-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, W+gLL1PcKromkmGeEMIG7ggJQVcjGcp6jmRjj7SS4seomNcgVB9VndBXuaDG+ra+ w6r3aHrxgKPIXh92Qxv+nQ== 0000950152-94-000340.txt : 19940330 0000950152-94-000340.hdr.sgml : 19940330 ACCESSION NUMBER: 0000950152-94-000340 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 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-K SEC ACT: 34 SEC FILE NUMBER: 000-00663 FILM NUMBER: 94518783 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-K 1 OGLEBAY NORTON 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1993 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 Securities registered pursuant to Section 12(g) of the Act: Common Stock Rights to Purchase $1 Par Value Preferred Stock ------------ --------------- Shares of Common Stock with associated Rights to Purchase Preferred Stock outstanding at March 7, 1994: 2,498,776 The aggregate market value of voting stock held by non-affiliates of the Registrant at March 7, 1994 (based upon excluding the total number of shares reported under Item 12 hereof) was $37,584,984. Portions of the following documents are incorporated by reference: Proxy Statement for 1994 Annual Meeting of Stockholders (Part III) The Exhibit Index is located herein beginning at sequential page _____. 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 _______. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] 2 PART I ITEM 1. BUSINESS A. GENERAL - INDUSTRY SEGMENTS The Registrant, which was incorporated in Delaware in 1931, its wholly owned subsidiaries and its predecessor organizations have been engaged in the transportation, mining and sale of industrial minerals, iron ore and coal since 1854. The principal offices of the Registrant are located at 1100 Superior Avenue, Cleveland, Ohio 44114-2598. The information regarding the approximate amounts of consolidated sales and revenues (including sales commissions, royalties and management fees), consolidated profit from operations and consolidated identifiable assets for the three years ended December 31, 1993, attributable to each of the Registrant's industry segments, appears on pages 39 through 42 of this Annual Report on Form 10-K. B. PRINCIPAL PRODUCTS AND SERVICES 1. MARINE TRANSPORTATION The Registrant, through its Columbia Transportation Division and Pringle Transit Company, a wholly owned subsidiary, operates self-unloading vessels engaged in the transportation of iron ore, coal, limestone and other dry bulk cargo on the Great Lakes. The self-unloader fleet consists of fifteen (15) vessels, of which thirteen (13) are operated by the Columbia Transportation Division and two (2) are operated by Pringle Transit Company. The Registrant has commenced steps to transfer the Pringle operations to its Columbia Transportation Division and anticipates the transfer to be completed early in the second quarter. Twelve (12) of the vessels are owned by the Registrant and three (3) are leased as described below. The vessels' cargo capacities range in size from 13,500 tons to 60,000 tons. The newest vessel was commissioned in 1981 and the oldest in 1925. The relatively long life of Great Lakes vessels is due to a scheduled program of regular winter maintenance and periodic rebuilding and to the lack of corrosion because of freshwater operations. One of the owned vessels, the "Columbia Star", a 1000-foot Great Lakes self-unloading bulk carrier, has been financed through the use of bonds issued pursuant to Title XI of the Merchant Marine Act of 1936, as amended. See - 2 - 3 Note F of the Notes to Consolidated Financial Statements for disclosure of financial data with respect to these bonds. One leased vessel, the Wolverine, is leased and operated by the Registrant under a bareboat charter agreement which expires in 1999 and is renewable thereafter for up to ten years. The agreement provides an option to purchase the equity position in the vessel on the charter hire payment date in each year and an option to purchase the vessel at the end of the charter period. The two other leased vessels, the Roesch and the Thayer, are leased and operated by Pringle Transit Company under bareboat subcharter and charter agreements which expire in 1998 and provide options to purchase the vessels at the end of the subcharter and charter terms, respectively. The standard annual Great Lakes vessel season of navigation is 260 days. In 1993, the Registrant operated eleven (11) vessels during the season. The Registrant's fleet carried approximately 3% more tons of commodities than in 1992. 2. INDUSTRIAL MINERALS IRON ORE The Registrant held iron ore mining rights located near Eveleth, Minnesota, which were assigned in exchange for an overriding royalty to Eveleth Taconite Company ("Taconite Company") and Eveleth Expansion Company ("Expansion Com- pany"), in which the Registrant and its wholly owned subsidiary, ONCO Eveleth Company, hold 15% and 20.5% interests, respectively ("Eveleth Mines"). The Eveleth Mines reserves are sufficient to support the normal level of operations for 40 years. The Registrant also has a contract to serve, on a fee basis, as Manager of the Eveleth Mines operations. In addition to the mine, the Eveleth facility consists of a concentrating and pellet production plant, located approximately eight miles south of the mine. In 1993, 3,138,945 long tons of taconite pellets were produced. The Registrant sold its share of Eveleth pellets, approximately 700,000 long tons, under contracts or on the open market. Eveleth Mines is a cost-sharing operation. The basic agreements, entered into as of December 1, 1974, govern the operation for the life of the mine. Under the basic agreements, Eveleth Mines is required to operate at full capacity, with participants sharing fixed and variable costs in proportion to their respective equity interests. These agreements were modified, effective as of January 1, - 3 - 4 1991, to permit the participants greater production flexibility and to alter the cost-sharing arrangements through December 31, 1996. Under the modified agreements, each of the participants pays fixed costs in proportion to its equity interest and variable costs in proportion to the amount of iron ore nominated by it. Eveleth Mines reached agreement on a new labor contract with the United Steelworkers of America in the fourth quarter of 1993. The agreement, which has been ratified by the work force, will expire on August 1, 1999. One of the participants, with a 35% equity interest, has not taken any iron ore from Eveleth Mines since September 1992. That participant continues to pay its share of fixed costs. Preliminary discussions have been held regarding that participant's possible exit from Eveleth Mines. No agreement has been reached regarding the terms or timing of any such exit. Until those terms have been set, it is impossible to predict how any such exit might affect the continued viability of Eveleth Mines. INDUSTRIAL SANDS The Registrant has three wholly owned subsidiaries engaged in the production of industrial sands. These subsidiaries are listed in the following table.
Minimum Subsidiary or Division Current Capacity Years of Name and Location Products (tons in 1000's) Reserves(1) - ---------------------- -------- ---------------- -------- California Silica Construction, 550 17.4 Products Company Golf Course and San Juan Capistrano, Stucco Sand California Central Silica Company Glass, Foundry 780 35.2(2) Zanesville, Ohio and Pulverized Sand Texas Mining Company Fracture and 1,240 50.1(3) Brady, Texas Pulverized Sand (1) Based on full production at current rated annual capacity. (2) The increase in the minimum years of reserves from prior years is due to acquisition of additional reserves. (3) The decrease in the minimum years of reserves from prior years is due to a recalculation of the ore deposit's recoverable tonnage.
- 4 - 5 The Registrant's three silica sand subsidiaries produced approximately 1,265,650 tons of sand in 1993. The finished products produced by the Registrant's industrial sand business move by truck and rail to consumers. 3. MANUFACTURING The Registrant's manufacturing operations consist of the design, manufacturing and marketing of hot topping products and continuous casting refractories used in molten steel processing and the custom blending of metallurgical powders used in the treatment of molten steel. The briquetting plant produces fluorspar briquettes and dries fluorspar purchased from Mexico. The following subsidiaries and two divisions make up the Registrant's manufacturing operations. Ferro Engineering Division(1) Cleveland, Ohio Canadian Ferro Hot Metal Specialties Limited(2) Hamilton, Ontario, Canada Indiana Manufacturing Company Inc.(2) Dunkirk, Indiana Tuscarawas Manufacturing Company(2) Uhrichsville, Ohio West Minerals Division ONCO Minerals, Inc.(2) Warren, Ohio Brownsville Briquetting Plant(1) Brownsville, Texas (1) A division of the Registrant. (2) A wholly owned subsidiary of the Registrant. Canadian Ferro Hot Metal Specialties Limited, Indiana Manufacturing Company Inc., ONCO Minerals, Inc. and Tuscarawas Manufacturing Company own the plants and properties on which the plants are located. The Registrant owns the Ferro Engineering Division plant site in Cleveland, Ohio. The Brownsville plant is held under a lease which expires July 31, 1999. 4. OTHER The Registrant owns a coal transfer facility at Ceredo, West Virginia, on the Ohio River. This facility transferred 4,137,071 tons of coal in 1993, which is approximately 27% less than 1992 due to a nine-month, nationwide strike by the United Mine Workers of America - 5 - 6 during 1993. The Registrant has entered into an agreement for the sale of this facility which, subject to the fulfillment of certain conditions, will be concluded in the third quarter of 1994. The Registrant sold substantially all of the assets of its Licking River Terminal facility located at Wilder, Kentucky, to Newport Steel Corporation on December 31, 1993. This facility had not operated since July 1992. The Registrant's wholly owned subsidiary, National Perlite Products Company, became inactive as of January 31, 1994. Prior to the cessation of operations, National Perlite had not been mining perlite ore from its reserves near Malad City, Idaho. It had continued to expand perlite until its closure. C. COMPETITION The Registrant experiences intense competition in all of its business segments from both foreign and domestic companies with which it competes in supplying products and services or which offer alternative choices as to modes of transportation. Vessel rates are an important factor as to the ability of the Registrant's Great Lakes fleet to compete with other independent and captive fleets, railroads and other providers of surface transportation. The Registrant believes that product quality, differentiation and customer service are significant competitive considerations for all of its business segments. D. ENVIRONMENTAL, HEALTH AND SAFETY CONSIDERATIONS The Registrant is subject to various other environmental laws and regulations imposed by federal, state and local governments. The Registrant cannot reasonably estimate future costs, if any, related to compliance with these laws and regulations. However, costs incurred to comply with environmental regulations have not been significant in 1993 and prior years. Although it is possible that the Registrant's future operating results could be affected by future costs of environmental compliance, it is management's belief that such costs will not have a material effect on the Registrant's consolidated financial position. The Registrant is unable at this time to predict the effects of recently enacted amendments to the Clean Air Act upon its business. E. PRINCIPAL CUSTOMERS More than 10% of the Registrant's 1993 sales and revenues was attributable to each of Armco Steel Company, L.P. and LTV Steel Company, Inc. A long-term vessel transportation contract and a contract for iron ore pellets were the primary sources of - 6 - 7 revenues from Armco Steel Company, L.P. In the case of LTV Steel Company, Inc., revenues were largely attributable to coal-loading and vessel transportation services and manufactured products sold in 1993. F. EMPLOYEES At December 31, 1993, the Registrant and its subsidiaries employed 1,390 persons. ITEM 2. PROPERTIES The Registrant's principal operating properties are described in response to Item 1. The Registrant's executive offices are located at 1100 Superior Avenue, Cleveland, Ohio, under a sublease expiring on March 31, 2003. The total area involved is approximately 55,000 square feet. ITEM 3. LEGAL PROCEEDINGS (1) The suit filed by Ray W. Bauman to recover royalties and profits and for punitive damages against Laxare, Inc. for allegedly unlawfully mining coal was dismissed by the Circuit Court of Boone County, West Virginia, on January 21, 1994. (2) The Registrant's subsidiary, Laxare, Inc., was named in a Complaint dated December 27, 1988, along with Cannelton Industries, Inc. and Thomas G. Williams, Jr., a Lessor of Laxare, Inc., in the Circuit Court of Boone County, West Virginia. The Plaintiffs, Mary Catherine Marks and Josephine W. Luther, allege that defendant Thomas Williams has unlawfully withheld royalties from coal mined from the leased premises and that Laxare, Inc. was negligent in its verification of the title to the leased premises, which has resulted in Plaintiffs not receiving royalties. (3) On January 9, 1989, Laxare, Inc. was served with an Action for Declaratory Judgment filed by Thomas G. Williams, Jr. and his sister, Sarah M. Williams, against John Chesley Williams, Mary Catherine Marks, Josephine W. Luther, Cannelton Industries, Inc. and Laxare, Inc. in the Circuit Court of Kanawha County, West Virginia, in which Mr. Williams asked the Court to interpret various documents related to the above-described suit. Both actions have been combined in the Circuit Court of Kanawha County, West Virginia. On October 1, 1993, the Court denied Laxare, Inc.'s Motion for Summary Judgment on the question of the leasehold's legal validity and required it to submit briefs in support of all of its affirmative defenses. A joint scheduling order is being drafted by the parties for submission to the Court. Trial is anticipated for - 7 - 8 later in 1994. The Registrant has not been able to assess the extent of damages in the event of an adverse decision in this case. (4) The Registrant; its wholly owned subsidiary, Oglebay Norton Taconite Company; Eveleth Taconite Company; Eveleth Expansion Company and The United Steel Workers of America, Local 6860, have been named Defendants in a Complaint filed on August 16, 1988, in Federal District Court, 5th District of Minnesota, by Lois E. Jenson and Patricia S. Kosmach, in their own behalf and on behalf of all others similarly situated. The Complaint alleges both sexual harassment and sexual discrimination under Title VII of the Civil Rights Act of 1964 (the Act), Title 42, United States Code, 2000e et seq., and under the provision of the Minnesota Human Rights Act, Minnesota Statutes, Section 363.01 et seq. (5) On November 22, 1988, Kathleen P. O'Brien Anderson, a former employee of Eveleth Mines, filed a Notice of Charge of Discrimination with the Equal Employment Opportunity Commission, alleging sexual harassment and sexual discrimination. Ms. Anderson was issued, by the Equal Employment Opportunity Commission, a Notice of Right to Sue, which has been consolidated with the preceding Federal Court proceeding. These proceedings have been certified as a class action. This matter was tried in December 1992 and February 1993. On May 14, 1993, the Court issued its decision, dismissing seven of Plaintiffs' nine claims of discrimination and harassment against Defendants, Oglebay Norton Taconite Company and the Registrant. In addition, it was determined that as Eveleth Taconite Company, Eveleth Expansion Company and Eveleth Expansion Financing Corporation were not "employers", as defined under the Act, they were dismissed as parties defendant. This dismissal, however, does not relieve them of their contractual obligations to the Registrant and Oglebay Norton Taconite Company. The Registrant and Oglebay Norton Taconite Company received unfavorable decisions on the remaining two claims, one involving discrimination in the promotion of hourly employees to step-up foreman and the other harassment. Proceedings continue with regard to the two remaining counts against the Registrant and its subsidiary. As final orders have not been issued, the opportunity for appeal is not yet available. No assessment of potential loss can be predicted at this time. All or a portion of any loss in respect of this litigation may be covered by insurance, although at this time no assessment can be made as to the ultimate scope of insurance coverage available. (6) On February 26, 1993, a Complaint was filed by Lois E. Jenson and Kathleen O'Brien Anderson in the United States District Court, District of Minnesota, Fifth Division, naming the Registrant; its wholly owned subsidiary, Oglebay Norton Taconite Company; Eveleth Taconite Company; Eveleth Expansion Company; and The United Steel - 8 - 9 Workers of America, Local 6860, Defendants. The Complaint alleges violations of Title VII of the Civil Rights Act of 1964, Title 42, United States Code, Section 2000e et seq., as amended by the Civil Rights Act of 1991, and the Minnesota Human Rights Act, Minnesota Statutes, Section 363.01 et seq. The Plaintiffs seek injunctive relief, back pay, with triple damages, and compensatory and punitive damages in unspecified amounts. This suit is considered by counsel to be superfluous and barred by the doctrine of res judicata due to the fact that these same Plaintiffs filed a related suit in 1988, which was tried in December 1992 and February 1993 and for which a ruling was rendered on May 14, 1993. An answer has been filed to this Complaint. No assessment of potential loss can be predicted at this time. (7) The Registrant and certain of its subsidiaries are involved in various other claims and ordinary routine litigation incidental to their businesses, including claims relating to the exposure of persons to asbestos and silica. The full impact of these claims and proceedings in the aggregate continues to be unknown. The Registrant continues to monitor this situation. (8) The Registrant, as Manager of Eveleth Mines, has received a number of demands for arbitration with respect to management of Eveleth Mines and the allocation of certain costs, including the right of the Registrant to allocate the cost of the litigation referred to above in paragraphs (4) and (5) among the participants, submitted by a participant with a 35% equity interest. Arbitration panels have not been selected to date, and no discovery has taken place. As noted above under the heading "Iron Ore" beginning on page 3, the 35% owner has not taken any iron ore from Eveleth Mines since September 1992 and has expressed an interest in exiting from Eveleth Mines. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of the Registrant's security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report. EXECUTIVE OFFICERS OF THE REGISTRANT (Included pursuant to Instruction 3 to paragraph (b) of Item 401 of Regulation S-K) The executive officers of the Registrant as of March 7, 1994, unless otherwise indicated, were as follows. - 9 - 10
Name Executive Office Age - -------------------- -------------------------------- --- R. Thomas Green, Jr. Chairman of the Board, President and Chief Executive Officer (since 1992); Executive Vice President (1990-1992); Vice President-Iron Ore Operations (1984-1990); and Director 56 Thomas J. Croyle Vice President-General Manager of Ferro Engineering Division (since 1988) 44 Edward G. Jaicks Vice President-Marketing (since 1992) 37 Richard J. Kessler Vice President-Finance (since 1981), and Development (since February 23, 1994) and Treasurer (since 1974) 57 H. William Ruf Vice President-Administrative and Legal Affairs (since February 23, 1994); Vice President-Human Resources (1993-1994); Vice President-Employee Relations (1992-1993); Vice President- Personnel and Industrial Relations (1978-1992) 59 John L. Selis Vice President-Iron Ore (since February 23, 1994); Vice President- Iron Ore Operations (1992 to February 23, 1994); Vice President- Administration (1981-1992) and Law (1986-1992) 57 Stuart H. Theis Vice President-Marine Transportation (since January 1, 1994); Assistant to the President (December 28, 1992- December 31,1993) 51 David A. Kuhn Secretary (since 1981) and General Counsel (since March 1, 1992) 64
Two executive officers, August F. Bradfish, Vice President- Industrial Minerals, and Frank A. Castle, Vice President-General Manager of Columbia Transportation Division, retired as of January 31, 1994, and December 31, 1993, respectively. Except as noted above, all executive officers of the Registrant have served in the capacities indicated, respectively, during the past five years. All executive officers serve at the pleasure of the Board of Directors, with no fixed term of office. - 10 - 11 Part II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock, par value $1 per share, as reported by NASDAQ is traded on the Over-The-Counter Market. The following is a summary of the market ranges and dividends declared for each quarterly period in 1993 and 1992 for the Common Stock.
Quarterly Dividends Period High Low Declared --------- ---- --- --------- 1993 4th $23 $19-1/4 $.20 3rd 22 18 .20 2nd 24-1/2 20 .20 1st 26-1/4 22-1/2 .20 1992 4th $29 $23 $.20 3rd 32-1/4 27-1/2 .40 2nd 36-1/2 31 .40 1st 35-1/2 28-1/2 .40
As of December 31, 1993, there were 543 stockholders of record. -11- 12 ITEM 6. SELECTED FINANCIAL DATA OGLEBAY NORTON COMPANY AND SUBSIDIARIES (Dollars in Thousands, Except Per Share Amounts)
YEAR ENDED 1993 1992 ------------------------------ OPERATIONS Net sales and operating revenues $ 159,736 $ 148,690 Sales commissions, royalties and management fees 3,710 5,321 ----------- ----------- Gross operating revenues $ 163,446 $ 154,011 =========== =========== Income (loss) from continuing operations before taxes $ 9,554 $ (49,761) Income taxes 2,292 (17,612) ----------- ----------- Income (loss) from continuing operations 7,262 (32,149) Discontinued operation 2,440 ----------- ----------- Income (loss) before extraordinary provision and cumulative effects of changes in accounting 7,262 (29,709) Extraordinary provision1 (9,978) Cumulative effects of changes in accounting2 (17,006) ----------- ----------- Net income (loss)3 $ 7,262 $ (56,693) =========== =========== Depreciation and amortization 13,432 16,165 Expenditures for properties and equipment 2,921 8,727 PER SHARE DATA Continuing operations $ 2.89 $ (12.79) Discontinued operation -0- .97 ----------- ----------- Income (loss) before extraordinary provision and cumulative effects of changes in accounting 2.89 (11.82) Extraordinary provision1 (3.97) Cumulative effects of changes in accounting2 (6.77) ----------- ----------- Net income (loss)3 $ 2.89 $ (22.56) =========== =========== Dividends $ .80 $ 1.40 =========== =========== OTHER STATISTICS Total assets $ 259,682 $ 263,974 Long-term debt 69,344 80,534 Other long-term liabilities 80,607 85,838 Dividends declared 2,009 3,518 Average shares of Common Stock outstanding 2,511,545 2,512,926 Shares of Common Stock outstanding at year-end 2,503,926 2,512,926 1 Extraordinary provision relates to the Coal Industry Retiree Health Benefit Act of 1992, as further described in Note I to the consolidated financial statements. 2 Cumulative effects of changes in accounting are for postretirement benefits other than pensions and vessel inspection costs in 1992, as further described in Note A to the consolidated financial statements.
-12- 13 DECEMBER 31
1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------ $ 144,249 $ 159,951 $ 145,402 4,594 6,210 6,791 ---------- ---------- ---------- $ 148,843 $166,161 $152,193 ========== ========== ========== $ 3,839 $ 7,006 $ 4,705 528 1,829 1,272 ---------- ---------- ---------- 3,311 5,177 3,433 1,816 1,773 1,574 ---------- ---------- ---------- 5,127 6,950 5,007 ---------- ---------- ---------- $ 5,127 $ 6,950 $ 5,007 ========== ========== ========== 15,878 13,691 12,970 3,506 63,894 3,030 $ 1.32 $ 2.03 $ 1.33 .72 .69 .61 ---------- ---------- ---------- 2.04 2.72 1.94 ---------- ---------- ---------- $ 2.04 $ 2.72 $ 1.94 ========== ========== ========== $ 1.60 $ 1.60 $ 1.60 ========== ========== ========== $ 291,133 $ 303,862 $ 245,219 87,937 99,839 48,492 52,209 53,253 53,743 4,022 4,084 4,160 2,513,767 2,555,750 2,580,925 2,512,926 2,517,153 2,578,116 3 The net loss for 1992 includes the effects of capacity rationalization, asset impairments, and a loss on the disposal of a business as further described in Notes G and H to the consolidated financial statements.
-13- 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION The Company's operating activities provided cash of $7,764,000 in 1993 as compared to $22,109,000 in 1992 and $24,891,000 in 1991. The increased cash provided from operations the past two years resulted from the timing of certain transactions at the end of 1991 and 1990. At the end of 1991, the Company sold its Licking River Terminal long-term coal dumping contract to a third party for $12,500,000. The proceeds from the sale were collected at the beginning of 1992 reducing accounts receivable, established at the time of the sale, and increasing cash from operations. At the beginning of 1991, the Company sold inventories and collected related accounts receivable for certain iron ore transactions which occurred at the end of 1990, increasing cash from operations by $14,295,000. In 1993, accounts receivable included $1,500,000 related to the sale of assets which caused a decline in cash provided by operating activities. In November 1993, the Company repaid $10,000,000 outstanding on its revolving credit and reborrowed $10,000,000 in December 1993. The Company repaid a total of $20,000,000 of borrowings under its revolving credit in January and September 1992 and borrowed a total of $15,000,000 in February and October 1992. In May 1991, the Company borrowed $6,000,000 under its revolving credit for working capital purposes and repaid the amount borrowed in July and August. In December 1993, the Company refinanced its Title XI Ship Financing Bonds at a cost of $652,000, reducing the fixed interest rate from 9.65% to 5.3%. The reduction in interest will result in cumulative savings approximating $3,200,000 over the life of the Bonds. In 1993 and 1991, the Company purchased 9,000 and 4,227 shares, respectively, of its Common Stock on the open market for $189,000 and $118,000, respectively, and placed these shares in treasury. The Company declared and paid dividends on a quarterly basis amounting to $.80 per share in 1993, $1.40 per share in 1992 and $1.60 per share in 1991. Dividends paid were $2,009,000 in 1993 compared to $3,518,000 and $4,022,000 in 1992 and 1991, respectively. In the fourth quarter of 1992, the Company's Board of Directors approved a reduction of the quarterly dividend from $.40 per share of Common Stock to $.20 per share. The equivalent dollars resulting from this action will be used to help advance the Company's strategic businesses. Expenditures for property and equipment amounted to $2,921,000 in 1993 compared to $8,727,000 and $3,506,000 in 1992 and 1991, respectively. Vessel inspection costs of $364,000 and $2,782,000 are included in 1993 and 1992 expenditures, respectively, capitalized as a result of a change in accounting for such costs, as further described in Note A to the consolidated financial statements. Expenditures for 1992 also include $2,400,000 of property and equipment acquired as a part of West Minerals, Inc. No significant capital expenditures for 1994 are currently anticipated. -14- 15 LTV Steel Company, Inc. (LTV) sought protection from its creditors under Chapter 11 of the Bankruptcy Code in 1986; and the U. S. bankruptcy court authorized LTV to reject the Company's long-term iron ore sales and vessel transportation contracts. In 1991, an agreement with LTV regarding the Company's unsecured bankruptcy claim was approved by the Court. In 1993, the Company sold for cash its claim against LTV, resulting in a $2,653,000 pretax gain after the retirement of $4,412,000 of long-term receivables. As previously mentioned, the Company sold its Licking River Terminal long-term dumping contract in 1991. In 1993, the Company sold the assets of the Terminal resulting in a $1,326,000 pretax gain. The Company's wholly-owned subsidiary, Saginaw Mining Company, ceased operation of its St. Clairsville, Ohio coal mine and began the mine closing process in 1992. Operation of the mine was discontinued as a result of a decision by a major public utility customer to terminate its long-term contract with the Company which provided for the sale of substantially all the mine's high-sulphur coal to that customer. Upon termination of the contract, the utility customer paid the Company $1,952,000 which was recognized as a gain on shutdown of this discontinued operation. Permanent closure of the mine was completed in 1993. Final settlement and customer funding of the closure costs has been extended to July 31, 1994, at the request of the customer. The Company's wholly-owned subsidiary, T & B Foundry, was disposed of in 1992 resulting in a $3,300,000 pretax loss. The above dispositions are further described in Note G to the consolidated financial statements. 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 1993 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. Anticipated cash flows from operations and current financial resources are expected to meet the Company's needs during 1994. As was demonstrated by the Company's 1993 refinancing of its Title XI Bonds, all financing alternatives are under constant review to determine their ability to provide sufficient funding at the least possible cost. RESULTS OF OPERATIONS Net sales, operating revenues, sales commissions, royalties and management fees from continuing operations amounted to $163,446,000 in 1993 as compared to $154,011,000 and $148,843,000 in 1992 and 1991, respectively. Income from continuing operations before taxes was $9,554,000 in 1993 as compared to a loss from continuing operations of $49,761,000 in 1992 and income of $3,839,000 in 1991. Net income for 1993 was $7,262,000 or $2.89 per share on 2,511,545 average shares as compared to a net loss of $56,693,000 or $22.56 per share in 1992 on 2,512,926 average shares and net income of $5,127,000 or $2.04 per share in 1991 on 2,513,767 average shares. -15- 16 Included in 1993 revenues is the $2,653,000 gain on the sale of the Company's unsecured bankruptcy claim and the $1,326,000 gain on the sale of the Company's Licking River Terminal assets. Notes G and K to the consolidated financial statements further describe these 1993 transactions. Revenues include a $1,544,000 gain in 1992 on the disposal of certain undeveloped Iron Ore and Industrial Sands properties and a $5,777,000 gain in 1991 on the sale of the Company's Licking River Terminal long-term coal dumping contract. Included in interest, dividends and other income in 1991 is interest income of $2,728,000 attributable to a federal income tax refund. Income from continuing operations before taxes for 1993 was reduced $1,700,000 as the result of a reserve against doubtful coal customer accounts receivable and $652,000 related to the Company's refinancing of its Title XI Bonds. The loss from continuing operations for 1992 was increased $47,912,000 for a provision for capacity rationalization, asset impairment charges and a loss on the disposal of a business. Notes G, H and K to the consolidated financial statements further describe these charges. In 1991, income from continuing operations before taxes was reduced $1,593,000 related to asset impairment charges, as further described in Note H to the consolidated financial statements. In 1992 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106 "Employers' Accounting for Postretirement Benefits Other than Pensions." As a part of adopting SFAS No. 106, the Company recorded a one-time, non-cash charge of $17,541,000 or $6.98 per share in 1992. The Company also changed its method of accounting for vessel inspection costs from expensing such costs over one shipping season to deferring these costs and amortizing them over five shipping seasons between required inspections. This change in accounting has resulted in a cumulative adjustment which decreased the 1992 net loss by $534,000 or $.21 per share. Note A to the consolidated financial statements further describes these changes in accounting. The net loss for 1992 was increased $9,978,000 or $3.97 per share for an extraordinary provision for the Coal Industry Retiree Health Benefit Act of 1992. This 1992 legislation requires former coal mining companies to assume certain health care benefit obligations for retired coal miners and their dependents, as further described in Note I to the consolidated financial statements. In 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which the Company must adopt in 1994. Under the new rules, the Company's marketable equity investments will be classified as available-for-sale and carried at fair value. Unrealized holding gains and losses on investments classified as available-for-sale are carried as a separate component of stockholders' equity, net of taxes. Presently, the Company reports such investments at the lower of cost or market and as long-term in the consolidated balance sheet. The Company will adopt the new standard in the first quarter of 1994, which will result in an approximate $2,972,000 increase in stockholders' equity as of January 1, 1994. In 1993, the Company reevaluated assumptions used in determining postretirement pension and health care benefits. The weighted-average discount rates were adjusted from 8.5% to 7.25% to better reflect market rates. The assumed health care cost -16- 17 trend rate will decline by 1.25% and the expected long-term rate of return on assets will be adjusted from 9.5% to 9% in 1994. The change in assumptions did not affect 1993 net income and will not have a significant effect on net income in 1994. Postretirement benefits are further described in Note D to the consolidated financial statements. Depressed economic conditions in the steel industry and the previously mentioned charges adversely affected the Company's 1992 operating results. In 1993, strong order levels experienced by the Company's steel industry customers as well as effective cost management have contributed significantly to 1993 operating results. The Company continues to stress quality products, cost reductions and improved marketing practices for its products and services in order to remain competitive within the industries served. The operating results of the Company's business segments for the three years ended December 31, 1993 are discussed below. Segments were redefined in 1993 resulting in an insignificant reclassification of prior years' information. It is the policy of the Company to allocate certain corporate general and administrative expenses to its business segments. MARINE TRANSPORTATION - Operating revenues amounted to $73,143,000 in 1993 which was 4% greater than revenues of $70,654,000 in 1992, and was comparable to revenues of $73,090,000 in 1991. Operating profit was $10,791,000 in 1993 which was a 13% and 26% increase over 1992 and 1991 levels of $9,538,000 and $8,571,000, respectively. Income from continuing operations before taxes was $5,492,000 in 1993 compared to $2,228,000 and $1,498,000 in 1992 and 1991, respectively. Revenues improved in 1993 for the Company's Great Lakes vessel fleet as operating days increased 6% from an extended sailing season and a 1% increase in the average rate per ton was realized due to a better commodity mix, compared to 1992 levels. The 1993 average rate per ton declined 5% compared to the 1991 rate. The fleet experienced 3% and 5% increases in tonnage carried in 1993, representing a record level, compared to 1992 and 1991 tonnage, respectively. Transportation of iron ore increased, while coal and stone shipments declined. Coal shipments were adversely affected by coal industry labor disputes. Ten vessels sailed for the full season and one vessel sailed for part of the season in 1993 compared to eleven and thirteen vessels operating for almost full seasons in 1992 and 1991, respectively. The 1993 operating profit improvement compared to prior years was primarily the result of improved revenues and lower operating costs. Asset impairment charges in 1992 relate primarily to adjusted carrying values of certain vessels in the Company's fleet based on market conditions in this industry. Depreciation expense declined in 1993 as a result of the prior year asset impairment charges. Depreciation was greater in 1992 compared to 1991 expense due to the acquisition of two vessels at the end of 1990. Interest expense declined in 1993 compared to prior years, as a result of lower interest rates and reductions in outstanding debt. The Title XI Bonds fixed interest rate reduction from 9.65% to 5.3% at the end of 1993, as further described in Note F to the consolidated financial statements, will reduce interest expense in 1994. -17- 18 A new four-year labor agreement was signed in the fourth quarter of 1993 covering the licensed officers and engineers in the Company's fleet. This agreement helps assure uninterrupted operation of this important segment of the Company's business. INDUSTRIAL MINERALS IRON ORE - Net sales, royalties and management fees for iron ore amounted to $23,634,000 in 1993, a 26% and 24% increase over 1992 and 1991 levels of $18,821,000 and $18,998,000, respectively. Operating profit contribution was $4,031,000 compared to operating losses of $2,832,000 in 1992 and $1,741,000 in 1991. Income from continuing operations was $3,405,000 in 1993 compared to losses of $38,206,000 in 1992 and $2,911,000 in 1991. The Company, in addition to its sales to long-term contract customers, attempts to sell the balance of its share of Eveleth Mines' iron ore production each year on the open spot market to steel producers. Iron ore spot market demand has been depressed the past three years; therefore, the Company has not been successful in selling its iron ore at competitive prices. Price pressure from the Company's customers continues as a result of excess capacity in the iron ore industry. The Company is continuing its efforts in responding to this pressure through increased productivity, managed cost reduction and more aggressive marketing. In 1992, the Company recorded a provision for capacity rationalization of $34,694,000, and asset impairment charges of $330,000, as disclosed in Note H to the consolidated financial statements. The charges resulted from depressed economic conditions in the steel industry and Eveleth's high costs, which caused certain partners in Eveleth Mines to continue to acquire their iron ore requirements from other sources rather than produce them at Eveleth. While the Company might conclude otherwise at a later date, the treatment of its Eveleth investment should not be viewed as an abandonment of its iron ore business. Preliminary discussions have been held regarding one of the partners possible exit from Eveleth Mines. No agreement has been reached regarding the terms or timing of any such exit. Until those terms have been set, it is impossible to predict how this event may affect the continued viability of Eveleth Mines. Revenues increased in 1993 primarily due to a 65% and 74% increase in iron ore pellet tonnage sold compared to 1992 and 1991, respectively. Spot market sales to long-term contract customers and other new customers accounted for the increase in 1993. Eveleth Mines was shut down for part of 1992. The improvement was partially offset by a 14% and 21% decline in the average selling price per ton in 1993 compared to 1992 and 1991 average prices, respectively. Capacity rationalization steps taken in 1992 improved operating profit in 1993 by $5,220,000. In addition, increased revenues and productivity and reduced costs contributed to the 1993 improvement. A $550,000 gain on the sale of certain undeveloped iron ore properties reduced the loss from continuing operations in 1992. Interest expense declined in 1993, compared to prior years, due to reductions in outstanding debt. -18- 19 Late in the fourth quarter of 1993, the Company reached a new collective bargaining agreement with members of the United Steel Workers of America at Eveleth Mines. Early in 1994, the six-year agreement was ratified by the Eveleth work force. INDUSTRIAL SANDS - Net sales for 1993 amounted to $26,606,000 compared to $24,447,000 and $23,326,000 in 1992 and 1991, respectively. Operating profit was $1,827,000 in 1993 compared to $944,000 and $910,000 in 1992 and 1991, respectively. Income from continuing operations before taxes was $1,846,000 in 1993 compared to a loss of $2,699,000 in 1992 and income of $537,000 in 1991. Included in 1992 is a gain on the sale of certain undeveloped sand properties which reduced the loss by $993,000. Asset impairment charges of $4,640,000 and $400,000 were recorded at the end of 1992 and 1991, respectively. These charges resulted from changes in market conditions and circumstances that have impaired certain asset carrying values at the Company's Texas Mining Company and California Silica Products Company. Central Silica Company, the Company's Ohio sand producer, experienced 13% and 29% increases in sales in 1993 compared to 1992 and 1991, respectively. Central's 1993 operating profit improved 29% and 53% compared to 1992 and 1991, respectively. Tonnage sold in 1993 declined 13% compared to 1992 and increased 10% compared to the 1991 level. The gross margin on sand products sold improved in 1993 by 54% and 44% compared to 1992 and 1991, respectively. The 1993 sales and profit improvements were principally due to a magnetic separation process implemented in the fourth quarter of 1992 which enabled Central to obtain new business. The improvements were partially offset by reductions in plant capacity for certain Central Silica customers in 1993. Texas Mining Company sales in 1993 were comparable to 1992 sales, while operating profit improved 21% in 1993, compared to 1992. Although tonnage shipped decreased 6%, gross margin increased 44% in 1993 compared to 1992. The improvement was primarily the result of a better mix of products sold, partially offset by greater health care costs. Sales in 1993 were 8% less than in 1991; however, operating profit more than tripled in 1993 compared to 1991. The sales decline reflects a lower level of oil well drilling due to lower market prices, partially offset by improved sales in the gas extraction market. The substantial profit improvement is the result of a 6% reduction in the average operating cost per ton sold and the expiration of a non-compete covenant, partially offset by greater health care costs. California Silica Products sales improved by 20% and 27% in 1993 compared to 1992 and 1991, respectively. Operating profit in 1993 improved $630,000 and $890,000 over 1992 and 1991 losses, respectively. The 1993 sales improvement reflects a 20% and 24% increase in tonnage shipped compared to 1992 and 1991 levels, respectively, primarily to recreational markets. The 1993 operating profit improvement is attributable to increased sales and lower depreciation expense due to asset impairment charges recognized in 1992. -19- 20 MANUFACTURING - Net sales for 1993 amounted to $35,756,000 which was 4% and 67% greater than 1992 and 1991 levels of $34,422,000 and $21,363,000, respectively. Operating profit was $2,809,000 in 1993 compared to a profit of $257,000 in 1992 and a loss of $1,154,000 in 1991. Income from continuing operations before taxes was $2,608,000 in 1993 compared to losses of $4,077,000 and $1,559,000 in 1992 and 1991, respectively. The loss from continuing operations before taxes in 1992 includes a $3,300,000 loss on the disposal of T & B Foundry, as disclosed in Note G to the consolidated financial statements. Asset impairment charges of $755,000 and $411,000 are included in 1992 and 1991, respectively, representing changes in market conditions and circumstances that impaired certain asset carrying values at the Company's Ferro Engineering Division. The increase in net sales in 1993 compared to 1992 is attributable to new business in the tundish coatings, shapes, hot tops and metal powders product lines. An 11% increase in net sales in 1993 related to this new business was partially offset by the loss of T & B Foundry revenues which was disposed of at the end of 1992. T & B Foundry accounted for 16% and 31% of the Manufacturing segment net sales in 1992 and 1991, respectively. Fluorspar product line net sales in 1993 were comparable to 1992, but declined 25% compared to the 1991 sales level. The increase in net sales in 1992 compared to 1991 is primarily attributable to the acquisition of the West Minerals metal powders product line at the beginning of 1992. Operating profit improved in 1993 compared to 1992 as a result of the new business and cost reductions in the tundish coatings, shapes and hot top product lines. Operating profit improved in 1992 compared to 1991 as a result of the West Mineral acquisition and improved tundish coatings and shapes revenues. Interest expense declined in 1993 compared to 1992 due to lower interest rates and a reduction in outstanding debt. Increases in depreciation, expenditures for properties and equipment and interest expense in 1992 compared to 1991 were related principally to the acquisition. -20- 21 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 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, 1993 and 1992, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Oglebay Norton Company and subsidiaries at December 31, 1993 and 1992, and the consolidated results of its operations and cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Note A to the consolidated financial statements, in 1992 the Company changed its method of accounting for postretirement benefits other than pensions and vessel inspection costs. ERNST & YOUNG Cleveland, Ohio February 18, 1994 -21- 22 CONSOLIDATED BALANCE SHEET OGLEBAY NORTON COMPANY AND SUBSIDIARIES
December 31 1993 1992 ------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 21,243,064 $ 23,332,342 Accounts receivable, less reserves for doubtful accounts of $2,082,000 in 1993 and $730,000 in 1992 28,291,306 19,310,084 Inventories Raw materials and finished products 4,354,120 3,642,800 Operating supplies 2,305,719 2,114,738 ------------- ------------- 6,659,839 5,757,538 Deferred income taxes 3,801,985 3,619,342 Prepaid insurance and other expenses 2,191,166 1,970,005 ------------- ------------- TOTAL CURRENT ASSETS 62,187,360 53,989,311 INVESTMENTS AND LONG-TERM RECEIVABLES 14,867,623 19,905,104 PROPERTIES AND EQUIPMENT Marine Transportation 239,999,642 239,760,249 Industrial Mining 49,911,250 49,016,019 Manufacturing 16,252,996 15,088,124 Other 13,197,688 29,293,167 ------------- ------------- 319,361,576 333,157,559 Less allowances for depreciation and amortization 156,962,679 161,845,867 ------------- ------------- 162,398,897 171,311,692 PREPAID PENSION COSTS AND OTHER ASSETS 20,228,456 18,767,955 ------------- ------------- $259,682,336 $263,974,062 ============ ============
-22- 23
December 31 1993 1992 --------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 11,189,664 $ 7,652,850 Accounts payable 4,005,475 4,498,281 Payrolls and other accrued compensation 4,828,016 3,549,066 Accrued taxes and other expenses 12,477,692 7,681,647 Income taxes 733,414 1,852,729 Reserve for capacity rationalization 6,312,600 6,312,600 Net liabilities of discontinued operation 311,490 2,189,862 ------------ ------------ TOTAL CURRENT LIABILITIES 39,858,351 33,737,035 LONG-TERM DEBT, less current portion 69,344,025 80,533,718 RESERVE FOR CAPACITY RATIONALIZATION 9,812,596 16,125,200 POSTRETIREMENT BENEFITS OBLIGATION 30,285,278 28,260,913 OTHER LONG-TERM LIABILITIES 18,166,140 19,209,818 DEFERRED INCOME TAXES 19,398,153 18,768,310 NET LONG-TERM LIABILITIES OF DISCONTINUED OPERATION 2,944,553 3,473,522 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 3,626,666 shares 3,626,666 3,626,666 Additional capital 8,988,043 8,946,541 Retained earnings 88,773,915 83,521,361 ------------ ------------ 101,388,624 96,094,568 Treasury Stock, at cost - 1,122,740 and 1,113,740 shares at respective dates (28,681,694) (28,492,454) Unallocated Employee Stock Ownership Plan shares ( 2,833,690) ( 3,736,568) ------------ ------------ 69,873,240 63,865,546 ------------ ------------ $259,682,336 $263,974,062 ============ ============ See notes to consolidated financial statements.
-23- 24 CONSOLIDATED STATEMENT OF OPERATIONS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Year Ended December 31 1993 1992 1991 ------------------------------------------------------------------- REVENUES Net sales and operating revenues $159,736,471 $148,690,067 $144,249,390 Sales commissions, royalties and management fees 3,709,687 5,321,222 4,594,140 Gain on sale of assets 4,116,906 1,560,218 5,827,280 Interest, dividends and other income 1,184,208 1,465,075 4,534,038 ------------ ------------- ------------ 168,747,272 157,036,582 159,204,848 COSTS AND EXPENSES Cost of goods sold and operating expenses 133,335,772 133,827,997 129,073,261 General, administrative and selling expenses 15,854,049 16,564,471 15,088,353 Provision for capacity rationalization -0- 34,693,983 -0- Asset impairment charges -0- 9,918,497 1,592,725 Loss on disposal of business -0- 3,300,000 -0- Reserve for doubtful accounts 1,892,419 638,110 41,400 Interest expense 7,554,878 7,610,195 9,256,744 Other expense 556,119 244,048 313,660 ------------ ------------- ------------ 159,193,237 206,797,301 155,366,143 ------------ ------------- ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 9,554,035 (49,760,719) 3,838,705 INCOME TAXES Current 233,000 2,330,000 (219,000) Deferred 2,059,000 (19,942,000) 747,000 ------------ ------------- ------------ 2,292,000 (17,612,000) 528,000 ------------ ------------- ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS 7,262,035 (32,148,719) 3,310,705 Discontinued operation: Income from discontinued operation -0- 1,152,566 1,816,667 Gain on shutdown of discontinued operation -0- 1,287,791 -0- ------------ ------------- ------------ Income and gain from discontinued operation -0- 2,440,357 1,816,667 ------------ ------------- ------------ INCOME (LOSS) BEFORE EXTRAORDINARY PROVISION AND CUMULATIVE EFFECTS OF CHANGES IN ACCOUNTING 7,262,035 (29,708,362) 5,127,372 Extraordinary provision for Coal Industry Retiree Health Benefit Act of 1992 ( 9,977,900) Cumulative effects of changes in accounting for postretirement benefits other than pensions and vessel inspection costs (17,006,415) ------------ ------------- ------------ NET INCOME (LOSS) $ 7,262,035 $ (56,692,677) $ 5,127,372 ============ ============= ============
-24- 25 CONSOLIDATED STATEMENT OF OPERATIONS - (CONTINUED) OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Year Ended December 31 1993 1992 1991 --------------------------------------------------------- Income (loss) per share of common stock: Continuing operations $ 2.89 $(12.79) $1.32 Discontinued operation -0- .97 .72 ------- ------- ----- Before extraordinary provision and cumulative effects of changes in accounting 2.89 (11.82) 2.04 Extraordinary provision ( 3.97) Cumulative effects of changes in accounting ( 6.77) ------- ------- ----- NET INCOME (LOSS) PER SHARE $ 2.89 $(22.56) $2.04 ======= ======= ===== See notes to consolidated financial statements.
-25- 26 CONSOLIDATED STATEMENT OF CASH FLOWS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Year Ended December 31 1993 1992 1991 ------------------------------------------------------------------ OPERATING ACTIVITIES Income (loss) from continuing operations $ 7,262,035 $(32,148,719) $ 3,310,705 Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: Depreciation and amortization 13,431,957 16,165,164 15,878,251 Deferred income taxes 447,200 (19,968,342) 747,000 Gain on sale of assets (4,116,906) ( 1,560,218) (5,827,280) Asset impairment charges -0- 9,918,497 1,592,725 Capacity rationalization -0- 34,693,983 -0- Loss on disposal of business -0- 3,300,000 -0- Prepaid pension costs and other assets (2,147,271) ( 1,921,313) (1,756,962) Decrease (increase) in accounts receivable (8,981,222) 11,315,860 15,274,129 Decrease (increase) in inventories ( 902,301) (422,785) 1,587,645 Increase (decrease) in accounts payable ( 492,806) 374,061 (1,044,829) Other operating activities 3,263,529 2,363,080 (4,870,453) ----------- ------------ ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,764,215 22,109,268 24,890,931 INVESTING ACTIVITIES Purchase of properties and equipment ( 2,557,011) ( 3,545,025) ( 3,505,599) Vessel inspection costs ( 364,164) ( 2,781,565) -0- Proceeds from sale of assets 8,656,012 2,269,306 111,776 Investments in iron ore mining ( 2,949,695) ( 2,925,167) ( 3,510,658) Acquisition of West Minerals, Inc. -0- ( 6,000,000) -0- Other investments 120,306 173,910 131,729 ----------- ------------ ----------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,905,448 (12,808,541) (6,772,752) FINANCING ACTIVITIES Payment on short-term bank borrowings -0- -0- ( 6,000,000) Additional short-term bank borrowings -0- -0- 6,000,000 Payments on long-term debt (18,152,879) (28,652,850) (10,250,000) Additional long-term debt 10,000,000 21,000,000 -0- Dividends paid ( 2,009,481) ( 3,518,096) ( 4,021,810) Purchase of Treasury Stock ( 189,240) -0- ( 118,412) ----------- ------------ ----------- NET CASH USED FOR FINANCING ACTIVITIES (10,351,600) (11,170,946) (14,390,222) ----------- ------------ ----------- Increase (decrease) in cash and cash equivalents from continuing operations 318,063 ( 1,870,219) 3,727,957 Cash (used for) provided by discontinued operation (2,407,341) 7,800,121 2,165,367 Cash and cash equivalents, January 1 23,332,342 17,402,440 11,509,116 ----------- ------------ ----------- CASH AND CASH EQUIVALENTS, DECEMBER 31 $21,243,064 $ 23,332,342 $17,402,440 =========== ============ =========== See notes to consolidated financial statements.
-26- 27 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Unallocated Common Employee Stock Total Common Additional Retained Stock Ownership Stockholders' Stock Capital Earnings in Treasury Plan Shares Equity ----- ------- -------- ----------- ----------- ------ Balance, January 1, 1991 $3,626,666 $8,866,493 $142,626,572 $(28,374,042) $ (5,542,325) $121,203,364 Net Income 5,127,372 5,127,372 Dividends $1.60 per share (4,021,810) (4,021,810) Purchase of Treasury Stock (118,412) (118,412) Allocated ESOP shares 902,879 902,879 ---------- ---------- ------------ ------------ ------------ ------------ Balance, December 31, 1991 3,626,666 8,866,493 143,732,134 (28,492,454) (4,639,446) 123,093,393 Net Loss (56,692,677) (56,692,677) Dividends $1.40 per share ( 3,518,096) ( 3,518,096) Tax benefit of unallocated shares in ESOP 80,048 80,048 Allocated ESOP shares 902,878 902,878 ---------- ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1992 3,626,666 8,946,541 83,521,361 (28,492,454) (3,736,568) 63,865,546 Net Income 7,262,035 7,262,035 Dividends $ .80 per share (2,009,481) (2,009,481) Tax benefit of unallocated shares in ESOP 41,502 41,502 Purchase of Treasury Stock (189,240) (189,240) Allocated ESOP shares 902,878 902,878 --------- --------- ---------- --------- ---------- --------- Balance, December 31, 1993 $3,626,666 $8,988,043 $ 88,773,915 $(28,681,694) $(2,833,690) $69,873,240 ========== ========== ============ ============ =========== ===========
See notes to consolidated financial statements. -27- 28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES December 31, 1993, 1992, and 1991 NOTE A - ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its majority 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 to be cash equivalents. Cash equivalents are stated at cost which approximates market value. INVENTORIES: Inventories are stated at the lower of average cost or market. INVESTMENTS: The Company holds an investment in Eveleth Mines through a 15 percent interest in Eveleth Taconite Company (ETC) and a 20.5 percent interest in Eveleth Expansion Company (EEC). Other long-term investments held by the Company have a carrying value of $3,172,000 and a fair value, based on quoted market prices, of $7,675,000 at December 31, 1993. In 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which the Company must adopt in 1994. Under the new rules, the Company's marketable equity investments will be classified as available-for-sale and carried at fair value. Unrealized holding gains and losses on investments classified as available-for-sale are carried as a separate component of stockholders' equity, net of taxes. Presently, the Company reports such investments at the lower of cost or market and as long-term in the consolidated balance sheet. The Company will adopt the new standard in the first quarter of 1994, which will result in an approximate $2,972,000 increase in stockholders' equity as of January 1, 1994. PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost. DEPRECIATION AND AMORTIZATION: The Company provides depreciation on the straight-line method over the estimated useful lives of the assets. The amortization of advances to Eveleth Mines equivalent to the Company's share of depreciation of the underlying plant is computed on the units-of-production method adjusted for levels of operation. Such adjustment provides for a minimum of 75% of depreciation calculated on a straight-line basis. INCOME TAXES: 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. -28- 29 NOTE A - ACCOUNTING POLICIES - (CONTINUED) NET INCOME (LOSS) PER SHARE: Net income (loss) per share of Common Stock is based on the average number of shares outstanding. ACCOUNTING CHANGES AND RECLASSIFICATION: In 1992, the Company adopted the accounting provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." This standard requires that the expected cost of retiree health benefits be charged to expense during the years that employees render service rather than recognizing these costs on a cash basis. As a part of adopting the standard, the Company recorded a one-time, non-cash charge of $17,540,830 (net of income taxes of $9,037,000), or $6.98 per share. This cumulative adjustment represents the discounted present value of expected future retiree health benefits attributed to employees' service rendered prior to that date. In 1992, the Company changed its method of accounting for vessel inspection costs from expensing such costs over one shipping season to deferring these costs and amortizing them over the five shipping seasons between required inspections. This change results in a better matching of these expenses with revenues generated during the periods benefited and improves financial reporting. This change in accounting has been applied retroactively to vessel inspection costs incurred in prior years and has resulted in a cumulative adjustment of $534,415 (net of income taxes of $275,000), or $.21 per share. Pro forma effects of the accounting change are not significant. Consolidated financial statements for years prior to 1992 have not been restated for the above accounting changes. Certain amounts in prior years have been reclassified to conform with the 1993 consolidated financial statement presentation. NOTE B - STOCKHOLDERS' EQUITY The 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. Certain shares of Series C $10.00 Preferred Stock and Common Stock have been reserved for issuance upon exercise of Rights under a Stockholders' Rights Plan. The Rights 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 their redemption price. The Company has a noncontributory Employee Stock Ownership Plan (ESOP) and Trust for the benefit of certain salaried employees. In prior years, the Trust financed the purchase of 250,000 shares of the Company's Common Stock. The Company has guaranteed the financing and is obligated to make annual contributions to enable the Trust to repay the loans, including interest. The Company, as guarantor, has recorded the loans as long-term debt and a like amount as a reduction of stockholders' equity. -29- 30 NOTE C - INCOME TAXES Total income tax expense (benefit) from continuing operations differs from the tax computed by applying the U.S. federal corporate income tax statutory rate for the following reasons (in thousands):
1993 1992 1991 --------------------------------------------------- Income (loss) from continuing operations before taxes $9,554 $(49,761) $3,839 ====== ======== ====== Computed income tax expense (benefit) at statutory rate - 34% $3,248 $(16,919) $1,305 Tax differences due to: Percentage depletion (751) (696) (459) State & local income taxes ( 22) 87 264 Reinstatement of investment tax credits -0- -0- (483) Other (183) (84) (99) ------- ------- ------- Total income tax expense (benefit) from continuing operations $2,292 $(17,612) $ 528 ====== ======== ======
The Company made income tax payments of $40,000, $2,483,000, and $2,641,000 during 1993, 1992 and 1991, respectively. The Company received income tax refunds of $222,000, $106,000, and $1,377,000 during those same periods. The 1991 refund, representing prior years' minimum taxes paid, allowed the Company to reinstate and use investment tax credits previously reduced under the Tax Reform Act of 1986. In addition, the Company received $2,728,000 of interest income on the 1991 tax refund. The U.S. current tax liability was reduced in 1991 by $821,000, reflecting the use of investment tax credits previously utilized for financial accounting purposes. The Company has no remaining investment tax credit carryforward. -30- 31 NOTE C - INCOME TAXES (CONTINUED) 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 are as follows (in thousands):
December 31 1993 1992 --------------------------------- Deferred tax liabilities: Tax over book depreciation $43,106 $43,555 Pension benefits 4,323 3,449 Other 2,776 5,441 ------- ------- Total deferred tax liabilities 50,205 52,445 Deferred tax assets: Capacity rationalization and asset impairment 13,575 15,579 Postretirement benefits other than pensions 9,459 9,610 Coal Act liability 4,869 5,140 Other 6,706 6,967 ------ ------ Total deferred tax assets 34,609 37,296 ------ ------- Net deferred tax liabilities $15,596 $15,149 ======= =======
-31- 32 NOTE D - POSTRETIREMENT BENEFITS The Company has a number of noncontributory defined benefit pension plans covering certain employees. The plans provide benefits based on the participants' 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 follows (in thousands):
1993 1992 1991 ---------------------------------------------- Service cost-benefits earned during the period $ 1,261 $ 1,156 $ 1,275 Interest cost on projected benefit obligation 4,644 4,574 4,163 Actual return on plan assets (7,558) (5,975) (12,371) Net amortization and deferral ( 575) (2,086) 5,227 ------- -------- -------- Net pension credit $(2,228) $(2,331) $ (1,706) ======= ======= ========
Assumptions used in the accounting for defined benefit plans as of December 31 were:
1993 1992 1991 ------------------------------------------------ Weighted-average discount rate 7 1/4% 8 1/2% 9% Rate of increase in compensation levels 4% 5% 6% Expected long-term rate of return on assets 9 1/2% 9 1/2% 9 1/2%
-32- 33 NOTE D - POSTRETIREMENT BENEFITS - (CONTINUED) The following table sets forth the funded status and amounts recognized in the consolidated balance sheet for the Company's defined benefit pension plans (in thousands):
December 31 1993 1992 --------------------------------- Actuarial present value of benefit obligations Vested benefit obligation $(55,720) $(48,451) Accumulated benefit ======== ======== obligation $(60,162) $(52,021) Projected benefit ======== ======== obligation $(64,431) $(56,407) Plan assets at fair value 84,854 81,372 --------- --------- Plan assets in excess of projected benefit obligation 20,423 24,965 Unrecognized net gain ( 2,432) ( 7,914) Unrecognized prior service cost 2,473 1,714 Unrecognized initial net assets ( 6,772) ( 7,417) ---------- -------- Prepaid pension costs recognized $ 13,692 $ 11,348 ========== ======== Plan assets consist primarily of stocks and bonds.
Defined contribution plans are maintained for certain employees and Company contributions are based on specified percentages of employee contributions, except for the ESOP. The expense for these plans was $1,434,000, $1,321,000 and $1,333,000 for 1993, 1992 and 1991, 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 the expense amounted to $1,348,000, $1,088,000, and $1,397,000 for 1993, 1992 and 1991, respectively. In addition to providing pension benefits, the Company provides health care and life insurance benefits 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. In 1992, the Company adopted Statement of Financial Accounting Standards No. 106, as further disclosed in Note A. Postretirement benefit costs for 1991 were recorded on a cash basis and have not been restated. -33- 34 NOTE D - POSTRETIREMENT BENEFITS - (CONTINUED) Net periodic postretirement benefits cost includes the following components (in thousands):
1993 1992 1991 --------------------------------------------------- Service cost $ 826 $ 691 Interest cost 2,228 2,180 Net amortization (13) -0- ----- ----- Net periodic postretirement benefit cost $3,041 $2,871 $1,385 ====== ====== ======
Components of the unfunded postretirement benefits obligation are as follows (in thousands):
December 31 1993 1992 --------------------------------- Retirees $14,478 $17,360 Fully eligible active plan participants 2,728 2,291 Other active plan participants 10,255 8,610 -------- ------- Accumulated postretirement benefits obligation 27,461 28,261 Unrecognized prior service credit 1,962 -0- Unrecognized net gain 862 -0- ------- ------ Postretirement benefits obligation recognized $30,285 $28,261 ======= =======
The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.25% and 8.5% at December 31, 1993 and 1992, respectively. The weighted-average annual assumed rate of increase in the health care cost trend rate for 1994 is 9% (11% in 1993) for retirees age 65 and over and 12% (14% in 1993) for retirees under age 65, and both are assumed to decrease gradually to 5.25% in 2001 and 2007, respectively, (6% in 1993) and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rate by 1% in each year would increase the accumulated postretirement benefits obligation as of December 31, 1993 by approximately $2,791,000 and the aggregate of the service and interest cost components of net periodic postretirement benefits cost for 1993 by approximately $534,000. -34- 35 NOTE E - COMMITMENTS Future minimum payments at December 31, 1993, under noncancellable operating leases, primarily vessel charters, are $4,530,000 in 1994, $4,440,000 in 1995, $4,218,000 in 1996, $4,035,000 in 1997, $3,996,000 in 1998, $1,790,000 in 1999 and $1,938,000 thereafter. Rental expense was $5,162,000, $5,181,000 and $5,337,000 in 1993, 1992 and 1991 respectively. In general, the leases are renewable or contain purchase options at the end of the lease term. The purchase price or renewal lease payment is based on the fair market value of the asset at the date of purchase or renewal. The Company and its partners in Eveleth Mines have guaranteed to reimburse ETC and EEC for all costs incurred in production of iron ore pellets, including EEC's debt service. Each partner of Eveleth Mines pays its share of costs based upon its share of production or ownership interest, whichever is applicable. Purchases by the Company under a take-or-pay contract, associated with Eveleth Mines long-term debt, amounted to $24,800,000, $21,764,000 and $19,166,000 for the years ended December 31, 1993, 1992 and 1991, respectively. Maturities on the long-term debt are $2,813,000 in 1994 and 1995 and are included in the reserve for capacity rationalization on the consolidated balance sheet. Accrued taxes and other expenses on the consolidated balance sheet include $4,955,000 and $146,000 payable in 1993 and 1992, respectively, for ETC's working capital requirements. NOTE F - LONG-TERM DEBT Long-term debt is as follows (in thousands):
December 31 1993 1992 --------------------------------- Title XI Ship Financing Bonds Fixed rate, 5.3% $18,700 $19,450 Term Loan, Variable rate, 4.88% 44,750 49,750 Revolving Credit, Variable rate, 4.81% 10,000 10,000 Term Loan, Variable rate, 4.44% due in equal quarterly installments through January 31, 1998 4,250 5,250 Guaranteed ESOP Loans Variable rate, 3.32% due in equal quarterly installments through May 31, 1994 213 640 Variable rate, 3.42%, and 971 1,147 Fixed rate, 8.88% due in equal quarterly installments through May 31, 1999 1,650 1,950 ------ ------ 80,534 88,187 Less current portion 11,190 7,653 ------ ------ $69,344 $80,534 ====== ======
-35- 36 NOTE F - LONG-TERM DEBT (CONTINUED) The Title XI Ship Financing Bonds are guaranteed by the U.S. Government under the Federal Ship Financing Program. During the fourth quarter of 1993 the Company refinanced the Title XI Bonds at a cost of $652,000, reducing the fixed interest rate from 9.65% to 5.3%. The reduction in interest will result in cumulative savings approximating $3,200,000 over the life of the Bonds. The Bonds mature in 2001 and require sinking fund redemptions of $1,250,000 semiannually. In connection with the Title XI Bonds and a vessel charter agreement, the Company may be required, under certain conditions, to make deposits to a Title XI reserve fund, maintain specified levels of stockholders' equity or obtain prior written consent from the Maritime Administrator, U.S. Department of Transportation, for certain designated financial transactions. No approval was required through 1993 and the Company does not anticipate any such consent will be required in the future. The Company has mandatory payments under the Term Loan of $7,000,000 in 1994, $8,000,000 in 1995, 1996 and 1997 and $13,750,000 in 1998. The Revolving Credit terminates on December 31, 1996 subject to annual renewals to December 31, 1998 under certain conditions. The Company has an additional $24,000,000 of borrowing available under the Revolving Credit at December 31, 1993. Collateral for the Title XI Ship Financing Bonds and the Term Loan is in the form of first preferred ship mortgages on five of the Company's vessels with a net book value of $111,953,000. The Company, in separate agreements which expire in 1995, entered into interest rate swaps with major financial institutions to substitute fixed rates for LIBOR-based interest rates on notional amounts totaling $32,684,000 at December 31, 1993. The interest rate differential is recognized over the lives of the agreements as an adjustment to interest expense. The weighted average interest rate was 10.1% on the amounts covered by the swap agreements during 1993. Market risks associated with the swap agreements are mitigated since increased interest payments under the agreements resulting from a decrease in LIBOR-based interest rates are effectively offset by decreased variable rate interest payments under the debt obligations. The Company's debt agreements, as amended, 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 $65,231,000 at December 31, 1993, compared to a minimum specified level of $60,631,000. Long-term debt maturities are $11,190,000 in 1994, $11,976,000 in 1995, 1996 and 1997 and $26,976,000 in 1998. The Company made interest payments of $7,973,000, $7,279,000 and $9,069,000 during 1993, 1992 and 1991, respectively. The fair value of the Company's long-term debt and interest rate swap liabilities is estimated to be $80,000,000 and $1,100,000, respectively, at December 31, 1993. Such fair values were estimated using discounted cash flow analysis based on the Company's current incremental borrowing rates for similar types of arrangements. -36- 37 NOTE G - DISPOSITIONS In July 1986, LTV Steel Company, Inc. (LTV) sought protection from its creditors under Chapter 11 of the Bankruptcy Code and the U.S. Bankruptcy Court authorized LTV to reject the Company's long-term iron ore sales and vessel transportation contracts. In May 1991, an agreement with LTV regarding the Company's unsecured bankruptcy claim was approved by the Court. During the second quarter of 1993 the Company sold for cash its claim against LTV, resulting in a $2,653,000 pretax gain after the retirement of $4,412,000 of long-term receivables. During the fourth quarter of 1991, the Company sold a long-term coal dumping contract held by its wholly owned subsidiary, Licking River Terminal (LRT) for $12,500,000. Since this contract represented the majority of LRT's business, the Company recorded asset impairment charges of $6,723,000 in 1991. This transaction, including the net gain on the sale of the contract of $5,777,000, is reflected in the 1991 consolidated financial statements. During the second quarter of 1992, the Company determined that the facility no longer served the objectives of the Company's strategic goals and was shut down. Amounts accrued in 1991 adequately covered shutdown costs incurred in 1992. During the fourth quarter of 1993, the Company sold its LRT assets resulting in a $1,326,000 pretax gain. The Company's wholly owned subsidiary, Saginaw Mining Company, ceased operation of its St. Clairsville, Ohio coal mine in August 1992 and began the mine closing process. The decision to terminate the operation of the mine followed a decision by a major public utility customer to terminate its long-term contract with the Company which provided for the sale of substantially all the mine's high-sulphur coal to that customer. Upon termination of the contract, the utility customer paid the Company $1,951,791 which was recognized as a gain on shutdown of discontinued operation of $1,287,791 (net of income taxes of $664,000), or $.51 per share. The contract was due to expire in 1994. Results of the discontinued operation are as follows (in thousands):
1992 1991 --------------------------------- Total revenues $19,365 $24,232 ======= ======= Income before income taxes $ 1,603 $ 2,282 Income taxes 450 465 ------- ------- Income from discontinued operation $ 1,153 $ 1,817 ======= =======
-37- 38 NOTE G - DISPOSITIONS - (CONTINUED) Permanent closure of the mine was completed in 1993. Closure costs of this discontinued operation are being funded by the public utility customer, as required by the contract. Final settlement and funding of the closure costs has been extended to July 31, 1994, at the request of the customer. Remaining net liabilities of the discontinued operation consist primarily of employee benefit costs. The Company's wholly owned subsidiary, T & B Foundry, was disposed of effective December 31, 1992 resulting in a $3,300,000 pretax loss. The Foundry is included in the Company's Manufacturing segment in 1992 and 1991. NOTE H - ASSET IMPAIRMENTS AND RESERVES During the fourth quarter of 1992, the Company recorded a $34,693,983 provision for capacity rationalization. The charge includes a $12,256,183 write down of the Company's investment in Eveleth Mines and the establishment of a $22,437,800 reserve for certain fixed obligations, including the Company's share of Eveleth's long-term debt. The charge resulted from economic conditions in the steel industry and Eveleth's high costs, which caused certain partners in Eveleth Mines to continue to acquire their iron ore requirements from other sources rather than produce them at Eveleth. During the fourth quarter of 1992 and 1991, the Company recorded asset impairment charges of $9,918,497 and $1,592,725, respectively. These charges relate primarily to changed market conditions and circumstances that have impaired certain asset carrying values. The Company has established reserves and written down several under performing assets at its Ferro Engineering Division, National Perlite Products Company and Texas Mining Company in both 1992 and 1991. In addition, certain under performing assets primarily at the Company's Columbia Transportation Division and California Silica Products Company were written down in 1992. Ferro is included in the Company's Manufacturing segment, while Columbia is included in the Marine Transportation segment. Texas Mining and California Silica are included in the Company's Industrial Sands segment. -38- 39 NOTE I - EXTRAORDINARY PROVISION During the fourth quarter of 1992, the Coal Industry Retiree Health Benefit Act of 1992 was enacted by the U.S. Congress. This legislation requires coal mining companies to assume certain health care benefit obligations for retired coal miners and their dependents. Some of these coal miners never worked for the companies now required by this law to pay these health care benefits. In other cases, the companies have had no relationship or obligation to these miners for decades. While the exact amount of the liability is difficult to determine, the Company recorded a, non-cash, extraordinary charge of $9,977,900 (net of income taxes of $5,140,000), or $3.97 per share, to accrue for this obligation in 1992. At December 31, 1993 and 1992, the Coal Act liability amounted to $14,320,000 and $15,117,900, respectively. The change in the liability in 1993 is a result of interest accretion, changes in actuarial assumptions and payments of $379,000. In 1994, interest accretion is expected to reduce net income by approximately $685,000. NOTE J - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS Oglebay Norton Company is a Cleveland-based raw materials and Great Lakes marine transportation company serving the steel, ceramic, chemical, electric utility and oil-and gas-well service industries with industrial minerals and supplying manufactured products used in hot metal processing. The Company's major industry segments are as follows: MARINE TRANSPORTATION Through its Columbia Transportation Division, the Company operates a fleet of vessels engaged in the transportation of iron ore, coal, limestone and other dry bulk cargoes on the Great Lakes. INDUSTRIAL MINERALS IRON ORE The Company owns interests in and manages the taconite mining and pelletizing operations of Eveleth Mines owned by Eveleth Taconite Company and Eveleth Expansion Company located on the Mesabi Range near Eveleth, Minnesota. INDUSTRIAL SANDS Company subsidiaries engaged in natural resource operations include: Central Silica Company, headquartered in Zanesville, Ohio, which produces silica sand for the glass, paint, ceramic and foundry industries; Texas Mining Company which produces sand products at Brady, Texas and Riverside, California for the oil-well service, construction and foundry industries; and California Silica Products Company near San Juan Capistrano, California, which produces silica products for the construction, recreation and other industries. -39- 40 MANUFACTURING The Ferro Engineering Division of the Company in Cleveland, Ohio, and the Company's Canadian, Indiana and Ohio subsidiaries, Canadian Ferro Hot Metal Specialties Limited, Indiana Manufacturing Company and Tuscarawas Manufacturing Company, produce a wide variety of ingot and tundish refractory products used in iron and steel making. West Minerals, whose assets were acquired by the Company's ONCo Minerals, Inc., retained its recognized name, continuing to engineer and custom blend metallurgical powders for the treatment of molten steel and steel making slags. The Company also operates a plant at Brownsville, Texas, which processes fluorspar for the fiberglass, glass, ceramics and steel industries. Accounts receivable of $15,036,000 at December 31, 1993 are due from companies in steel related industries. Credit is extended based on an evaluation of a customer's financial condition, and generally collateral is not required. Credit losses have, historically, been insignificant. Sales to two major steel producers exceeded 10% of consolidated net sales and operating revenues and are summarized as follows (in thousands):
Marine Iron Customer Transportation Ore Manufacturing Other Total - -------- ---------------- --- ------------- ----- ----- 1993 A $14,523 $ 8,935 $ 752 $ 68 $24,278 B 19,384 -0- 6,698 1,513 27,595 ------ --- ----- ----- ------ $33,907 $ 8,935 $7,450 $1,581 $51,873 ======= ======= ====== ====== ======= 1992 A $14,462 $10,090 $ 572 $ 105 $25,229 B 23,700 -0- 6,428 1,464 31,592 ------ ------- ----- ----- ------ $38,162 $10,090 $7,000 $1,569 $56,821 ======= ======= ====== ====== ======= 1991 A $13,419 $11,074 $ 52 $ -0- $24,545 B 30,483 -0- 1,706 1,511 33,700 ------ ------- ----- ----- ------ $43,902 $11,074 $1,758 $1,511 $58,245 ======= ======= ====== ====== =======
-40- 41 INDUSTRY SEGMENT DATA1 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDUSTRY - -------------------------------------------------------------------------------------------------------------
Marine Iron Transportation Ore ------------------ ---- 1993 Identifiable assets $ 146,918 $ 16,022 Depreciation and amortization expense 8,157 1,086 Expenditures for properties and equipment 364 137 Net sales, operating revenues, sales commissions, royalties and management fees 73,143 23,634 Income (loss) from continuing operations before taxes: Operating profit (loss) contribution $ 10,791 $ 4,031 Gain on sale of assets 10 4 Company's proportionate share in interest expense of Eveleth Mines ( 630) Interest expense (5,309) ---------- --------- $ 5,492 $ 3,405 ========== ========= 1992 Identifiable assets $ 149,830 $ 12,649 Depreciation and amortization expense 8,677 2,627 Expenditures for properties and equipment 3,359 231 Net sales, operating revenues, sales commissions, royalties and management fees 70,654 18,821 Income (loss) from continuing operations before taxes: Operating profit (loss) contribution $ 9,538 $( 2,832) Provision for capacity rationalization (34,694) Asset impairment charges (1,492) ( 330) Gain on sale of assets 550 Loss on disposal of business Company's proportionate share in interest expense of Eveleth Mines ( 900) Interest expense ( 5,818) ---------- --------- $ 2,228 $ (38,206) ========== ========= 1991 Identifiable assets $ 157,393 $ 25,029 Depreciation and amortization expense 7,966 2,676 Expenditures for properties and equipment 889 Net sales, operating revenues, sales commissions, royalties and management fees 73,090 18,998 Income (loss) from continuing operations before taxes: Operating profit (loss) contribution $ 8,571 $( 1,741) Asset impairment charges Gain on sale of assets 3 Company's proportionate share in interest expense of Eveleth Mines ( 1,170) Interest expense ( 7,076) ---------- --------- $ 1,498 $( 2,911) ========== ========= 1 Segments were redefined in 1993 resulting in an insignificant reclassification of prior years data. 2 Consists primarily of cash and cash equivalents, investments and prepaid pension costs.
-41- 42 SEGMENTS (In Thousands) - ----------------------------------------------------------------------------------------------------------------
Industrial Total Corporate Sands Manufacturing Segments and Other Consolidated - ---------- ------------- -------- --------- ------------ $ 25,682 $ 21,807 $ 210,429 $ 49,253(2) $ 259,682 2,055 1,657 12,955 477 13,432 943 1,202 2,646 412 3,058 26,606 35,756 159,139 4,307 163,446 $ 1,827 $ 2,809 $ 19,458 $ (5,836)(3) $ 13,622 19 33 4,084 4,117 ( 630) ( 630) ( 201) ( 5,510) (2,045) (7,555) - --------- --------- --------- --------- --------- $ 1,846 $ 2,608 $ 13,351 $ (3,797) $ 9,554 ========= ========= ========= ========= ========= $ 27,532 $ 20,304 $ 210,315 $ 53,659(2) $ 263,974 2,504 1,906 15,714 451 16,165 1,545 3,622 8,757 201 8,958 24,447 34,422 148,344 5,667 154,011 $ 944 $ 257 $ 7,907 $ (2,806)(3) $ 5,101 (34,694) (34,694) ( 4,640) ( 755) ( 7,217) (2,701) ( 9,918) 997 5 1,552 8 1,560 (3,300) ( 3,300) ( 3,300) ( 900) ( 900) ( 284) ( 6,102) ( 1,508) ( 7,610) - --------- --------- --------- --------- --------- $ ( 2,699) $ (4,077) $ (42,754) $ ( 7,007) $ (49,761) ========= ========= ========= ========= ========= $ 31,997 $ 14,397 $ 228,816 $ 62,317(2) $ 291,133 2,912 858 14,412 1,466 15,878 1,880 1,140 3,909 486 4,395 23,326 21,363 136,777 12,066 148,843 $ 910 $ (1,154) $ 6,586 $ 3,446(3) $ 10,032 ( 400) ( 411) ( 811) ( 782) ( 1,593) 27 6 36 5,791 5,827 ( 1,170) ( 1,170) ( 7,076) ( 2,181) ( 9,257) - --------- --------- --------- --------- --------- $ 537 $ (1,559) $ ( 2,435) $ 6,274 $ 3,839 ========= ========= ========= ========= ========= 3 Includes other operations, certain corporate expenses, net of dividends, interest and other income, and in 1993 a $1,700,000 reserve against doubtful coal customer accounts receivable and $652,000 of debt refinancing costs.
-42- 43 NOTE K - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Unaudited quarterly results of operations for the years ended December 31, 1993 and 1992 are summarized as follows (in thousands, except per share amounts):
Income (Loss) Income (Loss) Before Extra- Net Before Extra- ordinary Provision Net Sales and ordinary Provision and Changes Income Three Months Operating Gross and Changes Net Income In Accounting (Loss) Ended Revenues Profit In Accounting (Loss) Per Share Per Share - -------------- -------- ------ ------------- ---------- ------------- --------- 1993 December 31 $48,281 $8,703 $ 4,229 $ 4,229 $ 1.68 $ 1.68 September 30 47,946 8,215 2,311 2,311 .92 .92 June 30 47,004 7,632 2,810 2,810 1.12 1.12 March 31 16,505 1,850 ( 2,088) ( 2,088) ( .83) ( .83) 1992 December 31 $40,429 $5,603 $(30,272) $(40,250) $(12.05) $(16.02) September 30 43,958 4,322 2,978 2,978 1.18 1.18 June 30 45,596 5,343 711 711 .28 .28 March 31 18,707 (406) ( 3,126) (20,132) ( 1.24) ( 8.01)
Per share amounts are based on the average number of shares outstanding during each quarter. Certain quarterly amounts for 1992 are different from amounts reported in the prior year as a result of reallocations made for postretirement benefit costs and reserves for doubtful accounts. Second quarter income before extraordinary provision and changes in accounting and net income for 1993 increased $1,751,000 ($.70 per share) related to the sale of an unsecured bankruptcy claim, as further disclosed in Note G, and declined $792,000 ($.32 per share) as a result of a reserve against doubtful coal customer accounts receivable. Fourth quarter income before extraordinary provision and changes in accounting and net income for 1993 increased $875,000 ($.35 per share) related to the sale of assets, as further disclosed in Note G, and declined $760,000 ($.30 per share) related to bond refinancing costs, as further disclosed in Note F, and an additional reserve against remaining doubtful coal customer accounts receivable. The fourth quarter loss before extraordinary provision and changes in accounting and the net loss for 1992 was increased $31,622,000 ($12.58 per share) for a provision for capacity rationalization, asset impairment charges and a loss on the disposal of a business. See Notes G and H for further disclosure. The fourth quarter net loss for 1992 was also increased $9,978,000 ($3.97 per share) for an extraordinary provision for the Coal Industry Retiree Health Benefit Act of 1992 as further disclosed in Note I. -43- 44 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III Information in this Part III required by Item 10 ("Directors and Officers of the Registrant"), Items 11 and 13 ("Executive Compensation" and "Certain Relationships and Related Transactions"), and Item 12 ("Security Ownership of Certain Beneficial Owners and Management") is incorporated herein by reference to the information contained in the Registrant's definitive Proxy Statement for its 1994 Annual Meeting of Stockholders under the captions "Nominees for Board of Directors" on page 3, "Ownership of Voting Securities" on pages 6 and 7 and "Compensation of Executive Officers" on pages 9 through 17, respectively. A definitive Proxy Statement will be filed with the Securities and Exchange Commission on or before March 31, 1994. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) LIST OF FINANCIAL STATEMENTS: The response to this portion of Item 14 is submitted as a separate section of this Annual Report on Form 10-K. (a)(2) LIST OF FINANCIAL STATEMENT SCHEDULES: The response to this portion of Item 14 is submitted as a separate section of this Annual Report on Form 10-K. (a)(3) LIST OF EXHIBITS: See the Exhibit Index beginning at sequential page of this Annual Report on Form 10-K. (b) REPORTS ON FORM 8-K: The Registrant did not file any reports on Form 8-K in 1993. (c) EXHIBITS: The response to this portion of Item 14 is submitted as a separate section of this Annual Report on Form 10-K beginning at sequential page . (d) FINANCIAL STATEMENT SCHEDULES: The response to this portion of Item 14 is submitted as a separate section of this Annual Report on Form 10-K beginning at sequential page . - 44 - 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunto duly authorized. OGLEBAY NORTON COMPANY /S/ Richard J. Kessler -------------------------- Richard J. Kessler Vice President-Finance and Development and Treasurer March 29, 1994 - 45 - 46 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the Principal Executive Officer, the Principal Financial Officer, the Principal Accounting Officer and a majority of the Directors of the Registrant on March 29, 1994. Chairman of the Board, /S/ R. Thomas Green, Jr. President and Chief Executive - ------------------------ Officer and Director; Principal R. Thomas Green, Jr. Executive Officer Vice President-Finance and /S/ Richard J. Kessler Development and Treasurer; - ------------------------ Principal Financial and Richard J. Kessler Accounting Officer /S/ Brent D. Baird - ------------------------ Brent D. Baird Director /S/ Malvin E. Bank - ------------------------ Malvin E. Bank Director /S/ William G. Bares - ------------------------ William G. Bares Director /S/ Albert C. Bersticker - ------------------------ Albert C. Bersticker Director /S/ John J. Dwyer - ------------------------ John J. Dwyer Director /S/ Ralph D. Ketchum - ------------------------ Ralph D. Ketchum Director /S/ Herbert S. Richey - ------------------------ Herbert S. Richey Director /S/ Renold D. Thompson - ------------------------- Vice Chairman of the Board and Renold D. Thompson Director /S/ John D. Weil - ------------------------ John D. Weil Director /S/ Fred R. White, Jr. - ------------------------ Fred R. White, Jr. Director 47 ANNUAL REPORT ON FORM 10-K ITEM 14(a) (1) AND (2), 14(c) AND 14(d) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES CERTAIN EXHIBITS FINANCIAL STATEMENT SCHEDULES YEAR ENDED DECEMBER 31, 1993 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CLEVELAND, OHIO 48 FORM 10-K ITEM 14(a) (1) AND (2) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES OGLEBAY NORTON COMPANY AND SUBSIDIARIES The following consolidated financial statements of the Registrant and its subsidiaries are included in Item 8: Consolidated Balance Sheet - December 31, 1993 and 1992 Consolidated Statement of Operations - Years ended December 31, 1993, 1992, and 1991 Consolidated Statement of Cash Flows - Years ended December 31, 1993, 1992 and 1991 Consolidated Statement of Stockholders' Equity - Years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements The following consolidated financial statement schedules of the Registrant and its subsidiaries are included in Item 14(d): Schedule I - Marketable Securities - Other Investments Schedule V - Property, Plant and Equipment Schedule VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment Schedule VIII - Valuation and Qualifying Accounts Schedule IX - Short-Term Borrowings Schedule X - Supplementary Income Statement Information All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. 49 SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES Year Ended December 31, 1993
COLUMN A COLUMN B COLUMN C -------- ------------------- ----------------- Number of Shares or Units-Principal Amount of Bonds and Cost of NAME OF ISSUER AND TITLE OF EACH ISSUE Notes Each issue - -------------------------------------- ------------------- ----------------- Short-term money market investments: Society National Bank, time deposit 2.9% due January 3, 1994 $18,150,000 $18,150,000 Society National Bank, weekly put Meadowridge Investment Co. adjustable rate note 3.25% due January 3, 1994 1,000,000 1,000,000 Society National Bank, weekly put Atlantic Tool & Die adjustable rate note 3.25% due January 3, 1994 850,000 850,000 Society National Bank, weekly put Center Ridge Joint Venture adjustable rate note 3.25% due January 3, 1994 1,000,000 1,000,000 Society National Bank, weekly put The Perlmuter Printing Co. adjustable rate note 3.25% due January 3, 1994 675,000 675,000 Cattlemen's State Bank, certificate of deposit 3.0% due May 10, 1994 320,000 320,000 Toronto Dominion Bank, Bankers Acceptances 3.35% due January 27, 1994 264,389 263,689
COLUMN A COLUMN D COLUMN E -------- ---------------------- ---------------------------------- Amount at Which Each Market Value of Portfolio of Equity Security Each issue at Issues and Each Other Security NAME OF ISSUER AND TITLE OF EACH ISSUE Balance Sheet Date Issue Carried in the Balance Sheet - -------------------------------------- --------------------- ---------------------------------- Short-term money market investments: Society National Bank, time deposit 2.9% due January 3, 1994 $18,150,000 $18,150,000 Society National Bank, weekly put Meadowridge Investment Co. adjustable rate note 3.25% due January 3, 1994 1,003,028 1,000,000 Society National Bank, weekly put Atlantic Tool & Die adjustable rate note 3.25% due January 3, 1994 852,574 850,000 Society National Bank, weekly put Center Ridge Joint Venture adjustable rate note 3.25% due January 3, 1994 1,003,028 1,000,000 Society National Bank, weekly put The Perlmuter Printing Co. adjustable rate note 3.25% due January 3, 1994 677,043 675,000 Cattlemen's State Bank, certificate of deposit 3.0% due May 10, 1994 321,341 320,000 Toronto Dominion Bank, Bankers Acceptances 3.35% due January 27, 1994 263,762 263,689
50 SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES Year Ended December 31, 1993
COLUMN A COLUMN B COLUMN C -------- ------------------ ----------------- Number of Shares or Units-Principal Amount of Bonds and Cost of NAME OF ISSUER AND TITLE OF EACH ISSUE Notes Each issue - -------------------------------------- ------------------ ----------------- Warrants 1,220 ea. -0- Preferred Stock 250 sh. -0- Various Common Stocks 3,708 sh. 3,918 ----------- SHORT-TERM MONEY MARKET INVESTMENTS/OTHER $22,262,607 =========== Accrued Interest TOTAL Other Security Investments - carried as investments Great Northern Iron Ore Properties, rights of beneficial interest certificates 190,100 units $ 3,172,496 ============
COLUMN A COLUMN D COLUMN E -------- ---------------------- ---------------------------------- Amount at Which Each Market Value of Portfolio of Equity Security Each issue at Issues and Each Other Security NAME OF ISSUER AND TITLE OF EACH ISSUE Balance Sheet Date Issue Carried in the Balance Sheet - -------------------------------------- ---------------------- ---------------------------------- Warrants 1,830 -0- Preferred Stock -0- -0- Various Common Stocks 1,917 3,918 ----------- ------------ SHORT-TERM MONEY MARKET INVESTMENTS/OTHER $22,294,523 22,262,607 =========== Accrued Interest 12,135 ----------- TOTAL $ 22,274,742 ============ Other Security Investments - carried as investments Great Northern Iron Ore Properties, rights of beneficial interest certificates $ 7,675,288 $ 3,172,496 ============ ============ NOTE: The short-term securities are carried in the consolidated balance sheet at cost.
51 SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F -------- -------- -------- -------- -------- -------- Balance at Balance at Beginning Additions Retirements Other Charges End of Classification of Period at Cost or Sales Add (Deduct) Period -------------- --------- --------- ------------- ------------ --------------- YEAR ENDED DECEMBER 31, 1993: Marine Transportation $239,760,249 $ 364,164(1) $ 124,771 $ -0- $ 239,999,642 Industrial Mining 49,016,019 943,125(2) 47,894 -0- 49,911,250 Manufacturing 15,088,124 1,201,844(3) 36,972 -0- 16,252,996 Other 29,293,167 412,042(4) 16,507,521(5) -0- 13,197,688 ------------ ----------- ----------- ------------- ------------- $333,157,559 $ 2,921,175 $16,717,158 $ -0- $ 319,361,576 ============ =========== =========== ============= ============= YEAR ENDED DECEMBER 31, 1992: Marine Transportation $235,747,307 $ 3,358,178(6) $ 52,677 $ 707,441 (6) $ 239,760,249 Industrial Mining 48,087,922 1,545,379(7) 710,127(9) 92,845 49,016,019 Manufacturing 17,797,992 3,622,162(8) 378,026 ( 5,954,004)(11) 15,088,124 Other 43,652,920 200,871 910,948(10) (13,649,676)(12) 29,293,167 ------------ ----------- ----------- ------------ ------------- $345,286,141 $ 8,726,590 $ 2,051,778 $(18,803,394) $ 333,157,559 ============ =========== =========== ============ ============= YEAR ENDED DECEMBER 31, 1991: Marine Transportation $235,752,360 $ -0- $ -0- $ (5,053) $ 235,747,307 Industrial Mining 47,487,212 1,880,064(13) 887,040(16) ( 392,314)(17) 48,087,922 Manufacturing 16,737,633 1,139,630(14) 16,271 ( 63,000) 17,797,992 Other 43,368,904 626,702(15) 314,348 ( 28,338) 43,652,920 ------------ ----------- ----------- ------------ ------------- $343,346,109 $ 3,646,396 $ 1,217,659 $ ( 488,705) $ 345,286,141 ============ =========== =========== ============ =============
52 SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT - CONTINUED OGLEBAY NORTON COMPANY AND SUBSIDIARIES Years Ended December 31, 1993, 1992 and 1991 Note 1 - Capitalization of the Registrant's five year vessel inspection costs. Note 2 - Expansion and replacement of equipment at the Registrant's Texas Mining Company, California Silica Products Company and Central Silica Company. Note 3 - Expansion and replacement of equipment at the Registrant's Ferro Engineering Plant, ONCo Minerals, Inc., Indiana Manufacturing Company and Tuscarawas Manufacturing Company. Note 4 - Leasehold improvements and equipment replacement at the Registrant's corporate offices. Note 5 - Sale of Registrant's Licking River Terminal assets and the sale of the property owned by the Registrant in Ohio. Note 6 - Capitalization of Registrant's five year vessel inspection costs and boiler rework to one of Registrant's vessels. Note 7 - Expansion and replacement of equipment at the Registrant's Texas Mining Company, Central Silica Company, and California Silica Company. Note 8 - Purchase of West Minerals and expansion and replacement at the Registrant's Ferro Engineering Plant, T & B Foundry Company, Indiana Manufacturing Company and the Brownsville Briquetting Plant. Note 9 - Retirement of equipment primarily at Registrant's Central Silica Company. Note 10 - Sale of North Carolina sand property and retirement of equipment and furniture at the Registrant's corporate offices. Note 11 - Write-off of properties and equipment in connection with the disposal of the Registrant's T & B Foundry Company and write down of equipment principally at the Registrant's Canadian Ferro Hot Top Specialty LTD. Note 12 - Reclassification of properties and equipment of the Registrant's discontinued operation, Saginaw Mining Company, amounting to $13,381,675 and the write-off of land owned by the Registrant in Tennessee and Minnesota. Note 13 - Expansion and replacement of equipment at the Registrant's Texas Mining Company, California Silica Products Company and Central Silica Company. 53 SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT - CONTINUED OGLEBAY NORTON COMPANY AND SUBSIDIARIES Years Ended December 31, 1993, 1992 and 1991 Note 14 - Expansion and replacement of equipment principally at the Registrant's Ferro Engineering Plant, Indiana Manufacturing Company, Tuscarawas Manufacturing Company and T & B Foundry Company. Note 15 - Expansion and replacement of equipment and furniture at Registrant's corporate offices, National Perlite Products Company and Ceredo Dock Note 16 - Retirement of equipment at the Registrant's Texas Mining Company, and Central Silica Company. Note 17 - Write-down of equipment principally at the Registrant's Texas Mining Company. Note 18 - The annual provisions for depreciation have been computed principally in accordance with the following ranges of lives: Vessels 10 - 50 years Buildings 12 - 40 Dock and dock equipment 5 - 20 Machinery 3 - 15 Mining properties and equipment 3 - 15 Autos and trucks 2 1/2 - 4 Office furniture and fixtures 10 - 15 years Leasehold improvements Term of Lease
54 SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F -------- -------- -------- -------- -------- -------- Balance at Additions Balance at Beginning Charged to Costs Other Charges End of Classification of Period and Expenses Retirements Add (Deduct) Period -------------- --------- ------------ ----------- ------------ ------ YEAR ENDED DECEMBER 31, 1993: Marine Transportation $ 99,023,901 $ 8,157,275 $ 124,771 $ -0- $107,056,405 Industrial Mining 29,964,790 2,054,865 47,696 -0- 31,971,959 Manufacturing 7,466,338 1,019,565 36,971 -0- 8,448,932 Other 25,390,838 427,067 16,332,522(1) -0- 9,485,383 ------------- ------------ ------------- ----------- ------------ $ 161,845,867 $ 11,658,772 $ 16,541,960 $ -0- $156,962,679 ============= ============ ============= =========== ============ YEAR ENDED DECEMBER 31, 1992: Marine Transportation $ 89,035,845 $ 8,676,694 $ 52,677 $ 1,364,039(2) $ 99,023,901 Industrial Mining 24,350,696 2,346,041 606,582 3,874,635(3) 29,964,790 Manufacturing 10,301,529 1,321,239 378,026 (3,778,404)(4) 7,466,338 Other 34,764,129 441,638 312,905 (9,502,024)(5) 25,390,838 ------------- ------------ ------------- ----------- ------------ $ 158,452,199 $ 12,785,612 $ 1,350,190 $(8,041,754) $161,845,867 ============= ============ ============= =========== ============ YEAR ENDED DECEMBER 31, 1991: Marine Transportation $ 81,069,665 $ 7,966,180 $ -0- $ -0- $ 89,035,845 Industrial Mining 22,781,985 2,422,739 854,028 -0- 24,350,696 Manufacturing 9,459,898 857,902 16,271 -0- 10,301,529 Other 26,854,264 1,837,566 306,772 6,379,071(6) 34,764,129 ------------- ------------ ------------- ----------- ------------ $ 140,165,812 $ 13,084,387 $ 1,177,071 $ 6,379,071 $158,452,199 ============= ============ ============= =========== ============
55 SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - CONTINUED OGLEBAY NORTON COMPANY AND SUBSIDIARIES Years Ended December 31, 1993, 1992 and 1991 Note 1 - Sale of Registrant's Licking River Terminal assets. Note 2 - Write down of vessels and related equipment of the Registrant's Columbia Transportation Division. Note 3 - Write down of assets principally at the Registrant's California Silica Company and Texas Mining Company. Note 4 - Disposal of T & B Foundry Company assets. Note 5 - Reclassification of properties and equipment of the Registrant's discontinued operation, Saginaw Mining Company, amounting to $13,133,003 and write down of assets principally at the Registrant's Saginaw Mining Company and National Perlite Products Company. Note 6 - Write down of assets at the Registrant's Licking River Terminal Division and National Perlite Products Company. 56 SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- -------------------- ----------------------------------- ---------- ----------- Additions ----------------------------------- Balance at Beginning Charged to Costs Charged to Other Deductions- Balance at Description of Period and Expenses Accounts-Describe Describe of Period -------------------- ---------------- ----------------- ----------- ---------- Year Ended December 31, 1993: Deducted from asset accounts: Allowance for doubtful accounts $ 729,608 $ 1,892,419 $ 539,619(1) $ 2,082,408 Reserves: Reserve for capacity rationalization 22,437,800 -0- 6,312,600(2) 16,125,200 ------------- ----------- ----------- ----------- $ 23,167,408 $ 1,892,419 $ 6,852,219 $18,207,608 ============= =========== =========== =========== Year Ended December 31, 1992: Deducted from asset accounts: Allowance for doubtful accounts $ 260,160 $ 593,520 $ 124,072(1) $ 729,608 Reserves: Reserve for capacity rationalization -0- 22,437,800 -0- 22,437,800 ------------- ----------- ----------- ----------- $ 260,160 $23,031,320 $ 124,072 $23,167,408 ============= =========== =========== =========== Year Ended December 31, 1991: Deducted from asset accounts: Allowance for doubtful accounts $ 286,186 $ 41,400 $ 67,426(1) $ 260,160 ============= =========== =========== =========== Note 1 - Uncollectible accounts written off, net of recoveries. Note 2 - Payment of the Company's share of Eveleth Mines fixed obligations, including long-term debt.
57 SCHEDULE IX - SHORT-TERM BORROWINGS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------- ----------- ------------ ------------- -------------- -------------- Maxium Average Weighted Category of Weighted Amount Amount Average Aggregate Balance at Average Outstanding Outstanding Interest Rate Short-Term End of Interest During the During the During the Borrowings Period Rate Period Period (2) Period (3) - ------------ ------------ ------------ ------------- --------------- --------------- Year Ended December 31, 1993 -0- -0- -0- -0- -0- Year Ended December 31, 1992 -0- -0- -0- -0- -0- Year Ended December 31, 1991 Notes Payable to Bank (1) -0- 6.876% $6,000,000 $1,250,000 9.755% (1) Notes payable to Bank represent borrowings under lines of credit borrowing arrangements. (2) The average amount outstanding during the period was computed by dividing the total of month-end outstanding principal balances by 12. (3) The weighted average interest rate during the period was computed by dividing the actual interest expense by average short-term debt outstanding.
58 SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B - ---------------------------------------------- ------------------------------------------------- ITEM CHARGED TO COSTS AND EXPENSES - ---------------------------------------------- ------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------- 1993 1992 1991 ---- ---- ---- Maintenance and repairs $10,922,116 $11,333,700 $12,852,041 Taxes, other than payroll and income taxes 1,260,576 1,529,279 1,405,259 Amounts for depreciation and amortization of intangible assets, preoperating costs and similar deferrals, as well as royalties and advertising costs are not presented as such amounts are less than 1% of total sales and operating revenues.
59 Item 14 (a) 3 EXHIBIT INDEX
SEC Location or Exhibit No. Description Sequential Page ----------- ----------- --------------- 3 (a) Restated Certificate of Incorporation (b) By-Laws 4 (a) The Registrant is a party to instruments, copies of which will be furnished to the Securities and Exchange Commission upon request, defining the rights of holders of its long-term debt identified in Note F of Notes to Consolidated Financial Statements (b) Form of Rights Agreement 10 (a) Form of Supplemental Pension Agreements with selected former officers (b) Agreement with Brent D. Baird (c) Trust Agreement for Oglebay Norton Company Incentive Savings Plan and Trust (January 1, 1991 Restatement)
60
SEC Location or Exhibit No. Description Sequential Page ----------- ----------- --------------- (d) Form of Change in Control Agreements with Nine Executive Officers (e) Form of Right of First Refusal Agreements with seven Directors (f) Agreement with John D. Weil (g) Employment Agreement with Chairman, Pres- ident and Chief Executive Officer 11 Statement re: Computation of Not Applicable Per Share Earnings 12 Statement re: Computations of Not Applicable Ratios 13 1993 Annual Report to Not Applicable Stockholders 18 Letter re: Change in Not Applicable Accounting Principles 21 Subsidiaries of the Registrant 22 Published Report Regarding Not Applicable Matters Submitted to Vote of Security Holders 23 Consent of Independent Auditors 24 Power of Attorney Not Applicable 28 Information from reports Not Applicable furnished to state insurance regulatory authorities
61 SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- -------------------- ----------------------------------- ---------- ----------- Additions ----------------------------------- Balance at Beginning Charged to Charged to Other Deductions- Balance at Description of Period CostsandExpenses Accounts-Describe Describe of Period -------------------- ---------------- ----------------- ----------- ---------- Year Ended December 31, 1993: Deducted from asset accounts: Allowance for doubtful accounts $ 729,608 $ 1,892,419 $ 539,619(1) $ 2,082,408 Reserves: Reserve for capacity rationalization 22,437,800 -0- 6,312,600(2) 16,125,200 ------------- ----------- ----------- ----------- $ 23,167,408 $ 1,892,419 $ 6,852,219 $18,207,608 ============= =========== =========== =========== Year Ended December 31, 1992: Deducted from asset accounts: Allowance for doubtful accounts $ 260,160 $ 593,520 $ 124,072(1) $ 729,608 Reserves: Reserve for capacity rationalization -0- 22,437,800 -0- 22,437,800 ------------- ----------- ----------- ----------- $ 260,160 $23,031,320 $ 124,072 $23,167,408 ============= =========== =========== =========== Year Ended December 31, 1991: Deducted from asset accounts: Allowance for doubtful accounts $ 286,186 $ 41,400 $ 67,426(1) $ 260,160 ============= =========== =========== =========== Note 1 - Uncollectible accounts written off, net of recoveries. Note 2 - Payment of the Company's share of Eveleth Mines fixed obligations, including long-term debt.
62 SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT OGLEBAY NORTON COMPANY AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F -------- -------- -------- -------- -------- -------- Balance at Balance at Beginning Additions Retirements Other Charges End of Classification of Period at Cost or Sales Add (Deduct) Period -------------- --------- --------- ------------- ------------ --------------- YEAR ENDED DECEMBER 31, 1993: Marine Transportation $239,760,249 $ 364,164(1) $ 124,771 $ -0- $ 239,999,642 Industrial Mining 49,016,019 943,125(2) 47,894 -0- 49,911,250 Manufacturing 15,088,124 1,201,844(3) 36,972 -0- 16,252,996 Other 29,293,167 412,042(4) 16,507,521(5) -0- 13,197,688 ------------ ----------- ----------- ------------- ------------- $333,157,559 $ 2,921,175 $16,717,158 $ -0- $ 319,361,576 ============ =========== =========== ============= ============= YEAR ENDED DECEMBER 31, 1992: Marine Transportation $235,747,307 $ 3,358,178(6) $ 52,677 $ 707,441(6) $ 239,760,249 Industrial Mining 48,087,922 1,545,379(7) 710,127(9) 92,845 49,016,019 Manufacturing 17,797,992 3,622,162(8) 378,026 ( 5,954,004)(11) 15,088,124 Other 43,652,920 200,871 910,948(10) (13,649,676)(12) 29,293,167 ------------ ----------- ----------- ------------ ------------- $345,286,141 $ 8,726,590 $ 2,051,778 $(18,803,394) $ 333,157,559 ============ =========== =========== ============ ============= YEAR ENDED DECEMBER 31, 1991: Marine Transportation $235,752,360 $ -0- $ -0- $ (5,053) $ 235,747,307 Industrial Mining 47,487,212 1,880,064(13) 887,040(16) ( 392,314)(17) 48,087,922 Manufacturing 16,737,633 1,139,630(14) 16,271 ( 63,000) 17,797,992 Other 43,368,904 626,702(15) 314,348 ( 28,338) 43,652,920 ------------ ----------- ----------- ------------ ------------- $343,346,109 $ 3,646,396 $ 1,217,659 $ ( 488,705) $ 345,286,141 ============ =========== =========== ============ =============
EX-3.A 2 EXHIBIT 1 Exhibit 3(a) RESTATED CERTIFICATE OF INCORPORATION OF OGLEBAY NORTON COMPANY [with amendments approved by the stockholders on May 4, 1988 and on April 19, 1989] FIRST. The name of the Corporation is "Oglebay Norton Company." SECOND. The principal office and place of business of the Corporation in the State of Delaware is located at 100 West 10th Street, Wilmington, County of New Castle, and the name of the resident agent in charge thereof is The Corporation Trust Company. THIRD. The nature of the business to be transacted by the Corporation and the objects and purposes to be promoted and carried on by it are: (a) To explore for, mine, process and merchandise ores, minerals, and metals of any and every kind, and to develop, manufacture, and merchandise their products, by-products, and derivatives; (b) To engage in the transportation of persons and property by water, and, in connection therewith, to engage in the docking, repairing, altering, storing, and salvaging of water craft of any and every kind, and in lighterage, wharfage, and the loading, unloading, elevating, storing, and warehousing of products and commodities of any and every kind; (c) To develop, manufacture, and merchandise machinery, equipment, apparatus, tools, accessories, and supplies for use in the mining or processing of ores, minerals, and metals or in the manufacture of their products, by-products, and derivatives, and, generally and without limitation by reason of the foregoing, to engage in the development, manufacturing, and merchandising of products and commodities of any and every kind; (d) To render managerial and advisory services with reference to the mining, processing, and merchandising of ores, minerals, 2 and metals, the development, manufacturing, and merchandising of their products, by-products, and derivatives, the transportation of persons and property by water, and the development, manufacturing, and merchandising of products and commodities of any and every kind; (e) To purchase, lease, charter, construct, erect, or otherwise acquire, to own, hold, use, trade or deal in or with, develop, maintain, improve, manage, or operate, and to sell, lease, grant, charter, assign, transfer, convey, mortgage, pledge, or otherwise dispose of or encumber property of any and every kind, real, personal, or mixed, including, but without limitation upon the generality of the foregoing, mines, mine plants and facilities, manufacturing plants and facilities, town sites, commercial and residential buildings, and buildings and structures of any and every kind, machinery and equipment of any and every kind, ships, barges, scows, tugs, and water craft of any and every kind, docks, piers, wharves, elevators, warehouses, terminals, and transportation and storage facilities of any and every kind, and the stock, bonds, and other obligations of any corporation, domestic or foreign, any government, or any governmental agency or subdivision, and including rights and interests in property and powers, privileges, and franchises of any and every kind; (f) To engage in scientific and other research, to develop or otherwise acquire, own, hold, use, and dispose of inventions, devices, formulae, processes, and designs of any and every kind, and to apply for, register, take licenses in respect of, or otherwise acquire, own, hold, use, sell, assign, grant licenses and sublicenses under, or otherwise dispose of or encumber letters patent, patent rights, patent licenses, and privileges, copyrights, trademarks, trade names, and rights analogous thereto of any and every kind; (g) To issue storage, dock, and warehouse receipts, negotiable and non-negotiable, covering goods, wares, merchandise, or any commercial commodity or thing of value, to collect and receipt for dockage, wharfage, and storage dues and other compensation, and to make -2- 3 advances to cover freights, duties, fire and marine insurance, and liens of any and every kind on goods, wares, merchandise, or other property received for storage or for the purpose of being warehoused or forwarded, and to lend money or make advances on the pledge of goods, wares, merchandise, or other property or on the pledge of storage, dock, or warehouse receipts therefor; (h) To enter into and perform contracts of any and every kind with any person, firm, association, corporation, government, or any governmental agency or subdivision, without limitation as to amount; (i) To lend its uninvested funds to any person, firm, association, corporation, government, or governmental agency or subdivision in such amounts, for such periods of time, upon such terms, and with such security, if any, as it may determine; (j) To borrow money or otherwise use its credit for its corporate purposes, without limitation as to amount, to execute, accept, endorse, issue, and deliver promissory notes, bills of exchange, bonds, debentures, and other obligations and evidences of indebtedness, and to secure the payment of any such obligations by mortgage, pledge, deed of trust, or otherwise; (k) To guarantee or become surety for the performance of the obligations or undertakings of any person, firm, association, or corporation in which it may have an interest; (l) To carry on any lawful business whatsoever in connection with or incidental to the foregoing, or which has for its object the promotion, directly or indirectly, of the interests of the Corporation, to do any and all lawful acts and things which it may deem necessary, suitable, or convenient for the accomplishment of any of its purposes, the promotion of its interests, or the enhancement of the value of its property, and to exercise any and all powers, rights, and privileges which a corporation may now or hereafter be organized to exercise under the laws of the State of Delaware or any law amendatory thereof, supplemental thereto, or in substitution therefor; and -3- 4 (m) To carry out any of its purposes or exercise any of its powers either as principal or as agent or in any other lawful capacity, in any state of the United States, in any territory or possession thereof, or in any foreign country, and to carry out such purposes and exercise such powers either alone or as a participant with others in any lawful transaction, venture, combination, or organization. The foregoing clauses shall be construed both as objects and as powers, and each as an independent right and power, and it is hereby expressly provided that the enumeration herein of specific objects and powers shall not be held to limit or restrict in any manner the general powers of the Corporation. FOURTH. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 15,000,000, of which 5,000,000 shares shall be Preferred Stock without par value, and 10,000,000 shares shall be Common Stock with a par value of $1 per share. The Preferred Stock may be issued from time to time in one or more series. Each series shall consist of the number of shares and shall have such designation, such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional, or other special rights and qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation. Authority is granted to the Board of Directors of the Corporation, subject to the provisions of this Article FOURTH, to authorize the issue of shares of Preferred Stock in one or more series and, with respect to each such series, to fix, by such resolution or resolutions, the number of shares of which it shall consist and its designation, voting powers, preferences, and relative, participating, optional, or other special rights and any qualifications, limitations, or restrictions thereof; provided, however, that (i) the aggregate number of shares of Common Stock of the Corporation into which all shares of Preferred Stock 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 Corporation's Common Stock; and (ii) the price at which shares of Preferred Stock of any series shall at any time be convertible into shares of Common Stock shall be not less than the fair market value, as determined by the directors, of the Company's Common Stock on the date on which the conversion rights of the shares of Preferred Stock of such series are fixed by -4- 5 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 Corporation's Common Stock. All shares of any series of Preferred Stock 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 5-1/2% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A There is hereby established a first series of Preferred Stock; the designation, number, voting powers, preferences and rights and the qualifications, limitations, or restrictions thereof are as follows: Section 1. Designation of Series. The series shall be designated "5-1/2% Cumulative Convertible Preferred Stock, Series A" ("Series A Preferred Stock"). Section 2. Number of Shares. The number of shares of Series A Preferred Stock is 148,950, which number the Board of Directors may increase or decrease (but not below the number of shares of the series then outstanding). Section 3. Dividends. (a) The holders of shares of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of any funds legally available for the declaration of dividends, cumulative dividends at the annual rate of $2.75 per share, and no more, payable quarterly in cash, on the fifteenth day of March, June, September, and December of each year, hereinafter referred to as the "quarterly dividend date," to stockholders of record on such dates respectively preceding the payment thereof as may be fixed by the Board of Directors in declaring any such dividends. Such dividends shall be cumulative from the date of issuance, and the first such dividend shall be prorated from the date of issuance. Accumulations of dividends on shares of Series A Preferred Stock shall not bear interest. (b) So long as any shares of Series A Preferred Stock shall remain outstanding, no dividends or other distributions (other than dividends payable in shares ranking junior to the Series A Preferred Stock, both as to dividends and in liquidation) shall be paid upon or set apart for or distributed with respect to any shares ranking -5- 6 junior to the Series A Preferred Stock (either as to dividends or assets) at any time when there exists a default with respect to the payment of dividends with respect to outstanding shares of Series A Preferred Stock. Section 4. Liquidation Preference. (a) In the event of any liquidation, dissolution, or winding up of the Corporation, or any distribution of its capital, the holders of shares of the Series A Preferred Stock shall be entitled to receive, from the assets of the Corporation, payment in cash of an amount equal to $50 per share, plus a further amount equal to all accrued and unpaid cumulative dividends on the Series A Preferred Stock to the date of payment of the amount due pursuant to such liquidation, dissolution, or winding up of the Corporation, before any distribution of assets shall be made to the holders of any class of shares ranking junior to the Series A Preferred Stock, either as to dividends or assets. If, upon such liquidation, dissolution, winding up, or distribution of capital, the assets thus distributable to the holders of shares of Series A Preferred Stock shall be insufficient to permit the payment to such holders of the preferential amounts aforesaid, then such assets or the proceeds thereof shall be distributed ratably among the holders of shares of Series A Preferred Stock according to the number of such shares held by each. After such payment to the holders of shares of Series A Preferred Stock, the remaining assets and funds of the Corporation shall be divided and distributed among the holders of shares ranking junior to the Series A Preferred Stock, then outstanding, according to their respective interests. (b) The liquidation, dissolution, winding up, or distribution of capital, as such terms are used in the foregoing paragraph, shall not be deemed to include any consolidation or merger of the Corporation with another corporation or any transfer substantially as an entirety of the property and assets of the Corporation to another corporation. Section 5. Redemption and Purchase. (a) At the election of the Corporation, to be exercised by resolution adopted by its Board of Directors, all or any part of the shares of Series A Preferred Stock may be redeemed, at any time and from time to time subsequent to December 31, 1976, on any quarterly dividend payment date upon not less than 30 days nor more than 60 days' previous notice given by first-class mail, postage prepaid, to the holders of record thereof at their addresses as the same appear on the records of the Corporation and by (i) paying $50 for each share thereof called for redemption, plus a -6- 7 further amount equal to all accrued and unpaid cumulative dividends on the Series A Preferred Stock to the date fixed for redemption, or, in lieu of such payment, by (ii) depositing the redemption price in cash on or prior to said redemption date with such bank or trust company in the City of Cleveland, Ohio, as may be designated by the Board of Directors of the Corporation in trust for payment on the redemption date to the holders of the shares of Series A Preferred Stock so to be redeemed. In case of the redemption of less than all of the outstanding shares of Series A Preferred Stock, the shares to be redeemed may be selected by lot or pro rata, or by call of all or any part of the shares owned by one or more holders of such shares, or by such other method as the Board of Directors in its discretion may determine, and notice, as above provided, shall be given to the holders of record whose shares have been so selected for redemption. On and after the date fixed in any such notice as the date of redemption of the shares of Series A Preferred Stock, unless default shall be made by the Corporation in the payment and/or deposit of the redemption price pursuant to such notice and to the provisions hereof, all dividends on the shares of Series A Preferred Stock so called for redemption shall cease to accrue, and on such date or on deposit in trust as aforesaid of funds sufficient for such redemption (notice of redemption having been given as aforesaid), whether said deposit shall have been made on said redemption date or prior thereto, all rights of the holders of said shares of Series A Preferred Stock as stockholders of the Corporation shall cease and determine except the right to receive the redemption price and no more from the Corporation or from a depositary as above described, upon surrender of their certificates properly endorsed. If the holders of the shares of Series A Preferred Stock which shall have been called for redemption shall not, within six years after such deposit, claim the amount deposited for the redemption of their shares, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts, and thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in respect thereof and to such holders. (b) The Corporation may also, from time to time, purchase or otherwise acquire outstanding shares of Series A Preferred Stock. (c) Any shares of Series A Preferred Stock which are redeemed or purchased by the Corporation or which are converted into Common Stock of the Corporation pursuant to the conversion privilege shall have the status of -7- 8 authorized but unissued shares of Preferred Stock without designation of any series. Section 6. Conversion Privilege. (a) Subject to and upon compliance with the provisions of this Section 6, the shares of Series A Preferred Stock may, at the option of the holder, at any time (in the case of shares called for redemption, then until and including the close of business on the date fixed for redemption but not thereafter if payment of the redemption price has been duly provided for by the date fixed for redemption), be converted into shares of Common Stock (as such shares shall be constituted at the conversion date) at the conversion price in effect at the conversion date. (b) The holder of each share of Series A Preferred Stock may exercise the conversion privilege in respect thereof by delivering to any transfer agent of the shares of Series A Preferred Stock the certificate for the share to be converted accompanied by written notice that the holder elects to convert such share. Conversion shall be deemed to have been effected immediately prior to the close of business on the date when such delivery is made, and such date is referred to in this Section 6 as the "conversion date." On the conversion date or as promptly thereafter as practicable, the Corporation shall issue and deliver to the holder of the shares of Series A Preferred Stock surrendered for conversion, or on his written order, a certificate for the number of full shares of Common Stock, issuable upon the conversion of such shares of Series A Preferred Stock and a check or cash in respect of any fraction of a share as provided in paragraph (c) of this Section 6. The person in whose name the stock certificate is to be issued shall be deemed to have become a holder of shares of Common Stock of record on the conversion date. No adjustment shall be made for any dividends accrued on shares of Series A Preferred Stock surrendered for conversion or for dividends on the shares of Common Stock issued on conversion. (c) The Corporation shall not be required to issue fractional shares of Common Stock upon conversion of Series A Preferred Stock. If more than one share of Series A Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares so surrendered. If any fractional interest in a share of Common Stock would otherwise be delivered upon the conversion of any shares of Series A Preferred Stock, the Corporation shall in lieu of -8- 9 delivering a fractional share therefor make an adjustment therefor in cash at the current market value thereof, computed (to the nearest cent) on the basis of the mean between the highest and lowest prices at which the shares of Common Stock are traded on any exchange on which they may be listed on the last business day before the conversion date or, if no sale of shares of Common Stock shall have been made on such exchange on that day, the mean between the bid and asked prices on such exchange at the close of the market on such day; if the shares of Common Stock are not listed on any exchange, the basis for determining the current market value thereof shall be the mean between the highest and lowest prices at which the shares of Common Stock are traded on the Cleveland over-the-counter market on such day or, if no sale of shares of Common Stock shall have been made on such a day, then the mean between the bid and asked prices at the close of the market on such day. (d) Unless and until an adjusted conversion price is required to be computed as hereinafter provided, the conversion price per share of Common Stock shall be $50. The number of shares of Common Stock issuable upon conversion of one share of Series A Preferred Stock shall be determined by dividing $50 by the conversion price then in effect. (e) The conversion price shall be adjusted from time to time as follows: (1) If the Corporation splits or combines the outstanding shares of Common Stock, the conversion price shall be proportionately decreased in the case of a split or increased in the case of a combination, so as appropriately to reflect the same, in each case as of the opening of business on the day following the day on which such split or combination became effective. For this purpose, any stock dividend shall be considered a split of the outstanding shares as of the close of business on the dividend record date. (2) If the Corporation shall issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current average market price per share of Common Stock at the record date mentioned below, the conversion price shall be reduced by a price determined by multiplying the conversion -9- 10 price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such current average market price and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustments shall be made whenever such rights or warrants are issued and shall become effective retroactively immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such rights or warrants. For purposes of the foregoing, the current average market price of a share of Common Stock on any day shall be deemed to be the average of the daily current market value per share of Common Stock (computed on the basis outlined in paragraph (c) of this Section 6) for the ten consecutive business days commencing 25 business days before the day in question. (3) Whenever the conversion price is adjusted as herein provided, the Corporation shall forthwith place on file with the transfer agents for the Series A Preferred Stock a statement signed by the President or a Vice President of the Corporation and by its Treasurer or its Secretary or an Assistant Treasurer showing in detail the facts requiring such adjustment and the conversion price after such adjustment and shall exhibit the same from time to time to any holder of shares of Series A Preferred Stock desiring an inspection thereof. (f) In case of any reclassification or change of outstanding shares of Common Stock (except a split or combination, or a change from no par value to par value, or a change in par value, or a change from par value to no par value), provision shall be made as part of the terms of such reclassification or change that the holder of each share of Series A Preferred Stock then outstanding shall have the right to receive upon the conversion of such share, at the conversion price which otherwise would be in effect at the time of conversion, with the same protection -10- 11 against dilution as herein provided, the same kind and amount of stock and other securities and property as he would own or be entitled to receive upon the happening of any of the events described above had such share been converted immediately prior to the happening of the event. (g) In case the Corporation shall be consolidated with or shall merge into any other corporation, provision shall be made as a part of the terms of such consolidation or merger whereby the holder of any share of Series A Preferred Stock outstanding immediately prior to such event shall thereafter be entitled to such conversion privilege with respect to securities of the Corporation resulting from such consolidation or merger as shall be substantially equivalent to the conversion privilege herein specified. (h) The issuance of stock certificates on conversions of shares of Series A Preferred Stock shall be without charge to the converting stockholder for any tax in respect to the issuance thereof. The Corporation shall not, however, be required to pay any tax which may be payable in respect to any transfer involved in the issuance and delivery of shares in any name other than that of the holder of the shares of Series A Preferred Stock converted, and the Corporation shall not be required to issue or deliver any such stock certificates unless and until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (i) The Corporation hereby reserves and shall at all times reserve and keep available, free from pre-emptive right, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of Series A Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock. (j) In case at any time: (1) the Corporation shall split or combine its outstanding shares of Common Stock or pay any dividend upon its shares of Common Stock payable in its shares of Common Stock and such dividend shall be in excess of 5%; or (2) the Corporation shall authorize the granting to the holders of its shares of -11- 12 Common Stock of rights to subscribe for or purchase any shares of any class or of any other rights; or (3) the Corporation shall authorize the distribution to all holders of its shares of Common Stock of evidences of indebtedness or other assets (other than cash dividends); then, in any of such cases, the Corporation shall give written notice, by first-class mail, postage prepaid, to the transfer agent for the Series A Preferred Stock and to each holder of record of shares of Series A Preferred Stock, at his address then appearing upon the records of the Corporation, of the record date or of the date on which the transfer books of the Corporation shall close with respect to such action. Such notice shall be given at least 20 days prior to the action in question and not less than ten days prior to the record date on which the Corporation's transfer books are closed with respect thereto. Section 7. Voting Rights. Each holder of shares of Series A Preferred Stock shall be entitled to one vote for each share held and except as otherwise by law provided, the holders of Series A Preferred Stock and the holders of Common Stock of the Corporation shall vote together as one class. DIVISION B EXPRESS TERMS OF 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B OF OGLEBAY NORTON COMPANY There is hereby established a second series of Preferred Stock; the designation, number, voting powers, preferences and rights and qualifications, limitations, or restrictions thereof are as follows: Section 1. Designation of Series. The series shall be designated "5% Cumulative Convertible Preferred Stock, Series B" ("Series B Preferred Stock"). Section 2. Number of Shares. The number of shares of Series B Preferred Stock is 40,000, which number the Board of Directors may increase or decrease (but not below the number of shares of the series then outstanding). -12- 13 Section 3. Dividends. (a) The holder of shares of Series B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of any funds legally available for the declaration of dividends, cumulative dividends at the annual rate of $2.50 per share, and no more, payable quarterly in cash, on the fifteenth day of March, June, September, and December of each year, hereinafter referred to as the "quarterly dividend date," to stockholders of record on such dates respectively preceding the payment thereof as may be fixed by the Board of Directors in declaring any such dividends. Such dividends shall be cumulative from the date of issuance, and the first such dividend shall be prorated from the date of issuance. Accumulatives of dividends on shares of Series B Preferred Stock shall not bear interest. (b) So long as any shares of Series B Preferred Stock shall remain outstanding, no dividends or other distributions (other than dividends payable in shares ranking junior to the Series B Preferred Stock, both as to dividends and in liquidation) shall be paid upon or set apart for or distributed with respect to any shares ranking junior to the Series B Preferred Stock (either as to dividends or assets) at any time when there exists a default with respect to the payment of dividends with respect to outstanding shares of Series B Preferred Stock. Section 4. Liquidation Preference. (a) In the event of any liquidation, dissolution, or winding up of the Corporation, or any distribution of its capital, the holders of shares of the Series B Preferred Stock shall be entitled to receive, from the assets of the Corporation, payment in cash of an amount equal to $50 per share, plus a further amount equal to all accrued and unpaid cumulative dividends on the Series B Preferred Stock to the date of payment of the amount due pursuant to such liquidation, dissolution, or winding up of the Corporation, before any distribution of assets shall be made to the holders of any class of shares ranking junior to the Series B Preferred Stock, either as to dividends or assets. If, upon such liquidation, dissolution, winding up, or distribution of capital, the assets thus distributable to the holders of shares of Series B Preferred Stock shall be insufficient to permit the payment to such holders of the preferential amounts aforesaid, then such assets or proceeds thereof shall be distributed ratably among the holders of shares of Series B Preferred Stock according to the number of such shares held by each. After such payment to the holders of shares of Series B Preferred Stock, the remaining assets and funds of the Corporation shall be divided and distributed among the holders of shares ranking junior to -13- 14 the Series B Preferred Stock, then outstanding, according to their respective interests. (b) The liquidation, dissolution, winding up, or distribution of capital, as such terms are used in the foregoing paragraph, shall not be deemed to include any consolidation or merger of the Corporation with another corporation or any transfer substantially as an entirety of the property and assets of the Corporation to another corporation. Section 5. Redemption and Purchase. (a) At the election of the Corporation, to be exercised by resolution adopted by its Board of Directors, all or any part of the shares of Series B Preferred Stock may be redeemed, at any time and from time to time subsequent to December 31, 1976, on any quarterly dividend payment date upon not less than 30 days nor more than 60 days' previous notice given by first-class mail, postage prepaid, to the holders of record thereof at their addresses as the same appear on the records of the Corporation and by (a) paying for each share thereof called for redemption $50, plus a further amount equal to all accrued and unpaid cumulative dividends on the Series B Preferred Stock to the date fixed for redemption, or, in lieu of such payment, by (b) depositing the redemption price in cash on or prior to said redemption date with such bank or trust company in the City of Cleveland, Ohio, as may be designated by the Board of Directors of the Corporation in trust for payment on the redemption date to the holders of the shares of Series B Preferred Stock so to be redeemed. In case of the redemption of less than all of the outstanding shares of Series B Preferred Stock, the shares to be redeemed may be selected by lot or pro rata, or by call of all or any part of the shares owned by one or more holders of such shares, or by such other method as the Board of Directors in its discretion may determine, and notice, as above provided, shall be given to the holders of record whose shares have been so selected for redemption. On and after the date fixed in any such notice as the date of redemption of the shares of Series B Preferred Stock, unless default shall be made by the Corporation in the payment and/or deposit of the redemption price pursuant to such notice and to the provisions hereof, all dividends on the shares of Series B Preferred Stock so called for redemption shall cease to accrue, and on such date or on deposit in trust as aforesaid of funds sufficient for such redemption (notice of redemption having been given as aforesaid), whether said deposit shall have been made on said redemption date or prior thereto, all rights of the holders of said shares of Series B Preferred Stock as stockholders of the Corporation -14- 15 shall cease and determine except the right to receive the redemption price and no more from the Corporation or from a depositary as above described, upon surrender of their certificates properly endorsed. If the holders of the shares of Series B Preferred Stock which shall have been called for redemption shall not, within six years after such deposit, claim the amount deposited for the redemption of their shares, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts, and thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in respect thereof and to such holders. (b) The Corporation may also, from time to time, purchase or otherwise acquire outstanding shares of Series B Preferred Stock. (c) Any shares of Series B Preferred Stock which are redeemed or purchased by the Corporation or which are converted into Common Stock of the Corporation pursuant to the conversion privilege shall have the status of authorized but unissued shares of Preferred Stock without designation of any series. Section 6. Conversion Privilege. (a) Subject to and upon compliance with the provisions of this Section 6, the shares of Series B Preferred Stock may, at the option of the holder, at any time (in the case of shares called for redemption, then until and including the close of business on the date fixed for redemption but not thereafter if payment of the redemption price has been duly provided for by the date fixed for redemption), be converted into shares of Common Stock (as such shares shall be constituted at the conversion date) at the conversion price in effect at the conversion date. (b) The holder of each share of Series B Preferred Stock may exercise the conversion privilege in respect thereof by delivering to any transfer agent of the shares of Series B Preferred Stock the certificate for the share to be converted accompanied by written notice that the holder elects to convert such share. Conversion shall be deemed to have been effected immediately prior to the close of business on the date when such delivery is made, and such date is referred to in this Section 6 as the "conversion date." On the conversion date or as promptly thereafter as practicable the Corporation shall issue and deliver to the holder of the shares of Series B Preferred Stock surrendered for conversion, or on his written order, a certificate for the number of full shares of Common Stock issuable upon the conversion of such shares of Series B -15- 16 Preferred Stock and a check or cash in respect of any fraction of a share as provided in paragraph (c) of this Section 6. The person in whose name the stock certificate is to be issued shall be deemed to have become a holder of shares of Common Stock of record on the conversion date. No adjustment shall be made for any dividends accrued on shares of Series B Preferred Stock surrendered for conversion or for dividends on the shares of Common Stock issued on conversion. (c) The Corporation shall not be required to issue fractional shares of Common Stock upon conversion of Series B Preferred Stock. If more than one share of Series B Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares so surrendered. If any fractional interest in a share of Common Stock would otherwise be delivered upon the conversion of any shares of Series B Preferred Stock, the Corporation shall in lieu of delivering a fractional share therefor make an adjustment therefor in cash at the current market value thereof, computed (to the nearest cent) on the basis of the mean between the highest and lowest prices at which the shares of Common Stock are traded on any exchange on which they may be listed on the last business day before the conversion date or, if no sale of shares of Common Stock shall have been made on such exchange on that day, the mean between the bid and asked prices on such exchange at the close of the market on such day; if the shares of Common Stock are not listed on any exchange, the basis for determining the current market value thereof shall be the mean between the highest and lowest prices at which the shares of Common Stock are traded on the Cleveland over-the- counter market on such day, or, if no sale of shares of Common Stock shall have been made on such day, then the mean between the bid and asked prices at the close of the market on such day. (d) Unless and until an adjusted conversion price is required to be computed as hereinafter provided, the conversion price per share of Common Stock shall be $50. The number of shares of Common Stock issuable upon conversion of one share of Series B Preferred Stock shall be determined by dividing $50 by the conversion price then in effect. (e) The conversion price shall be adjusted from time to time as follows: -16- 17 (1) If the Corporation splits or combines the outstanding shares of Common Stock, the conversion price shall be proportionately decreased in the case of a split or increased in the case of a combination, so as appropriately to reflect the same, in each case as of the opening of business on the day following the day on which such split or combination became effective. For this purpose, any stock dividend shall be considered a split of the outstanding shares as of the close of business on the dividend record date. (2) If the Corporation shall issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current average market price per share of Common Stock at the record date mentioned below, the conversion price shall be reduced to a price determined by multiplying the conversion price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such current average market price and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustments shall be made whenever such rights or warrants are issued and shall become effective retroactively immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such rights or warrants. For purposes of the foregoing, the current average market price of a share of Common Stock on any day shall be deemed to be the average of the daily current market value per share of Common Stock (computed on the basis outlined in paragraph (c) of this Section 6) for the ten consecutive business days commencing 25 business days before the day in question. (3) Whenever the conversion price is adjusted as herein provided, the Corporation -17- 18 shall forthwith place on file with the transfer agents for the Series B Preferred Stock a statement signed by the President or a Vice President of the Corporation and by its Treasurer or its Secretary or an Assistant Treasurer showing in detail the facts requiring such adjustment and the conversion price after such adjustment and shall exhibit the same from time to time to any holder of shares of Series B Preferred Stock desiring an inspection thereof. (f) In case of any reclassification or change of outstanding shares of Common Stock (except a split or combination, or a change from no par value to par value, or a change in par value, or a change from par value to no par value), provision shall be made as part of the terms of such reclassification or change that the holder of each share of Series B Preferred Stock then outstanding shall have the right to receive upon the conversion of such share, at the conversion price which otherwise would be in effect at the time of conversion, with the same protection against dilution as herein provided, the same kind and amount of stock and other securities and property as he would own or be entitled to receive upon the happening of any of the events described above had such share been converted immediately prior to the happening of the event. (g) In case the Corporation shall be consolidated with or shall merge into any other corporation, provision shall be made as a part of the terms of such consolidation or merger whereby the holder of any share of Series B Preferred Stock outstanding immediately prior to such event shall thereafter be entitled to such conversion privilege with respect to securities of the corporation resulting from such consolidation or merger as shall be substantially equivalent to the conversion privilege herein specified. (h) The issuance of stock certificates on conversions of shares of Series B Preferred Stock shall be without charge to the converting stockholder for any tax in respect to the issuance thereof. The Corporation shall not, however, be required to pay any tax which may be payable in respect to any transfer involved in the issuance and delivery of shares in any name other than that of the holder of the shares of Series B Preferred Stock converted, and the Corporation shall not be required to issue or deliver any such stock certificates unless and until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or -18- 19 shall have established to the satisfaction of the Corporation that such tax has been paid. (i) The Corporation hereby reserves and shall at all times reserve and keep available, free from pre-emptive right, out of its authorized but unissued stock, for the purpose of effecting the conversion of the shares of Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series B Preferred Stock. (j) In case at any time: (1) the Corporation shall split or combine its outstanding shares of Common Stock or pay any dividend upon its shares of Common Stock payable in its shares of Common stock and such dividend shall be in excess of 5%; or (2) the Corporation shall authorize the granting to the holders of its shares of Common Stock of rights to subscribe for or purchase any shares of any class or of any other rights; or (3) the Corporation shall authorize the distribution to all holders of its shares of Common Stock of evidences of indebtedness or other assets (other than cash dividends); then, in any of such cases, the Corporation shall give written notice, by first-class mail, postage prepaid, to the transfer agent for the Series B Preferred Stock and to each holder of record of shares of Series B Preferred Stock, at his address then appearing upon the records of the Corporation, of the record date or of the date on which the transfer books of the Corporation shall close with respect to such action. Such notice shall be given at least 20 days prior to the action in question and not less than ten days prior to the record date on which the Corporation's transfer books are closed with respect thereto. Section 7. Voting Rights. Each holder of shares of Series B Preferred Stock shall be entitled to one vote for each share held and, except as otherwise by law provided, the holders of Series B Preferred Stock and the holders of Common Stock of the Corporation shall vote together as one class. -19- 20 DIVISION C EXPRESS TERMS OF SERIES C $10 PREFERRED STOCK There is hereby established a third series of Preferred Stock; 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 100,000. 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 Stock 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 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 to the nearest cent) equal to the greater of (a) $10.00 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 shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend -20- 21 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 Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock 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 Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock 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 -21- 22 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 Stock 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 Stock, 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. 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 of stock 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 shares of Common Stock 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 Stock) (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 Stock, respectively, holders of Series C Preferred Stock and holders of shares of Common Stock shall receive -22- 23 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 such Preferred Stock and Common Stock, 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 Stock, 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 Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock 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 the shares of Common Stock are exchanged or changed into other stock 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 stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence -23- 24 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock 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 Stock of the Corporation shall vote together as one class. Section 8. Condition to Issuance of any other Series. The Restated Certificate of Incorporation of the Corporation shall not be further amended to provide for the issuance of any other series of Preferred Stock 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 stockholders 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 stockholders, are as follows: (a) The number of directors of the Corporation shall be fixed from time to time, as may be provided in its bylaws, 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 bylaws. The directors shall be divided into three classes as nearly equal in number as possible. At the 1987 Annual Meeting, one class, consisting of four directors, shall be elected to serve until the 1988 Annual Meeting of stockholders and their successors are elected, a second class, consisting of four directors, shall be elected to serve until the 1989 Annual Meeting of stockholders and -24- 25 their successors are elected, and a third class, consisting of three directors, shall be elected to serve until the 1990 Annual Meeting of stockholders and their successors are elected. Thereafter, at each annual meeting of stockholders, 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 at the number stated in the preceding sentence unless and until otherwise fixed or changed as may be provided in the bylaws. Notwithstanding the foregoing, whenever the holders of any class or series of preferred stock issued by the Corporation has the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, classification, term of office, filling of vacancies, and other features of such directorships shall be governed by the terms of such preferred stock. (b) The Board of Directors shall have power to make, alter, and repeal bylaws of the Corporation; but bylaws made by the directors may be altered or repealed by the stockholders. (c) 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 stockholders, and no stockholder 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. (d) The stockholders and directors shall have power, if the bylaws so provide, to hold their meetings and to have one or more offices within or without the State of Delaware and, subject to the provisions of the laws of Delaware, to keep the books, documents, and papers of the Corporation outside the State of Delaware at such places as may be from time to time designated by the Board of Directors. (e)(1) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, -25- 26 trustee, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, trustee, officer, employee, or agent or in any other capacity while serving as a director, trustee, officer, employee, or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability, and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of his or her heirs, executors, and administrators: provided, however, that, except as provided in Subsection (2) hereof, the Corporation shall indemnify any such person seeking indemnification 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. The right to indemnification conferred in this Subparagraph (e) shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition: provided, however, that, if the Delaware Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. -26- 27 (e)(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 tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware 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 stockholders) 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 Delaware Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) 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. (e)(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 (e) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. (e)(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, or employee of another corporation, partnership, 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 (e) or of the Delaware Corporation Law. -27- 28 (f) A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. (g) Any action required or permitted to be taken by the holders of the Common Stock of the Corporation may be taken only at a duly called annual or special meeting of such holders and not by the consent in writing of such holders, unless the consent in writing is signed by all such holders. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 75% of the voting power of all the stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, or repeal this Subparagraph (g) or to adopt any provision inconsistent herewith. (h) The Corporation may in its bylaws 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. (i) No stockholder of the Corporation shall have any pre-emptive right to subscribe for any additional issues of stock of the Corporation. EIGHTH. At all elections of directors of the Corporation, each stockholder shall be entitled to as many votes as shall equal the number of votes which, except for this provision, he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected, and he may cast all such votes for a single director or may distribute them among the number to be voted for or for any two or more of them as he may see fit. NINTH. The affirmative vote of the holders of shares entitling them to exercise at least two-thirds of the voting power of the Company shall be required: (a) To approve (1) the merger of the Company into or its consolidation with another corporation, or (2) the merger into the Company of another corporation -28- 29 if, under the Delaware Corporation Law, the affirmative vote of holders of shares of capital stock of the Company would be required to effect the merger, or (3) the sale, lease, exchange, or other disposition by the Company 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 Certificate of Incorporation of the Company shall amend, alter, change, or repeal any of the provisions of this Article NINTH, unless the amendment effecting such amendment, alteration, change, or repeal shall receive the affirmative vote or consent of the holders of shares entitling them to exercise at least two-thirds of the voting power of the Company. TENTH. (a) Voting Requirement for Certain Business Combinations. Unless both the fair price requirement set forth in this 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 stock 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 stockholder (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 stockholder, or from an interested stockholder to 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 stockholder, or by an interested stockholder 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 -29- 30 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 stockholder. (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 stockholder or of otherwise diluting the position of any stockholder of the Corporation in comparison with the position of an interested stockholder. (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 this Certificate 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 the Corporation's Common Stock or Preferred Stock, 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 Corporation's Common Stock or Preferred Stock, other than an interested stockholder, is to receive consideration in the business combination for any of the stock, 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 stockholder for any stock of the same class or series during the two-year period ending on the date of the most recent purchase by the interested stockholder of any stock of the same class or series, (B) the highest per share sales price reported for stock of the same class or -30- 31 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 Stock, the amount of the per share liquidation preference; plus (ii) interest on the per share price calculated at the prime rate for unsecured short-term loans in effect at AmeriTrust Company, Cleveland, Ohio, on the date on which the interested stockholder became an interested stockholder, 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 Corporation's Common Stock or Preferred Stock must be paid in cash or in the same form as was previously paid by the interested stockholder for stock of the same class or series; if the interested stockholder previously paid for such stock with different forms of consideration, the consideration to be received by the holders of the stock must be in cash or in the same form as was previously paid by the interested stockholder for the greatest number of shares of the stock previously acquired by it. The provisions of this Subsection (2) are not intended to diminish the aggregate amount of cash and fair market value of any other consideration that any holder of the Corporation's Common Stock or Preferred Stock 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 stockholder, 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 -31- 32 stockholder became an interested stockholder 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 TENTH, means an individual who (i) either was a director of the Corporation at the time the interested stockholder became an interested stockholder 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 stockholder. All actions required or permitted to be taken by the continuing directors under this Article TENTH 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 stockholder has not become the beneficial owner (as hereinafter defined) of any additional shares of Common Stock or Preferred Stock of the Corporation, except (i) as part of the transaction that resulted in the interested stockholder becoming an interested stockholder, (ii) upon conversion of securities previously acquired by it, or (iii) pursuant to a stock dividend or stock split. (c)(3) The interested stockholder has not received, directly or indirectly, the benefit (except proportionately as a stockholder) 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 stock of the Corporation entitled to vote in elections of directors, whether or not stockholder 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 -32- 33 directors and retained at the expense of the Corporation, as to the fairness (or unfairness) of the business combination to holders of the Corporation's Common Stock or Preferred Stock other than the interested stockholder. (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 Corporation's Preferred Stock or (ii) failure to pay or reduction in the annual rate of dividends on the Corporation's Common Stock, 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 shares of Common Stock, the number and series of any outstanding Preferred Stock, 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 stock or other instruments, the issuance of previously authorized debt securities, or the mandatory redemption or retirement of debt securities in accordance with their terms. (d) Definitions: As used in this Article TENTH: (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 the date of the adoption of this Restated Certificate of Incorporation. (d)(2) "Beneficial Ownership." A person or entity is deemed to "beneficially own" stock 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 stock or (ii) the right to acquire the stock pursuant to any contract or arrangement, upon the exercise of any option, warrant, or right, upon the conversion of any stock or other instrument, upon revocation of a trust, or otherwise. The person or entity is also deemed to "beneficially own" stock that is beneficially owned by affiliates and associates of that person or entity. -33- 34 (d)(3) "Business Combination." The term "business combination" has the meaning ascribed to it in Subparagraph (a) of this Article TENTH. (d)(4) "Continuing Directors." The term "continuing directors" has the meaning ascribed to it in Subsection (1) of Subparagraph (c) of this Article TENTH. (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 stockholder." The term "interested stockholder" 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 stock having at least 25% of the aggregate voting power of all outstanding stock of the Corporation entitled to vote in elections of directors. The term "interested stockholder," for purposes of the requirements and conditions of this Article TENTH, also includes the affiliates and associates of the interested stockholder. 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 stockholders." (e) Nothing contained in this Article TENTH shall be construed to relieve any interested stockholder from any fiduciary obligations imposed by law. (f) Notwithstanding any other provision of this Certificate of Incorporation or the bylaws of the Corporation (and notwithstanding the fact that a lesser percentage may be required by law, this Certificate of Incorporation, or the bylaws of the Corporation), the affirmative vote of the holders of 75% of the outstanding stock of the Corporation entitled to vote in elections of directors, voting together as a single class, shall be -34- 35 required to amend or repeal, or adopt any provisions inconsistent with, this Article TENTH. ELEVENTH. (a) Foreign Ownership of Stock, etc. (a)(1) Notwithstanding anything to the contrary in this Restated Certificate 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 stock 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 stock 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, 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 stock of the Corporation possessing prescribed qualifications. (a)(2) The Board of Directors is generally authorized to adopt all such bylaws 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 ELEVENTH, 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 of stock 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 stock of the -35- 36 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 stockholder 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 ELEVENTH. (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 stock 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 Stock. Notwithstanding any other provision of this Restated Certificate of Incorporation and without limiting the power of the Board of Directors to purchase stock pursuant to Subparagraph (f), outstanding stock 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 151(b) of the Delaware General Corporation Law (or any other provision of law) to the extent necessary to reduce the percentage of shares of such stock 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 stock; -36- 37 (2) the redemption price for shares owned by Foreigners in excess of the Permitted Percentage at the time of the merger of ON Corp. into Oglebay Norton Company shall be paid in cash, and the redemption price for shares owned by Foreigners in excess of the Permitted Percentage at any time subsequent to the merger 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 ELEVENTH; (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; (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 thence-forth 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. -37- 38 (e) Dual Stock Certificate System and Other Actions. The Board of Directors is authorized to adopt bylaw provisions 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 stock of any class of the Corporation, in accordance with Section 202 of the Delaware General Corporation Law or any other provision of law, and to determine whether outstanding stock of any class of the Corporation is owned by Foreigners or by citizens of the United States. Such restrictions may include a Dual Stock Certificate System. (f) Purchase of Stock by the Corporation. Without limiting the power of the Board of Directors to redeem stock owned by Foreigners in accordance with Subparagraph (d) or generally to purchase outstanding stock 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 stock of any class of the Corporation that is 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 stock is owned by Foreigners for the purposes of this Article ELEVENTH shall be determined under such bylaws 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 ELEVENTH, as may be adopted from time to time by the Board of Directors. The Corporation may, in its discretion, rely on the stock 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 ELEVENTH shall be effective only so long as the Corporation or any -38- 39 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 stock 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 stock 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 stock 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 such class is 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 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 stock of which is 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 of 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 stock is 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 -39- 40 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 stock 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 stock 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 stock 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 stock 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 -40- 41 other respects and comply with all provisions of the Delaware General Corporation Law (including Section 202(a) 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 stock 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" share certificate and the Corporation will not recognize any such transferee as an owner of stock of the Corporation for any purpose whatsoever; (iv) a certification is required from any transferee (and from any recipient upon original issuance) of stock 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 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 stock 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 stock 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 stock records of the Corporation are maintained in such manner as to enable determination at any time, as to each class of outstanding stock 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 -41- 42 any provision of the United States maritime, shipping, or vessel documentation laws because of the ownership by Foreigners of its stock, or (iv) maintains a Capital Construction Fund under the provisions of Section 807 of the Merchant Marine Act of 1936, as amended. TWELFTH. The Corporation reserves the right to amend, alter, change, or repeal any provision contained herein which constitutes a part of the Certificate of Incorporation of the Corporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders are granted subject to this reservation. -42- EX-3.B 3 EXHIBIT 1 Exhibit 3(b) BY-LAWS OF OGLEBAY NORTON COMPANY As of February 23, 1994 2
TABLE OF CONTENTS Section Page Number Subject Number - ----------------------------------------------------------------- OFFICES 1. Offices ............................................. 1 SEAL 2. Seal ................................................ 1 STOCKHOLDERS' MEETINGS 3. Place of meetings ................................... 1 4. Annual meeting ...................................... 1 5. Quorum .............................................. 2 6. Voting .............................................. 2 7. Notice of annual meeting ............................ 3 8. Stockholders' list .................................. 3 9. Special meetings .................................... 3 10. Business transacted at special meetings ............. 3 11. Notice of special meetings .......................... 3 DIRECTORS 12. Number; election; qualifications; term of office .... 3 13. Powers and authorities .............................. 4 VACANCIES 14. Vacancies ........................................... 4 MEETINGS OF THE BOARD 15. Regular meetings .................................... 4 16. Special meetings .................................... 4 17. Quorum .............................................. 5 ACTION WITHOUT A MEETING 18. Action by directors without a meeting ............... 5
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Section Page Number Subject Number - ----------------------------------------------------------------- COMMITTEES 19. Executive Committee ................................. 5 20. Other committees .................................... 5 COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS 21. Compensation of directors ........................... 6 22. Compensation of committee members ................... 6 OFFICERS 23. Election and designation of officers; compensation; term of office; vacancies ......................... 6 CHAIRMAN OF THE BOARD 24. Chairman of the Board ............................... 7 VICE CHAIRMAN OF THE BOARD 24a. Vice Chairman of the Board .......................... 7 PRESIDENT 25. President ........................................... 7 EXECUTIVE VICE PRESIDENTS 26. Executive Vice Presidents ........................... 7 SENIOR VICE PRESIDENTS 27. Senior Vice Presidents .............................. 7 VICE PRESIDENTS 28. Vice Presidents ..................................... 7
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Section Page Number Subject Number - ----------------------------------------------------------------- SECRETARY 29. Secretary ........................................... 8 TREASURER 30. Treasurer ........................................... 8 OTHER OFFICERS 31. Other officers ...................................... 8 EXECUTION OF DOCUMENTS 32. Execution of documents .............................. 8 AUTHORITY TO VOTE SECURITIES 33. Authority to vote securities ........................ 8 DELEGATION OF AUTHORITY AND DUTIES 34. Delegation of authority and duties of officers ...... 9 STOCK CERTIFICATES 35. Stock certificates .................................. 9 TRANSFERS OF STOCK 36. Transfers of stock .................................. 9 LOST, STOLEN OR DESTROYED CERTIFICATES 37. Lost, stolen or destroyed certificates .............. 9
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Section Page Number Subject Number - ----------------------------------------------------------------- TRANSFER AGENT AND REGISTRAR 38. Transfer agent and registrar ........................ 10 RECORD DATES 39. Record dates ........................................ 10 REGISTERED STOCKHOLDERS 40. Right of corporation to recognize only record stockholders ...................................... 10 INSPECTION OF BOOKS 41. Inspection of books ................................. 10 FISCAL YEAR 42. Fiscal year ......................................... 11 DIVIDENDS 43. Dividends ........................................... 11 DIRECTORS' ANNUAL STATEMENT 44. Directors' annual statement ......................... 11 NOTICES 45. Notices ............................................. 11 AMENDMENTS 46. Amendments .......................................... 12
6 BY-LAWS OF OGLEBAY NORTON COMPANY (Revised as of February 23, 1994) OFFICES 1. The principal office shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof is The Corporation Trust Company. 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 Delaware, as the Board of Directors may from time to time designate or the business of the corporation may require. The books of the corporation, other than the duplicate stock ledger, which shall at all times be kept at the principal office of the corporation in Delaware, shall be kept at such one or more of the offices of the corporation or at such other place or places, either within or without the State of Delaware, as the directors may from time to time determine. SEAL 2. The corporate seal shall have inscribed thereon the name of the corporation and the words "Corporate Seal, Delaware". Said seal may be used by causing it, or a facsimile thereof, to be impressed or affixed or reproduced or otherwise. STOCKHOLDERS' MEETINGS 3. The annual meeting of the stockholders shall be held in the office of the corporation in the City of Cleveland, Ohio. All other meetings of the stockholders may be held at such place within or without the State of Delaware as shall be designated in the call for such meeting. 4. The annual meeting of the stockholders 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 stockholders shall elect, by ballot, a Board of Directors and transact such other business as may properly be brought before the meeting. 7 5. The holders of a majority of the capital stock of the corporation present in person or represented by proxy shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or by these By-Laws; provided, however, that no action required by law, by the Certificate of Incorporation, or by these By-Laws to be authorized or taken by a designated proportion of the capital stock 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 stockholders, 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 amount of voting stock shall be present or represented. At such adjourned meeting, at which the requisite amount of voting stock 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 stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such stockholder, and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. On all matters, except the election of directors, each stockholder shall have one vote for each share of stock having voting power registered in his name on the books of the corporation. At all elections of directors, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he may see fit. In the event that no record date shall be fixed for the determination of stockholders entitled to vote at any election of directors, in accordance with the provisions of Section 39 of these By-Laws, no share of stock shall be voted at such election which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election. The vote for directors and, on the demand of any stockholder, 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 By-Laws. 8 7. Written notice of the annual meeting, stating the time, place and object thereof, shall be mailed to each stockholder entitled to vote thereat at such address as appears on the stock book of the corporation at least ten (10) days prior to the meeting. 8. A complete list of the stockholders entitled to vote at the ensuing election of directors, arranged in alphabetical order and showing the address of each and the number of shares registered in the name of each, shall be prepared by the Secretary and open to the examination of any stockholder during ordinary business hours for a period of at least ten (10) days before every such election, either at a place within the city, town, or village where the election is to be held and which place shall be specified in the notice of the meeting, or , if not so specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. 9. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by law, may be called by the Chairman of the Board or by the President, and shall be called by the President or Secretary at the request, in writing, of a majority of the Board of Directors, or at the request, in writing, of stockholders owning not less than one-third in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. 10. Business transacted at all special meetings shall be confined to the objects stated in the call. 11. Written notice of any special meeting of the stockholders stating the time, place and object thereof, shall be mailed, postage prepaid, at least ten (10) days before such meeting, to each stockholder 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 stockholders 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 capital stock which is represented at the meeting and entitled to vote on such 9 proposal. Unless so determined by the stockholders, the number shall be eleven, of which four shall be directors of the class whose term expires in 1995 and every three years thereafter, three shall be directors of the class whose term expires in 1996 and every three years thereafter, and four shall be directors of the class whose term expires in 1997 and every three years thereafter. Whenever the stockholders 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 stockholders as aforesaid or by amendment of these By-Laws. Directors need not be stockholders. They shall be elected at the annual meeting of the stockholders, and each director shall be elected to serve until his successor shall be elected and shall qualify. 13. In addition to the powers and authorities by these By-Laws 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 Certificate of Incorporation, or by these By-Laws directed or required to be exercised or done by the stockholders. VACANCIES 14. If the office of any director or directors becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the remaining directors, though less than a quorum, shall choose a successor or successors who shall hold office until the next annual meeting of stockholders at which the class or classes of directors in which the vacancy or vacancies occur shall be elected and until a successor or successors shall have been duly elected and qualified, unless sooner displaced. MEETINGS OF THE BOARD 15. Regular meetings of the Board shall be held on the last Wednesday of February, April, June, August, October and December at such hour and place and upon such notice, if any, as the Board shall determine. In the event the last Wednesday is a holiday or for any reason is deemed by the Board to be inappropriate, then the meeting shall be held on such alternate date as may be determined by the Board. 16. Special meetings of the Board may be called by the Chairman of the Board or by the President on one (1) 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 (2) directors. 10 17. 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 Certificate of Incorporation, or by these By-Laws. ACTION WITHOUT A MEETING 18. 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 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 19. The Board of Directors shall by resolution appoint an Executive Committee consisting of not less than five 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 on the last Wednesday of each calendar month in which the Board of Directors does not meet at such place or places as they may from time to time determine, and shall have and may exercise all of the powers of the Board of Directors when the Board is not in session. 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. 20. The Board of Directors may by resolution appoint one or more additional committees, each committee to consist of two or more directors of the corporation and to have such authority and to perform such duties as may from time to time be determined by the Board of Directors. 11 COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS 21. Each member of the Board of this Company, with the exception of salaried officers or employees of the Company or its subsidiaries, shall be paid a quarterly retainer of $3,000 for each quarter in which such director serves, payable in May, August, November and February covering the previous quarter. In addition, each member of the Board of Directors and each "honorary" member of the Board of Directors, with the exception of salaried officers or employees of the Company or its subsidiaries, shall receive for his attendance at the Company's Annual Meeting of Stockholders and each meeting of the Board of Directors a fee of $650, plus travel expenses incurred by him in attending any meeting or in pursuance of any activity on behalf of the Company or its subsidiaries. 22. Each member of the Executive Committee, the Compensation and Organization Committee, the Audit Committee and such other committee as may from time to time be appointed by the Board of Directors, with the exception of salaried officers or employees of the Company or its subsidiaries, shall receive for his attendance at each such committee meeting a fee of $650, plus travel expenses incurred by him in attending any meeting or in pursuance of any activity on behalf of the Company or its subsidiaries. OFFICERS 23. 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, the 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. 12 CHAIRMAN OF THE BOARD 24. 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. VICE CHAIRMAN OF THE BOARD 24a. The Vice Chairman of the Board shall have such authority as may be determined by the Board of Directors and perform such duties as may be assigned to him by the Chairman of the Board. PRESIDENT 25. The President shall preside at all meetings of the stockholders. 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. EXECUTIVE VICE PRESIDENTS 26. The Executive Vice Presidents shall exercise all of the authority and perform all of the duties of the President in case of the absence or disability of the latter or when circumstances prevent the latter from acting, and shall have such other authority and perform such other duties as may be determined by the Board of Directors. SENIOR VICE PRESIDENTS 27. The Senior Vice Presidents shall exercise all of the authority and perform all of the duties of the President in case of the absence or disability of both the President and the Executive Vice Presidents or when circumstances prevent both the President and the Executive Vice Presidents from acting, and shall have such other authority and perform such other duties as may be determined by the Board of Directors. VICE PRESIDENTS 28. The Vice Presidents severally shall have such authority and perform such duties as may be determined by the Board of Directors or by the President. 13 SECRETARY 29. The Secretary shall record all of the proceedings of the meetings of the stockholders, 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 stockholders, the Board, and the Executive Committee required by law, by these By-Laws, 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 30. The Treasurer shall receive and have in charge all money, bills, notes, bonds, stocks 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 31. The 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. EXECUTION OF DOCUMENTS 32. Except as otherwise provided in these By-Laws, or by resolutions of the Board, all documents evidencing conveyances by or contracts or other obligations of the corporation shall be signed by the President, the Executive Vice President, a Senior Vice President, or a Vice President, and attested by the Secretary or an Assistant Secretary. AUTHORITY TO VOTE SECURITIES 33. The Chairman of the Board, the President, the Executive Vice President, and the Senior Vice Presidents are each authorized to vote, appoint proxies, and execute consents, waivers, and releases with respect to securities of other corporations owned by the corporation. 14 DELEGATION OF AUTHORITY AND DUTIES 34. 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 By-Laws. STOCK CERTIFICATES 35. Every holder of stock in the corporation shall be entitled to one or more certificates, signed by the Chairman of the Board, the President, the Executive Vice President, or a Senior Vice President and by the Secretary, the Treasurer, an Assistant Secretary, or an Assistant Treasurer, 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 STOCK 36. Stock 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. LOST, STOLEN OR DESTROYED CERTIFICATES 37. 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. 15 TRANSFER AGENT AND REGISTRAR 38. 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 39. The Board of Directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of stockholders, 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 capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders 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 capital stock, or to give such consent, and in such case only such stockholders as shall be stockholders 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 stock on the books of the corporation after any such record date fixed as aforesaid. REGISTERED STOCKHOLDERS 40. The corporation shall be entitled to treat the holder of record of any share or shares of stock 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 Delaware. INSPECTION OF BOOKS 41. 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 stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. 16 FISCAL YEAR 42. The fiscal year shall begin on the first day of January in each year. DIVIDENDS 43. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate 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 of the capital stock. 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 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 44. The Board of Directors shall present at each annual meeting, and when called for by vote of the stockholders, at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. NOTICES 45. Whenever, under the provisions of these By-Laws, notice is required to be given to any director, officer or stockholder, it shall not be construed to mean personal notice, but such notice 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 stockholder, 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 stockholder, director or officer may waive any notice required to be given by law, by the Certificate of Incorporation, or by these By-Laws 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. 17 AMENDMENTS 46. The By-Laws of the corporation may be amended, or new By-Laws may be adopted, by the Board of Directors by the affirmative vote of a majority of the directors present at any meeting of the Board at which there is a quorum present and acting; or they may be amended, or new By-Laws may be adopted, by the stockholders, at any regular or special meeting thereof, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, if notice of the proposed amendment be contained in the notice of the meeting, or without a meeting by the written consent of a majority of the stock issued and outstanding. No amendment of these By-Laws with respect to the time or place for the election of directors shall be made within sixty (60) days next before the day on which such election is to be held. In case of any amendment of these By-Laws with respect to such time or place, notice thereof shall be given to each stockholder, in the manner provided in Section 45 of these By-Laws, at least twenty (20) days before the first election following such amendment is held. EX-4.B 4 EXHIBIT 1 Exhibit 4(b) ________________________________________________________________________________ OGLEBAY NORTON COMPANY and AMERITRUST COMPANY NATIONAL ASSOCIATION, Rights Agent AMENDED AND RESTATED RIGHTS AGREEMENT Dated as of February 22, 1989 ________________________________________________________________________________ 2 TABLE OF CONTENTS
Page ---- RIGHTS AGREEMENT Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . 8 Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . 9 Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . 12 Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . 14 Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . 15 Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . 17 Section 8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 9. Reservation and Availability of Shares of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 23 Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . 26 Section 11. Adjustment of Purchase Price, Exercise Price, Number and Type of Shares or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 12. Certificate of Adjusted Purchase Price, Exercise Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . 55
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Page ---- Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . 57 Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 58 Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . 60 Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . 66 Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . 71 Section 27. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 28. Determinations and Actions by the Board of Directors, etc . . . . . . . . . . . . . . . . . . . . . . . 73 Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . 74 Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Exhibit A - Certificate of Designation, Preferences and Rights of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Exhibit B - Form of Right Certificate . . . . . . . . . . . . . . . . . . . . . . B-1 - Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . B-6 - Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7
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Page ---- - Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7 - Form of Election to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . B-8 - Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9 - Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9 Exhibit C - Summary of Amended Rights to Purchase Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
-iii- 5 AMENDED AND RESTATED RIGHTS AGREEMENT This Agreement, dated as of February 22, 1989, is between Oglebay Norton Company, a Delaware corporation (the "Company"), and AmeriTrust Company National Association, a national banking association (the "Rights Agent"). This Agreement amends and restates the Rights Agreement, dated as of August 26, 1987, between the Company and the Rights Agent. The Board of Directors of the Company on August 26, 1987 authorized and declared a dividend consisting of one right ("Right") for each share of the Common Stock with a par value of $1 per share of the Company outstanding on September 7, 1987 (the "Record Date") and authorized the issuance of one Right in respect of each share of Common Stock of the Company issued between the Record Date and the earlier of the Distribution Date, the Expiration Date or the Final Expiration Date (as such terms are hereinafter defined), including but not limited to shares of Common Stock which are treasury shares as of the Record Date and subsequently become outstanding. Each Right initially represents the right to purchase one one-hundredth of a share of Series C $10.00 Preferred Stock of the Company having the rights, powers and preferences set forth in the Certificate of Designation, Preferences and Rights of Preferred Stock attached hereto as Exhibit A. -1- 6 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) "Acquiring Person" shall mean (i) any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, is the Beneficial Owner (as such term is hereinafter defined) of securities of the Company constituting a Substantial Block (as such term is hereinafter defined) or (ii) any Adverse Person (as such term is hereinafter defined), but shall not include the Company, any subsidiary of the Company, any employee benefit plan or employee stock ownership plan of the Company or of any subsidiary of the Company or any person organized, appointed or established by the Company or any subsidiary of the Company for or pursuant to the terms of any such plan. (b) "Adverse Person" shall mean any Person declared to be an Adverse Person by the Board of Directors of the Company upon (i) a determination by the Board of Directors, at any time after the date of this Agreement, that such Person, alone or together with its Affiliates and Associates, has become, or has announced an intention to -2- 7 become, in one or more transactions, the Beneficial Owner of an amount of Common Stock that the Board of Directors determines to be substantial (which amount shall in no event be less than 15% of the shares of Common Stock then outstanding) and (ii) a determination by at least a majority of the Board of Directors who are not officers of the Company, after reasonable inquiry and investigation, that (A) such Beneficial Ownership by such Person (1) is intended to cause the Company to repurchase the Common Stock beneficially owned by such Person, (2) is intended or may reasonably be anticipated to cause pressure on the Company to take action or enter into a transaction or series of transactions that would provide such Person with short-term financial gain under circumstances in which the Board of Directors determines that the best long-term interests of the Company and its stockholders would not be served by taking such action or entering into such transactions or series of transactions at that time or (3) is intended or may reasonably be anticipated to permit such Person to acquire control of or a controlling influence over the Company, as a result of such Beneficial Ownership or one or more subsequent actions or transactions, in a manner or pursuant to one or more actions or transactions that the Board determines to be unfair or coercive to stockholders or (B) such Beneficial Ownership by such Person is causing or may reasonably be -3- 8 anticipated to cause a material adverse impact (including, without limitation, the impairment of relationships between the Company and its customers, suppliers, creditors or employees or the impairment of the Company's ability to maintain its competitive position) on the business, financial condition or prospects of the Company. (c) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as in effect on the date hereof. (d) A Person shall be deemed to be the "Beneficial Owner" of and shall be deemed to "beneficially own" any securities: (i) which such Person, or any of such Person's Affiliates or Associates, beneficially owns, directly or indirectly; (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, -4- 9 however, that a Person shall not be deemed to be the "Beneficial Owner" of or to "beneficially own" (1) securities tendered pursuant to a tender offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase, or (2) securities issuable upon exercise of these Rights; (iii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of, pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed to be the Beneficial Owner of or to "beneficially own" any security under this subparagraph (iii) if the agreement, arrangement or understanding to vote such security (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or -5- 10 (iv) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in subparagraph (iii) of this paragraph (c)) or disposing of any securities of the Company. (e) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in State of Ohio are authorized or obligated by law or executive order to close. (f) "Close of business" on any given date shall mean 5:00 P.M., Cleveland time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Cleveland time, on the next succeeding Business Day. (g) "Common Stock", when used with reference to the Company, shall mean the Common Stock with a par value of $1 per share of the Company. "Common Stock", when used with reference to any Person other than the Company, shall mean the capital stock with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management -6- 11 of such person, or, if such Person is a subsidiary of another corporation or entity, the capital stock with the greatest voting power, or the equity securities or other equity interests having power to control or direct the management, of the corporation or other entity that ultimately controls such Person. (h) "Continuing Director" shall mean any individual who is a member of the Board of Directors of the Company, while such individual is a member of the Board, who is not an Acquiring Person, an Affiliate or Associate of an Acquiring Person or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate and was a member of the Board prior to the Shares Acquisition Date, and any successor of a Continuing Director, while such successor is a member of the Board, who is not an Acquiring Person, an Affiliate or Associate of an Acquiring Person or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate and was recommended or elected to succeed the Continuing Director by a majority of the Continuing Directors. (i) "Exercise Price" shall mean the exercise price per share set forth in Section 11(a)(ii). (j) "Person" shall mean any individual, firm, corporation or other entity. (k) "Preferred Stock" shall mean shares of Series C $10.00 Preferred Stock of the Company. -7- 12 (l) "Purchase Price" shall mean the purchase price per share set forth in Section 7(b). (m) "Shares Acquisition Date" shall mean the first date of public announcement by the Company or an Acquiring Person (by press release, filing made with the Securities and Exchange Commission or otherwise) that an Acquiring Person has become such. (n) "Subsidiary" shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or other equity interests is owned, directly or indirectly, by the Company. (o) "Substantial Block" shall mean a number of shares of the Common Stock which equals or exceeds 20% of the number of shares of the Common Stock then outstanding. (p) "Triggering Event" shall mean any event described in Section 11(a) (ii) or in Section 13(a). Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. Any actions which may be taken by the Rights Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights Agent. -8- 13 Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the tenth calendar day after the Shares Acquisition Date or (ii) the tenth calendar day after the date of the commencement of, or first public announcement of the intent to commence, by any Person (other than the Company, any subsidiary of the Company, any employee benefit plan or employee stock ownership plan of the Company or of any subsidiary of the Company or any Person organized, appointed or established by the Company or any subsidiary of the Company for or pursuant to the terms of any such plan), a tender or exchange offer if, upon consummation thereof, such Person would be an Acquiring Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earlier of the dates in subparagraphs (i) and (ii) of this Section 3(a) being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of Section 3(b)) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for the Common Stock shall also be deemed to be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of the Common Stock. As soon as practicable after the Distribution Date, the Rights Agent will send, by first- -9- 14 class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit B hereto, evidencing one Right for each share of the Common Stock held of record as of the close of business on the Distribution Date. As of the close of business on the Distribution Date, the Rights will be evidenced solely by such Right Certificates. (b) As soon as practicable following the execution of this Agreement, the Company will send a copy of a Summary of Amended Rights to Purchase Preferred Stock, in substantially the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to each record holder of the Common Stock, at the address of such holder shown on the records of the Company. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the Rights will be evidenced by such certificates for the Common Stock registered in the names of the holders of the Common Stock with a copy of the Summary of Rights attached thereto. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the surrender for transfer of any of the certificates for the Common Stock, even without a copy of the Summary of Rights attached thereto, shall also constitute the surrender for transfer of the Rights -10- 15 associated with the Common Stock represented by such certificate. (c) Rights shall be issued in respect of all shares of Common Stock issued (including but not limited to shares of Common Stock which are treasury shares as of the Record Date and subsequently become outstanding) or surrendered for transfer or exchange after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date or the Final Expiration Date (as such terms are defined in Section 7). Certificates representing such shares of Common Stock shall have impressed on, printed on, written on or otherwise affixed to them the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in an Amended and Restated Rights Agreement between Oglebay Norton Company and AmeriTrust Company National Association, Rights Agent, dated as of February 22, 1989 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Oglebay Norton Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Oglebay Norton Company will mail to the holder of this certificate a copy of the Rights Agreement (as in effect on the date of mailing) without charge promptly after receipt of a written request therefor. Under certain circumstances, Rights which are or were beneficially owned by Acquiring Persons or their Affiliates or Associates (as such terms are defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. -11- 16 Until the Distribution Date, the Rights associated with the Common Stock represented by certificates containing the foregoing legend shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the surrender for transfer of the Rights associated with the Common Stock represented by such certificate. Section 4. Form of Right Certificates. (a) The Right Certificates (and the forms of election to purchase shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law, with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed or of any association on which the Rights may from time to time be authorized for quotation, or to conform to usage. Subject to the provisions of Section 22 hereof, the Right Certificates, whenever issued, shall be dated as of the Record Date and, on their face, shall entitle the holders thereof to purchase such number of shares of the Preferred Stock (or, following a Triggering Event, Common Stock, -12- 17 other securities, cash or other assets, as the case may be) as shall be set forth therein at the Purchase Price (or, upon the occurrence of a Triggering Event, at the Exercise Price), but the number of such shares, the Purchase Price and the Exercise Price shall be subject to adjustment as provided herein. (b) Notwithstanding any other provision of this Agreement, any Right Certificate issued pursuant to Section 3 or Section 22 hereof that represents Rights beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of such Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person became an Acquiring Person or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming an Acquiring Person and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to any Person who holds an equity interest in such Acquiring Person or with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has a primary purpose or effect the avoidance of Section 7(e) -13- 18 hereof, any Right Certificate issued at any time to any nominee of an Acquiring Person or any Associate or Affiliate of such Acquiring Person, and any Right Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall contain the following legend: The Rights represented by this Right Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of the Rights Agreement. Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, President or any Vice President, either manually or by facsimile signature, and have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such -14- 19 Right Certificates may nevertheless be countersigned by the Rights Agent, issued and delivered with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. Following the Distribution Date, the Rights Agent will keep or cause to be kept, at one of its offices in Cleveland, Ohio, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the earlier of the Expiration Date or the Final Expiration Date, any Right Certificate or Certificates may -15- 20 be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock (or, following a Triggering Event, a like number or amount of shares of Common Stock or other securities, cash or other assets, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner or former Beneficial Owner, or Affiliates or Associates thereof, as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 -16- 21 hereof, countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of the loss, theft or destruction of a Right Certificate, of indemnity or security reasonably satisfactory to them and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and, in case of the mutilation of a Right Certificate, upon surrender to the Rights Agent and cancellation of the mutilated Right Certificate, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part -17- 22 at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at its office in Cleveland, Ohio together with payment of the aggregate Purchase Price with respect to the total number of one one-hundredths of a share of Preferred Stock (or the aggregate Exercise Price with respect to the total number of shares of Common Stock or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercised, at or prior to the close of business on the earlier of (i) September 7, 1997 (the "Final Expiration Date"), or (ii) the date on which the Rights are redeemed as provided in Section 23 (such earlier date being herein referred to as the "Expiration Date"). (b) The Purchase Price for each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $65.00, shall be subject to adjustment from time to time as provided in Section 11 hereof and shall be payable in lawful money of the United States of America in accordance with Section 7(c) below. (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment of the Purchase Price for the Preferred Stock -18- 23 (or the Exercise Price for the Common Stock or other securities, cash or assets, as the case may be) to be purchased and an amount equal to any applicable transfer tax in cash, or by certified check or bank draft payable to the order of the Company, the Rights Agent shall, subject to Section 20(k) hereof, promptly (i) requisition from any transfer agent of the Preferred Stock of the Company certificates for the total number of one one-hundredths of a share of Preferred Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, (ii) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent), and the Company will direct the depositary agent to comply with all such requests, (iii) when appropriate, requisition from any transfer agent of the Common Stock of the Company certificates for the total number of shares of Common Stock to be purchased in accordance with Section 11(a)(ii) and 11(a)(iii), (iv) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance -19- 24 of fractional shares in accordance with Section 14, (v) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (vi) when appropriate, after receipt promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue securities, pay cash or distribute assets pursuant to Section 11(a)(iii) hereof, the Company will make all arrangements necessary so that such securities, cash and assets are available for issuance, payment or distribution by the Rights Agent, as and when appropriate. (d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, any Rights that are or were at any time on or after the earlier of the Distribution Date or the Shares Acquisition Date beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of an -20- 25 Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to any Person who holds an equity interest in such Acquiring Person or with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has, as a primary purpose or effect, the avoidance of this Section 7(e), shall become null and void upon the occurrence of a Triggering Event and no holder of such Rights shall have any right with respect to such Rights under any provision of this Agreement from and after the occurrence of the Triggering Event. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. -21- 26 (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall cancel and retire, any Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled -22- 27 Right Certificates to the Company or shall, at the written request of the Company, destroy such cancelled Right Certificates and, in such case, shall deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of Shares of Capital Stock. (a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock or authorized and issued shares of Preferred Stock held in its treasury (and, following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock or any authorized and issued shares of Common Stock held in its treasury), the number of shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock) that will be sufficient to permit the exercise in full of all outstanding Rights. (b) If and so long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock or other securities) issuable and deliverable upon the exercise of Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. -23- 28 (c) The Company shall (i) prepare and file, as soon as practicable following the first occurrence of a Triggering Event, a registration statement under the Securities Act of 1933 (the "Act") with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, (ii) use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and (iii) use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the date of the expiration of the Rights. The Company will also take such action as may be appropriate under the blue sky laws of the various states. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days, the exercisability of the Rights in order to prepare and file such registration statement. Upon any such suspension, the Company shall issue a public announcement and notice to the Rights Agent stating that the exercisability of the Rights has been temporarily suspended, and the Company shall issue a public announcement and notice to the Rights Agent at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction in which any requisite registration or qualification shall not have been obtained. -24- 29 (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a share of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates therefor (subject to payment of the Purchase Price or the Exercise Price, as the case may be), be duly and validly authorized and issued, fully paid and nonassessable, freely tradeable, free and clear of any liens, encumbrances or other adverse claims and not subject to call or first refusal. (e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any one one-hundredth of a share of Preferred Stock (or Common Stock or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required (a) to pay any transfer tax which may be payable in respect of any transfer involved in the transfer or delivery of Right Certificates or the issuance or delivery of certificates for the one one-hundredth of a share of Preferred Stock (or Common Stock or other securities, as the case may be) in a name other than that of the registered holder of the Right Certificate -25- 30 evidencing the Rights surrendered for exercise or (b) to issue or deliver any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock or other securities, as the case may be) upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. Section 10. Preferred Stock Record Date. Each person in whose name any certificate for a number of one one-hundredths of a share of Preferred Stock (or shares of Common Stock or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such one one-hundredths of a share of Preferred Stock (or Common Stock or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (or the Exercise Price, as the case may be) and any applicable transfer taxes was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Stock (or Common Stock or other securities, as the case may be) transfer books of the Company are closed, such person shall be deemed to have become the record -26- 31 holder thereof on, and such certificate shall be dated, the next succeeding business day on which the Preferred Stock (or Common Stock or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. Section 11. Adjustment of Purchase Price, Exercise Price, Number and Type of Shares or Number of Rights. The Purchase Price and the Exercise Price, the number of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of the Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a -27- 32 consolidation or merger in which the Company is the continuing corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to any adjustment required pursuant to Section 11(a)(ii). (ii) In the event (A) any Person (other than the Company, any Subsidiary, any employee benefit plan or employee stock ownership plan of the -28- 33 Company or of any Subsidiary or any Person organized, appointed or established by the Company or any Subsidiary for or pursuant to the terms of any such plan), alone or together with any of its Affiliates or Associates, becomes the Beneficial Owner of 24% or more of the Common Stock of the Company then outstanding, (B) any person is declared to be an Adverse Person by the Board of Directors, (C) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, at any time after the date of this Agreement, directly or indirectly, other than in a transaction subject to Section 13(a), (1) merges into or consolidates with the Company and the Company is the surviving or continuing corporation in the merger or consolidation, (2) merges or consolidates with a Subsidiary, whether or not the Subsidiary is the surviving or continuing corporation in the merger or consolidation, (3) sells, purchases, leases, exchanges, mortgages, pledges or otherwise disposes of or acquires, to, from or with the Company or a Subsidiary, assets having an aggregate Fair Market Value (as such term is defined in Article Tenth, Section (d)(5), of the -29- 34 Company's Restated Certificate of Incorporation) equal to or exceeding 20% of the Fair Market Value of the consolidated assets of the Company and its Subsidiaries, (4) purchases or otherwise acquires from the Company or a Subsidiary securities for cash or other consideration having an aggregate Fair Market Value equal to or exceeding 20% of the Fair Market Value of the consolidated assets of the Company and its Subsidiaries, (5) sells or otherwise transfers, to the Company or a Subsidiary, securities for cash or other consideration having an aggregate Fair Market Value equal to or exceeding 20% of the Fair Market Value of the consolidated assets of the Company and its Subsidiaries, (6) proposes the liquidation or dissolution of the Company or (7) engages in any transaction or series of transactions that is similar in purpose or effect those referred to in clauses (1) through (6) above or in Subsection (D) below or (D) during such time as there is an Acquiring Person, there is any reclassification of securities (including any reverse stock split), recapitalization of the Company, merger or consolidation of the Company with any Subsidiary or other transaction or series of -30- 35 transactions to which the Company or any Subsidiary is a party (whether with, into or otherwise involving an Acquiring Person or any Associate or Affiliate of an Acquiring Person), other than a transaction subject to Section 13(a), that has the effect, directly or indirectly, of increasing by more than 1% the percentage of the outstanding equity securities of any class, or of securities exercisable for or convertible into equity securities of any class, of the Company or any Subsidiary that is beneficially owned, directly or indirectly, by an Acquiring Person or any Associate or Affiliate of an Acquiring Person, proper provisions shall be made so that, from and after the close of business on the tenth calendar day after the first of such events has occurred, each holder of a Right (except as provided in Section 7(e) shall thereafter have the right to receive, upon exercise of the Right in accordance with the terms of this Agreement, one share of Common Stock of the Company for an Exercise Price of $5.00 per share (such shares are hereinafter referred to as the "Adjustment Shares"); the number of such Adjustment Shares and the Exercise Price shall be subject to adjustment as provided in this Section 11. -31- 36 (iii) In the event that the number of shares of Common Stock which is authorized by the Company's certificate of incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with the subparagraph (ii) of this Section 11(a), the Continuing Directors shall (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (assuming Payment of the Exercise price for the Adjustment Shares) over (2) the Exercise Price (such excess, the "Spread"), and (B) upon the surrender for exercise of a Right and without requiring payment of the Exercise Price, the Company shall deliver uniformly on a pro rata basis to the holders of all outstanding Rights shares of Common Stock (to the extent available) and cash (to the extent sufficient shares of Common Stock are not available) in an amount (determined by the Continuing Directors) equal to the excess of the Spread over the value of the shares of Common Stock so delivered. To the extent that any legal or contractual restrictions prevent the Company from paying the full amount of the cash payable in accordance with the foregoing sentence, the Company shall pay to holders of the Rights uniformly on a pro rata basis all funds which are not then restricted. The Company shall continue to make -32- 37 payments on a pro rata basis as funds become available until such payments have been paid in full. (b) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of Preferred Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock ("equivalent preferred stock") or securities convertible into Preferred Stock or equivalent preferred stock) at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less than the current market price (as defined in Section 11(d)) per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, of which the numerator shall be the number of shares of Preferred Stock outstanding on such record date plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at -33- 38 such current market price and of which the denominator shall be the number of shares of Preferred Stock outstanding on such record date plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date has not been fixed. (c) In case the Company shall fix a record date for the making of a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular -34- 39 periodic cash dividend at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid or a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, of which the numerator shall be the current market price (as defined in Section 11(d)) per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one share of Preferred Stock and of which the denominator shall be such current market price per share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (d) (i) For the purpose of any computation hereunder, the "current market price" or "value" per share -35- 40 of the Common Stock on any date of determination shall be deemed to be the average of the daily closing prices per share of such Common Stock for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that, in the event that the "current market price" or "value" per share of the Common Stock is determined during the period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock or (B) any sub-division, combination or reclassification of such Common Stock and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution or the record date for such sub-division, combination or reclassification, then, and in each such case, the "current market price" or "value" shall be appropriately adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if shares of the Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the -36- 41 principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which shares of the Common Stock are listed or admitted to trading or, if shares of the Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use or, if on any such date shares of the Common Stock are not quoted by such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the closing price on such date shall be the value of a share of Common Stock on such date as determined in good faith by the Continuing Directors if the Continuing Directors constitute a majority of the Board of Directors or, if the Continuing Directors do not constitute a majority of the Board of Directors, by an independent investment banking firm selected by the Board of Directors. The term "Trading Day" shall mean a day on which the principal national securities exchange on which shares of Common Stock are listed or admitted to trading is open for the transaction of business -37- 42 or, if shares of the Common Stock are not listed or admitted to trading on any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in the State of Ohio are not authorized or obligated by law or executive order to close. If the Common Stock is not publicly held or not so listed or traded, "current market price" or "value" per share shall mean the value per share as determined in good faith by the Continuing Directors of the Company if the Continuing Directors constitute a majority of the Board of Directors or, if the Continuing Directors do not constitute a majority of the Board of Directors, by an independent investment banking firm selected by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. (ii) For the purpose of any computation hereunder, the "current market price" per share of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in subparagraph (i) of this Section 11(d) (other than the last sentence thereof). If the "current market price" per share of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in subparagraph (i) of this Section 11(d), the "current market price" per share of -38- 43 Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current market price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, "current market price" per share of the Preferred Stock shall mean the value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the "current market price" of one one-hundredth of a share of Preferred Stock shall be equal to the "current market price" of one share of Preferred Stock divided by 100. (e) No adjustment in the Purchase Price or the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one-millionth of a share of Preferred Stock or ten- -39- 44 thousandth of a share of Common Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which mandates such adjustment or (ii) the date of the expiration of the right to exercise any Rights. (f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right exercised after such adjustment becomes entitled to receive upon exercise of such Right any shares of capital stock of the Company other than Preferred Stock, thereafter the Number of and the Exercise Price for such other shares so receivable shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Section 11(a) through (m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price or the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price or the adjusted Exercise Price, as the case may be, the number of one one-hundredths of a share of Preferred Stock or the number of shares of Common Stock or other securities, as -40- 45 the case may be, purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price or the Exercise Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price or the adjusted Exercise Price, as the case may be, that number of one one-hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) or that number of shares of Common Stock of the Company (calculated to the nearest ten- thousandth), as the case may be, obtained by (i) multiplying (x) the number of one one-hundredths of a share of Preferred Stock or the number of shares of Common Stock of the Company, as the case may be, covered by a Right immediately prior to this adjustment by (y) the Purchase Price or the Exercise Price, as the case may be, in effect immediately prior to such adjustment and (ii) dividing the product so obtained by the Purchase Price or the Exercise Price, as the case may be, in effect immediately after such adjustment. (i) The Company may elect on or after the date of any adjustment of the Purchase Price or the -41- 46 Exercise Price to adjust the number of Rights, in substitution for any adjustment in the number of one one-hundredths of a share of Preferred Stock or the number of shares of Common Stock of the Company, as the case may be, purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one- hundredths of a share of Preferred Stock or the number of shares of Common Stock of the Company, as the case may be, for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price or the Exercise Price, as the case may be, in effect immediately prior to such adjustment by the Purchase Price or the Exercise Price, as the case may be, in effect immediately after such adjustment. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment to be made. This record date may be the date on which the Purchase Price or the Exercise Price, as the case may be, is adjusted or any day thereafter but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this -42- 47 Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of Right Certificates on such record date Right Certificates evidencing, subject to Section 14, the additional Rights to which such holders shall be entitled as a result of such adjustment or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price or the adjusted Exercise Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Notwithstanding any adjustment or change in the Purchase Price, the Exercise Price or the number of one one-hundredths of a share of Preferred Stock or the number of shares of Common Stock of the Company issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price, the Exercise Price and the number of one one-hundredths of a share of Preferred Stock -43- 48 and the number of shares of Common Stock of the Company which were expressed in the initial Right Certificates issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-hundredth of the then stated capital, if any, of a share of Preferred Stock issuable upon exercise of the Rights or reducing the Exercise Price below the stated capital, if any, of a Common Share issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable one one-hundredths of a share of such Preferred Stock at such adjusted Purchase Price and fully paid and nonassessable shares of Common Stock at such adjusted Exercise Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price or the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date the number of one one-hundredths of a share of Preferred Stock and the number of share of Common Stock of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a share of Preferred Stock and the -44- 49 number of shares of Common Stock of the Company, if any, issuable upon such exercise on the basis of the Purchase Price or the Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional one one-hundredths of a share of Preferred Stock or additional shares of Common Stock of the Company upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reduction in the Purchase Price or the Exercise Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion determines to be advisable in order that any consolidation or sub-division of Preferred Stock or Common Stock of the Company, issuance wholly for cash of any shares of Preferred Stock or Common Stock of the Company at less than the current market price, issuance wholly for cash of securities which by their terms are convertible into or exchangeable for Preferred Stock or Common Stock of the Company, stock dividends or issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Stock or Common Stock shall not be taxable to such holders. -45- 50 Section 12. Certificates of Adjusted Purchase Price, Exercise Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 25. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained. Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that, following the Distribution Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person and the Company shall not be the continuing or surviving corporation, (y) any Person shall consolidate or merge with and into the Company, the Company shall be the continuing or surviving corporation and, in connection with the consolidation or merger, all or part of the Common Stock of the Company shall be changed into or exchanged for cash or other -46- 51 property or stock or other securities of any Person other than the Company (except for a merger in which (1) each share of Common Stock of the Company outstanding immediately prior to the merger is changed into or exchanged for Common Stock of such other Person having a vote or number of votes in elections of directors that represents the same percentage of the total number of votes of all capital stock of such other Person outstanding immediately after the merger as the percentage of the total number of votes of all capital stock of the Company outstanding immediately prior to the merger represented by each such share of Common Stock of the Company and (2) such other Person becomes the beneficial owner of all Common Stock of the Company outstanding immediately after the merger), or (z) the Company shall sell or otherwise transfer (or one or more of its subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating more that 50% of the assets or earning power of the Company and its subsidiaries (taken as a whole) to any other Person, then, and in each such case, proper provision shall be made so that (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon exercise of the Right in accordance with the terms of this Agreement, at the Exercise Price set forth in Section 11(a)(ii) (subject to adjustment pursuant to the provisions of Section 11), -47- 52 such number of validly issued, fully paid, nonassessable and freely tradeable Common Shares of the Principal Party (as hereinafter defined), free and clear of any liens, encumbrances or other adverse claims and not subject to any rights of call or first refusal, as shall be equal to the quotient of (A) the market price (determined in the manner described in Section 11(d)), at the close of business on the date on which the first such event occurs, of the number of shares of Common Stock of the Company that would be purchasable upon the occurrence of one of the events set forth in Section 11(a)(ii) divided by (B) the market price per share of the Common Stock of the Principal Party as the close of business on such date; (ii) the Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party (it being specifically intended that the provisions of Section 11(a) (iii) shall apply to such Principal Party); (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with Section 9) as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the shares of its Common Stock thereafter -48- 53 deliverable upon the exercise of the Rights; and (v) the provision of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any of the transaction described in Section 13(a) hereof. (b) "Principal Party" shall mean (1) in the case of any transaction described in (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to the merger or consolidation; and (2) in the case of any transaction described in (z) of the first sentence in this Section 13, the Person that is the other party to such transaction; provided, however, that in any such case, (x) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under Section 12 of the Securities Exchange Act of 1934, and such Person is a direct or indirect subsidiary of another corporation the Common Stock of which (or the Common Stock of another subsidiary of which) is and has been so registered, "Principal Party" shall refer to such other corporation; (y) in case there is more than one such -49- 54 Person referred to in clause (x) of the proviso of this Section 13(b), or in case there is more than one Person referred to in Section 13(b)(1) or (2), the Common Stock of each of which is and has been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest market value of shares held by the public, and (z) in case such Person is owned, directly or indirectly, by a joint venture formed by two or more joint venturers, the rules set forth in (x) and (y) above shall apply to each of the joint venturers having an interest in such joint venture as if such joint venture were a "subsidiary" of both or all of such joint venturers and the joint venturers shall each bear the obligations set forth in this Section 13 in the same ratio as its direct or indirect interest in such joint venture bears to the total of such interests. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets described in paragraph (a) of this Section 13, the Principal Party shall -50- 55 (i) prepare and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the date of expiration of the Rights; and (ii) deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Securities Exchange Act of 1934. The provision of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that one of the transactions described in Section 13(a) hereof shall occur at any time after the occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a). -51- 56 Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, -52- 57 the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the current market value of a whole Right shall be the value of the Rights on such date as determined in good faith by the Board of Directors of the Company. (b) The Company shall not be required to issue fractions of shares of the Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares. In lieu of fractional shares that are not integral multiples of one one- hundredth of a share of Preferred Stock, the Company may pay to the registered holders of Right Certificates at the time such Right Certificates are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one- hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth of a share of Preferred Stock shall be -53- 58 one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii)) for the Trading Day immediately prior to the date of such exercise. (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market value of one share of Common Stock shall be the closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise. (d) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right. Section 15. Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Right Certificates -54- 59 (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement. Section 16. Agreement of Right Holders. Every holder of a Right by accepting such Right consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Stock; -55- 60 (b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; and (c) subject to Section 6(a), Section 7(e) and Section 7(f), the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e), shall be required to be affected by any notice to the contrary. Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of one -56- 61 one-hundredths of a share of Preferred Stock (or, following a Triggering Event, of any Common Stock of the Company or other securities) which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate have been exercised in accordance with the provisions of this Agreement. Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time on demand of the Rights Agent, to reimburse it for or pay its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on the -57- 62 part of the Rights Agent as a result of anything done or omitted to be done by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for the Common Stock of the Company or other securities, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged by the proper person or persons. Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation, succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper -58- 63 or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor so counter-signed; in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases, such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so counter-signed; in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases, -59- 64 such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with the legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof is specifically prescribed in this Agreement) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or -60- 65 omitted in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify such statements or recitals, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any adjustment required under the pro visions of Sections 11 or 13 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after -61- 66 actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Stock or Common Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of Preferred Stock or Common Stock will, when issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, -62- 67 sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other Person. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. -63- 68 (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Preferred Stock and Common Stock by registered or certified mail, and to the holders of the Right Certificates by first class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any -64- 69 court of competent jurisdiction for the appointment of a successor Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the law of the United States or of the State of Ohio (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Ohio), in good standing, having a principal office in the State of Ohio, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority or which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Stock and Common Stock, and mail a notice thereof in writing to the registered holders of the Right -65- 70 Certificates. Failure to give any notice provided for in this Section 21 or any defect therein, however, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price per share and the number, kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. Section 23. Redemption. (a) The Board of Directors of the Company may, at its option, at any time prior to 5:00 p.m., Cleveland time, on the earlier of (x) the tenth calendar day following the Shares Acquisition Date, or (y) the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.05 per Right appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"), provided; however, that if such -66- 71 redemption occurs on or after the Shares Acquisition Date the Board of Directors of the Company shall be entitled to so redeem the Rights only if Continuing Directors constitute a majority of the Board of Directors at the time of such redemption and such redemption is approved by a majority of the Continuing Directors; provided, further, however, that if, following the occurrence of a Shares Acquisition Date and following the expiration of the right of redemption hereunder but prior to any Triggering Event, each of the following shall have occurred and remain in effect: (i) a Person who is an Acquiring Person shall have transferred or otherwise disposed of a number of shares of Common Stock in a transaction, or series of transactions, which did not result in the occurrence of a Triggering Event, and such Person after such transfer or other disposition is a Beneficial Owner of 10% or less of the outstanding shares of Common Stock, (ii) there are no other Persons, immediately following the occurrence of the event described in clause (i), who are Acquiring Persons, and (iii) such transfer or other disposition did not result from a transaction, or series of transactions, which directly or indirectly involved the Company or any of its subsidiaries; then the right of redemption shall be reinstated and thereafter be subject to the provisions of this Section 23. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be -67- 72 exercisable pursuant to Section 11(a)(ii) prior to the expiration of the Company's right of redemption pursuant to this Section 23(a) without regard to the last proviso. (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. Within ten calendar days after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the holders of the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any of the Rights at any time in any manner other than that specifically set forth in this Section 23 or in connection with the repurchase of Common Stock prior to the Distribution Date. -68- 73 Section 24. Notice of Certain Events. In case the Company shall propose at any time following the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular periodic cash dividend at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid), or (b) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the sub-division of outstanding Preferred Stock), or (d) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, or (e) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Right, in accordance with Section 25, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date -69- 74 on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Preferred Stock, if any such date is to be fixed, and such notice shall be so given, in the case of any action described in clause (a) or (b) above, at least twenty days prior to the record date for determining holders of the Preferred Stock for purposes of such action and, in the case of any such other action, at least twenty days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Preferred Stock, whichever shall be the earlier. In case any of the events set forth in Section 11(a)(ii) of this Agreement shall occur, then, in any such case, the Company shall as soon as practicable thereafter give to each holder of a Right, in accordance with Section 25, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii). Section 25. Notices. Notice or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: -70- 75 Oglebay Norton Company 1100 Superior Avenue Cleveland, Ohio 44114-2598 Attention: Secretary Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: AmeriTrust Company National Association Corporate Trust Division P.O. Box 6477 Cleveland, Ohio 44101 Attention: Doris Hogan Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Right Certificate shall be sufficiently given or made if personally delivered or sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. Section 26. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contain herein which may be defective or inconsistent with any other provision -71- 76 herein, or (iii) prior to the Distribution Date, to change or supplement the provisions hereunder which the Company may deem necessary or desirable and not adverse to the interests of the holders of the Rights; provided, however, that this Agreement shall not be supplemented or amended in any way on or after the Shares Acquisition Date (other than pursuant to clauses (i) and (ii) above) unless such amendment is approved by a majority of the Continuing Directors and the Continuing Directors constitute a majority of the Board of Directors. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. Section 27. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. -72- 77 Section 28. Determination and Actions by the Board of Directors, etc. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company (and, where expressly provided for herein, the Continuing Directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board, or the Company (or, as expressly provided herein, the Continuing Directors), or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations, interpretations and determinations (including, for the purpose of clause (ii) below, all omissions with respect to the foregoing) which are done or made by the Board (or, as expressly provided herein, by the Continuing Directors) in -73- 78 good faith, shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Right Certificates and all other parties, and (ii) not subject the Board or the Continuing Directors to any liability to the holders of the Right Certificates. Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates. Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its -74- 79 good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth day following the date of such determination by the Board of Directors. Section 31. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Section 32. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 33. Descriptive Headings. Descriptive headings of the Sections of this Agreement are inserted for convenience only and shall not control or -75- 80 affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. (SEAL) OGLEBAY NORTON COMPANY Attest: By /s/ David A. Kuhn By /s/ Renold D. Thompson ------------------------------------- --------------------------------- (SEAL) AMERITRUST COMPANY NATIONAL ASSOCIATION By /s/ R. Schmidt By /s/ Doris A. Hogan ------------------------------------- ---------------------------------
-76- 81 Exhibit A FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C $10.00 PREFERRED STOCK OF OGLEBAY NORTON COMPANY Pursuant to Section 151 of the General Corporation Law of the State of Delaware Renold D. Thompson, President and Chief Executive Officer, and David A. Kuhn, Secretary, of Oglebay Norton Company, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the Corporation, the Board of Directors on August 26, 1987, adopted the following resolution creating a series of 100,000 shares of Preferred Stock designated as Series C $10.00 Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation. The shares of such series is 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 100,000. 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 A-1 82 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 Stock 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 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 to the nearest cent) equal to the greater of (a) $10.00 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 shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise), declared on the Common Stock 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 Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series C Preferred Stock as A-2 83 provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock 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 Stock 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 Stock, the shares of all series shall share ratably in the payment of A-3 84 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. 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 of stock 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 shares of Common Stock 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 Stock) (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 Stock, respectively, holders of Series C Preferred Stock and holders of shares of Common Stock 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 such Preferred Stock and Common Stock, 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 Stock, 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 Stock. A-4 85 (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 5. Conversion on Merger, Consolidation, etc. In case the Corporation shall enter into any merger, consolidation, combination or other transaction in which the shares of Common Stock are exchanged or changed into other stock 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 stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 6. Redemption. The outstanding shares of Series C Preferred Stock shall not be redeemable. 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 Stock of the Corporation shall vote together as one class. A-5 86 8. Condition to Issuance of any other Series. The Restated Certificate of Incorporation of the Corporation shall not be further amended to provide for the issuance of any other series of Preferred Stock 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. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this ____ day of August, 1987. -------------------------------- President Attest: - ------------------------- Secretary
A-6 87 Exhibit B [Form of Right Certificate] Certificate No. R - _____________ Rights NOT EXERCISABLE AFTER SEPTEMBER 7, 1997 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $65.00 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES Specified IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]* RIGHT CERTIFICATE This certifies that __________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement dated as of February 22, 1989 (the "Rights Agreement") between Oglebay Norton Company, a Delaware corporation (the "Company"), and AmeriTrust Company National Association, a national banking association (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to __________________________________ * The portion of the legend in brackets shall be inserted only if applicable. B-1 88 5:00 P.M., Cleveland time, on September 7, 1997 at the office of the Rights Agent, or its successors as Rights Agent, in Cleveland, Ohio, one one-hundredth of a fully paid nonassessable share of the Series C $10.00 Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of $65.00 per one one-hundredth of a share (the "Purchase Price"), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate, the number of shares of Preferred Stock which may be purchased upon exercise thereof and the Purchase Price per share set forth above are the numbers and Purchase Price as of August 26, 1987, based on the Preferred Stock of the Company as constituted at such date. Upon the occurrence of a Triggering Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to B-2 89 such Rights from and after the occurrence of such Triggering Event. As provided in the Rights Agreement, the Purchase Price, the Exercise Price (as such term is defined in the Rights Agreement) and number and kind of shares of Preferred Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the office of the Rights Agent mentioned above. This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-hundredths of a share of Preferred Stock as the Rights evidenced by the Right B-3 90 Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Right Certificate may be redeemed by the Company at its option at a redemption price of $.05 per Right. No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Common Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of B-4 91 directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or, to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of ___________________, 19__. ATTEST: OGLEBAY NORTON COMPANY ________________________ By______________________________ Secretary Title: Countersigned: By_______________________
B-5 92 [Form of Reverse Side of Right Certificate] Form of Assignment (To be executed by the registered holder if the holder desires to transfer the Right Certificate) FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto ________________________________________________________________________________ ___________________ ________________________________________________________________________________ _____________________________________________________ (Please print name and address of transferee) this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________ as attorney, to transfer the Right Certificate on the books of the Oglebay Norton Company, with full power of substitution. Dated: , 19__ ------------------- -------------------------------- Signature Signature Guaranteed:
B-6 93 Certificate The undersigned hereby certifies by checking the appropriate boxes that: (1) this Right Certificate [ ] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: ------------------- -------------------------------- Signature Signature
Notice The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. B-7 94 Form of Election to Purchase (To be executed if the holder desires to exercise the Right Certificate) To Oglebay Norton Company: The undersigned hereby irrevocably elects to exercise _________________ Rights represented by this Right Certificate to purchase the shares of the Common Stock issuable upon the exercise of such Rights and requests that certificates for such shares be issues in the name of: ________________________________________________________________________________ _____________________________________________________ (Please print name and address) ________________________________________________________________________________ _____________________________________________________ Please insert social security or other identifying number:_________________________________________________________________________ ________________________________ If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to: ________________________________________________________________________________ _____________________________________________________ (Please print name and address) Please insert social security or other identifying number:_________________________________________________________________________ ________________________________ Dated: , 19__ ------------------ --------------------------------- Signature (Signature must conform in all respects to name of the holder as specified on the face of this Right Certificate) Signature Guaranteed:
B-8 95 Certificate The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: , 19__ ------------- -------------------------------- Signature
Notice The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the fact of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. B-9 96 Exhibit C --------- SUMMARY OF AMENDED RIGHTS TO PURCHASE PREFERRED STOCK On August 26, 1987, the Board of Directors of Oglebay Norton Company (the "Company") declared a dividend consisting of one Right for each outstanding share of Common Stock with a par value of $1 per share (the "Common Stock") of the Company. The distribution was paid on September 7, 1987 (the "Record Date") to the stockholders of record on the Record Date. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series C $10.00 Preferred Stock (the "Preferred Stock") at a price of $65.00 (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in an Amended and Restated Rights Agreement (the "Rights Agreement") between the Company and AmeriTrust Company National Association, as Rights Agent (the "Rights Agent"), adopted by the Company on February 22, 1989. Until the earlier to occur of (i) ten days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the shares of the Common Stock then outstanding or has been declared by the Board of Directors of the Company to be an Adverse Person or (ii) ten days following the commencement or announcement of an intention to commence a tender offer or exchange offer by any person if, upon consummation thereof, such person would be an Acquiring Person (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the Common Stock certificates outstanding as of the Record Date, by such Common Stock certificates with a copy of this Summary of Amended Rights attached thereto. An "Adverse Person" is defined as a person or group of affiliated or associated persons declared to be an Adverse Person by the Board of Directors of the Company upon a determination that such person or group has become, or has announced an intention to become, the beneficial owner of a substantial amount of Common Stock (not, however, less than 15% of the outstanding Common Stock) and that such beneficial ownership will have consequences that are adverse to the interest of the Company and its stockholders. C-1 97 The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or the earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of the Common Stock will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the surrender for transfer of any of the Common Stock certificates, even without a copy of this Summary of Amended Rights attached thereto, will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire at the close of business on September 7, 1997 unless earlier redeemed by the Company as described below. The Purchase Price payable, and the number of shares of Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) issuable upon exercise of the Rights, are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for shares of the Preferred Stock or convertible securities at less than the current market price of the Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid or dividends payable in the Preferred Stock) or of subscription rights or warrants (other than those referred to above). In the event that the Company were acquired in a merger or other business combination or that 50% or more of its assets or earning power were sold, proper provision shall be made so that the holder of each Right, other than Rights that were or are beneficially owned by the Acquiring Person (which will thereafter be void), shall thereafter have the right to receive, upon the exercise of C-2 98 the Right and the payment of an Exercise Price of $5.00, that number of shares of common stock of the acquiring company equal to the quotient of (A) the market price per share of the Common Stock of the Company divided by (B) the market price per share of the common stock of the acquiring company. In the event that (i) the Company is the surviving corporation in a merger and its Common Stock is not changed or exchanged, (ii) an Acquiring Person engages in one of a number of self-dealing transactions specified in the Rights Agreement, (iii) there is a reclassification or recapitalization of the Company that has the effect of increasing by more than 1% the proportionate ownership of shares of the Company by the Acquiring person or (iv) a person or group of affiliated or associated persons acquires, or obtains the right to acquire, beneficial ownership of 24% or more of the shares of the Common Stock then outstanding, proper provision will be made so that the holder of each Right, other than Rights that were or are beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise of the Right and the payment of the Exercise Price of $5.00, one share of Common Stock of the Company. The Exercise Price and the number of shares purchasable upon exercise of the Rights will be subject to anti-dilution adjustment as provided in the Rights Agreement. With certain exceptions, no adjustment in the Purchase Price or the Exercise Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price or the Exercise Price. No fractional shares will be issued (other than fractional shares which are integral multiples of one one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. At any time prior to 5:00 p.m. Cleveland time on the tenth day following public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (the "Shares Acquisition Date"), the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.05 per Right (the "Redemption Price"), provided that if such redemption occurs on or after the Shares Acquisition Date the Board shall be entitled to redeem the Rights only if such redemption is approved by a majority of the Continuing Directors (as defined in the Rights Agreement) and the Continuing Directors constitute a majority of the Board of Directors. Thereafter, the Company's right of redemption C-3 99 may be reinstated if an Acquiring Person reduces his beneficial ownership to 10% or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. The provisions of the Rights Agreement may be amended by the Board of Directors in order to cure any ambiguity or correct any defect or inconsistency and by the Continuing Directors, prior to the Distribution Date, to make changes deemed to be not adverse to the interests of the holders of the Rights. A copy of the Rights Agreement will be filed with the Securities and Exchange Commission as an Exhibit to an Amendment to Application or Report on Form 8. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference. C-4 100 Exhibit 4(b) FIRST AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT (this "Amendment"), dated as of June 10, 1991, is between Oglebay Norton Company, a Delaware corporation (the "Company"), and Ameritrust Company National Association, a national banking association (the "Rights Agent"). This Amendment amends the Amended and Restated Rights Agreement, dated as of February 22, 1989, between the Company and the Rights Agent (the "Amended and Restated Rights Agreement"). W I T N E S S E T H: WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, dated as of August 26, 1987, which has been amended and restated by the Amended and Restated Rights Agreement; and WHEREAS, the Board of Directors of the Company, pursuant to Section 26 of the Amended and Restated Rights Agreement, has deemed it to be desirable and not adverse to the interests of the Company, its stockholders, and the holders of the Rights that the Amended and Restated Rights Agreement be amended as set forth herein; NOW, THEREFORE, the Company and the Rights Agent agree as follows: 101 1. Clause (A) of Section 11(a)(ii) of the Amended and Restated Rights Agreement shall be amended to read as follows: (A) any Person (other than the Company, any Subsidiary, any employee benefit plan or employee stock ownership plan of the Company or of any Subsidiary or any Person organized, appointed or established by the Company or any Subsidiary for or pursuant to the terms of any such plan), alone or together with any of its Affiliates or Associates, becomes the Beneficial Owner of 20% or more of the Common Stock of the Company then outstanding, or 2. Clause (C) of Section 11(a)(ii) of the Amended and Restated Rights Agreement shall be deleted in its entirety. 3. Clause (D) of Section 11(a)(ii) of the Amended and Restated Rights Agreement shall be deleted in its entirety. 4. Section 23(a) of the Amended and Restated Rights Agreement shall be amended to read as follows: Section 23. Redemption. (a) The Board of Directors ----------- of the Company may, at its option, at any time prior to 5:00 p.m., Cleveland time, on the earlier of (x) the tenth calendar day following the occurrence of any event described in Section 11(a)(ii), (y) the occurrence of any event described in Section 13(a), or (z) the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.05 per Right appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"); provided, however, that if such redemption occurs on or after the --------- -------- Shares Acquisition Date the Board of Directors of the Company shall be entitled to so redeem the Rights only if Continuing Directors constitute a majority of the Board of Directors at the time of -2- 102 such redemption and such redemption is approved by a majority of the Continuing Directors. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the expiration of the Company's right of redemption pursuant to this Section 23(a). 5. Section 26 of the Amended and Restated Rights Agreement shall be amended to read as follows: Section 26. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or (iii) prior to (x) the tenth calendar day following the occurrence of any event described in Section 11(a)(ii) or (y) the occurrence of any event described in Section 13(a), to change or supplement the provisions hereunder which the Company may deem necessary or desirable and not adverse to the interests of the holders of the Rights;provided, however, that this Agreement shall not be supplemented or amended in any way on or after the Shares Acquisition Date (other than pursuant to clauses (i) and (ii) above) unless such amendment is approved by a majority of the Continuing Directors and the Continuing Directors constitute a majority of the Board of Directors. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. 6. Schedule 1 to this Amendment sets forth a Summary of Rights to Purchase Preferred Stock (As Amended as of June 10, 1991) that updates and replaces the Summary of Amended Rights to Purchase Preferred Stock attached as -3- 103 Exhibit B to the Amended and Restated Rights Agreement to reflect the amendments contained in this Amendment. 7. This Amendment shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and assigns. 8. Except as amended by this Amendment, all other provisions of the Amended and Restated Rights Agreement shall remain in full force and effect and are unchanged hereby. 9. Unless otherwise defined herein, all defined terms used herein shall have the meanings given to them in the Amended and Restated Rights Agreement. 10. This Amendment shall be governed by, and interpreted in accordance with, the laws of the State of Delaware applicable to contracts to be made and performed entirely within that State. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written. OGLEBAY NORTON COMPANY By: /s/ Renold D. Thompson -------------------------------------- Name: Renold D. Thompson Title: President and Chief Executive Officer AMERITRUST COMPANY NATIONAL ASSOCIATION By: /s/ Caroline Lukez-Byrne --------------------------------------- Name: Caroline Lukez-Byrne Title: Trust Officer and Assistant Secretary
-4- 104 Schedule 1 SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK (As Amended As of June 10, 1991) On August 26, 1987, the Board of Directors of Oglebay Norton Company (the "Company") declared a dividend consisting of one Right for each outstanding share of Common Stock with a par value of $1 per share (the "Common Stock") of the Company. The distribution was paid on September 7, 1987 (the "Record Date") to the stockholders of record on the Record Date. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series C $10.00 Preferred Stock (the "Preferred Stock") at a price of $65.00 (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in an Amended and Restated Rights Agreement, between the Company and Ameritrust Company National Association, as Rights Agent (the "Rights Agent"), adopted by the Company on February 22, 1989, as modified by a First Amendment to Amended and Restated Rights Agreement, dated as of June 10, 1991, between the Company and the Rights Agent (the Amended and Restated Rights Agreement, as amended, being hereinafter referred to as the "Rights Agreement"). Until the earlier to occur of (i) ten days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the shares of the Common Stock then outstanding or has been declared by the Board of Directors of the Company to be an Adverse Person or (ii) ten days following the commencement or announcement of an intention to commence a tender offer or exchange offer by any person if, upon consummation thereof, such person would be an Acquiring Person (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the Common Stock certificates outstanding as of the Record Date, by such Common Stock certificates with a copy of this Summary of Amended Rights attached thereto. An "Adverse Person" is defined as a person or group of affiliated or associated persons declared to be an Adverse Person by the Board of Directors of the Company upon a determination that such person or group has become, or has announced an intention to become, the beneficial owner of a substantial amount of Common Stock (not, however, less than 15% of the outstanding Common Stock) and that such beneficial ownership will have consequences that are adverse to the interest of the Company and its stockholders. -1- 105 The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or the earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of the Common Stock will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the surrender for transfer of any of the Common Stock certificates, even without a copy of this Summary of Amended Rights attached thereto, will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date. The Rights will expire at the close of business on September 7, 1997 unless earlier redeemed by the Company as described below. The Purchase Price payable, and the number of shares of Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) issuable upon exercise of the Rights, are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for shares of the Preferred Stock or convertible securities at less than the current market price of the Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid or dividends payable in the Preferred Stock) or of subscription rights or warrants (other than those referred to above). In the event that the Company were acquired in a merger or other business combination or that 50% or more of its assets or earning power were sold (such event being hereinafter referred to as a "Flip-over Event"), proper provision shall be made so that the holder of each Right, other than Rights that were or are beneficially owned by the Acquiring Person (which will thereafter be void), shall thereafter have the right to receive, upon the exercise of the Right and the payment of an Exercise Price of $5.00, that number of shares of common stock of the acquiring company equal to the quotient of (A) the market -2- 106 price per share of the Common Stock of the Company divided by (B) the market price per share of the common stock of the acquiring company. In the event that (i) the Company is the surviving corporation in a merger and its Common Stock is not changed or exchanged, (ii) any person is declared to be an Adverse Person by the Board of Directors, or (iii) any person or group of affiliated or associated persons acquires, or obtains the right to acquire, beneficial ownership of 20% or more of the shares of the Common Stock then outstanding (any such event being hereinafter referred to as a "Flip-in Event"), proper provision will be made so that the holder of each Right, other than Rights that were or are beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive, upon exercise of the Right and the payment of the Exercise Price of $5.00, one share of Common Stock of the Company. The Exercise Price and the number of shares purchasable upon exercise of the Rights will be subject to anti-dilution adjustment as provided in the Rights Agreement. With certain exceptions, no adjustment in the Purchase Price or the Exercise Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price or the Exercise Price. No fractional shares will be issued (other than fractional shares which are integral multiples of one one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. At any time prior to 5:00 p.m. Cleveland time (a) on the tenth day following the occurrence of a Flip-in Event or (b) on the day on which a Flip-over Event occurs, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.05 per Right (the "Redemption Price"), provided that if such redemption occurs on or after the day on which a public announcement is made that a person or group of affiliated or associated persons has become an Acquiring Person (the "Shares Acquisition Date"), the Board shall be entitled to redeem the Rights only if such redemption is approved by a majority of the Continuing Directors (as defined in the Rights Agreement) and the Continuing Directors constitute a majority of the Board of Directors. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of -3- 107 the Company, including, without limitation, the right to vote or to receive dividends. The provisions of the Rights Agreement may be amended by the Board of Directors in order to cure any ambiguity or correct any defect or inconsistency and, prior to (a) the tenth calendar day following the occurrence of a Flip-in Event or (b) the occurrence of a Flip-over Event, to make changes deemed to be not adverse to the interests of the holders of the Rights, provided that, if such amendment occurs on or after the Shares Acquisition Date, the Board shall be entitled to amend the Rights Agreement only if such amendment is approved by a majority of the Continuing Directors (as defined in the Rights Agreement) and the Continuing Directors constitute a majority of the Board of Directors. A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to an Amendment to Application or Report on Form 8. A copy of the Rights Agreement is also available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference. -4- 108 Exhibit 4(b) SECOND AMENDMENT TO RIGHTS AGREEMENT THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is entered into as of March 2, 1992, between Oglebay Norton Company, a Delaware corporation (the "Company), and Ameritrust Company National Association, Rights Agent (the "Rights Agent"). This Amendment modifies and amends the Amended and Restated Rights Agreement, dated as of February 22, 1989, between the Company and the Rights Agent (the "Rights Agreement"). IN CONSIDERATION OF the premises and mutual agreements herein set forth, the Company and the Rights Agent agree as follows: 1. Amendment of Section 1(d) (iv). Section 1(d)(iv) of the Rights Agreement is amended to read as follows: "(iv) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) (except an agreement, arrangement or understanding with the Company that either is approved by the Board of Directors before a Shares Acquisition Date or is approved by a majority of the Continuing Directors on or after the Shares Acquisition Date) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in subparagraph (iii) of this paragraph (d)) or disposing of any securities of the Company." 109 2. Effectiveness. This Amendment shall be deemed to be in force and effective as of the date hereof. Except as amended hereby, the Rights Agreement shall remain in full force and effect and shall otherwise be unaffected hereby. 3. Miscellaneous. (a) This Amendment shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and assigns. (b) Unless otherwise defined herein, each of the defined terms used herein shall have the same meaning given to it in the Rights Agreement. (c) This Amendment shall be deemed to be a contract made under the substantive laws of the State of Ohio and for all purposes shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio applicable to contracts to be made and performed entirely within the State of Ohio. IN WITNESS WHEREOF, the Company and the Rights Agent have caused this Amendment to be duly executed as of the day and year first above written. OGLEBAY NORTON COMPANY By: /s/ Renold D. Thompson ----------------------------- Title: President AMERITRUST COMPANY NATION ASSOCIATION By: /s/ Caroline Lukez-Byrne ---------------------------- Title: Trust Officer II and Assistant Secretary
-2- EX-10.A 5 EXHIBIT 1 Exhibit 10(a) AGREEMENT --------- THIS AGREEMENT, made this ____ day of _____________, 19___, between OGLEBAY NORTON COMPANY, a Delaware corporation (hereinafter called the "Company"), and ______________________ (hereinafter called "Employee"); W I T N E S S E T H : - - - - - - - - - - WHEREAS, Employee, age ____, has served the Company for more than __________ years as an officer and employee and, at the present time, as the _________________________________ ____________________________ and _____________________________ of the Company; WHEREAS, Employee has performed valuable services and has developed and possesses valuable knowledge and executive and administrative skill with respect to the operation of the business of the Company; WHEREAS, the Company considers it to be in the best interests of the Company to secure Employee's full-time services, to induce him to continue as ____________________ ___________________________________ of the Company or such other position as may be determined by the Company's Board of Directors from time to time, and to compensate him for such services; WHEREAS, Employee desires to be assured of certain benefits and security for himself and his family; 2 NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Employee mutually agree as follows: 1. Until such time as Employee attains the age of ____ years, Employee will continue in the full-time, regular employ of the Company as its _________________________________ _________________________ or such other position as the Company's Board of Directors may determine. 2. The Company will employ Employee in the aforesaid capacity and, effective _______________, his annual salary rate shall not be less than _________________________ Dollars ($__________), subject to adjustment in the event of any general salary increase or decrease hereafter in the salaries of all by-law officers of the Company, plus an annual bonus in an amount determined by the Company's Board of Directors or by an appropriate committee of the Board. 3. Employee will, during his employment, perform to the best of his ability all duties and responsibilities reasonably assigned to him by the Company's Board of Directors, represent the Company and carry out the Company's policies and directives and devote substantially his full time and attention to the performance of such duties under the direction of the Company's Board of Directors. 3 4. During his employment, Employee will not engage either directly or indirectly as an officer, director, employee, consultant or partner in any business enterprise in competition with the Company to a degree contrary to its best interests. 5. During his employment, Employee will be entitled to participate in and be covered by all pension, profit-sharing, stock incentive, stock option, incentive savings and insurance plans or programs or deferred compensation arrangements heretofore or hereafter placed in effect by the Company for its executives or salaried employees, and such period shall be credited as continuous service under the applicable provisions of such plans, programs or arrangements where length of service is a factor. 6. In addition to the compensation to be paid hereunder, the Company shall pay such expenses as may reasonably be incurred by Employee in the performance of his duties and responsibilities in the manner and to the same extent as it does for other company officers of comparable rank. 7. This Agreement shall not be changed, modified or amended in any respect except by a written instrument signed by Employee and such officer of the Company as may be designated by the Company's Board of Directors. 8. If the Company shall at any time be merged or consolidated into or with any other entity, or if substantially all of the assets of the Company are transferred to another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity resulting from such merger or consolidation 4 or to which such assets shall be transferred. This provision shall continue to apply in the event of any subsequent merger, consolidation or transfer of assets. 9. Employee shall have no right to commute, encumber or dispose of the right to receive payments or benefits provided for hereunder, all of which are expressly declared to be nonassignable and nontransferable. 10. This Agreement shall be governed by the laws of the State of Ohio. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement the day and year first above written, each intending to be legally bound hereby. OGLEBAY NORTON COMPANY By_____________________________ President Attest_________________________ Secretary ____________________________________ EX-10.B 6 EXHIBIT 1 Exhibit 10(b) AGREEMENT THIS AGREEMENT, entered into as of January 1, 1990, is between OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and Mr. Brent D. Baird ("Baird"). In consideration of the mutual covenants and agreements contained in this Agreement, Baird and the Company agree as follows: 1. Definitions. For purposes of this Agreement, the following terms will have the meanings set forth below: (a) An "affiliate" of a person is another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with that person. Baird's affiliates are deemed to include (but are not limited to) the holders of shares identified in Item 5 of Amendment No. 2 to Schedule 13D, dated May 17, 1989, signed by Bridget B. Baird, individually and as successor trustee, Anne S. Baird, Jane D. Baird, Brenda B. Senturia, Robert G. Wilmers, and The Cameron Baird Foundation; such inclusion does not, however, constitute a representation or warranty by Baird that he in fact controls, is controlled by, or is under common control with any of such persons. (b) "Control," when used with respect to any person, means the power to direct the management or -1- 2 policies of that person, either directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise. (c) "Person" includes (but is not limited to) any individual, corporation, company, partnership, joint venture, group, organization, plan, trust, or other entity. (d) "Voting securities" means securities entitled to vote in the election of directors and securities convertible into, or exchangeable or exercisable for, such securities. 2. Confidentiality. From and after the date of this Agreement, Baird will hold in confidence and will not disclose to any person or use, except as may be required for the discharge of his duties as a director of the Company, any trade secrets or other confidential information about the Company that may come to his knowledge, including but not limited to technical data or "know how," financial information, information relating to customers and suppliers, business plans and forecasts, and other information relating to the Company's assets and operations. When Baird ceases to be a director of the Company, he will forthwith deliver to the Company (i) all documents containing such confidential information then in his possession and (ii) all other material then in his -2- 3 possession furnished to him by the Company in his capacity as a director. 3. Standstill. For the longer of (i) his tenure as a Director of the Company and (ii) the seven year period following the date of this Agreement, without the prior approval of a majority of the Company's Board of Directors or except as required or authorized by the terms of this Agreement, Baird will not, and will cause his affiliates not to: (a) acquire, directly or indirectly, alone or together with his affiliates, "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than 11% of the voting securities of the Company then outstanding; except that, if the beneficial ownership of voting securities by Baird and his affiliates exceeds 11% of the outstanding voting securities solely by reason of the purchase by the Company of outstanding voting securities, Baird and his affiliates will not be required to dispose of voting securities to reduce their beneficial ownership to not more than 11% of the voting securities then outstanding; (b) except for taking action as a director of the Company, take action which, if effective, would result in Baird's or his affiliates' ability to direct the management or policies of the Company; -3- 4 (c) act jointly with any other person in the acquisition of, holding of, or disposition of voting securities of the Company; (d) "solicit" proxies in opposition to a majority of the Company's Board of Directors with respect to voting securities of the Company, or become a "participant" in opposition to a majority of the Company's Board of Directors in an "election contest" relating to the election of directors of the Company, as those terms are defined in Regulation 14 under the Securities Exchange Act of 1934, as amended; (e) initiate or propose any stockholder proposal relating to the Company which is not supported by a majority of the Company's Board of Directors, or induce or attempt to induce any other person to initiate or propose any stockholder proposal relating to the Company which is not supported by a majority of the Company's Board of Directors; or (f) deposit any voting securities of the Company in a voting trust or subject them to a voting agreement or other arrangement of similar effect. 4. Sale of Voting Securities of the Company. For the longer of (i) his tenure as a director of the Company and (ii) the seven year period following the date of this Agreement, without the prior approval of a majority of the Company's Board of Directors, Baird will -4- 5 not, and will cause his affiliates not to, dispose of any voting securities of the Company, except: (a) pursuant to a tender offer approved or recommended by the Company's Board of Directors; (b) in open-market sales during any three month period not exceeding 1% of the shares outstanding as shown by the most recent Quarterly or Annual Report of the Company to the Securities and Exchange Commission; provided, however, that a minimum of two years shall elapse between the date of any acquisition and any sale; and further provided that no such sale may be made to any person known by Baird or his affiliates to own at the time of the sale 5% or more of the outstanding voting securities of any class of the Company; or (c) in a sale as to which the Company has been given a right of first refusal in accordance with this Section 4(c). To make such a sale, Baird or his affiliates, as the case may be, must notify the Company of the person proposing to purchase the voting securities and the price and other terms of the proposed sale. The Company will have 15 days following its receipt of this notice to purchase the voting securities at the price and on the other terms set forth in the notice. If the Company is not willing and able to complete the purchase within the 15-day period, Baird or his affiliates, as the case may be, may sell the voting securities to the person, at the price, -5- 6 and on the other terms specified in the notice, provided that the sale is completed within 60 days following the end of the 15-day period. If Baird or one or more of his affiliates shall desire to dispose of any voting securities of the Company and shall be precluded from doing so by the terms of this Agreement, the Company shall cooperate with Baird or such affiliate or affiliates in a good faith effort to arrange a purchase of such voting securities by the Company or by a mutually satisfactory third party or third parties upon mutually acceptable terms. 5. Voting of Voting Securities Beneficially Owned by Baird and his Affiliates. For as long as he is a director, Baird will cause voting securities entitling the holders to exercise at least 75% of the voting power of all voting securities of the Company beneficially owned by him or by his affiliates to be represented at all meetings of the stockholders of the Company and will vote or cause to be voted all of those voting securities (a) for the election as directors of the Company of the nominees of a majority of the Company's Board of Directors and (b) in accordance with the recommendation of a majority of the Company's Board of Directors in the election of Directors of the Company. Within five days following the record date for the determination of stockholders entitled to receive notice of and to vote at each meeting of stockholders, -6- 7 Baird shall provide the Company with a detailed list of the record and beneficial ownership of all voting securities of the Company beneficially owned by him or by his affiliates as of that date. Not less than seven days prior to the meeting date, the Company shall notify Baird if Board of Directors proxies have not been received with respect to voting securities entitled to exercise at least 75% of the voting power of all such voting securities. The failure of the Company to so notify Baird shall relieve him of his obligations under this section. 6. Remedies. Baird agrees that he will, forthwith upon the request of the Company's Board of Directors, resign as a director of the Company in the event that he deliberately breaches any of his covenants in this Agreement. Any such resignation will not terminate this Agreement or preclude the Company or Baird from seeking any other remedies to which either of them may be entitled by reason of the breach by the other party of any term of this Agreement. Baird acknowledges that any breach of his covenants in this Agreement would cause immediate and irreparable harm to the Company and, therefore, consents to the entry, by a court of competent jurisdiction, of any temporary, preliminary, or permanent injunction that would arrest or redress any such breach. The inability of Baird to cause his affiliates to act in accordance with the provisions of this Agreement, following diligent efforts to -7- 8 cause them to do shall so, shall not result in personal liability to Baird hereunder. 7. Election of Baird as a Director. Following the execution and delivery of this Agreement, at the February 1990 meeting of the Board of Directors, the Board of Directors of the Company shall elect Baird as a Director of the Company. It is the intention of the Board of Directors to nominate Baird for, and to solicit proxies upon election for, subsequent successive terms as a Director of the Company ending not sooner than the Annual Meeting of the Stockholders to be held in 1997. If the Board shall fail to do so, or if Baird shall be removed as a Director by the Company, this Agreement shall terminate. If Baird shall cease to serve as a Director by reason of his resignation death or incapacity, this Agreement shall terminate upon the expiration of both (i) one year following the date on which Baird ceases to serve as a Director and (ii) two years following the date of this Agreement. A termination under this section shall relieve Baird of all of his obligations hereunder other than the obligations relating to confidentiality set forth in Section 2. 8. Term. The initial term of this Agreement shall commence on the date of this Agreement and end on the day that is seven years following that date. Thereafter, the term of this Agreement shall be -8- 9 automatically extended for successive terms of one year each unless either party shall give written notice to the other not less than 60 days prior to the end of the then current term of his or its desire that the term of this Agreement not be extended beyond the end of the then current term, in which event this Agreement shall automatically terminate at the end of that term. 9. Miscellaneous. This Agreement will be binding upon the Company, its successors and assigns, and upon Baird,his assigns, executors, administrators, or personal representatives; will be interpreted and enforced in accordance with the laws of the State of Ohio; and represents the entire understanding between the parties on its subject matter and supersedes all prior understandings. If any provision of this Agreement is held to be invalid, void, or unenforceable for any reason, the remaining provisions of this Agreement will nevertheless continue to be in full force and effect. IN WITNESS WHEREOF, the Company and Baird have executed this Agreement as of the date first written above. OGLEBAY NORTON COMPANY By /s/ Renold D. Thompson --------------------------------- /s/ Brent D. Baird ---------------------------------- Brent D. Baird
-9- EX-10.C 7 EXHIBIT 1 Exhibit 10(c) TRUST AGREEMENT FOR OGLEBAY NORTON COMPANY INCENTIVE SAVINGS PLAN AND TRUST (January 1, 1991 Restatement) 2 TABLE OF CONTENTS
ARTICLE PAGE - ------- ---- I DEFINITIONS 3 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . 8 II EMPLOYEE ELIGIBILITY AND PARTICIPATION 9 2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Election to Participate . . . . . . . . . . . . . . . . . . 9 2.3 Notification of Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . 10 2.4 Certification of New Participants . . . . . . . . . . . . . . . . . . . . . . . 10 2.5 Service . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.6 Changes in Employment Status . . . . . . . . . . . . . . . . 13 2.7 Reemployment of a Participant . . . . . . . . . . . . . . . 14 III CONTRIBUTIONS MADE BY OR ON BEHALF OF PARTICIPANTS 16 3.1 Tax Deferred Compensation Contributions . . . . . . . . . . . . . . . . . . . . . . 16 3.2 Limitation on Tax Deferred Compensation Contributions . . . . . . . . . . . . . . . . 16 3.3 Additional Limitation on Tax Deferred Compensation Contributions of Highly Compensated Employees . . . . . . . . . . . . . . . . . . 17 3.4 Distribution of Excess Contributions . . . . . . . . . . . . . . . . . . . . . . 19 3.5 Regular Participant Contri- butions . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.6 Administration . . . . . . . . . . . . . . . . . . . . . . . 20 3.7 Changes in Contribution Authorizations . . . . . . . . . . . . . . . . . . . . . . 21 3.8 Suspension of Contributions . . . . . . . . . . . . . . . . 21 3.9 Election Adjustments . . . . . . . . . . . . . . . . . . . . 22 3.10 Distribution of Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . . . 22 3.11 Overriding Limitation . . . . . . . . . . . . . . . . . . . 23 IV EMPLOYER CONTRIBUTIONS 24 4.1 Amount of Contributions . . . . . . . . . . . . . . . . . . 24 4.2 Payment of Contributions . . . . . . . . . . . . . . . . . . 24 4.3 General Limitation on Contributions . . . . . . . . . . . . . . . . . . . . . . 25
(i) 3
ARTICLE PAGE - ------- ---- IV 4.4 Finality of Determination . . . . . . . . . . . . . . . . . 25 4.5 Limitation on Employer Contri- butions for Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . 25 4.6 Forfeiture or Distribution of Excess Employer Contributions . . . . . . . . . . . . . . 27 4.7 Effect of Plan Termination . . . . . . . . . . . . . . . . . 28 V DEPOSIT AND INVESTMENT OF CONTRIBUTIONS 29 5.1 Deposit of Contributions . . . . . . . . . . . . . . . . . . 29 5.2 Investment of Employer Contri- butions and Tax Deferred Compensation Contributions . . . . . . . . . . . . . . . . 29 5.3 Election to Transfer Invested Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 31 5.4 Election With Respect to the Insured Fund . . . . . . . . . . . . . . . . . . . . . . 31 VI ESTABLISHMENT OF FUNDS AND PARTICIPANTS' ACCOUNTS 33 6.1 Establishment of Funds . . . . . . . . . . . . . . . . . . . 33 6.2 Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . 33 6.3 Insured Fund . . . . . . . . . . . . . . . . . . . . . . . . 34 6.4 Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . 34 6.5 Income on Trust Funds . . . . . . . . . . . . . . . . . . . 35 6.6 Separate Accounts . . . . . . . . . . . . . . . . . . . . . 35 6.7 Distribution Accounts . . . . . . . . . . . . . . . . . . . 36 6.8 Administration . . . . . . . . . . . . . . . . . . . . . . . 36 6.9 Account Balances . . . . . . . . . . . . . . . . . . . . . . 36 VII ACCOUNTS: ALLOCATIONS, VALUATIONS, AND LIMITATIONS 37 7.1 Allocation of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . 37 7.2 Valuation of Participant's Interest . . . . . . . . . . . . . . . . . . . . . . . . . 37 7.3 Finality of Trustee's Determination . . . . . . . . . . . . . . . . . . . . . . 39 7.4 Limitation on Crediting of Contributions . . . . . . . . . . . . . . . . . . . . . . 39 7.5 Notification . . . . . . . . . . . . . . . . . . . . . . . 44 VIII WITHDRAWALS WHILE EMPLOYED 45 8.1 Withdrawal of Regular Participant Contributions . . . . . . . . . . . . . . . . 45 8.2 Withdrawal of Tax Deferred Compensation Contributions . . . . . . . . . . . . . . . . 46
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ARTICLE PAGE - ------- ---- VIII 8.3 Determination of Hardship . . . . . . . . . . . . . . . . . 47 8.4 Resumption of Contributions . . . . . . . . . . . . . . . . 50 IX TERMINATION OF PARTICIPATION AND DISTRIBUTION 51 9.1 Termination of Participation . . . . . . . . . . . . . . . . 51 9.2 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . 52 9.3 Transfer to Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . 53 9.4 Years of Vested Service . . . . . . . . . . . . . . . . . . 54 9.5 Election of Former Schedule . . . . . . . . . . . . . . . . 54 9.6 Distribution . . . . . . . . . . . . . . . . . . . . . . . . 55 9.7 Limitation on Commencement of Distribution . . . . . . . . . . . . . . . . . . . . . . . 56 9.8 Effect of Company's Determination . . . . . . . . . . . . . . . . . . . . . . 57 9.9 Separate Distribution Funds . . . . . . . . . . . . . . . . 57 9.10 Reemployment of Former Participant . . . . . . . . . . . . . . . . . . . . . . . 58 9.11 Restrictions on Alienation . . . . . . . . . . . . . . . . . 59 9.12 Facility of Payment . . . . . . . . . . . . . . . . . . . . 60 9.13 Disposition of Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.14 Recrediting of Forfeited Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 62 9.15 Felonious Conduct of a Participant . . . . . . . . . . . . . . . . . . . . . . . 62 9.16 Designation of Beneficiary . . . . . . . . . . . . . . . . . 63 9.17 Beneficiary in Absence of a Designated Beneficiary . . . . . . . . . . . . . . . . . 64 9.18 Spousal Consent to Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . 64 9.19 Methods of Distribution in Effect Prior to January 1, 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 X ADMINISTRATION 66 10.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 66 10.2 Action of Company . . . . . . . . . . . . . . . . . . . . . 67 10.3 Denial of Claims . . . . . . . . . . . . . . . . . . . . . . 67 10.4 Claims Review Procedure . . . . . . . . . . . . . . . . . . 68 10.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . 69 10.6 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . 70
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ARTICLE PAGE - ------- ---- XI POWERS AND DUTIES OF THE TRUSTEE 71 11.1 Power and Duties . . . . . . . . . . . . . . . . . . . . . . 71 11.2 Trust Property and Investments . . . . . . . . . . . . . . . 71 11.3 Investment Guidelines . . . . . . . . . . . . . . . . . . . 74 11.4 Claims Against Trust . . . . . . . . . . . . . . . . . . . . 76 11.5 Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . 76 11.6 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . 76 11.7 Investment Manager . . . . . . . . . . . . . . . . . . . . . 77 11.8 Directions . . . . . . . . . . . . . . . . . . . . . . . . . 77 11.9 Registration of Securities; Nominees . . . . . . . . . . . . . . . . . . . . . . . . . 79 11.10 Agents, Attorneys, Actuaries, and Accountants . . . . . . . . . . . . . . . . . . . . . 79 11.11 Deposit of Funds . . . . . . . . . . . . . . . . . . . . . . 79 11.12 Legal Advice . . . . . . . . . . . . . . . . . . . . . . . . 80 11.13 Other Authority . . . . . . . . . . . . . . . . . . . . . . 80 11.14 Court Action Not Required . . . . . . . . . . . . . . . . . 80 11.15 Trustee's Performance . . . . . . . . . . . . . . . . . . . 80 11.16 Directions to the Trustee . . . . . . . . . . . . . . . . . 81 11.17 Payment of Taxes; Indemnity . . . . . . . . . . . . . . . . 81 11.18 Compensation and Expenses . . . . . . . . . . . . . . . . . 82 11.19 Apportionment of Expenses . . . . . . . . . . . . . . . . . 82 11.20 Records and Statements . . . . . . . . . . . . . . . . . . . 83 XII SUCCESSOR TRUSTEE 84 12.1 Resignation or Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 84 12.2 Appointment of the Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 84 XIII AMENDMENT AND TERMINATION 86 13.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 86 13.2 Limitation on Amendment . . . . . . . . . . . . . . . . . . 86 13.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . 86 13.4 Withdrawal of an Employer . . . . . . . . . . . . . . . . . 88 13.5 Special Rules Relating to Distribution Upon Ter- mination of Plan or Dis- position of Assets or Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 89 13.6 Corporation Reorganization . . . . . . . . . . . . . . . . . 90 XIV ADOPTION BY RELATED CORPORATIONS 92
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ARTICLE PAGE - ------- ---- XV TOP-HEAVY PROVISIONS 93 15.1 Applicability . . . . . . . . . . . . . . . . . . . . . . . 93 15.2 Top-Heavy Definitions . . . . . . . . . . . . . . . . . . . 94 15.3 Accelerated Vesting . . . . . . . . . . . . . . . . . . . . 96 15.4 Minimum Employer Contribution . . . . . . . . . . . . . . . 96 15.5 Adjustments to Section 415 Limitations . . . . . . . . . . . . . . . . . . . . . . . 98 15.6 Compensation Taken Into Account . . . . . . . . . . . . . . 98 XVI ROLLOVERS 100 16.1 Rollover Contributions . . . . . . . . . . . . . . . . . . . 100 16.2 Administration . . . . . . . . . . . . . . . . . . . . . . . 100 16.3 Rollover Contributions not Considered for Certain Plan Purposes . . . . . . . . . . . . . . . . . . . . . . 101 16.4 Settlement or Termination . . . . . . . . . . . . . . . . . 101 XVII MISCELLANEOUS PROVISIONS 103 17.1 No Commitment as to Employment . . . . . . . . . . . . . . . 103 17.2 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 103 17.3 No Guarantees . . . . . . . . . . . . . . . . . . . . . . . 103 17.4 Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 103 17.5 Duty to Furnish Information . . . . . . . . . . . . . . . . 103 17.6 Withholding . . . . . . . . . . . . . . . . . . . . . . . . 104 17.7 Merger, Consolidation, or Transfer of Plan Assets . . . . . . . . . . . . . . . . . 104 17.8 Conditions and Limitations on Employer Contributions . . . . . . . . . . . . . . . . 104 17.9 Return of Contributions to Employer . . . . . . . . . . . . . . . . . . . . . . . 105 17.10 Back Pay Awards . . . . . . . . . . . . . . . . . . . . . . 106 17.11 Validity of Agreement . . . . . . . . . . . . . . . . . . . 108 17.12 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . 108
(v) 7 TRUST AGREEMENT FOR OGLEBAY NORTON COMPANY INCENTIVE SAVINGS PLAN AND TRUST (January 1, 1991 Restatement) THIS AGREEMENT, made and entered into at Cleveland, Ohio, this day of , 1990, by and between OGLEBAY NORTON COMPANY, a Delaware corporation, (hereinafter referred to as the "Company") and SOCIETY NATIONAL BANK, of Cleveland, Ohio, a national banking association organized and existing under the laws of the United States (hereinafter referred to as the "Trustee"), W I T N E S S E T H: WHEREAS, by trust agreement dated December 31, 1959, the Company established an incentive savings plan and trust for the exclusive benefit of certain eligible employees and their beneficiaries; and WHEREAS, said trust agreement was completely amended and restated effective as of April 1, 1967, January 1, 1976, January 1, 1980, January 1, 1983, January 1, 1985, and January 1, 1989; and WHEREAS, it is desired to amend further and to restate the terms, provisions, and conditions of said restated trust agreement; NOW, THEREFORE, the parties agree that, effective as of January 1, 1991, or such other date as may be expressly provided herein with respect to a particular 8 provision, said restated trust agreement is hereby amended and restated in its entirety to provide as hereinafter set forth, and that the Trustee shall hold all assets presently held by it and all funds and other property hereafter contributed to it pursuant to the provisions hereof, together with all the increments, proceeds, investments, and reinvestments thereof, in trust, for the uses and purposes and upon the terms and conditions hereinafter set forth. -2- 9 ARTICLE I DEFINITIONS 1.1 Definitions. The following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly required by the context: (a) The term "Act" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a section of the Act shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. (b) The term "Active Participant" shall mean a Participant who, as of the time the determination is being made, is an Employee and who currently has in effect an authorization with respect to Tax Deferred Compensation Contributions as described in Section 2.2. (c) The term "Agreement" shall mean this Trust Agreement, including any amendment hereof. (d) The term "Beneficiary" shall mean the person who, in accordance with the provisions of Section 9.16, 9.17, and 9.18, is entitled to receive a distribution of a Participant's interest, or portion thereof, under the Plan in the event a Participant or former Participant dies before his entire interest shall have been distributed to him. (e) The term "Bond Fund" shall mean the common trust fund established and maintained by the Trustee in conjunction with the Plan pursuant to the provisions of Section 6.4. (f) The term "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation -3- 10 that amends, supplements, or supersedes such section. (g) The term "Company" shall mean Oglebay Norton Company, a Delaware corporation, its corporate successors, and any corporation into or with which it is merged or consolidated. (h) The term "Compensation" shall mean the base salary and compensation for overtime hours which is paid, or which would have been paid except for the provisions of the Plan, during the Plan Year to a Participant by an Employer for his services as an Employee while he is a Participant; provided, however, that such term shall exclude additional compensation, such as bonuses, commissions, special vacation pay, and all noncash remuneration; provided, further, that the Compensation of a Participant for a Plan Year shall not include any amount in excess of $200,000 (adjusted for changes in the cost of living as provided in Section 415(d) of the Code); and provided, further, that for purposes of applying such dollar limitation, the rules of Section 414(q)(6) of the Code requiring aggregation of certain family members shall apply, except that in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. (i) The term "Distribution Account" shall mean any of the accounts maintained by the Trustee in the name of a Participant pursuant to the provisions of Section 6.7 which reflect his interest in the Bond Fund, the Equity Fund, and the Insured Fund. (j) The term "Eligibility Date" shall mean the earliest date on which an Employee becomes an Eligible Employee in accordance with the provisions of Article II. (k) The term "Eligible Employee" shall mean an Employee who is eligible to participate in the Plan in accordance with the provisions of Article II. -4- 11 (l) The term "Employee" shall mean any common law employee who is compensated on a salaried basis by the Company on its Cleveland Office payroll or who is employed on a salaried basis by any Employer other than the Company; provided, however, that the term shall not include any person who renders service to an Employer solely as a director or an independent contractor, any person covered by a collective bargaining agreement, unless such agreement specifically provides for coverage under the Plan, or any person who is a "leased employee," as hereinafter defined. For purposes of this paragraph (l), a "leased employee" shall mean any person who is not otherwise an employee of an Employer and who provides services to the Employer that are (i) performed on a substantially full-time basis for a period of at least one year, (ii) performed pursuant to an agreement between the Employer and a leasing organization, and (iii) of a type historically performed by employees of the Employer. (m) The term "Employer" shall mean the Company, Central Silica Company, California Silica Products Company, or any other corporation which adopts this Agreement as provided in Article XIV. (n) The term "Employer Contribution" shall mean the amount which an Employer contributes to the Trust in accordance with the provisions of Article IV. (o) The term "Enrollment Date" shall mean each January 1 and July 1 of each Plan Year. (p) The term "Equity Fund" shall mean the common trust fund established and maintained by the Trustee in conjunction with the Plan pursuant to the provisions of Section 6.2. (q) The term "Family Member" of an Employee shall mean the Employee's spouse, his lineal ascendants, his lineal descendants, and the spouses of such lineal ascendants and descendants. (r) The term "Highly Compensated Employee" shall mean any Eligible Employee who is a -5- 12 "highly compensated employee" as defined in Section 414(q) of the Code. (s) The term "Inactive Participant" shall mean a Participant who, although continuing to participate in the Plan, is not an Active Participant because he no longer has in effect an authorization with respect to Tax Deferred Compensation Contributions as described in Section 2.2. (t) The term "Insured Fund" shall mean the common trust fund established and maintained by the Trustee in conjunction with the Plan pursuant to the provisions of Section 6.3. (u) The term "Participant" shall mean an Eligible Employee who elects to participate in the Plan in accordance with the provisions of Article II and shall include an Employee who is participating in the Plan either on an active or inactive basis. (v) The term "Plan" shall mean the incentive savings plan originally established by instrument dated December 31, 1959, as currently embodied in this Agreement, and referred to as the "Oglebay Norton Company Incentive Savings Plan." (w) The term "Plan Administrator" shall mean the Company which is the administrator for purposes of the Act and the plan administrator for purposes of the Code. (x) The term "Plan Year" shall mean the 12-month period which begins on January l and ends on December 31 of each year. (y) The term "Regular Participant Contribution" shall mean the contributions made by a Participant and designated as such in accordance with the provisions of the Plan as in effect prior to January 1, 1991. (z) The term "Related Corporation" shall mean any corporation that is a member of the controlled group of corporations of which an Employer is a member, as determined under Section 1563(a) of the Code, without regard to -6- 13 Section 1563(a)(4) or Section 1563(e)(3)(C) of the Code; any trade or business (whether or not incorporated) that is a member of a group under common control with an Employer as determined under Section 414(c) of the Code; any organization that is a member of an affiliated service group of which an Employer is also a member as determined under Section 414(m) of the Code; and any entity which is required to be aggregated with an Employer pursuant to regulations under Section 414(o) of the Code. (aa) The term "Rollover Contribution" shall mean with respect to a Participant the amount distributed from (i) a qualified plan or (ii) a Participant's IRA that is attributable to a distribution from a qualified plan, and transferred to the Plan by the Participant in accordance with the provisions of Section 16.1. (bb) The term "Separate Account" shall mean any of the accounts maintained by the Trustee in the name of a Participant pursuant to the provisions of Section 6.6 which reflects his interest in the Bond Fund, the Equity Fund, and the Insured Fund. (cc) The term "Tax Deferred Compensation Contribution" shall mean the contributions made by an Employer on behalf of a Participant in accordance with the provisions of Section 3.1 and a duly executed and filed compensation reduction authorization. (dd) The term "Trust" shall mean the trust originally established by instrument dated December 31, 1959, as currently maintained under this Agreement, and shall include the Bond Fund, the Equity Fund, the Insured Fund, and any Separate Distribution Fund, which trust is called the "Oglebay Norton Company Incentive Savings Trust." (ee) The term "Trustee" shall mean Society National Bank or any successor trustee which at the time shall be designated, qualified, and acting hereunder. -7- 14 (ff) The term "Valuation Date" shall mean the last day of each month of each Plan Year. 1.2 Pronouns. The masculine pronoun wherever used herein shall include the feminine in any case so requiring. -8- 15 ARTICLE II EMPLOYEE ELIGIBILITY AND PARTICIPATION 2.1 Eligibility. Each Employee who was an Eligible Employee on December 31, 1990, shall continue as an Eligible Employee hereunder. Each other Employee shall become an Eligible Employee as of the first January 1 or July 1 on which he is an Employee. 2.2 Election to Participate. Each Eligible Employee who was a Participant in the Plan on December 31, 1990, shall continue as a Participant hereunder. Each other Eligible Employee shall become a Participant as of the first Enrollment Date coinciding with his Eligibility Date or any subsequent Enrollment Date, if he timely files with the Company a written election, on a form prescribed by the Company, which contains: (a) his authorization for his Employer to reduce his Compensation otherwise payable and to make Tax Deferred Compensation Contributions on his behalf in accordance with the provisions of Section 3.1; and (b) his election as to the investment of his Tax Deferred Compensation Contributions and Employer Contributions allocable to his Separate Accounts in accordance with the provisions of Section 5.2; provided, however, that an Eligible Employee's election to become a Participant under this Section 2.2 shall be timely only if received by his Employer such number of days prior -9- 16 to the Enrollment Date as of which his participation is to become effective as the Company shall require. 2.3 Notification of Eligible Employees. Within a reasonable period prior to each Enrollment Date, the Company shall cause a written notice of eligibility to be given to each Employee who is not then a Participant, but who is an Eligible Employee or who would, if his employment with an Employer continues, become an Eligible Employee before the next succeeding Enrollment Date. Any Employee, whether or not so notified, may apply to the Company for a determination as to his eligibility. Any Employee making such an application shall be considered a Claimant within the meaning of Section 10.4. The decision of the Company as to eligibility shall be binding upon all affected persons. 2.4 Certification of New Participants. As soon as practicable after each Enrollment Date, the Company shall notify the Trustee of Eligible Employees becoming Participants on such date. Upon becoming a Participant hereunder, an Eligible Employee shall become entitled to the benefits under the Plan and shall be bound by all of the provisions of this Agreement. 2.5 Service. Each person who is an employee of an Employer or a Related Corporation on January 1, 1985, shall be credited with service equal to -10- 17 the service with which he was credited under the Plan provisions in effect on December 31, 1984. Each person who is an employee of an Employer or a Related Corporation on or after January 1, 1985, shall be credited with service on and after such date for each period (i) beginning on his service date (as defined in paragraph (b) below), or his reemployment date (as defined in paragraph (d) below), and (ii) ending on his next following severance date (as defined in paragraph (c) below). For purposes of this Section 2.5 the following provisions shall apply: (a) An "hour of service" shall mean each hour for which an employee is paid, or entitled to payment, with respect to the performance of duties for an Employer or a Related Corporation. (b) An employee's "service date" shall mean January 1, 1985, or the first date thereafter on which he completes an hour of service under paragraph (a) above. (c) An employee's "severance date" shall mean the earlier of (i) the date on which his retirement, death, or other termination of employment occurs, (ii) the second anniversary of the first date on which an employee is absent from employment with an Employer or a Related Corporation for maternity or paternity reasons, or (iii) the first anniversary of the first date of a period in which he remains absent from employment with an Employer or a Related Corporation for any other reason; provided, however, that if he is absent from employment due to illness, injury, or layoff or on an approved leave of absence, he shall not incur a severance date by reason of such absence if he returns to employment at the conclusion of such illness, injury, layoff, or approved leave of absence; and provided, further, that if he is absent from employment while on active service in the Armed -11- 18 Service of the United States, his severance date shall be the date on which he was first so absent unless he returns to employment with an Employer or a Related Corporation during the period during which he retains reemployment rights pursuant to federal law. For purposes of this paragraph, an absence from employment for maternity or paternity reasons shall mean an absence due to (i) the pregnancy of the employee, (ii) the birth of a child of the employee, (iii) the placement of a child with the employee in connection with the adoption of such child by the Employee, or (iv) the caring of such child for a period beginning immediately following such birth or placement. Notwithstanding the foregoing, however, if any employee retires or dies or his employment otherwise is terminated during a period of his absence from employment for any reason other than retirement or termination, his severance date shall be the date of such retirement, death, or other termination of employment. (d) An employee's "reemployment date" shall mean the first date on which he again completes an hour of service after a severance date. (e) If an employee's reemployment date occurs within 12 months after the earlier of (i) his immediately preceding severance date, or (ii) the first date of a period in which he remains absent from employment with an Employer or a Related Corporation for any reason, he shall receive service credit for the period of absence preceding such reemployment date if he otherwise does not receive service credit for such absence under the foregoing provisions of this Section 2.5. (f) If after a severance date occurs with respect to a person who is an employee the provisions of paragraph (e) above do not apply, and if his reemployment date occurs on or after January 1, 1985, he shall forfeit his service credited with respect to the period ending on such severance date, and such forfeited service shall be reinstated upon his next following reemployment date: -12- 19 (i) if the period between such severance date and such reemployment date is less than five years, or (ii) if his previously forfeited service is greater than the periods computed to the nearest 1/12th year, beginning on his most recent severance date and ending on such reemployment date, or (iii) if he had a nonforfeitable right to any portion of his Separate Account balances derived from Employer contributions on such severance date. (g) An employee's service as determined under this Section 2.5 shall be aggregated and computed to the nearest 1/12th year of service. (h) For purposes of this Section 2.5, "employee" shall mean any person who is a common law employee and any person who is a leased employee, as defined in paragraph (l) of Section 1.1, with respect to an Employer or a Related Corporation. 2.6 Changes in Employment Status. If a Participant ceases to be an Employee but continues in the employment of (i) an Employer in some other capacity, or (ii) a Related Corporation, he shall, as of the date of such change in status, cease to be an Active Participant and shall become an Inactive Participant until his participation is otherwise terminated in accordance with the provisions of the Plan. If such Inactive Participant shall make a withdrawal under Section 8.1 and/or 8.2 which causes his Tax Deferred Compensation Contributions to be suspended, any authorization for reduction of Compensation -13- 20 theretofore in effect with respect to him shall be automatically revoked; otherwise, any such authorization shall continue in effect despite his change in status (although no reduction shall be made while he remains inactive). Such Inactive Participant shall again become an Active Participant immediately upon his transfer to a position as an Employee unless, in the interim, any such authorization has been revoked, in which event he shall remain an Inactive Participant until his participation terminates or until he resumes active participation as provided in Section 8.4. No Inactive Participant shall be permitted to have contributions made on his behalf to the Plan at any time during which he is employed in any capacity other than as an Employee. Moreover, if a person is transferred directly from employment (i) with an Employer in a capacity other than as an Employee, or (ii) with a Related Corporation, to employment as an Employee, his service with such Employer or such Related Corporation shall be included in determining his eligibility under Section 2.l. 2.7 Reemployment of a Participant. Subject to the provisions of Section 2.5, if a retired or former Participant is reemployed by an Employer or a Related Corporation after he incurs a settlement date under Section 9.1, he shall again become a Participant on the date -14- 21 he is reemployed by an Employer and files his authorization in accordance with the provisions of Section 2.2, unless he is not reemployed as an Employee, in which event he shall again become a Participant on the first date thereafter on which he becomes an Employee and files such authorization. -15- 22 ARTICLE III CONTRIBUTIONS MADE BY OR ON BEHALF OF PARTICIPANTS 3.1 Tax Deferred Compensation Contributions. Commencing with the Enrollment Date as of which an Eligible Employee becomes a Participant, each Participant may elect to have Tax Deferred Compensation Contributions made to the Plan on his behalf by his Employer which shall be an integral percentage of his Compensation of not less than one percent nor more than six percent. In the event a Participant so elects to have his Employer make Tax Deferred Compensation Contributions, his Compensation otherwise payable shall be reduced by the percentage he elects to have contributed on his behalf to the Plan in accordance with the terms of the authorization in effect pursuant to Section 2.2 or pursuant to Section 3.7. 3.2 Limitation on Tax Deferred Compensation Contributions. Notwithstanding any other provision of this Article III, in no event shall the Tax Deferred Compensation Contributions made on a Participant's behalf during a Participant's taxable year, when aggregated with any elective contributions made on behalf of the Participant under any other plan of an Employer or a Related Corporation for such taxable year, exceed $7,000 (or such adjusted amount established by the Secretary of the Treasury pursuant to Section 402(g)(5) of the Code). In the event that -16- 23 the Company determines that a contribution election by a Participant will result in his exceeding the annual limitation described above, the Company shall adjust the reduction authorization of such Participant by reducing his Tax Deferred Compensation Contribution percentage to such smaller percentage or amount that will result in the annual limitation not being exceeded. 3.3 Additional Limitation on Tax Deferred Compensation Contributions of Highly Compensated Employees. Notwithstanding anything to the contrary contained in this Agreement, no Tax Deferred Compensation Contributions made with respect to a Plan Year on behalf of Highly Compensated Employees shall result in an average deferral percentage for Highly Compensated Employees that exceeds the greater of: (a) a percentage that is equal to 125 percent of the average deferral percentage for all other Eligible Employees; or (b) a percentage that is not more than 200 percent of the average deferral percentage for all other Eligible Employees and that is not more than two percentage points higher than the average deferral percentage for all other Eligible Employees. The Company may adjust as required the deferral percentage of Highly Compensated Employees by reducing such percentage in order, beginning with the highest of such percentages, to such smaller percentages that will result in the limits set forth above not being exceeded. The Company shall then -17- 24 adjust the Compensation reduction authorizations of affected Highly Compensated Employees to reflect the adjustment to their deferral percentages. For purposes of this Section 3.3 and Section 4.5, the following terms shall have the following meanings: (c) The term "compensation" means compensation as defined in Section 414(s) of the Code, including any amount contributed by an Employer pursuant to a salary reduction agreement that is not includable in the gross income of an Employee under Section 125, 402(a)(8), 402(h), or 403(b) of the Code. (d) The "deferral percentage" of an Employee is the ratio of the sum of his Tax Deferred Compensation Contributions with respect to the Plan Year to his compensation for such Plan Year. For the purposes of applying the limitation contained in this Section 3.3, the Tax Deferred Compensation Contributions and compensation of any Eligible Employee who is a Family Member of any Highly Compensated Employee who (i) is a five percent owner or (ii) is among the ten Highly Compensated Employees receiving the greatest compensation for the Plan Year shall be aggregated with the Tax Deferred Compensation Contributions and compensation of such Highly Compensated Employee, and such Family Member shall not be considered an Eligible Employee for purposes of determining the average deferral percentage for all other Eligible Employees. -18- 25 3.4 Distribution of Excess Contributions. Notwithstanding anything to the contrary contained in this Agreement, in the event that the limitation contained in Section 3.3 of the Plan is exceeded in any Plan Year, the excess Tax Deferred Compensation Contributions with respect to a Highly Compensated Employee, plus any income and minus any losses attributable thereto, shall be distributed to the Highly Compensated Employee prior to the end of the succeeding Plan Year. Moreover, to the extent any Employer Contribution would be allocable based upon such excess amount in accordance with the provisions of Section 7.1, such Employer Contribution shall be deemed a forfeiture for the Plan Year in which such excess Tax Deferred Compensation Contributions are distributed hereunder and shall be applied against the Employer Contribution obligation as described in Section 9.13. For purposes of this Section 3.4, "excess Tax Deferred Compensation Contributions" with respect to a Highly Compensated Employee means the excess of the Tax Deferred Compensation Contributions made on his behalf over the maximum amount permitted to be contributed on his behalf under Section 3.3, determined by reducing Tax Deferred Compensation Contributions of Highly Compensated Employees in order of their deferral percentages beginning with the highest of such percentages. The amount of excess Tax Deferred Compensation Contributions -19- 26 for a Plan Year shall be reduced by any excess deferrals as defined in Section 3.10 previously distributed to the Highly Compensated Employee for the Highly Compensated Employee's taxable year ending with or within the Plan Year. 3.5 Regular Participant Contributions. Prior to January 1, 1991, Participants were permitted to make Regular Participant Contributions to the Plan in accordance with provisions from time to time in effect. Such amounts shall continue to be held under the Plan and administered in accordance with the provisions of this Agreement and the provisions of the Plan as in effect on December 31, 1990 relating to the determination and disposition of "excess Employer Contributions and Regular Participant Contributions." 3.6 Administration. The Company shall cause to be delivered to the Trustee all Tax Deferred Compensation Contributions made in accordance with the provisions of Section 3.1 as of the earliest date on which such contributions can be reasonably segregated from the Employer's general assets, but not later than the 30th day of the next succeeding calendar month after such Tax Deferred Compensation Contributions are made. Subject to the provisions of Article VII, the Trustee shall credit the amount of Tax Deferred Compensation Contributions of each -20- 27 Participant for each calendar month, which are received by it, to the Participant's Separate Accounts in accordance with the provisions of Section 5.2, as of the last day of the calendar month for which they are made. 3.7 Changes in Contribution Authorizations. Any Participant may change the percentage of his Compensation which he causes to be contributed on his behalf as Tax Deferred Compensation Contributions effective as of any Enrollment Date by filing an amended Compensation reduction authorization with the Company such number of days prior to such Enrollment Date as the Company shall require; provided, however, that he shall be limited to selecting an integral percentage of his Compensation of not less than one percent nor more than six percent. 3.8 Suspension of Contributions. Any Participant who is making contributions under Section 3.1 may suspend such contributions at any time by giving such number of days' advance written notice to the Company as it shall require. Any such suspension shall take effect beginning with the first payment of Compensation to such Participant following the expiration of the required notice period and shall remain in effect until contributions are resumed as hereinafter set forth. Any Participant who has suspended his Tax Deferred Compensation Contributions in accordance with the foregoing provisions of this -21- 28 Section 3.8 may resume such contributions pursuant to the limitations of Section 3.7 as of any subsequent Enrollment Date by filing a written notice to such effect with the Company such number of days prior to the Enrollment Date as of which such contributions are to be resumed as the Company shall require. 3.9 Election Adjustments. Notwithstanding any other provision to the contrary contained in this Agreement, in the event any Tax Deferred Compensation Contributions made on behalf of a Participant, when aggregated with Employer Contributions allocated to him, would exceed the limitations set forth in Section 7.4, the election made by a Participant pursuant to Section 2.2 shall be adjusted prospectively in accordance with procedures adopted by the Company in such a manner so as to prevent such limits from being exceeded. 3.10 Distribution of Excess Deferrals. Notwithstanding anything to the contrary contained in this Agreement, in the event that a Participant notifies the Company in writing and in accordance with the Company's rules regarding such notification that excess deferrals have been made on his behalf under the Plan for a taxable year, such excess amounts, plus any income and minus any losses attributable thereto, shall be distributed to the Participant no later than the April 15 immediately -22- 29 following such taxable year. For purposes of this Section 3.10, "excess deferrals" means that portion of a Participant's Tax Deferred Compensation Contributions that, when added to amounts deferred under other plans or arrangements described in Section 401(k), 408(k), or 403(b) of the Code, would exceed the limit imposed on the Participant under Section 402(g) of the Code for the calendar year in which the Tax Deferred Compensation Contributions were made. The amount of excess deferrals for a taxable year under this Section 3.10 shall be reduced by any excess Tax Deferred Compensation Contributions as defined in Section 3.4 previously distributed with respect to the Participant for the Plan Year beginning with or within such calendar year. 3.11 Overriding Limitation. Notwithstanding anything to the contrary contained in this Agreement, the value of any Separate Accounts attributable to contributions made by or on behalf of a Participant shall be fully vested in such Participant, and the forfeiture provisions contained in this Agreement shall not apply to them. -23- 30 ARTICLE IV EMPLOYER CONTRIBUTIONS 4.1 Amount of Contributions. The Employer Contribution for each calendar month shall be an amount, subject to reduction by the amount of any forfeitures as provided in Section 9.13, equal to 50 percent of the total of the eligible Tax Deferred Compensation Contributions made on behalf of Participants for such calendar month. An "eligible Tax Deferred Compensation Contribution" means a Tax Deferred Compensation Contribution in an amount up to, but not exceeding, four percent of a Participant's Compensation for such calendar month. Employer Contributions and Tax Deferred Compensation Contributions shall not exceed the limitation specified in Section 4.3. 4.2 Payment of Contributions. Employer Contributions made pursuant to Section 4.1 shall be paid to the Trustee not later than the 30th day of the next succeeding calendar month and upon receipt thereof the Trustee shall deposit the same in accordance with the provisions of Section 5.1. Notwithstanding the foregoing, the Employer Contribution and any Tax Deferred Compensation Contributions for any month, regardless of when actually paid, shall for all purposes of this Agreement be deemed to have been made on the last day of such month. -24- 31 4.3 General Limitation on Contributions. Notwithstanding anything to the contrary contained in this Agreement, the contribution of each Employer for any Plan Year shall in no event exceed (i) the maximum amount which will constitute an allowable deduction for such Plan Year to such Employer under Section 404 of the Code, (ii) the maximum amount which may be contributed by such Employer under Section 415 of the Code, or (iii) the maximum amount which may be contributed pursuant to any wage stabilization law, or any regulation, ruling, or order issued pursuant to law. 4.4 Finality of Determination. The Company shall have exclusive responsibility with respect to determining the amount of the Employer Contributions and, upon determining such amount with respect to a Plan Year, shall transmit to the Trustee a written statement of the amount of such contribution from an authorized officer of the Company. A determination so made and certified shall be final and conclusive upon the Employers, the Trustee, and all Participants, former Participants, and Beneficiaries. 4.5 Limitation on Employer Contributions for Highly Compensated Employees. Notwithstanding anything to the contrary contained in this Agreement, no Employer Contributions made with respect to a Plan Year on behalf of -25- 32 Highly Compensated Employees shall result in an average contribution percentage for Highly Compensated Employees that exceeds the greater of: (a) a percentage that is equal to 125 percent of the average contribution percentage for all other Eligible Employees; or (b) a percentage that is not more than 200 percent of the average contribution percentage for all other Eligible Employees and that is not more than two percentage points higher than the average contribution percentage for all other Eligible Employees; provided, however, that, to the extent required by regulations of the Secretary of the Treasury, the alternative limitation contained in this paragraph (b) shall not be used for purposes of this Section 4.5 in any Plan Year with respect to which the Employer uses paragraph (b) of Section 3.3 to meet the deferral percentage limitations specified therein. For purposes of this Section 4.5, the "contribution percentage" of an Employee for a Plan Year is the ratio of the Employer Contributions made on his behalf for the Plan Year to his compensation for such Plan Year, except that, to the extent permitted by regulations promulgated by the Secretary of the Treasury, the Company may elect to take into account in computing the numerator of each Eligible Employee's contribution percentage the Tax Deferred Compensation Contributions made on his behalf for the Plan Year. For purposes of applying the limitations contained in this Section 4.5, the Employer Contributions and compensation of any Eligible Employee who is a Family Member of a Highly -26- 33 Compensated Employee who (i) is a five percent owner or (ii) is among the ten Highly Compensated Employees receiving the greatest compensation for the Plan Year shall be aggregated with the Employer Contributions and compensation of such Highly Compensated Employee, and such Family Member shall not be considered an Eligible Employee for purposes of determining the average contribution percentage for all other Eligible Employees. 4.6 Forfeiture or Distribution of Excess Employer Contributions. Notwithstanding anything to the contrary contained in this Agreement, in the event that the limitation contained in Section 4.5 is exceeded in any Plan Year, the excess Employer Contributions with respect to a Highly Compensated Employee, plus any income and minus any losses attributable thereto, shall be forfeited or distributed prior to the end of the succeeding Plan Year as hereinafter provided in the same proportion as the Highly Compensated Employee's forfeitable and vested interest in his Separate Accounts to which such contributions have been credited. Any amounts forfeited pursuant to this Section 4.6 for a Plan Year shall be applied against the Employer Contribution obligation for the month in which the forfeiture occurs. For purposes of this Section 4.6, "excess Employer Contributions" with respect to a Highly Compensated Employee means the excess of the Employer -27- 34 Contributions allocated to his Separate Accounts over the maximum amount permitted to be contributed on his behalf under Section 4.5, determined by reducing Employer Contributions made on behalf of Highly Compensated Employees in order of their contribution percentages beginning with the highest of such percentages. The determination of the amount of excess Employer Contributions shall be made after application of Section 3.4, if applicable, and after application of Section 3.10, if applicable. 4.7 Effect of Plan Termination. Notwithstanding anything to the contrary contained in this Agreement, the termination of the Plan shall terminate the liability of the Employers to make further contributions hereunder, other than contributions for any Plan Year ended prior to the time of such termination. -28- 35 ARTICLE V DEPOSIT AND INVESTMENT OF CONTRIBUTIONS 5.1 Deposit of Contributions. All Employer Contributions, Tax Deferred Compensation Contributions, and Rollover Contributions shall be deposited by the Trustee in the Equity Fund, the Insured Fund, or the Bond Fund in accordance with directions received from the Company; provided, however, that the Company's directions shall be based upon the investment election of each Participant made in accordance with the provisions of Sections 2.2 and 5.2. For all purposes hereunder, contributions with respect to a month shall be deemed to have been deposited as of the last day of such month. The Trustee shall have no duty to collect or enforce payment of contributions or inquire into the amount or method used in determining the amount of contributions, and shall be accountable only for contributions received by it. 5.2 Investment of Employer Contributions and Tax Deferred Compensation Contributions. Each Participant, upon electing to become a Participant under the Plan in accordance with the provisions of Section 2.2, shall make an investment election directing the manner in which his Tax Deferred Compensation Contributions and Employer Contributions allocable to his Separate Accounts shall be deposited and held by the Trustee. In the event the -29- 36 Participant elects to make a Rollover Contribution in accordance with Article XVI, he shall also make an investment election directing the manner in which such Rollover Contribution shall be deposited and held by the Trustee. The investment election of a Participant shall specify, in increments of ten percent, a combination which in the aggregate equals 100 percent selected from among the Equity Fund, the Insured Fund, and the Bond Fund. If a Participant makes no investment election or does not direct the investment of 100 percent of the Tax Deferred Compensation Contributions and Employer Contributions made on his behalf and any Rollover Contribution, such amounts shall be deposited in the Bond Fund. The investment option so elected by a Participant shall remain in effect until he ceases to be a Participant in accordance with the provisions of this Agreement; provided, however, that a Participant may change his investment election effective as of any Enrollment Date by filing with the Company, such number of days prior to such Enrollment Date as the Company shall require, a written election directing a change in his investment election. Any such change shall not affect the amounts credited to any Separate Accounts of such Participant as of any date prior to the Enrollment Date on which such change is to become effective. -30- 37 5.3 Election to Transfer Invested Amounts. A Participant or former Participant who has attained age 60 or completed 25 years of service may elect at any time to have the entire balances of his Separate Accounts or Distribution Accounts, as the case may be, which are invested in the Equity Fund and the Bond Fund transferred from such Funds to the Insured Fund and to have his Separate Accounts or Distribution Accounts, as the case may be, reflect such transfer. Any such election shall be effective as of the first Enrollment Date of a Plan Year or as soon thereafter as administratively practicable, and shall be made in writing delivered to the Company such number of days prior to such Enrollment Date and in such form and manner as the Company shall require. Upon receipt of written directions from the Company, the Trustee shall cause such amounts to be so transferred. The provisions of this Section 5.3 shall be effective with respect to Participants and former Participants meeting the requirements set forth herein on or after January 1, 1990, with respect to Enrollment Dates occurring on the first day of a Plan Year on or after January 1, 1991. 5.4 Election With Respect to the Insured Fund. Notwithstanding any other provision contained in this Agreement, each Participant or former Participant who made an investment election prior to December 31, 1990 -31- 38 directing all or a portion of his Tax Deferred Compensation Contributions, Regular Participant Contributions, and Employer Contributions, if applicable, to be invested in a guaranteed investment contract held in the Insured Fund may elect subsequently to transfer to any other Fund the amounts in his Separate Accounts in the Insured Fund attributable to such insurance contract upon its maturity. In the event such a Participant does not make such election, such amounts shall be reinvested in the Insured Fund. -32- 39 ARTICLE VI ESTABLISHMENT OF FUNDS AND PARTICIPANTS' ACCOUNTS 6.1 Establishment of Funds. The Trustee shall establish and maintain three funds hereunder, the Equity Fund, the Insured Fund, and the Bond Fund (formerly referred to as the "Fixed Income Fund"), which shall be invested, respectively, in accordance with the provisions of Sections 6.2, 6.3, and 6.4; provided, however, that investment may in each case be made through investment in participating shares or interests in a fund maintained under a master trust for plans of the Company and its affiliates, provided that investments in such fund consist primarily of the type of investments specified herein with respect to each. Each fund maintained hereunder shall be held and administered by the Trustee as a separate common trust fund. 6.2 Equity Fund. Up to 50 percent of the assets of the Equity Fund may be invested in common stock of the Company with the remaining assets of such Fund invested, in the Trustee's discretion, (a) in common stocks and other securities, which are convertible into common stocks, of issuers other than the Company, or (b) in participating shares or interests in any common or collective trust or investment funds established or operated by the Trustee or others or shares in investment companies, -33- 40 provided that the types of investments held in such funds or companies consist primarily of the type of investments specified in clause (a) of this sentence. 6.3 Insured Fund. The assets of the Insured Fund shall be invested by the Trustee (a) primarily under an insurance contract or contracts which provide for a guaranteed rate of return with respect to such investment or in United States Government securities the income from which is fixed or determinable in advance, or (b) in participating shares or interests in any common or collective trust or investment funds established or operated by the Trustee or others or shares in investment companies, provided that the types of investments held in such funds or companies consist primarily of the type of investments specified in clause (a) of this sentence. 6.4 Bond Fund. The assets of the Bond Fund shall be invested, in the Trustee's discretion, (a) in such bonds, notes, debentures, mortgages, preferred stocks, equipment trust certificates, investment trust certificates, certificates of indebtedness, acceptances, bills of exchange, Treasury bills, savings bank deposits, commercial paper, personal property wherever situated and any other property (other than real property), or securities, domestic or foreign, from which the return is fixed, limited, or determinable in advance; provided, however, that such -34- 41 investments shall be of issuers other than the Company, or (b) in participating shares or interests in any common or collective trust or investment funds established or operated by the Trustee or others or shares in investment companies, provided that the types of investments held in such funds or companies consist primarily of the type of investments specified in clause (a) of this sentence. 6.5 Income on Trust Funds. Any dividends, interest, distributions, or other income received by the Trustee in respect of the Equity Fund, the Insured Fund, or the Bond Fund shall be reinvested by the Trustee in the Fund in respect of which such income was received by it. 6.6 Separate Accounts. Each Participant shall have established in his name a Separate Account within each Fund to reflect (i) his Tax Deferred Compensation Contributions deposited in such Fund and the earnings and losses attributable to such amounts; (ii) his share of Employer Contributions deposited in such Fund and the earnings and losses attributable to such amounts; (iii) his Regular Participant Contributions deposited in such Fund and the earnings and losses attributable to such amounts; and (iv) his Rollover Contributions deposited in such Fund and the earnings and losses attributable to such amounts. The Company shall cause each such Separate -35- 42 Account to be maintained and administered for each Participant in accordance with the provisions of this Agreement. 6.7 Distribution Accounts. As of a Participant's Settlement Date (as determined in accordance with the provisions of Section 9.1) there shall be established Distribution Accounts in his name that correspond to the Separate Accounts maintained by the Trustee on the Participant's behalf to reflect his interest in the Trust that is subject to distribution under the terms of this Agreement. The Trustee shall cause the Distribution Accounts to be maintained and administered in accordance with the provisions of this Agreement. 6.8 Administration. After receiving Tax Deferred Compensation Contributions and Employer Contributions for a month pursuant to Section 5.1, the Trustee shall acknowledge the amount of contributions received by it for such month. 6.9 Account Balances. For all purposes of this Agreement, the balance of each Separate Account of a Participant as of any date shall be the balance of such account after all credits and charges thereto, for and as of such date have been made as provided in this Agreement. -36- 43 ARTICLE VII ACCOUNTS: ALLOCATIONS, VALUATIONS, AND LIMITATIONS 7.1 Allocation of Employer Contributions. The Employer Contribution made pursuant to Section 4.1 for each calendar month shall be allocated as of the last day of such month among Participants who are employees of such Employer or a Related Corporation during such month and who had made on their behalf Tax Deferred Compensation Contributions for such month, in an amount for each such Participant equal to 50 percent of the eligible Tax Deferred Compensation Contributions not in excess of four percent of such Participant's Compensation (as described in Section 4.1) contributed to the Plan on his behalf for such month. Subject to the other provisions of this Article VII, the Trustee shall credit the amount of each Participant's allocated share of the Employer Contribution for such month which is received by it to the Participant's appropriate Separate Accounts as of the last day of such month. 7.2 Valuation of Participant's Interest. As of each Valuation Date, the Trustee shall adjust the Separate Accounts and the Distribution Accounts of each Participant and former Participant to reflect any increase or decrease in net worth of the Funds hereunder since the immediately preceding Valuation Date, based on the -37- 44 valuation of each Fund by the Trustee, all in the following manner: (a) The Trustee shall value all of the assets of each of the Funds at fair market value. (b) The Trustee shall then, on the basis of the valuation provided under paragraph (a) of this Section 7.2, and after making appropriate adjustments for the amount of all contributions made with respect to the month in which such Valuation Date occurs and for any distributions and withdrawals from the respective Funds since the immediately preceding Valuation Date and prior to such date, ascertain the net increase or decrease in net worth of the respective Funds which is attributable to net earnings and all profits and losses, realized and unrealized, since the immediately preceding Valuation Date. (c) The Trustee shall then allocate the net increase or decrease in the net worth of the respective Funds as thus determined among all Participants, former Participants, and Beneficiaries who have an interest in the respective Funds, separately with respect to each of such Funds, in the ratio that the balance of each Separate Account and Distribution Account maintained under such Fund on the day immediately preceding such Valuation Date bears to the aggregate of the balances of all such accounts on the day immediately preceding such Valuation Date, and shall credit or charge, as the case may be, each such Separate Account and Distribution Account with the amount of its allocated share. (d) The Trustee then shall credit to the appropriate Separate Accounts of each Participant, in accordance with the provisions of Section 3.6, his Tax Deferred Compensation Contributions for the month in which such Valuation Date occurs. (e) The Trustee shall then credit to the appropriate Separate Accounts of each Participant the portion of the Employer Contribution for the month in which such Valuation Date occurs -38- 45 which is allocated to such Participant pursuant to Section 7.1. 7.3 Finality of Trustee's Determination. The Trustee shall have exclusive responsibility for determining the net income, liabilities, and value of the assets of the Funds hereunder. The Trustee's determination thereof shall be conclusive upon the Employers, the Company, and all Participants, former Participants, and Beneficiaries hereunder. 7.4 Limitation on Crediting of Contributions. Notwithstanding anything to the contrary contained in this Agreement, the amount of Employer Contributions and Tax Deferred Compensation Contributions which may be credited to the Separate Accounts of Participants shall be subject to the following provisions: (a) For purposes of this Section 7.4, the annual addition with respect to a Participant shall mean the sum for any limitation year of the following amounts: (i) Employer Contributions which are credited to a Separate Account of such Participant for such limitation year; (ii) Tax Deferred Compensation Contributions which are credited to a Separate Account of such Participant for such limitation year; (iii) a portion of such Participant's employee contributions under any qualified defined contribution plan (whether or not terminated) maintained by an Employer or a Related Corporation -39- 46 which are credited to a separate account of such Participant for such limitation year, determined as follows: (1) For limitation years ending prior to January 1, 1987, the lesser of (A) the amount of such contributions in excess of six percent of such Participant's compensation paid for such limitation year; or (B) one-half of such contributions for such limitation year; and (2) For limitation years ending after December 31, 1986, the entire amount of such Participant's contributions for such limitation year; (iv) the amount, if any, of contributions as provided in subparagraphs (i) and (ii) above and forfeitures which are credited to the Participant under any other defined contribution plan (whether or not terminated) maintained by an Employer or a Related Corporation concurrently with the Plan; and (v) the amount, if any, attributable to medical benefits allocated to an account for such Participant established under Section 419A(d)(1) of the Code for such limitation year. (b) For purposes of this Section 7.4, a "limitation year" shall mean each 12-month period beginning each January 1 and terminating each subsequent December 31 and the "compensation" of a Participant shall mean his wages, salaries, and other amounts received for personal services actually rendered in the course of employment with an Employer or a Related Corporation, excluding, however, (i) contributions made by an Employer or a Related Corporation to a -40- 47 plan of deferred compensation to the extent that, before the application of the limitations of Section 415 of the Code to such plan, the contributions are not includable in the gross income of the Participant for the taxable year in which contributed, (ii) contributions made by an Employer or a Related Corporation on his behalf to a simplified employee pension described in Section 408(k) of the Code, (iii) any distributions from a plan of deferred compensation (other than amounts received pursuant to an unfunded non-qualified plan in the year such amounts are includable in the gross income of the Participant), (iv) amounts received from the exercise of a non-qualified stock option or when restricted stock or other property held by the Participant becomes freely transferable or is no longer subject to substantial risk of forfeiture, (v) amounts received from the sale, exchange, or other disposition of stock acquired under a qualified stock option, (vi) any other amounts that receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includable in gross income of the Participant), (vii) any contribution for medical benefits (within the meaning of Section 419A(f) of the Code) after separation from service that is otherwise treated as an annual addition; and (viii) any amount otherwise treated as an annual addition under Section 415(l)(1) of the Code. (c) For each limitation year, the annual addition with respect to a Participant shall not exceed the lesser of (i) $30,000 (subject to adjustment annually pursuant to Internal Revenue Service rulings and regulations under Section 415 of the Code), or (ii) 25 percent of such Participant's compensation paid for such limitation year. If the annual addition to the Separate Accounts of a Participant in any limitation year would exceed the limitation contained in this Section 7.4 absent such limitation and if paragraph (e) is not applicable, the portion of the Employer Contribution which would be allocated to such Participant under Section 7.1, but which would exceed the limitation herein, shall be deemed a forfeiture for such limitation year and shall be held unallocated in a suspense -41- 48 account established with respect to such limitation year and applied against the Employer Contribution obligation. No such suspense account shall share in any increase or decrease in the net worth of the Trust property. If the limitation contained in this Section 7.4 would still be exceeded with respect to a Participant, the portion of the Tax Deferred Compensation Contributions which would be allocated to such Participant under Section 3.6, but which would exceed the limitation herein, shall be deemed a forfeiture for such limitation year and shall be administered in the manner earlier described in this paragraph (c). For purposes of this paragraph (c), excess annual contributions shall result only from the allocation of forfeitures, a reasonable error in estimating a Participant's annual compensation, or under other limited facts and circumstances which the Commissioner of Internal Revenue finds justify the availability of the provision set forth above. (d) If any Participant in the Plan also shall be covered by a qualified defined benefit plan (whether or not terminated) maintained by an Employer or by a Related Corporation concurrently with the Plan, the sum of subparagraphs (i) and (ii) below shall in no event exceed l.0 in any limitation year where (i) is the defined benefit plan fraction (determined as of the close of such limitation year), the numerator of which is the projected annual benefit of such Participant under such plan and the denominator of which is the lesser of (1) the product of 1.25 multiplied by the dollar limitation in effect under Section 415(b)(1)(A) of the Code for such year, or (2) the product of 1.4 multiplied by the amount which may be taken into account under Section 415(b)(1)(B) of the Code with respect to such Participant for such year; and (ii) is the defined contribution plan fraction, the numerator of which is the sum of the annual additions to such Participant's Separate Accounts as -42- 49 of the close of such limitation year and for each prior year of service with an Employer or a Related Corporation and the sum of the lesser of the following amounts determined for such year and each prior year of service with an Employer or a Related Corporation: (1) the product of 1.25 multiplied by the dollar limitation in effect under Section 415(c)(1)(A) of the Code for such year determined without regard to Section 415(c)(6), or (2) the product of 1.4 multiplied by the amount which may be taken into account under Sections 415(c)(1)(B) (or Section 415(c)(7) or (8), if applicable) with respect to such Participant for such year. In the event the special limitation contained in this paragraph (d) is exceeded, the benefits otherwise payable to the Participant under any such qualified defined benefit plan shall be reduced to the extent necessary to meet such limitation. (e) In the event that a Participant is covered by any other qualified defined contribution plan (whether or not terminated) maintained by an Employer or a Related Corporation concurrently with the Plan, the procedure set forth in paragraph (c) shall be implemented first by returning the Participant's voluntary employee contributions for such limitation year under all of the defined contribution plans. If the limitation contained in this Section 7.4 still is not satisfied after returning all of the Participant's voluntary employee contributions under all such plans, the portion of Employer contributions and of forfeitures for the limitation year under all such plans which are allocable to the Participant thereunder, but which exceed the limitation herein, shall be deemed a forfeiture for the limitation year and shall, subject to the provisions of this Section 7.4, be reallocated among and credited to the separate accounts of the remaining participants or applied against employer contribution obligations as provided for under each such plan; except that the amount of -43- 50 the contribution by the employers and any forfeitures that is deemed a forfeiture under this paragraph (e) shall be effected on a pro rata basis among all of the plans, unless the Participant is covered by an employee stock ownership plan or a money purchase pension plan, in which event the forfeiture shall be effected first under the employee stock ownership plan, then, if the limitation is still not satisfied, under any other defined contribution plan (including the Plan) that is not a money purchase pension plan, and, finally, if the limitation is still not satisfied, under the money purchase pension plan. In the event that a Participant is covered by a qualified defined benefit plan, the procedure set forth in paragraph (d) shall be implemented prior to effecting any reduction in the Participant's benefit under the defined contribution plans. 7.5 Notification. As soon as practicable after the end of each Plan Year, the Trustee shall notify the Company of the balance of all Separate Accounts and Distribution Accounts as of the last day of such Plan Year. -44- 51 ARTICLE VIII WITHDRAWALS WHILE EMPLOYED 8.1 Withdrawal of Regular Participant Contributions. By filing written notice with the Company within such number of days following the Valuation Date on which it will become effective as the Company shall require, a Participant may elect to withdraw in cash any portion or all of the value of his own contributions attributable to Regular Participant Contributions as of the most recent preceding Valuation Date; provided, however, that such a withdrawal shall be made from his Separate Accounts reflecting his Regular Participant Contributions on a pro rata basis. Any Participant who makes a withdrawal pursuant to this Section 8.l for reasons other than the alleviation of "hardship" as described in Section 8.3 (but including also, for purposes only of this Section 8.1, financial hardship due to the purchase of a principal residence for the Participant or any of his dependents, the illness or injury of the Participant or any of his dependents, and the education of the Participant or any of his dependents) may elect such a withdrawal only once in any 12-consecutive-month period and thereafter may not have made on his behalf Tax Deferred Compensation Contributions until the Enrollment Date next following a period of six months after the Valuation Date as of which such withdrawal -45- 52 is made. Any election made by a Participant in accordance with the provisions of this Section 8.l shall be made in writing in the form prescribed by the Company and shall become effective only when filed by the Participant with the Company. 8.2 Withdrawal of Tax Deferred Compensation Contributions. Subject to the provisions of this Section 8.2, a Participant may file a written request with the Company, within such number of days following the Valuation Date on which it is to be effective as the Company shall require, for a withdrawal from his Separate Accounts reflecting his Tax Deferred Compensation Contributions; provided, however, that such withdrawal: (i) shall not be permitted by the Company unless it shall determine that such withdrawal is necessary to meet an immediate and heavy financial need of the Participant due to hardship, as defined in Section 8.3, which cannot be satisfied from other resources of the Participant; (ii) shall be permitted by the Company only after the Participant has withdrawn the total value of his Separate Accounts reflecting Regular Participant Contributions pursuant to the provisions of Section 8.1; and (iii) shall not exceed an amount equal to the lesser of: (a) the aggregate balances of his Separate Accounts reflecting Tax Deferred Compensation Contributions, excluding in the case of a Participant who has not attained age 59-1/2 any -46- 53 earnings thereon credited after December 31, 1988, or (b) the amount required to meet the immediate financial need created by the hardship. Any amount withdrawn by a Participant in accordance with the provisions of this Section 8.2 shall be from his Separate Accounts reflecting Tax Deferred Compensation Contributions on a pro rata basis and shall be charged against such Separate Accounts as of the date such withdrawal is paid. Upon receipt of instructions to such effect from the Company, the Trustee shall pay such amount to the Participant. 8.3 Determination of Hardship. The Company shall -------------------------- determine for purposes of this Article VIII upon a Participant's application whether the Participant has a "hardship" on account of an immediate and heavy financial need. Immediate and heavy financial need of the Participant shall mean a financial need on account of: (1) Medical expenses (as described in Section 213(d) of the Code) incurred by the Participant, the Participant's spouse, or any dependents of the Participant (as defined in Section 152 of the Code); (2) Purchase (excluding mortgage payments) of a principal residence for the Participant; (3) Payment of tuition for the next semester or quarter of post-secondary education for the Participant, his spouse, children, or dependents; or (4) The need to prevent the eviction of the Participant from his principal residence -47- 54 or foreclosure on the mortgage of the Participant's principal residence. A withdrawal shall not be determined by the Company to be necessary to satisfy a hardship on account of an immediate and heavy financial need of the Participant to the extent the amount of the withdrawal would be in excess of the amount required to relieve the financial need or to the extent such need may be satisfied from other resources that are reasonably available to the Participant, which determination shall generally be made on the basis of all relevant facts and circumstances. A withdrawal shall be treated as necessary to satisfy a financial need if the Company reasonably relies upon the Participant's representation that the need cannot be relieved: (1) Through reimbursement or compensation by insurance or otherwise; (2) By reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need; (3) By cessation of Tax Deferred Compensation Contributions under the Plan; or (4) By other distributions or non-taxable (as the time of the loan) loans from the Plan or other plans maintained by any other employer, or by borrowing from commercial sources on reasonable commercial terms. Notwithstanding the foregoing, a withdrawal shall be deemed to be necessary to satisfy an immediate and heavy financial -48- 55 need of a Participant if all of the following requirements are satisfied: (1) The withdrawal is not in excess of the amount of the immediate and heavy financial need of the Participant; (2) The Participant has obtained all distributions, other than hardship distributions, and all non-taxable loans currently available under all plans maintained by any Employer or Related Corporation; (3) The Participant's Tax Deferred Compensation Contributions under the Plan, and the Participant's elective (Section 401(k) of the Code) contributions and employee (after-tax) contributions under all other tax-qualified defined contribution plans maintained by any Employer or Related Corporation shall be suspended for 12 months after his receipt of the withdrawal; and (4) The Participant shall not make Tax Deferred Compensation Contributions under the Plan or elective (Section 401(k) of the Code) contributions under any other plan maintained by any Employer or Related Corporation for the Participant's taxable year immediately following the taxable year of the withdrawal in excess of the applicable limit under Section 402(g) of the Code for such next taxable year less the amount of such Participant's Tax Deferred Compensation Contributions and elective (Section 401(k) of the Code) contributions for the taxable year of the withdrawal. A Participant shall not fail to be treated as an Eligible Employee for purposes of Section 401(k) of the Code or Section 401(m) of the Code merely because his contributions are suspended in accordance with this Section 8.3. Except as otherwise provided in this Section 8.3, a hardship -49- 56 withdrawal under Section 8.2 shall not affect the Participant's right under the Plan to make withdrawals or continue to be a Participant, but a distribution under the deemed necessity standard of this Section 8.3 shall require suspension of the Participant's Tax Deferred Compensation Contributions for the period and to the extent provided above. 8.4 Resumption of Contributions. A Participant who has made a withdrawal in accordance with the provisions of Section 8.l and/or 8.2 and whose Tax Deferred Contributions are suspended by reason thereof may resume having made on his behalf Tax Deferred Compensation Contributions in accordance with the provisions of Section 3.1 as of the first date as of which he is again permitted to make such contributions pursuant to such provisions or as of any subsequent Enrollment Date, by filing a written notice with the Company, on a form prescribed by it for such purpose, such number of days prior to the date as of which such contributions are to be resumed as the Company shall require. -50- 57 ARTICLE IX TERMINATION OF PARTICIPATION AND DISTRIBUTION 9.1 Termination of Participation. Each Participant shall cease to be a Participant hereunder upon the first to occur of the following dates: (a) on the date such Participant's employment with an Employer or a Related Corporation is terminated after he has attained age 65; (b) on the date such Participant's employment with an Employer or a Related Corporation is terminated because of physical or mental disability preventing his continuing in the service of such Employer, as determined by the Company upon the basis of a written certificate of a physician selected by it; (c) on the date such Participant's employment with an Employer or a Related Corporation is terminated because of the death of such Participant; (d) on the date such Participant's employment with an Employer or a Related Corporation is terminated as a result of a reduction of force or a permanent closing of a division, office, department, or plant of his Employer; (e) on the date such Participant's employment with an Employer or a Related Corporation is terminated after he has completed five years of vested service under Section 9.4; or (f) on the date such Participant's employment with an Employer and all Related Corporations is terminated under any other circumstances; provided, however, that if such date shall be a Valuation Date, such Participant, for all purposes hereof, shall cease to be a Participant upon the next succeeding day. -51- 58 The date upon which a Participant ceases to be such is hereinafter referred to as his "Settlement Date," and written notice thereof shall be given promptly by his Employer to the Trustee. Notwithstanding anything to the contrary contained in this Agreement, upon his attainment of age 65 a Participant's right to receive distribution of his Separate Accounts in accordance with the provisions of this Article IX shall be fully vested and nonforfeitable. 9.2 Vesting Schedule. A Participant whose employment terminates in accordance with paragraph (a), (b), (c), (d), or (e), of Section 9.1 shall be fully vested in the balance of each of the Separate Accounts. A Participant whose employment terminates in accordance with paragraph (f) of Section 9.1 shall have a vested interest in his Separate Accounts to which Employer Contributions have been credited equal to a percentage, but in no event in excess of 40%, determined in accordance with the following schedule:
YEARS OF VESTED SERVICE PERCENTAGE ----------------------- ---------- Less than one 0% One but less than two 10% Two but less than three 20% Three but less than four 30% Four but less than five 40%
Notwithstanding the foregoing provisions of Sections 9.1 and 9.2, the vested interest of each person whose Settlement Date occurs on or after January 1, 1989, but who last -52- 59 completed an hour of service with an Employer and all Related Corporations prior to January 1, 1989 (other than a person on layoff on that date), shall be determined as if the provisions of the Plan in effect on December 31, 1988, had continued in effect. 9.3 Transfer to Distribution Account. As of a Participant's Settlement Date, and after notice thereof has been given as provided in Section 9.l, all or a portion of the balance of each of the Participant's Separate Accounts shall be transferred to the Distribution Accounts established in his name in accordance with the provisions of Section 6.7, as follows: (a) In the event such Participant's Settlement Date occurs under the conditions specified in paragraph (a), (b), (c), (d), or (e) of Section 9.1, the entire balance of each of his Separate Accounts as of such Settlement Date shall be so transferred. (b) In the event such Participant's Settlement Date occurs under the conditions stated in paragraph (f) of Section 9.1, (i) that portion of the balance of his Separate Accounts to which Employer Contributions have been credited which shall be determined in accordance with the vesting schedule set forth in Section 9.2 shall be so transferred and (ii) the entire balance of his other Separate Accounts shall be so transferred. The portion of the balance of a Participant's Separate Account that is not transferred to the Participant's Distribution Account as provided in this Section 9.3 shall be disposed of in accordance with the provisions of -53- 60 Section 9.13. The Trustee shall make distribution to or for the benefit of the Participant from the Distribution Accounts established in his name in accordance with the provisions of this Article IX. 9.4 Years of Vested Service. For the purpose of determining a Participant's vested interest in his Separate Accounts to which Employer Contributions have been credited, a Participant shall be credited with a number of years of vested service equal to the number of years of service determined in accordance with the provisions of Section 2.5. Moreover, any salaried employee of California Silica Products Company who was so employed on January 1, 1985 and who became a Participant on that date shall be credited with years of vested service in the same amount as the service for vesting purposes with which he was credited under the Owens-Illinois Stock Purchase and Savings Plan as of August 31, 1984, with respect to periods prior to such date. 9.5 Election of Former Schedule. In the event the Company adopts an amendment to the Plan that directly, or indirectly, affects the computation of an Employee's nonforfeitable interest in his Separate Accounts, any Participant with three or more years of vested service shall have a right to have his nonforfeitable interest in his Separate Accounts continue to be determined -54- 61 under the vesting schedule in effect prior to such amendment rather than under the new vesting schedule, unless the nonforfeitable interest of such Participant in his Separate Accounts under the Plan, as amended, at any time is not less than such interest determined without regard to such amendment. Such Participant shall exercise such right by giving written notice of his exercise thereof to the Company within 60 days after the latest of (i) the date he receives notice of such amendment from his Employer, (ii) the effective date of the amendment, or (iii) the date the amendment is adopted. Notwithstanding the foregoing provisions of this Section 9.5, the vested interest of each Participant on the effective date of such amendment shall not be less than his interest under the Plan as in effect immediately prior to the effective date thereof. 9.6 Distribution. The Trustee shall make distribution to or for the benefit of the former Participant or his Beneficiary, as the case may be, in a single lump-sum payment equal to the aggregate amount of the balances of his Distribution Accounts. Distribution shall be made as soon as reasonably practicable after the first Valuation Date occurring on or after the former Participant's Settlement Date, but in no event later than 60 days after the close of the Plan Year in which he (i) attains age 65 or (ii) terminates employment, whichever -55- 62 is later; provided, however, that at the election of the Participant the Trustee shall defer making distribution until the earlier of a specified date or the date described in Section 9.7. Any such election shall be made by submitting to the Company on a form provided by it a written statement, signed by the Participant, which describes his benefit and the date on which payment is to be made. Notwithstanding the foregoing provisions of this Section 9.6, if the amount distributable to a former Participant is in excess of $3,500 and the former Participant has not attained age 65, no distribution shall be made to such former Participant without his written consent. 9.7 Limitation on Commencement of Distribution. Notwithstanding the provisions of Section 9.6, in no event shall the distribution of the interest of a Participant commence later than the April 1 following the close of the calendar year in which the Participant attains age 70 1/2. In the event the former Participant dies after commencement of the distribution of his interest, any remaining portion of such interest shall be distributed to his Beneficiary in the method which is at least as rapid as the method being used at the date of his death. In the event the former Participant dies prior to commencement of the distribution of his interest, the entire interest -56- 63 attributable to such former Participant shall be distributed within five years after the date of his death. 9.8 Effect of Company's Determination. In exercising its authority under this Article IX, the Company shall act in such a manner as it in good faith shall determine will most adequately and fairly meet the needs of each former Participant or Beneficiary, as the case may be. No authority shall be exercised in such manner as to discriminate between any class or group of Participants. The determination of the Company with respect to all questions which may arise under this Article IX (if made in accordance with the standards prescribed herein and in Section 10.3) shall be conclusive upon all persons claiming to have any interest hereunder. In making any determinations hereunder, the Company may rely upon any signed statement which the Participant files with it. 9.9 Separate Distribution Funds. As of a former Participant's Settlement Date, but only if such Settlement Date occurred prior to April 1, 1989, the Trustee established a "Separate Distribution Fund" for the benefit of such former Participant or, if he was not then living, his Beneficiary, to which such Separate Distribution Fund was transferred, in accordance with procedures established by the Company, that portion of his former interest in the Equity Fund, the Insured Fund, and the -57- 64 Fixed Income Fund which was segregated from the funds pursuant to Plan provision then in effect. A Separate Distribution Fund shall not share in any net increase or decrease in value of the assets of the mingled funds, and shall not for any other purpose constitute a part of the mingled funds. Distribution shall be made from such Separate Distribution Fund in the same manner as if it were a Distribution Account, and references to the Distribution Accounts of a former Participant shall be deemed to include any Separate Distribution Fund maintained on his behalf for this purpose. Pending complete distribution thereof, such Separate Distribution Fund shall be held by the Trustee for the benefit of the former Participant or his Beneficiary, as the case may be, subject to all provisions of this Agreement relating to the Trust property in general. Any net income, gain, or loss arising from such Separate Distribution Fund shall serve to increase or decrease, as the case may be, such Separate Distribution Fund. Any expenses of the Trustee which are directly attributable to its administration of a Separate Distribution Fund, as determined by the Trustee, shall be charged to and paid from such fund to the extent of the assets thereof. 9.10 Reemployment of Former Participant. If a former Participant is reemployed by an Employer, he shall be treated as a new Employee for all purposes of this -58- 65 Agreement, subject to the provisions hereof relating to crediting years of service and years of vested service; provided, however, that in no event shall any years of vested service attributable to such former Participant's service with an Employer after his reemployment affect the transfer of the balance of his Separate Accounts to his Distribution Accounts under Section 9.3 as of his prior Settlement Date. Furthermore, if such former Participant again becomes a Participant in accordance with the provisions of Article II, the Company, upon his subsequent termination of participation, may cause his new Distribution Accounts to be consolidated with the Distribution Accounts which previously had been established for him. 9.11 Restrictions on Alienation. Except as provided in Section 414(p) of the Code relating to qualified domestic relations orders, no right or interest under the Plan of any Participant, former Participant, or Beneficiary at any time shall be subject in any manner to anticipation, alienation, assignment (either by law or in equity), encumbrance, garnishment, levy, execution, or other legal or equitable process. No person shall have power in any manner to anticipate, transfer, assign (either at law or in equity), alienate, or subject to attachment, garnishment, levy, execution, or other legal or equitable -59- 66 process, or in any way encumber his rights or interests under the Plan, and any attempt to do so shall be void. 9.12 Facility of Payment. In the event that it shall be found that any person to whom an amount is payable hereunder is incapable of attending to his financial affairs because of any mental or physical condition, including the infirmities of advanced age, such amount (unless prior claim therefor shall have been made by a duly qualified guardian or other legal representative), in the discretion of the Company, may be paid to another person for the use or benefit of the person found incapable of attending to his financial affairs or in satisfaction of legal obligations incurred by or on behalf of such person. The Trustee shall make such payment only upon receipt of written instructions to such effect from the Company. Any such payment shall be charged to the Distribution Accounts of the person found incapable of attending to his financial affairs and shall be a complete discharge of any liability therefor under this Agreement. 9.13 Disposition of Separate Accounts. In the event that a Participant's Settlement Date occurs under the conditions specified in paragraph (f) of Section 9.1, the balances remaining in the Participant's Separate Accounts that are not transferred to the Distribution Accounts established in his name upon the -60- 67 occurrence of his Settlement Date shall be disposed of as follows: (a) In the event that the Participant receives a lump-sum distribution of the Distribution Accounts established in his name prior to the end of the second Plan Year beginning on or after his employment termination date, the balances remaining in the Participant's Separate Accounts will be forfeited and his Separate Accounts closed as of the last day of the Plan Year in which such lump-sum distribution occurs. (b) In the event that paragraph (a) is not applicable, the balances remaining in the Participant's Separate Accounts will continue to be held in such accounts and will not be forfeited until the end of the fifth Plan Year beginning on or after his employment termination date, at which time the Participant's Separate Accounts shall be closed. In the event that such a Participant returns to employment with an Employer or a Related Corporation prior to the end of such fifth Plan Year, the balance of the Distribution Accounts, determined as of the Valuation Date next following his date of rehire, shall be recredited as of such Valuation Date to his Separate Accounts from which derived. Whenever the interest of a Participant in his Separate Accounts is forfeited under the provisions of the Plan with respect to a Plan Year, the amount of such forfeiture, as of the last day of such Plan Year, shall be applied against the Employer Contribution obligation of the Employers for the last calendar month of such Plan Year. Notwithstanding the foregoing, however, should the amount of all such forfeitures for any Plan Year exceed the amount of the Employer Contribution obligation for such last calendar month, the excess amount of such forfeitures shall be held -61- 68 unallocated in a suspense account and shall for all Plan purposes be applied against the Employer Contribution obligation for the following calendar month (and succeeding calendar months, as necessary). 9.14 Recrediting of Forfeited Amounts. A former Participant who forfeited the balances of his Separate Accounts that were not transferred to Distribution Accounts in accordance with the provisions of Section 9.13 and who returns to employment covered under the Plan shall have such forfeited amounts recredited to his new Separate Accounts, without adjustment for interim gains or losses experienced by the Trust, if: (a) he returns to employment covered under the Plan before the end of the fifth Plan Year beginning on or after the date he received distribution from his Distribution Accounts, and (b) he repays to the Plan the full amount of the distribution he received from his Distribution Accounts before the end of the fifth year beginning on the date he is reemployed. Funds needed in any Plan Year to recredit the Separate Accounts of such Participant with the amounts of prior forfeitures in accordance with the preceding sentence shall first come from forfeitures that arise during such Plan Year, to the extent sufficient, and, to the extent not sufficient, shall be provided by an Employer contribution. 9.15 Felonious Conduct of a Participant. Notwithstanding anything to the contrary contained in this -62- 69 Agreement, in the event that, prior to the termination of the Plan, a Participant's employment with an Employer is terminated by reason of fraud, theft, embezzlement, or his felonious conduct, proven or admitted, in connection with such employment, and, at such time, the Participant has less than five years of vested service under Section 9.4, the following provisions shall apply: (a) There shall be returned to him an amount equal to his interest in the Trust which is attributable to his Tax Deferred Compensation Contributions and his Regular Participant Contributions. (b) Except as provided in paragraph (a), his entire interest in the Trust shall be forfeited and shall be applied against the Employer Contribution obligation as provided in Section 9.13. (c) Neither such former Participant nor his Beneficiary shall be entitled to any benefit or other rights hereunder except as provided in this Section 9.15. 9.16 Designation of Beneficiary. In the event of the death of a Participant or former Participant prior to distribution in full of his interest under the Plan, the spouse, if any, of such Participant or former Participant shall be his Beneficiary and receive distribution of his remaining interest in accordance with the provisions of Section 9.6; provided, however, that a Participant may designate a person or persons other than his spouse as his beneficiary if the requirements of Section 9.18 are met. -63- 70 9.17 Beneficiary in Absence of a Designated Beneficiary. If a Participant or former Participant who dies does not have a surviving spouse and if no Beneficiary has been designated pursuant to the provisions of Section 9.16 or if no Beneficiary survives such Participant or former Participant, then the Beneficiary shall be the estate of such Participant or former Participant. If any Beneficiary designated pursuant to Section 9.16 dies after becoming entitled to receive distributions hereunder and before such distributions are made in full, and if no other person or persons have been designated to receive the balance of such distributions upon the happening of such contingency, the estate of such deceased Beneficiary shall become the Beneficiary as to such balance. 9.18 Spousal Consent to Beneficiary Designation. In the event a Participant or former Participant is married, any Beneficiary designation, other than a designation of his spouse as Beneficiary, shall be effective only if his spouse consents in writing thereto and such consent acknowledges the effect of such action and is witnessed by a Plan representative or a notary public, unless a Plan representative finds that such consent cannot be obtained because the spouse cannot be located or because of other circumstances set forth in Section 401(a)(11) of the Code and regulations issued thereunder. Such spousal -64- 71 consent shall be valid only with respect to the spouse who signs the consent. 9.19 Methods of Distribution in Effect Prior to January 1, 1989. In the event that distribution of the interest of a former Participant or Beneficiary commenced prior to January 1, 1989, in accordance with provisions of the Plan in effect at the time of such commencement, distribution shall continue in accordance with such method; provided, however, that any such distribution shall be made over a period not extending beyond the life or life expectancy of such former Participant or the joint lives or joint life expectancy of such former Participant and his Beneficiary. For the purposes of this Section 9.19, the life expectancy of a former Participant and his spouse may be redetermined, but not more frequently than annually, at the election of the former Participant. All distributions hereunder shall be determined and made in accordance with Treasury regulations under Sec-tion 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of Treasury Reg. Section 1.401(a)(9)-2. -65- 72 ARTICLE X ADMINISTRATION 10.1 General. The Company shall be responsible for the general administration of the Plan and for carrying out the provisions thereof, and shall constitute the administrator for purposes of the Act and the plan administrator for purposes of the Code. The Company shall have all such powers and authorities as may be necessary to carry out the provisions of the Plan, including the discretionary power and authority to interpret and construe the provisions of the Plan and to resolve any disputes which arise under the Plan, the powers and authorities expressly conferred upon it in this Agreement, and all such other powers and authorities as shall be reasonably necessary to carry out the expressly conferred powers, authorities, and duties. The Company may from time to time establish rules for the administration of the Plan. The Company may employ such attorneys, investment counsel, agents, and accountants as it shall deem necessary or advisable to assist it in carrying out its duties hereunder. The Company shall be a "named fiduciary" as that term is defined in Section 402(a)(2) of the Act. The Company may: (a) allocate any of the powers, authorities, or responsibilities for the operation or administration of the Plan, which are retained by it or granted to it by this Article X to the Trustee; and -66- 73 (b) designate a person or group of persons other than a named fiduciary, to carry out any of such powers, authorities, or responsibilities; provided, however, that no power, authority, or responsibility of the Trustee shall be subject to the provisions of paragraph (b) of this Section 10.1; and provided, further, that no allocation or delegation by the Company of any its powers, authorities, or responsibilities to the Trustee shall become effective unless such allocation or delegation shall first be accepted by the Trustee in a written instrument signed by it and delivered to the Company. 10.2 Action of Company. Subject to the provisions of Sections 10.3 and 10.4, any action taken by the Company which is authorized, permitted, or required under the Plan shall be final and binding upon the Employers and the Trustee, all persons who have or who claim an interest under the Plan, and all third parties dealing with the Trustee or the Company. 10.3 Denial of Claims. Whenever the Company denies, in whole or in part, a claim for benefits filed by any person (hereinafter referred to in this Article X as the "Claimant"), the Company shall transmit a written notice setting forth, in a manner calculated to be understood by the Claimant, a statement of the specific reasons for the denial of the claim, references to the -67- 74 specific Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and an explanation of the claims review procedure as set forth in Section 10.4. In addition, the written notice shall contain the date on which the written notice was sent and a statement advising the Claimant that, within 60 days of the date on which such notice was received, he may obtain review of the decision of the Company. 10.4 Claims Review Procedure. Within 60 days of the date on which the notice of denial of claim is received by the Claimant, the Claimant, or his authorized representative, may request that the claim denial be reviewed by filing with the Company a written request therefor, which request shall contain the following information: (a) The date on which the notice of denial of claim was received by the Claimant; (b) The date on which the Claimant's request was filed with the Company; provided, however, that the date on which the Claimant's request for review was in fact filed with the Company shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (b); (c) The specific portions of the denial of his claim which the Claimant requests the Company to review; (d) A statement by the Claimant setting forth the basis upon which he believes the -68- 75 Company should reverse its previous denial of his claim for benefits and accept his claim as made; and (e) Any written material (included as exhibits) which the Claimant desires the Company to examine in its consideration of his position as stated pursuant to paragraph (d). Within 60 days of the date determined pursuant to paragraph (b) of this Section 10.4, the Company shall conduct a full and fair review of the decision denying the Claimant's claim for benefits. Within ten days following the date of such review, the Company shall send to the Claimant its written decision setting forth, in a manner calculated to be understood by the Claimant, a statement of the specific reasons for its decision, including references to the specific Plan provision relied upon. 10.5 Indemnification. In addition to whatever rights of indemnification the members of the Board of Directors of the Company and any officer of the Company may be entitled under the Articles of Incorporation or Regulations of the Company, under any provision of law or under any other agreement, the Company shall satisfy any liability actually and reasonably incurred by any such member or officer, including expenses, attorneys' fees, judgments, fines, and amounts paid in settlement, in connection with any threatened, pending, or completed action, suit, or proceeding which is related to the exercise or failure to exercise by such member or officer of any of the -69- 76 authority, responsibilities, or discretion provided under this Agreement or reasonably believed by such member or officer to be provided hereunder, and any action taken by such member or officer in connection therewith. 10.6 Qualified Domestic Relations Orders. The Company shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under domestic relations orders which are deemed to be qualified orders. Such procedures shall be in writing and shall comply with the provisions of Section 414(p) of the Code and regulations issued thereunder. Notwithstanding anything to the contrary contained in the Plan, the Company shall direct the Trustee to make immediate distribution to or for the benefit of an alternate payee under a domestic relations order that has been determined to be a qualified order of the alternate payee's benefit under the Plan in any form which such benefit may be paid under the Plan to the Participant or former Participant with respect to whom such qualified order applies, but only if the qualified order provides for the immediate distribution. -70- 77 ARTICLE XI POWERS AND DUTIES OF THE TRUSTEE 11.1 Power and Duties. In the administration of the Trust held hereunder, the Trustee shall have the powers and duties set forth in this Article XI, in addition to all powers and duties otherwise expressly set forth in this Agreement. 11.2 Trust Property and Investments. Subject to the provisions of Sections 6.2, 6.3, 6.4, 11.3, and 11.7, the Trustee is empowered: (a) to invest and reinvest all or any part of the Trust property, including both principal and income, in such securities, real estate, and other property as may be selected by it; moreover, the Trustee may invest and reinvest the entire trust property or any part thereof in qualifying Employer securities; (b) to purchase annuities or otherwise insure the payment of benefits under a contract or contracts with an insurance company or companies, and hold and retain such contract or contracts as part of the Trust; (c) to sell, lease, exchange, or otherwise dispose of all or any part of the Trust property at such prices, upon such terms and conditions, and in such manner as it shall determine, including the right to lease, with or without option to purchase, for any term, irrespective of the period of the Trust, and also including the right to surrender or cancel any insurance or annuity contract or contracts at any time held in the Trust; (d) to exercise, buy, or sell rights of conversion or subscription; provided, however, that any conversion of Employer securities shall be on the same terms as are applicable to all holders of the convertible securities and in -71- 78 exchange for at least the fair market value of the securities converted; (e) to enter into or oppose any plan of consolidation, merger, reorganization, capital readjustment, or liquidation of any corporation or other issuer of securities held hereunder (including any plan for the sale, lease, or mortgage of any of its property or the adjustment or liquidation of any of its indebtedness) and, in connection with any such plan, to enter into any security holders' agreement, to deposit securities under such agreement, and to pay assessments or subscriptions from the other assets held hereunder; (f) to retain in cash or securities in a form unproductive of income such portion of the Trust property as it shall determine is necessitated by the cash requirements of the Trust; provided, however, that, to the maximum extent feasible, such amounts shall be held in forms of investment which are productive of income but are sufficiently liquid to meet such cash requirements; (g) to deposit any securities held hereunder in any depository; (h) to deposit all or any part of the Trust property, including both principal and income, in its own banking department; provided, however, that any such deposits shall bear a reasonable rate of interest; and provided, further, that such deposits shall be subject to the provisions of Section 11.11; (i) to invest and reinvest all or any part of the Trust property under an insurance contract or contracts which contain provisions relating to a guaranteed rate of return on such investment; (j) to invest and reinvest, in its discretion, notwithstanding the appointment of any Investment Manager pursuant to the provisions of Section 11.7, such amounts of cash forming part of the Trust property in such United States obligations, time deposits (including savings accounts and certificates of deposit in the -72- 79 Society National Bank or its affiliates if such deposits bear a reasonable rate of interest) or corporation commercial notes including variable notes and units of a common trust fund holding any such variable note administered by the Trustee as are then available and which bear at the time of acquisition a maturity of not more than 15 months; and (k) to transfer to and invest all or any part of the Trust property in the Multiple Investment Trust for Employee Benefit Plans of Society National Bank, in a master trust maintained for plans of the Company and its affiliates (including the Oglebay Norton Company Master Trust), or in any other appropriate collective investment trust which constitutes an exempt trust within the meaning of the Code and which is then maintained by a bank or trust company when acting as Trustee, co-Trustee, agent for the Trustee, or as an Investment Manager or by a bank or trust company that is a subsidiary of, or under common control with, any such bank or trust company acting as Trustee, co-Trustee, agent for the Trustee, or Investment Manager; provided that the instrument establishing any such collective investment trust, as amended from time to time, shall govern any investment therein, which instrument is hereby made a part of this Agreement as if fully set forth herein. The term "securities", wherever used in this Agreement, shall include common and preferred stocks, contractual obligations of every kind, whether secured or unsecured, equitable interests in real or personal property, and intangible property of every description and howsoever evidenced. Notwithstanding the foregoing provisions of this Section 11.2, or of Sections 11.6 and 11.7, the following provisions shall apply: (l) the Trustee shall not acquire or hold any Employer security unless it is a qualifying Employer security and shall not acquire or -73- 80 hold any Employer real property unless it is qualifying Employer real property. The terms "Employer security", "qualifying Employer security", "Employer real property", and "qualifying Employer real property" shall have the meanings provided in Section 407(d) of the Act; and (m) the Trustee is empowered to re-tain as an investment, without liability for depreciation in value, any Employer securities contributed to it by the Employers or acquired by it prior to December 31, 1989, or as hereinafter provided at the direction of the Compensation and Organization Committee, even though the purchase or retention of such securities may result in a large portion of the Trust property being invested in securities of a single corporation. Furthermore, the Compensation and Organization Committee of the Board of Directors may at any time and from time to time direct the Trustee in writing regarding the purchase, sale, or retention of any such Employer securities and regarding the voting of any such Employer securities. 11.3 Investment Guidelines. The powers conferred upon the Trustee in Section 11.2 shall be exercised by the Trustee in its sole discretion, subject, however, to the provisions of paragraph (m) of Section 11.2, this Section 11.3, and Section 11.7. In investing and reinvesting the assets of the Bond Fund, the Trustee shall be guided, in general, by a desire to conserve principal while at the same time providing reasonable accumulations of income, to which end a substantial part of the Bond Fund should at all times be invested in securities and other property providing for a fixed return on investment. Subject to the provisions of Section 6.2, in investing and reinvesting the assets of the Equity Fund, -74- 81 the Trustee should be guided, in general, by a desire to provide for growth in capital as well as some return on investment, to which end a substantial part of the Equity Fund should be invested in equity securities; provided, however, that such general guides set forth in this Section 11.3 are not to be applied as a single standard for investment, but rather in conjunction with other pertinent factors such as the relative state of the markets for equity and fixed income securities, the size of the particular amounts to be invested from time to time, the fiduciary standards established by the Act, and the like. Such general guides are directory only and do not in any way limit the general powers of investment otherwise set forth in Section 11.2. The assets of the Insured Fund shall be invested by the Trustee under a contract or contracts between the Trustee and an insurance company or companies, which contract or contracts shall contain provisions relating to the return on investment that such insurance company or companies shall be obligated to provide with respect to amounts invested, and the repayment of such amounts in the event of distribution made in accordance with the provisions of the Plan or in the event of termination or discontinuance of such contract or contracts, or in such other investments as are described in Section 6.3. -75- 82 11.4 Claims Against Trust. Subject to the provisions of Section 11.8, the Trustee is empowered to compromise and adjust any and all claims, debts, or obligations in favor of or against the Trust, whether such claims be in litigation or not, upon such terms and conditions as it shall determine, and to reduce the rate of interest on, to extend or otherwise modify, or to foreclose upon default or otherwise enforce any such claim, debt, or obligation. 11.5 Borrowing. Subject to the provisions of Section 11.8, the Trustee is empowered to make advances or borrow money upon such terms and conditions as it deems desirable or proper for the improvement, protection, preservation, or other best interest of the Trust. For the repayment of any such advance with interest, the Trustee shall have a lien upon the property of the Trust, and for any sum so borrowed may issue its promissory note as Trustee and secure the repayment thereof by mortgaging or pledging any part or all of the Trust property. 11.6 Voting Rights. Subject to the provisions of Sections 11.2 and 11.7, the Trustee is empowered to exercise the voting rights appurtenant to any securities held hereunder, either in person or by proxy, and to execute proxies or powers of attorney to any one or more persons. -76- 83 11.7 Investment Manager. The powers conferred upon the Trustee in Sections 11.2 and 11.6 shall be exercised by the Trustee in its sole discretion; provided, however, that the Company at any time and from time to time, by action of its Board of Directors, may appoint an Investment Manager to manage the investment of any assets of the Trust. The term "Investment Manager" shall have the same meaning as provided in Section 3(38) of the Act. Upon appointment of the Investment Manager in writing and the written acknowledgment by the Investment Manager of its status as a fiduciary with respect to the Plan and Trust, it shall have such authority as is delegated to it by the resolution of the Board of Directors in which it is appointed, together with such authority as thereafter from time to time may be delegated to it by resolution of the Board of Directors. Upon the appointment of an Investment Manager and the delegation to it of authority over investment management as herein provided, the Trustee shall be required to follow the written investment directions of the Investment Manager. Any such written direction of the Investment Manager may be of a continuing nature, or otherwise, and may be revoked or superseded by the Investment Manager at any time by notice in writing to the Trustee. 11.8 Directions. The powers conferred upon the Trustee in Sections 11.4 and 11.5 shall be exercised by -77- 84 the Trustee in its sole discretion; provided, however, that the Company, at any time and from time to time, by action of its Board of Directors, may direct the Trustee in writing to obtain written approval of the Committee or of such person or persons as the Board of Directors of the Company may designate before exercising any one or more of such powers. Moreover, the Company, at any time and from time to time, by action of its Board of Directors, may direct the Trustee in writing to follow any written directions of the Committee or of such person or persons as the Board of Directors may designate, with respect to the exercising of any one or more of such powers. Any such written directions by the Committee or by such designated person or persons may be of a continuing nature, or otherwise, and may be revoked or superseded by the Committee or by such person or persons, or by the Board of Directors, at any time by notice in writing to the Trustee. The Trustee shall be required to follow the directions so given to it; provided, however, that the Trustee shall not be required to follow any directions which would result in a breach of the Trustee's fiduciary duties; and provided, further, that the Trustee shall have no obligation by reason of any such direction to make any advance or loan in its banking capacity. -78- 85 11.9 Registration of Securities; Nominees. The Trustee is empowered to register securities in its own name, or in the name of its nominee without disclosing the Trust, or to hold the same in bearer form, and to take title to other property in its own name or in the name of its nominee without disclosing the Trust; but the Trustee shall be responsible for the acts of its nominee. 11.10 Agents, Attorneys, Actuaries, and Accountants. The Trustee is empowered to employ such agents, attorneys, actuaries, and accountants as it may deem necessary or proper in connection with its duties hereunder, and to determine and pay the reasonable compensation and expenses of such agents, attorneys, actuaries, and accountants. 11.11 Deposit of Funds. The Trustee is empowered to deposit funds, pending investment or distribution thereof, in any bank organized under the national banking laws of the United States or under the laws of the State of Ohio, or in an insured savings and loan association located in the State of Ohio; and it is authorized to accept such regulations covering the withdrawal of funds so deposited as it shall deem proper; provided, however, that no funds may be deposited by the Trustee in its own banking department under this Section 11.11 unless authorized pursuant to the provisions of Section 408 of the Act. -79- 86 11.12 Legal Advice. The Trustee may consult with counsel selected by it, who may be of counsel for the Company or a Related Corporation, as to any matters or questions arising hereunder, and the opinion of said counsel shall be full and complete authority and protection in respect to any action taken, suffered, or omitted by the Trustee in good faith and in accordance with the opinion of said counsel. 11.13 Other Authority. The Trustee is authorized to execute and deliver any and all instruments and to perform any and all acts which may be necessary or proper to enable it to discharge its duties under this Agreement and to carry out the powers and authority conferred upon it. 11.14 Court Action Not Required. All the powers and authority herein conferred upon the Trustee shall be exercised by it without the necessity of applying to any court for leave or confirmation. No person dealing with the Trustee shall be required to ascertain whether the Trustee shall have obtained the approval of any court or of any person to any action which it may propose to take hereunder, but every such person may rely upon the deed, transfer, or assurance of the Trustee. 11.15 Trustee's Performance. In the exercise of any of the powers and authorities conferred upon it -80- 87 herein, the Trustee at all times shall adhere to the fiduciary standards established by the Act. 11.16 Directions to the Trustee. Any written direction, request, approval, or other document signed in the name of one of the Employers or an officer thereof, shall be conclusively deemed to constitute the written direction, approval, or other document of such Employer. 11.17 Payment of Taxes; Indemnity. The Trustee is empowered to pay out of the assets of the Trust, as a general charge thereon, any and all taxes of whatsoever nature assessed on or in respect thereto; provided, however, that if the Company shall notify the Trustee in writing that in the opinion of its counsel any such tax is not lawfully assessed, the Trustee, if so requested by the Company, shall contest the validity of such tax in any manner deemed appropriate by the Company or its counsel. The word "taxes", as used herein, shall be deemed to include any interest or penalties assessed in respect to such taxes. Unless the Trustee first shall have been indemnified to its satisfaction, the Trustee shall not be required to contest the validity of any tax, to institute, maintain, or defend against any other action or proceeding, or to incur any other expense in connection with the Trust except to the extent that the same is sufficient therefor. -81- 88 11.18 Compensation and Expenses. The Trustee shall be entitled to such reasonable compensation for its service as the Company and the Trustee from time to time shall agree, and shall be entitled to reimbursement for all reasonable expenses incurred by the Trustee in the administration of the Trust. Said compensation and expenses shall be paid from the Trust property by the Trustee as a general charge thereon; provided, however, that the Company may elect to make payment of such amounts subject, however, to allocation among the Employers, the share of each to be determined by the Company on a fair and equitable basis. Notwithstanding the foregoing, the Trustee shall be empowered to pay expenses from a Separate Distribution Fund as provided in Section 9.9. Costs incident to the purchase or sale of securities, such as brokerage fees, commissions, and stock transfer taxes, shall be changed to the fund or Separate Distribution Fund with respect to which such purchases or sales are made. 11.19 Apportionment of Expenses. Expenses and other charges made against the Trust property shall be apportioned equitably, by the Trustee, as between the Fixed Income Fund, the Equity Fund, and the Insured Fund, taking into consideration the extent to which a particular charge is directly attributable to the operations of one Fund only -82- 89 and the extent to which a particular charge is attributable to the operations of the Trust as a whole. 11.20 Records and Statements. The Trustee shall keep accurate records of all receipts, disbursements, and other transactions affecting the Trust which, together with the assets comprising the Trust and all evidences thereof, shall be available during the Trustee's usual business hours for inspection (or for the purpose of making copies or reproductions thereof) by the Company or its duly authorized representatives. The Trustee shall render to the Company monthly statements of all receipts, disbursements, and other transactions affecting the Trust during the preceding month, and the Trustee further shall render to the Company annually, or more frequently if requested, a statement of all assets then held by it hereunder. The Trustee shall notify the Company promptly concerning any default of any kind with respect to securities held hereunder. -83- 90 ARTICLE XII SUCCESSOR TRUSTEE 12.1 Resignation or Removal of the Trustee. The Trustee may resign at any time by giving notice in writing to the Company at least 30 days before such resignation is to become effective, unless the Company shall accept as adequate a shorter notice. The Company, by action of its Board of Directors, may remove, with or without cause, any Trustee acting hereunder by giving notice in writing to such Trustee at least 30 days before such removal is to become effective, unless the Trustee shall accept as adequate a shorter notice. 12.2 Appointment of the Successor Trustee. If for any reason a vacancy should occur in the trusteeship, then a successor trustee shall be designated by the Company, by action of its Board of Directors, which successor trustee may be either a corporation authorized to carry on a trust business, a national banking association, or any three or more individuals selected by the Company. Any successor trustee appointed hereunder shall execute, acknowledge, and deliver to the Company an instrument in writing accepting such appointment hereunder. Such successor trustee thereupon shall become vested with the same title to the property comprising the Trust property, and the same powers and duties with respect thereto, as hereby -84- 91 are vested in the original Trustee. The predecessor trustee shall execute all such instruments and perform all such other acts as the successor trustee shall reasonably request to effectuate the provisions hereof. The successor trustee shall have no duty to inquire into the administration of the Trust for any period prior to its succession. -85- 92 ARTICLE XIII AMENDMENT AND TERMINATION 13.1 Amendment. Subject to the provisions of Section 13.2, the Company, at any time and from time to time, by action of its Board of Directors, may amend this Agreement; provided, however, that no such amendment shall substantially change the powers, duties, or liabilities of the Trustee, without the approval of the Trustee; and provided, further, that the Board may delegate its authority hereunder to the extent provided in a resolution setting forth such delegation. 13.2 Limitation on Amendment. The Company shall make no amendment to this Agreement which shall result in the forfeiture or reduction of the interest of any Participant, former Participant, or Beneficiary under the Trust; provided, however, that nothing herein contained shall restrict the right to amend the provisions hereof relating to the administration of the Plan and Trust. Moreover, no such amendment shall be made hereunder which shall permit any part of the Trust property to revert to an Employer or be used for or be diverted to purposes other than the exclusive benefit of the Participants, former Participants, and their Beneficiaries. 13.3 Termination. The Company reserves the right, by action of its Board of Directors, to terminate -86- 93 the Plan as to each and every Employer at any time, which termination shall become effective upon notice in writing to the Committee and to the Trustee (the effective date of such termination being hereinafter referred to as the "termination date"). The Plan shall terminate automatically if there shall be a complete discontinuance of contributions by every Employer hereunder. In the event of the termination of the Plan, written notice thereof shall be given to all persons who have a vested interest hereunder and to the Trustee. Upon any such termination of the Plan, the Trustee shall take the following actions for the benefit of Participants, former Participants, and Beneficiaries: (a) As of the termination date, the Trustee shall value the Funds and adjust all accounts in the manner provided in Section 7.2 with any unallocated contributions being allocated for the Plan Year up to the termination date as otherwise provided in this Agreement. The termination date shall become a Valuation Date for purposes of Article VII. In determining the net worth of the Funds, the Trustee shall include as a liability such amounts as in its judgment shall be necessary to pay all expenses in connection with the termination of the Trust and the liquidation and distribution of the Trust property, as well as other expenses, whether or not accrued, and shall include as an asset all accrued income. (b) The Trustee thereafter shall dispose of all Separate Accounts and Distribution Accounts to or for the benefit of each Participant, former Participant, or Beneficiary, in accordance with Article IX. -87- 94 Notwithstanding anything to the contrary contained in this Agreement, upon any such Plan termination, the interest of each Participant, former Participant, and Beneficiary shall become fully vested and nonforfeitable; and, if there is a partial termination of the Plan, the interest of each Participant and Beneficiary who is affected by such partial termination shall be fully vested. Moreover, no such Plan termination shall affect distributions from any Distribution Account or Separate Distribution Fund of Participants whose Settlement Dates occurred prior to the termination date. 13.4 Withdrawal of an Employer. Any Employer other than the Company, by action of its Board of Directors, may withdraw from the Plan, such withdrawal to be effective upon notice in writing to the Committee and the Trustee (the effective date of such withdrawal being hereinafter referred to as the "withdrawal date"); and such withdrawing Employer shall thereupon cease to be an Employer for all purposes hereof. Moreover, a complete discontinuance by such an Employer of the contributions otherwise required of it hereunder shall be deemed automatically to constitute a withdrawal of such Employer from the Plan. In the event of any such withdrawal, the Trustee, as of the withdrawal date, shall take the following action or actions for the benefit of the Participants and -88- 95 former Participants employed by or formerly employed by such withdrawing Employer, or their Beneficiaries: (a) The Trustee shall value and adjust as of such withdrawal date the balances of the Separate Accounts and Distribution Accounts of such Participants and former Participants, in the manner provided in Section 7.2 with respect to a Valuation Date, including any accrued income and expenses. (b) The balances of the Separate Accounts, as determined under paragraph (a), of each such Participant employed solely by such withdrawing Employer, who is not transferred to or continued in employment with any other Employer or any Related Corporation, shall be transferred to Distribution Accounts, and the Trustee shall thereafter hold such Distribution Accounts for the benefit of such Participant, on a nonforfeitable basis, and it shall dispose of the same in accordance with the provisions of Article IX. The interest of any Participant employed by such withdrawing Employer, who is transferred to or continued in employment with any other Employer or any Related Corporation, shall remain unaffected by such withdrawal, and he shall continue as a Participant hereunder. 13.5 Special Rules Relating to Distribution Upon Termination of Plan or Disposition of Assets or Subsidiary. Notwithstanding anything to the contrary contained in this Agreement, in the event the Plan is terminated or an Employer disposes of assets or a subsidiary, no distribution shall be made from the Plan to a Participant prior to his separation from service, other than a withdrawal made in accordance with Article VIII, except upon the occurrence of one of the following events: (a) The termination of the Plan without establishment or maintenance of another -89- 96 defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code). (b) The disposition by an Employer of substantially all of the assets (within the meaning of Section 409(d)(2) of the Code) used by such Employer in a trade or business of such Employer, but only with respect to an employee who continues employment with the corporation acquiring such assets. (c) The disposition by an Employer of such Employer's interest in a subsidiary (with the meaning of Section 409(d)(3) of the Code), but only with respect to an employee who continues employment with such subsidiary. An event shall not be treated as described in this Section 13.5 with respect to any employee unless the employee receives a lump sum distribution by reason of the event. For purposes of this Section 13.5, the term "lump sum distribution" has the meaning given such term by Section 402(e)(4) of the Code, without regard to clauses (i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B), or subparagraph (H) thereof. Moreover, an event shall not be treated as described in paragraph (b) or (c) of this Section 13.5 unless the transferor corporation continues to maintain the Plan after the disposition. 13.6 Corporation Reorganization. The merger, consolidation, or liquidation of the Company, any Employer, or any Related Corporation with or into the Company, any other Employer, or any other Related Corporation -90- 97 shall not constitute a termination of the Plan as to the Company or such Employer. -91- 98 ARTICLE XIV ADOPTION BY RELATED CORPORATIONS A Related Corporation, with the consent of the Board of Directors of the Company and as of the first day of any Plan Year, may adopt the Plan and become an Employer hereunder by causing an appropriate written instrument evidencing such adoption to be executed pursuant to the authority of its Board of Directors and filed with the Company and the Trustee. -92- 99 ARTICLE XV TOP-HEAVY PROVISIONS 15.1 Applicability. Notwithstanding any other provision to the contrary, in the event the Plan is deemed to be a top-heavy plan for any Plan Year, the provisions contained in this Article XV with respect to vesting and Employer Contributions shall be applicable with respect to such Plan Year. In the event the Plan is determined to be a top-heavy plan and upon a subsequent termination date is determined to no longer be a top-heavy plan, the vesting and the Employer Contribution provisions in effect immediately preceding the Plan Year in which the Plan was determined to be a top-heavy plan shall again become applicable as of such subsequent determination date; provided, however, that in the event such prior vesting schedule does again become applicable, the provisions of Section 9.5 and Section 13.2 shall apply (a) to preserve the nonforfeitable accrued benefit of any Participant, former Participant, or Beneficiary and (b) to permit any Participant with three years of vested service to elect to continue to have his nonforfeitable interest in his Separate Accounts attributable to Employer Contributions determined in accordance with the vesting schedule applicable while the Plan was a top-heavy plan. -93- 100 15.2 Top-Heavy Definitions. For purposes of this Article XV, the following definitions shall apply: (a) The term "determination date" with respect to any Plan Year shall mean the last day of the preceding Plan Year. (b) The term "key employee" shall mean any Participant or former Participant who is a key employee pursuant to the provisions of Section 416(i)(1) of the Code and any Beneficiary of such Participant or former Participant. (c) The term "non-key employee" shall mean any Participant who is not a key employee. (d) The term "permissive aggregation group" shall mean those plans included in an Employer's required aggregation group in conjunction with any other plan or plans of an Employer, so long as the entire group of plans would continue to meet the requirements of Sections 401(a)(4) and 410 of the Code. (e) The term "required aggregation group" shall include (i) all plans of an Employer in which a key employee is a participant, and (ii) all other plans of an Employer which enable a plan described in (i) to meet the requirements of Section 401(a)(4) or Section 410 of the Code. (f) A "super top-heavy group" with respect to a particular Plan Year shall mean a required or permissive aggregation group that, as of the determination date, would qualify as a top-heavy group under the definition in paragraph (h) of this Section 15.2 with "90 percent" substituted for "60 percent" each place where "60 percent" appears in such definition. (g) The term "super top-heavy plan" with respect to a particular Plan Year shall mean a plan that, as of the determination date, would qualify as a top-heavy plan under the definition in paragraph (i) of this Section 15.2 with "90 percent" substituted for "60 percent" each place where "60 percent" appears in such definition. A plan shall also be a "super top-heavy plan" if it is part of a super top-heavy group. -94- 101 (h) The term "top-heavy group" with respect to a particular Plan Year shall mean a required or a permissive aggregation group if the sum, as of the determination date, of the present value of the cumulative accrued benefits for key employees under all defined benefit plans included in such group and the aggregate of the account balances of key employees under all defined contribution plans included in such group exceeds 60 percent of a similar sum determined for all employees covered by the plans included in such group. (i) The term "top-heavy plan" with respect to a particular Plan Year shall mean (i) in the case of a defined contribution plan, a plan for which, as of the determination date, the aggregate of the accounts (within the meaning of Section 416(g) of the Code and the regulations thereunder) of key employees exceeds 60 percent of the aggregate of the accounts of all participants under the plan, with the accounts valued as of the applicable valuation date, or (ii) in the case of a defined benefit plan, a plan for which, as of the determination date, the present value of the cumulative accrued benefits payable under the plan (within the meaning of Section 416(g) of the Code and the regulations thereunder) to key employees exceeds 60 percent of the present value of the cumulative accrued benefits under the plan for all employees, with present value of accrued benefits to be determined as of the applicable valuation date in accordance with the actuarial assumptions specified in such defined benefit plan, and (iii) any plan included in a required aggregation group which is a top-heavy group. For purposes of this paragraph (i), the accounts and accrued benefits of any employee who has not performed services for an Employer during the five-year period ending on the determination date shall be disregarded. Notwithstanding the foregoing, if a plan is included in a required or permissive aggregation group which is not a top-heavy group, such plan shall not be a top-heavy plan. The term "valuation date" with respect to each determination date shall mean the most recent date used for computing plan costs for minimum funding purposes in the case of a defined benefit plan and the most recent date on which plan assets are -95- 102 valued for the purpose of determining the value of account balances in the case of a defined contribution plan. (j) The term "compensation" shall mean compensation as described in paragraph (b) of Section 7.4. 15.3 Accelerated Vesting. In the event the Plan is determined to be a top-heavy plan, a Participant shall have a vested interest in the balances of his Separate Accounts determined no less rapidly than by application of the following vesting schedule:
Nonforfeitable Years of Vested Service Percentage ----------------------- -------------- Less than one 0% One but less than two 10% Two but less than three 20% Three but less than four 40% Four but less than five 60% Five or more 100%
15.4 Minimum Employer Contribution. In the event the Plan is determined to be a top-heavy plan, effective for Plan Years beginning on and after January 1, 1989, the Employer Contributions allocated to the Separate Accounts of each non-key employee who is not separated from service with an Employer as of the end of such Plan Year shall be no less than the lesser of (a) three percent of his compensation or (b) the largest percentage of compensation that is allocated for such Plan Year to the Separate Accounts of any key employee attributable to Employer Contributions and Tax Deferred Compensation Contributions, -96- 103 except that, in the event the Plan is part of a required aggregation group, and the Plan enables a defined benefit plan included in such group to meet the requirements of Section 401(a)(4) or 410 of the Code, the minimum allocation of Employer Contributions to the Separate Accounts of each non-key employee shall be three percent of the compensation of such non-key employees. Any minimum allocation to the Separate Accounts of a Participant required by this Section 15.4 shall be made without regard to any social security contribution made by an Employer on behalf of the Participant, and for this purpose an Eligible Employee shall be deemed to be a Participant notwithstanding his failure to make an election described in Section 2.2. Notwithstanding the minimum top-heavy allocation requirements of this Section 15.4, in the event that the Plan is a top-heavy plan, each non-key employee hereunder who is also covered under a top-heavy defined benefit plan maintained by an Employer will receive the top-heavy benefits provided for under such defined benefit plan equal to his average compensation during the testing period multiplied by the lesser of two percent times years of service with the Employers or twenty percent, all as described in such plan, in lieu of the minimum top-heavy allocation under the Plan. -97- 104 15.5 Adjustments to Section 415 Limitations. Notwithstanding the provisions of paragraph (d) of Section 7.4, in the event that the Plan is a top-heavy plan and an Employer maintains a defined benefit plan covering some or all of the employees that are covered by the Plan, Sections 415(e)(2)(B) and 415(e)(3)(B) of the Code shall be applied to the Plan by substituting "1.0" for "1.25" and Section 415(e)(6)(B)(i) of the Code shall be applied to the Plan by substituting "$41,500" for "$51,875", except that such substitutions shall not be applied to the Plan if (a) the Plan is not a super top-heavy plan, (b) the Employer Contribution for such Plan Year for each non-key employee is not less than four percent of such non-key employee's compensation, and (c) every non-key employee who receives his minimum benefit under a defined benefit plan receives a benefit which is not less than his average compensation for years in the testing period multiplied by the lesser of three percent times years of service with such employer or thirty percent, all as described in such defined benefit plans. 15.6 Compensation Taken Into Account. The annual compensation of any Participant to be taken into account under the Plan during any Plan Year in which the Plan is determined to be a top-heavy plan shall not exceed -98- 105 $200,000 (or such adjusted amount determined by the Secretary of the Treasury pursuant to Section 416(d)(2) of the Code). -99- 106 ARTICLE XVI ROLLOVERS 16.1 Rollover Contributions. A Participant who prior to his employment with an Employer was a participant in a plan maintained by a previous employer and qualified under Section 401 of the Code and who receives a distribution from such plan that he either elects (i) to roll over immediately to a qualified retirement plan or (ii) to roll over into a conduit IRA from which he receives a later distribution, may elect to make a Rollover Contribution to the Plan if he is entitled under Section 402(a)(5) of the Code to roll over such distribution to another qualified retirement plan. A Participant shall make a Rollover Contribution to the Plan by delivering, or causing to be delivered, to the Trustee the property which constitutes such Rollover Contribution amount within 60 days of receipt of the distribution from the plan or from the conduit IRA in such manner as shall be specified by the Company. 16.2 Administration. Notwithstanding anything to the contrary contained in the Agreement, all Rollover Contributions received by the Trustee shall be held and administered by the Trustee in accordance with the provisions of this Article XVI. Upon receipt of any Rollover Contribution, the Trustee shall credit the appropriate -100- 107 Separate Account of the Participant to whom it is attributable in accordance with the provisions of Section 5.1 with the fair market value of the property that constitutes the Rollover Contribution on such date, and such property shall be deposited in the Trust. The determination of the fair market value of such property shall be made by the Trustee, subject to the provisions of Section 7.2. The Participant's interest in his Separate Account to which any Rollover Contributions have been credited shall at all times be fully vested. 16.3 Rollover Contributions not Considered for Certain Plan Purposes. Separate Accounts to which any Rollover Contributions have been credited shall not be aggregated with the other Separate Accounts maintained under the Plan for purposes of determining whether the Plan is top heavy within the meaning of paragraph (i) of Section 15.2, except that amounts contained in a Separate Account that are attributable to any Rollover Contributions made from a plan maintained by an Employer or a Related Corporation shall be aggregated with the other Separate Accounts maintained under the Plan for purposes of determining whether the Plan is top heavy. 16.4 Settlement or Termination. A Participant's interest in his Separate Account to which any Rollover Contributions have been credited shall, upon his -101- 108 Settlement Date or in the event of termination of the Plan, be distributed at such time and according to such method as is provided generally in the Agreement with respect to such settlement or termination, as the case may be. -102- 109 ARTICLE XVII MISCELLANEOUS PROVISIONS 17.l No Commitment as to Employment. Nothing herein contained shall be construed as a commitment or agreement upon the part of any Participant hereunder to continue his employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of an Employer to continue the employment or rate of compensation of any Participant hereunder for any period. 17.2 Benefits. Nothing in this Agreement shall be construed to confer any right or claim upon any person other than the parties hereto, Participants, former Participants, and Beneficiaries. 17.3 No Guarantees. Neither any Employer, nor the Trustee guarantees the Trust from loss or depreciation, nor the payment of any amount which may become due to any person hereunder. 17.4 Precedent. Except as otherwise specifically provided, no action taken in accordance with this Agreement by the Company, any other Employer, or the Trustee shall be construed or relied upon as a precedent for similar action under similar circumstances. 17.5 Duty to Furnish Information. Each of the Company, any other Employer, or the Trustee shall furnish to any of the others any documents, reports, returns, -103- 110 statements, or other information that any of the others reasonably deem necessary to perform its duties imposed hereunder or otherwise imposed by law. 17.6 Withholding. The Trustee shall withhold any tax which by any present or future law is required to be withheld and which the Company notifies the Trustee in writing is to be so withheld, from any payment to any Participant, former Participant, or Beneficiary hereunder, unless an Employer shall have notified the Trustee in writing to the effect that such Employer has withheld such tax. 17.7 Merger, Consolidation, or Transfer of Plan Assets. The Plan shall not be merged or consolidated with any other plan, nor shall any of its assets or liabilities be transferred to another plan, unless, immediately after such merger, consolidation, or transfer of assets or liabilities, each Participant in the Plan would receive a benefit under the Plan which is at least equal to the benefit he would have received immediately prior to such merger, consolidation, or transfer of assets or liabilities (assuming in each instance that the Plan had then terminated). 17.8 Conditions and Limitations on Employer Contributions. Notwithstanding anything to the contrary contained in this Agreement, any obligation of any Employer -104- 111 to make any contribution hereunder is hereby conditioned upon the continued qualification of the Plan under Section 401(a) of the Code, the exempt status of the Trust under Section 501(a) of the Code, and the deductibility of the contribution under Section 404 of the Code. The Plan is designated as and designed to qualify as a profit-sharing plan for all purposes of the Code, although all contributions to the Plan by the Employers may be made without regard to current or accumulated earnings and profits for the taxable year or years ending with or within any Plan Year. 17.9 Return of Contributions to Employer. Except as otherwise provided herein, in no event shall any portion of the Trust property ever revert to or otherwise inure to the benefit of any Employer or any Related Corporation. Notwithstanding anything to the contrary contained in the Agreement, Employer Contributions and Tax Deferred Compensation Contributions: (a) made under a mistake of fact, or (b) the deduction of which under Section 404 of the Code is disallowed, or (c) with respect to which the Plan does not qualify under Section 401(a) of the Code or the Trust is not exempt under Section 501(a) of the Code (but only if such contribution is made prior to December 22, 1987), may be returned to the Employer by which made within one year after the payment of the contribution, the -105- 112 disallowance of the deduction to the extent disallowed, or the date of denial of the qualification of the Plan or the exempt status of the Trust in connection with an amendment, whichever is applicable. Any Tax Deferred Compensation Contributions made on behalf of a Participant and returned to an Employer pursuant to this Section 17.9 shall be distributed to such Participant. 17.10 Back Pay Awards. The provisions of this Section 17.10 shall apply only to an Employee or former Employee who becomes entitled to back pay by an award or agreement of an Employer without regard to mitigation of damages. For all purposes of the Plan, the years of service and years of vested service of a person to whom this Section 17.10 applies for the period to which such award or agreement relates shall include the number of years, computed to the nearest 1/12th year, to which such award or agreement relates unless such years are otherwise included in his years of service for such period under Section 2.5 and, as applicable, in his years of vested service for such period under Section 9.4. If a person to whom this Section 17.10 applies was or, after application of the foregoing provisions of this Section 17.10, would have become an Eligible Employee during such period, and if any such person who had not previously become a Participant pursuant to Section 2.2 shall, within 30 days -106- 113 of the date he receives notice of the provisions of this Section 17.10, make an election to become a Participant in accordance with such Section 2.2 (retroactive to any Enrollment Date as of which he was or has become eligible to do so), then any Regular Participant Contributions or Tax Deferred Compensation Contributions which he previously had not made but which, after application of the foregoing provisions of this Section 17.10, he would have made under the provisions of Article II or Article III as in effect during each of the months to which such award or agreement relates, if such Participant so elects, shall be made out of the proceeds of such back pay award or agreement. To the extent that any Regular Participant Contributions or Tax Deferred Compensation Contributions are made during a month in accordance with the provisions of the foregoing sentence, such Employer shall make an Employer Contribution for such month, in addition to any other Employer Contribution for such month, equal to the amount of the Employer Contribution which would have been allocated to such Participant under the provisions of Article IV as in effect during each of the months to which such Regular Participant Contributions or Tax Deferred Compensation Contributions relate. The amounts of such additional contributions shall: (a) be credited to such Participant's Separate Accounts, as appropriate, if such person -107- 114 is a Participant when the award or agreement is made or becomes a Participant as a result of the provisions of this Section 17.10; or (b) if such person is a former Participant whose Settlement Date occurred under Section 9.1 before the award or agreement is made, be credited to his Distribution Accounts; moreover, if a portion of such former Participant's Separate Accounts attributable to Employer Contributions was not credited to his Distribution Accounts under Section 9.3 as of his Settlement Date, the amount of the additional Employer Contribution for him shall include an amount equal to the difference, if any, between (i) the amount which would have been so credited after application of the provisions of this Section 17.10, and (ii) the amount which was so credited. Any contributions made by such Participant and by the Employer pursuant to this Section 17.10 shall be made in accordance with, and subject to the limitations of, the applicable provisions of Articles III, IV, and VII. 17.11 Validity of Agreement. The validity of this Agreement shall be determined and this Agreement shall be construed and interpreted in accordance with the laws of the State of Ohio. The invalidity or illegality of any provision of this Agreement shall not affect the legality or validity of any other part thereof. 17.12 Parties Bound. This Agreement shall be binding upon the Company, any other Employer, the Trustee, all Participants, former Participants, and Beneficiaries hereunder, and, as the case may be, the heirs, -108- 115 executors, administrators, successors, and assigns of each of them. * * * IN WITNESS WHEREOF, the parties hereto, each by its duly authorized officers, have caused this Agreement to be executed as of the day and year first above written. OGLEBAY NORTON COMPANY By /s/ H. William Ruf ---------------------------- Title: Vice President - Personnel and Industrial Relations And /s/ Richard J. Kessler ---------------------------- Title: Vice President - Finance and Treasurer SOCIETY NATIONAL BANK, Trustee By /s/ Mark O. Minar ---------------------------- Title: Senior Trust Officer And /s/ Richard Lutts ---------------------------- Title: Vice President
-109- EX-10.D 8 EXHIBIT 1 Exhibit 10(d) CONFORMED COPY EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is entered into on this ________ day of June, 1987, by and between OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and JOHN L. SELIS ("Employee"). W I T N E S S E T H: WHEREAS, Employee has for many years served the Company as an executive officer, has fully and ably discharged his responsibilities and duties in his service to the Company to date, and is now serving the Company as Vice President-Administration and Law; WHEREAS, the Company desires to assure itself of continuity of management in the event of any threatened or actual Change in Control (as hereafter defined); WHEREAS, the Company desires to provide inducements for Employee not to engage in activity competitive with the Company; WHEREAS, the Company desires to assure itself, in the event of any threatened or actual Change in Control, of the continued performance of services by Employee on an objective and impartial basis and without distraction by concern for his employment status and security; WHEREAS, Employee is willing to continue in the employ of the Company but desires assurance that his responsibilities and status as an executive of the Company will not be 2 adversely affected by any threatened or actual Change in Control; NOW, THEREFORE, the Company and Employee agree as follows: 1. Operation of Agreement. This Agreement shall be effective and binding immediately upon its execution, but, anything in this Agreement to the contrary notwithstanding, this Agreement shall not be operative unless and until there has been a Change in Control while Employee is in the employ of the Company. For purposes of this Agreement, a Change in Control shall have occurred if at any time any of the following events occurs: (a) a report is filed with the Securities and Exchange Commission (the "SEC") on Schedule 13D or Schedule 14D-1 (or any successor schedule, form, or report), each as promulgated pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any "person" (as the term "person" is used in Section 13(d) or Section 14(d)(2) of the Exchange Act) is or has become a beneficial owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities; (b) the Company files a report or proxy statement with the SEC pursuant to the Exchange Act disclosing in response to Item 1 of Form 8-K thereunder or Item 5(f) of Schedule 14A thereunder that a Change in Control of the 3 Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; (c) the Company is merged or consolidated with another corporation and, as a result thereof, securities representing less than 50% of the combined voting power of the surviving or resulting corporation's securities (or of the securities of a parent corporation in case of a merger in which the surviving or resulting corporation becomes a wholly-owned subsidiary of the parent corporation) are owned in the aggregate by holders of the Company's securities immediately prior to such merger or consolidation; (d) all or substantially all of the assets of the Company are sold in a single transaction or a series of related transactions to a single purchaser or a group of affiliated purchasers; or (e) during any period of 24 consecutive months, individuals who were Directors of the Company at the beginning of such period cease to constitute at least a majority of the Company's Board of Directors (the "Board") unless the election, or nomination for election by the Company's shareholders, of more than one half of any new Directors of the Company was approved by a vote of at least two-thirds of the Directors of the Company then still in office who were Directors of the Company at the beginning of such 24 month period. 4 The first date on which a Change in Control occurs is referred to herein as the "Change in Control Date." Upon the occurrence of a Change in Control while Employee is in the employ of the Company, this Agreement shall become immediately operative. 2. Employment, Contract Period. (a) Subject to the terms and conditions of this Agreement, upon the occurrence of a Change in Control, the Company shall continue to employ Employee and Employee shall continue in the employ of the Company for the period specified in Paragraph 2(b) (the "Contract Period"), in the position and with the duties and responsibilities set forth in Paragraph 3. (b) The Contract Period shall commence on the date of occurrence of a Change in Control (the "Change in Control Date") and, subject only to the provisions of Paragraph 8 below, shall continue for a period of thirty months to the close of business on the day (the "Contract Expiration Date") falling thirty months after the Change in Control Date. 3. Position, Duties, Responsibilities. At all times during the Contract Period, Employee shall: (a) hold the same position with substantially the same duties and responsibilities as an executive officer of the Company as Employee held immediately before the Change in Control Date and as those duties and responsibilities may be extended, from time to time during the Contract Period, by the Board with Employee's consent; 5 (b) adhere to and implement the policies and directives promulgated, from time to time, by the Board; (c) observe all Company policies applicable to executive officers of the Company; and (d) devote his business time, energy, and talent to the business of and to the furtherance of the purposes and objectives of the Company to generally the same extent as he has so devoted his business time, energy, and talent before the Change in Control Date, and neither directly nor indirectly render any business, commercial, or professional services to any other person, firm, or organization for compensation without the prior approval of the Board. Nothing in this Agreement shall preclude Employee from devoting reasonable periods of time to charitable and community activities or the management of his investment assets provided such activities do not materially interfere with the performance by Employee of his duties hereunder. 6 4. COMPENSATION. For services actually rendered by Employee on behalf of the Company during the Contract Period as contemplated by this Agreement the Company shall pay to Employee a base salary at a rate equal to the highest of (a) the rate in effect immediately before the Change in Control Date, (b) the rate in effect exactly two years before the Change in Control Date, or (c) such greater rate as the Company may determine. The base salary shall be paid to Employee in the same increments and on the same schedule each month as in effect immediately before the Effective Date. Employee shall not be entitled to any base salary during any period when he is receiving long-term disability benefits under the Disability Benefit Arrangement provided to Employee by the Company. 5. VACATION. Employee will be entitled to such periods of vacation and sick leave allowance each year as are determined by the Company's vacation and sick leave policy for executive officers as in effect immediately before the Change in Control Date or as may be increased from time to time thereafter. Neither vacation time nor sick leave allowance will be accumulated from year to year. 6. OTHER COMPANY PLANS, BENEFITS, AND PERQUISITES. During the Contract Period Employee shall be entitled to participate in the Company's Pension Plan for Salaried Employees (the "Salaried Plan") and the related Excess Benefit Retirement Plan (the "Excess Benefit Plan"); the Salary Continuation Arrangement; the Disability Benefit Arrangement; his Split Dollar Insurance Agreement with the Company; the post-retirement Death Benefit Arrangement; the Incentive Savings Plan; the 1983 Stock Equivalent Plan; and every other employee benefit plan not specifically referred to in this Agreement that is generally available to executive officers of the Company immediately before the Change in Control Date. Employee's participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan as in effect immediately before the Change in 7 Control Date, which terms and conditions shall not be amended during the Contract Period unless the benefits to Employee are at least as great under the plan as amended (or under a substitute plan or arrangement) as were the benefits under the plan as in effect immediately before the Change in Control Date. The Company will also provide Employee with such perquisites during the Contract Period as the Company customarily provided to its top executive officers in the period immediately before the Change in Control Date. 7. Effect of Disability. If during the Contract Period and before his employment hereunder is otherwise terminated, Employee becomes disabled to such an extent that he is prevented from performing his duties hereunder by reason of physical or mental incapacity: (a) he shall be entitled to disability and other benefits at least equal to those that would have been available to him had the Company continued, throughout the period of Employee's disability, all of its programs, benefits, and policies with respect to disabled employees that were in effect immediately before the Change in Control; and (b) if he recovers from his disability before the end of the Contract Period he shall be reinstated as an active employee for the remainder of the Contract Period under and subject to all of the terms of this Agreement including, without limitation, the Company's right to terminate Employee with or without cause under Paragraph 8(b). 8. Termination Following a Change in Control. Following a Change in Control: 8 (a) Employee's employment hereunder will terminate without further notice upon the death of Employee; (b) The Company may terminate Employee's employment hereunder effective immediately upon giving notice of such termination; (i) For "cause," (A) if Employee commits an act of fraud, embezzlement, theft, or other similar criminal act constituting a felony and involving the Company's business or (B) if Employee breaches his agreement with respect to the time to be devoted to the business of the Company set forth in Paragraph 3(d) hereof and fails to cure such breach within 30 days of receipt of written notice of such breach from the Board; or (ii) without cause at any time; and (c) Employee may terminate his employment hereunder effective immediately upon giving of notice of such termination: (i) without cause at any time; or (ii) for "good reason," which, for purposes of this Agreement shall mean the occurrence of any of the following: 9 (A) any reduction in base salary or position or any material reduction in responsibilities or duties contemplated for Employee under this Agreement or any material reduction in the aggregate of employee benefits, perquisites, or fringe benefits contemplated for Employee under this Agreement, provided that any particular reduction described in this clause (A) shall constitute "good reason" only if Employee terminates his employment within six months of the date of the reduction; or (B) any good faith determination by Employee that, as a result of fundamental differences of opinion between Employee and the Board as to the goals of the Company, Employee is unable to carry out the responsibilities and duties contemplated for Employee under this Agreement, provided that any determination by Employee described in this clause (B) shall constitute "good reason" only if Employee terminates his employment within six months of the Change in Control Date. 9. SEVERANCE COMPENSATION. (a) If, before the Contract Expiration Date, Employee's employment is terminated by the Company without cause or by Employee for good reason, then, except as provided in Paragraph 9(b), 9(c), or 9(d), the Company shall pay and provide to Employee the following compensation and benefits through the last to occur of (x) the expiration of six months after the effective date of the termination, and (y) the Contract Expiration Date (such last-to-occur date is hereinafter referred to as the "Severance Benefits Termination Date"): (i) base salary at the highest monthly rate payable to Employee during the Contract Period, to be paid at the times provided in Paragraph 4 hereof; 10 (ii) coverage under the Company's medical insurance plan, short-term disability plan, long-term disability plan, Salary Continuation Arrangement, Disability Benefit Arrangement, Split Dollar Insurance Agreement, and post-retirement Death Benefit Arrangement, each as in effect on the Change in Control Date (or, if subsequently amended to increase benefits to Employee or his dependents, as so amended) and each as if Employee's employment had continued through the Severance Benefits Termination Date; and (iii) coverage and service credit under the Salaried Plan and the Excess Benefit Plan so that the aggregate benefits payable to or with respect to the Employee under the Salaried Plan and the Excess Benefit Plan will be equal to the aggregate benefits that would have been paid to or with respect to Employee under the Salaried Plan and the Excess Benefit Plan if Employee's employment had continued through the Severance Benefits Termination Date. 11 If any of the benefits to be provided under one or more of the plans, agreements, or arrangements specified above cannot be provided through that plan, agreement, or arrangement to Employee following termination of his employment, the Company shall directly provide the full equivalent of such benefits to Employee. For example, since it is not possible to provide additional service credit directly through the Salaried Plan, if Employee becomes entitled to an additional 18 months of service credit under the Salaried Plan pursuant to (iii) above, the Company will be required to pay to Employee, from its general assets, on each date on which Employee receives a payment from the Salaried Plan, a supplemental payment equal to the amount by which that particular payment under the Salaried Plan would have been increased if Employee's total service credit under the Salaried Plan were 18 months greater than is actually the case. In addition, if in these circumstances any payments become due under the Salaried Plan with respect to Employee following his death, the Company will be obligated to make similar supplemental payments with respect to Employee on the dates on which payments are made with respect to Employee under the Salaried Plan. (b) If Employee becomes entitled to compensation and benefits pursuant to Paragraph 9(a) he shall use reasonable efforts to seek other employment, provided, however, that he shall not be required to accept a position of less importance and dignity or of substantially different character than that of his position with the Company or a position that would require Employee to engage in activity in violation of Employee's agreement with respect to noncompetition set forth in Paragraph 11 hereof nor shall he be required to accept a position outside the greater Cleveland area. The Company's obligations under items (i) and (ii) of Paragraph 9(a) will be offset by payments and benefits received by Employee from another employer to the following extent: (i) The Company's obligation to pay any particular installment of base salary following Employee's termination will be offset, on a dollar for dollar basis, by any cash 12 compensation received by Employee from another employer before the date on which the installment of base salary is payable by the Company. (ii) To the extent that Employee is provided medical, dental, or short-term or long-term disability income protection benefits by another employer during any period, the Company will be relieved of its obligation to provide such benefits to Employee. For example, if a new employer provides Employee with a medical benefits plan that pays $500.00 for a specific claim made by Employee and the Company's medical insurance plan would have paid $750.00 for that claim, then the Company will be obligated to pay Employee $250.00 with respect to that claim. Other than as provided in this Paragraph 9(b) Employee shall have no duty to mitigate the amount of any payment or benefit provided for in this Agreement. (c) If during any period in which Employee is entitled to payments or benefits from the Company under Paragraph 9(a): (i) Employee materially and willfully breaches his agreement with respect to confidential information set forth in Paragraph 10 hereof and such breach directly causes the Company substantial and demonstrable damage; or (ii) Employee materially and willfully breaches his agreement with respect to noncompetition set forth in 13 Paragraph 11 hereof and such breach directly causes the Company substantial and demonstrable damage; then the Company will be relieved of its obligations under Paragraph 9(a) hereof as of the first day of the month immediately following the date of such material breach. (d) If Employee dies on or before the Severance Benefits Termination Date and immediately before his death he is entitled to payments or benefits from the Company under Paragraph 9(a), the Company will be relieved of its obligations under item (i) of Paragraph 9(a) as of the first day of the month immediately following the month in which Employee dies and thereafter the company will provide to Employee's beneficiaries and dependents salary continuation payments, benefits under the Excess Benefits Plan (as supplemented by item (iii) of Paragraph 9(a)), and continuing medical and dental benefits to the same extent (subject to reduction for payments or benefits from a new employer under Paragraph 9(b)) as if Employee's death had occurred while Employee was in the active employ of the Company. 10. CONFIDENTIAL INFORMATION. Employee agrees that he will not, during the term of the Agreement or at any time thereafter, either directly or indirectly, disclose or make known to any other person, firm, or corporation any confidential information, trade secret, or proprietary information of the Company that Employee may acquire in the performance of Employee's duties hereunder. Upon the termination of Employee's employment with the Company, Employee agrees to deliver forthwith to the 14 Company any and all literature, documents, correspondence, and other materials and records furnished to or acquired by Employee during the course of such employment. 11. NONCOMPETITION. During any period in which Employee is receiving base salary under this Agreement (whether during the Contract Period pursuant to Paragraph 4 or following termination pursuant to Paragraph 9(a)), Employee shall not act as a proprietor, investor, director, officer, employee, substantial stockholder, consultant, or partner in any business engaged to a material extent in direct competition with the Company in any market in any line of business engaged in by the Company during the Contract period. If Employee delivers to the Company a written waiver of his right to receive any further compensation or benefits pursuant to Paragraph 9(a), he shall be released, effective as of the date of delivery of the notice, from the post-termination noncompetition covenant contained in this Paragraph 11. 12. COSTS OF ENFORCEMENT. The Company shall pay and be solely responsible for any and all costs and expenses (including attorneys' fees) incurred by Employee in seeking to enforce the Company's obligations under this Agreement unless and to the extent a court of competent jurisdiction determines that the Company was relieved of those obligations because (a) the Company terminated Employee for cause (as determined under Paragraph 8(b)(i) hereof), (b) Employee voluntarily terminated his employment other than for good reason (as determined under Paragraph 8(c)(ii) hereof), or (c) Employee materially and willfully breached his 15 agreement not to compete with the Company or his agreement with respect to confidential information and such breach directly caused substantial and demonstrable damage to the Company. The Company shall forthwith pay directly or reimburse Employee for any and all such costs and expenses upon presentation by Employee or by counsel selected from time to time by Employee of a statement or statements prepared by Employee or by such counsel of the amount of such costs and expenses. If and to the extent a court of competent jurisdiction renders a final binding judgment determining that the Company was relieved of its obligations for any of the reasons set forth in (a), (b), or (c) above, Employee shall repay the amount of such payments or reimbursements to the Company. In addition to the payment and reimbursement of expenses of enforcement provided for in this Paragraph 12, the Company shall pay to Employee in cash, as and when the Company makes any payment on behalf of, or reimbursement to, Employee, an additional amount sufficient to pay all federal, state, and local taxes (whether income taxes or other taxes) incurred by Employee as a result of (x) payment of the expense or receipt of the reimbursement, and (y) receipt of the additional cash payment. The Company shall also pay to Employee interest (calculated at the Base Rate from time to time in effect at National City Bank, Cleveland, Ohio, compounded monthly) on any payments or benefits that are paid or provided to Employee later than the date on which due under the terms of this Agreement. 13. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement shall create any right or duty on the 16 part of the Company or Employee to have Employee remain in the employ of the Company before any Change in Control and Employee shall have no rights under this Agreement if his employment with the Company is terminated for any reason or for no reason before any Change in Control. Nothing expressed or implied in this Agreement shall create any duty on the part of the Company to continue in effect, or continue to provide to Employee, any plan or benefit unless and until a Change in Control occurs. If, before a Change in Control, the Company ceases to provide any plan or benefit to Employee, nothing in this Agreement shall be construed to require the Company to reinstitute that plan or benefit to Employee upon the later occurrence of a Change in Control. 14. NOTICES. For purposes of this Agreement, all communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (Attention: President) at its principal executive office and to Employee at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance herewith, except that notices of change of address shall be effective only upon receipt. 15. ASSIGNMENT, BINDING EFFECT. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company and the Company's successors and assigns. The Company shall require any 17 successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and or assets of the Company, by agreement in form and substance satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. (b) This Agreement shall be binding upon Employee and this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee and his personal or legal representatives, executors, or administrators. No right, benefit, or interest of Employee hereunder shall be subject to assignment, anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation, or to execution, attachment, levy, or similar process; except that Employee may assign any right, benefit, or interest hereunder if such assignment is permitted under the terms of any plan or policy of insurance or annuity contract governing such right, benefit, or interest. 16. INVALID PROVISIONS. (a) Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent, but only to the extent, of such prohibition or unenforceability without invalidating the remaining portions hereof and such remaining portions of this Agreement shall continue to be in full force and effect. 18 (b) In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable, the parties will negotiate in good faith to replace such provision with another provision that will be valid or enforceable and that is as close as practicable to the provision held invalid or unenforceable. 17. MODIFICATION. No modification, amendment, or waiver of any of the provisions of the Agreement shall be effective unless in writing, specifically referring hereto, and signed by both parties. 18. WAIVER OF BREACH. The failure at any time to enforce any of the provisions of this Agreement or to require performance by the other party of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement or the right of either party thereafter to enforce each and every provision of this Agreement in accordance with the terms hereof. 19. GOVERNING LAW. This Agreement has been made in and shall be governed and construed in accordance with the laws of the State of Ohio. 20. LIMITATION ON CONTINGENT PAYMENTS. Notwithstanding any other provision of this Agreement to the contrary, amounts and benefits to be paid and provided by the Company to Executive under this Agreement ("Agreement Benefits") shall be reduced if necessary to avoid the application of sections 19 280G and 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), to Agreement Benefits. This Paragraph 20 will be applicable to reduce Agreement Benefits only if (a) without regard to this Paragraph 20, the aggregate present value of the payments in the nature of compensation to (or for the benefit of) Employee that are contingent on a Change in Control would equal or exceed an amount equal to three times Employee's "base amount" (as defined in section 280G of the Code) and if (b) reducing the aggregate present value of such contingent payments by reducing Agreement Benefits would result in a greater after-tax benefit to Employee from such contingent payments. If the foregoing conditions are satisfied, the aggregate present value of all Agreement Benefits will be limited to the maximum amount that can be paid without equalling the threshold amount (three times Employee's base amount) provided in section 280G(b)(2)(A)(ii) of the Code. If reductions in the amount of Agreement Benefits are necessary to satisfy the limit stated in the immediately preceding sentence, the reductions shall be made in the following order: (a) The present value of the obligation to pay base salary will be reduced (but not to less than one half of the present value of that obligation before reduction) by decreasing (but not by more than 50%) the rate at which base salary is paid pursuant to Paragraph 9(a)(i). (No change will be made in the timing of the payments of installments of base salary.) 20 (b) The present value of the Salary Continuation Arrangement, of the Disability Arrangement, and of the post-retirement Death Benefit Arrangement will be reduced by reducing (to zero if necessary) the amount to be paid in the future under each such arrangement upon the occurrence of certain events. (No change will be made in the timing of any of such benefits, if any, that are payable in spite of the reduction.) (c) The present value of coverage under the Company's medical insurance plan, short-term disability plan, and long-term disability plan will be reduced by reducing the level of coverage under each such plan (to zero if necessary). (d) The present value of any obligation to pay base salary (as reduced under item (a)) will be further reduced by decreasing the rate at which base salary is paid pursuant to Paragraph 9(a)(i). Agreement Benefits in each of the first three categories above, (a), (b), and (c), respectively, will be reduced to zero (to 50% of the unreduced present value in the case of the reduction in category (a) in the present value of the obligation to pay base salary), if necessary, before any reduction is made in any Agreement Benefits listed in a later category. At any time and from time to time the Company and Employee may agree upon a different method of reduction of any contingent payments to avoid the application of sections 280G and 4999 of the Code if the different method is not prohibited by regulations issued under 21 those sections of the Code. If the Company's obligation to pay any Agreement Benefit is reduced by mitigation as provided in Paragraph 9(b) and, as a result of that mitigation and reduction, the amounts of other Agreement Benefits that have been reduced under this Paragraph 20 to avoid the application of sections 280G and 4999 of the Code can be restored in whole or in part without triggering the application of those sections, the amount of those other Agreement Benefits shall be so restored and paid by the Company to the maximum extent possible without triggering the application of those sections. Except as provided in either of the immediately preceding sentences, after contingent payments having an aggregate present value equal to such maximum amount that can be paid or provided without equalling the threshold amount have been paid or provided, no further Agreement Benefits will be paid or provided by the Company to Employee. For purposes of this Paragraph 20, contingent payments include all payments and benefits in the nature of compensation to or for the benefit of Employee that are required to be taken into account for purposes of section 280G(b)(2)(A)(ii) of the Code. For purposes of this Paragraph 20, the present value of Agreement Benefits shall be determined using the interest rate prescribed by section 1274(b)(2) of the Code and applicable regulations and the method described by section 280G(d)(4) of the Code and applicable regulations. 22 IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the day and year first above written. OGLEBAY NORTON COMPANY By: /s/ Renold D. Thompson -------------------------- Renold D. Thompson, President and Chief Executive Officer /s/ John L. Selis ------------------------------ John L. Selis (Employee) EX-10.E 9 EXHIBIT 1 Exhibit 10(e) RIGHT OF FIRST REFUSAL The undersigned director and shareholder (the "Shareholder") of Oglebay Norton Company, a Delaware corporation (the "Company"), in consideration of similar grants by other directors of the Company, hereby grants a right of first refusal with respect to the sale of Common Shares of the Company (the "Common Shares") owned by him, upon the following terms and conditions: 1. Right of First Refusal. Except as provided in Section 2, before selling any Common Shares owned by him, or permitting any individual, corporation or other entity that he controls or that is otherwise affiliated with him (his "affiliate") to sell any Common Shares owned by his affiliate, the Shareholder will notify the Company of the person proposing to purchase the Common Shares and the price and other terms of the proposed sale. The Company will have 30 days following its receipt of this notice to purchase the Common Shares at the price and on the other terms set forth in the notice. If the Company is not willing and able to complete the purchase within the 30-day period, the Shareholder, or his affiliate, as the case may be, may sell the Common Shares to the person, at the price, and on the other terms specified in the notice, provided that the sale is completed within 60 days following the end of the 30-day period. 2. Exceptions. The notice and right of first refusal referred to in Section 1 will not apply to (a) sales made pursuant to a tender offer approved or recommended by the Company's Board of Directors and (b) open-market sales of not more than 1% of the outstanding Common Shares during any twelve month period (provided that the open-market sale is not made to a person known by the Shareholder to own more than 5% of the outstanding Common Shares at the time of the sale). 3. Gifts and Bequests. The Shareholder will not, and will not permit an affiliate of his to, give, bequeath, or otherwise transfer any Common Shares without consideration unless the recipient of the Common Shares agrees to take the Common Shares subject to the restrictions on transfer set forth in this instrument. 4. Term of Restrictions on Transfer. The restrictions on transfer set forth in this instrument will last for the longer of (a) the Shareholder's tenure as a director of the Company and (b) five years from the date of this instrument. 2 5. Confidentiality. The Shareholder acknowledges that, because he is a director of the Company, he must hold in confidence and may not disclose to any person or use, except as may be required for the discharge of his duties as a director, any trade secrets or other confidential information about the Company that may come to his knowledge, including but not limited to technical data or "know how," financial information, information relating to customers and suppliers, business plans and forecasts, and other information relating to the Company's assets and operations. When he ceases to be a director of the Company, the Shareholder will deliver to the Company (a) all documents containing such confidential information then in his possession and (b) all other material then in his possession furnished to him by the Company in his capacity as a director. 6. Miscellaneous. This instrument will be binding upon the Shareholder, his assigns, executors, administrators, and personal representatives; will be interpreted and enforced in accordance with the laws of the State of Ohio; and represents the entire understanding on its subject matter and supersedes all prior understandings. If any provision of this instrument is held to be invalid, void, or unenforceable for any reason, the remaining provisions will nevertheless continue to be in full force and effect. IN WITNESS WHEREOF, the Shareholder has signed this instrument on July 26, 1989. /s/ Malvin E. Bank ------------------------------- The "Shareholder" Also Signed By: William G. Bares Courtney Burton A. M. Rankin Herbert S. Richey Renold D. Thompson Fred R. White, Jr.
-2- EX-10.F 10 EXHIBIT 1 Exhibit 10(f) AGREEMENT THIS AGREEMENT, entered into as of March 2, 1992, is between OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and Mr. John D. Weil ("Weil"). In consideration of the mutual covenants and agreements contained in this Agreement, Weil and the Company agree as follows: 1. Definitions. For purposes of this Agreement, the following terms will have the meanings set forth below: (a) An "affiliate" of a person is another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with that person. Weil's affiliates are deemed to include (but are not limited to) the holders of shares identified in Item 5 of Amendment No. 4 to Schedule 13D, dated February 17, 1992, signed by Weil (the "Schedule 13D"); such inclusion does not, however, constitute a representation or warranty by Weil that he in fact controls, is controlled by, or is under common control with any of such persons. Weil's affiliates are also deemed to include any trust to which Weil or any of his affiliates transfers voting securities of the Company and of which the spouse, children, or grandchildren of Weil or one of his affiliates, as the case may be, are the beneficiaries. -1- 2 (b) "Control," when used with respect to any person, means the power to direct the management or policies of that person, either directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise. (c) "Person" includes (but is not limited to) any individual, corporation, company, partnership, joint venture, group, organization, plan, trust, or other entity. (d) "Voting securities" means securities entitled to vote in the election of directors and securities convertible into, or exchangeable or exercisable for, such securities. 2. Confidentiality. From and after the date of this Agreement, Weil will hold in confidence and will not disclose to any person or use, except as may be required for the discharge of his duties as a director of the Company, any Confidential Information. When Weil ceases to be a director of the Company, he will forthwith deliver to the Company all documents containing such Confidential Information then in his possession and all other material then in his possession furnished to him by the Company in his capacity as a director. As used herein, "Confidential Information" means any trade secrets or other confidential information about the Company that may come to his knowledge during the term of Weil's serving as a director of the Company, including but not limited to -2- 3 technical data or "know how," financial information, information relating to customers and suppliers, business plans and forecasts, and other information relating to the Company's assets and operations. Notwithstanding the above, Confidential Information will not include any information which: (i) is in the public domain or becomes generally available to the public through no wrongful act of Weil, (ii) is contained in any public or governmental filings, including without limitation any filings with the Securities and Exchange Commission or any state securities authorities, or (iii) is disclosed to Weil by a party who is not a director, officer, employee, or agent of the Company. 3. Standstill. During the Term of this Agreement (as defined in Section 8), without the prior approval of a majority of the Company's Board of Directors or except as required or authorized by the terms of this agreement, Weil will not, and will cause his affiliates not to: (a) acquire, directly or indirectly, alone or together with his affiliates, "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than 11% of the voting securities of the Company then outstanding; except that, if the beneficial ownership of voting securities by Weil and his affiliates exceeds 11% of the outstanding voting securities solely by reason of the purchase by the Company of -3- 4 outstanding voting securities, Weil and his affiliates will not be required to dispose of voting securities to reduce their beneficial ownership to not more than 11% of the voting securities then outstanding; (b) except for taking action solely in his capacity as a director of the Company and for the voting of voting securities of the Company beneficially owned by him in accordance with the terms of this Agreement, take, either alone or in concert with any other person, any action that is designed to cause, or may have the effect of causing, a change in the control, management, business or policies of the Company; (c) act jointly with any person (other than the holders of shares included in the Schedule 13D) in the acquisition, holding, disposition, or voting of any voting securities of the Company; (d) "solicit" or participate with others in the solicitation of proxies with respect to voting securities of the Company in opposition to the recommendation of a majority of the Company's Board of Directors, or become a "participant" in opposition to the recommendation of a majority of the Company's Board of Directors in an "election contest" relating to the election of directors of the Company, as those terms are defined in Regulation 14 under the Securities Exchange Act of 1934, as amended; -4- 5 (e) initiate, propose, or support (except for taking action solely in his capacity as a director of the Company and for the voting of voting securities of the Company beneficially owned by him in accordance with the terms of this Agreement) any stockholder proposal relating to the Company that is not supported by a majority of the Company's Board of directors, or induce or attempt to induce any other person to initiate or propose any stockholder proposal relating to the Company that is not supported by a majority of the Company's Board of Directors; or (f) deposit any voting securities of the Company in a voting trust, or subJect any such securities to a voting agreement or other arrangement of similar effect; except that, Weil and his affiliates may deposit any voting securities of the Company in a voting trust, or subject any such securities to a voting agreement or other arrangement of similar effect, if either (i) no securities other than those beneficially owned by Weil or any of the holders of shares included in the Schedule 13D are subject to the voting trust, voting agreement, or other arrangement or (ii) Weil retains sole voting power with respect to all of the securities subject to the voting trust, voting agreement, or other arrangement. 4. Sale of Voting Securities of the Company. During the Term of this Agreement, without the prior approval of a majority of the Company's Board of -5- 6 Directors, Weil will not, and will cause his affiliates not to, dispose of any voting securities of the Company, except: (a) pursuant to a tender offer approved or recommended by the Company's Board of Directors; (b) in open-market sales during any three-month period not exceeding 1% of the shares outstanding as shown by the most recent Quarterly or Annual Report of the Company to the Securities and Exchange Commission; provided that no such sale may be made if Weil knows that the sale is being made to a purchaser that beneficially owns at the time of the sale 5% or more of the outstanding voting securities of any class of the Company; (c) in a sale as to which the Company has been given a right of first refusal in accordance with this section 4(c). To make such a sale, Weil or his affiliates, as the case may be, must notify the Company of the person proposing to purchase the voting securities and the price and other terms of the proposed sale. The Company will have 15 days following its receipt of this notice to purchase the voting securities at the price and on the other terms set forth in the notice. If the Company is not willing and able to complete the purchase within the 15-day period, Weil or his affiliates, as the case may be, may sell the voting securities to the person, at the price, and on the other terms specified in the notice, provided that -6- 7 the sale is completed within 60 days following the end of the 15-day period; or (d) in a gift or other transfer without consideration to (i) an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, (ii) to the spouse, children, or grandchildren of Weil or one of his affiliates, as the case may be, provided that the purpose of the transfer is not to circumvent the provisions of this Agreement, or (iii) to a trust of which the spouse, children, or grandchildren of Weil or one of his affiliates, as the case may be, are the beneficiaries. If Weil or one or more of his affiliates shall desire to dispose of any voting securities of the Company and shall be precluded from doing so by the terms of this Agreement, the Company and Weil or such affiliates shall cooperate with each other in a good faith effort to arrange a purchase of such voting securities by the Company or by a mutually satisfactory third party or third parties upon mutually acceptable terms. 5. Voting of Voting Securities Beneficially owned by Weil and his Affiliates. (a) During the Term of this Agreement, Weil will: (i) not vote any voting securities of the Company beneficially owned by him, and cause his affiliates not to vote any voting securities of the Company beneficially owned by them, for -7- 8 any nominee for election as a director who is not recommended by a majority of the Company's Board of Directors; if any voting securities of the Company beneficially owned by Weil or his affiliates are included in a quorum at any stockholders meeting at which directors are elected, Weil will vote or cause to be voted all such voting securities for the election of the nominee or nominees recommended by a majority of the Company's Board of Directors. (ii) not vote any voting securities of the Company beneficially owned by him, and cause his affiliates not to vote any voting securities of the Company beneficially owned by them, for any proposal to amend the Certificate of Incorporation or the Bylaws of the Company, or to adopt a new or restated Certificate of Incorporation or Bylaws of the Company, unless the proposal is recommended by a majority of the Company's Board of Directors. (b) In all matters submitted to the Company's stockholders for a vote other than those referred to in Section 5(a), including but not limited to any action on stock option or other executive compensation plans, Weil and his affiliates may vote their voting securities without restriction. -8- 9 6. Remedies. (a) Weil agrees that he will, forthwith upon the request of the Company's Board of Directors, resign as a director of the Company in the event that he deliberately breaches any of his covenants in this Agreement. Any such resignation will not terminate this Agreement or preclude the Company or Weil from seeking any other remedies to which either of them may be entitled by reason of the breach by the other party of any term of this Agreement. (b) Weil acknowledges that any breach of his covenants in this Agreement would cause immediate and irreparable harm to the Company and, therefore, consents to the entry, by a court of competent jurisdiction, of any temporary, preliminary, or permanent injunction that would arrest or redress any such breach. The Company agrees that any such injunction would be its exclusive remedy for a breach by Weil of his obligations under Sections 3, 4, and 5 of this Agreement, except that, in the event Weil (i) solicits or participates in the solicitation of proxies or participates in an election contest in violation of his obligations Section 3(d) or (ii) initiates, proposes, or supports, or induces any other person to initiate or propose, any stockholder proposal in violation of his obligations under Section 3(e), the Company will also be entitled to recover monetary damages in the amount of the expenses (including attorneys' fees) incurred by the -9- 10 Company in opposing the proxy contest, election contest, or stockholder proposal. The inability of Weil to cause his affiliates to act in accordance with the provisions of this Agreement, following diligent efforts to cause them to do so, shall not result in liability to Weil for monetary damages hereunder. 7. Election of Weil as a Director. Following the execution and delivery of this Agreement, the Board of Directors will nominate Weil for, and will solicit proxies for his election for, successive terms as a Director of the Company ending not sooner than the Annual Meeting of Stockholders to be held in 1998. 8. Term of Agreement. The "Term of this Agreement" will begin on the date that this Agreement is approved by the Company's Board of Directors and will end as follows: (a) If the Board of Directors fails to nominate Weil for, or to solicit proxies for his election for, successive terms as a Director of the Company ending not sooner than the Annual Meeting of Stockholders to be held in 1998, the Term of this Agreement will end when Weil's term in office expires. (b) If Weil ceases to serve as a Director by reason of his resignation, death, or incapacity, the term of this Agreement will end upon the expiration of both (i) the date on which Weil ceases to serve as a Director and (ii) one year following the date of this Agreement. -10- 11 A termination under this Section 8 shall relieve Weil of all of his obligations hereunder other than the obligations relating to confidentiality set forth in Section 2. 9. Miscellaneous. This Agreement will be binding upon the Company, its successors and assigns, and upon Weil, his assigns, executors, administrators, or personal representatives; will be interpreted and enforced in accordance with the laws of the State of Ohio; and represents the entire understanding between the parties on its subject matter and supersedes all prior understandings. If any provision of this Agreement is held to be invalid, void, or unenforceable for any reason, the remaining provisions of this Agreement will nevertheless continue to be in full force and effect. IN WITNESS WHEREOF, the Company and Weil have executed this Agreement as of the date first written above. OGLEGAY NORTON COMPANY By /s/ Renold D. Thompson ----------------------------- /s/ John D. Weil ------------------------------- John D. Weil
-11- EX-10.G 11 EXHIBIT 1 Exhibit 10(g) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is entered into as of the 26th day of February, 1992, by and between OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and R. THOMAS GREEN, JR., ("Employee"). W I T N E S S E T H: WHEREAS, Employee has for many years served the Company in many different capacities, each with increasing responsibility and increasing importance to the Company, and has fully, ably, and responsibly discharged the duties of his various positions with the Company; and WHEREAS, the Board of Directors of the Company (the "Board") has determined that it would be in the best interests of the Company and its shareholders to have the Company enter into this Employment Agreement with Employee to secure his services as Chairman of the Board, President, and Chief Executive Officer of the Company; NOW, THEREFORE, the Company and Employee agree as follows; 1. Employment Contract Period. (a) During the period specified in Paragraph 1(b), the Company shall employ Employee, and Employee shall serve the Company, as Chairman of the 2 Board, President, and Chief Executive Officer of the Company on the terms and subject to the conditions set forth herein. (b) The term of Employee's employment hereunder shall commence on April 1, 1992 (the "Effective Date") and, subject to prior termination as provided in Paragraph 7 hereof, shall continue for three years until March 31, 1995. The term of Employee's employment hereunder is sometimes hereinafter referred to as the "Contract Period". 2. Position, Duties, Responsibilities. At all times during the Contract Period, Employee shall: (a) Hold the position and have the duties and responsibilities of Chairman of the Board, President, and Chief Executive Officer of the Company as those duties and responsibilities have been understood by the executive officers of the Company and by its Board through the Effective Date and as those duties and responsibilities may be defined and extended, from time to time after the Effective Date, by the Board with Employee's consent; (b) Adhere to and implement the policies and directives promulgated, from time to time, by the Board; (c) Observe all Company policies applicable to executive officers of the Company; -2- 3 (d) Devote his business time, energy, and talent to the business of and to the furtherance of the purposes and objectives of the Company to generally the same extent as he has so devoted his business time, energy, and talent as an officer of the Company before the Effective Date, and neither directly nor indirectly render any business, commercial, or professional services to any other person, firm, or organization for compensation without the prior approval of the Board; and (e) Serve as a Director of the Company and as a member of any Board committees determined by the Board, upon the same terms and conditions as any other employee of the Company who also serves as a Director. Nothing in this Agreement shall preclude Employee from devoting reasonable periods of time to charitable and community activities or the management of his investment assets provided such activities do not materially interfere with the performance by Employee of his duties hereunder. 3. Compensation. For services actually rendered by Employee on behalf of the Company during the Contract Period as contemplated by this Agreement the Company shall pay to Employee a base salary at the rate of $225,000 per year or such greater amount as the Board, upon recommendation of the Compensation and Organization Committee, may determine. The base salary shall be paid to -3- 4 Employee in the same increments and on the same schedule each month as in effect for Employee's base salary as an officer of the Company on the Effective Date. Employee shall not be entitled to any base salary during any period when he is receiving long-term disability benefits under the Disability Benefit Arrangement provided to Employee by the Company. 4. Automobile. During the Contract Period, the Company will provide Employee with a suitable automobile (of a class and relative model year at least as good as provided to Employee on the Effective Date) purchased or leased by the Company. The Company will pay all maintenance expenses with respect to the automobile; will procure and maintain in force at the Company's expense collision, comprehensive, and liability insurance coverage with respect to the automobile; and will pay operating expenses with respect to the automobile to the extent such operating expenses are incurred in the conduct of the Company's business. 5. Vacation. Employee will be entitled to such periods of vacation and sick leave allowance each year as are determined by the Company's vacation and sick leave policy for executive officers as in effect on the Effective Date or as may be increased from time to time thereafter. Neither vacation time nor sick leave allowance will be accumulated from year to year. -4- 5 6. Other Company Plans, Benefits, and Perquisites. Employee shall be entitled to participate in the Company's Pension Plan for Salaried Employees; the unfunded excess benefit plan maintained in conjunction with the Salaried Plan; the Salary Continuation Arrangement; the Disability Benefit Arrangement; his Split Dollar Insurance Agreement with the Company; the post-retirement Death Benefit Arrangement; the Incentive Savings Plan; the 1983 Stock Equivalent Plan; and every other employee benefit plan not specifically referred to in this Agreement that is generally available to executive officers of the Company at any time during the Contract Period. Employee's participation in and benefits under any such plan shall be on the terms and subject to the conditions specified in the governing document of the particular plan which terms and conditions shall not be amended during the Contract Period unless the benefits to Employee are at least as great under the plan as amended (or under a substitute plan or arrangement) as were the benefits under the plan as in effect on the Effective Date. The Company will also provide Employee with such perquisites as the Company has customarily provided to its top executive officers. 7. Termination. (a) Employee's employment hereunder will terminate without further notice upon the death of Employee. -5- 6 (b) The Company may terminate Employee's employment hereunder effective immediately upon giving notice of such termination; (i) For "cause," (A) if Employee commits an act of fraud, embezzlement, theft, or other similar criminal act constituting a felony and involving the Company's business or (B) if Employee breaches his agreement with respect to the time to be devoted to the business of the Company set forth in Paragraph 2(d) hereof and fails to cure such breach within 30 days of receipt of written notice of such breach from the Board; or (ii) Upon disability, if Employee is prevented from performing his duties hereunder by reason of physical or mental incapacity for a period of 180 consecutive days. (c) Employee may terminate his employment hereunder effective immediately upon giving of notice of such termination: (i) Without cause at any time; or (ii) For "good reason," which, for purposes of this Agreement shall -6- 7 mean the occurrence of any of the following: (A) Any reduction in aggregate direct remuneration, position, responsibilities, or duties contemplated for Employee under this Agreement or any material reduction in the aggregate of employee benefits, perquisites, or fringe benefits contemplated for Employee under this Agreement; or (B) Any good faith determination by Employee that, as a result of fundamental differences of opinion between Employee and the Board as to the goals of the Company, Employee is unable to carry out the responsibilities and duties contemplated for Employee under this Agreement. 8. Severance Compensation. (a) If Employee's employment is terminated before March 31, 1995 by the Company without cause or by Employee for good reason, then, except as provided in Paragraph 8(b), 8(c), 8(d), or 8(e), the Company -7- 8 shall pay and provide to Employee the following compensation and benefits through March 31, 1995: (i) Base salary at the highest monthly rate payable to Employee during the Contract Period, to be paid at the times provided in Paragraph 3 hereof; (ii) Coverage under the Company's medical insurance plan, short-term disability plan, and long-term disability plan, Salary Continuation Arrangement, Disability Benefit Arrangement, Split Dollar Insurance Agreement, and post-retirement Death Benefit Arrangement, each as in effect on the Effective Date (or, if terminated and replaced by a successor plan or benefit arrangement, as so provided in such successor plan or benefit arrangement or, if subsequently amended to increase benefits to Employee or his dependents, as so amended) and each as if Employee's employment had continued through March 31, 1995; and (iii) Coverage under the Company's unfunded excess benefit plan -8- 9 as if Employee's employment had continued through March 31, 1995. If any of the benefits to be provided under one or more of the plans, agreements, or arrangements specified above can not be provided through that plan, agreement, or arrangement to Employee following termination of his employment, the Company shall directly provide the full equivalent of such benefits to Employee. (b) If Employee becomes entitled to compensation and benefits pursuant to Paragraph 8(a) he shall use reasonable efforts to seek other employment, provided, however, that he shall not be required to accept a position of less importance and dignity or of substantially different character than that of Chairman of the Board, President, and Chief Executive Officer of the Company or a position that would require Employee to engage in activity in violation of Employee's agreement with respect to noncompetition set forth in Paragraph 10 hereof nor shall he be required to accept a position outside the greater Cleveland area. The Company's obligations under items (i) and (ii) of Paragraph 8(a) will be offset by payments and benefits received by Employee from another employer to the following extent: -9- 10 (i) The Company's obligation to pay any particular installment of base salary following Employee's termination will be offset, on a dollar for dollar basis, by any cash compensation received by Employee from another employer before the date on which the installment of base salary is payable by the Company. (ii) To the extent that Employee is provided medical, dental, short-term or long-term disability income protection, or life insurance benefits by another employer during any period, the Company will be relieved of its obligation to provide such benefits to Employee. For example, if a new employer provides Employee with a medical benefits plan that pays $500.00 for a specific claim made by Employee and the Company's medical insurance plan would have paid $750.00 for that claim, then the Company will be obligated to pay Employee $250.00 with respect to that claim. -10- 11 Other than as provided in this Paragraph 8(b) Employee shall have no duty to mitigate the amount of any payment or benefit provided for in this Agreement. (c) If during any period in which Employee is entitled to payments or benefits from the Company under Paragraph 8(a); (i) Employee materially and willfully breaches his agreement with respect to confidential information set forth in Paragraph 9 hereof and such breach directly causes the Company substantial and demonstrable damage; or (ii) Employee materially and willfully breaches his agreement with respect to noncompetition set forth in Paragraph 10 hereof and such breach directly causes the Company substantial and demonstrable damage; then the Company will be relieved of its obligations under Paragraph 8(a) hereof as of the first day of the month immediately following the date of such material breach. (d) If Employee dies during any period in which he is entitled to payments or benefits from the Company under Paragraph 8(a), the Company will be relieved of its obligations under item (i) of -11- 12 Paragraph 8(a) and the Company will provide to Employee's beneficiaries and dependents death benefits and continuing medical and dental benefits to the same extent as if Employee's death had occurred while Employee was in the active employ of the Company. (e) If at any time Employee becomes entitled to payments or benefits from the Company both under Paragraph 8(a) of this Agreement and under any provision of the "Change of Control Agreement" (defined and amended by Paragraph 11, below), Employee shall be entitled to receive, with respect to each category of payments and benefits, all of the payments and benefits provided for under that agreement (either this Agreement or the Change of Control Agreement) that is most favorable to Employee but Employee shall not be entitled to a double payment with respect to any calendar period. 9. Confidential Information. Employee agrees that he will not, during the term of the Agreement or at any time thereafter, either directly or indirectly, disclose or make known to any other person, firm, or corporation any confidential information, trade secret, or proprietary information of the Company that Employee may acquire in the performance of Employee's duties hereunder. Upon the termination of Employee's employment with the Company, Employee agrees to deliver forthwith to the -12- 13 Company any and all literature, documents, correspondence, and other materials and records furnished to or acquired by Employee during the course of such employment. 10. Noncompetition. During any period in which Employee is receiving base salary under this Agreement (whether during the Contract Period pursuant to Paragraph 3 or following termination pursuant to Paragraph 8(a)) and for a period of one year after Employee last receives base salary under this Agreement, Employee shall not act as a proprietor, investor, director, officer, employee, substantial stockholder, consultant, or partner in any business engaged to a material extent in direct competition with the Company in any market in any line of business engaged in by the Company during the Contract Period. 11. Change of Control Agreement. The Company and Employee are parties to another employment agreement (intended to become effective upon a change of control of the Company) entered into in 1987 by and between the Company and Employee (as amended to date, as amended in the remainder of this Paragraph 11, and as may be amended from time to time by the Company and Employee, the "Change of Control Agreement"). The Change of Control Agreement is hereby amended by substituting for the original Paragraph 20 thereof (captioned "Limitation on Contingent -13- 14 Payments") a new Paragraph 20 to read in its entirety, with its caption, as follows: "20. Excise Tax. As to the Company's obligation if any of the payments or benefits to be paid and provided to Employee by the Company under any provision of this Agreement or any portion of any such payment or benefits would constitute "excess parachute payments" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor provision, see Paragraph 13 of the Employment Agreement between Employee and the Company pursuant to which Employee is employed as Chairman of the Board, President, and Chief Executive Officer effective April 1, 1992. Except for the prohibition of double payments contained in Paragraph 8(e), above, nothing in this Agreement shall limit Employee's rights under the Change of Control Agreement. 12. Costs of Enforcement. The Company shall pay and be solely responsible for any and all costs and expenses (including attorneys' fees) incurred by Employee in seeking to enforce the Company's obligations under this Agreement unless and to the extent a court of competent jurisdiction determines that the Company was relieved of those obligations because (a) the Company terminated Employee for cause (as determined under -14- 15 Paragraph 7(b)(i) hereof), (b) Employee voluntarily terminated his employment other than for good reason (as determined under Paragraph 7(c)(ii) hereof), or (c) Employee materially and willfully breached his agreement not to compete with the Company or his agreement with respect to confidential information and such breach directly caused substantial and demonstrable damage to the Company. The Company shall forthwith pay directly or reimburse Employee for any and all such costs and expenses upon presentation by Employee or by counsel selected from time to time by Employee of a statement or statements prepared by Employee or by such counsel of the amount of such costs and expenses. If and to the extent a court of competent jurisdiction renders a final binding judgment determining that the Company was relieved of its obligations for any of the reasons set forth in (a), (b), or (c) above, Employee shall repay the amount of such payments or reimbursements to the Company. In addition to the payment and reimbursement of expenses of enforcement provided for in this Paragraph 12, the Company shall pay to Employee in cash, as and when the Company makes any payment on behalf of, or reimbursement to, Employee, an additional amount sufficient to pay all federal, state, and local taxes (whether income taxes or other taxes) incurred by Employee as a result of (x) payment of the expense or receipt of the reimbursement, and (y) receipt of the -15- 16 additional cash payment. The Company shall also pay to Employee interest (calculated at the Base Rate from time to time in effect at National City Bank, Cleveland, Ohio, compounded monthly) on any payments or benefits that are paid or provided to Employee later than the date on which due under the terms of this Agreement. 13. Excise Tax. If any of the payments or benefits to be paid and provided to Employee by the Company under any provision of this Agreement, under any provision of the Change of Control Agreement, or under any provision of any other agreement, plan, or arrangement, or any portion of any such payment or benefits would constitute "excess parachute payments" within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor provision, the Company shall make additional cash payments to Employee at the same times as any such payment or benefit constituting an excess parachute payment is paid or provided and in such amounts as are necessary to put Employee in the same position after payment of all federal, state, and local taxes (whether income taxes, excise taxes under section 4999 of the Code or otherwise, or other taxes) as he would have been in after payment of all federal, state, and local income taxes if the payments or benefits had been subject only to federal, state, and local income taxes generally applicable to compensation income. For example, -16- 17 if a $100,000 payment to Employee constituted an excess parachute payment subject to a 20% excise tax under section 4999 of the Code, as well as federal income tax at a 28% effective rate, state income tax at a 10% marginal rate, and local income tax at a 2% marginal rate and no other taxes, and the state and local taxes were deductible for federal income tax purposes, the Company would be required to pay to Employee an additional $46,748 with respect to the $100,000 excess parachute payment. The net amount available to Employee after all taxes, including the excise tax on both the $100,000 and the $46,748, would be $63,630, the same amount that would be available to Employee had the $100,000 payment been subject only to federal, state and local income taxes. 14. Notices. For purposes of this Agreement, all communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (Attention: Secretary) at its principal executive office and to Employee at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance effective only upon receipt. -17- 18 15. Assignment Binding Effect. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company and the Company's successors and assigns. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. (b) This Agreement shall be binding upon Employee and this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee and his personal or legal representatives, executors, or administrators. No right, benefit, or interest of Employee hereunder shall be subject to assignment, anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation, or to execution, attachment, levy, or similar process; except that Employee may assign any right, benefit, or interest hereunder if such assignment is permitted under the terms of any plan or policy of insurance or annuity contract governing such right, benefit, or interest. -18- 19 16. Invalid Provisions. (a) Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent, but only to the extent, of such prohibition or unenforceability without invalidating the remaining portions hereof and such remaining portions of this Agreement shall continue to be in full force and effect. (b) In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable, the parties will negotiate in good faith to replace such provision with another provision that will be valid or enforceable and that is as close as practicable to the provision held invalid or unenforceable. 17. Entire Agreement, Modification. Except for the Change of Control Agreement, this Agreement contains the entire agreement between the parties with respect to the employment of Employee by the Company and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No modification, amendment, or waiver of any of the provisions of the Agreement shall be effective unless in writing, specifically referring hereto, and signed by both parties. 18. Waiver of Breach. The failure at any time to enforce any of the provisions of this Agreement or -19- 20 to require performance by the other party of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement or the right of either party thereafter to enforce each and every provision of this Agreement in accordance with the terms hereof. 19. Governing Law. This Agreement has been made in and shall be governed and construed in accordance with the laws of the State of Ohio. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the day and year first above written. Attest: OGLEBAY NORTON COMPANY /s/ David A. Kuhn By: /s/ Richard J. Kessler - ----------------------------------------- ---------------------------------- David A. Kuhn Richard J. Kessler Secretary Vice President-Finance and Treasurer /s/ R. Thomas Green, Jr. ---------------------------------- R. Thomas Green, Jr.
-20- EX-21 12 EXHIBIT 1 EXHIBIT 21 SUBSIDIARIES OF OGLEBAY NORTON COMPANY -------------------------------------- Jurisdiction Subsidiaries of Incorporation ------------ ---------------- California Silica Products Company California Canadian Ferrto Hot Metal Specialties Limited Ontario Central Silica Company Ohio Indiana Manufacturing Company Inc. Indiana Laxare, Inc. West Virginia National Perlite Products Company Idaho Oglebay Norton Sales Company Ohio Oglebay Norton Taconite Company Minnesota ON Coast Petroleum Company Texas ONCO Eveleth Company Minnesota ONCO Minerals, Inc. Ohio ONCO WVA, Inc. West Virginia ON Corp. Delaware Pringle Transit Company Ohio Saginaw Mining Company Ohio TBF, Inc. Ohio Texas Mining Company Texas Tuscarawas Manufacturing Company Ohio EX-23 13 EXHIBIT 1 EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in the following Registration Statements and Post-Effective Amendment of our report dated February 18, 1994, with respect to the consolidated financial statements and schedules of Oglebay Norton Company included in this Annual Report (Form 10-K) for the year ended December 31, 1993: Registration Statement Number 33-37974 on Form S-8 dated November 23, 1990 pertaining to the Olgebay Norton Company Incentive Savings Plan and Trust; Registration Statement Number 33-37975 on Form S-8 dated November 23, 1990 pertaining to the Olgebay Norton Taconite Company Thrift Plan and Trust; Post-Effective Amendment Number 4 to Registration Statement Number 2-80895 on Form S-8 dated February 13, 1990 pertaining to the Olgebay Norton Company Incentive Savings Plan and Trust; Registration Statement Number 33-29046 on Form S-8 dated June 9, 1989 pertaining to the Olgebay Norton Company Employee Stock Ownership Plan and Trust; Registration Statement Number 33-21006 on Form S-8 dated April 21, 1988 pertaining to the Olgebay Norton Company Employee Stock Ownership Plan and Trust. /S/ ERNST & YOUNG ERNST & YOUNG Cleveland, Ohio March 28, 1994 -----END PRIVACY-ENHANCED MESSAGE-----