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REGISTRATION STATEMENT NO. 333-47231
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
OGLEBAY NORTON HOLDING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Ohio 4400 To Be Applied For
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NUMBER)
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1100 Superior Avenue, 20th Floor
Cleveland, Ohio 44114-2598
(216) 861-3300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID G. SLEZAK, ESQ.
Oglebay Norton Holding Company
c/o Oglebay Norton Company
1100 Superior Avenue, 20th Floor
Cleveland, Ohio 44114-2598
(216) 861-3300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
James R. Carlson
Thompson Hine & Flory LLP
3900 Key Center
127 Public Square
Cleveland, Ohio 44114-1216
(216) 566-5500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.
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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OGLEBAY NORTON HOLDING COMPANY
CROSS-REFERENCE SHEET SHOWING LOCATIONS IN PROXY STATEMENT-PROSPECTUS OF
INFORMATION REQUIRED BY EACH ITEM IN PART I OF FORM S-4
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ITEM CAPTION OR LOCATION IN
NO. FORM S-4 CAPTION PROXY STATEMENT-PROSPECTUS
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus....... Facing page of Registration Statement; Cross-Reference
Sheet; Cover Page of Proxy Statement-Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus................................... AVAILABLE INFORMATION; INFORMATION INCORPORATED BY
REFERENCE; TABLE OF CONTENTS
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................ Cover Page of Proxy Statement-Prospectus; INFORMATION
INCORPORATED BY REFERENCE; SUMMARY; REORGANIZATION
PROPOSAL -- Voting Rights and Proxy
Information, -- Formation of Ohio Holding Company, --
Conditions to the Merger, -- Federal Income Tax
Consequences and -- Appraisal Rights; BENEFICIAL
OWNERSHIP OF OGLEBAY NORTON COMMON STOCK
4. Terms of the Transaction..................... REORGANIZATION PROPOSAL -- Formation of Ohio Holding
Company, -- No Material Effect on Financial Condition
or Results of Operations, -- Conditions to the Merger
and -- Federal Income Tax Consequences; REASONS FOR
THE REORGANIZATION; CAPITAL STOCK OF THE HOLDING
COMPANY; ARTICLES OF INCORPORATION AND REGULATIONS OF
THE HOLDING COMPANY; SIGNIFICANT DIFFERENCES BETWEEN
THE CORPORATION LAWS OF DELAWARE AND OHIO; EXPERTS
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....... LEGAL OPINION; EXPERTS
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not Applicable
10. Information with Respect to S-3
Registrants.................................. Not Applicable
11. Incorporation of Certain Information by
Reference.................................... Not Applicable
12. Information with Respect to S-2 or S-3
Registrants.................................. Not Applicable
13. Incorporation of Certain Information by
Reference.................................... Not Applicable
14. Information with Respect to Registrants Other
Than S-2 or S-3 Registrants.................. Not Applicable
15. Information with Respect to S-3 Companies.... Not Applicable
16. Information with Respect to S-2 or S-3
Companies.................................... Notice of Annual Meeting of Stockholders; INFORMATION
INCORPORATED BY REFERENCE; FINANCIAL STATEMENTS
17. Information with Respect to Companies Other
Than S-3 or S-2 Registrants.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited........... Cover Page of Proxy Statement-Prospectus;
INTRODUCTION; REORGANIZATION PROPOSAL -- Appraisal
Rights; ELECTION OF DIRECTORS; COMPENSATION OF
EXECUTIVE OFFICERS; OWNERSHIP OF OGLEBAY NORTON COMMON
STOCK; RELATED PARTY TRANSACTIONS; INDEPENDENT
AUDITORS
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer............................ Not Applicable
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ONCO Letterhead
April 28, 1998
To the Stockholders of
Oglebay Norton Company:
These are exciting times at Oglebay Norton Company as we begin implementing
our goal to grow into a $1 billion company by early in the next millennium. Part
of our strategy is to leverage a portion of that growth on those core
competencies in industrial minerals that have served your Company well. Towards
that end, your Company has recently announced a tender offer for all of the
outstanding stock of Global Stone Corporation, an organization headquartered in
Ontario, Canada, that is the fourth largest limestone company in North America
with eight operations in the United States and Canada. Global Stone
Corporation's Board of Directors has unanimously recommended that its
shareholders accept Oglebay Norton Company's offer. However, the pendency of the
tender offer period necessitates the deferral, by a few days, and change in
location of Oglebay Norton Company's 1998 Annual Meeting of Stockholders.
Oglebay Norton Company's 1998 Annual Meeting of Stockholders will now be held as
follows:
OGLEBAY NORTON COMPANY
1998 ANNUAL MEETING OF STOCKHOLDERS
9:00 A.M., FRIDAY, MAY 22, 1998
DIAMOND BUILDING CONFERENCE CENTER
1100 SUPERIOR AVENUE -- 12TH FLOOR
CLEVELAND, OHIO 44114
Timing considerations unfortunately forced the change in the date, time and
place of our 1998 Annual Meeting of Stockholders after the 1997 Annual Report to
Stockholders was printed. Please disregard the old date, time and location for
the 1998 Annual Meeting of Stockholders that appears on the inside back cover of
the 1997 Annual Report.
This is an important Annual Stockholders Meeting for your Company as one of
the issues presented for your approval is the formation of a holding company
structure. That structure will facilitate implementing our growth strategy. I
look forward to your participation, in person or by proxy, in our 1998 Annual
Meeting of Stockholders.
Thank you for your continued interest in and support of your Company.
Very truly yours,
/s/ John N. Lauer
John N. Lauer
President and Chief Executive Officer
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Oglebay Logo
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1998
The Annual Meeting of Stockholders of Oglebay Norton Company ("Oglebay
Norton") will be held at the Diamond Building Conference Center, 12th Floor,
1100 Superior Avenue, Cleveland, Ohio, on Friday, May 22, 1998, at 9:00 a.m.,
Cleveland, Ohio time. The purposes of the Annual Meeting are as follows.
I. To vote upon a proposal to approve and adopt an Agreement and Plan
of Merger, dated April 6, 1998, a copy of which is attached as Exhibit A to
the Proxy Statement-Prospectus, pursuant to which Oglebay Norton will
become a second-tier wholly-owned subsidiary of a new Ohio holding company
called Oglebay Norton Holding Company (the "Holding Company") and the
shares of Common Stock of Oglebay Norton will be converted, on a
share-for-share basis, into Common Shares of the Holding Company. At the
time of the merger, the name of the Holding Company will be changed to
"Oglebay Norton Company" and the name of Oglebay Norton will be changed to
"ONCO Transportation Company." The Agreement and Plan of Merger provides
that, following the merger, the internal affairs of the Holding Company
will be governed by Articles of Incorporation and Regulations attached as
Exhibits B and C to the Proxy Statement-Prospectus. The Articles of
Incorporation and Regulations are substantially identical to the Restated
Certificate of Incorporation and By-laws of Oglebay Norton, except for
amendments necessary to conform the Articles of Incorporation and
Regulations to Ohio law and the amendment set forth in Proposal II below.
All of these matters are more fully discussed in the Proxy
Statement-Prospectus.
II. To vote upon a proposal to approve the authorization of 30,000,000
Common Shares in the Articles of Incorporation of the Holding Company, an
increase of 20,000,000 shares from that authorized in the Restated
Certificate of Incorporation of Oglebay Norton, which proposal is
contingent upon the approval of Proposal I above.
III. To vote upon a proposal to approve the Oglebay Norton Company
Director Fee Deferral Plan, a copy of which is attached as Exhibit D to the
Proxy Statement-Prospectus.
IV. To vote upon a proposal to approve the Performance Option
Agreement with Mr. John N. Lauer, a copy of which is attached as Exhibit E
to the Proxy Statement-Prospectus.
V. To elect three directors to the class whose term expires in 2001.
VI. To hear reports and transact any other business that may properly
come before the Annual Meeting.
The Board of Directors has fixed the close of business on April 9, 1998, as
the record date for determining the stockholders entitled to notice of the
Annual Meeting and to vote at the Annual Meeting or any postponement or
adjournment thereof.
The Proxy Statement-Prospectus accompanies this Notice. The Annual Report
to Stockholders for the year ended December 31, 1997 is being mailed to
stockholders with the Proxy Statement-Prospectus, although only portions of the
Annual Report to Stockholders are incorporated by reference in the Proxy
Statement-Prospectus, as more fully described therein.
YOUR VOTE IS IMPORTANT
Please sign, date and return your Proxy card in the enclosed envelope.
By Order of the
Board of Directors
/s/ David G. Slezak
DAVID G. SLEZAK,
Secretary and Director
April 28, 1998 of Legal Affairs
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OGLEBAY NORTON COMPANY
1100 Superior Avenue
Cleveland, Ohio 44114-2598
(216) 861-3300
OGLEBAY NORTON HOLDING COMPANY
1100 Superior Avenue
Cleveland, Ohio 44114-2598
(216) 861-3300
PROXY STATEMENT-PROSPECTUS
ANNUAL MEETING OF STOCKHOLDERS
May 22, 1998
This Proxy Statement-Prospectus is being furnished in connection with the
solicitation of proxies by the Board of Directors of Oglebay Norton Company, a
Delaware corporation ("Oglebay Norton"), for use at the Annual Meeting of
Stockholders to be held on May 22, 1998 (the "Annual Meeting"), and at any
adjournment or postponement of the Annual Meeting. At the Annual Meeting,
stockholders will: (i) consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger providing for the reorganization of Oglebay Norton
through the formation of an Ohio holding company; (ii) consider and vote upon a
proposal to approve the authorization of 30,000,000 Common Shares in the
Articles of Incorporation of the Holding Company, an increase of 20,000,000
shares from that authorized in the Restated Certificate of Incorporation of
Oglebay Norton; (iii) consider and vote upon a proposal to approve the Oglebay
Norton Company Director Fee Deferral Plan; (iv) consider and vote upon a
proposal to approve the Performance Option Agreement with Mr. John N. Lauer; (v)
elect three directors of the class whose terms in office will expire in 2001;
and (vi) hear reports and transact any other business that may properly come
before the Annual Meeting. This Proxy Statement-Prospectus also relates to the
offering of 7,303,332 Common Shares, par value $1.00 per share, of Oglebay
Norton Holding Company, an Ohio corporation (the "Holding Company"), to be
issued to the stockholders of Oglebay Norton in connection with the proposed
reorganization.
The proposed reorganization will be implemented by the merger (the
"Merger") of a third-tier wholly-owned subsidiary of Oglebay Norton into Oglebay
Norton, which will be the surviving corporation. By virtue of the Merger,
Oglebay Norton will become a second-tier wholly-owned subsidiary of the Holding
Company and all of the outstanding shares of Common Stock of Oglebay Norton will
be converted, on a share-for-basis, into Common Shares of the Holding Company.
This Proxy Statement-Prospectus does not cover any resales of the Common
Shares of the Holding Company received by Oglebay Norton stockholders upon the
implementation of the holding company structure as described herein. No person
is authorized to make any use of this Proxy Statement-Prospectus in connection
with any such resale or in connection with the offer of any other securities.
It is anticipated that the mailing of this Proxy Statement-Prospectus and
accompanying form of Proxy to stockholders will begin on or about April 28,
1998.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE 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-Prospectus is April 28, 1998.
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AVAILABLE INFORMATION
Oglebay Norton is subject to the information, reporting and proxy statement
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
Holding Company has filed a Registration Statement on Form S-4 (the
"Registration Statement") with the Commission under the Securities Act of 1933,
as amended, with respect to the Common Shares of the Holding Company. As
permitted by the rules and regulations of the Commission, this Proxy
Statement-Prospectus omits certain information contained in the Registration
Statement. The reports, proxy statements and other information filed with the
Commission by Oglebay Norton, as well as the Registration Statement and exhibits
to the Registration Statement, can be inspected, and copied at prescribed rates,
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004, and
should also be available for inspection and copying at the following regional
offices of the Commission: Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Northeast Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048. In addition,
the Commission maintains a public access site on the Internet at which site
reports, proxy and information statements and other information regarding
registrants, including all electronic filings, may be viewed. The address of the
Internet site is http://www.sec.gov.
In connection with the reorganization described herein, the Holding Company
will become subject to the same information, reporting and proxy statement
requirements under the Exchange Act as currently apply to Oglebay Norton, and
copies of materials will be available for inspection and copying at the offices
and on the Internet site of the Commission set forth above.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report on Form 10-K of Oglebay Norton for the year ended
December 31, 1997, which has previously been filed by Oglebay Norton with the
Commission, is incorporated by reference in this Proxy Statement-Prospectus.
All documents subsequently filed by Oglebay Norton or the Holding Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Proxy Statement-Prospectus and prior to the
date of the Annual Meeting or any adjournment or postponement thereof shall be
deemed to be incorporated in this Proxy Statement-Prospectus by reference and to
be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein, or contained in this Proxy Statement-Prospectus, shall be deemed to be
modified or superseded for purposes of this Proxy Statement-Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
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-Prospectus.
The Annual Report of Oglebay Norton for the year ended December 31, 1997
(the "Annual Report") is being mailed to stockholders with this Proxy
Statement-Prospectus. However, none of the information included in the Annual
Report is incorporated by reference in or deemed to be a part of this Proxy
Statement-Prospectus or the Registration Statement, other than the following:
the information regarding the approximate amounts of total consolidated net
sales and operating revenues, total consolidated income from operations, and
total consolidated identifiable assets for the three years ended December 31,
1997, attributable to each of the business segments of Oglebay Norton that
appears on pages 10 and 11 of the Annual Report; the information regarding the
market prices of and dividends on the shares of Common Stock of Oglebay Norton
and related stockholder matters that appears on the inside back cover of the
Annual Report; the selected financial data that appears on page 1 of the Annual
Report; management's discussion and analysis of the financial condition and
results of operations of Oglebay Norton that appears on pages 12 through 16 of
the Annual Report; and the financial statements and related notes that appear on
pages 17 through 27 of the Annual Report.
ii
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THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST DIRECTED TO DAVID G. SLEZAK,
SECRETARY AND DIRECTOR OF LEGAL AFFAIRS, OGLEBAY NORTON COMPANY, 1100 SUPERIOR
AVENUE, CLEVELAND, OHIO 44114-2598 (TELEPHONE NUMBER (216) 861-3300). IN ORDER
TO ENSURE TIMELY DELIVERY OF THESE DOCUMENTS, ANY REQUEST SHOULD BE MADE AT
LEAST FIVE BUSINESS DAYS BEFORE THE DATE OF THE ANNUAL MEETING.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL A SECURITY, OR A SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR
TO ANY PERSON TO WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF
THE SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF OGLEBAY NORTON OR
THE HOLDING COMPANY SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
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TABLE OF CONTENTS
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SUMMARY..................................................... 1
INTRODUCTION................................................ 4
Purposes of the Annual Meeting............................ 4
Voting Rights and Proxy Information....................... 4
PROPOSAL I -- REORGANIZATION PROPOSAL....................... 6
Formation of Ohio Holding Company......................... 6
Management of the Holding Company......................... 6
Employee Benefit Plans.................................... 6
Indebtedness of Oglebay Norton............................ 7
Oglebay Norton Restated Rights Agreement.................. 7
No Material Effect on Financial Condition or Results of
Operations............................................. 7
Conditions to the Merger.................................. 7
Effective Time; Amendment; Abandonment.................... 8
Federal Income Tax Consequences........................... 8
Appraisal Rights.......................................... 9
REASONS FOR THE REORGANIZATION.............................. 9
Benefits of the Reorganization............................ 9
ARTICLES OF INCORPORATION AND REGULATIONS OF THE HOLDING
COMPANY................................................... 10
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF
DELAWARE AND OHIO......................................... 10
Amendment of Charter Documents............................ 10
Amendment and Repeal of By-laws/Regulations............... 10
Removal of Directors...................................... 11
Vacancies on the Board.................................... 11
Rights to Call Special Meetings of Stockholders........... 11
Stockholder Action Without A Meeting...................... 11
Class Voting.............................................. 12
Cumulative Voting......................................... 12
Business Combinations with Interested Stockholders........ 12
Control Share Acquisition................................. 13
Control Bid............................................... 14
Mergers, Acquisitions and Certain Other Transactions...... 14
Consideration of Constituencies........................... 15
Rights of Dissenting Stockholders......................... 15
Dividends................................................. 15
Preemptive Rights of Stockholders......................... 16
Director Liability and Indemnification.................... 16
CAPITAL STOCK OF THE HOLDING COMPANY........................ 17
Number of Authorized Shares............................... 17
Terms of the Common Shares of the Holding Company......... 18
Terms of the Preferred Shares of the Holding Company...... 18
Board Recommendation...................................... 19
PROPOSAL II -- COMMON SHARES OF THE HOLDING COMPANY......... 19
Board Recommendation...................................... 19
PROPOSAL III -- OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL
PLAN...................................................... 19
Board Recommendation...................................... 21
PROPOSAL IV -- PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N.
LAUER..................................................... 21
Board Recommendation...................................... 21
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PROPOSAL V -- ELECTION OF DIRECTORS......................... 21
Nominees for Terms Expiring in 2001....................... 22
Present Directors Whose Terms Expire in 2000.............. 22
Present Directors Whose Terms Expire in 1999.............. 22
Board and Committee Attendance............................ 23
Structure/Committees of the Board......................... 23
Compensation of Directors................................. 24
Director Agreements....................................... 24
BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK......... 24
PERFORMANCE GRAPH........................................... 27
COMPENSATION OF EXECUTIVE OFFICERS.......................... 27
Report of the Compensation Committee on Executive
Compensation........................................... 27
Summary Compensation Table................................ 30
Stock Option Grants in 1997............................... 31
Option Grants in Last Fiscal Year......................... 31
Long-Term Incentive Plans -- Awards In Last Fiscal Year... 32
RETIREMENT PLANS............................................ 33
Salaried Employees Pension Plan; Excess and TRA
Supplemental Benefit Retirement Plan................... 33
Supplemental Savings and Stock Ownership Plan............. 34
OFFICER AGREEMENTS.......................................... 34
Separation Agreement with Mr. R. Thomas Green, Jr......... 34
Employment Agreement with Mr. John N. Lauer............... 34
New Plan Benefits -- Performance Options.................. 37
Officer Agreements Effective Upon "Change in Control"..... 37
"Pour-Over" and Irrevocable Trusts........................ 38
Long-Term Incentive Plan.................................. 38
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 39
RELATED PARTY TRANSACTIONS.................................. 40
LEGAL OPINION............................................... 40
EXPERTS..................................................... 40
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 40
INDEPENDENT AUDITORS........................................ 40
FINANCIAL STATEMENTS........................................ 40
1999 ANNUAL MEETING......................................... 41
OTHER MATTERS............................................... 41
EXHIBITS
Agreement and Plan of Merger.............................. A-1
Articles of Incorporation of Oglebay Norton Holding
Company................................................ B-1
Regulations of Oglebay Norton Holding Company............. C-1
Oglebay Norton Company Director Fee Deferral Plan......... D-1
Performance Option Agreement with Mr. John N. Lauer....... E-1
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SUMMARY
The following is a summary of certain information contained in this Proxy
Statement-Prospectus. Certain capitalized terms used in this summary are defined
elsewhere in this Proxy Statement-Prospectus. This summary is qualified in its
entirety by reference to the more detailed information contained in this Proxy
Statement-Prospectus, the Exhibits hereto, and the documents incorporated by
reference.
DATE, TIME AND PLACE OF ANNUAL MEETING; RECORD DATE; REQUIRED VOTE
The Annual Meeting will be held on Friday, May 22, 1998, at 9:00 a.m.,
Cleveland, Ohio time, at the Diamond Building Conference Center, 12th Floor,
1100 Superior Avenue, Cleveland, Ohio.
The Board of Directors has fixed the close of business on April 9, 1998 as
the Record Date for determining stockholders entitled to notice of the Annual
Meeting and to vote. As of April 3, 1998, 4,763,351 shares of Common Stock of
Oglebay Norton were outstanding. The affirmative vote of the holders of
two-thirds of the shares of Common Stock of Oglebay Norton outstanding on the
Record Date is necessary to approve and adopt the Agreement and Plan of Merger.
All other matters that may properly come before the Annual Meeting, including
the approval of the authorization of 30,000,000 Common Shares in the Articles of
Incorporation of the Holding Company, the approval of the Oglebay Norton Company
Director Fee Deferral Plan and the Performance Option Agreement with Mr. John N.
Lauer and the election of directors, require the affirmative vote of a majority
of shares of Common Stock of Oglebay Norton present in person or represented by
proxy at the meeting and entitled to vote on such subject matter, assuming such
majority also constitutes at least a majority of the required quorum. See
"INTRODUCTION -- Voting Rights and Proxy Information."
PURPOSES OF THE ANNUAL MEETING; PROPOSED REORGANIZATION
The purposes of the Annual Meeting are to: (i) consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger providing for the
reorganization of Oglebay Norton through the formation of an Ohio holding
company; (ii) consider and vote upon a proposal to approve the authorization of
30,000,000 Common Shares in the Articles of Incorporation of the Holding
Company, an increase of 20,000,000 shares from that authorized in the Restated
Certificate of Incorporation of Oglebay Norton; (iii) consider and vote upon a
proposal to approve the Oglebay Norton Company Director Fee Deferral Plan; (iv)
consider and vote upon a proposal to approve the Performance Option Agreement
with Mr. John N. Lauer; (v) elect three directors of the class whose terms in
office will expire in 2001; and (vi) hear reports and transact any other
business that may properly come before the Annual Meeting. See
"INTRODUCTION -- Purposes of the Annual Meeting."
Pursuant to the Agreement and Plan of Merger, Oglebay Norton will become a
second-tier wholly-owned subsidiary of the Holding Company, a new Ohio
corporation organized for the purpose of implementing the reorganization, and
all of the outstanding shares of Common Stock of Oglebay Norton will be
converted, on a share-for-share basis, into Common Shares of the Holding
Company. THE CONVERSION OF SHARES WILL OCCUR WITHOUT AN EXCHANGE OF
CERTIFICATES, AND THE STOCKHOLDERS OF OGLEBAY NORTON WILL NOT NEED TO SURRENDER
CERTIFICATES FOR THEIR SHARES OF COMMON STOCK OF OGLEBAY NORTON IN ORDER TO
BECOME STOCKHOLDERS OF THE HOLDING COMPANY. At the effective time of the Merger,
the name of the Holding Company will be changed to "Oglebay Norton Company" and
the name of Oglebay Norton will be changed to "ONCO Transportation Company." See
"REORGANIZATION PROPOSAL -- Formation of Ohio Holding Company."
The reorganization will have no material effect on the financial condition
or results of operations of Oglebay Norton. See "REORGANIZATION PROPOSAL -- No
Material Effect on Financial Condition or Results of Operations."
REASONS FOR THE REORGANIZATION; BOARD RECOMMENDATION
The principal reasons for the reorganization are to permit the operation
and administration of certain operations of Oglebay Norton as separate
subsidiaries of a common holding company, to provide a framework that can
readily accommodate future acquisitions and diversification, to broaden the
alternatives available for future financing, and generally to provide greater
administrative and operational flexibility. Oglebay Norton will,
1
<PAGE> 11
however, experience other potential benefits as a result of the reorganization.
See "REASONS FOR THE REORGANIZATION -- Benefits of the Reorganization."
On February 26, 1998, the Board of Directors of Oglebay Norton unanimously
approved the Agreement and Plan of Merger and the proposed reorganization and
recommended that the stockholders of Oglebay Norton vote to approve and adopt
the Agreement and Plan of Merger at the Annual Meeting. See "REASONS FOR THE
REORGANIZATION -- Board Recommendation."
CONDITIONS TO THE MERGER; EFFECTIVE TIME; ABANDONMENT
The completion of the Merger is conditioned upon (i) the approval and
adoption of the Agreement and Plan of Merger by the stockholders of Oglebay
Norton and (ii) the receipt of the consent of the United States Secretary of
Transportation, which is required by the terms of contracts relating to the
financing of vessels under Title XI of the Merchant Marine Act of 1936. There
can be no assurance that both of these conditions will be satisfied. It is
anticipated that the Merger will become effective promptly after the approval
and adoption of the Agreement and Plan of Merger by the stockholders of Oglebay
Norton and satisfaction of the other condition to the Merger. See
"REORGANIZATION PROPOSAL -- Effective Time; Amendment; Abandonment."
The Merger will be abandoned if the Agreement and Plan of Merger is not
approved and adopted by the stockholders of Oglebay Norton. In addition, the
Board of Directors of Oglebay Norton may abandon the Merger at any time, whether
or not the stockholders of Oglebay Norton have approved and adopted the
Agreement and Plan of Merger or the other conditions have been satisfied,
although the Board has no present intention to do so. See "REORGANIZATION
PROPOSAL -- Effective Time; Amendment; Abandonment."
FEDERAL INCOME TAX CONSEQUENCES TO STOCKHOLDERS
The Merger is intended to qualify as a tax-free reorganization under the
Internal Revenue Code. Assuming such tax treatment, no gain or loss will be
recognized by the stockholders of Oglebay Norton upon the conversion of their
shares of Common Stock of Oglebay Norton into Common Shares of the Holding
Company, and the basis of the Common Shares of the Holding Company received by
such stockholders of Oglebay Norton will be the same as the basis of the shares
of Common Stock of Oglebay Norton held by such stockholders immediately prior to
the Merger. Stockholders should consult their own tax advisors regarding the
federal, state, local and foreign tax consequences of the Merger. See
"REORGANIZATION PROPOSAL -- Federal Income Tax Consequences."
APPRAISAL RIGHTS
Dissenters' rights of appraisal will not be available to the stockholders
of Oglebay Norton with respect to the Merger or the reorganization. See
"REORGANIZATION PROPOSAL -- Appraisal Rights."
ARTICLES OF INCORPORATION AND REGULATIONS OF THE HOLDING COMPANY
The Articles of Incorporation and Regulations of the Holding Company, which
are attached to this Proxy Statement-Prospectus as Exhibits B and C, are
substantially identical to the Restated Certificate of Incorporation and By-laws
of Oglebay Norton, except for amendments necessary to conform the Articles of
Incorporation and Regulations to Ohio law, the amendment set forth in Proposal
II increasing the authorized number of Common Shares of the Holding Company from
10,000,000 to 30,000,000 and certain other minor conforming or stylistic
changes. See "ARTICLES OF INCORPORATION AND REGULATIONS OF THE HOLDING COMPANY."
CAPITAL STOCK OF THE HOLDING COMPANY
The authorized capital stock of the Holding Company consists of 5,000,000
Preferred Shares, without par value, and, if Proposal II is approved, 30,000,000
Common Shares, $1.00 par value per share, which differs from the capitalization
of Oglebay Norton only in the addition of 20,000,000 Common Shares. Immediately
following the Merger, approximately 4,813,351 Common Shares of the Holding
Company will be outstanding and approximately 2,489,981 shares will be held in
treasury. No Preferred Shares of the Holding Company will be
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outstanding immediately after the Merger. See "CAPITAL STOCK OF THE HOLDING
COMPANY -- Number of Authorized Shares."
The terms of the Common Shares of the Holding Company are the same as the
terms of the shares of Common Stock of Oglebay Norton, except to the extent
these terms are affected by the changes in the Articles of Incorporation and
Regulations of the Holding Company and changes due to the applicability of Ohio
law. The Common Shares of the Holding Company, like the shares of Common Stock
of Oglebay Norton, will be traded on the NASDAQ National Market. See "CAPITAL
STOCK OF THE HOLDING COMPANY -- Terms of the Common Shares of the Holding
Company." The terms of the Preferred Shares of the Holding Company will be
determined by the Holding Company's Board of Directors at the time of issuance.
See "CAPITAL STOCK OF THE HOLDING COMPANY -- Terms of the Preferred Shares of
the Holding Company."
APPROVAL OF OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN
On January 28, 1998, the Compensation Subcommittee of Oglebay Norton's
Board of Directors (the "Compensation Subcommittee") and the Board of Directors
adopted and recommended that the stockholders approve the Oglebay Norton Company
Director Fee Deferral Plan (the "Director Plan") pursuant to which non-employee
directors can elect to defer some or all of the fees earned by them for services
as a director of Oglebay Norton and can choose to have amounts deferred
denominated in Share Units or Deferred Cash (as defined in the Director Plan).
The Director Plan is intended to attract and retain qualified individuals to
serve as directors of Oglebay Norton. The Compensation Subcommittee and the
Board of Directors have determined that the Director Plan will provide
non-employee directors with a stronger identity of interests with Oglebay Norton
and its stockholders and will therefore be in the best interests of Oglebay
Norton and all of its stockholders. The Director Plan does not amend or
otherwise affect the Oglebay Norton Company Director Stock Plan pursuant to
which each non-employee director is awarded 200 shares of Common Stock of
Oglebay Norton at the time of each annual meeting of stockholders. See "OGLEBAY
NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN." The complete text of the Director
Plan is attached as Exhibit D to this Proxy Statement-Prospectus.
APPROVAL OF PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER
On December 17, 1997, the Compensation Subcommittee and the Board of
Directors granted to Mr. John N. Lauer, the newly appointed President and Chief
Executive Officer of Oglebay Norton, a Performance Option to acquire up to
380,174 shares of Common Stock of Oglebay Norton, at an exercise price of $38.00
per share, which is $6.00 above the per share closing price as reported on the
NASDAQ National Market on December 16, 1997 (the last closing price available at
the time the option was granted). The options were granted pursuant to a
Performance Option Agreement with Mr. Lauer, a copy of which agreement is
attached to this Proxy Statement-Prospectus as Exhibit E, and are subject to
stockholder approval. See "PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER"
and "OFFICER AGREEMENTS -- Employment Agreement with Mr. John N. Lauer."
ELECTION OF DIRECTORS
The nominees for election as directors are Malvin E. Bank, William G. Bares
and John D. Weil. Information about each of these nominees is set forth under
the heading "ELECTION OF DIRECTORS -- Nominees for Terms Expiring in 2001." All
of these nominees are presently members of the Board of Directors and were
elected by the stockholders. It is anticipated that, upon completion of the
Merger, the persons elected as directors of Oglebay Norton will also serve as
directors of the Holding Company. See "REORGANIZATION PROPOSAL -- Management of
the Holding Company."
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INTRODUCTION
This Proxy Statement-Prospectus is being furnished to the stockholders of
Oglebay Norton in connection with the solicitation of proxies by the Board of
Directors of Oglebay Norton for use at the Annual Meeting. This Proxy
Statement-Prospectus, the enclosed Notice of Annual Meeting of Stockholders, and
the enclosed form of Proxy were first mailed to the stockholders of Oglebay
Norton on or about April 28, 1998.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the stockholders of Oglebay Norton will be asked to:
(i) consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger providing for the reorganization of Oglebay Norton through the
formation of an Ohio holding company; (ii) consider and vote upon a proposal to
approve the authorization of 30,000,000 Common Shares in the Articles of
Incorporation of the Holding Company, an increase of 20,000,000 shares from that
authorized in the Restated Certificate of Incorporation of Oglebay Norton; (iii)
consider and vote upon a proposal to approve the Oglebay Norton Company Director
Fee Deferral Plan; (iv) consider and vote upon a proposal to approve the
Performance Option Agreement with Mr. John N. Lauer; (v) elect three directors
of the class whose terms in office will expire in 2001; and (vi) hear reports
and transact any other business that may properly come before the Annual
Meeting.
Pursuant to the Agreement and Plan of Merger, Oglebay Norton will become a
second-tier wholly-owned subsidiary of the Holding Company and all of the
outstanding shares of Common Stock of Oglebay Norton will be converted, on a
share-for-share basis, into Common Shares of the Holding Company. The conversion
of shares of Common Stock of Oglebay Norton in the Merger will occur without an
exchange of certificates. Following the Merger, certificates formerly
representing shares of Common Stock of Oglebay Norton will be deemed to
represent Common Shares of the Holding Company. STOCKHOLDERS OF OGLEBAY NORTON
WILL NOT NEED TO EXCHANGE THEIR CERTIFICATES IN ORDER TO BECOME STOCKHOLDERS OF
THE HOLDING COMPANY. A description of the proposal to approve and adopt the
Agreement and Plan of Merger is set forth below under the heading "PROPOSAL
I -- REORGANIZATION PROPOSAL," and a copy of the Agreement and Plan of Merger is
attached as Exhibit A to this Proxy Statement-Prospectus. A description of the
proposal to approve the authorization of 30,000,000 Common Shares in the
Articles of Incorporation of the Holding Company is set forth below under the
heading "PROPOSAL II -- COMMON SHARES OF THE HOLDING COMPANY."
A description of the proposal to approve the Oglebay Norton Company
Director Fee Deferral Plan is set forth below under the heading "PROPOSAL
III -- OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN," and a copy of the
plan is attached as Exhibit D to this Proxy Statement-Prospectus. Likewise, a
description of the proposal to approve the Performance Option Agreement with Mr.
John N. Lauer appears below under the heading "PROPOSAL IV -- PERFORMANCE OPTION
AGREEMENT WITH MR. JOHN N. LAUER," and a copy of the agreement is attached as
Exhibit E to this Proxy Statement-Prospectus.
The nominees for election as directors, with information about each of
them, is set forth below under the heading "PROPOSAL V -- ELECTION OF
DIRECTORS -- Nominees for Terms Expiring in 2001."
VOTING RIGHTS AND PROXY INFORMATION
Record Date; Required Vote. The Board of Directors of Oglebay Norton has
fixed the close of business on April 9, 1998 as the record date (the "Record
Date") for determining the stockholders entitled to notice of the Annual Meeting
and to vote at the Annual Meeting or any postponement or adjournment thereof. As
of April 3, 1998, 4,763,351 shares of Common Stock of Oglebay Norton were
outstanding, each of which is entitled to one vote.
Approval of the Agreement and Plan of Merger requires the affirmative vote
of the holders of two-thirds of the shares of Common Stock of Oglebay Norton
outstanding on the Record Date. All other matters that may properly come before
the Annual Meeting, including the approval of the authorization of 30,000,000
Common Shares in the Articles of Incorporation of the Holding Company, the
approval of the Oglebay Norton Company Director Fee Deferral Plan, the approval
of the Performance Option Agreement with Mr. John N. Lauer and the election of
directors, require the affirmative vote of a majority of the outstanding shares
of Common Stock of
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Oglebay Norton present in person or represented by proxy at the meeting and
entitled to vote on such subject matter, assuming such majority also constitutes
at least a majority of the required quorum. The percentage of outstanding shares
of Common Stock of Oglebay Norton held by its directors and executive officers
and entitled to vote at the Annual Meeting is set forth below under the heading
"BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK." Abstentions and broker
non-votes are tabulated in determining votes present at the meeting. An
abstention or broker non-vote has the same effect as a vote against a proposal
or a director nominee, as each abstention or broker non-vote is one less vote in
favor of a proposal or for a director nominee.
In the election of directors, each stockholder has the right to cumulate
the stockholder's votes and to give one nominee a number of votes equal to the
number of directors to be elected multiplied by the number of votes which the
stockholder's shares are entitled, or the stockholder may distribute the
stockholder's votes on the same principle among two or more nominees. Cumulative
voting will be in effect if any stockholder gives notice in writing to the
President or the Secretary of Oglebay Norton at least 48 hours in advance of the
time set for the Annual Meeting and an announcement is made at the beginning of
the Annual Meeting by the President, Secretary or the stockholder giving the
notice. Oglebay Norton has not been advised of any stockholder who intends to
cumulate his votes.
Proxies. All shares of Common Stock of Oglebay Norton represented at the
Annual Meeting by properly executed Proxies will be voted in accordance with the
instructions on the Proxies. If no instructions are given, Proxies will be voted
FOR the approval and adoption of the Agreement and Plan of Merger, FOR the
approval of the authorization of 30,000,000 Common Shares in the Articles of
Incorporation of the Holding Company, FOR the approval of the Oglebay Norton
Company Director Fee Deferral Plan, FOR the approval of the Performance Option
Agreement with Mr. John N. Lauer, and FOR the election as directors of the
nominees listed under the heading "ELECTION OF DIRECTORS -- Nominees for Terms
Expiring in 2001." If cumulative voting is in effect, shares represented by each
properly signed Proxy card will also be voted on a cumulative basis, with the
votes distributed among the nominees in accordance with the judgment of the
persons named in the Proxy card. However, the persons named in the Proxy card
will not vote any shares cumulatively for nominees for whom authority to vote
was withheld. Oglebay Norton has no knowledge of any other matters to be
presented at the Annual Meeting but, in the event that other matters do properly
come before the Annual Meeting, the persons named in the Proxies will also vote
on these matters in accordance with their best judgment.
A stockholder giving a Proxy pursuant to this solicitation may revoke the
Proxy at any time before it is voted. A Proxy may be revoked by filing with the
Secretary of Oglebay Norton, at the address set forth above, a written notice of
revocation bearing a later date than the Proxy, by duly executing a subsequent
Proxy relating to the same shares and delivering it to the Secretary or by
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute the revocation of a Proxy).
Oglebay Norton will bear the cost of preparing and mailing the proxy
material to the stockholders of Oglebay Norton in connection with the Annual
Meeting. The cost of soliciting Proxies, in addition to a fee of $7,500 payable
to Georgeson & Co., will be borne by Oglebay Norton.
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PROPOSAL I
REORGANIZATION PROPOSAL
FORMATION OF OHIO HOLDING COMPANY
Oglebay Norton Holding Company (the "Holding Company") is a wholly-owned
subsidiary of Oglebay Norton recently organized under the laws of the state of
Ohio. The Holding Company has a newly-formed Ohio subsidiary, ONCO Investment
Company (the "Investment Company"), which in turn has a newly-formed Delaware
subsidiary, Oglebay Norton Merger Company (the "Merger Company"). The Merger
Company has been organized solely for the purpose of effecting the merger (the
"Merger") contemplated by the Reorganization Proposal. As a result of the
Merger, the Merger Company will be merged into Oglebay Norton, the Merger
Company will cease to exist and Oglebay Norton will be the surviving entity and
a second-tier wholly-owned subsidiary of the Holding Company. Upon consummation
of the Merger, stockholders of Oglebay Norton will become stockholders of the
Holding Company and will receive one Common Share of the Holding Company in
exchange for each share of Common Stock of Oglebay Norton now held by the
stockholder. A copy of the Agreement and Plan of Merger is attached as Exhibit A
to this Proxy Statement-Prospectus and is hereby incorporated by reference.
At the time of the Merger, the name of the Holding Company will be changed
to "Oglebay Norton Company," and the name of Oglebay Norton will be changed to
"ONCO Transportation Company."
The Holding Company, the Investment Company and the Merger Company are
newly formed corporations organized by Oglebay Norton for the purpose of
carrying out the Merger. Prior to the completion of the Merger, none of the
Holding Company, the Investment Company or the Merger Company is expected to
have any significant assets or liabilities or to engage in any significant
activities, other than those arising under the Agreement and Plan of Merger or
associated with the reorganization.
The conversion of shares of Common Stock of Oglebay Norton in the Merger
will occur without an exchange of certificates. Following the Merger,
certificates formerly representing shares of Common Stock of Oglebay Norton will
be deemed to represent Common Shares of the Holding Company. THEREFORE, THE
STOCKHOLDERS OF OGLEBAY NORTON WILL NOT NEED TO EXCHANGE THEIR CERTIFICATES IN
ORDER TO BECOME STOCKHOLDERS OF THE HOLDING COMPANY AND ARE REQUESTED NOT TO
SURRENDER THEIR CERTIFICATES AT THIS TIME. If such an exchange becomes advisable
in the future, stockholders will be notified at that time and instructed as to
proper procedures for exchanging their certificates.
MANAGEMENT OF THE HOLDING COMPANY
If the Agreement and Plan of Merger is approved by the stockholders, the
directors elected at the Annual Meeting will serve as directors of the Holding
Company. Oglebay Norton will cause R. Thomas Green, Jr., Ralph D. Ketchum and
John N. Lauer to be elected as Class I directors of the Holding Company whose
terms in office would continue until the Annual Meeting of Stockholders of the
Holding Company to be held in 1999, Brent D. Baird, James T. Bartlett, Albert C.
Bersticker and William G. Pryor to be elected as Class II directors, whose terms
in office would continue until the Annual Meeting of Stockholders of the Holding
Company to be held in 2000, and Malvin E. Bank, William G. Bares and John D.
Weil to be elected as Class III directors, whose terms in office would continue
until the Annual Meeting of Stockholder of the Holding Company to be held in
2001. It is anticipated that, upon completion of the Merger, the executive
officers of Oglebay Norton would be elected to substantially the same positions
with the Holding Company.
EMPLOYEE BENEFIT PLANS
The pension plans and other employee benefit plans of Oglebay Norton will
not be changed in the reorganization, except to permit participation by
employees of the Holding Company. All of the options to purchase shares of
Common Stock of Oglebay Norton granted to executive officers of Oglebay Norton
and rights of directors to acquire shares of Common Stock under the Oglebay
Norton Company Director Stock Plan (the "Director Stock Plan") that are
outstanding when the Merger becomes effective will be converted into options to
purchase (or, as to the Director Stock Plan, rights to acquire) the same number
of Common Shares of the Holding
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Company at the same price and on the same terms and conditions as were in effect
prior to the Merger, and the Holding Company will assume the obligation to sell
or grant shares under these options and the Director Stock Plan. In addition,
after the Merger becomes effective, stock equivalent units outstanding under the
Oglebay Norton Long-Term Incentive Plan (and, if approved by the stockholders,
the Director Fee Deferral Plan) will relate to Common Shares of the Holding
Company rather than to shares of Common Stock of Oglebay Norton and dividend
equivalents under the Oglebay Norton Long-Term Incentive Plan (and, if approved
by the stockholders, the Director Fee Deferral Plan) will relate to cash
dividends paid on the Common Shares of the Holding Company. See "COMPENSATION OF
EXECUTIVE OFFICERS."
INDEBTEDNESS OF OGLEBAY NORTON
All indebtedness of Oglebay Norton outstanding before the reorganization
will remain the indebtedness of Oglebay Norton and will not, except as described
below, be guaranteed or assumed by the Holding Company. It is possible that the
United States Secretary of Transportation, as a condition to consenting to the
Merger, will require the Holding Company to guarantee or assume the payment of
indebtedness owed by Oglebay Norton under contracts relating to the construction
and chartering of vessels financed under Title XI of the Merchant Marine Act of
1939 (the "Title XI Contracts") and will insist that the financial tests and
restrictive covenants under the Title XI contracts relating to the financing of
the Columbia Star continue to be applied on a consolidated basis. See
"REORGANIZATION PROPOSAL -- Conditions to the Merger."
Oglebay Norton is also a party to a credit agreement with certain banks
providing a term loan in the amount of $50,000,000 and a line of credit in the
amount of $40,000,000 to Oglebay Norton. Under the terms of the credit
agreement, the consent of the banks is required for the reorganization. Oglebay
Norton will, prior to the completion of the reorganization, enter into
discussions with the banks, which discussions may lead to the consent of the
banks to the reorganization, the modification of the terms of the credit
agreement or the substitution of the Holding Company as the borrower under the
credit agreement. If the discussions with the banks are unsuccessful, Oglebay
Norton intends to cancel the credit agreement. Oglebay Norton believes that
other sources of credit are readily available and that the cancellation of the
credit agreement would not have a material adverse effect upon Oglebay Norton or
the Holding Company.
OGLEBAY NORTON RESTATED RIGHTS AGREEMENT
Oglebay Norton is party to a Restated Rights Agreement, dated as of
February 22, 1989, with National City Bank as Rights Agent. Under the Restated
Rights Agreement, rights have been issued with respect to each outstanding share
of Common Stock of Oglebay Norton. In the event that any person or group
acquires 15% or more of the outstanding shares of Common Stock of Oglebay
Norton, each right "flips in" and entitles the holder to purchase an additional
share of Common Stock for $2.50. As a result of the Merger, the Holding Company
will assume the Restated Rights Agreement, and thereafter the rights issued
under the Restated Rights Agreement will relate to Common Shares of the Holding
Company, rather than shares of Common Stock of Oglebay Norton.
NO MATERIAL EFFECT ON FINANCIAL CONDITION OR RESULTS OF OPERATIONS
The consolidated financial position and proforma results of operations of
the Holding Company as of the effective time of the Merger will be substantially
identical to the consolidated financial position and results of operations of
Oglebay Norton prior to the Merger. Accordingly, no proforma statements of the
Holding Company showing the effect of the Merger or the subsequent transfers are
included in this Proxy Statement-Prospectus.
CONDITIONS TO THE MERGER
Oglebay Norton's obligation to complete the Merger is conditioned upon (i)
the approval and adoption of the Agreement and Plan of Merger by the
stockholders of Oglebay Norton and (ii) the receipt by Oglebay Norton of the
consent of the United States Secretary of Transportation. See "REORGANIZATION
PROPOSAL -- Indebtedness of Oglebay Norton."
The consent of the United States Secretary of Transportation is required
under the Title XI contracts. One of the Title XI contracts, relating to the
financing of the vessel Columbia Star, imposes restrictive covenants on
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Oglebay Norton. Additional restrictive covenants are imposed if certain
financial tests are not met. These financial tests relate to the consolidated
net worth, long-term debt and working capital of Oglebay Norton and its
subsidiaries. Oglebay Norton presently meets these financial tests and,
therefore, the additional restrictive covenants are not in effect at this time.
It is possible that the Secretary of Transportation, as a condition to
consenting to the Merger, will require the Holding Company to guarantee or
assume the payment of indebtedness owed by Oglebay Norton under the Title XI
contracts and will insist that the financial tests and restrictive covenants,
including the additional restrictive covenants, under the Title XI contracts
relating to the financing of the Columbia Star continue to be applied on a
consolidated basis. Oglebay Norton will request the consent of the Secretary of
Transportation to the reorganization prior to the date of the Annual Meeting.
There can be no assurance that both of the conditions to Oglebay Norton's
obligation to complete the Merger will be satisfied. Oglebay Norton cannot
implement the proposed reorganization without completing the Merger, which is
necessary to form the holding company structure.
No material governmental approvals, other than the consent of the United
States Secretary of Transportation, are needed to complete the reorganization.
EFFECTIVE TIME; AMENDMENT; ABANDONMENT
The Merger will become effective upon the filing with the Delaware
Secretary of State of either a certified copy of the Agreement and Plan of
Merger or a separate certificate of merger. It is anticipated that this filing
will be made as soon as practicable following the satisfaction of the conditions
to Oglebay Norton's obligation to complete the Merger. Oglebay Norton has the
right to defer this filing and the completion of the Merger for any period of
time that it deems to be appropriate, although it presently intends to complete
the Merger as soon as practicable. See "REORGANIZATION PROPOSAL -- Conditions to
the Merger."
The Agreement and Plan of Merger may be amended at any time before the
Merger becomes effective by a written instrument approved by the Board of
Directors of Oglebay Norton and executed by all of the parties to the Agreement
and Plan of Merger. However, after the approval and adoption of the Agreement
and Plan of Merger by the stockholders of Oglebay Norton, no such amendment may,
in the judgment of the Board of Directors of Oglebay Norton, materially and
adversely affect the rights of the stockholders of Oglebay Norton, unless the
Agreement and Plan of Merger, as amended, is resubmitted to and approved and
adopted by the stockholders of Oglebay Norton.
The Agreement and Plan of Merger will terminate and the Merger will be
abandoned if the holders of two-thirds of the outstanding shares of Common Stock
of Oglebay Norton do not vote to approve and adopt the Agreement and Plan of
Merger at the Annual Meeting. In addition, the Board of Directors of Oglebay
Norton has the right to terminate the Agreement and Plan of Merger and abandon
the Merger, whether or not the stockholders of Oglebay Norton have approved and
adopted the Agreement and Plan of Merger or the other conditions have been
satisfied, although the Board has no present intention to do so.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Deloitte & Touche LLP, the following discussion
accurately summarizes the material United States federal income tax consequences
of the Merger to the stockholders of Oglebay Norton, Oglebay Norton, the Holding
Company, the Investment Company and the Merger Company. This opinion is based on
the current provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), applicable Treasury Regulations, judicial authority
and administrative rulings and practice. No ruling from the Internal Revenue
Service (the "IRS") has been or will be sought with respect to any aspect of the
Merger. Therefore, there can be no assurance that the IRS will not take a
contrary view as to the tax consequences described herein. Furthermore,
legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set forth
herein.
The following does not consider the tax consequences of the Merger under
state, local and foreign law. Moreover, special considerations not described
herein may apply to certain taxpayers, such as financial institutions,
broker-dealers, insurance companies, tax-exempt organizations, investment
companies and persons who are neither citizens nor residents of the United
States, or who are foreign corporations, foreign partnerships or foreign estates
or trusts as to the United States. In issuing its opinion, Deloitte & Touche LLP
has relied upon
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certain representations made by Oglebay Norton. EACH STOCKHOLDER IS URGED TO
CONSULT THE STOCKHOLDER'S OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE MERGER.
Subject to the qualifications set forth above, the Merger will qualify as a
tax-free reorganization under the Internal Revenue Code, with the following
results:
(i) No gain or loss shall be recognized by the stockholders of
Oglebay Norton upon the conversion of their shares of Common Stock of
Oglebay Norton into Common Shares of the Holding Company;
(ii) The basis of the Common Shares of the Holding Company received
by each stockholder of Oglebay Norton shall be the same as the basis of the
shares of Common Stock of Oglebay Norton held by such stockholder
immediately prior to the Merger;
(iii) The holding period of the Common Shares of the Holding Company
received by each stockholder of Oglebay Norton shall include the holding
period of the shares of Common Stock of Oglebay Norton held by such
stockholder immediately prior to the Merger, provided that such stockholder
held such shares of Common Stock of Oglebay Norton as a capital asset on
the date of the Merger; and
(iv) No gain or loss shall be recognized by Oglebay Norton, the
Holding Company, the Investment Company or the Merger Company in connection
with the Merger.
APPRAISAL RIGHTS
Appraisal rights are not available in a merger under Delaware law where the
shares of the subject corporation, and the shares received by the stockholders
in the merger, are listed on a national securities exchange or designated as a
national market system security on an interdealer quotations system by the
National Association of Securities Dealers, Inc. Since the shares of Common
Stock of Oglebay Norton are, and the Common Shares of the Holding Company after
consummation of the Merger will be, listed as part of the NASDAQ National
Market, appraisal rights will not be available to the stockholders of Oglebay
Norton in connection with the Merger. See "SIGNIFICANT DIFFERENCES BETWEEN THE
CORPORATION LAWS OF DELAWARE AND OHIO -- Rights of Dissenting Stockholders."
REASONS FOR THE REORGANIZATION
BENEFITS OF THE REORGANIZATION
The reorganization will permit the operation and administration of certain
operations of Oglebay Norton as separate subsidiaries of a common holding
company. This structure will, to some extent, enable Oglebay Norton to insulate
certain of its assets and operations from some of the risks incident to other
operations. The holding company structure will also readily accommodate
acquisitions and further diversification. Whenever attractive opportunities
arise to enter into new lines of business or to expand existing lines of
business, either through the acquisition of other companies or internal growth,
the Holding Company will have the option of operating the new or expanded lines
of business as separate subsidiaries of the Holding Company or as part of
existing subsidiaries. The holding company structure should enhance the
prospects for successfully concluding acquisitions when opportunities arise.
The reorganization will also broaden the alternatives available for future
financing. Financing could be arranged by one or more of the separate
subsidiaries of the Holding Company, based on their separate cash flows and
credit worthiness, or by the Holding Company. Financing by the Holding Company
could take the form of either debt or equity, utilizing the authorized but
unissued Common Shares or Preferred Shares of the Holding Company. See "CAPITAL
STOCK OF THE HOLDING COMPANY." These authorized shares could, for example, be
issued to finance acquisitions, to raise capital for internal expansion or to
generate additional working capital.
The holding company structure will also generally provide greater
administrative and operational flexibility, in that management authority and
responsibility can be precisely delineated by the appointment of the directors
and officers of the separate subsidiaries of the Holding Company and the
designation of their official functions.
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Finally, the reorganization would significantly reduce the annual franchise
tax liability of Oglebay Norton. By reducing the number of authorized shares of
Common Stock from 10,000,000 to 1 in its Certificate of Incorporation, Oglebay
Norton will reduce its franchise tax liability to the state of Delaware, which
tax is based upon the authorized capital stock of a corporation.
ARTICLES OF INCORPORATION AND REGULATIONS
OF THE HOLDING COMPANY
The Agreement and Plan of Merger provides that, upon completion of the
Merger, the internal affairs of the Holding Company will be governed by the
Articles of Incorporation and Regulations of the Holding Company, copies of
which are attached as Exhibits B and C to this Proxy Statement-Prospectus. The
Articles of Incorporation and the Regulations of the Holding Company are
substantially identical to the Restated Certificate of Incorporation and By-laws
of Oglebay Norton, except (i) if Proposal II is approved, for an amendment to
the Articles of Incorporation increasing the authorized number of Common Shares
of the Holding Company from 10,000,000 to 30,000,000, (ii) for amendments
discussed in the immediately following section which are necessary to conform
the Articles of Incorporation and Regulations to Ohio law, and (iii) for certain
other minor conforming or stylistic changes.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION
LAWS OF DELAWARE AND OHIO
As a result of the Merger, stockholders of Oglebay Norton will receive
Common Shares of the Holding Company, an Ohio corporation, in exchange for their
shares of Common Stock of Oglebay Norton, a Delaware corporation. The following
is a summary of certain significant differences between the rights of
stockholders under Delaware law and Ohio law. The differences arise in large
part from the differences between the Delaware General Corporation Law and the
Ohio General Corporation Law (hereinafter referred to as the "DGCL" and "OGCL,"
respectively). Although it is impractical to compare all of the aspects in which
Delaware law and Ohio law differ with respect to the rights of stockholders, the
following discussion summarizes significant differences between the laws of the
two states.
AMENDMENT OF CHARTER DOCUMENTS
Delaware law requires approval by holders of a majority of the outstanding
stock of a corporation, and a majority of the outstanding stock of each class
entitled to vote thereon, in order to amend a Delaware corporation's certificate
of incorporation. To amend an Ohio corporation's articles of incorporation, Ohio
law generally requires the approval of stockholders holding two-thirds of the
voting power of the corporation, unless otherwise specified in the corporation's
articles of incorporation. The Articles of Incorporation of the Holding Company
provide that, except for certain actions specified in the Articles, any action
that Ohio law would otherwise require the affirmative vote of the two-thirds of
the voting power of the Holding Company may be taken with the affirmative vote
of a majority of such voting power. The Articles of Incorporation of the Holding
Company may therefore be amended by a majority vote of the Holding Company's
stockholders, notwithstanding the differences between Delaware law and Ohio law.
AMENDMENT AND REPEAL OF BY-LAWS/REGULATIONS
Under Delaware law, the holders of a majority of the voting power of a
corporation and, when provided in the certificate of incorporation, the
directors of the corporation have the power to adopt, amend and repeal the by-
laws of a corporation. Oglebay Norton's Restated Certificate of Incorporation
and By-laws provide that the Board of Directors of Oglebay Norton has the power
to amend the By-laws. Ohio law provides that only the stockholders of a
corporation have the power to amend and repeal a corporation's regulations, by a
vote of a majority of the voting power of the corporation. Accordingly, the
Regulations of the Holding Company differ from the By-laws of Oglebay Norton as
they provide that the Regulations may be amended or repealed only by the
stockholders of the Holding Company.
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REMOVAL OF DIRECTORS
Delaware law provides that directors may be removed from office, with or
without cause, by the holders of a majority of the voting power of all
outstanding voting stock, except that (i) if the corporation has a classified
board and its certificate of incorporation does not otherwise provide, directors
may be removed only for cause, or (ii) in the case of a corporation that has
cumulative voting, no director may be removed without cause if the votes cast
against the director's removal would be sufficient to elect the director at an
election of the corporation. Oglebay Norton has a classified board and its
Restated Certificate of Incorporation does not provide that directors may be
removed without cause. Accordingly, under Delaware law and the Restated
Certificate of Incorporation, stockholders can remove directors, but only for
cause. Ohio law provides that, unless the governing documents of a corporation
provide that directors may not be removed, directors may be removed, with or
without cause, by the affirmative vote of the holders of a majority of the
voting power of the corporation with respect to the election of directors;
except that, unless all the directors or all the directors of a particular class
are removed, no individual director may be removed if the votes of a sufficient
number of shares are cast against such director's removal which, if voted at an
election of the directors of the corporation, would be sufficient to elect the
director. Consistent with Ohio law, the Regulations of the Holding Company
provide that no director may be removed by the stockholders.
VACANCIES ON THE BOARD
Delaware Law provides that, unless the governing documents of a corporation
provide otherwise, vacancies and newly created directorships resulting from a
resignation or any increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class may be filled by
a majority of the directors then in office. Neither the Restated Certificate of
Incorporation nor the By-laws of Oglebay Norton alters this provision of
Delaware law. Ohio law provides that, unless the governing documents of a
corporation provide otherwise, any vacancy in the board of directors may be
filled by a majority of the remaining directors of a corporation. Neither the
Articles of Incorporation nor the Regulations of the Holding Company alters this
provision of Ohio law.
RIGHTS TO CALL SPECIAL MEETINGS OF STOCKHOLDERS
Delaware Law permits special meetings of stockholders to be called by the
board of directors and such other persons, including stockholders, as the
certificate of incorporation or by-laws may provide. Delaware law does not
require that stockholders be given the right to call special meetings. The
By-laws of Oglebay Norton extends the right to call a special meeting of
stockholders to the Chairman of the Board, the President and a majority of the
Board of Directors of Oglebay Norton, but not the stockholders. Under Ohio law,
the holders of at least 25% of the outstanding shares of a corporation, unless
the corporation's articles or regulations specify another percentage, which may
not be greater than 50%, the directors, by action at a meeting or a majority of
the directors acting without a meeting, the Chairman of the Board, the President
or, in case of the President's absence, death or disability, the Vice President
authorized to exercise the authority of the President have the authority to call
special meetings of stockholders. The Regulations of the Holding Company provide
that a special meeting may be called by, in addition to the Chairman of the
Board, the President and a majority of the Board of Directors, the holders of at
least 50% of all outstanding shares of the Holding Company entitled to vote at
the meeting.
STOCKHOLDER ACTION WITHOUT A MEETING
Delaware law provides that, unless otherwise provided in a corporation's
certificate of incorporation, any action that may be taken at an annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if the holders of common stock having not less than
the minimum number of votes otherwise required to approve such action at a
meeting of stockholders consent in writing. The Restated Certificate of
Incorporation of Oglebay Norton provides that any action required or permitted
to be taken by the stockholders of the corporation may be taken only at an
annual or special meeting of such stockholders, unless consent in writing is
given by all the stockholders of the corporation. Under Ohio law, unless
otherwise provided in the articles of incorporation or regulations of the
corporation, any action that may be taken by stockholders at a meeting may be
taken without a meeting with the unanimous written consent of all stockholders
entitled to vote
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at the meeting. The Articles of Incorporation and Regulations of the Holding
Company do not alter this provision of Ohio law. Therefore, as under the
Restated Certificate of Incorporation of Oglebay Norton, the stockholders of the
Holding Company may only take actions without a meeting of stockholders upon the
unanimous consent of all stockholders of the Holding Company.
CLASS VOTING
Delaware law generally requires voting by separate classes only with
respect to amendments to a corporation's certificate of incorporation that
adversely affect the holders of those classes or that increase or decrease the
aggregate number of authorized shares or the par value of the shares of any of
those classes. Under Ohio law, holders of a particular class of shares generally
are entitled to vote as a separate class if the rights of that class are
affected in certain respects by mergers, consolidations or amendments to the
articles of incorporation.
CUMULATIVE VOTING
Under Delaware Law, stockholders do not have the right to cumulate their
votes in the election of directors unless that right is granted in the
corporation's certificate of incorporation. The Restated Certificate of
Incorporation of Oglebay Norton grants stockholders the right to cumulate their
votes in the election of directors. Under Ohio Law, unless the articles of
incorporation eliminate cumulative voting for directors, each stockholder has
the right to vote cumulatively in the election of directors if certain notice
requirements are satisfied. The Articles of Incorporation of the Holding Company
do not eliminate cumulative voting in the election of directors. Accordingly, if
the notice requirements of Ohio law are satisfied, the stockholders of the
Holding Company will have the right to vote cumulatively in the election of
directors, even though the Articles of Incorporation of the Holding Company do
not specifically grant to stockholders the right to vote cumulatively.
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
Delaware law, in Section 203 of the DGCL, provides generally that any
person who acquires 15% or more of a corporation's voting stock (thereby
becoming an "interested stockholder") may not engage in a wide range of business
combinations with the corporation for a period of three years following the date
the person became an interested stockholder, unless (i) the board of directors
of the corporation has approved, prior to the date on which such stockholder
became an interested stockholder, either the business combination or the
transaction that resulted in the person becoming an interested stockholder, (ii)
upon consummation of the transaction that resulted in the person becoming an
interested stockholder, that person owns at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding shares
owned by persons who are directors and also officers and shares owned by
employee stock plans in which participants do not have the right to determine
confidentially whether shares will be tendered in a tender or exchange offer),
or (iii) the business combination is approved by the board of directors and
authorized by the affirmative vote (at an annual or special meeting and not by
written consent) of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder.
These restrictions on business combinations with interested stockholders do
not apply under certain circumstances, including, but not limited to, where (i)
the corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by Section 203 of the DGCL, or (ii) the
corporation, by action of its stockholders, adopts an amendment to its by-laws
or certificate of incorporation expressly electing not to be governed by such
section. Neither the original certificate of incorporation of Oglebay Norton nor
any amendment thereto expressly elects Oglebay Norton not to be governed by
Section 203 of the DGCL.
Ohio law, in Chapter 1704 of the OGCL, prohibits an "issuing public
corporation" (as defined below) from engaging in a "Chapter 1704 transaction"
(as defined below) with an "interested shareholder" (generally, a shareholder
who, directly or indirectly, exercises or directs the exercise of 10% or more of
the voting power of the corporation) for a period of three years following the
date on which the person becomes an interested shareholder unless, prior to such
date, the directors of the issuing public corporation approve either the
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Chapter 1704 transaction or the acquisition of shares pursuant to which such
person became an interested shareholder.
After the initial three-year moratorium has expired, an issuing public
corporation may engage in a Chapter 1704 transaction with an interested
shareholder if (i) the acquisition of shares pursuant to which the person became
an interested shareholder received the prior approval of the board of directors
of the issuing public corporation, (ii) the Chapter 1704 transaction is approved
by the affirmative vote of the holders of shares representing at least
two-thirds of the voting power of the issuing public corporation and by the
holders of at least a majority of voting shares which are not beneficially owned
by the interested shareholder or an affiliate or associate of an interested
shareholder, or (iii) the Chapter 1704 transaction meets certain statutory tests
designed to ensure that the transaction is economically fair to all
shareholders.
For purposes of Chapter 1704 of the OGCL, an "issuing public corporation"
is any Ohio corporation with fifty or more shareholders that has its principal
place of business, its principal executive offices or substantial assets within
the state of Ohio. Upon consummation of the Merger, the Holding Company will be
an issuing public corporation for this purpose. A "Chapter 1704 transaction"
includes any merger, consolidation, combination or majority share acquisition
(as defined below) between or involving an issuing public corporation or any
subsidiary of an issuing public corporation and an interested shareholder or an
affiliate or associate of an interested shareholder. A Chapter 1704 transaction
also includes certain transfers of property, dividends and issuance or transfers
of shares from or by an issuing public corporation or a subsidiary of an issuing
public corporation to, with or for the benefit of an interested shareholder or
an affiliate or associate of an interested shareholder unless such transaction
is in the ordinary course of business of the issuing public corporation on terms
no more favorable to the interested shareholder than those acceptable to third
parties as demonstrated by contemporaneous transactions. Finally, Chapter 1704
transactions include certain transactions which (i) increase the proportionate
share ownership of an interested shareholder, (ii) result in the adoption of a
plan or proposal for the dissolution, winding up of the affairs or liquidation
of the issuing public corporation if such plan is proposed by or on behalf of
the interested shareholder, or (iii) pledge or extend the credit or financial
resources of the issuing public corporation to or for the benefit of the
interested shareholder.
The Restated Certificate of Incorporation of Oglebay Norton contains
provisions relating to business combinations with interested stockholders and
these same provisions appear substantially unaltered in the Articles of
Incorporation of the Holding Company. The provisions state that the affirmative
vote of 75% of the voting power of the corporation shall be required to approve
a "business combination" (as defined below) between the corporation and an
"interested stockholder" (defined generally as any person or entity that owns,
together with any affiliates of the person or entity, shares having at least 25%
of the voting power of the corporation) unless both (a) certain requirements
which are intended to ensure that the stockholders of the corporation receive
fair consideration for their shares in the business combination are satisfied
and (b) certain other requirements which are intended to ensure that the
interested stockholder does not take unfair advantage of the corporation between
the time such person becomes an interested stockholder and the time that the
business combination is consummated are satisfied. For purposes of these
provisions, the term "business combination" includes (i) the merger or
consolidation of the corporation or any of its subsidiaries with or into the
interested stockholder, (ii) the sale, lease, pledge or other disposition by the
corporation or any of its subsidiaries to or from the interested stockholder of
assets having an aggregate value equal to or exceeding 20% of the fair market
value of the corporation, (iii) the issuance, sale or other transfer by the
corporation or any of its subsidiaries to or from the interested stockholder of
securities having an aggregate value equal to or exceeding 20% of the fair
market value of the corporation, (iv) the liquidation or dissolution of the
corporation proposed by the interested stockholder, (v) the reclassification of
securities, recapitalization of the corporation or other transaction that has
the effect of increasing the proportionate share of any security owned by the
interested stockholder, and (vi) any other transaction or series of transactions
that is similar in purpose to those transactions referred to in clauses (i)
through (vi) above.
CONTROL SHARE ACQUISITION
Ohio law, in Section 1701.831 of the OGCL, requires that, unless the
articles of incorporation or regulations of a corporation otherwise provide, any
"control share acquisition" of an "issuing public corporation" (as
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defined above) can only be made with the prior approval of the corporation's
stockholders, by the affirmative vote of a majority of the voting power of the
corporation and a majority of the portion of such voting power excluding the
voting power of interested shares (those held by the acquiring person, by
certain officers and directors and by persons who acquire a block of shares
after the first public disclosure of a proposed control share acquisition or
certain other transactions). A "control share acquisition" is defined as any
acquisition of shares of a corporation that, when added to all other shares of
that corporation owned by the acquiring person, would enable that person to
exercise levels of voting power in any of the following ranges: at least
one-fifth or more but less than one-third; one-third or more but less than a
majority; or a majority or more. There is no similar provision under Delaware
law. Neither the Articles of Incorporation nor the Regulations of the Holding
Company provide that Section 1701.831 does not apply to the Holding Company.
CONTROL BID
Under Ohio law, any offeror making a "control bid" for the securities of a
"subject company" (generally, a corporation with a certain threshold value of
assets located in Ohio and a certain threshold number of stockholders residing
in Ohio) pursuant to a tender offer must file upon commencement of the bid
certain information specified in the Ohio Securities Act with the Ohio Division
of Securities, who may then within five calendar days suspend the bid if the
required information has not been supplied to it, if material information
regarding the bid has not been provided to the offerees or if there has been any
other violation of the Ohio Securities Act. There is no similar provision under
Delaware law.
MERGERS, ACQUISITIONS AND CERTAIN OTHER TRANSACTIONS
Delaware law requires approval of mergers, consolidations and dispositions
of all or substantially all of a corporation's assets (other than certain
"parent-subsidiary" mergers) by a majority of the voting power of the
corporation, unless the certificate of incorporation specifies a different
percentage. The Restated Certificate of Incorporation of Oglebay Norton provides
that the affirmative vote of two-thirds of the voting power of the corporation
shall be required to approve (i) the merger of the corporation into or its
consolidation with another corporation, (ii) the merger into the corporation of
another corporation, if a stockholder vote is required under Delaware law, (iii)
the sale, lease, exchange or other disposition by the corporation of all or
substantially all of its property and assets to another corporation, or (iv) any
agreement or arrangement providing for any of the transactions described in
clauses (i) through (iii) above. Delaware law does not require stockholder
approval for majority share acquisitions or for combinations involving the
issuance of less than 20% of the voting power of the corporation, except for
"business combinations" subject to Section 203 of the DGCL, as described above.
Under Ohio law, a merger, consolidation or disposition of all or
substantially all of the assets of an Ohio corporation generally requires the
affirmative vote of holders of shares representing at least two-thirds of the
voting power of the corporation, unless the corporation's articles of
incorporation provide for approval by a different proportion not less than a
majority. The Articles of Incorporation of the Holding Company includes
substantially the identical provision contained in the Restated Certificate of
Incorporation of Oglebay Norton (as described in the immediately preceding
paragraph) relating to the approval of mergers, consolidations or disposition of
all or substantially all of the assets of the corporation and therefore does not
alter the two-thirds vote required for the approval of such transactions.
However, the Articles of Incorporation provide that, except as expressly
required by the provision referred to above or other provisions of the Articles
of Incorporation, actions that would otherwise require a two-thirds vote can be
approved by the affirmative vote of the holders of a majority of the voting
power of the Holding Company.
Ohio law, in Section 1701.83 of the OGCL, also requires a "combination" or
"majority share acquisition" to be authorized by the stockholders of an Ohio
acquiring corporation, by the vote of holders of two-thirds of the voting power
of the corporation if (a) the transaction involves the issuance or transfer by
the acquiring corporation of such number of its shares as entitle the holders to
exercise one-sixth or more of the voting power of such corporation in the
election of directors immediately after the consummation of such transaction or
(b) the articles of incorporation require the transaction to be authorized by
the corporation's stockholders. For purposes of Section 1701.83 of the OGCL,
"combination" includes transactions, other than mergers or consolidations, where
voting shares of an Ohio corporation are issued or transferred in consideration
for the transfer to the
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corporation or its subsidiary of all or substantially all of the assets of one
or more domestic or foreign corporations. "Majority share acquisition" means
generally the acquisition of shares of a corporation entitling the holder of the
shares to exercise a majority of the voting power in the election of directors
of such corporation. The Articles of Incorporation of the Holding Company
includes no provision setting forth authorization requirements for any
combination or majority share acquisition in addition to those prescribed by
Section 1701.83 of the OGCL, although the Articles of Incorporation change the
vote required to approve a combination or majority share acquisition from
two-thirds to a majority of the outstanding voting power of the Holding Company.
CONSIDERATION OF CONSTITUENCIES
Section 1701.59 of the OGCL permits a director, in determining what such
director reasonably believes to be in the best interests of the corporation, to
consider, in addition to the interests of the corporation's stockholders, any of
the following: (i) the interests of the corporation's employees, suppliers,
creditors and customers, (ii) the economy of the state and nation, (iii)
community and societal considerations, and (iv) the long-term as well as the
short-term interests of the corporation and its stockholders, including the
possibility that these interests may be best served by the continued
independence of the corporation. Delaware law contains no comparable provision.
RIGHTS OF DISSENTING STOCKHOLDERS
Under Delaware law, appraisal rights are available to dissenting
stockholders in connection with certain mergers or consolidations. However,
unless the certificate of incorporation otherwise provides, Delaware law does
not provide for appraisal rights if (i) the shares of the corporation are listed
on a national securities exchange or designated as a national market system
security on an interdealer quotations system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 stockholders (as
long as the stockholders receive in the merger only shares of the surviving
corporation or of any other corporation the shares of which are listed on a
national securities exchange or designated as a national market systems security
on an interdealer quotations system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 stockholders, with cash
permitted in lieu of fractional shares) or (ii) the corporation is the surviving
corporation and no vote of its stockholders is required for the merger. See
"REORGANIZATION PROPOSAL -- Appraisal Rights." Delaware law does not provide
appraisal rights to stockholders who dissent from the sale of all or
substantially all of a corporation's assets or an amendment to the corporation's
certificate of incorporation, although a corporation's certificate of
incorporation may so provide. The Restated Certificate of Incorporation of
Oglebay Norton creates no rights of appraisal in addition to those set forth in
the DGCL.
Under Ohio law, dissenting stockholders are entitled to appraisal rights in
connection with the lease, sale, exchange, transfer or other disposition of all
or substantially all of the assets of a corporation and in connection with
certain amendments to the corporation's articles of incorporation. Stockholders
of an Ohio corporation being merged into or consolidated with another
corporation are also entitled to appraisal rights, whether or not the shares are
listed on a national securities exchange or designated as a national market
systems security on an interdealer quotations system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 stockholders.
In addition, stockholders of an acquiring corporation are entitled to appraisal
rights in any merger, "combination" or "majority share acquisition" (as defined
above) in which such stockholders are entitled to vote.
Under Delaware law, among other procedural requirements, a stockholder's
written demand for appraisal of shares must, in most circumstances, be received
before the taking of the vote on the matter giving rise to the right of
appraisal. Under Ohio law, a stockholder's written demand must be delivered to
the corporation not later than ten days after the taking of the vote on the
matter giving rise to appraisal rights.
DIVIDENDS
Delaware law provides that dividends may be paid in cash, property or
shares of a corporation's capital stock. Delaware law provides that a
corporation may pay dividends out of any surplus and, if it has no surplus, out
of any net profits for the fiscal year in which the dividend was declared or for
the preceding fiscal year
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(provided that such payment will not reduce capital below the amount of capital
represented by all classes of shares having a preference upon the distribution
of assets). Ohio law provides that a corporation may pay dividends in the form
of cash, property or shares of the corporation and that such dividends may be
paid out of surplus. Ohio law requires a corporation to notify its stockholders
if a dividend is paid out of capital surplus.
PREEMPTIVE RIGHTS OF STOCKHOLDERS
Delaware law provides that no stockholder shall have any preemptive rights
to purchase additional securities of the corporation unless the certificate of
incorporation expressly grants such rights. The Restated Certificate of
Incorporation of Oglebay Norton specifically provides that no stockholder of the
corporation shall have any preemptive right to subscribe for any additional
shares of the corporation. Ohio law provides that, subject to certain
limitations and conditions contained in the OGCL and unless the articles of
incorporation provide otherwise, stockholders shall have preemptive rights to
purchase additional securities of the corporation. The Articles of Incorporation
of the Holding Company provides that no stockholder of the corporation shall
have any preemptive right to subscribe for any additional shares of the
corporation.
DIRECTOR LIABILITY AND INDEMNIFICATION
Delaware law allows a Delaware corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or the corporation's stockholders for monetary
damages for a breach of such director's fiduciary duties as a director, except
liability (i) for any breach of the director's duty of loyalty to the
corporation and the corporation's stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, (iii) under Section 174 of the DGCL (which deals generally with unlawful
payments of dividends, stock repurchases and redemptions), and (iv) for any
transaction from which the director derived an improper personal benefit. The
Restated Certificate of Incorporation includes a provision that eliminates the
personal liability of directors to the extent permitted by Delaware law.
Delaware law permits a Delaware corporation to indemnify directors,
officers, employees and agents under certain circumstances and mandates
indemnification under certain circumstances. Delaware law permits a corporation
to indemnify an officer, director, employee or agent for fines, judgments or
settlements, as well as for expenses in the context of actions other than
derivative actions if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification against expenses incurred by a director, officer,
employee or agent in connection with a proceeding against such person for
actions in such capacity is mandatory to the extent that such person has been
successful on the merits. If a director, officer, employee or agent is
determined to be liable to the corporation, indemnification for expenses is not
allowable, subject to limited exceptions when a court deems the award of
expenses appropriate. The Restated Certificate of Incorporation of Oglebay
Norton provides that the directors of the corporation will be indemnified to the
fullest extent permitted by Delaware law. Advancement of expenses is permitted,
but a person receiving such advances must repay those expenses if it is
ultimately determined that such person is not entitled to indemnification.
Delaware law grants express power to a Delaware corporation to purchase
liability insurance for its directors, officers, employees and agents,
regardless of whether any such person is otherwise eligible for indemnification
by the corporation. The Restated Certificate of Incorporation of Oglebay Norton
includes provisions relating to the payment and advancement of fees and expenses
to directors and the purchase of liability insurance consistent with the
foregoing.
There is no comparable provision under Ohio law permitting corporations to
eliminate the liability of officers, employees or agents of the corporation.
However, Ohio law provides that a director will be liable for damages only if it
is proved by clear and convincing evidence that an action or failure to act was
undertaken with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation. Further, Ohio law
provides specific statutory authority for directors to consider, in addition to
the interests of the corporation's stockholders, other factors such as the
interests of the corporation's employees, suppliers, creditors and customers;
the economy of the state and nation; community and societal considerations; the
long-term and short-term interests of the corporation and its stockholders; and
the possibility that these interests may be best served by the continued
independence of the corporation.
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Under Ohio law, Ohio corporations are permitted to indemnify directors,
officers, employees and agents within prescribed limits and must indemnify them
under certain circumstances. Ohio law does not authorize payment by a
corporation of judgments against a director, officer, employee or agent in a
derivative suit after a finding of negligence or misconduct absent a court
order. Indemnification is required, however, to the extent such person succeeds
on the merits. In all other cases, if it is determined that a director, officer,
employee or agent acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
indemnification is discretionary, except as otherwise provided by a
corporation's articles of incorporation, code of regulations or by contract,
except with respect to the advancement of expenses of directors (as discussed in
the next paragraph). The statutory right to indemnification is not exclusive in
Ohio, and Ohio corporations may, among other things, purchase insurance to
indemnify such persons.
Ohio law provides that a director (but not an officer, employee, or agent)
is entitled to mandatory advancement of expenses, including attorneys' fees,
incurred in defending any action, including derivative actions, brought against
the director, provided that the director agrees to cooperate with the
corporation concerning the matter and to repay the amount advanced if it is
proved by clear and convincing evidence that such director's act or failure to
act was done with deliberate intent to cause injury to the corporation or with
reckless disregard for the corporation's best interests.
The Articles of Incorporation of the Holding Company provides that the
corporation shall indemnify, to the fullest extent permitted by Ohio law, any
director or officer of the corporation who is made a party or is threatened to
be made party to certain proceedings by reason of the fact that he or she is a
director or officer of the corporation. The Articles also provide that the
Holding Company shall pay, to the fullest extent permitted by Ohio law, expenses
and attorneys' fees incurred by a director in defending any such proceeding as
such expenses are incurred, in advance of the disposition thereof, upon receipt
from the director of any undertaking required by Ohio law. The Articles provide
further that the Holding Company may, in its discretion, indemnify any other
person, or advance expenses to any other person, in the same manner as described
above to the fullest extent permitted by Ohio law. Finally, the Articles provide
that Holding Company may purchase liability insurance on behalf of any director
or officer against any liability asserted against the director or officer,
whether or not the Holding Company would have the power to indemnify the
director or officer under Ohio law. The foregoing provisions of the Articles of
Incorporation of the Holding Company are substantially the same as those
relating to indemnification of officers and directors in the Restated
Certificate of Incorporation of Oglebay Norton, except for certain conforming or
stylistic changes.
CAPITAL STOCK OF THE HOLDING COMPANY
NUMBER OF AUTHORIZED SHARES
The authorized capital stock of Oglebay Norton consists of 5,000,000 shares
of Preferred Stock and 10,000,000 shares of Common Stock. The authorized capital
stock of the Holding Company consists of 5,000,000 Preferred Shares and, if
Proposal II is approved, 30,000,000 Common Shares. Consistent with Ohio law, the
common stock of the Holding Company is referred to as the "Common Shares" and
the preferred stock of the Holding Company is referred to as the "Preferred
Shares." Immediately following the Merger, approximately 4,813,351 Common Shares
of the Holding Company will be outstanding and approximately 2,489,981 Common
Shares of the Holding Company will be held in treasury. No Preferred Shares of
the Holding Company will be outstanding immediately after the Merger. There are
no present plans for use of the 20,000,000 additional Common Shares authorized
in the Articles of Incorporation of the Holding Company, although such Common
Shares would be available for the uses described below.
The Holding Company will reserve 49,900 authorized but unissued Common
Shares for issuance upon exercise of options granted or to be granted to
employees. If the option granted to Mr. Lauer is approved at the Annual Meeting,
the Holding Company will also reserve 380,174 authorized but unissued Common
Shares for issuance upon exercise of that option. Three hundred thousand shares
of Series C Preferred Shares of the Holding Company will be reserved for future
issuance under the Holding Company's stockholder rights plan. Possible uses of
the remaining authorized but unissued Common Shares and Preferred Shares include
acquisitions and
17
<PAGE> 27
equity financings (see "REASONS FOR THE REORGANIZATION -- Benefits of the
Reorganization"), as well as employee stock plans, stock dividends or stock
splits and recapitalizations or reorganizations. It is possible that the shares
could be issued for the purpose of deterring an unsolicited tender offer or
other transaction that might result in a change in control of the Holding
Company. The Holding Company is not aware of any threatened transaction of this
type, and any such use of the shares would depend on an evaluation by the
Holding Company's Board of Directors of the relevant circumstances at the time
of issuance.
TERMS OF THE COMMON SHARES OF THE HOLDING COMPANY
The terms of the Common Shares of the Holding Company are the same as the
terms of the shares of Common Stock of Oglebay Norton, except to the extent
these terms are affected by the changes in the Articles of Incorporation of the
Holding Company described above and changes due to the applicability of Ohio
law. See "ARTICLES OF INCORPORATION AND REGULATIONS OF THE HOLDING COMPANY" and
"SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF DELAWARE AND OHIO." The
Common Shares of the Holding Company, like the shares of Common Stock of Oglebay
Norton, will be traded on the NASDAQ National Market.
Holders of Common Shares of the Holding Company will be entitled (a) to
receive dividends, when and as declared by the Board of Directors of the Holding
Company, after any dividends that may be due on the Preferred Shares of the
Holding Company, if issued, have been paid or set apart, (b) to one vote per
share on all matters properly submitted to stockholders for their vote, (c) to
vote cumulatively in the election of directors, and (d) to participate ratably
in the net assets of the Holding Company in the event of liquidation, after any
liquidation preferences of the Preferred Shares of the Holding Company, if
issued, have been satisfied. No holder of Common Shares of the Holding Company,
as such, has the preemptive right to purchase stock or other securities of the
Holding Company of any class. The outstanding Common Shares of the Holding
Company are, and the Common Shares of the Holding Company offered hereby will
be, fully paid and nonassessable. The Restated Rights Agreement of Oglebay
Norton that will be assumed by the Holding Company if the Merger is consummated
(see "REORGANIZATION PROPOSAL -- Oglebay Norton Restated Rights Agreement") and
certain provisions of the Articles of Incorporation of the Holding Company,
which are substantially identical to provisions contained in the Restated
Certificate of Incorporation of Oglebay Norton (see "SIGNIFICANT DIFFERENCES
BETWEEN THE CORPORATION LAWS OF DELAWARE AND OHIO -- Business Combinations with
Interested Stockholders" and "-- Mergers, Acquisitions and Certain Other
Transactions"), could have the effect of delaying, deferring or preventing a
change in control of the Holding Company.
One of the Title XI contracts imposes restrictive covenants on Oglebay
Norton, including a restriction on the payment of dividends, if certain
financial tests are not met. These financial tests relate to the consolidated
net worth, long-term debt and working capital of Oglebay Norton and its
subsidiaries. Oglebay Norton presently meets these financial tests and,
therefore, the restrictive covenants are not in effect at this time. It is
possible that the Secretary of Transportation, as a condition to consenting to
the Merger, will insist that these financial tests and restrictive covenants
continue to be applied on a consolidated basis. See "REORGANIZATION
PROPOSAL -- Conditions to the Merger." If so, the restriction on the payment of
dividends would apply to the Common Shares of the Holding Company in the event
that the Holding Company and its subsidiaries should fail to meet the financial
tests.
TERMS OF THE PREFERRED SHARES OF THE HOLDING COMPANY
The Holding Company will be authorized to issue Preferred Shares in one
or more series. The express terms of Series C Preferred Stock are set forth in
the Articles of Incorporation of the Holding Company, and 300,000 shares of
Series C Preferred Shares will be reserved for issuance under the Holding
Company's stockholder rights plan. See "REORGANIZATION PROPOSAL -- Oglebay
Norton Restated Rights Agreement." Under the provisions of the Holding Company's
Articles of Incorporation, the Board of Directors is authorized, without further
stockholder action, to approve the issuance of additional series of Preferred
Shares and to designate the express terms of each series, including the number
of shares, dividend rights, redemption provisions, sinking fund provisions,
liquidation rights, conversion rights and any other rights, preferences or
provisions applicable to that series. The holders of all outstanding Preferred
Shares of the Holding Company will
18
<PAGE> 28
be entitled to vote as a separate class on any proposed amendment to the
Articles of Incorporation of the Holding Company that would (i) increase or
decrease the par value of the issued Preferred Shares, (ii) change the number of
issued Preferred Shares into a lesser number or into the same or different
number of any other class of shares, (iii) change the express terms of the
Preferred Shares in any manner substantially prejudicial to the holders of
Preferred Shares, (iv) change the express terms of issued shares of any class
senior to the Preferred Shares in any manner substantially prejudicial to the
holders of the Preferred Shares, (v) authorize shares of another class that are
convertible into, or authorize the conversion of another class of stock into,
the Preferred Shares, or authorize the directors to fix or alter conversion
rights of shares of another class of stock that are convertible into the
Preferred Shares, or (vi) reduce or eliminate the stated capital of the
corporation in certain specified respects. No holder of Preferred Shares, as
such, has the preemptive right to purchase stock or other securities of the
Holding Company of any class.
BOARD RECOMMENDATION
The Board of Directors of Oglebay Norton determined on February 26, 1998
that the proposed reorganization is in the best interests of Oglebay Norton and
its stockholders on the basis of the factors discussed above and voted
unanimously to approve the Agreement and Plan of Merger and to recommend that
the stockholders of Oglebay Norton vote to approve and adopt the Agreement and
Plan of Merger at the Annual Meeting. ACCORDINGLY, THE BOARD OF DIRECTORS OF
OGLEBAY NORTON RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE AGREEMENT
AND PLAN OF MERGER.
PROPOSAL II
COMMON SHARES OF THE HOLDING COMPANY
The authorized capital stock of the Holding Company includes 30,000,000
Common Shares, an increase of 20,000,000 shares from that authorized in the
Restated Certificate of Incorporation of Oglebay Norton. See "ARTICLES OF
INCORPORATION AND REGULATIONS OF THE HOLDING COMPANY" and "CAPITAL STOCK OF THE
HOLDING COMPANY." Although there are no present plans for use of the 20,000,000
additional Common Shares, such shares would be available for the uses described
above under the heading "CAPITAL STOCK OF THE HOLDING COMPANY -- Number of
Authorized Shares."
Proposal II is contingent upon the approval of Proposal I, the
Reorganization Proposal, pursuant to which Oglebay Norton will become a
second-tier wholly-owned subsidiary of the Holding Company, which is an Ohio
corporation. If Proposal I were not approved and the number of authorized shares
of Common Stock of Oglebay Norton were increased to 30,000,000, Oglebay Norton,
which is a Delaware corporation, would be subject to an increase of
approximately $75,000 in its annual franchise tax liability to the state of
Delaware, which tax is based upon its authorized capital stock. Although the
Holding Company will pay a fee upon the initial authorization of its Common
Shares, its annual franchise tax liability to the State of Ohio will not be
based upon its number of authorized Common Shares. See "REASONS FOR THE
REORGANIZATION -- Benefits of the Reorganization."
BOARD RECOMMENDATION
The favorable vote of the holders of a majority of Common Stock of Oglebay
Norton present in person or by Proxy at the meeting is required to approve
Proposal II, the authorization of 30,000,000 Common Shares in the Articles of
Incorporation of the Holding Company. THE BOARD OF DIRECTORS OF OGLEBAY NORTON
RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL II.
PROPOSAL III
OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN
The Compensation Subcommittee (on January 27, 1998) and the Board of
Directors (on January 28, 1998) adopted and recommended that the stockholders
approve the Oglebay Norton Company Director Fee Deferral
19
<PAGE> 29
Plan (the "Director Plan") pursuant to which non-employee directors can elect to
defer some or all of the fees earned by them for services as a director of
Oglebay Norton and can choose to have amounts deferred denominated in Share
Units or Deferred Cash, as those terms are defined in the Director Plan. The
Director Plan is intended to attract and retain qualified individuals to serve
as directors of Oglebay Norton. The Compensation Subcommittee and the Board of
Directors have determined that the Director Plan will provide non-employee
directors with a stronger identity of interest with Oglebay Norton and its
stockholders and will therefore be in the best interests of Oglebay Norton and
all of its stockholders. The Director Plan does not amend or otherwise affect
the Oglebay Norton Company Director Stock Plan pursuant to which each
non-employee director is awarded 200 shares of Common Stock of Oglebay Norton at
the time of each annual meeting of stockholders. If the Reorganization Proposal
is approved by the stockholders of Oglebay Norton, the Holding Company will
assume the Director Plan, and the share units based on the value of the shares
of Common Stock of Oglebay Norton will be converted into share units based on
the value of the Common Shares of the Holding Company.
The complete text of the Director Plan is attached as Exhibit D to this
Proxy Statement-Prospectus. The following summary of the Director Plan does not
purport to be complete and is qualified in its entirety by reference to Exhibit
D.
Election to Defer. Each non-employee director can elect under the Director
Plan to defer some or all or the cash portion of fees payable to him for service
as a director of Oglebay Norton, including the basic retainer and additional
fees for attending meetings and serving as head of committees. Elections are to
be made on or before the time necessary to defer inclusion of the cash portion
of fees in a director's gross income for federal income tax purposes. Elections
for the last eleven months of 1998 were made upon adoption of the Director Plan
by the Compensation Subcommittee. A director may elect, in 10% increments, (a)
to defer the cash portion of fees as Share Units, (b) to defer the cash portion
of fees as Deferred Cash, or (c) to receive fees as earned without any deferral.
In addition, a director who defers at least some fees as Share Units may elect
to either have any dividend equivalents with respect to the Share Units deferred
as additional deferred Share Units or to have those dividend equivalents paid to
him in cash as accrued.
Deferral, Crediting, and Deferral Period. Amounts deferred are credited to
book accounts maintained in the name of each participating non-employee
director, either as Share Units or as Deferred Cash. Amounts deferred as Share
Units are converted into Share Units at the fair market value of the shares of
Common Stock of Oglebay Norton as of the date on which the fees would otherwise
be paid. Amounts deferred in cash are credited with interest at the prime rate,
compounded annually, until distributed. Amounts deferred are deferred through
termination of service by the deferring director and are then paid out in shares
of Common Stock of Oglebay Norton (if deferred in Share Units) or in cash (if
Deferred Cash).
Dividend Equivalent. On each date on which dividends are paid on the
shares of Common Stock of Oglebay Norton, dividend equivalents are credited on
deferred Share Units and are either converted into additional deferred Share
Units based on the fair market value of shares of Common Stock of Oglebay Norton
on the dividend payment date or paid out to the director in cash.
Matching Contribution. Each Share Unit credited to a participating
director's account, whether credited as the result of a direct fee deferral or
as a result of a dividend equivalent being converted into additional deferred
Share Units, is matched at the rate of 25% by Oglebay Norton's contribution of
additional Share Units to the director's account.
Maximum Number of Shares. The maximum number of shares of Common Stock of
Oglebay Norton to be issuable under the Director Plan is 100,000, subject to
adjustment upon the occurrence of certain changes with respect to the shares.
Federal Income Tax Consequences of Deferrals. The following is a brief
general discussion of the anticipated income tax treatment of the deferrals and
distributions to be made pursuant to the Director Plan under current provisions
of the Internal Revenue Code. Fees deferred by a director and credited to his
account will not be recognized as income to the director for income tax purposes
until the deferred fees are distributed to the director either in the form of
cash or shares of Common Stock of Oglebay Norton. Interest credited on Deferred
20
<PAGE> 30
Cash and compounded and added to a director's account will not be recognized as
income to the director for income tax purposes until the accrued interest is
distributed to the director. Similarly, dividend equivalents converted into
additional deferred Share Units will not be recognized as income until the
additional Deferred Shares are distributed as shares of Common Stock of Oglebay
Norton to the director. Dividend equivalents paid in cash will be recognized as
ordinary income to the director when the cash is paid. At the time of
distribution of shares of Common Stock of Oglebay Norton in satisfaction of
deferred Share Units or cash in satisfaction of Deferred Cash, the recipient
will have ordinary income equal to the fair market value of the shares of Common
Stock of Oglebay Norton or the dollar amount of the cash distributed. Oglebay
Norton will be entitled to a deduction equal in amount to the amount taken into
income by a director during the same year that the amount is taken into income
by the director.
BOARD RECOMMENDATION
The favorable vote of the holders of a majority of the shares of Common
Stock of Oglebay Norton present in person or by Proxy at the meeting is required
to adopt the Director Plan. THE BOARD OF DIRECTORS OF OGLEBAY NORTON RECOMMENDS
A VOTE FOR APPROVAL OF THE OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN.
PROPOSAL IV
PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER
In connection with the employment of Mr. John N. Lauer as President and
Chief Executive Officer of Oglebay Norton effective January 1, 1998, on December
17, 1997, the Compensation Subcommittee and the Board of Directors granted to
Mr. Lauer, subject to the approval of the stockholders of Oglebay Norton, an
option to acquire up to 380,174 shares of Common Stock of Oglebay Norton (the
"Performance Option"). The exercise price of the option is $38.00 per share,
which is $6.00 above the per share closing price as reported on the NASDAQ
National Market on December 16, 1997 (the last closing price available at the
time the option was granted). If approved by the stockholders, the option will
first become exercisable in the normal course of events on January 1, 2001.
Oglebay Norton is seeking stockholder approval of the Performance Option
Agreement to satisfy the requirements of Section 162(m) of the Internal Revenue
Code. The Performance Option is described in more detail as part of the terms of
Mr. Lauer's employment in the section below entitled "OFFICER
AGREEMENTS -- Employment Agreement with Mr. John N. Lauer." A copy of the
Performance Option Agreement with Mr. Lauer, pursuant to which the Performance
Option was granted, is attached to this Proxy Statement-Prospectus as Exhibit E.
BOARD RECOMMENDATION
The favorable vote of the holders of a majority of the shares of Common
Stock of Oglebay Norton present in person or by Proxy at the meeting is required
to approve the Performance Option Agreement. THE BOARD OF DIRECTORS OF OGLEBAY
NORTON RECOMMENDS A VOTE FOR APPROVAL OF THE PERFORMANCE OPTION AGREEMENT WITH
MR. LAUER.
PROPOSAL V
ELECTION OF DIRECTORS
Oglebay Norton's Board of Directors is composed of ten directors, divided
into two classes of three members and one class of four members. As of the date
of this Proxy Statement-Prospectus, the terms of these classes will expire in
1998, 1999 and 2000, respectively. Each of the directors serves for a term of
three years and until a successor is elected. The directors whose terms expire
in 1998 were nominated by the Board to stand for election to new terms which
expire at the Annual Meeting in 2001. Directors whose terms expire in 1999 and
2000 are also described below. THE BOARD OF DIRECTORS OF OGLEBAY NORTON
RECOMMENDS A
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<PAGE> 31
VOTE FOR EACH OF MALVIN E. BANK, WILLIAM G. BARES AND JOHN D. WEIL AS DIRECTORS
OF THE CLASS WHOSE TERMS IN OFFICE WILL EXPIRE IN 2001.
NOMINEES FOR TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE
---- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
Malvin E. Bank.......... 67 Partner, Thompson Hine & Flory LLP, Cleveland, Ohio, attorneys, 1977
for more than five years. Mr. Bank also serves on the Board of
Directors of Metropolitan Financial Corp.
William G. Bares........ 56 Chairman, President and Chief Executive Officer, since April 1982
1996, President and Chief Executive Officer, from January 1996 to
April 1996, President and Chief Operating Officer, from 1987 to
1995, of The Lubrizol Corporation, Cleveland, Ohio, supplier of
chemical additives for use in lubricants and fuels. Mr. Bares
serves on the Boards of Directors of The Lubrizol Corporation,
Applied Industrial Technologies, Inc. and KeyCorp.
John D. Weil............ 57 President of Clayton Management Co., St. Louis, Missouri, invest- 1992
ments, for more than five years. Mr. Weil also serves on the
Boards of Directors of CleveTrust Realty Investors, Cliffs
Drilling Company, PICO Holdings Inc., Todd Shipyards Corporation,
Southern Investors Service Co. Inc., Allied Healthcare Products,
Inc. and Baldwin & Lyons, Inc.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 2000
Brent D. Baird.......... 59 Private investor; formerly a Limited Partner of Trubee, Collins & 1990
Co., Buffalo, New York and a member of the New York Stock
Exchange, Inc. for more than five years. Mr. Baird serves on the
Boards of Directors of First Carolina Investors, Inc., First
Empire State Corporation, Todd Shipyards Corporation, Exolon-Esk,
Inc. and Merchants Group, Inc.
James T. Bartlett....... 61 Managing Director, Primus Venture Partners, Cleveland, Ohio, the 1996
fund manager for Primus Capital Fund and Primus Capital Funds II,
III and IV, venture capital limited partnerships, for more than
five years. Mr. Bartlett serves on the Boards of Directors of
Keithley Instruments, Inc. and Lamson & Sessions.
Albert C. Bersticker.... 63 Chairman and Chief Executive Officer, since January 1, 1996, 1992
President and Chief Executive Officer, from May 1991 to Decem-
ber 1995, of Ferro Corporation, producer of specialty coatings,
plastics, chemicals and ceramics. Mr. Bersticker also serves on
the Boards of Directors of Brush Wellman Corporation, Ferro
Corporation and KeyCorp.
William G. Pryor........ 58 President, since April 1993, of Van Dorn Demag Corporation, 1997
manufacturer of plastic injection molding equipment, President
and Chief Executive Officer, Van Dorn Corporation (predecessor to
Van Dorn Demag Corporation), January 1, 1992 to April 20, 1993.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1999
R. Thomas Green, Jr..... 60 Chairman of the Board of Directors, since April 1, 1992, and 1992
President and Chief Executive Officer, from April 1, 1992 to
December 31, 1997, of Oglebay Norton.
</TABLE>
22
<PAGE> 32
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE
---- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
Ralph D. Ketchum........ 71 President and Chief Executive Officer of RDK Capital, Inc., 1992
general partner of RDK Capital Limited Partnership, investments,
and Chief Executive Officer of Heintz Corporation, manufacturer
of jet engine components, for more than five years. An August
1993 petition was filed by Heintz Corporation, a subsidiary of
RDK Capital Limited Partnership, for reorganization under the
federal bankruptcy laws. Prior to his election to Oglebay
Norton's Board of Directors, Mr. Ketchum was a long-term officer
and employee of General Electric, rising to the position of
Senior Vice President and Group Executive of the Lighting Group
at the time of his retirement in 1987. Mr. Ketchum serves on the
Board of Directors of Thomas Industries, Inc., Pacific Scientific
Company, Lithium Technologies, Inc. and Metropolitan Financial
Corp.
John N. Lauer........... 59 President, Chief Executive Officer and Director of Oglebay 1998
Norton, since January 1, 1998, retired private investor, 1994 to
December 1997, President and Chief Operating Officer, The BF
Goodrich Company, Chemical and Aerospace Company, 1990 to 1994.
Mr. Lauer also serves on the Boards of Diebold, Incorporated,
Menasha Corporation and BorsodChem, Rt.
</TABLE>
BOARD AND COMMITTEE ATTENDANCE
The Board met 10 times during 1997. No director attended fewer than 75% of
the total of all 1997 meetings of the Board and those committees on which he
served.
STRUCTURE/COMMITTEES OF THE BOARD
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of Oglebay Norton.
However, in accordance with the corporate principles, it is not involved in the
day-to-day operating details. Members of the Board are kept informed of Oglebay
Norton's business through discussions with the President and Chief Executive
Officer and other officers, by reviewing monthly analyses and reports, and by
participating in Board and committee meetings.
The Board has four committees, described as follows:
Executive Committee. The members of the Executive Committee are Messrs.
Bares (Chairman), Baird, Bank, Bersticker and Green. The Executive Committee may
exercise all of the authority of the Board of Directors subject to specific
resolutions of the Board and Delaware law. The Executive Committee meets only as
called by its Chairman. The Executive Committee met twice during 1997.
Audit Committee. The members of the Audit Committee are Messrs. Bersticker
(Chairman), Baird, Bartlett and Pryor. The Audit Committee (i) reviews the
proposed audit programs (including both independent and internal) for each
fiscal year, the results of these audits and the adequacy of Oglebay Norton's
internal systems and controls, (ii) recommends to the Board the appointment of
independent auditors for the year, and (iii) reviews activities conducted under
Oglebay Norton's Legal and Ethical Compliance Program. The Audit Committee met
twice during 1997.
Compensation and Organization Committee. The members of the Compensation
and Organization Committee are Messrs. Weil (Chairman), Bartlett, Bersticker and
Ketchum. The Compensation and Organization Committee fixes compensation for the
executive officers of Oglebay Norton and considers corporate organizational
matters and employee benefit programs generally. The Board has also established
a Compensation Subcommittee whose members are Messrs. Weil (Chairman), Bartlett
and Ketchum. The Compensation Subcommittee reviews and approves compensation
matters that include Oglebay Norton's stock or are calculated,
23
<PAGE> 33
in whole or part, with reference to the value of Oglebay Norton's stock. The
Compensation and Organization Committee met six times and the Compensation
Subcommittee met once during 1997.
Director Search and Governance Committee. The members of the Director
Search and Governance Committee are Messrs. Ketchum (Chairman), Bank, Pryor and
Weil. The Director Search and Governance Committee (i) considers, screens and
nominates candidates for election to the Board, (ii) reviews contributions of
current Board members, and (iii) reviews and makes recommendations on corporate
governance issues affecting the Board.
The Director Search and Governance Committee will consider nominees for the
Board of Directors submitted by stockholders. Recommendations by stockholders
should include the nominee's name, age, business and residence addresses,
principal occupation, a list of companies of which the nominee is an officer or
director, qualifications, a statement on whether the nominee is a United States
citizen, the name, address and number of shares of Common Stock of Oglebay
Norton owned by the nominee and the recommending stockholder and the nominee's
written consent to nomination. Nominations should be mailed to: Chairman,
Director Search and Governance Committee, c/o David G. Slezak, Secretary and
Director of Legal Affairs, Oglebay Norton Company, 1100 Superior Avenue,
Cleveland, Ohio 44114-2598.
COMPENSATION OF DIRECTORS
Directors who are not employees of Oglebay Norton receive a fee of $3,000
per quarter ($12,000 per year), an annual award of 200 shares of Common Stock of
Oglebay Norton under the Director Stock Plan, and $900 for each Board and
committee meeting attended. Directors are also reimbursed for expenses they
incur in attending Board and committee meetings.
The Board has adopted, subject to stockholder approval, the Oglebay Norton
Company Director Fee Deferral Plan which permits directors to defer all or part
of the cash portion of their compensation into: (a) share units based upon the
market price of Common Stock of Oglebay Norton; or (b) into an account as
deferred cash which is credited with a market rate of interest. Amounts deferred
into share units receive a 25% matching payment by Oglebay Norton, but amounts
deferred as cash do not receive any matching payment. See the proposal to
approve the Oglebay Norton Company Director Fee Deferral Plan in the section
above entitled "OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN," for a
summary of the Director Fee Deferral Plan.
DIRECTOR AGREEMENTS
Oglebay Norton has entered into separate standstill agreements with Brent
D. Baird and John D. Weil. These agreements limit to 11% the percentage of
Common Stock of Oglebay Norton which each of them and their respective
affiliates may own. The 11% limit is not affected if their ownership percentages
increase solely due to repurchases by Oglebay Norton of its Common Stock. The
standstill agreements also limit the rights of Messrs. Baird, Weil and their
respective affiliates to sell their shares of Common Stock of Oglebay Norton,
and prohibits them from voting their shares or participating in a proxy contest
against the recommendations of Oglebay Norton's Board. Pursuant to their
respective standstill agreements, the Board nominated Mr. Baird for election as
a director at the 1991 and 1994 Annual Meetings and Mr. Weil for election as a
director at the 1992 and 1995 Annual Meetings. Upon completion of the Merger,
the standstill agreements will remain in effect, in accordance with their terms,
with respect to the Common Shares of the Holding Company.
BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK
The following table shows the number of shares and percent of the
outstanding shares of Common Stock of Oglebay Norton beneficially owned on March
10, 1998, by each director of Oglebay Norton, each of the executive officers
named in the Summary Compensation Table set forth below, and by all directors
and executive officers as a group.
24
<PAGE> 34
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
---- -------------------- --------
<S> <C> <C>
Brent D. Baird.............................................. 451,000(1)(4) 9.46%
1350 One M&T Plaza
Buffalo, New York 14203
Malvin E. Bank.............................................. 314,938(2)(4) 6.61%
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
John D. Weil................................................ 549,800(3)(4) 11.53%
200 North Broadway, Suite 825
St. Louis, Missouri 63102-2573
William G. Bares............................................ 1,200(4) (7)
James T. Bartlett........................................... 600(4) (7)
Albert C. Bersticker........................................ 1,300(4) (7)
R. Thomas Green, Jr......................................... 12,716(5)(6) (7)
Ralph D. Ketchum............................................ 5,300(4) (7)
John N. Lauer............................................... 51,744 1.09%
William G. Pryor............................................ 400(4) (7)
Stuart H. Theis............................................. 2,506(5)(6) (7)
Mark P. Juszli.............................................. 1,038(5)(6) (7)
Richard J. Kessler.......................................... 10,175(5)(6) (7)
Paul V. Gorman, Jr.......................................... 4,783(5) (7)
Directors, nominees and executive officers as a group,
including those listed above (15 persons)................. 1,408,402(4)(5) 29.55%
</TABLE>
- ---------------
(1) Mr. Baird, together with other reporting persons, as a group, holds sole
voting and sole dispositive power as to 450,800 shares, of which Mr. Baird
holds 17,600 shares individually and 6,000 shares as a trustee.
(2) Mr. Bank's shares include 313,588 shares held in various trusts. As a
trustee, Mr. Bank has sole voting and dispositive power as to 210,118 shares
and, as to 104,820 shares, Mr. Bank shares the voting power and the
dispositive power with a co-trustee. In addition, Mr. Bank has sole voting
and dispositive power as to 1,350 shares held individually.
(3) Mr. Weil, together with other reporting persons, as a group, holds 549,800
shares, of which he holds sole voting and dispositive power as to 535,200
shares and shared voting and dispositive power as to 14,600 shares.
(4) Includes 200 shares which the individual (and 1,600 shares for directors and
executive officers as a group) will acquire, within 60 days, on the date of
the 1998 Annual Meeting of Stockholders pursuant to the Oglebay Norton
Company Director Stock Plan.
(5) Includes the following numbers of shares, rounded to the nearest whole
share, beneficially owned by the following executives under Oglebay Norton's
Employee Stock Ownership Plan as of December 31, 1997: Green -- 10,096
shares; Theis -- 2,106 shares; Juszli -- 1,038 shares; Kessler -- 8,975
shares; and, Gorman -- 4,783 shares; and directors and executive officers as
a group -- 27,392 shares.
(6) Additional stock rights held by executive officers: Each of Messrs. Green,
Theis, Kessler and Juszli are participants in Oglebay Norton's Long-Term
Incentive Plan (the "LTIP"), under which they have elected to forego a
portion of their annual compensation and invest it in share units, the value
of which are dependent upon the value of the shares of Common Stock of
Oglebay Norton. The share units are payable solely in the shares of Common
Stock of Oglebay Norton upon the named executive officer's retirement,
death, termination of employment or change in control, each as defined under
the LTIP. None of the share units held
25
<PAGE> 35
in the LTIP by the named executive officers are included in the above table.
Under the LTIP, as further described below (see "OFFICER
AGREEMENTS -- Long-Term Incentive Plan"), the total number of share units
attributable to each named executive officer, including Oglebay Norton
matches and dividends under the LTIP, as of March 10, 1998 are as follows:
<TABLE>
<CAPTION>
TOTAL NUMBER
NAME OF SHARE UNITS
---- --------------
<S> <C>
R. Thomas Green, Jr......................................... 17,459
Richard J. Kessler.......................................... 8,588
Mark P. Juszli.............................................. 7,991
Stuart H. Theis............................................. 1,433
</TABLE>
(7) Less than 1% of the outstanding shares of Common Stock of Oglebay Norton on
March 10, 1998.
The following table shows certain information with respect to all persons
who, as of March 10, 1998, were known by Oglebay Norton to beneficially own more
than five percent of the outstanding shares of Common Stock of Oglebay Norton,
other than Mr. Baird, Mr. Bank and Mr. Weil whose beneficial ownership of shares
of Common Stock of Oglebay Norton is reported above.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF OWNER BENEFICIAL OWNERSHIP OF CLASS
------------- -------------------- --------
<S> <C> <C>
KeyCorp 1,009,878(1) 21.19%
127 Public Square
Cleveland, Ohio 44114
Warburg Pincus Counsellors, Inc. 294,200(2) 6.17%
466 Lexington Avenue
New York, New York 10017-3147
Douglas N. Barr 289,040(3) 6.06%
3900 Society Center
127 Public Square
Cleveland, Ohio 44114-1216
Robert I. Gale, III 285,260(4) 5.98%
17301 St. Clair Avenue
Cleveland, Ohio 44110
Dimensional Fund Advisors, Inc. 265,056(5) 5.56%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) As of February 13, 1998, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission, KeyCorp has sole voting
power as to 422,702 shares, shared voting power as to 230,768 shares, sole
dispositive power as to 701,240 shares, and shared dispositive power as to
292,038 shares.
(2) As of January 9, 1997, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission, Warburg Pincus
Counsellors, Inc. has beneficial ownership of 294,200 shares. According to
the Schedule 13G filed, Warburg, Pincus Counsellors, Inc. has sole voting
and dispositive power as to 244,600 shares.
(3) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Barr has sole voting and
dispositive power as to 400 of these shares. As trustee, Mr. Barr has shared
voting and dispositive power as to 57,200 of these shares and, together with
Mr. Robert I. Gale III, shared voting and dispositive power as to 230,440 of
these shares.
26
<PAGE> 36
(4) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Gale has sole voting and
dispositive power as to 54,820 shares, 4,198 shares of which he owns
individually and 50,622 shares of which he holds as trustee. Together with
Mr. Douglas N. Barr, Mr. Gale shares voting and dispositive power as to
230,440 of these shares.
(5) As of February 5, 1997, based upon information contained in a Schedule 13D
filed with the Securities and Exchange Commission, Dimensional Fund
Advisors, Inc. has sole voting power as to 178,656 shares. Certain persons
who are officers of Dimensional Fund Advisors, Inc. also serve as officers
of DFA Investment Dimensions Group Inc. (the "Fund") and The DFA Investment
Trust Company (the "Trust"), each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacities as
officers of the Fund and the Trust, these persons have sole voting power as
to 50,000 additional shares owned by the Fund and 36,400 shares owned by the
Trust. Dimensional Fund Advisors, Inc. has sole dispositive power as to
265,056 shares, including the shares held by the Fund and the Trust.
PERFORMANCE GRAPH
The following is a graph which compares the five year cumulative return
from investing $100 on January 1, 1993 in each of Oglebay Norton Common Stock,
the S&P 500 Index of companies and the Valueline Composite Index of companies,
with dividends assumed to be reinvested when received.
<TABLE>
<CAPTION>
Valueline
Measurement Period Oglebay Composite
(Fiscal Year Covered) Norton S&P 500 Index
<S> <C> <C> <C>
1992 100 100 100
1993 100.345 109.99 113.22
1994 142.601 111.409 109.246
1995 180.237 153.265 132.941
1996 218.199 188.486 153.388
1997 420.543 251.364 187.532
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Oglebay Norton's Board of Directors has delegated to its Compensation and
Organization Committee (the "C & O Committee"), none of whose members is a
former or current officer or employee of Oglebay Norton or any of its
subsidiaries, general responsibility for executive compensation matters. Oglebay
Norton has further delegated to the Compensation Subcommittee, which is
comprised of all of the members of the C & O Committee other than Mr.
Bersticker, responsibility for executive compensation actions to be taken by a
committee of "outside directors" as defined in the Treasury Regulations
promulgated under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and "non-employee directors" as defined
in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
On December 17, 1997, Oglebay Norton entered into an Employment Agreement
with Mr. John N. Lauer, the terms of which had been negotiated on behalf of
Oglebay Norton by the C & O Committee, pursuant to which Mr. Lauer became
President and Chief Executive Officer of Oglebay Norton, succeeding Mr. Green in
these
27
<PAGE> 37
posts, effective January 1, 1998. Under the Employment Agreement, Mr. Lauer will
not be paid a salary during his tenure with Oglebay Norton. Rather, as more
fully described in this Proxy Statement-Prospectus under the heading "OFFICER
AGREEMENTS--Employment Agreement with Mr. John N. Lauer," the primary elements
of his compensation under the Employment Agreement are a grant of restricted
shares a grant of an option to purchase additional shares and an annual bonus of
up to $200,000 per year. The C & O Committee concluded that the largely
stock-based compensation package contained in the Employment Agreement is in the
best interests of Oglebay Norton and its stockholders. The remainder of this
report deals with compensation of executives other than Mr. Lauer, including,
specifically, compensation of Mr. Green, who held the post of Chairman,
President and Chief Executive Officer throughout 1997.
The C & O Committee seeks to compensate executive officers based on their
contributions to Oglebay Norton's success, and specifically to reward officers
who make significant contributions to Oglebay Norton's short-term and long-term
profitability. In 1997, executive officers' annual compensation packages were
comprised of an annual salary, an annual bonus and equity-based compensation.
Annual Salary. Executive officers' annual salaries for 1997 were set by the
C & O Committee after consideration of each executive officer's contribution to
Oglebay Norton's performance in 1996, Oglebay Norton's financial performance and
prospects, and the level of competitive salaries paid to executives in
comparable positions with companies whose sales and revenues were similar to
those of Oglebay Norton.
Bonuses. Executive officers were eligible to receive cash bonuses with
respect to 1997 under Oglebay Norton's Annual Incentive Plan (the "Incentive
Plan") pursuant to which the C & O Committee established corporate, business
unit, and individual performance goals for the year. The corporate and business
unit performance measures for 1997 under the Incentive Plan were corporate
income from operations and business unit operating profit, respectively. The
amount of the incentive award under the Incentive Plan, if any, to each
participant is based on the participant's target award level, the weightings
assigned to each company, business unit and individual performance goal
applicable to the participant and achievement of those goals.
Target awards are determined with reference to the participant's base
salary and range from 15% to 50% of base salary. Nominal awards may range from
0% to 150% of target awards, depending on the extent to which corporate,
business unit, and individual performance goals are met or exceeded. In
addition, the C & O Committee has the discretion to increase or decrease the
amount of any particular nominal award by a maximum of 25%. If threshold
performance goals are not achieved, no award may be made under the Incentive
Plan. Based on the extent to which the relevant goals were met during 1997,
actual awards for the year under the Incentive Plan ranged from 17% to 73% of
base salary.
Equity-Based Compensation. Oglebay Norton's Long-Term Incentive Plan
authorizes the Compensation Subcommittee to grant equity-based incentive
compensation (including stock options, stock appreciation rights, restricted
stock, performance units and share units) to executive officers and other key
employees for performance occurring over a period longer than one fiscal year.
The Compensation Subcommittee believes that Oglebay Norton is better able to
attract, retain and motivate its executives to achieve superior financial
performance if a portion of executive compensation is equity-based, thereby
promoting the ownership and holding of shares of Common Stock of Oglebay Norton
by its officers.
On October 29, 1997, the Compensation Subcommittee granted nonqualified
stock options to 21 executives and key employees covering an aggregate of 48,700
shares of Common Stock of Oglebay Norton, each at an exercise price of $30 5/8
(the fair market value of the shares on the grant date). In addition, the
Compensation Subcommittee made grants under the Long-Term Incentive Plan in
connection with executives' decisions to defer a portion of their bonuses
received under the Incentive Plan. Amounts so deferred are invested in "share
units" based on the fair market value of the shares of Common Stock of Oglebay
Norton on the date the bonus otherwise would be due. In addition, each executive
deferring a portion of a bonus for 1997 received a matching grant of additional
share units equal to 50% of the share units allocable to the bonus deferred,
with the executive's rights in the matching grant share units vesting over five
years. Deferred and matching amounts are paid in shares of Common Stock of
Oglebay Norton and are generally payable only upon termination of
28
<PAGE> 38
employment, death or retirement. Executives receiving bonuses under the
Incentive Plan for 1997 elected to defer from 20% to 100% of those bonuses.
Chief Executive Officer. During 1997, pursuant to the recommendation of the
C & O Committee, as approved by the Board of Directors, Mr. Green was paid a
base salary of $310,000, effective March 1, 1997, for his services as Oglebay
Norton's Chairman, President and Chief Executive Officer. In recommending Mr.
Green's 1997 base salary, the C & O Committee considered Mr. Green's performance
through the end of 1996 in executing Oglebay Norton's Corporate Strategic Plan,
Oglebay Norton's financial performance and Mr. Green's salary level relative to
the salary levels of other chief executive officers in companies that compete in
similar markets and businesses.
Mr. Green received a bonus for 1997 under the Incentive Plan which, taking
into account all factors (including the C & O Committee's discretion to vary any
award otherwise payable by up to an additional 25%), could have ranged from 0%
to 94% of his 1997 base salary. Based upon the extent to which Oglebay Norton
and Mr. Green attained corporate and performance goals during 1997, Mr. Green
was awarded a bonus of $225,000.
In connection with the general grant of nonqualified options to executives
and other key employees on October 29, 1997, the Compensation Subcommittee
granted Mr. Green a nonqualified option under the Long-Term Incentive Plan to
acquire 20,000 shares of Common Stock of Oglebay Norton at an exercise price of
$30 5/8. To afford Mr. Green an opportunity to defer a portion of his 1997 bonus
and receive a matching grant from Oglebay Norton comparable to the matching
grant received by other executives who elected to defer portions of their
bonuses and receive a matching grant under the Long-Term Incentive Plan, the C &
O Committee granted to Mr. Green a 50% match of the $180,000 of his 1997 bonus
that he elected to defer. Under this special arrangement, the amount deferred
and the match amount will be credited, until withdrawn, with earnings each year
at the annual rate earned by a specified fund maintained under Oglebay Norton's
Incentive Savings Plan. The match amount ($90,000) is subject to the same
vesting and distribution provisions as are applicable to matching share units
granted to other executives under the Long-Term Incentive Plan, except that
settlement of both the deferred and match amount will be in cash.
Compliance with Section 162(m) of the Internal Revenue Code. Section 162(m)
of the Internal Revenue Code generally disallows a tax deduction to a publicly
held corporation for compensation over $1 million paid in any year to any
individual who is either the corporation's Chief Executive Officer or one of the
four other most highly compensated executive officers of the corporation.
Qualifying "performance-based compensation" will not be subject to the deduction
limit if certain requirements are met. At present, the Performance Option
granted to Mr. Lauer by the Compensation Subcommittee is the only compensation
element that provides a sufficiently large dollar amount of compensation to
bring the Section 162(m) limit into play. However, subject to stockholder
approval of the Performance Option, the Compensation Subcommittee believes that
compensation under the Performance Option will qualify as performance-based
compensation and that Oglebay Norton's deduction with respect to that
compensation will not be limited by Section 162(m).
COMPENSATION AND
ORGANIZATION COMMITTEE
John D. Weil, Chairman
James T. Bartlett
Albert C. Bersticker
Ralph D. Ketchum
February 20, 1998
29
<PAGE> 39
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation information for
Oglebay Norton's Chief Executive Officer and the four other most highly
compensated executive officers whose total annual salary and bonus for the
fiscal year ended December 31, 1997, exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
OTHER ANNUAL ALL OTHER ANNUAL
NAME AND BONUS COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($)(3)
------------------ ---- --------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
R. Thomas Green, Jr.* 1997 $305,833 $45,000 $16,803 $55,441
Chairman of the Board 1996 283,600 30,000 19,026 45,250
1995 276,600 68,000 16,638 42,305
Stuart H. Theis 1997 153,167 80,000 16,760 44,195
Vice President-- 1996 142,767 24,300 -0- 12,430
Marine Transportation 1995 136,600 44,100 -0- 12,441
Richard J. Kessler 1997 154,333 16,000 8,879 33,979
Vice President-- 1996 150,333 13,500 8,879 24,785
Finance and Planning 1995 147,000 18,600 8,879 25,088
Mark P. Juszli 1997 137,667 20,000 5,621 24,853
Vice President-- 1996 125,333 23,200 -0- 10,913
Industrial Sands 1995 117,300 17,500 -0- 6,682
Paul V. Gorman, Jr. 1997 105,833 44,000 -0- 15,278
Assistant Vice President-- 1996 97,500 15,763 -0- 8,079
Human Resources 1995 94,000 18,457 -0- 7,259
</TABLE>
- ---------------
* Mr. Green stepped down from the positions of President and Chief Executive
Officer on December 31, 1997.
(1) Amounts shown for bonuses are the portion of the total bonuses of Messrs.
Green, Theis, Kessler and Juszli received in cash under Oglebay Norton's
Annual Incentive Plan. Total amounts of bonuses earned under the Annual
Incentive Plan and portions of that bonus elected to be deferred by the
following executives under the Oglebay Norton Company Long-Term Incentive
Plan ("LTIP") (or, in the case of Mr. Green's 1997 bonus, pursuant to the
special arrangement described above under the heading "COMPENSATION OF
EXECUTIVE OFFICERS -- Report of the Compensation Committee on Executive
Compensation") were, respectively, as follows: Green (1997 -- $225,000 and
$180,000; 1996 -- $150,000 and $120,000; 1995 -- $170,000 and $102,000);
Theis (1997 -- $100,000 and $20,000; 1996 -- $27,000 and $2,700; 1995 --
$49,000 and $4,900); Kessler (1997 -- $80,000 and $64,000; 1996 -- $45,000
and $31,500; 1995 -- $62,000 and $43,400); and, Juszli (1997 -- $85,000 and
$65,000; 1996 -- $58,000 and $34,800; 1995 -- $50,000 and $32,500). Deferred
portions of bonuses of Messrs. Green, Theis, Kessler and Juszli, which were
automatically converted upon deferral into share units based on the fair
market value of shares of Common Stock of Oglebay Norton, are shown in the
Long-Term Incentive Plan Table, below. Mr. Gorman was not eligible to
participate in the Annual Incentive Plan bonus deferral portion of the LTIP
during the years presented. The Annual Incentive Plan bonus deferral feature
of the LTIP has been discontinued effective for bonus payments earned in
1998.
(2) Represents "gross-up" for taxes in respect of payments by Oglebay Norton to
the named executives for life insurance premiums.
(3) Includes contributions by Oglebay Norton for the named executives under
Oglebay Norton's Incentive Savings Plan (the "Savings Plan") and Oglebay
Norton's Employee Stock Ownership Plan (the "ESOP"), respectively
(Green -- $3,200 and $19,897; Theis -- $3,063 and $19,047; Kessler -- $3,087
and $19,192; Juszli -- $2,753 and $17,120; and, Gorman -- $2,117 and
$13,161); payments by Oglebay Norton to the named executive for life
insurance premiums (Green -- $19,200, Theis -- $22,085; Kessler -- $11,700;
and,
30
<PAGE> 40
Juszli $4,980); and contributions under the Supplemental Savings and Stock
Ownership Plan of $13,144 for Mr. Green.
STOCK OPTION GRANTS IN 1997
Options granted to the named executive officers will expire on the tenth
anniversary of the grant dates. Option exercise prices were in all cases equal
to the fair market value of a share of Common Stock of Oglebay Norton on the
date the option was granted. The options have no value unless Oglebay Norton's
stock price appreciates and the recipient satisfies the applicable vesting
requirements.
The following table shows the stock options granted to the named executive
officers during 1997, and the potential realizable value of those grants (on a
pre-tax basis) determined in accordance with Securities and Exchange Commission
rules. The information in this table shows how much the named executive officers
may eventually realize in future dollars under two hypothetical situations: if
the stock gains 5% or 10% in value per year, compounded over the ten-year life
of the options. These are assumed rates of appreciation and are not intended to
forecast future appreciation of the shares of Common Stock of Oglebay Norton.
Also included in this table is the increase in value to all common stockholders
of Oglebay Norton using the same assumed rates of appreciation.
For perspective, in ten years, one share of Common Stock of Oglebay Norton
valued at $30.625 on October 29, 1997 (the grant date) would be worth $49.88,
assuming the hypothetical 5% compounded growth rate, or $79.43, assuming the
hypothetical 10% compounded growth rate.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(3)
------------------------------------------- ---------------------------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED(#)(1) IN 1997(2) PRICE($/SH.) DATE 5% ($) 10% ($)
---- ------------- ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
R. T. Green, Jr...... 20,000 40.1% $30.625 10/29/07 $385,100 $976,100
S. H. Theis.......... 3,700 7.4% 30.625 10/29/07 71,244 180,579
R. J. Kessler........ 3,700 7.4% 30.625 10/29/07 71,244 180,579
M. P. Juszli......... 3,700 7.4% 30.625 10/29/07 71,244 180,579
P.V. Gorman, Jr...... 1,700 3.4% 30.625 10/29/07 32,734 82,960
INCREASE IN VALUE TO ALL COMMON STOCKHOLDERS(4)................................ $92.1MILLION $233.5MILLION
</TABLE>
- ---------------
(1) The options vest 25% each year commencing October 29, 1998. The options also
vest if the employee retires and is otherwise entitled to a normal, early or
shutdown pension under the Oglebay Norton Company Pension Plan for Salaried
Employees. In that event, the retired employee may exercise the options
within two years from the date of retirement, but not beyond the October 29,
2007 option expiration date.
(2) Percentage based on the total number of options granted to employees under
the Oglebay Norton Company Long-Term Incentive Plan. This percentage
calculation excludes the 380,174 options granted to Mr. Lauer, on December
17, 1997 under the Performance Option Agreement (see "OFFICER AGREEMENTS --
Employment Agreement with Mr. John N. Lauer"). If Mr. Lauer's options were
included, then each of the officers in the table would have received less
than 1% of the total options granted to employees. Mr. Lauer became the
President and Chief Executive Officer of Oglebay Norton on January 1, 1998.
(3) Calculated over a ten-year period representing the life of the options.
(4) Calculated using a price of $30.625 per share of Common Stock of Oglebay
Norton, the closing price on the date the options were granted, and the
total weighted average number of shares of Common Stock of Oglebay Norton
outstanding for 1997 (4,784,892 shares).
31
<PAGE> 41
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, UNITS OR OTHER PERIOD UNTIL
NAME OTHER RIGHTS(#)(1) MATURATION OR PAYOUT(2)
---- ------------------ -----------------------
<S> <C> <C>
R. Thomas Green, Jr............................. 7,448.28 5 years
Stuart H. Theis................................. 827.58 5 years
Richard J. Kessler.............................. 2,648.28 5 years
Mark P. Juszli.................................. 2,689.65 5 years
</TABLE>
- ---------------
(1) Reflects the total of: (a) the portion of the named executive's total 1997
bonus deferred under the Oglebay Norton Company Long-Term Incentive Plan
(the "LTIP") (or, in the case of Mr. Green's 1997 bonus, pursuant to the
special arrangement described above under the heading "COMPENSATION OF
EXECUTIVE OFFICERS -- Report of the Compensation Committee on Executive
Compensation"); and (b) the 50% company match of the deferred amounts under
that plan, respectively, as converted into share units based upon the fair
market value of the shares of Common Stock of Oglebay Norton, as follows:
Green -- 4,965.52 and 2,482.76; Theis -- 551.72 and 275.86;
Kessler -- 1,765.52 and 882.76; and, Juszli -- 1,793.10 and 896.55. Mr.
Gorman was not eligible to participate in the bonus deferral portion of the
LTIP during 1997. Bonus and matching contribution amounts were automatically
converted into share units at the rate of $36.25 per share, the closing
price of Oglebay Norton's Common Stock on the date the 1997 bonuses were
paid and deferred as previously elected by such officers.
(2) Share units reflecting the portion of the total bonus elected to be deferred
by the named executive, and dividends paid on those share units, are fully
vested upon allocation to the named executive's LTIP account. Share units
reflecting the matching contribution, and dividends paid on those share
units, generally do not vest for five years, assuming the executive's
continuous service with Oglebay Norton for the five-year period. However,
distributions of vested amounts will generally be made only upon a
participant's retirement, death or other termination of employment. All
distributions under the LTIP will be made in shares of Common Stock of
Oglebay Norton.
32
<PAGE> 42
RETIREMENT PLANS
SALARIED EMPLOYEES PENSION PLAN
EXCESS AND TRA SUPPLEMENTAL BENEFIT RETIREMENT PLAN
The following table sets forth the annual pension payable under the Oglebay
Norton Company Pension Plan for Salaried Employees (the "Salaried Plan") and the
Oglebay Norton Company Excess and TRA Supplemental Benefit Retirement Plan (the
"Excess Benefit Retirement Plan") at normal retirement age:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT
(ASSUMING RETIREMENT ON JANUARY 1, 1998)
----------------------------------------------------
FINAL YEARS OF SERVICE
ANNUAL AVERAGE ----------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000 $ 16,875 $ 22,500 $ 28,125 $ 33,750 $ 39,375
100,000 22,500 30,000 37,500 45,000 52,500
150,000 33,750 45,000 56,250 67,500 78,750
200,000 45,000 60,000 75,000 90,000 105,000
250,000 56,250 75,000 93,750 112,500 131,250
300,000 67,500 90,000 112,500 135,000 157,500
350,000 78,750 105,000 131,250 157,500 183,750
400,000 90,000 120,000 150,000 180,000 210,000
450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500
550,000 123,750 165,000 206,250 247,500 288,750
600,000 135,000 180,000 225,000 270,000 315,000
650,000 146,250 195,000 243,750 292,500 341,250
</TABLE>
Benefits under the Salaried Plan and the Excess Benefit Retirement Plan are
based on average annual compensation for the highest five years during the last
10 years of employment prior to retirement ("Average Compensation"). Covered
compensation is equal to total base pay and incentive compensation (including
amounts deferred under the Long-Term Incentive Plan), which is substantially the
same as shown in the salary and bonus columns of the Summary Compensation Table
set forth above, (including total bonus referred to in footnote 1 to that
table). The annual benefit is calculated by multiplying the participant's
Average Compensation by a factor of 1 1/2% and the participant's years of
covered service (but not below a minimum benefit unrelated to compensation).
Benefits, which are paid in a straight life annuity form, are not subject to
reduction for Social Security or other offset. Certain surviving spouse benefits
are also available under the plans, as well as early retirement and facility
shutdown benefits. The Pension Plan Benefits table is prepared without regard to
benefit limitations imposed by the Internal Revenue Code. The years of benefit
service credited for executive officers named in the Summary Compensation Table
are: Mr. Green -- 32.6 years; Mr. Theis -- 5.0 years; Mr. Kessler -- 28.2 years;
Mr. Juszli -- 3.7 years; and Mr. Gorman -- 10.4 years.
The Internal Revenue Code limits the benefits provided under the Salaried
Plan. The Excess Benefit Retirement Plan provides for the payment, out of
Oglebay Norton's general funds, of the amount that a participant would have
received under the Salaried Plan but for the Internal Revenue Code limits. The
above table, which does not reflect those limits, shows the total annual pension
benefits payable under both the Salaried Plan and the Excess Benefit Retirement
Plan. The Excess Benefit Retirement Plan also provides supplemental benefits
under provisions in effect under the Salaried Plan prior to 1989 if the current
provisions would result in a lesser benefit. Since the pre-1989 benefit formula
has been grandfathered, Mr. Green will be the only participant receiving such a
supplemental benefit from the Excess Benefit Retirement Plan. That lifetime
benefit is estimated at $10,229 annually, commencing at normal retirement age.
33
<PAGE> 43
SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN
As with the Salaried Plan, the Internal Revenue Code limits the amount that
Oglebay Norton can contribute for an employee under its Savings Plan and
Employee Stock Ownership Plan ("ESOP"). The Supplemental Savings and Stock
Ownership Plan (the "Supplemental Plan"), provides for the payment, out of
Oglebay Norton's general funds, of the amount by which certain participants'
benefits under the Savings Plan and ESOP would exceed the limitations applicable
to those plans. The terms of the Supplemental Plan provide a benefit equal to
that which the participants would have received under the Savings Plan and ESOP
but for the Internal Revenue Code limitations. Benefits under the Supplemental
Plan are payable in cash only at such time and in such manner as the
Compensation and Organization Committee of the Board of Directors may select
from those available under the Savings Plan and ESOP. The terms of the
Supplemental Plan also prohibit a participant from competing with Oglebay Norton
for 10 years or wrongfully disclosing a trade secret. Based upon current
compensation levels and the period of time during which Mr. Green (six years)
and Mr. Kessler (less than one year) have accrued benefits under the
Supplemental Plan (other than benefits relating solely to dividends on Oglebay
Norton Common Stock), the only named executive officers eligible for
supplemental benefits are Messrs. Green and Kessler, who would be entitled to
benefits of $139,507 and $51, respectively.
OFFICER AGREEMENTS
SEPARATION AGREEMENT WITH MR. R. THOMAS GREEN, JR.
On December 17, 1997, Oglebay Norton entered into an agreement with Mr.
Green pursuant to which he was retained to provide services to Oglebay Norton
through June 30, 1999. The agreement provides for Mr. Green's stepping down as
President and Chief Executive Officer of Oglebay Norton effective as of December
31, 1997, his service as Chairman of the Board of Oglebay Norton through the
1998 Annual Meeting of Stockholders and his continued service thereafter as a
director through completion of his current term in April 1999. Mr. Green will
also serve as a director of the Holding Company until April 1999. Whether Mr.
Green is nominated as a candidate for election as a director after April 1999
will be determined by him and the Board of Directors of the Holding Company at
that time. While Mr. Green provides services to Oglebay Norton, Oglebay Norton
is to pay compensation to him at the rate of not less than $465,000 per year and
to provide to him all other benefits that are provided to full-time salaried
employees of Oglebay Norton. In addition, Oglebay Norton is to (i) pay such
premiums as may be required to have fully paid at age 65 a $720,000 face amount
life insurance policy on Mr. Green's life owned by him, (ii) provide Mr. Green
with up to $5,000 of retirement planning consultation (plus a "gross-up" amount
sufficient to enable Mr. Green to pay all taxes on the value of the consultation
and on the gross-up amount), (iii) provide Mr. Green with a furnished office and
related support and secretarial services through June 30, 2004, and (iv)
continue to pay Mr. Green's club membership dues and assessments for as long as
Mr. Green desires to maintain his membership.
EMPLOYMENT AGREEMENT WITH MR. JOHN N. LAUER
On December 17, 1997, Oglebay Norton entered into an employment agreement
(the "Employment Agreement") with Mr. Lauer pursuant to which he (i) became
employed by Oglebay Norton immediately upon execution of the Employment
Agreement, and (ii) became President and Chief Executive Officer of Oglebay
Norton effective January 1, 1998. The Employment Agreement contemplates Mr.
Lauer's election as Chairman of the Board of Directors at the time of the 1998
Annual Meeting of Stockholders and his continued employment as Chairman,
President and Chief Executive Officer of Oglebay Norton thereafter through
January 2, 2003. The Employment Agreement was negotiated with Mr. Lauer on
behalf of Oglebay Norton by the Compensation and Organization Committee of the
Board of Directors and was approved by the full Board of Directors at its
regularly scheduled meeting held on December 17, 1997.
The compensation arrangements embodied in the Employment Agreement are
intended to tie Mr. Lauer's compensation for services directly to the
performance of Oglebay Norton -- and particularly the price of shares of Common
Stock of Oglebay Norton -- over the term of Mr. Lauer's employment. Mr. Lauer
will not be paid a salary during his tenure with Oglebay Norton. Rather, the
primary elements of his compensation under the
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<PAGE> 44
Employment Agreement are (i) a grant of restricted shares of Common Stock of
Oglebay Norton, (ii) a grant of an option to purchase additional shares of
Common Stock of Oglebay Norton, and (iii) an annual bonus of up to $200,000 per
year depending upon the performance of Oglebay Norton during the year. The Board
of Directors determined that these compensation arrangements are appropriate in
that the ultimate value of the compensation package provided to Mr. Lauer will
depend in large part upon the ultimate value achieved by Oglebay Norton under
Mr. Lauer's management. The Board of Directors believes that the direct, largely
stock-based relationship between performance and reward is in the best interests
of Oglebay Norton and its stockholders. Each of the primary elements of Mr.
Lauer's compensation arrangements is described in more detail below.
Restricted Stock. On January 19, 1998, Oglebay Norton granted to Mr. Lauer
25,744 shares of Common Stock of Oglebay Norton subject to restrictions set
forth in the Employment Agreement (the "Restricted Shares"). The making of this
grant was contingent upon Mr. Lauer's personal investment of at least $1,000,000
in shares of Common Stock of Oglebay Norton. As provided in the Employment
Agreement, the number of Restricted Shares granted is equal to the number of
shares acquired by Mr. Lauer for his $1,000,000 investment. Of the 25,744
Restricted Shares granted, 20% (5,148 shares) were fully vested and
nonforfeitable as of the grant date. Assuming Mr. Lauer continues in the employ
of Oglebay Norton, another 20% of the total number of Restricted Shares will
vest and become nonforfeitable on January 1 of each of 1999, 2000, 2001, and
2003 (i.e., on each of the first, second, third, and fifth anniversaries of
January 1, 1998). However, if Mr. Lauer reduces his personal investment by
disposing of any of the shares he acquired for his $1,000,000 investment at any
time before January 1, 2003, any Restricted Shares that have not become fully
vested and nonforfeitable will be forfeited at the time of the reduction in Mr.
Lauer's personal investment. For these purposes, shares as to which (i) the
beneficial interest is held by any of certain members of Mr. Lauer's family, and
(ii) the voting rights are controlled by Mr. Lauer, will be treated as held by
Mr. Lauer.
If, before the restrictions on all of the Restricted Shares have lapsed,
Mr. Lauer's employment with Oglebay Norton is terminated by Oglebay Norton
without "Cause," Mr. Lauer is "Constructively Terminated," or Mr. Lauer
terminates his employment by notice to the Board of Directors within 90 days
after the occurrence of a "Change of Control" (with each such term defined as
provided in the Employment Agreement), Mr. Lauer's rights to all of the
Restricted Shares will become fully vested and nonforfeitable. If Mr. Lauer's
employment with Oglebay Norton is terminated by death or disability during 1998
or 1999, an aggregate of 12,872 Restricted Shares (50% of the entire grant) will
be fully vested and nonforfeitable; if his employment is terminated by death or
disability during 2000, an aggregate of 18,021 Restricted Shares (70% of the
entire grant) will be fully vested and nonforfeitable; if his employment is
terminated by death or disability during 2001, an aggregate of 21,882 Restricted
Shares (85% of the entire grant) will be fully vested and nonforfeitable; and if
his employment is terminated by death or disability after December 31, 2001, all
25,744 of the Restricted Shares will be fully vested and nonforfeitable (in each
case including any Restricted Shares that had previously become fully vested and
nonforfeitable). If Mr. Lauer's employment is terminated by Oglebay Norton for
Cause or by Mr. Lauer other than as a result of a Constructive Termination, any
Restricted Shares that were not already fully vested and nonforfeitable will be
forfeited at the time of termination.
Mr. Lauer elected under Section 83(b) of the Internal Revenue Code to
recognize the entire value of the shares of Common Stock of Oglebay Norton
subject to the grant as current income as of the date of the grant and without
regard to the restrictions on those shares. Mr. Lauer has also made arrangements
to satisfy the obligations to pay federal, state and local income tax in
connection with the grant and the income recognized in connection with the
grant.
Performance Option. As provided by the Employment Agreement, the
Compensation Subcommittee granted to Mr. Lauer, on December 17, 1997, subject to
the approval of the stockholders of Oglebay Norton, an option to acquire up to
380,174 shares at an exercise price of $38.00 per Share. The total of 380,174
shares subject to the Performance Option equals 8% of the entire number of
shares outstanding both on the grant date and on January 1, 1998. The $38.00 per
share exercise price is $6.00 above the per share closing price as reported on
the NASDAQ National Market on December 16, 1997 (the last closing price
available at the time the Employment Agreement was executed). The Performance
Option will not be exercisable by Mr. Lauer unless and until the approval of
Oglebay Norton's stockholders is obtained.
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<PAGE> 45
In the normal course, the Performance Option will first become exercisable
on January 1, 2001, after Mr. Lauer has been employed by Oglebay Norton for
three full years. If Mr. Lauer remains in the employ of Oglebay Norton
throughout the term contemplated by the Employment Agreement (i.e., through
January 2, 2003), the Performance Option, to the extent not previously exercised
by him, will remain exercisable through June 30, 2005. Any part of the
Performance Option not earlier exercised or terminated will terminate at the
close of business on June 30, 2005.
The exercise price under the Performance Option may be paid by Mr. Lauer in
cash or in such other form of consideration as the Compensation Subcommittee may
determine to accept including (i) delivery of instructions to a broker to
deliver to Oglebay Norton sale or loan proceeds to pay the exercise price, (ii)
delivery of shares, (iii) surrender of a portion of the Performance Option
itself, or (iv) any combination of these various methods. The Compensation
Subcommittee may permit or require Mr. Lauer to satisfy, by such means as the
Compensation Subcommittee may determine, any withholding tax obligation arising
from any exercise of the Performance Option.
If, before January 2, 2003, Mr. Lauer's employment with Oglebay Norton is
terminated by Oglebay Norton without Cause, Mr. Lauer is Constructively
Terminated, or Mr. Lauer terminates his employment by notice to the Board of
Directors within 90 days after the occurrence of a Change of Control, the
Performance Option, to the extent not previously exercised, will become
immediately exercisable and will remain exercisable thereafter through January
2, 2004, at which time it will be terminated.
If Mr. Lauer dies or his employment is terminated by Oglebay Norton on
account of his disability before January 1, 2001, the Performance Option will be
terminated as of the date of his death or termination due to disability without
ever having become exercisable. If Mr. Lauer dies or his employment is
terminated by Oglebay Norton on account of his disability after December 31,
2000 and before January 2, 2003, the Performance Option will remain exercisable
through the first anniversary of the date of his death or termination due to
disability and will be terminated as of the close of business on that first
anniversary.
If, before January 2, 2003, Mr. Lauer's employment is terminated by Oglebay
Norton for Cause or by Mr. Lauer voluntarily (and not in response to a
Constructive Termination), the Performance Option will be terminated on the date
of termination of employment.
Under currently applicable provisions of the Internal Revenue Code, the
grant of the Performance Option had no immediate tax consequences to Oglebay
Norton or to Mr. Lauer. Mr. Lauer will recognize compensation income at the time
of exercise of the Performance Option in an amount equal to the difference
between the exercise price and the fair market value on the exercise date of the
acquired shares. Oglebay Norton will be entitled to a deduction in the same
taxable year and in the same amount as Mr. Lauer recognizes compensation income
as a result of the exercise of the Performance Option, provided Oglebay Norton
satisfies applicable withholding requirements.
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<PAGE> 46
NEW PLAN BENEFITS -- PERFORMANCE OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
NAME AND OPTIONS
PRINCIPAL POSITION GRANTED(#)
------------------ ----------------
<S> <C>
R. Thomas Green, Jr......................................... --
Chairman of the Board
Stuart H. Theis............................................. --
Vice President -- Marine Transportation
Richard J. Kessler.......................................... --
Vice President -- Finance and Planning
Mark P. Juszli.............................................. --
Vice President -- Industrial Sands
Paul V. Gorman, Jr.......................................... --
Assistant Vice President -- Human Resources
Executive Officers as a Group(1)............................ 380,174(2)
Non-Executive Officer Directors as a Group.................. --
Non-Executive Officer Employees as a Group.................. --
</TABLE>
- ---------------
(1) John N. Lauer, who became Oglebay Norton's President and Chief Executive
Officer on January 1, 1998, is the sole member of this group who has
received a Performance Option grant.
(2) The expiration date, which is dependent on various factors, and the material
conditions to the exercise of the Performance Option granted to Mr. Lauer
are described in this section above.
Annual Bonus. Under the Employment Agreement, Mr. Lauer is eligible to
receive a cash bonus with respect to each calendar year during which he is
employed by Oglebay Norton with the amount of the bonus ranging in value from $0
to $200,000, depending upon the extent to which Oglebay Norton and Mr. Lauer
achieve such goals as may be specified in an incentive plan to be adopted by the
Compensation Subcommittee by the end of February during each calendar year. Any
cash bonus earned during a calendar year will be paid by March 15 of the
immediately following year.
Other Benefits. Oglebay Norton will provide to Mr. Lauer the same
perquisites as it has customarily provided to its top executives. Oglebay Norton
will also provide to Mr. Lauer a supplemental retirement benefit plan that will
provide to him retirement benefits that, when added to any benefits payable to
him under the Salaried Plan, will equal the benefits he would have been entitled
to under the Salaried Plan if (i) in addition to any bonuses received by him,
there had been included in his covered compensation, throughout the period of
his employment with Oglebay Norton, salary earned by him at the rate of $350,000
per year, and (ii) there were no limits on the amount of covered compensation
that could be taken into account in determining the benefit payable to him under
the Salaried Plan. If Mr. Lauer remains in the employ of Oglebay Norton through
January 2, 2003 and receives maximum (i.e., $200,000) annual bonuses, the
aggregate retirement benefit under the Salaried Plan and the supplemental plan
will be the equivalent of an annual lifetime benefit of $38,250 per annum.
The Employment Agreement obligates Mr. Lauer to refrain from competing with
Oglebay Norton while he is employed by Oglebay Norton and for a period of two
years after his employment with Oglebay Norton is terminated.
OFFICER AGREEMENTS EFFECTIVE UPON "CHANGE IN CONTROL"
Oglebay Norton has entered into separate agreements (collectively, the
"Officer Agreements") with the executive officers listed in the Summary
Compensation Table set forth above. The Officer Agreements are designed to
retain these individuals and provide for continuity of management in the event
of any actual or
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threatened "Change in Control" (as defined in the Officer Agreements) of Oglebay
Norton. None of the Officer Agreements will become effective unless, and until,
there is a Change in Control.
There are two "triggers" which apply to the Officer Agreements. The first
"trigger" requires that a "Change in Control" occur. Following a Change in
Control, the officer is entitled to continued employment at a compensation rate
equal to the greatest of that in effect (i) immediately before the Change in
Control, (ii) two years before the Change in Control, or (iii) such greater rate
determined by Oglebay Norton, plus continued participation in specified benefit
plans as an executive officer ("Contract Compensation"). The second "trigger" is
tripped if, following a Change in Control, the officer is terminated without
"Cause", or the officer terminates his employment for "Good Reason" (as defined
in the Officer Agreements). If the second "trigger" is tripped, then the officer
is entitled to receive Contract Compensation in lieu of employment, but only for
the longer of the time remaining in the original 30-month contract term
(following the Change in Control), or six months. Following employment
termination, the officer is obligated to endeavor to mitigate damages by seeking
comparable employment elsewhere and, to the extent the officer is successful,
Contract Compensation is reduced, dollar-for-dollar, for compensation and
benefits received from the subsequent employer. In addition, for as long as
Contract Compensation is received, the officer agrees neither to compete against
Oglebay Norton nor to disclose any of its trade secrets. Finally, Contract
Compensation under the Officer Agreements will be reduced if and to the extent
necessary to prevent any portion from being treated as excess parachute payments
under the Internal Revenue Code.
"POUR-OVER" AND IRREVOCABLE TRUSTS
Oglebay Norton has made commitments under various plans and agreements for
supplemental pension benefits, deferred and executive compensation arrangements,
and obligations arising in the event of a change in control, which it has not
been required to fund on a current basis (collectively, "Benefit Plans"). In
order to provide assurances that those commitments will be honored, Oglebay
Norton has established three trusts with independent trustees to fund those
Benefit Plan obligations in the event of a Change in Control (as defined in the
trust documents).
Irrevocable Trust Agreement I ("Trust I") exists to provide additional
assurances for benefits under a 1974 Supplemental Retirement Plan, all
participants of which have retired from Oglebay Norton. Irrevocable Trust
Agreement II ("Trust II") provides additional assurances for benefits and
payments due under the Excess Benefit Retirement Plan, the Supplemental Plan,
the Officer Agreements, the 1991 Executive Life Program and the 1996 Executive
Life Plan, pursuant to which Oglebay Norton pays life insurance premiums on
behalf of its executive officers.
The Oglebay Norton Company Pour-Over Trust ("Pour-Over Trust") provides
that in the event of a threatened Change in Control, Oglebay Norton shall
deposit in the Pour-Over Trust, on an irrevocable basis, 125% of the aggregate
unfunded obligations of such Benefit Plans subject to Trust I and Trust II. The
Pour-Over Trust becomes revocable if, following the threat, no Change in Control
occurs. If a Change in Control does occur, the Pour-Over Trust remains
irrevocable, and the assets in the Pour-Over Trust are transferred to Trusts I
and II. Although Oglebay Norton has contributed certain company-owned life
insurance policies to the trust held under Trust I, it has not contributed
significant assets to any of the three trusts, although Oglebay Norton has the
right to make additional discretionary contributions into the trusts. Assets
held in the trusts are subject at all times to claims of Oglebay Norton's
general creditors. If funds in the trusts are insufficient to pay amounts due
under a plan or agreement, Oglebay Norton remains obligated to pay those
amounts. No employee has any right to assets in the trusts until and to the
extent benefits are paid from the trusts.
LONG-TERM INCENTIVE PLAN
Oglebay Norton established its Long-Term Incentive Plan ("LTIP") on
December 18, 1995, which was approved by Stockholders at the 1996 Annual
Meeting. The Compensation Subcommittee administers the LTIP and selects those
officers and other key employees to participate in the plan. Participants are
eligible to defer a portion of their annual incentive award or are eligible to
be granted awards under the LTIP, as determined by the Compensation
Subcommittee. Each of the named executive officers currently participates in the
LTIP. During
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years 1995 through 1997, the LTIP consisted of two programs, the "Annual
Incentive Deferral Program" and the "Long-Term Incentive Program." The Annual
Incentive Deferral Program will not be in effect for compensation earned in 1998
and thereafter.
Under the Annual Incentive Deferral Program, each participant is able to
defer all or a portion (as determined by the Compensation Subcommittee) of any
incentive award payable under Oglebay Norton's Annual Incentive Plan. The
deferred amounts are converted into "share units" based upon the fair market
value of the shares of Common Stock of Oglebay Norton on the date of deferral.
Oglebay Norton will make a matching contribution to the participant's deferred
incentive award in an amount determined by the Compensation Subcommittee. For
amounts deferred for 1997, Oglebay Norton's match was 50% of the portion of each
participant's annual incentive award for 1997. An amount equal to dividends paid
on the shares of Common Stock of Oglebay Norton is also credited to the
participant's deferral account and Oglebay Norton match and is also converted
into share units based upon the fair market value of the shares of Common Stock
of Oglebay Norton on the dividend payment date. All annual incentive award
deferrals (and related dividends) are one hundred percent (100%) vested at all
times. Matching contributions (and related dividends) are vested on the fifth
anniversary of the date they are allocated to a participant's account, assuming
the employee has been in continuous service with Oglebay Norton for the entire
five-year period. Prior to the fifth anniversary of a particular allocation, a
matching contribution may become one hundred percent (100%) vested upon the
occurrence of certain events, including, without limitation, a participant's
early retirement or disability or a "Change of Control" (as defined in the
LTIP). All distributions under the LTIP are made in shares of Common Stock of
Oglebay Norton. Distributions of vested amounts are made upon a participant's
retirement, death or other termination of employment, upon a "Change in Control"
(as defined in the LTIP), or upon any other event deemed appropriate by the
Compensation Subcommittee. A participant may elect an in-service withdrawal of
all or a portion of his incentive award deferrals (and related dividends),
provided that the withdrawn deferrals have been allocated to the participant's
account for at least a five-year period prior to the withdrawal. However, upon
taking such an in-service withdrawal, all of the participant's matching
contributions are immediately forfeited. As noted above, the Annual Incentive
Deferral Program of the LTIP is no longer in effect for compensation earned in
1998 and thereafter.
The LTIP also provides for awards by the Compensation Subcommittee,
including a grant of options (which may be "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code, or nonqualified options),
stock appreciation rights, restricted stock and performance awards
(collectively, the "Incentive Awards"). The Compensation Subcommittee has the
discretion to set performance objectives as it deems appropriate respecting any
performance awards or restricted stock grants. The performance objectives may
vary from participant to participant and between groups of participants and will
be based upon such company, business unit and/or individual performance factors
and criteria as the Compensation Subcommittee may deem appropriate. As discussed
above under the heading "COMPENSATION OF EXECUTIVE OFFICERS -- Stock Option
Grants in 1997," on October 29, 1997, Oglebay Norton granted stock options to
certain of its executive officers and key employees under the LTIP.
The Compensation Subcommittee also has the authority, in its discretion, to
provide at the time of grant of any award under the LTIP, that the terms of the
grant or date on which an award vests or becomes exercisable may be modified in
the event of a change of control, as defined under the LTIP.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Malvin E. Bank, formerly a member of the Compensation and Organization
Committee of Oglebay Norton, is a partner of the law firm of Thompson Hine &
Flory LLP, Cleveland, Ohio, which provided legal services to Oglebay Norton in
1997 and continues to provide such services in 1998. Mr. Bank has not served on
the Compensation and Organization Committee since April 30, 1997.
Mr. Bersticker serves on the Compensation and Organization Committee of
Oglebay Norton, and is the Chairman and Chief Executive Officer of Ferro
Corporation. As is discussed in the immediately following section, a
wholly-owned subsidiary of Oglebay Norton sells to, and purchases from, Ferro
Corporation various
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<PAGE> 49
items in the ordinary course of business pursuant to arm's length negotiations.
Mr. Bersticker is not a member of the Compensation Subcommittee.
RELATED PARTY TRANSACTIONS
Oglebay Norton Industrial Sands, Inc. ("ONIS"), a wholly-owned subsidiary
of Oglebay Norton, sells ground silica to, and purchases heavy density grinding
media and ceramic mill lining from, Ferro Corporation. Mr. Bersticker is
Chairman of the Board and Chief Executive Officer of Ferro Corporation. During
the year ended December 31, 1997, total sales to and purchases from Ferro
Corporation by ONIS were $627,603 and $528,067, respectively. These transactions
were entered into by ONIS pursuant to arm's length negotiations in the ordinary
course of business and on terms that Oglebay Norton believes to be fair.
LEGAL OPINION
The legality of the Common Shares of the Holding Company has been passed
upon by Thompson Hine & Flory LLP, Cleveland, Ohio, legal counsel to Oglebay
Norton. Several partners of Thompson Hine & Flory LLP own shares of Common Stock
of Oglebay Norton. Information on the share ownership of Malvin E. Bank, who is
a director of Oglebay Norton, and Douglas N. Barr is set forth above under the
heading "BENEFICIAL OWNERSHIP OF COMMON STOCK OF OGLEBAY NORTON." Other partners
of Thompson Hine & Flory LLP have advised Oglebay Norton that they own an
aggregate of approximately 500 shares of Common Stock of Oglebay Norton.
EXPERTS
The consolidated financial statements of Oglebay Norton appearing in
Oglebay Norton's Annual Report on Form 10-K for the year ended December 31,
1997, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Deloitte & Touche LLP has delivered an opinion to Oglebay Norton regarding
the federal income tax consequences of the reorganization described herein.
Deloitte & Touche LLP was selected by Oglebay Norton, and is qualified to
deliver such opinion, based upon the authority of such firm as experts in tax
matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the records and information of Oglebay Norton, Oglebay Norton
believes that all Securities and Exchange Commission filing requirements
applicable to directors and executive officers under Section 16(a) of the
Securities Exchange Act of 1934, as amended, for 1997 were met.
INDEPENDENT AUDITORS
A representative of Ernst & Young LLP, the independent auditor of Oglebay
Norton for the year ended December 31, 1997, is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if the
representative desires to do so and to respond to appropriate questions with
respect to the firm's examination of the consolidated financial statements and
records of Oglebay Norton for the year ended December 31, 1997. The Board of
Directors of Oglebay Norton has not yet considered the appointment of
independent auditors for the year ending December 31, 1998.
FINANCIAL STATEMENTS
Oglebay Norton's Annual Report for the year ended December 31, 1997,
including financial statements for such year, accompanies this Proxy
Statement-Prospectus. Stockholders may obtain a copy of Oglebay Norton's
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<PAGE> 50
Annual Report on Form 10-K as filed with the Securities and Exchange Commission
free of charge upon oral or written request to the Secretary, Oglebay Norton
Company, 1100 Superior Avenue, Cleveland, Ohio 44114-2598, Telephone Number
(216) 861-3300.
1999 ANNUAL MEETING
The 1999 Annual Meeting of Stockholders of the Holding Company is presently
scheduled to be held on April 28, 1999. The deadline for stockholders to submit
proposals to be considered for inclusion in the proxy statement for that meeting
is November 25, 1998.
OTHER MATTERS
The management of Oglebay Norton does not know of any business to be acted
upon at the Annual Meeting other than the matters described above, but if any
other matter properly comes before the Annual Meeting, the persons named on the
enclosed proxy card will vote thereon in accordance with their best judgment.
Stockholders are urged to sign and return their proxies without delay.
By Order of the
Board of Directors
/s/ David G. Slezak
DAVID G. SLEZAK,
Secretary and Director
of Legal Affairs
April 28, 1998
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<PAGE> 51
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Merger Agreement") is made as of
April 6, 1998, by and among Oglebay Norton Company, a Delaware corporation
("Oglebay Norton"), Oglebay Norton Holding Company, an Ohio corporation and
wholly-owned subsidiary of Oglebay Norton (the "Holding Company"), ONCO
Investment Company, an Ohio corporation and wholly-owned subsidiary of the
Holding Company (the "Investment Company"), and Oglebay Norton Merger Company, a
Delaware corporation and wholly-owned subsidiary of the Investment Company (the
"Merger Company").
WHEREAS, Oglebay Norton has an authorized capital stock consisting of
10,000,000 shares of Common Stock, $1.00 par value per share, of which 4,763,351
are issued and outstanding, and 5,000,000 shares of Preferred Stock, without par
value, none of which are issued and outstanding.
WHEREAS, the Investment Company has an authorized capital stock consisting
of 100 Common Shares, $1.00 par value, of which one share is issued and
outstanding and is owned by the Holding Company.
WHEREAS, the Merger Company has an authorized capital stock consisting of
100 shares of Common Stock, $1.00 par value, of which one share is issued and
outstanding and is owned by the Investment Company.
WHEREAS, at the Effective Date (as defined below), the Holding Company will
have an authorized capital stock consisting of 30,000,000 Common Shares, $1.00
par value per share, of which one share is issued and outstanding and is owned
by Oglebay Norton, and 5,000,000 Preferred Shares, without par value, none of
which are issued and outstanding.
WHEREAS, the respective Boards of Directors of Oglebay Norton, the Holding
Company, the Investment Company and the Merger Company deem it advisable that
the Merger Company merge with and into Oglebay Norton upon the terms and
conditions herein provided and, therefore, have each approved and authorized
this Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree that in accordance with the Delaware
General Corporation Law (the "DGCL") the Merger Company shall be merged with and
into Oglebay Norton in accordance with the following terms and conditions.
1. The Merger. Effective upon the filing of this Merger Agreement or a
separate certificate of merger, in such form as is required by the DGCL, with
the Secretary of State of the State of Delaware (the "Effective Date"), the
Merger Company will be merged with and into Oglebay Norton in accordance with
the DGCL. As a result of the merger (the "Merger"), the separate existence of
the Merger Company will cease and Oglebay Norton will be the surviving
corporation (the "Surviving Company"). From and after the Effective Time, the
Merger will have the effects specified in the DGCL.
2. Conditions to the Merger. The obligations of Oglebay Norton, the
Holding Company, the Investment Company and the Merger Company to consummate the
Merger are subject to (a) the adoption of the Merger Agreement at the 1998
Annual Meeting of Stockholders of Oglebay Norton (the "Annual Meeting") by the
vote of the holders of at least two-thirds of the shares of Common Stock of
Oglebay Norton outstanding on the record date for the Annual Meeting and (b) the
receipt by Oglebay Norton of the consent to the Merger of the United States
Secretary of Transportation as and to the extent required by contracts relating
to the construction and chartering of vessels financed under Title XI of the
Merchant Marine Act of 1939.
3. Certificate of Incorporation and By-laws of the Surviving Company. The
Certificate of Incorporation of the Merger Company, as amended and in effect on
the Effective Date, shall be the Certificate of Incorporation of the Surviving
Company without change or amendment until further amended in accordance with the
provisions
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thereof and applicable law, except that the first section of the Certificate of
Incorporation of the Surviving Company shall, as of the Effective Date, be
amended to read as follows:
FIRST. The name of the Corporation shall be "ONCO Transportation
Company."
The By-laws of the Merger Company, as amended and in effect on the
Effective Date, shall be the By-laws of the Surviving Company, without change or
amendment until further amended in accordance with the provisions thereof and
applicable law.
4. Articles of Incorporation and By-laws of the Holding Company. Article
FIRST of the Articles of Incorporation of the Holding Company shall, as of the
Effective Date, be amended to read as follows:
FIRST. The name of the Corporation shall be "Oglebay Norton Company."
5. Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
applicable law, the directors and officers of the Merger Company immediately
prior to the Effective Time will be the directors and officers of the Surviving
Company after the consummation of the Merger.
6. Further Assurances. From time to time, as and when required by the
Surviving Company or by its successors and assigns, there shall be executed and
delivered on behalf of the Merger Company such deeds and other instruments, and
there shall be taken or caused to be taken by it such further actions, as shall
be appropriate or necessary in order to vest or perfect in or to confirm of
record or otherwise in the Surviving Company the title to and possession of all
the property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of the Merger Company, and otherwise to carry out the
purposes of this Merger Agreement, and the officers and directors of the
Surviving Company are fully authorized in the name and on behalf of the Merger
Company or otherwise to take any and all such actions and to execute and deliver
any and all such deeds and other instruments.
7. Common Stock of Oglebay Norton. On the Effective Date, by virtue of the
Merger and without any action on the part of any holder thereof, each share of
Common Stock, $1.00 par value per share, of Oglebay Norton outstanding
immediately prior thereto shall be changed and converted into one fully paid and
nonassessable Common Share, $1.00 par value per share, of the Holding Company.
The conversion of these shares will occur by virtue of the Merger and without an
exchange of certificates, and each certificate representing shares of Common
Stock of Oglebay Norton issued and outstanding immediately prior to the Merger
will, upon completion of the Merger, represent Common Shares of the Holding
Company.
8. Common Stock of the Merger Company. On the Effective Date, by virtue of
the Merger and without any action on the part of the holder thereof, each share
of Common Stock, $1.00 par value per share, of the Merger Company outstanding
immediately prior thereto shall be changed and converted into one fully paid and
nonassessable share of Common Stock, $1.00 par value per share, of the Surviving
Company.
9. Common Shares of the Holding Company Owned by Oglebay Norton. On the
Effective Date, each Common Share of the Holding Company will be canceled, and
all rights in respect thereof will cease.
10. Stock Certificates. On and after the Effective Date, all of the
outstanding certificates that prior to that time represented shares of Common
Stock of Oglebay Norton shall be deemed for all purposes to evidence the same
number of Common Shares of the Holding Company. The registered owner on the
books and records of the Holding Company or its transfer agent of any such stock
certificate shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to the Holding Company or its
transfer agent, have and be entitled to exercise any voting and other rights
with respect to, and to receive any dividend and other distributions upon, the
shares of the Holding Company to which such person is entitled.
11. Abandonment. This Merger Agreement will terminate and the Merger will
be abandoned if the Merger Agreement is not adopted at the Annual Meeting by the
vote of the holders of at least two-thirds of the shares of Common Stock of
Oglebay Norton outstanding on the record date for the Annual Meeting. In
addition, at any
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time before the Effective Date, this Merger Agreement may be terminated and the
Merger may be abandoned at the election of the Board of Directors of Oglebay
Norton, whether before or after approval of this Merger Agreement by the
stockholders of Oglebay Norton, if the Board of Directors shall have determined
that the Merger is not in the best interest of Oglebay Norton or its
stockholders.
12. Amendment. This Merger Agreement may be amended at any time before the
Merger becomes effective in a written instrument approved in form and substance
by the Board of Directors of Oglebay Norton and executed by all of the parties
hereto. However, after the adoption of this Merger Agreement by the stockholders
of Oglebay Norton, this Merger Agreement may not be amended in a way that, in
the judgment of the Board of Directors of Oglebay Norton, materially and
adversely affects the rights of the stockholders of Oglebay Norton, unless the
Merger Agreement, as amended, is adopted by the holders of at least two-thirds
of the outstanding shares of Common Stock of Oglebay Norton entitled to vote
thereon.
13. Counterparts. This Merger Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be duly executed by their respective authorized officers as of the date first
written above.
OGLEBAY NORTON COMPANY
/s/ JOHN N. LAUER
--------------------------------------
By: John N. Lauer
Title: President and Chief Executive
Officer
OGLEBAY NORTON HOLDING COMPANY
/s/ JOHN N. LAUER
--------------------------------------
By: John N. Lauer
Title: President
ONCO INVESTMENT COMPANY
/s/ JOHN N. LAUER
--------------------------------------
By: John N. Lauer
Title: President
OGLEBAY NORTON MERGER COMPANY
/s/ JOHN N. LAUER
--------------------------------------
By: John N. Lauer
Title: President
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EXHIBIT B
ARTICLES OF INCORPORATION
OF
OGLEBAY NORTON HOLDING COMPANY
FIRST. The name of the Corporation is "Oglebay Norton Holding Company."
SECOND. The principal office of the Corporation in the State of Ohio is
located in the City of Cleveland, Cuyahoga County.
THIRD. The purpose or purposes for which the Corporation is formed is to
engage in any lawful act or activity for which corporation may be formed under
the Ohio General Corporation Law.
FOURTH. The total number of shares which the Corporation shall have
authority to issue is 35,000,000, of which 5,000,000 shall be Preferred Shares
without par value, and 30,000,000 shall be Common Shares with a par value of $1
per share. The Preferred Shares may be issued from time to time in one or more
series. To the extent permitted by the Ohio General Corporation Law, the Board
of Directors of the Corporation shall have the right, by resolution or
resolutions, to adopt amendments to these Articles of Incorporation in respect
of any unissued or treasury Preferred Shares and thereby to fix or change: the
division of such shares into series; the dividend or distribution rate; the
dates of payment dividends or distributions; whether dividends are cumulative
and, if so, the dates from which they are cumulative; the liquidation price; the
redemption rights and price; sinking fund requirements; conversion rights;
restrictions on the issuance of shares of any class or series; and any other
relative, participating, optional, or other special rights and privileges of,
and qualifications or restrictions on, the rights of holders of shares of any
class or series; provided, however, that (i) the aggregate number of Common
Shares into which all of the Preferred Shares shall at any time be convertible
shall not exceed 5,000,000, subject to appropriate adjustment in the event of
any stock dividend, stock split-up, or other change in the Common Shares; and
(ii) the price at which Preferred Shares of any series shall at any time be
convertible into Common Shares shall be not less than the fair market value, as
determined by the directors, of the Common Shares on the date on which the
conversion rights of the Preferred Shares of such series are fixed by resolution
or resolutions adopted by the Board of Directors, subject to appropriate
adjustment in the event of any stock dividend, stock split-up, or other change
in the Common Shares. All Preferred Shares of any series issued at different
times may differ as to the dates of issue and the dates from which dividends
thereon shall accumulate.
DIVISION A
EXPRESS TERMS
OF
SERIES C $10 PREFERRED STOCK
There is hereby established a series of Preferred Shares; the designation,
number, voting powers, preferences and rights and the qualifications,
limitation, or restrictions thereof are as follows:
SECTION 1. DESIGNATION. The shares of such series are designated as
the "Series C $10.00 Preferred Stock" (the "Series C Preferred Stock").
SECTION 2. AUTHORIZED NUMBER OF SHARES. Fractional Shares. The
authorized number of shares constituting the Series C Preferred Stock is
300,000. Series C Preferred Stock may be issued in fractions of a share
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series C Preferred Stock.
SECTION 3. DIVIDENDS AND DISTRIBUTIONS. (a) Subject to any prior and
superior rights of the holders of any series of Preferred Shares ranking
prior and superior to the shares of Series C Preferred Stock with respect
to dividends that may be authorized by the Restated Certificate of
Incorporation, the holders of
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shares of Series C Preferred Stock shall be entitled prior to the payment
of any dividends on shares ranking junior to the Series C Preferred Stock
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on
the last day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series C Preferred Stock, in
an amount per share (rounded by the nearest cent) equal to the greater of
(a) $1,000 or (b) subject to the provisions for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions (other than a dividend payable in Common
Shares or a subdivision of the outstanding Common Shares, by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series C Preferred Stock. In the event the
Corporation shall at any time after August 26, 1987 (the "Rights
Declaration Date") (i) declare any dividend on Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares, or (iii)
combine the outstanding Common Shares into a smaller number of shares, then
in each such case the amount to which holders of shares of Series C
Preferred Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (a) above immediately
after it declares a dividend or distribution on the Common Shares (other
than a dividend payable in Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the Common Shares
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share
on the Series C Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series C Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
C Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date.
(d) Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series C Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series C Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 60 days prior to the date fixed for
the payment thereof.
(e) Dividends in full shall not be declared or paid or set apart for
payment on the Series C Preferred Stock for a dividend period terminating
on the Quarterly Dividend Payment Date unless dividends in full have been
declared or paid or set apart for payment on the Preferred Shares of all
series (other than series with respect to which dividends are not
cumulative from a date prior to such dividend date) for the respective
dividend periods terminating on such dividend date. When the dividends are
not paid in full on all series of the Preferred Shares, the shares of all
series shall share ratably in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be payable
on such shares if all dividends were declared and paid in full.
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SECTION 4. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made to the holders of shares ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received $10.00 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series C Liquidation
Preference"). Following the payment of the full amount of the Series C
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series C Preferred Stock unless, prior thereto, the
holders of Common Shares shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the
Series C Liquidation Preference by (ii) 100 (as appropriately adjusted in
accordance with subparagraph (c) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Shares) (such number in clause (ii) is hereinafter referred to as the
"Adjustment Number"). Following the payment of the full amount of the
Series C Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series C Preferred Stock and Common Shares,
respectively, holders of Series C Preferred Stock and holders of Common
Shares shall receive their ratable and proportionate share, on a per share
basis of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to the Series C Preferred Stock and
Common Shares, respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference
and the liquidation preferences of all other series of Preferred Shares, if
any, which rank on a parity with the Series C Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall
be distributed ratably to the holders of Common Shares.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares, or (iii)
combine the outstanding Common Shares into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
SECTION 5. CONVERSION ON MERGER, CONSOLIDATION, ETC. In case the
Corporation shall enter into any merger, consolidation, combination or
other transaction in which Common Shares are exchanged or changed into
other shares or securities, cash and/or any other property, then in any
such case each share of Series C Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of shares, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common
Share is changed or exchanged. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common
Shares, or (iii) combine the outstanding Common Shares into a smaller
number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
SECTION 6. REDEMPTION. The outstanding shares of Series C Preferred
Stock shall not be redeemable.
SECTION 7. VOTING RIGHTS. Each holder of shares of Series C Preferred
Stock shall be entitled to one hundred votes for each share held, and
except as otherwise by law provided, the holders of Series C Preferred
Stock and the holders of Common Shares shall vote together as one class.
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SECTION 8. CONDITION TO ISSUANCE OF ANY OTHER SERIES. The Articles of
Incorporation of the Corporation shall not be further amended to provide
for the issuance of any other series of Preferred Shares without the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series C Preferred Stock, voting separately as one voting group.
FIFTH. The existence of the Corporation shall be perpetual.
SIXTH. The private property of the shareholders of the Corporation shall
not be subject to the payment of corporate debts to any extent whatever.
SEVENTH. Provisions for the management of the business and conduct of the
affairs of the Corporation, and to define and regulate the powers of the
Corporation, the directors and the shareholders, are as follows:
(a) The number of directors of the Corporation shall be fixed from
time to time as may be provided in its Regulations, but shall never be less
than three. In the case of an increase in the number of directors at any
time, the additional directors may be elected by the directors then in
office, unless otherwise provided in the Regulations. At each annual
meeting of shareholders, successors to the class of directors whose term
expires at the annual meeting shall be elected for a three-year term. The
number of directors in each of these classes shall be fixed or changed as
may be provided in the Regulations.
Notwithstanding the foregoing, whenever the holders of any class or
series of Preferred Shares issued by the Corporation has the right, voting
separately by class or series, to elect directors at an annual or special
meeting of shareholders, the election, classification, term of office,
filling of vacancies, and other features of such directorships shall be
governed by the terms of such Preferred Shares.
(b) The Board of Directors may from time to time determine whether and
to what extent and at what times and places and under what conditions and
regulations the accounts and books of the Corporation shall be open to the
inspection of the shareholders, and no shareholder shall have any right to
inspect any document, book, or account of the Corporation, except as
conferred by law, unless authorized by resolution of the Board of
Directors.
(c) The shareholders and directors shall have power, if the
Regulations so provide, to hold their meetings and to have one or more
offices within or without the State of Ohio and, subject to the provisions
of the laws of Ohio, to keep the books, documents, and papers of the
Corporation outside the State of Ohio at such places as may be from time to
time designated by the Board of Directors.
(d)(1) The Corporation shall indemnify, to the full extent then
permitted by law, any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, by
reason of the fact the he or she is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, or agent of another corporation,
partnership, limited liability company, joint venture, trust, or other
enterprise. The Corporation shall pay, to the full extent then required by
law, expenses, including attorney's fees, incurred by a director in
defending any such action, suit, or proceeding as they are incurred, in
advance of the disposition thereof, upon receipt of any undertaking then
required by law. The Corporation may, in its discretion, indemnify and
other person, or advance expenses to any other person, in the same manner
and to the full extent then permitted by law. Notwithstanding the
foregoing, except as provided in Subsection (2) hereof, the Corporation
shall indemnify or advance expenses to any person in connection with a
proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
(d)(2) If a claim under Subsection (1) is not paid in full by the
Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been
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tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Ohio General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Ohio General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable
standard of conduct.
(d)(3) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this subparagraph (d) shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, Regulations, agreement, vote of
shareholders or disinterested directors, or otherwise.
(d)(4) The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, or agent of another corporation,
partnership, limited liability company, joint venture, trust, or other
enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as
such, whether or not the Corporation would have the power to indemnify him
or her against such liability under the provisions of this subparagraph (d)
or of the Ohio General Corporation Law.
(e) The Corporation may in its Regulations confer powers upon its
directors in addition to those conferred herein and in addition to the
powers and authorities expressly conferred upon them by statute.
(f) No shareholder of the Corporation shall have any pre-emptive right
to subscribe for any additional issues of shares of the Corporation.
EIGHTH. The affirmative vote of the holders of shares entitling them to
exercise at least two-thirds of the voting power of the Corporation shall be
required:
(a) To approve (1) the merger of the Corporation into or its
consolidation with another corporation, or (2) the merger into the
Corporation of another corporation, if under the Ohio General Corporation
Law, the affirmative vote of holders of shares would be required to effect
the merger, or (3) the sale, lease, exchange, or other disposition by the
Corporation of all, or substantially all, of its property and assets to
another corporation; or
(b) To approve any agreement, contract, or other arrangement providing
for any of the transactions described in subparagraph (a) above.
No amendment to the Articles of Incorporation of the Corporation shall
amend, alter, change, or repeal any of the provisions of this Article
EIGHTH, unless the amendment effecting such amendment, alteration, change,
or repeal shall receive the affirmative vote or consent of the holders of
share entitling them to exercise at least two-thirds of the voting power of
the Corporation.
NINTH. (a) VOTING REQUIREMENT FOR CERTAIN BUSINESS COMBINATIONS. Unless
both the fair price requirement set forth in the subparagraph (a) and the other
conditions set forth in subparagraph (c) below have been satisfied, the
affirmative vote of the holders of 75% of all outstanding shares of the
Corporation entitled to vote in elections of directors, voting together as a
single class, shall be required for the authorization or approval of any of the
following transactions:
(a)(1) The merger or consolidation of the Corporation or any of its
subsidiaries with or into an interested shareholder (as hereinafter
defined).
(a)(2) The sale, lease, pledge, or other disposition, in one
transaction or in a series of transactions, from the Corporation or any of
its subsidiaries to an interested shareholder, or from an interested
shareholder to
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the Corporation or any of its subsidiaries, of assets having an aggregate
fair market value (as hereinafter defined) equal to or exceeding 20% of the
fair market value, as determined by the continuing directors (as
hereinafter defined), of the consolidated assets of the Corporation and its
subsidiaries.
(a)(3) The issuance, sale, or other transfer, in one transaction or in
a series of transactions, by the Corporation or any of its subsidiaries to
an interested shareholder, or by an interested shareholder to the
Corporation or any of its subsidiaries, of securities for cash or other
consideration having an aggregate fair market value equal to or exceeding
20% of the fair market value, as determined by the continuing directors, of
the consolidated assets of the Corporation and its subsidiaries.
(a)(4) The liquidation or dissolution of the Corporation proposed by
an interested shareholder.
(a)(5) The reclassification of securities, recapitalization of the
Corporation, or other transaction that has the effect of increasing the
proportionate share of any class or series of outstanding securities of the
Corporation or any of its subsidiaries beneficially owned (as hereinafter
defined) by an interested shareholder or of otherwise diluting the position
of any shareholder of the Corporation in comparison with the position of an
interested shareholder.
(a)(6) Any other transaction or series of transactions that is similar
in purpose or effect to those referred to in subsections (1) through (5) of
this subparagraph (a).
This voting requirement shall apply even though no vote, or a lesser
percentage vote, may be required by law, by any other provision of these
Articles of Incorporation, or otherwise. The term "business combination,"
as used in this Article, means any of the transactions referred to in
subsections (1) through (6) of this subparagraph (a).
(b) FAIR PRICE REQUIREMENT. The fair price requirement will be
satisfied if the consideration to be received in the business combination
by the holders of Common Shares or Preferred Shares, and by the Corporation
or any of its subsidiaries, as the case may be, meets the following tests:
(b)(1) If any holder of the Common Shares or Preferred Shares,
other than an interested shareholder, is to receive consideration in the
business combination for any of the shares, the aggregate amount of cash
and fair market value of any other consideration to be received per
share may not be less than the sum of --
(i) the greater of (A) the highest per share price, including
commissions, paid by the interested shareholder for any shares of the
same class or series during the two-year period ending on the date of
the most recent purchase by the interested shareholder of any shares
of the same class or series, (B) the highest per share sales price
reported for shares of the same class or series traded on a national
securities exchange or in the over-the-counter market during the
one-year period preceding the first public announcement of the
proposed business transaction, or (C) in the case of Preferred
Shares, the amount of the per share liquidation preference; plus
(ii) interest on the per share price calculated at the rate
payable by the Corporation under its principal credit facility on the
date on which the interested shareholder became an interested
shareholder, compounded annually from that date until the business
combination is consummated, less the per share amount of cash
dividends payable to holders of record on record dates from that date
until the business combination is consummated, up to the amount of
such interest.
For purposes of this subsection (1), per share amounts will be
adjusted for any stock dividend, stock split, or similar transaction.
(b)(2) The consideration to be received by holders of the Common
Shares or Preferred Shares must be paid in cash or in the same form as
was previously paid by the interested shareholder for shares of the same
class or series; if the interested shareholder previously paid for such
shares with different forms of consideration, the consideration to be
received by the holders of the shares must be in cash or in the same
form as was paid by the interested shareholder for the greatest number
of shares previously acquired by it. The provisions of this subsection
(2) are not intended to diminish the aggregate amount
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of cash and fair market value of any other consideration that any holder
of the Common Shares or Preferred Shares is otherwise entitled to
receive upon the liquidation or dissolution of the Corporation, under
the terms of any contract with the Corporation or an interested
shareholder, or otherwise.
If the Corporation or any of its subsidiaries is to receive
consideration in the business combination, the consideration to be
received must be fair to the Corporation or its subsidiaries, as
determined by the continuing directors.
(c) OTHER CONDITIONS. The other conditions will be satisfied if, from
the time the interested shareholder became an interested shareholder until
the completion of the business combination, each of the following has at
all times been and continues to be true:
(c)(1) The Corporation's Board of Directors has included at least a
majority of continuing directors. The term "continuing director," as
used in this Article NINTH, means an individual who (i) either was a
director of the Corporation at the time the interested shareholder
became an interested shareholder or whose nomination was subsequently
approved by the other continuing directors and (ii) is not an affiliate
or associate (as hereinafter defined) of the interested shareholder. All
actions required or permitted to be taken by the continuing directors
under this Article NINTH shall be taken by the unanimous written consent
of all continuing directors or by the vote of a majority of the
continuing directors then in office at a meeting convened upon such
notice as would be required for a meeting of the full Board of
Directors.
(c)(2) The interested shareholder has not become the beneficial
owner (as hereinafter defined) of any additional Common Shares or
Preferred Shares, except (i) as part of the transaction that resulted in
the interested shareholder becoming an interested shareholder, (ii) upon
conversion of securities previously acquired by it, or (iii) pursuant to
a stock dividend or stock split.
(c)(3) The interested shareholder has not received, directly or
indirectly, the benefit (except proportionately as a shareholder) of any
loan, advance, guaranty, pledge, or other financial assistance, tax
credit or deduction, or other benefit from the Corporation or any of its
subsidiaries.
(c)(4) A proxy or information statement describing the business
combination and complying with the requirements of the Securities and
Exchange Act of 1934, as amended, and the rules and regulations under it
(or any subsequent provisions replacing that Act and the rules and
regulations under it) has been mailed at least 30 days prior to the
completion of the business combination to the holders of all shares of
the Corporation entitled to vote in elections of directors, whether or
not shareholder approval of the business combination is required. If
deemed advisable by the continuing directors, the proxy or information
statement shall contain a recommendation by the continuing directors as
to the advisability (or inadvisability) of the business combination or
an opinion by an investment banking firm, selected by the continuing
directors and retained at the expense of the Corporation, as to the
fairness (or unfairness) of the business combination to holders of
Common Shares or Preferred Shares other than the interested shareholder.
(c)(5) Except to the extent approved by the continuing directors,
there has been no (i) failure to pay in full, when and as due, any
dividends on the Preferred Shares or (ii) failure to pay or reduction in
the annual rate of dividends on the Common Shares, whether directly or
indirectly through a reclassification, recapitalization, or otherwise.
(c)(6) Except to the extent approved by the continuing directors,
there has been no material change in (i) the nature of the business
conducted by the Corporation and its subsidiaries or (ii) the capital
structure of the Corporation, including but not limited to any change in
the number of outstanding Common Shares, the number and series of any
outstanding Preferred Shares, and the types and aggregate principal
amount of any outstanding debt securities, except for changes resulting
from the exercise of previously issued options, warrants, or other
rights, the conversion of previously issued shares or other instruments,
the issuance of previously authorized debt securities, or the mandatory
redemption or retirement of debt securities in accordance with their
terms.
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(d) DEFINITIONS. As used in this Article NINTH:
(d)(1) "AFFILIATE" and "ASSOCIATES". The terms "affiliate" and
"associate" have the meanings ascribed to them in Rule 12b-2 of the
General Rules and Regulations under the Securities and Exchange Act of
1934, as amended, as in effect on May 4, 1983.
(d)(2) "BENEFICIAL OWNERSHIP". A person or entity is deemed to
"beneficially own" shares if, directly or indirectly through any
contract, understanding, arrangement, relationship, or otherwise, that
person or entity has or shares (i) the power to vote or to dispose of,
or to direct the voting or disposition of, the shares or (ii) the right
to acquire the shares pursuant to any contract or arrangement, upon the
exercise of any option, warrant, or right, upon the conversion of any
shares or other instrument, upon revocation of a trust, or otherwise.
The person or entity is also deemed to "beneficially own" shares that
are beneficially owned by affiliates and associates of that person or
entity.
(d)(3) "BUSINESS COMBINATION". The term "business combination" has
the meaning ascribed to it in subparagraph (a) of this Article NINTH.
(d)(4) "CONTINUING DIRECTORS". The term "continuing directors" has
the meaning ascribed to it in subsection (1) of subparagraph (c) of this
Article NINTH.
(d)(5) "FAIR MARKET VALUE". The term "fair market value" means,
(i) in the case of securities listed on a national securities exchange
or quoted in the National Association of Securities Dealers Automated
Quotation Systems (NASDAQ), the highest sales price reported for
securities of the same class or series traded on the national securities
exchange or in the over-the-counter market during the preceding 30-day
period, or if no such report or quotation is available, the value
determined by the continuing directors, and (ii) in the case of other
securities and of consideration or assets other than securities or cash,
the value determined by the continuing directors.
(d)(6) "INTERESTED SHAREHOLDER". The term "interested shareholder"
means any person or entity that, together with its affiliates and
associates, is at the time of, or has been within the two-year period
immediately prior to, the consummation of a business combination the
beneficial owner of shares having at least 25% of the aggregate voting
power of all outstanding shares of the Corporation entitled to vote in
elections of directors. The term "interested shareholder," for purposes
of the requirements and conditions of this Article NINTH, also includes
the affiliates and associates of the interested shareholder.
Notwithstanding the foregoing, the Corporation and its subsidiaries, and
any profit-sharing, employee stock ownership, employee pension, or other
employee benefit plan of the Corporation or any subsidiary, are not
deemed to be "interested shareholders."
(e) Nothing contained in this Article NINTH shall be construed to
relieve any interested shareholder from any fiduciary obligations
imposed by law.
(f) Notwithstanding any other provision of these Articles of
Incorporation or the Regulations of the Corporation (and notwithstanding
the fact that a lesser percentage may be required by law, these Articles
of Incorporation, or the Regulations), the affirmative vote of the
holders of 75% of the outstanding shares of the Corporation entitled to
vote in elections of directors, voting together as a single class, shall
be required to amend or repeal, or adopt any provisions inconsistent
with, this Article NINTH.
TENTH. (A) FOREIGN OWNERSHIP OF SHARES, ETC.
(a)(1) Notwithstanding anything to the contrary in these Articles of
Incorporation, it is the policy of the Corporation that, consistent with
law, Foreigners shall not own or control more than the Permitted Percentage
of the shares of any class of the Corporation at any time outstanding, and,
if Foreigners nevertheless at any time do own more than the Permitted
Percentage of such shares, shares owned by Foreigners may be purchased by
the Corporation, or the voting and the dividend and other distribution
rights of shares owned by Foreigners may be suspended, and the issuance of
stock certificates and the transfer of share ownership on the books of
register of the Corporation to Foreigners may be denied, all to the extent
necessary to prevent the loss by the Corporation (or any Subsidiary or
Controlled Person) of, or to reinstate,
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its right to be a United States Maritime Company or to have any license or
franchise from a governmental agency that is conditioned upon some or all
of the holders of shares of the Corporation possessing prescribed
qualifications.
(a)(2) The Board of Directors is generally authorized to adopt all
such rules and resolutions and to take any and all other lawful measures
reasonably necessary, appropriate, or desirable to carry out the policy set
forth in subparagraph (a)(1).
(a)(3) Without in any way limiting the general powers and authority
set forth in subparagraph (a)(2), the Board of Directors is specifically
authorized to take any or all of the actions specified below and, in that
regard, is authorized to take all such action and make all such
determinations as it deems necessary, appropriate, or desirable and as are
in accordance with law and not inconsistent with this Article TENTH,
including making changes in any of the definitions contained in
subparagraph (i) to accord with changes in applicable law or the rules,
regulations, and practices of any relevant governmental agency.
(b) RESTRICTIONS ON TRANSFER. Any transfer, or attempted or purported
transfer, of any shares issued by the Corporation that would result in the
ownership by one or more Foreigners of an aggregate percentage of the
shares of any class of the Corporation in excess of the Permitted
Percentage shall, to the full extent permitted by law and for so long as
such excess exists, be ineffective as against the Corporation, and the
Corporation shall not recognize the purported transferee as a shareholder
of the Corporation for any purpose whatsoever except for the purpose of
making a further transfer to a person not a Foreigner and for purposes of
the purchase or redemption of such shares by the Corporation, effecting any
other remedy available to the Corporation, or otherwise carrying out the
provisions of this Article TENTH.
(c) NO VOTING RIGHTS; TEMPORARILY WITHHOLDING PAYMENTS OF DIVIDENDS
AND OTHER DISTRIBUTIONS. If at any time (including the time of any record
date) ownership by Foreigners of the outstanding shares of any class of the
Corporation is in excess of the Permitted Percentage, the Corporation may,
to the full extent permitted by law, determine which shares owned by
Foreigners are deemed to be included in such excess (to be selected in a
manner consistent with the provisions of Subsection (d)(3) below), and the
shares deemed to be included in such excess shall (so long as such excess
exists) not have any voting rights, and the Corporation may (so long as
such excess exists) temporarily withhold the payment of dividends and the
sharing in any other distribution (upon liquidation or otherwise) in
respect of the shares deemed to be included in such excess; provided,
however, that any such dividend or distribution shall be set aside for
payment to the owners of such shares (or their transferees) when, as, and
if such excess no longer exists or such shares are no longer owned by
Foreigners.
(d) REDEMPTION OF SHARES. Notwithstanding any other provision of
these Articles of Incorporation and without limiting the power of the Board
of Directors to purchase shares pursuant to subparagraph (f), outstanding
shares of any class of the Corporation shall be subject to redemption by
the Corporation (by action of the Board of Directors, if in the judgment of
the Board such action should be taken) pursuant to Section 1701.23 of the
Ohio General Corporation Law (or any other provision of law) to the extent
necessary to reduce the percentage of shares owned by Foreigners to the
Permitted Percentage. The terms and conditions of such redemption shall be
as follows:
(1) the redemption price shall be the Fair Market Value of such
shares;
(2) the redemption price for shares owned by Foreigners in excess
of the Permitted Percentage may be paid in cash or in Redemption
Securities, as determined by the Board of Directors;
(3) the shares owned by Foreigners to be redeemed shall be selected
in such manner as shall be prescribed by the Board of Directors,
including selection first of the shares most recently purchased,
selection by lot or on a pro rata basis, or selection in any other
manner that is consistent with the policy set forth in this Article
TENTH;
(4) the number of shares to be redeemed shall not exceed the number
necessary to reduce the percentage of shares owned by Foreigners to the
Permitted Percentage;
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(5) written notice of the date of redemption (the "Redemption
Date") shall be given to the record holders of the selected shares
(unless waived in writing by any such holder);
(6) the Redemption Date shall be the later of (i) the date on which
written notice is given to record holders and (ii) the date on which the
funds or Redemption Securities necessary to effect the redemption have
been deposited in trust for the benefit of such record holders and are
subject to immediate withdrawal by them upon surrender of their stock
certificates;
(7) from and after the Redemption Date, any and all rights in
respect of the shares selected for redemption shall cease and terminate,
and the owners of such shares shall thenceforth be entitled only to
receive the cash or Redemption Securities payable upon redemption; and
(8) such other terms and conditions as the Board of Directors may
reasonably determine.
(e) DUAL STOCK CERTIFICATE SYSTEM AND OTHER ACTIONS. The Board of
Directors is authorized to adopt rules and to take such other action as it
may deem necessary or desirable in order to carry out the policy set forth
in subparagraph (a)(1), to impose restrictions on the transfer or the
registration of transfer of shares of any class of the Corporation, in
accordance with law, and to determine whether outstanding shares of any
class of the Corporation are owned by Foreigners or by citizens of the
United States. Such restrictions may include a Dual Stock Certificate
System.
(f) PURCHASE OF SHARES BY THE CORPORATION. Without limiting the power
of the Board of Directors to redeem shares owned by Foreigners in
accordance with subparagraph (d) or generally to purchase outstanding
shares or other securities of the Corporation, the Board of Directors is
authorized, in carrying out the policy set forth in subparagraph (a)(1), to
cause the Corporation to purchase shares of any class of the Corporation
that are owned by Foreigners. Any such purchase may be carried out at such
price and under such other terms as the Board of Directors deems
appropriate and fair to the Corporation under the circumstances.
(g) OWNERSHIP. Whether outstanding shares are owned by Foreigners for
the purposes of this Article TENTH shall be determined under such rules and
resolutions, consistent with definitions of ownership under any applicable
law and the rules, regulations, and practices of any governmental agency
and not inconsistent with this Article TENTH, as may be adopted from time
to time by the Board of Directors. The Corporation may, in its discretion,
rely on the records of the Corporation maintained in accordance with a Dual
Stock Certificate System and the certificates of transferees or with
holders to prove that shares are or are not owned by a Foreigner. Whether
shares are or are not owned by Foreigners may also be subject to proof in
such other way or ways as the Corporation may deem reasonable. The
Corporation at any time may require proof, in addition to the
certification, that shares are or are not owned or are or are not applied
for by a Foreigner, and the payment of dividends may be withheld, and any
application for transfer of ownership on the books of register of the
Corporation may be rejected, until such additional proof is submitted.
(h) EFFECTIVENESS. This Article TENTH shall be effective only so long
as the Corporation or any Subsidiary or Controlled Person (a) is a United
States Maritime Company or has a license or franchise from a governmental
agency that is conditioned upon one or all of the holders of shares of the
Corporation possessing prescribed qualifications or (b) intends to
reinstate itself as a United States Maritime Company, or to reinstate any
such license or franchise, within a reasonable time, after ceasing to be or
hold the same.
(i) DEFINITIONS.
(i)(1) "FAIR MARKET VALUE" of a share of any class of the
Corporation on any particular date shall mean the average (unweighted)
closing price for such a share on the New York Stock Exchange for each
of the 45 trading days on which shares of such class have been traded
preceding the day on which notice of a redemption is given pursuant to
subparagraph (d)(5), except that if such class is not traded on the New
York Stock Exchange, then such closing price for each of the 45 trading
days shall be those listed on any other national security exchange on
which shares of such class are listed, and if not listed on any national
security exchange, the last sale price for each of the 45 trading days
as quoted in the NASDAQ National Market System, and if not quoted in the
NASDAQ National Market System, the
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mean between the representative bid and asked prices on each of the 45
trading days as quoted by NASDAQ or another generally recognized
reporting system.
(i)(2) "SUBSIDIARY" shall mean any corporation more than 50% of the
outstanding shares of which are owned by the Corporation or by any
Subsidiary of the Corporation.
(i)(3) "FOREIGNER" shall mean (a) any person (including for
purposes of this subparagraph (i) an individual, a partnership, a
corporation, or an association) that is not a United States citizen or
is the representative of or fiduciary for any person that is not a
United States citizen; (b) any foreign government or the representative
thereof; (c) any corporation the president, chief executive officer, or
chairman of the board of directors of which is a Foreigner, or of which
more than a minority cf its directors necessary to constitute a quorum
are Foreigners; (d) any corporation organized under the laws of any
foreign government; (e) any corporation of which a majority of its
shares are owned beneficially or of record, or may be voted by,
Foreigners, or which by any other means whatsoever is controlled by or
in which control is permitted to be exercised by Foreigners; (f) any
partnership or association which is controlled by Foreigners; (g) any
corporation of which a 25% or greater interest is owned beneficially or
of record by Foreigners and which may be deemed to "control" the
Corporation (the Board of Directors being authorized to determine
reasonably the meaning of "control" for this purpose); (h) any other
person deemed by the Board of Directors to be a Foreigner as to the
United States or the Corporation (or any Subsidiary) or otherwise not
possessing prescribed qualifications to be a holder of outstanding
shares of the Corporation in accordance with the policy set forth in
subparagraph (a)(1); or (i) any person who acts as representative of or
fiduciary for any person described in clauses (a) through (h) above.
(i)(4) "PERMITTED PERCENTAGE" shall mean the lesser of the
following percentages of the outstanding shares of any class of the
Corporation: (i) so long as the Corporation (or any Subsidiary or
Controlled Person) operates vessels in the United States coastwise,
intercoastal, or noncontiguous domestic trade, 25%; and (ii) so long as
the Corporation (or any Subsidiary or Controlled Person) shall have a
license or franchise from a governmental agency to conduct its business
which is conditioned upon some of the holders of shares of the
Corporation possessing prescribed qualifications, the percentage
prescribed by law to possess or operate under such license or franchise;
except that the Board of Directors may reduce the lesser of the
foregoing percentages by not more than 2-1/2% in the event that the
Board determines that a reasonable margin in the amount of such
reduction is desirable, in which case "Permitted Percentage" shall mean
the lesser of such percentages reduced by such margin.
(i)(5) "REDEMPTION SECURITIES" shall mean interest bearing
promissory notes of the Corporation with a maturity of not more than 10
years from the date of issue and bearing interest at a rate, and having
other terms, designed to ensure that the value of the promissory note at
the date of issue is equivalent to the redemption price.
(i)(6) "DUAL STOCK CERTIFICATE SYSTEM" means a system under which
(i) one of two different forms of stock certificate, representing
outstanding shares of any class of the Corporation, is issued to the
holders of record dependent on whether the shares are or are not owned
by a Foreigner; (ii) the forms of stock certificate for any class of the
Corporation are marked "Foreign" for shares owned by Foreigners or
"Domestic" for shares not owned by Foreigners but are identical in all
other respects and comply with all provisions of the Ohio General
Corporation Law (including Section 1701.23 thereof with respect to
restrictions on transfer or registration of transfer); (iii) when, as,
and if the Permitted Percentage is reached or exceeded for any class of
shares and until the percentage of the class owned by Foreigners has
been reduced to or below the Permitted Percentage, no additional
"Foreign" stock certificates may be issued for the class to any
transferee of the holder of a "Domestic" stock certificate and the
Corporation will not recognize any such transferee as an owner of shares
of the Corporation for any purpose whatsoever; (iv) a certification is
required from any transferee (and from any recipient upon original
issuance) of shares of the Corporation as to whether such transferee (or
recipient), and if such transferee (or recipient) is acting as nominee
or in any other capacity for an owner, such owner, is
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or is not a Foreigner and registration of transfer (or original
issuance) is denied upon refusal to furnish such certification; (v) to
the extent necessary to enable the Corporation to determine the
percentage of any class of outstanding shares of the Corporation that is
owned by Foreigners for the purpose of submitting any proof of
citizenship required by law or by contract with the United States
government (or any agency thereof), the record holders and the owners of
such shares may be required from time to time to confirm their
citizenship status, and dividends payable to any such record holder and
owner may, in the discretion of the Board of Directors, be temporarily
withheld until confirmation of such citizenship status is received; and
(vi) the records of the Corporation are maintained in such manner as to
enable determination at any time, as to each class of outstanding shares
of the Corporation, of the percentage that is owned by Foreigners and
the percentage that is owned by United States citizens.
(i)(7) "CONTROLLED PERSON" means any corporation or partnership of
which the Corporation or any subsidiary owns or controls an interest in
excess of 25%.
(i)(8) "UNITED STATES MARITIME COMPANY" means any corporation or
other entity which, directly or indirectly, (i) owns or operates vessels
in the United States coastwise trade, intercoastal trade, or
non-contiguous domestic trade, (ii) owns, charters, sub-charters, or
leases any vessel the costs of construction, renovation, or
reconstruction of which have been financed, in whole or in part, by
obligations insured or guaranteed under Title XI of the Merchant Marine
Act of 1936, as amended, (iii) conducts any activity, takes any action,
or receives any benefit that would be adversely affected under any
provision of the United States maritime, shipping, or vessel
documentation laws because of the ownership by Foreigners of its shares,
or (iv) maintains a Capital Construction Fund under the provisions of
Section 807 of the Merchant Marine Act of 1936, as amended.
ELEVENTH. Except as expressly provided in these Articles of Incorporation,
all actions that would otherwise require the affirmative vote of the holders of
shares entitling them to exercise two-thirds of the voting power of the
Corporation on such proposal may be taken with the affirmative vote of the
holders of a majority of such voting power.
TWELFTH. The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in these Articles of Incorporation of the
Corporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon shareholders are granted subject to this reservation.
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EXHIBIT C
REGULATIONS
OF
OGLEBAY NORTON HOLDING COMPANY
<PAGE> 67
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER SUBJECT NUMBER
- ------- ------- ------
<C> <S> <C>
OFFICES
1. Offices..................................................... 1
SEAL
2. Seal........................................................ 1
SHAREHOLDERS' MEETINGS
3. Place of meetings........................................... 1
4. Annual meeting.............................................. 1
5. Quorum...................................................... 1
6. Voting...................................................... 1
7. Notice of annual meeting.................................... 1
8. Shareholders' list.......................................... 1
9. Special meetings............................................ 2
10. Business transacted at special meetings..................... 2
11. Notice of special meetings.................................. 2
DIRECTORS
12. Number; election; qualifications; term of office............ 2
13. Powers and authorities...................................... 2
VACANCIES
14. Vacancies................................................... 2
MEETINGS OF THE BOARD
15. Notice...................................................... 2
16. Quorum...................................................... 2
ACTION WITHOUT A MEETING
17. Action by directors without a meeting....................... 2
COMMITTEES
18. Executive Committee......................................... 3
19. Other committees............................................ 3
COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS
20. Compensation of directors and committee members............. 3
OFFICERS
Election and designation of officers; compensation; term of
21. office; vacancies........................................... 3
CHAIRMAN OF THE BOARD
22. Chairman of the Board....................................... 3
PRESIDENT
23. President................................................... 3
SECRETARY
24. Secretary................................................... 4
TREASURER
25. Treasurer................................................... 4
OTHER OFFICERS
26. Other officers.............................................. 4
AUTHORITY TO VOTE SECURITIES
27. Authority to vote securities................................ 4
DELEGATION OF AUTHORITY AND DUTIES
28. Delegation of authority and duties of officers.............. 4
</TABLE>
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<TABLE>
<CAPTION>
PAGE
NUMBER SUBJECT NUMBER
- ------- ------- ------
<C> <S> <C>
STOCK CERTIFICATES
29. Stock certificates.......................................... 4
TRANSFERS OF SHARES
30. Transfers of shares......................................... 4
LOST, STOLEN OR DESTROYED CERTIFICATES
31. Lost, stolen or destroyed certificates...................... 5
TRANSFER AGENT AND REGISTRAR
32. Transfer agent and registrar................................ 5
RECORD DATES
33. Record dates................................................ 5
REGISTERED SHAREHOLDERS
Right of corporation to recognize only record
34. shareholders................................................ 5
INSPECTION OF BOOKS
35. Inspection of books......................................... 5
DIVIDENDS
36. Dividends................................................... 5
DIRECTORS' ANNUAL STATEMENT
37. Directors' annual statement................................. 6
NOTICES
38. Notices..................................................... 6
39. Advance notice of proposals by shareholders................. 6
40. Advance notice of nominations by shareholder................ 6
AMENDMENTS
41. Amendments.................................................. 7
</TABLE>
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<PAGE> 69
REGULATIONS
OF
OGLEBAY NORTON HOLDING COMPANY
OFFICES
1. The principal office of the corporation in the State of Ohio is located
in the City of Cleveland, Cuyahoga County. The corporation shall also have an
office in the City of Cleveland, Ohio, and it may also have such other offices
at such other places, either within or without the State of Ohio, as the Board
of Directors may from time to time designate or the business of the corporation
may require.
SEAL
2. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Ohio". Said seal may be used by
causing it, or a facsimile thereof, to be impressed, affixed, or otherwise
reproduced.
SHAREHOLDERS' MEETINGS
3. All meetings of the shareholders may be held at such place within or
without the State of Ohio as shall be designated in the call for such meeting.
4. The annual meeting of the shareholders shall be held on the last
Wednesday in April in each year at such time and place as shall be designated in
the call for such meeting, and at such meeting the shareholders shall elect, by
ballot, a Board of Directors and transact such other business as may properly be
brought before the meeting.
5. The holders of a majority of the outstanding shares of the corporation
present in person or represented by proxy shall constitute a quorum at all
meetings of the shareholders for the transaction of business, except as
otherwise provided by law, by the Articles of Incorporation, or by these
Regulations; provided, however, that no action required by law, by the Articles
of Incorporation, or by these Regulations to be authorized or taken by a
designated proportion of the shares of the corporation may be authorized or
taken by a lesser proportion; and provided, further, that, if a quorum shall not
be present or represented at any meeting of the shareholders, the holders of a
majority of the voting shares present or represented thereat shall have power to
adjourn the meeting, from time to time, without notice other than announcement
at the meeting, until the requisite number of shares shall be present or
represented. At such adjourned meeting, at which the requisite number of shares
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
6. At each meeting of the shareholders, every shareholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and bearing a date not more
than eleven months prior to said meeting, unless said instrument specifies the
date on which it is to expire or the length of time it is to continue in force.
In all elections of directors, each shareholder shall be entitled to vote
cumulatively, subject to the notice requirements of the Ohio General Corporation
Law, and to give one candidate as many votes as the number of directors to be
elected multiplied by the number of his or her votes, or to distribute his or
her votes on the same principle among two or more candidates, as he or she sees
fit. The vote for directors and, on the demand of any shareholder, the vote upon
any question before the meeting shall be by ballot. All elections shall be had
and all questions decided by a plurality vote, except as otherwise required by
law or by these Regulations.
7. Written notice of the annual meeting, stating the time, place and object
thereof, shall be mailed to each shareholder entitled to vote thereat at such
address as appears on the records of the corporation not less than ten or more
than sixty days prior to the meeting.
8. Upon request of any shareholder at any meeting of shareholders, a
complete list, or classified lists, of the shareholders of record, arranged in
alphabetical order and showing the address of each and the number of shares
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registered in the name of each, shall be produced at the meeting and open to the
examination of any shareholder who may be present at the meeting.
9. Special meetings of the shareholders for any purpose or purposes, unless
otherwise prescribed by law, may be called by the Chairman of the Board, by the
President, by the directors by action at a meeting or a majority of the
directors acting without a meeting, or by persons who hold fifty percent of all
shares outstanding and entitled to vote thereat.
10. Business transacted at all special meetings shall be confined the
objects stated in the call.
11. Written notice of any special meeting of the shareholders stating the
time, place and object thereof, shall be mailed, postage prepaid, not less than
ten or more than sixty days before such meeting, to each shareholder entitled to
vote thereat, at such address as appears on the books of the corporation.
DIRECTORS
12. The property and business of this corporation shall be managed by its
Board of Directors, consisting of such number of members, not less, however,
than three, as the shareholders may determine at any annual or special meeting
called for the purpose of electing directors at which a quorum is present, by
the affirmative vote of a majority of the shares which are represented at the
meeting and entitled to vote on such proposal, or as the directors may determine
from time to time. Whenever the shareholders shall have so determined the
number, such number shall be deemed the authorized number of directors until the
same shall be changed by vote of the shareholders as aforesaid or by the
directors. Directors need not be shareholders. They shall be elected at the
annual meeting of the shareholders, and each director shall be elected to serve
until his successor shall be elected and shall qualify. No director may be
removed from office.
13. In addition to the powers and authorities by these Regulations
expressly conferred upon them, the directors may exercise all such powers of the
corporation and do all such lawful acts and things as are not by law, by the
Articles of Incorporation, or by these Regulations directed or required to be
exercised or done by the shareholders.
VACANCIES
14. If the office of any director or directors becomes vacant by reason of
death, resignation, retirement, disqualification or otherwise, the remaining
directors, though less than a quorum, may choose a successor or successors who
shall hold office until the next annual meeting of shareholders at which the
class or classes of directors in which the vacancy or vacancies occur shall be
elected.
MEETINGS OF THE BOARD
15. Regular or special meetings of the Board may be called by the Chairman
of the Board or by the President on one day's notice to each director, either
personally or by mail, telegram, or cablegram. Special meetings shall be called
by the President or Secretary in like manner and on like notice on the written
request of two directors.
16. At all meetings of the Board, a majority of the directors shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by law, by the Articles of Incorporation, or by
these Regulations.
ACTION WITHOUT A MEETING
17. Any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a meeting if,
prior to such action, a written consent thereto is signed by all members
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of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or committee.
COMMITTEES
18. The Board of Directors shall by resolution appoint an Executive
Committee consisting of not less than four or more than eight directors of the
corporation, as the Board shall determine, together with such alternates as the
Board may deem advisable. The Executive Committee shall meet as called by either
the Chairman of that Committee or the Secretary of the Company, at such place or
places as they may from time to time determine. The Executive Committee shall
have and may exercise all of the powers and authority of the Board of Directors
in the management of the business and affairs of the corporation, other than the
filling of vacancies among the directors or in any committee of the directors,
when the Board is not in session, subject to any specific resolutions of the
Board of Directors. Unless otherwise ordered by the Board of Directors, the
Executive Committee may prescribe its own rules for calling and holding meetings
and for its own procedures and may act at a meeting by a majority of its members
or without a meeting by written consent of all of its members. The Executive
Committee shall cause the Secretary to keep full and complete records of all
meetings and actions, which shall be open to inspection. by any director. Each
member of the Executive Committee and each alternate shall hold office during
the pleasure of the Board of Directors.
19. The Board of Directors may by resolution appoint one or more additional
committees, each committee to consist of three or more directors and to have
such authority and to perform such duties as may from time to time be determined
by the Board of Directors.
COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS
20. The directors, by the affirmative vote of a majority of those in
office, shall have the authority to establish reasonable compensation for
services to the corporation by directors and committee members, or may delegate
such authority to one or more officers or directors.
OFFICERS
21. The Board of Directors shall elect a Chairman of the Board, a
President, one or more Vice Presidents, any one or more of whom may be
designated Executive Vice Presidents and any one or more of whom may be
designated Senior Vice Presidents, a Treasurer and a Secretary. The Board of
Directors may elect such other officers as in its discretion it deems necessary.
The Chairman of the Board, any Vice Chairman of the Board, and the President
shall be directors, but no other one of the officers need be a director. Any
two, but not more than two, of such offices may be held by the same person. The
compensation of all of the officers of the corporation shall be fixed by the
Board of Directors. officers elected by the Board of Directors shall hold office
until their successors are chosen and qualified in their stead. Any officer
elected by the Board of Directors shall hold office during the pleasure of the
Board. If the office of any officer or officers becomes vacant, the vacancy may
be filled by the Board of Directors.
CHAIRMAN OF THE BOARD
22. The Chairman of the Board shall preside at all meetings of the Board of
Directors and shall have such other authority and perform such other duties as
may be determined by the Board of Directors.
PRESIDENT
23. The President shall preside at all meetings of the shareholders.
Subject to directions of the Board of Directors, he shall have general executive
authority and responsibility with respect to the business and affairs of the
corporation, and shall have such other authority and perform such other duties
as may be determined by the Board of Directors.
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SECRETARY
24. The Secretary shall record all of the proceedings of the meetings of
the shareholders, the Board of Directors, and the Executive Committee. He shall
keep such other books as may be required by the Board of Directors, shall give
notices of meetings of the shareholders, the Board, and the Executive Committee
required by law, by these Regulations, or otherwise, shall attest, on behalf of
the corporation, all documents requiring the attestation of the Secretary, and
shall have such authority and perform such other duties as may be determined by
the Board of Directors.
TREASURER
25. The Treasurer shall receive and have in charge all money, bills, notes,
bonds, shares in other corporations, and similar property belonging to the
corporation, and shall hold and dispose of the same as may be ordered by the
Board of Directors. He shall keep accurate financial accounts and hold the same
open for the inspection and examination of the directors and shall have such
authority and perform such other duties as may be determined by the Board of
Directors.
OTHER OFFICERS
26. The Vice Presidents, Assistant Secretaries, and the Assistant
Treasurers, if any, and any other officers whom the Board of Directors may elect
shall, respectively, have such authority and perform such duties as may be
determined by the Board of Directors.
AUTHORITY TO VOTE SECURITIES
27. The Chairman of the Board, the President, and any other officers
designated by the Board of Directors are each authorized to vote, appoint
proxies, and execute consents, waivers, and releases with respect to securities
of other corporations owned by the corporation.
DELEGATION OF AUTHORITY AND DUTIES
28. The Board of Directors is authorized to delegate the authority and
duties of any officer to any other officer and generally to control the action
of the officers and to require the performance of duties in addition to those
mentioned in these Regulations.
STOCK CERTIFICATES
29. Every holder of shares in the corporation shall be entitled to one or
more certificates, signed by the Chairman of the Board, the President, a Vice
President, the Treasurer, an Assistant Treasurer, the Secretary, or an Assistant
Secretary, certifying the number of shares owned by him in the corporation. When
such a certificate is countersigned by an incorporated transfer agent or
registrar, the signature of any of said officers of the corporation may be
facsimile, engraved, stamped, or printed. Although any officer of the
corporation whose manual or facsimile signature is affixed to such a certificate
ceases to be such officer before the certificate is delivered, such certificate
nevertheless shall be effective in all respects when delivered.
TRANSFERS OF SHARES
30. Shares of the corporation shall be transferable upon the books of the
corporation by the holders thereof, in person, or by a duly authorized attorney,
and new certificates shall be issued upon surrender and cancellation of
certificates for a like number of shares, with duly executed assignment or power
of transfer endorsed thereon or attached thereto, and with such proof of the
authenticity of the signatures to such assignment or power of transfer as the
corporation or its agents may reasonably require.
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LOST, STOLEN OR DESTROYED CERTIFICATES
31. The corporation may issue a new stock certificate in the place of any
certificate alleged to have been lost, stolen or destroyed. The Board of
Directors may require the owner, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the issuance of such new certificate.
A new certificate may be issued without requiring any bond when, in the judgment
of the directors, it is proper to do so.
TRANSFER AGENT AND REGISTRAR
32. The Board of Directors may, from time to time, appoint, or revoke the
appointment of, transfer agents and registrars and may require all stock
certificates to bear the signatures of such transfer agents and registrars or
any of them.
RECORD DATES
33. The Board of Directors may fix in advance a date, not exceeding fifty
days preceding the date of any meeting of shareholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares, or to give such consent, and in such case only such shareholders as
shall be shareholders of record on the date so fixed shall be entitled to such
notice of and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
any such record date fixed as aforesaid. In the event that no record date shall
be fixed for the determination of shareholders entitled to vote at a meeting of
shareholders, the record date shall be the date next preceding the day on which
notice is given, or the date next preceding the day on which the meeting is
held, as the case may be.
REGISTERED SHAREHOLDERS
34. The corporation shall be entitled to treat the holder of record of any
share or shares as the holder in fact thereof, and, accordingly, shall not be
bound to recognize any equitable or other claim to, or interest in, such share
on the part of any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of Ohio.
INSPECTION OF BOOKS
35. The directors shall determine, from time to time, whether and if
allowed, when and under what conditions and regulations, the accounts and books
of the corporation (except such as may by statute be specifically open to
inspection), or any of them, shall be open to the inspection of the
shareholders, and the shareholders' rights in this respect are and shall be
restricted and limited accordingly.
DIVIDENDS
36. Dividends upon the shares of the corporation, subject to the provisions
of the Articles of Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property or in shares.
Before payment of any dividend, there may be set aside, out of any funds of
the corporation available for dividends, such sum or sums as the directors, from
time to time, in their absolute discretion, think proper, as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of
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the corporation, or for such other purpose as the directors shall think
conducive to the interest of the corporation; and the directors may abolish any
such reserve in the manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
37. The Board of Directors shall present at each annual meeting, and when
called for by vote of the shareholders, at any special meeting of the
shareholders, a full and clear statement of the business and condition of the
corporation.
NOTICES
38. Expect as provided in Section 39 and 40, whenever, under the provisions
of these Regulations, notice is required to be given to any director, officer or
shareholder, it shall not be construed to mean personal notice, but such notice
as may be given in writing by mail, by depositing the same in the post office or
letter box in a postpaid, sealed wrapper, addressed to such shareholder, officer
or director at such address as appears on the books of the corporation; and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
Any shareholder, director or officer may waive any notice required to be
given by law, by the Articles of Incorporation or by these Regulations and shall
be deemed to have waived notice of any meeting which he shall attend without
protesting, prior to or at the commencement of such meeting, the lack, of proper
notice thereof.
39. At any annual or special meeting of shareholders, proposals by
shareholders shall be considered only if the shareholder intending to make the
proposal is entitled to vote on the proposal at the meeting, advance notice of
the intention to make the proposal is timely given in accordance with this
Section 39 and the proposals are otherwise proper for consideration under
applicable law and the Articles of Incorporation. Notice of any such shareholder
proposal must be given in writing to the Secretary, and received at the
corporation's principal executive offices, not less than sixty nor more than
ninety days prior to the scheduled date of the meeting, as disclosed by the
corporation to its shareholders or in other public notice (including, in the
case of an annual meeting, disclosure in the proxy statement for the previous
year); except that, if notice to the shareholders or prior public disclosure of
the scheduled date of the meeting is first given or made less than seventy-five
days prior to the date of the meeting, the written notice of the intention to
make the shareholder proposal must be given to the Secretary not later than the
close of business on the fifteenth day following the day on which such notice to
the shareholders or public disclosure (whichever occurs earlier) is first given
or made. Notice of the anticipated date of the annual meeting included the
corporation's proxy statement for the prior year will, for this purpose, be
adequate notice of the date of the meeting unless the date is subsequently
advanced by more than thirty days or delayed by more than ninety days. Any
notice of the intention to make a shareholder proposal shall be accompanied by
the text of the proposal and a brief written statement of the reasons why the
shareholder favors the proposal and shall set forth (i) the shareholder's name
and record address, (ii) a representation that the shareholder is a holder of
record of shares of the corporation entitled to vote at the meeting and intends
to appear in person or by proxy at the meeting to make the proposal, (iii) a
description of all arrangements or understandings between the shareholder and
any other person (naming that person) pursuant to which the proposal is to be
made, and (iv) the number and class of all shares of the corporation beneficial
owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) by the shareholder and any material interest of the shareholder in the
proposal (other than any interest solely as a shareholder). The person presiding
at the meeting shall determine whether the notice of the shareholder proposal
has been duly given and shall direct that the proposal not be considered if the
notice (together with all information required to be submitted by the
shareholder under this Section 40) has not been given.
40. Subject to the rights of the holders of any class or series of
preferred shares of the corporation, a shareholder may make nominations for the
election of directors at an annual or special meeting of shareholders only if
the shareholder intending to make the nominations is entitled to vote for the
election of directors at the meeting and written notice of the intention to make
the nominations is timely given as provided in this Section 41. Notice of any
such shareholder nominations must be given in writing to the Secretary, and
received at
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the corporation's principal executive offices, not less than sixty nor more than
ninety days prior to the scheduled date of the meeting, as disclosed by the
corporation to its shareholders or in other public notice (including, in the
case of an annual meeting, disclosure in the proxy statement for the previous
year); except that, if notice to the shareholders or prior public disclosure of
the scheduled date of the meeting is first given or made less than seventy-five
days prior to the date of the meeting, the written notice of the intention to
make the nominations must be given to the Secretary not later than the close of
business on the fifteenth day following the day on which such notice to the
shareholders or public disclosure (whichever occurs earlier) is first given or
made. Any notice of a shareholder's intention to make such nominations shall set
forth: (i) as to each person who is not an incumbent director when the
shareholder proposes to nominate that person for election as a director, (A) the
name, age, and business and residence address of that person, (B) the principal
occupation and employment of that person during the past five years and the name
and principal business of any corporation or other organization in which such
occupations and employment were carried on, (C) all positions of that person as
a director, officer, partner, employee or controlling shareholder of any
corporation or other organization, (D) the class and number of shares of the
corporation that are beneficially owned (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934) by that person, (E) any other information
regarding the person that would be required, pursuant to Item 401 of Regulation
S-K adopted by the Securities and Exchange Commission (or the corresponding
provisions of any regulations subsequently adopted by the Securities and
Exchange Commission applicable to the corporation), to be included in a proxy
statement of the corporation complying with the proxy rules of the Securities
and Exchange Commission if that person were nominated by the board of directors
of the corporation, and (F) the written consent of that person to serve as a
director of the corporation, and (ii) as to the shareholder giving the notice,
(A) the name and record address of the shareholder, (B) a representation that
the shareholder is a holder of record of shares of the corporation entitled to
vote at the meeting and intends to appear in person or by proxy at the meeting
to nominate the person specified in the notice, (C) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person (naming that person) pursuant to which the nomination is to be
made, and (D) the class and number of shares of the corporation that are
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934) by the shareholder.
AMENDMENTS
41. These Regulations may be amended, or new Regulations may be adopted, at
a meeting by the affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power of the corporation on the proposal, or
without a meeting by the written consent of the holders of shares entitling them
to exercise all of the voting power of the corporation on the proposal. No
amendment of these Regulations with respect to the time or place for the
election of directors shall be made within sixty days next before the day on
which such election is to be held. In case of any amendment of these Regulations
with respect to such time or place, notice thereof shall be given to each
shareholder, in the manner provided in Section 39 of these Regulations, at least
twenty days before the first election following such amendment is held. Any
amendment of [the first sentence of Section 14,] Section 39, or Section 40 of
these Regulations adopted by shareholders at an annual or special meeting shall
only be effective for subsequent meetings and shall not eliminate or modify the
prohibition on removal of directors or the requirement for advance notice of
shareholder proposals or shareholder nominations for the election of directors,
as the case may be, made at the meeting at which the amendment is adopted.
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EXHIBIT D
OGLEBAY NORTON COMPANY
DIRECTOR FEE DEFERRAL PLAN
ARTICLE I
ESTABLISHMENT OF PLAN, PURPOSE, SHARES AUTHORIZED
SECTION 1.1 ESTABLISHMENT OF PLAN. This Oglebay Norton Company Director
Fee Deferral Plan (the "Plan") is established effective as of February 1, 1998,
subject to approval by its Stockholders at its 1998 Annual Meeting of
Stockholders.
SECTION 1.2 PURPOSE. The Plan is intended to attract and retain qualified
individuals to serve as Directors of the Company by offering them the
opportunity to defer some or all of the Fees earned by them for services as a
Director of the Company.
SECTION 1.3 SHARES AUTHORIZED. The aggregate number of shares of Common
Stock of the Company that may be issued and distributed under the Plan shall be
100,000 shares, subject to adjustment as, provided in Section 7.5, which may be
authorized and unissued shares, treasury shares, or shares acquired on the open
market specifically for distribution under the Plan, as the Board of Directors
may from time to time determine.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms, when used with initial
capital letters, shall have the meanings as set forth below:
"Account" means the bookkeeping account established by the Company for a
Participant who elects to defer any portion of his Fees pursuant to the Plan.
"Board" means the Board of Directors of the Company.
"Committee" means the Committee authorized by the Board to administer the
Plan.
"Common Stock" or "Stock" means common stock, one dollar ($1.00) par value
per share, of the Company.
"Company" means Oglebay Norton Company, a corporation organized under the
laws of the State of Delaware, or any successor organization.
"Deferred Cash" means Deferred Fees that are credited with interest based
on the Prime Rate in accordance with Section 4.5.
"Deferred Compensation Election" means a written election delivered to the
Company pursuant to which a Participant elects to defer Fees under the Plan.
"Deferred Fee" means any portion of Fees deferred pursuant to the Plan.
"Designated Beneficiary" means one or more beneficiaries designated by the
Participant in accordance with Section 7.2.
"Fair Market Value," with respect to a share of Stock as of any given day,
means the last reported closing price for a share of Stock on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for that
day or, if there was no sale of Stock so reported for that day, on the most
recently preceding day on which there was such a sale. If the Stock is not
listed or admitted to trading on NASDAQ on any given day, the Fair Market Value
on that day will be as determined by the Committee.
"Fees" means any and all compensation payable, but for an election made
under the Plan, to a Participant in the form of cash for services as a Director
of the Company.
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"Matching Contributions" mean the additional Share Units credited by the
Company to the Account of a Participant who (i) elects to defer a portion of his
Fees in the form of Share Units, or (ii) elects to defer a portion of dividend
equivalents attributable to Share Units as provided in Section 4.03.
"Participant" means a Director who is or hereafter becomes eligible to
participate in the Plan and does participate by electing, in the manner
specified herein, to defer Fees pursuant to the Plan.
"Prime Rate" means the Prime Rate as reported in The Wall Street Journal in
effect as of the date of each Annual Meeting of Stockholders.
"Share Units" mean Deferred Fees that are converted into share units in
accordance with Section 4.3.
"Termination of Service" means an individual's termination of service as a
Director for any reason whatsoever.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
SECTION 3.1 ELIGIBILITY AND PARTICIPATION. Any Director of the Company who
is not employed by the Company shall be eligible to participate under the Plan
and will become a Participant upon submission to the Company of a properly
completed and executed Deferred Compensation Election.
SECTION 3.2 DEFERRAL OPTIONS. For the period beginning February 1, 1998
and ending December 31, 1998, and each calendar year thereafter, a Participant
may elect to defer the receipt of all or part of his or her Fees (in ten-percent
increments) in the form of Share Units or Deferred Cash. Once a Participant has
made an effective election, he may not thereafter change that election or change
any allocation between Share Units or Deferred Cash with respect to such
calendar year.
SECTION 3.3 ELECTION DEADLINE. To be in effect, a Participant's election
must be completed, signed and filed with the Secretary of the Company on or
before such date as is necessary to defer inclusion of the Fees in the
Director's gross income for Federal income tax purposes.
ARTICLE IV
DEFERRED FEES
SECTION 4.1 CREDITING OF DEFERRED FEES. Deferred Fees shall be credited to
the Participant's Account on the dates the Fees would have been paid to the
Participant if there had been no valid deferral election.
SECTION 4.2 DEFERRAL PERIODS. Payment of the amount of Fees allocated to
Share Units or Deferred Cash will be deferred to Termination of Service. Such
Fees shall be credited to the Participant on the date such amounts would have
been paid to him if there had been no valid deferral election.
SECTION 4.3 SHARE UNITS. Fees deferred in the form of Share Units shall be
converted into that number of Share Units equal to the amount of the Fees being
deferred divided by the Fair Market Value of one share of Stock on the date the
Fees are credited to the Participant's Account. On each Company Stock dividend
payment date, dividend equivalents equal to the actual Company Stock dividends
shall either, based upon the written election of the Participant, (i) be
credited to the Share Units in the Participant's Account, and shall in turn be
converted into Share Units based upon the Fair Market Value of the Stock on that
date, or (ii) be paid to the Participant in cash.
SECTION 4.4 MATCHING CONTRIBUTION. The Company shall credit to the
Participant's Account in the form of additional Share Units (a) at the time the
Fees are credited to the Account a Matching Contribution equal to twenty-five
percent (25%) of the Deferred Fees credited in the form of Share Units, and (b)
at each Company Stock dividend payment date, to the extent the Participant has
elected to defer dividend equivalents in Share Units, a Matching Contribution
equal to twenty-five percent (25%) of the dividends deferred by the Participant
on that date.
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SECTION 4.5 DEFERRED CASH. Fees deferred as Deferred Cash shall be
credited with interest at the Prime Rate, compounded annually effective as of
the end of each calendar year, until distributed.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 TIMING. Following a Participant's Termination of Service, all
Share Units and Deferred Cash in the Participant's Account shall be distributed
in the manner described in Section 5.2. Such distributions shall be made or
commence as soon as administratively feasible following the event that entitles
the Participant to a distribution.
SECTION 5.2 FORM OF DISTRIBUTION. Any Share Units standing to the
Participant's credit shall be converted to the same number of common shares of
Stock for distribution to the Participant in a single distribution, except that
any fractional Share Units shall be paid in cash. Any Deferred Fees credited to
the Participant's Account in the form of Deferred Cash shall be automatically
distributed in three substantially equal annual installments of principal in the
form of cash, with interest continuing to accrue on the undistributed balance in
the Participant's Account.
ARTICLE VI
ADMINISTRATION, AMENDMENT AND TERMINATION
SECTION 6.1 ADMINISTRATION. The Plan shall be administered by the
Committee.
SECTION 6.2 AUTHORITY OF THE COMMITTEE. The Committee shall have the
authority to:
(a) interpret the terms and provisions of the Plan and any deferral
made hereunder (and any agreements relating thereto), and otherwise settle
all claims and disputes arising under the Plan;
(b) delegate responsibility and authority for the operation and
administration of the Plan, appoint employees and officers of the Company
to act on its behalf, and employ persons to assist in fulfilling its
responsibilities under the Plan; and
(c) adopt, alter and repeal such administrative rules, guidelines, and
practices governing the Plan as it shall, from time to time, deem
advisable, and otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan shall
be final and binding on all persons, including the Company and Participants.
SECTION 6.3 AMENDMENTS AND TERMINATION. The Board may amend, alter, or
discontinue the Plan at any time and from time to time, but no amendment,
termination, or discontinuation shall be made that would impair the rights of a
Participant with respect to any outstanding deferral under the Plan without the
Participant's consent, or that, without the approval of the Company's
stockholders, would (a) except as expressly provided in this Plan, increase the
total number of shares reserved for the purpose of the Plan; or (b) otherwise
cause the Plan to fail to satisfy the requirements of any applicable securities
or tax law or the applicable rules and regulations promulgated under NASDAQ.
SECTION 6.4 UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for deferral of compensation. Payments shall be made from the
general funds of the Company, and the Company shall not be required to establish
or maintain any special or separate fund, to purchase or acquire life insurance
on a Participant's life, or otherwise to segregate assets to assure that such
payments shall be made, and neither a Participant nor Designated Beneficiary
shall have any interest in any particular assets of the Company by reason of its
obligations hereunder. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to deferrals hereunder;
provided, however, that, unless the Committee otherwise determines with the
consent of the affected
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Participant, the existence of such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NON-ALIENATION OF BENEFITS. Subject to any federal statute to
the contrary, no right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
any right or benefit under the Plan shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefits. If a Participant
or a Designated Beneficiary (if entitled to benefits under the Plan) shall
become bankrupt, or attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge any right hereunder, then such right or benefit shall, in
the discretion of the Committee, cease and terminate, and in such event, the
Company may hold or apply the same or any part thereof for the benefit of the
Participant, Designated Beneficiary, or his spouse, children, or other
dependents, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
SECTION 7.2 DESIGNATION OF BENEFICIARY. A Participant may designate one or
more Designated Beneficiaries on a form prescribed by the Committee, to whom
payments otherwise due to or for the benefit of the Participant hereunder shall
be made in the event of his death prior to the commencement or completion of
benefit payments hereunder. In the event no such written designation is made by
a Participant or if no Designated Beneficiary shall be in existence at the time
of the Participant's death or if each Designated Beneficiary predeceases the
Participant, the estate of the Participant shall be his Designated Beneficiary.
SECTION 7.3 NO EMPLOYMENT AGREEMENT. The Plan shall not be deemed to
constitute a contract of employment between the Company and a Participant.
Neither shall the execution of the Plan nor any action taken by the Company
pursuant to the Plan be held or construed to confer on a Participant any legal
right to be continued as Director of the Company or in any other capacity with
the Company whatsoever; nor shall any provision herein restrict the right of any
Participant to resign as a Director.
SECTION 7.4 BINDING EFFECT. Obligations incurred by the Company pursuant
to the Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participant or his Designated Beneficiary.
SECTION 7.5 ENTIRE PLAN This document and any amendments hereto contain
all the terms and provisions of the Plan and shall constitute the entire Plan,
any other alleged terms or provisions being of no effect.
SECTION 7.6 ADJUSTMENT UPON CHANGE IN COMMON STOCK. In the event of any
stock dividend, stock split, or share combination with respect to the Common
Stock or any reclassification, recapitalization, merger, consolidation, other
form of business combination, liquidation, or dissolution involving the Company
or any spin-off or other distribution to stockholders of the Company (other than
normal cash dividends), (a) the Committee shall make appropriate adjustments to
the maximum number of shares of Common Stock that may be issued under the Plan,
and (b) the Committee shall adjust the number and such other aspects of the
Share Units then outstanding as may be necessary and in such manner that the
benefits of Participants under all then outstanding Share Units shall be
maintained substantially as before the occurrence of such event. Any adjustment
so made by the Committee shall be conclusive and binding for all purposes of the
Plan as of such date as the Committee may determine.
ARTICLE VIII
CONSTRUCTION
SECTION 8.1 GOVERNING LAW. The Plan shall be construed and governed in
accordance with the laws of the State of Ohio.
D-4
<PAGE> 80
SECTION 8.2 GENDER. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary.
* * *
EXECUTED at Cleveland, Ohio, effective as of the date described herein.
OGLEBAY NORTON COMPANY
By: /s/ Richard J. Kessler
----------------------------------
Richard J. Kessler
Vice President -- Finance &
Planning
By: /s/ Paul V. Gorman, Jr.
----------------------------------
Paul V. Gorman, Jr.
Assistant Vice President -- Human
Resources
D-5
<PAGE> 81
EXHIBIT E
OGLEBAY NORTON COMPANY
PERFORMANCE OPTION AGREEMENT
This Agreement between OGLEBAY NORTON COMPANY ("Oglebay") and JOHN LAUER
("Lauer") memorializes the grant made on December 17, 1997 by Oglebay's
Compensation Subcommittee to Lauer of a nonqualified stock option as
contemplated by the Employment Agreement entered into between Oglebay and Lauer
on that same date (the "Employment Agreement"). Capitalized terms used in this
Agreement and not otherwise defined have the meanings assigned to them in the
Employment Agreement.
1. GRANT OF OPTION. The Compensation Subcommittee hereby grants to Lauer,
as of December 17, 1997, an option (the "Performance Option") to purchase all or
any number of an aggregate of 380,174 shares of Oglebay Common Stock, $1.00 par
value ("Shares"), at an exercise price of $38.00 per Share (the "Exercise
Price"). (The Exercise Price is equal to the closing per Share sales price for
December 16, 1997 as reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market plus $6.00 per Share.) The
Performance Option shall be a nonqualified stock option and shall not be treated
as an incentive stock option. The Performance Option is granted subject to
approval of Oglebay's shareholders, which approval will be sought at Oglebay's
1998 Annual Meeting of Shareholders.
2. TERM OF OPTION. Unless earlier terminated pursuant to any of Sections
6.1, 6.2, or 6.3, the Performance Option shall terminate at the close of
business on, and shall not be exercisable at any time after, June 30, 2005.
3. FULL VESTING IF LAUER REMAINS IN EMPLOY OF OGLEBAY THROUGH JANUARY 2,
2003. If Lauer remains in the employ of Oglebay through January 2, 2003, the
Performance Option, to the extent not previously exercised by Lauer, shall
remain exercisable thereafter through June 30, 2005.
4. EXERCISE OF OPTION.
4.1 First Exercise Date. Unless accelerated as provided in Section
6.1, the Performance Option will first become exercisable on January 1,
2001.
4.2 Exercise in Whole or in Part. Once exercisable, the Performance
Option may be exercised by Lauer in whole or in part (but not for any
fractional Shares) and from time to time until the expiration or
termination of the Performance Option.
4.3 Method of Exercise. The Performance Option will be exercisable by
delivery of (a) the Exercise Price (payable in accordance with Section
4.4), and (b) a written notice to Oglebay identifying this Agreement and
specifying the number of Shares as to which the Performance Option is being
exercised. Upon any exercise of the Performance Option, Lauer shall provide
Oglebay the means to satisfy Oglebay's withholding obligation in accordance
with Section 5. Oglebay shall deliver to Lauer certificates representing
the Performance Option Shares as soon as administratively feasible
following any exercise made in conformance with all of the terms of this
Agreement.
4.4 Payment for Shares. Upon exercise of the Performance Option,
Lauer shall pay the Exercise Price in cash or in such other form of
consideration as the Compensation Subcommittee may determine to be
acceptable, including, without limitation, (a) by delivery by Lauer (with
the written notice of election to exercise) of irrevocable instructions to
a broker registered under the Securities Exchange Act of 1934, as amended,
to promptly deliver to Oglebay the amount of sale or loan proceeds to pay
the Exercise Price, (b) in Shares (including through an attestation
procedure) surrendered to Oglebay, (c) by the surrender of all or part of
the Performance Option, or (d) by a combination of the foregoing methods,
as and to the extent permitted by the Compensation Subcommittee. Shares
surrendered in connection with the exercise of the Performance Option shall
be valued at their Fair Market Value on the date of exercise. Except as
otherwise determined by the Compensation Subcommittee, the term "Fair
Market Value" with respect to Shares means the closing sales price of
Shares as reported on NASDAQ National Market on the date for which the
determination of fair market value is made or, if there are no sales of
Shares on that date, then on the next
E-1
<PAGE> 82
preceding date on which there were any sales of Shares. If the Shares cease
to be traded on the NASDAQ National Market, the "Fair Market Value" of
Shares shall be determined in such similar manner as may be prescribed by
the Compensation Subcommittee.
5. WITHHOLDING OF TAXES. The Compensation Subcommittee may, in its
discretion, permit or require Lauer to satisfy, in whole or in part, any
applicable federal, state, and local withholding tax obligation that may arise
in connection with the acquisition of Shares pursuant to the Performance Option,
by such means as the Compensation Subcommittee may determine including, without
limitation, by having Oglebay hold back some portion of the Shares that would
otherwise be delivered pursuant to the Performance Option or by delivering to
Oglebay an amount equal to the withholding tax obligation arising with respect
to such acquisition in (a) cash, (b) Shares, or (c) such combination of cash and
Shares as the Compensation Subcommittee may determine. The Fair Market Value of
the Shares to be so held back by Oglebay or delivered by Lauer shall be
determined as of the date on which the obligation to withhold first arose.
Oglebay may apply the provisions of this Section 5 based upon generally
applicable withholding rates and without regard to any statutory minimum rate
applicable to special payments.
6. EFFECT OF TERMINATION OF LAUER'S EMPLOYMENT BEFORE JANUARY 2, 2003. The
provisions of this Section 6 shall apply only if the date on which Lauer's
employment with Oglebay terminates (the "Termination Date") occurs before
January 2, 2003.
6.1 Termination Without Cause, etc., Constructive Termination, or
Termination by Lauer after a Change of Control. If, before January 2,
2003, Lauer's employment is terminated by Oglebay for any reason other than
Cause, disability, or death or Lauer is Constructively Terminated or Lauer
terminates his employment by notice to the Board of Directors within 90
days of the occurrence of a Change of Control, the Performance Option, (a)
to the extent not already exercisable, will become immediately exercisable,
(b) will remain exercisable through January 2, 2004, and (c) will be
terminated at the close of business on January 2, 2004.
6.2 Termination by Death or Disability. If, before January 2, 2003,
Lauer's employment with Oglebay is terminated by his death or by Oglebay on
account of Lauer's disability:
(a) if the Termination Date occurs before January 1, 2001, the
Performance Option will be terminated as of the Termination Date; and
(b) if the Termination Date occurs after December 31, 2000, the
Performance Option, to the extent not previously exercised, will remain
exercisable for a period of one year after the Termination Date and will
be terminated at the close of business on the first anniversary of the
Termination Date.
6.3 Termination for Cause or Voluntarily by Lauer. If, before January
2, 2003, Lauer's employment is terminated by Oglebay for Cause or by Lauer
other than as a result of a Constructive Termination, the Performance
Option will be terminated as of the Termination Date.
7. TRANSFERABILITY. The Performance Option may not be transferred by Lauer
other than by will or by the laws of descent and distribution. During Lauer's
lifetime, only Lauer himself (or, in the case of his incapacity, his attorney in
fact or legal guardian) may exercise the Performance Option.
8. ADJUSTMENT UPON CHANGES IN SHARES. In the event of any stock dividend,
stock split, or share combination of the Shares or any reclassification,
recapitalization, merger, consolidation, other form of business combination,
liquidation, or dissolution involving Oglebay or any spin-off or other
distribution to shareholders of Oglebay (other than normal cash dividends), the
Compensation Subcommittee shall adjust the number and kind of shares subject to,
the price per share under, and the terms and conditions of the Performance
Option to the extent necessary and in such manner that the benefits to Lauer
under the Performance Option shall be maintained substantially as before the
occurrence of that event. Any adjustment so made by the Compensation
Subcommittee shall be conclusive and binding for all purposes of this Agreement
as of such date as the Compensation Subcommittee may determine.
E-2
<PAGE> 83
9. ADMINISTRATION. The Compensation Subcommittee shall have the authority
to make all determinations necessary for the administration of this Agreement.
The construction and interpretation by the Compensation Subcommittee of any
provision of this Agreement and any determination made by the Compensation
Subcommittee pursuant to any provision hereof shall be final and conclusive. No
member or alternate member of the Committee shall be liable for any action or
determination made in good faith. The Compensation Subcommittee may authorize
any one or more members of the Compensation Subcommittee or any officer of
Oglebay to execute and deliver documents on behalf of the Compensation
Subcommittee and the Compensation Subcommittee may delegate to one or more
employees, agents, or officers of Oglebay, or to one or more third party
consultants, accountants, lawyers, or other advisors, such ministerial duties
related to the operation of the Agreement as it may deem appropriate.
10. MISCELLANEOUS. Nothing contained in this Agreement shall be understood
as conferring on Lauer any right to continue as an employee of Oglebay or any
affiliate. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio. This Agreement shall inure to the benefit of and
be binding upon its parties and their respective heirs, executors,
administrators, successors, and assigns, but the Performance Option shall not be
transferable by Lauer other than as provided in Section 7.
IN WITNESS WHEREOF, Oglebay has caused this Agreement to be executed on its
behalf by its duly authorized Chairman of the Compensation Subcommittee, and
Lauer has hereunto set his hand, all as of the day and year first written above.
OGLEBAY NORTON COMPANY
By /s/ JOHN D. WEIL
------------------------------------
John D. Weil, Chairman, Compensation
Subcommittee
/s/ JOHN LAUER
-----------------------------------
John Lauer
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<PAGE> 84
Oglebay Logo
<PAGE> 85
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Paragraph (E) of Section 1701.13 of the Ohio Revised Code grants each
corporation organized under the laws of the State of Ohio, such as the Holding
Company, the power to indemnify its directors, officers and other specified
persons. Provisions relating to indemnification of directors and officers of the
Holding Company and other specified persons have been adopted pursuant to Ohio
law and are contained in Article Seventh of the Holding Company's Articles of
Incorporation. Article Seventh of the Articles of Incorporation provides that
the corporation shall indemnify, to the fullest extent then permitted by law,
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation, partnership, limited liability company, joint venture,
trust or other enterprise. Article Seventh provides also that the corporation
shall pay, to the fullest extent then required by law, expenses, including
attorney's fees, incurred by a director in defending any such action, suit or
proceeding as they are incurred, in advance of the disposition thereof, upon
receipt of any undertaking then required by law. Article Seventh provides
further that the corporation may, in its discretion, indemnify any other person,
or advance expenses to any other person, in the same manner and to the fullest
extent then permitted by law. Finally, Article Seventh provides that the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer or employee of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee or
agent of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise, against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under Article Seventh of the
Articles of Incorporation or Ohio law.
Oglebay Norton maintains insurance coverage for the benefit of its
directors and officers with respect to many types of claims that may be asserted
against them, some of which claims may be in addition to those which would
entitle the director or officer to indemnification under Article Seventh of the
Articles of Incorporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
(a) EXHIBITS.
2 Agreement and Plan of Merger (included as Exhibit A to Proxy
Statement-Prospectus).
3.1 Articles of Incorporation of Oglebay Norton Holding Company
(included as Exhibit B to Proxy Statement-Prospectus).
3.2 Regulations of Oglebay Norton Holding Company (included as
Exhibit C to Proxy Statement-Prospectus).
5 Opinion of Thompson Hine & Flory LLP regarding legality of
the Common Shares of Oglebay Norton Holding Company.
8.1 Opinion of Deloitte & Touche LLP regarding federal income
tax matters.
8.2 Opinion of Thompson Hine & Flory LLP regarding the Merger.
10.1 Oglebay Norton Company Director Fee Deferral Plan (included
as Exhibit D to Proxy Statement-Prospectus).
10.2 Performance Option Agreement with Mr. John N. Lauer
(included as Exhibit E to Proxy Statement-Prospectus).
13 The portions of the Annual Report to Stockholders of Oglebay
Norton Company for the year ended December 31, 1997 that are
incorporated by reference into the Proxy
Statement-Prospectus.
</TABLE>
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<PAGE> 86
<TABLE>
<C> <S>
21 Subsidiaries of Oglebay Norton Holding Company.
23.1 Consents of Thompson Hine & Flory LLP (included in Exhibits
5 and 8.2 to this Registration Statement).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Ernst & Young LLP.
24 Power of Attorney.
(b) NOT APPLICABLE.
(c) See Exhibit 8 under Section (a) of this Item.
</TABLE>
ITEM 22. UNDERTAKINGS
The Registrant hereby undertakes as follows:
(a) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is 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 Registrant 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.
(b) That every prospectus that is filed pursuant to paragraph (a) above, or
that purports to meet the requirements of Section 10(a)(3) of the Securities Act
of 1933 and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to this registration statement and
will not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment 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.
(c) For purposes of determining any liability under the Securities Act of
1933, each filing of Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) 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.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described 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 of 1933 and is, therefore, unenforceable. In the
event 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 of 1933, and will be governed by the final adjudication of such
issue.
(e) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 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 responding to the request.
(f) To supply 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.
II-2
<PAGE> 87
II-3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND,
STATE OF OHIO ON APRIL 24, 1998.
OGLEBAY NORTON HOLDING COMPANY
By: /s/ DAVID G. SLEZAK
------------------------------------
David G. Slezak, Secretary and
Director of Legal Affairs
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED AS OF APRIL 24, 1998.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C> <C>
/s/ JOHN N. LAUER President, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
John N. Lauer
/s/ DAVID H. KELSEY Vice President and Chief Financial Officer
- --------------------------------------------- (Principal Financial and Accounting Officer)
David H. Kelsey
/s/ BRENT D. BAIRD Director
- ---------------------------------------------
Brent D. Baird
/s/ MALVIN E. BANK Director
- ---------------------------------------------
Malvin E. Bank
/s/ WILLIAM G. BARES Director
- ---------------------------------------------
William G. Bares
/s/ JAMES T. BARTLETT Director
- ---------------------------------------------
James T. Bartlett
/s/ ALBERT C. BERSTICKER Director
- ---------------------------------------------
Albert C. Bersticker
/s/ R. THOMAS GREEN, JR. Director
- ---------------------------------------------
R. Thomas Green, Jr.
/s/ RALPH D. KETCHUM Director
- ---------------------------------------------
Ralph D. Ketchum
/s/ WILLIAM G. PRYOR Director
- ---------------------------------------------
William G. Pryor
/s/ JOHN D. WEIL Director
- ---------------------------------------------
John D. Weil
By /s/ DAVID G. SLEZAK April 24, 1998
- --------------------------------------------------------
David G. Slezak, Attorney-in-Fact
for the Officers and Directors
signing in the capacities indicated
</TABLE>
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<PAGE> 88
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<C> <S> <C>
2 Agreement and Plan of Merger (included as Exhibit A to Proxy
Statement-Prospectus).
3.1 Articles of Incorporation of Oglebay Norton Holding Company
(included as Exhibit B to Proxy Statement-Prospectus).
3.2 Regulations of Oglebay Norton Holding Company (included as
Exhibit C to Proxy Statement-Prospectus).
5 Opinion of Thompson Hine & Flory LLP regarding legality of
the Common Shares of Oglebay Norton Holding Company.
8.1 Opinion of Deloitte & Touche LLP regarding federal income
tax matters.
8.2 Opinion of Thompson Hine & Flory LLP regarding the Merger.
10.1 Oglebay Norton Company Director Fee Deferral Plan (included
as Exhibit D to Proxy Statement-Prospectus).
10.2 Performance Option Agreement with Mr. John N. Lauer
(included as Exhibit E to Proxy Statement-Prospectus).
13 The portions of the Annual Report to Stockholders of Oglebay
Norton Company for the year ended December 31, 1997 that are
incorporated by reference into the Proxy
Statement-Prospectus.
21 Subsidiaries of Oglebay Norton Holding Company.
23.1 Consents of Thompson Hine & Flory LLP (included in Exhibits
5 and 8.2 to this Registration Statement).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Ernst & Young LLP.
24 Power of Attorney.
</TABLE>
<PAGE> 89
DETACH CARD
- --------------------------------------------------------------------------------
OGLEBAY NORTON COMPANY -- PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22, 1998
At the Annual Meeting of Stockholders of Oglebay Norton Company to be held at
9:00 a.m. on May 22, 1998, at The Diamond Building Conference Center, 12th
Floor, 1100 Superior Avenue, Cleveland, Ohio, and at any adjournment thereof,
Brent D. Baird, John N. Lauer and William G. Pryor, and each of them, with full
power of substitution (the "Proxy Committee"), are hereby authorized to
represent me and to vote my shares on the following:
<TABLE>
<C> <S> <C>
1. Approve the Agreement and Plan of Merger FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approve the authorization of 30,000,000 Common
Shares in the Articles of Incorporation of
Oglebay Norton Holding Company, which proposal
is contingent upon the approval of Proposal 1. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approve the Oglebay Norton Company Director Fee
Deferral Plan FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Approve the Performance Option Agreement with
Mr. John N. Lauer FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Electing three directors of the class whose terms will expire in 2001. The nominees of the Board of Directors
are: Malvin E. Bank, William G. Bares and John D. Weil. In the event of the unavailability of any of the
nominees, such other person(s) as the Board of Directors may recommend.
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the contrary below) to vote for all nominees listed below
Malvin E. Bank, William G. Bares and John D. Weil
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE NOMINEES WRITE THE NAME OF SUCH NOMINEE(S) IN THE
SPACE PROVIDED BELOW.
----------------------------------------------------------------------------------------------------------------
6. Any other business which may properly come before the Annual Meeting and all adjournments thereof, in accordance
with the judgment of the Proxy Committee on such business.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
</TABLE>
<PAGE> 90
DETACH CARD
- --------------------------------------------------------------------------------
PROXY NO. SHARES
(Continued from the other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE STOCKHOLDERS SIGNING BELOW. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF THE AGREEMENT AND PLAN OF MERGER, FOR APPROVAL OF THE
AUTHORIZATION OF 30,000,000 COMMON SHARES IN OGLEBAY NORTON HOLDING COMPANY'S
ARTICLES OF INCORPORATION (CONTINGENT UPON APPROVAL OF PROPOSAL 1), FOR APPROVAL
OF THE OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN, FOR APPROVAL OF THE
PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER AND FOR THE ELECTION OF THE
NOMINEES FOR DIRECTORS LISTED ABOVE.
Dated _______________, 1998
---------------------------
Signature
---------------------------
Signature
NOTE: Please sign exactly
as name appears hereon.
Joint owners should each
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
CHANGE OF ADDRESS:
Please indicate change of
address below:
---------------------------
---------------------------
---------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
<PAGE> 91
DETACH CARD
- --------------------------------------------------------------------------------
OGLEBAY NORTON COMPANY -- VOTING INSTRUCTIONS
EMPLOYEE STOCK OWNERSHIP PLAN
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22, 1998
TO: NATIONAL CITY BANK, TRUSTEE (THE "TRUSTEE") UNDER TRUST AGREEMENT FOR
OGLEBAY NORTON COMPANY EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST, AS AMENDED
(THE "PLAN")
Pursuant to Article VI, Section 6.6 of the Plan, the undersigned, as a
Participant or Beneficiary under the Plan, hereby instructs the Trustee to vote
(in person or by proxy) all allocated shares of Common Stock of Oglebay Norton
Company held in the General Fund under the Plan on the undersigned's behalf on
the record date ("Shares") in the following manner:
1. Approve the Agreement and Plan of Merger.
2. Approve the authorization of 30,000,000 Common Shares in the Articles of
Incorporation of Oglebay Norton Holding Company, which proposal is contingent
upon the approval of Proposal 1.
3. Approve the Oglebay Norton Company Director Fee Deferral Plan.
4. Approve the Performance Option Agreement with Mr. John N. Lauer.
5. Electing three directors of the class whose terms expire in 2001. The
nominees of the Board of Directors are: Malvin E. Bank, William G. Bares and
John D. Weil. In the event of the unavailability of any of the nominees, such
other person(s) as the Board of Directors may recommend.
<TABLE>
<S> <C>
Election of Directors
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the contrary below) to vote for all nominees listed below
</TABLE>
Malvin E. Bank, William G. Bares, John D. Weil
INSTRUCTION: (TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE NOMINEES WRITE THE
NAME OF SUCH NOMINEE(S) IN THE SPACE PROVIDED BELOW)
- --------------------------------------------------------------------------------
6. Any other business which may properly come before the meeting and all
adjournments thereof, in accordance with the judgment of the Trustee.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 92
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from the other side)
I UNDERSTAND THAT, UNLESS OTHERWISE SPECIFIED BELOW, THE SHARES HELD ON MY
BEHALF UNDER THE PLAN WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND PLAN OF
MERGER, FOR APPROVAL OF THE AUTHORIZATION OF 30,000,000 COMMON SHARES IN OGLEBAY
NORTON HOLDING COMPANY'S ARTICLES OF INCORPORATION (CONTINGENT UPON APPROVAL OF
PROPOSAL 1), FOR APPROVAL OF THE DIRECTOR FEE DEFERRAL PLAN, FOR APPROVAL OF THE
PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER AND FOR THE ELECTION OF
NOMINEES FOR DIRECTORS LISTED ABOVE.
YOU MUST SIGN THESE INSTRUCTIONS PROMPTLY AND RETURN THEM TO THE TRUSTEE IN THE
ENCLOSED ENVELOPE TO DIRECT THE VOTING OF THE SHARES HELD ON YOUR BEHALF UNDER
THE PLAN.
Dated _______________, 1998
---------------------------
Signature
<PAGE> 1
Exhibit 5
[Thompson Hine & Flory LLP letterhead]
April 6, 1998
Oglebay Norton Holding Company
c/o Oglebay Norton Company
1100 Superior Avenue, 20th Floor
Cleveland, Ohio 44114-2598
Re: Oglebay Norton Holding Company Registration Statement on Form S-4
Ladies and Gentlemen:
Oglebay Norton Holding Company, an Ohio corporation (the "Holding
Company"), is filing with the Securities and Exchange Commission a Registration
Statement on Form S-4 (the "Form S-4 Registration Statement") for the
registration, under the Securities Act of 1933, as amended, of 7,303,332 Common
Shares, par value $1.00 per share, to be issued to the stockholders of Oglebay
Norton Company, a Delaware corporation (the "Company"), in connection with the
reorganization of the Company as a second-tier wholly-owned subsidiary of the
Holding Company.
Item 601 of Regulation S-K and the instructions to Form S-4 require that
an opinion of counsel concerning the legality of the securities to be
registered be filed as an exhibit to the Form S-4 Registration Statement. This
opinion is provided in satisfaction of that requirement.
We have examined such records and documents and obtained such other
information as we have deemed advisable in order to render this opinion. As a
result of the forgoing, we are of the opinion that:
(1) The Holding Company is a corporation validly organized and
existing and in good standing under the laws of the State of Ohio;
(2) On the effective date of the merger of the Company with and into
Oglebay Norton Merger Company, the Holding Company will be
authorized to issue 5,000,000 Preferred Shares and, if Proposal II
is approved, 30,000,000 Common Shares; and
(3) When issued, the Common Shares which are the subject of the Form
S-4 Registration Statement will be legally issued, fully paid and
non-assessable.
We hereby consent to the use and filing of this opinion in connection
with the Form S-4 Registration Statement.
Very truly yours,
/s/ THOMPSON HINE & FLORY LLP
Thompson Hine & Flory LLP
<PAGE> 1
Exhibit 8.1
[Deloitte & Touche LLP letterhead]
April 24, 1998
Board of Directors
Oglebay Norton Company
1100 Superior Avenue, 20th Floor
Cleveland, Ohio 44114-2598
Dear Board:
This letter is in response to your request for our tax opinion on the federal
income tax consequences of the merger of Oglebay Norton Merger Company (the
"Merger Company") with and into Oglebay Norton Company ("Oglebay Norton") with
Oglebay Norton surviving and the conversion of the Oglebay Norton shares held by
the former shareholders of Oglebay Norton to shares of Oglebay Norton Holding
Company (the "Holding Company") pursuant to the Agreement and Plan of Merger by
and among Oglebay Norton, the Holding Company, ONCO Investment Company (the
"Investment Company"), and the Merger Company dated April 6, 1998 (the "Plan").
Our opinion is based upon the representations provided and our understanding of
the facts. Specifically, we have relied upon the representations set forth in
Oglebay Norton's letter dated April 23, 1998 ("Representation Letter"), the
representation set forth in Thompson Hine & Flory LLP's letter dated April 23,
1998 ("Attorney Letter"), and the statement of facts in the following documents:
the Plan and the Form S-4 Registration Statement filed with the Securities and
Exchange Commission (SEC), Registration Statement No. 333-47231 ("Form S-4").
FACTS
- -----
Oglebay Norton, a corporation organized under the laws of the state of Delaware,
is the parent corporation of an affiliated group of corporations filing a
consolidated federal income tax return. Oglebay Norton files its consolidated
return on the basis of a December 31 fiscal year. As of March 2, 1998, Oglebay
Norton is authorized to issue 10,000,000 shares of common stock of which
4,763,351 shares are issued and outstanding ("Oglebay Norton Common Stock"),
each of which is entitled to one vote and which are publicly traded. Oglebay
Norton is authorized to issue 5,000,000 shares of preferred stock, none of which
is outstanding. Oglebay Norton's principal business consists of marine
transportation. Through its subsidiaries, it also engages in industrial sands
and engineered materials.
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April 24, 1998
Board of Directors
Page 2
The Holding Company is a corporation organized under the laws of the state of
Ohio on March 2, 1998. At the Effective Date, the Holding Company will have an
authorized capital stock consisting of 30,000,000 common shares, par value $1.00
per share (the "Holding Company Common Stock"), of which one share is issued and
outstanding and is owned by Oglebay Norton, and 5,000,000 shares of preferred
stock, without par value (the "Holding Company Preferred Stock"). After the
transaction, 4,816,258 shares of the Holding Company Common Stock will be
outstanding, each of which will be entitled to one vote and which will be
publicly traded.
The Investment Company is a corporation organized under the laws of the state of
Ohio on March 6, 1998 and was formed as a first-tier holding company. The
Investment Company is authorized to issue 100 shares of common stock, $1.00 par
value (the "Investment Company Common Stock"), of which one share is issued and
outstanding and owned by the Holding Company.
The Merger Company is a corporation organized under the laws of the state of
Delaware on March 6, 1998, and was formed to facilitate the proposed transaction
described herein. The Merger Company is authorized to issue 100 shares of common
stock, $1.00 par value (the "Merger Company Common Stock"), of which one share
is issued and outstanding and owned by the Investment Company.
The Board of Directors of Oglebay Norton have determined that it is in the best
interest of the company and its shareholders to form a holding company
structure. Such a structure will, to some extent, enable Oglebay Norton to
insulate certain of its assets and operations from some of the risks incident to
other operations and broaden the alternatives available for future financing.
Accordingly, the following proposed transaction is being undertaken to
accomplish this purpose.
TRANSACTION
- -----------
Pursuant to the Plan, the following transaction will take place:
1. In accordance with the Delaware General Corporation Law ("DGCL"),
the Merger Company will merge with and into Oglebay Norton with
Oglebay Norton surviving.
(a) Upon the consummation of the Merger, by virtue of the Merger and
without any action on the part of the Investment Company,
the one share of the Merger Company Common Stock outstanding
immediately prior to the Effective Date shall be changed and
converted into one share of the Oglebay Norton Common Stock,
which will be owned by the Investment Company.
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April 24, 1998
Board of Directors
Page 3
(b) Each share of Oglebay Norton Common Stock, which shall be
outstanding immediately prior to the Effective Date, shall by
virtue of the Merger and without any action on the part of the
holder thereof, be converted as of the Effective Date, into one
share of the Holding Company Common Stock, for a total of
4,816,258 shares of the Holding Company Common Stock.
2. The conversion of shares of Oglebay Norton Common Stock will occur
without an exchange of certificates. Following the Merger,
certificates formerly representing the shares of Oglebay Norton
Common Stock will be deemed to represent the Holding Company Common
Stock and, accordingly, no certificates for fractional shares of the
Holding Company Common Stock, no scrip or other certificates
evidencing fractional interests in such shares shall be issueable,
and no cash will be distributed in lieu of fractional shares. The
registered owners on the books and records of the Holding Company or
its transfer agent of any such stock certificate shall, until such
certificate shall have been surrendered for transfer or conversion
or otherwise accounted for to the Holding Company or its transfer
agent, have and be entitled to exercise any voting and other rights
with respect to, and to receive any dividend and other distributions
upon, the shares of the Holding Company to which such person is
entitled.
3. Dissenters' rights of appraisal will not be available to holders of
Oglebay Norton Common Stock in connection with the Merger.
As of the Effective Date, the name of the Holding Company shall be changed to
"Oglebay Norton Company."
Following the merger, Oglebay Norton may distribute certain nonoperating assets
and the stock of subsidiaries which operate the industrial sands and engineered
materials businesses (the "nontransportation assets") representing approximately
25% of its gross assets to the Investment Company. The Investment Company may
also assume an amount of liabilities equal to the approximate value of the
nontransportation assets.
OPINION
- -------
Based on the facts contained herein, the Plan, the Representation Letter, the
Attorney Letter and the Form S-4, in our opinion, the federal income tax
consequences of the merger of the Merger Company with and into Oglebay Norton
will be as follows:
(1) For federal income tax purposes, the merger of the Merger Company
with and into Oglebay Norton will be disregarded and the transaction
will be treated as a transfer by the Oglebay Norton shareholders of
Oglebay Norton Common
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April 24, 1998
Board of Directors
Page 4
Stock to the Investment Company in constructive exchange for shares
of the Holding Company Common Stock. Rev. Rul. 74-565, 1972-2 C.B.
125.
(2) The acquisition by the Investment Company of all of the outstanding
stock of Oglebay Norton in constructive exchange for the Holding
Company Common Stock will be a reorganization within the meaning of
Section 368(a)(1)(B).(1) Oglebay Norton, the Holding Company and the
Investment Company will each be "a party to a reorganization" within
the meaning of Section 368(b).
(3) No gain or loss will be recognized to the Oglebay Norton
shareholders on the constructive exchange of the Oglebay Norton
Common Stock for the Holding Company Common Stock. Section
354(a)(1).
(4) The basis of the Holding Company Common Stock deemed to be received
by the Oglebay Norton shareholders in the transaction will be the
same as the basis of the Oglebay Norton Common Stock constructively
exchanged therefor. Section 358(a).
(5) The holding period of the Holding Company Common Stock deemed to be
received by the Oglebay Norton shareholders will include the period
during which they held the Oglebay Norton Common Stock that is
deemed to be transferred to the Investment Company provided that the
shares of Oglebay Norton Common Stock are capital assets on the date
of the deemed exchange. Section 1223(1).
(6) No gain or loss will be recognized by the Holding Company or the
Investment Company on the receipt by the Investment Company of the
Oglebay Norton Common Stock in constructive exchange for Holding
Company Common Stock. Treas. Reg. Section 1.1032-2(b).
(7) The distribution of nontransportation assets by Oglebay Norton to
the Investment Company will be a distribution to which Section 301
applies. Rev. Rul. 74-35, 1974-1 C.B.85.
(8) The Oglebay Norton consolidated group will not terminate as a
result of the Holding Company becoming the common parent. Treas.
Reg. Section 1.1502-75(d) and Rev. Rul. 82-152, 1982-2 C.B.205.
- --------
(1) Unless otherwise stated, all Section references contained herein
refer to the Internal Revenue Code of 1986, as amended, and the
Income Tax Regulations thereunder.
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April 24, 1998
Board of Directors
Page 5
(9) The Holding Company's basis in its share of Investment Company
Common Stock will equal Oglebay Norton's net asset basis. Treas.
Reg. Section 1.1502-31(b).
(10) The Investment Company's basis in its share of Oglebay Norton
Common Stock received in the exchange will equal the Oglebay
Norton's net asset basis. Treas. Reg. Section 1.1502-31(b).
(11) The holding period of the share of the Investment Company Common
Stock held by the Holding Company will include the period for which
the assets are held by Oglebay Norton provided the assets are
capital assets on the date of the deemed exchange. Section 1223(1).
(12) The holding period of the shares of Oglebay Norton Common Stock
held by the Investment Company will include the period for which the
assets are held by the Investment Company provided the assets are
capital assets on the date of the deemed exchange. Section 1223(1).
REPRESENTATIONS
- ---------------
We have relied on the following representations of fact by Oglebay Norton in
connection with the merger of the Merger Company with and into Oglebay Norton:
a. The fair market value of the Holding Company Common Stock constructively
received by an Oglebay Norton shareholder will be equal to the fair
market value of the Oglebay Norton Common Stock constructively
surrendered in exchange therefor.
b. Oglebay Norton Common Stock will be constructively exchanged solely for
Holding Company Common Stock, all of which is voting stock. For purposes
of this representation, the Oglebay Norton stock redeemed for cash or
other property furnished by the Holding Company or the Investment Company
will be considered acquired by the Investment Company. Further, no
liabilities of Oglebay Norton or Oglebay Norton shareholders will be
assumed by the Investment Company, nor will any Oglebay Norton Common
Stock be subject to any liabilities.
c. Following the transaction, Oglebay Norton will continue its historic
business or use a significant portion of its historic business assets in
its business.
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April 24, 1998
Board of Directors
Page 6
d. On the date of the transaction, the fair market value of the assets of
Oglebay Norton will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
e. Oglebay Norton, the Holding Company and the Investment Company are not
investment companies within the meaning of Section 368(a)(2)(F)(iii) and
(iv). The term investment company in this context means a corporation 50
percent or more of the value of whose total assets are stock and
securities and 80 percent or more of the value of whose total assets are
assets held for investment. In making the 50-percent and 80-percent
determinations under the preceding sentence, stock and securities in any
subsidiary corporation shall be disregarded and the parent corporation
shall be deemed to own its ratable share of the subsidiary's assets.
f. Oglebay Norton, the Holding Company, the Investment Company, and the
shareholders of Oglebay Norton will each pay their own expenses, if any,
incurred in connection with the proposed transaction.
g. Oglebay Norton is not under the jurisdiction of a court in a Title 11 or
similar case (within the meaning of Section 368(a)(3)(A)) and the stock
or securities received in the exchange will not be used to satisfy the
indebtedness of such debtor.
h. Oglebay Norton has no plan or intention to issue additional shares of its
stock that would result in the Investment Company losing control of
Oglebay Norton within the meaning of Section 368(c). For this purpose,
"control" means stock possessing at least 80% of the combined voting
power of all voting stock and at least 80% of the total number of shares
of each other class of stock.
i. The Investment Company has no plan or intention to issue additional
shares of its stock that would result in the Holding Company losing
control of the Investment Company within the meaning of Section 368(c).
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April 24, 1998
Board of Directors
Page 7
j. There is no plan or intention on the part of the Holding Company or any
member of its consolidated group to redeem or otherwise acquire any stock
to be constructively issued in the transaction.
k. At the time of the transaction, Oglebay Norton will not have outstanding
any warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire stock in Oglebay Norton
that, if exercised or converted, would affect the Investment Company's
acquisition or retention of control of Oglebay Norton by the Investment
Company, as defined in Section 368(c).
l. At the time of the exchange, the Investment Company will not have
outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in the
Investment Company that, if exercised or converted, would affect the
Holding Company's retention of control of the Investment Company as
defined in Section 368(c).
m. The Holding Company and the Investment Company have no plan or intention
to liquidate Oglebay Norton; to merge Oglebay Norton with or into another
corporation; to sell or otherwise dispose of the stock of Oglebay Norton
except for transfers of stock to corporations controlled within the
meaning of Section 368(c) by the Investment Company; or to cause Oglebay
Norton to sell or otherwise dispose of any of its assets, except for
dispositions made in the ordinary course of business, and for the
possible distribution of certain nontransportation assets, representing
approximately 25% of its gross assets, to the Investment Company.
n. The Holding Company has no plan or intention to liquidate the Investment
Company; to merge the Investment Company into another corporation; or to
sell or otherwise dispose of any Investment Company Common Stock.
o. Prior to the transaction, the Holding Company will be in control of the
Investment Company within the meaning of Section 368(c).
p. Prior to the transaction, the Investment Company will be in control of
the Merger Company within the meaning of Section 368(c).
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April 24, 1998
Board of Directors
Page 8
q. The Holding Company and the Investment Company do not own, nor have they
owned during the past 5 years, any shares of the stock of Oglebay Norton.
r. None of the compensation received by any shareholder-employees of Oglebay
Norton will be separate consideration for, or allocable to, any of their
shares of Oglebay Norton Common Stock; none of the shares of the Holding
Company Common Stock received by any shareholder-employees of Oglebay
Norton will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any
shareholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's-length for similar services.
s. Oglebay Norton and the members of its consolidated group do not own nor
have they owned in the last 5 years a 50% or greater interest in any
corporation (other than stock of other members of the consolidated group)
and do not own nor have they owned in the last 5 years any options to
acquire such an interest.
t. Oglebay Norton and the members of its consolidated group will not form or
acquire any corporation or partnership which will acquire any of the
Holding Company Common Stock to be constructively issued in the
transaction.
u. Neither Oglebay Norton nor any of the members of its consolidated group
own or has owned in the last 5 years an interest in any partnerships
which have redeemed any stock of Oglebay Norton shareholders.
v. Oglebay Norton or any member of its consolidated group has not and will
not redeem any stock from any Oglebay Norton shareholder in connection
with the Merger.
w. Oglebay Norton has not made and will not make any extraordinary
distributions to its shareholders in connection with the Merger.
x. The shareholders of Oglebay Norton have no plan or intention to sell or
otherwise dispose of any of their Holding Company Common Stock to be
constructively received in the Merger to the Holding Company, any member
of its consolidated group, or any
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April 24, 1998
Board of Directors
Page 9
partnership or limited liability company owned by the Holding Company or
any member of its consolidated group.
We have relied on the following respresentations of fact by Thompson Hine &
Flory LLP in connection with the merger of the Merger Company with and into
Oglebay Norton:
a. The Merger of the Merger Company with and into Oglebay Norton will
qualify as a statutory merger under the laws of the Commonwealth of
Delaware.
LAW AND ANALYSIS
- ----------------
In Rev. Rul. 67-448, 1967-2 C.B.144, pursuant to a plan of reorganization, a
parent corporation issued some of its voting shares to its new subsidiary and
the subsidiary immediately merged into an unrelated corporation, with the
unrelated corporation's shareholders receiving parent stock and the parent
receiving 80% or more of the unrelated corporation's stock. The Internal Revenue
Service ("Service") held that the existence of the transitory subsidiary was
disregarded and the transaction was to be viewed, in substance, as an
acquisition by the parent, in exchange solely for part of its voting stock, of
the unrelated corporation's stock within the meaning of Section 368(a)(1)(B).
In Rev. Rul. 74-565, pursuant to a plan of reorganization, a parent corporation
issued shares of its voting stock to its wholly-owned subsidiary which, in turn,
contributed the voting shares to its new second-tier subsidiary and the
second-tier subsidiary immediately merged into an unrelated corporation, with
the unrelated corporation's shareholders receiving parent stock and the parent
receiving 80% or more of the unrelated corporation's stock. The Service, citing
Rev. Rul. 67-448, held that the existence of the transitory subsidiary was
disregarded and the transaction was to be viewed, in substance, as an
acquisition by the parent's wholly-owned subsidiary, in exchange solely for part
of parent's voting stock, of the unrelated corporation's stock within the
meaning of Section 368(a)(1)(B).
Thus, under Rev. Ruls. 67-448 and 74-565, the existence of the Merger Company
will be disregarded and the Merger will be considered a deemed transfer by the
Oglebay Norton shareholders of their Oglebay Norton Common Stock to the
Investment Company solely in constructive exchange for the Holding Company
Common Stock.
Section 368(a)(1)(B) provides that the term "reorganization" means the
acquisition by one corporation, in exchange solely for all or a part of its
voting stock (or in exchange solely for all or part of the voting stock of a
corporation which is in control of the acquiring corporation), of the stock of
another corporation if, immediately after the acquisition, the acquiring
corporation has control of such other corporation. Section 368(c) defines
control to mean the ownership of at least 80 percent of the stock entitled to
vote and at least 80 percent of the total number of shares of each other class
of the corporation's nonvoting stock.
Treas. Reg. Section 1.368-2(c) provides that, in order to qualify as a
reorganization under section 368(a)(1)(B), the acquisition by the acquiring
corporation of stock of another corporation must be in exchange solely for all
or a part of the voting stock of the acquiring
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April 24, 1998
Board of Directors
Page 10
corporation (or, in the case of transactions occurring after December 31, 1963,
solely for all or a part of the voting stock of a corporation which is in
control of the acquiring corporation), and the acquiring corporation must be in
control of the other corporation immediately after the transaction.
In the transaction, the Investment Company will acquire 100 percent of the stock
of Oglebay Norton and, thus, the Investment Company will control Oglebay Norton
within the meaning of Section 368(c). The only consideration the Oglebay Norton
shareholders will receive is the Holding Company Common Stock upon the
conversion of the Oglebay Norton Common Stock into the Holding Company Common
Stock.
Oglebay Norton is party to a Restated Rights Agreement, dated as of February 22,
1989, with National City Bank as Rights Agent. Under the Restated Rights
Agreement, rights have been issued with respect to each outstanding share of
Oglebay Norton Common Stock. In the event that any person or group acquires 15%
or more of the outstanding shares of Oglebay Norton Common Stock, each right
"flips in" and entitles the holder to purchase an additional share of Oglebay
Norton Common Stock for $2.50. As a result of the Merger, the Holding Company
will assume the Restated Rights Agreement, and thereafter the rights issued
under the Restated Rights Agreement will relate to Common Shares of the Holding
Company, rather than shares of Common Stock of Oglebay Norton.
The assumption of the Restated Rights Agreement will not disqualify the
transaction from qualifying as a reorganization under Section 368(a)(1)(B). In
Rev. Rul. 90-11, 1990-1 C.B.10, the Service held that the adoption of the
described "poison pill" plan by the corporation's board of directors does not
constitute the distribution of stock or property by the corporation to its
shareholders, an exchange of property or stock (either taxable or nontaxable),
or any other event giving rise to the realization of gross income by any
taxpayer, even though it is treated as a distribution of a dividend under state
law.
In addition to the requirements set forth in the statute, certain requirements
set forth in the regulations under Section 368 must also be met in order for a
transaction to be a tax-free reorganization. Treas. Reg. Section 1.368-1(b)
excepts from the general rule of taxability certain specifically described
exchanges incident to such readjustments of corporate structures made in one of
the particular ways specified in the Code as are required by business exigencies
and which affect only a readjustment of a continuing interest in property under
modified corporate form. Requisite to a reorganization are a continuity of
business enterprise and a continuity of interest therein on the part of those
persons who, directly or indirectly, were the owners of the enterprise prior to
the reorganization.
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April 24, 1998
Board of Directors
Page 11
Under Treas. Reg. Section 1.368-1(e), the continuity of interest doctrine
requires that in substance a substantial part of the value of the proprietary
interests in the target corporation be preserved in the reorganization. A
proprietary interest in the target corporation is preserved if, in a potential
reorganization, it is exchanged for a proprietary interest in the issuing
corporation (i.e., the acquiring corporation or a corporation in control of the
acquiring corporation), it is exchanged by the acquiring corporation for a
direct interest in the target corporation enterprise, or it otherwise continues
as a proprietary interest in the target corporation. A proprietary interest in
the target corporation is not preserved if, in connection with the potential
reorganization, it is acquired by the issuing corporation for consideration
other than stock of the issuing corporation, or stock of the issuing corporation
furnished in exchange for a proprietary interest in the target corporation in
the potential reorganization is redeemed. All facts and circumstances must be
considered in determining whether, in substance, a proprietary interest in the
target corporation is preserved. For purposes of the continuity of interest
requirement, a mere disposition of stock of the target corporation prior to a
potential reorganization to persons not related (as defined in Treas. Reg.
Section 1.368- 1(e)(3) and determined without regard to Treas. Reg. Section
1.368-1(e)(3)(i)(A)) to the target corporation or to persons not related (as
defined in Treas. Reg. Section 1.368-1(e)(3)) to the issuing corporation is
disregarded and a mere disposition of stock of the issuing corporation received
in a potential reorganization to persons not related (as defined in Treas. Reg.
Section 1.368-1(e)(3)) to the issuing corporation is disregarded.
Treas. Reg. Section 1.368-1T(e)(1)(ii)(A) provides that a proprietary interest
in the target corporation (other than one held by the acquiring corporation) is
not preserved if, prior to and in connection with a potential reorganization, it
is redeemed or to the extent that, prior to and in connection with a potential
reorganization, an extraordinary distribution is made with respect to it. The
determination of whether a distribution with respect to stock of the target
corporation is an extraordinary distribution for purposes of Treas. Reg. Section
1.368-1T(e)(1)(ii) will be made on the basis of all of the facts and
circumstances, but the treatment of the distribution under Section 1059
(relating to extraordinary dividends) will not be taken into account.
Oglebay Norton's shareholders will receive solely Holding Company Common Stock,
the corporation in control of the acquiring corporation, i.e., the Investment
Company. It has been represented that there is no plan or intention on the part
of the Holding Company or any member of its consolidated group to redeem or
otherwise acquire any stock to be issued in the transaction. It has also been
represented that the shareholders of Oglebay Norton have no plan or intention to
sell or otherwise dispose of any of their Holding Company Common Stock to be
constructively received in the Merger to the Holding Company, any member of its
consolidated group or any partnership or limited liability company owned by the
Holding Company or any member of its consolidated group. Further, it has been
represented that
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April 24, 1998
Board of Directors
Page 12
Oglebay Norton or any member of its consolidated group has not and will not
redeem or otherwise acquire any stock from any Oglebay Norton shareholder in
connection with the Merger and Oglebay Norton has not made and will not make any
extraordinary distributions to its shareholders in connection with the Merger.
Accordingly, the continuity of interest requirement will be met.
Treas. Reg. Section 1.368-1(d)(1) provides that continuity of business
enterprise requires that the acquiring corporation either (i) continue the
acquired corporation's historic business or (ii) use a significant portion of
the acquired corporation's historic assets in a business. It has been
represented that, following the transaction, Oglebay Norton will continue its
historic business or use of a significant portion of its historic business
assets in its business; thus, the continuity of business enterprise requirement
will be met.
In order to qualify as a reorganization described in Section 368, there must be
a genuine business purpose for this transaction. The Boards of Directors of the
Holding Company and Oglebay Norton have determined that it is in the best
interests of the corporations and their respective stockholders that the Merger
take place. Specifically, the Boards believe that the Merger will, to some
extent, enable Oglebay Norton to insulate certain of its assets and operations
from some of the risks incident to other operations and broaden the alternatives
available for future financing. Therefore, this requirement will be met.
Based on the above law and analysis, the merger of the Merger Company with and
into Oglebay Norton and the constructive exchange of Oglebay Norton Common Stock
by the Oglebay Norton shareholders for the Holding Company Common Stock will
qualify as a reorganization described in Section 368(a)(1)(B).
Section 368(b)(2) provides that the term "a party to a reorganization" includes
both corporations in the case of a reorganization resulting from the acquisition
by one corporation of stock or properties of another. In the case of a
reorganization qualifying under section 368(a)(1)(B), the term "a party to a
reorganization" also includes the controlling corporation. Accordingly, Oglebay
Norton, the Holding Company and the Investment Company will each be a party to a
reorganization.
Section 354(a)(1) provides that no gain or loss shall be recognized to a
shareholder if stock or securities in a corporation a party to a reorganization
are, in pursuance of the plan of reorganization, exchanged solely for stock or
securities in such corporation or in another corporation a party to the
reorganization. Because Oglebay Norton and the Holding Company will each be
parties to a reorganization, no gain or loss will be recognized by the Oglebay
Norton shareholders upon the conversion of their Oglebay Norton Common Stock
solely for the Holding Company Common Stock.
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April 24, 1998
Board of Directors
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Section 358(a)(1) provides that, in the case of an exchange to which Section 354
applies, the basis of the property permitted to be received under such section
without the recognition of gain or loss shall be the same as that of the
property exchanged, decreased by (i) the fair market value of any other property
(except money) received by the taxpayer, (ii) the amount of money received by
the taxpayer, and (iii) the amount of loss to the taxpayer which was recognized
on such exchange, and increased by (i) the amount which was treated as a
dividend, and (ii) the amount of gain to the taxpayer which was recognized in
such exchange (not including any portion of such gain which was treated as a
dividend). The basis of the Holding Company Common Stock deemed to be received
by the Oglebay Norton shareholders in the transaction will be the same as the
basis of the Oglebay Norton Common Stock transferred to the Holding Company
because this proposed transaction will constitute an exchange to which Section
354 applies. Each of the Oglebay Norton shareholders should contact their own
tax advisors to determine the basis they will have in their Holding Company
Common Stock.
Section 1223(1) provides that, in determining the period for which the taxpayer
has held property received in an exchange, there shall be included the period
for which the taxpayer held the property exchanged if the property has, for the
purpose of determining gain or loss from a sale or exchange, the same basis (in
whole or in part) in its hands as the property exchanged, provided the property
exchanged at the time of such exchange is a capital asset as defined in Section
1221 or property described in Section 1231. The basis of the Holding Company
Common Stock deemed to be received by the Oglebay Norton shareholders will have
the same basis as the Oglebay Norton Common Stock constructively exchanged
therefor; accordingly, the holding period for the Holding Company Common Stock
will include the period for which the Oglebay Norton Common Stock was held by
the shareholders, provided that the Oglebay Norton shares are capital assets on
the date of the exchange.
Section 1032(a) provides that no gain or loss shall be recognized to a
corporation on the receipt of money or other property in exchange for stock
(including treasury stock) of such corporation. Treas. Reg. Section 1.1032-2(b)
provides that in the case of a triangular B reorganization, the stock of the
corporation (P) in control of the acquiring corporation (S) provided by P to S,
or directly to the corporation acquired (T) or T's shareholders on behalf of S,
pursuant to the plan of reorganization is treated as a disposition by P of
shares of its own stock for T stock. Accordingly, the Holding Company and the
Investment Company will not recognize any gain or loss on constructive issuance
of Holding Company Common Stock.
Rev. Rul. 74-35 provides that a distribution, pursuant to a plan of
reorganization under Section 368(a)(1)(B), by the acquired corporation (X) of
appreciated investment assets, amounting to 30% in value of X's assets, not
constituting an active trade or business, to the acquiring corporation (Y) is a
distribution to which Section 301 applies. The issue in the revenue ruling
13
<PAGE> 14
April 24, 1998
Board of Directors
Page 14
is whether the transaction will be recast for federal income tax purposes into
(1) a constructive sale by X to Y of the assets " distributed" in exchange for
an amount of the Y stock received of equivalent value, followed by a
constructive taxable distribution of such stock by X to its shareholders, and
(2) a concurrent exchange by the X shareholders of their X stock solely for the
remainder of the Y stock qualifying as a reorganization under Section
368(a)(1)(B). The Service held that it will not recast the transaction because Y
does not acquire substantially all of the property of X. Y continues its stock
interest in X, which retains all of its operating assets and 70% in value of all
the assets it owned prior to the transaction.
After the merger, Oglebay Norton may distribute the nontransportation assets to
the Investment Company, and the Investment Company may assume a similar amount
of liabilities. These assets represent approximately 25% of the gross assets of
Oglebay Norton. Although the stock of operating subsidiaries may be distributed
in addition to nonoperating assets, the principles of this ruling will still
apply because Oglebay Norton will retain all of its operating assets and
approximately 75% in value of the asset it owns prior to the transaction.
Accordingly, the transfer of nontransportation assets by Oglebay Norton to the
Investment Company will be treated as a distribution to which Section 301
applies.
A group structure change is a transaction in which the affiliated group
continues notwithstanding the fact that the common parent ceases to be the
common parent by reason of a downstream merger or similar transaction described
in Treas. Reg. Section 1.1502-75(d)(2) or a reverse acquisition described in
Treas. Reg. Section 1.1502-75(d)(3).
Treas. Reg. Section 1.1502-75(d)(2)(ii) provides that the affiliated group shall
be considered as remaining in existence notwithstanding that the common parent
is no longer in existence if the members of the affiliated group succeed to and
become owners of substantially all of the assets of the former parent and there
remains one or more chains of includible corporations connected through stock
ownership with a common parent corporation that is an includible corporation and
that was a member of the group prior to the date the former parent ceases to
exist.
Treas. Reg. Section 1.1502-75(d)(3) provides that the affected group shall be
considered as remaining in existence in the case of transactions characterized
as a "reverse acquisition." A "reverse acquisition" is defined as a transaction
in which a corporation ("first corporation") or any member of the group of which
the first corporation is the common parent acquires (a) stock of another
corporation ("second corporation"), and as a result the second corporation
becomes (or would become but for the application of Treas. Reg. Section
1.1502-75(d)(3)) a member of the group of which the first corporation is the
common parent, or (b) substantially all the assets of the second corporation.
The acquisition of stock or assets must be in exchange (in whole or in part) for
stock of the first corporation, and the stockholders (immediately
14
<PAGE> 15
April 24, 1998
Board of Directors
Page 15
before the acquisition) of the second corporation, as a result of owning stock
of the second corporation, own (immediately after the acquisition) more than 50
percent of the fair market value of the outstanding stock of the first
corporation.
In Rev. Rul. 82-152, the Service held that while a merger of a second-tier
wholly-owned subsidiary of a first-tier wholly-owned subsidiary into a parent
corporation, with the parent corporation surviving and the former parent
corporation shareholders exchanging all of their parent stock for stock of the
first-tier subsidiary, does not satisfy the literal description of either an
acquisition of assets by a subsidiary under Treas. Reg. Section 1.1502-75(d)(2)
or a reverse acquisition under Treas. Reg. Section 1.1502-75(d)(3), it is
indistinguishable in substance from a transaction described in Treas. Reg.
Section 1.1502-75(d)(2) and the group will be treated as remaining in existence.
While the Merger Company is a third-tier wholly-owned subsidiary of Oglebay
Norton, the merger of the Merger Company into Oglebay Norton with the
shareholders of Oglebay Norton constructively exchanging their shares of Oglebay
Norton Common Stock for the Holding Company Common Stock is not distinguishable
in substance from Treas. Reg. Section 1.1502-75(d)(2) and Rev. Rul 82-152.
Accordingly, a group structure change will result from the merger of the Merger
Company into Oglebay Norton and the Oglebay Norton consolidated group will be
treated as remaining in existence.
If one corporation succeeds another corporation as the common parent of a
consolidated group in a group structure change, the corporation's basis in the
stock of the former common parent (or the stock of a successor) is adjusted or
determined under Treas. Reg. Section 1.1502-31.
Treas. Reg. Section 1.1502-31(b)(2) provides that if a corporation acquires
stock of the former common parent in a group structure change, the corporation's
basis in the former common parent's stock immediately after the group structure
change (including any stock of the former common parent owned before the group
structure change) is redetermined to reflect the acquiring corporation's
allocable share of the former common parent's net asset basis.
The net asset basis is the basis the former common parent would have in the
stock of a newly formed subsidiary if (1) the former common parent transferred
its assets (and any liabilities assumed or to which the assets are subject) to
the subsidiary in a transaction to which Section 351 applies; (2) the former
common parent and the subsidiary were members of the same consolidated group;
and (3) the asset basis taken into account is each asset's basis immediately
after the group structure change.
The basis of the Investment Company Common Stock held by the Holding Company
will reflect the net asset basis of Oglebay Norton. In addition, the basis of
the shares of Oglebay Norton Common Stock to the Investment Company will reflect
the net asset basis of the Investment Company.
15
<PAGE> 16
April 24, 1998
Board of Directors
Page 16
Section 1223(1) provides that in determining the period for which the taxpayer
has held property received in an exchange, there shall be included the period
for which he held the property exchanged if, under this chapter, the property
has, for the purpose of determining gain or loss from a sale or exchange, the
same basis in whole or in part in his hands as the property exchanged, and, in
the case of such exchanges after March 1, 1954, the property exchanged at the
time of such exchange was a capital asset as defined in section 1221 or property
described in section 1231. Because the basis of the share of the Investment
Company Common Stock will be the same, in whole or in part, in the hands of the
Holding Company as the net asset basis of Oglebay Norton, in determining the
period for which the Holding Company has held the share of Investment Company
Common Stock, there will be included the period for which the assets were held
by Oglebay Norton provided that the assets are capital assets on the date of the
deemed exchange. Because the basis of the share of the Oglebay Norton Common
Stock will be the same, in whole or in part, in the hands of the Investment
Company as the net asset basis of the Investment Company, in determining the
period for which the Investment Company has held the share of Oglebay Norton
Common Stock, there will be included the period for which the assets were held
by Oglebay Norton provided that the assets are capital assets on the date of the
deemed exchange.
GENERAL
- -------
We note that the federal income tax consequences to the parties involved
relating to the transactions described herein are complex and subject to varying
interpretations. Thus, we can give you no assurance that the Service or the
courts would ultimately resolve the issues discussed herein in agreement with
our opinions.
Our opinion is based upon our assumption (without independent investigation or
review) that all of the representations and all of the original, copies, and
signatures of documents are accurate, true and authentic and our assumption
(without independent investigation or review) that there will be timely
execution and delivery of, and performance as required by the representations
and documents.
Additionally, we cannot assume responsibility for apprising the parties of any
federal income tax developments that occur subsequent to the date of this
letter. If there are any significant changes of the foregoing tax authorities,
it may result in our opinion being rendered invalid, or necessitate (upon your
request) a reconsideration of the opinion.
We have not considered the consequences to the parties involved of any tax other
than the federal income tax.
This opinion letter is solely for your information and inclusion in the Form
S-4.
16
<PAGE> 17
April 24, 1998
Board of Directors
Page 17
Other than the uses indicated in the preceding sentence, this opinion may
not be relied upon, distributed, or disclosed by anyone without prior written
consent of Deloitte & Touche LLP.
If we can be of further assistance in connection with this matter, please
contact us.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
17
<PAGE> 1
Exhibit 8.2
[Thompson Hine & Flory LLP Letterhead]
April 23, 1998
Oglebay Norton Holding Company
c/o Oglebay Norton Company
1100 Superior Avenue, 20th Floor
Cleveland, Ohio 44114-2598
Re: Oglebay Norton Holding Company Registration Statement on Form S-4
Ladies and Gentlemen:
Oglebay Norton Holding Company, an Ohio corporation (the "Holding
Company"), is filing with the Securities and Exchange Commission a Registration
Statement on Form S-4 (the "Form S-4 Registration Statement") for the
registration, under the Securities Act of 1933, as amended, of 7,303,332 Common
Shares, par value $1.00 per share, to be issued to the stockholders of Oglebay
Norton Company, a Delaware corporation (the "Company"), in connection with the
reorganization of the Company as a second-tier wholly-owned subsidiary of the
Holding Company. The reorganization will be carried out through the merger (the
"Merger") of the Company with Oglebay Norton Merger Company (the "Merger
Company") pursuant to an Agreement and Plan of Merger, dated April 6, 1998, by
and among the Company, the Holding Company, ONCO Investment Company and the
Merger Company.
We have examined such records and documents and obtained such other
information as we have deemed advisable in order to render this opinion. As a
result of the foregoing, we are of the opinion that the Merger will be a
statutory merger under the laws of the Commonwealth of Delaware.
We hereby consent to the use and filing of this opinion in connection with
the Form S-4 Registration Statement.
Very truly yours,
/s/ Thompson Hine & Flory LLP
Thompson Hine & Flory LLP
<PAGE> 1
Exhibit 13
FINANCIAL HIGHLIGHTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(Dollars and Shares in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995 1994 1993
OPERATIONS
<S> <C> <C> <C> <C> <C>
Net sales and operating revenues $ 145,185 $ 129,697 $ 126,373 $ 118,509 $ 109,677
Income from continuing operations 18,356 11,039 10,624 9,558 2,823
Discontinued operations (2,104) 4,518 4,737 5,333 4,439
Net income 16,252 15,557 15,361 14,891 7,262
PER SHARE DATA
Income (loss) per common share - basic:
Continuing operations $ 3.84 $ 2.26 $ 2.15 $ 1.92 $ .56
Discontinued operations (.44) .93 .95 1.07 .88
Net income 3.40 3.19 3.10 2.99 1.44
Income (loss) per common share -
assuming dilution:
Continuing operations $ 3.81 $ 2.26 $ 2.15 $ 1.92 $ .56
Discontinued operations (.44) .92 .95 1.07 .88
Net income 3.37 3.18 3.10 2.99 1.44
Dividends .75 .65 .60 .50 .40
Market price 41.00 21.88 18.63 15.25 11.25
Book value 24.77 22.01 19.52 17.07 13.95
Shares of common stock outstanding 4,752 4,835 4,932 4,966 5,008
Average shares of common stock
outstanding 4,785 4,876 4,948 4,982 5,023
Average shares of common stock -
assuming dilution 4,816 4,891 4,948 4,982 5,023
FINANCIAL CONDITION
Capital expenditures $ 24,554 $ 5,573 $ 5,968 $ 6,411 $ 1,719
Working capital 38,756 28,561 24,780 21,387 22,329
Total assets 263,452 234,696 247,220 259,177 258,111
Capitalization:
Current portion of long-term debt 8,723 8,476 8,476 8,476 11,190
Long-term debt 36,942 28,665 43,641 57,118 69,344
Stockholders' equity 117,716 106,449 96,265 84,753 69,873
</TABLE>
CONTENTS
Financial Highlights 1
Letter to Stockholders 2
A Message from John Lauer 4
Review of Operations 5
Financial Information 10
Management's Discussion and Analysis 12
Consolidated Financial Statements 17
Corporate Information 28
In 1997, the Company's Engineered Materials business segment was classified as a
discontinued operation. In 1996, the Company sold its interest in Eveleth Mines
and certain mining equipment, completing its exit from the iron ore business.
Prior years' results have been adjusted for discontinued operations and to
reflect a two-for-one split of the Company's common stock in October 1997.
1
<PAGE> 2
FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
INDUSTRY SEGMENT DATA(1)
(In Thousands)
1997
- --------------------------------------------------------------------------------
Identifiable assets
Depreciation and amortization expense
Capital expenditures
Net sales and operating revenues
Income from operations(4)
Gain on sale of assets
Interest expense
Interest, dividends and other income (expense) - net
Income from continuing operations before income taxes
1996
- --------------------------------------------------------------------------------
Identifiable assets
Depreciation and amortization expense
Capital expenditures
Net sales and operating revenues
Income from operations(4)
Gain on sale of assets
Interest expense
Interest, dividends and other income (expense) - net
Income from continuing operations before income taxes
1995
- --------------------------------------------------------------------------------
Identifiable assets
Depreciation and amortization expense
Capital expenditures
Net sales and operating revenues
Income from operations(4)
Gain on sale of assets
Interest expense
Interest, dividends and other income (expense) - net
Income from continuing operations before income taxes
1 Should be read as an integral part of the consolidated financial statements
and related notes. Segment data has been reclassified for discontinued
operations.
2 Consists primarily of cash and cash equivalents, marketable securities,
prepaid pension costs and net assets of discontinued operations of
$15,571,000, $13,661,000 and $17,666,000 for 1997, 1996 and 1995,
respectively.
<PAGE> 3
<TABLE>
<CAPTION>
Marine Corporate
Transportation Industrial Sands Total Segments and Other Consolidated
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 143,554 $ 40,928 $ 184,482 $ 78,970(2) $ 263,452
5,654 3,150 8,804 143 8,947
20,234 4,108 24,342 212 24,554
$ 95,701 $ 49,484 $ 145,185 $ 145,185
$ 19,312 $ 9,970 $ 29,282 $ (4,817)(3) $ 24,465
197 197 5,351 5,548
(2,318) (350) (2,668) (166) (2,834)
(117) (117) (1,486) (1,603)
--------- --------- --------- --------- ---------
$ 16,877 $ 9,817 $ 26,694 $ (1,118) $ 25,576
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------
$ 130,125 $ 36,120 $ 166,245 $ 68,451(2) $ 234,696
8,671 2,444 11,115 144 11,259
925 4,540 5,465 108 5,573
$ 86,178 $ 42,583 $ 128,761 $ 936 $ 129,697
$ 7,860 $ 8,520 $ 16,380 $ (4,727)(3) $ 11,653
75 75 3,075 3,150
(2,409) (356) (2,765) (239) (3,004)
(65) (65) 846 781
--------- --------- --------- --------- ---------
$ 5,386 $ 8,239 $ 13,625 $ (1,045) $ 12,580
========= ========= ========= ========= =========
- -----------------------------------------------------------------------------------------------
$ 132,455 $ 33,964 $ 166,419 $ 80,801(2) $ 247,220
8,695 2,567 11,262 141 11,403
3,125 2,360 5,485 483 5,968
$ 85,657 $ 40,552 $ 126,209 $ 164 $ 126,373
$ 11,845 $ 6,655 $ 18,500 $ (5,527)(3) $ 12,973
2,325 157 2,482 2,159 4,641
(3,422) (524) (3,946) (201) (4,147)
(120) (120) (91) (211)
--------- --------- --------- --------- ---------
$ 10,628 $ 6,288 $ 16,916 $ (3,660) $ 13,256
========= ========= ========= ========= =========
</TABLE>
3 Includes other operations, net of certain corporate expenses.
4 Business segments include the reallocation of corporate general and
administrative expenses previously allocated to discontinued operations.
<PAGE> 4
MANAGEMENT'S
DISCUSSION AND ANALYSIS
of Financial Condition and
Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the letter "To Our Stockholders" beginning on page 2 of this
report may contain statements concerning certain trends and other
forward-looking information within the meaning of the federal securities laws.
Such forward-looking statements are subject to uncertainties and factors
relating to the Company's operations and business environment, all of which are
difficult to predict and many of which are beyond the control of the Company.
The Company believes that the following factors, among others, could affect its
future performance and cause actual results to differ materially from those
expressed or implied by forward-looking statements made by or on behalf of the
Company: (1) unfavorable weather conditions; (2) fluctuations in oil prices; (3)
changes in the demand for the Company's products or services due to changes in
technology; (4) vessel service availability; (5) change in United States
cabotage laws; (6) labor unrest; (7) the loss or bankruptcy of major customers;
and (8) year 2000 software conversion failures of vendors, suppliers and
customers.
INCOME
FROM OPERATIONS
[GRAPHIC]
<TABLE>
<S> <C>
1997 $24,464,000
1996 $11,653,000
1995 $12,973,000
</TABLE>
FINANCIAL
CONDITION
The Company's operating activities provided cash of $23,690,000 in 1997; an
increase of 17% compared with $20,166,000 in 1996. Cash from operations was 9%
less in 1997 compared with $25,940,000 generated in 1995. The Company's income
from operations was $24,465,000 in 1997 compared with $11,653,000 in 1996 and
$12,973,000 in 1995. The Company's Marine Transportation and Industrial Sands
businesses both had record years in 1997. After two years of harsh weather
conditions, Marine Transportation's fleet benefited from milder weather in 1997
and set new Company records for tonnage carried on the Great Lakes. Industrial
Sands had its best performance ever with an increased share of robust oil and
gas markets and a strong construction market in the Southwest during 1997.
Changes in accounts receivable, accounts payable and inventories added net cash
from operations of $3,341,000 in 1997 compared with $947,000 and $5,913,000
generated by these working capital accounts in 1996 and 1995, respectively. Net
cash from operations for 1997, 1996 and 1995 are comparable if these working
capital changes were excluded in each year. Operating results of the Company's
business segments are discussed in more detail under "RESULTS OF OPERATIONS."
Capital expenditures from continuing operations amounted to $24,554,000 in 1997
compared with $5,573,000 and $5,968,000 in 1996 and 1995, respectively.
Expenditures in 1997 included $17,000,000 for the acquisition of two
self-unloading vessels. The Company operated these vessels on the Great Lakes,
under a charter agreement, as a part of its Marine Transportation fleet for over
20 years. Vessel inspection costs of $2,260,000 and $2,037,000 are included in
capital expenditures in 1997 and 1995, respectively. No vessel inspections were
required in 1996. Capital expenditures in 1997 and 1996 included increases of
$1,748,000 and $2,180,000, respectively, for new mineral reserves, equipment and
improvements at the California, Texas and Ohio operations of Industrial Sands.
Capital expenditures for 1998, excluding business acquisitions, are currently
expected to approximate $8,000,000.
In 1997, the Company purchased the assets of two industrial sand operations for
$3,400,000 in cash and notes payable. These operations screen sand to make
specialty grades and sizes and supply certain blended sand and organic mixes for
end users, such as golf courses, playgrounds, parks and sports fields. Operating
results for these businesses
<PAGE> 5
have been included in the Company's Industrial Sands business segment since
acquisition, and are not material to the consolidated operations of the Company.
In December 1997, the Company decided to divest the assets of its Engineered
Materials business. Hot top operations were sold in December, and the sale of
its remaining metallurgical treatment operations is anticipated in 1998. The net
loss upon disposition of these discontinued operations is estimated to be
$1,263,000. In December 1996, the Company sold its interest in Eveleth Mines and
certain mining equipment for $5,000,000, completing its exit from the iron ore
business. The sale of this discontinued operation resulted in a net gain of
$570,000. Discontinued operations are further described in Note B to the
consolidated financial statements.
In 1997, the Company sold its interest in certain coal reserves for $6,000,000
in cash, resulting in a pretax gain of $5,212,000. In 1996, the Company sold an
inactive business and current marketable securities, resulting in pretax gains
totaling $2,701,000. In 1995, the Company sold two vessels no longer in service,
current marketable securities and undeveloped clay properties resulting in
pretax gains totaling $4,474,000. Total proceeds from the sale of assets from
continuing operations were $8,192,000 in 1997, $5,543,000 in 1996 and $6,538,000
in 1995. In 1997, the Company entered into a $17,000,000 fixed-rate term loan to
finance the acquisition of two Marine Transportation vessels. The Company
borrowed $15,000,000 on its revolving credit facility for a one-month period in
1997 to provide interim financing for the vessels acquired, but did not utilize
the facility in 1996 or 1995. At the end of 1996 and 1995, the Company elected
to pay $6,500,000 and $5,000,000, respectively, on its variable rate term loan,
in addition to annual required long-term debt payments. Long-term debt is
further described in Note F to the consolidated financial statements. In March
1998, the Company renegotiated its revolving credit agreement with certain
banks. The new agreement, expected to be completed by the end of April 1998,
will enable the Company to borrow up to $100,000,000 for acquisitions, working
capital requirements and other general needs. The Company's current revolving
credit facility permits it to borrow up to $40,000,000, of which only
$15,000,000 is available for acquisitions. Anticipated cash flows from
operations and current financial resources are expected to meet the Company's
needs during 1998. Financing alternatives are continuously reviewed to determine
their practicality and ability to provide sufficient funding for the Company on
a timely basis at the least possible cost.
The Company declared a two-for-one split of its common stock, paid in the form
of a 100% stock dividend in October 1997. All per share amounts have been
retroactively restated for the stock split. The Company declared and paid
dividends on a quarterly basis totaling $.75 per share in 1997, $.65 per share
in 1996 and $.60 per share in 1995. Dividends paid were $3,584,000 in 1997
compared with $3,162,000 and $2,968,000 in 1996 and 1995, respectively. In the
third quarter of 1996 and 1997, the Company's Board of Directors approved a 2.5
cent increase in the quarterly dividend to $.175 and $.20 per share of common
stock, respectively. The Company purchased, and placed in treasury, 87,990
shares of its common stock for $1,970,000 in 1997, 99,558 shares for $2,068,000
in 1996 and 36,500 shares for $615,000 in 1995.
RESULTS OF OPERATIONS
The consolidated financial statements of the Company have been reclassified to
report separately the operating results of continuing and discontinued
operations.
Net sales and operating revenues of $145,185,000 in 1997 were 12% greater
than the 1996 level of $129,697,000 and 15% above net sales and operating
revenues of $126,373,000 in 1995. Income from operations of $24,465,000 in
1997 more than doubled compared with $11,653,000 in 1996, and almost doubled
compared with the 1995 level of $12,973,000. Income from continuing operations
was $18,356,000 ($3.84
<PAGE> 6
per share) in 1997, compared with $11,039,000 ($2.26 per share) in 1996 and
$10,624,000 ($2.15 per share) in 1995. In 1997, net income was $16,252,000
($3.40 per share) compared with net income of $15,557,000 ($3.19 per share) in
1996 and $15,361,000 ($3.10 per share) in 1995.
In 1997, income from continuing operations includes the effect of pretax gains
totaling $5,548,000, primarily from the sale of certain coal reserves. In 1996,
income from continuing operations includes the effect of $3,150,000 in pretax
gains, principally from the sale of an inactive business and current marketable
securities and the effects of a $1,824,000 state tax refund and related interest
income of $576,000. Income from continuing operations in 1995 includes the
effect of $4,641,000 in pretax gains, primarily from the sale of inactive
vessels, current marketable securities and undeveloped clay properties. Income
from continuing operations, excluding gains on the sale of assets and, in 1996,
the effects of the tax refund, approximated $14,694,000 ($3.07 per share) in
1997, compared with $7,376,000 ($1.51 per share) in 1996 and $7,561,000 ($1.53
per share) in 1995.
At the beginning of the year, the Company increased the estimated useful lives
and salvage values for certain vessels in its Marine Transportation fleet. The
effect of these changes reduced depreciation by $3,178,000 and increased net
income by $2,097,000 ($.44 per share) in 1997. At the end of the year, the
Company re-evaluated assumptions used in determining postretirement pension and
health care benefits. The weighted-average discount rates were adjusted from
7.5% to 7.25% to better reflect market rates. In 1998, the health care cost
trend rate will decline by 1/2% and the ultimate trend rate will decrease by
1/4% for all retirees. The changes in benefit plan assumptions did not affect
1997 net income and will not have a significant effect on net income in 1998.
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share" Statement No. 130, "Reporting Comprehensive Income" and
Statement No. 131, "Disclosure about Segments of an Enterprise and Related
Information." The Company adopted Statement No. 128 at the end of 1997 and has
applied it retroactively to all periods presented, as required. The Company must
adopt Statement No. 130 in the first quarter of 1998 and does not expect that
comprehensive income will differ materially from net income. Statement No. 131
must be adopted by the end of 1998; however, the Company believes that most of
its disclosures already comply with the new Statement. These new Statements are
further described in Note A to the consolidated financial statements.
The Company recognizes the need to ensure that its operations will not be
adversely affected by year 2000 software failures. Computer system failures due
to processing errors potentially arising from calculations using a year 2000
date are a known risk. Appropriate measures are necessary to ensure that systems
and applications will recognize and process the year 2000 and beyond. The
Company has identified, evaluated and begun implementation of changes to
computer systems and applications necessary to achieve year 2000 conversion with
no effect on its customers or disruption to its operations. Communications have
begun with major customers and suppliers, financial institutions and others with
which the Company does business to determine the extent to which the Company may
be vulnerable to other companies failures to remediate their own year 2000
issues. However, there can be no guarantee that the systems of other companies
will be timely converted and would not have an adverse effect on the Company.
The Company's major computer systems and applications are already year 2000
compliant. The Company believes that all other systems and applications that it
presently utilizes will be year 2000 compliant by the end of 1998; and the cost
of conversion will not have a material impact on the Company's consolidated
results of operations or financial condition.
The operating results of the Company's business segments for 1997, 1996 and 1995
are discussed below. It is the policy of the Company to allocate
<PAGE> 7
a portion of corporate general and administrative expenses to its business
segments. Corporate general and administrative expenses previously allocated to
discontinued operations were reallocated to the remaining business segments for
all years discussed.
MARINE TRANSPORTATION
Operating revenues of $95,701,000 in 1997 exceeded, by more than 11%, operating
revenues of $86,178,000 and $85,657,000 in 1996 and 1995, respectively. Income
from operations of $19,312,000 in 1997, more than doubled compared with income
from operations of $7,860,000 in 1996 and increased 63% compared with income
from operations of $11,845,000 in 1995. Income before taxes was $16,877,000 in
1997 compared with $5,386,000 and $10,628,000 in 1996 and 1995, respectively. In
1995, the Company sold two inactive vessels resulting in pretax gains totaling
$2,324,000. Interest expense declined to $2,318,000 in 1997, compared with
$2,409,000 in 1996 and $3,422,000 in 1995, due to an overall decline in the
Company's long-term debt through the middle of 1997.
MARINE TRANSPORTATION
VESSEL TONNAGE
[GRAPHIC]
<TABLE>
<S> <C>
1997 23,846,000
1996 22,103,000
1995 21,486,000
</TABLE>
The Company's Great Lakes vessel fleet hauled a record 23,846,000 tons in 1997.
This is an 8% increase over 1996 tonnage of 22,103,000 and an 11% increase over
1995 tonnage of 21,486,000. In addition to setting a new fleet tonnage record,
the M/V Columbia Star set a record for the Head-of-Lakes coal trade by hauling
70,903 net tons of low-sulfur coal in one shipment from Superior, Wisconsin to
St. Clair, Michigan. Strong customer demand and favorable operating conditions
increased operating revenues in 1997. Improved dispatch and the weather
conditions experienced on the Great Lakes resulted in a 2% increase in operating
days with a corresponding 28% reduction in delay days when compared with 1996.
Continuing strong customer demand for cargo on the Great Lakes allowed the
Company to operate twelve vessels throughout the 1997 sailing season. Also, the
high water levels experienced on the Great Lakes and rivers in 1997 enabled the
fleet to carry more tonnage per trip, resulting in more efficient operations.
Vessel operating days were 3,405 in 1997, compared with 3,336 and 3,469 in 1996
and 1995, respectively. Iron ore, coal and limestone shipments increased 14%, 5%
and 4%, respectively, compared with 1996. Favorable fuel rates also contributed
to the improved operating results in 1997.
Heavy ice conditions at the start of the 1996 sailing season caused substantial
delays, minor damage and, in general, hampered operations. It was not until the
middle of the second quarter of 1996 that the fleet began to operate in a normal
fashion. The Company operated 12 vessels throughout the 1995 sailing season
until adverse weather conditions restricted operations at the end of the year.
High winds and unusually heavy ice at the end of the 1995 sailing season caused
considerable delays and negatively impacted operations. In 1995, northern
limestone quarries closed earlier than usual due to the harsh weather. There
were 55% more delay days during the 1995 sailing season, compared with the 1997
sailing season, on the same approximate number of operating days. As a result,
1995 iron ore, coal and limestone shipments were lower by 4%, 13% and 19%,
respectively, compared with 1997.
In April 1997, material-handling operations began at the Cleveland Bulk
Terminal and contributed modestly to the operating revenues and income from
operations of the segment. The Terminal, located in the Cleveland, Ohio harbor,
is a bulk commodity dock for the transfer of commodities such as iron ore
pellets, coal and limestone. In 1997, the Terminal accepted 1,494,000 tons of
iron ore pellets, of which 1,331,000 tons were loaded onto railroad cars
<PAGE> 8
for delivery to customers. While the Terminal handled only iron ore shipments in
1997, plans are to expand its operations to include truck access and vessel
loading, and diversification of the commodities handled to include salt,
limestone and coal.
As a result of increased operating activities, the segment's 1997 selling,
general and administrative expenses, prior to the allocation of corporate
expenses, increased by 27% and 18%, compared with 1996 and 1995, respectively.
These expenses were 3% of segment operating revenues in 1997, 1996 and 1995.
Capital expenditures were $20,234,000, $925,000 and $3,125,000 in 1997, 1996 and
1995, respectively. In 1997, two self-unloading vessels, which operated as part
of the segment's fleet for over 20 years, were purchased for a total combined
price of $17,000,000. Included in expenditures for 1997 and 1995 are $2,260,000
and $2,037,000, respectively, for required vessel inspections. No vessel
inspections were required in 1996. Three of the Company's vessels require
inspection prior to sailing in 1998 for a total estimated cost of $2,400,000.
Depreciation and amortization expense was $5,654,000, $8,671,000 and $8,695,000
in 1997, 1996 and 1995, respectively. The decrease in depreciation and
amortization in 1997 compared with 1996 and 1995 is the result of an increase in
estimated useful lives and salvage values for certain vessels in the fleet. The
effect of these changes reduced depreciation by $3,178,000 in 1997.
INDUSTRIAL
SANDS TONNAGE
[GRAPHIC]
<TABLE>
<S> <C>
1997 1,770,000
1996 1,533,000
1995 1,563,000
</TABLE>
INDUSTRIAL SANDS
Net sales of $49,484,000 in 1997 increased by 16% compared with $42,583,000 in
1996. Net sales in 1997 were 22% greater than the 1995 level of $40,552,000.
Income from operations of $9,970,000 in 1997 improved 17%, compared with
$8,520,000 in 1996. Income from operations was $6,655,000 in 1995. Income before
taxes in 1997 was $9,817,000, compared with $8,239,000 in 1996 and $6,288,000 in
1995. Interest expense of $350,000 for 1997 was comparable to 1996 and 33% lower
than 1995 interest expense. Interest expense on notes payable associated with
the acquisition of assets and related businesses in 1997 offset reductions in
interest expense due to an overall decline in the Company's long-term debt
through the middle of 1997.
Net sales and income from operations in 1997 set new records. The improvements
were a direct result of strong demand, particularly in the oil and gas well
service industry and the construction industry in the Southwest. Record
shipments totaling 1,770,000 tons in 1997 exceeded 1996 shipments by 16% and
1995 shipments by 13%. The segment's Brady, Texas operations experienced record
tonnage, with shipments increasing 23% and 26% compared with 1996 and 1995,
respectively. Tonnage at the segment's Orange County, California operations also
experienced record levels, as 1997 shipments exceeded 1996 and 1995 shipments by
21% and 27%, respectively. The 1997 additions of the Kurtz Sports Turf
operations in Ohio and operations in Bakersfield, California also contributed to
the record tonnage levels. The segment's income from operations was 20% of net
sales in 1997 and 1996, an improvement of 4% over 1995. Selling prices for 1997
improved an average of 2%, compared with 1996 and 1995, while operating costs
per ton remained steady through the three-year period.
The segment's selling, general and administrative expenses for 1997, prior to
the allocation of corporate expenses, increased by 12% and 9%, compared with
1996 and 1995, respectively. These expenses were 7% of the segment's sales in
1997 and 8% in 1996 and 1995.
Capital expenditures were $4,108,000 in 1997 compared with $4,540,000 in 1996
and $2,360,000 in 1995. The increase in capital expenditures in 1996 compared
with 1995 relates to the acquisition of additional mineral reserves, plant
enhancements and equipment placed in service in 1996. Depreciation and
amortization expense was $3,150,000 in 1997 compared with $2,444,000 in 1996
and $2,567,000 in 1995. Depreciation expense increased during 1997 compared
with 1996 and 1995 as a result of
<PAGE> 9
FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
CONSOLIDATED STATEMENT OF OPERATIONS
1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES $ 145,184,849 $ 129,697,228 $ 126,373,159
COSTS AND EXPENSES
Cost of goods sold and operating expenses 98,421,276 94,395,629 88,519,736
Depreciation and amortization 8,946,878 11,259,284 11,403,425
General, administrative and selling expenses 13,352,068 12,388,863 13,477,143
------------- ------------- -------------
120,720,222 118,043,776 113,400,304
------------- ------------- -------------
INCOME FROM OPERATIONS 24,464,627 11,653,452 12,972,855
Gain on sale of assets 5,548,036 3,150,434 4,640,713
Interest, dividends and other income 2,693,101 2,790,859 2,281,405
Interest expense (2,834,445) (3,003,639) (4,147,057)
Other expense (4,295,342) (2,011,072) (2,491,488)
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 25,575,977 12,580,034 13,256,428
INCOME TAXES
Current 6,967,000 1,387,000 2,477,000
Deferred 253,000 154,000 155,000
------------- ------------- -------------
7,220,000 1,541,000 2,632,000
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS 18,355,977 11,039,034 10,624,428
Discontinued operations:
(Loss) income from operations (841,727) 3,947,518 4,736,562
(Loss) gain from disposals (1,262,700) 570,433
------------- ------------- -------------
(Loss) income from discontinued operations (2,104,427) 4,517,951 4,736,562
------------- ------------- -------------
NET INCOME $ 16,251,550 $ 15,556,985 $ 15,360,990
============= ============= =============
PER SHARE AMOUNTS:
Income (loss) per common share - basic:
Continuing operations $ 3.84 $ 2.26 $ 2.15
Discontinued operations (.44) .93 .95
------------- ------------- -------------
NET INCOME PER SHARE $ 3.40 $ 3.19 $ 3.10
============= ============= =============
Income (loss) per common share - assuming dilution:
Continuing operations $ 3.81 $ 2.26 $ 2.15
Discontinued operations (.44) .92 .95
------------- ------------- -------------
NET INCOME PER SHARE - ASSUMING DILUTION $ 3.37 $ 3.18 $ 3.10
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 10
FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1997 1996
--------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 29,885,922 $ 21,850,282
Marketable securities -0- 898,475
Accounts receivable, less reserve for
doubtful accounts of $723,000 in
1997 and $512,000 in 1996 22,292,432 24,428,115
Inventories
Raw materials and finished products 1,210,940 550,027
Operating supplies 3,382,764 3,534,003
------------ ------------
4,593,704 4,084,030
Deferred income taxes 3,050,091 3,214,573
Prepaid insurance and other expenses 1,300,715 1,504,947
Discontinued operations 15,571,082 4,562,590
------------ ------------
TOTAL CURRENT ASSETS 76,693,946 60,543,012
PROPERTIES AND EQUIPMENT
Marine Transportation 241,044,884 220,811,102
Industrial Sands 59,531,668 57,220,602
Other 4,382,014 7,050,095
------------ ------------
304,958,566 285,081,799
Less allowances for depreciation
and amortization 154,022,177 148,950,726
------------ ------------
150,936,389 136,131,073
DISCONTINUED OPERATIONS -0- 9,097,902
PREPAID PENSION COSTS AND OTHER ASSETS 35,821,995 28,923,567
------------ ------------
TOTAL ASSETS $263,452,330 $234,695,554
============ ============
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
December 31
1997 1996
------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 8,722,545 $ 8,476,450
Accounts payable 6,875,498 5,485,181
Payrolls and other accrued compensation 7,547,241 6,915,055
Accrued expenses 12,514,672 9,485,216
Income taxes 2,277,749 1,620,176
------------ ------------
TOTAL CURRENT LIABILITIES 37,937,705 31,982,078
LONG-TERM DEBT, less current portion 36,942,130 28,664,675
POSTRETIREMENT BENEFITS OBLIGATION 24,341,252 24,675,900
OTHER LONG-TERM LIABILITIES 25,404,891 20,272,081
DEFERRED INCOME TAXES 21,109,949 22,651,821
STOCKHOLDERS' EQUITY
Preferred stock, without par value - authorized
5,000,000 shares; none issued -0- -0-
Common stock, par value $1.00 per share - authorized
10,000,000 shares; issued 7,253,332 shares 7,253,332 7,253,332
Additional capital 6,288,822 5,849,177
Unrealized gains -0- 410,447
Retained earnings 138,628,719 125,960,692
------------ ------------
152,170,873 139,473,648
Treasury stock, at cost - 2,501,152 and
2,417,958 shares at respective dates (33,739,795) (31,833,524)
Unallocated Employee Stock Ownership
Plan shares (714,675) (1,191,125)
------------ ------------
117,716,403 106,448,999
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $263,452,330 $234,695,554
============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 12
FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
----------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $16,251,550 $15,556,985 $15,360,990
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,946,878 11,259,284 11,403,425
Deferred income taxes (1,166,000) 806,000 (90,000)
Gain on sale of assets (5,548,037) (3,150,434) (4,681,213)
Loss (gain) from disposals of discontinued operations 1,262,700 (570,433) -0-
Prepaid pension costs and other assets (4,204,687) (3,125,094) (2,450,918)
Decrease (increase) in accounts receivable 2,671,391 (945,050) 4,488,027
Decrease (increase) in inventories (697,639) 142,466 692,000
Increase in accounts payable 1,367,172 1,750,056 732,484
Other operating activities 4,051,961 3,442,976 (1,756,870)
Operating activities of discontinued operations - net 754,820 (5,000,521) 2,241,683
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,690,109 20,166,235 25,939,608
INVESTING ACTIVITIES
Capital expenditures (24,554,382) (5,573,238) (5,968,234)
Acquisition of businesses (1,600,000) -0- -0-
Proceeds from sale of assets 8,191,884 10,543,361 6,538,009
Investing activities of discontinued operations - net (662,014) (5,739,689) (4,009,399)
----------- ----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (18,624,512) (769,566) (3,439,624)
FINANCING ACTIVITIES
Payments on long-term debt (8,476,450) (14,976,450) (13,476,450)
Additional long-term debt 17,000,000 -0- -0-
Payments of dividends (3,583,523) (3,162,341) (2,968,426)
Purchases of treasury stock (1,969,984) (2,068,032) (615,091)
Financing activities of discontinued operations - net -0- -0- (500,000)
----------- ----------- -----------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES 2,970,043 (20,206,823) (17,559,967)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents 8,035,640 (810,154) 4,940,017
Cash and cash equivalents, January 1 21,850,282 22,660,436 17,720,419
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, DECEMBER 31 $29,885,922 $21,850,282 $22,660,436
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 13
FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unallocated
Common Employee Stock Total
Common Additional Unrealized Retained Stock in Ownership Stockholders'
Stock Capital Gains Earnings Treasury Plan Shares Equity
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
January 1, 1995 $3,626,666 $9,035,841 $2,278,273 $101,173,484 $(29,217,318) $(2,144,025) $ 84,752,921
Net income 15,360,990 15,360,990
Dividends, $.60 per share (2,968,426) (2,968,426)
Change in unrealized gains (809,797) (809,797)
Tax benefit of unallocated
shares in ESOP 35,360 35,360
Stock plans 7,410 25,590 33,000
Purchases of treasury stock (615,091) (615,091)
Allocated ESOP shares 476,450 476,450
--------------------------------------------------------------------------------------------------
BALANCE,
December 31, 1995 3,626,666 9,078,611 1,468,476 113,566,048 (29,806,819) (1,667,575) 96,265,407
Net income 15,556,985 15,556,985
Dividends, $.65 per share (3,162,341) (3,162,341)
Change in unrealized gains (1,058,029) (1,058,029)
Tax benefit of unallocated
shares in ESOP 57,460 57,460
Stock plans 339,772 41,327 381,099
Purchases of treasury stock (2,068,032) (2,068,032)
Allocated ESOP shares 476,450 476,450
--------------------------------------------------------------------------------------------------
BALANCE,
December 31, 1996 3,626,666 9,475,843 410,447 125,960,692 (31,833,524) (1,191,125) 106,448,999
Net income 16,251,550 16,251,550
Dividends, $.75 per share (3,583,523) (3,583,523)
Change in unrealized gains (410,447) (410,447)
Tax benefit of unallocated
shares in ESOP 68,250 68,250
Stock plans 371,395 63,713 435,108
Two-for-one stock split 3,626,666 (3,626,666) -0-
Purchases of treasury stock (1,969,984) (1,969,984)
Allocated ESOP shares 476,450 476,450
--------------------------------------------------------------------------------------------------
BALANCE,
December 31, 1997 $7,253,332 $6,288,822 $ -0- $138,628,719 $(33,739,795) $ (714,675) $117,716,403
==================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
DECEMBER 31, 1997, 1996 AND 1995
NOTE A - ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. Intercompany
transactions and accounts have been eliminated upon consolidation.
CASH EQUIVALENTS: The Company considers all highly liquid investments with
a maturity of three months or less at the date of purchase to be cash
equivalents. Cash equivalents are stated at cost which approximates market
value.
INVENTORIES: Inventories are stated at the lower of average cost (first-in,
first-out method) or market.
MARKETABLE SECURITIES: Available-for-sale securities are carried at fair
value, based on quoted market prices. Realized gains and losses on the sale
of such securities are based on average cost. The Company realized gains on
the sale of available-for-sale securities of $656,000 (proceeds of
$933,000) in 1997, $2,076,000 (proceeds of $3,130,000) in 1996 and
$1,630,000 (proceeds of $2,621,000) in 1995. The fair value of current
available-for-sale securities was $898,000 (including unrealized gains of
$621,000) at December 31, 1996.
PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost. The
Company provides depreciation on the straight-line method over the assets'
estimated useful lives that range from 2 to 60 years. Effective January 1,
1997, the Company extended the estimated useful lives and increased the
estimated salvage values for certain vessels in its Marine Transportation
fleet. The effect of these changes in estimate reduced depreciation by
$3,178,000 and increased net income by $2,097,000 ($.44 per share) for the
year ended December 31, 1997.
IMPAIRMENT OF LONG-LIVED ASSETS: The Company assesses the recoverability of
its long-lived assets by determining whether the amortization of the
remaining balance of an asset over its remaining useful life can be
recovered through undiscounted future operating cash flows. If impairment
exists, the carrying amount of the related asset is reduced.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the Company's
consolidated financial statements and accompanying notes. Actual results
could differ from those estimates and assumptions.
NEW FINANCIAL ACCOUNTING STANDARDS: In June 1997, Statement of Financial
Accounting Standard (SFAS) No. 130, "Reporting Comprehensive Income," was
issued. SFAS No. 130 establishes new standards for reporting comprehensive
income and its components. The Company must adopt SFAS No. 130 in the first
quarter of 1998. The Company expects that comprehensive income will not
differ materially from net income.
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," was issued. SFAS No. 131 changes the standards for
reporting financial results by operating segments and related products and
services, geographic areas and major customers. The Company must adopt the
standard by the end of 1998.
REVENUE RECOGNITION: Sales are generally recognized when products are
shipped to customers. Operating revenues are recognized as services are
provided to customers over the Great Lakes sailing season.
RECLASSIFICATIONS: Certain amounts in prior years have been reclassified to
conform with the 1997 consolidated financial statement presentation.
NOTE B - DISCONTINUED OPERATIONS
In December 1997, the Company decided to sell the assets of its Engineered
Materials business segment. Hot top operations were sold in December, and
the sale of its metallurgical treatment operations is expected to occur
during 1998. The loss upon disposition of these operations is estimated to
be $1,263,000 (net of an income tax benefit of $807,000). The results of
these discontinued operations were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------
<S> <C> <C> <C>
Net sales $ 30,883 $ 30,964 $ 36,779
Cost of goods sold 27,180 24,443 29,893
Depreciation and amortization 1,691 1,793 2,029
Selling, general and administrative
expenses 3,279 3,379 3,457
Loss on sale and shutdown of facilities -0- 1,078 613
-------- -------- --------
(Loss) income from operations (1,267) 271 787
Interest, other income (expense) - net (76) (142) (212)
-------- -------- --------
(Loss) income before income taxes (1,343) 129 575
Income tax (benefit) expense (501) 111 249
-------- -------- --------
(Loss) income from discontinued
operations $ (842) $ 18 $ 326
======== ======== ========
</TABLE>
In December 1996, the Company sold its interest in Eveleth Mines and
certain mining equipment for $5,000,000, completing its exit from the iron
ore business. The sale of these discontinued operations resulted in a gain
of $570,000 (net of an income tax benefit of $744,000). The results of
discontinued iron ore operations were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
----------------------
<S> <C> <C>
Net sales $ 26,766 $ 26,281
Cost of sales 28,468 27,627
-------- --------
Gross margin (1,702) (1,346)
Credit through reduction of
impairment obligations 3,208 3,500
-------- --------
Adjusted gross margin 1,506 2,154
Royalties and management fees - net 4,332 4,527
-------- --------
Income before income taxes 5,838 6,681
Income tax expense 1,908 2,270
-------- --------
Income from discontinued operations $ 3,930 $ 4,411
======== ========
</TABLE>
The consolidated financial statements of the Company have been reclassified
to report separately the operating results, net assets and net liabilities
of these discontinued operations. Current assets of the Engineered
Materials discontinued operations at December 31, 1997 include primarily
inventories, accounts receivable and net fixed assets.
<PAGE> 15
NOTE C - ACQUISITIONS AND DISPOSITIONS
In 1997, the Company purchased, for $3,400,000 in cash and notes payable,
the assets of two sand operations. These operations screen sand to make
specialty grades and sizes and supply certain blended sand and organic
mixes for end users, such as golf courses, playgrounds, parks and sports
fields. Operating results for these businesses have been included within
the Industrial Sands business segment since acquisition, and are not
material. Additionally, two 630-foot-long, self-unloading vessels, the M/V
Wolverine and the M/V David Z. Norton, were purchased for $17,000,000.
These vessels have been operated on the Great Lakes under charter, as part
of the Company's Marine Transportation fleet, for over 20 years.
In November 1997, the Company sold its interest in certain coal reserves
for $6,000,000 in cash. The sale resulted in a $5,212,000 pretax gain. In
1996, the Company sold its National Perlite Products business, which had
been inactive, resulting in a pretax gain of $625,000. In 1995, the Company
sold two Marine Transportation vessels no longer in service and undeveloped
clay properties in Tennessee, resulting in pretax gains of $2,324,000 and
$520,000, respectively.
NOTE D - NET INCOME PER SHARE
The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," at the end of 1997 retroactive to prior periods. The
calculation of net income per share - basic and net income per share -
assuming dilution follows (in thousands except per share data):
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------
<S> <C> <C> <C>
Net income per share - basic:
Net income $16,252 $15,557 $15,361
Average number of shares
outstanding 4,785 4,876 4,948
======= ======= =======
Net income per share $ 3.40 $ 3.19 $ 3.10
======= ======= =======
Net income per share - assuming dilution:
Net income $16,252 $15,557 $15,361
Average number of shares
outstanding 4,785 4,876 4,948
Dilutive effect of stock plans 31 15 -0-
------- ------- -------
Adjusted average number of
shares outstanding 4,816 4,891 4,948
======= ======= =======
Net income per share -
assuming dilution $ 3.37 $ 3.18 $ 3.10
======= ======= =======
</TABLE>
All per share amounts have been retroactively restated to reflect a
two-for-one stock split in October 1997.
NOTE E - INCOME TAXES
Total income taxes from continuing operations differs from the tax computed
by applying the U.S. federal corporate income tax statutory rate as follows
(in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------
<S> <C> <C> <C>
Income from continuing operations
before taxes $ 25,576 $ 12,580 $ 13,256
======== ======== ========
Income taxes at statutory rate $8,952 $ 4,277 $ 4,507
Tax differences due to:
Percentage depletion (1,271) (1,344) (1,584)
State income taxes 312 (991) 53
Officers' life insurance (410) (76) (77)
Other (363) (325) (267)
-------- -------- --------
Total income taxes $ 7,220 $ 1,541 $ 2,632
======== ======== ========
</TABLE>
The Company received income tax refunds of $2,479,000, and $32,000 during
1996 and 1995, respectively. Included in 1996 was a $1,824,000 state income
tax refund for prior tax years, which favorably impacted 1996 state income
tax expense. The Company made income tax payments of $6,161,000,
$1,962,000, and $6,270,000 during 1997, 1996 and 1995, respectively.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
from continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
-------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation $29,267 $34,319
Pension benefits 8,949 6,507
Other 2,619 2,268
------- -------
Total deferred tax liabilities 40,835 43,094
Deferred tax assets:
Postretirement benefits 9,865 10,590
Coal Act liability 5,285 4,731
Other 7,625 8,336
------- -------
Total deferred tax assets 22,775 23,657
------- -------
Net deferred tax liabilities $18,060 $19,437
======= =======
</TABLE>
NOTE F - LONG-TERM DEBT
Long-term debt is as follows (in thousands):
<TABLE>
<CAPTION>
December 31
-------------------
1997 1996
-------------------
<S> <C> <C>
Title XI Ship Financing Bonds $ 8,700 $11,200
Term Loan - variable rate 19,250 24,750
Term Loan - fixed rate 17,000 -0-
Guaranteed ESOP Loans 715 1,191
------- -------
45,665 37,141
Less current portion 8,723 8,476
------- -------
$36,942 $28,665
======= =======
</TABLE>
The Title XI Ship Financing Bonds (5.3% fixed rate) relate to a first
preferred ship mortgage on the M/V Columbia Star and are guaranteed by the
U.S. Government under the Federal Ship Financing Program. The Bonds require
semiannual sinking fund payments of $1,250,000 through 2000, with a final
payment of $1,200,000 in 2001. Under certain conditions, the Company may be
required to make deposits to a reserve fund, maintain specified levels of
stockholders' equity or obtain prior written consent from the U.S.
Department of Transportation for certain designated financial transactions.
No deposits or approvals were required through 1997, and the Company does
not anticipate any such actions will be required in the future.
Under a bank loan agreement, the Company is required to make semiannual
payments on the Term Loan of $2,750,000, excluding interest, through June
30, 2001. The Company has a $40,000,000 Revolving Credit facility available
under the loan agreement, of which $15,000,000 is only available for
acquisitions. The variable interest rate (6.53% at December 31, 1997) on
borrowings under the agreement fluctuates based upon the Company's ratios
of funded debt to total capital and interest coverage. The Revolving Credit
facility terminates on December 31, 1998, subject to annual renewals
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
through 2001. At December 31, 1997 and 1996, the Company had $40,000,000 of
borrowings available under the Revolving Credit facility.
In 1997, the Company entered into a $17,000,000 fixed rate (7.32%) Term
Loan with a bank to finance the acquisition of two Marine Transportation
vessels, which had previously been under charter agreements. The Company is
required to make semiannual payments on the Term Loan of $750,000,
including interest, through July 14, 2002; $1,350,000 payable semiannually,
including interest, through January 14, 2007 and a final payment of
$7,805,000, including interest, on July 14, 2007. The loan is secured by
mortgages on the two vessels acquired.
The Company's debt agreements contain various covenants with the most
restrictive covenant requiring the Company to maintain specified levels of
tangible net worth during each year. The Company's tangible net worth was
$111,584,000 at December 31, 1997, compared to a minimum specified level of
$88,376,000.
Long-term debt maturities are $8,723,000 in 1998, $8,499,000 in 1999,
$8,278,000 in 2000, $4,252,000 in 2001, $325,000 in 2002 and $15,589,000
thereafter. The Title XI Ship Financing Bonds and the Term Loans are
secured by first preferred ship mortgages on seven of the Company's vessels
with a net book value of $113,186,000. The fair value of long-term debt
approximates the total liability recorded at December 31, 1997. The Company
made interest payments of $2,353,000, $3,117,000 and $4,399,000 during
1997, 1996 and 1995, respectively.
NOTE G - STOCKHOLDERS' EQUITY
On August 27, 1997, the Company declared a two-for-one split of its common
stock in the form of a 100% stock dividend to stockholders of record as of
October 10, 1997. This stock split has been recorded by a transfer, within
stockholders' equity, of $3,626,000 from additional capital to common stock
for all periods presented, representing $1.00 par value for each additional
share issued. All per share amounts have been retroactively restated for
the stock split.
The Company's preferred stock is issuable in series and the Board of
Directors is authorized to fix the number of shares and designate the terms
of each issue. In 1987, under a Stockholder Rights Plan, as amended, the
Company's Board of Directors declared a dividend consisting of one Right
for each outstanding share of the Company's common stock. Upon certain
"change in control" events, the Rights entitle the holder to purchase one
one-hundredth of a share of the Company's Series C $10.00 preferred stock
for $130 or one share of the Company's common stock for $2.50, depending on
the "change in control" circumstances. The Stockholder Rights Plan, which
expires December 18, 2006, should not interfere with any merger or other
business combination approved by the Board of Directors, because the Board,
at its option, may redeem the Rights at a redemption price of $.05 per
Right.
NOTE H - COMPANY STOCK PLAN
The Company's Long-Term Incentive Plan (the "Plan"), adopted in 1996,
allows selected officers and key employees the opportunity to defer a
portion of any bonus received under the Company's Annual Incentive Plan. In
addition, the Plan permits grants of stock options, stock appreciation
rights, restricted stock and performance awards. The number of common
shares authorized for awards is 200,000. At the end of 1997, there were
115,778 shares available for grant under the Plan.
The Company will make an annual matching contribution of at least 50% plus
a potential discretionary award of up to an additional 50% with respect to
annual incentive awards deferred by participants under the Plan. The
deferred awards are converted to "share units" based on the fair market
value of the Company's common stock on the date the bonuses would have
otherwise been paid. Dividends are allocated to the participant's account
on a similar "share unit" basis, for both the deferred amount and the
Company match. Deferred awards (and related dividends) are fully vested at
all times. Matching contributions become fully vested on the fifth
anniversary of the initial deferral date, provided the participant has been
in continuous service for the entire five-year period. Prior to the fifth
anniversary of a particular allocation, the matching contribution may
become fully vested upon the occurrence of certain events, including early
retirement or disability. All distributions under the Plan will be in
common stock of the Company. Included in Additional Capital at December 31,
1997 is $655,000 of obligations under the Plan, representing 31,549 "share
units." At December 31, 1996 $318,000 was included in Additional Capital
for obligations under the Plan, representing 16,242 "share units."
Compensation expense under the deferred plan was $568,000 in 1997 and
$387,000 in 1996.
In October 1997, 48,700 common stock options were granted under the Plan,
all of which were outstanding as of December 31, 1997, at an option price
of $30 5/8 per share. These options vest ratably over a four-year period
and expire 10 years from the date of grant. The Company has elected to
account for stock-based compensation in accordance with the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APBO No. 25), and related interpretations. No expense has been
recognized, because, under APBO No. 25, the exercise price of the stock
options equals the market price of the underlying stock on the date of
grant. No other options were issued by the Company prior to 1997.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). Pro forma information regarding net income
and net income per share is required by SFAS No. 123, and has been
determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. Under this method, the
estimated fair value of the options is amortized to expense over the
options' vesting period. The fair value for these options was estimated at
the date of grant using a Black-Scholes option pricing model with the
following weighted average assumptions: risk-free interest rate of 6.0%;
dividend yield of 2.6%; volatility factors of the expected market price of
the Company's common shares of .22; and a weighted-average expected life of
the options of 5 years. Had the fair value method been used to account for
these stock options, the effect would have been a $.01 reduction in net
income per share with no correspond-
<PAGE> 17
ing effect on net income per share - assuming dilution. Since changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
There have been no stock appreciation rights, restricted stock or
performance awards granted under the Plan.
NOTE I - CEO AND DIRECTORS COMPENSATION
In connection with an Employment Agreement (the "Agreement") the Company
has agreed to provide its President and Chief Executive Officer ("CEO")
with a restricted common stock award and stock option grant, in lieu of
compensation.
On January 19, 1998, upon the CEO's completion of a $1,000,000 personal
investment in the Company's common stock ("Personal Investment Shares"),
the Company issued 25,744 shares of common stock equal to the number of
shares of the Company's common stock he acquired. Of the total shares
issued, 5,148 became immediately vested and non-forfeitable. The remaining
shares are restricted and become vested and non-forfeitable, ratably, on
January 1, 1999, 2000, 2001 and 2003, subject to the effects of termination
of employment, as defined by the Agreement. The non-vested and forfeitable
shares are subject to the restrictions that the CEO remain employed by the
Company and that he continue to hold all of his Personal Investment Shares.
If on any date before January 1, 2003 the CEO sells or otherwise disposes
of any of his Personal Investment Shares, he will forfeit any and all
restricted shares that have not become fully vested and non-forfeitable
before that date. The CEO is entitled to all voting rights and any
dividends on the restricted shares. Total compensation expense of $965,000,
computed based on the closing market price at the date of issuance, will
be recognized over the vesting period beginning in January 1998.
Effective December 17, 1997, the Company granted the CEO, subject to
stockholder approval, an option to acquire an amount which represents 8% of
the issued and outstanding common stock of the Company as of January 1,
1998, or 380,174 shares, at an exercise price of $38 per share. Unless
accelerated under the termination provisions of the Agreement, the option
becomes exercisable in whole or in part on January 1, 2001 and, subject to
employment conditions imposed by the Agreement, expires June 30, 2005.
Compensation expense, if any, will be recognized based on what amount, if
any, the closing market price of the Company's common stock exceeds the
exercise price on the date the option is approved by the stockholders.
Effective February 1, 1998, the Company established a Director Fee Deferral
Plan (the "Directors Plan"), which, subject to stockholder approval, allows
non-employee directors of the Company the option of deferring all or part
of their fees in the form of "share units" or "deferred cash." Any fees
deferred as "share units" will be matched at 25% by the Company in the form
of additional "share units." If approved by the stockholders, 100,000
shares of the Company's common stock will be authorized for distribution
under the Directors Plan.
NOTE J - POSTRETIREMENT BENEFITS
The Company has a number of noncontributory defined benefit pension plans
covering certain employees. The plans provide benefits based on the
participant's years of service and compensation or stated amounts for each
year of service. The Company's funding policy is to contribute amounts to
the plans sufficient to meet the minimum funding required by applicable
regulations.
A summary of the components of the net periodic pension credit for defined
benefit plans from continuing operations follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,309 $ 1,303 $ 1,131
Interest cost on projected
benefit obligation 4,354 4,332 4,202
Actual return on plan assets (17,534) (9,464) (16,227)
Net amortization and deferral 9,098 1,926 9,565
-------- -------- --------
Net pension credit $ (2,773) $ (1,903) $ (1,329)
======== ======== ========
</TABLE>
Assumptions used in accounting for the Company's defined benefit pension
plans were:
<TABLE>
<CAPTION>
1997 1996 1995
------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.25% 7.5% 7.5%
Rate of increase in compensation levels 4% 4% 4%
Expected long-term rate of return on assets 9% 9% 9%
</TABLE>
The following table presents the funded status and amounts recognized in
the consolidated balance sheet for the Company's defined benefit pension
plans from continuing operations (in thousands):
<TABLE>
<CAPTION>
December 31
-----------------------
1997 1996
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $(54,694) $(53,178)
======== ========
Accumulated benefit
obligation $(57,616) $(56,112)
======== ========
Projected benefit
obligation $(62,149) $(60,886)
Plan assets at fair value 102,934 89,373
-------- --------
Plan assets in excess of
projected benefit obligation 40,785 28,487
Unrecognized net gain (17,885) (9,287)
Unrecognized prior service cost 2,213 2,543
Unrecognized initial net assets (2,962) (3,672)
-------- --------
Prepaid pension costs recognized $ 22,151 $ 18,071
======== ========
</TABLE>
Plan assets consist primarily of debt and equity securities.
The Company maintains defined contribution plans for certain employees and,
except for the ESOP, contributes to these plans based on percentages of
employee contributions. The expense for these plans was $1,039,000,
$934,000 and $880,000 for 1997, 1996 and 1995, respectively.
The Company also pays into certain defined benefit multi-employer plans
under various union agreements which provide pension and other benefits for
various classes of employees. Payments are based upon negotiated contract
rates and related expenses totaled $1,688,000, $1,915,000 and $1,879,000
for 1997, 1996 and 1995, respectively.
In addition to pension benefits, the Company provides health care and life
insurance for certain retired employees. Substantially all of the Company's
employees are eligible for these benefits when they reach normal retirement
age. The Company's policy is to fund these postretirement benefit costs
principally on a cash basis as claims are incurred.
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Components of the Company's net periodic postretirement benefits cost from
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------
<S> <C> <C> <C>
Service cost $ 379 $ 368 $ 404
Interest cost 1,069 1,059 1,273
Actual return on plan assets (3) (1) -0-
Net amortization (598) (745) (579)
------ ------ ------
Net periodic postretirement
benefits cost $ 847 $ 681 $1,098
====== ====== ======
</TABLE>
Assumptions used in the accounting for the Company's postretirement health
care and life insurance benefits were:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------
<S> <C> <C> <C>
Weighted average discount rate 7.25% 7.5% 7.5%
Expected long-term rate of return on assets 6% 6% 6%
</TABLE>
Components of the Company's postretirement benefits obligation from
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
----------------------
1997 1996
----------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Retired participants $(10,475) $(10,104)
Other fully eligible participants (1,196) (1,329)
Other ineligible participants (3,305) (3,290)
-------- --------
Accumulated postretirement benefits obligation (14,976) (14,723)
Plan assets at fair value 103 75
-------- --------
Accumulated postretirement benefits obligation
in excess of plan assets (14,873) (14,648)
Unrecognized prior service credit (1,543) (1,735)
Unrecognized net gain (7,925) (8,293)
-------- --------
Postretirement benefits obligation recognized $(24,341) $(24,676)
======== ========
</TABLE>
The weighted average annual assumed rate of increase in the health care
cost trend rate for 1998 is 5.75% (6.25% in 1997) for retirees age 65 and
over and 8.25% (8.75% in 1997) for retirees under age 65, and both are
assumed to decrease to 5.00% by 2000 and 2005, respectively (5.25% in
1997), and remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. Increasing the
assumed health care cost trend rate by 1% in each year would increase the
accumulated postretirement benefits obligation as of December 31, 1997 by
approximately $1,797,000 and the aggregate service and interest cost
components of the net periodic postretirement benefits cost for 1997 by
approximately $221,000.
The Coal Industry Retiree Health Benefit Act requires companies that
previously mined coal to assume certain health care benefit obligations for
retired coal miners and their dependents. Components of the Company's net
periodic postretirement benefits cost under the Coal Act, are as follows
(in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------
<S> <C> <C> <C>
Interest cost $ 974 $ 936 $1,033
Actuarial net (gain) loss (121) 122 (82)
----- ------ ------
Net periodic postretirement
benefits cost $ 853 $1,058 $ 951
===== ====== ======
</TABLE>
The Company's accumulated postretirement benefits obligation was
$13,551,000 and $13,914,000 at December 31, 1997 and 1996, respectively, of
which $12,435,000 and $12,732,000 in 1997 and 1996, respectively, is
included in other long-term liabilities.
The weighted average discount rate used in accounting for post-retirement
benefits under the Coal Act was 7% at December 31, 1997, 1996 and 1995.
The weighted average annual assumed rate of increase in the health care
cost trend rate for 1998 and 1997 is 6%. The health care cost trend rate
assumption has a significant effect on the amounts reported. Increasing the
assumed health care cost trend rate by 1% in each year would increase the
accumulated postretirement benefits obligation at December 31, 1997 by
approximately $1,651,000 and the interest cost component of the net
periodic postretirement benefit cost by approximately $119,000.
NOTE K - COMMITMENTS AND CONTINGENCIES
The Company leases various buildings and equipment in addition to a vessel
charter in its Marine Transportation fleet. In general, these operating
leases are renewable or contain purchase options. The purchase price or
renewal lease payment is based on the fair market value of the asset at the
date of purchase or renewal. Rental expense was $3,718,000, $4,767,000 and
$5,082,000 in 1997, 1996 and 1995, respectively.
Future minimum payments at December 31, 1997, under non- cancelable
operating leases, are $2,667,000 in 1998, $1,564,000 in 1999, $1,433,000 in
2000, $1,232,000 in 2001, $1,237,000 in 2002 and $1,521,000 thereafter.
The Company is subject to various environmental laws and regulations
imposed by federal, state and local governments. Also, in the normal course
of business, the Company is involved in various pending or threatened legal
actions. The Company cannot reasonably estimate future costs, if any,
related to these matters. However, costs incurred to comply with
environmental regulations and to settle litigation have not been
significant in 1997 and prior years. Although it is possible that the
Company's future operating results could be affected by future costs of
environmental compliance or litigation, it is management's belief that such
costs will not have a material adverse effect on the Company's consolidated
financial position.
NOTE L - INDUSTRY SEGMENTS AND
MAJOR CUSTOMERS
The Company's major industry segments are Marine Transportation and
Industrial Sands. Industry Segment Data on pages 10 and 11 and About The
Company on the inside front cover are an integral part of these financial
statements.
Accounts receivable of $11,083,000 at December 31, 1997 are due from
companies in the steel and utilities industries. Credit is extended based
on an evaluation of a customer's financial condition, and generally
collateral is not required. Credit losses within these industries have not
been significant for the three years in the period ended December 31, 1997.
<PAGE> 19
Marine Transportation's operating revenues from two major steel producers
and one utility company exceeded 10% of consolidated net sales and
operating revenues and are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C> <C>
Customer:
A $18,773 $14,008 $17,041
B 18,589 15,787 19,280
C 18,245 17,315 15,790
------- ------- -------
$55,607 $47,110 $52,111
======= ======= =======
</TABLE>
NOTE M - QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
Unaudited quarterly results of operations for the years ended December 31,
1997 and 1996 are summarized as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31
------- -------- ------- -------
<S> <C> <C> <C> <C>
1997
Net sales and operating revenues $43,222 $45,602 $43,576 $12,785
Gross profit 9,165 13,571 10,839 4,242
Income from continuing
operations 5,989 6,431 5,184 752
Net income 3,814 6,476 5,109 853
Per common share - basic:
Continuing operations 1.26 1.35 1.09 .16
Net income .80 1.36 1.07 .18
Per common share - assuming dilution:
Continuing operations 1.25 1.34 1.08 .16
Net income .80 1.35 1.06 .18
1996
Net sales and operating revenues $39,537 $42,097 $37,238 $10,825
Gross profit 6,968 9,537 4,963 2,575
Income (loss) from continuing
operations 3,814 5,212 1,188 825
Net income 5,257 6,061 2,261 1,978
Per common share - basic and diluted:
Continuing operations .79 1.08 .25 .17
Net income 1.09 1.25 .47 .40
</TABLE>
Amounts reported in prior quarters have been reclassified for discontinued
operations. The sum of per share amounts for the four quarters of 1997 and
1996 do not equal the annual per share amounts as a result of treasury
stock purchases by the Company. All per share amounts have been
retroactively restated to reflect a two-for-one stock split in October
1997.
Effective January 1, 1997, the Company increased the estimated useful lives
and salvage values of certain vessels in its Marine Transportation fleet.
The changes in estimate increased 1997 net income over the fleet's sailing
season as follows: $737,000 ($.155 per share) in the second quarter;
$745,000 ($.155 per share) in the third quarter; and $615,000 ($.13 per
share) in the fourth quarter. Net income for the fourth quarter of 1997
also increased $3,388,000 ($.71 per share) related to the sale of certain
coal reserves. Fourth quarter 1997 net income includes a $1,052,700 ($.22
per share) charge related to supplemental retirement benefits to its former
President and Chief Executive Officer.
Net income for the first quarter of 1996 increased $1,314,000 ($.27 per
share) related to the sale of marketable securities and other assets,
including the sale of the Company's National Perlite Products Company.
First quarter net income for 1996 also included interest income of $576,000
($.11 per share) related to a $1,824,000 state tax refund received during
the quarter. As a result of the state tax refund, the Company's 1996 annual
effective income tax rate was reduced.
RESPONSIBILITY FOR CONSOLIDATED FINANCIAL
STATEMENTS
Management is responsible for the financial and operating information
contained in the Annual Report, including the consolidated financial
statements covered by the Report of Independent Auditors. These statements
were prepared in conformity with generally accepted accounting principles
and include amounts based on estimates and judgments of management.
The Company seeks to assure the integrity and objectivity of the data in
the financial statements through a system of internal controls. These
controls are designed to provide reasonable assurance that assets are
safeguarded and transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of financial
statements. Independent auditors, Ernst & Young LLP, are engaged to render
an independent opinion on the Company's financial statements. Their
opinion, which appears herein, is based on an audit of the Company's
consolidated financial statements in accordance with generally accepted
auditing standards which includes a review of internal controls to the
extent Ernst & Young LLP deems necessary.
The Company's Board of Directors, through its Audit Committee that is
composed of four outside directors, reviews the Company's financial reports
and accounting and auditing practices. It meets periodically with the
independent auditors and management in this regard.
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Oglebay Norton Company
We have audited the accompanying consolidated balance sheet of Oglebay
Norton Company and subsidiaries as of December 31, 1997 and 1996 and the
related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Oglebay Norton Company and subsidiaries at December 31, 1997
and 1996 and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
February 12, 1998
<PAGE> 20
OFFICERS
R. THOMAS GREEN, JR.
Chairman
JOHN N. LAUER
President and Chief Executive Officer
JEFFREY S. GRAY
Vice President - Corporate Development
and Legal Affairs
MARK P. JUSZLI
Vice President - Industrial Sands
DAVID H. KELSEY
Vice President - Chief Financial Officer
STUART H. THEIS
Vice President - Marine Transportation
TIMOTHY J. WOJCIECHOWSKI
Vice President - Engineered Materials
PAUL V. GORMAN
Assistant Vice President - Human Resources
MICHAEL F. BIEHL
Treasurer and Director of Finance
DAVID G. SLEZAK
Secretary and Director of Legal Affairs
JOHN J. KIRN, JR.
Assistant Secretary
DATA
EXECUTIVE OFFICE
1100 Superior Avenue
Cleveland, Ohio 44114-2598
Telephone: (216) 861-3300
Fax: (216) 861-2863
TRANSFER AGENT
National City Bank
Corporate Trust Operations
Cleveland, Ohio 44135-1385
Telephone: 1-800-622-6757
COUNSEL
Thompson Hine & Flory LLP
Cleveland, Ohio
INDEPENDENT AUDITORS
Ernst & Young LLP
Cleveland, Ohio
ADDITIONAL INFORMATION
Copies of the SEC Form 10-K for 1997 will be provided without charge to
stockholders upon written request to:
David G. Slezak
Secretary and Director of Legal Affairs
Oglebay Norton Company
1100 Superior Avenue
Cleveland, Ohio 44114-2598
NASDAQ/NMS Symbol: OGLE
1998 Annual Meeting of Stockholders
May 14, 1998, 2:00 p.m.
Forum Conference and Education Center
One Cleveland Center
1375 East 9th Street
Cleveland, Ohio 44114
COMMON STOCK AND DIVIDENDS
The Company's common stock is traded on the NASDAQ national market. The
Company had 451 stockholders of record at December 31, 1997 and 473 at
December 31, 1996. The following is a summary of the market range and
dividends for each quarterly period in 1997 and 1996 for the Company's
common stock, adjusted for a two-for-one stock split in October 1997.
<TABLE>
<CAPTION>
Market Range
Quarterly ---------------
Period High Low Dividends
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 4th $41 1/4 $29 5/8 $.20
3rd 29 7/8 21 3/4 .20
2nd 22 3/8 19 5/8 .175
1st 22 1/2 20 1/2 .175
---------------------------------------------------------
1996 4th $22 3/8 $21 1/8 $.175
3rd 22 7/8 20 15/16 .175
2nd 23 5/8 19 3/8 .15
1st 20 1/2 18 5/8 .15
</TABLE>
<PAGE> 21
DIRECTORS
[(From left to right in photo below)]
WILLIAM G. PRYOR
President, Van Dorn Demag Corporation, manufacturer of plastic injection
molding equipment
Audit Committee, Director Search and Governance Committee
JOHN N. LAUER
President and Chief Executive Officer of the Company
WILLIAM G. BARES
Chairman, President and Chief Executive Officer, The Lubrizol Corporation,
Wickliffe, Ohio, supplier of chemical additives to the petroleum industry
Chairman of the Executive Committee
RALPH D. KETCHUM
President and Chief Executive Officer, RDK Capital, Inc., Pepper Pike, Ohio,
investments
Compensation and Organization Committee, Chairman of the Director Search and
Governance Committee
MALVIN E. BANK
Partner, Thompson Hine & Flory LLP, Cleveland, Ohio, attorneys
Executive Committee, Director Search and Governance Committee
BRENT D. BAIRD
Private Investor; Formerly Limited Partner, Trubee, Collins & Co., Buffalo, New
York
Member, New York Stock Exchange
Executive Committee, Audit Committee
ALBERT C. BERSTICKER
Chairman and Chief Executive Officer, Ferro Corporation, producer of specialty
coatings, plastics, chemicals and ceramics
Chairman of the Audit Committee, Executive Committee, Compensation and
Organization Committee
JOHN D. WEIL
President, Clayton Management Co., St. Louis, Missouri, investments
Chairman of the Compensation and Organization Committee, Director Search and
Governance Committee.
R. THOMAS GREEN, JR.
Chairman of the Company
Executive Committee
JAMES T. BARTLETT
Managing Director, Primus Venture Partners, venture capital firm
Compensation and Organization Committee, Audit Committee
[Photo]
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF OGLEBAY NORTON HOLDING COMPANY
Name of Subsidiary State of Incorporation
------------------ ----------------------
ONCO Investment Company Ohio
Oglebay Norton Merger Company Delaware
<PAGE> 1
Exhibit 23.2
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the reference to our firm under the captions "Federal Income Tax
Consequences" and "Experts" in the Registration Statement on Form S-4 of Oglebay
Norton Holding Company and related Proxy Statement-Prospectus of Oglebay Norton
Company and Oglebay Norton Holding Company for the registration of 7,303,332
Common Shares of Oglebay Norton Holding Company and to the attachment thereto as
an exhibit our opinion regarding the federal income tax consequences of the
reorganization and merger described in the Registration Statement and related
Proxy Statement-Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Cleveland, Ohio
April 24, 1998
<PAGE> 2
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to Registration Statement No. 333-47231 on Form S-4 of Oglebay
Norton Holding Company and related Proxy Statement-Prospectus of Oglebay Norton
Company and Oglebay Norton Holding Company for the registration of 7,303,332
Oglebay Norton Holding Company common shares and to the incorporation by
reference therein of our report dated February 12, 1998 with respect to the
consolidated financial statements of Oglebay Norton Company included in its
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Cleveland, Ohio
April 24, 1998
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/24/98 /s/ A. C. Bersticker
- ------------------ -------------------------------
Date Albert C. Bersticker
Director
<PAGE> 2
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
Feb. 23, 1998 /s/ Brent D. Baird
- ------------------ -------------------------------
Date Brent D. Baird
Director
<PAGE> 3
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/26/98 /s/ D. H. Kelsey
- ------------------ -------------------------------
Date David H. Kelsey
Vice President and Chief Financial
Officer
<PAGE> 4
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/26/98 /s/ John D. Weil
- ------------------ -------------------------------
Date John D. Weil
Director
<PAGE> 5
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
March 2, 1998 /s/ John N. Lauer
- ------------------ -------------------------------
Date John N. Lauer
President and Chief Executive
Officer and Director
<PAGE> 6
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/24/98 /s/ James T. Bartlett
- ------------------ -------------------------------
Date James T.Bartlett
Director
<PAGE> 7
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/26/98 /s/ Malvin E. Bank
- ------------------ -------------------------------
Date Malvin E. Bank
Director
<PAGE> 8
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
Feb. 27, 1998 /s/ R. Thomas Green, Jr.
- ------------------ -------------------------------
Date R. Thomas Green, Jr.
Chairman of the Board and Director
<PAGE> 9
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/27/98 /s/ Ralph D. Ketchum
- ------------------ -------------------------------
Date Ralph D. Ketchum
Director
<PAGE> 10
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2-26-98 /s/ William G. Bares
- ------------------ -------------------------------
Date William G. Bares
Director
<PAGE> 11
POWER OF ATTORNEY
WHEREAS, OGLEBAY NORTON HOLDING COMPANY, an Ohio corporation
("Holding Company"), proposes to file with the Securities and Exchange
Commission a Registration Statement on Form S-4 relating to shares of Holding
Company that will be issued in connection with an Agreement and Plan of Merger
("Agreement"). That Agreement provides that Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), will become a wholly-owned subsidiary of Holding
Company and the shares of common stock of Oglebay Norton will be converted into
common shares of Holding Company.
NOW, THEREFORE, the undersigned hereby appoints David G.
Slezak, as attorney for the undersigned, for the purpose of executing and filing
such Registration Statement and any amendments thereto, hereby giving said
attorney full authority to perform all acts necessary or desirable thereto as
fully as the undersigned could do if personally present and hereby ratifying all
that said attorney may lawfully do, have done or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney prior to the filing of the above-referenced Form S-4.
2/24/98 /s/ W. G. Pryor
- ------------------ -------------------------------
Date William G. Pryor
Director
