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As filed with the Securities and Exchange Commission on April 3, 1997
Registration No. 333-22679
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ZARING NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-1506058
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11300 Cornell Park Drive, Suite 500
Cincinnati, Ohio 45242
(513) 489-8849
(Address, including zip code, and telephone number, including area code of
registrant's principal executive office)
----------------------------------------
Ronald G. Gratz
Zaring National Corporation
11300 Cornell Park Drive, Suite 500
Cincinnati, Ohio 45242
(513) 489-8849
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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Please send copies of all communications to:
Mark H. Longenecker, Jr.
Frost & Jacobs LLP
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box./ / _
----------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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EXPLANATORY NOTE
The number of Zaring National Corporation Common Shares to be
issued in the conversion of Zaring Homes, Inc. Common Shares in the Merger
described herein cannot be precisely determined at the time this Registration
Statement becomes effective because Zaring Homes, Inc. Common Shares may be
issued thereafter and until the effective time of the Merger under the Zaring
Homes, Inc. Retirement Benefit Plan and Employee Stock Purchase Plan. This
Registration Statement covers a number of Zaring National Corporation Common
Shares which is estimated to be at least as large as the number of Zaring Homes,
Inc. Common Shares which is expected to be outstanding at the effective time of
the Merger. See the undertaking in Item 22(3) in Part II of this Registration
Statement.
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Zaring National Corporation
Cross Reference Sheet Pursuant to
Item 501(b) of Regulation S-K
Showing the Location in the Proxy Statement
and Prospectus of the Information Required
to be Included Therein in Accordance with
Part 1 of Form S-4
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FORM S-4 ITEM NUMBER LOCATION OR HEADING IN THE
AND CAPTION PROXY STATEMENT AND PROSPECTUS
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1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus.....................................Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus......................................................"Available Information;" "Incorporation
of Certain Documents by Reference;"
"Table of Contents"
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information ............................................."Summary"
4. Terms of the Transaction..........................................."Summary;" "Proposal 2: Formation
of a Holding Company Structure"
5. Pro Forma Financial Information....................................Not Applicable
6. Material Contracts with the Company Being Acquired.................Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters......................Not Applicable
8. Interests of Named Experts and Counsel.............................Not Applicable
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.....................................Not Applicable
10. Information with Respect to S-3 Registrants........................"Available Information;" "Incorporation
of Certain Documents by Reference"
11. Incorporation of Certain Information by Reference.................."Available Information;" Incorporation
of Certain Documents by Reference"
12. Information with Respect to S-2 or S-3 Registrants.................Not Applicable
13. Incorporation of Certain Information by Reference..................Not Applicable
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14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants........................................Not Applicable
15. Information with Respect to S-3 Companies.........................."Available Information;" "Incorporation
of Certain Documents by Reference"
16. Information with Respect to S-2 or S-3 Companies...................Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies..........................................Not Applicable
18. Information if Proxies, Consents or Authorizations
are to be Solicited................................................"Summary;" "General Information;"
"Proposal 1: Election of Directors;"
"Proposal 2: Formation of a Holding
Company Structure: "Dissenters' Rights;"
"Shareholder Vote," Proposal 3: "Approval
of the Zaring Homes, Inc. 1997 Stock
Option Plan"
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer....................Not Applicable
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ZARING HOMES, INC.
11300 CORNELL PARK DRIVE
SUITE 500
CINCINNATI, OHIO 45242
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 7, 1997
TO THE SHAREHOLDERS OF ZARING HOMES, INC.:
The Annual Meeting of Shareholders (the "Meeting") of Zaring Homes, Inc.
("Zaring") will be held on Thursday, May 8, 1997 at 9:00 A.M. at the Blue Ash
Conference Center, 5901 Pfeiffer Road, Cincinnati, Ohio 45242, for the
following purposes:
1. To elect seven directors to hold office until the 1998 Annual Meeting
of Shareholders and until such time as their successors are duly
elected and qualified;
2. To approve a management proposal to form a holding company structure
for Zaring and adopt a related Agreement and Plan of Merger which will
result in (i) the current holders of Zaring common shares having their
shares converted into common shares of the holding company, (ii)
Zaring becoming a subsidiary of the holding company, and (iii) the
consummation of related activities to complete the transition into a
holding company structure;
3. To approve the Zaring Homes, Inc. 1997 Stock Option Plan;
4. To confirm the appointment of Arthur Andersen LLP as independent
auditors of Zaring for the 1997 fiscal year; and
5. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Shareholders of record at the close of business on March 14, 1997 will be
entitled to vote at the meeting and at any adjournment thereof.
IMPORTANT
Your prompt dating, signing and returning of the enclosed proxy in the
enclosed envelope would be appreciated. If you attend the Meeting, you may
nevertheless vote in person should you desire. The return of proxies is
important, regardless of the number of shares owned.
NOTE: THE PROXY STATEMENT AND PROSPECTUS THAT FOLLOWS APPEARS IN A FORMAT
DIFFERENT FROM THAT OF PRIOR YEARS BECAUSE SHAREHOLDERS ARE BEING ASKED TO
CONSIDER A PROPOSAL REGARDING THE FORMATION OF A HOLDING COMPANY STRUCTURE FOR
ZARING.
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PROXY STATEMENT FOR ZARING HOMES, INC.
PROSPECTUS FOR ZARING NATIONAL CORPORATION COMMON SHARES
This Proxy Statement and Prospectus is being furnished to shareholders of
Zaring Homes, Inc., an Ohio corporation ("Zaring"), in connection with the
solicitation of proxies by the Zaring Board of Directors. The proxies will be
voted at the annual meeting of shareholders (the "Meeting") to be held at 9:00
a.m. on Thursday, May 8, 1997, at the Blue Ash Conference Center, 5901 Pfeiffer
Road, Cincinnati, Ohio 45242, and at any adjournment thereof, for the purposes
listed in the preceding Notice of Annual Meeting of Shareholders.
At the Meeting, the shareholders will be asked to approve, among other
things, the formation of a holding company structure for Zaring and a related
Agreement and Plan of Merger (the "Merger Agreement") among Zaring, Zaring
National Corporation, an Ohio corporation formed by Zaring ("Zaring National"),
and Zaring Merger Subsidiary, Inc., an Ohio corporation formed by Zaring
("MergeCo"). At the time of the Merger (defined below), Zaring National will be
a wholly-owned subsidiary of Zaring, and MergeCo will be a wholly-owned
subsidiary of Zaring National. Pursuant to the Merger Agreement, MergeCo will
merge with and into Zaring (the "Merger") and each outstanding common share of
Zaring, without par value ("Zaring Common Share"), will automatically be
converted into one common share of Zaring National, without par value ("Zaring
National Common Share"). As a result, Zaring will become a subsidiary of Zaring
National and the holders of Zaring Common Shares will become holders of Zaring
National Common Shares. In connection with the implementation of the holding
company structure, Zaring intends to transfer to Zaring National its ownership
interests in two of its principal subsidiaries, Zaring Holdings, Inc. and
HomeMax, Inc. See "Proposal 2: Formation of a Holding Company Structure" under
the heading "Terms of the Proposed Restructuring."
The principal executive offices of Zaring and Zaring National are located
at 11300 Cornell Park Drive, Suite 500, Cincinnati, Ohio 45242, telephone
number (513) 489-8849.
This Proxy Statement and Prospectus also serves as the prospectus for
Zaring National under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the issuance of up to 5,000,000 Zaring National
Common Shares in connection with the Merger. Further information concerning the
shares offered hereby is contained in "Proposal 2: Formation of a Holding
Company Structure."
The date of mailing of this Proxy Statement and Prospectus is on or about
April 7, 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT AND PROSPECTUS IS ON OR ABOUT APRIL 7, 1997.
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AVAILABLE INFORMATION
This Proxy Statement and Prospectus is also a prospectus delivered in
compliance with the Securities Act. A registration statement under the
Securities Act has been filed with the Securities and Exchange Commission (the
"SEC") with respect to the securities offered hereby (the "Registration
Statement"). As permitted by the rules and regulations of the SEC, this Proxy
Statement and Prospectus omits certain information contained in the
Registration Statement. For further information pertaining to the securities
being offered, reference is made to the Registration Statement, including
exhibits filed as a part thereof.
Zaring is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance with
the Exchange Act, files reports, proxy statements and other information with
the SEC. These reports, proxy statements and other information, as well as the
Registration Statement, can be inspected and copied at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices in Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511) and
in New York (Seven World Trade Center, Suite 1300, New York, New York 10048),
and copies of such material can be obtained from the Public Reference Section
of the SEC at prescribed rates by writing to the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Reports, proxy statements and other information
concerning Zaring also can be inspected and obtained from the SEC's Web site at
http://www.sec.gov. Reports, proxy statements and other information concerning
Zaring also can be inspected at the offices of the Nasdaq National Market
System at 1735 K Street, N.W., Washington, D.C. 20006-1506.
Zaring National was formed to effectuate the transactions described under
"Proposal 2: Formation of a Holding Company Structure." Zaring National
previously has not been subject to the requirements of the Exchange Act and
there is currently no public market for its shares. However, if the
transactions described herein are approved and consummated, Zaring National
will become subject to the same information, reporting and proxy statement
requirements under the Exchange Act as currently apply to Zaring, and such
information will be available for inspection and copying at the offices of the
SEC set forth above. Zaring National has applied to have Zaring National Common
Shares listed on the Nasdaq National Market System as of the effective date of
the Merger described under "Proposal 2: Formation of a Holding Company
Structure" and, if such application is accepted, Exchange Act reports, proxy
statements and other information concerning Zaring National will be available
for inspection and copying at the offices of such system.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT AND PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST FROM RONALD G. GRATZ, 11300 CORNELL PARK DRIVE, SUITE
500 CINCINNATI, OHIO 45242 (TELEPHONE 513-489-8849). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 1, 1997.
The following documents filed by Zaring with the SEC are incorporated in
the Proxy Statement and Prospectus by reference:
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1. Zaring's annual report on Form 10-K for the year ended December 31,
1996.
2. Zaring's quarterly reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996.
3. Zaring's current report on Form 8-K dated March 14, 1997.
All documents filed by Zaring pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy Statement and
Prospectus and prior to the termination of the offering made by this Proxy
Statement and Prospectus shall be deemed to be incorporated by reference in
this Proxy Statement and Prospectus and to be a part of this Proxy Statement
and Prospectus from the date of filing of such documents (such documents, and
the documents enumerated above, being hereinafter referred to as "Incorporated
Documents"). Any statement contained in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this Proxy Statement and
Prospectus to the extent that a statement contained herein or in any other
subsequently filed Incorporated Document modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement and
Prospectus.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT
AND PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT AND
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT
AND PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF ZARING
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION......................................................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................... 2
SUMMARY OF PROXY STATEMENT AND PROSPECTUS..................................................................... 6
INFORMATION ABOUT THE ANNUAL MEETING.......................................................................... 8
VOTING AND REVOCATION OF PROXIES.............................................................................. 8
PROPOSAL 1: ELECTION OF DIRECTORS............................................................................ 10
INFORMATION CONCERNING NOMINEES...................................................................... 10
SECURITY OWNERSHIP................................................................................... 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.............................................. 13
COMMITTEES OF THE ZARING BOARD OF DIRECTORS.......................................................... 13
EXECUTIVE COMPENSATION............................................................................... 14
REPORT OF THE COMPENSATION COMMITTEE OF THE ZARING
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION.................................................... 18
SHAREHOLDER RETURN PERFORMANCE INFORMATION........................................................... 20
DIRECTOR COMPENSATION................................................................................ 20
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS.............................................. 21
PROPOSAL 2: FORMATION OF A HOLDING COMPANY STRUCTURE......................................................... 22
TERMS OF THE PROPOSED RESTRUCTURING.................................................................. 22
PRESENT BUSINESSES................................................................................... 23
CORPORATE STRUCTURE.................................................................................. 24
REASONS FOR THE RESTRUCTURING........................................................................ 24
RISKS ASSOCIATED WITH THE RESTRUCTURING ............................................................. 25
THE MERGER AGREEMENT................................................................................. 25
TERMINATION OR AMENDMENT OF MERGER AGREEMENT......................................................... 26
DISSENTERS' RIGHTS................................................................................... 26
EXCHANGE OF SHARE CERTIFICATES....................................................................... 28
TREATMENT OF ZARING INDEBTEDNESS..................................................................... 29
DESCRIPTION OF ZARING CAPITAL SHARES................................................................. 29
DESCRIPTION OF ZARING NATIONAL CAPITAL SHARES........................................................ 30
COMPARISON OF ZARING CAPITAL SHARES AND ZARING NATIONAL CAPITAL SHARES............................... 30
EMPLOYEE STOCK PLANS................................................................................. 31
STOCK EXCHANGE LISTINGS.............................................................................. 31
TRANSFER AGENT AND REGISTRAR......................................................................... 31
MARKET VALUES OF ZARING COMMON SHARES................................................................ 31
DIVIDEND POLICY...................................................................................... 32
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER........................................................ 32
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DIRECTORS AND EXECUTIVE OFFICERS.......................................................................... 33
SHAREHOLDER VOTE.......................................................................................... 33
EFFECTIVE DATE OF THE MERGER.............................................................................. 33
LEGAL OPINION............................................................................................. 34
EXPERTS................................................................................................... 34
PROPOSAL 3: APPROVAL OF THE ZARING HOMES, INC. 1997 STOCK OPTION PLAN............................................. 34
PROPOSAL 4: INDEPENDENT AUDITORS.................................................................................. 41
SHAREHOLDER PROPOSALS.............................................................................................. 41
OTHER BUSINESS..................................................................................................... 41
EXHIBIT A-AGREEMENT AND PLAN OF MERGER............................................................................. A-1
EXHIBIT B-DISSENTERS' RIGHTS STATUTE............................................................................... B-1
EXHIBIT C-THE ZARING HOMES, INC. 1997 STOCK OPTION PLAN............................................................ C-1
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SUMMARY OF PROXY STATEMENT AND PROSPECTUS
The following summary of the matters to be voted on at the annual meeting
is qualified in its entirety by reference to the more detailed information set
forth elsewhere in this document, including the attached exhibits and the
documents incorporated herein by reference.
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Date, Time and Place The Meeting will be held at 9:00 a.m. on May 8, 1997 at the Blue Ash
of Meeting Conference Center, 5901 Pfeiffer Road, Cincinnati, Ohio 45242.
Record Date and Holders of record of Zaring Common Shares, on March 14, 1997, are
Eligible Voters entitled to vote at the Meeting.
Proposals at the The following proposals will be presented to shareholders for approval at the
Meeting Meeting: (1) the election of directors of Zaring; (2) the formation of a
holding company structure and the adoption of the Merger Agreement; (3) the
approval of Zaring's 1997 Stock Option Plan; and (4) the confirmation of
the appointment of Arthur Andersen LLP as independent auditors of Zaring for
the 1997 fiscal year.
Election of Zaring The Zaring Board of Directors has nominated Allen G. Zaring, III, John R.
Directors Brooks, George E. Casey, Jr., Murat H. Davidson, Daniel W. Geeding,
Robert N. Sibcy and John H. Wyant to serve as directors until the Annual
Meeting of Shareholders in 1998. See "Proposal 1: Election of Directors."
At the Effective Time (as hereinafter defined), the Board of Directors of
Zaring National will consist of the same persons as the foregoing nominees
for the Board of Directors of Zaring. See "Proposal 2: Formation of a
Holding Company Structure: Directors and Executive Officers."
The Formation of a
Holding Company
Structure
General The Zaring Board of Directors has authorized a restructuring pursuant to the
Merger Agreement whereby Zaring National will serve as the parent
company of Zaring. See "Proposal 2: Formation of a Holding Company
Structure: Terms of the Proposed Restructuring."
Zaring Zaring is incorporated under the laws of the State of Ohio. Zaring, its
wholly-owned subsidiaries, Zaring Holdings, Inc. and HomeMax, Inc, and
Zaring Homes of Indiana, LLC and Zaring Homes Kentucky, LLC, entities
in which Zaring owns an interest, are engaged principally in the
residential home building business. "See Proposal 2: Formation of a
Holding Company Structure: Present Businesses."
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Zaring National Zaring National was incorporated under the laws of the State of Ohio on
February 5, 1997 and MergeCo was incorporated under the laws of the State
of Ohio on March 7, 1997 for the purpose of carrying out the
restructuring. See "Proposal 2: Formation of a Holding Company Structure:
Present Businesses." Currently, Zaring National is a direct wholly-owned
subsidiary of Zaring. Following the fulfillment of conditions described
under "Proposal 2: Formation of a Holding Company Structure: Terms of
the Proposed Restructuring," at the Effective Time, Zaring National will
become the parent company of Zaring.
Reasons for the The Zaring Board of Directors believes that the restructuring will result in
Restructuring greater financial, managerial and organizational flexibility and will place
Zaring in a better position to meet and take advantage of future challenges
and opportunities. Zaring National and Zaring have no plans or proposals to
utilize the holding company structure for any purpose other than to achieve
flexibility as described herein. See "Proposal 2: Formation of a Holding Company
Structure: Reasons for the Restructuring."
Risks Associated After the Effective Time, Zaring National will operate as a holding company
with the Restructuring and will only conduct business operations through its operating subsidiaries.
Zaring National's principal asset will be the outstanding stock of its operating
subsidiaries. Further, Zaring National will be dependent upon the earnings and
cash flows of such operating subsidiaries and dividends and distributions
from such operating subsidiaries to pay its expenses, to meet its obligations
and to pay any cash dividends or distributions on Zaring National Common Shares
that may be authorized from time to time by the Zaring National Board of
Directors. In addition, there can be no assurance that such operating
subsidiaries will generate sufficient earnings and cash flows to pay dividends and
distribute funds to Zaring National to enable Zaring National to meet its obligations
and pay its expenses, or that contractual restrictions that may apply, including but
not limited to negative covenants contained in the instruments and agreements covering
indebtedness of such operating subsidiaries, will permit such distributions
or dividends.
Dissenters' Any shareholder whose shares are entitled to vote on the Merger Agreement
Rights and whose shares are not voted in favor of adoption of the Merger
Agreement is entitled, if the related Merger is consummated, to be paid the
fair cash value of such shares held of record by such shareholder on the
Record Date. See "Proposal 2: Formation of a Holding Company:
Dissenters' Rights."
Exchange of Share As part of the restructuring, each Zaring Common Share issued and
Certificates outstanding immediately prior to the Merger will be converted
into one Zaring National Common Share. As soon as practicable after the
Effective Time, Zaring will furnish a letter of transmittal to shareholders
for use in exchanging their share certificates (each a "Letter of Transmittal"),
which will contain instructions with respect to the surrender of certificates
representing Zaring Common Shares and the distribution of certificates representing
Zaring National Common Shares. See "Proposal 2: Formation of a Holding Company:
Exchange of Share Certificates."
Stock Exchange Zaring Common Shares are currently traded on the Nasdaq National Market
Listing System under the stock symbol "ZHOM." Application has been made to list
Zaring National Common Shares on the Nasdaq National Market System
and, after the Effective Time, such shares also are expected to trade under
the stock symbol "ZHOM." See "Proposal 2: Formation of a Holding
Company: Stock Exchange Listings."
Dividends on Zaring has never paid dividends on the Zaring Common Shares. After the
Zaring National Effective Time, payments of dividends and other distributions will be within
Common Shares the discretion of the Zaring National Board. See "Proposal 2: Formation of
a Holding Company: Dividend Policy."
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Certain Income No gain or loss will be recognized for federal income tax purposes by
Tax Zaring, Zaring National or holders of Zaring Common Shares whose shares
Consequences are exchanged for Zaring National Common Shares as a result of the
restructuring. See "Proposal 2: Formation of a Holding Company: Federal
Income Tax Consequences of the Merger."
Vote Required Approval of the restructuring requires the affirmative vote of the holders of
a majority of the issued and outstanding Zaring Common Shares. See
"Proposal 2: Formation of a Holding Company Structure: Shareholder
Vote."
Effective Time It is expected that the Merger will become effective (the "Effective Time")
as soon as practicable after shareholder approval is obtained. See "Proposal
2: Formation of a Holding Company: Effective Date of the Merger."
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INFORMATION ABOUT THE ANNUAL MEETING
The enclosed proxy is solicited by the Board of Directors of Zaring, 11300
Cornell Park Drive, Suite 500, Cincinnati, Ohio 45242, for use at the Annual
Meeting of Shareholders of Zaring to be held on May 8, 1997, and at any
adjournment thereof (the "Meeting"). This Proxy Statement and Prospectus is
being mailed to shareholders on or about April 7, 1997.
On March 14, 1997, the record date for the determination of shareholders
entitled to vote at the Meeting (the "Record Date"), there were 4,781,080 Zaring
Common Shares outstanding, and each such share is entitled to one vote on each
matter coming before the Meeting.
In voting on the proposal to approve the formation of a holding company
structure (Proposal 2), shareholders may vote in favor or against the proposal
or may abstain from voting. In accordance with the Ohio General Corporation Law
("OGCL") and the Amended Articles of Incorporation of Zaring (the "Zaring
Articles"), the vote required to approve Proposal 2 is the affirmative vote of
the holders of a majority of the issued and outstanding Zaring Common Shares.
In voting on the proposal to elect directors of Zaring (Proposal 1), the
nominees receiving the greatest number of votes will be elected.
Approval of any other matter properly coming before the Meeting requires
the vote of the holders of a majority of Zaring Common Shares present in person
or represented by proxy at the Meeting, and entitled to vote.
VOTING AND REVOCATION OF PROXIES
HOLDERS OF ZARING COMMON SHARES
An abstention from voting will be tabulated as a vote withheld (and thus
will have the practical effect of a "no" vote in voting on Proposals 2, 3 and
4), but will be included in
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computing the number of Zaring Common Shares present for purposes of
determining the presence of a quorum at the Meeting. If a broker indicates on
the form of proxy that it does not have discretionary authority as to certain
Zaring Common Shares to vote on a particular matter, those Zaring Common Shares
will be considered as present but not entitled to vote with respect to that
matter. If a proxy card is signed and returned without specifying choices, the
shares represented thereby will be voted (1) to elect as directors the seven
persons named below, (2) to approve the proposal to form a holding company
structure and adopt the Merger Agreement, (3) to approve Zaring's 1997 Stock
Option Plan and (4) to confirm Arthur Andersen LLP as independent auditors of
Zaring for fiscal year 1997.
The members of the proxy committee, whose names are set forth on the
accompanying form of proxy, were named by the Zaring Board of Directors. A
shareholder giving a proxy in the accompanying form retains the power to revoke
it by making a later appointment or by giving notice of revocation to the proxy
tabulator, The Fifth Third Bank, 38 Fountain Square, Cincinnati, Ohio 45263.
Attendance at the Meeting does not in itself revoke the appointment; however,
it may be revoked by giving notice in open meeting. A revocation made during
the Meeting will not affect any vote previously taken.
PARTICIPANTS IN RETIREMENT SAVINGS PLAN
Separate proxy cards are being submitted to all persons who have Zaring
Common Shares allocated to their accounts as participants or beneficiaries under
Zaring's Retirement Savings Plan (the "RSP Plan"). It is anticipated that a
representative of PNC Bank, Ohio, National Association, which acts as Trustee
for the RSP Plan, will attend the Meeting in order to vote, in accordance with
the instructions of the participants or their beneficiaries, the shares which it
holds of record as Trustee and which have been allocated to the participants'
accounts. If no proxy card is received from a participant or beneficiary or a
proxy card is signed and returned without specifying choices, the shares
represented thereby will be voted (1) to elect as directors the seven persons
named below, (2) to approve the proposal to form a holding company structure and
adopt the Merger Agreement, (3) to approve Zaring's 1997 Stock Option Plan and
(4) to confirm Arthur Andersen LLP as independent auditors of Zaring for fiscal
year 1997.
Any RSP Plan participant or beneficiary giving a proxy in the accompanying
form retains the power to revoke it by making a later appointment or by giving
notice of revocation to PNC Bank, Ohio, National Association. Under the terms of
the RSP Plan, only the Trustee of the plan can vote the shares allocated to the
accounts of participants, even if such participants or their beneficiaries
attend the Meeting in person.
COSTS OF SOLICITATION
Zaring will bear the costs of solicitation of proxies, including the
charges and expenses of stock brokerage firms, banks, trust companies and
others for forwarding solicitation materials to beneficial owners of shares. In
addition to solicitation by mail, directors, officers and regular employees of
Zaring may solicit proxies in person or by telephone.
9
<PAGE> 15
PROPOSAL 1: ELECTION OF DIRECTORS
THE ZARING BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES.
Zaring's Amended Regulations provide that the number of directors
shall be not less than five or more than nine. Directors are elected for a
one-year term until the next Annual Meeting of Shareholders.
INFORMATION CONCERNING NOMINEES
Seven directors will be elected at the Meeting. The Zaring Board of
Directors has nominated Allen G. Zaring, III, John R. Brooks, George E. Casey,
Jr., Murat H. Davidson, Daniel W. Geeding, Robert N. Sibcy and John H. Wyant to
serve as directors of Zaring until the 1998 Annual Meeting of Shareholders and
until such time as their respective successors are elected and qualified.
If any nominee is unable or unwilling to serve as a director on the date
of the Meeting (a situation which is not contemplated by the Zaring Board of
Directors at the present time), proxies will be voted by the proxy committee
for the election of such substitute as the Zaring Board of Directors may
recommend and for the remaining nominees.
The following table sets forth information with respect to the age and
experience of nominees for election as directors.
<TABLE>
<CAPTION>
POSITIONS WITH YEAR FIRST ELECTED
NOMINEE AGE ZARING A DIRECTOR
------- --- ------ ----------
<S> <C> <C> <C>
John R. Brooks 52 Director 1979
George E. Casey, Jr. 50 Director, President 1995
and CEO
Murat H. Davidson 52 Director 1989
Daniel W. Geeding (a) 54 Director 1993
Robert N. Sibcy 53 Director 1995
John H. Wyant (a) 50 Director 1994
Allen G. Zaring, III (a) 54 Chairman of the 1964
Board
</TABLE>
- --------------
(a) Member of the Executive Committee of the Zaring Board of Directors. The
membership of the Executive Committee includes the Chairman of the Board.
John R. Brooks is a member of the Audit and Compensation Committees. From
1990 to 1996, Mr. Brooks served as the Business Affairs Director of The Seven
Hills Schools, a private
10
<PAGE> 16
school in Cincinnati. Since 1996, he has served as a consultant to the Seven
Hills Schools.
George E. Casey has been a director of Zaring since 1995. Since 1995, he
has been President of Zaring. From 1989 to 1995, he was an executive officer of
Realen Homes.
Murat H. Davidson has been a director of Zaring since 1989. Mr. Davidson
is a partner and the managing director of Regan Partners, L.P. From 1993 to
1995, he was the managing director of Tiger Management Corp. Prior to joining
Tiger, Mr. Davidson was managing director of Dreman Value Management L.P. He
has 22 years of portfolio management experience.
Daniel W. Geeding is a member of the Executive, Audit and Compensation
Committees. Since 1988, Mr. Geeding has been the Dean of the Xavier University
College of Business Administration. He is also on the Board of Directors of
ChoiceCare Corporation, Glenway Financial Corporation and Frisch's Restaurants,
Inc., and on the Board of Trustees of TriState Foundation for Health.
Robert N. Sibcy has been a director of Zaring since 1995. Mr. Sibcy is
President and the owner of Sibcy Cline, Inc., a real estate brokerage firm.
John H. Wyant is a member of the Executive, Audit and Compensation
Committees. Mr. Wyant also serves as the Vice Chairman of the Zaring Board. He
is the founder and general partner of Blue Chip Venture Capital Fund, a venture
capital fund formed in 1992 to invest in privately-held companies. He has served
as Chief Executive Officer of Nutrition Technology Corporation and Home
Entertainment Network. Mr. Wyant also serves as a director of Digex, Inc. and
Ciao Cucina Corporation.
Allen G. Zaring, III formed the principal predecessor to Zaring in 1964
and is currently Chairman of the Board of Zaring. He is a member of the
Executive Committee of the Zaring Board of Directors. Mr. Zaring also serves as
a director of PNC Bank, Ohio, National Association and is a member of the Board
of Advisors of Blue Chip Venture Capital Fund.
11
<PAGE> 17
SECURITY OWNERSHIP
The following table sets forth information, as of March 14, 1997 (unless a
different date is specified in the notes to the table), with respect to (a)
each person known by the Board of Directors of Zaring to be the beneficial
owner of more than 5% of outstanding Zaring Common Shares, (b) each current
director and nominee for director of Zaring, (c) each current executive officer
of Zaring named in the Summary Compensation Table herein, and (d) all directors
and executive officers of Zaring as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
SHAREHOLDER OWNERSHIP (a) OF CLASS
- ----------- ------------- --------
<S> <C> <C>
Allen G. Zaring, III........................................... 2,730,608(b)(c) 56.57%
Zaring Family Limited Partnership.............................. 2,000,000(b) 41.44%
Richard J. Bell................................................ 13,882(c) *
John R. Brooks................................................. 119,240(c) 2.47%
George E. Casey, Jr............................................ 34,199(c) *
Murat H. Davidson.............................................. 18,539(c) *
Daniel W. Geeding.............................................. 2,500(c) *
Ronald G. Gratz................................................ 9,632(c) *
J. Stephen Jellicorse.......................................... 10,484(c) *
Daniel W. Jones................................................ 13,178(c) *
Robert N. Sibcy................................................ 238,492(c) 4.94%
John H. Wyant.................................................. 5,500(c) *
All directors and executive officers as a group
(21 persons)................................................... 3,218,879 66.69%
</TABLE>
- -----------------
* Percent of class is less than 1%
(a) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or investment
power with respect to any such security or who has the right to acquire
beneficial ownership of any such security within 60 days. Unless otherwise
indicated, the amounts owned reflect (i) direct beneficial ownership, and
(ii) the person indicated has sole voting and investment power.
(b) Includes the following Zaring Common Shares: 719,599 owned individually
by Allen G. Zaring, III, 11,009 owned by Mr. Zaring's spouse, Anne M.
Zaring and 2,000,000 held by the Zaring Family Limited Partnership of
which Allen G. Zaring, III and Anne M. Zaring are general partners.
(c) Includes Zaring Common Shares subject to outstanding options under
Zaring's stock option plans. The percentages shown in the foregoing
table are calculated on the basis that outstanding shares include
Zaring Common Shares subject to outstanding options under Zaring's
stock option plans that are exercisable by directors and officers
within 60 days, in addition to the number of shares actually
oustanding. Such amounts are:
Allen G. Zaring, III........................ 4,399
Richard J. Bell............................. 7,999
John R. Brooks.............................. 1,000
George E. Casey, Jr. ....................... 12,732
Murat H. Davidson........................... 1,000
Daniel W. Geeding........................... 1,000
Ronald G. Gratz............................. 1,584
J. Stephen Jellicorse....................... 2,309
Daniel W. Jones............................. 6,139
Robert N. Sibcy............................. 500
John H. Wyant............................... 1,000
In addition, an officer of Zaring has received options to purchase
2,718 Zaring Common Shares.
12
<PAGE> 18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Zaring's
officers, directors and persons who own more than 10% of a registered class of
Zaring's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required to furnish Zaring with copies of all
Section 16(a) forms they file. Based solely on its review of the copies of such
forms received by it, and by statements of officers and directors that they
complied with all applicable filing requirements, its officers, directors and
greater than 10% beneficial owners complied with all filing requirements
applicable to them.
COMMITTEES OF THE ZARING BOARD OF DIRECTORS
The Zaring Board of Directors has an Audit Committee, the members of which
are not officers or employees of Zaring. The Audit Committee, which held four
meetings during fiscal year 1996, recommends to the Zaring Board of Directors
the independent auditors to be employed by Zaring; consults with the
independent auditors on the scope of the annual audit; approves the fees paid
to the independent auditors for audit services; reviews reports of examination
of the independent auditors, internal auditors and regulatory authorities; and
reports to the Zaring Board of Directors with respect to all of the foregoing.
The members of the Audit Committee are Messrs. Geeding (Chairman), Brooks and
Wyant.
The Zaring Board of Directors has a Compensation Committee, the members of
which are not officers or employees of Zaring. The Compensation Committee,
which held three meetings during fiscal year 1996, is responsible for
developing Zaring's executive compensation principles, policies and programs
and recommending them to the Zaring Board of Directors. The Compensation
Committee also recommends to the Zaring Board of Directors, on an annual basis,
the amount and type of compensation to be paid to the Chief Executive Officer
and, with advice from the Chief Executive Officer, to each of the other
executive officers of Zaring. The members of the Compensation Committee are
Messrs. Brooks (Chairman), Geeding and Wyant. See "Report of the Compensation
Committee of the Zaring Board of Directors on Executive Compensation."
The Zaring Board of Directors has an Executive Committee, which held two
meetings during fiscal year 1996. During intervals between meetings of the
Zaring Board of Directors, the Executive Committee has the authority to
exercise all the powers of the Zaring Board of Directors, except that it is not
empowered to declare dividends, to elect or remove officers, or to fill
vacancies on the Zaring Board of Directors or on the Executive Committee. All
actions of the Executive Committee are reported to the Zaring Board of
Directors at its next meeting and are subject to revision or alteration by the
Zaring Board of
13
<PAGE> 19
Directors. The members of the Executive Committee are Messrs. Zaring
(Chairman), Geeding and Wyant.
The Zaring Board of Directors held 4 meetings during fiscal year 1996.
Each current director who held that office throughout the fiscal year attended
75% or more of those meetings and the meetings held during the fiscal year by
all board committees on which he served.
The Zaring Board of Directors does not have a Nominating Committee.
EXECUTIVE COMPENSATION
The following table summarizes all annual and long-term compensation paid
by Zaring for services rendered Zaring in all capacities for the fiscal years
ended December 31, 1994 through December 31, 1996, by those persons who, at
December 31, 1996, were (i) the Chief Executive Officer and (ii) the four most
highly compensated executive officers of Zaring (whose total annual salary and
bonuses exceeded $100,000) (the "Named Officers").
14
<PAGE> 20
SUMMARY COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------- --------------------------- --------------------------
Securities
Restricted Underlying All Other
Name and Salary Bonus Other Annual Shares Options/ LTIP Compensation
Principal Position Year ($) ($) Compensation ($) Award(s) ($) SARs (#) (2) Payouts ($) ($)(3)
- ------------------ ---- ------- ------- ---------------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen G. Zaring, III 1996 $ 11,774 $ 0 $ 0 $ 0 9,217 $ 0 $117,561
Chairman (1) 1995 4,855 0 0 0 0 0 79,414
1994 6,613 0 0 0 0 0 65,763
George E. Casey, Jr. 1996 200,000 181,680 0 0 34,217 0 3,597
President & CEO 1995 192,308 161,180 0 0 0 0 0
1994 - - - - - - -
Richard J. Bell 1996 114,039 117,627 0 0 5,069 0 8,763
Regional President 1995 109,039 113,014 0 0 0 0 0
Midsouth Region 1994 98,269 99,375 0 0 0 0 0
Daniel W. Jones 1996 114,039 134,253 0 0 5,069 0 6,652
Regional President 1995 109,039 110,253 0 0 0 0 0
Midwest Region 1994 91,115 45,271 0 0 0 0 0
Ronald G. Gratz 1996 120,000 29,160 0 0 3,318 0 1,123
Vice President/CFO 1995 16,154 0 0 0 0 0 0
1994 - - 0 0 0 0 0
J. Stephen Jellicorse 1996 113,077 73,336 0 0 4,839 0 9,501
President 1995 105,000 26,250 0 0 0 0 0
Zaring Holdings,Inc. 1994 60,577 26,250 0 0 0 0 0
</TABLE>
- -----------------
(1) Annual salary reflects only amounts paid by Zaring for Mr. Zaring and his
family's health insurance coverage and associated expenses and the value of
split dollar life insurance maintained on his life by Zaring.
(2) The Zaring Board of Directors approved the grant of an option to purchase
25,000 Zaring Common Shares to Mr. Casey in 1996. No options were granted
to the Named Officers in fiscal years 1994 or 1995. For additional
information, see the table captioned "Options/SAR Grants in Last Fiscal
Year".
(3) Zaring maintains split-dollar life insurance on the life of Mr. Zaring.
Zaring paid $10,595 allocated to the term portion of the split-dollar
coverage in 1996; Mr. Zaring reimbursed Zaring for this portion of the
insurance coverage. The terms of the split-dollar agreement between Zaring
and Mr. Zaring state that Zaring is to be reimbursed for its payment of
premiums. The actuarial value of the excess of the cash value over the
premiums
15
<PAGE> 21
paid by Zaring for 1996 was $117,561. The amount was based upon the
assumption that the policies will be paid in full and remain in effect
until Mr. Zaring's retirement, with the amount representing the weighted
average for retirement at ages 55, 60 and 65.
Includes in 1996, for the other Named Officers: for Mr. Casey: $576
contributed by Zaring as a premium on a life insurance policy on the life
of Mr. Casey and $3,021 contributed by Zaring to the Employee Stock
Purchase Plan (the "Stock Purchase Plan", described below); for Mr. Bell:
$576 contributed by Zaring as a premium on a life insurance policy on the
life of Mr. Bell, $1,303 contributed by Zaring to the Stock Purchase Plan
and $6,884 representing a discount on Zaring Common Shares sold to Mr. Bell
in a private placement of securities in 1996 (the "Private Placement",
described below); for Mr. Jones: $576 contributed by Zaring as a premium on
a life insurance policy on the life of Mr. Jones, $1,485 contributed by
Zaring to the Stock Purchase Plan and $4,591 representing a discount on
Zaring Common Shares sold to Mr. Jones in the Private Placement; for Mr.
Gratz: $576 contributed by Zaring as a premium on a life insurance policy
on the life of Mr. Gratz, $160 contributed by Zaring to the Stock Purchase
Plan and $387 contributed by Zaring to the Executive Deferred Compensation
Plan (the "Deferred Compensation Plan", described below); and for Mr.
Jellicorse: $576 contributed by Zaring as a premium on a life insurance
policy on the life of Mr. Jellicorse, $2,037 contributed by Zaring to the
Stock Purchase Plan and $6,888 representing a discount on Zaring Common
Shares sold to Mr. Jellicorse in the Private Placement.
The Stock Purchase Plan is intended to enable employees of Zaring and
its subsidiaries to acquire a proprietary interest in the growth and
performance of Zaring and thereby an increased incentive to work for the
future success of Zaring and its subsidiaries, by offering full-time
employees the opportunity to acquire Zaring Common Shares. An eligible
employee is able to have a percentage of his or her cash compensation other
than his or her base salary or wages (such compensation being called
"Incentive Pay") deducted on an after-tax basis from his or her paychecks,
provided that the maximum amount deductible is between 1% and 10% of a
participant's Incentive Pay if such participant is a sales manager, or from
1% to 25% of a participant's Incentive Pay if such participant is not a
sales manager. Any such deduction is called an "Incentive Pay Deduction."
Zaring will match any participant's Incentive Pay Deduction with a
contribution equal to 1/9 of such Incentive Pay Deduction.
In 1996, Zaring offered 135,000 Zaring Common Shares to its directors,
officers and employees. On March 9, 1996, Zaring sold 65,000 Zaring Common
Shares to certain of its officers, directors and employees that elected to
purchase Zaring Common Shares in the Private Placement for $9.15 per share.
Such Zaring Common Shares were sold at a discount from the prevailing
market price of $11.00 on such day. The Private Placement was intended to
enable directors, officers and employees to acquire a proprietary interest
in the growth and performance of Zaring and thereby an increased incentive
to work for the future success of Zaring.
The Deferred Compensation Plan is intended to provide retirement
income to a select group of key employees of Zaring, and any subsidiary of
Zaring which adopts the Deferred Compensation Plan, by enabling
participants to defer a portion of their base salary and/or their bonuses.
Participants are able to elect to defer, on a pre-tax basis, up to 25% of
their base salary and/or up to 100% of their bonuses for such year.
However, only bonuses which are
16
<PAGE> 22
made with respect to a calendar year and paid during such year or within
six months of the end of such year are eligible for deferral. Participants
may designate how they want their deferred earnings to be assumed to be
invested in certain investment funds, one of such investment funds being
the Zaring Common Stock Fund, which is a fund which invests substantially
all of its assets in Zaring Common Shares. Zaring will credit additional
amounts to a participant's account for each calendar quarter equal to the
lesser of: (i) 100% of the amount of the base salary and bonuses which the
participant has deferred during such calendar quarter and for which the
participant has directed that the initial assumed investment will be the
Zaring Common Stock Fund; or (ii) 25% of the total amount of base salary
and bonuses which the participant defers in such calendar quarter. Once a
participant has made deferrals of at least $9,500, subject to certain
adjustments, in any calendar year, no further deferrals of base salary or
bonus in the rest of the year will be considered in determining any
additional matching amount for the participant's account. The additional
matching amount will always be assumed to be invested in the Zaring Common
Stock Fund.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term*
- ---------------------------------------------------------------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- --------- ----------- ----------- ------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Allen G. Zaring, III 9,217(1) 12.3% $ 11.15 4/16/06 $167,401 $266,558
George E. Casey, Jr. 9,217(1) 12.3% 11.15 4/16/06 167,401 266,558
George E. Casey, Jr. 25,000(2) 33.3% 12.50 4/18/06 509,030 810,545
Richard J. Bell 5,069(1) 6.8% 11.15 4/16/06 92,064 146,597
Ronald G. Gratz 3,318(1) 4.4% 11.15 4/16/06 60,262 95,957
Daniel W. Jones 5,069(1) 6.8% 11.15 4/16/06 92,064 146,597
J. Stephen Jellicorse 4,839(1) 6.4% 11.15 4/16/06 87,887 139,945
</TABLE>
- ----------------------------------
* The dollar gains under these columns result from calculations assuming 5% and
10% growth rates as set by the Securities and Exchange Commission and are not
intended to forecast future price appreciation of Zaring Common Shares. The
gains reflect a future value based upon growth at these prescribed rates.
Zaring did not use an alternative formula for a grant date valuation, an
approach which would state gains at present, and therefore lower value. Zaring
is not aware of any formula
17
<PAGE> 23
which will determine with reasonable accuracy a present value based on future
unknown or volatile factors.
It is important to note that options have value to the Named Officers and
to all option recipients only if the stock price advances beyond the base price
shown in the table during the effective option period.
(1) These awards were made pursuant to the Key Employees Stock Option Plan.
Under this plan, the option will, in general, be able to be exercised only on
or after the date of issuance of Zaring's Form 10-K for the fiscal year during
which such option is granted and only as to a number of Zaring Common Shares
equal to the product obtained by multiplying (i) the total number of Zaring
Common Shares which were subject to the option by (ii) the performance-based
percentage applicable to such option (as determined below). The option will
become void as to all other Zaring Common Shares which were subject to the
option.
The performance-based percentage applicable to the option will be deemed
to be equal to the quotient produced by dividing (i) the difference between the
EPS percentage growth value (as determined below) and 10% by (ii) 10%. The EPS
percentage growth rate refers to the percentage by which Zaring's earnings per
Common Share (as set forth within the financial statements contained in
Zaring's Forms 10-K) have increased, on a compounded annual basis, from the end
of Zaring's latest fiscal year which ended prior to the regular annual meeting
of the Zaring Board of Directors which was held in 1995 to the end of Zaring's
fiscal year during which the option is granted. However, notwithstanding the
foregoing, in no event will the EPS percentage growth rate applicable to any
option be deemed to be less than 10% or more than 20%.
However, notwithstanding the above provisions, the option will become void
as to all Zaring Common Shares which were subject to the option if the key
employee to whom the option is granted fails to purchase Zaring Common Shares
during Zaring's fiscal year during which the option is granted at a cost to the
key employee of at least 10% of his or her incentive compensation earned for
such fiscal year.
(2) On September 13, 1996, Zaring granted George Casey an option to purchase
25,000 Zaring Common Shares.
REPORT OF THE COMPENSATION COMMITTEE OF THE
ZARING BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Zaring Board of Directors (the
"Committee") consists entirely of outside directors, currently three in number.
The Committee is responsible for developing Zaring's executive compensation
principles, policies and programs and recommending them to the Zaring Board of
Directors. In addition, the Committee, with
18
<PAGE> 24
advice from the Chief Executive Officer, recommends to the Zaring Board of
Directors on an annual basis the compensation to be paid to the Chief Executive
Officer and to each of the other executive officers of Zaring, including those
named in the Summary Compensation Table.
The Committee believes that, in representing the Zaring Board of
Directors, it must act in the best interests of the shareholders as it reviews
and determines Zaring's executive compensation principles, policies and
programs. The Committee's essential goal is to create a balance by which
Zaring is able to attract and retain qualified management personnel while at
the same time maximizing Zaring's financial performance and safeguarding
Zaring's assets. In compensating Zaring's executive officers, the Committee
seeks to achieve the following goals:
o motivate executive officers to strive for and achieve outstanding corporate
performance that provides a direct benefit to shareholders;
o attract highly-qualified key management personnel; and
o reward superior performance in reaching corporate objectives with aggressive
compensation levels and provide that a significant portion of compensation is
dependent on Zaring's annual performance.
In fiscal year 1996, executive officer compensation had two primary
elements: base salary and incentive cash bonuses. These elements are discussed
in more detail below.
BASE SALARY COMPENSATION:
Base salaries for executive officers in fiscal 1996 were determined after
review of an analysis of salaries paid for comparable positions and
consideration of the competition for executive talent within Zaring's industry.
The Committee's review included the companies used in the Peer Group for the
performance information graph (see "Shareholder Return Performance
Information", below) as well as additional companies in the homebuilding
industry. Zaring's compensation philosophy is to target executive salaries
close to the mean of the market rate paid for comparable positions within the
homebuilding industry.
In 1996, executive officers' base salaries were increased on an average by
3.6% to reflect general economic conditions, with the exception of the base
salaries of two executives which increased by an average of 31.6% recognizing
that the executives would receive base salary in 1997 without the opportunity
to receive incentive bonus compensation.
INCENTIVE CASH BONUS COMPENSATION:
The Incentive Cash Bonus Compensation, which is paid out in the form of
quarterly bonuses during the year, was established to provide a direct
financial incentive to achieve both individual and corporate goals. Each year
Zaring enters into incentive cash bonus
19
<PAGE> 25
arrangements with its executive officers. Under this program, an executive may
earn a maximum bonus equal to his or her base salary. The bonus is based upon
the achievement of certain goals, including customer satisfaction, the time to
construct homes, the level of revenues, the level of profits, inventory turnover
and return on managed assets.
COMPENSATION OF CHIEF EXECUTIVE OFFICER:
At the request of Allen G. Zaring, III, Zaring's Chief Executive Officer,
the only compensation he received during 1996 was health insurance coverage and
payment of associated health expenses for himself and his family and the value
of split dollar life insurance maintained on his life by Zaring.
The Compensation Committee
John R. Brooks, Chairman
Daniel W. Geeding
John H. Wyant
SHAREHOLDER RETURN PERFORMANCE INFORMATION
The following graph portrays a comparison of the percentage change in
Zaring's cumulative total shareholder return on its Common Shares (as measured
by dividing (i) the sum of (A) the cumulative amount of dividends, assuming
dividend reinvestment during the periods presented, and (B) the difference
between Zaring's share price at the end and the beginning of the periods
presented; by (ii) the share price at the beginning of the periods presented)
since the date of its initial public offering with the NASDAQ U.S. Composite
Index and a Peer Group Index. The Peer Group consists of Engle Homes, Inc.,
FPA Corporation, Inco Homes Corporation, Oriole Homes Corp., and Washington
Homes, Inc.
COMPARISON OF 43 MONTH TOTAL RETURN* AMONG ZARING HOMES, INC., THE NASDAQ STOCK
MARKET-US INDEX AND A PEER GROUP.
<TABLE>
CUMULATIVE TOTAL RETURN
---------------------------------
5/93 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C>
Zaring Homes Inc. 100 115 45 69 82
Peer Group 100 109 49 54 52
NASDAQ STOCK MARKET-US 100 112 109 155 190
<FN>
* $100 Invested on 5/25/93 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
</TABLE>
DIRECTOR COMPENSATION
Directors who are not employees of Zaring are paid directors' fees for
their services at the rate of $5,000 per year each, as well as a fee of $1,000
per Board meeting attended and $500 per Committee meeting attended. Total
payments to such directors for Zaring's last
20
<PAGE> 26
fiscal year amounted to $53,864, which includes amounts paid as reimbursement
for travel expenses.
In addition to such remuneration, outside directors (directors who are not
also employees of Zaring) will receive stock options under Zaring's Outside
Directors Stock Option Plan (the "Outside Directors Option Plan"). The Outside
Directors Option Plan provides for the grant to all outside directors of
options to purchase Zaring Common Shares over an extended period of time at a
set purchase price.
The full Board of Directors of Zaring interprets the Outside Directors
Option Plan to the extent any interpretation is necessary. Beginning with the
date of the 1994 annual meeting of shareholders of Zaring held in 1995 and on
each annual meeting of shareholders thereafter as long as the Outside Directors
Option Plan is in effect, an option to purchase 500 Zaring Common Shares will
be granted automatically to each outside director who continues in such office
after such annual meeting.
Any option granted under the Outside Directors Option Plan is exercisable
after six months and one day from the date the option is granted. In no event
may any such option be exercisable after the expiration of ten years from the
date the option is granted. The price at which shares can be purchased under
any option will be equal to the fair market value of such shares at the time
the option is granted. Each option granted under the Outside Directors Option
Plan will be granted within ten years from the date the plan was adopted by
Zaring.
The total number of Zaring Common Shares that may be issued pursuant to
the Outside Directors Option Plan is 25,000 subject to adjustments to prevent
dilution or enlargement of rights of participants in certain circumstances.
2,000 options were awarded under the Outside Directors Option Plan during
Zaring's last fiscal year.
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
In 1996, Zaring sold residential lots to L.T. Zaring Co., a company owned
by Mr. Zaring's brother, for approximately $105,000. The sale was on terms
equivalent to those that would have applied to a purchase by an unrelated third
party. In 1996, Zaring sold residential homes to certain members of management,
for a total of approximately $375,000.
Zaring is a 50% owner of a joint venture with Bramblewood Development,
Inc., a company owned by Mr. Robert Sibcy, a director of Zaring. Zaring's
equity interest in that venture was $300,648 as of December 31, 1996. In
addition, in 1996, Zaring acquired residential lots and developable land from
Bramblewood Development, Inc., in the total amount of $1,844,918. The purchase
was at a value equal to or lower than a value established by independent
appraisal. This transaction was approved by independent members of the Zaring
Board and Mr. Sibcy abstained from voting thereon.
In 1996, Zaring purchased developed lots and developable raw land from an
entity controlled by Mr. Zaring and his family for approximately $1,833,503. The
purchase was at a value equal to or lower than a value established by
independent appraisal. This transaction was approved by independent members of
the Zaring Board and Mr. Zaring abstained from voting thereon.
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PROPOSAL 2: FORMATION OF A HOLDING COMPANY STRUCTURE
THE ZARING BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
FORMATION OF A HOLDING COMPANY STRUCTURE.
TERMS OF THE PROPOSED RESTRUCTURING
Zaring proposes to reorganize its operations pursuant to the Merger
Agreement, a copy of which is attached hereto as Exhibit A. Under the terms of
the Merger Agreement, MergeCo will merge with and into Zaring, and each
outstanding common share of MergeCo will be converted into one Zaring Common
Share, as the surviving corporation in the Merger, and each outstanding Zaring
Common Share will be converted into one Zaring National Common Share. Upon
consummation of the Merger, each owner of Zaring Common Shares immediately
prior to the Merger will own a corresponding number and percentage of the
outstanding Zaring National Common Shares, and Zaring National will own all of
the outstanding Zaring Common Shares.
The respective Boards of Directors of Zaring, Zaring National and MergeCo
have approved the Merger Agreement. If the holders of Zaring Common Shares
adopt the Merger Agreement, the Merger will become effective upon the filing of
a Certificate of Merger with the Secretary of State of the State of Ohio (the
"Effective Time"). Shareholder approval of Proposal 2 will constitute adoption
of the Merger Agreement.
Shareholder approval of Proposal 2 also will constitute approval of
certain amendments to the Employee Stock Plans (as hereinafter defined)
providing for the future use of Zaring National Common Shares in lieu of Zaring
Common Shares under the Employee Stock Plans. See "Employee Stock Plans,"
below.
After the Effective Time, the holders of Zaring National Common Shares
will have the right to vote on corporate actions concerning Zaring National in
accordance with OGCL, the Articles of Incorporation of Zaring National (the
"Zaring National Articles") and the Regulations of Zaring National (the "Zaring
National Regulations") then and thereafter in effect.
In connection with the restructuring, it is intended that Zaring will
transfer to Zaring National its ownership interests in its wholly-owned
subsidiaries, Zaring Holdings, Inc. and HomeMax, Inc. Zaring will retain its
ownership of Zaring Homes of Indiana, L.L.C. and Zaring Homes Kentucky, L.L.C.
(These proposed changes to the corporate structure of Zaring and the
transactions connected therewith are generally referred to in this Proxy
Statement and Prospectus as the "restructuring.")
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<PAGE> 28
PRESENT BUSINESSES
Zaring is incorporated under the laws of the State of Ohio and is engaged
principally in the business of designing, constructing, marketing and selling
single-family homes and the acquisition and development of land for sale as
residential lots in Cincinnati, Ohio/Northern Kentucky; Nashville and Knoxville,
Tennessee; Raleigh/Durham and Charlotte, North Carolina; Indianapolis, Indiana;
and Louisville, Kentucky. Zaring was founded in 1964 and has been profitable in
each year of operation.
Zaring National was incorporated under the laws of the State of Ohio on
February 5, 1997 and MergeCo was incorporated under the laws of the State of
Ohio on March 7, 1997 for the purpose of carrying out the restructuring. Zaring
National currently is a wholly-owned subsidiary of Zaring. At the Effective
Time, Zaring National will become the parent company of Zaring.
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<PAGE> 29
CORPORATE STRUCTURE
The following diagrams illustrate the present corporate structure of
Zaring and its subsidiaries and the intended organization after the
restructuring is completed.
CURRENT STRUCTURE
COMMON SHAREHOLDERS
:
:
Zaring Homes,Inc.
:
............................... : .................................
: : : :
Zaring Homes of Indiana, Zaring Holdings, Inc. HomeMax, Inc. Zaring Homes
L.L.C. Kentucky, L.L.C.
PROPOSED STRUCTURE
COMMON SHAREHOLDERS
:
:
Zaring National Corporation (Zaring National)
:
....................... : ................................
: : :
HomeMax, Inc. Zaring Homes, Inc. Zaring Holdings, Inc.
:
................:..................
: :
Zaring Homes of Indiana, L.L.C. Zaring Homes Kentucky, L.L.C.
REASONS FOR THE RESTRUCTURING
The Zaring Board of Directors considers the proposed restructuring to be
in the best interests of Zaring and its shareholders because the Zaring Board
believes that the restructuring will result in greater financial, managerial
and organizational flexibility and will place Zaring in a better position to
meet and take advantage of future challenges and opportunities.
The corporate separation and financing flexibility afforded by a holding
company structure will, in the Zaring Board's judgment, increase Zaring's
ability to respond to
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<PAGE> 30
opportunities in the competitive housing industry. For example, when new
opportunities arise, the new businesses can be operated through subsidiaries of
Zaring National rather than through subsidiaries of Zaring, thereby allowing
Zaring National to better allocate resources to each business depending upon
the specific needs and market demand for each business. Similarly, should
separation of components of Zaring's business from Zaring's remaining core
business become necessary or appropriate, a holding company structure could
accommodate such a separation, while allowing for common ownership of these
businesses under Zaring National.
Zaring National's ability to allocate business characteristics and risks
to particular subsidiaries will enhance its ability to develop new businesses
as appropriate. Additionally, the holding company structure will permit a more
effective and flexible use of financing techniques that are directly suited to
the particular requirements, characteristics and risks of each of Zaring's
other businesses. Accordingly, it is believed that the holding company
structure will support Zaring's ability to continue to meet its customers'
needs efficiently while permitting Zaring to respond to a changing business
environment.
Zaring National and Zaring have no plans or proposals to utilize the
holding company structure for any purpose other than to achieve flexibility as
described herein. For example, Zaring National and Zaring have no plans for
specific transactions or for additional types of corporate restructuring.
RISKS ASSOCIATED WITH THE RESTRUCTURING
After the Effective Time, Zaring National will operate as a holding
company and will only conduct business operations through its operating
subsidiaries. Zaring National's principal asset will be the outstanding stock
of its operating subsidiaries. Further, Zaring National will be dependent upon
the earnings and cash flows of such operating subsidiaries and dividends and
distributions from such operating subsidiaries to pay its expenses, to meet its
obligations and to pay any cash dividends or distributions on Zaring National
Common Shares that may be authorized from time to time by the Zaring National
Board of Directors. In addition, there can be no assurance that such operating
subsidiaries will generate sufficient earnings and cash flows to pay dividends
and distribute funds to Zaring National to enable Zaring National to meet its
obligation and pay its expenses, or that contractual restrictions that may
apply, including but not limited to negative convenants contained in the
instruments and agreements covering indebtedness of such operating
subsidiaries, will permit such distributions or dividends.
THE MERGER AGREEMENT
The Merger Agreement has been approved by the Zaring Board, by the Board of
Directors of Zaring National and by the Board of Directors of MergeCo, and has
been executed by authorized officers of each company. A copy of the Merger
Agreement is attached to this Proxy Statement and Prospectus as Exhibit A.
The Merger Agreement provides that at the Effective Time:
(1) each Zaring Common Share issued and outstanding immediately prior
to the Merger will be converted into one Zaring National Common Share;
(2) the outstanding common shares of MergeCo will be converted into
Zaring Common Shares, all of which will then be owned by Zaring National;
and
(3) the outstanding Zaring National Common Shares held by Zaring will
be canceled.
As a result of the Merger, Zaring will become a subsidiary of Zaring
National, and all of the Zaring National Common Shares outstanding immediately
after the Merger will be owned by the holders of the Zaring Common Shares
outstanding when the Merger takes effect, in the same number and proportion as
their present ownership of Zaring Common Shares.
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In order for the Merger Agreement to be adopted under OGCL and the Zaring
Articles, it must receive the affirmative vote of the holders of a majority of
the issued and outstanding Zaring Common Shares.
The Merger Agreement also provides that the outstanding options to acquire
Zaring Common Shares will be assumed by Zaring National, so that they will be
converted into outstanding options to acquire Zaring National Common Shares.
See "Employee Stock Plans," below.
TERMINATION OR AMENDMENT OF MERGER AGREEMENT
Notwithstanding shareholder approval of the restructuring, the Merger
Agreement may be terminated at any time prior to the Effective Time by
resolution approved by the Zaring Board of Directors or by the MergeCo Board of
Directors. If the Merger Agreement is so terminated, the Merger and other
transactions that comprise the restructuring will be abandoned.
By mutual consent of their respective Boards of Directors, Zaring, Zaring
National and MergeCo may amend the Merger Agreement at any time prior to the
Effective Time. However, following adoption of the Merger Agreement by the
shareholders, such amendment must be in accordance with Section 1701.78(G) of
OGCL.
DISSENTERS' RIGHTS
THE FOLLOWING SUMMARY OF SHAREHOLDERS' DISSENTERS' RIGHTS DOES NOT PURPORT TO
BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 1701.85 OF
OGCL, A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT B.
Any shareholder who is entitled to vote on the Merger Agreement and whose
shares are not voted in favor of the adoption of the Merger Agreement is
entitled, if the Merger is consummated, to be paid the fair cash value of such
shares held of record by him or her on the Record Date. To be entitled to such
payment, such shareholder must serve a written demand therefor upon Zaring at
11300 Cornell Park Drive, Suite 500, Cincinnati, Ohio 45242, on or before the
tenth day after the taking of the vote authorizing the Merger and must
otherwise comply with Section 1701.85 of OGCL. Neither Zaring, Zaring National
nor MergeCo will inform the shareholders of the expiration of such ten-day
period. A vote in favor of the adoption of the Merger Agreement constitutes a
waiver of dissenters' rights. Failure to vote does not constitute a waiver of
dissenters' rights. A form of proxy that is returned signed but unmarked as to
choice with respect to the Merger Agreement will, as indicated thereon, be
voted FOR the adoption of the Merger Agreement, and therefore also will result
in a loss of dissenters' rights. Any written demand must specify the
shareholder's name and address, the number of shares held by him or her on the
Record Date and the amount claimed as the fair cash value of his or her shares.
Voting against, or a direction on
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<PAGE> 32
the accompanying proxy to vote against, the adoption of the Merger Agreement
will not itself constitute a written demand, as required by Section 1701.85.
If Zaring sends to the dissenting shareholder, at the address specified in
his or her demand, a request for the certificates representing the shares as to
which the dissenting shareholder seeks relief, the dissenting shareholder must,
within fifteen days from the date of the sending of such request, deliver to
Zaring the certificates requested, in order that Zaring may endorse thereon a
legend to the effect that demand for the fair cash value of such shares has
been made. Such request by Zaring is not an admission that the dissenting
shareholder is entitled to relief under Section 1701.85. Zaring will promptly
return such endorsed certificates to the dissenting shareholder. Failure on the
part of the dissenting shareholder to deliver such certificates terminates his
or her rights as a dissenting shareholder, at the option of Zaring, exercised
by written notice sent to the dissenting shareholder within twenty days after
the lapse of the fifteen-day period above mentioned, unless a court for good
cause shown otherwise directs.
If shares represented by a certificate on which such a legend has been
endorsed are transferred, each new certificate issued therefor must bear a
similar legend, together with the name of the original dissenting holder of
such shares. A transferee of the shares so endorsed will acquire only such
rights in Zaring as the original dissenting holder of such shares had
immediately after the service of a demand for payment of the fair cash value of
such shares.
If Zaring and any dissenting shareholder cannot agree on the fair cash
value of his or her shares, either may, within three months after service of
the demand by the shareholder, file a complaint in the Court of Common Pleas of
Hamilton County, Ohio for a determination of the fair cash value of his or her
shares. If the court determines the shareholder is entitled to be paid the fair
cash value of his or her shares, it may appoint one or more appraisers to
recommend a decision on the amount of the fair cash value. The court thereupon
shall make a finding as to the fair cash value of the shares and shall render
judgment against Zaring for the payment of it, with interest at such rate and
from such date as the court considers equitable. Costs of the proceeding,
including reasonable compensation to the appraisers, shall be assessed or
apportioned as the court considers equitable. Fair cash value is the amount
which a willing seller, under no compulsion to sell, would be willing to
accept, and which a willing buyer, under no compulsion to sell, would be
willing to accept, and which a willing buyer, under no compulsion to purchase,
would be willing to pay, but in no event in excess of the sum specified in the
shareholder's demand. Fair cash value is determined as of the day prior to that
on which the vote was taken and excludes any appreciation or depreciation
resulting from the proposed Merger.
The right of any shareholder to be paid the fair cash value of his or her
shares will terminate if: (i) for any reason, the Merger does not become
effective; (ii) the dissenting shareholder fails: (a) to serve an appropriate
timely written demand upon Zaring; (b) to timely surrender his or her
certificates for an endorsement thereon of a legend to the effect that demand
for the fair cash value of such shares has been made, after an appropriate
request
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<PAGE> 33
by Zaring; or (c) to comply otherwise with Section 1701.85; (iii) the demand is
withdrawn by the dissenting shareholder, with the consent of the Zaring Board;
or (iv) Zaring and the dissenting shareholder shall not have come to an
agreement as to the fair cash value of the shares and neither shall have filed
a complaint in the Court of Common Pleas of Hamilton County as described above.
From the making of the shareholder's demand until the termination of
dissenters' rights arising from the demand or the purchase of the shares by
Zaring, all the rights accruing from such shares, including dividend and voting
rights, shall be suspended. If the right to receive fair cash value as a
dissenter is terminated other than by the purchase of the shares by Zaring, all
shareholder rights with respect to the shares shall be restored to the
shareholder; however, if the Merger has then been consummated, such rights
shall consist solely of the right to receive shares of Zaring National,
together with any distributions in respect thereof.
EXCHANGE OF SHARE CERTIFICATES
At the Effective Time, holders of certificates representing Zaring Common
Shares will cease to have any rights with respect to such Zaring Common Shares
and each such certificate will be deemed to evidence the right to receive an
equivalent number of Zaring National Common Shares. Zaring's share transfer
books will be closed at the close of business on the business day immediately
preceding the Effective Time, and the holders of record of Zaring Common Shares
as of the Effective Time will be the holders of record of Zaring National
Common Shares immediately after the Effective Time.
As soon as practicable after the Effective Time, Zaring will furnish a
letter of transmittal to shareholders for use in exchanging their share
certificates (each a "Letter of Transmittal"), which will contain instructions
with respect to the surrender of certificates representing Zaring Common Shares
and the distribution of certificates representing Zaring National Common
Shares. Zaring's shareholders should not send in certificates until they
receive the Letter of Transmittal.
Until Zaring's shareholders exchange their certificates representing Zaring
Common Shares by surrendering such certificates, together with a properly
completed Letter of Transmittal, to the agent designated by Zaring and Zaring
National (the "Exchange Agent") they will not receive certificates representing
their Zaring National Common Shares and all of their rights as shareholders of
Zaring National will be suspended with respect to such shares pursuant to
Section 1701.24(E) of OGCL. No interest will accrue or be payable with respect
to any dividends or distributions on Zaring National Common Shares, the right
to receive which will be suspended pending exchange of the certificates
representing Zaring Common Shares. In no event will Zaring or Zaring National be
liable to any holder of Zaring Common Shares for
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<PAGE> 34
dividends or distributions on Zaring National Common Shares delivered
in good faith to a public official pursuant to any applicable abandoned
property, escheat or similar law.
After the Effective Time, there shall be no transfers on Zaring's share
transfer books of the Zaring Common Shares which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates representing Zaring Common Shares are presented for transfer, no
transfer shall be effected on Zaring National's share transfer books with
respect to such shares and no certificate shall be issued representing the
Zaring National Common Shares exchangeable for such Zaring Common Shares unless
and until the certificate representing such Zaring Common Shares is delivered
to the Exchange Agent together with a properly completed Letter of Transmittal
(or such other documents as are satisfactory to Zaring National and the
Exchange Agent in their sole discretion). In addition, it will be a condition
to the issuance of any certificate for any shares of Zaring National Shares in
a name other than the name in which the surrendered certificate representing
Zaring Common Shares is registered that the person requesting the issuance of
such certificate either pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of a certificate representing Zaring
National Common Shares in a name other than the registered holder of the
certificate surrendered, or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
TREATMENT OF ZARING INDEBTEDNESS
The current indebtedness of Zaring will continue to be indebtedness of
Zaring after the Restructuring. It will be guaranteed by Zaring National after
the Restructuring.
DESCRIPTION OF ZARING CAPITAL SHARES
Zaring has an authorized capitalization consisting of: (i) 18,000,000
Zaring Common Shares, without par value of which 4,781,080 shares were issued
and outstanding as of the Record Date, and (ii) 2,000,000 Preferred Shares, of
which none are issued or outstanding.
Holders of Zaring Common Shares are entitled to one vote per share for
each share held of record on each matter submitted to a vote of shareholders,
including the election of directors. Subject to preferences that may be
applicable to any Preferred Shares outstanding at the time and any restrictions
in agreements to which Zaring is a party, the holders of Zaring Common Shares
are entitled to receive ratably such dividends as may be declared by the Board
of Directors out of funds legally available therefore and to receive pro rata
the net assets of Zaring upon dissolution. The Zaring Common Shares have no
cumulative voting or preemptive rights. Accordingly, shareholders have no right
to subscribe to future offerings of Zaring Common Shares. In addition, holders
of a majority of the votes present at a meeting of shareholders can elect all
directors. Notwithstanding any provision of OGCL now or hereafter in force
requiring for any purpose the vote, consent, waiver or release of the holders
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of shares entitling them to exercise two-thirds, or any other proportion, of
the voting power of Zaring or of any class or classes of shares thereof, such
action, unless otherwise expressly required by statute or by the Zaring
Articles, may be taken by the vote, consent, waiver or release of the holders
of shares entitling them to exercise a majority of the voting power of the
corporation or of such class or classes.
Zaring's Articles provide for the issuance of up to 2,000,000 Preferred
Shares, 1,000,000 voting Preferred Shares (the "Voting Preferred Shares") and
1,000,000 non-voting Preferred Shares (the "Non-Voting Preferred Shares"). All
Preferred Shares of all series shall rank equally and be identical in all
respects, except that only the holders of Voting Preferred Shares shall be
entitled to one vote per share for each share held of record on each matter
submitted to a vote of shareholders, including the election of directors.
Notwithstanding, the Zaring Board has the authority to fix or change, to the
full extent now or hereafter permitted by the laws of Ohio, the designation and
authorized number of shares of each series and, subject to the Zaring Articles,
the relative rights, preferences and limitations of each series and the
variations of such rights, preferences and limitations as between series.
All Preferred Shares of any particular series shall rank equally and be
identical in all respects except that shares of any one series issued at
different times may differ as to the date from which dividends shall be
cumulative.
DESCRIPTION OF ZARING NATIONAL CAPITAL SHARES
Zaring National has an authorized capitalization consisting of: (i)
18,000,000 Zaring National Common Shares, of which 1 share was issued and
outstanding as of the Record Date and (ii) 2,000,000 Preferred Shares, of which
none are issued or outstanding.
The terms of the Zaring National Common Shares are identical to the terms
of the Zaring Common Shares.
COMPARISON OF ZARING CAPITAL SHARES
AND ZARING NATIONAL CAPITAL SHARES
As Ohio corporations, both Zaring and Zaring National are governed by
OGCL. Holders of Zaring Common Shares, whose rights as shareholders are
currently governed by OGCL, the Zaring Articles and the Zaring Amended
Regulations, will become as a result of the Merger holders of Zaring National
Common Shares, whose rights as shareholders will be governed by OGCL, the
Zaring National Articles and the Zaring National Regulations. The Zaring
National Articles and Regulations will afford the holders of Zaring National
Common Shares the identical rights as those enjoyed by the current
holders of Zaring Common Shares.
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EMPLOYEE STOCK PLANS
If the Merger is completed, the Zaring Homes Inc. Retirement Benefit Plan,
the Zaring Homes, Inc. Employee Stock Purchase Plan, the Zaring Homes Key
Employees Stock Option Plan, the Zaring Outside Directors Stock Option Plan and
the Zaring Homes Executive Deferred Compensation Plan will be amended, as and
when appropriate, to provide for the issuance of Zaring National Common Shares
rather than Zaring Common Shares. Such plans, as well as other employee benefit
plans of Zaring (collectively, the "Employee Stock Plans"), also will be
amended, as and when appropriate, to include eligible employees of Zaring
National and the other subsidiaries of Zaring National, in addition to the
eligible employees of Zaring, and to make any other changes necessary or
appropriate as a result of the formation of a holding company structure for
Zaring and the related restructuring.
By adopting the Merger Agreement and thereby approving the proposed
formation of a holding company structure for Zaring, the shareholders of Zaring
will be deemed to have approved the actions to be taken in connection with the
Employee Stock Plans, including any amendments to the Employee Stock Plans
necessary to accomplish those actions.
STOCK EXCHANGE LISTINGS
Zaring Common Shares are currently traded on the Nasdaq National Market
System under the stock symbol "ZHOM". Application has been made to list Zaring
National Common Shares on the Nasdaq National Market System and, after the
Effective Time, such shares also are expected to trade under the stock symbol
"ZHOM." In the absence of such listing on the Nasdaq National Market System,
the Zaring Board of Directors may elect not to consummate the transactions
contemplated by the Merger Agreement (including the Merger). At the time of the
listing of Zaring National Common Shares, the Zaring Common Shares will be
withdrawn from listing.
TRANSFER AGENT AND REGISTRAR
The Fifth Third Bank currently acts as the transfer agent for Zaring
Common Shares. After the Merger, it is anticipated that The Fifth Third Bank
will act as the transfer agent for Zaring National Common Shares. It is
expected that the registrar of Zaring Common Shares will continue to serve in
such capacity for Zaring National Common Shares.
MARKET VALUES OF ZARING COMMON SHARES
Zaring Common Shares are listed on the Nasdaq National Market System. The
high and low sale prices of the Zaring Common Shares on February 4, 1997 (the
business day immediately preceding public announcement of the terms of the
proposed Merger) were $10.25 and $10.00, respectively. For additional
information, see section captioned "Stock Exchange Listings".
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There is no public market for Zaring National Common Shares, but one is
expected to develop.
DIVIDEND POLICY
Zaring has never paid dividends on the Zaring Common Shares. After the
Effective Time, future dividend payments will depend primarily on the earnings
of Zaring National's subsidiaries, principally Zaring, the dividend
restrictions of Zaring National and its subsidiaries, including Zaring; other
financial considerations; and other factors affecting Zaring. Payments of
dividends and other distributions will be within the discretion of the Zaring
National Board.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Zaring and Zaring National have been advised by their counsel, Frost &
Jacobs LLP, that:
(1) No gain or loss will be recognized by the holders of Zaring Common
Shares on the receipt of Zaring National Common Shares solely in exchange
for Zaring Common Shares;
(2) The basis of Zaring National Common Shares received by the holders of
Zaring Common Shares will be the same as the basis of the Zaring Common
Shares exchanged for such Zaring National Common Shares;
(3) As to each holder of Zaring Common Shares who held his or her shares as
a capital asset, the holding period of Zaring National Common Shares will
include the holding period of the Zaring Common Shares exchanged for such
Zaring National Common Shares; and
(4) No gain or loss will be recognized by Zaring National upon the issuance
of Zaring National Common Shares in exchange for Zaring Common Shares.
Holders of Zaring Common Shares who contemplate dissenting from the Merger
should consult with their tax advisors concerning the tax consequences of that
action.
The United States federal income tax discussion set forth above is based
upon current law and is intended for general information only. No rulings have
been requested from the Internal Revenue Service. The foregoing is not intended
to be a comprehensive discussion of all possible federal income tax
consequences of the Merger. Furthermore, the Registration Statement of which
this Proxy Statement and Prospectus is a part does not provide information
regarding the tax consequences of the Merger under the tax laws of any state or
of any local or foreign jurisdiction. Holders of Zaring Common Shares are urged
to consult their own tax advisors with respect to specific tax consequences of
the Merger.
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DIRECTORS AND EXECUTIVE OFFICERS
At the Effective Time, the Board of Directors of Zaring National will
consist of the same members as the Board of Directors of Zaring.
Following the Merger it is expected that the following persons, each of
whom is currently an executive officer of Zaring, will hold, in addition, the
offices of Zaring National indicated below.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Allen G. Zaring, III President
Ronald G. Gratz Secretary and Treasurer
</TABLE>
Zaring National and Zaring each may have directors or executive officers
who are not directors or executive officers of the other.
SHAREHOLDER VOTE
Only holders of record of Zaring Common Shares on the Record Date, will be
entitled to receive notice of and to vote at the Meeting with respect to
adoption of the Merger Agreement to effect the restructuring.
Shareholder approval of the restructuring will require the affirmative
vote of the holders of a majority of the issued and outstanding Zaring Common
Shares.
Unless they are marked to the contrary, properly executed proxies received
by Zaring prior to or at the Meeting will be voted in favor of the Merger
Agreement and the proposed formation of a holding company structure for Zaring.
Proxies that are marked "Abstain," as well as broker proxies which are not
voted with respect to the Merger Agreement, will have the same effect as a vote
against this proposal.
Zaring's directors and executive officers and their affiliates own 66.69%
of the voting securities of Zaring. The directors and executive officers have
indicated that they will vote in favor of Proposal 2: Formation of a Holding
Company Structure, assuring that such proposal will be approved regardless of
voting by the other shareholders. After the restructuring, they will continue to
own 66.69% of the voting securities of Zaring National.
EFFECTIVE DATE OF THE MERGER
The Merger Agreement provides that the Effective Time will occur when the
Certificate of Merger is filed with the Secretary of State of Ohio as provided
in Section 1701.81 of OGCL. Management anticipates that the Effective Time will
occur as soon as practicable after shareholder approval is obtained.
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LEGAL OPINION
Frost & Jacobs LLP, as counsel for Zaring National and Zaring, has rendered
an opinion to the effect that Zaring National Common Shares offered in this
Proxy Statement and Prospectus will be validly issued, fully paid and
nonassessable.
EXPERTS
The consolidated financial statements included in Zaring's current report
on Form 8-K dated March 14, 1997 and Zaring's current annual report on Form
10-K, dated March 28, 1997, and incorporated by reference in this Proxy
Statement and Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said report.
PROPOSAL 3: APPROVAL OF THE ZARING HOMES, INC. 1997 STOCK OPTION PLAN
THE ZARING BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE 1997 STOCK OPTION PLAN.
The Zaring Board has determined that it is in the best interests of
Zaring to provide its employees and the employees of its subsidiaries with the
opportunity to acquire Zaring Common Shares through written offers of Zaring to
sell such Zaring Common Shares. Accordingly, the Zaring Board has proposed for
shareholder approval the Zaring Homes, Inc. 1997 Stock Option Plan (the "Stock
Option Plan"). The full text of the proposed Stock Option Plan is set forth as
Exhibit C to this Proxy Statement and Prospectus. The following discussion
describes the operation of the Stock Option Plan but it is qualified in its
entirety by reference to the text of the Stock Option Plan.
PURPOSE
The purpose of the Stock Option Plan is to aid in the long-term
retention of certain full-time employees of Zaring and its subsidiaries, and
thereby to advance the long-range interests and performances of Zaring and its
subsidiaries, by offering such employees the opportunity to acquire Zaring
Common Shares through written offers of Zaring to sell such Common Shares. The
Stock Option Plan is effective as of May 8, 1997.
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<PAGE> 40
NUMBER OF SHARES RESERVED FOR THE STOCK OPTION PLAN
The aggregate number of Zaring Common Shares which may be delivered
upon the exercise of options granted pursuant to the Stock Option Plan shall be
228,000 Zaring Common Shares. To the extent any option granted under the Stock
Option Plan becomes void or cannot be exercised, however, the Zaring Common
Shares subject to the part of such option which has become void or
nonexercisable will again be eligible for other options to be granted under the
Stock Option Plan. The Stock Option Plan has no expiration date, but, as a
practical matter, its operation is limited to the number of Zaring Common Shares
that are reserved for its purposes.
ELIGIBILITY
(a) Grant of Options: Subject to the approval of the Compensation
Committee of the Board of Directors of Zaring, on each date on which the regular
annual meeting of the Zaring Board for 1997, 1998, 1999, or 2000 is held (each
such date herein called an "Option Date"), an option shall be granted under the
Stock Option Plan to each person who is then an eligible employee (as determined
under paragraph (b) below). Each option granted to an eligible employee shall
offer to the eligible employee the opportunity to purchase a number of Zaring
Common Shares equal to the product (rounded down, if such product is not
otherwise a whole number, to the next lower whole number) produced by
multiplying (i) the number of Zaring Common Shares which are available for
options on the subject Option Date (as described under paragraph (c) below) by
(ii) the eligible employee's compensation fraction applicable to such Option
Date (as described under paragraph (d) below). No other options will be granted
under the Stock Option Plan.
(b) Eligible Employees: For purposes of the Stock Option Plan, each
person who is employed and classified by Zaring or a subsidiary of Zaring as a
full-time employee on any Option Date shall be considered an eligible employee
(to whom an option shall be granted under the Stock Option Plan) as of any
Option Date; except that, notwithstanding the foregoing, no person who then is
employed as an employee by HomeMax, Inc. ("HomeMax"), Blue Chip Mortgage Company
("Blue Chip"), and any other corporation (other than HomeMax or Blue Chip)
which, now or at any later time, is part of an unbroken chain of corporations
(i) that begins with HomeMax or Blue Chip and (ii) in which each corporation in
such chain, other than the last corporation in such chain, owns at least 50% of
the total combined voting power of all classes of stock in one of the other
corporations in such chain, shall be considered an eligible employee as of any
Option Date.
(c) Number of Common Shares Available for Options on Each Option
Date: The number of Zaring Common Shares which are available for options
granted on any Option Date shall be equal to the number produced by first
multiplying A by B and then subtracting C from such product ((A x B) - C), where
"A" refers to 57,000 Zaring Common Shares, "B" refers to the number of Option
Dates which have occurred up to and including the subject Option Date, and "C"
refers to the number of Zaring Common Shares which are covered by the portions
of the options which have been granted under the Stock Option Plan on all Option
Dates that have occurred prior to the subject Option Date and which have not
become void by the subject Option Date.
(d) Eligible Employees' Compensation Fractions: An eligible
employee's compensation fraction applicable to any Option Date (which is
used to determine the portion of the Zaring Common Shares available for options
granted on such Option Date which will be subject to the option to be granted on
such date to such eligible employee) shall be equal to a fraction having (i) a
numerator equal to such eligible employee's annual rate of base salary or wages
from Zaring and its subsidiaries which is in effect on such Option Date and (ii)
a denominator equal to the aggregate annual rates of base salary and wages from
Zaring and its subsidiaries which are in effect on such Option Date for all
persons who are eligible employees as of such Option Date. Incentive
compensation, reimbursements or other expense allowances, fringe benefits,
moving expenses, welfare benefits, and any benefits provided under the Stock
Option Plan are not, however, considered part of an eligible employee's annual
rate of base salary or wages.
35
<PAGE> 41
The number of Zaring Common Shares underlying options to be granted under
the Stock Option Plan for fiscal year 1997 and the dollar value of such shares
is not determinable at this time since the date of grant will be May 8, 1997.
However, if the Stock Option Plan had been in effect in 1996, the following
benefits would have been granted to Allen G. Zaring, III, George E. Casey, Jr.,
Richard J. Bell, Daniel W. Jones, Ronald G. Gratz, J. Stephen Jellicorse, all
current executive officers as a group, all current directors who are not
executive officers as a group and all employees, including all current officers
who are not executive officers, as a group under the Stock Option Plan:
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1997 STOCK OPTION PLAN
NUMBER OF SHARES
NAME AND POSITION DOLLAR VALUE (A) UNDERLYING OPTIONS
<S> <C> <C>
Allen G. Zaring, III $ 0 0
Chairman
George E. Casey, Jr. 11,205 1,748
President & CEO
Richard J. Bell 6,442 1,005
Regional President
Midsouth Region
Daniel W. Jones 6,442 1,005
Regional President
Midwest Region
Ronald G. Gratz 6,724 1,049
Vice President/CFO
J. Stephen Jellicorse 6,442 1,005
President
Zaring Holdings, Inc.
Executive Group 60,466 9,433
Non-Executive Director Group 0 0
Non-Executive Officer 304,347 47,480
Employee Group
- -----------------
</TABLE>
(a) As described below under "Terms and Exercise of Options", the price at
which any Zaring Common Share subject to the option may be purchased
(the "Option Price") will be the fair market value of a Zaring Common
Share on the Option Date on which such option is granted. Accordingly,
on April 18, 1996 the date on which the regular annual meeting of the
Zaring Board was held in 1996, the fair market value of a Zaring Common
Share was $12.50 and accordingly, the Option Price was $12.50. The
dollar value of the shares underlying the options has been valued
utilizing the Black-Scholes pricing method, assuming an Option Price of
$12.50, a life of seven years, a risk free interest rate of 6.53% and
volatility of 35.94%, resulting in a value of $6.41 per share
underlying each option.
(b) In 1996, Mr. Jellicorse became the President of HomeMax, Inc.
Employees of HomeMax, Inc. are not eligible employees under the Stock
Option Plan and, accordingly, Mr. Jellicorse will not be granted on
option to purchase Zaring Common Shares under the Stock Option Plan
while he is employed by HomeMax, Inc. However, Mr. Jellicorse was an
employee of Zaring on April 18, 1996 and, accordingly, would have
received an option to purchase 1,005 Zaring Common Shares if the Stock
Option Plan had been in effect in 1996.
36
<PAGE> 42
TERMS AND EXERCISE OF OPTIONS
Each option granted under the Stock Option Plan to an eligible employee
gives the eligible employee the right to purchase the number of Zaring Common
Shares which are subject to the option under the conditions described below.
The price at which any Zaring Common Share subject to the option may be
purchased (the "Option Price") will be the fair market value of a Zaring Common
Share on the Option Date on which such option is granted.
The option may not be transferred by the eligible employee to whom it is
granted except by will or the laws concerning inheritances, and during the
eligible employee's lifetime can be exercised only by him or her.
Further, the option will, in general, be able to be exercised as to the
total number of Zaring Common Shares granted under the option at any time on or
after (but not before) the first annual anniversary of the Option Date on which
such option was granted.
In addition, the option will become void as to all of the Zaring Common
Shares which are subject to the option and have not been earlier purchased under
the option (including both Zaring Common Shares with respect to which the option
has not earlier become exercisable under the provisions of the option and Zaring
Common Shares with respect to which the option has become exercisable but has
not earlier been exercised) no later than ten years from the date the option is
granted or the date determined in accordance with the following provisions:
(i) If the eligible employee to whom the option is granted dies while
still employed by Zaring or an affiliate of Zaring, the date which is one year
after the date of the eligible employee's death;
(ii) If the eligible employee terminates his or her position as an
employee with Zaring and its affiliates by reason of having become disabled, the
date which is one year after the date of the eligible employee's termination of
employment;
(iii) If the eligible employee terminates his or her position as an
employee with Zaring and its affiliates by reasons of his or her voluntary
resignation or by reason of his or her termination by Zaring or an affiliate of
Zaring for cause, the date of the eligible employee's termination of employment;
and
(iv) If the eligible employee terminates his or her position as an
employee with Zaring and its affiliates for any reason other than death,
disability, voluntary resignation, or termination for cause, the date which is
60 days after the date of the eligible employee's termination of employment.
37
<PAGE> 43
Any option to be granted under the Stock Option Plan will also be subject
to any additional terms as are specified by the Committee in the applicable
written option agreement.
The payment for any Zaring Common Shares subject to an option granted to a
eligible employee under the Stock Option Plan which are being purchased by the
eligible employee (or, if applicable, another person to whom the option is
transferred after the eligible employee's death) must be made in cash.
MISCELLANEOUS RULES
In general, the fair market value of a Zaring Common Share as of any date
will, for purposes of the Stock Option Plan, be deemed to be the closing price
on such date of a Zaring Common Share on the largest national securities
exchange on which the Zaring Common Shares are then listed (which currently is
the NASDAQ National Market). On March 14, 1997, the last sale price of Zaring's
Common Shares as reported by NASDAQ was $10 per share.
Further, the number and class of Zaring Common Shares which are subject to
options granted under the Stock Option Plan and the Option Prices of such
options will be adjusted appropriately in the event there are changes in the
outstanding Zaring Common Shares by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, liquidations or other similar
changes in the capitalization of Zaring. In any such case, the aggregate number
and classes of shares available under the Stock Option Plan and the number of
shares as to which options may be granted will also be appropriately adjusted.
In addition, if at any time the Committee determines, in its discretion,
that the listing of Zaring Common Shares purchased under the Stock Option Plan
on any securities exchange, the registration or qualification of such shares
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the purchase, issue or transfer of such Zaring Common Shares purchased
under the Stock Option Plan, then such Zaring Common Shares will not be
purchased, issued or transferred unless and until one of the following
conditions is satisfied: (i) such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee, or (ii) the applicable eligible employee or other
person who exercises the option agrees that the Zaring Common Shares subject to
the option may be issued or transferred subject to any restrictions that will
make it unnecessary to effect or obtain such listing, registration,
qualification, consent or approval.
TAX ASPECTS
In general, the grant of an option to a eligible employee under the Stock
Option Plan does not result in federal income tax to the eligible employee, or a
deduction to Zaring or any subsidiary of Zaring, at the time of the grant of the
option.
38
<PAGE> 44
However, upon the exercise of an option granted to a eligible employee
under the Stock Option Plan, the excess of the fair market value on the date of
exercise of the Zaring Common Shares being purchased under the option over the
Option Price of such shares will generally be considered compensation income to
the eligible employee when the option is exercised.
Also, in general, Zaring or a subsidiary of Zaring will be entitled to
claim a deduction for its taxable year which includes the end of the eligible
employee's taxable year in which income is recognized by the eligible employee
by reason of the exercise of the option, and the amount of such deduction will
be equal to the taxable income recognized by the eligible employee.
In the event of a subsequent sale or exchange of the shares acquired upon
exercise of the option, any increase or decrease in the value of such shares
after the date of exercise would generally qualify as long-term capital gain or
loss if the shares have been held by the person who exercised the option for
more than one year after such date or short-term capital gain or loss if the
shares have been held for one year or less after such date.
Certain special rules may apply when the eligible employee to whom the
option is granted is subject to Section 16(b) of the Securities Exchange Act of
1934 (the "1934 Act"), which section generally provides that sales and purchases
of Zaring Common Shares by certain directors, officers or other eligible
employees at a profit can subject the person to suit in order to prevent him or
her from obtaining short-swing trading profits. The effect of these special
rules at this time is somewhat unclear, but they potentially could cause some
slight delay in the eligible employee recognizing compensation income, and in
Zaring taking a deduction, by reason of the exercise by the eligible employee of
an option granted under the Stock Option Plan.
Any eligible employee subject to Section 16(b) of the 1934 Act will need to
check carefully with his or her tax advisor with respect to the effect of such
section on the time at which income attributable to the exercise of an option
granted under the Stock Option Plan will be included in his or her income.
The above discussion is a general overview of the federal income tax
consequences of the Stock Option Plan and is not intended to cover all tax
aspects of such plan. It is based on current federal income tax laws and
regulations and is subject to change if such laws and regulations are amended or
modified.
AMENDMENT
Zaring may amend or terminate the Stock Option Plan at any time by action
taken by the Zaring Board. However, no such action can adversely affect the
rights of any eligible employee under any option granted under the Stock Option
Plan prior to the amendment or termination.
39
<PAGE> 45
In addition, no amendment can change the class of employees or persons
eligible to receive options under the Stock Option Plan, change the aggregate
number of shares to be subject to options granted under the Stock Option Plan or
materially increase the benefits to eligible persons under the plan without, in
any of such cases, approval by the majority of the outstanding Zaring Common
Shares present or represented and entitled to vote at a meeting of shareholders
of Zaring.
ADMINISTRATION OF THE STOCK OPTION PLAN
The Stock Option Plan is administered by the Compensation Committee of the
Board of Directors of Zaring, which is the Committee referred to in this
discussion.
The Committee will prepare a form of a written option agreement, which form
shall comply with all provisions set forth in the Stock Option Plan, to use in
issuing options granted under the plan.
The grant of options under the Stock Option Plan will be made by the
execution of written option agreements in the form approved by the Committee and
signed by a member of the Committee (or any person designated as its agent for
this purpose).
The Committee has, subject to the applicable provisions of the Stock Option
Plan, full authority and discretion to interpret the Stock Option Plan, and its
decision on all matters relating to the Stock Option Plan will be conclusive on
all interested persons.
ZARING NATIONAL'S ASSUMPTION OF THE STOCK OPTION PLAN
Following the Effective Time, (i) Zaring National shall take all required
corporate action to assume the obligations of Zaring under the Stock Option
Plan, (ii) all shares of Zaring which are reserved for use under the Stock
Option Plan shall become common shares of Zaring National and (iii) each
reference to Zaring in the Stock Option Plan shall be deemed to be a reference
to Zaring National and not Zaring.
40
<PAGE> 46
PROPOSAL 4: INDEPENDENT AUDITORS
The Zaring Board of Directors has appointed Arthur Andersen LLP as
independent auditors of Zaring for fiscal year 1997. Arthur Andersen LLP has
served Zaring in that capacity since 1983.
While there is no legal requirement that the selection of auditors be
submitted to a vote of the shareholders, the Zaring Board of Directors believes
that the selection of auditors is of sufficient importance to justify
shareholder ratification. In the event that the shareholders do not confirm the
selection of Arthur Andersen LLP, the Zaring Board of Directors will reconsider
its selection. It is anticipated that a representative of Arthur Andersen LLP
will attend the Meeting, will have an opportunity to make a statement if he or
she desires to do so and will be available to respond to appropriate questions
that may be asked by shareholders.
Confirmation of the appointment of Arthur Andersen LLP will require the
affirmative vote of the holders of a majority of the Zaring Common Shares
present in person or represented by proxy and entitled to vote at the Meeting.
THE ZARING BOARD OF DIRECTORS RECOMMENDS THAT THE SELECTION OF ARTHUR ANDERSEN
LLP BE CONFIRMED.
SHAREHOLDER PROPOSALS
Proposals of security holders intended by such holders to be presented at
the next annual meeting of shareholders of Zaring must be received by Zaring no
later than December 8, 1997 for inclusion in Zaring's proxy statement and proxy
relating to that meeting. Proposals should be sent to Ronald G. Gratz,
Assistant Secretary, Zaring Homes, Inc., 11300 Cornell Park Drive, Suite 500,
Cincinnati, Ohio 45242.
OTHER BUSINESS
The Zaring Board of Directors knows of no other matter to be presented, or
to be acted upon, at the Meeting. If any other matter comes before the Meeting
or any adjournment thereof, the members of the proxy committee named in the
enclosed proxy will vote upon such matter in accordance with their best
judgment.
This Proxy Statement and Prospectus and the above Notice are sent by order
of the Zaring Board of Directors.
Ronald G. Gratz
Assistant Secretary
41
<PAGE> 47
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("this Agreement") is made and entered into
this ____ day of _________, 1997 by and among ZARING HOMES, INC., an Ohio
corporation ("Zaring"), ZARING MERGER SUBSIDIARY, INC., an Ohio corporation
("Subsidiary"), and ZARING NATIONAL CORPORATION, an Ohio corporation
("National"), which is a third party to this Agreement.
A. Zaring is authorized to have outstanding: (i) 18,000,000 common shares
without par value ("Zaring Common Shares") 4,781,110 of which shares were issued
and outstanding as of December 31, 1996; and (ii) 2,000,000 preferred shares
without par value ("Zaring Preferred Shares"), none of which are issued or
outstanding;
B. Subsidiary is authorized to have issued and outstanding 850 common shares
without par value ("Subsidiary Common Shares"), one of which Subsidiary
Common Share is issued and outstanding and is held by National;
C. National is authorized to have issued and outstanding 18,000,000 common
shares without par value ("National Common Shares"), one of which National
Common Share is issued and outstanding and held by Zaring; and 2,000,000
preferred shares without par value ("National Preferred Shares"), none of which
are issued or outstanding; and
D. The Boards of Directors of Zaring, National and Subsidiary deem it advisable
to merge Subsidiary with and into Zaring (the "Merger") in accordance with Ohio
General Corporation Law and this Agreement, whereby Zaring Common Shares will be
converted into National Common Shares.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, and in accordance with the laws of the State of Ohio, the
parties hereto agree that Subsidiary shall be merged with and into Zaring,
which shall be the corporation surviving the Merger, and that the terms and
conditions of the Merger, the mode of carrying it into effect and the manner of
converting shares shall be as follows:
ARTICLE 1
THE MERGER
1.1 Subject to and in accordance with the provisions of this Agreement, a
Certificate of Merger will be filed with the Ohio Secretary of State, as
provided in Section 1701.81 of the Ohio Revised Code, upon which filing the
Merger will become effective (the "Effective Time"). At the Effective Time, the
separate existence of Subsidiary will cease and Subsidiary will be
A-1
<PAGE> 48
merged with and into Zaring (Subsidiary and Zaring being sometimes referred to
herein as the "Constituent Corporations" and Zaring, as the surviving
corporation, being sometimes referred to herein as the "Surviving
Corporation").
1.2 Prior to and after the Effective Time, National, Zaring and Subsidiary,
respectively, will take all such actions as may be necessary or appropriate in
order to effectuate the Merger. In this connection, National will issue
National Common Shares into which outstanding Zaring Common Shares will be
converted on a share-for-share basis to the extent provided in Article 2 of
this Agreement. In the event that at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full title to all
properties, assets, privileges, rights, immunities and franchises of either of
the Constituent Corporations, the officers and directors of each of the
Constituent Corporations as of the Effective Time will take all such further
action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
At the Effective Time:
2.1 The one Subsidiary Common Share issued and outstanding immediately
prior to the Merger, and all rights in respect thereof, will be converted into
1,000 fully-paid and nonassessable shares of the Surviving Corporation.
2.2 The one National Common Share issued and outstanding immediately prior
to the Merger and held by Zaring will be retired and restored to the status of
an authorized but unissued National Common Share, and all rights in respect
thereof will cease, and no shares of any party hereto will be issued in
exchange thereof.
2.3 Each Zaring Common Share issued and outstanding immediately prior to the
Merger will thereupon be changed and converted into one National Common Share,
which will thereupon be issued and fully-paid and nonassessable; provided,
however, that such conversion will not affect shares of holders, if any, who
perfect their rights as dissenting shareholders under Section 1701.85 of the
Ohio Revised Code.
ARTICLE 3
STOCK OPTIONS
At the Effective Time, each outstanding option to purchase Zaring Common Shares
will be assumed by National. Each such option will be exercisable in accordance
with its existing
A-2
<PAGE> 49
terms for the same number of National Common Shares as the number of Zaring
Common Shares subject to such option prior to the Merger.
ARTICLE 4
ARTICLES OF INCORPORATION AND REGULATIONS
4.1 From and after the Effective Time, and until thereafter amended, the
Amended Articles of Incorporation of Zaring as in effect immediately prior to
the Merger will be and continue to be the Amended Articles of Incorporation of
the Surviving Corporation.
4.2 From and after the Effective Time, and until thereafter amended, the
Amended Regulations of Zaring as in effect immediately prior to the Merger will
be and continue to be the Amended Regulations of the Surviving Corporation.
ARTICLE 5
DIRECTORS AND OFFICERS
The persons who are directors and officers of Zaring immediately prior to the
Merger will continue as directors and officers, respectively, of the Surviving
Corporation and will continue to hold office as provided in the Regulations of
the Surviving Corporation. If, at or following the Effective Time, a vacancy
shall exist or occur in the Board of Directors or in any office of the Surviving
Corporation, such vacancy may be filled in the manner provided by the
Regulations of the Surviving Corporation.
ARTICLE 6
STOCK CERTIFICATES
6.1 At the Effective Time, the holders of certificates representing Zaring
Common Shares outstanding immediately prior to the Effective Time will cease to
have any rights with respect to shares of the Surviving Corporation and each
such certificate will be deemed to evidence the right to receive an equivalent
number of National Common Shares.
6.2 Following the Effective Time, each holder of an outstanding certificate or
certificates up to that time representing Zaring Common Shares will be required
to surrender the same to National for cancellation and each such holder will be
entitled to receive a certificate or certificates representing the same number
of National Common Shares as Zaring Common Shares previously represented by the
share certificate(s) surrendered.
A-3
<PAGE> 50
6.3 Until a holder of an outstanding Zaring Common Share certificate or
certificates surrenders the same to National, such holder shall not be entitled
to receive certificates representing such holder's National Common Shares, and
any and all rights of such holder, as a shareholder of National, shall be
suspended with respect to the shares represented thereby. This provision shall
constitute an "order" for purposes of Section 1701.24(E) of the Ohio Revised
Code and such order shall become effective at the Effective Time. No interest
will accrue or be payable with respect to any dividends or distributions
retained on unissued certificates representing National Common Shares, the
right to receive which has been suspended. In no event will Zaring or National
be liable to any holder of Zaring Common Shares for dividends or distributions
on shares of National Common Shares delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat or similar law.
6.4 The share transfer books for Zaring Common Shares will be deemed to be
closed at the close of business on the business day immediately preceeding the
Effective Time and no transfer of Zaring Common Shares which were issued and
outstanding prior to the Effective Time will thereafter be made on such books.
ARTICLE 7
CONDITIONS OF THE MERGER
Completion of the Merger is subject to the satisfaction of the following
conditions prior to the Effective Time.
7.1 At separate meetings of the shareholders of each of the Constituent
Corporations and National, or in the case of National and Subsidiary by written
consent thereof, this Agreement will have been adopted and the Merger approved
by the affirmative vote of the holders of a majority of the issued and
outstanding common shares of each of the Constituent Corporations and of
National.
7.2 A Registration Statement on Form S-4 providing for the registration under
the provisions of the Securities Act of 1933 of National Common Shares to be
issued upon conversion of Zaring Common Shares in the Merger will have been
filed with and declared effective by the Securities and Exchange Commission and
no stop order proceedings will be pending or threatened with respect thereto.
7.3 The National Common Shares which will be converted from Zaring Common
Shares in the Merger will have been approved for listing on the Nasdaq National
Market System.
7.4 The number of Zaring Common Shares whose holders have exercised their
dissenters' rights will not be so large that, in the judgment of the boards
of directors of the Constituent Corporations and National, the consummation of
the Merger is impractical or inadvisable.
7.5 There will have been obtained an opinion or opinions of counsel
satisfactory to the board of directors of Zaring with respect to the tax
consequences of the Merger and other transactions incident hereto.
A-4
<PAGE> 51
ARTICLE 8
AMENDMENT AND TERMINATION
8.1 The parties to this Agreement, by mutual consent of their respective boards
of directors, may amend, modify or supplement this Agreement in such manner as
may be agreed upon by them in writing at any time before adoption of this
Agreement by the shareholders of the Constituent Corporations or, after such
adoption of this Agreement, only in accordance with Section 1701.78(G) of the
Ohio Revised Code.
8.2 This Agreement may be terminated and the Merger and other transactions
provided for by this Agreement may be abandoned at any time, whether before or
after adoption of this Agreement by the shareholders of the Constituent
Corporations, by action of the board of directors of either Constituent
Corporation if such board of directors determines for any reason that the
completion of the transactions provided for herein would for any reason be
inadvisable or not in the best interest of the Constituent Corporation or its
shareholders.
IN WITNESS WHEREOF, Zaring, Subsidiary and National pursuant to approval and
authorization duly given by resolutions adopted by their respective Boards of
Directors, have each caused this Agreement and Plan of Merger to be executed by
its authorized officer.
ZARING HOMES, INC.
an Ohio corporation
By__________________________________
Title:_____________________
ZARING MERGER SUBSIDIARY, INC.
an Ohio corporation
By__________________________________
Title:______________________
ZARING NATIONAL CORPORATION
an Ohio corporation
By__________________________________
Title:_____________________
A-5
<PAGE> 52
EXHIBIT B
SECTION 1701.85, OHIO GENERAL CORPORATION LAW
Qualifications and procedures for dissenting shareholders
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the corporation
involved, the dissenting shareholder shall be a record holder of the shares of
the corporation as to which he seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after the
date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a record holder
of the shares of the corporation as to which he seeks relief as of the date on
which the agreement of merger was adopted by the directors of that corporation.
Within twenty days after he has been sent the notice provided in section 1701.80
or 1701.801 of the Revised Code, the dissenting shareholder shall deliver to the
corporation a written demand for payment with the same information as that
provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new entity, whether the demand is served before, on, or after the effective
date of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may
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forthwith endorse on them a legend to the effect that demand for the fair cash
value of such shares has been made. The corporation promptly shall return such
endorsed certificates to the dissenting shareholder. A dissenting shareholder's
failure to deliver such certificates terminates his rights as a dissenting
shareholder, at the option of the corporation, exercised by written notice sent
to the dissenting shareholder within twenty days after the lapse of the
fifteen-day period, unless a court for good cause shown otherwise directs. If
shares represented by a certificate on which such a legend has been endorsed
are transferred, each new certificate issued for them shall bear a similar
legend, together with the name of the original dissenting holder of such
shares. Upon receiving a demand for payment from a dissenting shareholder who
is the record holder of uncertificated securities, the corporation shall make
an appropriate notation of the demand for payment in its shareholder records.
If uncertificated shares for which payment has been demanded are to be
transferred, any new certificate issued for the shares shall bear the legend
required for certificated securities as provided in this paragraph. A
transferee of the shares so endorsed, or of uncertificated securities where
such notation has been made, acquires only such rights in the corporation as
the original dissenting holder of such shares had immediately after the service
of a demand for payment of the fair cash value of the shares. A request under
this paragraph by the corporation is not an admission by the corporation that
the shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and requiring
that a copy of the complaint and a notice of the filing and of the date for
hearing be given to the respondent or defendant in the manner in which summons
is required to be served or substituted service is required to be made in other
cases. On the day fixed for the hearing on the complaint or any adjournment of
it, the court shall determine from the complaint and from such evidence as is
submitted by either party whether the dissenting shareholder is entitled to be
paid the fair cash value of any shares and, if so, the number and class of such
shares. If the court finds that the dissenting shareholder is so entitled, the
court may appoint one or more persons as appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value. The appraisers have
such power and authority as is specified in the order of their appointment.
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The court thereupon shall make a finding as to the fair cash value of a share
and shall render judgment against the corporation for the payment of it, with
interest at such rate and from such date as the court considers equitable. The
costs of the proceeding, including reasonable compensation to the appraisers to
be fixed by the court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding and final orders in it may be
vacated, modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules, Chapter 2505. of
the Revised Code. If, during the pendency of any proceeding instituted under
this section, a suit or proceeding is or has been instituted to enjoin or
otherwise to prevent the carrying out of the action as to which the shareholder
has dissented, the proceeding instituted under this section shall be stayed
until the final determination of the other suit or proceeding. Unless any
provision in division (D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under this section shall
be paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or
the consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and, in
the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent subsidiary corporation
shall be determined as of the day before the adoption of the agreement of merger
by the directors of the particular subsidiary corporation. The fair cash value
of a share for the purposes of this section is the amount that a willing seller
who is under no compulsion to sell would be willing to accept and that a willing
buyer who is under no compulsion to purchase would be willing to pay, but in no
event shall the fair cash value of a share exceed the amount specified in the
demand of the particular shareholder. In computing such fair cash value, any
appreciation or depreciation in market value resulting from the proposal
submitted to the directors or to the shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
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(b) The corporation abandons the action involved or is finally enjoined or
prevented from carrying it out, or the shareholders rescind their adoption of
the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent of the
corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder nor
the corporation has filed or joined in a complaint under division (B) of this
section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended. If
during the suspension, any dividend or distribution is paid in money upon
shares of such class or any dividend, distribution, or interest is paid in
money upon any securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or interest which,
except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair
cash value of the shares. If the right to receive fair cash value is
terminated other than by the purchase of the shares by the corporation, all
rights of the holder shall be restored and all distributions which, except for
the suspension, would have been made shall be made to the holder of record of
the shares at the time of termination.
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EXHIBIT C
ZARING HOMES, INC.
1997 STOCK OPTION PLAN
----------------------
(As adopted effective as of May 8, 1997)
(a) PURPOSE. The purpose of this Zaring Homes, Inc. 1997 Stock Option
Plan (such plan herein called the "Plan") is to aid in the long-term retention
of certain full-time employees of Zaring Homes and its Subsidiaries, and thereby
to advance the long-range interests and performances of Zaring Homes and its
Subsidiaries, by offering such employees the opportunity to acquire Common
Shares through written offers of Zaring Homes (each offer continuing for a
stated period of time at a set price) to sell such stock (each such written
offer herein called an "option"). This Plan is effective as of May 8, 1997.
(b) GENERAL DEFINITIONS. Unless otherwise required by the context
and except as otherwise provided under the following provisions of the Plan,
the following terms when used in the Plan shall have the meanings hereinafter
set forth:
(1) "Affiliated Company" means any corporation (other than
Zaring Homes) which, now or at any later time, is part of an unbroken chain of
corporations (i) that begins with Zaring Homes and (ii) in which each
corporation in such chain, other than the last corporation in such chain, owns
at least 50% of the total combined voting power of all classes of stock in one
of the other corporations in such chain;
(2) "Board of Directors" means the Board of Directors of
Zaring Homes;
(3) "Committee" means the Compensation Committee of the Board
of Directors;
(4) "Common Shares" means common shares of Zaring Homes;
(5) "Eligible Employee" means, with respect to any Option
Date, each person who is eligible to be granted an option on such Option Date
under the provisions of paragraph (d) below;
(6) "Excluded Affiliated Company" means HomeMax, Inc., Blue
Chip Mortgage Company, and any other corporation which would still be considered
an Affiliated Company under this Plan if each reference to Zaring Homes
contained in subparagraph (1) above was a reference to HomeMax, Inc. or Blue
Chip Mortgage Company instead of to Zaring Homes;
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(7) "Option Date" means each date on which the regular annual
meeting of the Board of Directors for 1997, 1998, 1999, or 2000 is held;
(8) "Optionee" means, with respect to any option which is
granted under the Plan, the person to whom such option is granted.
(9) "Option Price" means, with respect to any option granted
under the Plan, the price at which the Common Shares subject to the option may
be purchased;
(10) "Subsidiary" means any corporation (other than Zaring
Homes) which, now or at any later time, is part of an unbroken chain of
corporations (i) that begins with Zaring Homes and (ii) in which each
corporation in such chain, other than the last corporation in such chain, owns
at least 80% of the total combined voting power of all classes of stock in one
of the other corporations in such chain; and
(11) "Zaring Homes" means Zaring Homes, Inc., or any
corporate successor thereto.
(b) AGGREGATE NUMBER OF SHARES AVAILABLE FOR OPTIONS. The aggregate
number of Common Shares which may be delivered upon the exercise of options
granted pursuant to the Plan shall be 228,000 Common Shares. Upon any date on
which any option which is granted under the Plan becomes nonexercisable and void
as to any Common Shares, such Common Shares shall become available for other
options to be granted under the Plan.
(c) GRANT OF OPTIONS. Subject to the approval of the Committee, on
each Option Date, an option shall be granted by the Committee under the
Plan to each person who is then an Eligible Employee (as determined under
paragraph (d) below). Each option so granted to an Eligible Employee shall offer
to the Eligible Employee the opportunity to purchase a number of Common Shares
equal to the product (rounded down, if such product is not otherwise a whole
number, to the next lower whole number) produced by multiplying (i) the number
of Common Shares which are available for options on the subject Option Date (as
determined under paragraph (e) below) by (ii) the Eligible Employee's
compensation fraction applicable to such Option Date (as determined under
paragraph (f) below). In no event, even where there is only one Eligible
Employee, may any Eligible Employee be granted options to purchase more than the
total number of Common Shares which are available under this Plan. Except as
provided in this paragraph (c), no options will be granted under the Plan.
(d) ELIGIBLE EMPLOYEES. For purposes of the Plan (and in particular
the provisions of paragraph (c) above), each person who is employed and
classified by Zaring Homes or a Subsidiary as a full-time employee on any Option
Date shall be considered an Eligible Employee with respect to such Option Date
(to whom an option shall be granted under the Plan as of such Option Date);
except that, notwithstanding the foregoing, no person who then is employed as an
employee by any Excluded Affiliated Company, or who then both is employed by
Zaring Homes or a Subsidiary (other than an Excluded Affiliated Company) and has
his or her services
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leased to an Excluded Affiliated Company, shall be considered an Eligible
Employee as of such Option Date.
(e) NUMBER OF COMMON SHARES AVAILABLE FOR OPTIONS ON EACH OPTION
DATE. For purposes of paragraph (c) above, the number of Common Shares which are
available for options on any Option Date shall be deemed to be equal to the
number produced by first multiplying A by B and then subtracting C from such
product ((A x B) - C), where "A" refers to 57,000 Common Shares, "B" refers to
the number of Option Dates which have occurred up to and including the subject
Option Date, and "C" refers to the number of Common Shares which are covered by
the portions of the options which have been granted under the Plan on all Option
Dates that have occurred prior to the subject Option Date and which have not
become void by the subject Option Date.
(f) ELIGIBLE EMPLOYEES' COMPENSATION FRACTIONS. For purposes of
paragraph (c) above, an Eligible Employee's compensation fraction applicable to
any Option Date shall be deemed to be equal to a fraction having (i) a numerator
equal to such Eligible Employee's annual rate of base salary or wages from
Zaring Homes and its Subsidiaries which is in effect on such Option Date and
(ii) a denominator equal to the aggregate annual rates of base salary and wages
from Zaring Homes and its Subsidiaries which are in effect on such Option Date
for all persons who are Eligible Employees as of such Option Date. For this
purpose, the annual rate of base wages for an hourly-paid Eligible Employee
shall be determined on the basis of a 2,080 hour year. Also for purposes hereof,
incentive compensation, reimbursements or other expense allowances, fringe
benefits (cash and noncash, such as the use of an automobile), moving expenses,
welfare benefits, and any benefits provided under this Plan shall not in any
event be considered part of an Eligible Employee's annual rate of base salary or
wages. In addition, an Eligible Employee's annual rate of base salary or wages
shall be determined hereunder without regard to any reductions in such salary or
wages which the Eligible Employee may elect and which may not be includable in
the Eligible Employee's income for federal income tax purposes by reason of
Section 402(e)(3) or 125 of the Internal Revenue Code of 1986, as amended (such
act herein called the "Code").
(g) REQUIREMENTS OF OPTIONS. Each option granted under this Plan to
an Eligible Employee:
(1) shall be granted only with respect to Common Shares;
(2) shall call for an Option Price which is equal to the
fair market value of a Common Share on the Option Date on which such option was
granted;
(3) shall not be transferable by the Optionee of the option
except by will or the laws of descent and distribution, and during the
Optionee's lifetime shall be exercisable only by him or her;
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<PAGE> 59
(4) shall, except as otherwise is provided in subparagraph (5)
below, be exercisable as to the total number of Common Shares granted under the
option at any time on or after (but not before) the first annual anniversary of
the Option Date on which such option was granted;
(5) shall, notwithstanding the provisions of subparagraph (4)
above, become nonexercisable and void as to all of the Common Shares which are
subject to the option and have not been earlier purchased under the option
(including both Common Shares with respect to which the option has not earlier
become exercisable under the provisions of the option and Common Shares with
respect to which the option has become exercisable but has not earlier been
exercised) no later than the earlier of the date which is ten years from the
Option Date on which such option was granted or the date determined in
accordance with the following provisions:
(i) If the Optionee of the option dies while still
employed by Zaring Homes or an Affiliated Company, the date which is one year
after the date of the Optionee's death;
(ii) If the Optionee terminates his or her position as
an employee with Zaring Homes and the Affiliated Companies by reason of having
become disabled, the date which is one year after the date of the
Optionee's termination of employment. For purposes of the Plan, an Optionee
shall be considered disabled only if the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which can be
expected to last for a continuous period of not less than twelve months;
(iii) If the Optionee terminates his or her position as
an employee with Zaring Homes and the Affiliated Companies by reason of his or
her voluntary resignation or by reason of his or her termination by Zaring
Homes or an Affiliated Company for cause, the date on which the Optionee
terminates employment. For purposes of the Plan, the Optionee's employment shall
be deemed to be "for cause" if it occurs by reason of or as a result of his or
her participation in conduct consisting of fraud, felony, willful misconduct, or
commission of any act which causes or may reasonably be expected to cause
substantial damage to Zaring Homes or any Affiliated Company; and
(iv) If the Optionee terminates his or her position as
an employee with Zaring Homes and the Affiliated Companies for any reason
other than his or her death, disability, voluntary resignation, or termination
for cause, the date which is 60 days after the date on which the Optionee
terminates employment;
(6) shall indicate that it is not intended to be an incentive
stock option within the meaning of Section 422 of the Code; and
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<PAGE> 60
(7) shall be subject to any additional terms (but not
inconsistent with the above conditions) as are specified in the applicable
written option agreement.
(h) ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF ZARING HOMES.
Notwithstanding any other provision of the Plan, the number and class of shares
subject to the options granted under the Plan and the option prices of such
options shall be proportionately adjusted in the event of changes in the
outstanding Common Shares by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
split-ups, split-offs, spin-offs, liquidations or other similar changes in
capitalization, or any distribution to common shareholders other than cash
dividends, and, in the event of any such change in the outstanding Common
Shares, the aggregate number and class of shares available under the Plan and
the number of shares as to which options may be granted shall be appropriately
adjusted.
(i) Miscellaneous Items Concerning Operation of Plan.
-------------------------------------------------
(1) At the time of the transfer of Common Shares as a result
of the exercise of an option, the Committee shall have the right to direct
Zaring Homes to retain or sell (without notice to the applicable Optionee or
such other person who exercised the option) a sufficient number of Common Shares
to cover the amount of any tax required by any government to be withheld or
otherwise deducted from such transfer and paid to such government, remitting any
balance to the Optionee or such other person who exercised the option. The
Optionee or such other person who exercised the option shall have the right,
however, to provide Zaring Homes, prior to the transfer of the Common Shares,
with the funds to enable Zaring Homes to pay such tax, in which case the
Committee shall not direct Zaring Homes to retain or sell any of such Common
Shares at the time of their transfer to the Optionee or such other person who
exercised the option.
(2) Any option granted under the Plan may be exercised as of
any date only by written notice to the Secretary of Zaring Homes, signed by the
Optionee of the option or such other person as is entitled to exercise the
option and received during normal business hours on such date by the office of
the Secretary of Zaring Homes. The notice shall state the number of shares with
respect to which the option is being exercised and shall be accompanied by
payment in full of the option price for such shares. If the option is exercised
by anyone other than the Optionee, the notice shall be accompanied by proof of
the right of such person to exercise the option. Payment for the shares shall be
made in cash.
(3) For purposes of the Plan, the fair market value of a
Common Share on any date shall be deemed to be: (i) the closing price on such
date of a Common Share on the largest national securities exchange on which the
Common Shares are then listed; or (ii) if there have been no sales of Common
Shares on such exchange on such date, the average of the highest bid and lowest
asked prices on such exchange at the close of business on such date; or (iii) if
there are no bid or asked prices on such exchange on such date or if no national
securities exchange then lists the Common Shares on such date, the fair market
value of a Common Share as is determined by the Committee in good faith. For
purposes hereof, the NASDAQ National
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Market will be considered a national securities exchange as long as the
information reported daily for Common Shares is substantially the same as that
reported for securities listed on national securities exchanges.
(4) If at any time the Committee shall determine, in its
discretion, that the listing of the Common Shares with respect to which any
option is granted under the Plan on any securities exchange, the registration or
qualification of such shares under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the purchase, issue, or transfer of the
Common Shares with respect to which an option is granted, then such option may
not be exercised in whole or in part unless and until one of the following
conditions is satisfied: (i) such listing, registration, qualification, consent,
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee, or (ii) the Optionee of the option or such other
person who exercises the option shall have agreed that the Common Shares may be
issued or transferred to him or her subject to any restrictions that will make
it unnecessary to effect or obtain such listing, registration, qualification,
consent, or approval.
(j) Administration.
--------------
(1) The Plan shall be administered by the Committee.
(2) The Committee shall have prepared and shall approve a
form of written option agreement, which form shall comply with all provisions
set forth in this Plan, to use in issuing options required under this Plan. The
grant of options under the Plan shall be made by the Committee and shall be
effected by the execution of written option agreements in the form approved by
the Committee and signed by a member of the Committee (or any person designated
as its agent for this purpose).
(3) The Committee shall, subject to the applicable
provisions of the Plan, have full authority and discretion to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determination as to any matter
relating to the interpretation of the Plan shall be conclusive on all persons.
(k) NO RIGHT OF EMPLOYMENT. Nothing contained in the Plan or any
option granted pursuant to the Plan shall confer on any Eligible Employee
any right to be continued as an employee of Zaring Homes or any Affiliated
Company or to interfere in any way with the right of Zaring Homes or any
Affiliated Company to terminate his or her employment at any time, in the same
manner as though the Plan or any options granted hereunder were not in effect.
(l) AMENDMENT OR TERMINATION OF PLAN: The Board of Directors shall
have the right to amend, suspend, or terminate this Plan at any time;
provided, however, that: (i) no action shall affect adversely the rights of any
Optionee under any option granted under this Plan prior to such amendment,
suspension, or termination; and (ii) no amendment changing the class of
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employees or persons eligible to receive options hereunder, changing the
aggregate number of shares to be subject to options granted hereunder, or
materially increasing the benefits accruing to Eligible Employees hereunder may
be made without, in any of such cases, approval by the favorable vote of a
majority of the outstanding shares of Zaring Homes present, or represented, and
entitled to vote at a meeting duly held in accordance with the applicable laws
of the state in which Zaring Homes is incorporated.
(m) APPROVAL OF PLAN AND CORPORATE CONDITIONS ON EFFECTIVENESS OF
OPTIONS: This Plan shall be approved by the favorable vote of a majority of the
outstanding shares of Zaring Homes present, or represented, and entitled to vote
at a meeting duly held in accordance with the applicable laws of the state in
which Zaring Homes is incorporated. Notwithstanding any other provision of the
Plan to the contrary, any option granted under the Plan shall not be exercisable
prior to such shareholder approval.
(n) EFFECT OF REORGANIZATION. Notwithstanding any other provision of
this Plan, if, pursuant to a merger and/or other agreements, at least 80% of the
total combined voting power of all classes of stock of Zaring Homes becomes
owned by a corporation named Zaring National, Inc. (such corporation herein
called "Zaring National"), then, upon the date Zaring National becomes the owner
of at least 80% of the total combined voting power of all classes of stock of
Zaring Homes (such date herein called the "reorganization date") and in
accordance with such merger and/or other agreements, Zaring National shall have
assumed this Plan and all shares of Zaring Homes which are reserved for use
under this Plan shall become common shares of Zaring National. In such case, on
and after the reorganization date, each and every reference to Zaring Homes
which is contained in the foregoing paragraphs of this Plan shall be deemed to
be a reference to Zaring National and not to Zaring Homes.
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PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
There is no provision in Zaring National's Articles of Incorporation
regarding the indemnification of directors, officers, employees or agents of
Zaring National. Zaring National has provided in its Regulations that Zaring
National will, to the fullest extent permitted by law, indemnify any current or
former director, officer, agent or employee, or any person who is serving or has
served, whether by reason of service in such capacity or by reason of service at
Zaring National's request as a director, trustee, officer, agent or employee of
another corporation (and that Zaring National may indemnify employees or agents
of Zaring National to the extent determined by the Board of Directors in each
case), against expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement, actually and reasonably incurred by him or her in connection
with the defense of any pending, threatened or completed action, criminal or
civil, to which he or she is or is threatened to be made a party by reason of
having been such director, trustee, officer, agent or employee, provided that he
or she is determined to have acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of Zaring
National or such other corporation and that in any matter which is the subject
of criminal action he or she had no reasonable cause to believe that his or her
conduct was unlawful. The same standards apply in an action or suit by or in the
right of Zaring National or such other corporation, except that no
indemnification is available if such person is adjudged to be liable for
negligence or misconduct in the performance of his or her duty to Zaring
National or such other corporation unless and to the extent that a court
determines that in view of all the circumstances he or she is fairly and
reasonably entitled to indemnity for his or her expenses as the court deems
proper; however, Zaring National cannot indemnify a director with respect to any
action or suit where the only liability asserted against the director is
pursuant to OGCL Section 1701.95, which imposes liability upon directors who
vote for or assent to, among other things, improper dividends or distributions,
share purchases or redemptions, or loans to directors, officers or employees.
Unless otherwise ordered by a court, a determination of whether such
indemnification is proper in the circumstances shall be made according to
applicable standards of conduct by a majority vote of a quorum of disinterested
directors of Zaring National acting without those who seek indemnification, or
if such a quorum is not available or if such a majority vote so directs, in a
written opinion by independent counsel, by the shareholders, by the court of
common pleas or by the court in which the proceeding is brought. Depending on
the person involved, the circumstances and the type of undertaking to be
received from the person to be indemnified, Zaring National either must or may
pay the expenses of an action, including attorneys' fees incurred by such
person, in advance of final disposition of such action. Indemnification under
the above provisions by Zaring National may continue as to any person who has
ceased to be a director, trustee, officer, agent or employee and may inure to
the benefit of his or her heirs, executors and administrators. The Regulations
further provide that the right of directors or officers to indemnification is a
contract right that applies to events occurring prior to the adoption of the
Regulations and that will continue after rescission or modification as to events
occurring prior
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<PAGE> 64
thereto. Zaring National may purchase and maintain insurance or furnish similar
protection on behalf of any person (qualified to be indemnified) against any
liability asserted against him or her, and incurred by him or her in or arising
out of his or her indemnifiable status, whether or not Zaring National would
have the power to indemnify him or her against such liability.
Zaring National provides liability insurance for its directors and
officers for certain losses arising from certain claims and charges, including
claims and charges under the Securities Act, which may be made against such
persons while acting in their capacities as directors and officers of Zaring
National.
ITEM 21: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
An Exhibit Index, containing a list of all exhibits filed with this
Registration Statement, commences on page 6.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement
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relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act, such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering
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<PAGE> 66
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first-class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of the response to the request.
The undersigned Registrant hereby undertakes to apply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cincinnati, County of
Hamilton, State of Ohio, on the 3rd day of April, 1997.
Zaring National Corporation
By: /s/ ALLEN G. ZARING, III
--------------------------
Allen G. Zaring, III President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C> <C>
A. Principal Executive Officer
/s/ ALLEN G. ZARING, III President April 3, 1997
------------------------
B. Principal Financial Officer and
Principal Accounting Officer
/s/ RONALD G. GRATZ Treasurer April 3, 1997
-------------------
C. Majority of the Board of Directors
/s/ ALLEN G. ZARING, III Sole Director April 3, 1997
------------------------
</TABLE>
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<PAGE> 68
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT METHOD OF FILING
- ------ ------- ----------------
<S> <C> <C>
2 Agreement and Plan of Merger Included as Exhibit A to Proxy
Statement and Prospectus
3.1 Articles of Incorporation of Previously Filed
Zaring National Corporation
3.2 Regulations of Previously Filed
Zaring National Corporation
5.1 Opinion of Frost & Jacobs LLP Previously Filed
8 Tax Opinion of Frost & Jacobs LLP Previously Filed
23.1 Consent of Frost & Jacobs LLP Previously Filed
23.2 Consent of Arthur Andersen LLP Filed Herewith
99.1 Form of Proxy Previously Filed
</TABLE>
6
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENCE PUBLIC ACCOUNTANTS
------------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reportts (i) dated February
3, 1997 incorporated by reference in Zaring Homes, Inc's Form 10-k for the
year ended December 31, 1996 and (ii) dated February 3, 1997 incorporated by
in Zaring Homes, Inc.'s Form 8-K dated March 14, 1997 and to all references to
our Firm included in this registration statement.
Cincinnati, Ohio
March 28, 1997
