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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ___]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PH Group Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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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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PH GROUP INC.
2365 SCIOTO HARPER DRIVE
COLUMBUS, OHIO 43204
(614) 279-8877
1998 ANNUAL MEETING OF SHAREHOLDERS
April 9, 1998
Dear Shareholder:
You are invited to attend the 1998 Annual Meeting of Shareholders of PH
Group Inc. which will be held at 5:00 p.m., Eastern Time, on April 30, 1998, at
its corporate offices, 2365 Scioto Harper Drive, Columbus, Ohio. The matters on
the meeting agenda are described in the Notice of 1998 Annual Meeting of
Shareholders and Proxy Statement which accompany this letter.
We hope you will be able to attend the meeting, but whatever your
plans, we ask that you please complete, execute, and date the enclosed proxy
card and return it in the envelope provided so that your common shares will be
represented at the meeting.
Very truly yours,
/s/ Charles T. Sherman
Charles T. Sherman, President
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PH GROUP INC.
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 1998
TO THE SHAREHOLDERS OF
PH GROUP INC.:
The Annual Meeting of Shareholders of PH Group Inc. (the "Company"),
will be held at 2365 Scioto Harper Drive, Columbus, Ohio, on Thursday, April 30,
1998, at 5:00 p.m., Eastern Time, for the following purposes:
1. To elect three directors to serve for terms of two years.
2. To vote on a proposal to amend Article IV of the Amended Articles of
Incorporation of the Company to authorize the issuance of 2,500,000
Preferred Shares, without par value, as further described in the Proxy
Statement attached hereto.
3. To vote on a proposal to amend Sections 2 and 5 of Article I of the
Amended Code of Regulations of the Company to delete references therein
to "common" shares and to substitute therefor "voting" shares as
further described in the Proxy Statement attached hereto.
4. 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 March 6,
1998, 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,
/s/ Charles T. Sherman
Charles T. Sherman
President and Chief Executive Officer
Columbus, Ohio
April 9, 1998
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PH GROUP INC.
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ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1998
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PROXY STATEMENT
DATED APRIL 9, 1998
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GENERAL INFORMATION
Solicitation. This Proxy Statement is furnished to the shareholders of
PH Group Inc., an Ohio corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of proxies to be voted at
the Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be
held on April 30, 1998 and any adjournment thereof. This Proxy Statement and the
accompanying proxy card are first being mailed to shareholders on or about April
9, 1998.
Voting Rights. Shareholders of record at the close of business on March
6, 1998 are entitled to notice of and to vote at the Annual Meeting. As of that
date, there were 1,588,731 Common Shares, without par value ("Common Shares") of
the Company, issued and outstanding. Each shareholder of record on March 6, 1998
is entitled to one vote for each Common Share with respect to all matters which
may be brought before the Annual Meeting. There is no cumulative voting in the
election of directors.
Authorization. All Common 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 ovals on the
accompanying proxy card, the Common Shares represented by such proxy will be
voted in accordance with the recommendation of the Board of Directors, which is
(1) FOR the election of Alida L. Breen, David H. Montgomery and Charles T.
Sherman as directors of the Company, (2) FOR approval of the proposal to amend
Article IV of the Amended Articles of Incorporation of the Company (the
"Articles") to authorize the issuance of 2,500,000 Preferred Shares, without par
value (the "Preferred Shares") and (3) FOR approval of the proposal to amend
Sections 2 and 5 of Article I of the Amended Code of Regulations of the Company
(the "Regulations") to delete references therein to "common" shares and to
substitute therefor "voting" shares. 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 written notice of
revocation to the Company (addressed to the attention of the Secretary), by
giving oral notice of revocation to the Company at the Annual Meeting, 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 Regulations, a quorum must be present at the Annual Meeting in order for any
valid action, other than adjournment, to be taken thereat. The Regulations
provide that a quorum consists of the holders of a majority of the Common Shares
present in person or by proxy. Common 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' Common Shares in street name, may,
under the applicable rules of the exchange and other self-regulatory
organizations of which the broker/dealers are members, sign and submit proxies
for such Common Shares and may vote such Common Shares on routine matters,
which, under such rules, typically include the election of directors, but
broker/dealers may not vote such Common Shares on other matters, which typically
include amendments to the
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articles of incorporation of the Company and the approval of stock compensation
plans, without specific instructions from the customer who owns such Common
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 count toward the establishment of a quorum.
Under Section 1701.55 of the ORC and the 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.
Under Section 1701.71 of the ORC and the Articles, the amendment to the
Articles must be approved by the affirmative vote of the holders of a majority
of the outstanding shares in order to be approved. Proxies marked "Abstain" and
broker non-votes have the same effect as votes against the amendment.
Under Section 1701.11 of the ORC and the Regulations, the amendment to
the Regulations must be approved by the affirmative vote of the holders of a
majority of the outstanding shares in order to be approved. Proxies marked
"Abstain" and broker non-votes have the same effect as votes against the
amendment.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
Three members of the Board of Directors of the Company will be elected
at the Annual Meeting. Directors elected at the Annual Meeting will hold office
for terms of two years or until their successors are duly elected and qualified.
See "GENERAL INFORMATION - Tabulation." The nominees of the Board of Directors
for such positions are identified below. The Company has no reason to believe
that any of the nominees named below will not stand for election or serve as a
director if elected. In the event any person nominated fails to stand for
election, the proxies will be voted for the election of such other person as is
designated by the directors.
BUSINESS EXPERIENCE
Nominees of the Board of Directors for Election at the 1998 Annual
Meeting
ALIDA L. BREEN, age 50, has served as a director of the Company since
1996. Since 1979, she has been the Vice President Finance of Ohio Transmission &
Pump Co., a distributor of industrial products.
DAVID H. MONTGOMERY, age 55, has served as a director of the Company
since 1997. Since 1976, Mr. Montgomery has served as President and Chief
Executive Officer of Dayton Machine Tool Company, a manufacturer of machine
tools.
CHARLES T. SHERMAN, age 52, 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.
Directors Whose Terms Continue until the 1999 Annual Meeting
BOB BINSKY, age 58, has served as a director of the Company since 1993.
Since 1985, Mr. Binsky has been President of TR Sport, Inc., a distributor of
maternity garments to the retail trade. Mr. Binsky has served as Chairman of the
Board of Cable Link, Inc., a cable television refurbisher, since July 31, 1995
and served as a consultant to and Executive Vice President of Cable Link, Inc.
from October 1, 1992 until July 1995. Mr. Binsky also serves on the Board of
Directors of Kahiki Foods, Inc., a restaurant and food products retailer.
MICHAEL W. GARDNER, age 47, 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.
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TERRY L. SANBORN, age 55, has served as a director of the Company since
1991. From 1993 to 1997, Mr. Sanborn served as Chief Operating Officer of Medex,
Inc., a medical device manufacturing company. Since his retirement from Medex,
Inc. in 1997, Mr. Sanborn has been a business consultant and advisor.
EXECUTIVE OFFICERS OF THE COMPANY
All of the executive officers of the Company are named above, except
Kenneth P. Furlong, Treasurer of the Company.
KENNETH P. FURLONG, age 44, has been Treasurer of the Company since
November 1997. From 1977 to 1997, Mr. Furlong was employed by The Marion Power
Shovel Company, a manufacturer of surface mining equipment.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held nine meetings in fiscal 1997, and each of
the directors attended at least 75 percent of the aggregate of all of the Board
meetings and all of the committee meetings (if any) on which he or she served,
during the period he or she served.
COMMITTEES
The Company has a standing Audit Committee, Compensation Committee and
Nominating Committee.
The Audit Committee 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 1997. The Audit
Committee currently consists of Alida L. Breen (Chairman), Terry L. Sanborn and
Bob Binsky.
The Nominating Committee recommends candidates to fill vacancies on the
Board of Directors. 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 Nominating Committee did not hold any meetings in fiscal
1997. The Nominating Committee currently consists of Charles T. Sherman
(Chairman), David H. Montgomery and Terry L. Sanborn.
The Compensation Committee establishes the compensation of all
employees and consultants of the Company, administers and interprets the
Company's 1997 Stock Incentive 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. The Compensation Committee held four meetings
in fiscal 1997. The Compensation Committee currently consists of Terry L.
Sanborn (Chairman), David H. Montgomery and Alida L. Breen.
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PROPOSED AMENDMENT TO ARTICLE IV OF
THE AMENDED ARTICLES OF INCORPORATION
PROPOSAL
The Board has determined that Article IV of the Articles currently in
effect should be amended to read as set forth in the proposed amendment, a copy
of which is attached hereto as Exhibit A and incorporated herein by reference.
Article IV of the Articles currently only authorizes the issuance of
Common Shares. The Board has proposed that the Articles be amended to permit the
Company to issue 2,500,000 Preferred Shares. Article IV, as amended, would
authorize the Board, without further vote or action by the shareholders, to
issue Preferred Shares in one or more series by adopting amendments to the
Articles which specify the express terms of each series of Preferred Shares so
issued. Ohio law requires that the express terms of different series of
Preferred Shares be identical, except with respect to (a) dividend or
distribution rates, (b) dates of payment of dividends or distributions and the
dates from which they are cumulative, (c) redemption rights and price, (d)
liquidation price, (e) sinking fund requirements, (f) conversion rights and (g)
restrictions on the issuance of shares of the same series or of any other class
or series.
All Preferred Shares (regardless of series) issued by the Company will
have the following common rights and preferences:
o Each Preferred Share will have one vote on all matters requiring
the consent or approval of the shareholders, regardless of any
other terms which may be established for different series of
Preferred Shares.
o Except as otherwise required by law or the proposed amendment to
the Articles, Preferred Shares and Common Shares will vote together
as a single class on all matters requiring the consent or approval
of shareholders.
o Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of Preferred
Shares will be entitled to receive a specified dollar amount as
determined by the Board before any distribution is made to holders
of Common Shares.
o As and when the Board declares dividends or other distributions on
the Company's outstanding shares, holders of Preferred Shares will
be entitled to receive a dividend or distribution in an amount
determined by the Board before payment of any such dividend or
distribution is made to holders of Common Shares.
If the proposed amendment is adopted, the Preferred Shares will be
available, free from any preemptive rights, for issuance from time to time, to
such persons and for such considerations as the Board of Directors may
determine, without necessarily requiring further action by the shareholders. The
Preferred Shares would be available for issuance from time to time for any
proper corporate purpose, including, without limitation, issuance in public or
private sales for cash as a means of obtaining capital for use in the Company's
business and operations, and issuance as part or all of the consideration
required to be paid for acquisitions of other business properties. The Company
is currently actively seeking opportunities to pursue a public or private sale
of Preferred Shares in order to obtain additional capital, if this proposal is
adopted. A letter of intent has been entered into with First of Michigan
Corporation contemplating a sale of $3 million of Preferred Shares upon terms
and conditions yet to be negotiated. However, there can be no assurance that
this contemplated sale or any other sale of Preferred Shares will be
consummated. Depending on the terms of any such sale, the issuance of Preferred
Shares may have a dilutive effect on the equity interests and/or voting power of
the Company's then-existing shareholders.
Although the Board has no present intent to do so, authorized but
unissued Preferred Shares may be issued as a defense to an attempted takeover of
the Company. For example, the Board may sell a block of Preferred Shares to
persons who are loyal to current management, thereby diluting the stock
ownership of persons seeking to obtain control of the Company. Consequently,
approval of the proposal to authorize the issuance of Preferred Shares may
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have an anti-takeover effect. Management is not aware of any effort on the part
of any person to acquire control of the Company.
The Articles and Regulations contain other provisions which also could
potentially make a change of control of the Company more difficult. These
include (a) classification of the Board of Directors into two classes of
directors so that each director serves for two years, with one class being
elected each year; (b) elimination of cumulative voting in the election of
directors; and (c) authorization for the Board of Directors to enlarge the size
of the Board (up to a maximum of nine members) and to fill the vacancies created
thereby with the Board's own nominees. Each of these provisions has previously
been approved by the shareholders of the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
Common Shares of the Company is required to authorize the proposed amendment to
the Articles. See "GENERAL INFORMATION - Tabulation." As of the record date for
the Annual Meeting, the current executive officers and directors of the Company
and Phoenix Management, Ltd. held approximately 40.9% of the Common Shares of
the Company and corresponding voting power.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE APPROVAL OF THE PROPOSED AMENDMENT TO ARTICLE IV OF THE
AMENDED ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT TO SECTIONS 2 AND 5 OF ARTICLE I
OF THE AMENDED CODE OF REGULATIONS
PROPOSAL
The Board has determined that Sections 2 and 5 of Article I of the
Amended Code of Regulations currently in effect should be amended to delete the
references to "common" shares therein and to substitute therefor "voting"
shares. If this proposal is approved, Sections 2 and 5 of Article I of the
Regulations would read as set forth in Exhibit B which is attached hereto and
incorporated herein by reference.
The Company is currently authorized to issue only Common Shares. If
Proposal No. 2 is approved at the Annual Meeting, the Company will be authorized
to issue Common Shares and Preferred Shares, both of which would be voting
shares. The proposed amendment to the Regulations would ensure that the holders
of all outstanding voting shares, regardless of class, are considered in
determining who may call a special meeting and when a quorum is present at a
meeting of shareholders, which is consistent with the ORC.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
Common Shares of the Company is required to authorize the proposed amendment to
the Regulations. See "GENERAL INFORMATION - Tabulation." As of the record date
for the Annual Meeting, the current executive officers and directors of the
Company and Phoenix Management, Ltd. held approximately 40.9% of the Common
Shares of the Company and corresponding voting power.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE APPROVAL OF THE PROPOSED AMENDMENT TO SECTIONS 2 AND 5 OF ARTICLE
I OF THE AMENDED CODE OF REGULATIONS.
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of March 6, 1998, certain
information with respect to the beneficial ownership of Common Shares by (i)
each person, including any group of persons, known to the Company to be the
beneficial owner of more than five percent of the outstanding Common Shares,
(ii) each director or nominee for election as a director of the Company, (iii)
the executive officer identified in the Summary Compensation Table, and (iv) the
Company's directors and executive officers as a group.
NUMBER OF COMMON SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED (a) PERCENT OF CLASS
---------------- ---------------------- ----------------
Phoenix Management, Ltd. (b) 330,875 (b)(c) 20.8%
Bob Binsky, Director (d) 163,042 (c)(d)(n) 10.1%
Charles T. Sherman, Director and
Executive Officer (e) 244,747 (c)(e) 15.4%
Theodore P. Schwartz (f) 161,435 (c)(f) 10.0%
Michael W. Gardner, Director (g) 26,250 (c)(g) 1.6%
Kenneth J. Warren (h) 9,000 (c)(h) (m)
Alida L. Breen, Director (i) 7,750 (i)(n) (m)
Terry L. Sanborn, Director (j) 26,500 (n) 1.7%
David H. Montgomery, Director (k) 5,875 (k)(n) (m)
All directors and executive officers
as a group (seven persons) 474,164 (n) 28.1%
Phoenix and its Members 695,349 (l) 40.7%
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(a) Unless otherwise indicated, the beneficial owner has sole voting and
dispositive power over these Common 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) 138,875
Common Shares owned outright by Phoenix, (ii) 72,000 Common Shares as to which
Phoenix has the right to acquire (by virtue of assignment) but have yet to be
purchased under the agreements dated September 11, 1996, to purchase Common
Shares from Lyman Brownfield, Candace Brownfield, Charlotte Brownfield (a.k.a.
Charlotte Huddle), individually and as Trustee of the Candace Brownfield Trust,
and Diane McBee (collectively, the "Brownfield Agreements"), and as to which
Phoenix has the power to vote by proxy, and (iii) 120,000 Common Shares as to
which Phoenix has the right to acquire (by virtue of assignment) but have yet to
be purchased under the agreement, dated June 6, 1996, to purchase Common Shares
from Paul M. Gillmor (the "Gillmor Agreement"). As to the 120,000 Common Shares
covered by the Gillmor Agreement, Mr. Sherman and Mr. Schwartz, individually,
have the power to vote by proxy; therefore, such 120,000 Common Shares are also
reported as beneficially owned by each of Mr. Schwartz and Mr. Sherman
individually.
(c) Each Member shares the power to vote or direct the voting and to dispose or
direct the disposition of the 138,875 block of Common 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 72,000 Common Shares
as to which Phoenix has the power to vote by proxy. By virtue of assignment,
Phoenix has the right to acquire the 72,000 block of Common Shares under the
Brownfield Agreements and the right to acquire the 120,000 block of Common
Shares under the Gillmor Agreement. Until the purchase of the 120,000 block of
Common Shares from Mr. Gillmor, Mr. Sherman and Mr. Schwartz share the power to
vote such Common Shares by virtue of a proxy granted by Mr. Gillmor, and such
Common Shares are also reported as beneficially owned by each of Mr.
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Schwartz and Mr. Sherman. The Common Shares listed as beneficially owned by each
Member individually are exclusive of the Common 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 136,542 Common Shares owned outright by Mr. Binsky. Also
includes 26,500 unissued Common 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 PH Group Inc., 2365 Scioto Harper Drive,
Columbus, Ohio 43204. Includes 90,747 Common Shares owned outright by Mr.
Sherman, and 33,750 unissued Common Shares reported as beneficially owned by Mr.
Sherman which are the subject of currently issued, but unexercised options. Also
includes 120,000 Common 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 Common Shares are also reported as beneficially owned by Mr. Schwartz. Mr.
Sherman's wife has sole voting and dispositive power with respect to 250 Common
Shares reported as beneficially owned by Mr. Sherman. Mr. Sherman is a Member of
Phoenix.
(f) Mr. Schwartz's address is 3817 Lyon Drive, Columbus, Ohio 43220. Includes
13,500 Common Shares owned outright by Mr. Schwartz and 2,935 Common Shares
owned jointly by Mr. Schwartz and his wife as to which they share voting and
dispositive power. Also includes 25,000 unissued Common Shares reported as
beneficially owned by Mr. Schwartz which are the subject of currently issued but
unexercised options. Also includes 120,000 Common 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 Common Shares are also reported as beneficially
owned by Mr. Sherman. Mr. Schwartz is a Member of Phoenix.
(g) Mr. Gardner's address is c/o PH Group Inc., 2365 Scioto Harper Drive,
Columbus, Ohio 43204. Includes 1,250 Common Shares jointly owned by Mr. Gardner
and his wife as to which they share voting and dispositive power. Also includes
25,000 unissued Common Shares reported as beneficially owned by Mr. Gardner
which are the subject of currently issued but unexercised options. Mr. Gardner
is a Member of Phoenix.
(h) Mr. Warren's address is 5920 Cromdale Drive, Suite 1, Dublin, Ohio 43017.
Includes 7,500 unissued Common Shares reported as beneficially owned by Mr.
Warren which are the subject of currently issued but unexercised options and
1,500 unissued Common Shares which are the subject of an option that will be
granted automatically and vest on the date of the Annual Meeting. 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 2,500 Common Shares owned outright by Ms. Breen,
and 5,250 unissued Common Shares reported as beneficially owned by Ms. Breen
which are the subject of currently issued but unexercised options.
(j) Mr. Sanborn's address is 983 Loch Ness, Worthington, Ohio 43085. Includes
25,000 Common Shares which Mr. Sanborn owns outright, and 1,500 unissued Common
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. Includes 1,250 Common Shares which Mr. Montgomery
owns outright, and 4,625 unissued Common Shares reported as beneficially owned
by Mr. Montgomery which are the subject of currently issued but unexercised
options.
(l) Includes all Common Shares reported as beneficially owned by Phoenix and all
Common Shares reported as beneficially owned individually by the Members, except
that the 120,000 Common 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 Common 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 Common Shares owned
by them individually in the same manner as the Common Shares voted by Phoenix.
(m) Less than 1 percent.
(n) Includes 1,500 unissued Common Shares which are the subject of an option
that will be granted automatically and vest on the date of the Annual Meeting.
Does not include 250 Common Shares which the director will have the right to
receive at the Annual Meeting as additional director's compensation. See
"COMPENSATION OF MANAGEMENT - Compensation of Non-Employee Directors."
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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, who
was the only executive officer of the Company whose salary and bonus totaled
more than $100,000, during the last fiscal year (the "Named Executive") for the
Company's last three fiscal years.
Long Term Compensation
----------------------
Awards
Annual Compensation ------
------------------- Securities Underlying All Other
Name and Principal Position Year Salary Bonus Options (#) Compensation
--------------------------- ---- ------ ----- ----------- ------------
Charles T. Sherman, President(1) 1997 $150,000 $25,000 12,500 $27,854 (2)
1996 104,756 13,965 0 0
1995 103,041 5,000 0 0
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(1) Mr. Sherman became President of the Company on 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) Represents premiums paid by the Company for an insurance policy on the life
of Mr. Sherman in the face amount of $416,006 pursuant to a Split Dollar
Agreement entered into on September 11, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of options
made under the Company's 1997 Stock Incentive Plan (the "1997 Plan") during the
1997 fiscal year to the Named Executive.
Number of
Securities % of Total
Underlying Options Granted
Name Options Granted to Employees in Exercise Price
(#) Fiscal Year ($/Share) Expiration Date
- ------------------ ------------------ ----------------- ----------------------- ----------------------
Charles T. Sherman 12,500(1)(2) 66% $1.36(2) January 23, 2007
- ----------
(1) All of the Common Shares subject to the option are vested and fully
exercisable.
(2) Adjusted for a 5-for-4 stock split distributed on January 2, 1998.
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FISCAL YEAR END OPTION NUMBERS AND VALUES
No stock options were exercised by the Named Executive during the 1997 fiscal
year.
The following table sets forth certain information concerning the number and
value of unexercised options held by the Named Executive at the end of the last
fiscal year (December 31, 1997).
Value of Unexercised
Number of Securities Underlying In-the-Money Options
Unexercised Options at Fiscal Year-End(#) at Fiscal Year-End ($)(1)
----------------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Charles T. Sherman 36,250 (2) -0- $80,000(2) $-0-
- ----------
(1) Rounded to nearest whole dollar. "Value of Unexercised In-the-Money Options
at Fiscal Year-End" is based upon the fair market value of the Company's Common
Shares on December 31, 1997, as adjusted ($3.20) less the exercise price of
in-the-money options at the end of the 1997 fiscal year.
(2) Adjusted for a 5-for-4 stock split distributed on January 2, 1998.
EMPLOYMENT AGREEMENT
Charles T. Sherman entered into an Employment Agreement with the Company
effective January 23, 1997 (the "Employment Agreement") whereby Mr. Sherman
agreed to be employed by the Company as its President and Chief Executive
Officer for a term ending December 31, 2001, continuing thereafter on a
year-to-year basis until terminated by either party upon six months notice prior
to December 31 of the year in which such party intends to have the agreement
terminate. Mr. Sherman is to receive a salary of $150,000 per year which may be
increased or decreased by the Board of Directors (but not below $150,000 per
year), such annual bonus as the Board deems appropriate, and such employee
benefits as are generally available to all executives of the Company. If Mr.
Sherman's employment is terminated for any reason other than for "cause", his
voluntary resignation, his death or his disability, Mr. Sherman will continue to
receive his base salary in effect at such time until the earlier of the start of
Mr. Sherman's employment with another employer, or 12 months from the date of
such termination; provided, that if Mr. Sherman's new employment results in an
annual base salary less than the annual base salary he received at the time of
termination of his employment with the Company, the monthly difference (net of
applicable taxes, if any) will be paid by the Company to Mr. Sherman for any
month that he was so employed during the period of 12 months from the date of
termination of his employment with the Company. If Mr. Sherman's employment is
terminated for "cause" (as defined in the Employment Agreement) or if he
voluntarily resigns, his salary and benefits will immediately cease. If Mr.
Sherman's employment is terminated by reason of his death or disability, his
salary, benefits and other payments (not required by statute to continue) will
cease; however, the Company will provide such health, dental and similar
insurance or benefits as were being provided to Mr. Sherman, immediately before
such termination of employment, to Mr. Sherman or his family for a period of 12
months on the same terms and conditions. The terms of any then-existing benefit
plan or stock option plan concerning the effect of a termination of employment
will control the benefits or stock options covered thereby. Mr. Sherman was
granted an option to purchase 12,500 Common Shares for $1.36 per share, the
average of the closing bid and asked prices of the Common Shares on January 23,
1997 (as adjusted for the 5-for-4 stock split distributed on January 2, 1998).
The Employment Agreement provides that Mr. Sherman, during the term of
employment and for three years thereafter, will not compete with the Company.
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. On January 21, 1998, the Board determined to increase the fees paid to
non-employee directors by authorizing the issuance of 250 Common Shares to each
non-employee director on the date of each annual
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meeting of shareholders. The non-employee directors are also eligible to receive
options under the 1997 Plan. On the date of each annual meeting, an option
covering 5,000 Common Shares will be granted automatically to each person who is
first elected as a non-employee director at such meeting. Each person who is
first appointed as a non-employee director to fill a vacancy on the Board is
automatically granted an option covering a number of Common Shares equal to
5,000 multiplied by a fraction, the numerator of which equals the number of
whole months remaining in the term for which the director is appointed and the
denominator of which is 24. If a new director receives an option under the 1997
Plan and is not the beneficial owner of at least 1,000 Common Shares as of the
first annual meeting following his election or appointment, such director is
required to exercise such option with respect to at least 1,000 Common Shares on
the date of such annual meeting, subject to compliance with all applicable laws,
rules and regulations. In addition, an option will be granted automatically to
each person whose term of office as a non-employee director expires on such date
or continues through such annual meeting or who is re-elected for a subsequent
term on such meeting date. The number of Common Shares underlying these options
is based upon the increase in the total income of the Company before taxes each
year, and ranges from 0 to 3,000 Common Shares. Each option granted to a
non-employee director will have an exercise price equal to the fair market value
of a Common Share on the date of grant or with respect to options granted based
on the Company's increase in total income before taxes, on the date of the
annual meeting of shareholders of the Company occurring during the applicable
Performance Year, as defined in the 1997 Plan. Each option is subject to the
vesting schedule outlined in the 1997 Plan. Each option will lapse and cease to
be exercisable upon the earliest to occur: (a) ten years from the grant date;
(b) nine months after the option holder ceases to be a director because of death
or disability; (c) immediately upon resignation of the option holder as a
director; and (d) one year after the option holder ceases to be a director for
any reason other than death, disability or resignation. Other directors do not
receive any compensation for their services as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 29, 1997, the Company acquired substantially all of the operating
assets of St. Lawrence Press Company, Inc. A fee is to be paid by the Company to
Phoenix Management, Ltd. in the amount of $85,000, of which $60,500 has been
paid to date, 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 providing collateral for use in obtaining financing. The Members of Phoenix
are Bob Binsky, Michael W. Gardner and Charles T. Sherman, all directors of the
Company, Kenneth J. Warren, general counsel of the Company, and Theodore P.
Schwartz, a former director of 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 Shares, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (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 1997, all filing requirements
applicable to its officers, directors and greater than 10 percent beneficial
owners were complied with.
INDEPENDENT ACCOUNTANTS
Greene & Wallace, Inc. served as the Company's independent accountants for
the fiscal year 1997 which ended December 31, 1997, 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 1998 fiscal year.
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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 person named in the enclosed proxy will vote the Common Shares represented
thereby in accordance with his best judgment.
COST OF SOLICITATION OF PROXIES
The cost of this solicitation will be paid by the Company. The Company may
request persons holding Common 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 1999 must be received by the Company before December 10, 1998, 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, 1997, 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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EXHIBIT A
PROPOSED AMENDED
ARTICLE IV OF AMENDED ARTICLES OF INCORPORATION
OF
PH GROUP INC.
ARTICLE IV
AUTHORIZED SHARES
Section 1. Number and Class of Shares. The number of shares which the
Corporation is authorized to have issued and outstanding is 12,500,000 shares.
The classes and the aggregate number of shares of each class are as follows:
(a) 10,000,000 Common Shares, without par value; and
(b) 2,500,000 Preferred Shares, without par value.
No holder of Common Shares or of Preferred Shares shall have as such, as a
matter of right, the preemptive right to subscribe for or purchase any part of
any new or additional issue of shares of any class whatsoever, or of securities
or other obligations convertible into or exchangeable for any shares of any
class whatsoever or which by warrants or otherwise entitle the holders thereof
to subscribe for or purchase any shares of any class whatsoever, whether now or
hereafter authorized and whether issued for cash or other consideration.
Section 2. Preferred Shares.
2.1. Issuance in Series. Any unissued or treasury Preferred Shares may
be issued from time to time in one or more series for such consideration as may
be fixed from time to time by the Board of Directors. The Board of Directors is
hereby expressly authorized to adopt amendments to the Articles of Incorporation
in respect of any unissued or treasury Preferred Shares to, among other things,
fix or change (a) the division of Preferred Shares into one or more series, (b)
the designation and authorized number of shares of each series, and (c) the
express terms of each series of Preferred Shares. The express terms of shares of
different series of Preferred Shares shall be identical except that there may be
variations in respect of:
2.1.1. the dividend or distribution rate;
2.1.2. the dates of payments of dividends or distributions
and the dates from which they are cumulative;
2.1.3. redemption rights and price;
2.1.4. liquidation price;
2.1.5. sinking fund requirements;
2.1.6. conversion rights; and
2.1.7. restrictions on the issuance of shares of the same
series or of any other class or series.
2.2. Voting Rights. As to every matter requiring the approval of the
shareholders of the Corporation, every holder of Preferred Shares shall be
entitled to one vote for each Preferred Share standing in his name on the books
of the Corporation, with the same and identical voting rights, except as
otherwise provided herein, as a holder of Common Shares. The Preferred Shares
and Common Shares shall vote together as a single class, except as otherwise
required by law or the Articles of Incorporation.
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2.3. Priority of Preferred Shares in Event of Dissolution. In the event
of any dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntarily or involuntarily, the holders of each series of Preferred
Shares shall be entitled, after payment or provision for payment of the debts
and other liabilities of the Corporation, to receive, out of the net assets of
the Corporation, the amount fixed and determined by the Board of Directors in
any amendment to the Articles of Incorporation providing for the issuance of a
particular series of Preferred Shares, before any distribution shall be made to
the holders of Common Shares. Neither the merger or consolidation of the
Corporation, nor the sale, lease or conveyance of all or part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the affairs of
the Corporation within the meaning of this Section 2.3.
2.4. Priority of Preferred Shares to Dividends or Other Distributions.
As and when dividends or other distributions payable in cash, property or
capital stock of the Corporation may be declared by the Board of Directors,
holders of Preferred Shares shall be paid a dividend or distribution in an
amount to be determined by the Board of Directors in any amendment to the
Articles of Incorporation before payment of any such dividend or distribution is
made to holders of Common Shares.
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Exhibit B
PROPOSED AMENDED SECTIONS 2 AND 5 OF ARTICLE I
OF THE
AMENDED CODE OF REGULATIONS
OF PH GROUP INC.
Section 2. Special Meetings.
Special meetings of the shareholders shall be held whenever called by any
of the following: President, Chairman of the Board, a majority of the Directors,
and persons who hold at least one-quarter of the outstanding voting shares of
the Company.
***
Section 5. Quorum.
At any meeting of shareholders, the holders of a majority of the shares of
the Company then outstanding and entitled to vote who are present in person or
represented by proxy, shall constitute a quorum for all purposes, but no action
required by law or by the Articles of Incorporation to be authorized or taken by
the holders of a designated proportion of the shares of any particular class or
of each class may be authorized or taken by a lesser proportion. The holders of
a majority of the voting shares represented at a meeting, whether or not a
quorum is present, may adjourn such meeting from time to time.
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18
PH GROUP INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles T. Sherman, with full power of
substitution, as proxy for the undersigned and hereby authorizes him to
represent and to vote, as designated below, all of the Common Shares of PH Group
Inc. (the "Company") held of record by the undersigned on March 6, 1998, at the
Annual Meeting of Shareholders to be held on April 30, 1998, or any adjournment
thereof, with all the power the undersigned would possess if present in person.
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 TO ELECT ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3. IF ANY
OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT
THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT
IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE COMMON SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXY ON SUCH
MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
19
PH GROUP INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL NOMINEES IN ITEM
1 AND A VOTE "FOR" ITEMS 2 AND 3.
1. ELECTION OF DIRECTORS FOR TERMS OF TWO YEARS.
NOMINEES: Alida L. Breen, David H. Montgomery, and Charles T. Sherman
[ ] FOR All
[ ] WITHHOLD All
[ ] FOR All Except
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
---------------------------
Nominee(s) Exception
2. PROPOSAL TO AMEND ARTICLE IV OF THE AMENDED ARTICLES OF INCORPORATION
OF THE COMPANY TO AUTHORIZE THE ISSUANCE OF 2,500,000 PREFERRED
SHARES, WITHOUT PAR VALUE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AMEND SECTIONS 2 AND 5 OF ARTICLE I OF THE AMENDED CODE OF
REGULATIONS OF THE COMPANY TO DELETE REFERENCES THEREIN TO "COMMON"
SHARES AND TO SUBSTITUTE THEREFOR "VOTING" SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the Annual Meeting of Shareholders or any
adjournment thereof.
The undersigned hereby acknowledges receipt with this Proxy of a copy
of the Notice of Annual Meeting and Proxy Statement dated April 9, 1998 and a
copy of the Company's 1997 Annual Report to Shareholders.
Dated , 1998
----------------------------
--------------------------------------
(Signature)
--------------------------------------
Signature (if held jointly)
IMPORTANT: Please sign exactly as name or names appear above. 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. Corporations
should sign in their full corporate name by their president or other authorized
officer. If a partnership or other entity, please sign in partnership or entity
name by an authorized person.