RESOURCE GENERAL CORP, DEF 14A, 1997-03-21

RESOURCE GENERAL CORP
DEF 14A, 1997-03-21
METALWORKG MACHINERY & EQUIPMENT

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<PAGE> 1
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section 240.14a-12

Resource General Corporation
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(Name of Registrant as Specified in Its Charter)

Registrant
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:

- -------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- -------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):

- -------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- -------------------------------------------------------------------------------

(5) Total fee paid:

- -------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2

RESOURCE GENERAL CORPORATION
2365 SCIOTO HARPER DRIVE
COLUMBUS, OHIO 43204

1997 ANNUAL MEETING OF SHAREHOLDERS

March 21, 1997

Dear Shareholder:

You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Resource General Corporation which will be held at 4:00 p.m.,
Eastern Daylight Time, on April 22, 1997, at the offices of the Company, 2365
Scioto Harper Drive, Columbus, Ohio 43204. The matters on the meeting agenda are
described in the Notice of 1997 Annual Meeting of Shareholders and Proxy
Statement which accompany this letter.

We hope you will be able to attend the meeting. If you cannot attend,
we ask that you please complete, execute, and date the enclosed proxy card and
return it in the envelope provided so that your shares will be represented at
the meeting.

Very truly yours,

Charles T. Sherman
President

<PAGE> 3

RESOURCE GENERAL CORPORATION

NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 22, 1997

TO THE SHAREHOLDERS OF
RESOURCE GENERAL CORPORATION:

The Annual Meeting of the Shareholders of Resource General Corporation,
an Ohio corporation (the "Company"), will be held at the offices of the Company,
2365 Scioto Harper Drive, Columbus, Ohio, on April 22, 1997 at 4:00 p.m.,
Eastern Daylight Time, for the following purposes which are more fully described
in the proxy statement attached hereto:

1. To consider and vote upon a proposal to amend the Articles of
Incorporation and the Code of Regulations of the Company to eliminate
cumulative voting;

2. To consider and vote upon a proposal to amend the Articles of
Incorporation of the Company to increase the authorized number of
shares of the Company;

3. To consider and vote upon a proposal to amend the Code of Regulations
of the Company to divide the Board of Directors into two classes, to
permit the Board of Directors to determine the number of directors who
serve on the Board of Directors and to establish a retirement age for
directors;

4. To consider and vote upon a proposal to amend the Articles of
Incorporation of the Company to change the name of the Company;

5. To consider and vote upon a proposal to amend the Articles of
Incorporation of the Company to eliminate the applicability of the Ohio
Control Share Acquisition Act;

6. To elect three directors in the first class, each to serve for a term
of one year or until their successors are duly elected and qualified;

7. To elect four directors in the second class, each to serve for a term
of two years or until their successors are duly elected and qualified;

8. To consider and vote upon a proposal to terminate the Company's
existing Employees' Incentive Stock Option Plan and approve the 1997
Stock Incentive Plan of the Company; and

9. To transact such other business as may properly come before the meeting
or any adjournment thereof.

The Board of Directors has fixed the close of business on February 22,
1997, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. A list
of shareholders will be available for examination by any shareholder at the
Annual Meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN,
DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.

By Order of the Board of Directors

Charles T. Sherman
President

Columbus, Ohio
March 21, 1997

<PAGE> 4

RESOURCE GENERAL CORPORATION

----------------------------------

1997 ANNUAL MEETING OF SHAREHOLDERS

APRIL 22, 1997

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PROXY STATEMENT

DATED MARCH 21, 1997

----------------------------------

GENERAL INFORMATION

Solicitation. This Proxy Statement is furnished to the shareholders of
Resource General Corporation, an Ohio corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company (the "Board of
Directors") of proxies to be voted at the 1997 Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held on April 22, 1997, and any
adjournment thereof. This Proxy Statement and the accompanying proxy card are
first being mailed to shareholders on or about March 21, 1997.

Voting Rights. Shareholders of record at the close of business on
February 22, 1997, are entitled to notice of and to vote at the Annual Meeting.
As of that date, there were 1,108,020 shares of Common Stock of the Company
without par value ("Common Stock"), issued and outstanding. Each shareholder of
record on February 22, 1997, is entitled to one vote per share held with respect
to all matters which may be brought before the Annual Meeting.

Summary of Proposals. Eight proposals will be voted on at the Annual
Meeting. A brief summary of each of the proposals is listed below; however,
before completing your proxy card please refer to the complete discussion of
each of the proposals and their purposes and effects set forth below under the
heading "PROPOSALS":

PROPOSAL 1: If approved at the Annual Meeting, Proposal 1 will amend
the Articles of Incorporation and the Code of Regulations of the Company so
as to eliminate cumulative voting. Upon adoption of this proposal and the
filing of the amended Articles of Incorporation, shareholders will no
longer be permitted to cumulate votes in the election of directors. This
proposal may have an anti-takeover effect. See "Anti-Takeover Effect of
Amendments." A detailed discussion of the purposes and effects of adopting
Proposal 1 is set forth below under the heading "Amendments to the Articles
of Incorporation and Code of Regulations."

PROPOSAL 2: If approved at the Annual Meeting, Proposal 2 will amend
the Articles of Incorporation of the Company so as to increase the
authorized number of shares of Common Stock from 3,412,000 to 10,000,000.
The additional authorized shares will provide the Company with additional
shares of Common Stock to be used from time to time for general corporate
purposes, such as compensation plans, raising capital or acquisitions. This
proposal may have an anti-takeover effect. See "Anti-Takeover Effect of
Amendments." A detailed discussion of the purposes and effects of adopting
Proposal 2 is set forth below under the heading "Amendments to the Articles
of Incorporation and Code of Regulations."

PROPOSAL 3: If approved at the Annual Meeting, Proposal 3 will amend
the Code of Regulations of the Company so as to divide the Board of
Directors into two classes, permit the Board of Directors to determine the
number of directors who serve on the Board of Directors and establish a
retirement age for directors. Currently, the Board of Directors is divided
into three classes and must seek shareholder approval to change the total
number of directors who serve on the Board of Directors. This proposal may
have an anti-takeover effect. See "Anti-Takeover Effect of Amendments." A
detailed discussion of the purposes and effects of adopting Proposal 3 is
set forth below under the heading "Amendments to the Articles of
Incorporation and Code of Regulations."

<PAGE> 5

PROPOSAL 4: If approved at the Annual Meeting, Proposal 4 will amend
the Articles of Incorporation of the Company so as to change the name of
the Company to "PH Group, Inc." Upon adoption of this proposal and the
filing of the amended Articles of Incorporation, the Company will cease to
do business under the name Resource General Corporation and will thereafter
do business under the name "PH Group, Inc." A detailed discussion of the
purposes and effects of adopting Proposal 4 is set forth below under the
heading "Amendments to the Articles of Incorporation and Code of
Regulations."

PROPOSAL 5: If approved at the Annual Meeting, Proposal 5 will amend
the Articles of Incorporation of the Company so as to eliminate the
applicability of the Ohio Control Share Acquisition Act. The Ohio Control
Share Acquisition Act generally requires persons acquiring large portions
of a public corporation's stock to first obtain the shareholders' approval
of the acquisition. Upon adoption of this proposal and the filing of the
amended Articles of Incorporation, shareholder approval will no longer be
required for certain acquisitions of the Company's shares. A detailed
discussion of the purposes and effects of adopting Proposal 5 is set forth
below under the heading "Amendments to the Articles of Incorporation and
Code of Regulations."

PROPOSAL 6: Three directors will be elected at the Annual
Meeting to serve in the first class of directors. Each such director will
serve for a term of one year. The three nominees selected by the Board of
Directors are Alida L. Breen, Terry L. Sanborn and Charles T. Sherman. A
detailed discussion of the qualifications of each of the nominee directors
and any committees of the Company on which they serve is set forth below
under the heading "Election of Directors."

PROPOSAL 7: Four directors will be elected at the Annual Meeting
to serve in the second class of directors. Each such director will serve
for a term of two years. The four nominees selected by the Board of
Directors are Bob Binsky, Michael W. Gardner, David H. Montgomery and
Theodore P. Schwartz. A detailed discussion of the qualifications of each
of the nominee directors and any committees of the Company on which they
serve is set forth below under the heading "Election of Directors."

PROPOSAL 8: If approved at the Annual Meeting, Proposal 8 will
terminate the Company's existing Employees' Incentive Stock Option Plan and
adopt the 1997 Stock Incentive Plan of the Company. The Employees'
Incentive Stock Option Plan was adopted by the shareholders in 1988, but no
options have ever been granted under the plan. The 1997 Stock Incentive
Plan provides for the grant of stock options to directors who are not
employees and employees and consultants who are not members of the
committee chosen to administer the plan. A detailed discussion of both
plans and the purposes and effects of adopting Proposal 8 is set forth
below under the heading "1997 Stock Incentive Plan."

Cumulative Voting. If notice in writing is given by any shareholder to
the President, Vice President, or the Secretary of the Company not less than
forty-eight (48) hours before the time fixed for the holding of the Annual
Meeting that such shareholder desires that the voting with respect to the
election of directors shall be cumulative, and if an announcement of the giving
of such notice is made upon the convening of the Annual Meeting by the Chairman
or Secretary of the Company of the Annual Meeting, or failing such an
announcement by the Chairman or Secretary, by or on behalf of the shareholder
giving such notice, each shareholder shall have the right to cumulate such
voting power as he or she possesses at such election. Under cumulative voting, a
shareholder may cast his or her votes for any one nominee or distribute such
votes among any two or more nominees as the shareholder may elect, or in the
case of proxies as the proxy may elect. In the event of cumulative voting, the
proxy holders designated by the Board of Directors will distribute the votes for
shares subject to proxies they hold so as to elect the maximum number of
nominees for director on the slate intended to be nominated. If a shareholder
withholds authority in his or her proxy card to vote for one or more nominees,
in the event of cumulative voting, none of the votes of that shareholder may be
cumulated and voted for such nominee or nominees by the proxy holders designated
by the Board of Directors.

The enclosed proxy card does not provide for cumulative voting.
Therefore, if any shareholder wishes to require cumulative voting for the
election of directors, that shareholder or proxy appointed by the shareholder
must follow the procedures described above, which require attendance at the
meeting by the shareholder or the proxy holder.

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Authorization. All shares represented by properly executed proxies
received by the Company pursuant to this solicitation will be voted in
accordance with the shareholder's directions specified on the proxy card. If no
directions have been specified by marking the appropriate squares on the
accompanying proxy card, the shares represented by such proxy will be voted in
accordance with the recommendations of the Board of Directors, which are (1) FOR
the approval of the proposal to amend the Articles of Incorporation of the
Company (the "Articles of Incorporation") and the Code of Regulations of the
Company (the "Code of Regulations") to eliminate cumulative voting; (2) FOR the
approval of the proposal to amend the Articles of Incorporation to increase the
authorized number of shares of the Company; (3) FOR the approval of the proposal
to amend the Code of Regulations to divide the Board of Directors into two
classes, to permit the Board of Directors to determine the number of directors
who serve on the Board of Directors and to establish a retirement age for
directors; (4) FOR the approval of the proposal to amend the Articles of
Incorporation to change the name of the Company; (5) FOR the approval of the
proposal to amend the Articles of Incorporation to eliminate the applicability
of the Ohio Control Share Acquisition Act; (6) FOR the election of Alida L.
Breen, Terry L. Sanborn and Charles T. Sherman as directors, each to serve for a
term of one year; (7) FOR the election of Bob Binsky, Michael W. Gardner, David
H. Montgomery and Theodore P. Schwartz as directors, each to serve for a term of
two years; and (8) FOR the termination of the Company's existing Employees'
Incentive Stock Option Plan and approval of the 1997 Stock Incentive Plan of the
Company. The proxy will also be voted at the discretion of the persons acting
under the proxy to transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.

Revocation. Any shareholder returning the accompanying proxy has the
power to revoke it at any time before its exercise by giving notice of
revocation to the Company in writing, by duly executing and delivering to the
Company a proxy card bearing a later date, or by voting in person at the Annual
Meeting.

Tabulation. Under Section 1701.51 of the Ohio Revised Code ("ORC") and
the Code of Regulations, a quorum must be present at the Annual Meeting in order
for any valid action, including the election of directors and voting on the
other matters presented to the meeting, other than adjournment, to be taken
thereat. ORC Section 1701.51 and the Code of Regulations provide that a quorum
consists of a majority of the shares entitled to vote at the Annual Meeting
present in person or represented by proxy. Shares represented by signed proxies
that are returned to the Company will be counted toward the quorum in all
matters even though they are marked as "Abstain," "Against" or "Withhold
Authority" on one or more or all matters or they are not marked at all (see
"Authorization"). Broker/dealers, who hold their customers' shares in street
name, may, under the applicable rules of the exchanges and other self-regulatory
organizations of which such broker/dealers are members, sign and submit proxies
for such shares and may vote such shares on routine matters, which, under such
rules, typically include the election of directors, but broker/dealers may not
vote such shares on other matters, which typically include amendments to the
articles of incorporation of a company and the approval of stock compensation
plans without specific instructions from the customer who owns such shares.
Proxies signed and submitted by broker/dealers which have not been voted on
certain matters as described in the previous sentence are referred to as broker
non-votes. Such proxies nevertheless count toward the establishment of a quorum.

Under ORC Section 1701.71 and Article V of the Articles of
Incorporation, the amendments to the Articles of Incorporation must be approved
by the affirmative vote of the holders of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting. For the purpose of ORC Section
1701.71, proxies marked "Abstain" and broker non-votes have the same effect as
votes against approval.

Under ORC Section 1701.11 and Article V of the Code of Regulations, the
amendments to the Code of Regulations must be approved by the affirmative vote
of the holders of a majority of the shares of Common Stock entitled to vote at
the Annual Meeting. For purposes of ORC Section 1701.11, proxies marked
"Abstain" and broker non-votes have the same effect as votes against approval.

Under ORC Section 1701.55 and Section 8 of Article I of the Code of
Regulations, directors are elected by a plurality of the votes for the
respective nominees. Therefore, proxies that are marked "Withhold Authority" and
broker non-votes, if any, will not affect the election of directors.

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<PAGE> 7

Under Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission (the "Commission") under Section 16 of the Securities
Exchange Act of 1934, the 1997 Stock Incentive Plan must be approved by the
affirmative vote of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at the Annual Meeting at which a
quorum is present. For the purpose of Rule 16b-3, a proxy marked "Abstain" has
the same effect as a vote against approval but a broker non-vote is disregarded
in determining the number of shares voted for approval and in determining the
total number of shares as to which the majority is determined in such matter.
However, under Section 8 of Article I of the Code of Regulations, the
termination of the Employees' Incentive Stock Option Plan must be approved by
the affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting. Thus, proxies that are marked "Abstain",
as well as broker non-votes, have the same effect as votes against approval.
Accordingly, Proposal 8 to terminate the Employees' Incentive Stock Option Plan
and approve the 1997 Stock Incentive Plan must be approved by the affirmative
vote of the holders of a majority of the shares of Common Stock entitled to vote
at the Annual Meeting.

PROPOSALS

AMENDMENTS TO ARTICLES OF INCORPORATION AND CODE OF REGULATIONS

ANTI-TAKEOVER EFFECT OF AMENDMENTS. The Board of Directors has proposed
amendments to the Articles of Incorporation and Code of Regulations, some of
which may discourage a threatened takeover or change in control of the Company.
Specifically, the proposed amendments to the Articles of Incorporation and Code
of Regulations that could have an anti-takeover effect are the amendments to
eliminate cumulative voting (see "Proposal 1"), increase the number of
authorized shares of Common Stock (see "Proposal 2") and divide the Board of
Directors into two classes and permit the Board of Directors to determine the
number of directors who serve on the Board of Directors (see "Proposal 3"). The
over-all effect of these amendments (the "Amendments") may be to render more
difficult the accomplishment of mergers, tender offers, proxy contests or the
assumption of control by a principal shareholder, and thus to make more
difficult the removal of management.

Section 2 of Article II in the Company's Code of Regulations, which
provides for three classes of directors, is the only provision in the Company's
current Articles of Incorporation or Code of Regulations that may have an
anti-takeover effect. Cumulative voting is currently permitted under the
Company's Code of Regulations and Ohio law. The Board of Directors does not
presently contemplate recommending the adoption of any further amendments to the
Articles of Incorporation or Code of Regulations which would affect the ability
of third parties to take over or change control of the Company. The Amendments
are not part of a plan by management to adopt a series of such amendments and
are not the result of management's knowledge of any specific effort to
accumulate the Common Stock or to obtain control of the Company by means of a
merger, tender offer, solicitation in opposition to management or otherwise.
Other than the acquisition of shares by Phoenix Management, Ltd., the Company is
not aware of any effort on the part of any person to acquire control of the
Company. See "Security Ownership of Principal Shareholders, Directors, Nominees
and Executive Officers - Change in Control" below. Detailed descriptions of the
purpose and effects of the amendments to eliminate cumulative voting (see
"Proposal 1"), increase the number of authorized shares of Common Stock (see
"Proposal 2") and divide the Board of Directors into two classes and permit the
Board of Directors to determine the number of directors who serve on the Board
of Directors (see "Proposal 3") are set forth below.

PROPOSAL 1. TO AMEND THE ARTICLES OF INCORPORATION AND THE CODE OF
REGULATIONS OF THE COMPANY TO ELIMINATE CUMULATIVE VOTING.

Shareholders of the Company are currently entitled to cumulate votes in
the election of directors. The Board of Directors has unanimously determined
that it would be advisable and in the best interests of the Company and its
shareholders to amend the Articles of Incorporation and the Code of Regulations,
as set forth in Exhibit A attached hereto, to eliminate cumulative voting in the
election of directors. In order to eliminate cumulative voting, the Code of
Regulations must be amended to delete its reference to cumulative voting and the
Articles of Incorporation must be amended to specify that cumulative voting is
prohibited.

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<PAGE> 8

PURPOSE AND EFFECTS OF THE AMENDMENT

Cumulative voting permits shareholders voting for directors to cast a
number of votes equal to the product of the number of shares such shareholder
owns and the number of nominees proposed for election to the Board of Directors.
Thus, through cumulative voting, minority shareholders may cast all their votes
for one nominee and may elect one or more nominees to the Board of Directors who
would not otherwise have received sufficient votes to be elected. Without
cumulative voting rights, each shareholder would be entitled to cast one vote
per share for a candidate for director so that the holders of a majority of
shares would elect or remove the entire Board of Directors. If the proposal to
eliminate cumulative voting is approved, it will be more difficult, if not
impossible, for minority shareholders to elect a representative to the Board of
Directors without the cooperation of the shareholders owning a majority of the
Common Stock. Therefore, the proposal could have the effect of entrenching
incumbent management.

THIS AMENDMENT TO THE CURRENT ARTICLES OF INCORPORATION WILL (A) PERMIT
A MAJORITY OF A QUORUM OF THE VOTING POWER IN THE ELECTION OR REMOVAL OF
DIRECTORS TO ELECT OR REMOVE EVERY DIRECTOR AND (B) PRECLUDE A MINORITY OF A
QUORUM OF THE VOTING POWER IN THE ELECTION OR REMOVAL OF DIRECTORS FROM ELECTING
OR PREVENTING THE REMOVAL OF ANY DIRECTOR.

While the elimination of cumulative voting may impact the voting rights
of certain minority shareholders, cumulative voting creates an administrative
expense and burden to administer for the Company and may affect the Company's
ability to conduct a public offering of its shares on an underwritten basis on
commercially reasonable terms. Thus, the Board of Directors believes that the
expense and burdens associated with cumulative voting outweigh its benefits to
minority shareholders.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will be required to amend
the Articles of Incorporation and Code of Regulations and approve Proposal 1.
See "General Information - Tabulation" above.

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
OF PROPOSAL 1.

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<PAGE> 9

PROPOSAL 2. TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES.

The Board of Directors has unanimously proposed that the Articles of
Incorporation be amended, as set forth in Exhibit A attached hereto, to increase
the authorized number of shares of Common Stock from 3,412,000 to 10,000,000.
The Articles of Incorporation presently authorize the issuance of 3,412,000
shares of Common Stock, of which 1,108,020 shares were outstanding at the close
of business on February 22, 1997, and 50,000 shares were reserved for issuance
under the Employees' Incentive Stock Option Plan and 202,000 shares were
reserved for issuance upon exercise of existing but unexercised options.

PURPOSE AND EFFECT OF AMENDMENT

The purpose of the amendment of the Articles of Incorporation to
increase the number of authorized shares is to provide the Company with
additional shares of Common Stock to be used from time to time for general
corporate purposes, such as benefit and compensation plans, raising capital and
acquisitions. The additional newly authorized shares of Common Stock would be
issuable for any corporate purpose, including stock splits, stock dividends,
employee benefit and compensation plans, public or private sales for cash as a
means of raising capital or acquisitions. The Board of Directors believes that
greater flexibility in the Company's capital structure is highly desirable. By
authorizing additional shares of Common Stock, the Board of Directors would have
the authorized shares and flexibility necessary to meet the Company's future
needs without experiencing the time delay and significant expense of having to
seek shareholder approval for the authorization of additional shares.

The increase in the authorized number of shares of Common Stock does
not alter the rights of the outstanding shares of Common Stock or the manner in
which the Board of Directors may authorize the issuance of additional shares of
Common Stock. The additional shares of Common Stock authorized by the proposed
amendment will, if and when issued, have the same rights as the currently
authorized shares of Common Stock. Holders of Common Stock have no preemptive
rights. Consequently, current shareholders will not have any preferential right
to purchase any of the additional shares of Common Stock.

It is not possible to describe the actual effect of the authorization
of additional shares of Common Stock upon the rights of holders of Common Stock
until the Board of Directors, if ever, issues such additional Common Stock.
However, such effects might include dilution of the voting power of the
outstanding Common Stock to the extent that additional shares of Common Stock
are issued. Any such issuance of additional shares could also have the effect of
diluting the earnings per share and book value per share of existing shares of
Common Stock, and such additional shares could be used to dilute the stock
ownership of persons seeking to obtain control of the Company.

Under Ohio law, authorized, but unissued, shares may be issued for such
consideration and purposes as the Board of Directors may determine without
further action by the shareholders in most circumstances. The Board of Directors
does not intend to seek shareholder approval of issuances within the proposed
authorization of additional shares of Common Stock, unless otherwise required by
law or by the rules of any exchange on which the Company's securities may be
listed at the time such shares are issued. Frequently, opportunities arise that
require immediate action, and it is the belief of the Board of Directors that
the delay necessitated by shareholder approval of the specific issuance could be
detrimental to the Company and its shareholders.

Approval of the proposal to increase the authorized shares of Common
Stock may have an anti-takeover effect. Although the Board of Directors has no
present intent to do so, the Company could issue authorized but unissued shares
of Common Stock, warrants or other rights which could, depending on the terms of
such issue, preclude or make difficult merger or takeover attempts. Increasing
the number of authorized shares of Common Stock would allow the Company to issue
additional shares in order to dilute the voting power of the outstanding Common
Stock, thereby deterring potential acquirors by lessening their ability to
obtain control of the Company. Although the Board of Directors would make such a
determination in accordance with the standards of applicable law, the Board of
Directors could so act to discourage an acquisition attempt or other transaction
viewed favorably by the holders of a majority of the Common Stock. Accordingly,
approval of the proposal to increase the authorized shares of Common Stock could
have the effect of entrenching incumbent management.

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<PAGE> 10

Shareholders are encouraged to review the financial statements of the
Company, Management's Discussion and Analysis of Financial Condition and Results
of Operations and other information included in the Company's 1996 Annual
Report, which was mailed to shareholders with this Proxy Statement, when
considering this proposal.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will be required to amend
the Articles of Incorporation and approve Proposal 2. See "General Information
- - Tabulation" above.

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
OF PROPOSAL 2.
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PROPOSAL 3. TO AMEND THE CODE OF REGULATIONS TO DIVIDE THE BOARD OF
DIRECTORS INTO TWO CLASSES, TO PERMIT THE BOARD OF DIRECTORS TO
DETERMINE THE NUMBER OF DIRECTORS SERVING ON THE BOARD OF DIRECTORS
AND TO ESTABLISH A RETIREMENT AGE FOR DIRECTORS.

The Board of Directors has unanimously determined that it would be
advisable and in the best interest of the Company and its shareholders to amend
the Code of Regulations by deleting the current Section 2 of Article II and
replacing it with the proposed Section 2 of Article II, which is set forth on
Exhibit A attached hereto.

Under the current Section 2 of Article II, the Board of Directors is
divided into three classes of directors, with each class of directors serving
staggered three year terms. If the proposed amendment is adopted, the number of
classes of directors on the Board of Directors will change from three to two.
The directors in the first class will be elected for a term of one year and the
directors in the second class will be elected for a term of two years. At the
next two annual meetings of shareholders, the terms of one class of directors
will expire and the newly nominated directors of the class will be elected for a
term of two years. If the Board of Directors increases the number of directors
in a class, it may fill the vacancy created thereby for the full remaining term
of a director in that class even though such term may extend beyond the next
annual election. The Board of Directors may fill any vacancy occurring for any
other reason for the full remaining term of the director whose death,
resignation or removal caused the vacancy, even though such term may extend
beyond the next annual election.

The current Section 2 of Article II also requires the Company to obtain
the approval of its shareholders in order to increase or decrease the number of
directors on the Board of Directors. After the adoption of the proposed
amendment by the shareholders, the Board of Directors will have the authority to
determine the number of directors serving on the Board of Directors and the
number of directors in each class, as long as the total number of directors does
not exceed nine, or the number of directors in any class does not exceed five.
Under the proposed Section 2 of Article II, subject to these rules, the classes
of directors need not have equal numbers of members. Further, no reduction in
the total number of directors or in the number of directors of any given class
will have the effect of removing a director from office or reducing the term of
any then sitting director.

The current Code of Regulations does not include any qualifications for
becoming a director. The proposed amendment to Section 2 of Article II contains
a new provision not contained in the current Section 2 of Article II relating to
the retirement of directors. The additional language provides that when a
director reaches the age of 67, the director shall no longer be eligible for
reelection to the Board of Directors.

PURPOSE AND EFFECTS OF AMENDMENT

The purpose of amending the Code of Regulations to divide the Board of
Directors into two classes is to ensure that the composition of the Board of
Directors conforms at all times with Ohio law. Under Ohio law, the
classification of the Board of Directors is permitted, provided, each class
includes at least three directors.

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<PAGE> 11

Currently, the Code of Regulations provides for three classes of directors,
but also allows the Board of Directors to consist of less than nine directors.
Therefore, in order to conform the number of directors permitted under the Code
of Regulations to Ohio law, in the context of classifying directors, the Code of
Regulations must be amended to provide for only two classes of directors. The
Board of Directors has therefore decided to propose that the Code of Regulations
be amended to permit only two classes of directors.

The purpose of amending the Code of Regulations to allow the Board of
Directors to determine the number of directors serving on the Board of Directors
is to provide the Board of Directors with the flexibility to add directors or to
forego replacing directors that resign or die, without the significant expense
of having to obtain shareholder approval in each instance. Currently, only the
shareholders of the Company can increase or decrease the number of directors
serving on the Board of Directors. If the proposed amendment is adopted, the
Board of Directors may increase or decrease the number of directors serving on
the Board of Directors. However, because a reduction in the number of directors
cannot be used to remove a director from office or to reduce the term of a
current director, the number of directors may only be reduced upon the
occurrence of a vacancy on the Board of Directors. In addition, the proposed
amendment to the Code of Regulations only permits the Board of Directors to add
additional directors if the number of directors serving on the Board of
Directors after such addition does not exceed nine.

The purpose of requiring directors to retire at the end of their
current term upon reaching age 67 is to ensure that only persons who are
actively involved in the business community continue to serve on the Board of
Directors as a director. The current Code of Regulations does not discuss the
qualifications of directors. As a result of this new provision in the Code of
Regulations, directors will not be eligible for reelection to the Board of
Directors upon reaching the age of 67.

Generally, classifying a board of directors provides for a continuing
body, even in the face of a person who accumulates a sufficient amount of voting
power, whether by ownership or proxy or a combination, to have a majority of the
voting power at a given meeting and take control of the Company, possibly
without paying a fair premium for control to all holders of Common Stock. In
addition, the classification of directors makes the removal of incumbent
management, the assumption of control by a holder of a large block of the Common
Stock, tender offers, mergers and proxy contests more difficult to accomplish.
Thus, the division of the Board of Directors into two classes of directors could
have an anti-takeover effect. However, the Code of Regulations currently
provides for three classes of directors. Therefore, at present, shareholders
cannot replace the entire Board of Directors at any annual meeting since no more
than one-third of the Board of Directors members are elected at any annual
meeting. If the proposed amendment to the Code of Regulations is adopted, a
person who has a majority of the voting power at a given meeting will be able to
replace a majority of the directors at such meeting if a majority of the
directors are up for election. Thus, the reduction from three classes of
directors to two classes of directors may make the removal of incumbent
management, the assumption of control by a holder of a large block of the
Company's stock, tender offers, mergers and proxy contests easier to accomplish
than if the Company maintains three classes of directors.

Providing the Board of Directors with the ability to determine the
number of directors serving on the Board of Directors could also make the
removal of incumbent management and the assumption of control of the Company
more difficult. If challenged by an attempt to gain control of the Board of
Directors, the existing members of the Board of Directors could increase the
number of directors on the Board of Directors and then fill the new vacancies
with people that are allied with the existing Board of Directors. Accordingly,
allowing the Board of Directors to increase the number of directors could have
an anti-takeover effect.

The proposal, if adopted, will affect every election of directors and
will be applicable even when no change of control is pending or threatened.
There have been no problems with the continuity of the Board of Directors in the
past that the proposal is intended to address. The proposal is not intended to
limit the voting power of a particular block of Common Stock or to frustrate
accumulations of such blocks.

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<PAGE> 12

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will be required to amend
the Code of Regulations and approve Proposal 3. See "General Information -
Tabulation above."

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
OF PROPOSAL 3.

-------------

PROPOSAL 4. TO AMEND THE ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY.

The Board of Directors has unanimously determined that it would be
advisable and in the best interests of the Company and its shareholders to amend
the Articles of Incorporation, as set forth in Exhibit A attached hereto, to
change the name of the Company to "PH Group, Inc." The Board of Directors
believes it is advisable to change the name of the Company to PH Group, Inc. in
order to take advantage of the name recognition, within the metal forming and
plastics industry, the investor community and the general public, associated
with the "PH Hydraulics(TM)" and the "Trueblood(TM)" lines of equipment that are
designed and manufactured by the Company. The effect of the amendment will be
that, upon filing of the amendment with the Secretary of State of the State of
Ohio, the Company will cease to do business under the name Resource General
Corporation and will thereafter do business under the name "PH Group, Inc." The
name of the Company will be officially changed to PH Group, Inc. and all reports
and statements filed with the Commission on behalf of the Company, including
proxy statements and periodic reports, will be filed under the new name, PH
Group, Inc. After officially changing the name, the Company anticipates that it
will undertake to replace the current trading symbol of the Company ("RGEL")
with a symbol more closely associated with the new name of the Company.

VOTE REQUIRED

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
OF PROPOSAL 4.

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PROPOSAL 5. TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO
ELIMINATE THE APPLICABILITY OF THE OHIO CONTROL SHARE ACQUISITION
ACT.

The Board of Directors has unanimously determined that it would be
advisable and in the best interests of the Company and its shareholders to amend
the Articles of Incorporation, as set forth in Exhibit A attached hereto, to
eliminate the requirement under Ohio law that control share acquisitions be
approved by the shareholders. The Board of Directors believes it is advisable to
encourage and maintain stability in the price of the Common Stock, and also to
encourage consistent changes in management.

PURPOSE AND EFFECTS OF THE AMENDMENT

Under Ohio law, unless a company's articles or regulations otherwise
provide, any Control Share Acquisition of a public corporation, as defined
below, may be made only with the prior authorization of its shareholders in
accordance with the Ohio Control Share Acquisition Act, ORC Section 1701.831 and
related definitions in ORC

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<PAGE> 13

Section 1701.01(Z) (collectively, the "Act"). The proposed amendment to
Section D of Article V of the Articles of Incorporation states that the Act will
not apply to Control Share Acquisitions of shares of stock of the Company.

Pursuant to the Act, a "Control Share Acquisition" is an acquisition of
a company's shares which would give the acquiring person voting power falling
within one of the following three categories: (a) one-fifth or more, but less
than one-third of the voting power, (b) one-third or more but less than a
majority of the voting power, or (c) a majority or more of the voting power. For
a Control Share Acquisition to occur, the affirmative vote of both the majority
of the voting power of a company and the majority of the voting power of a
company, excluding "Interested Shares" must be obtained. "Interested Shares" are
defined under Ohio law to include shares held by the acquiring person, shares
held by an officer of the company elected by the board of directors, and shares
held by employees of the company who are also directors.

Excepted from the definition of Control Share Acquisition are certain
acquisitions of shares (a) pursuant to the laws of descent and distribution, (b)
in satisfaction of a pledge or security interest, (c) pursuant to a
shareholder-authorized merger or consolidation, or (d) subsequent transfers of
shares which were acquired in an approved Control Share Acquisition. Once a
shareholder has received approval of a Control Share Acquisition, approval of
additional acquisitions is not necessary so long as the voting power of the
acquiring person remains within the range approved in the Control Share
Acquisition proposal. For example, the Members of Phoenix Management, Ltd.
received shareholder approval for a Control Share Acquisition of a majority or
more of the voting power of the Company at a special meeting of the shareholders
of the Company held on May 28, 1996. Thus, additional share acquisitions by the
Members of Phoenix would not need to be approved by the shareholders of the
Company.

The effect of the proposed amendment is to eliminate the requirement of
shareholder approval of a Control Share Acquisition. The Act provides
shareholders of Ohio corporations the right to vote on whether an acquiring
party should be permitted to obtain large portions of stock or even control of
their corporation through a tender offer or other means of accumulating voting
control. If the proposed amendment is adopted, persons seeking to acquire
control of the Company would not be required to file certain disclosures and to
obtain shareholder approval before a Control Share Acquisition could be
completed thereby lessening the ability of the Company to resist a change in
control.

Eliminating the requirement of shareholder approval of a Control Share
Acquisition can in certain circumstances be beneficial to shareholders. In order
to comply with the Act, an acquiring person must satisfy the requirements of the
Act, which may result in an increase of acquisition costs. These additional
costs may result in preventing the shareholders from realizing any premium over
the prevailing market price that may be involved in such a transaction.
Furthermore, acquisitions of stock by persons attempting to acquire control of a
company through gradual open-market purchases often cause the market price of
the target company's stock to rise. Requiring shareholder approval of such
transactions discourages gradual market purchases, thereby depriving some
shareholders of an opportunity to sell their shares at a higher market price.
Certain shareholders may desire to sell their shares in a Control Share
Acquisition proposed by a person, but be prevented from doing so because the
requisite shareholder vote was not obtained. However, because the current
Articles of Incorporation render Control Share Acquisitions more difficult,
removal of management may be more difficult, even if such removal will be
beneficial to the shareholders.

VOTE REQUIRED

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
OF PROPOSAL 5.

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<PAGE> 14

ELECTION OF DIRECTORS

PROPOSALS 6 AND 7. ELECTION OF DIRECTORS.

NOMINEES FOR ELECTION AS DIRECTORS

Assuming adoption by the shareholders of Proposal 3 at the Annual
Meeting, the nominees to each class of the Board of Directors receiving the
highest number of votes will be elected as directors to terms of one and two
years, respectively. Thereafter directors will be elected for terms of two
years. Alida L. Breen, Terry L. Sanborn and Charles T. Sherman have been
nominated as directors in the first class, to serve for a term of one year, and
Bob Binsky, Michael W. Gardner, David H. Montgomery and Theodore P. Schwartz
have been nominated as directors in the second class to serve for a term of two
years. If the shareholders do not approve Proposal 3, the two nominees to the
Board of Directors receiving the highest number of votes will be elected as
directors to terms of three years. Bob Binsky and Alida L. Breen have been
nominated as directors to serve for a term of three years in the event the
shareholders do not approve Proposal 3. The terms of office of Bob Binsky and
Alida L. Breen expire at the Annual Meeting.

The Company has no reason to believe that any of the nominees will not
stand for election or serve as a director. In the event any person nominated
fails to stand for election, the proxies will be voted for the election of such
other person as shall be designated by the persons named in the proxy. See
"General Information -- Tabulation."

THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING PERSONS TO SERVE AS
DIRECTORS OF THE COMPANY:

TERM EXPIRING IN 1998:

ALIDA L. BREEN, age 49, has served as a director of the Company since
May 1996 when she was appointed by the Board of Directors to fill a vacancy.
Since 1979, she has been the Vice President of Finance of Ohio Transmission &
Pump Co., a distributor of industrial products.

TERRY L. SANBORN, age 54, has served as a director of the Company since
1991. From 1979 to 1993 Mr. Sanborn was Senior Vice President of Operations for
Medex, Inc. ("Medex"), a medical device manufacturing company. From 1993 until
his retirement in February 1997, Mr. Sanborn served as Chief Operating Officer
of Medex.

CHARLES T. SHERMAN, age 51, has served as a director of the Company
since 1987. From 1987 until 1996, Mr. Sherman served as Vice President of
Operations of the Company and as President of PH Hydraulics and Automation, Inc.
("PH Hydraulics"), the wholly-owned subsidiary of the Company that was merged
into the Company in October 1996. Mr. Sherman was elected President of the
Company in May 1996.

TERM EXPIRING IN 1999:

BOB BINSKY, age 57, has served as a director of the Company since 1993.
Since 1985, Mr. Binsky has been President of TR Sport, Inc. Mr. Binsky also
serves on the Board of Directors of Kahiki Foods, Inc., a restaurant and food
products retailer, and as Chairman and Chief Executive Officer of Cable Link,
Inc., a cable television refurbisher.

MICHAEL W. GARDNER, age 46, has served as a director of the Company
since 1996. From 1987 until October 1996, Mr. Gardner served as Vice President
of Manufacturing of PH Hydraulics. Since October 1996, Mr. Gardner has served as
Vice President of Manufacturing of the Company.

DAVID H. MONTGOMERY, age 54, is a nominee for election as a director of
the Company. Since 1976, Mr. Montgomery has served as President and Chief
Executive Officer of Dayton Machine Tool Company, a manufacturer of machine
tools and repairer of industrial machinery.

THEODORE P. SCHWARTZ, age 60, has served as a director of the Company
since May 1996. From 1992 until October 1996, Mr. Schwartz served as Senior Vice
President of PH Hydraulics. Since October 1996, Mr. Schwartz has served as
Senior Vice President of the Company.

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<PAGE> 15

EXECUTIVE OFFICERS OF THE COMPANY

All of the executive officers of the Company are named above, except
Shelley R. Weaver, Treasurer of the Company.

SHELLEY R. WEAVER, age 27, has been Treasurer of the Company since May
1996. From November 1995 until May 1996, she served as Assistant Treasurer of
the Company and from 1992 until joining the Company, she was a staff accountant
for Ernst & Young, a national accounting firm.

BOARD OF DIRECTORS MEETINGS

The Board of Directors held six meetings in fiscal 1996 and each of the
directors attended at least 75 percent of the aggregate number of meetings of
the Board of Directors and committees (if any) on which he or she served.

COMMITTEES

The Company has a standing Audit Committee, Compensation Committee and
Nominating Committee.

The Audit Committee (comprised of Alida L. Breen (Chairman), Terry L.
Sanborn and Bob Binsky) recommends the firm to be employed by the Company as its
independent auditors; consults with the firm so chosen to be the independent
auditors with regard to the plan of audit; reviews, in consultation with the
independent auditors, their report of audit, or proposed report of audit, and
the accompanying management letter, if any, and consults with the independent
auditors with regard to the adequacy of the internal accounting controls. The
Audit Committee held one meeting in fiscal 1996.

The Nominating Committee (comprised of Charles T. Sherman (Chairman),
Terry L. Sanborn and Theodore P. Schwartz) recommends candidates to fill
vacancies on the Board of Directors. The Nominating Committee was formed by a
meeting of the Board of Directors on January 28, 1997. Accordingly, the
Nominating Committee did not hold any meetings in fiscal 1996. The current
purpose of the Nominating Committee is not to consider nominees recommended by
shareholders. Instead, the Nominating Committee simply nominates directors to
fill vacancies created from time to time on the Board of Directors.

The Compensation Committee (comprised of Terry L. Sanborn (Chairman),
Bob Binsky and Alida L. Breen) establishes the compensation of all employees and
consultants of the Company, administers and interprets the Company's Employees'
Incentive Stock Option Plan and takes any action that is permitted to be taken
by a committee of the Board of Directors under the terms of such plan, including
the granting of options. If adopted at the Annual Meeting, the Compensation
Committee will administer and interpret the Company's 1997 Stock Incentive Plan.
The Compensation Committee held three meetings in fiscal 1996.

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<PAGE> 16

1997 STOCK INCENTIVE PLAN

PROPOSAL 8. TO TERMINATE THE COMPANY'S EXISTING EMPLOYEES' INCENTIVE STOCK
OPTION PLAN AND APPROVE THE 1997 STOCK INCENTIVE PLAN OF THE
COMPANY.

The Employees' Incentive Stock Option Plan was adopted by the
shareholders of the Company in 1988. The 1997 Stock Incentive Plan (the "Plan")
was adopted by the Board of Directors on January 28, 1997. The Board of
Directors has proposed that the Company's shareholders approve the termination
of the Employees' Incentive Stock Option Plan and adoption of the Plan.

EMPLOYEES' INCENTIVE STOCK OPTION PLAN

At the special meeting of the shareholders of the Company held on
November 12, 1988, the shareholders approved an Employees' Incentive Stock
Option Plan providing options for 50,000 shares. To date, no options have been
granted under the plan. The Board of Directors has determined that it is in the
bests interest of the Company to terminate the Employees' Incentive Stock Option
Plan and replace it with the Plan. Although shareholder approval is not required
to terminate the Employees' Incentive Stock Option Plan, the Board of Directors
has determined to seek the approval of the shareholders to terminate the
Employees' Incentive Stock Option Plan since it was originally adopted by a vote
of the shareholders in 1988. If the shareholders do not approve the proposal to
terminate the Employees' Incentive Stock Option Plan, the Board of Directors
will not terminate the Employees' Incentive Stock Option Plan until shareholder
approval is obtained.

1997 STOCK INCENTIVE PLAN

PURPOSE, DURATION, AMENDMENT AND TERMINATION

The Plan is designed to attract and retain capable directors, employees
and consultants and to provide them with long term incentives to continue their
services to the Company, to maximize the value of the Company to its
shareholders and to acquire a continuing ownership interest in the Company. No
award of a stock option (an "Option" or an "Award") may be granted under the
Plan more than 10 years after January 28, 1997. The Board of Directors may at
any time terminate the Plan, or make such amendment to the Plan as it may deem
advisable. However, to the extent required by Rule 16b-3 or by Section 422 of
the Internal Revenue Code of 1986 and the regulations thereunder (the "Code"),
no amendment will be effective without the approval of the shareholders of the
Company if it would materially increase the benefits accruing to participants
under the Plan; increase the aggregate number of shares of Common Stock which
may be issued under the Plan; materially modify the requirements as to
eligibility for participation in the Plan; or change the designation of
employees or class of employees eligible to receive Options under the Plan. No
amendment or termination of the Plan may alter or impair the rights of a person
to whom an Award was granted (a "Grantee"), under any Award made before the
adoption of such amendment or termination by the Board of Directors, without the
written consent of such Grantee. The provisions of the Plan setting forth the
formulae that determine the exercise price of certain Options granted to
directors (see "Directors' Stock Options"), the number of shares of Common Stock
as to which they are exercisable, the times when they are granted and the
persons who are participants may not be amended more than once every six months,
other than to comport with changes in the Code and the Employee Retirement
Income Security Act of 1974, or the rules thereunder.

ADMINISTRATION

The Plan will be administered by a committee of the Board of Directors
consisting of three or more directors, each of whom is a "non-employee director"
as described in Rule 16b-3. Unless the Board of Directors designates another of
its committees to administer the Plan, the Plan will be administered by a
committee consisting of those members of the Compensation Committee who are
qualified (the "Committee"), but, if the Compensation Committee is abolished or
its membership does not contain three persons who are qualified, the Board of
Directors will either reconstitute the Compensation Committee or create another
committee that complies with these requirements to administer the Plan. See
"Election of Directors -- Committees." Subject to the express provisions

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<PAGE> 17

of the Plan and in addition to the powers granted by other sections of the
Plan, the Committee has the authority, in its discretion, to determine the
participants, grant Awards and determine their timing, pricing and amount;
define, prescribe, amend and rescind rules, regulations, procedures, terms and
conditions relating to the Plan; make all other determinations necessary or
advisable for administering the Plan, including, but not limited to,
interpreting the Plan, correcting defects, reconciling inconsistencies and
resolving ambiguities; review and resolve all claims; and delegate to the
officers the authority to select consultant and employee Grantees (other than
officers) and grant Awards to such Grantees having terms and in appropriate
amounts determined by the Committee.

COMMON STOCK

The aggregate number of shares of Common Stock in respect of which
Awards may be granted under the Plan may not exceed 150,000. This number and the
terms of any Award will be adjusted proportionately if the shares of Common
Stock are split, combined or altered by a stock dividend or a merger or other
corporate event. If any Award granted under the Plan is canceled, terminates or
expires for any reason without having been exercised in full, the shares of
Common Stock related to the unexercised portion of the Award may be used again.
If any shares of Common Stock purchased under the Plan are forfeited for any
reason, the shares shall be available again for purposes of the Plan. Except as
otherwise determined by the Board of Directors, the shares of Common Stock
issued under the Plan will be drawn from authorized but unissued shares.
However, shares which are to be delivered under the Plan may be obtained by the
Company from its treasury, by purchases on the open market or from private
sources. The proceeds of the exercise of any Award will be general corporate
funds of the Company.

EMPLOYEES' AND CONSULTANTS' STOCK OPTIONS

Only employees and consultants who are not members of the Committee
are eligible to receive Options under this provision. On December 31, 1996, the
Company had 61 full-time employees, but no consultants. The Committee will
determine which eligible employees or consultants will be granted Options, the
number of shares of Common Stock for which the Options may be exercised, the
times when they will receive them and the terms and conditions of individual
Option grants (which need not be identical). The Committee will determine the
exercise price of each Option at the time that it is granted, but in no event
will the exercise price of an Option be less than the fair market value of a
share of Common Stock on the date of grant. The "fair market value of a share"
means the amount determined to be the fair market value of a share by the
Committee based upon the trading price of the shares, their offering price in
public and private offerings by the Company and such other factors as it deems
relevant. In the absence of such a determination, the fair market value of a
share shall be deemed to be (a) if the shares are listed or admitted to trading
on a national securities exchange or the NASDAQ - National Market System, the
per share closing price regular way on the principal national securities
exchange or the NASDAQ - National Market System on which the shares are listed
or admitted to trading on the day prior to the date of determination or, if no
closing price can be determined for the date of determination, the most recent
date for which such price can reasonably be ascertained, or (b) if the shares
are not listed or admitted to trading on a national securities exchange or the
NASDAQ - National Market System, the mean between the representative bid and
asked per share prices in the over-the-counter market at the closing of the day
prior to the date of determination or the most recent such bid and asked prices
then available, as reported by NASDAQ or if the shares are not then quoted by
NASDAQ as furnished by any market maker selected from time to time by the
Company for that purpose. On March 13, 1997, the mean between the representative
bid and asked prices on the over-the-counter market of a share of Common Stock
was $3.13. The Committee has the authority, in its discretion, to delegate to
the officers of the Company the authority to select Grantees (who are not
officers) and grant Awards of Options to employees and consultants under this
provision to such Grantees having terms and in aggregate amounts determined by
the Committee.

The Committee will determine the term during which an Option is
exercisable at the time that it is granted, but no Option will be exercisable
after 10 years from the date of grant. Generally, each Option will vest and
first become exercisable as to one-fourth of the shares of Common Stock
originally subject to the Option on each anniversary of the date of grant
provided the Grantee thereof has been an employee or a consultant, as the case
may be, continuously during the time beginning on the date of grant and ending
on the date when such portion of the Option first becomes exercisable.
Generally, each Option will lapse and cease to be exercisable upon the earliest
of

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<PAGE> 18

the expiration of 10 years from the date of grant, nine months after the
Grantee ceases to be an employee or consultant because of his death or
disability (six months for incentive stock options, see below), three months
after the Grantee's employment with or services to the Company are terminated by
the Company without cause, or immediately upon termination of the Grantee's
employment with or services to the Company for cause or by the Grantee's
resignation. The Committee may, in its sole discretion, accelerate the time at
which any Options become exercisable or waive any provisions of the Plan
relating to the manner of payment or procedures for the exercise of any Option.
Any such acceleration may be made effective with respect to one or more or all
Grantees, with respect to some or all of the shares subject to an Option of any
Grantee or for a period of time ending at or before the expiration date of any
Option.

The Committee will determine whether an Option is an incentive stock
option or a nonqualified option (as such terms are defined in the Code, see
"Taxation") at the time that it is granted, and if no express determination is
made by the Committee, all Options granted to employees who are not 10 percent
shareholders of the Company are incentive stock options and all Options granted
to consultants or 10 percent shareholders are nonqualified options. The
aggregate fair market value of the shares of Common Stock, determined as of the
time the Option is granted, which first become exercisable under all incentive
stock options granted to the employee may not exceed $100,000 during any
calendar year and if that limit would be exceeded by the terms of any incentive
stock option, the exercisability of a portion of such Option will be deferred,
but the Committee may, in its sole discretion, waive such deferral. No ten
percent shareholder will be granted an incentive stock option, unless the
exercise price thereof is at least 110 percent of the fair market value and the
Option is not exercisable after five years.

DIRECTORS' STOCK OPTIONS

Only directors who are not employees of the Company are eligible to
receive Options under this provision. On the date of each annual meeting of
shareholders, beginning with the 1997 Annual Meeting of Shareholders, an Option
on 5,000 shares of Common Stock will be granted automatically to each person who
is elected as a director at such meeting, provided such person has not
previously served as a director of the Company since January 28, 1997. In
addition, when a person is appointed as a director to fill a vacancy on the
Board of Directors, an Option will be automatically granted to such person on a
number of shares equal to 5,000 multiplied by a fraction, the numerator of which
equals the number of whole calendar months remaining in the term for which such
director is appointed and the denominator of which equals twenty-four, provided
the new director has not previously served as a director of the Company since
January 28, 1997. Each Option granted to new directors shall vest and first
become exercisable as to the first 1,000 shares on the date of grant (or such
lesser number as remain subject to the Option in the case of an Option granted
to a director filling a vacancy); as to the next 2,000 shares on the date of the
first annual meeting of shareholders following such director's election or
appointment, as the case may be (or such lesser number as remain subject to the
Option in the case of an Option granted to a director filling a vacancy); and as
to the remaining 2,000 shares originally subject to the Option on the date of
the second annual meeting following such director's election or appointment, as
the case may be (or such lesser number as remain subject to the Option in the
case of an Option granted to a director filling a vacancy). If a new director
receives an Option under the Plan and is not the beneficial owner of at least
1,000 shares of Common Stock as of the first annual meeting following such
director's election or appointment, as the case may be, such director is
required to exercise the Option with respect to at least 1,000 shares on the
date of such annual meeting, provided the exercise can be effected in compliance
with all applicable laws, rules and regulations.

At each annual meeting of shareholders, beginning with the 1998 Annual
Meeting of Shareholders, an Option will be granted automatically to each
director whose term of office as a director expires on such date or continues
through such annual meeting or who is reelected for a subsequent term on such
meeting date. The number of shares as to which such Option shall be granted is
based on the increase of total income before taxes of the Company for a fiscal
year (the "Performance Year"), as specified in its audited financial statements,
from the prior fiscal year. If total income increases, but less than 10 percent,
then each director will be granted an Option on 1,000 shares. If total income
increases between 10 percent and 20 percent then each director will be granted
an Option on 2,000 shares. If total income increases more than 20 percent, then
the directors will be granted an Option on 3,000 shares. Each Option granted to
directors pursuant to the above formula will vest and first become exercisable
as to 50 percent of the shares of Common Stock originally subject to the Option
on the date of each

-15-
<PAGE> 19

annual meeting, beginning on the date of grant, if the Grantee is a
director of the Company at the time of adjournment of the meeting of
shareholders held on such date. An Option granted to a Grantee who is not
reelected as a director upon expiration of term shall vest and become
exerciseable as to 100% of the shares subject to the Option on the date of
grant.

Three directors would currently qualify as non-employee directors
eligible for Awards. If elected, David H. Montgomery will receive an Option on
5,000 shares of Common Stock and will also qualify as a non-employee director
eligible for additional Awards. The exercise price of director Options will be
the fair market value of a share of Common Stock on the date of grant (see
"Employees' and Consultants' Stock Options") or with respect to Options granted
based on the Company's increase of total income before taxes, on the date of the
annual meeting of shareholders of the Company occurring during the Performance
Year. Each Option shall lapse and cease to be exercisable upon the earliest of
the expiration of 10 years from the date of grant, nine months after the Grantee
ceases to be a director because of death or disability, immediately upon
resignation by the Grantee as a director, or one year after the Grantee ceases
to be a director for any reason other than death, disability or resignation.

An Option granted to a director will be a nonqualified option (as such
term is defined in the Code, see "Taxation") at the time that it is granted.

PROVISIONS APPLICABLE TO ALL TYPES OF AWARDS

The Committee may, in its sole discretion, and upon such terms and
conditions as it shall determine at or after the date of grant, permit the
exercise price of an Award granted to an employee or consultant to be paid in
cash, by the tender to the Company of shares of Common Stock owned by the
Grantee or by a combination thereof. If the Committee does not make such
determination or the Award is granted to a director, the exercise price must be
paid in cash, by certified or cashier's check, wire transfer or reduction of a
debt of the Company to the Grantee. Shares of Common Stock may not be delivered
to the Company as payment for the exercise of an Award, if such shares have been
owned by the Grantee (together with his decedent or testator) for less than six
months or if such shares were acquired upon the exercise of an incentive stock
option and their disposition would be taxable.

The Committee may permit the voluntary surrender of all or a portion of
any Award to be conditioned upon the granting to the participant of a new Award
for the same or a different number of shares as the Award surrendered, or may
require such voluntary surrender as a condition precedent to a grant of a new
Award to such participant. Subject to the other provisions of the Plan, such new
Award shall be exercisable at the price, during the period and on such other
terms and conditions as are specified by the Committee at the time the new Award
is granted. The Committee may grant Awards having terms and conditions which
vary from those specified in the Plan if such Awards are granted in substitution
for, or in connection with the assumption of, existing awards granted by another
business entity and assumed or otherwise agreed to be provided for by the
Company pursuant to a transaction involving a merger or consolidation of or
acquisition of substantially all of the assets or stock of another business
entity that is not a subsidiary of the Company prior to such acquisition. The
Committee, subject to the written consent of the Grantee where the action
impairs or adversely alters the rights of the Grantee, has the right at any time
after the date of grant of any Award to modify its terms.

Notwithstanding the terms of any Award, all Awards that have not
previously been exercised nor lapsed and ceased to be exercisable, will vest and
become exercisable upon the occurrence of any change in control of the Company
if the Grantee is then an eligible participant in the Plan. A change in control
includes (a) the acquisition, directly or indirectly, by a person (other than
the Company or an employee benefit plan established by the Board of Directors)
of beneficial ownership of 20 percent or more of the Company's securities with
voting power in the next meeting to elect the directors; (b) the election of a
majority of the directors elected at any meeting of the holders of the Company's
voting securities who are persons who were not nominated by the Company's then
current Board of Directors or authorized committee thereof; or (c) the approval
by the shareholders of the Company of a merger or consolidation with another
person, other than a merger or consolidation in which the holders of the
Company's voting securities continue to hold voting securities in the surviving
corporation (in the same relative proportions as existed before the event)
comprising 80 percent or more of the voting power of the surviving corporation;
or (d) the approval by the shareholders of the Company of a transfer of
substantially all of the assets of the Company to

-16-
<PAGE> 20

another person other than a transfer to a transferee, 80 percent or more of
the voting power of which is owned by the Company or by the holders of the
Company's voting securities in the same relative proportions to each other as
existed before the event.

DISABILITY

If a Grantee who is an employee with or consultant to the Company is
absent from work with the Company because of a physical or mental disability,
such Grantee will not be considered to have ended his employment with the
Company for purposes of the Plan, while he has that disability, unless he
resigns or the Committee decides otherwise. If a Grantee who is a director is
absent from meetings of the Board of Directors because of a physical or mental
disability, such Grantee will not be considered to have ended his or her service
with the Board of Directors for purposes of the Plan while the Grantee has that
disability, unless the Grantee resigns or is not re-elected by the shareholders.

TRANSFER RESTRICTIONS

No Award under the Plan may be sold, pledged or otherwise transferred
other than by will or the laws of descent and distribution; and no Award may be
exercised during the life of the participant to whom it was granted except by
such participant.

TAXATION

GRANTEES SHOULD CONSULT THEIR INDIVIDUAL TAX ADVISERS BEFORE
EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED ON THE
EXERCISE OF AN AWARD

Grantees are not taxed on the grant or exercise of an incentive stock
option. The difference between the exercise price of an incentive stock option
and the fair market value of a share of Common Stock received upon the exercise
of an incentive stock option may be subject to the federal alternative minimum
tax. If a Grantee exercises an incentive stock option and disposes of any of the
shares of Common Stock received by such Grantee as a result of such exercise
within two years from the date of grant or within one year after the transfer of
such shares to such Grantee, the Company will receive a tax deduction and the
Grantee will be taxed, as ordinary income, on the lesser of the gain on sale or
the difference between the exercise price and the fair market value of a share
at the time of exercise; and the Grantee must pay or provide for the withholding
taxes on such ordinary income. The Grantee will also have a capital gain to the
extent that the sale price exceeds the fair market value on the date of
exercise. If the shares are not sold by the Grantee before the end of those
periods and if the incentive stock option is exercised no later than three
months (or one year, if the Grantee is disabled) after termination of the
Grantee's employment with the Company (the "Exercise Period"), the Grantee will
have a capital gain or capital loss upon sale of the shares to the extent that
the sale price differs from the exercise price. No tax effect will result to the
Company by reason of the grant or exercise of incentive stock options (except
when the incentive stock option is exercised after the Exercise Period), or upon
the disposition of shares after expiration of two years from the date of grant
or one year from the date of exercise. If the incentive stock option is
exercised after the Exercise Period, the Grantee will recognize taxable ordinary
income equal to the difference between the fair market value of the acquired
shares and the exercise price, and the Company will be entitled to a
corresponding deduction.

Nonqualified options are not taxed upon grant. The Grantee is taxed, as
ordinary income, on the exercise of such an Option. The exercise of a
nonqualified option requires the Grantee to realize ordinary income to the
extent that the fair market value of the shares acquired upon the exercise of
the option on the date of exercise exceeds the exercise price. The Grantee's
basis for determining capital gain or capital loss upon sale of the shares is
the higher of their fair market value on the date of exercise and the exercise
price. The Company is entitled to a deduction equal to the ordinary income
realized by the Grantee upon the exercise of nonqualified options.

-17-
<PAGE> 21

NEW PLAN BENEFITS

The following table sets forth the number of shares of Common Stock
that are currently determinable and that will be received under the Plan if
adopted.

1997 STOCK INCENTIVE PLAN

Name and Position Number of Shares
----------------- ----------------

David H. Montgomery, 5,000 (if elected)
Nominee for Director

No grants of Options have yet been made. Grants of Options to employees
and consultants are discretionary with the Committee and are, therefore, not
currently determinable. See "Compensation of Management" for certain information
as to grants of options made in previous fiscal years. The non-executive nominee
directors, other than David H. Montgomery, will not be eligible to receive
Options under the Plan until the 1998 Annual Meeting of Shareholders. The number
of shares underlying Options that may be granted to such directors under the
Plan on an annual basis ranges from 0 to 3,000 shares of Common Stock, depending
upon the amount of increase in the total income before taxes of the Company each
year. See "Directors' Stock Options."

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote at the Annual Meeting will be required to
terminate the Employees' Incentive Stock Option Plan and approve the Plan. See
"General Information -- Tabulation," above.

BOARD OF DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
TERMINATION OF THE EMPLOYEES' INCENTIVE STOCK OPTION PLAN AND THE APPROVAL OF
THE 1997 STOCK INCENTIVE PLAN.

-18-

<PAGE> 22

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS

The following table sets forth, as of February 22, 1997, certain
information with respect to the beneficial ownership of shares of Common Stock
by (i) each person, including any group of persons, known to the Company to be
the beneficial owner of more than 5 percent of the outstanding shares of Common
Stock, (ii) each director or nominee for director of the Company, (iii) each of
the Named Executives (see "Compensation of Management; Summary Compensation
Table"), and (iv) the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>

NUMBER OF
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(A) OF CLASS
------------------------------------------ -------------------- ------------

<S> <C> <C>
Phoenix Management, Ltd. (b) 310,000 (b)(c) 28%

Bob Binsky, Director (d) 159,874 (c)(d) 14%

Charles T. Sherman, Director and 239,798 (c)(e) 22%
Officer (e)

Theodore P. Schwartz, Director and 182,148 (c)(f) 16%
Officer (f)

Michael W. Gardner, Director and 21,000 (c)(g) 2%
Officer (g)

Kenneth J. Warren (h) 5,000 (c)(h) (m)

Alida L. Breen, Director (i) 5,000 (i) (m)

Terry L. Sanborn, Director (j) 20,000 (j) 2%

David H. Montgomery, Nominee (k) 0 (k) (m)

All directors and executive officers as

a group (six persons) 627,820 53%

Phoenix and its Members 617,820 (l) 52%

- --------------------
<FN>

(a) Unless otherwise indicated, the beneficial owner has sole voting and
dispositive power over these shares subject to the spousal rights, if any,
of the spouses of those beneficial owners who have spouses.

(b) The address of Phoenix Management, Ltd. ("Phoenix") is c/o Charles T.
Sherman, 2365 Scioto Harper Drive, Columbus, Ohio 43204. The members of
Phoenix, an Ohio limited liability company, and their percentages of
ownership in Phoenix, are Bob Binsky (28.5 percent), Michael W. Gardner
(5 percent), Theodore P. Schwartz (31.667 percent), Charles T. Sherman
(31.667 percent) and Kenneth J. Warren (3.167 percent) (collectively,
the "Members"). Includes (i) 74,500 shares owned outright by Phoenix as
of February 22, 1997, (ii) 85,500 shares as to which Phoenix has the
right to acquire (by virtue of assignment) but have yet to be purchased
under the Brownfield Agreements, as defined in the "Change of Control"
section, and as to which Phoenix has the power to vote by proxy, and
(iii) 150,000 shares as to which Phoenix has the right to acquire (by
virtue of assignment) but have yet to be purchased under the
Gillmor Agreement, as defined in the "Change of Control" section. As to
such 150,000 shares, Mr. Sherman and Mr. Schwartz, individually, have the
power to vote by proxy. Therefore, such 150,000 shares are also reported
as beneficially owned by each of Mr. Schwartz and Mr. Sherman individually.
</TABLE>

-19-
<PAGE> 23

(c) Each Member shares the power to vote or direct the voting and to dispose or
direct the disposition of the 74,500 block of shares owned outright by
Phoenix by virtue of each Member being a member in Phoenix. Each of the
Members also shares the power to vote or direct the voting of the 85,500
shares as to which Phoenix has the power to vote by proxy. By virtue of
assignment, Phoenix has the right to acquire the 85,500 block of shares
under the Brownfield Agreements and the right to acquire the 150,000 block
of shares under the Gillmor Agreement. Until the purchase of the 150,000
block of shares from Mr. Gillmor, Mr. Sherman and Mr. Schwartz share the
power to vote such shares by virtue of a proxy granted by Mr. Gillmor, and
such shares are also reported as beneficially owned by each of Mr. Schwartz
and Mr. Sherman. The shares listed as beneficially owned by each Member
individually are exclusive of the shares such Member may be deemed to
indirectly beneficially own by virtue of his membership interest in
Phoenix.

(d) Mr. Binsky's address is c/o Cable Link, Inc., 280 Cozzins Street, Columbus,
Ohio 43215. Includes 109,234 shares owned outright by Mr. Binsky as of
February 22, 1997, and 30,640 shares which were purchased by Michael Tsao
but are owned of record by Mr. Binsky. Mr. Binsky has sole power to vote or
direct the voting and to dispose or direct the disposition of all 139,874
shares. Also includes 20,000 unissued shares reported as beneficially owned
by Mr. Binsky which are the subject of currently issued but unexercised
options. Mr. Binsky is a Member of Phoenix.

(e) Mr. Sherman's address is c/o Resource General Corporation, 2365 Scioto
Harper Drive, Columbus, Ohio 43204. Includes 70,598 shares owned outright
by Mr. Sherman as of February 22, 1997, and 19,000 shares reported as
beneficially owned by Mr. Sherman which are the subject of currently
existing, but unexercised options. Also includes 150,000 shares 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. Mr. Sherman's wife has sole voting and
dispositive power with respect to 200 shares reported as beneficially owned
by Mr. Sherman. Under the 1997 Stock Incentive Plan, as described herein
and which will be considered by the shareholders for approval at the Annual
Meeting, Mr. Sherman may be eligible to be awarded an employee stock
option, of an undetermined amount, exercisable within 60 days or less after
the Annual Meeting. This potential option is not reported as beneficially
owned by Mr. Sherman. Mr. Sherman is a Member of Phoenix.

(f) Mr. Schwartz's address is c/o Resource General Corporation, 2365 Scioto
Harper Drive, Columbus, Ohio 43204. Includes 12,148 shares owned outright
by Mr. Schwartz as of February 22, 1997 and 20,000 unissued shares reported
as beneficially owned by Mr. Schwartz which are the subject of currently
issued but unexercised options. Also includes 150,000 shares 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. Under the 1997 Stock Incentive Plan, as
described herein and which will be considered by the shareholders for
approval at the Annual Meeting, Mr. Schwartz may be eligible to be awarded
an employee stock option, of an undetermined amount, exercisable within 60
days or less after the Annual Meeting. This potential option is not
reported as beneficially owned by Mr. Schwartz. Mr. Schwartz is a Member of
Phoenix.

(g) Mr. Gardner's address is c/o Resource General Corporation, 2365 Scioto
Harper Drive, Columbus, Ohio 43204. Includes 20,000 unissued shares
reported as beneficially owned by Mr. Gardner which are the subject of
currently issued but unexercised options. Under the 1997 Stock Incentive
Plan, as described herein and which will be considered by the shareholders
for approval at the Annual Meeting, Mr. Gardner may be eligible to be
awarded an employee stock option, of an undetermined amount, exercisable
within 60 days or less after the Annual Meeting. This potential option is
not reported as beneficially owned by Mr. Gardner. Mr. Gardner is a Member
of Phoenix.

(h) Mr. Warren's address is 2109 West Fifth Avenue, Suite C, Columbus, Ohio
43212. Includes 5,000 unissued shares reported as beneficially owned by Mr.
Warren which are the subject of currently issued but unexercised options.
Under the 1997 Stock Incentive Plan, as described herein and which will be
considered by the shareholders for approval at the Annual Meeting, Mr.
Warren may be eligible to be awarded a consultant stock option, of an
undetermined amount, exercisable within 60 days or less after the Annual
Meeting. This potential option is not reported as beneficially owned by Mr.
Warren. Mr. Warren is a Member of Phoenix.

(i) Ms. Breen's address is c/o Ohio Transmission & Pump Co., 666 Parsons
Avenue, Columbus, Ohio 43215. Includes 1,000 shares owned outright by Ms.
Breen, and 4,000 unissued shares reported as beneficially owned by Ms.
Breen which are the subject of currently issued but unexercised options.

(j) Mr. Sanborn's address is c/o Resource General Corporation, 2365 Scioto
Harper Drive, Columbus, Ohio 43204. Includes 1,000 shares which Mr. Sanborn
owns outright, and 19,000 unissued shares reported as beneficially owned by
Mr. Sanborn which are the subject of currently issued but unexercised
options.

(k) Mr. Montgomery's address is c/o Dayton Machine Tool Company, 1314 Webster
Street, Dayton, Ohio 45404. If elected, Mr. Montgomery will be granted an
Option on 5,000 shares of Common Stock under the Plan on the date of the
Annual Meeting. This potential Option is not reported as beneficially owned
by Mr. Montgomery.

(l) Includes all shares reported as beneficially owned by Phoenix and all
shares reported as beneficially owned individually by the Members, except
that the 150,000 shares listed as beneficially owned by each of Phoenix,
Mr. Sherman and Mr. Schwartz are included only once. Under the Operating
Agreement of Phoenix which expires December 31, 2016 (i) the shares owned
by Phoenix are voted in accordance with the vote of a majority in interest
of its Members, and (ii) the Members are obligated to vote shares owned by
them individually in the same manner as the shares voted by Phoenix.

(m) Less than 1 percent.

-20-
<PAGE> 24

CHANGE IN CONTROL - APPROVAL OF ACQUISITION OF CONTROL BY PHOENIX MANAGEMENT,
LTD.

At a Special Meeting of the Shareholders of Resource General
Corporation held on May 28, 1996, pursuant to Ohio Revised Code Section
1701.831, the Ohio Control Share Acquisition Act, the shareholders authorized
two acquisitions of the outstanding Common Stock by the Members of Phoenix
(collectively the "Acquiring Group").

DESCRIPTION OF TRANSACTIONS WHICH RESULT IN CHANGE OF CONTROL

On June 6, 1996, Mr. Schwartz and Mr. Sherman entered into an agreement
to purchase 200,000 shares of Common Stock from Paul M. Gillmor (the "Gillmor
Agreement"), which agreement superseded earlier agreements dated April 3, 1996
and March 25, 1996. The total purchase price for the shares is $250,000 ($1.25
per share). On June 6, 1996, 40,000 of the shares were purchased and transferred
with a down payment of $50,000. Mr. Schwartz and Mr. Sherman executed a
promissory note payable to Mr. Gillmor providing for payment of the remaining
$200,000 in 16 quarterly payments. Under the note, the quarterly payment for the
first year is $6,250, the quarterly payments for the second and third years are
$12,500 and the quarterly payment for the fourth year is $18,750. Interest on
the unpaid balance of the note will accrue at the rate of four percent per
annum. Upon receipt of each quarterly payment, 5,000 shares are to be
transferred during the first year, 10,000 shares are to be transferred during
the second and third years and 15,000 shares are to be transferred during the
fourth year. The power to vote all of the shares owned by Mr. Gillmor was
transferred to Mr. Schwartz and Mr. Sherman on June 6, 1996, and subsequently
transferred to Phoenix on February 12, 1996. This proxy expires August 2, 2000.

Pursuant to the Gillmor Agreement on November 1, 1997, 5,000 shares
were purchased for $10,250 (includes interest). On February 1, 1997, another
5,000 shares were purchased for $8,187.50 (includes interest). In addition, Mr.
Schwartz and Mr. Sherman granted Mr. Gillmor an option to purchase 20,000 shares
owned by the Acquiring Group at a price of $1.00 per share which option expires
on August 1, 2002.

On September 11, 1996, Mr. Schwartz and Mr. Sherman also entered into
agreements to purchase, in the aggregate, 110,000 shares (the "Brownfield
Shares") from Lyman Brownfield (7,866 shares), Candace Brownfield (20,000
shares), Charlotte Brownfield (a.k.a. Charlotte Huddle), individually and as
Trustee of the Candace Brownfield Trust (63,372 shares), and Diana McBee (18,762
shares) (collectively, the "Brownfield Agreements"), which agreements superseded
earlier agreements dated April 2, 1996 and March 28, 1996. The total purchase
price for the Brownfield Shares is $137,500 ($1.25 per share). Payment for the
Brownfield 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 are to be
transferred to Phoenix.

Under the Brownfield Agreements, all of the Brownfield Shares to be
purchased were placed in escrow, and single payments will be made by Phoenix to
an escrow agent, who will then deliver the purchased shares to Phoenix. On
September 11, 1996, 20,000 shares were purchased under the Brownfield Agreements
with a down payment of $25,000. The remaining 90,000 shares were financed by the
sellers and are to be purchased over a five-year period, with 9,000 shares to be
purchased in year one, 18,000 shares to be purchased in each of years two, three
and four and 27,000 shares to be purchased in year five. Also on September 11,
1996, 2,250 shares were purchased at a negotiated discount of $2,756.25
(includes interest). On February 1, 1997, another 2,250 shares were purchased
for $3,909.38 (includes interest).

On September 11, 1996, Lyman Brownfield, Candace Brownfield, Diana
McBee and Charlotte Brownfield, individually and as trustee, transferred voting
power for the remaining 85,500 Brownfield Shares to Mr. Schwartz and Mr.
Sherman, with such proxy expiring on August 1, 2001. Mr. Schwartz and Mr.
Sherman have transferred such power to Phoenix.

Effective June 1, 1996, Phoenix assumed all of the obligations of Mr.
Sherman and Mr. Schwartz under the Gillmor Agreement and the Brownfield
Agreements, pursuant to the Operating Agreement of Phoenix (the "Operating
Agreement"), as adopted by the Acquiring Group, who are also the Members of
Phoenix.

-21-
<PAGE> 25

See "Security Ownership of Principal Shareholders, Directors, Nominees
and Executive Officers" and the footnotes thereto for a discussion of the share
ownership of Phoenix and its Members and the manner in which shares owned by
Phoenix and its Members will be voted.

SOURCE AND AMOUNT OF CONSIDERATION

The initial down payment of $50,000 made under the Gillmor Agreement
was made from the personal funds of the Members. The initial down payment of
$25,000 and the first installment of $2,756.25 under the Brownfield Agreements
were made (i) through the forgiveness of a $20,000 debt outstanding under a
promissory note delivered by Charlotte Brownfield to Mr. Sherman, (ii) through
the forgiveness of a $5,000 debt outstanding under a promissory note delivered
by Lyman Brownfield to Mr. Sherman, and (iii) from the personal funds of Mr.
Sherman and Mr. Schwartz. Mr. Schwartz and Mr. Sherman were reimbursed by
Phoenix to the extent the cash outlayed by Mr. Schwartz and Mr. Sherman exceeded
their required initial capital contributions as Members of Phoenix. Phoenix
derived the funds to reimburse Mr. Sherman and Mr. Schwartz from a loan
described below. Additional purchases under the Gillmor and Brownfield
Agreements were and will be made using (i) the working capital of Phoenix
derived from the capital contributions of personal funds of its Members; and
(ii) funds obtained by virtue of a loan obtained by Phoenix from PH Hydraulics,
a former wholly-owned subsidiary of the Company 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. $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 percent. Interest is due on the first
day of November, February, May and August commencing November 1, 1996. Accrued
interest has been paid on time. 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.

Mr. Binsky will contribute approximately 28.50 percent of the capital
of Phoenix, Mr. Gardner will contribute approximately 5 percent of the capital,
Mr. Schwartz will contribute approximately 31.667 percent of the capital, Mr.
Sherman will contribute approximately 31.667 percent of the capital, and Mr.
Warren will contribute approximately 3.167 percent of the capital.

In addition to using funds derived from personal resources, Phoenix is
contemplating paying for the shares to be purchased under the agreements with
the proceeds of:

(1). The sale of a portion of the Common Stock acquired under the
agreements to an employee stock ownership plan which may be
formed for the Company. The employee stock ownership plan
would fund the purchase of the stock with bank debt.

(2). The sale of a portion of the Common Stock acquired under the
agreements to third parties including, but not limited to,
directors, officers, employees and shareholders of the
Company.

-22-

<PAGE> 26

COMPENSATION OF MANAGEMENT

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning the
annual and long term compensation of the chief executive officer of the Company
during the last fiscal year (the "Named Executives") for the Company's last
three fiscal years.
<TABLE>
<CAPTION>

Annual Compensation
-------------------
Name and Principal Position Year Salary Bonus
- --------------------------- ---- ------ -----
<S> <C> <C> <C>
Charles T. Sherman, President(1) 1996 $104,756 $13,965
1995 103,041 5,000
1994 94,333 15,369

Robert S. Ryan, Former President(2) 1996 $ 19,000 ---
1995 16,684 ---
</TABLE>

- ------------------

1 Mr. Sherman became President of the Company May 28, 1996. Prior to that
time he served as President of PH Hydraulics, the wholly-owned subsidiary
of the Company that was merged into the Company in October 1996.

2. Mr. Ryan served as President of the Company from August 1, 1995 until May
28, 1996.

OPTION GRANTS IN LAST FISCAL YEAR

No stock options were granted to the Named Executives during the last
fiscal year (1996).

FISCAL YEAR END OPTION NUMBERS AND VALUES

The following table sets forth certain information concerning each
exercise of stock options and the number and value of unexercised options held
by the Named Executives at the end of the last fiscal year (December 31, 1996).
<TABLE>
<CAPTION>

Number of

Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End: at Fiscal Year-End:
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- ------------------------

<S> <C> <C>
Charles T. Sherman 19,000/0 $14,250/$0

Robert S. Ryan 20,000/0 $15,000/$0
</TABLE>

COMPENSATION OF NON-EMPLOYEE DIRECTORS

Non-employee directors receive a fee of $500 for each board meeting
attended and $200 for each committee meeting attended, unless the director is a
chair of the committee, in which case the fee is $450 per committee meeting
attended. If the 1997 Stock Incentive Plan is approved by the shareholders, the
non-employee directors will be eligible to receive Options under the Plan at the
1998 annual meeting of shareholders. The number of shares underlying Options
that may be granted to such directors under the Plan on an annual basis ranges
from 0 to 3,000 shares of Common Stock, depending upon the increase in the total
income of the Company before taxes each year (See "Directors' Stock Options").
Other directors do not receive any compensation for their services as directors.

-23-
<PAGE> 27

Alida L. Breen received an option on 5,000 shares of Common Stock in
1996 as compensation for her services as a newly appointed director of the
Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FEE TO PHOENIX MANAGEMENT, LTD.

The Company has signed a letter of intent to acquire substantially all
of the operating assets of another company in the metal forming industry. If
this acquisition is authorized by the Board of Directors and completed, the
Compensation Committee of the Board of Directors has authorized the payment of a
fee to Phoenix Management, Ltd. based on the consideration paid by the Company
to the acquired business. The fee to be paid to Phoenix is in exchange for
certain services provided by Phoenix and its Members in connection with the
acquisition that are outside of the scope of the customary duties of the
officers and directors of the Company, including negotiating in furtherance of
the transaction, examining financing alternatives and possibly providing
collateral for use in obtaining financing. The fee will be five percent of the
total consideration paid by the Company, as and when the consideration is paid
by the Company. The Members of Phoenix are Bob Binsky, Michael W. Gardner,
Charles T. Sherman and Theodore P. Schwartz, all directors of the Company, and
Kenneth J. Warren, special outside counsel for the Company. See "Security
Ownership of Principal Shareholders, Directors, Nominees and Executive
Officers."

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10 percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Commission. Officers, directors and greater than 10 percent
shareholders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it,
the Company believes that, during fiscal year 1996 all filing requirements
applicable to its officers, directors and greater than 10 percent beneficial
owners were complied with, except that one report, covering one transaction, was
filed late by Bob Binsky and one report, covering one transaction, was filed
late by Charles T. Sherman.

INDEPENDENT ACCOUNTANTS

Greene & Wallace, Inc. served as the Company's independent accountants
for the fiscal year 1996 which ended December 31, 1996, and has audited the
Company's financial statements for each of the past three fiscal years. The
Audit Committee has not yet met to recommend an accountant to serve as the
Company's independent accountants for the 1997 fiscal year.

A representative of Greene & Wallace, Inc. is expected to be present at
the Annual Meeting. The representative will have an opportunity to make a
statement if he so desires and is expected to be available to respond to
appropriate questions of shareholders.

OTHER BUSINESS

The Board of Directors does not intend to present, and has no knowledge
that others will present, any other business at the Annual Meeting. If, however,
any other matters are properly brought before the meeting, it is intended that
the persons named in the enclosed proxy will vote the shares represented thereby
in accordance with their best judgment.

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<PAGE> 28

COST OF SOLICITATION OF PROXIES

The cost of this solicitation will be paid by the Company. The Company
may request persons holding shares in their names for others to forward
soliciting materials to their principals to obtain authorization for the
execution of proxies, and the Company will reimburse such persons for their
expenses in so doing.

SHAREHOLDER PROPOSALS

A shareholder proposal intended for inclusion in the proxy statement
and form of proxy for the annual meeting of Shareholders of the Company to be
held in 1998 must be received by the Company before November 21, 1997, at 2365
Scioto Harper Drive, Columbus, Ohio 43204, Attention: President.

FORM 10-KSB

THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE
DIRECTED TO MISSY JACOB, INVESTOR RELATIONS COORDINATOR, 2365 SCIOTO HARPER
DRIVE, COLUMBUS, OHIO 43204.

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<PAGE> 29

EXHIBIT A

PROPOSAL 1. TO AMEND THE ARTICLES OF INCORPORATION AND CODE OF REGULATIONS TO
ELIMINATE CUMULATIVE VOTING

RESOLVED, that Section 7 of the Amended and Restated Code of
Regulations of the Company be deleted in its entirety; and further

RESOLVED, that Article V of the Articles of Incorporation of the
Company be amended to include the following section:

E. No shareholder of the corporation may cumulate voting power in the
election of directors.

PROPOSAL 2. TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO INCREASE
THE NUMBER OF AUTHORIZED SHARES.

RESOLVED, that Article IV of the Articles of Incorporation of the
Company be amended in its entirety to read as follows:

ARTICLE IV

The maximum number of shares which the corporation is authorized to
have outstanding is ten million (10,000,000), all of which shall be common
shares without par value. Each common share shall be equal to every other common
share. The holders of common shares shall be entitled to one (1) vote for each
share upon all matters presented or required to be presented to the
shareholders. No holder of Common Shares of the corporation shall have any
preemptive right to purchase or subscribe to any shares or other securities of
the Corporation, whether now or hereafter issued or authorized.

PROPOSAL 3. TO AMEND THE CODE OF REGULATIONS OF THE COMPANY TO DIVIDE THE BOARD
OF DIRECTORS INTO TWO CLASSES, TO PERMIT THE BOARD OF DIRECTORS TO DETERMINE THE
TOTAL NUMBER OF DIRECTORS AND TO ESTABLISH A RETIREMENT AGE FOR DIRECTORS.

RESOLVED, that Section 2 of Article II of the Code of Regulations of
the Company be amended by inserting the following paragraph in place thereof:

The Board of Directors shall be divided into two classes; the initial
term of office of those of the first class to expire at the annual meeting next
ensuing; of the second class one year thereafter; and at each annual election
held after the initial adoption of this regulation by the shareholders and the
election of Directors held at the meeting at which this regulation is adopted,
directors shall be chosen for a full term of two years to succeed those whose
terms expire. When this regulation is initially adopted, the Board of Directors
shall consist of seven members and the first class shall consist of three
members and the second class shall consist of four members. Thereafter, the
Board of Directors may fix the total number of Directors constituting the full
Board of Directors and the number of Directors in each class, but the total
number of Directors shall not exceed nine nor shall the number of Directors in
any class exceed five. Subject to the foregoing, the classes of Directors need
not have the same number of members. No reduction in the total number of
Directors or in the number of Directors in any class shall be effective to
remove any Director or to reduce the term of any Director. Notwithstanding any
other provision set forth in the Regulations of the Company, if the Board of
Directors increases the number of Directors in a class, it may fill the vacancy
created thereby for the full remaining term of a Director in that class even
though such term may extend beyond the next annual election. The Board of
Directors may fill any vacancy occurring for any other reason for the full
remaining term of the Director whose death, resignation or removal caused the
vacancy, even though such term may extend beyond the next annual election. A
director who reaches the age of 67 shall thereafter no longer be eligible for
reelection to the Board of Directors. Directors need not be either residents of
the State of Ohio or shareholders of the Company.

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<PAGE> 30

PROPOSAL 4. TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO CHANGE THE
NAME OF THE COMPANY.

RESOLVED, that Article I of the Articles of Incorporation of the
Company be amended in its entirety to read as follows:

ARTICLE I

The name of said corporation shall be PH Group, Inc.

PROPOSAL 5. TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO ELIMINATE
THE APPLICABILITY OF THE OHIO CONTROL SHARE ACQUISITION ACT.

RESOLVED, that Article V of the Articles of Incorporation of the
Company be amended to include the following section:

D. Section 1701.831 of the Ohio Revised Code, as amended from time to
time, shall not apply to "control share acquisitions" of shares of stock of the
Corporation, as defined in Section 1701.01(Z) of the Ohio Revised Code, as
amended from time to time.

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<PAGE> 31

RESOURCE GENERAL CORPORATION THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Charles T. Sherman and Theodore R.
Schwartz, and each of them, severally, with full power of substitution, as
proxies for the undersigned, and hereby authorizes them to represent and to
vote, as designated below, all of the shares held of record by the undersigned
on February 22, 1997, at the Annual Meeting of Shareholders to be held on April
22, 1997, or any adjournment thereof.

THE BOARD OF DIRECTORS RECOMMENDS ADOPTION OF ALL PROPOSALS AND THE ELECTION OF
ALL NOMINEES.

1. Amendment of the Articles of Incorporation and the Code of Regulations
of the Company to eliminate cumulative voting.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Amendment of the Articles of Incorporation of the Company to increase
the authorized number of shares of the Company.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Amendment of the Code of Regulations of the Company to divide the Board
of Directors into two classes, to permit the Board of Directors to
determine the number of directors who serve on the Board of Directors
and to establish a retirement age for directors.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Amendment of the Articles of Incorporation of the Company to change the
name of the Company.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Amendment of the Articles of Incorporation of the Company to eliminate
the applicability of the Ohio Control Share Acquisition Act.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. To elect as directors in the first class the nominees named below for a
term of one year and until their successors are duly elected and
qualified.

NOMINEES: Alida L. Breen, David H. Montgomery and Charles T. Sherman.

[ ] FOR all nominees listed above (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed above.)
(NOTE: If Proposal 3 is not approved, only two seats on the Board of
Directors will be filled at the Annual Meeting of Shareholders, with
the two nominees receiving the most votes being elected for a term of
three years. The Board of Directors has nominated Bob Binsky and Alida
L. Breen to serve as directors if Proposal 3 is not approved.)

7. To elect as directors in the second class the nominees named below for
a term of two years and until their successors are duly elected and
qualified.

NOMINEES: Bob Binsky, Michael W. Gardner, Terry L. Sanborn and
Theodore P. Schwartz

[ ] FOR all nominees listed above (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above

<PAGE> 32

(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed above.)
(NOTE: If Proposal 3 is not approved, only two seats on the Board
of Directors will be filled at the Annual Meeting of
Shareholders, with the two nominees receiving the most votes
being elected for a term of three years. The Board of Directors
has nominated Bob Binsky and Alida L. Breen to serve as directors
if Proposal 3 is not approved.)

8. To terminate the Employees' Incentive Stock Option Plan and approve
the 1997 Stock Incentive Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Shareholders or any
adjournment thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL PROPOSALS AND FOR THE ELECTION OF ALL NOMINEES LISTED ABOVE.

Date: , 1997
--------------------------

---------------------------------------
Signature

---------------------------------------
Signature (if held jointly)

IMPORTANT: Please sign exactly as name or names appear
to the left. When shares are held by joint tenants,
both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. Corporation should sign in their full
corporate name by their president or other authorized
officer. If a partnership, please sign in partnership
name by an authorized person.