-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UntSs3MSS2CS1srOyISMDjvh2xwqvLK8MqpRb81/Ae6iK6Lic8yrq/sh2t3q9SPB Apbtt7Xgi8PFr2RJB45Rjg== 0000950152-98-009074.txt : 19981123 0000950152-98-009074.hdr.sgml : 19981123 ACCESSION NUMBER: 0000950152-98-009074 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 DATE AS OF CHANGE: 19981120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLEBAY NORTON CO CENTRAL INDEX KEY: 0000073918 STANDARD INDUSTRIAL CLASSIFICATION: 4400 IRS NUMBER: 340158970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00663 FILM NUMBER: 98752745 BUSINESS ADDRESS: STREET 1: 1100 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2598 BUSINESS PHONE: 2168613300 MAIL ADDRESS: STREET 1: 1100 SUPERIOR AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114-2598 10-Q 1 OGLEBAY NORTON COMPANY 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1998 Commission File Number 0-663 ------------------ ----- OGLEBAY NORTON COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 34-0158970 ------------------------------ ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1100 Superior Avenue Cleveland, Ohio 44114-2598 --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (216) 861-3300 -------------- None --------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Shares of Common Stock outstanding at October 31, 1998: 4,765,431 ----------- 2 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDEX
PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION ------------------------------ Condensed Consolidated Balance Sheet - September 30, 1998 (Unaudited) and December 31, 1997 3 Condensed Consolidated Statement of Operations (Unaudited) - Three Months Ended September 30, 1998 and 1997 and Nine Months Ended September 30, 1998 and 1997 4 Condensed Consolidated Statement of Cash Flows (Unaudited) - Nine Months Ended September 30, 1998 and 1997 5 Notes to Condensed Consolidated Financial Statements 6 - 9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10-17 PART II. OTHER INFORMATION 18-19 ---------------------------
3 PART I. ITEM 1. FINANCIAL INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS
SEPTEMBER 30 December 31 1998 1997 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 2,910,660 $ 29,885,922 Accounts receivable, less reserve for doubtful accounts (1998-$921,000; 1997-$723,000) 47,153,911 22,292,432 Inventories Raw materials and finished products 18,783,748 1,210,940 Operating supplies 7,938,143 3,382,764 ------------ ------------ 26,721,891 4,593,704 Deferred income taxes 3,050,091 3,050,091 Prepaid insurance and other expenses 4,458,834 1,300,715 Discontinued operations -0- 15,571,082 ------------ ------------ TOTAL CURRENT ASSETS 84,295,387 76,693,946 PROPERTIES, PLANT, EQUIPMENT AND MINERAL RESERVES Property, plant and equipment 588,147,114 304,958,566 Minerals reserves 47,541,624 -0- ------------ ------------ 635,688,738 304,958,566 Less allowances for depreciation, depletion and amortization 216,366,071 154,022,177 ------------ ------------ 419,322,667 150,936,389 EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED 46,131,595 5,337,459 PREPAID PENSION COSTS 29,140,883 25,361,290 OTHER ASSETS 22,472,635 5,123,246 ------------ ------------ $601,363,167 $263,452,330 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY SEPTEMBER 30 December 31 1998 1997 ------------- ------------ CURRENT LIABILITIES Current portion of long-term debt $ 11,277,565 $ 9,086,708 Accounts payable 15,262,909 6,875,498 Payrolls and other accrued compensation 7,685,595 7,547,241 Accrued expenses 17,408,643 12,150,509 Income taxes 3,846,169 2,277,749 ------------- ------------ TOTAL CURRENT LIABILITIES 55,480,881 37,937,705 LONG-TERM DEBT, less current portion 309,534,847 38,445,616 POSTRETIREMENT BENEFITS OBLIGATIONS 27,724,111 24,341,252 OTHER LONG-TERM LIABILITIES 22,491,216 23,901,405 DEFERRED INCOME TAXES 58,008,687 21,109,949 STOCKHOLDERS' EQUITY Preferred stock, without par value, authorized 5,000,000 shares; none issued -0- -0- Common stock, par value $1 per share, authorized 10,000,000 shares; issued 7,253,332 shares 7,253,332 7,253,332 Additional capital 7,362,791 6,288,822 Retained earnings 146,677,983 138,628,719 Accumulated other comprehensive income 1,097,230 -0- ------------- ------------ 162,391,336 152,170,873 Treasury stock, at cost - 2,486,936 and 2,501,152 shares at respective dates (33,910,573) (33,739,795) Unallocated Employee Stock Ownership Plan shares (357,338) (714,675) ------------- ------------ 128,123,425 117,716,403 ------------- ------------ $ 601,363,167 $263,452,330 ============= ============
See notes to condensed consolidated financial statements. -3- 4 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------------- ------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- REVENUES Net sales $ 53,298,806 $ 13,177,978 $ 96,616,758 $ 37,833,198 Operating revenues 32,546,220 32,424,231 67,262,283 64,130,740 ------------- ------------- ------------- ------------- 85,845,026 45,602,209 163,879,041 101,963,938 COSTS AND EXPENSES Cost of goods sold 34,538,255 8,232,143 62,719,048 23,178,473 Operating expenses 20,694,897 20,908,107 43,139,627 43,792,081 Depreciation, depletion and amortization 7,848,950 2,907,390 14,236,421 6,369,574 General, administrative and selling expenses 7,025,956 3,343,351 15,963,385 10,046,937 ------------- ------------- ------------- ------------- 70,108,058 35,390,991 136,058,481 83,387,065 ------------- ------------- ------------- ------------- INCOME FROM OPERATIONS 15,736,968 10,211,218 27,820,560 18,576,873 Gain on sale of assets 187,239 36,700 231,676 829,734 Interest, dividends and other income 403,755 242,377 1,131,377 1,971,065 Other expense ( 434,209) (627,320) (1,478,643) (2,003,080) Interest expense (7,441,270) (826,582) (11,888,506) (2,020,025) ------------- ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 8,452,483 9,036,393 15,816,464 17,354,567 Income taxes 2,773,000 2,605,350 4,908,000 4,987,569 ------------- ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS 5,679,483 6,431,043 10,908,464 12,366,998 Discontinued operations -0- 45,203 -0- 70,702 ------------- ------------- ------------- ------------- NET INCOME $ 5,679,483 $ 6,476,246 $ 10,908,464 $ 12,437,700 ============= ============= ============= ============= Income per share of common stock - basic: Continuing operations $ 1.19 $ 1.35 $ 2.29 $ 2.58 Discontinued operations -0- .01 -0- .01 ------------- ------------- ------------- ------------- NET INCOME PER SHARE - BASIC $ 1.19 $ 1.36 $ 2.29 $ 2.59 ============= ============= ============= ============= Income per share of common stock - assuming dilution: Continuing operations $ 1.19 $ 1.34 $ 2.28 $ 2.57 Discontinued operations -0- .01 -0- .01 ------------- ------------- ------------- ------------- NET INCOME PER SHARE - ASSUMING DILUTION $ 1.19 $ 1.35 $ 2.28 $ 2.58 ============= ============= ============= ============= DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $ .20 $ .60 $ .55 ============= ============= ============= =============
See notes to condensed consolidated financial statements. -4- 5 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30 ------------------------------- 1998 1997 ---- ---- OPERATING ACTIVITIES Net income $ 10,908,464 $ 12,437,700 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 14,236,420 6,369,574 Deferred income taxes 129,413 906,000 Gain on sale of assets ( 231,676) ( 829,734) Prepaid pension costs ( 3,776,983) ( 2,701,975) Deferred vessel maintenance costs ( 1,189,980) ( 1,474,761) Increase in accounts receivable ( 6,859,222) ( 2,099,337) Increase in inventories ( 2,817,599) ( 254,105) Decrease in accounts payable ( 181,362) ( 2,718,101) Decrease in payrolls and other accrued compensation ( 887,660) ( 810,323) (Decrease) increase in accrued expenses ( 555,719) 526,769 Increase in income taxes 1,486,079 514,574 Operating activities of discontinued operations - net -0- 1,819,583 Other operating activities 1,710,355 ( 1,087,811) ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 11,970,530 10,598,053 INVESTING ACTIVITIES Capital expenditures ( 13,115,134) (23,635,805) Proceeds from sale of assets 661,312 1,362,325 Acquisition of businesses (242,660,722) ( 1,600,000) Proceeds from the sale of discontinued operations 9,047,112 -0- Investing activities of discontinued operations - net -0- ( 1,725,915) ------------- ------------- NET CASH USED FOR INVESTING ACTIVITIES (246,067,432) (25,599,395) FINANCING ACTIVITIES Additional long-term debt 292,000,000 17,000,000 Payments on long-term debt ( 72,569,772) ( 4,357,338) Financing costs ( 9,042,043) -0- Payments of dividends ( 2,859,201) ( 2,633,088) Purchases of treasury stock ( 560,868) ( 1,969,984) ------------- ------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 206,968,116 8,039,590 Effect of exchange rate changes on cash and cash equivalents 153,524 -0- ------------- ------------- Decrease in cash and cash equivalents ( 26,975,262) ( 6,961,752) CASH AND CASH EQUIVALENTS, JANUARY 1 29,885,922 21,850,282 ------------- ------------- CASH AND CASH EQUIVALENTS, SEPTEMBER 30 $ 2,910,660 $ 14,888,530 ============= =============
See notes to condensed consolidated financial statements. -5- 6 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes to the condensed consolidated financial statements necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Management of the Registrant, however, believes that all adjustments considered necessary for a fair presentation of the results of operations for such periods have been made. The accompanying condensed consolidated financial statements have been reclassified to report separately the operating results of the Registrant's discontinued Engineered Materials business segment for the three and nine month periods ended September 30, 1997. Additionally, certain amounts in the prior year have been reclassified to conform with the 1998 condensed consolidated financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Registrant's 1997 Annual Report on Form 10-K. 2. Operating results are not necessarily indicative of the results to be expected for the year, due to the seasonal nature of certain aspects of the Registrant's business. 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 Registrant's condensed consolidated financial statements. Actual results could differ from those estimates and assumptions. 3. On March 9, 1998, the Registrant's Industrial Sands segment acquired 100% of the outstanding shares of Colorado Silica Sands, Inc. ("Colorado Silica") for $4,523,000 in cash and a note payable of $1,337,000. The addition of this operation is not expected to have a material impact on the results of operations of the Registrant. On April 28, 1998, Oglebay Norton Limestone Company, a wholly-owned subsidiary of the Registrant, purchased the Port Inland, Michigan limestone operations of Minerals Technologies Inc. for $34,300,000. The acquisition, renamed Global Stone Port Inland, Inc. ("Port Inland"), included inventories, land, mineral reserves, equipment and other tangible property used in the business of mining, processing, marketing and distributing limestone, chemical limestone and construction aggregate to the iron and steel, chemical, environmental, agricultural and construction industries. The purchase price was financed using the Registrant's variable rate revolving credit agreement in place at the time of the acquisition. On May 22, Oglebay Norton Acquisition Company Limited, an indirect wholly-owned subsidiary of the Registrant, acquired all of the outstanding common shares of Global Stone Corporation ("Global Stone"), a publicly traded Canadian company. Global Stone, which at the time of acquisition had eight operations in the United States and Canada, is engaged in the mining, production and marketing of lime, chemical limestone and construction aggregate used in a variety of manufacturing processes and industries, including iron and steel, pulp and paper, chemical, environmental, agricultural and construction. The total purchase price of $226,000,000, including $54,000,000 of net debt, was financed through borrowings under a three year, $215,000,000 bank revolving credit facility ("Senior Credit Facility") and a private placement of $100,000,000 in ten year senior subordinated debt ("Senior Subordinated Facility"). The new borrowings replaced the Registrant's existing variable rate revolving credit and term loan agreements, which were retired using the proceeds from the Senior Credit Facility. The Registrant incurred $9,042,000 in financing costs associated with the Senior Credit and Senior Subordinated Facilities. The financing costs are being amortized over the terms of the respective agreements and are included within Other Assets as of September 30, 1998. -6- 7 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On August 31, 1998, Global Stone (U.S.A.) Inc. an indirect wholly-owned subsidiary of the Registrant, purchased the assets of Filler Products, Inc. a privately owned producer of chemical limestone in Chatsworth, Georgia, for $24,000,000. The acquisition, renamed Global Stone Filler Products, Inc. ("Filler Products"), included inventories, land, mineral reserves, equipment and other tangible property used in the business of mining, processing, marketing and distributing chemical limestone, to the carpet and decorative gardening industries. The purchase price was financed using cash on hand and borrowings under the Registrant's Senior Credit Facility. The above four acquisitions have been recorded applying the purchase method of accounting and the purchase price allocations are preliminary. Upon final determination, the purchase prices will be allocated to the assets and liabilities acquired based on the fair value of the assets acquired. The following unaudited pro forma information presents a summary of consolidated results of operations for the Registrant and the acquisitions of Global Stone and Port Inland for the nine month periods ending September 30, 1998 and 1997 as if the acquisitions had occurred on January 1, 1997. The pro forma adjustments give effect to the acquisitions under the purchase method of accounting and (i) the amortization of goodwill, (ii) the amortization of the write-up of mineral reserves to fair market value, (iii) the interest expense on debt incurred to fund the acquisitions and (iv) the related income tax effects. This unaudited pro forma information (i) assumes that the Registrant incurred all acquisition related debt as of January 1, 1997, (ii) included operating results for periods of time prior to the Registrant's ownership for certain business segments and (iii) does not take into consideration any expense reductions or the expected future benefits from Global Stone's significant capital expenditures made prior to its acquisition by the Registrant. Additionally, the unaudited pro forma information does not reflect any other events that may occur in the future.
Nine Months Ended September 30 ----------------------------------------- 1998 1997 ---- ---- (In thousands, except earnings per share) Revenues $ 212,000 $ 202,000 Net Income 4,200 5,800 Earnings per share - basic 0.89 1.21 Earnings per share - assuming dilution 0.88 1.20 EBITDA 47,900 42,200 EBITDA margin percentage 22.6% 20.9%
(EBITDA is defined as income before (i) income taxes, (ii) interest, (iii) depreciation, amortization and depletion, (iv) non-recurring gains and other income (as described below) and (v) in 1997, an unusual item related to a flood at an operating unit of Global Stone. EBITDA is not a measure of performance under generally accepted accounting principles ("GAAP") . EBITDA should not be considered as a substitute for net income or other income or cash flow data prepared in accordance with GAAP or as a measure of profitability or liquidity. The Registrant's definition of EBITDA may not be comparable to that of other companies.) -7- 8 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) During the first nine months of 1997, the Registrant recorded a gain on the sale of marketable securities of $656,000 and other income of $804,000 from the receipt of insurance proceeds. The net income impact of non-recurring gains and other income recognized during the first nine months of 1997 was $1,272,000 or $0.27 per share - assuming dilution. Excluding these non-recurring items, pro forma net income and earnings per share would have been:
Nine Months Ended September 30, 1997 ----------------------------------------- (In thousands, except earnings per share) Net Income $ 4,500 Earnings per share - basic 0.94 Earnings per share - assuming dilution 0.93
On May 15, 1998, the Registrant sold the assets of its Engineered Materials metallurgical treatment operations for $14,573,000, which included a cash payment of $3,650,000 and notes receivable of $10,923,000. The notes receivable will be paid over a four year period, beginning in 1999 with a final payment of $2,400,000 in June 2003. As of September 30, 1998, $6,292,000 relating to these notes is included within Other Assets. The Engineered Materials segment was classified as a discontinued operation at December 31, 1997. 4. In the first quarter of 1998, the Registrant adopted Statement of Financial Accounting Standard (SFAS) No. 130, "Reporting Comprehensive Income". Comprehensive income generally represents all changes in stockholders' equity except those resulting from investments or contributions by stockholders. Accordingly, foreign currency translation adjustments have been recorded as a separate component of Stockholders Equity. The following reconciles net income to comprehensive income under SFAS 130 (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1998 1997 1998 1997 ------- ------- ------- ------- Net income $ 5,679 $ 6,476 $10,908 $12,438 Other comprehensive income: --------------------------- Foreign currency translation adjustments 1,097 -0- 1,097 -0- ------- ------- ------- ------- Comprehensive income $ 6,776 $ 6,476 $12,005 $12,438 ======= ======= ======= =======
In the first quarter of 1998, the Registrant also adopted Statement of Financial Accounting Standard (SFAS) No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". SFAS No 132 revises employers' disclosures about pension and other postretirement benefit plans. It does not change the measurement or recognition of those plans and, accordingly, does not have any effect on the Registrant's financial position or results of operations. -8- 9 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Registrant will adopt, as required, Statement of Financial Accounting Standard (SFAS) No. 131, "Disclosure about Segments of an Enterprise and Related Information" at the end of 1998. SFAS No. 131 requires the Registrant to provide information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports. It also requires certain related disclosures about products and services, geographic areas and major customers. The Registrant is not required to, and has elected not to, report segment information in its interim financial statements during 1998. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. SFAS No. 133 is effective for years beginning after June 15, 1999. Adoption of the new Standard is not expected to have a material impact on the results of operations or financial position of the Registrant. The calculation of net income per share-basic and net income per share-assuming dilution follows (in thousands, except per share data):
Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------ 1998 1997 1998 1997 ------- ------- ------- ------- Net income per share-basic: --------------------------- Net income $ 5,679 $ 6,476 $10,908 $12,438 Average number of shares outstanding 4,772 4,764 4,771 4,793 ======= ======= ======= ======= Net income per share $ 1.19 $ 1.36 $ 2.29 $ 2.59 ======= ======= ======= ======= Three Months Ended Nine Months Ended September 30 September 30 ------------------ ------------------ 1998 1997 1998 1997 ------- ------- ------- ------- Net income per share- ----------------------- assuming dilution: ------------------ Net income $ 5,679 $ 6,476 $10,908 $12,438 Average number of shares outstanding 4,772 4,764 4,771 4,793 Dilutive effect of stock plans 17 36 24 30 ------- ------- ------- ------- Adjusted average number of shares outstanding 4,789 4,800 4,795 4,823 ======= ======= ======= ======= Net income per share $ 1.19 $ 1.35 $ 2.28 $ 2.58 ======= ======= ======= =======
-9- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations may contain statements concerning certain trends and other forward-looking information, within the meaning of certain safe harbor provisions of the federal securities laws. Such forward-looking statements are subject to uncertainties and factors relating to the Registrant's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Registrant. The Registrant 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 Registrant: (1) unfavorable weather conditions; (2) fluctuations in oil prices; (3) steel production; (4) changes in the demand for the Registrant's products or services due to changes in technology; (5) Great Lakes and Mid-Atlantic construction activity; (6) the California economy and population growth rates in the Southwestern United States; (7) labor unrest; (8) the loss or bankruptcy of major customers; and (9) year 2000 software conversion failures of vendors, suppliers and customers. Due to the seasonal nature of certain aspects of the Registrant's business, the operating results and cash flows for the first nine months of the year are not necessarily indicative of the results to be expected for the full year. FINANCIAL CONDITION ------------------- During the first nine months of 1998, the Registrant acquired the assets and liabilities of Global Stone Inc. ("Global Stone") and Colorado Silica, Inc. ("Colorado Silica") and the assets of the Port Inland, Michigan operations of Minerals Technologies, Inc. (subsequently renamed Global Stone Port Inland ("Port Inland")) and Filler Products, Inc. (subsequently renamed Global Stone Filler Products ("Filler Products")). These acquisitions were accounted for as business combinations accounted using the purchase method of accounting. The combined purchase prices of these acquisitions totaled $290,160,000. During the first nine months of 1997, the Registrant acquired certain assets of a sand screening plant in California and a supplier of blending sand and organic mixes in Ohio. The combined purchase prices of these assets totaled $3,400,000. The Registrant's operating activities provided cash of $11,971,000 in the first nine months of 1998 compared to $10,598,000 for the same period of 1997 reflecting an increase of $1,373,000. The increase in cash provided by operations during the first nine months of 1998 compared to the same period of 1997 is principally due to the operating activities of the acquisitions of Global Stone and Port Inland, as described in the accompanying Notes to Condensed Consolidated Financial Statements. Operating results of the Registrant's business segments are discussed in more detail under "RESULTS OF OPERATIONS". Expenditures for property and equipment, including vessel inspection costs, amounted to $13,115,000 through the first nine months of 1998 compared with $23,636,000 for the same period in 1997. During the first nine months of 1998, the Registrant's Marine Transportation segment expended $3,552,000 related to vessel inspection costs and various equipment additions on the vessel fleet, while the Industrial Sands segment expended $4,108,000 primarily on plant expansion projects at the Brady, Texas and Orange County, California operations. The Registrant's Lime and Limestone segment expended $5,430,000 for various capital projects through the first nine months of 1998. During the first nine months of 1997, the Registrant's Marine Transportation segment purchased two vessels for $17,000,000 and expended $3,219,000 for vessel inspection costs and various additions to vessels, while the Industrial Sands segment expended $3,218,000 in various capital projects. -10- 11 FINANCIAL CONDITION (CONTINUED) During the first nine months of 1998, the Registrant received installment payments totaling $9,047,000 related to the sale of its discontinued Engineered Materials segment. While there were no such receipts during the first nine months of 1997, the discontinued operations used $1,726,000 for investing activities, principally for various capital expenditures. The Registrant made long-term debt payments of $72,570,000 during the first nine months of 1998 compared with $4,357,000 during the same period of 1997. During the first nine months of 1998, the Registrant borrowed $292,000,000 ($192,000,000 on the Senior Credit Facility and $100,000,000 under the Senior Subordinated Facility) to finance the Global Stone and Filler Products acquisitions. The interest rate on the Senior Credit Facility, which approximated 7.8% at September 30, 1998, is based on LIBOR interest rates, plus an applicable margin, while interest accrues at a fixed rate of 9.4% on the Senior Subordinated Facility. In June 1997, the Registrant borrowed $15,000,000, at a variable interest rate of 6.2%, against its then existing Revolving Credit facility for the acquisition of two Marine Transportation vessels. During July 1997, the Registrant refinanced the entire $17,000,000 purchase amount under a 10 year term loan with a bank at a fixed interest rate of 7.3%. The Registrant declared dividends of $0.60 per share during the first nine months of 1998 compared with $0.55 per share for the same period of 1997. Dividends paid were $2,859,000 for the first nine months of 1998 compared with $2,633,000 for the same period of 1997. The Registrant purchased on the open market, and placed in treasury, 14,666 shares of its Common Stock for $561,000 during the first nine months of 1998 and 87,990 shares for $1,970,000 during the first nine months of 1997. Anticipated cash flows from operations and current financial resources are expected to meet the Registrant's needs during the remainder of 1998. All financing alternatives are under constant review to determine their ability to provide sufficient funding at the least possible cost. RESULTS OF OPERATIONS --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 The Registrant's income from operations increased $9,244,000, or 49.8%, to $27,821,000 on revenues of $163,879,000 for the first nine months of 1998, compared with $18,577,000 on revenues of $101,964,000 for the same period of 1997. Net income was $10,908,000 ($2.28 per share - assuming dilution) for the first nine months of 1998 compared with $12,438,000 ($2.58 per share assuming dilution) for the first nine months of 1997. The increases in income from operations and revenues for the first nine months of 1998 are attributable to the acquisitions of Global Stone, Port Inland, Colorado Silica and Filler Products and strong operating results of the Registrant's Marine Transportation segment. The decline in net income is primarily due to increased interest expense on borrowings used to fund the 1998 acquisitions and a higher effective tax rate. Additionally, the Registrant recorded a gain from the sale of marketable securities of $656,000 and $804,000 in other income from the receipt of insurance proceeds during in the first nine months of 1997. The net income impact of non-recurring gains and other income recognized during the first nine months of 1997 was $1,272,000, ($0.27 per share - assuming dilution). -11- 12 RESULTS OF OPERATIONS (CONTINUED) --------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 Operating results of the Registrant's business segments for the nine months ended September 30, 1998 and 1997 are discussed below. It is the policy of the Registrant to allocate a portion of corporate general and administrative expenses to its business segments. Corporate general and administrative expenses for the first nine months of 1997 that were previously allocated to discontinued operations have been reallocated to the remaining business segments. Net Sales and Operating Revenues - - -------------------------------- Marine Transportation. Operating revenues for the Registrant's Marine Transportation segment increased by $3,132,000, or 4.9%, to $67,263,000 for the first nine months of 1998, compared with $64,131,000 for the same period in 1997. The increase can be attributed to strong customer demand and good operating conditions on the Great Lakes. The mild winter provided an early start to the sailing season and the weather conditions favorably impacted sailing days and operating activities. Sailing days increased 3.6% to 2,294 during the first nine months of 1998 compared with 2,214 during the same period of 1997. Tonnage levels increased 0.8% to 16,307,000 for the first nine months of 1998 compared with 16,171,000 for the same period in 1997. Additionally, a shift in the product mix of tonnage levels hauled improved operating revenues during the first nine months of 1998 compared with 1997. Industrial Sands. Net sales for the Registrant's Industrial Sands segment decreased by $932,000, or 2.5%, to $36,901,000 for the first nine months of 1998, compared with $37,833,000 for the same period of 1997. The decline in net sales is attributable to a 9.2% decrease in shipments, from 1,359,000 for the first nine months of 1997 to 1,234,000 for the first nine months of 1998. The decreases in tonnage and net sales are related to softness in oil prices and related oil field demand. Accordingly, the demand for frac sands provided by the segment's Brady, Texas operations, were negatively impacted as tonnage levels and average selling prices decreased. The acquisition of the Colorado Silica operations during March 1998 and the strong performance of the segment's Orange County, California operations tempered the overall decrease in net sales. Although tonnage levels at the Orange County operations declined when compared with the same period of 1997, a favorable shift in product mix resulted in an increase in net sales when compared with the prior year. Lime and Limestone. Net sales for the Registrant's Lime and Limestone segment include the operations of Port Inland, Global Stone and Filler Products as of their respective purchase dates of April 28, May 22, and August 31, 1998 and totaled $59,716,000 through September 30, 1998. Cost of Goods Sold and Operating Expenses - - ----------------------------------------- Marine Transportation. Operating expenses for the Marine Transportation segment totaled $43,140,000 for the first nine months of 1998, compared with $43,792,000 for the same period in 1997, a decrease of $652,000, or 1.5%. Operating expenses as a percentage of operating revenues improved to 64.1% during the first nine months of 1998 compared with 68.3% for the same period of 1997, principally due to lower fuel costs, favorable operating conditions and increased efficiencies within the segment's fleet dispatch operations. -12- 13 RESULTS OF OPERATIONS (CONTINUED) --------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 Industrial Sands. Cost of goods sold for the Industrial Sands segment increased less than 1% for the first nine months of 1998 compared with the same period of 1997. Cost of goods sold as a percentage of net sales was 63.0% for the first nine months of 1998 compared with 61.3% for the first nine months of 1997. The marginal increase in cost of goods sold was primarily attributable to the lower overall tonnage levels. Lime and Limestone. Cost of goods sold for the Lime and Limestone segment totaled $38,770,000, or 64.9% of net sales, for the nine months ended September 30, 1998. Depreciation, Depletion and Amortization - - ---------------------------------------- Depreciation, depletion and amortization expense increased by $7,866,000 to $14,236,000 for the first nine months of 1998 compared with $6,370,000 for the same period of 1997. Of this increase, $7,238,000 relates to the acquisitions consummated during the first nine months of 1998. The balance of the increase is principally due to additional depreciation recognized by the Registrant's Marine Transportation segment as a result of the purchase of two vessels in June 1997 and the nature and timing of vessel inspection costs incurred prior to the 1998 sailing season. General, Administrative and Selling Expenses - - -------------------------------------------- As a result of the acquisitions described in the accompanying Notes to Condensed Consolidated Financial Statements, total general, administrative and selling expenses increased $5,916,000, or 58.9%, to $15,963,000 for the first nine months of 1998 compared with $10,047,000 for the same period of 1997. As a percentage of total revenues, general, administrative and selling expenses remained comparable at approximately 10.0%. Income From Operations - - ---------------------- Marine Transportation. Due to the favorable operating conditions previously described, income from operations for the Registrant's Marine Transportation segment increased $3,058,000 to $16,513,000 for the first nine months of 1998 compared with $13,455,000 for the first nine months of 1997. Industrial Sands. Income from operations for the Industrial Sands segment declined $2,101,000 to $6,701,000 for the first nine months of 1998 compared with $8,802,000 for the same period of 1997. The decline was principally the result of reduced oil field demand for frac sand supplied by the segment's Brady, Texas operations, partially offset by the addition of the Colorado Silica operations and improvements in product mix at the segment's Orange County operations. Lime and Limestone. The acquisitions of Port Inland, Global Stone and Filler Products contributed $8,434,000 to income from operations during the nine month period ended September 30, 1998. -13- 14 RESULTS OF OPERATIONS (CONTINUED) --------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 Corporate and Other. Certain cost of goods sold and general and administrative expenses are not allocated to the business segments. Accordingly, Corporate and Other operations recognized a loss from operations of $3,827,000 and $3,680,000 for the nine month periods ended September 30, 1998 and 1997, respectively. Other - - ----- During the first nine months of 1998, the Registrant recognized gains of $232,000 from asset sales compared with $830,000 for the same period of 1997. The decrease in gains is principally due to the sale of marketable securities during the first nine months of 1997. All available for sale marketable securities were liquidated prior to 1998. Interest, dividends and other income decreased $840,000, or 42.6%, during the first nine months of 1998, as the comparable period in the prior year included gains recognized on life insurance proceeds received. Interest expense for the first nine months of 1998 increased to $11,889,000, compared with $2,020,000 for the same period of 1997. The increase in interest expense is principally the result of increased debt levels and the amortization of financing costs incurred to acquire Port Inland, Global Stone and Filler Products. THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 The Registrant's income from operations increased $5,526,000, or 54.1%, to $15,737,000 on revenues of $85,845,000 for the three months ended September 30, 1998, compared with $10,211,000 on revenues of $45,602,000 for the same period of 1997. Net income was $5,679,000 ($1.19 per share - assuming dilution) for the three months ended September 30, 1998 compared with $6,476,000 ($1.35 per share - assuming dilution) for the three months ended September 30, 1997. The increases in income from operations and revenues for the three months ended September 30, 1998 can be attributed to the acquisitions of Global Stone, Port Inland and Filler Products and strong operating results of the Registrant's Marine Transportation segment. While both income from operations and revenues improved substantially from the same period in the prior year, the marginal decrease in net income is the result of increased interest expense on borrowings to fund the acquisitions and a higher effective tax rate. Operating results of the Registrant's business segments for the three months ended September 30, 1998 and 1997 are discussed below. The comments set forth above in the nine months comparisons of 1998 with 1997 generally apply, except as noted, when comparing the third quarter to the same period in 1997. Net Sales and Operating Revenues - - -------------------------------- Marine Transportation. Operating revenues for the Registrant's Marine Transportation segment of $32,546,000 for the third quarter of 1998 were comparable to operating revenues of $32,424,000 for the same period of 1997. Third quarter 1998 sailing days and tonnage hauled of 1,104 and 7,715,000, respectively were also comparable to the third quarter of the prior year. -14- 15 RESULTS OF OPERATIONS (CONTINUED) --------------------- THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 Industrial Sands. Net sales for the Registrant's Industrial Sands segment decreased by $454,000, or 3.5%, to $12,724,000 for the third quarter of 1998, compared with $13,178,000 for the same period of 1997. The decline in net sales is attributable to decreased shipments, principally due to softness in oil prices and related oil field demand. The overall decrease in net sales and tonnage was partially offset by the addition of the Colorado Silica operations and the strong performance of the segment's Orange County operations. Lime and Limestone. Net sales for the Registrant's Lime and Limestone segment include the operations of Port Inland, Global Stone and Filler Products as of their respective purchase dates of April 28, May 22 and August 31, 1998 and totaled $40,575,000 for the third quarter of 1998. Cost of Goods Sold and Operating Expenses - - ----------------------------------------- Marine Transportation. Operating expenses for the Marine Transportation segment totaled $20,695,000 for the three months ended September 30, 1998, compared with $20,908,000 for the same period in 1997, a decrease of $213,000, or 1.0%. Operating expenses as a percentage of operating revenues remained comparable at 63.6% and 64.5% during the third quarters of 1998 and 1997, respectively. Industrial Sands. As a result of the overall decrease in volumes, cost of goods sold for the Industrial Sands segment decreased $442,000, or 5.4%, to $7,786,000 for the third quarter of 1998 from $8,229,000 for the same period in 1997. Cost of goods sold as a percentage of net sales were comparable at 61.2% for the third quarter of 1998 compared with 62.4% for the same period of 1997. Lime and Limestone. Cost of goods sold for the Lime and Limestone segment totaled $26,104,000, or 64.3% of net sales, for the third quarter of 1998. Depreciation, Depletion and Amortization - - ---------------------------------------- As a result of the 1998 acquisitions, depreciation, depletion and amortization expense increased to a level of $7,849,000 for the third quarter of 1998 compared with $2,907,000 for the same period of 1997. Of this increase, $4,762,000 relates to the acquisitions of Global Stone, Port Inland, Colorado Silica and Filler Products. General, Administrative and Selling Expenses - - -------------------------------------------- As a result of the acquisitions previously described, total general, administrative and selling expenses increased $3,683,000 to $7,026,000 for third quarter of 1998 compared with $3,343,000 for the same period of 1997. As a percentage of total revenues, general, administrative and selling expenses increased from 7.3% in the third quarter of 1997 to 8.2% in the third quarter of 1998. -15- 16 RESULTS OF OPERATIONS (CONTINUED) --------------------- THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 Income From Operations - - ---------------------- Marine Transportation. Income from operations for the Registrant's Marine Transportation segment was $8,530,000 for the third quarter of 1998 compared with $8,527,000 for the third quarter of 1997. Industrial Sands. Income from operations for the Industrial Sands segment declined $403,000 to $2,497,000 for the third quarter of 1998 compared with $2,900,000 for the same period of 1997. Lime and Limestone. The acquisitions of Port Inland, Global Stone and Filler Products contributed $5,918,000 to income from operations for the third quarter of 1998. Corporate and Other. Certain cost of goods sold and general and administrative expenses are not allocated to the business segments. Accordingly, Corporate and Other operations recognized a loss from operations of $1,208,000 and $1,216,000 for the three month periods ended September 30, 1998 and 1997, respectively. Other - - ----- Interest, dividends and other income increased $161,000 during the third quarter of 1998. Interest expense for the third quarter of 1998 increased $6,615,000 to $7,441,000 in the third quarter of 1998 compared with $827,000 for the same period of 1997. The increase in interest expense is principally the result of increased debt levels and the amortization of financing costs related to the Global Stone, Port Inland and Filler Products acquisitions. YEAR 2000 COMPLIANCE The Registrant continues to address the impact of the Year 2000 issue on its business. This issue affects computer systems that have date-sensitive programs that may not properly recognize the year 2000. Specifically, with respect to the Registrant, this issue affects not only the computer software and hardware but also machines and equipment used in production that contain embedded computer chips. The Registrant has reviewed and assessed its information system hardware, business system software, production system hardware and other systems and technology used in its business operations. Based on this review and assessment, the Registrant believes that the majority of its internal systems are Year 2000 compliant. The Registrant expects to complete its internal Year 2000 remediation efforts by March 31, 1999 with the implementation of a new order processing system for both the Industrial Sands and Lime and Limestone business segments. -16- 17 YEAR 2000 COMPLIANCE (CONTINUED) As part of its Year 2000 program, the Registrant has also made efforts to determine and assess the Year 2000 compliance status of third parties with which it does business. During 1997, the Registrant sent a detailed questionnaire to its customers, suppliers, financial institutions and others to obtain information relating to the status of such third parties with respect to Year 2000 issues. Of the total questionnaires sent out, 80 percent of these third parties have returned their questionnaires to the Registrant. The Registrant is following up on the balance of the questionnaires not returned. Based upon its review of the returned questionnaires, the Registrant does not believe that it will experience material disruption of its operations as a result of third parties Year 2000 noncompliance. In addition, since sending the questionnaires, the Registrant has maintained ongoing correspondence with its suppliers regarding Year 2000 issues and placed particular emphasis on determining the Year 2000 readiness of its critical suppliers. Due to the uncertainties associated with Year 2000 problems, the Registrant has developed a contingency plan to use manual entry in its accounting and order entry system in the event that its business or operations are disrupted as of January 1, 2000. The Registrant expects to incur total expenditures of approximately $175,000 in connection with its Year 2000 remediation efforts. To date, the Registrant has incurred approximately $80,000 in expenses relating to its Year 2000 issues and expects to incur an additional $95,000 during the remainder of 1998 and 1999. The Registrant believes that the cost of its remediation will not have a material impact on the Registrant's consolidated results of operations or financial condition. The date on which the Registrant believes it will complete its Year 2000 compliance efforts and the expenses related to the Registrant's Year 2000 compliance efforts are management's best estimates, which are based on assumptions of future events, including the availability of certain resources, third party modification plans and other factors. There can be no assurances that these results and estimates will be achieved, and the actual results could materially differ from those anticipated. A specific factor that might cause such material differences is the ability to locate and correct all relevant computer codes. In addition, there can be no assurances that the systems or products of third parties on which the Registrant relies will be timely converted or that a failure by a third party, or a conversion that is incompatible with the Registrant's systems, would not have a material adverse effect on the Registrant. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES - - ------- ---------------------------------------- ABOUT MARKET RISK ----------------- Not applicable. -17- 18 PART II. OTHER INFORMATION - - --------------------------- ITEM 5. OTHER INFORMATION - - ------------------------- (a) The Registrant's proxies for its 1999 Annual Meeting of Stockholders will confer discretionary authority to vote on any matter if the Registrant does not receive timely written notice of such matter in accordance with Section 46 of the Registrant's By-Laws. In general, Section 46 provides that, to be timely, a stockholder's notice of business requested to be brought before an annual meeting of stockholders must be delivered to or mailed and received at the principal executive offices of the Registrant not less than 60 nor more than 90 days prior to the annual meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - - ---------------------------------------- (a)
- - ------------------------------------------------------------------------------------------------------------ 10.1 First Amendment Agreement to Filed herewith as Exhibit 10.1 previously filed Credit Agreement dated as of May 15, 1998 among Oglebay Norton Company, as Borrower, various financial institutions, as Banks and KeyBank National Association, as Agent - - ------------------------------------------------------------------------------------------------------------ 10.2 Second Amendment Agreement to Filed herewith as Exhibit 10.2 previously filed Credit Agreement dated as of May 15, 1998 among Oglebay Norton Company, as Borrower, various financial institutions, as Banks and KeyBank National Association, as Agent - - ------------------------------------------------------------------------------------------------------------ Financial Exhibits - - ------------------------------------------------------------------------------------------------------------
(b) See Part II item 6(b) of the Registrant's quarterly report for the Period ended June 30, 1998. -18- 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OGLEBAY NORTON COMPANY DATE: November 16, 1998 By: /s/ David H. Kelsey ------------------------- David H. Kelsey Vice President and Chief Financial Officer -19- EX-10.2 2 EXHIBIT 10.2 1 Exhibit 10.2 SECOND AMENDMENT AGREEMENT This Second Amendment Agreement is made effective as of the 15th day of August, 1998, by and among OGLEBAY NORTON COMPANY, a Delaware corporation ("Borrower"), the banking institutions listed on Schedule 1 to the Credit Agreement, as hereinafter defined ("Banks"), and KEYBANK NATIONAL ASSOCIATION, as agent for the Banks ("Agent"): WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit Agreement dated as of May 15, 1998, as amended, and as it may from time to time be further amended, restated or otherwise modified, which provides, among other things, for loans, letters of credit, and other financial accommodations aggregating Two Hundred Fifteen Million Dollars ($215,000,000), all upon certain terms and conditions stated therein ("Credit Agreement"); WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement to modify certain provisions thereof; and WHEREAS, each term used herein shall be defined in accordance with the Credit Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other valuable considerations, Borrower, Agent and the Banks hereby agree as follows: 1. The first two lines of Section 4.2(c) of the Credit Agreement are hereby amended by deleting the date "September 15, 1998" and inserting in place thereof the date "October 15, 1998". 2. The Credit Agreement is hereby amended by deleting Section 4.2(g) thereof in its entirety and by substituting in place thereof the following: (g) PREFERRED SHIP MORTGAGE. On or before (i) October 31, 1998, Borrower shall have executed and delivered to Agent a Preferred Ship Mortgage with respect to the Columbia Star, and (ii) September 15, 1998, Borrower shall have caused to be filed a Preferred Ship Mortgage with respect to the Wolverine and the David Z. Norton. 3. The Credit Agreement is hereby amended by deleting the first four lines of Section 4.2(j) thereof in their entirety and by inserting in place thereof the following: (j) REAL ESTATE MATTERS. Borrower shall have delivered to Agent all of the following on or before October 31, 1998, with respect to the Mortgaged Real Property owned by a Pledgor: 2 4. The Credit Agreement is hereby amended by deleting Schedule 1 thereto in its entirety and by substituting in place thereof the Schedule 1 attached to this Second Amendment Agreement as EXHIBIT A and made a part hereof 5. Concurrently with the execution of this Second Amendment Agreement, Borrower shall: (a) cause each Pledgor to consent and agree to and acknowledge the terms of this Second Amendment Agreement; and (b) pay all legal fees and expenses of Agent in connection with this Second Amendment Agreement. 6. Borrower hereby represents and warrants to Agent and the Banks that (a) Borrower has the legal power and authority to execute and deliver this Second Amendment Agreement; (b) the officers executing this Second Amendment Agreement have been duly authorized to execute and deliver the same and bind Borrower with respect to the provisions hereof; (c) the execution and delivery hereof by Borrower and the performance and observance by Borrower of the provisions hereof do not violate or conflict with the organizational agreements of Borrower or any law applicable to Borrower or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against Borrower; (d) no Unmatured Event of Default or Event of Default exists under the Credit Agreement, nor will any occur immediately after the execution and delivery of the Second Amendment Agreement or by the performance or observance of any provision hereof; (e) neither Borrower nor any Pledgor is aware of any claim or offset against, or defense or counterclaim to, any of Borrower's or any Pledgor's obligations or liabilities under the Credit Agreement or any Related Writing; and (f) this Second Amendment Agreement constitutes a valid and binding obligation of Borrower in every respect, enforceable in accordance with its terms. 7. Each reference that is made in the Credit Agreement or any other writing to the Credit Agreement shall hereafter be construed as a reference to the Credit Agreement as amended hereby. Except as herein otherwise specifically provided, all provisions of the Credit Agreement shall remain in full force and effect and be unaffected hereby. This Second Amendment Agreement is a Related Writing as defined in the Credit Agreement. 8. Borrower and each Pledgor, by signing below, hereby waives and releases Agent and each of the Banks and their respective directors, officers, employees, attorneys, affiliates and subsidiaries from any and all such claims, offsets, defenses and counterclaims of which Borrower and any Pledgor is aware, such waiver and release being with full knowledge and understanding of the circumstances and effect thereof and after having consulted legal counsel with respect thereto. 2 3 9. This Second Amendment Agreement may be executed in any number of counterparts, by different parties hereto in separate counterparts and by facsimile signature, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 10. The rights and obligations of all parties hereto shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of laws. 11. JURY TRIAL WAIVER. BORROWER, PLEDGORS, AGENT AND EACH OF THE BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. OGLEBAY NORTON COMPANY By: /s/ Michael F. Biehl -------------------------------- Michael F. Biehl, Treasurer KEYBANK NATIONAL ASSOCIATION as Agent and as a Bank By: /s/ Lawrence A. Mack -------------------------------- Lawrence A. Mack, Senior Vice President 3 4 BANK ONE, NA By:_______________________________________ Its:______________________________________ THE BANK OF NOVA SCOTIA By:_______________________________________ Its:______________________________________ COMERICA BANK By:_______________________________________ Its:______________________________________ THE HUNTINGTON NATIONAL BANK By:_______________________________________ Its:______________________________________ MELLON BANK, N A. By:_______________________________________ Its:______________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_______________________________________ Its:______________________________________ HARRIS TRUST AND SAVINGS BANK By:_______________________________________ Its:______________________________________ 4 5 THE CHASE MANHATTAN BANK By:_______________________________________ Its:______________________________________ STAR BANK NATIONAL ASSOCIATION By:_______________________________________ Its:______________________________________ FLEET BANK, N.A. By:_______________________________________ Its:______________________________________ ABN AMRO BANK N.V., PITTSBURGH BRANCH By:_______________________________________ Its:______________________________________ FIFTH THIRD BANK OF NORTHEASTERN OHIO By:_______________________________________ Its:______________________________________ 5 6 Each of the undersigned consents and agrees to and acknowledges the terms of the foregoing Second Amendment Agreement. Each of the undersigned further agrees that the obligations of each of the undersigned pursuant to the Guaranty of Payment executed by each of the undersigned shall remain in full force and effect and be unaffected hereby. Oglebay Norton Holding Company ONCO Investment Company Oglebay Norton Industrial Minerals, Inc. Oglebay Norton Management Company Oglebay Norton Industrial Sands, Inc. Colorado Silica Sand, Inc. Oglebay Norton Terminals, Inc. Oglebay Norton Engineered Materials, Inc. Oglebay Norton Acquisition Company Global Stone Port Inland, Inc. Moreland Development Company Western Wisconsin Materials, Inc. By: /s/ Michael F. Biehl ---------------------------------------- Michael F. Biehl as Treasurer of each of the companies listed above Texas Mining, LP By: Oglebay Norton Industrial Sands, Inc., General Partner By: /s/ Michael F. Biehl ------------------------------------ Michael F. Biehl, Treasurer 6 7 Exhibit A SCHEDULE I
- - ------------------------------------------------------------------------------------------------------------- REVOLVING CREDIT BANKING INSTITUTION COMMITMENT COMMITMENT MAXIMUM PERCENTAGE AMOUNT AMOUNT - - ------------------------------------------------------------------------------------------------------------- KeyBank National Association 13.953488% $ 30,000,000 $ 30,000,000 - - ------------------------------------------------------------------------------------------------------------- The Bank of Nova Scotia 11.627907% $ 25,000,000 $ 25,000,000 - - ------------------------------------------------------------------------------------------------------------- Bank of America National Trust and Savings Association 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Mellon Bank, N.A 7.906977% $ 17,000,000 $ 17,000,000 - - ------------------------------------------------------------------------------------------------------------- Harris Trust and Savings Bank 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Comerica Bank 7.906977% $ 17,000,000 $ 17,000,000 - - ------------------------------------------------------------------------------------------------------------- The Huntington National Bank 7.906977% $ 17,000,000 $ 17,000,000 - - ------------------------------------------------------------------------------------------------------------- Bank One, NA 11.627907% $ 25,000,000 $ 25,000,000 - - ------------------------------------------------------------------------------------------------------------- The Chase Manhattan Bank 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Star Bank, National Association 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Fleet Bank, N.A 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- ABN AMRO Bank N.V., Pittsburgh Branch 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Fifth Third Bank of Northeastern Ohio 5.581395% $ 12,000,000 $ 12,000,000 - - ------------------------------------------------------------------------------------------------------------- Total Commitment Amount: 100% $215,000,000 $215,000,000 - - -------------------------------------------------------------------------------------------------------------
7 EX-10.1 3 EXHIBIT 10.1 1 Exhibit 10.1 FIRST AMENDMENT AGREEMENT ------------------------- This First Amendment Agreement is made as of the 15th day of July, 1998, by and among OGLEBAY NORTON COMPANY, a Delaware corporation ("Borrower"), KEYBANK NATIONAL ASSOCIATION, as Agent ("Agent") and the banking institutions listed on Schedule 1 to the Credit Agreement, as hereinafter defined ("Banks"): WHEREAS, Borrower, Agent and the Banks are parties to a certain Credit Agreement dated as of May 15, 1998, as it may from time to time be amended, restated or otherwise modified, which provides, among other things, for loans, letters of credit, and other financial accommodations aggregating Two Hundred Fifteen Million Dollars ($215,000,000), all upon certain terms and conditions stated therein ("Credit Agreement"); WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement to modify certain provisions thereof; and WHEREAS, each term used herein shall be defined in accordance with the Credit Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other valuable considerations, Borrower, Agent and the Banks hereby agree as follows: 1. Upon (a) execution of this First Amendment Agreement by all of the parties hereto, (b) execution of the Assignment and Acceptance Agreement between Agent and Bank One, NA, and (c) execution of the Assignment and Acceptance Agreement between Agent and The Bank of Nova Scotia, the first paragraph of the Credit Agreement shall be amended to add the following new sentence at the end thereof and Bank One, NA and The Bank of Nova Scotia shall thereafter be deemed to be Co-Agents, as defined in the Credit Agreement, thereunder: Also parties to this Agreement are Bank One, NA, 600 Superior Avenue, 4th Floor Cleveland, Ohio 44114 and The Bank of Nova Scotia, Suite 2700, 600 Peachtree Street NE, Atlanta, GA 30308 (collectively, "Co-Agents" and each individually a "Co-Agent"). As used in this Agreement, the term "Agent" shall not include Co-Agent. 2. Article I of the Credit Agreement is hereby amended by deleting the definitions of "Global Reorganization", "Hedge Agreement", "Interest Period", "Mortgaged Real Property" and "Note" in their entirety and by substituting in place thereof the following: 2 "Global Reorganization" shall mean the transfer of at least ninety percent (90%) of direct ownership of all Global Domestic Subsidiaries to one (1) or more Oglebay Domestic Subsidiaries. "Hedge Agreement" shall mean any currency swap or hedge agreement, interest rate swap, cap, collar or floor agreement, or other interest rate management device entered into by Borrower with any financial institution. "Interest Period" shall mean, with respect to any LIBOR Loan, the period commencing on the date such LIBOR Loan is made and ending on the last day of such period, as selected by Borrower pursuant to the provisions hereof, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of such period, as selected by Borrower pursuant to the provisions hereof. The duration of each Interest Period for any LIBOR Loan shall be one (1) month, two (2) months, three (3) months, or six (6) months, in each case as Borrower may select upon notice, as set forth in Section 2.2 hereof, provided that: (a) if Borrower fails to so select the duration of any Interest Period, Borrower shall be deemed to have converted such LIBOR Loan to a Prime Rate Loan at the end of the then current Interest Period; (b) Borrower may not select any Interest Period for a LIBOR Loan which ends after any date when principal is due on such LIBOR Loan; and (c) during the period of time commencing on July 17, 1998 and ending on July 24, 1998, Borrower may elect an Interest Period of one (1) week so long as such Interest Period ends on or before July 31, 1998. "Mortgaged Real Property" shall mean each of the parcels of real property as set forth on Schedule 2 hereto, or interests therein, owned or leased by a Pledgor, in each case together with all of such Pledgor's right, title and interest in the improvements and buildings thereon and all appurtenances, easements or other rights belonging thereto. "Note" shall mean any Revolving Credit Note, the Swing Line Note or any other note delivered pursuant to this Agreement. 3. Article I of the Credit Agreement is hereby amended by adding the following new definition after the definition of "Release": "Replacement Subordinated Documentation" shall mean any documentation executed by Borrower in connection with any replacement of the Subordinated Note Purchase Agreement or the replacement of the Subordinated Indebtedness incurred pursuant to the Subordinated Note Purchase Agreement, including, but not limited to, any Permanent Financing (as defined in the Subordinated Note Purchase Agreement), as the same may be, with the prior written consent of Agent, which consent shall not be unreasonably withheld, from time to time amended, restated or otherwise modified or replaced. 2 3 4. The Credit Agreement is hereby amended by adding a new Section 2.9 as follows: SBCTION 2.9.PARTIAL RELEASE OF MORTGAGED REAL PROPERTY. Borrower shall have the right at any time to request that Agent, on behalf of the Banks, release the Lien of Agent, for the benefit of the Banks, on any of the Mortgaged Real Property or any part thereof under the following conditions: (a) Borrower shall submit a written request to Agent no fewer than ten (10) Business Days prior to the proposed date of release, describing the Mortgaged Real Property, or portion thereof, that Borrower is seeking to have released (the "Released Parcel") by legal description, with such request to state (i) the proposed sale price, if any, or any other available information regarding the fair market value of the Released Parcel, (ii) the current use of the Released Parcel, (iii) that such Released Parcel is no longer necessary to the operation of any Company's business and (iv) that the business of the Companies can continue to be operated profitably with the remainder of the Mortgaged Real Property; (b) the Companies agree to, and do in fact, substitute as security any and all property, if any, acquired in exchange for the Released Parcel or acquired with the proceeds received from the sale of such Released Parcel; and (c) Agent determines, in its reasonable discretion, that such release of the Released Parcel will not have a material adverse effect on the collateral securing the Debt or on any Company's ability to profitably conduct its business with the remainder of the Mortgaged Real Property. Upon the satisfaction of all of the foregoing, Agent, on behalf of the Banks, and Borrower shall execute such releases, agreements and other items as may be deemed necessary by Agent. 5. Section 4.2(b) of the Credit Agreement is hereby amended by deleting the number "seven (7)" and by substituting in place thereof the number "twenty-one (21)". 6. The first two lines of Section 4.2(c) of the Credit Agreement are hereby amended by deleting the words "On the Global Control Date" and inserting in place thereof the words "on or before September 15, 1998". 3 4 7. The Credit Agreement is hereby amended by deleting Section 4.2(d) thereof in its entirety and by substituting in place thereof the following: (d) GLOBAL REORGANIZATION. On or before August 31, 1998, Borrower shall have provided evidence to Agent that the Global Reorganization has occurred. 8. The Credit Agreement is hereby amended by deleting Section 4.2(g) thereof in its entirety and by substituting in place thereof the following: (g) PREFERRED SHIP MORTGAGE. On or before (i) September 15, 1998, Borrower shall have executed and delivered to Agent a Preferred Ship Mortgage with respect to the Columbia Star, and (ii) August 15, 1998, Borrower shall have caused to be filed a Preferred Ship Mortgage with respect to the Wolverine and the David Z. Norton. 9. The Credit Agreement is hereby amended by deleting Section 4.2(j) thereof in its entirety and by substituting in place thereof the following: (j) REAL ESTATE MATTERS. Borrower shall have delivered to Agent all of the following on or before August 31, 1998, with respect to the Mortgaged Real Property owned by a Pledgor other than a Global Stone Pledgor, and on or before September 15, 1998 with respect to the Mortgaged Real Property owned by a Global Stone Pledgor: (i) a commitment for the issuance of a Loan Policy of title insurance, ALTA 1970 Form B (amended 10/17/70 and 10/17/84) issued to Agent for the benefit of the Banks by Chicago Title Insurance Company, in an amount equal to the fair market value of the applicable Mortgaged Real Property, showing title to such Mortgaged Real Property to be free and clear of all defects and encumbrances except real estate taxes not yet due, assessments, zoning and comparable governmental restrictions and such other matters of record as are acceptable to Agent, in its reasonable discretion; (ii) copies of all underlying title documents, including, without limitation, prior title policies, deeds, and legal descriptions in the possession or control of Borrower or any Pledgor; (iii) copies of all environmental reports, inspections, studies, test results and any other environmental information with respect to the Mortgaged Real Property and the improvements located thereon in the possession or control of Borrower or any Pledgor; (iv) such other information in the possession or control of Borrower or a Pledgor relating to the ownership, use, occupancy, operation or maintenance 4 5 of the Mortgaged Real Property as Agent may request from time to time, including, without limitation, copies of all written inspections, reports, test results, correspondence and management reports received or sent by Borrower or any Pledgor that relate in any material respect to the operation of the Mortgaged Real Property, or any part thereof; and (v) evidence, to Agent's satisfaction, in Agent's reasonable discretion, that no portion of the Mortgaged Real Property is located in a Special Flood Hazard Area or is otherwise classified as Class A or Class BX on the Flood Maps maintained by the Federal Emergency Management Agency. 10. The Credit Agreement is hereby amended by deleting Section 5.17(b) thereof in its entirety and by substituting in place thereof the following: (b) Borrower shall provide notice to Agent contemporaneously with any notice provided to the Purchaser (as defined in the Subordinated Note Purchase Agreement or any similarly defined term under any Replacement Subordinated Documentation) under the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation. 11. The Credit Agreement is hereby amended by deleting Section 5.24 thereof in its entirety and by substituting in place thereof the following: SECTION 5.24. RESTRICTED PAYMENTS. No Company shall (i) make any payment, including, but not limited to, any prepayment, mandatory redemption or optional redemption of any kind, or (ii) exercise any right of defeasance or covenant defeasance or similar right, with respect to any Subordinated Indebtedness, except that if no Unmatured Event of Default (other than with respect to subpart (a) hereof only) or Event of Default shall then exist or immediately thereafter shall begin to exist: (a) Borrower may make regularly scheduled payments of interest with respect to any Subordinated Indebtedness; (b) Borrower shall pay in full the Indebtedness of Global Stone pursuant to the Global Stone Trust Indenture in accordance with Section 4.2(h) hereof and (c) Borrower may prepay the entire outstanding principal balance of any Subordinated Indebtedness so long as (i) Borrower shall have provided Agent with at least ten (10) days written notice (or such shorter period as to which Agent shall agree) prior to the proposed date of repayment; (ii) the Subordinated Indebtedness being prepaid is being prepaid solely with the proceeds of new Subordinated Indebtedness; (iii) Borrower shall have provided Agent with all documentation relating to such new Subordinated Indebtedness at least ten (10) days prior to the proposed date of repayment, which documents shall be in form and substance reasonably satisfactory to 5 6 Agent (it being understood that covenants and events of default substantially similar, in the reasonable opinion of Agent, to those set forth in Articles VIM, VII and IX, including the definitions relating thereto, of the Subordinated Note Purchase Agreement are satisfactory to Agent); and (iv) such new Subordinated Indebtedness shall be subject to a Subordination Agreement, in form and substance reasonably satisfactory to Agent (it being understood that provisions substantially similar, in the reasonable opinion Agent, to those set forth in Articles X and XI of the Subordinated Note Purchase Agreement, including the definitions relating thereto, are satisfactory to Agent). 12. The Credit Agreement is hereby amended by deleting Section 5.29 thereof in its entirety and by substituting in place thereof the following: SECTION 5.29. GUARANTY OF SUBORDINATED INDEBTEDNESS; No Company shall be or become a Guarantor of the Subordinated Indebtedness under the Subordinated Note Purchase Agreement or under any Replacement Subordinated Documentation unless such Company is also a Pledgor hereunder. 13. The Credit Agreement is hereby amended by adding a new Section 5.30 as follows: SECTION 5.30. POST CLOSING MORTGAGED REAL PROPERTY COVENANTS. (a) If, in the opinion of Agent, any title commitment provided by Borrower to Agent pursuant to subpart (j)(i) of Section 4.2 hereof discloses title conditions which Agent determines, in its reasonable discretion, may materially impact the value of any Mortgaged Real Property or Agent's ability to realize on such Mortgaged Real Property upon the occurrence of an Event of Default, Borrower shall provide to Agent with respect to such Mortgaged Real Property, or such thereof as Agent, in its reasonable discretion, may require, at Borrower's cost and expense, a Loan Policy of title insurance, ALTA 1970 Form B (amended 10/17/70 and 10/17/84) issued by Chicago Title Insurance Company (collectively, the "Loan Policies" and individually, a "Loan Policy") in an amount equal to the fair market value of such Mortgaged Real Property insuring each mortgage or deed of trust, as appropriate, to be a valid first priority lien on such Mortgaged Real Property, free and clear of all defects and encumbrances except such matters of record as are acceptable to Agent, in its reasonable discretion, with such endorsements and affirmative insurance as Agent, in its reasonable discretion, may require. If Agent shall require Borrower to deliver a Loan Policy of Title Insurance for any or all of the Mortgaged Real Property, Agent shall notify Borrower in writing of such requirement, the reason therefore, and the specific Mortgaged Real Property for which a Loan Policy of Title Insurance is being requested and Borrower shall, within thirty (30) days after receipt of such written notice, deliver the required Loan Policy or Loan Policies to Agent. 6 7 (b) If, in the opinion of Agent, either: (i) the information provided by Borrower pursuant to subpart (j)(iii) of Section 4.2 hereof with respect to any Mortgaged Real Property indicates or suggests the existence of an environmental condition or a potential environmental condition on such Mortgaged Real Property that requires further inquiry or study, or (ii) Borrower fails or is unable to provide any relevant environmental information regarding the environmental condition of any Mortgaged Real Property, Borrower shall provide to Agent with respect to each Mortgaged Real Property, or such thereof as Agent, in its reasonable discretion, may require, at Borrower's cost and expense, environmental reports or studies prepared by environmental engineering firms acceptable to Agent (the "Reports"), which Reports shall be in form and substance acceptable to Agent, in its sole discretion. If Agent shall require Borrower to deliver the Reports, Agent shall notify Borrower in writing of such requirement, the reason therefore, and the type of environmental report or study required, and Borrower shall, within sixty (60) days after receipt of such notice, deliver the required Reports to Agent. (c) If Agent shall determine that there is any question or dispute regarding any boundary of any Mortgaged Real Property, or any part thereof, that may materially impact the value of such Mortgaged Real Property or Agent's ability to realize on such Mortgaged Real Property upon the occurrence of an Event of Default, then, within thirty (30) days after Borrower's receipt of a request from Agent, Borrower shall initiate such action as Borrower deems appropriate to cure the dispute (to Agent's reasonable satisfaction) and provide Agent with periodic updates (and as may be requested by Agent) as to the status of the disputed boundary. (d) If Agent shall determine that there is any question or dispute as to the zoning of any Mortgaged Real Property, or any part thereof, that may materially impact the value of such Mortgaged Real Property or Agent's ability to realize on such Mortgaged Real Property upon the occurrence of an Event of Default, then, within thirty (30) days after Borrower's receipt of a request from Agent, Borrower shall provide evidence satisfactory to Agent that Borrower has initiated and is diligently proceeding to comply with all building and zoning codes applicable to such Mortgaged Real Property, or such thereof as Agent may require; provided that in no event shall Borrower fail to be in compliance more than one hundred fifty (150) days after receipt of such request from Agent. 14. The Credit Agreement is hereby amended by deleting Section 6.23 thereof in its entirety and by substituting in place thereof the following: SECTION 6.23. SUBORDINATED NOTE PURCHASE AGREEMENT. (a) No Event of Default (as defined in the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation) or Default (as defined in the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation) or event or condition that with the passage of time or the giving of notice or both would constitute a default or event or default under the Subordinated 7 8 Note Purchase Agreement or any Replacement Subordinated Documentation exists, nor will any such Event of Default, Default, event of default or default exist immediately under the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation, or any agreement executed in connection therewith after the granting of any Loan; (b) no Company has "incurred" (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation) any Designated Senior Indebtedness (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation), other than the Debt; and (c) no Company has "incurred" (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation) either prior to or after the granting of any Loan, any Indebtedness (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation) in violation of Section 6.8 (Limitation on Additional Indebtedness) of the Subordinated Note Purchase Agreement or any similar section of any Replacement Subordinated Documentation. 15. The Credit Agreement is hereby amended by deleting Section 7.12 thereof in its entirety and by substituting in place thereof the following: SECTION 7.12. SUBORDINATED NOTE PURCHASE AGREEMENT. If (a) any Event of Default (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation), or any event or condition that with the lapse of time or the giving of notice or both would constitute an Event of Default (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation), shall exist under the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation or any agreement executed in connection therewith; (b) without the prior written consent of Agent, the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation shall be amended or modified in any respect; (c) the Indebtedness incurred in connection with the Subordinated Note Purchase Agreement or any Replacement Subordinated Documentation shall be accelerated for any reason; (d) any Company incurs (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation) any Designated Senior Indebtedness (as defined in the Subordinated Note Purchase Agreement or any similar term as referenced or defined in any Replacement Subordinated Documentation) other than the Debt; or (e) Borrower exercises any rights of optional redemption, defeasance, covenant defeasance or similar right under the Subordination Note Purchase Agreement or any Replacement Subordinated Documentation. 16. The Credit Agreement is hereby amended by deleting Section 9.6 thereof in its entirety and by substituting in place thereof the following: 8 9 SECTION 9.6 KNOWLEDGE OF DEFAULT. It is expressly understood and agreed that Agent shall be entitled to assume that no Unmatured Event of Default or Event of Default has occurred and is continuing, unless Agent has been notified by a Bank or a Company in writing that such Bank or Company, as the case may be, believes that an Unmatured Event of Default or Event of Default has occurred and is continuing and specifying the nature thereof. 17. Borrower has notified Agent that certain provisions of the financing agreement (under Title XI of the United States Code) relating to the vessel, the "Columbia Star" need to be amended (or waived) in order to take into account the Credit Agreement and the indebtedness incurred thereunder. Borrower has requested that Agent and the Banks temporarily waive any breach of such financing agreement that results from the Credit Agreement and the indebtedness incurred thereunder until September 30, 1998 in order to give Borrower time to negotiate and finalize documentation relating thereto. Agent and the Banks are willing to grant and hereby grant such temporary waiver expressly on the condition that no action whatsoever is taken under such financing agreement to accelerate or collect the indebtedness thereunder or to enforce or proceed to enforce or assert any rights or remedies of the lender under such financing agreement. 18. Concurrently with the execution of this First Amendment Agreement, Borrower shall: (a) cause each Pledgor to consent and agree to and acknowledge the terms of this First Amendment Agreement; and (b) pay all legal fees and expenses of Agent in connection with this First Amendment Agreement. 19. Borrower hereby represents and warrants to Agent and the Banks that (a) Borrower has the legal power and authority to execute and deliver this First Amendment Agreement; (b) the officers executing this First Amendment Agreement have been duly authorized to execute and deliver the same and bind Borrower with respect to the provisions hereof; (c) the execution and delivery hereof by Borrower and the performance and observance by Borrower of the provisions hereof do not violate or conflict with the organizational agreements of Borrower or any law applicable to Borrower or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against Borrower; (d) no Unmatured Event of Default or Event of Default exists under the Credit Agreement, nor will any occur immediately after the execution and delivery of the First Amendment Agreement or by the performance or observance of any provision hereof; (e) neither Borrower nor any Pledgor is aware of any claim or offset against, or defense or counterclaim to, any of Borrower's or any Pledgor's obligations or liabilities under the Credit Agreement or any Related Writing; and (f) this First Amendment Agreement constitutes a valid and binding obligation of Borrower in every respect, enforceable in accordance with its terms. 9 10 20. Each reference that is made in the Credit Agreement or any other writing to the Credit Agreement shall hereafter be construed as a reference to the Credit Agreement as amended hereby. Except as herein otherwise specifically provided, all provisions of the Credit Agreement shall remain in full force and effect and be unaffected hereby. This First Amendment Agreement is a Related Writing as defined In the Credit Agreement. 21. Borrower and each Pledgor, by signing below, hereby waives and releases Agent and each of the Banks and their respective directors, officers, employees, attorneys, affiliates and subsidiaries from any and all such claims, offsets, defenses and counterclaims of which Borrower and any Pledgor is aware, such waiver and release being with full knowledge and understanding of the circumstances and effect thereof and after having consulted legal counsel with respect thereto. 22. This First Amendment Agreement may be executed in any number of counterparts, by different parties hereto in separate counterparts and by facsimile signature, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 23. The rights and obligations of all parties hereto shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of laws. [Remainder of page intentionally left blank.] 10 11 24. JURY TRIAL WAIVER. BORROWER, PLEDGORS, AGENT AND EACH OF THE BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. Address: 1100 Superior Avenue OGLEBAY NORTON COMPANY Cleveland, Ohio 44114 By: /s/ Michael F. Biehl -------------------------------- Michael F. Biehl, Treasurer Address: 127 Public Square KEYBANKNATIONAL ASSOCIATION Cleveland, OH 44114-1306 as Agent and as a Bank Attn: Large Corporate Group By /s/ Lawrence A. Mack -------------------------------- Lawrence A. Mack, Senior Vice President 11 12 The undersigned consent and agree to and acknowledge the terms of this First Amendment Agreement. Oglebay Norton Holding Company ONCO Investment Company Oglebay Norton Industrial Minerals, Inc. Oglebay Norton Management Company Oglebay Norton Industrial Sands, Inc. Colorado Silica Sand, Inc. Oglebay Norton Terminals, Inc. Oglebay Norton Engineered Materials, Inc. Oglebay Norton Acquisition Company Global Stone Port Inland, Inc. Moreland Development Company Western Wisconsin Materials, Inc. By: /s/ Michael F. Biehl ---------------------------------------- Michael F. Biehl as Treasurer of each of the companies listed above Texas Mining, LP By: Oglebay Norton Industrial Sands, Inc., General Partner By: /s/ Michael F. Biehl ------------------------------------ Michael F. Biehl, Treasurer 12 EX-27 4 EXHIBIT 27
5 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 2,910,660 0 47,153,911 921,000 26,721,891 84,295,387 635,688,738 216,366,071 601,363,167 55,480,881 0 0 0 7,253,332 120,870,093 601,363,167 96,616,758 163,879,041 62,719,048 136,058,481 1,478,643 0 11,888,506 15,816,464 4,908,000 10,908,464 0 0 0 10,908,464 2.29 2.28
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