners of the Stock. Mr. Gardner shares
the power to vote or direct the voting of and the power to
dispose or direct the disposition of the 74,500 shares of
Stock owned outright by Phoenix by virtue of his 5.0%
membership interest in Phoenix. Also by virtue of his
membership interest in Phoenix, Mr. Gardner shares the power
to vote or direct the voting of 85,500 of the shares of Stock
reported as beneficially owned by Phoenix as to which Phoenix
has the right to vote under proxies granted by the
Brownfields.
MR. SCHWARTZ. Mr. Schwartz has the sole power to vote or
direct the voting and to dispose or direct the disposition of
12,148 shares of the Stock currently beneficially owned by
him. Mr. Schwartz shares the power to vote or direct the
voting of and the power to dispose or direct the disposition
of the 74,500 shares of Stock owned outright by Phoenix by
virtue of his 31.667% membership interest in Phoenix. Also by
virtue of his membership interest in Phoenix, Mr. Schwartz
shares the power to vote or direct the voting of 85,500 of the
shares of Stock reported as beneficially owned by Phoenix as
to which Phoenix has the right to vote under proxies granted
by the Brownfields. Mr. Schwartz also shares with Mr. Sherman
the power to vote or direct the voting of 150,000 shares of
Stock reported as beneficially owned by him by virtue of a
proxy granted by Mr. Gillmor.
MR. SHERMAN. Mr. Sherman's wife has sole voting and
dispositive power with respect to 200 shares reported as
beneficially owned by Mr. Sherman. Mr. Sherman has the sole
power to vote or direct the voting and to dispose or direct
the disposition of 70,598 shares of Stock currently
beneficially owned by him (exclusive of 19,000 unissued shares
reported as beneficially owned by Mr. Sherman which are the
subject of currently issued but unexercised options). Mr.
Sherman shares the power to vote or direct the voting of and
the power to dispose or direct the disposition of the 74,500
shares of Stock owned outright by Phoenix by virtue of his
.667% membership interest in Phoenix. Also by virtue of his
membership interest in Phoenix, Mr. Sherman shares the power
to vote or direct the voting of 85,500 of the shares of Stock
reported as beneficially owned by Phoenix as to which Phoenix
has the right to vote under proxies granted by the
Brownfields. Mr. Sherman also shares with Mr. Schwartz the
power to vote or direct the voting of 150,000 shares of Stock
reported as beneficially owned by him by virtue of a proxy
granted by Mr. Gillmor.
<PAGE> 18
Page 18 of 95 Pages
SCHEDULE 13D
MR. WARREN. Mr. Warren shares the power to vote or direct the
voting of and the power to dispose or direct the disposition
of the 74,500 shares of Stock owned outright by Phoenix by
virtue of his 3.167% membership interest in Phoenix. Also by
virtue of his membership interest in Phoenix, Mr. Warren
shares the power to vote or direct the voting of 85,500 of the
shares of Stock reported as beneficially owned by Phoenix as
to which Phoenix has the right to vote under proxies granted
by the Brownfields.
(c) The transactions in the shares of Stock of Resource General
related to the Gillmor Agreement and the Brownfield Agreements
are described in Item 3. No transactions in the Stock of
Resource General have been effected by the Reporting Persons
during the past 60 days other than as so described. However,
as of April 23, 1996, Mr. Sherman disclaims any power to vote
or direct the vote or any power to dispose or direct the
disposition of 14,220 shares of Stock owned by his parents
previously reported as beneficially owned by Mr. Sherman in
the Schedule 13D filed by the Reporting Group on April 4,
1996.
(d) Michael Tsao has the right to receive the proceeds from the
sale of 30,640 shares of the Stock owned by Mr. Binsky.
(e) [Not applicable.]
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
ACQUISITION AGREEMENTS. The Gillmor Agreement and the Brownfield
Agreements are described above in Item 3. The Gillmor Agreement is
attached as Exhibit A and the Brownfield Agreements are attached as
Exhibit D.
PROXIES. In connection with the Gillmor Agreement, Mr. Schwartz and
Mr. Sherman were granted the authority to vote the shares owned by
Mr. Gillmor not yet purchased under the Gillmor Agreement. A copy of
the proxy is attached as Exhibit C. In connection with the Brownfield
Agreements, Mr. Schwartz and Mr. Sherman were granted the authority
to vote the shares not yet purchased under the Brownfield Agreements.
Copies of the proxies are attached as Exhibit E. Mr. Schwartz and Mr.
Sherman have assigned the authority to vote the Brownfield shares to
Phoenix. A copy of such assignment is attached as Exhibit F.
FORMATION OF PHOENIX MANAGEMENT, LTD. The Reporting Persons formed
Phoenix Management, Ltd., an Ohio limited liability company, on July
31, 1996. A copy of the Operating Agreement for Phoenix is attached
as Exhibit G. Pursuant to Section 9.2 of the Operating Agreement,
Phoenix has assumed Mr. Sherman's and Mr. Schwartz's
<PAGE> 19
Page 19 of 95 Pages
SCHEDULE 13D
obligations under the Gillmor Agreement and the Brownfield
Agreements. Shares of Stock acquired pursuant to the agreements will
be owned of record by Phoenix.
The interest of the Reporting Persons in Phoenix is as follows:
<TABLE>
<CAPTION>
NAME PERCENTAGE INTEREST
---- -------------------
<S> <C>
Charles T. Sherman 31.667%
Theodore P. Schwartz 31.667%
Bob Binsky 28.500%
Michael W. Gardner 5.00%
Kenneth J. Warren 3.167%
</TABLE>
The shares of Stock held by Phoenix will be voted consistent with the
vote of a majority in interest of Phoenix. Pursuant to the Operating
Agreement of Phoenix, the Reporting Persons have agreed
(i) to vote shares of Stock owned by them individually in the same
manner as the shares of Stock owned by Phoenix are voted; and
(ii) generally, that they cannot transfer or sell shares of Stock
owned by them individually without giving the remaining
Reporting Persons a first right to purchase such shares.
LOAN AGREEMENT. See Item 3 for a discussion of the Loan between
Phoenix and PH Hydraulics and Automation, Inc. A copy of the note
evidencing the Loan is attached as Exhibit H.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- Gillmor Agreement -- Page 22
Exhibit B -- Cognovit Note to Gillmor -- Page 25
Exhibit C -- Proxy to Mr. Schwartz and Mr. Sherman from Gillmor -- Page 27
Exhibit D -- Brownfield Agreements -- Page 28
Exhibit E -- Proxies from Brownfields to Mr. Sherman and Mr. Schwartz -- Page 41
Exhibit F -- Assignment of Brownfield Proxies to Phoenix -- Page 45
Exhibit G -- Operating Agreement of Phoenix -- Page 46
Exhibit H -- Note from Phoenix to PH Hydraulics and Automation, Inc. -- Page 86
Exhibit I -- Joint Filing Agreement -- Page 95
</TABLE>
<PAGE> 20
Page 20 of 95 Pages
SCHEDULE 13D
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Charles T. Sherman, Member
--------------------------------------------
Phoenix Management, Ltd.,
by Charles T, Sherman, a Member
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Bob Binsky
--------------------------------------------
Bob Binsky
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Michael W. Gardner
-------------------------------------------
Michael W. Gardner
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Theodore P. Schwartz
--------------------------------------------
Theodore P. Schwartz
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Charles T. Sherman
--------------------------------------------
Charles T. Sherman
<PAGE> 21
Page 21 of 95 Pages
SCHEDULE 13D
SIGNATURE
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1997
/s/ Kenneth J. Warren
--------------------------------------------
Kenneth J. Warren
<PAGE> 22
Page 22 of 95 Pages
SCHEDULE 13D
EXHIBIT A
STOCK PURCHASE AGREEMENT
PAUL M. GILLMOR, P.O. Box 123, Old Fort, Ohio 44861 is hereafter
referred to as "Seller". THEODORE P. SCHWARTZ, 3817 Lyon Drive. Columbus, Ohio
43220 and CHARLES T. SHERMAN, 354 Whitaker Ave. South, Powell, Ohio 43057 are
hereafter referred to as "Buyers". Seller and Buyers state and agree as follows:
1. Seller desires to sell to Buyers and Buyers desire to purchase from
Seller all 200,000 shares of Seller's common stock of Resource General Inc., an
Ohio Corporation (hereinafter referred to as "RGI") at a price of $1.25 per
share.
2. Buyers shall, on or before June 7, 1996 pay $50,000.00 to Seller and
Seller shall thereupon transfer 40,000 shares of RGI to Buyers.
3. Buyers shall at the same time as the $50,000 is paid pursuant to
paragraph 2 execute and deliver to Seller a promissory note ("note") in the face
amount of $200,000 and bearing interest at 4% per annum to evidence Buyer's
obligation to purchase Seller's remaining 160,000 shares of RGI. A copy of the
note is attached hereto. The payment and purchase schedule shall be as follows:
<TABLE>
<CAPTION>
SHARES
TOTAL TRANS- BALANCE
DATE PRINCIPAL INTEREST PAID FERRED OWING
<S> <C> <C> <C> <C>
-- -- -- -- -- 200,000
Nov. 1, 1996 6,250 4,000 10,250 5,000 193,750
Feb. 1, 1997 6,250 1,937.50 8,187.50 5,000 187,500
May 1, 1997 6,250 1,875 8,125 5,000 181,250
Aug. 1, 1997 6,250 1,812.50 8,062.50 5,000 175,000
Nov. 1, 1997 12,500 1,750 14,250 10,000 162,500
Feb. 1, 1998 12,500 1,625 14,125 10,000 150,000
May 1, 1998 12,500 1,500 14,000 10,000 137,500
Aug. 1, 1998 12,500 1,375 13,875 10,000 125,000
Nov. 1, 1998 12,500 1,250 13,750 10,000 112,500
Feb. 1, 1999 12,500 1,125 13,625 10,000 100,000
May 1, 1999 12,500 1,000 13,500 10,000 87,500
Aug. 1, 1999 12,500 875 13,375 10,000 75,000
Nov. 1, 1999 18,750 750 19,500 15,000 56,250
Feb. 1, 2000 18,750 562.50 19,312.50 15,000 37,500
May 1, 2000 18,750 375 19,125 15,000 18,750
Aug. 1, 2000 18,750 187.50 18,937.50 15,000 0
Total ------------- -------------- -------------- --------------
200,000 22,000 222,000 160,000
</TABLE>
<PAGE> 23
Page 23 of 95 Pages
SCHEDULE 13D
EXHIBIT A
4. At such time as the $50,000.00 payment is made pursuant to paragraph
2 and the note executed and delivered, Seller shall execute and deliver to
Buyers a proxy to vote all of Seller's remaining shares which proxy shall be
irrevocable through August 2, 2000, so long as Buyers are not in default on the
note. Should Buyers default on the note, Seller may send the Corporation's
statutory agent, president, or secretary a notice of the cancellation of the
proxy. A copy of the proxy is attached hereto.
5. Seller will transfer shares to Buyers as the shares are paid for
pursuant to the above schedule, with Buyers having full right of prepayment.
Seller will not transfer any shares to anyone other than Buyers, nor grant a
security interest in the stock, so long as Buyers are not in default on the
note.
6. Buyers may, as the shares are transferred to them, register them as
they wish.
7. Buyers are, jointly and severally, obligated to purchase all of
Seller's RGI stock regardless of any decrease in the value of the stock or of
the business, including the stock becoming wholly worthless. Buyers will be in
default on the note should any payments not be made in full. Seller shall have
no obligation to attempt to find a substitute purchaser for any or all of the
remaining stock should Buyers breach the terms of the note.
8. Buyers, as part of the consideration for this Agreement, grant to
Seller an option to purchase from time to time not to exceed a total of 20,000
shares of RGI common stock at a price of $1.00 per share which option must be
exercised by August 1, 2002. This option may be transferred, at death or
otherwise, to Seller's son and/or Seller's daughter and/or the trustee or
successor trustee of any trust of which Seller is the trustee, settlor or
beneficiary. If the option is exercised Buyers have no obligation or right to
repurchase the stock pursuant to this agreement. Buyers agree that no RGI stock
will be sold to anyone else for less than $1.00 per share prior to August 2,
2002. Buyers shall retain a sufficient number of shares in their names through
August 2, 2002 so that this option may be exercised.
9. Neither Seller nor Buyers have made any representations to the other
as to the value of the stock and each has done such investigation as to the
value of the stock as each deems appropriate under the circumstances.
10. Buyers shall at their expense make all appropriate filings, if any,
with the Securities and Exchange Commission, Ohio Division of Securities and all
other governmental agencies. Seller will cooperate with Buyers in making the
filings.
11. Seller and Buyers will not publicize this agreement other than as
may be required in any governmental filings.
<PAGE> 24
Page 24 of 95 Pages
SCHEDULE 13D
EXHIBIT A
12. Should Seller die prior to the completion of this agreement,
Seller's stock shall pass to Seller's estate subject to the terms of this
agreement. The person or persons who take Seller's stock upon Seller's death
take the stock subject to the terms of this agreement.
/s/ Paul M. Gillmor
-----------------------------------
Paul M. Gillmor
June 6, 1996
/s/ Theodore P. Schwartz
-----------------------------------
Theodore P. Schwartz
June 6, 1996
/s/ Charles T. Sherman
-----------------------------------
Charles T. Sherman
June 6, 1996
<PAGE> 25
Page 25 of 95 Pages
SCHEDULE 13D
EXHIBIT B
COGNOVIT NOTE, INSTALLMENT PAYMENTS
$200,000 Executed in Tiffin, Ohio, June 6, 1996
For value received, the undersigned jointly and severally promise to
pay to the order of PAUL M. GILLMOR P.O. Box 123, Old Fort, Ohio 44861 at Old
Fort, Ohio, on or before August 1, 2000, the sum of Two Hundred Thousand and
00/100 Dollars, with interest from the date hereof at the rate of four percent
(4%) per annum, payable according to the following schedule:
<TABLE>
<CAPTION>
DATE PRINCIPAL INTEREST TOTAL BALANCE
PAID OWING
<S> <C> <C> <C>
- - - - - 200,000
Nov. 1, 1996 6,250 4,000 10,250 193,750
Feb. 1, 1997 6,250 1,937.50 8,187.50 187,500
May 1, 1997 6,250 1,875 8,125 181,250
Aug. 1, 1997 6,250 1,812.50 8,062.50 175,000
Nov. 1, 1997 12,500 1,750 14,250 162,500
Feb. 1, 1998 12,500 1,625 14,125 150,000
May 1, 1998 12,500 1,500 14,000 137,500
Aug. 1, 1998 12,500 1,375 13,875 125,000
Nov. 1, 1998 12,500 1,250 13,750 112,500
Feb. 1, 1999 12,500 1,125 13,625 100,000
May 1, 1999 12,500 1,000 13,500 87,500
Aug. 1, 1999 12,500 875 13,375 75,000
Nov. 1, 1999 18,750 750 19,500 56,250
Feb. 1, 2000 18,750 562.50 19,312.50 37,500
May 1, 2000 18,750 375 19,125.00 18,750
Aug. 1, 2000 18,750 187.50 18,937.50 0
------- ------- --------
Total 200,000 22,000 222,000
</TABLE>
In the event of non-payment of any installment of principal or interest
hereunder, when due or within ten (10) days thereafter, the entire balance of
principal then remaining unpaid, with accrued interest thereon, shall at once
become due and payable at the option of the holder hereof, without notice or
demand.
<PAGE> 26
Page 26 of 95 Pages
SCHEDULE 13D
EXHIBIT B
The marker(s) and indorser(s) hereof hereby authorize any attorney at
law to appear in any court of record of the State of Ohio or any other State in
the United States at any time after this note becomes due, whether by
acceleration or otherwise, and to waive the issuing and service of process and
confess a judgment in favor of the legal holder hereof against the maker(s) and
indorser(s), or either or any one or more of them, for the amount of principal
and interest then appearing due upon this note, together with costs of suit and
to release all errors and waive all right of appeal. This note did NOT arise out
of a consumer loan or consumer trans-action. This note did NOT arise out of a
transaction which was primarily for personal, family or household purposes. This
note arose out of a business transaction.
The maker(s) and indorser(s) hereof hereby waive presentment, demand,
notice of dishonor, protest and notice of non-payment and protest. Each of the
undersigned has executed this instrument in the capacity of maker, regardless of
the location of his signature.
WARNING --- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
/s/ Theodore P. Schwartz /s/ Charles T. Sherman
- --------------------------- --------------------------
Theodore P. Schwartz Charles T. Sherman
3817 Lyon Drive 354 Whitaker Ave. South
Columbus, Ohio 43220 Powell, Ohio 43057
<PAGE> 27
Page 27 of 95 Pages
SCHEDULE 13D
EXHIBIT C
PROXY
The undersigned shareholder in RESOURCE GENERAL INCORPORATED hereby
appoints TED SCHWARTZ and C.T. SHERMAN, and each of them, either of them and the
survivor of them as agent for and in the name of the undersigned, to vote,
according to the number of votes which the undersigned would then be entitled to
cast and with all of the powers which the undersigned would be entitled to
exercise if personally present at each and every regular, annual or special
meeting of the shareholders of the Corporation held on or before August 2, 2000,
upon any matter coming before such meeting and does hereby revoke all proxies
heretofore given by the undersigned as a shareholder in said corporation. This
Proxy may be revoked only pursuant to the terms of an agreement dated June 6,
1996 between the undersigned and the above named agents. This Proxy expires
August 2, 2000.
/s/ Paul M. Gillmor
-------------------------------
Paul M. Gillmor
P.O. Box 123
Old Fort, Ohio 44861
June 6, 1996
<PAGE> 28
Page 28 of 95 Pages
SCHEDULE 13D
EXHIBIT D
STOCK PURCHASE AGREEMENT
CHARLOTTE BROWNFIELD (a.k.a. Charlotte Huddle) individually and as
Trustee of that certain Trust, Candace Brownfield Trust, Charlotte Brownfield,
as Trustee, dated April 24, 1992 (the "Trust"), 3310 Creek Road, Sunbury, Ohio,
is hereafter referred to as "Seller". Charles T. Sherman and Theodore P.
Schwartz are hereafter referred to as "Buyer". Seller and Buyer state and agree
as follows:
1. Seller desires to sell to Buyer and Buyer desires to purchase
from Seller all Sixty Three Thousand Three Hundred and Seventy-Two (63,372)
shares of common stock of Resource General Corporation, an Ohio corporation
(hereinafter referred to as "RGC"), owned by Seller individually (43,372) or by
the Trust (20,000) at a price of $1.25 per share. Seller, in her capacity as
Trustee of the Trust, shall sell and Buyer shall purchase, upon the terms and
conditions set forth herein, such additional shares of RGC as are transferred to
the Trust by Candace Brownfield or Diana B. McBee pursuant to the terms of
certain Stock Purchase Agreements between Buyer and Candace Brownfield and Buyer
and Diana B. McBee, each dated September 11, 1996, provided such shares were
owned of record on the books of RGC by Candace Brownfield or Diana B. McBee on
September 11, 1996.
2. Charles T. Sherman loaned to Seller Twenty Thousand Dollars
($20,000) as evidenced by that certain Term Promissory Note executed by Seller
dated April 16, 1996 (the "Brownfield Note"), and in connection therewith Seller
executed that certain Pledge Agreement dated April 16, 1996, pursuant to which
Seller pledged 26,000 shares of RGC stock represented by Certificates 2008,
10426 and 11107.
3. Concurrently with the signing of this Agreement, Schwartz, Warren
and Ramirez, as Escrow Agent under that certain Escrow Agreement between Seller,
Buyer and Schwartz, Warren & Ramirez executed in connection herewith, shall
transfer Sixteen Thousand (16,000) of the shares of stock represented by
Certificate 11107 to Buyer in satisfaction of the indebtedness under the
Brownfield Note. Upon transfer of such shares to Buyer, the Brownfield Note will
be deemed paid in full and returned to Seller and the Pledge Agreement shall be
deemed rescinded. The remaining 4,000 shares represented by Certificate 11107
and the 6,000 shares represented by Certificates 2008 and 10426 shall be held by
the Escrow Agent under the Escrow Agreement.
4. The debt due for the purchase of Seller's remaining 47,372 shares of
RGC stock (the "Shares") shall bear interest at 4% per annum which interest
shall begin to accrue on the date that the first payment is due hereunder. The
payment and purchase schedule shall be as set forth on the attached Exhibit A.
The Buyer shall have the right to make prepayments at any time of the principal
amount, in whole or in part, without notice. Each prepayment shall be without
premium or penalty, and shall be applied to the principal installments in
inverse order of maturity. The Buyer shall make all payments of principal and
interest under this Agreement to the Escrow Agent at the following address:
Schwartz, Warren & Ramirez, Attention: D. David
<PAGE> 29
Page 29 of 95 Pages
SCHEDULE 13D
EXHIBIT D
Carroll, 41 South High Street, Suite 2300, Columbus, Ohio 43215. If any payment
of principal or interest under this Agreement shall become due on a day that
ordinary mail is not normally delivered, such payment shall be due and payable
upon the next succeeding day upon which ordinary mail is normally delivered.
5. Seller shall execute and deliver to Buyer a proxy to vote all of the
Shares which proxy shall be irrevocable through August 1, 2001. A copy of the
proxy is attached hereto.
6. Concurrently with the signing of this Agreement, Seller is
delivering to the Escrow Agent the certificates representing the Shares
accompanied by stock transfer powers duly endorsed in blank, with her signature
guaranteed with a guaranteed medallion. The Escrow Agent shall promptly deliver
payments made under this Agreement to Seller and shall deliver the appropriate
number of Shares to the Buyer. If the Seller has not received a payment as
provided in this Agreement, the Seller shall deliver a notice forthwith to Buyer
stating the date any such missing payment was due and the amount of the
unreceived payment.
7. Neither Seller nor Buyer have made any representations to the other
as to the value of the stock and each has done such investigation as to the
value of the stock as each deems appropriate under the circumstances. Seller
does represent that she has the full authority to transfer the Shares and that
upon the delivery of the certificates representing the Shares to the Buyer and
payment in full of the purchase price therefor, good title to the Shares so
delivered will have been transferred to the Buyer free of any adverse claim.
8. Buyer shall at its expense make all appropriate filings which are
required to be made by Buyer, if any, with the Securities and Exchange
Commission, Ohio Division of Securities and all other governmental agencies.
Seller will cooperate with Buyer in making the filings.
9. Seller and Buyer will not publicize this Agreement other than as may
be required in any governmental filings or by applicable law.
10. This Agreement may be assigned by Buyer at any time to an entity
formed by Buyer for the purpose of holding ownership of the Shares acquired by
Buyer.
<PAGE> 30
Page 30 of 95 Pages
SCHEDULE 13D
EXHIBIT D
SELLER: BUYER:
/s/ Charlotte Brownfield (Aka Charlotte Huddle) /s/ Charles T. Sherman
- ------------------------------------------------- --------------------------
Charlotte Brownfield, Individually and as Charles T. Sherman
Trustee
Dated: September 11, 1996 Date: September 11, 1996
/s/ Theodore P. Schwartz
--------------------------
Theodore P. Schwartz
Date: September 11, 1996
<PAGE> 31
Page 31 of 95 Pages
SCHEDULE 13D
EXHIBIT D
<TABLE>
<CAPTION>
BROWNFIELD TRANSACTION
PURCHASE AND PAYMENT SCHEDULE
SHARES
DATE PRINCIPAL INTEREST TOTAL TRANSFERRED CUMULATIVE
---- --------- -------- ----- ----------- ----------
<S> <C> <C> <C> <C> <C>
September 11, 1996 25,000.00 0 25,000.00(8) 20,000 20,000
September 11, 1996 See footnote 2 0 2,756.25(9) 2,250 22,250
November 1, 1996 See footnote 2 0 0 0 22,250
February 1, 1997 2,812.50 1,096.88 3,909.38 2,250 24,500
May 1, 1997 2,812.50 1,068.75 3,881.25 2,250 26,750
August 1, 1997 2,812.50 1,040.63 3,853.13 2,250 29,000
November 1, 1997 5,625.00 1,012.50 6,637.50 4,500 33,500
February 1, 1998 5,625.00 956.25 6,581.25 4,500 38,000
May 1, 1998 5,625.00 900.00 6,525.00 4,500 42,500
August 1, 1998 5,625.00 843.75 6,468.75 4,500 47,000
November 1, 1998 5,625.00 787.50 6,412.50 4,500 51,500
February 1, 1999 5,625.00 731.25 6,356.25 4,500 56,000
May 1, 1999 5,625.00 675.00 6,300.00 4,500 60,500
August 1, 1999 5,625.00 618.75 6,243.75 4,500 65,000
November 1, 1999 5,625.00 562.50 6,187.50 4,500 69,500
February 1, 2000 5,625.00 506.25 6,131.25 4,500 74,000
May 1, 2000 5,625.00 450.00 6,075.00 4,500 78,500
August 1, 2000 5,625.00 393.75 6,018.75 4,500 83,000
November 1, 2000 8,437.50 337.50 8,775.00 6,750 89,750
February 1, 2001 8,437.50 253.13 8,690.63 6,750 96,500
May 1, 2001 8,437.50 168.75 8,606.25 6,750 103,250
August 1, 2001 8,437.50 84.38 10,523.88 6,750 110,000
---------- --------- ---------- ------- -------
137,443.75 12,487.52 149,931.27 110,000 110,000
========== ========= ========== ======= =======
<FN>
- ----------
SELLER AND BUYER AGREE THAT PAYMENTS BY BUYER WILL BE MADE PAYABLE AS FOLLOWS:
56% TO THE CANDACE BROWNFIELD TRUST AND 44% TO CHARLOTTE HUDDLE. PAYMENTS WILL
BE MADE TO THE ESCROW AGENT UNDER THAT CERTAIN ESCROW AGREEMENT BETWEEN EACH OF
SELLERS AND BUYER AND THE ESCROW AGREEMENT DATED AS OF SEPTEMBER 11, 1996.
8 The $25,000 in consideration was paid by the forgiveness of debt evidenced by
that certain Term Promissory Note executed by Charlotte Brownfield in favor of
Charles T. Sherman dated April 16, 1996 in the principal amount of $20,000 and
that certain Term Promissory Note executed by Lyman Brownfield in favor of
Charles T. Sherman dated April 18, 1996 in the principal amount of $5,000.
9 The November 1 payment was paid on September 11, 1996 at a discounted rate
($2,756.25) by agreement of the parties.
</TABLE>
<PAGE> 32
Page 32 of 95 Pages
SCHEDULE 13D
EXHIBIT D
STOCK PURCHASE AGREEMENT
LYMAN BROWNFIELD, 35 Eastmoor Boulevard, Columbus, Ohio, is hereafter
referred to as "Seller". Charles T. Sherman and Theodore P. Schwartz are
hereafter referred to as "Buyer". Seller and Buyer state and agree as follows:
1. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller Seven Thousand Eight Hundred and Sixty-Six (7,866) shares of common stock
of Resource General Corporation, an Ohio corporation (hereinafter referred to as
"RGC"), owned by Seller at a price of $1.25 per share.
2. Charles T. Sherman loaned to Seller Five Thousand Dollars ($5,000)
as evidenced by that certain Term Promissory Note executed by Seller dated April
8, 1996 (the "Brownfield Note"), and in connection therewith Seller executed
that certain Pledge Agreement dated April 8, 1996, pursuant to which Seller
pledged 4,064 shares of RGC stock represented by Certificates 10573 and 11017.
3. Concurrently with the signing of this Agreement, Schwartz, Warren &
Ramirez, as Escrow Agent under that certain Escrow Agreement between Seller,
Buyer and Schwartz, Warren & Ramirez executed in connection herewith, shall
transfer the Four Thousand Sixty-Four (4,064) shares of stock represented by
Certificates 10573 and 11017 to Buyer in satisfaction of the indebtedness under
the Brownfield Note. Upon transfer of such shares to Buyer, the Brownfield Note
will be deemed paid in full and returned to Seller and the Pledge Agreement
shall be deemed rescinded.
4. The debt due for the purchase of Seller's remaining 3,802 shares of
RGC stock (the "Shares") shall bear interest at 4% per annum which interest
shall begin to accrue on the date that the first payment is due hereunder. The
payment and purchase schedule shall be as set forth on the attached Exhibit A.
The Buyer shall have the right to make prepayments at any time of the principal
amount, in whole or in part, without notice. Each prepayment shall be without
premium or penalty, and shall be applied to the principal installments in
inverse order of maturity. The Buyer shall make all payments of principal and
interest under this Agreement to the Escrow Agent at the following address:
Schwartz, Warren & Ramirez, Attention: D. David Carroll, 41 South High Street,
Suite 2300, Columbus, Ohio 43215. If any payment of principal or interest under
this Agreement shall become due on a day that ordinary mail is not normally
delivered, such payment shall be due and payable upon the next succeeding day
upon which ordinary mail is normally delivered.
5. Seller shall execute and deliver to Buyer a proxy to vote all of the
Shares which proxy shall be irrevocable through August 1, 2001. A copy of the
proxy is attached hereto.
<PAGE> 33
Page 33 of 95 Pages
SCHEDULE 13D
EXHIBIT D
6. Concurrently with the signing of this Agreement, Seller is
delivering to the Escrow Agent the certificates representing the Shares
accompanied by stock transfer powers duly endorsed in blank, with his signature
guaranteed with a guaranteed medallion. The Escrow Agent shall promptly deliver
payments made under this Agreement to Seller and shall deliver the appropriate
number of Shares to the Buyer. If the Seller has not received a payment as
provided herein, the Seller shall deliver a notice forthwith to Buyer stating
the date any such missing payment was due and the amount of the unreceived
payment.
7. Neither Seller nor Buyer have made any representations to the other
as to the value of the stock and each has done such investigation as to the
value of the stock as each deems appropriate under the circumstances. Seller
does represent that he has the full authority to transfer the Shares and that
upon the delivery of the certificates representing the Shares to the Buyer and
payment in full of the purchase price therefor, good title to the Shares so
delivered will have been transferred to the Buyer free of any adverse claim.
8. Buyer shall at its expense make all appropriate filings which are
required to be made by Buyer, if any, with the Securities and Exchange
Commission, Ohio Division of Securities and all other governmental agencies.
Seller will cooperate with Buyer in making the filings.
9. Seller and Buyer will not publicize this Agreement other than as may
be required in any governmental filings or by applicable law.
10. This Agreement may be assigned by Buyer at any time to an entity
formed by Buyer for the purpose of holding ownership of the Shares acquired by
Buyer.
SELLER: BUYER:
/s/ Lyman Brownfield /s/ Charles T. Sherman
- -------------------- -----------------------------
Lyman Brownfield Charles T. Sherman
Dated: September 11, 1996
Date: September 11, 1996
/s/ Theodore P. Schwartz
----------------------------
Theodore P. Schwartz
Date: September 11, 1996
<PAGE> 34
Page 34 of 95 Pages
SCHEDULE 13D
<TABLE>
<CAPTION>
EXHIBIT D
---------
BROWNFIELD TRANSACTION
PURCHASE AND PAYMENT SCHEDULE
SHARES
DATE PRINCIPAL INTEREST TOTAL TRANSFERRED CUMULATIVE
---- --------- -------- ----- ----------- ----------
<S> <C> <C> <C> <C> <C>
September 11, 1996 25,000.00 0 25,000.00(10) 20,000 20,000
September 11, 1996 See footnote 2 0 2,756.25(11) 2,250 22,250
November 1, 1996 See footnote 2 0 0 0 22,250
February 1, 1997 2,812.50 1,096.88 3,909.38 2,250 24,500
May 1, 1997 2,812.50 1,068.75 3,881.25 2,250 26,750
August 1, 1997 2,812.50 1,040.63 3,853.13 2,250 29,000
November 1, 1997 5,625.00 1,012.50 6,637.50 4,500 33,500
February 1, 1998 5,625.00 956.25 6,581.25 4,500 38,000
May 1, 1998 5,625.00 900.00 6,525.00 4,500 42,500
August 1, 1998 5,625.00 843.75 6,468.75 4,500 47,000
November 1, 1998 5,625.00 787.50 6,412.50 4,500 51,500
February 1, 1999 5,625.00 731.25 6,356.25 4,500 56,000
May 1, 1999 5,625.00 675.00 6,300.00 4,500 60,500
August 1, 1999 5,625.00 618.75 6,243.75 4,500 65,000
November 1, 1999 5,625.00 562.50 6,187.50 4,500 69,500
February 1, 2000 5,625.00 506.25 6,131.25 4,500 74,000
May 1, 2000 5,625.00 450.00 6,075.00 4,500 78,500
August 1, 2000 5,625.00 393.75 6,018.75 4,500 83,000
November 1, 2000 8,437.50 337.50 8,775.00 6,750 89,750
February 1, 2001 8,437.50 253.13 8,690.63 6,750 96,500
May 1, 2001 8,437.50 168.75 8,606.25 6,750 103,250
August 1, 2001 8,437.50 84.38 10,523.88 6,750 110,000
----------- ---------- ---------- ------- -------
137,443.75 12,487.52 149,931.27 110,000 110,000
========== =========== ========== ======= =======
<FN>
SELLER AND BUYER AGREE THAT PAYMENTS BY BUYER WILL BE MADE PAYABLE AS FOLLOWS:
56% TO THE CANDACE BROWNFIELD TRUST AND 44% TO CHARLOTTE HUDDLE. PAYMENTS WILL
BE MADE TO THE ESCROW AGENT UNDER THAT CERTAIN ESCROW AGREEMENT BETWEEN EACH OF
SELLERS AND BUYER AND THE ESCROW AGREEMENT DATED AS OF SEPTEMBER 11, 1996.
- ----------
10 The $25,000 in consideration was paid by the forgiveness of debt evidenced by
that certain Term Promissory Note executed by Charlotte Brownfield in favor of
Charles T. Sherman dated April 16, 1996 in the principal amount of $20,000 and
that certain Term Promissory Note executed by Lyman Brownfield in favor of
Charles T. Sherman dated April 18, 1996 in the principal amount of $5,000.
11 The November 1 payment was paid on September 11, 1996 at a discounted rate
($2,756.25) by agreement of the parties.
</TABLE>
<PAGE> 35
Page 35 of 95 Pages
SCHEDULE 13D
EXHIBIT D
STOCK PURCHASE AGREEMENT
DIANA B. MC BEE, 35 Eastmoor Boulevard, Columbus, Ohio, is hereafter
referred to as "Seller". Charles T. Sherman and Theodore P. Schwartz are
hereafter referred to as "Buyer". Seller and Buyer state and agree as follows:
1. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller all Eighteen Thousand Seven Hundred Sixty-Two (18,762) shares of common
stock of Resource General Corporation, an Ohio corporation (hereinafter referred
to as "RGC"), owned by Seller at a price of $1.25 per share. Seller may transfer
such shares to the Candace Brownfield Trust dated April 24, 1992, Charlotte
Brownfield Trustee, provided Seller causes such Trust to comply with the terms
of this Agreement with respect to any such shares transferred.
2. The debt due for the purchase of Seller's 18,762 shares of RGC stock
(the "Shares") shall bear interest at 4% per annum which interest shall begin to
accrue on the date that the first payment is due hereunder. The payment and
purchase schedule shall be as set forth on the attached Exhibit A. The Buyer
shall have the right to make prepayments at any time of the principal amount, in
whole or in part, without notice. Each prepayment shall be without premium or
penalty, and shall be applied to the principal installments in inverse order of
maturity. The Buyer shall make all payments of principal and interest under this
Agreement to the Escrow Agent at the following address: Schwartz, Warren &
Ramirez, Attention: D. David Carroll, 41 South High Street, Suite 2300,
Columbus, Ohio 43215. If any payment of principal or interest under this
Agreement shall become due on a day that ordinary mail is not normally
delivered, such payment shall be due and payable upon the next succeeding day
upon which ordinary mail is normally delivered.
3. Seller shall execute and deliver to Buyer a proxy to vote all of the
Shares which proxy shall be irrevocable through August 1, 2001. A copy of the
proxy is attached hereto.
4. Concurrently with the signing of this Agreement, Seller is
delivering to the Escrow Agent the certificates representing the Shares
accompanied by stock transfer powers duly endorsed in blank, with her signature
guaranteed with a guaranteed medallion. The Escrow Agent shall promptly deliver
payments made under the Note to Seller and shall deliver the appropriate number
of Shares to the Buyer. If the Seller has not received a payment as provided in
this Agreement, the Seller shall deliver a notice forthwith to Buyer stating the
date any such missing payment was due and the amount of the unreceived payment.
5. Neither Seller nor Buyer have made any representations to the other
as to the value of the stock and each has done such investigation as to the
value of the stock as each deems appropriate under the circumstances. Seller
does represent that she has the full authority to
<PAGE> 36
Page 36 of 95 Pages
SCHEDULE 13D
EXHIBIT D
transfer the Shares and that upon the delivery of the certificates representing
the Shares to the Buyer and payment in full of the purchase price therefor, good
title to the Shares so delivered will have been transferred to the Buyer free of
any adverse claim.
6. Buyer shall at its expense make all appropriate filings which are
required to be made by Buyer, if any, with the Securities and Exchange
Commission, Ohio Division of Securities and all other governmental agencies.
Seller will cooperate with Buyer in making the filings.
7. Seller and Buyer will not publicize this Agreement other than as may
be required in any governmental filings or by applicable law.
8. This Agreement may be assigned by Buyer at any time to an entity
formed by Buyer for the purpose of holding ownership of the Shares acquired by
Buyer.
SELLER: BUYER:
/s/ Diana Mcbee /s/ Charles T. Sherman
- ---------------------------- ----------------------------
Diana McBee Charles T. Sherman
Dated: September 11, 1996
Date: September 11, 1996
/s/ Theodore P. Schwartz
----------------------------
Theodore P. Schwartz
Date: September 11, 1996
<PAGE> 37
Page 37 of 95 Pages
SCHEDULE 13D
EXHIBIT D
BROWNFIELD TRANSACTION
PURCHASE AND PAYMENT SCHEDULE
<TABLE>
<CAPTION>
SHARES
DATE PRINCIPAL INTEREST TOTAL TRANSFERRED CUMULATIVE
---- --------- -------- ----- ----------- ----------
<S> <C> <C> <C> <C> <C>
September 11, 1996 25,000.00 0 25,000.00(12) 20,000 20,000
September 11, 1996 See footnote 2 0 2,756.25(13) 2,250 22,250
November 1, 1996 See footnote 2 0 0 0 22,250
February 1, 1997 2,812.50 1,096.88 3,909.38 2,250 24,500
May 1, 1997 2,812.50 1,068.75 3,881.25 2,250 26,750
August 1, 1997 2,812.50 1,040.63 3,853.13 2,250 29,000
November 1, 1997 5,625.00 1,012.50 6,637.50 4,500 33,500
February 1, 1998 5,625.00 956.25 6,581.25 4,500 38,000
May 1, 1998 5,625.00 900.00 6,525.00 4,500 42,500
August 1, 1998 5,625.00 843.75 6,468.75 4,500 47,000
November 1, 1998 5,625.00 787.50 6,412.50 4,500 51,500
February 1, 1999 5,625.00 731.25 6,356.25 4,500 56,000
May 1, 1999 5,625.00 675.00 6,300.00 4,500 60,500
August 1, 1999 5,625.00 618.75 6,243.75 4,500 65,000
November 1, 1999 5,625.00 562.50 6,187.50 4,500 69,500
February 1, 2000 5,625.00 506.25 6,131.25 4,500 74,000
May 1, 2000 5,625.00 450.00 6,075.00 4,500 78,500
August 1, 2000 5,625.00 393.75 6,018.75 4,500 83,000
November 1, 2000 8,437.50 337.50 8,775.00 6,750 89,750
February 1, 2001 8,437.50 253.13 8,690.63 6,750 96,500
May 1, 2001 8,437.50 168.75 8,606.25 6,750 103,250
August 1, 2001 8,437.50 84.38 10,523.88 6,750 110,000
---------- --------- ---------- ------- -------
137,443.75 12,487.52 149,931.27 110,000 110,000
========== ========= ========== ======= =======
<FN>
SELLER AND BUYER AGREE THAT PAYMENTS BY BUYER WILL BE MADE PAYABLE AS FOLLOWS:
56% TO THE CANDACE BROWNFIELD TRUST AND 44% TO CHARLOTTE HUDDLE. PAYMENTS WILL
BE MADE TO THE ESCROW AGENT UNDER THAT CERTAIN ESCROW AGREEMENT BETWEEN EACH OF
SELLERS AND BUYER AND THE ESCROW AGREEMENT DATED AS OF SEPTEMBER 11, 1996.
- ----------
12 The $25,000 in consideration was paid by the forgiveness of debt evidenced by
that certain Term Promissory Note executed by Charlotte Brownfield in favor of
Charles T. Sherman dated April 16, 1996 in the principal amount of $20,000 and
that certain Term Promissory Note executed by Lyman Brownfield in favor of
Charles T. Sherman dated April 18, 1996 in the principal amount of $5,000.
13 The November 1 payment was paid on September 11, 1996 at a discounted rate
($2,756.25) by agreement of the parties.
</TABLE>
<PAGE> 38
Page 38 of 95 Pages
SCHEDULE 13D
EXHIBIT D
STOCK PURCHASE AGREEMENT
CANDACE BROWNFIELD, 3310 Creek Road, Sunbury, Ohio, is hereafter
referred to as "Seller". Charles T. Sherman and Theodore P. Schwartz are
hereafter referred to as "Buyer". Seller and Buyer state and agree as follows:
1. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller all Twenty Thousand (20,000) shares of common stock of Resource General
Corporation, an Ohio corporation (hereinafter referred to as "RGC"), owned by
Seller at a price of $1.25 per share. Seller may transfer such shares to the
Candace Brownfield Trust dated April 24, 1992, Charlotte Brownfield Trustee,
provided Seller causes such Trust to comply with the terms of this Agreement
with respect to any such shares transferred.
2. The debt due for the purchase of Seller's 20,000 shares of RGC stock
(the "Shares") shall bear interest at 4% per annum which interest shall begin to
accrue on the date that the first payment is due hereunder. The payment and
purchase schedule shall be as set forth on the attached Exhibit A. The Buyer
shall have the right to make prepayments at any time of the principal amount, in
whole or in part, without notice. Each prepayment shall be without premium or
penalty, and shall be applied to the principal installments in inverse order of
maturity. The Buyer shall make all payments of principal and interest under this
Agreement to the Escrow Agent at the following address: Schwartz, Warren &
Ramirez, Attention: D. David Carroll, 41 South High Street, Suite 2300,
Columbus, Ohio 43215. If any payment of principal or interest under this
Agreement shall become due on a day that ordinary mail is not normally
delivered, such payment shall be due and payable upon the next succeeding day
upon which ordinary mail is normally delivered.
3. Seller shall execute and deliver to Buyer a proxy to vote all of the
Shares which proxy shall be irrevocable through August 1, 2001. A copy of the
proxy is attached hereto.
4. Concurrently with the signing of this Agreement, Seller is
delivering to the Escrow Agent the certificates representing the Shares
accompanied by stock transfer powers duly endorsed in blank, with her signature
guaranteed with a guaranteed medallion. The Escrow Agent shall promptly deliver
payments made under the Note to Seller and shall deliver the appropriate number
of Shares to the Buyer. If the Seller has not received a payment as provided in
this Agreement, the Seller shall deliver a notice forthwith to Buyer stating the
date any such missing payment was due and the amount of the unreceived payment.
5. Neither Seller nor Buyer have made any representations to the other
as to the value of the stock and each has done such investigation as to the
value of the stock as each deems appropriate under the circumstances. Seller
does represent that she has the full authority to transfer the Shares and that
upon the delivery of the certificates representing the Shares to the
<PAGE> 39
Page 39 of 95 Pages
SCHEDULE 13D
EXHIBIT D
Buyer and payment in full of the purchase price therefor, good title to the
Shares so delivered will have been transferred to the Buyer free of any adverse
claim.
6. Buyer shall at its expense make all appropriate filings which are
required to be made by Buyer, if any, with the Securities and Exchange
Commission, Ohio Division of Securities and all other governmental agencies.
Seller will cooperate with Buyer in making the filings.
7. Seller and Buyer will not publicize this Agreement other than as may
be required in any governmental filings or by applicable law.
8. This Agreement may be assigned by Buyer at any time to an entity
formed by Buyer for the purpose of holding ownership of the Shares acquired by
Buyer.
SELLER: BUYER:
/s/ Candace Brownfield /s/ Charles T. Sherman
- ---------------------------- ---------------------------
Candace Brownfield Charles T. Sherman
Dated: September 11, 1996
Date: September 11, 1996
/s/ Theodore P. Schwartz
---------------------------
Theodore P. Schwartz
Date: September 11, 1996
<PAGE> 40
Page 40 of 95 Pages
SCHEDULE 13D
EXHIBIT D
BROWNFIELD TRANSACTION
PURCHASE AND PAYMENT SCHEDULE
<TABLE>
<CAPTION>
Shares
DATE PRINCIPAL INTEREST TOTAL TRANSFERRED CUMULATIVE
---- --------- -------- ----- ----------- ----------
<S> <C> <C> <C> <C> <C>
September 11, 1996 25,000.00 0 25,000.00(14) 20,000 20,000
September 11, 1996 See footnote 2 0 2,756.25(15) 2,250 22,250
November 1, 1996 See footnote 2 0 0 0 22,250
February 1, 1997 2,812.50 1,096.88 3,909.38 2,250 24,500
May 1, 1997 2,812.50 1,068.75 3,881.25 2,250 26,750
August 1, 1997 2,812.50 1,040.63 3,853.13 2,250 29,000
November 1, 1997 5,625.00 1,012.50 6,637.50 4,500 33,500
February 1, 1998 5,625.00 956.25 6,581.25 4,500 38,000
May 1, 1998 5,625.00 900.00 6,525.00 4,500 42,500
August 1, 1998 5,625.00 843.75 6,468.75 4,500 47,000
November 1, 1998 5,625.00 787.50 6,412.50 4,500 51,500
February 1, 1999 5,625.00 731.25 6,356.25 4,500 56,000
May 1, 1999 5,625.00 675.00 6,300.00 4,500 60,500
August 1, 1999 5,625.00 618.75 6,243.75 4,500 65,000
November 1, 1999 5,625.00 562.50 6,187.50 4,500 69,500
February 1, 2000 5,625.00 506.25 6,131.25 4,500 74,000
May 1, 2000 5,625.00 450.00 6,075.00 4,500 78,500
August 1, 2000 5,625.00 393.75 6,018.75 4,500 83,000
November 1, 2000 8,437.50 337.50 8,775.00 6,750 89,750
February 1, 2001 8,437.50 253.13 8,690.63 6,750 96,500
May 1, 2001 8,437.50 168.75 8,606.25 6,750 103,250
August 1, 2001 8,437.50 84.38 10,523.88 6,750 110,000
---------- --------- ---------- ------- -------
137,443.75 12,487.52 149,931.27 110,000 110,000
========== ========= ========== ======= =======
<FN>
SELLER AND BUYER AGREE THAT PAYMENTS BY BUYER WILL BE MADE PAYABLE AS FOLLOWS:
56% TO THE CANDACE BROWNFIELD TRUST AND 44% TO CHARLOTTE HUDDLE. PAYMENTS WILL
BE MADE TO THE ESCROW AGENT UNDER THAT CERTAIN ESCROW AGREEMENT BETWEEN EACH OF
SELLERS AND BUYER AND THE ESCROW AGREEMENT DATED AS OF SEPTEMBER 11, 1996.
- ----------
14 The $25,000 in consideration was paid by the forgiveness of debt evidenced by
that certain Term Promissory Note executed by Charlotte Brownfield in favor of
Charles T. Sherman dated April 16, 1996 in the principal amount of $20,000 and
that certain Term Promissory Note executed by Lyman Brownfield in favor of
Charles T. Sherman dated April 18, 1996 in the principal amount of $5,000.
15 The November 1 payment was paid on September 11, 1996 at a discounted rate
($2,756.25) by agreement of the parties.
</TABLE>
<PAGE> 41
Page 41 of 95 Pages
SCHEDULE 13D
EXHIBIT E
IRREVOCABLE PROXY
TO THE SECRETARY OF RESOURCE GENERAL CORPORATION:
The undersigned hereby appoints THEODORE SCHWARTZ and CHARLES T.
SHERMAN, and each of them severally, with full power of substitution, as proxy
for the undersigned and hereby authorizes them to represent and to vote all of
the shares of Resource General Corporation (the "Corporation") held of record by
the undersigned, or as to which the undersigned has the power to vote, on all
matters presented to the Shareholders of the Corporation at any meeting or
otherwise, with all the power the undersigned would possess if present in person
at any such meeting.
This Proxy has been delivered in connection with a certain Stock
Purchase Agreement dated September 11, 1996 between Lyman Brownfield, as Seller,
and Theodore Schwartz and Charles T. Sherman, as Buyer, and is coupled with an
interest and is irrevocable. This proxy supersedes, and the undersigned hereby
revokes, all proxies heretofore given by the undersigned with respect to shares
of the Corporation and will expire on August 1, 2001.
IN WITNESS WHEREOF, this Proxy has been executed this 11th day of
September, 1996.
/s/ Lyman Brownfield
----------------------------------
Lyman Brownfield, Individually
<PAGE> 42
Page 42 of 95 Pages
SCHEDULE 13D
EXHIBIT E
IRREVOCABLE PROXY
TO THE SECRETARY OF RESOURCE GENERAL CORPORATION:
The undersigned hereby appoints THEODORE SCHWARTZ and CHARLES T.
SHERMAN, and each of them severally, with full power of substitution, as proxy
for the undersigned and hereby authorizes them to represent and to vote all of
the shares of Resource General Corporation (the "Corporation") held of record by
the undersigned, or as to which the undersigned has the power to vote, on all
matters presented to the Shareholders of the Corporation at any meeting or
otherwise, with all the power the undersigned would possess if present in person
at any such meeting.
This Proxy has been delivered in connection with a certain Stock
Purchase Agreement dated September 11, 1996 between Candace Brownfield, as
Seller, and Theodore Schwartz and Charles T. Sherman, as Buyer, and is coupled
with an interest and is irrevocable. This proxy supersedes, and the undersigned
hereby revokes, all proxies heretofore given by the undersigned with respect to
shares of the Corporation and will expire on August 1, 2001.
IN WITNESS WHEREOF, this Proxy has been executed this 11th day of
September, 1996.
/s/ Candace Brownfield
------------------------------
Candace Brownfield
<PAGE> 43
Page 43 of 95 Pages
SCHEDULE 13D
EXHIBIT E
IRREVOCABLE PROXY
TO THE SECRETARY OF RESOURCE GENERAL CORPORATION:
The undersigned hereby appoints THEODORE SCHWARTZ and CHARLES T.
SHERMAN, and each of them severally, with full power of substitution, as proxy
for the undersigned and hereby authorizes them to represent and to vote all of
the shares of Resource General Corporation (the "Corporation") held of record by
the undersigned, or as to which the undersigned has the power to vote, on all
matters presented to the Shareholders of the Corporation at any meeting or
otherwise, with all the power the undersigned would possess if present in person
at any such meeting.
This Proxy has been delivered in connection with a certain Stock
Purchase Agreement dated September 11, 1996 between Diana McBee, as Seller, and
Theodore Schwartz and Charles T. Sherman, as Buyer, and is coupled with an
interest and is irrevocable. This proxy supersedes, and the undersigned hereby
revokes, all proxies heretofore given by the undersigned with respect to shares
of the Corporation and will expire on August 1, 2001.
IN WITNESS WHEREOF, this Proxy has been executed this 11th day of
September, 1996.
/s/ Diana Mcbee
---------------------------------
Diana McBee (aka Diana B. McBee)
<PAGE> 44
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SCHEDULE 13D
EXHIBIT E
IRREVOCABLE PROXY
TO THE SECRETARY OF RESOURCE GENERAL CORPORATION:
The undersigned hereby appoints THEODORE SCHWARTZ and CHARLES T.
SHERMAN, and each of them severally, with full power of substitution, as proxy
for the undersigned and hereby authorizes them to represent and to vote all of
the shares of Resource General Corporation (the "Corporation") held of record by
the undersigned, or as to which the undersigned has the power to vote, on all
matters presented to the Shareholders of the Corporation at any meeting or
otherwise, with all the power the undersigned would possess if present in person
at any such meeting.
This Proxy has been delivered in connection with a certain Stock
Purchase Agreement dated September 11, 1996 between Charlotte Brownfield (aka
Charlotte A. Huddle), as Seller, and Theodore Schwartz and Charles T. Sherman,
as Buyer, and is coupled with an interest and is irrevocable. This proxy
supersedes, and the undersigned hereby revokes, all proxies heretofore given by
the undersigned with respect to shares of the Corporation and will expire on
August 1, 2001.
IN WITNESS WHEREOF, this Proxy has been executed this 11th day of
September, 1996.
/s/ Charlotte Brownfield
--------------------------------------------------
Charlotte Brownfield (aka Charlotte A. Huddle),
Individually, and as Trustee
<PAGE> 45
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SCHEDULE 13D
EXHIBIT F
ASSIGNMENT OF PROXY POWER
WHEREAS, the undersigned, Theodore P. Schwartz and Charles T. Sherman,
have been granted the power to vote all of the shares of Resource General
Corporation owned by Charlotte Brownfield (aka Charlotte A. Huddle),
Individually, and as Trustee, Diana Mc Bee (aka Diana B. McBee), Candace
Brownfield, and Lyman Brownfield, Individually (collectively the "Brownfields"),
pursuant to Irrevocable Proxies granted by the Brownfields dated September 11,
1996, copies of which are attached hereto (the "Proxies"), and
WHEREAS, the undersigned have the authority to assign their power
granted under the Proxies and the undersigned desire to assign such power to
Phoenix Management, Ltd. which desires to accept such assignment.
NOW THEREFORE, the undersigned hereby assign their power to vote all of
the shares of Resource General Corporation owned by the Brownfields represented
by the Proxies and Phoenix Management, Ltd. hereby accepts such assignment.
This Assignment of Proxy Power has been delivered in connection with
the Operating Agreement of Phoenix Management, Ltd., is coupled with an
interest, is irrevocable and shall expire upon the expiration of the Proxies.
IN WITNESS WHEREOF, this Assignment of Proxy Power has been executed
this 12th day of February, 1997.
/s/ Theodore P. Schwartz
- ---------------------------------
Theodore P. Schwartz
/s/ Charles T. Sherman
- ---------------------------------
Charles T. Sherman
/s/ Charles T. Sherman, Member
- ---------------------------------
Phoenix Management, Ltd.,
by Charles T. Sherman, Member
<PAGE> 46
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SCHEDULE 13D
EXHIBIT G
OPERATING AGREEMENT
OF
PHOENIX MANAGEMENT, LTD.
AN OHIO LIMITED LIABILITY COMPANY
This Operating Agreement (the "Agreement") is made and entered into
effective upon the filing of the Articles as provided in Section 1.3 by and
among Charles T. Sherman, an individual residing at 354 Whitaker Avenue, South,
Powell, Ohio 43065 ("Sherman"), Theodore P. Schwartz, an individual residing at
3817 Lyon Drive, Columbus, Ohio 43220 ("Schwartz"), Bob Binsky, an individual
residing at 20185 E. Country Club Drive, Apartment #206, North Miami Beach,
Florida 33180 ("Binsky"), Michael W. Gardner, an individual residing at 6376
Plankton Drive, Columbus, Ohio 43213 ("Gardner") and Kenneth J. Warren, an
individual residing at 5567 Caplestone Lane, Dublin, Ohio 43017 ("Warren").
Sherman, Schwartz, Binsky, Gardner and Warren are collectively referred to as
the "Initial Members", who hereby agree as follows:
ARTICLE I
ORGANIZATION
------------
SECTION 1.1. ORGANIZATION. The Initial Members and any Person (this and
other capitalized terms shall have the definitions set forth in Section 12.14 of
this Agreement) hereafter admitted to the Company as a Member as provided in
this Agreement hereby enter into this Agreement for the purpose of forming a
limited liability company under the laws of the State of Ohio and of setting
forth the rights and obligations of the members of such limited liability
company. The Articles and this Agreement shall regulate the internal affairs of
the Company and the relations of the Members of the Company among themselves to
the extent set forth herein and therein.
SECTION 1.2. NAME. The name of the Company shall be "Phoenix
Management, Ltd." The Company may do business under such other or additional
names as the Members may, from time to time, consider necessary or appropriate
to conduct the business of the Company.
SECTION 1.3. ARTICLES OF ORGANIZATION; FOREIGN QUALIFICATION. The
Initial Members are, contemporaneously with the effectiveness of this Agreement,
causing the Articles of the Company and such other Articles and instruments as
are required by law to be filed for record in the office of the Secretary of
State of the State of Ohio in accordance with the Act. The Members shall cause
the Company to comply, to the extent procedures are available and those matters
are reasonably within the control of the Members, with all requirements
necessary to
<PAGE> 47
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SCHEDULE 13D
EXHIBIT G
qualify the Company as a foreign limited liability company in all jurisdictions
where the Company is conducting business and such qualification is required. At
the request of the Members, each Member shall execute, acknowledge, swear to and
deliver all Articles and other instruments that the Members consider to be
necessary or appropriate to qualify, continue and terminate the Company as a
limited liability company in all such jurisdictions in which the Company is
authorized to conduct business pursuant to this Section 1.3 or pursuant to other
provisions of this Agreement; provided, however, that no Member shall be
required to qualify to do business in any foreign jurisdiction without his
consent.
SECTION 1.4. TAX PARTNERSHIP STATUS. The Members intend that the
Company shall be treated as a partnership for federal and state income tax
purposes. Accordingly, this Agreement shall be construed in a manner that
ensures the Company's classification as a partnership for federal and state
income tax purposes at all times, and any provision of this Agreement that would
have the effect of preventing the Company from being classified as a partnership
for federal and state income tax purposes shall be null and void. The Members
shall take all actions, and execute, acknowledge and deliver all documents,
which in the judgment of the Members, or in the opinion of counsel satisfactory
to the Members, are necessary or desirable to obtain and maintain the Company's
classification as a partnership for federal and state income tax purposes at all
times.
SECTION 1.5. NO STATE LAW PARTNERSHIP; LIABILITY TO THIRD PARTIES. The
Members intend that for state law purposes (in contrast to federal and state
income tax treatment) the Company shall not be treated as a partnership
(including, without limitation, a limited partnership) or joint venture, that no
Member shall be a partner or joint venturer of any other Member, for any purpose
other than for federal and state income tax purposes, and that this Agreement
shall not be construed to suggest otherwise. No Member shall be liable for the
debts, obligations or liabilities of the Company, including under a judgment,
decree or order of a court.
ARTICLE II
PURPOSES AND POWERS; OFFICE;
----------------------------
STATUTORY AGENT; TERM
---------------------
SECTION 2.1. PURPOSES AND POWERS. The purpose of the Company
is to engage in any lawful act, activity or business in which a limited
liability company may be engaged under the laws of the State of Ohio. The
Company shall have all of the powers granted or permitted to a limited liability
company under the laws of the State of Ohio, including, without limitation, the
powers specifically enumerated in the Act. Without limiting the generality of
the foregoing, the
<PAGE> 48
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SCHEDULE 13D
EXHIBIT G
Members currently intend that the Company is to acquire and maintain shares of
Resource General Corporation., an Ohio corporation ("RGC").
SECTION 2.2. OFFICE. The principal office of the Company and the office
where the Company's books and records shall be maintained is located at 2365
Scioto Harper Drive, Columbus, Ohio 43204 or at such other or additional
location or locations as the Members may from time to time determine in their
discretion.
SECTION 2.3. STATUTORY AGENT. The statutory agent for service of
process on the Company in the State of Ohio shall be Kenneth J. Warren. The
Members shall have the power to cause the Company to revoke the appointment of
any statutory agent and appoint a substitute or replacement statutory agent, as
provided below.
SECTION 2.4. TERM. The Company shall have a term commencing
upon the filing of the Articles as provided in Section 1.3 and expiring on
December 31, 2016, unless earlier dissolved or terminated pursuant to law or the
provisions of this Agreement.
ARTICLE III
MEMBERSHIP
----------
SECTION 3.1. MEMBERSHIP INTERESTS. The "membership interests" as that
term is defined in ss.1705.01(H) of the Act, of the Company represent the
ownership interests of the Members of the Company. Such "membership interests"
in the Company are referred to in this Agreement as "Percentage Interests".
Subject to the provisions of this Agreement, the Initial Members shall have the
Percentage Interests set forth below:
<TABLE>
<CAPTION>
NAME PERCENTAGE INTEREST
---- -------------------
<S> <C>
Charles T. Sherman 31.667%
Theodore P. Schwartz 31.667%
Bob Binsky 28.500%
Michael W. Gardner 5.000%
Kenneth J. Warren 3.167%
</TABLE>
SECTION 3.2. INITIAL MEMBERS. The Initial Members shall cause the
Company to admit the Initial Members as Members of the Company and issue to them
the Percentage Interests as set forth above effective contemporaneously with the
filing of the Articles with the Ohio Secretary of State or the making of their
respective Capital Contributions, whichever is later.
<PAGE> 49
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SCHEDULE 13D
EXHIBIT G
The Members shall have the right to receive those allocations and distributions
as set forth in Article IV and Article V below.
SECTION 3.3. ADDITIONAL MEMBERS. After the Initial Members have been
admitted to the Company, the Company may issue additional Percentage Interests
(thereby reducing the Percentage Interests held by the Initial Members) and
admit the purchasers of such Percentage Interests as Members of the Company. The
Company shall determine the Persons to whom, the time when, the terms under
which, and the consideration for which the Company shall issue, dispose of or
receive subscriptions for its Percentage Interests. The terms of admission or
issuance shall specify the Capital Contribution and the Percentage Interests
applicable thereto. Any such admission shall be effective only after the new
Member has executed and delivered to the Company an instrument which shall set
forth the new Member's notice address and taxpayer Employer Identification
Number and the written acceptance and agreement of such Member to be bound by
all the provisions of this Agreement and which shall otherwise be in a form
satisfactory to the Company.
SECTION 3.4. ELIMINATION OF PREEMPTIVE RIGHTS. No Member shall have, as
a matter of right, the preemptive right to purchase or subscribe for Percentage
Interests of any class, now or hereafter authorized, or to purchase or subscribe
for securities or other obligations convertible into or exchangeable for
Percentage Interests or which by warrants or otherwise entitles the Members
thereof to subscribe for or purchase Percentage Interests, except such rights of
subscription or purchase, if any, for such consideration and upon such terms and
conditions as the Company may determine in its sole discretion.
SECTION 3.5. AUTHORITY TO DEAL IN SECURITIES OF THE COMPANY. The
Members shall have the power to cause the Company to purchase, hold, sell,
transfer or otherwise deal with (a) Percentage Interests, (b) any security or
other obligation of the Company which may confer upon the Member thereof the
right to convert the same into Percentage Interests, and (c) any security or
other obligations which may confer upon the Member thereof the right to purchase
Percentage Interests. The Members shall have the power to cause the Company to
repurchase, if and when any Member desires to sell, or on the happening of any
event is required to sell, Percentage Interests. The authority granted in this
Section 3.5 shall not limit the plenary authority of the Members, on behalf of
the Company, to purchase, hold, sell, transfer or otherwise deal with Percentage
Interests, securities, or other obligations issued by the Company pursuant to
the provisions of this Agreement.
<PAGE> 50
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SCHEDULE 13D
EXHIBIT G
ARTICLE IV
MEMBERS AND CAPITAL
SECTION 4.1. INITIAL MEMBERS - CAPITAL CONTRIBUTIONS.
Contemporaneously with the execution of this Agreement, each Initial Member is
contributing to the Company all of his right, title and interest in and to the
following (the "Initial Contributions"): (a) those certain agreements between
Sherman and Paul Gillmor relating to the purchase by Sherman of shares of RGC
set forth on Exhibit 4.1 (the "Gillmor Agreements"), (b) those certain
agreements between Sherman and Schwartz and members of the Brownfield family
relating to the purchase of shares of RGC set forth on Exhibit 4.1 (the
"Brownfield Agreements"), and (c) any and all shares of RGC each Initial
Member may have acquired pursuant to the Gillmor Agreements or the Brownfield
Agreements. Each Initial Member hereby warrants and represents that he is
transferring all of his right, title and interest in the Initial Contributions
to the Company free and clear of all liens and encumbrances. As a result of
such contributions, and the fact that the Initial Members have already made
payments totaling $75,000 under the Gillmor Agreements and Brownfield
Agreements, the Capital Accounts of the Initial Members are as follows:
<TABLE>
<CAPTION>
NAME AMOUNT
---- ------
<S> <C>
Charles T. Sherman $23,750
Theodore P. Schwartz $23,750
Bob Binsky $21,375
Michael W. Gardner $3,750
Kenneth J. Warren $2,375
</TABLE>
SECTION 4.2. ASSUMPTION OF LIABILITIES. The Company hereby assumes and
agrees to pay and discharge, as and when due, any and all amounts and
obligations that may be due under the Gillmor Agreements and the Brownfield
Agreements.
SECTION 4.3. ADDITIONAL CONTRIBUTIONS. At any time and from time to
time, but not more often than once during any three-month period, the Company
may issue a written notice to the Members requesting that additional capital
(the "Additional Contributions") is required in order for the Company to meet
the obligations the Company has assumed under Section 4.2 (a "Capital Call").
Each Capital Call shall set forth the amount each Member is required to
contribute and the date such contribution is to be made (the "Contribution
Date"), which date shall not be less than 15 days from the date of mailing the
Capital Call. The execution and delivery of this Agreement is the irrevocable
agreement of each Member to pay his Percentage Interest of such Additional
Contributions to the Company, on demand of the Company. Each Member and every
endorser and guarantor of this obligation hereby waive presentment, demand,
<PAGE> 51
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SCHEDULE 13D
EXHIBIT G
notice protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this obligation and
consent that this obligation may be extended from time to time and that no such
extension or indulgence, and no substitution, release or surrender of
collateral, and no discharge or release of any other party primarily or
secondarily liable on this obligation, shall discharge or otherwise affect the
liability of a Member or any such endorser or guarantor. No delay or omission on
the part of the Company in exercising any right under this obligation shall
operate as a waiver of any such right or of any other right hereunder and a
waiver of any such right on any one occasion shall not be construed as a bar to
or waiver of any such right on any future occasion. Each Member and every
endorser and guarantor hereof agree to pay on demand all costs and expenses
(including legal costs and attorneys' fees) incurred or paid by the Company in
enforcing this obligation on default. The obligation of an Initial Member to pay
his Percentage Interest of Additional Contributions shall not terminate upon the
withdrawal of such Member.
SECTION 4.4. FAILURE TO MAKE CAPITAL CONTRIBUTIONS.
4.4.1. If any Member (a "Defaulting Member") fails to make any
Additional Contribution required of him by the Contribution Date after receipt
of a Capital Call, the following shall apply:
(a) Until such Additional Contribution is made, or
one or more Members elect to exercise the option provided such Members as set
forth in Section 4.4.1(d), such Member shall have no further right to
participate in a purchase or sale of interests in the Company, under the
provisions of Section 9.3; or initiate a purchase or sale under the provisions
of Section 9.4.
(b) Unless one or more Members elect to cover the
share of the Additional Contribution owed by the Defaulting Member (the
"Assessment Share") as provided for in Section 4.4.1(d), the Defaulting Member
shall have an immediate and continuing obligation to pay to the Company the
unpaid balance of his Assessment Share, plus interest at the rate of 12% per
annum (the "Late Rate") on such unpaid balance from the Contribution Date until
the Assessment Share is paid in full. The Company shall have the right, without
the necessity of an accounting and upon 10 days written notice to the Defaulting
Member and demand for payment, to bring appropriate legal action against the
Defaulting Member to collect the Defaulting Member's unpaid Assessment Share,
plus interest thereon. When the Defaulting Member pays the past due portion of
his Assessment Share, the principal amount of the Assessment Share (but not the
amount of any interest paid) shall be credited to such Member's Capital Account
as an Additional Contribution. Regardless of a Defaulting Member's failure to
pay his Assessment Share, such Member shall remain a Member for all purposes of
this
<PAGE> 52
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SCHEDULE 13D
EXHIBIT G
---------
Agreement, with all the rights and obligations of a Member under this Agreement,
except as set forth in Section 4.4.1(a), unless and until one or more Members
elect to exercise the option provided such Members as set forth in Section
4.4.1(d).
(c) If a Defaulting Member fails to pay by the
Contribution Date the full amount of his Assessment Share, the other Members may
make one or more loans, with interest at the Late Rate, to the Company of any
amount up to the unpaid balance of the Assessment Share of the Defaulting
Member. The Company shall promptly repay any such loan or loans upon the
collection of funds from or for the benefit of the Defaulting Member, or
otherwise as the Company is financially able to repay such obligations.
(d) Regardless of any Company loans pursuant to
Section 4.4.1(c), if a Defaulting Member fails to pay the full amount of any
Assessment Share by the Contribution Date, any one or more of the Members who
are not Defaulting Members may make a written election (the "Cover Election"),
at the sole option and discretion of any one or more of such Members (the
"Covering Member[s]"), to pay the unpaid balance of the Assessment Share on
behalf of the Defaulting Member. The Cover Election (i) may only be made if the
full amount of the unpaid balance of the Assessment Share is to be paid by the
Covering Member[s], and (ii) must be received by the Company prior to the time
the Defaulting Member has paid to the Company the full amount of his Assessment
Share. The proceeds of any such contribution made pursuant to a Cover Election
shall be used, to the extent possible, to pay interest or principal with respect
to any loan made pursuant to Section 4.1.1(c). Each Covering Member shall
provide copies of the Cover Election to the Company and all of the Members. For
the Cover Election to be valid, the Covering Member[s] must include with the
Cover Election provided to the Company payment of the unpaid balance of the
Assessment Share of the Defaulting Member, plus interest at the Late Rate from
the Contribution Date. Any legal or accounting fees or expenses incurred by the
Company in connection with a Cover Election shall be paid by the Defaulting
Member on demand.
(e) Upon a Member or Members making a payment to the
Company pursuant to a Cover Election as provided in Section 4.4.1(d), the
interest of the Defaulting Member in the Company (including, without limitation,
the Percentage Interest of such Defaulting Member) shall be reduced by that
percentage amount determined by dividing (i) the unpaid balance of the
Assessment Share of a Defaulting Member which is the subject of a Cover Election
by (ii) the sum of (y) the total amount of the Capital Accounts of all Members
as of the date the Cover Election is made (including, without limitation, the
new money contributed as Additional Contributions by non-defaulting Members with
respect to the Contribution Notice for which the Defaulting Member has not paid
his Assessment Share), and (z) the Assessment Share of the Defaulting Partner
for which the Cover Election is made. The interests of the Covering
<PAGE> 53
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SCHEDULE 13D
EXHIBIT G
---------
Member[s] (including, without limitation, the respective Percentage Interests)
in the Company shall likewise be increased by the same percentage by which the
interest of the Defaulting Member is reduced.
4.4.2. By way of example of the operation of the foregoing,
assume that total capital contributions to the Company are $300,000, but that
Capital Accounts have been reduced to $200,000 by reason of accrued expenses and
losses. If a Capital Call is made for Additional Contributions of $50,000 and a
Member holding a 20% Percentage Interest does not pay his $10,000 Assessment
Share and a Cover Election is made by a Member owning a 50% Percentage Interest,
the following adjustments would be made: The Defaulting Member's Percentage
Interest would be reduced from 20% to 16% in accordance with the following: the
Defaulting Member's 20% share of the total Capital Accounts is $40,000 (20% x
$200,000 = $40,000). After the Additional Contributions are made, including the
Defaulting Member's $10,000 by the Covering Member, total Capital Accounts will
be $250,000. One then divides $10,000 (the amount of Assessment Share which the
Defaulting Member did not pay) by $250,000 (the total of contributions,
including the new money contributed as a result of the Capital Call (which is
$240,000), plus $10,000 (the amount of the Assessment Share which is being
covered). $10,000/$250,000 equals 4%. The Defaulting Member's Percentage
Interest is thus reduced from 20% to 16%. The Covering Member's Percentage
Interest would be increased by 4% from 50% to 54%. As a check on the accuracy of
the calculation in this section, note that the Covering Member's Capital Account
at the date of the Contribution Notice would be $100,000 (50% x $200,000 total
Capital Accounts). The Covering Member's share of the Additional Contribution
would be 50% x $50,000 or $25,000. In addition, the Covering Member would be
contributing $10,000 to cover the Defaulting Member's Assessment Share. As such,
the Covering Member's total Capital Account would be $135,000 ($100,000 Capital
Account as of the date of the Contribution Notice, plus the increase in his
Capital Account resulting from his $25,000 Additional Contribution plus the
increase in his Capital Account resulting from the additional $10,000
contributed as a result of the Cover Election equals $135,000).
$135,000/$250,000 (total Capital Accounts after all Additional Contributions
including the Cover Election) equals 54%.
4.4.3. If two or more Members desire to be Covering Members,
and cannot agree as between themselves what portion each Covering Member is to
pay of the Defaulting Member's Assessment Share, then each such Covering Member
shall have the right to pay that fraction of the unpaid balance of such
Assessment Share (and shall pay a pro rata portion of the interest attributable
thereto) equal to such Member's Percentage Interest in the Company over the
Percentage Interests of all Covering Members determined immediately prior to the
date on which the relevant Contribution Notice was sent. The increase in
Percentage Interests as provided in Section 4.4.1(e) above shall be attributed
to the Covering Members in proportion to the amount of the Defaulting Member's
Assessment Share paid by each such Covering Member.
<PAGE> 54
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SCHEDULE 13D
EXHIBIT G
---------
4.4.4. No Capital Call for Additional Contributions shall be
made under the provisions of this Section 4.4 solely for purposes of covering a
deficiency resulting from the failure of a Member to make the contributions
required under this Section 4.4 as set forth in a Contribution Notice.
4.4.5. In the event the Company brings any legal action to
enforce the obligations of a Member to make Additional Contributions, such
Member shall pay the reasonable legal fees and costs of the bringing of any such
action.
SECTION 4.5. NO ADDITIONAL CONTRIBUTIONS. Subject to the provisions of
Section 4.3, no Member shall be required to make any additional Capital
Contributions to the Company and each Member's obligation to contribute capital
is limited to his obligation to make the Capital Contributions provided for in
Sections 4.1 and 4.3 above.
SECTION 4.6. ADDITIONAL MEMBERS. Each Person admitted as a Member of
the Company after the date of original execution of this Agreement shall make
the Capital Contribution, if any, required to be made by such Member for the
Percentage Interests acquired by such Member in accordance with Section 3.3 and
the then Members shall amend this Agreement to reflect such admission, such
Capital Contribution, if any, and such Percentage Interests. The then Members
also shall similarly amend this Agreement to reflect the acquisition of
additional Percentage Interests by any Member. Any legal or accounting fees or
expenses incurred by the Company in connection with the admission of a new
Member shall be paid by the new Member on demand.
SECTION 4.7. LIMITED LIABILITY OF MEMBERS.
4.7.1. The personal liability of a Member for the
debts and obligations of the Company shall be limited to the amount of his
agreed upon Capital Contribution as set forth in Section 4.1, plus the amount of
his Percentage Interest of any Additional Contributions required to be made
pursuant to Section 4.3. No Member shall be obligated to restore any deficit in
his Capital Account, contribute money to the Company or to otherwise answer for
any debt or obligation of the Company beyond his commitment to pay his agreed
upon Capital Contribution or his Percentage Interest of any Additional
Contributions.
4.7.2. The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business or affairs under this Agreement or the Act shall not be grounds
for imposing personal liability on the Members for the debts and obligations of
the Company.
<PAGE> 55
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SCHEDULE 13D
EXHIBIT G
---------
SECTION 4.8. NO INTEREST ON CAPITAL CONTRIBUTION. No interest shall be
paid by the Company to any Member with respect to any Capital Contribution.
SECTION 4.9. NO LIABILITY FOR FAILURE TO RETURN CAPITAL CONTRIBUTION.
Except as otherwise provided in this Agreement, neither the Company nor any
Member shall have any personal liability for any Capital Contribution which has
not been returned to a Member.
SECTION 4.10. CAPITAL ACCOUNTS.
4.10.1. A single capital account ("Capital Account") shall be
established, determined and maintained for each Member on the books and records
of the Company in accordance with the provisions of the Allocation Regulations
governing the determination and maintenance of partnership capital accounts,
including, without limitation, the following rules of determination and
maintenance: such account shall be credited with (a) the amounts set forth in
Section 4.1, the amounts of such Member's paid-in cash, Additional Contributions
and the amount of any other money contributed by such Member to the Company in
accordance with the terms of this Agreement (including the amount of any Company
liabilities assumed by such Member, other than liabilities described in the
parenthetical language of clause (e) of this Section 4.10.1); (b) the fair
market value of any property or other assets contributed by such Member to the
Company in accordance with the terms of this Agreement (net of liabilities
secured by such contributed property or assets that the Company is considered to
assume or take subject to under Section 752 of the Code); and (c) such Member's
distributive Percentage Interest of Profits (or items thereof); such account
shall be debited with (d) the amount of money distributed to such Member
(including the amount of such Member's liabilities that are assumed by the
Company, other than liabilities described in the parenthetical language of
clause (b) of this Section 4.10.1); (e) the fair market value of property or
other assets distributed to such Member (net of liabilities secured by such
distributed property or assets that such Member is considered to assume or take
subject to under Section 752 of the Code); and (f) such Member's distributive
Percentage Interest of Losses (or items thereof). Such account shall reflect all
Percentage Interests owned by such Member. Upon a Transfer of all or a part of a
Percentage Interest, the Capital Account of the transferor will carry over to
the transferee, provided that if such Transfer causes a termination of the
Company under Section 708(b)(1)(B) of the Code, the Capital Account that carries
over will be appropriately adjusted to reflect the liquidating distribution and
the contributions deemed to have occurred under Section 1.708-1(b)(1)(iv) of the
Income Tax Regulations. Except as required by the Allocation Regulations, any
Member with respect to whom a Company election to make an optional adjustment to
the basis of property or other assets of the Company under Sections 734 and 743
of the Code is in effect (as a result of an election under Section 754 of the
Code) shall not have a corresponding adjustment made to such Member's Capital
Account, and
<PAGE> 56
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SCHEDULE 13D
EXHIBIT G
---------
any adjustments to such Member's Capital Account by reason of distributions,
depreciation, depletion, amortization, gain or loss with respect to such
property or other assets will disregard such basis adjustment.
4.10.2. The property and other assets of the Company shall be
revalued on the books of the Company in any case in which such revaluation is
required by the Allocation Regulations and may be revalued in any case where
such revaluation is permitted by the Allocation Regulations and such revaluation
is determined to be appropriate by the Members in their sole discretion. In the
event any property or other assets of the Company are revalued on the books of
the Company in accordance with the Allocation Regulations, the Members' Capital
Accounts shall be adjusted in accordance with the Allocation Regulations to
reflect such revaluation and for allocation to them of Profits and Losses, and
items thereof, as computed for book purposes, with respect to such property or
other assets. In the event any property or other asset of the Company is
revalued on the books of the Company, all property and other assets of the
Company shall be valued for such purpose at fair market value, as determined by
the Members in their sole discretion.
4.10.3. The provisions of this Section 4.10 are intended to
comply with the Allocation Regulations and shall be interpreted in a manner
consistent with such regulations. If any of the provisions of this Agreement
relating directly or indirectly to Capital Account determination and maintenance
at any time conflict with the Allocation Regulations, the Allocation Regulations
shall govern Capital Account determination and maintenance.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
SECTION 5.1. ALLOCATIONS OF PROFITS AND LOSSES. Profits and Losses
shall be allocated among the Members and debited or credited to their Capital
Accounts in a manner which is consistent with the economic agreement among the
Members provided in this Agreement, and which complies with the requirements of
Section 704 of the Code and the Income Tax Regulations thereunder, including the
Allocation Regulations (with particular reference to the safe harbor
requirements contained in Section 1.704-1(b)(2) of the Allocation Regulations),
as reasonably interpreted and applied by the Members pro rata in accordance with
the Percentage Interests of the Members.
SECTION 5.2. DISTRIBUTIONS OF EXCESS CASH FLOW. On an annual or more
frequent basis, the Company shall determine in its reasonable judgment to what
extent (if any) there exists Excess Cash Flow. For purposes of this Agreement,
"Excess Cash Flow" means all Net Cash
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Receipts and all Capital Proceeds, less all expenses of every kind (before
deduction for cost recovery or other non-cash expenses) of the Company for any
period and less such reserves as the Company reasonably determines are necessary
from time to time for the efficient operation of the Company's business. The
Company shall distribute Excess Cash Flow to the Members from time to time as
the Company shall determine. Any Excess Cash Flow not distributed shall be
utilized as working capital in the Company's business. All distributions of
Excess Cash Flow, as and when made, shall be made to the Members pro rata in
accordance with the Percentage Interests of such Members. Notwithstanding the
foregoing, without the unanimous consent of the Members, no distribution shall
be made to the Members: (a) at a time when the Company has cumulative losses; or
(b) to the extent that any such distribution would cause the Company to have a
cumulative loss.
SECTION 5.3. DISTRIBUTIONS WITH RESPECT TO TAXES. Notwithstanding any
other provision of this Agreement to the contrary, if a Member is allocated
Profits with respect to a taxable year, the Company shall, as a mandatory
distribution to the extent there exists Adjusted Excess Cash Flow, distribute to
such Member an amount equal to the product derived by multiplying (a) the sum of
(i) the maximum marginal individual income tax rate under the Code in effect for
such taxable year plus (ii) that percentage determined by multiplying the
highest individual income tax rate applicable in Ohio during such year by a
percentage equal to one minus the maximum marginal individual income tax rate
under the Code in effect for such taxable year, and (b) such Member's Percentage
Interest of the Profits. Such distributions shall be made to each applicable
Member no later than March 31st of the year immediately following the taxable
year in which such Profits were recognized for federal income tax purposes. For
purposes of the provisions of this Section 5.3 relating to distributions with
respect to taxes, "Adjusted Excess Cash Flow" shall mean the sum determined by
adding to "Excess Cash Flow" the amounts of all reserves of any nature which
have been established or provided for in determining "Excess Cash Flow."
SECTION 5.4. DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED
PERCENTAGE INTERESTS. If any Percentage Interest (or portion thereof) is
transferred during any accounting period, Profits, Losses, each item thereof and
all other items attributable to such Percentage Interests (or portion thereof)
for such period shall be allocated between the transferor and the transferee by
taking into account their varying interests during the period in accordance with
Section 706(d) of the Code, using any conventions permitted by law and selected
by the Company. Unless otherwise determined by the Company, all distributions
made on or before the last day of the calendar month in which the Company
received written notice of such Transfer shall be made to the transferor, and
all distributions made thereafter shall be made to the transferee. Solely for
purposes of making such allocations and distributions, the Company shall
recognize such Transfer not later than the end of the calendar month during
which it is first given notice of such Transfer.
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SECTION 5.5. CERTAIN PROVISIONS OF THE ACT SUPERSEDED. The provisions
of this Agreement regarding allocations and distributions among the Members are
intended to and shall, to the fullest extent permitted by law, supersede the
provisions of the Act regarding allocations and distributions.
ARTICLE VI
MANAGEMENT BY MEMBERS; CERTAIN EXPENSES
---------------------------------------
SECTION 6.1. IN GENERAL. Subject to the terms and conditions of this
Article VI, the Company shall be managed by its Members, the agreement of the
Initial Members owning a majority of Percentage Interests being required for the
Company or the Members to take any action except as otherwise specifically
provided in this Agreement. The taking of any action by a Member without the
consent of other Members, which in the aggregate own a majority of the
Percentage Interests, shall be a breach of this Agreement and the breaching
Member shall indemnify and hold the non-breaching Members harmless from and
against any obligations or liabilities arising by reason of such action by the
breaching Member, all as provided in Article VII.
SECTION 6.2. COMPANY RESOLUTIONS. Any of the Members shall have the
right to request and require, with respect to any action which the Members may
take, that the Members maintain minutes of any or all Member meetings and that
resolutions of the Members be adopted with respect to the taking of any action
by the Company which is to be authorized or approved by the Members. Such
minutes or resolutions shall be certified by one of the Members who shall be
designated as the "Recording Secretary" for any such Member meeting.
Alternatively, any of the Members shall have the right to request and require,
with respect to any action which the Members may take on behalf of the Company,
that the Members (or that Member or Members holding a majority in interest of
Percentage Interests if there is a disagreement among the Members as to any
issue to be decided or decision to be made) execute and deliver an "action in
writing" in the nature of a Company resolution or resolutions signed by the
necessary Members required under this Agreement to decide such issue or make
such decision. Such "action in writing" shall set forth in reasonable detail the
action taken by the Members. All such Company "resolutions" or "actions in
writing" shall be permanently maintained as part of the books and records of the
Company.
SECTION 6.3. OTHER BUSINESS INTERESTS. Any Member, and any Related
Person to any Member, shall be entitled to hold interests in any other business,
investment or undertaking without regard to this Agreement, and no Member, or
any Related Person to any Member, shall have any obligation to offer any
business opportunity of any nature to the Company, or to any other Member and
neither the Company, nor any Member or Related Party to any Member, shall
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have any right to participate in, or have any claim with respect to, any other
business, investment or undertaking of any nature in which any Member, or any
Related Party to any Member, now participates or may in the future participate
in any way. The provisions of this Section 6.3 are absolute and are intended to
by agreement eliminate any right or claim of the Company or any party hereto
under any "business opportunity" or related doctrine. Each of the parties
hereto is to be completely and absolutely free to pursue business and
investment interests of all manners and kinds without the Company or any other
party hereto having any right to participate in any way in any such businesses
or investments.
ARTICLE VII
INDEMNIFICATION; INSURANCE
--------------------------
SECTION 7.1. PROTECTION OF MEMBERS. The Members (and any affiliate of a
Member performing services for or acting on behalf of the Company) shall have no
liability to the Company or to any of the Members for any mistakes or errors in
judgment or for any act or omission believed by them in good faith to be within
the scope of authority conferred upon them by this Agreement, except that the
Members and their affiliates shall have liability for acts and omissions
involving their recklessness, willful misconduct and gross negligence. The fact
that the Members have obtained the advice of legal counsel for the Company that
any act or omission by them is within the scope of the authority conferred upon
them by this Agreement, shall be conclusive evidence that they believed in good
faith such act or omission to be within the scope of the authority conferred
upon them by this Agreement, but the Members shall not be required to procure
such advice to be entitled to the benefits of the preceding sentence.
SECTION 7.2. INDEMNIFICATION.
7.2.1. The Company shall indemnify each Member and each
officer, director, Member or other affiliate of a Member providing services to
or acting on behalf of the Company in respect of any payment made or personal
liability reasonably incurred by it or him (a) in the ordinary and proper
conduct of the Company's business or (b) for the preservation of the Company's
business or property. The Company is not required to indemnify a Member or
affiliate of a Member in respect of payments made or liability incurred by it if
such payments or incurrences were unreasonably made or incurred, were not made
or incurred in the ordinary and proper conduct of the Company's business or were
made or incurred as a result of the recklessness, willful misconduct or gross
negligence of, or material breach of this Agreement by, the Member or affiliate
seeking indemnification. Such indemnification shall include, but is not limited
to, indemnification for the costs and expenses of any threatened, pending or
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completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, any action threatened or
instituted by or in the right of the Company), by reason of the fact that the
Person to be indemnified is or was a Member, employee or agent of the Company
(including any affiliate of a Member and the directors, officers and employees
thereof which is providing services to the Company or acting on the Company's
behalf). If a Member or affiliate of a Member is entitled to indemnification
with respect to a matter, the costs and expenses to be indemnified shall
include, without limitation, attorneys' fees, filing fees, court reporters' fees
and transcript costs, judgments, fines and amounts paid in settlement actually
and reasonably incurred by it or him in connection with such action, suit or
proceeding.
7.2.2. If the Company does not have sufficient property with
which to provide the indemnity required by Section 7.2.1 above, the Members
shall contribute towards such indemnity in accordance with their Percentage
Interests, at the time the events giving rise to the right of indemnification
occurred.
7.2.3. The indemnification provided by this Article VII shall
not be exclusive of, and shall be in addition to, any other rights to which any
Person seeking indemnification may be entitled under any agreement, a vote of
Members, or otherwise, both as to action in his official capacity and as to
action in another capacity, and shall continue as to a Person who has ceased to
be a Member and shall inure to the benefit of the heirs, executors, and
administrators of such a Person.
7.2.4. Any action, suit or proceeding to determine a claim
for, or for repayment to the Company of, indemnification under this Article VII
shall be maintained by the Person claiming such indemnification, or by the
Company, in the Franklin County, Ohio Court of Common Pleas. The Company and (by
claiming or accepting such indemnification) each such Person consent to the
exercise of jurisdiction over its person by the Franklin County, Ohio Court of
Common Pleas in any such action, suit or proceeding.
SECTION 7.3. INSURANCE. The Company may purchase and maintain
insurance or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, on behalf of any Person who is or
was a Member, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a manager, director, trustee, officer, employee or
agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the obligation or the power to indemnify
him against such liability under the provisions of this Article VII.
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ARTICLE VIII
BOOKS AND RECORDS; TAX MATTERS; REPORTS
---------------------------------------
SECTION 8.1. BOOKS AND RECORDS. The Company shall maintain its books
and records, including all books and records required by the Act, at the office
identified in Section 2.2. The Company shall make and keep books, records, and
accounts, which, in reasonable detail, accurately and fairly reflect
transactions and dispositions of assets of the Company and shall devise and
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (a) transactions have been and are executed in
accordance with the general or specific authorization of the Members; (b)
transactions have been and are recorded as necessary (i) to permit preparation
of financial statements in conformity with this Agreement, and (ii) to maintain
accountability for assets; (c) access to assets has been and is permitted only
in accordance with the general or specific authorization of the Members; and (d)
the recorded accountability for assets has been and is compared with the
existing assets at reasonable intervals and appropriate action has been and is
taken with respect to any difference.
SECTION 8.2. FISCAL YEAR; ACCOUNTING METHOD. The fiscal year of the
Company shall be the calendar year. The method of accounting used by the Company
for book and tax purposes shall be determined by the Company.
SECTION 8.3. TAX ELECTIONS. The Company, in its sole discretion, may
elect, pursuant to Section 754 of the Code, to adjust the basis of the property
and other assets of the Company for Transfers of Percentage Interests if the
Company determines that such election would benefit any Member or the Company.
The Company may, in its reasonable discretion, make any other tax elections on
behalf of the Company.
SECTION 8.4. TAX RETURNS. The Company shall cause to be prepared and
filed on a timely basis all necessary federal, state and local tax returns of
the Company. The Company shall furnish to the Members all relevant information
in its possession relating to the Company that is necessary to enable the
Company's tax returns to be prepared and filed.
SECTION 8.5. TAX MATTERS PARTNER. Sherman, so long as he is a Member,
shall be designated as the "tax matters partner" of the Company pursuant to
Section 6231(a)(7) of the Code; or, if Sherman is no longer a Member, the "tax
matters partner" shall be a Member that is designated as such by the Members
owning a majority of the outstanding Percentage Interests. Any Member who is
designated as the "tax matters partner" shall inform each other Member of all
significant matters that may come to his attention in his capacity as "tax
matters partner" by giving notice thereof on or before the fifth business day
after becoming aware thereof and, within
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that time, shall forward to each Member copies of all significant written
notices he may receive in that capacity. Any Member who is designated as the
"tax matters partner" may take any action contemplated by Sections 6222 through
6232 of the Code to be taken by the tax matters partner only with the consent of
the Members owning a majority of the Percentage Interests but this sentence does
not authorize the tax matters partner to take any action left to the
determination of an individual Member under Sections 6222 through 6232 of the
Code. The Company shall indemnify the Member serving as the tax matters partner
of the Company, with respect to matters relating to the Member's serving as the
tax matters partner, to the same extent as the Company is obligated to indemnify
a Member pursuant to Article VII.
SECTION 8.6. K-1s TO THE MEMBERS, ETC. The Company shall cause to be
prepared and distributed to each Member, on or before March 31 of each fiscal
year, the Member's Schedule K-1 (Form 1065) and all other information reasonably
necessary for the preparation of such Member's federal, state and local tax
returns.
ARTICLE IX
RESTRICTIONS ON TRANSFER; RIGHTS OF REFUSAL; WITHDRAWAL
-------------------------------------------------------
SECTION 9.1. TRANSFERS OF PERCENTAGE INTERESTS. Except as provided in
this Agreement, no Member shall, voluntarily or involuntarily, give, sell,
pledge, assign or in any other manner transfer title or rights to, or otherwise
encumber (a "Transfer"), or otherwise permit to occur or suffer to exist any
Transfer of, any interest in the "Company Percentage Interests" held by such
Member, or any preemptive rights to new "Company Percentage Interests" allotted
to such Member, or take any action leading to or likely to result in any of the
foregoing, and the Company shall not register on its books any Transfer of the
"Company Percentage Interests" in violation of this Section 9. For purposes of
this Section 9: (a) "Company Percentage Interests" shall include all Percentage
Interests, other equity interests, capital stock and other voting or non-voting
securities of the Company (or any successor in interest to the Company), and (b)
"Transfer" shall include any Transfer of the equity, voting or security
interests in a Member or other intermediate company which results in an Initial
Member or his Permitted Transferees not controlling a Member other than a Member
to whom a Transfer was made in accordance with this Agreement. In addition to
any other obligation set forth herein, no Member shall take any action which may
constitute a Transfer of any of his Company Percentage Interests without first
giving the Company at least 30 days prior written notice thereof.
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SECTION 9.2. PERMITTED TRANSFERS.
9.2.1. Any Member may Transfer all or any portion of his
Company Percentage Interests and assign his rights and obligations hereunder in
whole or in part (a) to any Person who is a direct or indirect beneficial owner
of the Member pro rata to the interests of such Person in the Member; (b) to any
Person who is a Related Person so long as the transferor retains control over
the voting of the Company Percentage Interests; (c) to any corporation, limited
liability company or partnership so long as the transferor retains control of
the transferee; (d) to any trust established for the benefit of any distributee
described in the immediately preceding clauses (a) and (b) or (c) so long as the
transferor retains control over the voting of the Company Percentage Interests;
and (e) by way of testamentary transfer or by operation of law as the result of
the death or incapacity of any Person.
9.2.2. Any Transfer under this Section 9.2 shall be effective
only upon (a) notice thereof being given to each Member, (b) the transferee of
the applicable Company Percentage Interests under this Section 9.2 (each a
"Permitted Transferee"), if not already a party hereto, executes an agreement
with the then remaining Members and the Company by which such Permitted
Transferee declares itself to be bound as a Member by the provisions of this
Agreement, (c) a Permitted Transferee who received a Transfer under
circumstances described in Sections 9.2.1(b), (c) or (d) agrees with such
remaining Members that, should it be proposed at any time that his transferor
should cease to be in control over the voting of the Company Percentage
Interests, such Permitted Transferee will, prior to or immediately upon so
ceasing, Transfer the relevant Company Percentage Interests to an entity then
qualifying as an affiliate of a Member, (d) the transferring Member agrees to
ensure that the Permitted Transferee will comply in all respects with his
obligations under (a) and (b) above, and (e) the Transfer shall not relieve the
transferring Member of any liability under this Agreement whether accruing
before or after such transfer and the transferring Member shall remain liable
for any breach of this Agreement by the Permitted Transferee. Any reference in
this Agreement to a specific Member shall be deemed to include reference to such
Member's Permitted Transferees. When a Member has transferred all his Company
Percentage Interests to Persons other than Permitted Transferees, it shall no
longer be bound by this Agreement (subject to Section 4.3 and this Section
9.2.2(e)) or any amendments hereto except in relation to any act or omission by
such transferor prior to the registration of the last Transfer.
SECTION 9.3. NEGOTIATED SALE; RIGHT OF FIRST REFUSAL.
9.3.1. If any Member and his Permitted Transferees (a "Seller
Group") desire to sell all, but not less than all, of their "Company Unit
Percentage Interests" other than as permitted in Section 9.2, such Member shall
notify the other Members (the "Electors") and, if all parties
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agree on a price and all other terms of sale, each member of the Seller Group
may sell his "Company Unit Percentage Interests" to the Electors free of any
restrictions herein contained. For purposes of this Section 9.3, "Company Unit
Percentage Interests" with respect to a Member shall include all Company
Percentage Interests owned by such Member and his Permitted Transferees.
9.3.2. If at any time all members of a Seller Group receive,
and intend to sell all, but not less than all, of their Company Unit Percentage
Interests to a Person not a Permitted Transferee of the Seller Group (the
"Offeror") pursuant to an "Offer", then the Seller Group shall send a copy of
such Offer to the Electors within five days of the receipt thereof by the Seller
Group, and the Electors shall have the option to sell their Company Unit
Percentage Interests pursuant to the Offer or to purchase the Seller Group's
Company Unit Percentage Interests at the per Percentage Interest cash
consideration contained in the Offer. The Seller Group shall provide any
additional information regarding such Offer or the Offeror as may be reasonably
requested from time to time by an Elector. For purposes hereof, an "Offer" shall
mean a bona fide offer to purchase all of the Company Unit Percentage Interests
of each member of the Seller Group which (a) is open and irrevocable for 60 days
from the date thereof, (b) states the per Percentage Interest cash value of the
consideration to be given for such Company Unit Percentage Interests, (c)
provides that the Offeror shall agree in writing to comply with each of the
provisions of this Agreement that applies to the Members, and (d) provides that
the Offeror will purchase additional Percentage Interests from the other Members
if requested by such Members as contemplated by the provisions of Section 9.3.4.
An Offer which does not comply with the requirements of this Section 9.3.2 shall
not allow the Seller Group to sell its Company Unit Percentage Interests and
will not give rise to the provisions of this Section 9.3.
9.3.3. (a) If only one of the Electors (each Elector who duly
gives notice of his intent to purchase hereinafter referred to as a "Responder")
notifies the Seller Group and each other Elector within 30 days of the date on
which a copy of the Offer was sent to the Electors (the "Response Period") that
it desires to purchase all (but not less than all) of the Seller Group's Company
Unit Percentage Interests for the per Percentage Interest cash consideration to
be paid to the Seller Group pursuant to the Offer (sometimes referred to
hereinafter as a "Call Response"), then the Seller Group shall sell its Company
Unit Percentage Interests to such Responder at the closing contemplated by
Section 9.3.6.
(b) If more than one of the Electors delivers a Call
Response within the Response Period, then the Seller Group shall sell its
Company Unit Percentage Interests to each such Responder in the ratio of the
number of Company Unit Percentage Interests owned by each such Responder to the
number of Company Unit Percentage Interests owned by all such Responders, at the
closing contemplated by Section 9.3.6.
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(c) If one or more Electors deliver a Call Response
within the Response Period, and one or more Electors, pursuant to Section 9.3.4,
notify the Seller Group and the other Electors within the Response Period that
he desires to sell all (but not less than all) of such Elector's Company Unit
Percentage Interests for the per Percentage Interest cash consideration to be
paid to the Seller Group pursuant to the Offer (sometimes referred to
hereinafter as a "Put Response"), then the Responders may also elect to purchase
all (but not less than all) of the Company Unit Percentage Interests of any
Elector(s) delivering a Put Response. If the Electors who delivered an initial
Call Response do not elect to also purchase the Company Unit Percentage
Interests of each other Elector who elected to sell their Company Unit
Percentage Interests, then the Seller Group and each Elector delivering a Put
Response shall sell its Company Unit Percentage Interests to the Elector(s)
desiring to purchase the Seller Group's Company Unit Percentage Interests, and
each Elector delivering a Put Response whose Company Unit Percentage Interests
were not so purchased shall sell his Company Unit Percentage Interests to the
Offeror.
9.3.4. If one or more of the Electors (each such Elector, a
"Seller") delivers to the Seller Group and each other Elector within the
Response Period a Put Response with respect to all (but not less than all) of
the Company Unit Percentage Interests owned by such Seller and his Permitted
Transferees (the "Selling Group"), then no member of the Seller Group shall sell
his Company Unit Percentage Interests to the Offeror pursuant to the Offer
unless the Offeror also agrees to purchase the Company Unit Percentage Interests
of each member of the Selling Group for cash in an amount equal to the per
Percentage Interest cash consideration to be paid to each member of the Seller
Group pursuant to the Offer. If the Offeror also agrees to so purchase the
Selling Group's Company Unit Percentage Interests, then each member of the
Seller Group and of the Selling Group shall sell all (but not less than all) of
their Company Unit Percentage Interests to the Offeror at a mutually acceptable
time and place. At such closing, the Offeror shall deliver to each member of the
Seller Group and of the Selling Group the cash required to purchase all (but not
less than all) of such member's Company Unit Percentage Interests in the form of
wire transfers or certified or bank checks drawn on a reputable bank having an
office in Columbus, Ohio made payable to the applicable member, and each member
of the Seller Group and of the Selling Group shall deliver an assignment of such
Company Unit Percentage Interests to the Offeror, free and clear of any lien or
claim that the transfer of the Company Unit Percentage Interests was or would be
wrongful (an "Adverse Claim"). If (a) less than all of the consideration for the
purchase of any member of the Selling Group's and the Seller Group's Company
Unit Percentage Interests is tendered by the Offeror at such closing or (b) such
closing does not occur on or before the date that is 60 days after the date of
the Offer, the Selling Group's and the Seller Group's Company Unit Percentage
Interests shall not be sold to the Offeror and the Selling Group may adjourn
such closing and elect to acquire the Seller Group's Company Unit Percentage
Interests pursuant to this Section 9.3 as if the Offer were sent to the Selling
Group on
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the date that such closing was adjourned and otherwise on the terms and
conditions (other than those addressing acquisition of the Selling Group's
Company Unit Percentage Interests by the Offeror) contained therein.
9.3.5. If both:
(a) a copy of the Offer is delivered to the Electors
as provided in Section 9.3.2, and
(b) each Elector either (i) fails to deliver a Call
Response within the Response Period or (ii) after delivery of a Call Response,
the Responder(s) fail to purchase all of the Seller Group's Company Unit
Percentage Interests as provided in Section 9.3.6; then all (but not less than
all) of the members of the Seller Group may sell all (but not less than all) of
their Company Unit Percentage Interests to the Offeror pursuant to the terms and
conditions of the Offer within 60 days of the date of the Offer. Such sale shall
not be consummated unless the Offeror agrees in writing to comply with each of
the provisions of this Agreement that applies to the members of the Seller Group
and such Offeror shall, upon the acquisition of the Company Unit Percentage
Interests, be deemed to be one of the Members hereunder and shall be bound by
the terms hereof as though such Offeror were an original signatory hereto. If
the sale of the Company Unit Percentage Interests pursuant to the Offer is not
completed within 60 days of the date of the Offer, the Offer shall be invalid
and any sale by any member of the Seller Group of his Company Unit Percentage
Interests pursuant to such Offer shall be deemed a breach of this Agreement.
9.3.6. If the Responders, by delivery of a Call Response,
elect to purchase all (but not less than all) of the Seller Group's Company Unit
Percentage Interests as provided in Section 9.3.3, such election shall be
binding upon each member of the Seller Group and, within five days after the
date of the Call Response, the Seller Group shall notify the Responders of a
time during regular business hours on a regular business day within 20 days of
the end of the Response Period at a location within Columbus, Ohio where each
member of the Seller Group and the Responders shall meet for the purpose of
completing the sale of all of the Seller Group's Company Unit Percentage
Interests. At such meeting, the Responders shall deliver to each member of the
Seller Group a wire transfer or certified or bank check drawn on a reputable
bank having an office in Columbus, Ohio in an amount equal to the per Percentage
Interest cash consideration (the "Normal Purchase Price") to be paid to such
member of the Seller Group pursuant to the Offer and each member of the Seller
Group shall deliver an assignment of such Company Unit Percentage Interests to
the Responders, free and clear of all Adverse Claims. If less than the purchase
price for any member of the Seller Group's Company Unit Percentage
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Interests is tendered by the Responders at such meeting, the Seller Group may
adjourn such meeting and take one of the following courses of action:
(a) in the case where there are two or more
Responders and one or more of the Responders default on his payment to the
Seller Group (the "Breaching Party"), the Seller Group may (i) opt for the
Responder who does not default (the "Non-Breaching Party") to, nevertheless, buy
the Seller Group's Company Unit Percentage Interests, at which time, the
Non-Breaching Party would have the option to buy the Breaching Party's Company
Unit Percentage Interests at a 10% discount off the Normal Purchase Price; (ii)
purchase the Breaching Party's Company Unit Percentage Interests at a 10%
discount price off the Normal Purchase Price; or (iii) sell their Company Unit
Percentage Interests to the Offeror, at which time, the Offeror would have the
option to purchase the Breaching Party's Company Unit Percentage Interests at a
10% discount off the Normal Purchase Price;
(b) in the case where there are two or more
Responders and all Responders default on their payment to the Seller Group, the
Seller Group may (i) buy any or all of the Breaching Party's Company Unit
Percentage Interests at a 10% discount off the Normal Purchase Price; or (ii)
sell their Company Unit Percentage Interests to the Offeror, at which time the
Offeror would have the option to purchase any or all of the Breaching Party's
Company Unit Percentage Interests at a 10% discount off the Normal Purchase
Price; or
(c) in the case where there is one Responder and the
Responder defaults on his payment to the Seller Group, the Seller Group may (i)
opt to buy the Breaching Party's Company Unit Percentage Interests at a 10%
discount off the Normal Purchase Price; or (ii) sell to the Offeror, at which
time, the Offeror would have the option to purchase the Breaching Party's
Company Unit Percentage Interests at a 10% discount off the Normal Purchase
Price.
(d) in any case, the Seller Group must give written
notice of their elected course of action (the "Intentions") and deliver the
Intentions to the Breaching Party within 10 business days of the original
closing where the default occurred. The chosen course of action then shall take
place at a closing which shall occur at the offices of the Company at a mutually
acceptable time on the 30th day following the delivery of the Intentions. At the
closing, the Member(s) or Offeror buying Company Unit Percentage Interests shall
deliver to the Member(s) selling Company Unit Percentage Interests wire
transfers or certified or bank checks drawn on a reputable bank having an office
in Columbus, Ohio in an amount equal to the applicable purchase price as
determined hereinabove against delivery by the Member(s) selling Company Unit
Percentage Interests of an assignment of such Company Unit Percentage
<PAGE> 68
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SCHEDULE 13D
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Interests, free and clear of all Adverse Claims. If the Member(s) buying elect
for any reason or no reason not to proceed with the closing, then the option
herein granted in this section 9.3.6 shall terminate without any further
liability.
9.3.7. No Transfer which occurs prior to the payment
in full of all amounts owing under the Gillmor and Brownfield Agreements shall
relieve the Initial Member of his obligations to pay his pro rata share, based
on his Percentage Interest, under the Gillmor and Brownfield Agreements.
SECTION 9.4. OBLIGATIONS UNDER GILLMOR AND BROWNFIELD AGREEMENTS. The
Company hereby assumes all obligations of Sherman and Schwartz under the Gillmor
and Brownfield Agreements and agrees to indemnify and hold harmless Sherman and
Schwartz from any liability either may have thereunder. Each Initial Member
agrees to have personal liability, up to such Initial Member's Percentage
Interest, in all liabilities under the Gillmor and Brownfield Agreements,
regardless of any action or inaction, including without limitation, Transfers or
the death of any Initial Member.
SECTION 9.5. ADDITIONAL RESTRICTIONS. Notwithstanding anything in this
Agreement to the contrary, the following additional restrictions apply to the
Transfer of Percentage Interests:
9.5.1. No Member shall make any Transfer of any
Percentage Interests if the Transfer would, when considered with all other
Transfers during the same applicable 12-month period, cause a termination of the
Company for federal income tax purposes.
9.5.2. No Member shall make any Transfer of any
Percentage Interests to a minor or to an incompetent; except that a Transfer may
be made to a trustee, custodian or guardian for the benefit of a minor or an
incompetent, if such Transfer is effected in accordance with applicable law.
9.5.3. No Member shall make any Transfer of any
Percentage Interests unless such Member gives a copy of this Agreement to the
transferee before such Transfer is effected.
9.5.4. No Member shall make any Transfer of any
Percentage Interests unless, at the closing, the transferee shall file with the
Company a duly executed and acknowledged counterpart of the assignment making
such Transfer, which assignment shall evidence the written acceptance and
agreement of the transferee to be bound by all the provisions of this Agreement
and shall otherwise be in a form satisfactory to the Members.
<PAGE> 69
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9.5.5. The Members may, in addition to any other reasonable
requirements that they may impose, require, as a condition to the Transfer of
any Percentage Interests, that the Transferring Member and/or transferee (a)
assume all costs incurred by the Company in connection therewith; and (b)
furnish reasonable assurances to the Members, including the provision of any
factual information and/or legal opinions satisfactory in all respects to the
Members, that such Transfer complies in all respects with applicable federal and
state securities laws.
SECTION 9.6. VIOLATIVE TRANSFERS. Any attempted or purported
Transfer and any attempted or purported purchase or other acquisition of
Percentage Interests in violation of this Agreement shall be null and void and a
fraud upon the Company and the Members. Any such attempted or purported Transfer
or purchase or other acquisition may be enjoined in any court of competent
jurisdiction by any Member or by the Company. The Person making the attempted or
purported Transfer, notwithstanding any agreement or understanding with any such
attempted or purported transferee, shall retain all rights and obligations it
had with respect to the Percentage Interests immediately prior to the attempted
or purported Transfer.
SECTION 9.7. OPTION TO PURCHASE. In the event of the death or
incapacity of a Member (an "Incapacity Event"), the remaining Members shall have
an option to purchase all (but not less than all) of the Company Unit Percentage
Interests of the deceased or incapacitated Member (the "Incapacitated Member")
on the following terms and conditions:
9.7.1. Each remaining Member who wishes to purchase all or
part of the Company Unit Percentage Interests of an Incapacitated Member shall
meet with each other remaining Members for the purpose of agreeing on the "Fair
Market Value". All of the remaining Members who wish to purchase the Company
Unit Percentage Interests of an Incapacitated Member (the "Buying Members")
shall send a notice (the "First Notice"), within 60 days of first becoming aware
of the Incapacity Event, of their intention to require the Incapacitated Member
(which, for purposes of this Section includes the estate of such Incapacitated
Member) to sell his Company Unit Percentage Interests. The First Notice shall
set forth what the Buying Members believe to be the Fair Market Value, and a
time and date, not less than 30 days from the date of the First Notice, for a
closing. For purposes hereof, "Fair Market Value" shall mean the fair market
value of the Company multiplied by a fraction, the numerator of which is the
number of Company Unit Percentage Interests to be sold at Fair Market Value and
the denominator of which is the total number of issued and outstanding Company
Unit Percentage Interests.
<PAGE> 70
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---------
9.7.2. If the Incapacitated Member believes that the Fair
Market Value set by the Buying Members does not accurately reflect the Fair
Market Value of the Company, then, within 10 days of receipt of the First
Notice, the Incapacitated Member shall send a notice (the "Second Notice") to
the Buying Members setting forth a number which the Incapacitated Member
believes to be the Fair Market Value and such closing shall be deferred and such
Fair Market Value shall be determined as provided in this Section 9.7.
9.7.3. If the Second Notice is timely sent and if the Buying
Members and Incapacitated Member are unable to agree on the Fair Market Value on
or before the 10th day after the date of the Second Notice, then, if the Fair
Market Values selected by such parties pursuant to the terms of this Agreement
are within 10% of the lowest number, the average of such values so selected
shall be deemed the Fair Market Value. If the Fair Market Values selected by
such parties pursuant to the terms of this Agreement are not within 10% of the
lowest number, then either the Incapacitated Member or the Buying Members may
submit the dispute to arbitration by an independent firm of certified public
accountants who are not the then auditors for the Company or an appraisal firm,
in each case of recognized national standing, to be mutually selected by
representatives appointed by the two groups. If, within 10 days of the first
meeting of such groups for the purpose of selecting an arbitrator, no arbitrator
has been agreed to by the two groups, then each group may, for the sole purpose
of selecting a final arbitrator, itself appoint an arbitrator and the
arbitrators so appointed shall appoint a final arbitrator within 10 days of
notice of the first such appointment. A party not appointing an arbitrator in a
timely fashion shall forfeit his right to participate in the selection of the
final arbitrator hereunder.
9.7.4. Within 10 business days after appointment of the
arbitrator, the Incapacitated Member and the Buying Members shall submit to the
arbitrator a written statement of their position, setting forth the amount that
such party believes to be the Fair Market Value, together with a reasonably
detailed statement of the method of calculation. If either group fails to do so,
such group shall forfeit its right to participate in the setting of the Fair
Market Value. Within 30 days after appointment, the arbitrator shall elect
whether the amount submitted by the Incapacitated Member or by the Buying
Members most closely approximates the Fair Market Value and shall deliver his
decision to the parties hereto. The arbitrator shall have no power to select any
other amount for the Fair Market Value. During the interim between submission of
the statements and the decision of the arbitrator, the parties may meet with the
arbitrator in each other's presence to explain their positions. The parties
shall not communicate with the arbitrator in the absence of one another. The
losing party in the arbitration shall pay the arbitrator's fees and expenses.
<PAGE> 71
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9.7.5. The closing shall occur at the offices of the Company
at a mutually acceptable time on the 60th day following (a) if the Second Notice
is not sent, the first to occur of (i) the expiration of 30 days following
delivery of the First Notice or (ii) the delivery of notice to the Buying
Members that no Second Notice will be sent, or (b) if the Second Notice is sent,
(i) the date the Second Notice is sent if the amounts selected by the parties
are within 10% of the lowest number, or (ii) the date of the delivery of the
decision of the arbitrator.
9.7.6. At the closing, the Buying Members shall deliver to the
Incapacitated Member wire transfers or certified or bank checks drawn on a
reputable bank having an office in Columbus, Ohio in an amount equal to the
applicable purchase price as determined hereunder against delivery by the
Incapacitated Member of an assignment of such Company Unit Shares, free and
clear of all Adverse Claims. If the Buying Members elect for any reason or no
reason not to proceed with the closing, then the option herein granted in this
Section 9.7 shall terminate without any further liability with respect to the
Incapacity Event triggering the option.
SECTION 9.8. CERTAIN PROVISIONS OF THE ACT SUPERSEDED. The provisions
of this Agreement regarding the Transfer of Percentage Interests are intended to
and shall, to the fullest extent permitted by law, supersede the provisions of
the Act regarding the withdrawal of a member.
SECTION 9.9. RESTRICTIONS REASONABLE. The parties to this Agreement
agree and acknowledge that the restrictions on Transfer of Percentage Interests
imposed by this Agreement are reasonable and are imposed to accomplish
legitimate purposes of the Members and the Company, and that such restrictions
are not more restrictive than necessary to accomplish those purposes.
SECTION 9.10. WITHDRAWAL. Each Member shall have the right to withdraw
as a Member at any time without the consent of any other Member and without
breach of this Agreement and neither the Company, nor any other Member, shall
have any right or claim of any nature against any Member exercising his right to
withdraw as permitted in this Section 9.10, even if such withdrawal would result
in the termination and dissolution of the Company, except for the continuing
obligation to pay his Percentage Interest of Additional Contributions. Any such
withdrawal shall be effected by a Member giving written notice (the "Withdrawal
Notice") to all other Members. Upon receipt of the Withdrawal Notice, the
withdrawing Member's Capital Account will be frozen until all obligations due
under the Gillmor and Brownfield Agreements have been paid in full, at which
time, an amount equal to the Capital Account will be transferred to the
withdrawing Member minus any outstanding Additional Contributions.
<PAGE> 72
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SCHEDULE 13D
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---------
SECTION 9.11. APPLICABILITY OF CERTAIN PROVISIONS TO SHARES OF RGC
OWNED BY MEMBERS.
9.11.1. Each Member agrees to vote any shares of RGC owned by
such Member with respect to any matter on which the shareholders of RGC vote, in
the same manner as the shares of RGC owned by the Company are voted.
9.11.2. Each Member agrees that the provisions of Sections
9.1, 9.2 and 9.3 shall govern any transfer of shares of RGC that such Member may
own of record, and each Member agrees that any certificate representing shares
of RGC owned of record by such Member may have affixed to such certificate the
following legend:
ANY SALE, TRANSFER OR OTHER DISTRIBUTION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN AN AGREEMENT DATED __________, 1996
AMONG CERTAIN SHAREHOLDERS OF THE ISSUER.
ARTICLE X
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
SECTION 10.1. DISSOLUTION. The Company shall be dissolved and its
business and affairs wound up on the first to occur of the following:
10.1.1. December 31, 2016; or
10.1.2. Any other event specified in Section 1705.43 of the Act.
SECTION 10.2. LIQUIDATION AND TERMINATION. Upon the dissolution of the
Company, the Members shall jointly act as liquidator to wind up the business and
affairs of the Company and to complete its liquidation. The liquidator shall
proceed diligently to wind up the business and affairs of the Company and make
final distributions as provided in this Agreement. The costs of liquidation
shall be borne as a Company expense. Until final distribution, the liquidator
shall continue to operate the property and other assets of the Company with all
of the power and authority of the Members. A reasonable time shall be allowed
for the orderly liquidation of the property and other assets of the Company and
the discharge of its liabilities to creditors so as to enable the liquidator to
minimize any losses resulting from liquidation. Notwithstanding the
<PAGE> 73
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---------
foregoing, the liquidator shall not be required to convert assets to cash but
may make distributions in kind of all or some of the assets of the Company. The
liquidator, as promptly as possible after dissolution and again after final
liquidation, shall cause a proper accounting to be made of the Company's
property and other assets, liabilities, and operations through the last day of
the calendar month in which the dissolution occurs or the final liquidation is
completed, as applicable, and shall apply the proceeds of liquidation as set
forth in the remaining sections of this Article X.
SECTION 10.3. PAYMENT OF DEBTS. The assets shall first be applied
to the payment of the liabilities of the Company to Persons other than Members
(or Related Persons to any Member), and the expenses of liquidation. Thereafter
the assets shall next be applied to the payment of debts to any Member or any
Related Person to any Member.
SECTION 10.4. REMAINING DISTRIBUTION. The assets remaining after
the payment of the debts of the Company, as provided in Section 10.3, shall be
distributed pro rata to the Members in accordance with their Capital Accounts,
and after all Capital Accounts have been reduced to zero, in accordance with
their respective Percentage Interests.
SECTION 10.5. RESERVE. Notwithstanding the provisions of Section
10.3 and 10.4, the liquidator may retain such amount as it deems necessary as a
reserve for any contingent liabilities or obligations of the Company, which
reserve, after the passage of a reasonable period of time, shall be distributed
pursuant to the provisions of this Article X.
SECTION 10.6. FINAL ACCOUNTING. Each of the Members shall be
furnished with a statement which shall set forth the assets and liabilities of
the Company as of the date of the complete liquidation. Upon the compliance by
the liquidator with the foregoing distribution plan, the liquidator shall
execute and cause to be filed Articles of Cancellation and any and all other
documents necessary with respect to termination and cancellation of the Company
under the Act.
ARTICLE XI
AMENDMENTS
----------
The Members shall amend this Agreement and the Articles only with the
written consent of all Members.
<PAGE> 74
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---------
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
SECTION 12.1. NO THIRD PARTY BENEFICIARIES. This Agreement is entered
into among the Members for the exclusive benefit of the Company, its Members,
and their successors and permitted assignees. This Agreement is expressly not
intended for the benefit of any creditor of the Company or any other Person.
Except and only to the extent provided by applicable law, no creditor or third
party shall have any rights under this Agreement or any agreement between the
Company and any Member with respect to any Capital Contribution or otherwise.
SECTION 12.2. NOTICES. All notices and other communications required
or permitted under this Agreement shall be in writing and shall be mailed by
certified mail or otherwise delivered by hand or by messenger, addressed (a) if
to a Member, at such Member's address as set forth on the books of record of the
Company (the address of each Member at the time of execution of this Agreement
being as set forth on Exhibit 12.2 attached), or (b) if to the Company, at its
principal office and addressed to the attention of the President of the Company
or at such other address as the Company shall have furnished to the Members in
writing. Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given or received, if delivered
by hand or by messenger, when delivered, or, if mailed by certified mail, when
the return receipt is signed by the recipient.
SECTION 12.3. FURTHER ASSURANCES. The parties shall execute and deliver
such other instruments and take such other action as may be necessary or
convenient to effectuate the provisions of this Agreement.
SECTION 12.4. EQUITABLE RELIEF. The parties acknowledge that it is
impossible to measure in money the damages that would result by reason of a
party's breach. It is therefore agreed that the provisions of this Agreement
shall be enforceable by injunction, specific performance or other equitable
relief, without reference to whether or not an adequate remedy at law may be
available.
SECTION 12.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio applicable to
contracts executed and to be performed in the State of Ohio.
SECTION 12.6. SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect any other provision
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
<PAGE> 75
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SECTION 12.7. HEIRS AND SUCCESSORS. This Agreement and the Articles
shall inure to the benefit of and be binding upon the respective heirs, personal
representatives, successors and permitted assigns of the parties hereto.
SECTION 12.8. ENTIRE AGREEMENT. This Agreement and the Articles
constitute the entire and exclusive statement of the parties' agreement and
supersede all prior agreements, understandings, negotiations and discussions
among the parties, whether oral or written.
SECTION 12.9. SECTION HEADINGS. The section headings in this Agreement
are provided for convenience only and shall be disregarded in the interpretation
of this Agreement.
SECTION 12.10. COUNTERPARTS. This Agreement and any amendment hereto
may be executed in one or more counterparts (including counterparts executed and
then delivered by facsimile transmission) each of which shall be deemed to be a
duplicate original, but all counterparts taken together shall constitute one and
the same agreement.
SECTION 12.11. PRONOUNS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the Person or Persons may require.
SECTION 12.12. INVESTMENT REPRESENTATION. Each Member represents that
he is acquiring his Percentage Interests for his own account and not with a view
toward the distribution or other transfer thereof and acknowledges that his
acquisition of his Percentage Interests is subject to the conditions and limits
on the subsequent transferability of such Percentage Interests set forth in
Article IX. Each Member agrees that he will not transfer all or any portion of
his Percentage Interests, or negotiate in respect thereof with any Person or
Persons whomsoever, so as thereby to bring the transaction in which he acquired
his Percentage Interests or any other offering of securities of the Company
within the provisions of Section 5 of the Securities Act of 1933, as amended, or
the registration requirement of any other federal or state securities statute.
SECTION 12.13. ARBITRATION. Any disputes, controversies or claims
arising out of or relating to the formation, operation, dissolution or
winding-up of the Company or the negotiation, execution, delivery, performance
or breach of this Agreement shall be settled by arbitration conducted in
Columbus, Ohio in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. If the
amount claimed or disputed in such arbitration is equal to or more than
$100,000, it shall be conducted before a panel of three arbitrators. No
arbitrator(s) shall have any power to amend this Agreement or to issue any award
which by its terms amends this Agreement in any manner.
<PAGE> 76
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SCHEDULE 13D
EXHIBIT G
---------
SECTION 12.14. DEFINITIONS.
12.14.1. The following terms have the meanings set forth after
such terms:
ACT means Chapter 1705 of the Ohio Revised Code, as the same may be
amended from time to time, or the corresponding provisions of any subsequent
Ohio law governing limited liability companies.
AGREEMENT means this Operating Agreement, as the same may be amended,
from time to time.
ALLOCATION REGULATIONS means the Income Tax Regulations promulgated
under Code Section 704(b) (regarding partners' distributive Percentage Interests
of partnership tax items), as currently in effect, and as modified and clarified
by amendment, successor regulation, ruling, court decision or other Income Tax
Regulation relating to partners' distributive Percentage Interests.
ARTICLES means the Articles of Organization of the Company filed in the
office of the Secretary of State of the State of Ohio upon execution of this
Agreement as required by the Act, as amended from time to time.
CAPITAL CONTRIBUTION means the total amount of cash and/or property
contributed to the Company by each Member, plus any other contributions to the
capital of the Company made by a Member, in his capacity as a Member, pursuant
to the terms of this Agreement. Any reference in this Agreement to the Capital
Contribution of a Member (the "Designated Member") shall include a Capital
Contribution previously made by any predecessor Member with respect to the
Percentage Interests transferred, in one or more successive Transfers, by such
predecessor Member to the Designated Member.
CAPITAL PROCEEDS means the proceeds received by the Company as the
result of a Capital Transaction.
CAPITAL TRANSACTION means any of the following events: (a) a financing
or refinancing of any property or assets of the Company or any portion thereof,
(b) a sale (other than sales of personal property being replaced with like
personal property or otherwise in the ordinary course of business), lease,
condemnation award or other disposition of all or part of any property or other
assets of the Company; (c) the receipt by the Company of insurance proceeds as a
result of the occurrence of a casualty; or (d) any other event of a capital
nature resulting in the receipt by the Company of revenues other than in the
ordinary course of business.
<PAGE> 77
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CASH FLOW means all items of income or receipt received by the Company
net of all expenses incurred or paid by the Company, all determined on a cash
basis of accounting without regard to the claiming of any item of depreciation
or amortization (or other item of deduction unrelated to an annual period
expense represented by an actual cash expenditure within the taxable year) and
without regard to the payment of any federal, state or local income or franchise
tax (or similar tax based on income).
CODE means the Internal Revenue Code of 1986, as amended, or the
corresponding provisions of any subsequent federal income tax law.
COMPANY means Phoenix Management, Ltd., an Ohio limited liability
company.
EFFECTIVE DATE means the date upon which the Articles of Organization
are filed.
EVENT OF WITHDRAWAL means, with respect to a Member, any event
described in Section 1705.15 of the Act.
INCOME TAX REGULATIONS means those regulations promulgated under the
Code. Whenever reference is made to any Income Tax Regulation, unless otherwise
specified, such reference shall include any amendments or successor regulations
thereto.
LOSSES means the net losses of the Company for federal income tax
purposes (or as may be otherwise required to comply with the Allocation
Regulations) as determined as of the close of the Company's fiscal year and,
when the context requires, related items of deduction or loss, tax preference,
credit and depreciation, provided that "Losses" shall include items described in
Code Section 705(a)(2)(B) or required by the Income Tax Regulations to be
treated as so described.
MEMBER means any Person duly designated as a Member as provided in
Section 3.2 and Section 3.3 in his capacity as a Member. Each Member shall be
deemed to be a "Member" in respect of the Company within the meaning of that
term as used in the Act.
NET CASH RECEIPTS means the cash from all operations of the Company
(but not including Capital Proceeds or Capital Contributions) after the payment
of all expenses and other disbursements except that (a) amounts expended or
reserved for capital improvements, reasonable working capital needs, contingent
or unforeseen liabilities, replacement of equipment, fixtures and personalty,
amounts paid into replacement reserves, and sinking funds, all as determined by
the Members, shall be reserved and deducted; and (b) the amount of expenses
reserved for shall be added to the extent the Members determine that the
obligation for which the reserve has been established will not be required to be
paid.
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PERSON means a corporation, association, trust, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
PROFITS means the net profits of the Company for federal income tax
purposes (or as may otherwise be required to comply with the Allocation
Regulations) as determined as of the close of the Company's fiscal year, and,
when the context requires, related items of income or gain, provided that
Profits shall include income exempt from tax.
RELATED PERSON means (a) in respect of an individual, such individual's
spouse, lineal descendants, ancestors and siblings, and the duly acting
custodian or guardian of such individual, and the executor or personal
representative of the estate of such individual, and any trust the trustee of
which and the principal beneficiary or beneficiaries of which are such
individual or such individual's spouse, lineal descendants, ancestors and
siblings, or such custodian, guardian or executor; and (b) in respect of an
entity, (i) any director, officer or employee or such entity, (ii) any partner
or member of such entity, (iii) any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control of such
entity or any Person controlling such entity, (iv) any other Person beneficially
owning or holding 10% or more of any class of voting securities of such entity
and (v) with respect to any individual described in subparagraphs (b)(i), (ii),
(iii) or (iv) hereof, such individual's spouse, lineal descendants, ancestors
and siblings, and the duly acting custodian or guardian of such individual, and
the executor or personal representative of the estate of such individual, and
any trust the trustee of which and the principal beneficiary or beneficiaries of
which are such individual or such individual's spouse, lineal descendants,
ancestors and siblings, or such custodian, guardian or executor.
12.14.2. The following terms are defined in the Sections
indicated:
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Additional Contributions 4.3
Adjusted Excess Cash Flow 5.3
Adverse Claim 9.3.4
Assessment Share 4.4.1(b)
Binsky Introduction
Breaching Party 9.3.6(a)
Brownfield Agreements 4.1
Buying Members 9.7.1
Call Response 9.3.3(a)
Capital Account 4.10.1
Capital Call 4.3
</TABLE>
<PAGE> 79
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SCHEDULE 13D
EXHIBIT G
---------
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Company Percentage Interests 9.1
Company Unit Percentage Interests 9.3.1
Contribution Date 4.3
Cover Election 4.4.1(d)
Covering Member[s] 4.4.1(d)
Defaulting Member 4.4.1
Electors 9.3.1
Excess Cash Flow 5.2
Fair Market Value 9.7.1
First Notice 9.7.1
Gardner Introduction
Gillmor Agreements 4.1
Incapacitated Member 9.7
Incapacity Event 9.7
Initial Contributions 4.1
Initial Members Introduction
Non-Breaching Party 9.3.6(a)
Normal Purchase Price 9.3.6
Offer 9.3.2
Offeror 9.3.2
Percentage Interests 3.1
Permitted Transferee 9.2.2
Put Response 9.3.3(c)
Responder 9.3.3(a)
Response Period 9.3.3(a)
RGC 2.1
Schwartz Introduction
Second Notice 9.7.2
Seller 9.3.4
Seller Group 9.3.1
Selling Group 9.3.4
Sherman Introduction
Transfer 9.1
Warren Introduction
</TABLE>
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SCHEDULE 13D
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---------
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
hereby execute and deliver this Operating Agreement, effective as of the 1st day
of June, 1996.
INITIAL MEMBERS
/s/ Charles T. Sherman
------------------------------
Charles T. Sherman
/s/ Theodore P. Schwartz
------------------------------
Theodore P. Schwartz
/s/ Bob Binsky
------------------------------
Bob Binsky
/s/ Michael W. Gardner
------------------------------
Michael W. Gardner
/s/ Kenneth J. Warren
------------------------------
Kenneth J. Warren
<PAGE> 81
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SCHEDULE 13D
EXHIBIT G
---------
EXHIBIT 12.2
NOTICE ADDRESSES OF MEMBERS
CHARLES T. SHERMAN THEODORE P. SCHWARTZ
354 Whitaker Avenue, South 3817 Lyon Drive
Powell, Ohio 43065 Columbus, Ohio 43220
Taxpayer E.I.N. ###-##-#### Taxpayer E.I.N. ###-##-####
BOB BINSKY MICHAEL W. GARDNER
20185 E. Country Club Drive, Apt. #206 6376 Plankton Drive
North Miami Beach, Florida 33180 Columbus, Ohio 43213
Taxpayer E.I.N. ###-##-#### Taxpayer E.I.N. ###-##-####
KENNETH J. WARREN
5567 Caplestone Lane
Dublin, Ohio 43017
Taxpayer E.I.N. ###-##-####
<PAGE> 82
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SCHEDULE 13D
EXHIBIT G
---------
FIRST AMENDMENT TO
------------------
OPERATING AGREEMENT
-------------------
OF
PHOENIX MANAGEMENT, LTD.
THIS FIRST AMENDMENT TO THE OPERATING AGREEMENT OF PHOENIX MANAGEMENT,
LTD. (the "First Amendment") is entered into this 26th day of November, 1996 by
and among Phoenix Management, Ltd., an Ohio limited liability company (the
"Company"), Charles T. Sherman, an individual residing at 354 Whitaker Avenue,
South, Powell, Ohio 43065 ("Sherman"), Theodore P. Schwartz, an individual
residing at 3817 Lyon Drive, Columbus, Ohio 43220 ("Schwartz"), Bob Binsky, an
individual residing at 20185 E. Country Club Drive, Apartment #206, North Miami
Beach, Florida 33180 ("Binsky"), Michael W. Gardner, an individual residing at
6376 Plankton Drive, Columbus, Ohio 43213 ("Gardner"), and Kenneth J. Warren, an
individual residing at 5567 Caplestone Lane, Dublin, Ohio 43017 ("Warren").
WHEREAS, the parties hereto have entered into an Operating Agreement
with respect to the Company dated as of the 31st day of July, 1996 (the
"Operating Agreement"); and
WHEREAS, the parties desire to amend the Operating Agreement in certain
respects;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
SECTION 1. AMENDMENT. Article IX is hereby amended by adding a new
Section 9.12 to read as follows:
9.12. VOLUNTARY REDEMPTION.
9.12.1. At any time that the Company may sell shares
of RGC under the provisions of Rule 144 ("Rule 144") as promulgated by
the Securities and Exchange Commission ("SEC") under the Securities Act
of 1933 (the "Securities Act"), any Initial Member who wishes to have
all or part of his Percentage Interests redeemed by the Company for
cash (the "Redemptee") may send a written notice (the "Redemption
Notice") to the Company and each other Initial Member of his intention
to cause the Company to effect a sale of RGC shares under Rule 144 and
use the net proceeds to redeem all or part of the Percentage Interests
of the Redemptee. Such Redemption Notice shall set forth the amount of
cash requested, which may not be in excess of the amount of the
Redemptee's Capital Account as at the end of the month of the month
immediately
<PAGE> 83
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SCHEDULE 13D
EXHIBIT G
---------
prior to the month in which the Company received the Redemption Notice,
plus the pro rata share of any unrealized appreciation (the aggregate
amount of appreciation, net of any unrealized losses times the
Redemptee's Percentage Interest) attributable to the Company's
ownership of the RGC shares. Upon receipt of the Redemption Notice, the
Company shall forward such notice to the accountants for the Company
who shall determine the maximum amount of cash that could be available
to the Redemptee under this Section, which decision, in the absence of
manifest fraud, shall be binding on the parties hereto. All legal and
accounting fees and expenses, including without limitation, fees and
expenses to file appropriate forms or amendments with the SEC as a
result of any actions taken pursuant to this Section 9.12, incurred by
the Company to comply with its obligations under this Section shall be
born by the Redemptee and the Company may retain an amount from the net
proceeds of any sale of RGC shares as reimbursement or payment of any
such expenses. If within 20 days of receipt of the Redemption Notice by
the Company (the "Redemption Period"), the Redemptee and one or more of
the other Initial Members have entered into a written agreement, a copy
of which has been delivered to the Company, on the terms and conditions
under which the Redemptee will sell, and such other Initial Members
will purchase, all or part of the Percentage Interests of the
Redemptee, no further action shall be required of the Company under
this Section 9.12.
9.12.2. If within the Redemption Period, the Company
has not received a copy of such written agreement, the Company shall
proceed to (a) file all appropriate forms necessary to permit the
Company to effect a sale under Rule 144 of such number of RGC shares,
up to the amount that the Company may legally sell, as, in the
reasonable opinion of the Company, would result in net proceeds (after
deducting the expenses of sale and any legal or accounting fees and
expenses incurred by the Company under this Section 9.12) equal to the
cash requested by the Redemptee (the "Rule 144 Shares"), and (b)
promptly proceed to use reasonable efforts in good faith to effect a
sale of the Rule 144 Shares in compliance with all applicable law.
9.12.3. Upon receipt of the proceeds of the sale of
the RGC shares, the Company shall deliver to the Redemptee the net
proceeds thereof, and on and after the date of such receipt, the
Percentage Interest of the Redemptee in the Company shall be determined
by the formula
[(A+B) x C]-D
-------------
A+B
<PAGE> 84
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SCHEDULE 13D
EXHIBIT G
---------
where "A" equals the aggregate amount of the Capital Accounts of all
Members as of the end of the month of the month immediately prior to
the month in which the sale of the Rule 144 Shares occurred (the
"Determination Date");
"B" equals the aggregate amount of unrealized appreciation, if any, net
of any unrealized losses, the Company may have as of the Determination
Date with respect to RGC shares owned by the Company on the
Determination Date;
"C" equals the Percentage Interest of the Redemptee as of the
Determination Date;
"D" equals the gross proceeds from the sale of the Rule 144 Shares.
As an illustration of the formula, assume that the aggregate Capital
Accounts equaled $150,000, that the net unrealized appreciation in RGC
shares owned by the Company equaled $100,000, that the old Percentage
Interest of the Redemptee was 20% and the gross proceeds from the sale
of the Rule 144 Shares was $10,000. The formula would be
[(150,000+100,000) x 20%] - 10,000 divided by (150,000+100,000) or
(250,000) x 20% - 10,000 divided by 250,000 or 50,000-10,000 or 40,000
divided by 250,000 or 16%, which is the new Percentage Interest of the
Redemptee.
9.12.4. Any Profits resulting from the sale of the
Rule 144 Shares shall be allocated solely to the Redemptee.
9.12.5. If the Company receives, prior to the
expiration of the Redemption Period, a written notice from one or more
of the other Initial Members (the "Joining Member") requesting the
Company to redeem all or part of the Percentage Interest of the Joining
Member through the sale by the Company of RGC shares, the procedures
set forth in this Section 9.12 shall be followed with the exception
that in the event the Company is unable to sell sufficient RGC shares
to provide cash equal to the amounts requested, the net proceeds from
the sale of the Rule 144 Shares shall be divided between the Joining
Member and the Redemptee in the ratio that the Percentage Interest of
each bears to the aggregate Percentage Interests of all.
SECTION 2. CONTINUING VALIDITY. Except as amended hereby, all terms and
provisions of the Operating Agreement shall remain in full force and effect as
though this First Amendment were a part of the original Operating Agreement.
<PAGE> 85
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SCHEDULE 13D
EXHIBIT G
---------
SECTION 3. MISCELLANEOUS. This First Amendment shall be governed by the
laws of the State of Ohio and may be executed in counterparts, each of which
when executed by all of the parties hereto shall be deemed an original and all
of which together shall be deemed the same Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
hereby execute and deliver this First Amendment to Operating Agreement,
effective as of the date first referenced above.
PHOENIX MANAGEMENT, LTD.
By: /s/ Charles T. Sherman
------------------------------------
Name: Charles T. Sherman
----------------------------------
Title: Member
---------------------------------
/s/ Charles T. Sherman
---------------------------------------
Charles T. Sherman
/s/ Theodore P. Schwartz
---------------------------------------
Theodore P. Schwartz
/s/ Bob Binsky
---------------------------------------
Bob Binsky
/s/ Michael W. Gardner
---------------------------------------
Michael W. Gardner
/s/ Kenneth J. Warren
---------------------------------------
Kenneth J. Warren
<PAGE> 86
Page 86 of 95 Pages
SCHEDULE 13D
EXHIBIT H
---------
TERM PROMISSORY NOTE
================================================================================
COLUMBUS, OHIO
$59,000 SEPTEMBER 16, 1996
================================================================================
FOR VALUE RECEIVED, the undersigned, PHOENIX MANAGEMENT, LTD., an Ohio
limited liability company, 2365 Scioto Harper Drive, Columbus, Ohio 43204 (the
"Borrower"), hereby promises to pay to the order of PH HYDRAULICS AND
AUTOMATION, INC., an Ohio corporation, (the "Lender"), on or before March 1,
2000 (the "Maturity Date"), the principal sum of Fifty Nine Thousand Dollars
($59,000) (the "Loan"), together with interest, all as provided in Section 1 of
this Note.
SECTION 1. THE LOAN. Subject to and on the terms and conditions set
forth in this Note, the Lender shall make the Loan to the Borrower, and the
Borrower shall borrow the Loan from the Lender as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
$17,500 on September 12, 1996
27,500 on October 15, 1996
14,000 on February 1, 1997
</TABLE>
1.1. PRINCIPAL. The Borrower shall pay installments of the
principal balance of this Note to the Lender on the first day of each March,
June, September and December, commencing April 1, 1997, in accordance with the
schedule attached hereto as Schedule A; provided, however, that the Borrower
shall pay amounts greater than the amounts listed on Schedule A in order to pay
overdue principal.
1.2. INTEREST.
1.2.1. The Loan shall bear interest on the
outstanding principal amount, for each day from the date such Loan is made until
the Maturity Date, at a rate per annum equal to the sum of the rate of interest
for such day publicly announced from time to time by the Star Bank as its prime
rate (the "Prime Rate") plus one and one-quarter percent (1 1/4%). Interest on
the Loan shall be paid by the Borrower (a) on the first day of each November,
February, May and August, commencing November 1, 1996, (b) on the Maturity Date,
and (c) thereafter on demand. Any change in the Prime Rate shall be effective,
without notice, as of the opening of business of the Star Bank on the day on
which the Prime Rate shall change.
<PAGE> 87
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SCHEDULE 13D
EXHIBIT H
---------
1.2.2. All interest under this Note shall be computed
on the basis of the actual days elapsed in a year of 360 days.
1.3. PREPAYMENTS; PAYMENTS.
1.3.1. The Borrower shall have the right to make
prepayments at any time of the principal amount of the Loan, in whole or in
part, without notice. Each prepayment shall be without premium or penalty, and
shall be applied to the principal installments in inverse order of maturity.
1.3.2. The Borrower shall make all payments of
principal and interest under this Note to the Lender at its main office (or such
other location as the Lender may direct) in immediately available funds. If any
payment of principal or interest on this Note shall become due on a day other
than a Banking Day, such payment shall be due and payable upon the next
succeeding Banking Day and such extension of time shall in such case be included
in computing interest in connection with such payment. A "Banking Day" is any
day on which the main office of Star Bank is open for business.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The execution of this Note
by the Borrower, and the receipt of the Loan, shall in each case be deemed to
constitute the Borrower's representation and warranty to the Lender that, at the
time of execution and at the time of disbursement of the Loan: (a) this Note is
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms; (b) the execution and delivery of this
Note by the Borrower does not and will not conflict with or violate any court or
administrative order, decree or ruling, or any law, statute, ordinance or
regulation, or any agreement, indenture, mortgage, deed of trust, guaranty,
lease, note or other obligation or instrument binding upon the Borrower or any
of its respective properties or assets; and (c) neither this Note nor any other
statement, assignment, agreement, instrument or certificate of the Borrower made
or delivered pursuant to or in connection with this Note contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein, in light of the circumstances under which they were made, or
necessary to make the statements therein not misleading.
SECTION 3. EVENTS OF DEFAULT. The following are Events of Defaults:
3.1. The Borrower fails to make a payment of interest on the
Note when and as due and such failure is not remedied within three Banking Days
after the date such payment is due.
3.2. The Borrower fails to pay the principal of the Note when
and as due and such failure is not remedied within three Banking Days after the
date such payment is due.
<PAGE> 88
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SCHEDULE 13D
EXHIBIT H
---------
3.3. The Borrower fails to make a payment of any fee, expense
or other amount of money (not including the principal of or interest on the
Note) owing to the Lender under this Note when and as due and such failure is
not remedied within 10 Banking Days after the due date.
3.4. Any representation or warranty made by the Borrower in
this Note or any certificate, report, financial statement or other document
delivered to the Lender by the Borrower contains any untrue statement of a
material fact or omits to state a material fact required by this Note or law to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.5. The Borrower fails to perform any of its obligations
under or fails to comply with any covenant contained in the Note and such
failure continues unremedied for a period of 10 Banking Days.
3.6. Any governmental body or officer or creditor of the
Borrower seizes, takes possession of or collects (whether or not the Borrower
resists or acquiesces in such seizure, taking or collection) any property of the
Borrower by any means, including, without limitation, execution, levy,
sequestration, attachment, garnishment, replevin or self-help, unless such
seizure, taking or collection is vacated or the property is discharged within 30
days after the occurrence thereof.
3.7. One or more final judgments are entered against the
Borrower for the payment of money aggregating in excess of $50,000 and any one
of such judgments has been outstanding for more than 30 days from the date of
its entry and has not been discharged in full or stayed pending appeal.
3.8. The Borrower:
3.8.1. makes an assignment for the benefit of
creditors;
3.8.2. enters into any composition, compromise or
arrangement with its creditors;
3.8.3. generally does not pay its debts as such
debts become due; or
3.8.4. conceals, removes, or permits to be concealed
or removed, any part of its property, with intent to hinder, delay or defraud
its creditors or any of them, or makes or suffers a transfer of any of its
property, fraudulent under the provisions of any bankruptcy, fraudulent
conveyance or similar law, or makes or suffers a transfer of its property to or
for the benefit of a creditor at a time when other creditors similarly situated
have not been paid.
<PAGE> 89
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SCHEDULE 13D
EXHIBIT H
---------
3.9. If:
3.9.1. a trustee, receiver, agent or custodian is
appointed or authorized to take charge of any property of the Borrower for the
purpose of enforcing a lien against such property or for the purpose of
administering such property for the benefit of the Borrower's creditors; or
3.9.2. an order (a) for relief against the Borrower
is granted under Title 11 of the United States Code or any similar law, (b)
appointing a receiver, trustee, agent or custodian of the Borrower or any
property of the Borrower or (c) providing for a composition, compromise or
arrangement with the creditors of the Borrower, is entered by any court or
governmental body or officer; or
3.9.3. the Borrower files any pleading seeking
(whether by formal action or by the admission of the material allegations of a
pleading or otherwise) any such appointment or order; or
3.9.4. (a) any action or proceeding seeking any such
appointment or order is commenced without the authority or consent of the
Borrower and (b)(i) such action or proceeding is not dismissed within 30 days
after its commencement or (ii) the Borrower does not diligently contest such
action or proceeding.
3.10. The Borrower fails to pay when and as due the principal
of or any interest on any Indebtedness (as defined below), other than as
evidenced by this Note (assuming that all required notices have been properly
given and all corresponding grace periods, if any, have elapsed without cure by
the Borrower). "Indebtedness" means, for the Borrower (except for de minimus
amounts not to exceed in the aggregate $25,000), (a) all indebtedness or other
obligations of the Borrower for borrowed money or for the deferred purchase
price of property or services (except for unsecured trade payables incurred in
the ordinary course of business on normal and reasonable terms), (b) all
indebtedness or other obligations of any other person for borrowed money or for
the deferred purchase price of property or services, the payment or collection
of which the Borrower has guaranteed (except by reason of endorsement for
deposit or collection in the ordinary course of business) or in respect of which
the Borrower is liable, contingently or otherwise, including, without
limitation, liable by way of agreement to purchase, to provide funds for
payment, to supply funds to or otherwise to invest in such other person, or
otherwise to assure a creditor against loss, (c) all indebtedness or other
obligations of any other person for borrowed money or for the deferred purchase
price of property or services secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien upon or in property (including, without limitation, accounts and
contract rights) owned by the Borrower whether or not the
<PAGE> 90
Page 90 of 95 Pages
SCHEDULE 13D
EXHIBIT H
---------
Borrower has assumed or become liable for the payment of such indebtedness or
other obligations, (d) all direct or contingent obligations of the Borrower in
respect of letters of credit and (e) all lease obligations which have been or
should be, in accordance with generally accepted accounting principles,
capitalized on the books of the Borrower.
SECTION 4. DEFAULT REMEDIES.
4.1. ACCELERATION. If an Event of Default exists, the
outstanding unpaid principal balance of this Note, together with all interest
accrued thereon and any unpaid fees, expenses or other amounts due to the Lender
under this Note, is immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby waived.
4.2. SET-OFF. Any and all moneys now or at any time hereafter
owing to the Borrower from the Lender are hereby pledged for the security of
this and all other indebtedness from the Borrower to the Lender or any legal
holder hereof, and may, upon any demand for payment, be paid and applied thereon
whether such indebtedness be then due or to become due, all without notice to or
demand on the Borrower or any other person, all such notices and demands being
hereby expressly waived. If an Event of Default exists, the Lender shall have
the right, in addition to all other rights and remedies available to it, to
set-off against the principal of and interest on this Note and any fees,
expenses or other amounts owed to the Lender under this Note all without notice
to or demand on the Borrower or any other person, all such notices and demands
being hereby expressly waived. The Lender will notify the Borrower of any such
set-off promptly after its occurrence, but the failure to give such notice shall
not affect the validity of the set-off.
4.3. REMEDIES CUMULATIVE. No right or remedy conferred upon
the Lender by this Note or legally available to the Lender if an Event of
Default exists is intended to be exclusive of any other right or remedy, and
each such right or remedy is cumulative and in addition to every other such
right or remedy.
4.4. FORCE MAJEURE. The existence of an Event of Default is
not affected by the reason for its occurrence, even if the Event of Default was
not caused by a voluntary act of the Borrower or the Partnership or was caused
by a natural disaster or force majeure.
SECTION 5. MISCELLANEOUS.
5.1. MODIFICATIONS AND WAIVERS. No modification or waiver of
any term or provision contained in this Note and no consent to any departure by
the Borrower therefrom shall in any event be effective unless the same is in
writing and signed by the waiving party. Such waiver or consent shall be
effective only in the specific instance and for the purpose for which it is
given.
<PAGE> 91
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SCHEDULE 13D
EXHIBIT H
---------
5.2. NOTICES. Except where specific provisions of this Note
provide for some other form of notice or require receipt as a condition of
notice, any consent, waiver, notice, demand or other instrument required or
permitted to be given under this Note shall be deemed to have been properly
received when in writing and delivered in person or sent by certified or
registered United States mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth in the first paragraph of this
Note. Either party may change its address for notices by notice in the manner
set forth above.
5.3. PARTIAL INVALIDITY. If any term or provision of this Note
or the application thereof to any person, firm or corporation or any
circumstance, shall be invalid or unenforceable, the remainder of this Note, or
the application of such term or provision to any person, firm or corporation or
any circumstances, other than those as to which it is held invalid, shall both
be unaffected thereby and each term or provision of this Note shall be valid and
be enforced to the fullest extent permitted by law.
5.4. NO IMPLIED RIGHTS OR WAIVERS. No notice to or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in the same, similar or other circumstances. Neither any
failure nor any delay on the part of the Lender in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of the same or
the exercise of any other right, power or privilege. The Borrower hereby waives
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.
5.5. SUCCESSORS AND ASSIGNS. This Note shall be binding upon
and inure to the benefit of the respective successors and assigns of the Lender
and the Borrower; provided that the Borrower shall have no right to assign or
transfer its rights under this Note voluntarily or by operation of law without
first obtaining the written consent of the Lender, and any attempted assignment
or transfer in the absence of such consent shall be void and of no effect.
5.6. EXPENSES. All fees, costs and expenses, including
reasonable fees and expenses of outside legal counsel, incurred by the Lender in
connection with the preparation and enforcement of this Note or any other
instruments, documents, or agreements to be delivered pursuant hereto or in
connection herewith, shall be paid by the Borrower to the Lender on demand.
5.7. SURVIVAL OF PROVISIONS. All covenants, agreements,
representations, warranties and statements made in this Note or in any
certificate, statement, or other instrument given pursuant to this Note shall
survive the execution and delivery to the Lender of this Note and the making of
the Loan and shall continue in full force and effect so long as any obligation
of the Borrower under this Note is outstanding and unpaid.
<PAGE> 92
Page 92 of 95 Pages
SCHEDULE 13D
EXHIBIT H
---------
5.8. CAPTIONS. The captions and section numbers appearing in
this Note are inserted only as a matter of convenience; they do not define,
limit, construe or describe the scope or intent of the provisions of this Note.
5.9. GOVERNING LAW. This Note shall be governed and construed
by the provisions hereof and in accordance with the laws of the State of Ohio
applicable to instruments to be performed in the State of Ohio.
5.10. CONSENT. The Borrower hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Ohio and of the United States of America located in the City of
Columbus, Ohio for any actions, suits or proceedings arising out of or relating
to this Note and the transactions contemplated hereby (and the Borrower agrees
not to commence any action, suit or proceeding relating thereto except in such
courts), and further agrees that service of any process, summons, notice or
document by U.S. certified or registered mail, return receipt requested, to the
address set forth in Section 5.2 shall be effective service of process for any
action, suit or proceeding brought against the Borrower in any such court. The
Borrower hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Note, or
the transactions contemplated hereby, in the courts of the State of Ohio or the
United States of America located in the City of Columbus, Ohio, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
5.11. JOINT PREPARATION. This Note is to be deemed to have
been prepared jointly by the Borrower and the Lender, and any uncertainty or
ambiguity existing herein shall not be interpreted against either party, but
shall be interpreted according to the rules for the interpretation of arm's
length agreements.
5.12. THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person other than the
parties hereto and their successors or assigns, any rights or remedies under or
by reason of this Note.
5.13. WARRANT OF ATTORNEY. The Borrower hereby authorizes any
attorney at law to appear for the Borrower in an action on this Note, at any
time after the same becomes due and payable, as herein provided, in any court of
record in or of the State of Ohio, or elsewhere, to waive the issuing and
service of process against the Borrower and to confess judgment in favor of the
legal holder of this Note against the Borrower for the amount that may be due,
with interest at the rates herein mentioned and cost of suit, and to waive and
release all errors in said proceedings and judgment, and all petitions in error,
and right of appeal from the judgment rendered.
<PAGE> 93
Page 93 of 95 Pages
SCHEDULE 13D
EXHIBIT H
---------
This Note was executed in Columbus, Ohio as of the date first written
above.
- -------------------------------------------------------------------------------
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
- -------------------------------------------------------------------------------
PHOENIX MANAGEMENT, LTD., an Ohio limited
liability company
By /s/ Charles T. Sherman
---------------------------------------
<PAGE> 94
Page 94 of 95 Pages
SCHEDULE 13D
EXHIBIT H
---------
SCHEDULE A
PRINCIPAL PAYMENT SCHEDULE
<TABLE>
<CAPTION>
PRINCIPAL PAYMENT IS AMOUNT OF
DUE THE FIRST DAY OF PAYMENT DUE
-------------------- -----------
<S> <C>
April, 1997 $ 1,475.00
June, 1997 1,475.00
September, 1997 1,475.00
December, 1997 1,475.00
March, 1998 1,475.00
June, 1998 1,475.00
September, 1998 1,475.00
December, 1998 1,475.00
March, 1999 1,475.00
June, 1999 1,475.00
September, 1999 1,475.00
December, 1999 1,475.00
March, 2000 41,300.00
</TABLE>
<PAGE> 95
Page 95 of 95 Pages
SCHEDULE 13D
EXHIBIT I
---------
AGREEMENT
Pursuant to Rule 13d-1(f)(1), Phoenix Management, Ltd., Bob Binsky,
Michael W. Gardner, Theodore P. Schwartz, Charles T. Sherman and Kenneth J.
Warren agree that this Statement on Schedule 13D, to which this Agreement is
attached as Exhibit I, and any amendments thereto are filed on behalf of each of
them. This agreement may be executed in one or more counterparts each of which
shall constitute one and the same instrument.
Dated: February 12, 1997
/s/ Phoenix Management, LTD., by Charles T. Sherman, Member
-----------------------------------------------------------
Phoenix Management, Ltd.
/s/ Bob Binsky
-----------------------------------------------------------
Bob Binsky
/s/ Michael W. Gardner
-----------------------------------------------------------
Michael W. Gardner
/s/ Theodore P. Schwartz
-----------------------------------------------------------
Theodore P. Schwartz
/s/ Charles T. Sherman
-----------------------------------------------------------
Charles T. Sherman
/s/ Kenneth J. Warren
-----------------------------------------------------------
Kenneth J. Warren
