-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E1KTeF3m6ykhXadkWwsA7M23DRyiZxCiu95p44/OD9e/tunNj9PKW7a6pmP2o/NO pLT6JO1PpIyS0Id/vcUGdQ== 0000950152-97-002533.txt : 19970430 0000950152-97-002533.hdr.sgml : 19970430 ACCESSION NUMBER: 0000950152-97-002533 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-00663 FILM NUMBER: 97570481 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-K405 1 OGLEBAY NORTON COMPANY 10-K405 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, 1996 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 - 20th Floor, 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 11, 1997: 2,407,231 The aggregate market value of voting stock held by non-affiliates of the Registrant at March 11, 1997 (calculated by excluding the total number of shares reported under Item 12 hereof) was $ 70,191,436. Portions of the following document are incorporated by reference: Proxy Statement for 1997 Annual Meeting of Stockholders (Part III) The Exhibit Index is located herein beginning at page I-1. 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, whose predecessors date back to 1854, was incorporated in Delaware in 1931. Its wholly-owned subsidiaries are engaged in the transportation, mining and sale of industrial minerals, and the design and manufacture of metallurgical treatment and refractory products. The principal offices of the Registrant are located at 1100 Superior Avenue, Cleveland, Ohio 44114-2598. The information regarding the amounts of consolidated net sales and operating revenues, consolidated income (loss) from operations and consolidated identifiable assets for the three years ended December 31, 1996, attributable to each of the Registrant's industry segments, Marine Transportation, Industrial Sands and Engineered Materials, appears in Note J of the Consolidated Financial Statement on pages F-18 and F-19 of this Annual Report on Form 10-K. On December 23, 1996, the Registrant sold its entire interest in Eveleth Taconite Company and Eveleth Expansion Company (referred to in previous filings as "Eveleth Mines"), over-riding royalties, certain mining equipment, and the capital stock of Oglebay Norton Taconite Company (previously a wholly-owned subsidiary which was the employer at Eveleth Mines) to Eveleth Mines LLC and Rouge Steel Company in exchange for $5,000,000 and the assumption by the owners of liabilities as defined in the sale agreement. The sale of the discontinued operations resulted in a gain of $570,000 (net of the income tax benefit of $744,000). See Note B-Discontinued Operations of the Consolidated Financial Statements for the operating results of the discontinued operations. Net assets and liabilities of the discontinued operations are presented in the consolidated balance sheet on pages F-4 and F-5. B. Principal Products and Services ------------------------------- 1. Marine Transportation --------------------- The Registrant operates U.S. flag self-unloading vessels engaged in the transportation of iron ore, coal, limestone and other dry bulk cargo on the Great Lakes, serving the integrated steel, electric utility and construction industries. The Registrant's fleet consists of self-unloading vessels which are designed to unload cargo without shoreside assistance. Nine (9) 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 the Registrant's Great Lakes vessels is due to a scheduled program of regular winter maintenance, periodic renovation and the lack of corrosion because of freshwater operations. One of the owned vessels, the M/V Columbia Star, a 1,000-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 Note H of the Notes to Consolidated Financial Statements for disclosure of financial data with respect to these bonds. Another vessel, the M/V 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 2 3 agreement provides an option to purchase the equity position in the vessel on the semiannual charter hire payment dates in each year and an option to purchase the vessel at the end of the charter period. In October 1996, the Registrant gave notice of its intent to exercise its option to purchase the equity position in the M/V Wolverine on April 15, 1997, at a price to be determined under an appraisal process set forth in the bareboat charter. The price has not been determined as of the date of this filing. The two other leased vessels, the M/V David Z. Norton and the M/V Earl W. Oglebay, formerly known as the M/V William R. Roesch and the M/V Paul Thayer, respectively, are leased under bareboat subcharter and charter agreements, respectively, which expire in 1998 and provide options to purchase the vessels at the end of their respective terms. The Registrant's Marine Transportation business is seasonal. An ordinary annual Great Lakes vessel season of navigation is approximately 259 calendar days. However, the season is affected by weather conditions and customer demand for service which causes the actual days of operation to vary each year. In 1996, the number of vessel sailing days was 3,336 as compared to 3,469 sailing days in 1995. The decrease in the number of vessel sailing days in 1996 as compared to 1995 was the result of unusually bad weather during the first, second and fourth quarters. The decreased sailing days, along with higher fuel costs, negatively impacted operating revenues and costs. In 1996 and 1995, the Registrant operated twelve (12) vessels during each season. Despite the reduced number of sailing days, the Registrant's fleet carried approximately 22.1 million tons in 1996, compared to 21.5 million tons in 1995. The Registrant competes with three other similar-sized U.S. flag Great Lakes commercial fleets and certain steel companies which operate smaller captive fleets. The Registrant's fleet consumes substantial amounts of petroleum fuel products which presently are in adequate supply. On March 19, 1997, the Registrant's wholly-owned subsidiary, Oglebay Norton Terminals, Inc., entered into a 10-year agreement with the Cleveland-Cuyahoga County Port Authority (with an option to extend for an additional 10 years) to lease a dock facility in Cleveland, Ohio. The dock facility will receive cargo from Great Lakes vessels, store it as needed, and transfer cargo for further shipment via surface transportation. The dock facility will also be utilized for the processing and treatment of in-bound and out-bound cargo of dry-bulk commodities such as iron ore, coal, sand, limestone, magnetic concentrate ore, salt, cement and coke. The Registrant expects that its subsidiary will commence operation of the dock facility on April 1, 1997. 2. Engineered Materials -------------------- The Registrant's Engineered Materials segment (formerly referred to as the Refractories & Minerals segment) is operated through its wholly-owned subsidiaries Oglebay Norton Engineered Materials, Inc. and Canadian Ferro Hot Metal Specialties Limited. The Engineered Materials segment designs, manufactures and markets ingot hot top products used in molten steel processing, and designs, produces and markets metallurgical treatment products used in the refining of continuous cast and molten steel. The metallurgical treatment products manufactured by the Engineered Materials segment, which account for 11.2% of the Registrant's consolidated net sales and operating revenues, utilize recycled LMF slag and other raw materials under a patent issued by the United States Patent and Trademark Office and assigned to the Registrant, which will expire in 2013. The patent permits the Registrant to produce metallurgical treatment products with superior performance characteristics and at a lower cost than is otherwise possible. LMF slag is an important component in products produced under the patent, the present supply of which the Registrant believes to be adequate. The Registrant believes the patent provides it with a competitive advantage in the market for metallurgical treatment products. 3 4 The Engineered Materials segments also manufactures and sells hot tops, a coated lid-like covering placed on top of the ingot, which increases the yield from this method of producing steel. The Registrant believes the market for hot tops is expected to decline 30-40% before it stabilizes in the near future. The following is a list of the plants of the Engineered Materials segment:
PLANT LOCATION ACTIVE/INACTIVE - - -------------- --------------- Cleveland, Ohio Inactive / Closed in November, 1996 Dunkirk, Indiana Active Kingsford Heights, Indiana Active/Acquired on November 5, 1996 Warren, Ohio Active Stoney Creek, Ontario Active
Oglebay Norton Engineered Materials, Inc. and Canadian Ferro Hot Metal Specialties Limited own the plants and the properties on which the plants are located. The Cleveland Plant was closed in November 1996 in order to achieve greater operating efficiencies. The building and property, which are not material to the Registrant's consolidated assets, will be sold. 3. Industrial Sands ---------------- Oglebay Norton Industrial Sands, Inc., a wholly-owned subsidiary of the Registrant, mines and processes industrial sands for the glass, ceramic, recreational, foundry and oil well service industries. The following is a list of the plants of Oglebay Norton Industrial Sands, Inc.:
CURRENT MINIMUM PLANT NAME AND CAPACITY (TONS YEARS OF LOCATION (1) MARKETS SERVED IN 000s) RESERVES (2) - - ------------ -------------- -------- ------------ ORANGE COUNTY Construction, Specialty and 550 15.2 San Juan Capistrano, CA Recreational Sands RIVERSIDE Pulverized Sand 50 N/A Riverside, CA GLASS ROCK Glass, Foundry and Ceramic Sands 500 18.6 Glenford, OH MILLWOOD Glass, Foundry and Ceramic Sands 280 26.4 Howard, OH BRADY Fracture, Filter, Abrasives, 1,200 143.5 Brady and Voca, TX Industrial, and Pulverized Sands BAKERSFIELD Specialty Sands 20 N/A Bakersfield, CA
4 5 (1) Oglebay Norton Industrial Sands, Inc. owns all of the listed properties except for the Orange County, California plant, which is held under a lease expiring in 2013. (2) Based on full production at current rated annual capacity. The Bakersfield Plant, which is a sand rescreening operation acquired by the Company on January 2, 1997, provides well-packing feedstocks to service companies in the oil and gas industry, and vertically integrates a portion of this Segment's product lines. The Registrant's silica sand operations produced approximately 1,537,000 tons of sand in 1996. The processed sand sold by the Registrant's industrial sand business move by truck and rail to consumers. 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 price, product quality and 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 environmental laws and regulations imposed by federal, state and local governments. The Registrant cannot reasonably estimate future costs related to compliance with these laws and regulations. However, costs incurred to comply with environmental regulations have not been other than in the ordinary course of business. 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 adverse effect on the Registrant's consolidated financial position. The Registrant is unable to predict the effects of future environmental laws and regulations upon its business. E. Principal Customers ------------------- More than 10% of the Registrant's 1996 net sales and operating revenues was attributable to each of Detroit Edison Company, AK Steel Corporation and LTV Steel Company, Inc. Long-term vessel transportation contracts were the primary sources of revenues from each of the principal customers with additional revenues generated from the sale of iron ore pellets to AK Steel Company and sale of refractory and metallurgical treatment products to LTV Steel Company, Inc. As noted on page 2, the Registrant is no longer in the iron ore business. F. Employees --------- At December 31, 1996, the Registrant and its subsidiaries employed 935 persons. 5 6 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 Registrant's subsidiary, Laxare, Inc. ("Laxare"), is a defendant in a civil action in the Circuit Court of Kanawha County, West Virginia (the "State Court") in which plaintiffs seek compensatory and punitive damages for coal mining and other activity on land in which plaintiffs allegedly hold an interest. Laxare engaged in coal mining and other activities pursuant to a 1968 lease (the "Lease"), allegedly invalid as against plaintiffs. Identical allegations were made by plaintiffs against codefendant Cannelton Industries, Inc. ("Cannelton"), to which Laxare subleased its interest under the Lease. Plaintiffs seek compensatory and punitive damages in an unspecified amount against Laxare and Cannelton. Cannelton has filed a cross-claim against Laxare under the terms of the sublease for any damages it may suffer as a result of the lawsuit. In August 1995, Laxare sought protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia (the "Bankruptcy Court"). Following the entry of a partial summary judgment order by the State Court against Cannelton, Cannelton removed the State Court case to the Bankruptcy Court and then sought reconsideration of the State Court's order. In an order issued October 31, 1996, the Bankruptcy Court remanded the case back to the State Court and lifted its automatic stay of proceedings in that court with respect to Laxare, provided that any claims against Laxare that result from an award of damages by the State Court must be asserted in the Bankruptcy Court. The order also granted Laxare's motion to assume four leases which are the property of the Bankruptcy Estate, and permitted Laxare to sublease them to a third party. Following remand of the case to the State Court, the State Court issued a partial summary judgment order against Laxare finding that a trespass by Laxare and Cannelton did occur and rejecting Laxare's and Cannelton's defenses to the alleged trespass. Laxare will file with the West Virginia Supreme Court a petition for appeal from the partial sumary judgement order. Laxare is unable to predict, at this time, the result of the Bankruptcy proceeding which will follow the State Court actions. The Registrant believes that the Bankruptcy proceeding is unlikely to have a material adverse effect on the Registrant's consolidated financial position. (2) 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, but currently believes that these claims and proceedings are unlikely to have a material adverse effect on the Registrant's financial position. 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. 6 7 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 11, 1997, unless otherwise indicated, were as follows.
Name Executive Officer Age ---- ----------------- --- R. Thomas Green, Jr. Chairman of the Board, President and Chief Executive Officer (since 59 1992); Executive Vice President (1990-1992); and Director Mark P. Juszli Vice President-Industrial Sands (since 1995); General 45 Manager-Industrial Sands (1994-1995); Senior Vice President - Ohio Region, American Aggregates Corp., Dayton, Ohio, producer of construction aggregates (1993-1994); President, Western Rock Products, Inc., Albuquerque, New Mexico, producer of railroad ballast (1992-1993) Richard J. Kessler Vice President-Finance and Planning (since 1995); Vice President - 60 Finance and Development (1994-1996); Vice President and Treasurer (1981-1994) H. William Ruf Vice President-Administrative and Legal Affairs (since 1994); Vice 62 President-Human Resources (1993-1994); Vice President-Employee Relations (1992-1993); Vice President- Personnel and Industrial Relations (1978-1992) Stuart H. Theis Vice President-Marine Transportation (since 1994); Assistant to the 54 President (1992 - 1993) Timothy J. Wojciechowski Vice President-Engineered Materials (since 1997); Vice 41 President-Refractories & Minerals (1995-1997); President and Chief Executive Officer, Concast Standard, Inc., supplier of continuous cast equipment to the steel industry (1994-1995); Director of Marketing, North American Refractories Company, supplier to the steel industry (1992-1994)
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. 7 8 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND ---------------------------------------- RELATED STOCKHOLDER MATTERS --------------------------- The Company's common stock as reported by NASDAQ is traded on the Over-The-Counter Market. The Company had 473 stockholders of record at December 31, 1996 and 503 at December 31, 1995. The following is a summary of the market range and dividends for each quarterly period in 1996 and 1995 for the Company's common stock.
Market Range Quarterly ------------------------------- Period High Low Dividends ------ ---- --- --------- 1996 4th $44-3/4 $42-1/4 $.35 3rd 45-1/2 42-1/4 .35 2nd 47-1/4 38-3/4 .30 1st 41 37-1/4 .30 1995 4th $38-3/4 $34-3/4 $.30 3rd 36-1/2 33-1/4 .30 2nd 34-1/4 32 .30 1st 34 30 .30
-8- 9 ITEM 6. SELECTED FINANCIAL DATA ----------------------- OGLEBAY NORTON COMPANY AND SUBSIDIARIES (Dollars and Shares in Thousands, Except Per Share Amounts)
YEAR ENDED 1996 1995 ---------------------- OPERATIONS Net sales and operating revenues $160,661 $163,152 Income (loss) from continuing operations(1) 11,056 10,950 Discontinued operations(2) 4,501 4,411 Net income (loss)(3) 15,557 15,361 PER SHARE DATA Continuing operations(1) $ 4.53 $ 4.43 Discontinued operations(2) 1.85 1.78 Net income (loss)(3) 6.38 6.21 Dividends 1.30 1.20 Market price 43.75 37.25 Book value 43.66 38.91 Average shares of common stock outstanding 2,438 2,474 FINANCIAL CONDITION Capital expenditures $ 7,547 $ 6,906 Working capital 27,363 24,780 Total assets 236,213 248,744 Capitalization: Short term debt 8,476 8,476 Long term debt 28,665 43,641 Stockholders' equity 106,449 96,265
1 Income from continuing operations for 1996 and 1995 includes the effects of a loss on the sale of manufacturing operations and shutdown of facilities for the Company's Engineered Materials business segment ($711,000 in 1996 and $404,000 in 1995). The loss from continuing operations for 1992 includes the effects of asset impairments ($6,328,000) and a loss on the disposal of a business ($2,178,000). 2 In 1996, the Company sold its interest in Eveleth Mines and certain mining equipment, completing its exit from the iron ore business. Prior years financial information has been reclassified for discontinued operations. In 1992, the Company ceased operation of Saginaw Mining Company and exited the coal business. The loss from discontinued operations in 1992 is net of $2,440,000 of income from the coal business. 3 The 1992 net loss includes the effects of an extraordinary provision related to the Coal Act ($9,978,000 or $3.97 per share), and the cumulative effects of changes in accounting for postretirement benefits other than pensions and vessel inspection costs ($17,006,000 or $6.77 per share). -9- 10
DECEMBER 31 1994 1993 1992 - - -------------------------------------------------------------------------------- $152,696 $139,812 $135,191 9,508 3,978 (8,136) 5,383 3,284 (21,573) 14,891 7,262 (56,693) $ 3.82 $ 1.58 $ (3.24) 2.16 1.31 (8.58) 5.98 2.89 (22.56) 1.00 .80 1.40 30.50 22.50 23.00 34.02 27.82 25.41 2,491 2,512 2,513 $ 7,621 $ 2,921 $ 8,727 21,387 22,329 20,252 260,813 259,717 263,974 8,476 11,190 7,653 57,118 69,344 80,534 84,753 69,873 63,866
-10- 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- FINANCIAL CONDITION The Company's operating activities provided cash of $20,166,000 in 1996, a decline of 22% compared with $25,940,000 in 1995. Cash from operations improved by 3% in 1996 compared with the $19,589,000 generated in 1994. The Company's income from operations was $11,925,000 in 1996 compared with $13,759,000 in 1995 and $10,468,000 in 1994. Marine Transportation hauled record tonnage in 1996, however, the adverse impact on operations caused by severe weather conditions on the Great Lakes at the beginning and end of the sailing season resulted in lower profits. The reduced Marine profits were partially offset by the Company's Industrial Sands business, which achieved record results in 1996. Accounts receivable increased by $758,000 in 1996 compared with a significant decline of $4,354,000 in 1995 receivables. This change in accounts receivable results in an unfavorable variance in excess of $5,000,000 when 1996 cash from operations is compared with 1995. Harsh weather conditions on the Great Lakes at the end of 1995 prompted an early finish to Marine Transportation's sailing season and substantially lowered 1995 operating results. The Company's discontinued iron ore operations caused an $8,705,000 decline in cash from operations in 1996. Operating results of the Company's business segments are discussed in more detail under "RESULTS OF OPERATIONS". Capital expenditures amounted to $7,547,000 in 1996 compared with $6,906,000 and $7,621,000 in 1995 and 1994, respectively. Expenditures include $1,650,000 of properties and equipment purchased as part of an Engineered Materials metallurgical treatments business acquisition in November 1996. In addition, capital expenditures increased $1,400,000 in 1996 for property, equipment and improvements at the Brady, Texas operations of Industrial Sands. Vessel inspection costs of $2,037,000 and $1,326,000 are included in capital expenditures in 1995 and 1994, respectively. No vessel inspections were required in 1996. Also included in 1994 is $3,204,000 of property and equipment purchased as a part of an business acquisition by the Company's Industrial Sands segment. Capital expenditures for 1997 are currently expected to approximate $10,000,000, including a $1,800,000 expansion of the Engineered Materials Warren, Ohio facility to process raw materials and $2,700,000 for required Marine Transportation vessel inspections. The Company elected to pay $6,500,000 and $5,000,000 at the end of 1996 and 1995 on its term loan, in addition to annual required term loan payments of $5,500,000. The Company has a revolving credit facility of $40,000,000, of which $15,000,000 is available only for acquisitions. The Company has not utilized its revolving credit facility since the second quarter of 1994. Long-term debt is further described in Note H to the consolidated financial statements. The Company declared and paid dividends on a quarterly basis totaling $1.30 per share in 1996, $1.20 per share in 1995 and $1.00 per share in 1994. Dividends paid were $3,162,000 in 1996 compared with $2,968,000 and $2,491,000 in 1995 and 1994, respectively. In the third quarter of 1996 and 1994 the Company's Board of Directors approved an increase in the quarterly dividend to $.35 and $.30 per share of common stock, respectively. The Company purchased 49,779 shares of its common stock on the open market for $2,068,000 in 1996, 18,250 shares for $615,000 in 1995 and 20,800 shares for $536,000 in 1994 and placed these shares in treasury. In November 1996, the Company's Engineered Materials business segment purchased for $2,650,000 substantially all assets and operations of a company that provided briquetted metallurgical treatment products to the steel industry. -11- 12 On December 23, 1996, the Company sold its interest in Eveleth Mines and certain mining equipment for $5,000,000, completing its exit from the iron ore business. In addition, the new owners assumed all liabilities, as defined in the sale agreement. The sale of this discontinued operation resulted in a net gain of $570,000. Discontinued operations are further described in Note B to the consolidated financial statements. In 1996, the Company sold its National Perlite Products business, which had been inactive, and current marketable securities resulting in a pretax gains of $625,000 and $2,076,000, respectively. In 1995, the Company sold two Marine Transportation vessels no longer in service and current marketable securities resulting in pretax gains of $2,324,000 and $1,630,000, respectively. The Company also realized a $520,000 pretax gain on the sale of undeveloped clay properties in Tennessee in 1995. In 1994, the Company sold its Ceredo coal dock business and current marketable securities resulting in pretax gains of $6,518,000 and $1,315,000, respectively. Total proceeds from the sale of assets from continuing operations were $5,872,000 in 1996, $6,553,000 in 1995 and $11,850,000 in 1994. Anticipated cash flows from operations and current financial resources are expected to meet the Company's needs during 1997. Although the Company's credit arrangements currently in effect are considered adequate, all financing alternatives are reviewed annually to determine their practicality and ability to provide sufficient funding on a timely basis at the least possible cost. RESULTS OF OPERATIONS The consolidated financial statements of the Company have been reclassified to report separately the operating results of continuing and discontinued operations. Net sales and operating revenues totaled $160,661,000 in 1996 as compared with $163,152,000 and $152,696,000 in 1995 and 1994, respectively. Income from operations of $11,925,000 in 1996 declined by 13% compared with the $13,759,000 achieved in 1995. Income from operations in 1996 was 14% greater than the 1994 level of $10,468,000. Income from continuing operations was $11,056,000 ($4.53 per share) in 1996, compared with $10,950,000 ($4.43 per share) in 1995 and $9,508,000 ($3.82 per share) in 1994. In 1996, net income was $15,557,000 ($6.38 per share) compared with net income of $15,361,000 ($6.21 per share) in 1995 and $14,891,000 ($5.98 per share) in 1994. Income from continuing operations, excluding gains on the sale of assets and losses on the sale of operations and shutdown of facilities, was $9,474,000 ($3.89 per share in 1996), compared with $8,292,000 ($3.35 per share) in 1995 and $4,178,000 ($1.68 per share) in 1994. The effects of a $1,824,000 state tax refund and related interest income of $576,000 received in 1996 increased income from continuing operations by $1,584,000. In 1996, income from continuing operations before taxes includes gains totaling $3,153,000 principally from the sale of current marketable securities and the Company's National Perlite Products business. A $1,078,000 loss was recognized in 1996 on the sale of the Company's Engineered Materials refractory shapes and tundish coatings operations and the shutdown of a related manufacturing facility. Income from continuing operations before taxes in 1995 includes gains totaling $4,681,000, primarily from the sale of inactive Marine Transportation vessels and current marketable securities. Also included in 1995 is a $613,000 loss on the shutdown and consolidation of certain Engineered Materials facilities. In 1994, income from continuing operations before taxes includes gains totaling $8,076,000, essentially from the sale of the Company's Ceredo coal dock business and current marketable securities. -12- 13 The operating results of the Company's business segments for the three years in the period ended December 31, 1996 are discussed below. It is the policy of the Company to allocate a portion of corporate general and administrative expenses to its business segments. Corporate general and administrative expenses previously allocated to discontinued iron ore operations were reallocated to the remaining business segments for all years discussed. This discussion may contain statements concerning certain trends and other forward-looking information affecting or relating to the Company that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in such forward-looking statements contained herein because of a variety of factors, including but not limited to: (1) weather conditions affecting marine transportation; (2) unanticipated fluctuations in oil prices; (3) unanticipated changes in the demand for the Company's products as raw materials due to changes in technology; (4) vessel service availability; (5) continuation of United States cabotage laws; (6) labor unrest; and, (7) loss or bankruptcy of major customers. MARINE TRANSPORTATION Operating revenues of $86,178,000 in 1996 were comparable to revenues of $85,657,000 in 1995 and 5% greater than revenues of $82,153,000 in 1994. Income from operations was $8,063,000 in 1996, a decline in excess of 30%, compared with $12,077,000 and $12,216,000 in 1995 and 1994, respectively. Income before taxes was $5,589,000 in 1996 compared with $10,860,000 and $7,909,000 in 1995 and 1994, respectively. In 1995, the Company sold two inactive vessels resulting in pretax gains totaling $2,324,000. Interest expense declined to $2,409,000 in 1996, compared with $3,422,000 in 1995 and $4,283,000 in 1994, as a result of reductions in the Company's long-term debt. The Company's Great Lakes vessel fleet hauled record tonnage of 22,103,000, a 3% increase over 1995 tonnage of 21,486,000 and a 2% increase over the prior record tonnage of 21,619,000 in 1994. Operating revenues in 1996 were influenced by a 2% decrease in revenue per ton of capacity, due to product mix, and a 4% decrease in operating days in 1996 compared with 1995. Both revenue per ton of capacity and operating days increased by 3% in 1996 compared with 1994. Iron ore shipments declined by 9% in 1996, due in part to the severe weather conditions on the Great Lakes and capacity restraints due to contractual obligations. In 1996 coal shipments increased by 8%, while limestone shipments increased by 15% compared with 1995. In 1995 northern limestone quarries closed earlier than usual due to harsh weather conditions at the end of the year. Heavy ice conditions on the Great Lakes and rivers at the start of the 1996 sailing season caused substantial delays, minor damage and, in general, hampered operations. These conditions were as difficult or worse than those encountered at the end of the 1995 sailing season. A combination of increased maintenance and repair costs caused by the severe weather and increased fuel prices resulted in a significant decline in income from operations compared with 1995. Harsh weather conditions again affected operations at the end of the 1996 sailing season. Revenue lost on 133 fewer operating days in 1996 and increased operating costs due to the unfavorable weather conditions, resulted in an approximate $3,100,000 reduction in income from operations. High winds and unusually heavy ice conditions at the end of 1995 caused considerable delays and restricted 1995 operations resulting in a 2% decline in operating profit compared with 1994. -13- 14 In 1996, the Company operated only part of its fleet at the start of the sailing season. The Company's two 1,000 foot vessels were intentionally held back to reduce risk from the heavy ice conditions. All twelve of the Company's vessels operated in the second quarter and continued to sail for the remainder of the season. However, it was not until the middle of the second quarter that the fleet began to operate in a normal fashion. The Company operated twelve vessels throughout the 1995 sailing season until adverse weather conditions at the end of the year restricted operations. In 1994 eleven vessels operated for the whole sailing season and a twelfth vessel sailed at the end of the second quarter for the remainder of the season. Presently, it appears that the 1997 sailing season will be comparable to 1996 operating level, as a high level of demand continues to persist for the transportation of iron ore, coal and limestone. The segment's selling, general and administrative expenses, prior to allocation of corporate expenses, declined by 7% in 1996, compared with 1995. These similar costs declined by 1% in 1995, compared with 1994. Selling, general and administrative expenses were 3% of segment operating revenues in 1996, 1995 and 1994. Capital expenditures were $925,000, $3,125,000, and $1,397,000 in 1996, 1995 and 1994, respectively. Included in expenditures for 1995 and 1994 are $2,037,000 and $1,326,000, respectively, for required vessel inspections. No vessel inspection costs were required in 1996. Three of the Company's vessels require inspections prior to sailing in 1997. Depreciation and amortization expense was $8,631,000, $8,658,000 and $8,359,000 in 1996, 1995 and 1994, respectively. The increase in depreciation and amortization in 1995 compared with 1994 is the result of the amortization of increased vessel inspection costs. INDUSTRIAL SANDS Net sales of $42,583,000 in 1996 increased by 5% compared with $40,552,000 in 1995. Net sales in 1996 were 48% greater than the 1994 level of $28,818,000. Income from operations of $8,725,000 in 1996 improved 27%, compared with $6,886,000 in 1995. Income from operations was $2,473,000 in 1994. Income before taxes in 1996 was $8,444,000, compared with $6,519,000 in 1995 and $2,532,000 in 1994. Interest expense, which relates to the acquisition of additional sand assets at the end of 1994, was $356,000 in 1996 and $524,000 in 1995. Interest expense declined in 1996 as a result of reductions in the Company's long-term debt. Net sales and income from operations in 1996 were both record levels. Net sales improved as a result of broadening and strengthening the product mixes and increased demand due to higher oil prices. Income from operations benefited from strong volume, reduced costs and improved operational efficiency. Shipments totaling 1,533,000 tons for the segment in 1996 were comparable to the record level of 1,565,000 tons in 1995. The average selling price increased by 9% in 1996, compared with 1995. The segment's Brady, Texas operations had a strong performance in 1996, with 5% growth in sales and a 7% reduction in operating cost per ton, as it supplied high quality frac sand to the oil and gas well service markets. The Riverside, California operations had record results in 1996, benefiting from robust sales to the construction markets. Riverside's operating cost per ton declined by 14% with a volume increase of over a 100% in 1996. The Orange County, California and Millwood, Ohio operations also contributed to the segment's record results with healthy sales to the construction and pulverized sands markets. The Glass Rock, Ohio operations sustained a substantial decline in operating results on a 22% decline in volume in 1996. Glass Rock could not overcome the loss of business to glass sand customers due to high iron content, as well as some related production problems. -14- 15 The improvement shown in net sales and income from operations in 1995 was due to economic vigor in most of the segment's markets and advantages resulting from the acquisition of additional sand assets near the segment's Brady, Texas facility in the fourth quarter of 1994. A record 1,565,000 tons were shipped in 1995 achieving a 20% increase over the 1994 level of 1,308,000 tons. The average selling price of principal products improved by 9% in 1995 compared with 1994. This improvement was a result of favorable product mix as well as price increases in most markets served. In 1995, operating results of the segment's Orange County, California and Millwood, Ohio operations improved significantly over 1994 results as demand for construction related products increased. In addition, the benefits of streamlining management at the end of 1994 were more fully realized in 1995. The segment's selling, general and administrative expenses, prior to allocation of corporate expenses, declined by 2% in 1996, compared with 1995, and were in the 7% range of segment sales. These similar costs increased by 12% in 1995, compared with 1994, and were 8% of segment sales. Selling, general and administrative expenses were 10% of the segment's sales in 1994. Capital expenditures of $4,540,000 in 1996 compared with $2,360,000 in 1995 and $4,622,000 in 1994. The increase in expenditures in 1996 relates principally to an additional $1,400,000 of mineral reserves at the segment's Brady, Texas facility. In addition, $815,000 of plant enhancements and equipment purchases, including a new dryer system and quarry trucks, were made at the Millwood and Glass Rock, Ohio facilities in 1996. In 1994, $3,204,000 of expenditures relate to property and equipment included in the acquisition of additional sand assets described above. Depreciation and amortization expense of $2,427,000 in 1996 compares to $2,550,000 in 1995 and $2,149,00 in 1994. A full year of depreciation for the assets acquired at the end of 1994 is reflected in 1996 and 1995. ENGINEERED MATERIALS Net sales of $30,964,000 declined by 16% compared with $36,778,000 in 1995. Sales in 1995 were 7% less than 1994 sales of $39,502,000. The segment had a loss from operations of $805,000 in 1996, compared with a loss of $223,000 in 1995. In 1994, income from operations amounted to $714,000. The 1996 loss from operations includes a $1,078,000 loss on the sale of the segment's refractory shapes and tundish coatings operations and the shutdown of a related manufacturing facility. The 1995 loss from operations includes a $613,000 loss on the shutdown and consolidation of manufacturing facilities for the segment's hot top product line. A loss before taxes of $1,068,000 in 1996 compared with a loss of $436,000 in 1995 and income before taxes of $592,000 in 1994. Interest expense of $144,000 in 1996 compared with $213,000 in 1995 and $195,000 in 1994. Interest expense declined in 1996 as a result of reductions in the Company's long-term debt. The elimination of shapes and coatings manufacturing operations in 1996 will allow the segment to focus on expansion of its metallurgical treatment product line as planned. The 1996 fourth quarter acquisition of a briquetted metallurgical treatment products company located in Kingsford Heights, Indiana has enabled the segment to strengthen its position in the greater Chicago area. Although sales of metallurgical treatment products declined by 10% in 1996, income from operations improved as a percent of sales compared with 1995. Sales declined by 5% in 1995; however, income from operations improved by more than 80% compared with 1994. The decline in sales over the past two years is somewhat attributable to increased customer selectivity. Stronger cost controls and diversification of this product line contributed to the profit improvements in 1996 and 1995. -15- 16 The market for ingot hot top products continues to diminish at an accelerated rate, as sales dropped by 19% and income from operations declined by 23% in 1996, compared with 1995. Hot top sales declined by 7%, while income from operations, prior to the loss on shutdown and consolidation of facilities described above, declined by 20% in 1995. The Company is one of the few remaining suppliers of ingot hot top products to steel producers who have not shifted to the continuous casting process. In addition to the decline in volume, raw material cost increases also affected profitability of this product line in 1995. Manufacturing efficiencies and profitability will continue to be evaluated in 1997 to determine if further action is warranted for this product line. As a result of assessing the segment's products lines, its refractory shapes and tundish coatings operations were sold in July 1996 and a related manufacturing facility in Cleveland, Ohio was closed. Refractory shape products manufactured by others will, however, continue to be marketed and sold. These product lines contributed less than 9% to operating profit in both 1996 and 1995, and are not strategic to the segment's future development. The segment's selling, general and administrative expenses, prior to allocation of corporate expenses, dropped by 12% in 1996, compared with 1995, and were 11% of segment sales. These similar costs declined by 3% in 1995, compared with 1994, and were 10% of segment sales. Selling, general and administrative expenses were 10% of segment sales in 1994. Capital expenditures were $1,974,000 in 1996, compared with $938,000 in 1995 and $1,225,000 in 1994. Expenditures in 1996 include $1,650,000 of properties and equipment purchased as part of the segment's metallurgical treatments business acquisition, previously discussed. The Company delayed investment of any significant capital in this segment in 1996 until a review of existing product lines was completed and a revised strategic business plan was implemented. Depreciation and amortization expense was $1,766,000 in 1996, compared with $2,004,000 in 1995 and $1,913,000 in 1994. The decrease in depreciation in 1996 was a direct result of the shutdown and consolidation of facilities the past two years. -16- 17 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- See financial statements at pages F-1 through F-22. 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 Executive Officers of the Registrant"), Item 11 ("Executive Compensation"), Item 12 ("Security Ownership of Certain Beneficial Owners and Management") and Item 13 ("Certain Relationships and Related Transactions") is incorporated herein by reference to the information contained in the Registrant's definitive Proxy Statement for its 1997 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on March 26, 1997. Information concerning executive officers of the Company also required by Item 10 is contained in Part I of this report under the heading "Executive Officers of the Registrant". 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 part of a separate section of this Annual Report on Form 10-K beginning at page F-1. (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 page I-1 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 1996. The Registrant did file a Form 8-K dated January 7, 1997, consisting of the following: Item 2 - Acquisition or Disposition of Assets (the sale on December 23, 1996 of Registrant's interest in Eveleth Mines) and Item 7 - Financial Statements and Exhibits (Pro forma financial information). (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 after page I-3. (d) FINANCIAL STATEMENT SCHEDULES: None. 17 18 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 Planning March 31, 1997 18 19 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 31, 1997. /s/ R. Thomas Green, Jr. Chairman of the Board, President - - ----------------------------- and Chief Executive Officer R. Thomas Green, Jr. Officer and Director; Principal Executive Officer /s/ Richard J. Kessler Vice President-Finance and - - ----------------------------- Planning; Principal Financial Richard J. Kessler and 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/ James T. Bartlett - - ----------------------------- James T. Bartlett 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 Deceased - - ----------------------------- Vice Chairman of the Board and Renold D. Thompson Director /s/ John D. Weil - - ----------------------------- John D. Weil Director 19 20 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, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Oglebay Norton Company and subsidiaries at December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Cleveland, Ohio February 14, 1997 F-1 21 RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the financial and operating information contained in the Annual Report, including the consolidated financial statements covered by the Report of Independent Auditors. These statements were prepared in conformity with generally accepted accounting principles and include amounts based on estimates and judgements of management. The Company seeks to assure the integrity and objectivity of the data in the financial statements through a system of internal controls. These controls are designed to provide reasonable assurance that assets are safeguarded and transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements. Independent auditors, Ernst & Young LLP, are engaged to render an independent opinion on the Company's financial statements. Their opinion, which appears herein, is based on an audit of the Company's consolidated financial statements in accordance with generally accepted auditing standards which includes a review of internal controls to the extent Ernst & Young LLP deems necessary. The Company's Board of Directors, through its Audit Committee which is composed of five outside directors, reviews the Company's financial reports and accounting and auditing practices. It meets periodically with the independent auditors and management in this connection. F-2 22 CONSOLIDATED STATEMENT OF OPERATIONS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Year Ended December 31 1996 1995 1994 ----------------------------------------------- NET SALES AND OPERATING REVENUES $ 160,661,047 $ 163,151,703 $ 152,696,486 COSTS AND EXPENSES Cost of goods sold and operating expenses 131,861,130 131,605,778 124,991,456 General, administrative and selling expenses 15,797,267 17,174,521 17,237,070 Loss on sale of manufacturing operations and shutdown of facilities 1,077,845 612,656 ------------- ------------- ------------- 148,736,242 149,392,955 142,228,526 ------------- ------------- ------------- INCOME FROM OPERATIONS 11,924,805 13,758,748 10,467,960 Gain on sale of assets 3,152,934 4,640,713 8,076,080 Interest, dividends and other income 2,791,375 2,281,115 1,387,443 Interest expense (3,148,733) (4,359,804) (5,992,018) Other expense (2,011,072) (2,491,488) (1,423,707) ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 12,709,309 13,829,284 12,515,758 INCOME TAXES Current 847,000 2,969,000 2,846,000 Deferred (benefit) 806,000 (90,000) 162,000 ------------- ------------- ------------- 1,653,000 2,879,000 3,008,000 ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS 11,056,309 10,950,284 9,507,758 Discontinued operations: Income from discontinued operations 3,930,243 4,410,706 5,383,077 Gain on sale of discontinued operations 570,433 ------------- ------------- ------------- Income and gain from discontinued operations 4,500,676 4,410,706 5,383,077 NET INCOME $ 15,556,985 $ 15,360,990 $ 14,890,835 ============= ============= ============= Income per share of common stock: Continuing operations $ 4.53 $ 4.43 $ 3.82 Discontinued operations 1.85 1.78 2.16 ------------- ------------- ------------- NET INCOME PER SHARE $ 6.38 $ 6.21 $ 5.98 ============= ============= ============= Average shares of common stock outstanding 2,438,108 2,474,111 2,491,465
See notes to consolidated financial statements. F-3 23 CONSOLIDATED BALANCE SHEET OGLEBAY NORTON COMPANY AND SUBSIDIARIES
December 31 ASSETS 1996 1995 ---------------------------- CURRENT ASSETS Cash and cash equivalents $ 21,850,282 $ 22,660,436 Marketable securities 898,475 3,555,550 Accounts receivable, less reserve for doubtful accounts of $512,000 in 1996 and $511,000 in 1995 27,909,834 27,681,413 Inventories Raw materials and finished products 3,003,079 3,456,857 Operating supplies 2,336,468 2,311,529 ------------ ------------ 5,339,547 5,768,386 Deferred income taxes 3,214,573 3,033,075 Prepaid insurance and other expenses 1,650,620 2,851,646 ------------ ------------ TOTAL CURRENT ASSETS 60,863,331 65,550,506 PROPERTIES AND EQUIPMENT Marine Transportation 222,008,637 222,613,738 Industrial Sands 57,220,602 53,801,897 Engineered Materials 17,433,501 17,277,918 Other 4,609,486 9,943,674 ------------ ------------ 301,272,226 303,637,227 Less allowances for depreciation and amortization 157,473,072 153,066,268 ------------ ------------ 143,799,154 150,570,959 NET ASSETS OF DISCONTINUED OPERATIONS 3,820,058 PREPAID PENSION COSTS AND OTHER ASSETS 31,550,923 28,802,866 ------------ ------------ TOTAL ASSETS $236,213,408 $248,744,389 ============ ============
F-4 24
December 31 LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ------------------------------ CURRENT LIABILITIES Current portion of long-term debt $ 8,476,450 $ 8,476,450 Accounts payable 7,003,035 5,264,375 Payrolls and other accrued compensation 6,915,055 7,283,660 Accrued expenses 9,485,216 7,475,816 Income taxes 1,620,176 Current liabilities of discontinued operations 12,269,870 ------------- ------------- TOTAL CURRENT LIABILITIES 33,499,932 40,770,171 LONG-TERM DEBT, less current portion 28,664,675 43,641,125 POSTRETIREMENT BENEFITS OBLIGATIONS 24,675,900 24,921,900 OTHER LONG-TERM LIABILITIES 20,272,081 21,168,235 DEFERRED INCOME TAXES 22,651,821 21,977,551 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 9,475,843 9,078,611 Unrealized gains 410,447 1,468,476 Retained earnings 125,960,692 113,566,048 ------------- ------------- 139,473,648 127,739,801 Treasury stock, at cost - 1,208,979 and 1,160,790 shares at respective dates (31,833,524) (29,806,819) Unallocated Employee Stock Ownership Plan shares (1,191,125) (1,667,575) ------------- ------------- 106,448,999 96,265,407 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 236,213,408 $ 248,744,389 ============= =============
See notes to consolidated financial statements. F-5 25 CONSOLIDATED STATEMENT OF CASH FLOWS OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Year Ended December 31 1996 1995 1994 --------------------------------------------- OPERATING ACTIVITIES Net income $ 15,556,985 $ 15,360,990 $ 14,890,835 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,052,637 13,432,871 12,717,168 Deferred income taxes 806,000 (90,000) (73,000) Gain on sale of assets (2,527,934) (4,681,213) (8,094,005) Gain on sale of business (625,000) Gain on sale of discontinued operations (570,433) Loss on sale of manufacturing operations and shutdown of facilities 1,077,845 612,656 Prepaid pension costs and other assets (3,125,094) (2,450,918) (1,919,098) Decrease (increase) in accounts receivable (757,984) 4,353,995 (3,744,102) Decrease in inventories 737,724 339,455 396,592 Increase in accounts payable 1,743,447 792,604 475,654 Operating activities of discontinued operations - net (8,704,864) 34,661 6,369,008 Other operating activities 3,502,906 (1,765,493) (1,429,802) ------------ ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 20,166,235 25,939,608 19,589,250 INVESTING ACTIVITIES Capital expenditures (5,896,491) (6,905,775) (4,417,353) Acquisition of business (2,650,000) (8,000,000) Proceeds from sale of assets 3,971,706 6,552,562 2,749,592 Proceeds from sale of business 1,900,000 9,100,000 Proceeds from sale of discontinued operations 5,000,000 Investing activities of discontinued operations - net (3,094,781) (3,086,411) (4,077,580) ------------ ------------ ------------ NET CASH USED FOR INVESTING ACTIVITIES (769,566) (3,439,624) (4,645,341) FINANCING ACTIVITIES Payments on long-term debt (14,976,450) (13,976,450) (24,189,664) Additional long-term debt 8,750,000 Payments of dividends (3,162,341) (2,968,426) (2,491,266) Purchase of treasury stock (2,068,032) (615,091) (535,624) ------------ ------------ ------------ NET CASH USED FOR FINANCING ACTIVITIES (20,206,823) (17,559,967) (18,466,554) ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents (810,154) 4,940,017 (3,522,645) Cash and cash equivalents, January 1 22,660,436 17,720,419 21,243,064 ------------ ------------ ------------ CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 21,850,282 $ 22,660,436 $ 17,720,419 ============ ============ ============
See notes to consolidated financial statements. F-6 26 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY OGLEBAY NORTON COMPANY AND SUBSIDIARIES
Common Common Additional Unrealized Retained Stock in Stock Capital Gains Earnings Treasury ---------- ---------- ---------- ------------ ------------ Balance, January 1, 1994 $3,626,666 $8,988,043 - $ 88,773,915 $(28,681,694) Change in accounting $2,971,792 Net income 14,890,835 Dividends, $1.00 per share (2,491,266) Change in unrealized gains (693,519) Tax benefit of unallocated shares in ESOP 47,798 Purchase of treasury stock (535,624) Allocated ESOP shares ---------- ---------- ---------- ------------ ------------ Balance, December 31, 1994 3,626,666 9,035,841 2,278,273 101,173,484 (29,217,318) Net income 15,360,990 Dividends, $1.20 per share (2,968,426) Change in unrealized gains (809,797) Tax benefit of unallocated shares in ESOP 35,360 Director stock plan 7,410 25,590 Purchase of treasury stock (615,091) Allocated ESOP shares ---------- ---------- ---------- ------------ ------------ Balance, December 31, 1995 3,626,666 9,078,611 1,468,476 113,566,048 (29,806,819) Net income 15,556,985 Dividends, $1.30 per share (3,162,341) Change in unrealized gains (1,058,029) Tax benefit of unallocated shares in ESOP 57,460 Employee and director stock plans 339,772 41,327 Purchase of treasury stock (2,068,032) Allocated ESOP shares ---------- ---------- ---------- ------------ ------------ Balance, December 31, 1996 $3,626,666 $9,475,843 $ 410,447 $125,960,692 $(31,833,524) ========== ========== ========== ============ ============ Unallocated Employee Stock Total Ownership Stockholders' Plan Shares Equity ----------- ------------ Balance, January 1, 1994 $(2,833,690) $ 69,873,240 Change in accounting 2,971,792 Net income 14,890,835 Dividends, $1.00 per share (2,491,266) Change in unrealized gains (693,519) Tax benefit of unallocated shares in ESOP 47,798 Purchase of treasury stock (535,624) Allocated ESOP shares 689,665 689,665 ----------- ------------ Balance, December 31, 1994 (2,144,025) 84,752,921 Net income 15,360,990 Dividends, $1.20 per share (2,968,426) Change in unrealized gains (809,797) Tax benefit of unallocated shares in ESOP 35,360 Director stock plan 33,000 Purchase of treasury stock (615,091) Allocated ESOP shares 476,450 476,450 ----------- ------------ Balance, December 31, 1995 (1,667,575) 96,265,407 Net income 15,556,985 Dividends, $1.30 per share (3,162,341) Change in unrealized gains (1,058,029) Tax benefit of unallocated shares in ESOP 57,460 Employee and director stock plans 381,099 Purchase of treasury stock (2,068,032) Allocated ESOP shares 476,450 476,450 ----------- ------------ Balance, December 31, 1996 $(1,191,125) $106,448,999 =========== ============
See notes to consolidated financial statements. F-7 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OGLEBAY NORTON COMPANY AND SUBSIDIARIES December 31, 1996, 1995 and 1994 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 (first-in, first-out method) or market. MARKETABLE SECURITIES: Available-for-sale securities are carried at fair value, based on quoted market prices, and are reported as a current asset in the consolidated balance sheet. Realized gains and losses on the sale of such securities are based on average cost. PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost. The Company provides depreciation on the straight-line method over the assets estimated useful lives which range from 3 to 50 years. IMPAIRMENT OF LONG-LIVED ASSETS: The Company assesses the recoverability of its long-lived assets by determining whether the amortization of the remaining balance of an asset over its remaining useful life can be recovered through undiscounted future operating cash flows. If impairment exists, the carrying amount of the related asset is reduced. NET INCOME PER SHARE: Net income per share of common stock is based on the average number of shares outstanding. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions. RECLASSIFICATIONS: Certain amounts in prior years have been reclassified to conform with the 1996 consolidated financial statement presentation. F-8 28 NOTE B - DISCONTINUED OPERATIONS On December 23, 1996, the Company sold its interest in Eveleth Mines and certain mining equipment for $5,000,000, completing its exit from the iron ore business. In addition, the new owners assumed all liabilities, as defined in the sale agreement. Pellet sales contracts and royalty arrangements, as defined in the sale agreement, were also cancelled. The sale of these discontinued operations resulted in a gain of $570,000 (net of an income tax benefit of $744,000). The consolidated financial statements of the Company have been reclassified to report separately the operating results, net assets and net liabilities of discontinued operations. Results of discontinued operations are as follows (in thousands):
1996 1995 1994 -------- -------- ------- Net Sales $ 26,766 $ 26,281 $50,624 Cost of Sales 28,468 27,627 49,629 -------- -------- ------- Gross margin (1,702) (1,346) 995 Credit through reduction of impairment obligations 3,208 3,500 2,300 -------- -------- ------- Adjusted Gross Margin 1,506 2,154 3,295 Royalties and management fees - net 4,332 4,527 4,311 -------- -------- ------- Income before income taxes 5,838 6,681 7,606 Income taxes 1,908 2,270 2,223 -------- -------- ------- Income from discontinued operations $ 3,930 $ 4,411 $ 5,383 ======== ======== =======
NOTE C - MARKETABLE SECURITIES The fair value of current available-for-sale securities was $898,000 at December 31, 1996 and included unrealized gains of $621,000 based on a cost of $277,000. The Company realized gains of $2,076,000 from proceeds of $3,130,000 on the sale of such securities for the year ended December 31, 1996. The fair value of current available-for-sale securities was $3,555,000 at December 31, 1995 and includes unrealized gains of $2,225,000 based on a cost of $1,330,000. The Company realized gains of $1,630,000 from proceeds of $2,621,000 on the sale of such securities for the year ended December 31, 1995. F-9 29 NOTE D - STOCKHOLDERS' EQUITY The Company's preferred stock is issuable in series and the Board of Directors is authorized to fix the number of shares and designate the terms of each issue. 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. NOTE E - INCOME TAXES Total income taxes from continuing operations differs from the tax computed by applying the U.S. federal corporate income tax statutory rate for the following reasons (in thousands):
1996 1995 1994 -------------------------------- Income from continuing operations before taxes $ 12,709 $ 13,829 $ 12,516 ======== ======== ======== Income taxes at statutory rate $ 4,321 $ 4,702 $ 4,255 Tax differences due to: Percentage depletion (1,344) (1,584) (902) State income taxes (991) 53 40 Other (333) (292) (385) -------- -------- -------- Total income taxes $ 1,653 $ 2,879 $ 3,008 ======== ======== ========
The Company received income tax refunds of $2,479,000, $32,000 and $1,625,000 during 1996, 1995 and 1994, respectively. During 1996, the Company received a $1,824,000 state income tax refund for prior tax years, which favorably impacted 1996 state income tax expense. The Company made income tax payments of $1,962,000, $6,270,000 and $3,103,000 during 1996, 1995 and 1994, respectively. F-10 30 NOTE E - 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 from continuing operations are as follows (in thousands):
December 31 1996 1995 ----------------- Deferred tax liabilities: Depreciation $34,319 $35,091 Pension benefits 6,507 5,501 Other 2,268 3,839 ------- ------- Total deferred tax liabilities 43,094 44,431 Deferred tax assets: Asset impairment 3,472 Postretirement benefits 10,590 9,183 Coal Act liability 4,731 4,726 Other 8,336 8,106 ------- ------- Total deferred tax assets 23,657 25,487 ------- ------- Net deferred tax liabilities $19,437 $18,944 ======= =======
F-11 31 NOTE F - 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 from continuing operations follows (in thousands):
1996 1995 1994 ------- -------- ------- Service cost-benefits earned during the period $ 1,303 $ 1,131 $ 1,187 Interest cost on projected benefit obligation 4,332 4,202 3,981 Actual return on plan assets (9,464) (16,227) 352 Net amortization and deferral 1,926 9,565 (7,534) ------- -------- ------- Net pension credit $(1,903) $ (1,329) $(2,014) ======= ======== =======
Assumptions used in accounting for the Company's defined benefit pension plans were:
1996 1995 1994 --------------------------- Weighted-average discount rate 7.5% 7.5% 8% Rate of increase in compensation levels 4% 4% 4% Expected long-term rate of return on assets 9% 9% 9%
F-12 32 NOTE F - POSTRETIREMENT BENEFITS (Continued) The following table presents the funded status and amounts recognized in the consolidated balance sheet for the Company's defined benefit pension plans from continuing operations (in thousands):
December 31 1996 1995 --------------------- Actuarial present value of benefit obligations Vested benefit obligation $(53,178) $(51,416) ======== ======== Accumulated benefit obligation $(56,112) $(54,046) ======== ======== Projected benefit obligation $(60,886) $(58,332) Plan assets at fair value 89,373 83,169 -------- -------- Plan assets in excess of projected benefit obligation 28,487 24,837 Unrecognized net gain (9,287) (7,877) Unrecognized prior service cost 2,543 2,789 Unrecognized initial net assets (3,672) (4,336) -------- -------- Prepaid pension costs recognized $ 18,071 $ 15,413 ======== ========
The Company maintains defined contribution plans for certain employees and, except for the Employee Stock Ownership Plan (ESOP), contributes to these plans based on percentages of employee contributions. The expense for these plans was $971,000, $920,000, and $1,149,000 for 1996, 1995 and 1994, respectively. The Company also pays into certain defined benefit multi-employer plans under various union agreements which provide pension and other benefits for various classes of employees. Payments are based upon negotiated contract rates and related expenses totaled $1,915,000, $1,879,000 and $1,747,000 for 1996, 1995 and 1994, respectively. In addition to pension benefits, the Company provides health care and life insurance for certain retired employees. Substantially all of the Company's employees are eligible for these benefits when they reach normal retirement age. The Company's policy is to fund these postretirement benefit costs principally on a cash basis as claims are incurred. F-13 33 NOTE F - POSTRETIREMENT BENEFITS (Continued) Components of the Company's net periodic postretirement benefits cost from continuing operations are as follows (in thousands):
1996 1995 1994 ------- ------- ------- Service cost $ 368 $ 404 $ 462 Interest cost 1,059 1,273 1,384 Actual return on plan assets (1) -0- -0- Net amortization (745) (579) (552) ------- ------- ------- Net periodic postretirement benefits cost $ 681 $ 1,098 $ 1,294 ======= ======= =======
Assumptions used in the accounting for the Company's postretirement health care and life insurance benefits were:
1996 1995 1994 -------------------------------------------- Weighted-average discount rate 7.5% 7.5% 8% Expected long-term rate of return on assets 6% 6% 6%
Components of the Company's postretirement benefits obligation from continuing operations are as follows (in thousands):
December 31 1996 1995 --------------------- Actuarial present value of benefit obligations Retirees $(10,104) $(11,571) Fully eligible active plan participants (1,329) (1,441) Other active plan participants (3,290) (3,806) -------- -------- Accumulated postretirement benefits obligation (14,723) (16,818) Plan assets at fair value 75 50 -------- -------- Accumulated postretirement benefits obligation in excess of plan assets (14,648) (16,768) Unrecognized prior service credit (1,735) (1,928) Unrecognized net gain (8,293) (6,226) -------- -------- Postretirement benefits obligation recognized $(24,676) $(24,922) ======== ========
F-14 34 NOTE F - POSTRETIREMENT BENEFITS (Continued) The weighted-average annual assumed rate of increase in the health care cost trend-rate for 1997 is 6.75% (7.25% in 1996) for retirees age 65 and over and 9.25% (9.75% in 1996) for retirees under age 65, and both are assumed to decrease gradually to 5.25% in 2000 and 2005, respectively (5.25% in 1996) and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rate by 1% in each year would increase the accumulated postretirement benefits obligation as of December 31, 1996 by approximately $1,782,000 and the aggregate service and interest cost components of the net periodic postretirement benefits cost for 1996 by approximately $220,000. The Coal Industry Retiree Health Benefit Act requires companies that previously mined coal to assume certain health care benefit obligations for retired coal miners and their dependents. Components of the Company's net periodic postretirement benefits cost under the Coal Act, are as follows (in thousands):
1996 1995 1994 ---- ---- ---- Interest cost $ 936 $ 1,033 $ 1,006 Actuarial net loss (gain) 122 (82) (727) ------ ------- ------- Net periodic postretirement benefit cost $1,058 $ 951 $ 279 ====== ======= =======
The Company's accumulated postretirement benefits obligation was $13,914,000 and $13,901,000 at December 31, 1996 and 1995, respectively, of which $12,732,000 and $12,951,000 in 1996 and 1995, respectively, is included in other long-term liabilities. The weighted-average discount rate used in accounting for postretirement benefits under the Coal Act was 7% at December 31, 1996 and 1995. The weighted-average annual assumed rate of increase in the health care cost trend-rate for 1997 and 1996 is 6%. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rate by 1% in each year would increase the accumulated postretirement benefits obligation at December 31, 1996 by approximately $1,797,000 and the interest cost component of the net periodic postretirement benefit cost by approximately $121,000. F-15 35 NOTE G - COMMITMENTS AND CONTINGENCIES The Company leases various buildings and equipment in addition to certain vessel charters in its Marine Transportation fleet. In general, these operating leases are renewable or contain purchase options. The purchase price or renewal lease payment is based on the fair market value of the asset at the date of purchase or renewal. Rental expense was $5,113,000, $5,139,000 and $5,067,000 in 1996, 1995 and 1994, respectively. Future minimum payments at December 31, 1996, under noncancelable operating leases, primarily the vessel charters, are $4,581,000 in 1997, $4,534,000 in 1998, $2,266,000 in 1999, $1,010,000 in 2000, $874,000 in 2001 and $1,167,000 thereafter. The Company is subject to various environmental laws and regulations imposed by federal, state and local governments. Also, in the normal course of business, the Company is involved in various pending or threatened legal actions. The Company cannot reasonably estimate future costs, if any, related to these matters. However, costs incurred to comply with environmental regulations and to settle litigation have not been significant in 1996 and prior years. Although it is possible that the Company's future operating results could be affected by future costs of environmental compliance or litigation, it is management's belief that such costs will not have a material adverse effect on the Company's consolidated financial position. NOTE H - LONG-TERM DEBT Long-term debt is as follows (in thousands):
December 31 1996 1995 ----------------- Title XI Ship Financing Bonds $11,200 $13,700 Term Loan 24,750 36,750 Guaranteed ESOP Loans 1,191 1,667 ------- ------- 37,141 52,117 Less current portion 8,476 8,476 ------- ------- $28,665 $43,461 ======= =======
F-16 36 NOTE H - LONG-TERM DEBT (Continued) The Title XI Ship Financing Bonds (5.3% fixed rate) relate to a first preferred ship mortgage on the M/V Columbia Star and are guaranteed by the U.S. Government under the Federal Ship Financing Program. The Bonds require semiannual sinking fund payments of $1,250,000 through 2000, with a final payment of $1,200,000 in 2001. Under certain conditions, the Company may be required to make deposits to a reserve fund, maintain specified levels of stockholders' equity or obtain prior written consent from the U.S. Department of Transportation for certain designated financial transactions. No deposits or approvals were required through 1996 and the Company does not anticipate that any such actions will be required in the future. Under a bank loan agreement the Company is required to make semiannual payments on the Term Loan of $2,750,000 through June 30, 2001. The Company elected to pay an additional $6,500,000 and $5,000,000 on the Term Loan at the end of 1996 and 1995, respectively. The Company has a $40,000,000 Revolving Credit facility available under the loan agreement, of which $15,000,000 is only available for acquisitions. The variable interest rate (6.22% at December 31, 1996) on borrowings under the agreement fluctuates based upon the Company's ratios of funded debt to total capital and interest coverage. The Revolving Credit facility terminates on December 31, 1998, subject to annual renewals under certain conditions to December 31, 2001. The Company did not use Revolving Credit in 1996 or 1995 and has $40,000,000 of borrowing available at December 31, 1996. The Title XI Ship Financing Bonds and the Term Loan are secured by first preferred ship mortgages on five of the Company's vessels with a net book value of $98,347,000. The fair value of long-term debt approximates the total liability recorded at December 31, 1996. The Company's debt agreements contain various covenants with the most restrictive covenant requiring the Company to maintain specified levels of tangible net worth during each year. The Company's tangible net worth was $99,781,000 at December 31, 1996, compared to a minimum specified level of $79,619,000. Long-term debt maturities are $8,476,000 in 1997 and 1998, $8,239,000 in 1999, $8,000,000 in 2000 and $3,950,000 in 2001. The Company made interest payments of $3,117,000, $4,399,000 and $5,345,000 during 1996, 1995 and 1994, respectively. F-17 37 NOTE I - ACQUISITION AND DISPOSITIONS In November 1996, the Company purchased for $2,650,000 substantially all assets and operations of a company that provided briquetted metallurgical treatments to the steel industry and competed in the Engineered Materials market segment. Operating results have been included in the consolidated statement of operations since acquisition and are not material. In 1996, the Company sold its National Perlite Products business, which had been inactive, resulting in a pretax gain of $625,000. As a result of assessing its Engineered Materials product lines, the Company sold its refractory shapes and tundish coatings operations and closed a related manufacturing facility in 1996. This resulted in a realized pretax loss of $1,078,000. In 1995, the Company sold two Marine Transportation vessels no longer in service and undeveloped clay properties in Tennessee resulting in pretax gains of $2,324,000 and $520,000, respectively. Also included in 1995 is a $613,000 pretax loss on the shutdown and consolidation of certain facilities of the Company's Engineered Materials business segment. NOTE J - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS Oglebay Norton provides Great Lakes marine transportation, the mining and marketing of industrial sands, and the manufacturing and marketing of engineered materials for the steel, oil and gas, ceramic, chemical, glass, electric utility and construction industries. The Company's headquarters are in Cleveland, Ohio. Its operations are currently organized into three business units. OGLEBAY NORTON MARINE TRANSPORTATION Marine Transportation operates a highly efficient fleet of twelve self-unloading vessels that transport dry bulk commodities, primarily iron ore pellets, coal and limestone on the Great Lakes. OGLEBAY NORTON INDUSTRIAL SANDS, INC. Industrial Sands provides silica and a variety of sand products to a wide range of markets. Facilities in Brady, Texas provide special "frac" sands to the oil and gas well industry. Silica flour, used in the production of fiberglass, paint and ceramics, is produced in plants at Millwood and Glass Rock, Ohio and Riverside, California. Sand for specialty construction materials is provided by a plant in San Juan Capistrano, California. A plant in Bakersfield, California, provides well packing sands for the oil and gas industry. OGLEBAY NORTON ENGINEERED MATERIALS, INC. Engineered Materials, previously named Refractories & Minerals, provides metallurgical products and services to the steel industry from its Warren, Ohio and Kingsford Heights, Indiana facilities. It employs a special patented process for recycling slag into a material that removes impurities from molten steel. Facilities located in Warren, Ohio and Kingsford Heights, Indiana produce metallurgical treatment products for casting and refining molten steel. F-18 38 NOTE J- INDUSTRY SEGMENTS AND MAJOR CUSTOMERS (Continued) Accounts receivable of $15,168,000 at December 31, 1996 are due from companies in the steel and utilities industries. Credit is extended based on an evaluation of a customer's financial condition, and generally collateral is not required. Credit losses within these industries have not been significant for the three years in the period ended December 31, 1996. Sales from continuing operations to two major steel producers and one utility company exceeded 10% of net sales and operating revenues and are summarized as follows (in thousands):
Marine Engineered Customer Transportation Materials Total - - -------- -------------- ----------- ----- 1996 A $14,008 $6,816 $20,824 B 17,315 -0- 17,315 C 15,787 718 16,505 ------- ------ ------- $47,110 $7,534 $54,644 ======= ====== ======= 1995 A $17,041 $6,456 $23,497 B 15,790 -0- 15,790 C 19,280 440 19,720 ------- ------ ------- $52,111 $6,896 $59,007 ======= ====== ======= 1994 A $17,207 $7,122 $24,329 B 15,258 -0- 15,258 C 16,868 555 17,423 ------- ------ ------- $49,333 $7,677 $57,010 ======= ====== =======
F-19 39 INDUSTRY SEGMENT DATA OGLEBAY NORTON COMPANY AND SUBSIDIARIES (In Thousands)
Marine Transportation -------------- 1996 Identifiable assets $ 130,125 Depreciation and amortization expense 8,631 Capital expenditures 925 Net sales and operating revenues $ 86,178 Income (loss) from operations $ 8,063 Gain on sale of assets Interest expense (2,409) Interest, dividends and other income (expense) - net (65) --------- Income (loss) from continuing operations before taxes $ 5,589 ========= 1995 Identifiable assets $ 132,455 Depreciation and amortization expense 8,658 Capital expenditures 3,125 Net sales and operating revenues $ 85,657 Income (loss) from operations(5) $ 12,077 Gain on sale of assets 2,325 Interest expense (3,422) Interest, dividends and other income (expense) - net (120) --------- Income (loss) from continuing operations before taxes $ 10,860 ========= 1994 Identifiable assets $ 140,661 Depreciation and amortization expense 8,359 Capital expenditures 1,397 Net sales and operating revenues $ 82,153 Income (loss) from operations(5) $ 12,216 Gain on sale of assets 86 Interest expense (4,283) Interest, dividends and other income (expense) - net (110) --------- Income from continuing operations before taxes $ 7,909 =========
1 Should be read as an integral part of the consolidated financial statements and related notes. Segment data has been reclassified for discontinued operations. The Engineered Materials business segment was formerly named Refractories & Minerals. 2 Consists primarily of cash and cash equivalents, marketable securities, prepaid pension costs and, for 1995 and 1994, net assets of discontinued operations of $3,820,000 and $19,354,000, respectively. F-20 40
Industrial Engineered Total Corporate Sands Materials Segments and Other Consolidated - - -------- --------- -------- --------- ------------ $ 36,120 $ 18,027 $ 184,272 $51,941(2) $ 236,213 2,427 1,766 12,824 229 13,053 4,540 1,974 7,439 108 7,547 $ 42,583 $ 30,964 $ 159,725 $ 936 $ 160,661 $ 8,725 $ (805)(3) $ 15,983 $ (4,058)(4) $ 11,925 75 3 78 3,075 3,153 (356) (144) (2,909) (240) (3,149) (122) (187) 967 780 - - -------- -------- --------- -------- --------- $ 8,444 $ (1,068) $ 12,965 $ (256) $ 12,709 ======== ======== ========= ======== ========= $ 33,964 $ 17,987 $ 184,406 $64,338(2) $ 248,744 2,550 2,004 13,212 221 13,433 2,360 938 6,423 483 6,906 $ 40,552 $ 36,778 $ 162,987 $ 165 $ 163,152 $ 6,886 $ (223)(3) $ 18,740 $ (4,981)(4) $ 13,759 157 2,482 2,159 4,641 (524) (213) (4,159) (201) (4,360) (120) (91) (211) - - -------- -------- --------- -------- --------- $ 6,519 $ (436) $ 16,943 $ (3,114) $ 13,829 ======== ======== ========= ======== ========= $ 34,048 $ 19,309 $ 194,018 $66,795(2) $ 260,813 2,149 1,913 12,421 296 12,717 4,622 1,225 7,244 377 7,621 $ 28,818 $ 39,502 $ 150,473 $ 2,223 $ 152,696 $ 2,473 $ 714 $ 15,403 $ (4,935)(4) $ 10,468 59 73 218 7,858 8,076 (195) (4,478) (1,514) (5,992) (110) 74 (36) - - -------- -------- --------- -------- --------- $ 2,532 $ 592 $ 11,033 $ 1,483 $ 12,516 ======== ======== ========= ======== =========
(3) Includes pretax losses of $1,078,000 on the sale of refractory shapes and tundish coatings operations and the shutdown of a related manufacturing facility in 1996, and $613,000 on the shutdown and consolidation of facilities in 1995. (4) Includes other operations, net of certain corporate expenses. (5) Business segments include the reallocation of corporate general and administrative expenses previously allocated to discontinued operations. F-21 41 NOTE K- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Unaudited quarterly results of operations for the years ended December 31, 1996 and 1995 are summarized as follows (in thousands, except per share amounts):
Quarter Ended --------------------------------------- Dec. 31 Sept. 30 June 30 Mar. 31 ------- -------- ------- ------- 1996 Net sales and operating revenues $47,367 $49,680 $44,931 $ 18,683 Gross profit 8,294 10,649 6,080 3,777 Income from continuing operations 4,148 4,754 1,241 913 Net income 5,257 6,061 2,261 1,978 Per common share: Continuing operations 1.72 1.95 .51 .37 Net income 2.17 2.49 .93 .80 1995 Net sales and operating revenues $43,709 $49,368 $49,467 $ 20,608 Gross profit 7,324 10,195 9,893 4,134 Income (loss) from continuing operations 2,209 5,811 3,470 (540) Net income 4,039 6,810 4,375 137 Per common share: Continuing operations .89 2.35 1.40 (.22) Net income 1.64 2.75 1.77 .06
Amounts reported in prior quarters have been reclassified for discontinued operations. Per share amounts are based on the average number of shares outstanding during each quarter. The sum of per share amounts for the four quarters of 1996 and 1995 do not equal the annual per share amounts as a result of treasury stock purchases by the Company. Net income for the first quarter of 1996 increased $1,314,000 ($.53 per share) related to the sales of securities and other assets, including the sale of the Company's National Perlite Products Company. First quarter net income for 1996 also included interest income of $576,000 ($.23 per share) related to a $1,824,000 state tax refund received during the quarter. As a result of the state tax refund the Company's 1996 annual effective income tax rate was reduced. Third quarter net income for 1996 was reduced by a $711,000 ($.29 per share) related to a loss on the sale of certain Engineered Materials operations and shutdown of a related manufacturing facility. Third quarter net income for 1995 increased $1,534,000 ($.62 per share) related to the sale of two of the Company's Marine Transportation vessels no longer in service. The fourth quarter of 1995 included a $405,000 ($.16 per share) reduction of net income related to a loss on the shutdown and consolidation of certain Engineered Materials facilities. F-22 42 Item 14 (a) 3 EXHIBIT INDEX
SEC Exhibit No. Description Location ----------- ----------- -------- 3 (i) Restated Certificate of Incorporated by reference in Incorporation Exhibit 3(a) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (ii) By-Laws Filed herewith as Exhibit 3(ii). 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 H to the Consolidated Financial Statements (b) Form of Rights Agreement (including first Incorporated by reference in Exhibit 4(b) in and second amendments) the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (c) Form of Third Amendment to Rights Incorporated by reference in Exhibit 4(c) to Agreement, dated as of August 31, 1994, Amendment No. 3 to Form 8-A/A, filed on between Registrant and the Rights Agent September 26, 1994 (d) Form of Fourth Amendment to Rights Incorporated by reference in Exhibit 4(d) to Agreement, dated as of January 21, 1997, Form 8-A/A (Amendment No. 4), filed on between Registrant and the Rights Agent. January 21, 1997. 10 (a) Form of Supplemental Incorporated by reference in Exhibit 10(a) Pension Agreements with selected in the Registrant's Annual Report on Form former officers 10-K for the year ended December 31, 1993 (b) Agreement with Brent D. Baird Incorporated by reference in Exhibit 10(b) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (c) Trust Agreement for Incorporated by reference in Oglebay Norton Company Incentive Savings Plan Exhibit 10(c) in the Registrant's Annual and Trust (January 1, 1991 Restatement) Report on Form 10-K for the year ended December 31, 1993
I-1 43
SEC Exhibit No. Description Location ----------- ----------- -------- (d) Form of Change-in-Control Agreements with Incorporated by reference in three Executive Officers Exhibit 10(d) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (d)(1) Amendment to form of Change-in-Control Incorporated by reference in Exhibit Agreements with two Executive Officers 10(d)(1) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 (d)(2) Form of Change-in-Control Agreements Incorporated by reference in Exhibit with two Executive Officers 10-(d)(2) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 (d)(3) Form of Change in Control Agreement Filed herewith as Exhibit 10(d)(3) with two Executive Officers and three key employees (e) Form of Right of First Refusal Incorporated by reference in Exhibit 10(e) Agreements with seven Directors in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (f) Agreement with John D. Weil Incorporated by reference in Exhibit 10(f) in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (g) Employment Agreement with Chairman, Incorporated by reference in Exhibit 10(g) President and Chief Executive Officer in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (h) Oglebay Norton Company Long-Term Incorporated by reference in Exhibit 10(h) Incentive Plan in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (i) Director Stock Plan Filed herewith as Exhibit 10(i) (j) Supplemental Savings and Stock Ownership Filed herewith as Exhibit 10(j) Plan (j)(1) First Amendment to Oglebay Norton Filed herewith as Exhibit 10(j)(1) Company Supplemental Savings and Stock Ownership Plan
I-2 44
SEC Exhibit No. Description Location ----------- ----------- -------- (j)(2) Second Amendment to Oglebay Norton Filed herewith as Exhibit 10(j)(2) Company Supplemental Savings and Stock Ownership Plan (k) Irrevocable Trust Agreement I Filed herewith as Exhibit 10(k) (l) Irrevocable Trust Agreement II Filed herewith as Exhibit 10(l) (m) Executive Life Insurance Program I (Form Filed herewith as Exhibit 10(m) of letter agreement along with Schedules A for each current plan participant) (n) Executive Life Insurance Program II Filed herewith as Exhibit 10(n) (Program description) (o) Oglebay Norton Company Excess and TRA Filed herewith as Exhibit 10(o) Supplemental Benefit Retirement Plan (January 1, 1991 Restatement) (o)(1) First Amendment to Oglebay Norton Filed herewith as Exhibit 10(o)(1) Company Excess and TRA Supplemental Benefit Retirement Plan (January 1, 1991 Restatement), dated as of December 15, 1994 (p) Amended and Restated Loan Agreement, Filed herewith as Exhibit 10(p) between the Registrant and the Various Commercial Banking Institutions named therein, dated as of December 29, 1994 (p)(1) Amendment No. 1 to Amended and Filed herewith as Exhibit 10(p)(1) Restated Loan Agreement, dated as of August 29, 1995 (p)(2) Amendment No 2 to Amended and Restated Filed herewith as Exhibit 10(p)(2) Loan Agreement, dated as of March 1, 1997 (q) Annual Incentive Plan (plan description) Filed herewith as Exhibit 10(q) 21 Subsidiaries of the Registrant Filed herewith as Exhibit 21 23 Consent of Independent Filed herewith as Exhibit 23 Auditors 27 Financial Data Filed herewith Schedule
I-3 EX-3.II 2 EXHIBIT 3.II 1 Exhibit 3(ii) BY-LAWS OF OGLEBAY NORTON COMPANY As of February 27, 1997 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 ............................................ 2 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 .......... 4 13. Powers and authorities .................................... 4 VACANCIES 14. Vacancies ................................................. 4 MEETINGS OF THE BOARD 15. Regular meetings .......................................... 5 16. Special meetings .......................................... 5 17. Quorum .................................................... 5 3 Section Page Number Subject Number - - -------------------------------------------------------------------------------- ACTION WITHOUT A MEETING 18. Action by directors without a meeting ..................... 5 COMMITTEES 19. Executive Committee ....................................... 5 20. Other committees .......................................... 6 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 .............................. 7 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 .............................. .. 8 4 Section Page Number Subject Number - - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENTS 27. Senior Vice Presidents ................................. .. 8 VICE PRESIDENTS 28. Vice Presidents ........................................ .. 8 SECRETARY 29. Secretary .............................................. .. 8 TREASURER 30. Treasurer .............................................. .. 9 OTHER OFFICERS 31. Other officers ......................................... .. 9 EXECUTION OF DOCUMENTS 32. Execution of documents ................................. .. 9 AUTHORITY TO VOTE SECURITIES 33. Authority to vote securities ........................... .. 9 DELEGATION OF AUTHORITY AND DUTIES 34. Delegation of authority and duties of officers ......... .. 9 5 Section Page Number Subject Number - - -------------------------------------------------------------------------------- STOCK CERTIFICATES 35. Stock certificates ..................................... .. 10 TRANSFERS OF STOCK 36. Transfers of stock ....................................... 10 LOST, STOLEN OR DESTROYED CERTIFICATES 37. Lost, stolen or destroyed certificates ................... 10 TRANSFER AGENT AND REGISTRAR 38. Transfer agent and registrar ............................. 11 RECORD DATES 39. Record dates ............................................. 11 REGISTERED STOCKHOLDERS 40. Right of corporation to recognize only record stockholders .......................................... 11 INSPECTION OF BOOKS 41. Inspection of books ..................................... 11 FISCAL YEAR 42. Fiscal year ............................................. 12 6 Section Page Number Subject Number - - -------------------------------------------------------------------------------- DIVIDENDS 43. Dividends ............................................... 12 DIRECTORS' ANNUAL STATEMENT 44. Directors' annual statement ............................. 12 NOTICES 45. Notices ................................................. 12 AMENDMENTS 48. Amendments .............................................. 15 7 BY-LAWS OF OGLEBAY NORTON COMPANY (Revised as of February 27, 1997.) 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. 8 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. 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 -2- 9 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. 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. 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. -3- 10 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 proposal. Unless so determined by the stockholders, the number shall be ten, of which three shall be directors of the class whose term expires in 1996 and every three years thereafter, four shall be directors of the class whose term expires in 1997 and every three years thereafter, and three shall be directors of the class whose term expires in 1998 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. -4- 11 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. 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 four or more than eight directors of the corporation, as the Board shall determine, together with such alternates as the Board may deem advisable. The Executive Committee shall meet 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 -5- 12 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. 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 in an amount as determined from time to time by resolution adopted by the Board of Directors or its Compensation and Organization Committee for each quarter in which such director serves, payable in February, May, August and November, covering the quarter commencing with the month in which such payment is payable and, in addition, shall receive 100 shares of the common stock of the Company on the date upon which the Board of Directors holds its meeting next succeeding the annual meeting of the Company's stockholders. 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 such member's attendance at each meeting of the Board of Directors a fee in an amount as determined from time to time by resolution adopted by the Board of Directors or its Compensation and Organization Committee, plus travel expenses incurred by such member 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 -6- 13 at each such committee meeting a fee in an amount as determined from time to time by resolution adopted by the Board of Directors or its Compensation and Organization Committee, 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. 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 -7- 14 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. 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. -8- 15 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. 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. -9- 16 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. -10- 17 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 -11- 18 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. 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. Expect as provided in Section 46 and 47, 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 as may be given in writing -12- 19 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. 46. At any annual or special meeting of stockholders, proposals by stockholders shall be considered only if the stockholder intending to make the proposal is entitled to vote on the proposal at the meeting, advance notice of the intention to make the proposal is timely given in accordance with this Section 46 and the proposal are otherwise proper for consideration under applicable law and the Certificate of Incorporation. Notice of any such stockholder proposal must be given in writing to the Secretary, and received at the corporation's principal executive offices, not less than sixty (60) nor more than ninety (90) days prior to the scheduled date of the meeting, as disclosed by the corporation to its stockholders or in other public notice (including, in the case of an annual meeting, disclosure in the proxy statement for the previous year); except that, if notice to the stockholders or prior public disclosure of the scheduled date of the meeting is first given or made less than seventy-five (75) days prior to the date of the meeting, the written notice of the intention to make the stockholder proposal must be given to the Secretary not later than the close of business on the fifteenth (15th) day following the day on which such notice to the stockholders or public disclosure (whichever occurs earlier) is first given or made. Notice of the anticipated date of the annual meeting included the corporation's proxy statement for the prior year will, for this purpose, be adequate notice of the date of the meeting unless the date is subsequently advanced by more than 30 days or delayed by more than 90 days. Any notice of the intention to make a stockholder proposal shall be accompanied by the text of the proposal and a brief written statement of the reasons why the stockholder favors the proposal and shall set forth (i) the stockholder's name and record address, (ii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to make -13- 20 the proposal, (iii) a description of all arrangements or understandings between the stockholder and any other person (naming that person) pursuant to which the proposal is to be made, and (iv) the number and class of all shares of stock of the corporation beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by the stockholder and any material interest of the stockholder in the proposal (other than any interest solely as a stockholder). The person presiding at the meeting shall determine whether the notice of the stockholder proposal has been duly given and shall direct that the proposal not be considered if the notice (together with all information required to be submitted by the stockholder under this Section 46) has not been given. 47. Subject to the rights of the holders of any class or series of preferred stock of the corporation, a stockholder may make nominations for the election of directors at an annual or special meeting of stockholders only if the stockholder intending to make the nominations is entitled to vote for the election of directors at the meeting and written notice of the intention to make the nominations is timely given as provided in this Section 47. Notice of any such stockholder nominations must be given in writing to the Secretary, and received at the corporation's principal executive offices, not less than sixty (60) nor more than ninety (90) days prior to the scheduled date of the meeting, as disclosed by the corporation to its stockholders or in other public notice (including, in the case of an annual meeting, disclosure in the proxy statement for the previous year); except that, if notice to the stockholders or prior public disclosure of the scheduled date of the meeting is first given or made less than seventy-five (75) days prior to the date of the meeting, the written notice of the intention to make the nominations must be given to the Secretary not later than the close of business on the fifteenth (15th) day following the day on which such notice to the stockholders or public disclosure (whichever occurs earlier) is first given or made. Any notice of a stockholder's intention to make such nominations shall set forth: (i) as to each person who is not an incumbent director when the stockholder proposes to nominate that person for election as a director, (A) the name, age, and business and residence address of that person, (B) the principal occupation and employment of that person during the past five years and the name and principal business of any corporation or other organization in which such occupations and employment were carried on, (C) all positions of that person as a director, officer, partner, employee or controlling stockholder of any corporation or other organization, (D) the class and -14- 21 number of shares of stock of the corporation that are beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by that person, (E) any other information regarding the person that would be required, pursuant to Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulations subsequently adopted by the Securities and Exchange Commission applicable to the corporation), to be included in a proxy statement of the corporation complying with the proxy rules of the Securities and Exchange Commission if that person were nominated by the board of directors of the corporation, and (F) the written consent of that person to serve as a director of the corporation, and (ii) as to the stockholder giving the notice, (A) the name and record address of the stockholder, (B) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person specified in the notice, (C) a description of all arrangements or understandings between the stockholder and each nominee and any other person (naming that person) pursuant to which the nomination is to be made, and (D) the class and number of shares of stock of the corporation that are beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by the stockholder. AMENDMENTS 48. 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 the holders of all of the issued and outstanding stock of the corporation. 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. Any amendment of Section 46 or -15- 22 Section 47 of these By-Laws adopted by stockholders at an annual or special meeting shall only be effective for subsequent meetings and shall not eliminate or modify the requirement for advance notice of stockholder proposals or stockholder nominations for the election of directors, as the case may be, made at the meeting at which the amendment is adopted. -16- EX-10.D.3 3 EXHIBIT 10.D.3 1 Exhibit 10(d)(3) EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT is entered into on this ___ day of ____________, 1997, by and between OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and [NAME] ("Employee"). W I T N E S S E T H: WHEREAS, Employee is an executive and key employee of the Company, has fully and ably discharged his responsibilities and duties in his service to the Company to date, and is now serving the Company as [POSITION]; 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 adversely affected by any threatened or actual Change in Control; -1- 2 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 Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; -2- 3 (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. 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, -3- 4 this Agreement shall become immediately operative subject, however, to the provisions of Section 1A, below. 1A. POSSIBLE "UNDOING" OF A CHANGE IN CONTROL. If a report is filed with the SEC disclosing that a person (the "Acquiror") 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 outstanding securities and, as a result of that filing, a Change in Control, as defined in Paragraph 1(a), above, occurs, while Employee is in the employ of the Company, then, as provided in Paragraph 1, above, this Agreement will become immediately operative. However, if: (a) a Change in Control as described in Paragraph 1(a) occurs while Employee is in the employ of the Company; (b) the Acquiror subsequently transfers or otherwise disposes of sufficient securities of the Company in one or more transactions, to a person or persons other than affiliates of the Acquiror or any persons with whom the Acquiror has agreed to act together for the purpose of acquiring, holding, voting or disposing of securities of the Company, so that, after such transfer or other disposition, the Acquiror is no longer the beneficial owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding securities; -4- 5 (c) at the time of the subsequent transfer or disposition that reduced the Acquiror's holdings to less than 10% as provided in (b), immediately above, no other event constituting a Change in Control had occurred; and (d) at the time of the subsequent transfer or other disposition that reduced the Acquiror's holdings to less than 10%, Employee's employment with the Company had not been terminated by the Company without cause or by Employee for good reason, then, for all purposes of this Agreement, the filing of the report constituting a Change in Control under Section 1(a) shall be treated as if it had not occurred and this Agreement shall return to the status it had immediately before the filing of the report constituting a Change in Control under Paragraph 1(a). Accordingly, if and when a new Change in Control occurs, this Agreement will again become operative on the date of that new Change in Control. 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 -5- 6 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 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; (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 personnel 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 -6- 7 or the management of his investment assets provided such activities do not materially interfere with the performance by Employee of his duties hereunder. 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 personnel 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 -7- 8 PERQUISITES. During the Contract Period Employee shall be entitled to participate in the Company's Pension Plan for Salaried Employees (the "Salaried Plan"); the Salary Continuation Arrangement; the Disability Benefit Arrangement; the Incentive Savings Plan; and every other employee benefit plan or arrangement not specifically referred to in this Agreement that is generally available to executive personnel of the Company immediately before the Change in Control Date or that is specifically extended to Employee by the Company before the Change in Control Date, whether or not Employee is eligible to participate in such plan or arrangement on the date of this Agreement. Employee's participation in and benefits under any such plan or arrangement shall be on the terms and subject to the conditions specified in the governing document of the particular plan or arrangement as in effect immediately before the Change in 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 or arrangement as amended (or under a substitute plan or arrangement) as were the benefits under the plan or arrangement 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 similarly situated executive personnel in the period immediately before the Change in Control Date. 6A. ADDITIONAL BENEFIT. If a Change in Control occurs and this Agreement becomes operative and thereafter -8- 9 Employee's employment is terminated by the Company without cause or by Employee for good reason, whether such termination occurs before, on, or after the Contract Expiration Date, the Company shall pay and provide benefits to or with respect to Employee in such amounts and at such times so that the aggregate benefits payable to or with respect to Employee under the Salaried Plan and any Excess Benefit Plan maintained in connection with the Salaried Plan and under this Agreement with respect to the Salaried Plan and any such 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 any such Excess Benefit Plan if Employee were exactly five years older than his actual age and his credit under the Salaried Plan and any such Excess Benefit Plan were equal to the greater of his actual service or the amount of service he is deemed to have under Paragraph 9(a)(iii), below. If Employee's employment is terminated after a Change in Control by the Company without cause or by Employee for good reason and Employee is entitled to additional benefits by virtue of the additional five years of deemed age provided for in this Paragraph 6A, then the Company shall directly provide such benefits to Employee in the same manner as additional benefits are to be provided to Employee under Paragraph 9(a), below. 6B. PRIORITY OF PARAGRAPHS 1A AND 6B AMENDMENTS. Paragraph 1A of this Agreement shall take precedence over Paragraph 6A of this Agreement so that if a Change in Control occurs and is subsequently undone under Paragraph 1A of this -9- 10 Agreement, Employee will thereafter have no rights under Paragraph 6A of this Agreement unless and until a further Change in Control occurs. 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: (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: -10- 11 (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: (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 -11- 12 (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; (ii) coverage under the Company's medical insurance plan, short-term disability plan, long-term disability plan, Salary Continuation Arrangement, Disability Benefit Arrangement, and Executive Life -12- 13 Insurance Benefit (provided that he became eligible to participate therein prior to the date his employment is terminated), 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 any Excess Benefit Plan maintained in connection with the Salaried Plan under which he is eligible to participate so that the aggregate benefits payable to or with respect to the Employee under the Salaried Plan and any such 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 any such Excess Benefit Plan if Employee's employment had continued through the Severance Benefits Termination Date. 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 -13- 14 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: -14- 15 (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, 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 -15- 16 (ii) Employee materially and willfully breaches his agreement with respect to noncompetition set forth in 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 any 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 -16- 17 Employee's duties hereunder. Upon the termination of Employee's employment with the Company, Employee agrees to deliver forthwith to the 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 -17- 18 his employment other than for good reason (as determined under Paragraph 8(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 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. -18- 19 13. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement shall create any right or duty on the 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. -19- 20 (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. 16. INVALID PROVISIONS. (a) Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the -20- 21 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. 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 -21- 22 contrary, amounts and benefits to be paid and provided by the Company to Employee under this Agreement ("Agreement Benefits") shall be reduced if necessary to avoid the application of sections 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 -22- 23 will be made in the timing of the payments of installments of base salary.) (b) The present value of the Salary Continuation Arrangement, of the Disability Arrangement, and of the Executive Life Insurance Benefit 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 -23- 24 the application of sections 280G and 4999 of the Code if the different method is not prohibited by regulations issued under 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. -24- 25 IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the day and year first above written. OGLEBAY NORTON COMPANY By: ------------------------------- R. Thomas Green, Jr. Chairman, President and Chief Executive Officer ----------------------------------- [NAME] -25- EX-10.I 4 EXHIBIT 10.I 1 Exhibit 10(i) OGLEBAY NORTON COMPANY DIRECTOR STOCK PLAN 1. PURPOSE. The Oglebay Norton Company Director Stock Plan (the "Plan") is designed to provide appropriate consideration to Directors and to further align their interests with those of the stockholders of the Company. 2. ELIGIBILITY. All current Directors of the Company (excluding Directors who are employees on the date of distribution of the shares of stock) and each person becoming a Director of the Company (excluding Directors who are employees on the date of distribution of the shares of stock) during the term of the Plan. 3. DIRECTOR STOCK GRANTS. Each nominee for election as a Director at the 1995 Annual Meeting of Stockholders elected as a Director and each other Director of the Company (excluding Directors who are employees) in office on the date of such meeting shall, subject to approval by the stockholders at the 1995 Annual Meeting of Stockholders, be granted an initial grant of 100 shares of Common Stock of the Company at the meeting of the Board of Directors immediately following the 1995 Annual Meeting of Stockholders, be granted an initial grant of 100 shares of Common Stock of the Company at the meeting of the Board of Directors immediately following the 1995 Annual Meeting of Stockholders. Each Director (excluding Directors who are employees on the date of distribution of the shares of stock) continuing in office shall thereafter be granted an additional 100 shares of Common Stock of the Company as of the meeting of the Company's Stockholders during the term of the Plan. No action by the Board of Directors of the Compensation and Organization Committee of the Board of Directors of the Company will be required to effect these Director stock grants. 4. COMMON STOCK AVAILABLE FOR DIRECTOR GRANTS. The aggregate number of shares of Common Stock that may be subject to Director stock grants will be 15,000. 5. AMENDMENT. The Board of directors may amend, suspend, or terminate this Plan at any time, except that no amendments may be made more than once every six months, other than to comport with changes in the Internal Revenue Code, as amended, the Employee Retirement Income Security Act, or the rules thereunder and other relevant laws, rules and regulations. Stockholder approval for any such amendment will be required only to the extent necessary to preserve the exemption provided by Rule 16b-3 under the Securities and Exchange Act of 1934, as amended, for this Plan. 6. EFFECTIVE AND TERMINATION DATES. This Plan will become effective on the date it is approved by holders of a majority of the shares of Common Stock of the Company present or represented, and entitled to vote at the 1995 Annual Meeting of Stockholders and will continue in effect until December 31, 2004. EX-10.J 5 EXHIBIT 10.J 1 Exhibit 10(j) OGLEBAY NORTON COMPANY SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN The Oglebay Norton Company ISP Supplemental Plan, established effective January 1, 1985, for the purpose of providing benefits to certain salaried employees, is hereby amended and restated as the Oglebay Norton Company Supplemental Savings and Stock Ownership Plan, effective as of the date of execution hereof, to provide as hereinafter set forth. ARTICLE I --------- DEFINITIONS ----------- For the purposes hereof, the following words and phrases shall have the meanings indicated, unless a different meaning is plainly required by the context: 1. "Plan" shall mean the plan as set forth herein, together with all amendments hereto, which for periods on and after the date of execution hereof, shall be called the "Oglebay Norton Company Supplemental Savings and Stock Ownership Plan" and for periods prior to such date was called the "Oglebay Norton Company ISP Supplemental Plan." 2. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time except as otherwise provided in Section 3 of Article II. Except as otherwise provided in such Section 3, reference to a section of 2 the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section. Notwithstanding the foregoing, for periods prior to January 1, 1987, the term "Code" shall mean the Internal Revenue Code of 1954, as amended from time to time. 3. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 4. "Company" shall mean Oglebay Norton Company, a Delaware corporation, its corporate successors and the surviving corporation resulting from any merger of Oglebay Norton Company with any other corporation or corporations. 5. "ISP" shall mean the Oglebay Norton Company Incentive Savings Plan and Trust as the same shall be in effect from time to time. Any reference herein to a section of the ISP is a reference to a section of the Trust Agreement for Oglebay Norton Company Incentive Savings Plan and Trust (January 1, 1985 Restatement), as amended, and shall include such section and any comparable section or sections of any future amendment or restatement of the documents setting forth the ISP. 2 3 6. "ESOP" shall mean the Oglebay Norton Company Employee Stock Ownership Plan and Trust as the same shall be in effect from time to time. Any reference herein to a section of the ESOP is a reference to a section of the Trust Agreement for Oglebay Norton Company Employee Stock Ownership Plan and Trust executed September 4, 1987, as amended, and shall include such section and any comparable section or sections of any future amendment or restatement of the documents setting forth the ESOP. 7. An "Employee" shall mean any Participant in the ISP or in the ESOP, or both, who is designated by the Compensation and Organization Committee of the Board of Directors of the Company as eligible to receive benefits under the Plan. 8. "Effective Date" shall mean January 1, 1985. 9. "Beneficiary" shall mean with respect to an Employee's interest under the Plan based on Prevented Allocations under the ISP, his Beneficiary under the ISP as defined in Section 1.1(d) of the ISP, and with respect to his interest under the Plan based on Prevented Allocations under the ESOP, his Beneficiary under the ESOP as defined in Section 1.4 of the ESOP. 10. "Prevented Allocation" shall mean an amount described in Section 2 of Article II. ARTICLE II ---------- BENEFITS -------- 1. ELIGIBILITY. An Employee who retires, dies, or otherwise terminates his employment with the Company under conditions that make such Employee or his Beneficiary eligible for a distribution under the ISP or the ESOP or both, and with respect to whom there have been one or more Prevented Allocations, shall be eligible for a benefit under the Plan. Notwithstanding the immediately preceding sentence, as a condition to eligibility for certain benefits under the Plan, as further specified below, -3- 4 any Employee who is notified by the Company of his eligibility or potential eligibility for benefits under the Plan and requested by the Company to limit his Regular Participant Contributions under the ISP, as defined in Section 1.1(w) of the ISP, to the extent necessary that such contributions shall not constitute annual additions for purposes of Section 415 of the Code shall take all actions necessary to so limit such contributions as soon as permissible under the terms of the ISP. If any such Employee fails to limit his Regular Participant Contributions in accordance with the immediately preceding sentence, such Employee shall not be entitled to any benefit under the Plan with respect to any limitation year, as defined in Section 7.5 of the ISP, in which such Regular Participant Contributions constitute annual additions for purposes of Section 415 of the Code. Moreover, effective January 1, 1989, as a condition to eligibility for benefits under the Plan determined with reference to the ISP, an Employee must elect under the terms of the ISP to have contributed on his behalf as Tax Deferred Compensation Contributions the maximum amount permitted under Section 402(g) of the Code. 2. PREVENTED ALLOCATION. A Prevented Allocation means an amount described below which, on or after the Effective Date, would have been allocated to the -4- 5 account of an Employee under the ISP or the ESOP, as the case may be, but which was not so allocated, as follows: (a) any allocation of Employer Contributions or forfeitures under Section 7.1 or 7.2 of the ISP which would have been made but for the operation of (i) Section 415(c)(1)(A) of the Code, or (ii) any annual dollar amount specified in the ISP limiting Compensation, as defined in Section 1.1(g) of the ISP, covered by the ISP, provided that for purposes of determining such amount with respect to any Plan year, it shall be assumed that the Employee elected to contribute or have contributed on his behalf the maximum amount of Regular Participant Contributions and Tax Deferred Compensation Contributions subject to matching under Sections 7.1 and 7.2 of the ISP; and (b) any allocation of Employer contributions or forfeitures and any Shares and other assets released from the Suspense Fund under Section 7.1 of the ESOP which would have been made but for the operation of (i) Section 415(c)(1)(A) of the Code, or Section 415(c)(6) of the Code, if applicable; or (ii) any annual dollar amount specified in the ESOP limiting Compensation, as defined in Section 1.9 of the ESOP, covered by the ESOP. In no event, however, shall there be duplication of Prevented Allocation amounts under the Plan. 3. AMOUNT. The benefit payable under the Plan to an Employee, or his Beneficiary in the event of the Employee's death prior to receiving payment of all amounts -5- 6 due under the Plan, shall be in such amount as is required, when added to the Employee's benefits distributable under the ISP and the ESOP, to produce aggregate benefits equal to the benefits that would have been distributable under the ISP and the ESOP to the Employee or his Beneficiary if each Prevented Allocation had occurred. Notwithstanding any other provision of the Plan to the contrary, any decrease in a dollar limitation under Section 401(a)(17) or 415(c)(1)(A) of the Code shall not be given effect under the Plan. The Company shall in good faith determine the amount of benefit payable hereunder in its sole and absolute discretion. Such determination shall be based upon relevant factors including, without limitation, the investment results that would have occurred under the ISP and the ESOP with respect to the Prevented Allocations had such prevented allocations occurred under the respective plans, any election by the Employee pursuant to Section 5.3 of the ISP, and an adjustment to account on an approximate basis for any differences in federal, state, and local income tax consequences detrimental to the Employee or his Beneficiary as a result of not receiving the benefit payable under the Plan from the ISP or the ESOP (such adjustment being hereinafter referred to as the "tax adjustment"). As a condition to receiving the benefit of the tax adjustment, the Employee and, where applicable, his Beneficiary shall promptly furnish the -6- 7 Company with such information as it may reasonably request to make the foregoing determination, and any failure by the Employee or his Beneficiary to so furnish such information shall result in the forfeiture by the Employee or Beneficiary of any right to receive the benefits of the tax adjustment. The Company shall establish on its books and records an account for each Employee with respect to whom a Prevented Allocation has occurred to reflect such Employee's interest under the Plan, and shall maintain subaccounts reflecting the portions of his interest derived from the ISP and from the ESOP, respectively. Such account and subaccounts shall be debited and credited appropriately to account for the occurrence of and increments and decrements in Prevented Allocations in accordance with the preceding provisions of this Section 3 regarding the determination of such Employee's benefit under the Plan and the provisions of Section 4 of this Article II regarding payment of such benefit; provided, however, that no adjustment to such account and subaccounts with respect to the tax adjustment shall be made except at the time a payment under the Plan is made. 4. PAYMENT. The form and terms of payment of the benefit under the Plan derived from the ISP and the ESOP, respectively, shall be selected by the Company in its -7- 8 sole and absolute discretion from among those forms and terms of payment available under each such plan. ARTICLE III ----------- ADMINISTRATION -------------- The Plan consists in part of an excess benefit plan, as defined in ERISA, and is a plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. Accordingly, the Plan shall be construed and administered in the manner appropriate to maintain the Plan's status as such under ERISA. To the extent that ERISA applies to the Plan, the Company shall be the "named fiduciary" of and the "plan administrator" of the Plan. The Company shall be responsible for the administration of the Plan, for carrying out the provisions of the Plan, and for making any required benefit payments under the Plan. The Company shall have all powers as may be necessary or appropriate to carry out the provisions of the Plan, including the power to determine all questions relating to eligibility for and the amount of any benefit hereunder, all questions pertaining to claims for benefits and procedures for claim review, and all other questions arising under the Plan, including any questions of construction, and to take such further action as the Company shall deem advisable in the -8- 9 administration of the Plan. All actions taken and decisions made in good faith by the Company under the Plan shall be final and binding upon all interested parties. ARTICLE IV ---------- AMENDMENT AND TERMINATION ------------------------- The Company reserves the right in its sole and absolute discretion to amend or terminate the Plan at any time by action of its Board of Directors; provided, however, that no such action shall adversely affect any Employee or Beneficiary with respect to Prevented Allocations in accordance with Article II that have occurred prior to the later of the date of adoption or effective date of such amendment or termination, unless an equivalent benefit is provided under another plan sponsored by the Company. ARTICLE V --------- MISCELLANEOUS ------------- 1. NON-ALIENATION OF RIGHTS OR BENEFITS. No Employee or Beneficiary shall encumber or dispose of his right to receive any payments hereunder, which payments and the right thereto are expressly declared to be non-assignable and non-transferable. If an Employee or Beneficiary attempts to assign, transfer, alienate, or encumber his right to receive any payment hereunder or permits the same to be subject to alienation, garnishment, attachment, -9- 10 execution, or levy of any kind, then thereafter during the life of such Employee or Beneficiary, and also during any period in which any Employee or Beneficiary is incapable in the judgment of the Company of attending to his financial affairs, any payments which the Company is required to make under the Plan may be made, in the sole and absolute discretion of the Company, directly to such Employee or Beneficiary or to any other person for his use or benefit or that of his dependents, if any, including any person furnishing goods or services to or for his use or benefit or the use or benefit of his dependents, if any. Each such payment may be made without the intervention of a guardian, the receipt of the payee shall constitute a complete acquittance to the Company with respect thereto, and the Company shall have no responsibility for the proper application thereof. 2. PLAN NON-CONTRACTUAL. Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company. Nothing herein contained shall be construed as a commitment on the part of the Company to continue the employment, the compensation, or any term or condition of employment of any such person for any period, and all Employees shall remain subject to discharge to the same extent as if the Plan had never been put into effect. -10- 11 3. UNFUNDED, UNSECURED PROMISE. The provision of this Section 3 shall apply notwithstanding any other provision of the Plan to the contrary. All benefits payable under the Plan are payable solely from the Company's general assets. The obligation of the Company under the Plan to provide an Employee or his Beneficiary a benefit is solely the unfunded, unsecured promise of the Company to make payments as provided herein. No person shall have any interest in, or a lien or prior claim upon, any property of the Company with respect to such benefits or any priority or status with respect to such benefits greater than that of a general creditor of the Company. 4. CLAIMS. The provisions of the Plan shall in no event be construed as giving any person, firm, or corporation any legal or equitable right as against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 5. NO COMPETITION. The right of any Employee or his Beneficiary to a benefit hereunder will be terminated, or, if payment thereof has begun, all further payments will be discontinued and forfeited in the event such Employee at any time subsequent to the Effective Date (i) wrongfully discloses any secret process or trade secret of -11- 12 the Company or any of its subsidiaries or related companies or businesses, or (ii) engages, either directly or indirectly, as an officer, trustee, employee, consultant, partner, or substantial shareholder, on his own account or in any other capacity, in a business venture within the ten-year period following his retirement or other termination of employment with the Company that the Company's Board of Directors reasonably determines to be competitive with the Company or its subsidiaries or related companies or businesses to a degree materially contrary to the Company's best interest. 6. SEVERABILITY. The invalidity or unenforceability of any particular provision of the Plan shall not effect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 7. GOVERNING LAW. The provisions of the Plan shall be governed by and construed in accordance with applicable federal law, and to the extent not preempted thereby, the laws of the State of Ohio. Executed this day of , 1989. OGLEBAY NORTON COMPANY By __________________________ Title: And ___________________________ Title: -12- EX-10.J.1 6 EXHIBIT 10.J.1 1 Exhibit 10(j)(1) FIRST AMENDMENT TO OGLEBAY NORTON COMPANY SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN WHEREAS, the Oglebay Norton Company Supplemental Savings and Stock Ownership Plan, established effective January 1, 1985, for the purpose of providing benefits to certain salaried employees, is presently maintained under an amended and restated document executed on June 14, 1989 (the "Plan"); and WHEREAS, it is desired further to amend the Plan; NOW, THEREFORE, Section 4 of Article II of the Plan is hereby amended as of the date of execution hereof, to provide as follows: 4. PAYMENT. The form and terms of payment of the benefit under the Plan derived from the ISP and the ESOP, respectively, shall be selected by the Compensation and Organization Committee of the Company in its sole and absolute discretion from among those forms and terms of payment available under each such plan, except that in no event shall any payment be made in a form other than cash. * * * Executed at Cleveland, Ohio, this day of , 1991. OGLEBAY NORTON COMPANY By ----------------------------- Title: And ----------------------------- Title: EX-10.J.2 7 EXHIBIT 10.J.2 1 Exhibit 10(j)(2) SECOND AMENDMENT TO OGLEBAY NORTON COMPANY SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN WHEREAS, the Oglebay Norton Company Supplemental Savings and Stock Ownership Plan, established effective January 1, 1985, for the purpose of providing benefits to certain salaried employees, is presently maintained under an amended and restated document executed on June 14, 1989 (the "Plan"); and WHEREAS, it is desired further to amend the Plan; NOW, THEREFORE, the Plan is hereby amended in the respects hereinafter set forth. 1. Section 1 of Article II of the Plan is hereby amended, effective as of January 1, 1991, to provide as follows: 1. ELIGIBILITY. An Employee who retires, dies, or otherwise terminates his employment with the Company under conditions that make such Employee or his Beneficiary eligible for a distribution under the ISP or the ESOP or both, and with respect to whom there have been one or more Prevented Allocations, shall be eligible for a benefit under the Plan. Notwithstanding the immediately preceding sentence, as a condition to eligibility for benefits under the Plan determined with reference to the ISP, an Employee must elect under the terms of the ISP to have contributed on his behalf as Tax Deferred Compensation Contributions the maximum amount permitted under Section 402(g) of the Code. 2. Section 2 of Article II of the Plan is hereby amended, effective as of January 1, 1991, to provide as follows: 2 2. PREVENTED ALLOCATION. (a) With respect to any period prior to January 1, 1991, a Prevented Allocation means the amount determined as a Prevented Allocation under the provisions of the Plan as in effect from time to time prior to January 1, 1991. (b) With respect to any period on or after January 1, 1991, a Prevented Allocation means an amount described below which, on or after January 1, 1991, would have been allocated to the account of an Employee under the ISP or the ESOP, as the case may be, but which was not so allocated, as follows: (i) any allocation of Employer Contributions under Section 7.1 of the ISP which would have been made but for the operation of (A) Section 415(c)(1)(A) of the Code, or (B) any annual dollar amount specified in the ISP limiting Compensation, as defined in Section 1.1(h) of the ISP, covered by the ISP, or (C) Section 401(m) of the Code, provided that for purposes of determining such amount with respect to any Plan year, it shall be assumed that the Employee elected to contribute or have contributed on his behalf the maximum amount of Tax Deferred Compensation Contributions subject to matching under Section 7.1 of the ISP which may have been made but for the operation of (1) Section 415(c)(1)(A) of the Code, (2) any annual dollar amount specified in the ISP limiting Compensation as defined in Section 1.1(h) of the ISP, covered by the ISP, (3) Section 401(m) of the Code; (ii) any allocation of Employer contributions or forfeitures from any Shares and other assets released from the Suspense Fund under Section 6.1 of the ESOP which would have been made but for the operation of -2- 3 (A) Section 415(c)(1)(A) of the Code, or Section 415(c)(6) of the Code, if applicable; or (B) any annual dollar amount specified in the ESOP limiting Compensation, as defined in Section 1.8 of the ESOP, covered by the ESOP. In no event, however, shall there be duplication of Prevented Allocation amounts under the Plan. 3. Section 3 of Article II of the Plan is amended, effective January 1, 1991, by deleting the Second Sentence of Section 3 in its entirety. * * * Executed at Cleveland, Ohio this day of , 1994. OGLEBAY NORTON COMPANY By ___________________________ Title: And __________________________ Title: EX-10.K 8 EXHIBIT 10.K 1 EXHIBIT 10(k) IRREVOCABLE TRUST AGREEMENT I (Salary Continuation, Disability, and Death Benefit Arrangements, and Prior SupplementaL Retirement Plan) THIS AGREEMENT is made this 16th day of August, 1989, between OGLEBAY NORTON COMPANY, a Delaware corporation with its principal offices at Cleveland, Ohio, as grantor (the "Company"), and BANK ONE, CLEVELAND, NA, a national banking association, with offices in Cleveland, Ohio, as Trustee. WHEREAS, the Company is obligated to provide supplemental retirement benefits to seven of its former key executives under a Supplemental Retirement Plan adopted December 31, 1974 and has provided to certain of its key executives Salary Continuation Arrangements pursuant to letters dated November 29, 1982, Disability Benefit Arrangements pursuant to letters dated November 29, 1982, and Death Benefit Arrangements pursuant to letters dated May 1, 1986, to provide inducements for those executives to continue in the Company's employ until retirement age and not to engage in activity competitive with the Company (such plan and such arrangements are sometimes hereinafter referred to collectively as the "Plans" and individually as a "Plan" and the former and current key executives who are covered by one or more of the Plans are hereinafter referred to as "Participants"); WHEREAS, the Plans provide for payment of benefits in specified circumstances to Participants and/or to the surviving spouse or other beneficiary under a Plan of a Participant (such benefits payable under the Plans are herein referred to as "Benefits" and the surviving spouses and other beneficiaries of Participants under the Plans are herein referred to collectively as "Beneficiaries" and individually as a "Beneficiary"); WHEREAS, the Company desires to establish an irrevocable grantor trust (the "Trust") and transfer to the Trust assets to be held therein, subject to the claims of the Company's creditors in the event of the Company's insolvency, until paid to Participants or their Beneficiaries; WHEREAS, it is the intention of the Company to make payments of Benefits directly from assets other than those held in the Trust until such time as the assets held by the Trust are determined to be sufficient to pay all future Benefits under the Plans; 2 NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held, and disposed of as follows: Section 1. TRUST FUND. (a) Subject to the claims of its creditors as set forth in Section 3, the Company hereby deposits with the Trustee the property described in the attached Schedule A, and the Company and the Trustee hereby agree that such property, all additions made in accordance with the provisions of this Agreement, and the increments, proceeds, investments, and reinvestments of such property and additions shall be held in trust and administered and distributed by the Trustee as provided in this Agreement. (b) The Trust hereby established shall be irrevocable. (c) Any and all net income generated by the Trust shall be accumulated and added and credited to its principal upon receipt. Any and all increments, proceeds, investments, and reinvestments of the principal of the Trust similarly shall be credited to and remain part of such principal. (d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes herein set forth. Neither Participants, nor Beneficiaries, nor the Plans, shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Trust prior to the time such assets are paid to Participants or Beneficiaries as Benefits as provided in Section 2. Until satisfied by payment, all of the obligations of the Company under the Plans and this Agreement shall be unsecured promises of the Company to pay benefits under those Plans and the Participants and Beneficiaries shall have the status of unsecured creditors of the Company with respect to those obligations. (e) It is intended that the Trust will be treated for federal income tax purposes as a grantor trust, with the result that all items of income, exclusion, deduction, and credit with respect to the Trust will be attributed to the Company as the owner thereof in accordance with the provisions of Subpart E of Part I of Chapter lJ of the Internal Revenue Code of 1986, as it may be amended (the "Code"), or the corresponding provisions of any future internal revenue law. The Trustee shall prepare tax information relating to the administration of the trust, shall furnish the same to the Company, and shall file tax returns accordingly. - 2 - 3 It is also intended that transfers to the Trust of assets will not be transfers of property for purposes of section 83 of the Code or section 1.83-3(e) of the Treasury Regulations and that no amounts held in the Trust will be includable as compensation in the gross income of any Participant or Beneficiary before the taxable year of the Participant or Beneficiary in which the amounts are actually distributed or made available to the Participant or Beneficiary by the Trustee. The provisions of this Trust shall be interpreted and administered to the extent possible in such a manner as to carry out and effectuate the intentions expressed in this Paragraph 1(e). (f) The Company may at any time and from time to time, pursuant to authorization by the Company's Board of Directors, contribute additional cash or other property to the Trust to augment the principal to be held, administered, and disposed of by the Trustee as provided in this Agreement. Section 2. PAYMENTS TO PARTICIPANTS AND BENEFICIARIES. (a) Notwithstanding the other provisions of this Section 2, the Trustee shall not make any distribution as provided in this Section 2 if, at the time of the distribution, the Trustee is required to suspend such distributions (as provided in Paragraph 3(c)) by reason of having received notice or allegations of the Company's insolvency. (b) At least once each calendar year and in in advance of the month or months covered by the schedule so furnished, the Company shall furnish to the Trustee, for each calendar month in which any payment of Benefits is to be made to any Participant or Beneficiary under any of the Plans, a "Benefit Schedule" showing the name and address of each Participant or Beneficiary who is entitled to receive a payment of Benefits in that month and the amount of each such payment. If the Company so requests with respect to any payment shown on any Benefit Schedule, the Trustee shall make the payment to the Participant or Beneficiary shown on the Benefit Schedule to be entitled to the payment. The Trustee shall have no liability to the Company or any other person for the making of any distributions made in reliance upon any such request. (c) If any Participant or Beneficiary (a "Claimant") submits a written claim (a "Claim") to the Trustee notifying the Trustee that the Company has failed to make at least part of one payment of Benefits under a Plan to the Claimant when due and requesting that the Trustee pay any Benefits to the Claimant, the - 3 - 4 Trustee shall promptly forward a copy of the Claim to the Company. (Any such claim may include a request that Benefits acknowledged by the Claimant to be not yet due be paid as they become due in the future.) Within ten days of receipt of the Claim, the Company shall (i) deliver to the Trustee an amendment to the Benefit Schedule for the month or months with respect to which the Claim is made acknowledging the validity of all or part of the Claim and providing for the payment of Benefits so acknowledged to be validly claimed by the Claimant and/or (ii) notify the Trustee that the Company disputes all or part of the contents of the Claim. If at any time the Company delivers an amendment to one or more Benefit Schedules in which the Company acknowledges that payments of Benefits to a Claimant are overdue, the Trustee shall pay to the Claimant the overdue payments of Benefits that are so acknowledged by the Company together with interest thereon as provided in Paragraph 2(j). If the Company fails to deliver an amendment to the Benefit Schedule acknowledging the validity of all or part of a Claim, the Trustee shall make no distribution pursuant to that part of the Claim not acknowledged by the Company unless and until the Claimant has obtained a binding arbitration order confirming the validity in whole or in part of the unacknowledged part of the Claim. Upon receipt of a binding arbitration order holding that a Participant or Beneficiary is entitled to payments of Benefits under any of the Plans, the Trustee shall make payments of the Benefits specified in the order at the times and in the amounts specified in the order. The Trustee shall have no liability to the Company or any other person for any distributions made in reliance on an amended Benefit Schedule provided by the Company or on a binding arbitration order obtained in favor of any Participant or Beneficiary. (d) If any amount of cash or other property held in the Trust is included by the Internal Revenue Service in the gross income of a Participant or of a Beneficiary before actual distribution of the amount to the Participant or Beneficiary, the Trustee shall make a distribution to the person in whose gross income the amount is so included (the "Taxpayer") equal to the amount included in the gross income of the Taxpayer within 30 days after the Taxpayer delivers to the Company and to the Trustee (i) written notice of the inclusion of the amount in the gross income of the Taxpayer and (ii) a copy of a written determination by the Internal Revenue Service with respect to such inclusion. (e) The Company hereby agrees to submit any dispute between the Company and any Participant or Beneficiary as to the entitlement of such Participant - 4 - 5 or Beneficiary to the payment of Benefits under any of the Plans to binding arbitration under the rules of the American Arbitration Association upon demand for such arbitration by such Participant or Beneficiary. Moreover, the Company agrees that the costs of the arbitration shall be paid by the Company unless the arbitration order holds that the payments of Benefits due to the Participant or Beneficiary do not differ significantly from the payments of Benefits acknowledged by the Company to be payable in a Benefit Schedule delivered to the Trustee not later than ten days after the Participant or Beneficiary has delivered to the Company a demand for binding arbitration and that, in cases where the arbitration order so holds, the costs of arbitration shall be borne as the arbitration order may direct. The Company hereby authorizes the Trustee to accept as binding any arbitration order obtained by any Participant or Beneficiary as a result of any such arbitration proceedings. (f) All distributions made by the Trustee to a Participant or his Beneficiary shall be made on behalf of the Company and the acceptance of any such distribution by the Participant or his Beneficiary shall constitute a complete acquittance and discharge to the Company for a portion of the Benefits due under the Plans in respect of the Participant equal to the amount so distributed and accepted. (g) During any period in which any Participant or Beneficiary to whom distributions may be made in accordance with this Section 2 is under any legal disability or in the judgment of the Trustee is incapable of attending to personal financial affairs by reason of any mental or physical condition or the infirmities of advanced age, any such distribution, in the discretion of the Trustee, either may be made to him or her directly or may be made to any other individual or organization selected by the Trustee for his or her exclusive use and benefit, or the use and benefit of his or her legal dependents, if any, including any such other individual or organization furnishing goods or services to or for his or her use or benefit or the use and benefit of any such dependents. Each such distribution may be made without the intervention of a guardian, and the receipt of the distributee in each case shall constitute a complete acquittance to the Trustee, and to the Company, for the amount so distributed and its proper application. (h) No individual who is not listed on Schedule B on the date this Agreement is made shall become a Participant for purposes of this Agreement. Any individual who is listed on Schedule B on the date this Agreement is made shall be treated as a - 5 - 6 Participant for purposes of this Agreement only with respect to (i) that Plan or those Plans opposite which his name is listed on Schedule B and (ii) any amended or updated version of one or more of the 1982 Salary Continuation Arrangements, the 1982 Disability Benefit Arrangements, and the 1988 Death Benefit Arrangements that is generally similar to the version of that Plan that is available to those individuals listed on Schedule B opposite those three Plans. (i) For purposes of this Agreement, a Participant shall be deemed to be an "Eligible Participant" at any particular time if and only if, as of that time, the Participant is entitled to receive payments of Benefits currently under any of the Plans or may in the future become entitled to receive payments of Benefits under any of the Plans. For purposes of this Agreement a Beneficiary shall be deemed to be a "Current Beneficiary" at any particular time if and only if, as of that time, the Beneficiary is entitled to receive payments of Benefits currently under any of the Plans. (j) When making any distribution to a Participant or Beneficiary with respect to a payment of Benefits that is overdue, the Trustee shall increase the amount of the distribution to include compound interest on the overdue payment from the date due to the date of the distribution calculated and compounded on a daily basis and using as the interest rate for each day during the period with respect to which interest is due the prime or base lending rate published by the Trustee and in effect on that day. Section 3. EFFECT OF COMPANY'S INSOLVENCY. The provisions and limitations of this Section 3 shall apply notwithstanding any provision to the contrary contained in any other section of this Agreement. (a) For purposes of this Agreement, the Company shall be deemed to be "insolvent" at any particular time if, at that time, it is unable to pay its ordinary debts and obligations as they become due or it is subject to proceedings as a debtor under the United States Bankruptcy Code. (b) Until and unless distributed to Participants or their Beneficiaries pursuant to Section 2, all property contributed by the Company to the Trust and the increments, proceeds, investments, and reinvestments thereof shall be and remain subject to the rights and claims of the general creditors of the Company as hereinafter set forth as fully as if the Trust did not exist and title were not held in the name of the Trustee or any nominee of the Trustee. - 6 - 7 (c) The Company's Board of Directors (the "Board") and chief executive officer shall each have the duty to notify the Trustee of the Company's becoming insolvent promptly upon the occurrence thereof. If the Board or chief executive officer notifies the Trustee that the Company is insolvent, or if the Trustee receives credible written allegations from any other person claiming to be a creditor of the Company that the Company is insolvent, the Trustee shall suspend payments under Section 2 and shall notify the nationally recognized firm of independent accountants appointed by the Company to act as the Company's independent auditors (or, if the Company has not appointed such a firm to act as its independent auditors then such nationally recognized firm of independent accountants as the Trustee may select) and shall direct the firm so notified (the "Independent Evaluator") to determine within 60 days after such direction is given whether the Company is insolvent. If the Independent Evaluator determines the Company is solvent, the Trustee shall resume making payments under Section 2, including any payments suspended while the Independent Evaluator was making its determination of the Company's solvency that were not made by the Company in the interim. If the Independent Evaluator determines the Company is insolvent, the Trustee shall hold the trust property, during the period the Company is insolvent, as provided in Paragraph 3(d). All fees for the services of the Independent Evaluator shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust in the absence of timely payment by the Company. (d) Upon determination of the Company's insolvency pursuant to Paragraph 3(c), and thereafter for so long as the Company remains insolvent, the Trustee shall hold the trust property for the benefit of the Company's general creditors and shall deliver the trust property only in accordance with the orders of a court having jurisdiction of the application and disposition of the assets of the Company. The Trustee shall not be liable to the Company or any other person for any distributions made in accordance with Section 2 before it either (i) receives notice from the Board or chief executive officer that the Company is insolvent or (ii) receives credible written allegations from some other person claiming to be a creditor of the Company that the Company is insolvent. Nor shall the Trustee be liable to the Company or any other person for any such distributions made after the Independent Evaluator determines that the Company is no longer insolvent if, having been insolvent, the Company becomes solvent. - 7 - 8 (e) No provision of this Agreement shall be construed to alter the status of Participants in the Plan, or of their respective Beneficiaries, as unsecured general creditors of the Company or to diminish any rights of any participant or Beneficiary to pursue their rights as general creditors of the Company with respect to Benefits or otherwise. Section 4. ADDITIONAL POWERS, DUTIES, AND IMMUNITIES OF THE TRUSTEE. In the administration of the trust property, the Trustee shall have the following additional powers, duties, and immunities: (a) The Trustee is authorized to accept as contributions to the trust property from the Company, any property, tangible or intangible, that the Company may contribute, pursuant to authorization by the Board of Directors of the Company, and to sell, without notice, at public or private sale, and to exchange, mortgage, lease for any term, manage, operate, pledge, partition, appraise, apportion, divide in kind, borrow on, hypothecate, or dispose of any and all of the trust property, whether real or personal, tangible or intangible, upon such terms and conditions as the Trustee may deem best, except that the Trustee shall reinvest income and the proceeds from the sale or other disposition of any asset only as provided in Paragraph 4(b), below. If the Company contributes any real property to the Trust, the Trustee is authorized to sell the real property or to hold and lease the same for any period (without regard to the duration of any trust created under this agreement or to any statutory restriction) and to undertake such other acts with respect to such real property as may be necessary or desirable to perfect the Trust's title thereto and to protect and conserve the interests of the Trust therein. (b) Except to the extent necessary or advisable to preserve, manage, operate, or enhance the value of any item of property contributed by the Company that is not listed in clauses (i) through (v) of this Paragraph 4(b), the Trustee shall invest and reinvest the trust property, including any income accumulated and added to principal, only in (i) annuity or life insurance contracts; (ii) interest-bearing deposit accounts or certificates of deposit (including any such accounts or certificates issued or offered by the Trustee or any successor or affiliated corporation but excluding obligations of the Company); (iii) direct obligations of the United States of America, or obligations the payment of which is guaranteed, as to both principal and interest, by the government or an agency of the government of the United States of America; (iv) readily marketable securities listed on a United States national securities exchange (other than securities of - 8 - 9 the Company); or (v) shares or other units of participation in any mutual fund, investment trust, or common trust funds maintained by the Trustee, which are invested exclusively or predominantly in assets described in the foregoing clauses (i) through (iv) of this Paragraph 4(a) while allowing the use of contracts for the immediate or future delivery of financial instruments and other permitted property. The Trustee shall not be liable to any Participant or Beneficiary under any Plan for any insufficiency of the trust property to discharge all Benefits due the same under the Plan; rather, the liability for all such Benefits shall be and remain the primary and ultimate responsibility of the Company and any such Benefits not discharged in full by payments made by the Trustee under this Agreement shall be paid by the Company. (c) The Trustee is empowered to register securities, and to take and hold title to other property, in the name of the Trustee or in the name of a nominee without disclosing the Trust. Securities also may be held in bearer form and may be held in bulk with certificates of the same class and issuer which are assets of other fiduciary accounts. The Trustee shall be responsible for any wrongful acts of any nominee of the Trustee. (d) The Trustee is empowered to take all actions necessary or advisable in order to collect any life insurance, annuity, or other benefits or payments of which the Trustee is the designated beneficiary. The Company shall maintain in force all life insurance policies held in the Trust by paying all premiums and other charges due thereon; but if any such premiums or other charges are not paid directly by the Company, the Trustee shall pay such premiums and other charges. To the extent the Trustee has cash or its equivalent readily available for such purpose or policy loans and/or dividends are available, the Trustee shall pay premiums due with such cash or its equivalent or policy loans and/or dividends, as the Trustee may deem best. If the Trustee does not have sufficient cash or its equivalent readily available and policy loans and dividends are not available, then the Trustee shall dispose of or otherwise use other assets held by it in the Trust to generate the necessary cash. The Trustee shall have no liability to the Company or any other person if, as a result of an insufficiency of cash or its equivalent, policy loans and dividends, and assets that can be disposed of or otherwise used to generate cash, the Trustee is unable to pay premiums as they become due. The Trustee shall be named sole owner and beneficiary of each life insurance policy held in the Trust and shall have full authority and power to exercise all rights of ownership relating to the - 9 - 10 policy, except that the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy, or, except as provided in the immediately preceding sentence or in the last sentence of this Paragraph 4(d), to surrender any policy or allow any policy to lapse at any time when there are other assets in the Trust that can be disposed of or otherwise used to generate any cash necessary to maintain the policy. The Trustee shall have the power to acquire additional life insurance coverage on Participants through application for new life insurance. The Trustee shall acquire any additional life insurance from the agent or agents designated by the Company. The Trustee shall have the power, with the consent of the Company, to exchange that portion, if any, of the life insurance coverage on any particular Participant whose employment with the Company has been terminated prior to the Participant's attainment of age 60 that is in excess of the amount of such coverage necessary to provide sufficient proceeds to pay all Benefits that may become payable with respect to that Participant following the Participant's death (the "Excess Coverage" on a "Terminated Participant"), for additional life insurance coverage on other Participants. In addition, the Trustee shall have the power, with the consent of the Company, to surrender the Excess Coverage on any Terminated Participant if and only if, at the time of the surrender, the amount of life insurance coverage on every other Eligible Participant is in excess of the amount of such coverage necessary to provide sufficient proceeds to pay all Benefits that may become payable with respect to such Participant following the Participant's death, using, for purposes of determining the sufficiency of such coverage, the assumptions with respect to future events set forth in Section 6. (e) The Trustee is empowered to employ such agents and attorneys as the Trustee shall deem advisable and to determine and, except as provided in Section 6, pay the reasonable compensation of any agents and attorneys so employed, without diminution of the compensation of the Trustee. Such compensation shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust in the absence of timely payment by the Company. The Trustee shall not be liable for any neglect, omission, or wrongdoing of any such agent or attorney if reasonable care is exercised in the selection of such one. - 10 - 11 (f) The Trustee further is empowered to enforce, release, compromise, and settle any and all claims in favor of or against the Trust, whether or not such claims are in litigation, upon such terms and conditions as the Trustee shall deem advisable. (g) The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be done, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All such accounts, books and records shall be open to inspection and audit at all reasonable times by the Company and by Eligible Participants and Current Beneficiaries. Within sixty (60) days following the close of each calendar year and within sixty (60) days after the resignation of the Trustee, the Trustee shall deliver to the Company, to each then surviving Participant, and to each Current Beneficiary a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such resignation, setting forth all investments, receipts, disbursements, and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities, and other property held in the Trust at the end of such year or as of the date of such resignation, as the case may be. (h) The Trustee shall have all other powers and duties conferred or imposed on trustees by law which are consistent with the provisions of this Agreement and such further powers as may be required to give effect to the powers and duties of the Trustee expressly set forth in this Agreement including, without limitation, the power to withhold, deposit, and pay over any applicable federal, state, or local taxes from any distributions made pursuant to this Agreement. The Trustee shall not be required to furnish bond, nor shall the Trustee be required to obtain leave or confirmation from any court before exercising any of the powers or performing any of the duties of the Trustee; but the Trustee at all times shall be obligated to act in good faith, to exercise reasonable prudence, and to accord fair and equitable treatment to the Participants, their respective Beneficiaries, and the Company. No person dealing with the Trustee shall be obligated to inquire into the Trustee's powers with respect to any action that the Trustee may propose to take, and the receipt of the Trustee for any payment made or property transferred to the Trustee by any person shall constitute a complete acquittance to such - 11 - 12 person for such payment or property and its proper application. Section 5. TENURE, SUCCESSION, AND COMPENSATION OF TRUSTEES. The following provisions relate to the tenure, succession, and compensation of the Trustee and successor Trustees: (a) The Company may remove any Trustee from time to time serving under this Agreement at any time upon giving sixty days written notice to such Trustee and each Trustee from time to time serving under this instrument shall have the right to resign by delivering a written notice of resignation to the Company, except that the Company shall not have any power to remove the Trustee if at the time of such removal the Company is delinquent with respect to one or more payments of Benefits then due. No removal or resignation of a Trustee shall become effective until the acceptance of the trust by a successor Trustee designated in accordance with Paragraph 5(b). (b) If Bank One, Cleveland, NA, or any successor to it designated in accordance with this Paragraph 5(b), for any reason shall decline, cease, or otherwise fail to serve as Trustee, the vacancy in the trusteeship shall be filled by a bank or trust company, wherever located, having a capital and surplus of at least $25,000,000 in the aggregate. If the vacancy occurs by reason of the resignation of the predecessor Trustee, the successor Trustee shall be selected by the resigning Trustee. If the vacancy occurs for any other reason, the successor Trustee shall be selected by the Company. (c) Upon acceptance of the trust, each successor Trustee shall be vested with the title to the trust property possessed by the Trustee that it succeeds and shall have all the powers, discretions, and duties of that predecessor Trustee. No successor Trustee shall be required to furnish bond. (d) Each successor Trustee may accept as complete and correct and may rely upon any accounting by any predecessor Trustee and upon any statement or representation by any predecessor Trustee as to the assets comprising or any other matter pertaining to the administration of the Trust. No successor Trustee shall be liable for any act or omission of any predecessor Trustee or have any duty to enforce or seek to enforce any claim of any kind against any predecessor Trustee on account of any such act or omission. (e) The Trustee or any successor Trustee shall be entitled to receive fees for its ordinary - 12 - 13 services at the rates prescribed for the same in its standard schedule of fees in effect when such services are rendered and reasonable additional fees and expenses for any extraordinary services requested or required of it. All fees for the services of the Trustee or any successor Trustee shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust in the absence of timely payment by the Company. Section 6. REVERSION OF EXCESS ASSETS. From time to time, if and when requested by the Company to do so, the Trustee shall engage the services of The Wyatt Company or such other independent actuary as may be mutually satisfactory to the Company and to the Trustee, at the expense of the Company, to determine the actuarial present value of the maximum future Benefits that could become payable under all of the Plans and the actuarial present value of all assets held in the Trust. The Company shall pay the fees of such independent actuary and of any appraiser engaged by, or in connection with the engagement of, such independent actuary to value any property held in the Trust, and such fees shall not be paid by the Trustee or charged against Trust assets. The independent actuary shall make its calculations based on the assumption that no Participant who is employed by the Company on the date of calculation will leave the employ of the Company for any reason other than (i) death prior to retirement or (ii) retirement after becoming entitled to have the maximum amount of Benefits payable to him or his Beneficiary that is possible under the Plans. In addition, the independent actuary shall use the mortality, interest rate, annual percentage salary increase, and other actuarial assumptions then being used for purposes of the Oglebay Norton Company Pension Plan for Salaried Employees (or, if current actuarial assumptions under that plan are unavailable, then using such reasonably comparable current actuarial assumptions as the independent actuary may determine). If the actuarial present value of all assets held in the Trust that are of the type described in one of clauses (i) through (v) of Paragraph 4(b) hereof ("Specified Assets") exceeds 150% of the actuarial present value of the maximum future Benefits that could become payable under all of the Plans, then the Trust will be deemed to be "Fully Funded" and the Trustee shall retain Specified Assets that in the aggregate are at least equal to 150% of the actuarial present value of the maximum future Benefits that could become payable under all of the Plans and pay or transfer any other assets (the "Excess Assets"), upon the request of the Company, as follows: (a) if, and to the extent, at the time of the request, the trust ("Trust II") established by the Company under the agreement with Bank One, Cleveland, NA, as trustee, captioned "Irrevocable Trust - 13 - 14 Agreement II (For Employment Agreements and Certain Retirement Benefits)," dated _____________, 1989 ("Agreement II"), is not then "Fully Funded," as that term is defined in Agreement II, then the Trustee shall transfer the Excess Assets to the trustee of Trust II as contributions on behalf of the Company to the separate accounts in Trust II in such separate amounts so that the amount contributed to each such separate account will bear the same proportion to the total amount of Excess Assets so contributed to all such separate accounts as the total of all amounts theretofore contributed to that separate account bears to the aggregate total of all amounts theretofore contributed to all such separate accounts; and (b) if, and to the extent, at the time of the request, Trust II is so Fully Funded (or has been terminated), then the Trustee shall pay or transfer the Excess Assets to the Company; except that if payment or transfer of all or part of any such excess under (a) or (b) would leave the Trustee with insufficient liquid assets to pay all premiums due and to become due on any life insurance policies held in the Trust, the Trustee shall retain sufficient liquid assets to pay such premiums. Section 7. PROTECTION OF TRUSTEE. The Company, by making contributions to the trust property, agrees to indemnify and hold the Trustee harmless in its private capacity against any and all claims, actions, causes of action, judgments, surcharges, losses, and liabilities that may be asserted, brought, or made against the Trustee by any Participant in the Plans or by any Beneficiary under the Plans and against any costs incurred by the Trustee in its private capacity in resisting, negotiating, or compromising the same, including reasonable attorney fees. The Company agrees to indemnify and hold the Trustee harmless from and against any and all claims, actions, penalties, liabilities, or losses that may be asserted, brought, or made against the Trustee in connection with matters relating to the establishment and operation of the Trust, including, without limitation, claims or liabilities imposed by any federal or state governmental authority, and against any costs, including, without limitation, reasonable attorneys' fees, paid or incurred by the Trustee in defending, negotiating, or compromising the same, but excepting any such claims, actions, etc. in which there is proof of negligence or of actual bad faith on the part of the Trustee. Section 8. AMENDMENT. (a) This Agreement shall not be subject to amendment by the Company or any other organization or - 14 - 15 individual in any respect except as provided in this Section 8. No amendment of this Agreement shall be effective unless (i) it is in writing; (ii) notice of the amendment, including a copy of the amending language, is provided, at least ten days but not more than 60 days before the effective date of the amendment, to the Trustee and to all persons who, at the time of the notice, are either Eligible Participants or Current Beneficiaries; and (iii) the amendment is approved as provided in any one of Paragraph 8(b), Paragraph 8(c), or Paragraph 8(d). (b) At any time and from time to time, this Agreement may be amended to the extent necessary to obtain the intended tax treatment for the Company, for the Trust, for Participants, and for Beneficiaries with respect to assets held in the Trust (as specified in Paragraph 1(e)), if the amendment is approved in writing "by the Pre-Change in Control Board" (as that phrase is defined in Paragraph 8(e)), by the Trustee, by the Representative of Currently Employed Participants, and by the Representative of all other Eligible Participants and Current Beneficiaries (as identified pursuant to Paragraph 8(f)), except that no amendment may be made pursuant to this Paragraph 8(b) if the amendment adversely affects the rights of any Participant or Beneficiary under this Agreement. (c) At any time and from time to time, the provisions of Section 4 (relating to the management of the assets of the Trust) may be amended if the amendment is approved in writing by the Company, by the Trustee, by the Representative of Currently Employed Participants, and by the Representative of all other Eligible Participants and Current Beneficiaries (as identified pursuant to Paragraph 8(f)), except that no amendment may be made pursuant to this Paragraph 8(c) if the amendment adversely affects the rights of any Participant or Beneficiary under this Agreement. (d) At any time and from time to time, this Agreement may be amended in any respect (except that no amendment shall be made that would make the Trust revocable or change the manner in which amendments may be adopted), provided the Company first provides full and complete disclosure to all Eligible Participants and Current Beneficiaries of the effect of such amendment on each of them and the amendment is thereafter approved in writing by the Company, by the Trustee, and by all persons who, at the time of the amendment, are either Eligible Participants or Current Beneficiaries. (e) For purposes of Paragraph 8(b), an amendment will be deemed to be approved in writing "by the Pre-Change in Control Board" if the amendment is - 15 - 16 approved in writing by a majority of the class of individuals who (i) were members of the Board of Directors of the Company as constituted 30 days before the first date on which there occurs a Change in Control of the Company (as defined in Paragraph 8(g)), and (ii) are living at the time of the amendment. (f) For purposes of Paragraph 8(b) and Paragraphs 8(c), the "Representative of Currently Employed Participants" shall be such individual who may be designated from time to time by at least a majority in number of the class of persons comprised of all of the Participants who at that time are employed by the Company, and the "Representative of all other Participants and Beneficiaries" shall be such individual who may be designated from time to time by at least a majority in number of the class of persons comprised of all other Eligible Participants and all Current Beneficiaries. If at any time no such individual has been so designated by a majority in number of the members of one or the other of these classes, the resulting vacancy shall preclude amendment of this Agreement under Paragraph 8(b) or Paragraph 8(c) until after the vacancy is filled. (g) For purposes of this Agreement, a Change in Control of the Company shall have occurred if at any time any of the following events occurs: (i) 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; (ii) 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 Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; (iii) 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 - 16 - 17 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; (iv) 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 (v) 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. Section 9. TERMINATION. (a) This Trust shall terminate as of the first date on which there is no Participant or Beneficiary who is entitled on that date, or may become entitled in the future, to the payment of any Benefits under any of the Plans. (b) This Trust may be terminated before the date specified in Paragraph 9(a) if the Company, the Trustee, all Eligible Participants, and all Current Beneficiaries consent in writing to the termination following receipt of full and complete disclosure by the Company to the Trustee, to all Eligible Participants, and to all Current Beneficiaries of the effect of such termination on each of them. (c) Upon termination of the Trust provided for in Paragraph 9(a) or in Paragraph 9(b), the Trustee shall pay over any assets remaining in the Trust as follows: (i) if, and to the extent, at the time of the termination, Trust II is not "Fully Funded," as that term is defined in Agreement II, the Trustee shall pay such assets to the trustee of Trust II as contributions on behalf of the Company to the separate accounts maintained in Trust II in the same manner as is specified in Paragraph 6(a) of this Agreement; and - 17 - 18 (ii) if, and to the extent, at the time of termination, Trust II is so Fully Funded (or has been terminated), the Trustee shall pay such assets to the Company. Section 10. INTERPRETATION. The construction and validity of this instrument shall be determined under the laws of the State of Ohio in a manner consistent with the expressions of intent contained in the foregoing provisions and with the Plans. IN WITNESS WHEREOF, the Trustee and the Company have executed this instrument, in duplicate, at Cleveland, Ohio, on the date first above written. OGLEBAY NORTON COMPANY By /s/ Richard J. Kessler ------------------------------- VICE PRESIDENT And /s/ H. William Ruf ------------------------------ VICE PRESIDENT GRANTOR BANK ONE, CLEVELAND, NA By [Illegible] ------------------------------- And [Illegible] ------------------------------ TRUSTEE - 18 - 19 Schedule A The following described property has been transferred and delivered to the Trustee to be held and administered in accordance with the foregoing Irrevocable Trust Agreement: DESCRIPTION OF PROPERTY initial deposit: principal cash in the amount of one hundred dollars ($100.00) Acknowledged; BANK ONE, CLEVELAND, NA, TRUSTEE By /s/ Gary J. Reiter, Trust Officer - 19 - 20 Schedule B
PLAN OR PLANS WITH RESPECT TO WHICH INDIVIDUAL IS NAME OF INDIVIDUAL OR MAY BECOME A PARTICIPANT - - ------------------ __ J.J. Dwyer | R.A. Thomas | W.R. Herron | J. Limbocker, Jr. |- 1974 Supplemental Retirement Plan W.C. Mayo | K.S. Bensen | F.R. White, Jr. __| __ R.D. Thompson | __ M.A. Hyre | | D.A. Kuhn | | 1982 Salary Continuation H.Chisholm | | Arrangements F.A. Castle | | 1982 Disability Benefit H.W. Ruf |- -| Arrangements R.T. Green | | 1986 Death Benefit R.J. Kessler | | Arrangements J.L. Selis | |__ A.F. Bradfish | T.J. Croyle | E. Pruce | D. Kelly Campbell | Alfred E. Savage | __|
- 20 - EX-10.1 9 EXHIBIT 10.1 1 Exhibit 10 (1) IRREVOCABLE TRUST AGREEMENT II ------------------------------ (For Employment Agreements and Certain Retirement Benefits) THIS AGREEMENT is made this 16th day of August, 1989, between OGLEBAY NORTON COMPANY, a Delaware corporation with its principal offices at Cleveland, Ohio, as grantor (the "Company"), and BANK ONE, CLEVELAND, NA, a national banking association, with offices in Cleveland, Ohio, as Trustee. WHEREAS, the Company has adopted certain benefit plans and entered into certain employment agreements, described in greater detail on the attached Schedule A (these benefit plans and employment agreements are sometimes hereinafter referred to collectively as the "Plans" and individually as a "Plan") for the benefit of certain of its executives whose names are listed on the attached Schedule B (the executives whose names are listed on the attached Schedule B are hereinafter sometimes referred to collectively as the "Participants" and individually as a "Participant"), and each such Plan provides for payment of certain amounts in specified circumstances to a Participant and/or to the beneficiary under a Plan of a Participant (the benefits payable under the Plans that are listed on the attached Schedule C are herein referred to as "Benefits" and the beneficiary or beneficiaries under a Plan of a Participant are herein referred to collectively as "Beneficiaries" and individually as a "Beneficiary"); WHEREAS, the Company desires to establish an irrevocable grantor trust (the "Trust") and transfer to the Trust assets to be held therein, subject to the claims of the Company's creditors in the event of the Company's insolvency, until paid to Participants or their Beneficiaries; WHEREAS, it is the intention of the Company to make payments of Benefits directly from assets other than those held in the Trust until such time as the assets held by the Trust are determined to be sufficient to pay all future Benefits under the Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held, and disposed of as follows: Section 1. TRUST FUND. (a) Subject to the claims of its creditors as set forth in Section 3, the Company hereby deposits with the Trustee the property described in the attached 2 Schedule D, and the Company and the Trustee hereby agree that such property, all additions made in accordance with the provisions of this Agreement, and the increments, proceeds, investments, and reinvestments of such property and additions shall be held in trust and administered and distributed by the Trustee as provided in this Agreement. (b) The Trust hereby established shall be irrevocable. (c) Any and all net income generated by the Trust shall be accumulated and added and credited to its principal upon receipt. Any and all increments, proceeds, investments, and reinvestments of the principal of the Trust similarly shall be credited to and remain part of such principal. (d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes herein set forth. Neither Participants, nor Beneficiaries, nor the Plans, shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Trust prior to the time such assets are paid to Participants or Beneficiaries as Benefits as provided in Section 2. Until satisfied by payment, all of the obligations of the Company under the Plans and this Agreement shall be unsecured promises of the Company to pay benefits under those Plans and the Participants and Beneficiaries shall have the status of unsecured creditors of the Company with respect to those obligations. (e) It is intended that the Trust will be treated for federal income tax purposes as a grantor trust, with the result that all items of income, exclusion, deduction, and credit with respect to the Trust will be attributed to the Company as the owner thereof in accordance with the provisions of Subpart E of Part I of Chapter 1J of the Internal Revenue Code of 1986, as it may be amended (the "Code"), or the corresponding provisions of any future internal revenue law. The Trustee shall prepare tax information relating to the administration of the trust, shall furnish the same to the Company, and shall file tax returns accordingly. It is also intended that transfers to the Trust of assets will not be transfers of property for purposes of section 83 of the Code or section 1.83-3(e) of the Treasury Regulations and that no amounts held in the Trust will be includable as compensation in the gross income of any Participant or Beneficiary before the taxable year of the Participant or Beneficiary in which the amounts are actually distributed or made available - 2 - 3 to the Participant or Beneficiary by the Trustee. The provisions of this Trust shall be interpreted and administered to the extent possible in such a manner as to carry out and effectuate the intentions expressed in this Paragraph 1(e). (f) The Company may at any time and from time to time, pursuant to authorization by the Company's Board of Directors, contribute additional cash or other property to the Trust to augment the principal to be held, administered, and disposed of by the Trustee as provided in this Agreement. Section 2. PAYMENTS TO PARTICIPANTS AND BENEFICIARIES. (a) Notwithstanding the other provisions of this Section 2, the Trustee shall not make any distribution as provided in this Section 2 if, at the time of the distribution, the Trustee is required to suspend such distributions (as provided in Paragraph 3(c)) by reason of having received notice or allegations of the Company's insolvency. (b) At least once each calendar year and in advance of the month or months covered by the schedule so furnished, the Company shall furnish to the Trustee, for each calendar month in which any payment of Benefits is to be made to any Participant or Beneficiary under any of the Plans, a "Benefit Schedule" showing the name and address of each Participant or Beneficiary who is entitled to receive a payment of Benefits in that month, the amount of each such payment, and, in the case of each Beneficiary, the name of the Participant with respect to whom the Benefits are payable to the Beneficiary. If the Company so requests with respect to any payment shown on any Benefit Schedule, the Trustee shall make the payment to the Participant or Beneficiary shown on the Benefit Schedule to be entitled to the payment from the assets held in the trust in the separate account (maintained pursuant to Paragraph 4(e)) for the Participant to whom or with respect to whom the Benefit is payable (hereinafter referred to as a "Participant's Separate Account"). The Trustee shall have no liability to the Company or any other person for the making of any distributions made in reliance upon any such request. (c) If any Participant or Beneficiary (a "Claimant") submits a written claim (a "Claim") to the Trustee notifying the Trustee that the Company has failed to make at least part of one payment of Benefits under a Plan to the Claimant when due and requesting that the Trustee pay any Benefits to the Claimant, the - 3 - 4 Trustee shall promptly forward a copy of the Claim to the Company. (Any such claim may include a request that Benefits acknowledged by the Claimant to be not yet due be paid as they became due in the future.) Within ten days of receipt of the Claim, the Company shall (i) deliver to the Trustee an amendment to the Benefit Schedule for the month or months with respect to which the Claim is made acknowledging the validity of all or part of the Claim and providing for the payment of Benefits so acknowledged to be validly claimed by the Claimant and/or (ii) notify the Trustee that the Company disputes all or part of the contents of the Claim. If at any time the Company delivers an amendment to one or more Benefit Schedules in which the Company acknowledges that payments of Benefits to a Claimant are overdue, the Trustee shall pay to the Claimant, from the Participant's Separate Account, an amount equal to the amount of Benefits that are so acknowledged by the Company to be overdue plus interest thereon as provided in Paragraph 2(i). If the Company fails to deliver an amendment to the Benefit Schedule acknowledging the validity of all or part of a Claim, the Trustee shall make no distribution pursuant to that part of the Claim not acknowledged by the Company unless and until the Claimant has obtained a binding arbitration order confirming the validity in whole or in part of the unacknowledged part of the Claim. Upon receipt of a binding arbitration order holding that a Participant or Beneficiary is entitled to payments of Benefits under any of the Plans, the Trustee shall make payments of the Benefits specified in the order at the times and in the amounts specified in the order. The Trustee shall have no liability to the Company or any other person for any distributions made in reliance on an amended Benefit Schedule provided by the Company or on a binding arbitration order obtained in favor of any Participant or Beneficiary. (d) If any amount of cash or other property held in the Trust in a Participant's Separate Account is included by the Internal Revenue Service in the gross income of the Participant with respect to whom that Separate Account is maintained or of a Beneficiary of the Participant before actual distribution of the amount to the Participant or Beneficiary, the Trustee shall make a distribution out of assets held in that Separate Account only, to the person in whose gross income the amount is so included (the "Taxpayer") equal to the amount included in the gross income of the Taxpayer within 30 days after the Taxpayer delivers to the Company and to the Trustee (i) written notice of the inclusion of the amount in the gross income of the Taxpayer and (ii) a copy of a written determination by - 4 - 5 the Internal Revenue Service with respect to such inclusion. (e) The Company hereby agrees to submit any dispute between the Company and any Participant or Beneficiary as to the entitlement of such Participant or Beneficiary to the payment of Benefits under any of the Plans to binding arbitration under the rules of the American Arbitration Association upon demand for such arbitration by such Participant or Beneficiary. Moreover, the Company agrees that the costs of the arbitration shall be paid by the Company unless the arbitration order holds that the payments of Benefits due to the Participant or Beneficiary do not differ significantly from the payments of Benefits acknowledged by the Company to be payable in a Benefit Schedule delivered to the Trustee not later than ten days after the Participant or Beneficiary has delivered to the Company a demand for binding arbitration and that, in cases where the arbitration order so holds, the costs of arbitration shall be borne as the arbitration order may direct. The Company hereby authorizes the Trustee to accept as binding any arbitration order obtained by any Participant or Beneficiary as a result of any such arbitration proceedings. (f) All distributions made by the Trustee to a Participant or his Beneficiary shall be made on behalf of the Company and the acceptance of any such distribution by the Participant or his Beneficiary shall constitute a complete acquittance and discharge to the Company for a portion of the Benefits due under the Plans in respect of the Participant equal to the amount so distributed and accepted. (g) During any period in which any Participant or Beneficiary to whom distributions may be made in accordance with this Section 2 is under any legal disability or in the judgment of the Trustee is incapable of attending to personal financial affairs by reason of any mental or physical condition or the infirmities of advanced age, any such distribution, in the discretion of the Trustee, either may be made to him or her directly or may be made to any other individual or organization selected by the Trustee for his or her exclusive use and benefit, or the use and benefit of his or her legal dependents, if any, including any such other individual or organization furnishing goods or services to or for his or her use or benefit or the use and benefit of any such dependents. Each such distribution may be made without the intervention of a guardian, and the receipt of the distributee in each case shall constitute a complete - 5 - 6 acquittance to the Trustee, and to the Company, for the amount so distributed and its proper application. (h) For purposes of this Agreement, a Participant shall be deemed to be an "Eligible Participant" at any particular time if and only if, as of that time, the Participant is entitled to receive payments of Benefits currently under any of the Plans or may in the future become entitled to receive payments of Benefits under any of the Plans. For purposes of this Agreement a Beneficiary shall be deemed to be a "Current Beneficiary" at any particular time if and only if, as of that time, the Beneficiary is entitled to receive payments of Benefits currently under any of the Plans. (i) The Company may from time to time add one or more additional Plans to the list of Plans covered by this Agreement by delivering to the Trustee an addendum to Schedule A and the Company may from time to time add one or more additional Participants to the list of individuals covered by this Agreement by delivering to the Trustee an addendum to Schedule B. (j) When making any distribution to a Participant or Beneficiary with respect to a payment of Benefits that is overdue, the Trustee shall increase the amount of the distribution to include compound interest on the overdue payment from the date due to the date of the distribution calculated and compounded on a daily basis and using as the interest rate for each day during the period with respect to which interest is due the prime or base lending rate published by the Trustee and in effect on that day. (k) The Trustee shall pay Benefits to a Participant or to a Participant's Beneficiary only from assets held in that Participant's Separate Account. Section 3. EFFECT OF COMPANY'S INSOLVENCY. The provisions and limitations of this Section 3 shall apply notwithstanding any provision to the contrary contained in any other section of this Agreement. (a) For purposes of this Agreement, the Company shall be deemed to be "insolvent" at any particular time if, at that time, it is unable to pay its ordinary debts and obligations as they become due or it is subject to proceedings as a debtor under the United States Bankruptcy Code. (b) Until and unless distributed to Participants or their Beneficiaries pursuant to Section 2, all property contributed by the Company to the Trust and - 6 - 7 the increments, proceeds, investments, and reinvestments thereof shall be and remain subject to the rights and claims of the general creditors of the Company as hereinafter set forth as fully as if the Trust did not exist and title were not held in the name of the Trustee or any nominee of the Trustee. (c) The Company's Board of Directors (the "Board") and chief executive officer shall each have the duty to notify the Trustee of the Company's becoming insolvent promptly upon the occurrence thereof. If the Board or chief executive officer notifies the Trustee that the Company is insolvent, or if the Trustee receives credible written allegations from any other person claiming to be a creditor of the Company that the Company is insolvent, the Trustee shall suspend payments under Section 2 and shall notify the nationally recognized firm of independent accountants appointed by the Company to act as the Company's independent auditors (or, if the Company has not appointed such a firm to act as its independent auditors then such nationally recognized firm of independent accountants as the Trustee may select) and shall direct the firm so notified (the "Independent Evaluator") to determine within 60 days after such direction is given whether the Company is insolvent. If the Independent Evaluator determines the Company is solvent, the Trustee shall resume making payments under Section 2, including any payments suspended while the Independent Evaluator was making its determination of the Company's solvency that were not made by the Company in the interim. If the Independent Evaluator determines the Company is insolvent, the Trustee shall hold the trust property, during the period the Company is insolvent, as provided in Paragraph 3(d). All fees for the services of the Independent Evaluator shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust in the absence of timely payment by the Company. (d) Upon determination of the Company's insolvency pursuant to Paragraph 3(c), and thereafter for so long as the Company remains insolvent, the Trustee shall hold the trust property for the benefit of the Company's general creditors and shall deliver the trust property only in accordance with the orders of a court having jurisdiction of the application and disposition of the assets of the Company. The Trustee shall not be liable to the Company or any other person for any distributions made in accordance with Section 2 before it either (i) receives notice from the Board or chief executive officer that the Company is insolvent or (ii) receives credible written allegations from some - 7 - 8 other person claiming to be a creditor of the Company that the Company is insolvent. Nor shall the Trustee be liable to the Company or any other person for any such distributions made after the Independent Evaluator determines that the Company is no longer insolvent if, having been insolvent, the Company becomes solvent. (e) No provision of this Agreement shall be construed to alter the status of Participants in the Plan, or of their respective Beneficiaries, as unsecured general creditors of the Company or to diminish any rights of any Participant or Beneficiary to pursue their rights as general creditors of the Company with respect to Benefits or otherwise. Section 4. ADDITIONAL POWERS, DUTIES, AND IMMUNITIES OF THE TRUSTEE. In the administration of the trust property, the Trustee shall have the following additional powers, duties, and immunities: (a) The Trustee is authorized to accept as contributions to the trust property from the Company, any property, tangible or intangible, that the Company may contribute, pursuant to authorization by the Board of Directors of the Company, and to sell, without notice, at public or private sale, and to exchange, mortgage, lease for any term, manage, operate, pledge, partition, appraise, apportion, divide in kind, borrow on, hypothecate, or dispose of any and all of the trust property, whether real or personal, tangible or intangible, upon such terms and conditions as the Trustee may deem best, except that the Trustee shall reinvest income and the proceeds from the sale or other disposition of any asset only as provided in Paragraph 4(b), below. If the Company contributes any real property to the Trust, the Trustee is authorized to sell the real property or to hold and lease the same for any period (without regard to the duration of any trust created under this agreement or to any statutory restriction) and to undertake such other acts with respect to such real property as may be necessary or desirable to perfect the Trust's title thereto and to protect and conserve the interests of the Trust therein. (b) Except to the extent necessary or advisable to preserve, operate, manage, or enhance the value of any item of property contributed by the Company that is not listed in clauses (i) through (v) of this Paragraph 4(b), the Trustee shall invest and reinvest the trust property, including any income accumulated and added to principal, only in (i) annuity or life insurance contracts; (ii) interest-bearing deposit accounts or certificates of deposit (including - 8 - 9 any such accounts or certificates issued or offered by the Trustee or any successor or affiliated corporation but excluding obligations of the Company); (iii) direct obligations of the United States of America, or obligations the payment of which is guaranteed, as to both principal and interest, by the government or an agency of the government of the United States of America; (iv) readily marketable securities listed on a United States national securities exchange (other than securities of the Company); or (v) shares or other units of participation in any mutual fund, investment trust, or common trust funds maintained by the Trustee, which are invested exclusively or predominantly in assets described in the foregoing clauses (i) through (iv) of this Paragraph 4(a) while allowing the use of contracts for the immediate or future delivery of financial instruments and other permitted property. The Trustee shall not be liable to any Participant or Beneficiary under any Plan for any insufficiency of the trust property to discharge all Benefits due the same under the Plan; rather, the liability for all such Benefits shall be and remain the primary and ultimate responsibility of the Company and any such Benefits not discharged in full by payments made by the Trustee under this Agreement shall be paid by the Company. (c) The Trustee is empowered to register securities, and to take and hold title to other property, in the name of the Trustee or in the name of a nominee without disclosing the Trust. Securities also may be held in bearer form and may be held in bulk with certificates of the same class and issuer which are assets of other fiduciary accounts. The Trustee shall be responsible for any wrongful acts of any nominee of the Trustee. (d) The Trustee is empowered to employ such agents and attorneys as the Trustee shall deem advisable and to determine and, except as provided in Section 6, pay the reasonable compensation of any agents and attorneys so employed, without diminution of the compensation of the Trustee. Such compensation shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust in the absence of timely payment by the Company. The Trustee shall not be liable for any neglect, omission, or wrongdoing of any such agent or attorney if reasonable care is exercised in the selection of such one. (e) The Trustee further is empowered to enforce, release, compromise, and settle any and all claims in favor of or against the Trust, whether or not - 9 - 10 such claims are in litigation, upon such terms and conditions as the Trustee shall deem advisable. (f) The Trustee shall maintain a separate account within the Trust (a "Separate Account") with respect to each Participant. The Trustee shall credit or debit each Participant's Separate Account as appropriate to reflect that Participant's allocable portion of the Trust assets, as those assets may be adjusted from time to time pursuant to the terms of this Agreement. All deposits of principal to the Trust by the Company shall be allocated among the various Separate Accounts as designated by the Company at the time the deposit is made. The Trustee is authorized to segregate and hold separately any part or all of the trust property from time to time allocable to the Separate Accounts then existing or to hold any part or all of the trust property as a single commingled fund and allocate undivided interests in the same among the Separate Accounts then existing. (g) The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be done, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All such accounts, books, and records shall be open to inspection and audit at all reasonable times by the Company and by Eligible Participants and Current Beneficiaries. Within sixty (60) days following the close of each calendar year and within sixty (60) days after the resignation of the Trustee, the Trustee shall deliver (i) to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such resignation, setting forth all investments, receipts, disbursements, and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities, and other property held in the Trust at the end of such year or as of the date of such resignation, as the case may be, and (ii) to each surviving Participant or Current Beneficiary with respect to a deceased Participant, a report containing (A) a summary of the information provided to the Company pursuant to clause (i) of this Paragraph (f), (B) a detailed description of all transactions affecting the Participant's Separate Account, and (C) unless the report delivered to the then surviving Participant or Current Beneficiary is identical to the report delivered to the Company pursuant to clause (i) of this Paragraph (f), a statement that the surviving - 10 - 11 Participant or Current Beneficiary may inspect that report, either directly or by a duly authorized representative, at any reasonable time. (h) The Trustee shall have all other powers and duties conferred or imposed on trustees by law which are consistent with the provisions of this Agreement and such further powers as may be required to give effect to the powers and duties of the Trustee expressly set forth in this Agreement including, without limitation, the power to withhold, deposit, and pay over any applicable federal, state, or local taxes from any distributions made pursuant to this Agreement. The Trustee shall not be required to furnish bond, nor shall the Trustee be required to obtain leave or confirmation from any court before exercising any of the powers or performing any of the duties of the Trustee; but the Trustee at all times shall be obligated to act in good faith, to exercise reasonable prudence, and to accord fair and equitable treatment to the Participants, their respective Beneficiaries, and the Company. No person dealing with the Trustee shall be obligated to inquire into the Trustee's powers with respect to any action that the Trustee may propose to take, and the receipt of the Trustee for any payment made or property transferred to the Trustee by any person shall constitute a complete acquittance to such person for such payment or property and its proper application. Section 5. TENURE, SUCCESSION, AND COMPENSATION OF TRUSTEES. The following provisions relate to the tenure, succession, and compensation of the Trustee and successor Trustees: (a) The Company may remove any Trustee from time to time serving under this Agreement at any time upon giving sixty days written notice to such Trustee and each Trustee from time to time serving under this instrument shall have the right to resign by delivering a written notice of resignation to the Company, except that the Company shall not have any power to remove the Trustee if at the time of such removal the Company is delinquent with respect to one or more payments of Benefits then due. No removal or resignation of a Trustee shall become effective until the acceptance of the trust by a successor Trustee designated in accordance with Paragraph 5(b). (b) If Bank One, Cleveland, NA, or any successor to it designated in accordance with this Paragraph 5(b), for any reason shall decline, cease, or otherwise fail to serve as Trustee, the vacancy in the trusteeship shall be filled by a bank or trust company, - 11 - 12 wherever located, having a capital and surplus of at least $25,000,000 in the aggregate. If the vacancy occurs by reason of the resignation of the predecessor Trustee, the successor Trustee shall be selected by the resigning Trustee. If the vacancy occurs for any other reason, the successor Trustee shall be selected by the Company. (c) Upon acceptance of the trust, each successor Trustee shall be vested with the title to the trust property possessed by the Trustee that it succeeds and shall have all the powers, discretions, and duties of that predecessor Trustee. No successor Trustee shall be required to furnish bond. (d) Each successor Trustee may accept as complete and correct and may rely upon any accounting by any predecessor Trustee and upon any statement or representation by any predecessor Trustee as to the assets comprising or any other matter pertaining to the administration of the Trust. No successor Trustee shall be liable for any act or omission of any predecessor Trustee or have any duty to enforce or seek to enforce any claim of any kind against any predecessor Trustee on account of any such act or omission. (e) The Trustee or any successor Trustee shall be entitled to receive fees for its ordinary services at the rates prescribed for the same in its standard schedule of fees in effect when such services are rendered and reasonable additional fees and expenses for any extraordinary services requested or required of it. All fees for the services of the Trustee or any successor Trustee shall be payable by the Company, but shall be paid from the assets of the Trust and charged against the principal of the Trust (and against each of the Separate Accounts in direct proportion to the value of the assets held in each Separate Account during the period for which the fees are payable) in the absence of timely payment by the Company. Section 6. REVERSION OF EXCESS ASSETS. From time to time, if and when requested by the Company to do so, the Trustee shall engage the services of The Wyatt Company or such other independent actuary as may be mutually satisfactory to the Company and to the Trustee, at the expense of the Company, to determine the present value of the maximum future Benefits that could become payable with respect to any one or more Participants under all of the Plans. The Company shall pay the fees and expenses of such independent actuary and such fees and expenses shall not be paid by the Trustee or charged against Trust assets. The independent actuary shall make its calculations based on the assumption that each Participant's employment with the - 12 - 13 Company will terminate under such circumstances and on such date as will maximize the aggregate cost to the Company of providing all Benefits due with respect to the Participant under the Plans. In addition, the independent actuary shall use the interest rate, annual percentage salary increase, and other actuarial assumptions then being used for purposes of the Oglebay Norton Company Pension Plan for Salaried Employees (or, if current actuarial assumptions under that plan are unavailable, then using such reasonably comparable current actuarial assumptions as the independent actuary may determine). If the independent actuary determines that the value of all assets described in one of clauses (i) through (v) of Paragraph 4(b) hereof ("Specified Assets") held in the Trust with respect to any Participant (with respect to whom no payments of Benefits are overdue) exceeds 150% of the present value of the maximum future Benefits that could become payable under all of the Plans with respect to the Participant, then that Participant's Separate Account will be deemed to be "Fully Funded" and the Trustee shall take the amount of any assets in excess of the 150% amount of Specified Assets from that Separate Account and reallocate that excess to all of the other Separate Accounts that are not, at that time, Fully Funded, spreading the excess among those other Separate Accounts in direct proportion to the aggregate amounts theretofore contributed by the Company to each of such other Separate Accounts. If the independent actuary determines that all Separate Accounts are Fully Funded, the Trustee shall retain Specified Assets that in the aggregate are at least equal to 150% of the present value of the maximum future Benefits that could become payable under all of the Plans with respect to all Participants and pay or transfer any other assets (the "Excess Assets"), upon the request of the Company, as follows: (a) if, and to the extent, at the time of the request, the trust ("Trust I") established by the Company under the agreement with Bank One, Cleveland, NA, as trustee, captioned "Irrevocable Trust Agreement (Salary Continuation, Disability, and Death Benefit Arrangements, and Prior Supplemental Retirement Plan)," dated ____________, 1989 ("Agreement I"), is not then "Fully Funded," as that term is defined in Agreement I, then the Trustee shall transfer the Excess Assets to the trustee of Trust I as contributions on behalf of the Company to Trust I; and (b) if, and to the extent, at the time of the request, Trust I is so Fully Funded (or has been terminated), then the Trustee shall pay the Excess Assets to the Company. Section 7. PROTECTION OF TRUSTEE. The Company, by making contributions to the trust property, - 13 - 14 agrees to indemnify and hold the Trustee harmless in its private capacity against any and all claims, actions, causes of action, judgments, surcharges, losses, and liabilities that may be asserted, brought, or made against the Trustee by any Participant in the Plans or by any Beneficiary under the Plans and against any costs incurred by the Trustee in its private capacity in resisting, negotiating, or compromising the same, including reasonable attorney fees. The Company agrees to indemnify and hold the Trustee harmless from and against any and all claims, actions, penalties, liabilities, or losses that may be asserted, brought, or made against the Trustee in connection with matters relating to the establishment and operation of the Trust, including, without limitation, claims or liabilities imposed by any federal or state governmental authority, and against any costs, including, without limitation, reasonable attorneys' fees, paid or incurred by the Trustee in defending, negotiating, or compromising the same, but excepting any such claims, actions, etc. in which there is proof of negligence or of actual bad faith on the part of the Trustee. Section 8. AMENDMENT. (a) This Agreement shall not be subject to amendment by the Company or any other organization or individual in any respect except as provided in this Section 8. No amendment of this Agreement shall be effective unless (i) it is in writing; (ii) notice of the amendment, including a copy of the amending language, is provided, at least ten days but not more than 60 days before the effective date of the amendment, to the Trustee and to all persons who, at the time of the notice, are either Eligible Participants or Current Beneficiaries; and (iii) the amendment is approved as provided in any one of Paragraph 8(b), Paragraph 8(c), or Paragraph 8(d). (b) At any time and from time to time, this Agreement may be amended to the extent necessary to obtain the intended tax treatment for the Company, for the Trust, for Participants, and for Beneficiaries with respect to assets held in the Trust as specified in Paragraph 1(e), if the amendment is approved in writing "by the Pre-Change in Control Board" (as that phrase is defined in Paragraph 8(e)), by the Trustee, by the Representative of Currently Employed Participants, and by the Representative of all other Eligible Participants and Current Beneficiaries (as identified pursuant to Paragraph 8(f)), except that no amendment may be made pursuant to this Paragraph 8(b) if the amendment adversely affects the rights of any Participant or Beneficiary under this Agreement. - 14 - 15 (c) At any time and from time to time, the provisions of Section 4 (relating to the management of the assets of the Trust) may be amended if the amendment is approved in writing by the Company, by the Trustee, by the Representative of Currently Employed Participants, and by the Representative of all other Eligible Participants and Current Beneficiaries (as identified pursuant to Paragraph 8(f)), except that no amendment may be made pursuant to this Paragraph 8(c) if the amendment adversely affects the rights of any Participant or Beneficiary under this Agreement. (d) At any time and from time to time, this Agreement may be amended in any respect (except that no amendment shall be made that would make the Trust revocable or change the manner in which amendments may be adopted), provided the Company first provides full and complete disclosure to all Eligible Participants and Current Beneficiaries of the effect of such amendment on each of them and the amendment is thereafter approved in writing by the Company, by the Trustee, and by all persons who, at the time of the amendment, are either Eligible Participants or Current Beneficiaries. (e) For purposes of Paragraph 8(b), an amendment will be deemed to be approved in writing "by the Pre-Change in Control Board" if the amendment is approved in writing by a majority of the class of individuals who (i) were members of the Board of Directors of the Company as constituted 30 days before the first date on which there occurs a change in control of the Company (as defined in Paragraph 8(g)), and (ii) are living at the time of the amendment. (f) For purposes of Paragraph 8(b) and Paragraphs 8(c), the "Representative of Currently Employed Participants" shall be such individual who may be designated from time to time by at least a majority in number of the class of persons comprised of all of the Participants who at that time are employed by the Company, and the "Representative of all other Participants and Beneficiaries" shall be such individual who may be designated from time to time by at least a majority in number of the class of persons comprised of all other Eligible Participants and all Current Beneficiaries. If at any time no such individual has been so designated by a majority in number of the members of one or the other of these classes, the resulting vacancy shall preclude amendment of this Agreement under Paragraph 8(b) or Paragraph 8(c) until after the vacancy is filled. - 15 - 16 (g) For purposes of this Agreement, an Change in Control shall have occurred if at any time any of the following events occurs: (i) a report is filed with the Securities and Exchange Commission (the "SEC") on Schedule 13D or Schedule 14D-l (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; (ii) 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 Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; (iii) 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; (iv) 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 (v) 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 - 16 - 17 Directors of the Company at the beginning of such 24-month period. Section 9. TERMINATION. (a) This Trust shall terminate as of the first date on which there is no Participant or Beneficiary who is entitled on that date, or may become entitled in the future, to the payment of any Benefits under any of the Plans. (b) This Trust may be terminated before the date specified in Paragraph 9(a) if the Company, the Trustee, all Eligible Participants, and all Current Beneficiaries consent in writing to the termination following receipt of full and complete disclosure by the Company to the Trustee, to all Eligible Participants, and to all Current Beneficiaries of the effect of such termination on each of them. (c) Upon termination of the Trust provided for in Paragraph 9(a) or in Paragraph 9(b), the Trustee shall pay over any assets remaining in the Trust as follows: (i) if, and to the extent, at the time of the termination, Trust I is not "Fully Funded," as that term is defined in Agreement I, the Trustee shall pay such assets to the trustee of Trust I as contributions on behalf of the Company to Trust I; and (ii) if, and to the extent, at the time of termination, Trust I is so Fully Funded (or has been terminated), the Trustee shall pay such assets to the Company. Section 10. INTERPRETATION. The construction and validity of this instrument shall be determined under the laws of the State of Ohio in a manner consistent with the expressions of intent contained in the foregoing provisions and with the Plans. - 17 - 18 IN WITNESS WHEREOF, the Trustee and the Company have executed this instrument, in duplicate, at Cleveland, Ohio, on the date first above written. OGLEBAY NORTON COMPANY By /s/ Richard J. Kessler VICE PRESIDENT _____________________________________ And /s/ H. William Ruf VICE PRESIDENT _________________________________ GRANTOR BANK ONE, CLEVELAND, NA By /s/ [Illegible] ____________________________ And /s/ [Illegible] ____________________________ TRUSTEE -18- 19 Revised and Restated Schedule A (as revised August 31, 1994) BENEFIT PLANS AND EMPLOYMENT AGREEMENTS 1. Excess and TRA Supplemental Benefit Retirement Plan, adopted November 16, 1977, as amended and restated effective January 1, 1991, and any subsequent amendments thereto. 2. Supplemental Savings and Stock Ownership Plan, adopted May 31, 1989, and any subsequent amendments thereto. 3. 1983 Stock Equivalent Plan, adopted May 18, 1983. 4. Employment Agreement with R. D. Thompson. 5. Employment Agreements and the amendments thereto, if any (intended to become effective upon a change in control) with F. A. Castle, R. T. Green, R. J. Kessler, T. J. Croyle, J. L. Selis, A. F. Bradfish, M. A. Hyre, D. A. Kuhn, H. Chisholm, H. W. Ruf, and E. Pruc. 6. Employment Agreement with R. Thomas Green, Jr. entered into as of February 26, 1992. 7. Employment Agreements (intended to become effective upon a change in control) with Stuart M. Theis and Edward G. Jaicks. 20 ADDENDUM TO SCHEDULE A (August 31, 1994) 6. Employment Agreement with R. Thomas Green, Jr. entered into as of February 26, 1992. 7. Employment Agreements (intended to become effective upon a change in control) with Stuart M. Theis and Edward G. Jaicks. 21 Revised and Restated Schedule B (revised as of August 31, 1994) PARTICIPANTS R. D. Thompson F. A. Castle R. T. Green R. J. Kessler T. J. Croyle J. L. Selis A. F. Bradfish M. A. Hyre D. A. Kuhn H. Chisholm H. W. Ruf E. Pruc S. M. Theis E. G. Jaicks 22 ADDENDUM TO SCHEDULE B (August 31, 1994) S. M. Theis E. G. Jaicks 23 Revised and Restated Schedule C (revised as of August 31, 1994) l. With respect to the Excess and TRA Supplemental Benefit Retirement Plan, adopted November 16, 1977, as amended and restated effective January 1, 1991, and any subsequent amendments thereto: All benefits. 2. With respect to the Supplemental Savings and Stock Ownership Plan, adopted May 31, 1989, and any subsequent amendments thereto: All benefits. 3. With respect to the 1983 Stock Equivalent Plan, adopted May 18, 1983: All benefits. 4. With respect to the Employment Agreements with R. D. Thompson and R. Thomas Green, Jr. and the Employment Agreements and the amendments thereto, if any (intended to become effective upon a change in control) with F. A. Castle, R. T. Green, R. J. Kessler, T. J. Croyle, J. L. Selis, A. F. Bradfish, M. A. Hyre, D. A. Kuhn, H. Chisholm, H. W. Ruf, E. Pruc, S. M. Theis and E. G. Jaicks. 5. All amounts payable by the Company to or with respect to a Participant after the termination of the Participant's employment with the Company. 6. With respect to the 1991 Executive Life Program: All benefits. 24 ADDENDUM TO SCHEDULE C (August 31 , 1994) 5. All amounts payable by the Company to or with respect to a Participant after the termination of the Participant's employment with the Company. 6. With respect to the 1991 Executive Life Program: All benefits. 25 Schedule D The following described property has been transferred and delivered to the Trustee to be held and administered in accordance with the foregoing Irrevocable Trust Agreement: Description of Property ----------------------- Initial Deposit: Principal cash in the amount of one hundred dollars ($100.00). Acknowledged: BANK ONE, CLEVELAND, NA, Trustee By /s/ Gary J. Reiter, Trust Officer - 22 - EX-10.M 10 EXHIBIT 10.M 1 Exhibit 10(m) [OGLEBAY NORTON LETTERHEAD] June 3, 1992 Dear : As you have previously been advised, the Compensation Committee of the Board of Directors of Oglebay Norton Company (the "Company") has approved a new life insurance program for you and certain other executives (the "Executive Life Program" or "ELP") in lieu of your continuing participation in those agreements and arrangements that constitute the existing Executive Benefit Program (the "EBP"). You have indicated to the Company your desire to participate in the new ELP and you have furnished to the insurer selected by the Company evidence of your insurability (which is a prerequisite to your participation). The purpose of this letter agreement is to memorialize (1) your election to participate in the ELP in lieu of continuing participation in the EBP, (2) the Company's obligation to make the payments described below to you over the next ten years, and (3) your wife's acknowledgement that you have elected to participate, and will participate, in the ELP in lieu of continuing your participation in the EBP. 1. AGREEMENT. By this letter agreement, you elect to participate in the ELP, the Company agrees to make to you the payments specified in Paragraph 2, below, and you acknowledge that your participation in the EBP will be terminated as more fully set forth in Paragraph 4, below. 2. PAYMENTS TO BE MADE BY THE COMPANY. The Company hereby promises to pay to you the amounts specified in Schedule A, attached to and made a part of this letter agreement, provided that you are alive at the time each such payment is due. (a) FIRST PAYMENT. The Company's obligation to make the first payment shall be satisfied by (i) delivery of an insurance policy that names you as owner of the policy and with respect to which the Company has 2 Page 2 June 3, 1992 paid a premium in the amount specified on Schedule A plus (ii) payment to you of a tax gross-up amount sufficient to enable you to pay all current federal, state, and local income taxes resulting from the delivery to you of the insurance policy and the payment to you of the tax gross-up amount. (b) SUBSEQUENT PAYMENTS. The Company's obligation with respect to each subsequent payment shall be satisfied by (i) payment to you, in cash, of the amount specified on Schedule A for each such payment, plus (ii) payment to you of a tax gross-up amount sufficient to enable you to pay all current federal, state, and local income taxes resulting from the payment to you of the amount specified in (i), above, and the payment to you of the tax gross-up amount. 3. OBLIGATION ABSOLUTE. Except that the Company will not be required to make any payment under this letter agreement if you are not alive when the payment is otherwise due, the Company's obligation to make each of the ten payments specified on Schedule A is absolute and the Company shall make each such payment as and when due without regard to any claim or set-off of any nature whatsoever that the Company may have or assert against you. Accordingly, the Company's obligation is not contingent upon your continued employment by the Company and will not be affected in any way by any termination of your employment by the Company, regardless of the circumstances of any such possible termination. 4. EXECUTIVE BENEFIT PROGRAM TERMINATED. Your participation in the EBP will be terminated effective on the date you become the owner of the insurance policy under the ELP as contemplated in Paragraph 1(a), above. Accordingly, as of that date: (a) SPLIT DOLLAR INSURANCE AGREEMENT. The Split Dollar Insurance Agreement between you and the Company effective as of December 1, 1982, and any other Split Dollar Insurance Agreement heretofore in effect between you and the Company will be terminated without any further action by you or the Company and neither you nor the Company will have any further rights or obligations under any such agreement. (b) SALARY CONTINUATION ARRANGEMENT. The Salary Continuation Arrangement communicated to you by the Company by letter dated November 29, 1982, and any other Salary Continuation Arrangement heretofore 3 Page 3 June 3, 1992 communicated to you by the Company will be terminated without any further action by you or the Company and the Company will not make any payments under any such arrangement. (c) DEATH BENEFIT ARRANGEMENT. The Death Benefit Arrangement communicated to you by the Company by letter dated May 1, 1986, and any other Death Benefit Arrangement heretofore communicated to you by the Company will be terminated without any further action by you or the Company and the Company will not make any payments under any such arrangement. 5. MISCELLANEOUS. (a) BINDING AGREEMENT. This letter agreement constitutes a binding agreement between the Company and you and will be enforceable against and inure to the benefit of the Company and its successors and assigns and you. (b) NO EFFECT UPON EMPLOYMENT STATUS. Nothing contained in this letter agreement shall be construed as giving you the right to be retained in the service of the Company or shall in any way affect the right of the Company to control your status as an employee and to terminate your employment at any time. (c) RIGHTS NOT ASSIGNABLE. Although you may assign the insurance policy to be delivered to you as contemplated in Paragraph 1(a) after you have received that insurance policy, your rights to the payments to be made to you pursuant to this letter agreement shall not be subject to assignment, alienation, anticipation, pledge, sale, or transfer in any manner, and shall not be resorted to, appropriated, or seized in any proceeding at law, in equity, or otherwise. Any attempt by you to transfer, encumber, assign, or alienate any right to receive any payment that may become payable hereunder shall automatically terminate your rights under this letter agreement. (d) RIGHTS THOSE OF A GENERAL CREDITOR. Any payments to be made by the Company pursuant to this letter agreement will be made from the Company's general assets as and when due. Your rights to receive those payments shall be those of a general creditor of the Company only. 4 Page 4 June 3, 1992 (e) PAYMENTS NOT "PENSIONABLE EARNINGS". Payments made under this letter agreement will not be "pensionable earnings" for you and will not be taken into account for purposes of determining the amount of benefits under any other plan or program of or sponsored by the Company. Please confirm your election to participate in the ELP, acknowledge the termination of the EBP, and signify your agreement to the terms of this letter agreement by countersigning the enclosed copy of this letter agreement at the place provided for that purpose. In addition, please have your wife countersign this letter agreement to evidence her acknowledgment that you have elected to participate in the ELP in lieu of continuing participation in the EBP, to consent to that election, and to acknowledge that no payments will hereafter be made by the Company under the EBP to her or to any other beneficiary of yours. After you and your wife have both countersigned this letter agreement and have both dated your countersignatures, please return one countersigned copy to Dick Kessler. Sincerely, OGLEBAY NORTON COMPANY By ------------------------------ R. THOMAS GREEN, JR., Chairman, President, and Chief Executive Officer I hereby confirm my election to participate in the ELP, acknowledge the termination of the EBP, and agree to the terms of this letter agreement. June , 1992 ____________________________ I hereby acknowledge that my husband has elected to participate in the ELP and I consent to that election. I further acknowledge that as a result of the election by my husband, the EBP for my husband will be terminated and no payments will be made by the Company to me or to any other beneficiary of my husband in connection with the EBP. June , 1992 ____________________________ 5 SCHEDULE A TO EXECUTIVE LIFE PROGRAM FOR H. WILLIAM RUF, JR. FIRST PAYMENT. The Company's portion of the annual premium payable on the insurance policy referred to in Paragraph 2 (a) (1) is $ 8,480. SUBSEQUENT PAYMENTS: The amount of each subsequent payment referred to in Paragraph 2 (b) (i) for each year shall be as follows:
Payment Amount ------- ------ 2nd $ 8,448 3rd $ 8,412 4th $ 8,370 5th $ 8,326 6th $ 8,283 7th $ 8,235 8th $ 8,687 9th $ 8,850 10th $ 8,850
6 SCHEDULE A TO EXECUTIVE LIFE PROGRAM FOR RICHARD J. KESSLER FIRST PAYMENT. The Company's portion of the annual premium payable on the insurance policy referred to in Paragraph 2 (a) (i) is $ 11,386. SUBSEQUENT PAYMENTS: The amount of each subsequent payment referred to in Paragraph 2 (b) (i) for each year shall be as follows:
To Be Paid Payment Amount By Employee ------- ------ ----------- 2nd - 1993 $ 11,358 $342 3rd $ 11,330 370 4th $ 11,298 402 5th $ 11,262 438 6th $ 11,220 480 7th $ 11,176 524 8th $ 11,133 567 9th $ 11,085 615 10th $ 11,373 327
7 SCHEDULE A TO EXECUTIVE LIFE PROGRAM FOR R. THOMAS GREEN, JR. FIRST PAYMENT. The Company's portion of the annual premium payable on the insurance policy referred to in Paragraph 2 (a) (i) is $ 18,912. SUBSEQUENT PAYMENTS: The amount of each subsequent payment referred to in Paragraph 2 (b) (i) for each year shall be as follows:
Payment Amount ------- ------ 2nd $ 18,886 3rd $ 18,858 4th $ 18,830 5th $ 18,798 6th $ 18,762 7th $ 18,720 8th $ 18,676 9th $ 18,633 10th $ 18,585
EX-10.N 11 EXHIBIT 10.N 1 EXHIBIT 10(n) Executive Life Insurance Program II (the "Plan") Plan Description ELIGIBILITY: Eligible officers are selected by the Compensation and Organization Committee of the Board of Directors of Oglebay Norton Company (the "Company"). Officers must have completed two (2) years of service to participate in the Plan. Current Plan participants include S. H. Theis and M. P. Juszli. BENEFITS: Life insurance equal to three (3) times the participant's base salary at time he/she is eligible to participate in the Plan. The Company pays premiums on the insurance policy and an additional amount to "gross-up" participant for income taxes due on the premiums. The insurance policy is owned by the participant. EX-10.O 12 EXHIBIT 10.O 1 Exhibit 10(o) OGLEBAY NORTON COMPANY EXCESS AND TRA SUPPLEMENTAL BENEFIT RETIREMENT PLAN (January 1, 1991 Restatement) WHEREAS, Oglebay Norton Company maintains an excess benefit retirement plan, made effective as of January 1, 1976, for the purpose of supplementing the retirement benefits of certain salaried employees eligible to participate in accordance with its terms, as permitted by Section 3(36) of the Employee Retirement Income Security act of 1974, as amended (the "Act"); and WHEREAS, it is desired to amend and restate in its entirety said plan for the purpose of providing other supplemental retirement benefits on an unfunded basis to a select group of management or highly compensated employees eligible to participate in accordance with the terms hereof, as contemplated by Section 201(2) of the Act; NOW, THEREFORE, said excess benefit retirement plan is hereby amended and restated, effective January 1, 1991, to provide as follows: ARTICLE I --------- DEFINITIONS ----------- For the purposes hereof, the following words and phrases shall have the meanings indicated: 1. The "Plan" shall mean the plan as set forth herein, together with all amendments hereto, which for periods on or after January 1, 1991, shall be called the "Oglebay Norton Company Excess and TRA Supplemental -1- 2 Benefit Retirement Plan" and for periods prior to such date was called the "Oglebay Norton Company Excess Benefit Retirement Plan". 2. The "Company" shall mean Oglebay Norton Company, a Delaware corporation, its corporate successors and the surviving corporation resulting from any merger of Oglebay Norton Company with any other corporation or corporations. 3. The "Salaried Plan" shall mean the Oglebay Norton Company Pension Plan for Salaried Employees as the same shall be in effect on the date of an employee's retirement, death or other termination of employment. 4. The "Prior Plan" shall mean the Oglebay Norton Company Pension Plan for Salaried Employees as in effect on December 31, 1988. 5. An "Employee" shall mean any person employed by the Company on a salaried basis. 6. A "Supplemental Employee" shall mean any Employee designated by the Compensation and Organization Committee of the Board of Directors of the Company to receive supplemental retirement benefits under Article III hereof. All other words and phrases used herein shall have the meanings given them in the Salaried Plan, unless a different meaning is clearly required by the context. -2- 3 ARTICLE II ---------- EXCESS RETIREMENT BENEFIT ------------------------- 1. ELIGIBILITY. An Employee who retires, dies, otherwise terminates his employment with the Company under conditions that make such Employee, his beneficiary or Contingent Annuitant eligible for a benefit under the Salaried Plan, and whose benefit under the Salaried Plan is limited by Section 415 of the Code, shall be eligible for an excess retirement benefit. 2. AMOUNT AND PAYMENT. The monthly excess retirement benefit payable to an Employee, his beneficiary or Contingent Annuitant shall be in such amount as is required, when added to the monthly benefit payable (before the reduction applicable to any optional method of payment) to the Employee, his beneficiary or Contingent Annuitant under the Salaried Plan, to produce an aggregate monthly benefit equal to the monthly benefit which would have been payable (before the reduction applicable to any optional method of payment) to the Employee, his beneficiary or Contingent Annuitant if the limitations of Section 415 of the Code had not been in effect. All payments shall be made by the Company from its general assets. The terms of payment of the excess retirement benefit shall be identical to those specified in the Salaried Plan for the type of payment the Employee, his beneficiary or Contingent Annuitant receives under the Salaried Plan. -3- 4 ARTICLE III ----------- SUPPLEMENTAL RETIREMENT BENEFIT ------------------------------- 1. ELIGIBILITY. A Supplemental Employee who retires, dies, or otherwise terminates his employment with the Company under conditions that make such Supplemental Employee, his beneficiary or Contingent Annuitant eligible for a benefit under the Salaried Plan, and whose benefit under the Salaried Plan, including any excess retirement benefit under Article II hereto, is less than his benefit, including any excess retirement benefit under Article II hereto, determined under the Prior Plan, as if the Prior Plan's provisions had continued in effect, and actuarially adjusted to reflect the difference in the normal method of payment under the Prior Plan, shall be eligible for a supplemental retirement benefit. In making the actuarial adjustment provided for in this paragraph 1, the Company may rely upon calculations made by the independent actuaries for the Salaried Plan in the manner described in Article IV. 2. AMOUNT AND PAYMENT. The monthly supplemental retirement benefit payable to a Supplemental Employee, his beneficiary or Contingent Annuitant shall be in such amount as is required, when added to the monthly benefit payable (including any excess retirement benefit under Article II hereto, but before the reduction applicable to any optional method of payment) to the Employee, his beneficiary or Contingent Annuitant under the -4- 5 Salaried Plan, to produce an aggregate monthly benefit equal to the monthly benefit which would have been payable (including any excess retirement benefit under Article II hereto, but before the reduction applicable to any optional method of payment) to the Supplemental Employee, his beneficiary or Contingent Annuitant under the Prior Plan, determined as if the Prior Plan's provisions had continued in effect, and actuarially adjusted to reflect the difference in the normal method of payment under the Prior Plan, as described in paragraph 1 of this Article III. All payments shall be made by the Company from its general assets. The terms of payment of the supplemental retirement benefit shall be identical to those specified in the Salaried Plan for the type of payment the Supplemental Employee, his beneficiary or Contingent Annuitant receives under the Salaried Plan. ARTICLE IV ---------- OPTIONAL METHODS OF PAYMENT --------------------------- If one of the optional methods of payment, whether automatic or selected by the Employee, is applicable to the benefit payable to the Employee, his beneficiary or Contingent Annuitant under the Salaried Plan, then payment of any excess retirement benefit or supplemental retirement benefit hereunder shall be made in accordance with such option, subject, however, to the approval of the Compensation and Organization Committee of the Board of Directors of the Company. The amount of the -5- 6 excess retirement benefit or supplemental retirement benefit payable to an Employee, his beneficiary or Contingent Annuitant shall be reduced to reflect any such optional method of payment. In making the determination and reductions provided for in this Article IV, the Company may rely upon calculations made by the independent actuaries for the Salaried Plan, who shall apply the factors then in use for such purpose in connection with the Salaried Plan. ARTICLE V --------- ADMINISTRATION -------------- The Plan consists in part of an "excess benefit plan", as defined in the Act, and is a plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. Accordingly, the Plan shall be construed and administered in the manner appropriate to maintain the Plan's status as such under the Act. To the extent that the Act applies to the Plan, the Company shall be the "named fiduciary" of and the "plan administrator" of the Plan. The Company shall be responsible for the general administration of the Plan, for carrying out the provisions hereof, and for making any required benefit payments under the Plan. The Company shall have all such powers as may be necessary or appropriate to carry out the provisions of the Plan, including the power to determine all questions relating to eligibility for and the amount of any benefit -6- 7 hereunder and all questions pertaining to claims for benefits and procedures for claim review; to resolve all other questions arising under the Plan, including any questions of construction; and to take such further action as the Company shall deem advisable in the administration of the Plan. The actions taken and the decisions made by the Company hereunder shall be final and binding upon all interested parties. ARTICLE VI ---------- AMENDMENT AND TERMINATION ------------------------- The Company reserves the right in its sole and absolute discretion to amend or terminate the Plan at any time by action of its Board of Directors; provided, however, that no such action shall adversely affect any Employee, beneficiary or Contingent Annuitant who is then receiving excess retirement benefit or supplemental retirement benefit payments hereunder, unless an equivalent benefit is provided under the Salaried Plan or another Company plan. ARTICLE VII ----------- MISCELLANEOUS ------------- 1. NON-ALIENATION OF RETIREMENT RIGHTS OR BENEFITS. No Employee and no beneficiary or Contingent Annuitant of an Employee shall encumber or dispose of his right to receive any payments hereunder. Payments hereunder, or the right thereto, are expressly declared to -7- 8 be non-assignable and non-transferable. If an Employee, beneficiary or Contingent Annuitant attempts to assign, transfer, alienate or encumber his right to receive any payment hereunder or permits the same to be subject to alienation, garnishment, attachment, execution, or levy of any kind, then thereafter during the life of such Employee, beneficiary or Contingent Annuitant, and also during any period in which any Employee, beneficiary or Contingent Annuitant is incapable in the judgment of the Company of attending to his financial affairs, any payments which the Company is required to make hereunder may be made, in the sole and absolute discretion of the Company, either directly to such Employee, beneficiary or Contingent Annuitant or to any other person for the use or benefit of such Employee, beneficiary or Contingent Annuitant or that of his dependents, if any, including any person furnishing goods or services to or for the use or benefit of such Employee, beneficiary or Contingent Annuitant or the use or benefit of his dependents, if any. Each such payment may be made without the intervention of a guardian, the receipt of the payee shall constitute a complete acquittance to the Company with respect thereto, and the Company shall have no responsibility for the proper application thereof. 2. PLAN NON-CONTRACTUAL. Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by the Company to continue his employment with the Company, and nothing -8- 9 herein contained shall be construed as a commitment on the part of the Company to continue the employment, the annual rate of compensation, or any term or condition of employment of any such person for any period, and all Employees shall remain subject to discharge to the same extent as if the Plan had never been put into effect. 3. INTEREST OF EMPLOYEE AN UNFUNDED, UNSECURED PROMISE. The provision of this paragraph 3 shall apply notwithstanding any other provision of the Plan to the contrary. All benefits payable under the Plan are payable solely from the Company's general assets. The obligation of the Company under the Plan to provide an Employee, his beneficiary or Contingent Annuitant a benefit is solely the unfunded, unsecured promise of the Company to make payments as provided herein. No person shall have any interest in, or lien or prior claim upon, any property of the Company with respect to such benefits greater than that of a general creditor of the Company. 4. STATUS AT RETIREMENT CONTROLLING. No Employee, or his beneficiary or Contingent Annuitant shall be eligible for a supplemental retirement benefit under the Plan unless such Employee is a Supplemental Employee (as defined in paragraph 6 of Article I) on the date of his retirement, death, or other termination of employment. Furthermore, no Employee, or his beneficiary or Contingent Annuitant shall be eligible for any excess retirement benefit under the Plan unless such Employee is an Employee -9- 10 (as defined in paragraph 5 of Article I) on the date of his retirement, death, or other termination of employment. 5. CLAIMS OF OTHER PERSONS. The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against the Company, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan. 6. NO COMPETITION. The right of any Employee, beneficiary or Contingent Annuitant to an excess retirement benefit or a supplemental retirement benefit will be terminated, or, if payment thereof has begun, all further payments will be discontinued and forfeited in the event the Employee at any time subsequent to the effective date hereof (i) wrongfully discloses any secret process or trade secret of the Company or any of its subsidiaries or related companies or businesses, or (ii) engages, either directly or indirectly, as an officer, trustee, employee, consultant, partner, or substantial shareholder, on his own account or in any other capacity, in a business venture that, within the ten-year period following his retirement, death or other termination of his employment with the Company, the Company's Board of Directors reasonably determines to be competitive with the Company or any of its subsidiaries or related companies or businesses to a degree materially contrary to the Company's best interest. -10- 11 7. SEVERABILITY. The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom. 8. GOVERNING LAW. The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Ohio. * * * EXECUTED this day of , 1992. OGLEBAY NORTON COMPANY By -------------------------- Title: By -------------------------- Title: -11- EX-10.O.1 13 EXHIBIT 10.O.1 1 Exhibit 10(o)(1) FIRST AMENDMENT TO OGLEBAY NORTON COMPANY EXCESS AND TRA SUPPLEMENTAL BENEFIT RETIREMENT PLAN (JANUARY 1, 1991 RESTATEMENT) WHEREAS, the Oglebay Norton Company Excess TRA and Supplemental Benefit Retirement Plan, established effective January 1, 1976, for the purpose of providing benefits to certain salaried employees, is presently maintained under an amended and restated document executed on January 1, 1991 (the "Plan"); and WHEREAS, it is desired further to amend the Plan; NOW, THEREFORE, the Plan is hereby amended in the respects hereinafter set forth. 1. Section 1 of Article II of the Plan is hereby amended, effective as of January 1, 1994, to provide as follows: 1. ELIGIBILITY. An Employee who retires, dies, or otherwise terminates his employment with the Company under conditions that make such Employee, his beneficiary, or Contingent Annuitant eligible for a benefit under the Salaried Plan, and whose benefit under the Salaried Plan is limited by Section 415 or Section 401(a)(17) of the Code, shall be eligible for an excess retirement benefit. 2. Section 2 of Article II of the Plan is hereby amended, effective as of January 1, 1994, to provide as follows: 2 2. AMOUNT AND PAYMENT. The monthly excess retirement benefit payable to an Employee, his beneficiary, or Contingent Annuitant shall be in such amount as is required, when added to the monthly benefit payable (before the reduction applicable to any optional method of payment) to the Employee, his beneficiary or Contingent Annuitant under the Salaried Plan, to produce an aggregate monthly benefit equal to the monthly benefit which would have been payable (before the reduction applicable to any optional method of payment) to the Employee, his beneficiary or Contingent Annuitant if the limitations of Section 415 and Section 401(a)(17) of the Code had not been in effect. All payments shall be made by the Company from its general assets. The terms of payment of the excess retirement benefit shall be identical to those specified in the Salaried Plan for the type of payment the Employee, his beneficiary or Contingent Annuitant receives under the Salaried Plan. 3. Effective as of January 1, 1994, a new Article VIII is added to the Plan to provide as follows: ARTICLE VIII ------------ SPECIAL PAYMENT BENEFIT ----------------------- 1. ELIGIBILITY. An Employee who retires, dies, or otherwise terminates his employment with the Company and who would have been eligible for the "Special Payment" described in Section 7.11 of the Salaried Plan if he had not been a highly compensated employee for the Plan year in which he retires and had compensation during the Plan year preceding the year of his retirement in excess of the amount specified in Section 7.11, shall be eligible for a special payment benefit. 2. AMOUNT AND PAYMENT. The amount and terms of payment of the special payment benefit payable to an Employee shall be determined pursuant to the same terms that such special payment would have been payable to the Employee under Section 7.11 of the Salaried Plan if the Salaried Plan did not exclude any Employee that was a highly compensated employee for the Plan year in which he retires and had compensation during the Plan year preceding the year of his retirement in excess of the amount specified in Section 7.11 of the Salaried Plan. All payments shall be made by the Company from its general assets. * * * 3 Executed at Cleveland, Ohio this day of , 1994. OGLEBAY NORTON COMPANY By ___________________________ Title: And __________________________ Title: - 3 - EX-10.P 14 EXHIBIT 10.P 1 Exhibit 10(p) ================================================================================ U.S. $90,000,000 AMENDED AND RESTATED LOAN AGREEMENT originally dated as of December 1, 1990 and amended and restated as of December 29, 1994 among OGLEBAY NORTON COMPANY as the Borrower, and VARIOUS COMMERCIAL BANKING INSTITUTIONS as the Banks and SOCIETY NATIONAL BANK, as the Agent for the Banks ------------------------------------------------- Providing for U.S.$25,000,000 Tranche A Revolving Credit Loans U.S.$15,000,000 Tranche B Revolving Credit Loans U.S.$50,000,000 Term Loans ------------------------------------------------- ================================================================================ 2
TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS............................................................................................................ 2 1.1. Defined Terms........................................................................................... 2 1.2. Use of Defined Terms.................................................................................... 16 1.3. Accounting and Financial Determinations................................................................. 16 ARTICLE II COMMITMENTS............................................................................................................ 17 2.1. Commitments............................................................................................. 17 2.2. Total Revolving Credit Commitment Amount................................................................ 18 2.3. Fees.................................................................................................... 18 2.3.1. Revolving Credit Commitment..................................................................... 18 2.3.2. Facility........................................................................................ 19 2.3.3. Other........................................................................................... 19 2.4. Increased Capital Costs................................................................................. 19 2.5. Termination............................................................................................. 19 2.6. Master Vessel Trust Agreement........................................................................... 20 ARTICLE III LOANS AND NOTES........................................................................................................ 20 3.1. Borrowing Procedure..................................................................................... 20 3.2. Notes................................................................................................... 20 3.3. Principal Payments and Prepayments...................................................................... 20 3.4. Interest................................................................................................ 22 3.5. Post-Maturity Rates..................................................................................... 24 3.6. Payment Dates........................................................................................... 25 3.7. Payments, Computations, etc............................................................................. 25 3.8. Proration of Payments................................................................................... 25 3.9. Setoff.................................................................................................. 26 3.10. Taxes................................................................................................... 26 ARTICLE IV BASE RATE, CD RATE AND LIBO RATE OPTIONS FOR THE LOANS.................................................................................................. 26 4.1. Elections............................................................................................... 26 4.2. Fixed Rate Lending Unlawful............................................................................. 28 4.3. Deposits Unavailable.................................................................................... 28 4.4. Increased Fixed Rate Loan Costs, etc.................................................................... 28 4.5. FDIC Assessment Cost.................................................................................... 29 4.6. Funding Losses.......................................................................................... 29
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Page ---- ARTICLE V CONDITIONS PRECEDENT................................................................................................... 30 5.1. Initial Borrowing....................................................................................... 30 5.1.1. Resolutions, etc................................................................................ 30 5.1.2. Delivery of Notes............................................................................... 30 5.1.3. Opinion of Counsel.............................................................................. 30 5.1.4. Closing Fees, Expenses, etc..................................................................... 30 5.1.5. Indebtedness Discharged......................................................................... 31 5.1.6. Subsidiary Guaranty............................................................................. 31 5.1.7. Valuations...................................................................................... 31 5.1.8. Ship Mortgages, etc............................................................................. 31 5.1.9. Opinion of Maritime Counsel..................................................................... 31 5.2. All Loans............................................................................................... 31 5.2.1. Compliance with Warranties, non-Default, etc.................................................... 31 5.2.2. Absence of Litigation, etc...................................................................... 31 5.2.3. Loan Request.................................................................................... 32 5.2.4. Satisfactory Legal Form......................................................................... 32 ARTICLE VI WARRANTIES, ETC........................................................................................................ 32 6.1. Organization, Power, Authority, etc..................................................................... 32 6.2. Due Authorization....................................................................................... 32 6.3. Validity, etc........................................................................................... 32 6.4. Financial Information................................................................................... 33 6.5. Absence of Certain Default.............................................................................. 33 6.6. Litigation, etc......................................................................................... 33 6.7. Regulation U............................................................................................ 33 6.8. Government Regulation................................................................................... 33 6.9. Certain Contractual Obligations or Organic Documents.................................................... 33 6.10. Taxes................................................................................................... 34 6.11. Employee Benefit Plans.................................................................................. 34 6.12. Labor Controversies..................................................................................... 34 6.13. Subsidiaries............................................................................................ 34 6.14. Patents, Trademarks, etc................................................................................ 34 6.15. Ownership of Properties; Liens.......................................................................... 34 6.16. Licenses, etc........................................................................................... 34 6.17. Compliance with Laws.................................................................................... 34 6.18. Accuracy of Information................................................................................. 35 ARTICLE VII COVENANTS.............................................................................................................. 35 7.1. Certain Affirmative Covenants........................................................................... 35 7.1.1. Financial Information, etc...................................................................... 35 7.1.2. Maintenance of Corporate Existences, etc........................................................ 36 7.1.3. Foreign Qualification........................................................................... 36 7.1.4. Payment of Taxes, etc........................................................................... 36 7.1.5. Insurance....................................................................................... 36 7.1.6. Notice of Default, Litigation, etc.............................................................. 36
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Page ---- 7.1.7. Performance of Loan Documents................................................................... 37 7.1.8. Books and Records............................................................................... 37 7.2. Certain Negative Covenants.............................................................................. 37 7.2.1. Investments and Acquisitions; Business Activities............................................... 37 7.2.2. Liens........................................................................................... 38 7.2.3. Financial Condition............................................................................. 39 7.2.4. Fixed or Capital Assets, etc.................................................................... 39 7.2.5. Take or Pay Contracts........................................................................... 39 7.2.6. Consolidation, Merger, etc...................................................................... 39 7.2.7. Modification, etc. of Subordinated Debt......................................................... 40 7.2.8. Transactions with Affiliates.................................................................... 40 7.2.9. Sale or Discount of Receivables................................................................. 40 7.2.10. Negative Pledges................................................................................ 40 7.2.11. Inconsistent Agreements......................................................................... 40 7.2.12. Interest Rate Protection Agreements............................................................. 40 7.2.13. Dividends, Stock Purchases, etc................................................................. 40 7.2.14. Lease Obligations............................................................................... 41 ARTICLE VIII EVENTS OF DEFAULT...................................................................................................... 41 8.1. Events of Default....................................................................................... 41 8.1.1. Non-Payment of Liabilities...................................................................... 41 8.1.2. Non-Performance of Certain Covenants............................................................ 41 8.1.3. Certain Defaults on Other Indebtedness.......................................................... 41 8.1.4. Bankruptcy, Insolvency, etc..................................................................... 42 8.1.5. Control of the Borrower......................................................................... 42 8.1.6. Non-Performance of Other Obligations............................................................ 42 8.1.7. Breach of Warranty.............................................................................. 42 8.1.8. ERISA........................................................................................... 42 8.1.9. Judgments....................................................................................... 42 8.2. Action if Bankruptcy.................................................................................... 43 8.3. Action if Other Event of Default........................................................................ 43 ARTICLE IX THE AGENT.............................................................................................................. 43 9.1. Actions................................................................................................. 43 9.2. Funding Reliance, etc................................................................................... 43 9.3. Exculpation............................................................................................. 44 9.4. Successor............................................................................................... 44 9.5. Loans by the Agent...................................................................................... 44 9.6. Credit Decisions........................................................................................ 44 9.7. Copies, etc............................................................................................. 44 ARTICLE X MISCELLANEOUS.......................................................................................................... 44 10.1. Waivers, Amendments, etc................................................................................ 44 10.2. Notices................................................................................................. 45 10.3. Costs and Expenses...................................................................................... 45 10.4. Indemnification......................................................................................... 45
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Page ---- 10.5. Survival................................................................................................ 46 10.6. Severability............................................................................................ 46 10.7. Headings................................................................................................ 46 10.8. Counterparts, Effectiveness, etc........................................................................ 46 10.9. Governing Law; Entire Agreement......................................................................... 47 10.10. Successors and Assigns.................................................................................. 47 10.11. Sale and Transfers, etc., of Loans and Notes; Participations in Loans and Notes......................... 47 10.12. Other Transactions...................................................................................... 48 10.13. Waiver of Jury Trial.................................................................................... 49 10.14. Disposition of Margin Stock............................................................................. 49
- - ---------- EXHIBIT A-1 - Form of Tranche A Revolving Credit Note EXHIBIT A-2 - Form of Tranche B Revolving Credit Note EXHIBIT A-3 - Form of Term Loan Note EXHIBIT B - Form of Loan Request EXHIBIT C - Form of Continuation/Conversion Notice EXHIBIT D - Form of Compliance Certificate EXHIBIT E - Disclosure Schedule EXHIBIT F-1 - Form of Opinion of Counsel EXHIBIT F-2 - Form of Opinion of Maritime Counsel EXHIBIT G-1 - Form of Subsidiary Guaranty EXHIBIT G-2 - Form of Amendment to Ship Mortgage iv 6 AMENDED AND RESTATED LOAN AGREEMENT THIS AMENDED AND RESTATED LOAN AGREEMENT, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994, among OGLEBAY NORTON COMPANY, a Delaware corporation (the "BORROWER"), SOCIETY NATIONAL BANK, a national banking association ("SOCIETY"), and the various other commercial banking institutions signatories hereto (together with Society, the "BANKS", and each such banking institution and Society being sometimes referred to herein as a "BANK") and Society, as Agent (the "AGENT") for the Banks: W I T N E S S E T H: WHEREAS, the Borrower and its Subsidiaries are engaged in the raw materials and Great Lakes marine transportation business with industry segments in industrial sands, iron ore, transportation, refractories and minerals, serving the steel, ceramic, chemical, electric utility and oil and gas well service industries with industrial minerals and supplying manufactured products used for hot metal processing; and WHEREAS, Term Loans in the aggregate principal amount of U.S. $58,500,000 were made pursuant to the Original Loan Agreement on December 20, 1990, installment payments in the aggregate principal amount of U.S.$17,250,000 have been made on such Term Loans, with the result that Term Loans in the aggregate principal amount of U.S.$41,250,000 will continue to remain outstanding under this Agreement; WHEREAS, subject to the terms and conditions of this Agreement, the Banks will make Additional Term Loans to the Borrower on the Term Loan Closing Date in the aggregate principal amount of U.S.$8,750,000, with the result that Term Loans in the aggregate principal amount of U.S.$50,000,000 will be outstanding under this Agreement; WHEREAS, any Revolving Credit Loans outstanding under the Original Loan Agreement on the Restatement Effective Date shall continue outstanding under this Agreement as Tranche A Revolving Credit Loans; WHEREAS, the Borrower desires to obtain Revolving Credit Commitments from the Banks pursuant to which Tranche A Revolving Credit Loans, in a maximum aggregate principal amount at any one time outstanding not to exceed U.S.$25,000,000, and Tranche B Revolving Credit Loans, in a maximum aggregate principal amount at any one time outstanding not to exceed U.S.$15,000,000, will be made to the Borrower from time to time prior to the Tranche A Commitment Termination Date or the Tranche B Commitment Termination Date, as the case may be; and WHEREAS, the Banks are willing, on the terms and conditions hereinafter set forth (including Article V), to extend such Additional Term Loan Commitments and Revolving Credit Commitments and make such Additional Term Loans and such Revolving Credit Loans to the Borrower; WHEREAS, the proceeds of such Loans have been and will be used (a) to finance the acquisition of two Great Lakes self-unloading vessels, the OGLEBAY NORTON, and the BUCKEYE, pursuant to the Vessel Sale Agreement, (b) to repay all Indebtedness evidenced by the Existing Credit Agreement, and (c) for general corporate purposes and working capital purposes of the Borrower and Subsidiaries; and WHEREAS, this Agreement amends and restates in its entirety the Original Loan Agreement; 7 NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS 1.1. DEFINED TERMS. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "ADDITIONAL TERM LOANS" is defined in Section 2.1(b). "ADDITIONAL TERM LOAN COMMITMENTS" means the several commitments of the Banks pursuant to Section 2.1(b) to make Additional Term Loans on the Term Loan Closing Date. "ADDITIONAL TERM LOAN COMMITMENT TERMINATION DATE" means December 31, 1994. "AFFILIATE" of any Person means any other Person which, directly or indirectly, controls or is controlled by or under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "CONTROLLED BY" any other Person if such other Person possesses, directly or indirectly, power: (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGREEMENT" means, at any date, this loan agreement as originally in effect on the Effective Date under the Original Loan Agreement, and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect on such date. "APPROVAL" means each and every approval, consent, filing and registration by or with any Federal, state or other regulatory authority necessary to authorize or permit the execution, delivery or performance of this Agreement, the Notes or any other Loan Document or for the validity or enforceability hereof or thereof. "ARMCO" means the 767 foot Great Lakes self-unloading vessel, official number 265621, owned by the Borrower and documented in its name under the laws of the United States of America. "AUTHORIZED OFFICER" means, relative to any Loan Party, those of its officers whose signatures and incumbency shall have been certified to the Banks pursuant to Section 5.1.1. "BANK" is defined in the preamble. "BASE RATE" means at any time the rate of interest most recently announced by Society in Cleveland, Ohio as its base rate (of which announcements the Agent shall give notice promptly to the Banks and to the Borrower). The Base Rate is not necessarily intended to be the lowest rate of interest charged by Society in connection with extensions of credit. Changes in the rate of interest on Loans maintained as a Base Rate Loan shall take effect simultaneously with each announced change in the Base Rate. "BASE RATE LOAN" is defined in Section 4.1. "BNS INTEREST RATE SWAP AGREEMENT" means the Interest Rate Swap Agreement, dated as of August 3, 1988, between The Bank of Nova Scotia, through its New York Agency ("BNS"), and the Borrower, the Confirmation dated August 3, 1988, between BNS and the Borrower entered into pursuant thereto with a Trade Date of August 5, 1988 and 2 8 in an original Notational Amount of $15,463,920 (amortizing as per the Schedule attached), and the Amended and Restated Supplemental Agreement and Guaranty, dated as of the date hereof, among BNS, the Borrower and the Subsidiary Guarantors, related thereto. "BORROWER" is defined in the PREAMBLE. "BORROWING" means the Revolving Credit Loans made by all Banks on any Business Day in accordance with Section 3.1. "BUCKEYE" means the 698 foot Great Lakes self-unloading vessel (formerly "SPARROWS POINT"), official number 264391, built in 1952, identified in the Vessel Sale Agreement. "BUSINESS DAY" means: (a) any day which is neither a Saturday or Sunday nor a legal holiday in the State of New York or Ohio on which Banks are authorized or required to be closed in New York City or Cleveland; and (b) relative to the date of (i) making or continuing any portion of any Loans as, or converting any portion of any Loans from or into LIBO Rate Loans, (ii) making any payment or prepayment of principal of or payment of interest on the portion of the principal amount of the Loans being maintained as LIBO Rate Loans, and (iii) the Borrower's giving any notice (or the number of Business Days to elapse prior to the effectiveness thereof) in connection with any matter referred to in clause (b)(i) or (b)(ii), a banking business day of the Agent at, and on which dealings in Dollars are carried on in the interbank eurodollar market of, the Agent's LIBOR Office. "CAPITAL EXPENDITURES" means for any period the sum of the aggregate gross amount recorded on the books and records of the Borrower for: (a) additions during such period to property, plant and equipment of the Borrower and Consolidated Subsidiaries; PLUS (b) lease obligations incurred during such period by the Borrower and Consolidated Subsidiaries on capital leases (excluding the portion of any obligation under capital leases allocable to Interest Expense). The term Capital Expenditures shall not include the cost of acquisitions pursuant to Section 7.2.1 as such. "CD RATE (RESERVE ADJUSTED)" means a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined pursuant to the following formula: CDR(RA) = (CDR + 0.0005) ------------- (1.00 - CDRR) where, CDR(RA) = CD Rate (Reserve Adjusted) CDR = CD Rate CDRR = CD Reserve Requirement "CD RATE" means, relative to an Interest Period, the rate (expressed as a decimal) of interest determined by Agent to be the average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the bid rates quoted to Agent in the secondary market at approximately 10:00 a.m. New York City time (or as soon thereafter as practicable) on the first day of such Interest Period by two certificate of deposit dealers of recognized standing selected by Agent in its sole discretion for the purchase from Agent at face value of certificates issued by Agent in an amount approximately equal or 3 9 comparable to the amount of Agent's CD Rate Loan to be outstanding during such Interest Period and for the number of days comprised therein. "CD RATE LOAN" is defined in Section 4.1. "CD RESERVE REQUIREMENT" means, relative to each Interest Period, a percentage (expressed as a decimal) equal to the aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such Interest Period) on the first day of such Interest Period, as specified under Regulation D of the F.R.S. Board, or any other regulation of the F.R.S. Board which prescribes reserve requirements applicable to non-personal time deposits as presently defined in Regulation D, as then applicable to the class of banks of which the Agent is a member, on deposits of the type used as a reference in determining the CD Rate and having a maturity approximately equal to such Interest Period. "CHANGE IN CONTROL" means the acquisition by any Person or two or more Persons acting in concert of beneficial ownership (within the meaning of Rule l3d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of more than 24% of the outstanding shares of voting stock of the Borrower, unless such acquisition has been approved by the Board of Directors of the Borrower consisting at the time of such approval of persons a majority of whom have been Directors of the Borrower for a period of at least 24 consecutive months. "CODE" means the Internal Revenue Code of 1986, and the regulations thereunder, as amended from time to time. "COLLATERAL TRUSTEE" means Bank One, Columbus, NA, a national banking association, in its capacity as the trustee under the Master Vessel Trust Agreement and as the mortgagee under the Ship Mortgages, and its successors and assigns in such capacity. "COMMITMENT" means, relative to any Bank, such Bank's Tranche A Revolving Credit Commitment or its Tranche B Revolving Credit Commitment, or both, as the context may require. "COMPLIANCE CERTIFICATE" means a certificate duly executed by the chief executive or financial Authorized Officer of the Borrower in the form of Exhibit D attached hereto, with appropriate insertions, together with such changes as the Required Banks may from time to time request for purposes of monitoring the Borrower's compliance herewith. "CONSOLIDATED SUBSIDIARY" means, at any time, every Subsidiary which is included as a consolidated subsidiary of the Borrower in the financial statements contained in the then most recent annual or periodic report filed by the Borrower with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of such Commission) on Form 10-K, 10-Q or 8-K pursuant to the Securities Exchange Act of 1934, as then in effect (or any comparable forms or under similar Federal statutes then in force), and in the Borrower's most recent financial statements furnished to its stockholders and certified by the Borrower's independent certified public accountants. "CONTINUATION/CONVERSION NOTICE" means a notice of continuation or conversion and certificate duly executed by the chief executive or financial Authorized Officer of the Borrower substantially in the form of Exhibit C attached hereto. "CONTRACTUAL OBLIGATION" means, relative to any Person, any provision of any security issued by such Person or of any Instrument or undertaking to which such Person is a party or by which it or any of its property is bound. "CONTROLLED GROUP" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code. 4 10 "CURRENT ASSETS" means at any time all assets of the Borrower and its Consolidated Subsidiaries classified on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at such date as current assets (excluding Intangible Assets so classified as current assets), in accordance with generally accepted accounting principles. "CURRENT LIABILITIES" means at any time all liabilities of the Borrower and its Consolidated Subsidiaries classified on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at such date as current liabilities, including the then outstanding principal amount of the Notes due and to become due within the next 12 months, in accordance with generally accepted accounting principles. "DEBT TO TOTAL CAPITAL RATIO" means, at any date, the ratio of: (a) all Indebtedness of the Borrower and its Consolidated Subsidiaries (excluding intercompany obligations) described in clauses (a) through (d) of the definition of the term "INDEBTEDNESS" and all Indebtedness of Persons other than the Borrower and its Consolidated Subsidiaries of the nature described in clauses (a) and (b) of the definition of the term "INDEBTEDNESS" as to which the Borrower or a Consolidated Subsidiary has issued a Guaranty; to (b) the sum of (i) the amount determined pursuant to the preceding clause (a), PLUS (ii) the Net Worth of the Borrower and its Consolidated Subsidiaries on a consolidated basis. "DEBT SERVICE COVERAGE RATIO" means, as of any date of determination, the ratio of the Borrower's EBITDA, on a consolidated basis, for its most recently completed four Fiscal Quarters (whether or not such fiscal quarters are in the same Fiscal Year), to the Borrower's Debt Service Requirements, on a consolidated basis, for such period, where "EBITDA" means, for any period and for any Person, on a consolidated basis, such Person's Net Income, PLUS the sum of (i) such Person's Interest Expense (including for such purpose the Interest Expense of any Person which is not a Consolidated Subsidiary in respect of Indebtedness as to which the Borrower or a Consolidated Subsidiary has issued a Guaranty), (ii) such Person's income tax expense, (iii) such Person's depreciation expense, and (iv) such Person's amortization expense; and "DEBT SERVICE REQUIREMENTS" means, for any period and for any Person, on a consolidated basis, the sum of such Person's (i) Interest Expense (determined as provided in clause (i) of the definition of EBITDA), PLUS (ii) regularly scheduled principal payments in respect of all Indebtedness of the nature described in clauses (a) and (b) of the definition of the term Indebtedness (and all Indebtedness of Persons other than the Borrower and its Consolidated Subsidiaries of the nature described in such clauses (a) and (b) with respect to which the Borrower or any Consolidated Subsidiary has issued a Guaranty). "DEFAULT" means any Event of Default or any condition or event which, after notice or lapse of time or both, would constitute an Event of Default. "DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as Exhibit E as it may be amended, supplemented, or otherwise modified from time to time by the Borrower with the consent of the Required Banks. "DOLLAR" and the sign "$" mean lawful money of the United States of America. "DOMESTIC OFFICE" means, relative to the Agent or any Person, the office of such Person designated as such below its signature hereto or such other office of such Person (or any successor or assign of such Person) within the United States of America as may be designated from time to time by notice from such Person to each other Person party hereto. "ENVIRONMENTAL LAW" means any past, present or future Federal, state, local or foreign statutory or common law, or any regulation, code, plan, order, decree, judgment, permit, grant, franchise, concession, restriction, agreement or injunction issued, entered, promulgated or approved thereunder, relating to (a) the environment, human health or safety, including, without limitation, any law relating to emissions, discharges, releases or threatened releases of Hazardous Substances into the environment (including, without limitation, air, surface water, groundwater or land), or (b) the manufacture, generation, refining, processing, distribution, use, sale, treatment, recycling, receipt, storage, disposal, transport, arranging for transport, or handling of Hazardous Substances. 5 11 "ERISA" is defined in Section 6.11. "EVENT OF DEFAULT" is defined in Section 8.1. "EXISTING CREDIT AGREEMENT" means the Loan Agreement, dated as of July 11, 1988, among the Borrower, various commercial banking institutions named therein, and The Bank of Nova Scotia, as Agent, as amended. "FISCAL QUARTER" means any quarter of a Fiscal Year. "FISCAL YEAR" means any period of twelve consecutive calendar months ending on December 31. "FIXED RATE LOAN" is defined in Section 4.1. "FRED R. WHITE, JR." means the 635 foot Great Lakes self-unloading vessel, official number 606421, built in 1979, owned by the Borrower and documented in its name under the laws of the United States of America. "F.R.S. BOARD" means the Board of Governors of the Federal Reserve System (or any successor). "GUARANTY" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of the obligor's obligation under any Guaranty shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum outstanding principal amount, if larger) of the debt, obligation or other liability thereby guaranteed. "HAZARDOUS SUBSTANCES" means collectively, contaminants; pollutants; toxic or hazardous chemicals, substances, materials, wastes and constituents; petroleum products; polychlorinated biphenyls; medical wastes; infectious wastes; asbestos; paint containing lead; and urea formaldehyde. "HEREOF", "HERETO", "HEREUNDER" and similar terms refer to this Agreement and not to any particular Section or provision of this Agreement. "IMPERMISSIBLE QUALIFICATION" means, relative to the opinion by independent public accountants as to any financial statement of the Borrower, any qualification or exception to such opinion: (a) which is of a "going concern" or similar nature; (b) which relates to the limited scope of examination of matters relevant to such financial information; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause the Borrower to be in default of any of its obligations under Section 7.2.3. "INCLUDING" means including without limiting the generality of any description preceding such term. "INDEBTEDNESS" of any Person means, without duplication: (a) all obligations of such Person for borrowed money (including all notes payable and drafts accepted representing extensions of credit and all obligations evidenced by bonds, debentures, notes or other similar instruments) or on which interest charges are customarily paid; (b) all unpaid reimbursement obligations in respect of the face amount of all letters of credit, whether or not drawn, issued for the account of such Person, but only to the extent such obligations are in excess of $1,750,000 in the aggregate at any one time outstanding for such Person and its Consolidated Subsidiaries; 6 12 (c) capitalized leases; (d) to the extent not included under the foregoing clauses, all indebtedness for borrowed money or represented by notes, bonds, debentures or similar instruments (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) whether or not such indebtedness shall have been assumed by such Person; and (e) all Guaranties issued by such Person with respect to any Indebtedness of any other Person of the nature described in the foregoing clauses. "INSTRUMENT" means any document or writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken, or any right to any Lien is granted or perfected. "INTANGIBLE ASSETS" of any Person means all licenses, franchises, patents, patent applications, trademarks, program rights, goodwill and research and development expense or other like intangibles shown on a balance sheet of such Person. "INTEREST COVERAGE RATIO" means, as of any date of determination, the ratio of (a) the Borrower's EBIT, on a consolidated basis, for its most recently completed four Fiscal Quarters (whether or not such fiscal quarters are in the same Fiscal Year), to (b) the Borrower's Interest Expense (including for such purpose the Interest Expense of any Person which is not a Consolidated Subsidiary in respect of Indebtedness as to which the Borrower or a Consolidated Subsidiary has issued a Guaranty), on a consolidated basis, for such period, where "EBIT" means, for any period and for any Person, on a consolidated basis, such Person's Net Income, exclusive of (1) gains or losses from the sale of assets, (2) gains or losses from items treated as extraordinary or unusual items under generally accepted accounting principles, and (3) gains and losses from operations treated as discontinued operations in accordance with generally accepted accounting principles, for such period, PLUS the sum of (i) such Person's Interest Expense (determined as provided above) for such period, and (ii) such Person's income tax expense for such period. "INTEREST EXPENSE" means, for any Person and for any period, the aggregate amount of interest in respect of Indebtedness (including amortization of original issue discount on Indebtedness and the interest portion of any deferred payment obligation which constitutes Indebtedness, calculated in accordance with the effective interest method of accounting, and the net costs associated with Interest Rate Protection Agreements) and all but the principal component of rentals in respect of capitalized leases, paid, accrued and/or scheduled to be paid or accrued by such person during such period, all determined in accordance with generally accepted accounting principles. "INTEREST PERIOD" means, relative to any Fixed Rate Loan, the period which shall begin on (and include) the date on which such Fixed Rate Loan is made or continued as, or converted into, a Fixed Rate Loan pursuant to Section 4.1, and, unless the final maturity of such Fixed Rate Loan is accelerated, shall end on (but exclude) the day which is, in the case of a CD Rate Loan 30, 60, 90, 180 or 360 days thereafter, or which, in the case of a LIBO Rate Loan, numerically corresponds to such date one, two, three or six months thereafter, in either case as the Borrower may select in its relevant notice pursuant to Section 4.1; PROVIDED, HOWEVER, that: (a) the Interest Period applicable to any portion of the principal amount of the Loans made or continued as, or converted into, Fixed Rate Loans whenever any other portion of the principal amount of the Loans being maintained as a Fixed Rate Loan of the same type has a remaining Interest Period of one month or 30 days, as the case may be, or less shall end on the same day as the Interest Period applicable to such other portion; (b) the Borrower shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than eight different dates; 7 13 (c) absent such selection, the Borrower shall be deemed to have selected an Interest Period of one month or 30 days, as the case may be, or such other duration as shall be required in order to comply with clause (a) and clause (b); (d) if such Interest Period applies to LIBO Rate Loans and there exists no numerically corresponding day in such month, such Interest Period shall end on the last Business Day of such month; (e) if such Interest Period applies to LIBO Rate Loans and such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the Business Day next following such numerically corresponding day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the preceding Business Day); and (f) no Interest Period shall end later than December 31, 2001. "INTEREST RATE PROTECTION AGREEMENT" means any and all agreements and instruments governing any interest rate swap, cap or collar arrangement providing for the transfer or mitigation of interest rates either generally or under specific circumstances. "INVESTMENT" means, relative to any Person: (a) any loan or advance made by it to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any Guaranty by it of Indebtedness of any other Person; and (c) any ownership or similar interest by it in any other Person; and the amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person). "LIABILITIES" means all monetary obligations of the Borrower under this Agreement, the Notes and each other Loan Document. "LIBO RATE" means, relative to each Interest Period applicable to any LIBO Rate Loans comprising all or any part of any Borrowing, conversion or continuation, the rate per annum determined by the Agent at which dollar deposits in immediately available funds are offered to the Agent's LIBOR Office two Business Days prior to the beginning of such Interest Period by prime banks in the interbank eurodollar market as at or about the relevant local time of such LIBOR Office, for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal to the amount of the Agent's LIBO Rate Loan to be outstanding during such Interest Period. "Relevant local time" shall mean 11:00 a.m., local time, in London, England, when the LIBOR Office selected by the Agent to determine the LIBO Rate is located in Europe, or 10:00 a.m., Nassau, Bahamas time, when such LIBOR Office is located in North America. "LIBO RATE LOAN" is defined in Section 4.1. "LIBO RATE (RESERVE ADJUSTED)" means, relative to any portion of a Loan to be made, continued or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined pursuant to the following formula: LIBO Rate = LIBO RATE --------------------------- (Reserve Adjusted) 1 - LIBOR Reserve Percentage The Agent shall determine the LIBO Rate (Reserve Adjusted) for each Interest Period, applicable to LIBO Rate Loans comprising all or part of any Borrowing, conversion or continuation and promptly notify the Borrower thereof (which determination shall, in the absence of manifest error, be conclusive on the Borrower) and, if requested by the Borrower, deliver a statement showing the computation used by the Agent in determining any such Rate. 8 14 "LIBOR OFFICE" means, relative to any Bank, the office of such Bank designated as such below its signature hereto or such other domestic or foreign office or offices of such Bank (as designated from time to time by notice from such Bank to the Borrower and the Agent). "LIBOR RESERVE PERCENTAGE" means, relative to each Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentages in effect on each day of such Interest Period, as prescribed by the F.R.S. Board, for determining reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other applicable regulation of the F.R.S. Board which prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D as applicable to any Bank or any participant of such Bank with respect to such participation. "LIEN" means any mortgage, pledge, hypothecation, charge, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever securing Indebtedness (including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). "LOANS" is defined in Section 2.1. "LOAN DOCUMENT" means this Agreement and each Instrument from time to time executed and delivered to the Agent or any Bank pursuant hereto, whether or not mentioned herein, including the Notes, the Ship Mortgages and the Subsidiary Guaranty. "LOAN PARTY" means any of the Borrower or any of the Subsidiary Guarantors, and their respective successors and assigns. "LOAN REQUEST" means a loan request and certificate duly executed by the chief executive or financial Authorized Officer of the Borrower substantially in the form of Exhibit B attached hereto. "MASTER VESSEL TRUST AGREEMENT" means the Master Vessel Trust Agreement, dated as of December 1, 1990, between (a) the Banks, (b) the Agent, and (c) the Collateral Trustee, substantially in the form of Exhibit G-3 attached to the Original Loan Agreement (as such may be amended, supplemented, restated or otherwise modified and in effect from time to time). "MATERIALLY ADVERSE EFFECT" means, relative to any occurrence of whatever nature (including any adverse determination in any litigation, arbitration or governmental investigation or proceeding), a materially adverse effect, on a consolidated basis for the Borrower and its Subsidiaries in accordance with generally accepted accounting principles, on: (a) the consolidated financial condition, operations or prospects of the Borrower and Subsidiaries; or (b) the ability of the Borrower or any other Loan Party to perform any of its payment or other material obligations under this Agreement or any Loan Document. Notwithstanding the foregoing, a Materially Adverse Effect shall not be considered to have occurred solely by reason of the asset write-offs and early recognition of expenses, in the approximate aggregate pre-tax amount of $47,912,000, adjustments required by reason of the Coal Industry Retiree Health Benefits Act of 1992, in the approximate aggregate pre-tax amount of $15,117,900, and adjustments required by reason of the adoption of Statement No. 106 of the Financial Accounting Standards Board, in the approximate aggregate pre-tax amount of $26,577,000, effective December 31, 1992. "MATURITY" means, relative to any Loan, the date on which such Loan is stated to be due and payable, in whole or in part (in accordance with the Note evidencing such Loan, this Agreement, or otherwise), or such earlier date when such Loan (or any portion thereof) shall be or become due and payable, in whole or in part, in accordance with the terms of this Agreement, whether by required prepayment, declaration, or otherwise. 9 15 "NET CASUALTY OR REQUISITION PROCEEDS" means the net proceeds received by the Collateral Trustee pursuant to Sections 12, 17 or 18 of any of the Ship Mortgages which are to be applied as provided in Section 30 of the Ship Mortgages and are turned over to the Agent to be so applied. "NET INCOME" means, for any Person and for any period, the net income (loss) of such Person for such period, determined in accordance with generally accepted accounting principles, PROVIDED that: (a) all gains and all losses realized by such Person and its Subsidiaries arising from the revaluation of assets or upon the sale or other disposition (including, without limitation, pursuant to sale and leaseback transactions) or property or assets which are not sold or otherwise disposed of in the ordinary course of business, or pursuant to the sale of any capital stock of such Person or any Subsidiary, shall be excluded, (b) net income or net loss of any Person combined with such Person on a "pooling of interests" basis attributable to any period prior to the date of such combination shall be excluded, and (c) net income of any Person which is not a Subsidiary of such Person and which is consolidated with such Person or is accounted for by such Person by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid to such Person or a Subsidiary. "NET PROCEEDS" means, for each merger, consolidation, conveyance, transfer, lease, mortgage or other disposition or encumbrance of, or granting of any license with respect to, any asset (each such disposition, encumbrance and license being herein called a "TRANSACTION") by the Borrower or any of its Consolidated Subsidiaries and as of the date on which such Transaction is consummated, (a) the aggregate amount of all consideration received or to be received by the Borrower or any such Consolidated Subsidiary in connection therewith, including, without limitation, (i) all cash, (ii) the present value of all unpaid lease payments (calculated using as the discount rate the average interest rate for all Loans outstanding at the time of calculation, weighted by amounts outstanding), (iii) the unpaid principal amount of (A) each note or other evidence of Indebtedness received by the Borrower or any such Consolidated Subsidiary and (B) all Indebtedness of the Borrower or any such Consolidated Subsidiary which is cancelled or assumed by another party in connection with such Transaction, and (iv) the fair market value of all other non-cash consideration, MINUS (b) all income taxes payable by the Borrower or such Consolidated Subsidiary by reason of such Transaction and all reasonable brokerage commissions and other fees and expenses incurred by the Borrower or any such Consolidated Subsidiary in such Transaction. "NET TANGIBLE ASSETS" means at any time: (a) the total assets of the Borrower and Consolidated Subsidiaries as shown on a consolidated balance sheet of the Borrower and Consolidated Subsidiaries prepared at such date, REDUCED BY (b) Intangible Assets. "NET WORTH" means at any time the sum of capital stock, additional paid-in capital, unrealized gains or losses, and retained earnings (minus accumulated deficits) of the Borrower and its Consolidated Subsidiaries, all as shown on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared at such date. "NOTE" means any promissory note of the Borrower, substantially in the form of Exhibit A-1, Exhibit A-2 or Exhibit A-3 attached hereto (as such promissory note may be amended, endorsed, or otherwise modified from time to time), evidencing, respectively Tranche A Revolving Credit Loans, Tranche B Revolving Credit Loans or a Term Loan, made pursuant to this Agreement, and all other promissory notes accepted from time to time in substitution, replacement, or renewal therefor. "OGLEBAY NORTON" means the 1,000 foot Great Lakes self-unloading vessel (formerly "LEWIS WILSON FOY"), official number 592377, built in 1978, identified in the Vessel Sale Agreement. "ORGANIC DOCUMENT" means, relative to any corporation, its certificate of incorporation, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock. "ORIGINAL LOAN AGREEMENT" means the Loan Agreement, dated as of December 1, 1990, among the Borrower, the Banks named therein, and the Agent, as amended as of December 7, 1992 and as of April 8, 1993. 10 16 "PBGC" means the Pension Benefit Guaranty Corporation, a United States corporation. "PERCENTAGE" means, relative to any Bank, the percentage set forth opposite its signature hereto. "PERMITTED INVESTMENTS" means: (a) direct obligations of or obligations guaranteed by the United States of America; (b) obligations issued or guaranteed by an agency or instrumentality of the United States of America or obligations of the Federal National Mortgage Association, the Student Loan Marketing Association, the Federal home Loan Banks or the Federal Farm Credit Bank; (c) bankers' acceptances drawn on and accepted by banks (which may include the Agent, the Collateral Trustee or any Bank), and certificates of deposit or commercial paper of banks (which may include the Agent, the Collateral Trustee or any Bank), with a combined capital and surplus aggregating at least $100,000,000 and if such acceptances are drawn on, or such certificates of deposits or commercial paper are issued by, any bank other than the Banks, the unsecured deposits or securities of such bank shall be, at the time of acquisition, rated within one of the two highest rating categories assigned by either Rating Agency; (d) interest-bearing demand or time deposits or certificates of deposit of a bank (which may include the Agent, the Collateral Trustee or any Bank) or trust company continuously secured and collateralized by obligations of the type described in paragraph (a) hereof, or by obligations of the type described in paragraph (k) hereof, having a market value determined not less than daily equal at all times to at least the amount of such deposit or certificate, to the extent such deposit or certificate is not insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or any successors thereto; (e) interest-bearing notes or commercial paper of any of the Banks, or interest-bearing notes or commercial paper rated within one of the three highest rating categories assigned by either Rating Agency, issued by a bank or bank holding company which has a combined capital and surplus aggregating at least $100,000,000, or commercial paper rated within rating category A1+, A1, A2, P1 or P2, as assigned by the applicable Rating Agency, issued by any other entity; (f) repurchase agreements and investment agreements issued by banks (which may include the Agent, the Collateral Trustee or any Bank) with a combined capital and surplus aggregating at least $100,000,000 or by any other entity whose debt or unsecured securities are, at the time of acquisition, rated within one of the two highest rating categories assigned by either Rating Agency, or continuously secured and collateralized by obligations referred to in paragraphs (a) through (e) above or (g) through (j) below having a market value, determined not less frequently than daily, at least equal at the time of each such determination to the principal balance collectible pursuant thereto plus accrued interest thereon; (g) interest-bearing notes or investment agreements secured by a letter of credit issued by banks (which may include the Agent, the Collateral Trustee or any Bank) with a combined capital and surplus aggregating at least $100,000,000, or by a surety issued by an insurance company, in each case (other than in the case of a letter of credit issued by a Bank) the unsecured securities or deposits of either of which are rated at the time of acquisition within one of the two highest rating categories assigned by either Rating Agency; (h) securities with a remaining term of maturity of, or which are payable at par upon demand by the holder thereof within 90 days or less, the interest on which is exempt from federal income taxation, rated by either Rating Agency in its highest note or commercial paper rating category; (i) any other securities or obligations selected by the Borrower and approved in writing by the Required Banks; 11 17 (j) shares redeemable on demand at par of, or an investment agreement with, an Investment Company (as defined in the Investment Company Act of 1940, as amended) which invests in, or collateralizes such investment agreement with, obligations of the type described as Permitted Investments in any other paragraph of this definition; and (k) tax-free money market funds which invest principally in obligations rated in the highest rating category whether rated as short-term or long-term obligations by a Rating Agency. "PERSON" means any natural person, corporation, firm, association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "PLAN" is defined in Section 6.11. "QUARTERLY PAYMENT DATE" means the last day of any Fiscal Quarter or, if such day is not a Business Day, the next succeeding Business Day. "RATING AGENCY" means Moody's Investors Service or Standard & Poor's Corporation or the successor of either or, if both no longer exist and have no successors, than any other rating agency approved by the Required Banks. "REGULATORY CHANGE" means, relative to any Bank, any change after the date hereof in any (or the adoption after the date hereof of any new): (a) United States Federal or state law or foreign law applicable to such Bank; or (b) rule, regulation, interpretation, directive or request (whether or not having the force of law) applying to such Bank of any court or governmental authority charged with the interpretation or administration of any law referred to in clause (a) or of any fiscal, monetary or other authority having jurisdiction over such Bank. "REPORTABLE EVENT" is defined in Section 6.11. "REQUIRED BANKS" means, at any time, Banks having, in the aggregate, (a) a Percentage of 66-2/3% or more of the Total Revolving Credit Commitment Amount, and (b) Term Loans representing 66-2/3% or more of the aggregate Term Loans outstanding. "RESTATEMENT EFFECTIVE DATE" means the date this Agreement becomes effective pursuant to Section 10.8. "REVOLVING CREDIT COMMITMENT" means, relative to any Bank, such Bank's obligation to make Revolving Credit Loans pursuant to Section 2.1(a). "REVOLVING CREDIT LOANS" is defined in Section 2.1(a). "SHIP MORTGAGE" means each of those certain First Preferred Ship Mortgages, executed by the Borrower, substantially in the form of Exhibit G-2 attached to this Agreement as originally executed and delivered as of December 1, 1990 (as such may be amended, supplemented, restated or otherwise modified and in effect from time to time), covering, respectively, the OGLEBAY NORTON, the BUCKEYE, the FRED R. WHITE, JR. and the ARMCO. "SUBORDINATED DEBT" means all unsecured Indebtedness of the Borrower for money borrowed which is subject to, and is only entitled to the benefits of, terms and provisions (including acceleration, interest rate, sinking fund, covenant, default, and subordination provisions) satisfactory in form and substance to the Required Banks and which has terms of payment and holders satisfactory to the Required Banks, in each case as evidenced by their written approval thereof. 12 18 "SUBSIDIARY" of any corporation means any other corporation 51% of the outstanding shares of capital stock of which having ordinary voting power for the election of directors is owned directly or indirectly by such corporation, and, except as otherwise indicated herein, references to Subsidiaries shall refer to Subsidiaries of the Borrower. "SUBSIDIARY GUARANTOR" means each of Oglebay Norton Industrial Sands, Inc. and Oglebay Norton Refractories & Minerals, Inc. "SUBSIDIARY GUARANTY" means that certain guaranty, executed by each Subsidiary Guarantor, substantially in the form of Exhibit G-1 attached hereto (as such may be amended, supplemented, restated or otherwise modified and in effect from time to time). "TANGIBLE NET WORTH" means at any time: (a) the sum of capital stock, additional paid-in capital, unrealized gains or losses, and retained earnings (minus accumulated deficits) of the Borrower and its Consolidated Subsidiaries, all as shown on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared at such date, REDUCED BY (b) to the extent reflected as an asset in such consolidated balance sheet at such date, Intangible Assets. "TAXES" is defined in Section 3.10. "TERM LOAN" is defined in Section 2.1(b). "TERM LOAN CLOSING DATE" means the Restatement Effective Date or such later Business Day on or before the Additional Term Loans Termination Date on which the Additional Term Loans are to be made as provided in Section 2.1(b). "TOTAL REVOLVING CREDIT COMMITMENT AMOUNT" is defined in Section 2.2. "TOTAL TRANCHE A REVOLVING CREDIT COMMITMENT AMOUNT" is defined in Section 2.2. "TOTAL TRANCHE B REVOLVING CREDIT COMMITMENT AMOUNT" is defined in Section 2.2. "TRANCHE A COMMITMENT TERMINATION DATE" means the earliest of (a) December 31, 1997, unless the Tranche A Commitment Date is extended as provided in clause (c) below; (b) five Business Days after notice is given by the Borrower to the Agent for purposes of designating a Tranche A Commitment Termination Date pursuant to this clause, PROVIDED that, on such designated Tranche A Commitment Termination Date, no Loans are outstanding; (c) each of the Tranche A Commitment Termination Dates specified below, if during the renewal period (if any) specified below for such Tranche A Commitment Termination Date the Borrower and the Banks shall not have elected in writing to extend the Tranche A Commitment Termination Date to the next succeeding Tranche A Commitment Termination Date (if any):
RENEWAL PERIOD TRANCHE A COMMITMENT TERMINATION DATE Three months ended May 31, 1996 December 31, 1998 Three months ended May 31, 1997 December 31, 1999 Three months ended
13 19 May 31, 1998 December 31, 2000 Three months ended May 31, 1999 December 31, 2001 December 31, 2001
; PROVIDED, HOWEVER, that in the event less than all of the Banks shall have elected during any such renewal period to extend the Tranche A Commitment Termination Date as provided above, such Tranche A Commitment Termination Date shall nevertheless be so extended if either (i)(A) the Borrower arranges for another commercial banking institution (a "REPLACEMENT BANK"), satisfactory to the Agent, to replace each Bank which has failed to so elect to extend such Tranche A Commitment Termination Date (a "TERMINATING BANK"), (B) on such Tranche A Commitment Termination Date, the Tranche A Revolving Credit Commitment of each Terminating Bank is terminated and the Tranche A Revolving Credit Loans of such Terminating Bank are paid in full, together with accrued interest thereon and the fee payable with respect thereto through such Tranche A Commitment Termination Date pursuant to Section 2.3.1, and (C) prior to such Tranche A Commitment Termination Date each Replacement Bank enters into an amendment to this Agreement, the Master Vessel Trust Agreement and each of the other Loan Documents, in form and substance satisfactory to the Agent and the Banks, pursuant to which such Replacement Bank agrees to undertake the Tranche A Revolving Credit Commitment of the Terminating Bank; or (ii)(A) the electing Banks shall agree to change their Percentages as applied to the Tranche A Revolving Credit Commitments so that they aggregate 100% for such purpose, (B) prior to such Tranche A Commitment Termination Date the Agent and the Banks shall have entered into an amendment to this Agreement, the Master Vessel Trust Agreement and each of the other Loan Documents which gives effect to such change, and (C) on such Tranche A Commitment Termination Date the Tranche A Revolving Credit Commitment of each Terminating Bank is Terminated and the Tranche A Revolving Credit Loans of such Terminating Bank are paid in full, together with accrued interest thereon and the fee payable with respect thereto through such Tranche A Commitment Termination Date pursuant to Section 2.3.1; (d) immediately and without further action upon the occurrence of any Default described in Section 8.1.4 with respect to the Borrower or any Subsidiary; and (e) immediately when any other Event of Default shall have occurred and be continuing and either (i) the Loans shall be declared to be due and payable pursuant to Section 8.3, or (ii) in the absence of such declaration, the Agent, acting at the direction of the Required Banks, shall give notice to the Borrower pursuant to this clause that the Tranche A Revolving Credit Commitments have been terminated. "TRANCHE B COMMITMENT TERMINATION DATE" means the earliest of (a) December 31, 1997, unless the Tranche B Commitment Date is extended as provided in clause (c) below; (b) five Business Days after notice is given by the Borrower to the Agent for purposes of designating a Tranche B Commitment Termination Date pursuant to this clause, PROVIDED that, on such designated Tranche B Commitment Termination Date, no Loans are outstanding; (c) each of the Tranche B Commitment Termination Dates specified below, if during the renewal period (if any) specified below for such Tranche B Commitment Termination Date the 14 20 Borrower and the Banks shall not have elected in writing to extend the Tranche B Commitment Termination Date to the next succeeding Tranche B Commitment Termination Date (if any):
RENEWAL PERIOD TRANCHE B COMMITMENT TERMINATION DATE Three months ended May 31, 1996 December 31, 1998 Three months ended May 31, 1997 December 31, 1999 Three months ended May 31, 1998 December 31, 2000 Three months ended May 31, 1999 December 31, 2001 December 31, 2001
; PROVIDED, HOWEVER, that in the event less than all of the Banks shall have elected during any such renewal period to extend the Tranche B Commitment Termination Date as provided above, such Tranche B Commitment Termination Date shall nevertheless be so extended if either (i)(A) the Borrower arranges for another commercial banking institution (a "REPLACEMENT BANK"), satisfactory to the Agent, to replace each Bank which has failed to so elect to extend such Tranche B Commitment Termination Date (a "TERMINATING BANK"), (B) on such Tranche B Commitment Termination Date, the Tranche B Revolving Credit Commitment of each Terminating Bank is terminated and the Tranche B Revolving Credit Loans of such Terminating Bank are paid in full, together with accrued interest thereon and the fee payable with respect thereto through such Tranche B Commitment Termination Date pursuant to Section 2.3.1, and (C) prior to such Tranche B Commitment Termination Date each Replacement Bank enters into an amendment to this Agreement, the Master Vessel Trust Agreement and each of the other Loan Documents, in form and substance satisfactory to the Agent and the Banks, pursuant to which such Replacement Bank agrees to undertake the Tranche B Revolving Credit Commitment of the Terminating Bank; or (ii)(A) the electing Banks shall agree to change their Percentages as applied to the Tranche B Revolving Credit Commitments so that they aggregate 100% for such purpose, (B) prior to such Tranche B Commitment Termination Date the Agent and the Banks shall have entered into an amendment to this Agreement, the Master Vessel Trust Agreement and each of the other Loan Documents which gives effect to such change, and (C) on such Tranche B Commitment Termination Date the Tranche B Revolving Credit Commitment of each Terminating Bank is Terminated and the Tranche B Revolving Credit Loans of such Terminating Bank are paid in full, together with accrued interest thereon and the fee payable with respect thereto through such Tranche B Commitment Termination Date pursuant to Section 2.3.1; (d) immediately and without further action upon the occurrence of any Default described in Section 8.1.4 with respect to the Borrower or any Subsidiary; and (e) immediately when any other Event of Default shall have occurred and be continuing and either (i) the Loans shall be declared to be due and payable pursuant to Section 8.3, or (ii) in the absence of such declaration, the Agent, acting at the direction of the Required Banks, shall give notice to the Borrower pursuant to this clause that the Tranche B Revolving Credit Commitments have been terminated. 15 21 "TRANCHE A REVOLVING CREDIT LOANS" is defined in Section 2.1(a). "TRANCHE B REVOLVING CREDIT LOANS" is defined in Section 2.1(a). "TYPE" means, relative to the outstanding principal amount of all or any portion of a Loan, the portion thereof, if any, being maintained as a Base Rate Loan, a CD Rate Loan or a LIBO Rate Loan. "UNFUNDED VESTED OBLIGATIONS" means, relative to any Plan, at any time, the amount (if any) by which:(a) the present value of all vested nonforfeitable benefits under such Plan; EXCEEDS (b) the fair market value of all Plan assets allocable to such benefits; all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Borrower or any member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. "UNITED STATES" or "U.S." means the United States of America, its 50 States and the District of Columbia. "VESSEL SALE AGREEMENT" means the Vessel Sale Agreement dated as of December 20, 1990, between the Borrower, as purchaser, and Bethlehem Steel Corporation, as seller, relating to the purchase by the Borrower of the OGLEBAY NORTON and the BUCKEYE, together with all exhibits and schedules thereto and all Instruments executed in connection therewith, as originally executed and delivered (as the same may be amended, supplemented, restated or otherwise modified, as permitted by this Agreement, and in effect from time to time). 1.2. USE OF DEFINED TERMS. Terms for which meanings are provided in this Agreement shall, unless otherwise defined or the context otherwise requires, have such meanings when used in Exhibit E attached hereto, each Loan Request, Continuation/Conversion Notice, Compliance Certificate, notice and other communication delivered from time to time in connection with this Agreement or any Loan Document. 1.3. ACCOUNTING AND FINANCIAL DETERMINATIONS. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this Agreement (including Section 7.2.3), such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with the generally accepted accounting principles used in, and consistently applied with, the financial statements referred to in Section 6.4. ARTICLE II COMMITMENTS 2.1. COMMITMENTS. (a) REVOLVING CREDIT COMMITMENTS. (i) TRANCHE A REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions of this Agreement (including Article V), each Bank severally and for itself alone agrees that it will, from time to time on any Business Day occurring during the period commencing on the Restatement Effective Date and continuing to (but not including) the Tranche A Commitment Termination Date, make revolving credit loans (relative to each Bank, its "TRANCHE A REVOLVING CREDIT LOANS") to the Borrower equal to its Percentage of the aggregate amount of the Borrowing requested from all Banks on each such Business Day; PROVIDED, HOWEVER, that no Bank shall be permitted (in the case of clause (a) below) or required to make any Tranche A Revolving Credit Loan if, after giving effect thereto, the aggregate principal amount of all Tranche A Revolving Credit Loans outstanding at any one time from (a) all Banks would exceed the Total Tranche A Revolving Credit Commitment Amount; or (b) such Bank would exceed its Percentage of the aggregate principal amount of Tranche A Revolving Credit Loans then outstanding from all Banks. 16 22 Subject to the terms hereof, the Borrower may from time to time prior to the Tranche A Commitment Termination Date borrow, prepay, and reborrow amounts pursuant to the Tranche A Revolving Credit Commitments. (i) TRANCHE B REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions of this Agreement (including Article V), each Bank severally and for itself alone agrees that it will, from time to time on any Business Day occurring during the period commencing on the Restatement Effective Date and continuing to (but not including) the Tranche B Commitment Termination Date, make revolving credit loans (relative to each Bank, its "TRANCHE B REVOLVING CREDIT LOANS") to the Borrower equal to its Percentage of the aggregate amount of the Borrowing requested from all Banks on each such Business Day; PROVIDED, HOWEVER, that no Bank shall be permitted (in the case of clause (a) below) or required to make any Tranche B Revolving Credit Loan if, after giving effect thereto, the aggregate principal amount of all Tranche B Revolving Credit Loans outstanding at any one time from (a) all Banks would exceed the Total Tranche B Revolving Credit Commitment Amount; or (b) such Bank would exceed its Percentage of the aggregate principal amount of Tranche B Revolving Credit Loans then outstanding from all Banks. Subject to the terms hereof, the Borrower may from time to time prior to the Tranche B Commitment Termination Date borrow, prepay, and reborrow amounts pursuant to the Tranche B Revolving Credit Commitments; PROVIDED, that no amounts may be reborrowed pursuant to the Tranche B Revolving Credit Commitments unless at time of any such reborrowing, without giving effect thereto, the Borrower's Debt to Capital Ratio is equal to or less than .45 to 1.00. (b) TERM LOAN COMMITMENTS. Subject to the terms and conditions of the Original Loan Agreement (including Article V thereof), each Bank severally and for itself alone made on December 20, 1990 a term loan (relative to each Bank, a "TERM LOAN") to the Borrower. The aggregate original principal amount of the Term Loans made pursuant to the Original Agreement was U.S. $58,500,000. Subject to the terms and conditions of this Agreement (including Article V), each Bank severally and for itself alone agrees to make an additional Term Loan (relative to each Bank, an "ADDITIONAL TERM LOAN"; and together with the Term Loans made previously, the "TERM LOANS") to the Borrower on the Term Loan Closing Date equal to its Percentage of U.S,$8,750,000. The Additional Term Loans shall be made pursuant to a Loan Request delivered to the Agent on not less than one (or not less than three in the case of a LIBO Rate or a CD Rate Loan) Business Days' notice. The Borrower shall not have any right to reborrow any principal payments made on any Term Loan. As of December 26, 1994, the aggregate unpaid principal amount of the Term Loans was U.S. $41,250,000, with Term Loans payable to the Banks as shown below, and after giving effect to the additional Term Loans to be made on the Term Loan Closing Date, the aggregate Term Loans payable to the Banks will be as shown below:
AMOUNT OF TERM LOANS OUTSTANDING ------------------------------------------------ AFTER GIVING EFFECT TO ADDITIONAL TERM LOANS MADE NAME OF BANK DECEMBER 26, 1994 ON TERM LOAN CLOSING DATE Society National Bank $11,148,637.50 $13,513,500.00 The Bank of Nova Scotia $10,033,650.00 $12,162,000.00 NBD Bank, N. A. $10,033,650.00 $12,162,000.00 Comerica Bank (successor by merger to Manufacturers National Bank of Detroit) $ 5,574,525.00 $ 6,757,000.00 The Huntington National Bank $ 4,459,537.50 $ 5,405,500.00
17 23 (c) DEFINITIONS OF LOANS. As used herein, the term "LOANS" refers collectively to the Revolving Credit Loans and the Term Loans, unless the context otherwise requires. (d) INITIAL BORROWING TO INCLUDE TERM LOAN. The initial Borrowing under the Original Loan Agreement included the Term Loans. The initial Borrowing under this Agreement shall include the Additional Term Loans to be made on the Term Loan Closing Date. 2.2. TOTAL REVOLVING CREDIT COMMITMENT AMOUNT. The aggregate amount (the "TOTAL TRANCHE A REVOLVING CREDIT COMMITMENT AMOUNT") of all Tranche A Revolving Credit Commitments on any date on or prior to the Tranche A Commitment Termination Date shall be U.S. $25,000,000 less all voluntary reductions to such amount made by the Borrower and (without duplication of any such reductions) less any mandatory prepayment of the Tranche A Revolving Credit Loans as required pursuant to Section 3.3; PROVIDED, HOWEVER, that all such reductions shall require at least three Business Days' prior notice to the Agent and be permanent, and all partial reductions of such amount, in the case of any voluntary reduction, shall be in minimum amounts of $2,500,000 and in integral multiples of $1,000,000 in excess thereof. The aggregate amount (the "TOTAL TRANCHE B REVOLVING CREDIT COMMITMENT AMOUNT") of all Tranche B Revolving Credit Commitments on any date on or prior to the Tranche B Commitment Termination Date shall be U.S. $15,000,000 less all voluntary reductions to such amount made by the Borrower and (without duplication of any such reductions) less any mandatory prepayment of the Tranche B Revolving Credit Loans as required pursuant to Section 3.3; PROVIDED, HOWEVER, that all such reductions shall require at least three Business Days' prior notice to the Agent and be permanent, and all partial reductions of such amount, in the case of any voluntary reduction, shall be in minimum amounts of $1,500,000 and in integral multiples of $1,000,000 in excess thereof. The Tranche A Revolving Credit Commitments and the Tranche B Revolving Credit Commitments are herein referred to as the "REVOLVING CREDIT COMMITMENTS". The aggregate amount (the "TOTAL REVOLVING CREDIT COMMITMENT AMOUNT") of all Revolving Credit Commitments on any date shall be the sum of the Total Tranche A Revolving Credit Commitment Amount and the Total Tranche B Revolving Credit Commitment Amount on such date. 2.3. FEES. The Borrower agrees to pay the fees set forth in this Section 2.3: 2.3.1. REVOLVING CREDIT COMMITMENT. (a) TRANCHE A REVOLVING CREDIT COMMITMENT. To the Agent for the account of each Bank, for the period (including any portion thereof when its Commitment is suspended by reason of the Borrower's inability to satisfy any condition of Article V) commencing on the Restatement Effective Date and continuing through the Tranche A Commitment Termination Date, a commitment fee at the rate of 1/4 of 1% per annum on the average daily excess of such Bank's Percentage of the Total Tranche A Revolving Credit Commitment Amount over the outstanding amount of such Bank's Tranche A Revolving Credit Loans. Such commitment fees shall be payable by the Borrower in arrears to the Agent for the account of each Bank for the period ending on each Quarterly Payment Date, commencing with the first such day following the Restatement Effective Date, and on the Tranche A Commitment Termination Date. (b) TRANCHE B REVOLVING CREDIT COMMITMENT. To the Agent for the account of each Bank, for the period (including any portion thereof when its Commitment is suspended by reason of the Borrower's inability to satisfy any condition of Article V) commencing on the Restatement Effective Date and continuing through the Tranche B Commitment Termination Date, a commitment fee at the rate of 1/4 of 1% per annum on the average daily excess of such Bank's Percentage of the Total Tranche B Revolving Credit Commitment Amount over the outstanding amount of such Bank's Tranche B Revolving Credit Loans. Such commitment fees shall be payable by the Borrower in arrears to the Agent for the account of each Bank for the period ending on each Quarterly Payment Date, commencing with the first such day following the Restatement Effective Date, and on the Tranche B Commitment Termination Date. (c) COMMITMENT FEES ON REVOLVING CREDIT COMMITMENT PRIOR TO RESTATEMENT EFFECTIVE DATE. Commitment fees payable with respect to Revolving Credit Commitments as in effect immediately prior to the Restatement Effective Date shall cease to accrue on the Restatement Effective Date. Any such fees shall be payable on the Restatement Effective Date. 18 24 2.3.2. FACILITY. To the Agent for the account of each Bank, in the event of any Borrowing consisting of Tranche B Revolving Credit Loans, a non-refundable facility fee in the amount of its Percentage of 3/4 of 1% of the Tranche B Revolving Credit Loans made as part of such Borrowing, payable on the date of any such Borrowing, PROVIDED that the aggregate facility fees payable pursuant to this Section 2.3.2 shall in no event exceed $75,000. 2.3.3. OTHER. To the Agent for its individual account, an initial fee and an annual fee in accordance with the terms of the confidential letter, dated December 19, 1990, from the Agent to the Borrower. To the Agent for the account of the Collateral Trustee, an initial fee and annual fee in accordance with Article X of the Master Vessel Trust Agreement. To the Investment Banking Division of the Agent for its own account, an advisory fee in connection with the transactions contemplated hereby in accordance with the terms of a confidential letter dated November 9, 1990. 2.4. INCREASED CAPITAL COSTS. If any Bank determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Bank or any corporation controlling such Bank such that the amount of such capital is increased by or based upon the existence of such Bank's Commitment hereunder and other commitments of this type and as a result thereof, in the opinion of such Bank, the rate of return on such Bank's capital as a consequence of its Commitment hereunder is reduced to a level below that which such Bank could have achieved but for such circumstances, then, upon demand by such Bank (with a copy of such demand to the Agent), the Borrower shall immediately pay to the Agent for the account of such Bank, from time to time as specified by such Bank, additional amounts sufficient to compensate such Bank or such corporation in the light of such circumstances, for such reduction in rate of return. A statement of any Bank as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. In determining such amount, any Bank may use any method of averaging and attribution that it shall, in the absence of manifest error, deem applicable. 2.5. TERMINATION. The Tranche A Revolving Credit Commitments shall terminate and each Bank shall be relieved of its obligations to make any Tranche A Revolving Credit Loan on the Tranche A Commitment Termination Date. The Tranche B Revolving Credit Commitments shall terminate and each Bank shall be relieved of its obligations to make any Tranche B Revolving Credit Loan on the Tranche B Commitment Termination Date. The Additional Term Loan Commitments shall terminate and each Bank shall be relieved of its obligations to make any Additional Term Loan pursuant to Section 2.1(b) on the Additional Term Loans Commitment Termination Date. 2.6. MASTER VESSEL TRUST AGREEMENT. The Banks agreed in the Original Loan Agreement to enter into the Master Vessel Trust Agreement in order, among other things, that the Collateral Trustee shall be wholly and irrevocably substituted for the Banks as the holder of any security interest or other interest in any Vessel (as defined in the Ship Mortgages) in connection herewith, all as more specifically provided in the Master Vessel Trust Agreement. ARTICLE III LOANS AND NOTES 3.1. BORROWING PROCEDURE. By delivering to the Agent on or before 10:00 a.m., Cleveland time, a Loan Request, the Borrower may from time to time request, on not less than one (or not less than three in the case of a LIBO Rate Loan or a CD Rate Loan) nor more than five Business Days' notice, that a Borrowing consisting of Tranche A Revolving Credit Loans or Tranche B Revolving Credit Loans, as the case may be, be made from all Banks in the aggregate in a minimum amount of $1,000,000 and an integral multiple of $250,000 in excess thereof. Subject to the terms and conditions of this Agreement, each Borrowing shall be made on the Business Day specified in the Loan Request therefor. On such Business Day and subject to such terms and conditions, each Bank shall provide the Agent with funds, on or before 11:00 a.m., Cleveland time, in an amount equal to such Bank's Percentage of the requested Borrowing by transferring same day or immediately available funds to such account as the Agent shall specify from 19 25 time to time by notice to the Banks. The proceeds of each Borrowing shall be made available to the Borrower (albeit in the case of a Loan by any other Bank, the Agent shall be required to make the proceeds thereof available only to the extent received by it in same day funds from such other Bank) by wire transfer of such proceeds to such transferees, or to such accounts of the Borrower, as the Borrower shall have specified in the Loan Request therefor. No Bank's obligation to make any Loan shall be affected by any other Bank's failure to make any Loan. 3.2. NOTES. All Revolving Credit Loans made by each Bank shall be evidenced by a Note payable to the order of such Bank in a maximum principal amount equal to such Bank's Percentage of the original Total Tranche A Revolving Credit Commitment Amount or Total Tranche B Revolving Credit Commitment Amount, as the case may be. The Term Loan made by each Bank shall be evidenced by a Note payable to the order of such Bank in a principal amount equal to the amount specified in Section 2.1(b). The Borrower shall duly execute and deliver the Notes on or prior to the Restatement Effective Date. The Borrower hereby irrevocably authorizes each Bank to make (or cause to be made) appropriate notations on the grid attached to such Bank's Notes (or on a continuation of such grid attached to any such Note and made a part thereof), which notations, if made, shall evidence, INTER ALIA, the date of, the outstanding principal of, and the interest rate (including any conversions thereof pursuant to Section 4.2) and Interest Period applicable to, the Loans evidenced thereby. Any such notations on any such grid (and on any such continuation) indicating the outstanding principal amount of such Bank's Loans shall be rebuttable presumptive evidence of the principal amount thereof owing and unpaid, but the failure to record any such amount on such grid (or on such continuation) shall not limit or otherwise affect the obligations of the Borrower hereunder or under such Notes to make payments of principal of or interest on such Loans when due. 3.3. PRINCIPAL PAYMENTS AND PREPAYMENTS. The Borrower will repay the outstanding principal amount of the Tranche A Revolving Credit Loans on or before the Tranche A Commitment Termination Date. The Borrower will repay the outstanding principal amount of the Tranche B Revolving Credit Loans on or before the Tranche B Commitment Termination Date. The Borrower shall make mandatory installment payments on the Term Loans on the following dates and in the aggregate amounts specified:
DATE AGGREGATE AMOUNT December 31, 1994 $2,750,000 June 30, 1995 2,750,000 December 31, 1995 2,750,000 June 30, 1996 2,750,000 December 31, 1996 2,750,000 June 30, 1997 2,750,000 December 31, 1997 2,750,000 June 30, 1998 2,750,000 December 31, 1998 2,750,000 June 30, 1999 2,750,000 December 31, 1999 2,750,000 June 30, 2000 2,750,000 December 31, 2000 2,750,000 June 30, 2001 2,750,000 December 31, 2001 11,500,000
The Agent shall be entitled to apply any Net Casualty or Requisition Proceeds received by it to reimbursement of any costs and expenses incurred by the Agent or the Collateral Trustee in connection therewith, and the balance thereof shall be applied as a mandatory prepayment of the Loans (such prepayment to be applied, FIRST, to the Term Loans, and, SECOND, to the outstanding Tranche A Revolving Credit Loans, if any, and, THIRD, to the outstanding Tranche B Revolving Credit Loans, if any). In addition, the Borrower: 20 26 (a) may make a voluntary prepayment in part in an aggregate principal amount of not less than $500,000 and an integral multiple of $100,000 in excess thereof, or in full of the outstanding principal amount of, the Tranche A Revolving Credit Loans, the Tranche B Revolving Credit Loans or the Term Loans, as the case may be, from time to time at any time upon at least three Business Days' prior notice to the Agent (in the case of a LIBO Rate Loan or a CD Rate Loan) and one Business Days' prior notice to the Agent (in the case of a Base Rate Loan), PROVIDED that no such partial prepayment of any Tranche B Revolving Credit Loans shall be made if after giving effect thereto any Tranche A Revolving Credit Loans would remain outstanding; (b) shall, on each date when any reduction in the Total Tranche A Revolving Credit Commitment Amount or Total Tranche B Revolving Credit Commitment Amount shall become effective pursuant to Section 2.2, make a mandatory prepayment of the Tranche A Revolving Credit Loans or Tranche B Revolving Credit Loans, as the case may be, equal to the excess, if any, of the outstanding principal amount of all Tranche A Revolving Credit Loans over the Total Tranche A Revolving Credit Commitment Amount as so reduced, or of the outstanding principal amount of all Tranche B Revolving Credit Loans over the Total Tranche B Revolving Credit Commitment Amount as so reduced, as the case may be; (c) shall, on each date after December 1, 1994 when the Borrower or any of its Subsidiaries becomes entitled to receive Net Proceeds of any sale, lease, transfer or other disposition (including, without limitation, by means of merger) of assets (whether in one transaction or a series of transactions), other than dispositions of inventory in the ordinary course of business and other than dispositions of non-material assets in the ordinary course of business having a fair market value not in excess of $100,000 in any Fiscal Year, which, together with all other Net Proceeds from such dispositions which the Borrower or any of its Subsidiaries becomes entitled to receive after December 1, 1994, exceed $35,000,000, make a mandatory prepayment of the outstanding principal amount of the Loans (such prepayment to be applied, FIRST, to the Term Loans, and, SECOND, to the outstanding Tranche A Revolving Credit Loans, if any, and THIRD, to the outstanding Tranche B Revolving Credit Loans, if any), in an amount equal to at least 75% of such Net Proceeds in excess of $35,000,000 from all such dispositions; and (d) shall, on each date upon the receipt thereof, make a mandatory prepayment of the outstanding principal amount of the Loans (such prepayment to be applied, FIRST, to the Term Loans, and SECOND, to the outstanding Tranche A Revolving Credit Loans, if any, and THIRD, to the outstanding Tranche B Revolving Credit Loans, if any) in an amount equal to the lesser of (i) the amount of the net proceeds from the sale (whether in a private sale or public offering) by the Borrower of any equity securities for cash (other than any such sale to an employee stock plan or employee benefit plan or to employees pursuant to an employee stock plan or employee benefit plan) or (ii) the excess, if any, of the aggregate principal amount of the Revolving Credit Loans outstanding hereunder at the time of such sale over $25,000,000; PROVIDED, that the aggregate amount of mandatory prepayments under this clause (d) shall not exceed $5,000,000. Each prepayment of a Loan made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.6. In the case of any prepayment of the Revolving Loans made pursuant to the fourth sentence of this Section 3.3 or clause (c) or (d) of the preceding sentence, the Borrower shall permanently reduce the amount of the Tranche A Revolving Credit Commitments or Tranche B Revolving Credit Commitments, as the case may be, by an amount not less than the amount of such prepayment. All interest accrued on the principal amount of Loans prepaid shall be paid on the date of such prepayment. Each prepayment of the Term Loans otherwise than pursuant to the third sentence of this Section 3.3 shall be applied to the installment payments specified in such sentence in inverse order of maturity. The Borrower shall notify the Agent at the time of any prepayment of any of the Loans of the amount of such prepayment which is to be applied to the Term Loans and/or the Revolving Credit Loans (specifying amounts for the Tranche A Revolving Credit Loans and the Tranche B Revolving Credit Loans, as the case may be). Each prepayment of the Term Loans or the Revolving Credit Loans, as the case may be, shall, except as the Borrower may otherwise have notified the Agent, be applied, to the extent of such prepayment: (x) FIRST, to the principal amount thereof being maintained as a Base Rate Loan; 21 27 (y) SECOND, to the principal amount thereof being maintained as a CD Rate Loan; and (z) THIRD, to the principal amount thereof being maintained as a LIBO Rate Loan. 3.4. INTEREST. The Borrower agrees to pay interest on the principal amount of the Loans from time to time unpaid prior to and at Maturity (whether by required prepayment, declaration or otherwise) at a rate per annum: (a) on that portion of the outstanding principal amount thereof maintained from time to time as a Base Rate Loan, equal to the sum of the Base Rate from time to time most recently announced per annum, (b) on that portion of the outstanding principal amount thereof maintained from time to time as one or more CD Rate Loans during each applicable Interest Period, equal to the sum of the CD Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin per annum, and (c) on that portion of the outstanding principal amount thereof maintained from time to time as one or more LIBO Rate Loans during each applicable Interest Period, equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin per annum. As used herein, the term "APPLICABLE MARGIN" means for any Loan which is a LIBO Rate Loan or a CD Rate Loan, and for any Interest Period or other period or time, the interest rate per annum specified in the applicable table below based on (i) the Borrower's Interest Coverage Ratio and (ii) the Borrower's Funded Debt to Capital Ratio, in each case as of the end of the Borrower's fiscal quarter most recently ended prior thereto for which financial statements have been delivered as herein provided, as determined on the basis of the financial statements for such fiscal quarter (or the fiscal year ended with such fiscal quarter) delivered pursuant to Section 7.1.1(a) or 7.1.1(b) prior to the commencement of such Interest Period or other period or time (it being understood that such interest rate per annum shall be the highest rate per annum determined in accordance with the applicable table below until the Borrower delivers financial statements demonstrating that a lower rate should be applicable for any Interest Period, or other period or time, commencing on any date thereafter, as provided above):
PRICING MATRIX FOR TRANCHE A REVOLVING CREDIT LOANS WHICH ARE LIBO RATE LOANS Interest Coverage Ratio Tier 1 Tier 2 Tier 3 Tier 4 (Equal to or Greater Than) 3.50 to 1.00 3.00 to 1.00 2.50 to 1.00 2.00 to 1.00 Debt to Total .40 to 1.00 .50% .625% .75% .875% Capital Ratio .45 to 1.00 .625% .75% .875% 1.00% (Equal to or Less .50 to 1.00 .75% .875% 1.00% 1.125% Than) .55 to 1.00 .875% 1.00% 1.125% 1.250%
22 28 PRICING MATRIX FOR TRANCHE A REVOLVING CREDIT LOANS WHICH ARE CD RATE LOANS
Interest Coverage Ratio Tier 1 Tier 2 Tier 3 Tier 4 (Equal to or Greater Than) 3.50 to 1.00 3.00 to 1.00 2.50 to 1.00 2.00 to 1.00 Debt to Total .40 to 1.00 .625% .75% .875% 1.00% Capital Ratio .45 to 1.00 .75% .875% 1.00% 1.125% (Equal to or Less .50 to 1.00 .875% 1.00% 1.125% 1.25% Than) .55 to 1.00 1.00% 1.125% 1.250% 1.375%
23 29 PRICING MATRIX FOR TRANCHE B REVOLVING CREDIT LOANS AND TERM LOANS WHICH ARE LIBO RATE LOANS
Interest Coverage Ratio Tier 1 Tier 2 Tier 3 Tier 4 (Equal to or Greater Than) 3.50 to 1.00 3.00 to 1.00 2.50 to 1.00 2.00 to 1.00 Debt to Total .40 to 1.00 .625% .75% .875% 1.00% Capital Ratio .45 to 1.00 .75% .875% 1.00% 1.125% (Equal to or Less .50 to 1.00 .875% 1.00% 1.1250% 1.250% Than) .55 to 1.00 1.00% 1.125% 1.250% 1.375%
PRICING MATRIX FOR TRANCHE B REVOLVING CREDIT LOANS AND TERM LOANS WHICH ARE CD RATE LOANS
Interest Coverage Ratio Tier 1 Tier 2 Tier 3 Tier 4 (Equal to or Greater Than) 3.50 to 1.00 3.00 to 1.00 2.50 to 1.00 2.00 to 1.00 Debt to Total .40 to 1.00 .75% .875% 1.00% 1.125% Capital Ratio .45 to 1.00 .875% 1.00% 1.125% 1.25% (Equal to or Less .50 to 1.00 1.00% 1.125% 1.25% 1.375% Than) .55 to 1.00 1.125% 1.25% 1.375% 1.50%
The effective date of any change in the Applicable Margin for any LIBO Rate Loan or CD Rate Loan shall be the first day of the calendar month immediately next succeeding the date of delivery to the Banks of the financial statements demonstrating that a different Applicable Margin is applicable in accordance with the above tables and provisions. The Agent shall promptly notify the Borrower and the Banks of each change in the Applicable Margin and the effective date of such change. The interest rate or rates applicable to Revolving Credit Loans outstanding under the Original Loan Agreement, which Revolving Credit Loans shall continue hereunder as Tranche A Revolving Credit Loans, and Term Loans outstanding under the Original Loan Agreement (all of which Term Loans continue outstanding hereunder), shall as of the Restatement Effective Date reflect the Applicable Margins provided for in this Agreement. 3.5. POST-MATURITY RATES. After the Maturity of all or any portion of the principal amount of the Loans or after any other monetary Liabilities shall have become due, the Borrower shall pay interest (after as well as before judgment) on the principal amount of all types of Loans so matured or on such other monetary Liabilities, as the case may be, at a rate per annum which is determined by increasing each of the Applicable Margins referred to in clauses 24 30 (a), (b) and (c) of Section 3.4 by 2% per annum for Loans so matured and, to the extent permitted by applicable law, at a rate per annum equal to the Base Rate plus 2-3/8% for such other monetary Liabilities. 3.6. PAYMENT DATES. Interest accrued on the Loans prior to Maturity (as aforesaid) shall be payable, without duplication: (a) on that portion of the outstanding principal amount of each thereof maintained as a Base Rate Loan, on each Quarterly Payment Date, commencing with the first such day following the date of the Notes evidencing such Loans; (b) on that portion of the outstanding principal amount thereof maintained as one or more Fixed Rate Loans, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on the day in each third succeeding month numerically corresponding to the commencement date of such Interest Period); and (c) on that portion of the outstanding principal amount thereof converted into a Base Rate Loan or a Fixed Rate Loan on a day when interest would not otherwise have been payable pursuant to clause (a) or (b), on the date of such conversion. Interest on the Loans shall be payable at Maturity (as aforesaid) and, thereafter, on demand. 3.7. PAYMENTS, COMPUTATIONS, ETC. All payments by the Borrower pursuant to this Agreement, the Notes, or any other Loan Document, whether in respect of principal or interest, shall be made by the Borrower to the Agent for the account of the holders of Notes PRO RATA according to their respective unpaid principal amounts. The payment of all fees referred to in Section 2.3.1 and SECTION 2.3.2 shall be made by the Borrower to the Agent for the account of the Banks entitled thereto PRO RATA according to their Percentages. All other amounts payable to the Agent or any Bank under this Agreement or any other Loan Document shall be paid to the Agent for the account of the Person entitled thereto. All such payments required to be made to the Agent shall be made, without set-off, deduction, or counterclaim, not later than 11:00 a.m., Cleveland time, on the date due, in same day or immediately available funds, to such account as the Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Agent on the next following Business Day. The Agent shall promptly remit in same day or immediately available funds to each Bank, or other holder of a Note notified to the Agent, its share, if any, of such payments received by the Agent for the account of such Bank or holder. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (d) of the definition of the term "INTEREST PERIOD" with respect to payments then due of principal of or interest on any Notes being maintained as LIBO Rate Loans) be made on the next succeeding Business Day and such extension of time shall be included in computing interest, if any, in connection with such payment. 3.8. PRORATION OF PAYMENTS. If any Bank or other holder of a Note shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff, or otherwise) on account of principal of or interest on any Loan in excess of its PRO RATA share of payments then or therewith obtained by all holders upon principal of and interest on all Loans, such Bank or other holder shall purchase from the other Banks or holders such participations in Loans held by them as shall be necessary to cause such purchasing Bank or other holder to share the excess payment or other recovery ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing holder, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Borrower agrees that any Bank or other holder so purchasing a participation from another Bank or holder pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 3.9) with respect to such participation as fully as if such Bank or holder were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Bank receives a secured claim in lieu of a setoff to which this Section applies, such Bank shall, to the extent practicable, exercise its rights in respect of such secured claim in a 25 31 manner consistent with the rights of the Banks entitled under this Section to share in the benefits of any recovery on such secured claim. 3.9. SETOFF. In addition to and not in limitation of any rights of any Bank or other holder of any Note under applicable law, each Bank and each other such holder shall, upon the occurrence of any Default described in Section 8.1.4 or, with the consent of the Required Banks, upon the occurrence of any other Event of Default, have the right to appropriate and apply to the payment of the Liabilities owing to it (whether or not then due), and (as security for such Liabilities) the Borrower hereby grants to each Bank and each such other holder a continuing security interest in, any and all balances, credits, deposits, accounts, or moneys of the Borrower then or thereafter maintained with such Bank or other holder; PROVIDED, HOWEVER, that any such appropriation and application shall be subject to the provisions of Section 3.8. 3.10. TAXES. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, stamp, or other taxes, fees, duties, withholding or other charges of any nature whatsoever imposed by any taxing authority, other than taxes imposed on or measured by any Bank's net income or receipts (such non-excluded items being hereinafter referred to as "TAXES"). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule, or regulation, then the Borrower will: (a) pay to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (c) pay to the Agent for the account of the Banks or the holders of the Notes such additional amount or amounts as is necessary to ensure that the net amount actually received by each Bank or the holder of each Note, after giving effect to any credit against Taxes received by each such Bank or holder as a result of such withholding or deduction, will equal the full amount such Bank or such holder would have received had no such withholding or deduction been required. Each such Bank and holder shall determine such additional amount or amounts payable to it (which determination shall, in the absence of manifest error, be conclusive and binding on the Borrower). Upon the request of the Borrower, each Bank and each subsequent holder of any Note that is organized under the laws of a jurisdiction other than the United States or any state thereof shall, prior to the due date of any payments under the Notes, execute and deliver to the Borrower, on or about the first scheduled payment date in each Fiscal Year, a United States Internal Revenue Service Form 4224 (or any successor form ), appropriately completed. ARTICLE IV BASE RATE, CD RATE AND LIBO RATE OPTIONS FOR THE LOANS 4.1. ELECTIONS. The Loans comprising any Borrowing may be made as a loan having a fluctuating rate of interest determined by reference to the Base Rate ("BASE RATE LOANS") or, at the Borrower's election made in accordance with this Section, as a loan (a "FIXED RATE LOAN") having for each particular Interest Period a fixed rate of interest determined by reference to either the LIBO Rate (Reserve Adjusted) (a "LIBO RATE LOAN") or the CD Rate (Reserve Adjusted) (a "CD RATE LOAN"), as specified in the Loan Request for such Loan. The Borrower may from time to time by delivering to the Agent a Continuation/Conversion Notice request, on not less than one (or not less than three if a Loan is to be continued as, or converted into, a LIBO Rate Loan or CD Rate Loan) nor more than five Business Days' notice: 26 32 (a) that all, or any portion in a minimum amount of $1,000,000 or an integral multiple of $250,000 in excess thereof, of the outstanding principal amount of any Borrowing be converted from Base Rate Loans into Fixed Rate Loans of either type or, subject to Section 4.6, from either type of Fixed Rate Loans into Base Rate Loans or Fixed Rate Loans of the other type; and (b) on the expiration of the Interest Period applicable to any Fixed Rate Loans, that all, or any portion in a minimum amount of $1,000,000 or an integral multiple of $250,000 in excess thereof, of the outstanding principal amount of such Fixed Rate Loans be continued as Fixed Rate Loans of such type or be converted into Base Rate Loans or Fixed Rate Loans of the other type (in the absence of the delivery of a Continuation/Conversion Notice pursuant to this clause, the Borrower will be deemed to have requested that such Fixed Rate Loans be converted into Base Rate Loans); PROVIDED, HOWEVER, that: (c) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, Fixed Rate Loans if, after giving effect to such action, the Interest Period applicable thereto shall extend beyond the date of any prepayment required by Section 3.3, unless a sufficient principal amount of other Loans are being maintained as Base Rate Loans to permit such prepayment to be applied in full to such Base Rate Loans; (d) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, a Fixed Rate Loan when any Default has occurred and is continuing; and (e) no portion of the outstanding principal amount of any Loans may be made or continued as, or be converted into, Base Rate Loans or Fixed Rate Loans unless, after giving effect to such action, the principal amount of Loans of each type outstanding from each Bank then being so made, continued or converted shall be equal to such Bank's Percentage of the outstanding principal amount of all Loans then being so made, continued or converted. Each Continuation/Conversion Notice requesting that all, or any portion, of the principal amount of the Loans be continued as, or be converted into, Fixed Rate Loans shall specify the duration of the Interest Period commencing upon such continuation or conversion. Each Bank may, if it so elects, fulfill its commitment to make or continue any portion of the principal amount of a Loan as, or to convert any portion of the principal amount of a Loan into, one or more Fixed Rate Loans by causing a foreign branch or Affiliate of such Bank to make any such Fixed Rate Loan; PROVIDED, HOWEVER, that in such event such Fixed Rate Loan shall be deemed to have been made by such Bank, and the obligation of the Borrower to repay such Fixed Rate Loan shall nevertheless be to such Bank and shall be deemed to be held by it, to the extent of such Fixed Rate Loan, for the account of such foreign branch or Affiliate. Whenever any Bank makes any notations pursuant to Section 3.2 on the grid attached to any of its Notes (or on the continuation of such grid) and whenever such Bank converts a Loan into a Base Rate Loan or a Fixed Rate Loan, such Bank will make further notations on the grid attached to such Note (or on such continuation) reflecting the portions of the outstanding principal amounts thereof being maintained as a Base Rate Loan and Fixed Rate Loans. The Borrower understands that, if it elects that any portion of the principal amount of a Borrowing be made, continued as, or be converted into, a Fixed Rate Loan, each Bank may (while being entitled to fund all or any portion of such Fixed Rate Loan as it may see fit) wish to be able to fund such Fixed Rate Loan by purchasing, as the case may be, Dollar certificates of deposit in New York City or Dollar deposits in its LIBOR Office's interbank eurodollar market. Accordingly, in connection with any determination to be made for purposes of Section 4.2, 4.3, 4.4, 4.5 or 4.6, it shall be conclusively assumed that such Bank has elected to fund all Fixed Rate Loans by purchasing, as the case may be, Dollar certificates of deposit in New York City or Dollar deposits in such interbank eurodollar market. 27 33 4.2. FIXED RATE LENDING UNLAWFUL. If as the result of any Regulatory Change any Bank (the "AFFECTED BANK") shall determine (which determination shall, in the absence of manifest error, be conclusive and binding on the Borrower) that it is unlawful for the Affected Bank to make, continue or maintain a Loan as, or to convert a Loan into, one or more Fixed Rate Loans of a certain type, the obligation of the Affected Bank under Section 4.1 to make, continue or maintain any portion of the principal amount of a Loan as, or to convert such Loan into, one or more Fixed Rate Loans of such type shall, upon such determination (and telephonic notice thereof confirmed in writing to the Agent and the Borrower), forthwith terminate, and the Agent shall, by telephonic notice confirmed in writing to the Borrower and each Bank, declare that such obligation has so terminated, and any portion of the principal amount of a Loan then maintained as one or more Fixed Rate Loans of such type by the Affected Bank shall automatically convert into a Base Rate Loan. If circumstances subsequently change so that the Affected Bank shall determine that it is no longer so affected, the obligation of the Affected Bank under Section 4.1 to make or continue Loans as, or to convert Loans into, Fixed Rate Loans shall, upon such determination (and telephonic notice thereof confirmed in writing to the Agent and the Borrower), forthwith be reinstated, and the Agent shall, by notice to the Borrower and each Bank, declare that such obligation has been so reinstated. 4.3. DEPOSITS UNAVAILABLE. If prior to the date on which all or any portion of the principal amount of any Loan is to be made, continued as, or be converted into, a Fixed Rate Loan, any Bank (the "AFFECTED BANK") or the Agent shall determine for any reason whatsoever (which determination shall, in the absence of manifest error, be conclusive and binding on the Borrower) that: (a) Dollar certificates of deposit or Dollar deposits, as the case may be, in the relevant amount and for the relevant Interest Period are not available to the Affected Bank in its relevant market; or (b) by reason of circumstances affecting the Agent in its relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to Fixed Rate Loans of such type; the Agent (after receipt of notice from the Affected Bank, in the case of clause (a) above) shall promptly give telephonic notice of such determination confirmed in writing to each Bank and the Borrower, and: (c) the obligation under Section 4.1 of the Affected Bank (in the case of clause (a) above) or all Banks (in the case of clause (b) above) to make, continue any portion of the principal amount of a Loan as, or to convert a Loan into, one or more Fixed Rate Loans of such type shall, upon such notification, forthwith terminate; and (d) the portion of all Loans then maintained as Fixed Rate Loans of such type by the Affected Bank (in the case of clause (a) above) or all Banks (in the case of clause (b) above) shall on the expiration of the Interest Period applicable thereto automatically convert into a Base Rate Loan. If circumstances subsequently change so that the Agent or the Affected Bank, as the case may be, shall no longer be so affected, the Agent shall promptly give telephonic notice thereof confirmed in writing to the Borrower and each of the Banks, and the obligations of the Affected Bank or all Banks, as the case may be, under Section 4.1 to make or continue Loans as, or convert Loans into, LIBO Rate Loans shall be reinstated, and the Agent shall, by notice to the Borrower and each Bank, declare that such obligations have been so reinstated. 4.4. INCREASED FIXED RATE LOAN COSTS, ETC. The Borrower further agrees to reimburse each Bank for any increase in the cost to such Bank of making, continuing, or maintaining (or of its obligation to make, continue, or maintain) any portion of the principal amount of any of its Loans as, or of converting (or of its obligation to convert) any portion of the principal amount of any of its Loans into, Fixed Rate Loans and for any reduction in the amount of any sum receivable by such Bank hereunder in respect of making, continuing, or maintaining any portion of the principal amount of any of its Loans as, or converting any portion of the principal amount of any Loans into, Fixed Rate Loans, in either case, from time to time by reason of: 28 34 (a) to the extent not included in the calculation of the LIBO Rate (Reserve Adjusted), any reserve, special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended by, such Bank, under or pursuant to any law, treaty, rule, regulation (including any F.R.S. Board Regulation), or requirement in effect on the date hereof, or as the result of any Regulatory Change; or (b) any Regulatory Change which shall subject such Bank to any tax (other than taxes on net income), levy, impost, charge, fee, duty, deduction, or withholding of any kind whatsoever or change the taxation of any Loan made or maintained as a Fixed Rate Loan and the interest thereon (other than any change which affects, and to the extent that it affects, the taxation of net income). In any such event, such Bank shall promptly notify the Agent and the Borrower thereof stating the reasons therefor and the additional amount required fully to compensate such Bank for such increased cost or reduced amount. Such additional amounts shall be payable on demand after receipt of such notice. A statement as to any such increased cost or reduced amount or any change therein (including calculations thereof in reasonable detail) shall be submitted by such Bank to the Agent and the Borrower and shall, in the absence of manifest error, be conclusive and binding on the Borrower. 4.5. FDIC ASSESSMENT COST. In the event that the Federal Deposit Insurance Corporation shall levy any assessment on any Bank on its deposits insured under the Federal Deposit Insurance Act, the Borrower agrees to reimburse such Bank an amount with respect to any Loan which is maintained by such Bank as a CD Rate Loan which shall be determined by multiplying the principal amount thereof by the annualized amount of the most recent such assessment (after giving effect to the most recent rebate granted to such Bank by the Federal Deposit Insurance Corporation with respect to deposit insurance as well as the loss to such Bank of the use of such rebate prior to the date a credit is taken by such Bank with respect to such rebate). A certificate as to any such reimbursement (including calculations thereof in reasonable detail) shall be submitted by such Bank to the Agent and the Borrower and shall, in the absence of demonstrable error, be conclusive on the Borrower. 4.6. FUNDING LOSSES. In the event any Bank shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation, or reemployment of deposits or other funds acquired by such Bank to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Fixed Rate Loan) as a result of: (a) payment or prepayment of the principal amount of any Fixed Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.3 or otherwise; (b) any conversion of all or any portion of the outstanding principal amount of any Fixed Rate Loan to a Base Rate Loan pursuant to Section 4.1 prior to the expiration of the Interest Period then applicable thereto (but excluding in each case any loss or expense resulting therefrom to the extent the Bank is reimbursed therefor by interest payable pursuant to clause (c) of Section 3.6); or (c) a Loan not being made, continued as, or converted into, a Fixed Rate Loan in accordance with a Loan Request or the Continuation/Conversion Notice given therefor (other than as the result of a default by such Bank in complying with such Loan Request or such Continuation/Conversion Notice); then, upon the request of such Bank (with copies to the Agent), the Borrower shall pay directly to such Bank such amount as will (in the reasonable determination of such Bank) reimburse such Bank for such loss or expense. A certificate as to any such loss or expense (including calculations thereof in reasonable detail) shall be submitted by the Bank to the Agent and the Borrower and shall, in the absence of demonstrable error, be conclusive on the Borrower. ARTICLE V CONDITIONS PRECEDENT 29 35 5.1. INITIAL BORROWING. The obligations of the Banks to fund the Additional Term Loans on the Term Loan Closing Date and any initial Borrowing occurring on or after the Restatement Effective Date shall be subject to the prior or concurrent satisfaction of each of the following conditions precedent: 5.1.1. RESOLUTIONS, ETC. The Agent shall have received: (a) a certificate, dated the Restatement Effective Date, of the Secretary or an Assistant Secretary of the Borrower as to (i) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of the Vessel Sale Agreement and the Loan Documents to be executed by it hereunder, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to the Vessel Sale Agreement and this Agreement and each Loan Document executed by it, upon which certificate each Bank may conclusively rely until it shall have received a further certificate of the Secretary or an Assistant Secretary of the Borrower cancelling or amending such prior certificate; (b) a certificate, dated the Restatement Effective Date, of the Secretary or any Assistant Secretary of each Subsidiary Guarantor as to (i) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance by such Subsidiary Guarantor of the Loan Documents to be executed and delivered by it hereunder, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to such Loan Documents upon which certificate each Bank may conclusively rely until it shall have received a further certificate of such Subsidiary Guarantor cancelling or amending such prior certificate; (c) such other documents (certified if requested) as the Agent or the Required Banks may reasonably request, as soon as practicable after the execution of this Agreement, with respect to any Organic Document, Contractual Obligation or Approval. 5.1.2. DELIVERY OF NOTES. The Borrower shall have delivered to the Agent, for the account of each Bank, Notes evidencing any Revolving Credit Loan and/or Term Loan, duly executed and delivered and conforming to the requirements of Section 3.2, against receipt by the Borrower of the Notes issued by the Borrower to the Banks as in effect immediately prior to the Restatement Effective Date. 5.1.3. OPINION OF COUNSEL. The Agent shall have received an opinion, dated the Restatement Effective Date, addressed to all Banks from Thompson, Hine and Flory, counsel to the Borrower, substantially in the form of Exhibit F-1 attached hereto. 5.1.4. CLOSING FEES, EXPENSES, ETC. The Agent shall have received for its own account, or for the account of each Bank, as the case may be, all fees due and payable pursuant to Section 2.3, if then invoiced. 5.1.5. INDEBTEDNESS DISCHARGED. All Indebtedness identified in Item 1 ("INDEBTEDNESS TO BE PAID") of Exhibit E attached hereto, if any, together with all interest accrued thereon and all prepayment premium and other amounts payable in connection therewith, shall have been paid in full (including, to the extent necessary, from the proceeds of the initial Borrowing) and all security therefor shall have been released. 30 36 5.1.6. SUBSIDIARY GUARANTY. The Agent shall have received the Subsidiary Guaranty duly executed by each Subsidiary Guarantor. 5.1.7. VALUATIONS. The Banks shall have received (a) a true and correct copy of the Valuation Study dated October 12, 1990, prepared by Marine Consultants & Designers, Inc., containing a valuation estimate of the FRED R. WHITE, JR. on a replacement cost less depreciation basis of $26.9 million, (b) a written valuation estimate, dated as of approximately October 1990, prepared by a responsible officer of the Borrower on the same basis as the Valuation Study referred to above, demonstrating an estimated replacement cost less depreciation value for the ARMCO of at least $11,250,000, and (c) a certificate of a responsible Authorized Officer of the Borrower, dated the Restatement Effective Date, to the effect that since October 1, 1990, nothing has come to the attention of the Borrower which has caused the Borrower to believe that either of the estimates contained in the documents referred to in the preceding clauses (a) and (b) was materially incorrect when made. 5.1.8. SHIP MORTGAGES, ETC. The vessels covered by the Ship Mortgages shall have been duly documented in the name of the Borrower under the laws and regulations and flag of the United States; the Borrower shall have good and valid title to such vessels, free and clear of all Liens, whatsoever, except the Liens of the Ship Mortgages and Liens permitted under Section 1(d) of the Ship Mortgages; each Ship Mortgage shall have been duly filed with and recorded by the United States Coast Guard at the Port of Philadelphia, Pennsylvania pursuant to Chapter 313 of 46 U.S.C. so as to constitute such Ship Mortgage a "FIRST PREFERRED" mortgage as defined in such Chapter; Amendments to each of the Ship Mortgages, substantially in the form of Exhibit G-2 hereto, shall have been duly executed and delivered by the parties thereto and shall have been duly filed with and recorded by the United States Coast Guard at the Port of Philadelphia, Pennsylvania pursuant to such Chapter so as to continue such Ship Mortgage, as so amended by the Amendment thereto, as a "FIRST PREFERRED" mortgage as defined in such Chapter; and the Collateral Trustee shall have a legal, valid and perfected first Lien on and security interest in all of the right, title and interest of the Borrower in such vessels, as created by the Ship Mortgages, as so amended by such Amendments. 5.1.9. OPINION OF MARITIME COUNSEL. The Agent shall have received an opinion, dated the Restatement Effective Date or a later date on or prior to the date of the initial Borrowing, addressed to all Banks from Thompson & Mitchell, maritime counsel to the Borrower, substantially in the form of Exhibit F-2 attached hereto. 5.2. ALL LOANS. The obligation of the Banks to make any Loan (including the initial Loans) shall also be subject to the satisfaction of each of the conditions precedent set forth in Sections 5.2.1 through 5.2.4: 5.2.1. COMPLIANCE WITH WARRANTIES, NON-DEFAULT, ETC. The representations and warranties set forth in Article VI shall have been true and correct as of the date initially made, and on the date (and after giving effect to the incurrence) of such Loan: (a) such representations and warranties (excluding, however, Section 6.6) shall be true and correct with the same effect as if then made; and (b) no Default shall have then occurred and be continuing. 5.2.2. ABSENCE OF LITIGATION, ETC. No litigation, arbitration or governmental investigation or proceeding shall be pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary or shall affect the business, operations or prospects of any thereof which was not disclosed by the Borrower to the Banks pursuant to Section 6.6 (or prior to the date of the Loans most recently made hereunder, if any, pursuant to Section 7.1.6), and no development not so disclosed shall have occurred in any litigation, arbitration or governmental investigation or proceeding so disclosed, which, in either event, in the informed opinion of the Required Banks, might have a Materially Adverse Effect. 5.2.3. LOAN REQUEST. The Agent shall have received a Loan Request for such Borrowing. 31 37 5.2.4. SATISFACTORY LEGAL FORM. All documents executed or submitted pursuant hereto by or on behalf of the Borrower or any Subsidiary shall be satisfactory in form and substance to the Agent and its counsel; the Agent and its counsel shall have received all information, and such counterpart originals or such certified or other copies of such materials, as the Agent or its counsel may request; and all legal matters incident to the transactions contemplated by this Agreement shall be satisfactory to counsel to the Agent. ARTICLE VI WARRANTIES, ETC. In order to induce the Banks and the Agent to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Agent and each Bank as follows: 6.1. ORGANIZATION, POWER, AUTHORITY, ETC. Each of the Borrower and each Subsidiary is a corporation validly organized and existing and in good standing under the laws of the state of its incorporation, is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction where the nature of its business makes such qualification necessary and where the failure to so qualify would have a Materially Adverse Effect and has full power and authority to own and hold under lease its property and conduct its business substantially as presently conducted by it. The Borrower has full power and authority to enter into and to perform its obligations under this Agreement and each Loan Document and to obtain the Loans hereunder. The Borrower is a "citizen of the United States" within the meaning of Section 2 of the Shipping Act, 1916, as amended. 6.2. DUE AUTHORIZATION. The execution and delivery by the Borrower of the Vessel Sale Agreement, this Agreement and each Loan Document executed by it and the performance by the Borrower of its obligations hereunder and thereunder and the borrowings hereunder by the Borrower have been duly authorized by all necessary corporate action, do not require any Approval, do not and will not conflict with, result in any violation of, or constitute any default under, any provision of any Organic Document or material Contractual Obligation (except as disclosed in Item 2 ("CONTRACTUAL OBLIGATIONS") of Exhibit E attached hereto) of the Borrower known to it (or any other material Contractual Obligation) or any present law or governmental regulation or court decree or order applicable to it and will not result in or require the creation or imposition of any Lien (other than the Lien of the Ship Mortgage) in any of their properties pursuant to the provisions of any Contractual Obligation. 6.3. VALIDITY, ETC. This Agreement is, and each Loan Document executed by the Borrower will on the due execution and delivery thereof be, the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, subject, as to enforcement, only to bankruptcy, insolvency, reorganization, moratorium or other similar laws at the time in effect affecting the enforceability of the rights of creditors generally, and by general equitable principles which may limit the right to obtain the remedy of specific performance of executory covenants. The Vessel Sale Agreement is in full force and effect, is a valid and binding agreement of the respective parties thereto, is enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the rights of creditors generally, and by principles of equity, does not violate or result in any violation of any license, permit or other authorization, judgment, decree, order, law, statute, ordinance or governmental rule or regulation, and does not require the consent or authorization, as a condition to its valid execution, delivery or performance, pursuant to any law, statute, rule, regulation or ordinance, of the United States of America or any State or political subdivision or agency. The Borrower has delivered to each Bank a true, correct and complete copy of the Vessel Sale Agreement. 6.4. FINANCIAL INFORMATION. All balance sheets, the statements of operations, of cash flows and of shareholders' equity and other financial information of the Borrower and Consolidated Subsidiaries which have been or shall hereafter be furnished by or on behalf of the Borrower to the Banks for the purposes of or in connection with this Agreement or any transaction contemplated hereby (including the financial information referred to below) have been or will be prepared in accordance with generally accepted accounting principles consistently applied throughout the 32 38 periods involved (except as disclosed therein) and do or will present fairly the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then ended including the consolidated balance sheets at December 31, 1987, December 31, 1988, December 31, 1989, December 31, 1990, December 31, 1991, December 31, 1992 and December 31, 1993 and the consolidated statements of operations, of cash flows and of shareholders' equity, for each of the twelve month periods then ended, of the Borrower and its Consolidated Subsidiaries. Since December 31, 1989, there has been no occurrence which, individually or in the aggregate, comprises a Materially Adverse Effect. On the date of each Loan made after the Restatement Effective Date, there will have been no such Materially Adverse Effect. 6.5. ABSENCE OF CERTAIN DEFAULT. Neither the Borrower nor any Subsidiary is in default, except as described in Item 3 ("LAW, GOVERNMENTAL REGULATION, COURT DECREE OR ORDER") of Exhibit E attached hereto: (a) in the payment of (or in the performance of any obligation applicable to) any Indebtedness outstanding in a principal amount exceeding $1,000,000; or (b) under any law or governmental regulation or court decree or order which might have a Materially Adverse Effect. 6.6. LITIGATION, ETC. Except as described in Item 4 ("LITIGATION") of Exhibit E attached hereto, no litigation, arbitration or governmental investigation or proceeding against the Borrower or any Subsidiary or to which any of the properties of any thereof is subject is pending or, to the knowledge of the Borrower, threatened which, if adversely determined, might have a Materially Adverse Effect. 6.7. REGULATION U. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, and less than 25% of the assets of the Borrower consists of margin stock. Terms for which meanings are provided in Regulation U of the F.R.S. Board or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. The proceeds of the Tranche A Revolving Credit Loans will be used by the Borrower for working capital and any other lawful purpose not inconsistent with the requirements of this Agreement. The proceeds of the Tranche B Revolving Credit Loans will be used by the Borrower to finance acquisitions permitted pursuant to Section 7.2.1. The proceeds of the Term Loans have been and will be used by the Borrower to finance the acquisition of the OGLEBAY NORTON and the BUCKEYE and to refinance other Indebtedness. 6.8. GOVERNMENT REGULATION. Neither the Borrower nor any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 6.9. CERTAIN CONTRACTUAL OBLIGATIONS OR ORGANIC DOCUMENTS. Except as described in Item 5 ("CERTAIN CONTRACTUAL OBLIGATIONS OR ORGANIC DOCUMENTS") of Exhibit E attached hereto, neither the Borrower nor any Subsidiary is a party or subject to any Contractual Obligation or Organic Document which has a Materially Adverse Effect. 6.10. TAXES. The Borrower and all Subsidiaries have filed all tax returns and reports required by law to have been filed by them and have paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books. 6.11. EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which the Borrower or any Subsidiary may have any liability and that is subject to Title IV of ERISA (a "PLAN") complies in all material respects with all applicable requirements of law and regulations, and, except as set forth in Item 6 ("ERISA") of Exhibit E attached hereto, no "REPORTABLE EVENT", such term being used herein with the meaning provided for it in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), has occurred with respect to any Plan which might 33 39 give rise to an Event of Default of the type described in Section 8.1.8. No steps have been taken to terminate any Plan, and neither the Borrower nor any Subsidiary has withdrawn from any Plan or initiated steps to do so. 6.12. LABOR CONTROVERSIES. There are no labor controversies pending or, to the best of the Borrower's knowledge, threatened against the Borrower or any Subsidiary, which, if adversely determined, would have a Materially Adverse Effect. 6.13. SUBSIDIARIES. The Borrower has no Subsidiaries except those identified in Item 7 ("EXISTING SUBSIDIARIES") of Exhibit E attached hereto or those permitted to have been acquired in accordance with Section 7.2.6 or those created subsequent to the date hereof. 6.14. PATENTS, TRADEMARKS, ETC. The Borrower owns and possesses all such patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights as the Borrower considers necessary for the conduct of the businesses of the Borrower and Subsidiaries as now conducted without any infringement upon rights of others which might have a Materially Adverse Effect. There is no individual patent or patent license used by the Borrower in the conduct of its business the loss of which would have a Materially Adverse Effect except as may be disclosed in Item 8 ("MATERIAL PATENTS AND TRADEMARKS") of the Disclosure Schedule. 6.15. OWNERSHIP OF PROPERTIES; LIENS. Each of the Borrower and each Subsidiary has good and marketable title to or good leasehold interests in all of its material properties and assets (such materiality to be determined on a consolidated basis for the Borrower and its Subsidiaries), real and personal, of any nature whatsoever, free and clear of all Liens except as permitted pursuant to Section 7.2.2. 6.16. LICENSES, ETC. The certificate of documentation of each vessel subject to a Ship Mortgage is endorsed with a Great Lakes endorsement pursuant to 46 U.S.C. ss. 12107, and each such vessel is qualified under the laws of the United States to be employed in the coastwise trade. In addition to and without limitation of the preceding sentence, all material licenses, permits and other authorizations, and all material bonds, plans, consents to enter upon leased property and other filings, required by applicable law, rule, regulation or ordinance or any effective restrictive covenant to be obtained or made in order to permit the operation and conduct of the businesses of the Borrower and its Subsidiaries as now operated and conducted and as proposed to be operated and conducted have been obtained or made, except for any such authorizations or filings (a) which are not currently so required and which, in the judgment of the Borrower, can be obtained or made without difficulty prior to the time so required, or (b) the absence of which would not have a Materially Adverse Effect. 6.17. COMPLIANCE WITH LAWS. Neither the Borrower nor any Subsidiary is in violation of any existing law, governmental rule or regulation or order of any governmental body applicable to it or any of its properties (including, without limitation, any Environmental Law, and any law, rule, regulation or order relating to occupational health and safety standards, consumer protection and equal employment practice requirements), the consequence of which violation, either in any one case or in the aggregate, might reasonably be expected to have a Materially Adverse Effect. 6.18. ACCURACY OF INFORMATION. All factual information heretofore or contemporaneously furnished by the Borrower to the Agent and the Banks in connection with execution and delivery of this Agreement and the various transactions contemplated hereby, to the best of the Borrower's knowledge, has been, and all other such factual information hereafter furnished by the Borrower to the Agent and the Banks will be, true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement and not incomplete by omitting to state any material fact necessary to make such information not misleading. All projections and pro forma financial information contained in any materials furnished by the Borrower or any of its Subsidiaries to the Agent and the Banks are based on good faith estimates and assumptions by the management of the Borrower or the applicable Subsidiary, it being recognized by the Agent and the Banks, however, that projections and statements as to future events are not to be viewed as fact and that actual results during the period or periods covered by any such projections or statements may differ from the projected results and that the differences may be material. 34 40 ARTICLE VII COVENANTS 7.1. CERTAIN AFFIRMATIVE COVENANTS. The Borrower agrees with the Agent and the Banks that, until the Commitments shall have terminated and all of the Liabilities have been paid and performed in full, the Borrower will perform the obligations set forth in this Section 7.1: 7.1.1. FINANCIAL INFORMATION, ETC. The Borrower will furnish, or will cause to be furnished, to the Agent and each Bank copies of the following financial statements, reports and information: (a) promptly when available and in any event within 90 days after the close of each Fiscal Year (i) a balance sheet at the close of such Fiscal Year, and statements of operations, of cash flows and of shareholders' equity for such Fiscal Year, of the Borrower and its Consolidated Subsidiaries (as to which such balance sheet and statements shall be consolidated) certified without Impermissible Qualification by Ernst & Young LLP or other independent public accountants of recognized standing selected by the Borrower and acceptable to the Required Banks, (ii) a letter report of such accountants at the close of such Fiscal Year to the effect that they have reviewed the provisions of this Agreement and the Compliance Certificate then being furnished pursuant to clause (a)(iii), and are not aware of any miscalculation in such Compliance Certificate of the financial tests contained in Section 7.2.3 or of any Default hereunder continuing at the end of such Fiscal Year, except such miscalculation or Default, if any, as may be disclosed in such statement, and (iii) a Compliance Certificate calculated as of the computation date at the close of such Fiscal Year; (b) promptly when available and in any event within 45 days after the close of each of the first three Fiscal Quarters of each Fiscal Year (i) a balance sheet at the close of such Fiscal Quarter and statements of operations, of cash flows, and of shareholders' equity for the period commencing at the close of the previous Fiscal Year and ending with the close of such Fiscal Quarter, of the Borrower and its Consolidated Subsidiaries (as to which such balance sheet and statements shall be consolidated) certified by the chief accounting or financial Authorized Officer of the Borrower, and (ii) a Compliance Certificate calculated as of the computation date at the close of such Fiscal Quarter; (c) promptly and in any event within five Business Days following the filing thereof by the Borrower with the Securities and Exchange Commission (or any successor agency) under the Securities Exchange Act of 1934, as amended (or any successor statute), copies of its Reports on Form 10-K, 10-Q and 8-K (or any successor forms); (d) promptly upon receipt thereof and upon request of the Agent or any Bank, copies of all detailed financial and management reports submitted to the Borrower by independent public accountants in connection with each annual or interim audit made by such accountants of the books of the Borrower or any Subsidiary; (e) promptly upon the incorporation thereof, information regarding the creation of any new Subsidiary; and 35 41 (f) such other information with respect to the financial condition, business, property, assets, revenues, and operations of the Borrower and Subsidiaries as any Bank may from time to time reasonably request. 7.1.2. MAINTENANCE OF CORPORATE EXISTENCES, ETC. Except as permitted by Section 7.2.6, the Borrower will cause to be done at all times all things necessary to maintain and preserve the corporate existences of the Borrower and each Subsidiary, and to comply in all material respects with all applicable laws, rules, regulations and orders. Except as permitted by Section 7.2.6, the Borrower will continue to own and hold directly, free and clear of all Liens (except as permitted by Section 7.2.2), all of the outstanding shares of capital stock of each Subsidiary now owned or hereafter acquired. The Borrower shall continue to be a "citizen of the United States" within the meaning of Section 2 of the Shipping Act, 1916, as amended. 7.1.3. FOREIGN QUALIFICATION. The Borrower will, and will cause each Subsidiary to, cause to be done at all times all things necessary to be duly qualified to do business and in good standing as a foreign corporation in each jurisdiction where the nature of its business makes such qualification necessary and where the failure to so qualify would have a Materially Adverse Effect, and to comply in all material respects with all applicable laws, rules, regulations and orders. 7.1.4. PAYMENT OF TAXES, ETC. The Borrower will, and will cause each Subsidiary to, pay and discharge, as the same may become due and payable, all federal, state and local taxes, assessments and other governmental charges or levies against or on any of its property, as well as claims of any kind which, if unpaid, might become a material Lien upon any one of its properties; PROVIDED, HOWEVER, that the foregoing shall not require the Borrower or any Subsidiary to pay or discharge any such tax, assessment, charge, levy or lien so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves in accordance with generally accepted accounting principles with respect thereto. 7.1.5. INSURANCE. Except as described in Item 9 ("INSURANCE") of Exhibit E attached hereto, the Borrower will, and will cause each Subsidiary to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business against such casualties and contingencies and of such types and in such amounts as is customary in the case of similar businesses and will, upon request of the Agent, furnish to the Agent at reasonable intervals a certificate of an Authorized Officer setting forth the nature and extent of all insurance maintained by the Borrower and Subsidiaries in accordance with this Section. 7.1.6. NOTICE OF DEFAULT, LITIGATION, ETC. The Borrower will give prompt notice (with a description in reasonable detail) to each Bank of: (a) the occurrence of any Default; (b) the occurrence of any litigation, arbitration or governmental investigation or proceeding previously not disclosed by the Borrower to the Banks which has been instituted or, to the knowledge of the Borrower, is threatened against the Borrower or any Subsidiary or to which any of its properties is subject which if adversely determined might have a Materially Adverse Effect; (c) any material development which shall occur in any litigation, arbitration or governmental investigation or proceeding previously disclosed by the Borrower to the Banks; (d) the occurrence of any event which might have a Materially Adverse Effect; and (e) the occurrence of a Reportable Event under, or the institution of steps by the Borrower or any Subsidiary to withdraw from, or the institution of any steps to terminate, any Plan. 7.1.7. PERFORMANCE OF LOAN DOCUMENTS. The Borrower will, and will cause each Subsidiary to, perform promptly and faithfully all of its obligations under each Loan Document executed by it. 36 42 7.1.8. BOOKS AND RECORDS. The Borrower will, and will cause each Subsidiary to, keep books and records reflecting all of its business affairs and transactions in accordance with generally accepted accounting principles and permit each Bank or any of its representatives, at reasonable times and intervals and as arranged through the chief financial officer or chief legal officer of the Borrower, to visit all of its offices, discuss its financial matters with its officers and independent accountants, examine (and, at the expense of the Borrower, photocopy extracts from) any of its books or other corporate records. The Borrower shall pay any fees of such accountants incurred in connection with each Bank's exercise of its rights pursuant to this Section. 7.2. CERTAIN NEGATIVE COVENANTS. The Borrower agrees with the Agent and the Banks that, until the Commitments shall have terminated and all of the Liabilities have been paid and performed in full: 7.2.1. INVESTMENTS AND ACQUISITIONS; BUSINESS ACTIVITIES. (a) INVESTMENTS AND ACQUISITIONS. The Borrower will not, and will not permit any Subsidiary to, make any Investments, or acquire by purchase, merger, lease or otherwise ("ACQUISITIONS"), all or a substantial part of the assets of any Person, other than (i) Permitted Investments, (ii) Investments in a wholly-owned Subsidiary of the Borrower, PROVIDED (A) no Default has occurred and is continuing, (B) any such Investment consisting of advances shall be payable by such Subsidiary upon demand, and (C) upon the occurrence of a Default, the Borrower shall demand payment of all such Investments consisting of advances then outstanding, (iii) Investments consisting of advances by a wholly-owned Subsidiary of the Borrower to the Borrower or another wholly-owned Subsidiary of the Borrower, PROVIDED (A) no Default has occurred and is continuing, and (B) any such Investment consisting of advances to the Borrower constitute Subordinated Debt, (iv) its existing Investments at the Restatement Effective Date, (v) additional Investments in Eveleth Taconite Company and Eveleth Expansion Company not involving a material expansion of the operating capacity of either Eveleth Taconite Company or Eveleth Expansion Company, (vi) acquisitions of all or a substantial part of the assets of any Person, PROVIDED (A) no Default has occurred and is continuing, and (B) any such acquisition would not cause the Borrower to be in violation of the requirements of Section 7.2.1(b) or (taking into account any Capital Expenditures to be made during the Borrower's then current Fiscal Year and after the date of acquisition by the Borrower which relate to the assets acquired ) Section 7.2.4, (vii) any Guaranty issued with respect to the BNS Interest Rate Swap Agreement or any Interest Rate Protection Agreement entered into as contemplated by Section 7.2.12, and (viii) any other Guaranty which is not prohibited by Section 7.2.5 and which does not involve any violation of Section 7.2.3(b), (c) or (e). (B) BUSINESS ACTIVITIES. The Borrower will not, and will not permit any Subsidiary to: (i) operate its business other than in the ordinary and usual course; and (ii) engage in any type of business except the businesses described in the first recital and activities substantially related thereto. 7.2.2. LIENS. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property or assets, whether now owned or hereafter acquired, except: (a) security interests in favor of the Banks to secure the Liabilities; 37 43 (b) security interests which were granted prior to the date hereof in (and only in) assets identified in Item 10 ("ONGOING INDEBTEDNESS") and Item 11 ("SECURITY INTERESTS") of Exhibit E attached hereto and any security interests arising from any refinancing of such Ongoing Indebtedness in (and only in) such assets; (c) security interests in (and only in) fixed assets permitted to be acquired by Section 7.2.4 granted to secure Indebtedness incurred to finance the acquisition of such assets; (d) statutory and common law banker's Liens on bank deposits; (e) funds with respect to which the Borrower or any Subsidiary has become a trustee pursuant to Section 4113.15(c) of the Ohio Revised Code (or any successor provision); (f) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books; (g) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books; (h) other non-material Liens incurred or existing in the ordinary course of business, such as in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (i) judgment Liens in existence less than 30 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance; (j) other Liens securing Indebtedness in an aggregate principal amount not in excess of $1,000,000; (k) security interests in (and only in) stock or assets granted to secure Indebtedness, in an aggregate principal amount not in excess of $15,000,000, incurred to finance the acquisition of such stock or assets; (l) Liens existing on any assets at the date of acquisition of any stock or assets acquired after the Restatement Effective Date, PROVIDED such Liens are not incurred in anticipation of such acquisition; (m) Liens existing under reciprocal easement on similar types of agreements; and (n) Liens permitted by Section 1(d) of the Ship Mortgages. 7.2.3. FINANCIAL CONDITION. The Borrower will not permit: (a) the ratio of its Current Assets to its Current Liabilities, on a consolidated basis, at any time to be less than 1.20 to 1.00; (b) its Debt to Total Capital Ratio, on a consolidated basis, to exceed .60 to 1.00 at any time; 38 44 (c) its Debt Service Coverage Ratio, on a consolidated basis, to be less than 1.50 to 1.00 at any time; or (d) its Tangible Net Worth to be less than $57,000,000 (the "MINIMUM AMOUNT"), on a consolidated basis, at any time, EXCEPT that effective as of the end of the Borrower's Fiscal Year ended December 31, 1994, and as of the end of each Fiscal Year thereafter, the Minimum Amount (as it may from time to time be increased as herein provided), shall be increased by 50% of the Net Income of the Borrower and its Consolidated Subsidiaries, on a consolidated basis, for the Fiscal Year ended on such date, if any (there being no reduction in the case of any Net Income which reflects any net loss). 7.2.4. FIXED OR CAPITAL ASSETS, ETC. The Borrower will not, and will not permit any Subsidiary to, make any Capital Expenditures, unless such Capital Expenditure together with all other such Capital Expenditures made by the Borrower and its Subsidiaries in any Fiscal Year, does not aggregate in excess of the Maximum Amount of Capital Expenditures. As used herein, the term "MAXIMUM AMOUNT OF CAPITAL EXPENDITURES" means, with respect to any Fiscal Year, the sum of the depreciation expense of the Borrower and its Consolidated Subsidiaries, on a consolidated basis, for such Fiscal Year, PLUS an amount equal to 50% of the Net Income of the Borrower and its Consolidated Subsidiaries, on a consolidated basis, for such Fiscal Year. 7.2.5. TAKE OR PAY CONTRACTS. Except as described in Item 12 ("TAKE OR PAY CONTRACTS") of Exhibit E attached hereto, the Borrower will not, and will not permit any Subsidiary to, enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement by its express terms requires that payment be made by the Borrower or such Subsidiary regardless of whether or not such materials, supplies, other property or services are delivered or furnished to it. 7.2.6. CONSOLIDATION, MERGER, ETC. The Borrower will not, and will not permit any Subsidiary to, consolidate with or merge into or with any other corporation, or sell, transfer, lease or otherwise dispose of any part of its assets to any Person, except: (a) dispositions of inventory, and dispositions of non-material amounts of other assets, all in the ordinary course of business; (b) dispositions of stock or assets made for consideration at least equal to the fair market value thereof and in an aggregate amount for all dispositions by the Borrower and its Subsidiaries in any Fiscal Year not in excess of 10% of Net Tangible Assets at the beginning of such Fiscal Year, except that the foregoing restrictions shall not prevent the disposition of margin stock (as such term is used in Section 6.7) for cash at its fair value provided that the proceeds of such disposition are invested in or held as Permitted Investments; and 39 45 (c) the merger of any Subsidiary into a Subsidiary or into the Borrower provided that, in the latter case, the Borrower is the surviving corporation. 7.2.7. MODIFICATION, ETC. OF SUBORDINATED DEBT. The Borrower will not amend any term or provision, including any subordination provision, covenant, event of default or right of acceleration or any sinking fund provision or term of required repayment or redemption (except any amendment which extends the date or reduces the amount of any required repayment or redemption), contained in or applicable to any Instrument evidencing or applicable to any Subordinated Debt of the Borrower. 7.2.8. TRANSACTIONS WITH AFFILIATES. Except as described in Item 13 ("TRANSACTIONS WITH AFFILIATES") of Exhibit E attached hereto, the Borrower will not, and will not permit any Subsidiary to, enter into, or cause, suffer or permit to exist: (a) any arrangement or contract with any of its other Affiliates (other than the Borrower and its Subsidiaries) of a nature customarily entered into by Persons which are Affiliates of each other for tax or financial reporting purposes or for management services purposes (including management or similar contracts or arrangements relating to the allocation of revenues, taxes and expenses or otherwise) requiring any payments to be made by the Borrower or any Subsidiary to any such other Affiliates, whether or not such services shall be received by the Borrower or any Subsidiary; and (b) any other transaction, arrangement or contract with any of its other Affiliates which would not be entered into by a prudent Person in the position of the Borrower or such Subsidiary with, or which is on terms which are less favorable than are obtainable from, any Person which is not one of its Affiliates; and the Borrower will not, and will not permit any Subsidiary to, make any payment, whether voluntary or otherwise, in respect of any arrangement described in clause (a) or (b) or which involves the provision of services to the Borrower or any Subsidiary whether or not permitted by clause (b). 7.2.9. SALE OR DISCOUNT OF RECEIVABLES. Except as permitted by Section 7.2.6, the Borrower will not, and will not permit any Subsidiary to, directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable in an aggregate amount for all such sales or discounts by the Borrower and its Subsidiaries in any Fiscal Year in excess of $100,000. 7.2.10. NEGATIVE PLEDGES. Except as described in Item 14 ("NEGATIVE PLEDGES") of Exhibit E attached hereto, the Borrower will not, and will not permit any Subsidiary to, enter into any agreement (excepting this Agreement and any Loan Document) prohibiting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired. 7.2.11. INCONSISTENT AGREEMENTS. The Borrower will not, and will not permit any Subsidiary to, enter into any agreement containing any provision which would be violated or breached by any borrowing by the Borrower made hereunder or by the performance by the Borrower or any Subsidiary of their respective obligations hereunder or under any Loan Document. 7.2.12. INTEREST RATE PROTECTION AGREEMENTS. The Borrower shall promptly but in no case later than 180 days after the Effective Date under the Original Loan Agreement (with an effective date on or prior to 180 days after such Effective Date) enter into a separate Interest Rate Protection Agreement or Interest Rate Protection Agreements with respect to interest on Indebtedness under the Original Loan Agreement in an initial aggregate notational amount and otherwise having terms which, when considered in light of the notational amount and other terms of the BNS Interest Rate Swap Agreement, shall be satisfactory to the Agent. 7.2.13. DIVIDENDS, STOCK PURCHASES, ETC. The Borrower will not directly or indirectly declare, order, pay or make 40 46 (a) any dividend (other than dividends payable solely in capital stock of the Borrower) or other distribution on or in respect of any capital stock of any class of the Borrower, whether by reduction of capital or otherwise, or (b) any purchase, redemption, retirement or other acquisition of any capital stock of any class of the Borrower (other than for a consideration consisting solely of capital stock of the same class of the Borrower) or of any warrants, rights or options to acquire or any securities convertible into or exchangeable for any capital stock of the Borrower, UNLESS, (i) immediately prior to and immediately after giving effect to any such action, no condition or event shall exist which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default, and (ii) such action is permitted by applicable law and, immediately after giving effect to such action, the Borrower is solvent in both the equity and bankruptcy senses. 7.2.14. LEASE OBLIGATIONS. The Borrower will not, and will not permit any Subsidiary to, enter into, assume or otherwise be or remain liable under any obligations for the payment of rental on noncancellable leases of real or personal property (whether or not such leases are required to be capitalized under generally accepted accounting principles) if the aggregate of all obligations under such leases in respect of rentals due in any period of 12 consecutive months would exceed $8,000,000. ARTICLE VIII EVENTS OF DEFAULT 8.1. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall mean each of the following events: 8.1.1. NON-PAYMENT OF LIABILITIES. The Borrower shall default in the payment or prepayment when due of any principal of any Note, or the Borrower shall default (and such default shall continue unremedied for a period of five days) in the payment when due of interest on any Note, of any commitment fee or of any other Liability. 8.1.2. NON-PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall default in the due performance and observance of any of its obligations under: (a) Section 7.1.2 or 7.2 (other than 7.2.3), and such default shall continue unremedied for twenty days after notice thereof shall have been given to the Borrower by the Agent or the holder of any Note; or (b) Section 7.2.3 and such default shall continue unremedied for fifteen days after notice thereof shall have been given to the Borrower by the Agent or the holder of any Note. 8.1.3. CERTAIN DEFAULTS ON OTHER INDEBTEDNESS. Any default shall occur under the terms applicable to any Indebtedness outstanding in a principal amount exceeding $1,000,000 of the Borrower or any Subsidiary representing any borrowing or financing or arising under any other material agreement, and such default shall: (a) consist of the failure to pay such Indebtedness at the maturity thereof; or (b) continue unremedied for a period of time sufficient to permit acceleration of such Indebtedness; or (c) continue unremedied (and not have been waived by the holder of such Indebtedness) for more than 30 days after notice thereof shall have been given to the Borrower by the Agent or the holder of any Note. 41 47 8.1.4. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any Subsidiary shall become insolvent or generally fail to pay, or admit in writing its inability to pay, debts as they become due; or the Borrower or any Subsidiary shall apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or such Subsidiary or any property of any thereof, or make a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver, sequestrator or other custodian shall be appointed for the Borrower or any Subsidiary or for a substantial part of the property of any thereof and not be discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, shall be commenced in respect of the Borrower or any Subsidiary, and, if such case or proceeding is not commenced by the Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed; or the Borrower or any Subsidiary shall take any corporate action to authorize, or in furtherance of, any of the foregoing. 8.1.5. CONTROL OF THE BORROWER. Any Change in Control shall occur. 8.1.6. NON-PERFORMANCE OF OTHER OBLIGATIONS. The Borrower shall default in the due performance and observance of any other agreement contained herein or in any Loan Document, and such default shall continue unremedied for a period of 30 days after notice thereof shall have been given to the Borrower by the Agent or the holder of any Note. 8.1.7. BREACH OF WARRANTY. Any warranty of the Borrower hereunder or in any writing furnished after the date of this Agreement by or on behalf of the Borrower to the Banks for the purposes of or in connection with this Agreement is or shall be incorrect when made, and the Borrower shall not have taken corrective measures with respect thereto satisfactory to the Required Banks within 30 days after notice thereof to the Borrower by the Agent or the holder of any Note. 8.1.8. ERISA. Any of the following events shall occur with respect to any Plan: (a) such Plan shall be terminated (or steps shall be instituted to effect such termination), but only if such Plan has any Unfunded Vested Obligations on the date of this Agreement or has any Unfunded Vested Obligations at the date of such termination or the date of the institution of such steps, as the case may be, (b) the Borrower or any Subsidiary shall withdraw from such Plan (or shall institute steps to effect such withdrawal), or (c) any Reportable Event (other than any Reportable Event as to which the requirement of giving notice to the PBGC within 30 days has been waived) shall occur with respect to such Plan, and there shall exist a deficiency in excess of $500,000 in the assets available to satisfy the benefits guaranteeable under ERISA with respect to such Plan. 8.1.9. JUDGMENTS. A final judgment to the extent not covered by insurance which, with other such outstanding final judgments against the Borrower and Subsidiaries, exceeds an aggregate of $1,000,000 shall be rendered against the Borrower or any Subsidiary and if, within 60 days after entry thereof, such judgment shall not have been discharged or otherwise satisfied or execution thereof stayed pending appeal, or if, within 60 days after the expiration of any such stay, such judgment shall not have been discharged or otherwise satisfied. 8.2. ACTION IF BANKRUPTCY. If any Event of Default described in Section 8.1.4 shall occur, the outstanding principal amount of all outstanding Notes and all other Liabilities shall be and become immediately due and payable, without notice or demand. 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default (other than an Event of Default described in Section 8.1.4) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Agent, upon the 42 48 direction of the Required Banks shall, without notice or demand, declare all or any portion of the outstanding principal amount of the Loans to be due and payable and any or all other Liabilities to be due and payable, whereupon the full unpaid amount of such Loans and any and all other Liabilities which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand, or presentment. ARTICLE IX THE AGENT 9.1. ACTIONS. Each Bank and the holder of each Note authorizes the Agent to act on behalf of such Bank or holder under this Agreement and any other Loan Document and, in the absence of other written instructions from the Required Banks received from time to time by the Agent (with respect to which the Agent agrees that it will, subject to the last two sentences of this Section, comply in good faith except as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Bank agrees (which agreement shall survive any termination of this Agreement) to indemnify the Agent, PRO RATA according to such Bank's Percentage of the Total Commitment Amount, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement, the Notes, and any other Loan Document, including without limitation the reimbursement of the Agent for all reasonable out-of-pocket expenses (including reasonable attorneys' fees) incurred by the Agent hereunder or in connection herewith or in enforcing the Liabilities of the Borrower under this Agreement or any other Loan Document, in all cases as to which the Agent is not reimbursed by the Borrower; PROVIDED that no Bank shall be liable for the payment of any portion of such Liabilities, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent's gross negligence or wilful misconduct. The Agent shall not be required to take any action hereunder or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement or any other Loan Document, unless it is indemnified to its satisfaction by the Banks against loss, costs, liability, and expense. If any indemnity in favor of the Agent shall become impaired, it may call for additional indemnity and cease to do the acts indemnified against until such additional indemnity is given. 9.2. FUNDING RELIANCE, ETC. Unless the Agent shall have been notified by telephone, confirmed in writing, by any Bank by 5:00 p.m., Cleveland time, on the day prior to a Borrowing that such Bank will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Agent may assume that such Bank has made such amount available to the Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is made available by such Bank to the Agent on a date after the date of such Borrowing, such Bank shall pay to the Agent on demand interest on such amount at the daily average Federal funds rate quoted by the Agent for the number of days from and including the date of such Borrowing to the date on which such amount becomes immediately available to the Agent, together with such other compensatory amounts as may be required to be paid by such Bank to the Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse Compensation Committee, as the case may be, as in effect from time to time. A statement of the Agent submitted to any Bank with respect to any amounts owing under this paragraph shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to the Agent by such Bank within three Business Days after the date of such Borrowing, the Agent shall be entitled to recover such amount, with interest thereon at the rate per annum then applicable to the Loans comprising such Borrowing, within five Business Days after demand, from the Borrower. 9.3. EXCULPATION. Neither the Agent nor any of its directors, officers, employees, or agents shall be liable to any Bank for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity, or due execution of this Agreement or any other Loan Document, nor to make any inquiry respecting the performance by the Borrower of its 43 49 obligations hereunder or thereunder. The Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement, or writing which they believe to be genuine and to have been presented by a proper Person. 9.4. SUCCESSOR. The Agent may resign as such at any time upon at least 30 days' prior notice to the Borrower and all Banks. If the Agent at any time shall resign, the Required Banks may appoint another Bank as a successor Agent which shall thereupon become the Agent hereunder. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be one of the Banks or a commercial banking institution organized under the laws of the United States and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from the retiring Agent such documents of transfer and assignment as such successor Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges, and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. 9.5. LOANS BY THE AGENT. The Agent shall have the same rights and powers with respect to (a) the Loans made by it or any of its Affiliates, and (b) the Notes held by it or any of its Affiliates as any Bank and may exercise the same as if it were not the Agent. 9.6. CREDIT DECISIONS. Each Bank acknowledges that it has, independently of the Agent and each other Bank, and based on the financial information referred to in Section 6.4 and such other documents, information, and investigations as it has deemed appropriate, made its own credit decision to extend its Commitment. Each Bank also acknowledges that it will, independently of the Agent and each other Bank, and based on such other documents, information, and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. 9.7. COPIES, ETC. The Agent shall give prompt notice to each Bank of each notice or request required or permitted to be given to the Agent by the Borrower pursuant to the terms of this Agreement. The Agent will distribute to each Bank each Instrument received for its account and copies of all other communications received by the Agent from the Borrower for distribution to the Banks by the Agent in accordance with the terms of this Agreement. ARTICLE X MISCELLANEOUS 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement and of each Loan Document may from time to time be amended, modified, or waived, if such amendment, modification or waiver is in writing and consented to by the Borrower and the Required Banks; PROVIDED, HOWEVER, that no such amendment, modification, or waiver: (a) which would modify any requirement hereunder that any particular action be taken by all the Banks or by the Required Banks shall be effective unless consented to by each Bank; (b) which would modify Section 3.8, Section 3.9 or this Section 10.1, release any collateral at the time provided by any of the Ship Mortgages, change the definition of "Required Banks", increase the Total Tranche A Revolving Credit Commitment Amount, the Total Tranche B Revolving Credit Commitment Amount, or the Percentage of any Bank (except as expressly contemplated by clause (d) of the definitions of the terms Tranche A Commitment Termination Date and Tranche B Commitment Termination Date), reduce any fees described in Article II, or extend the Tranche A Commitment Termination Date or the Tranche B Commitment Termination Date (except as expressly contemplated by clause (d) of the definitions of the terms Tranche A Commitment 44 50 Termination Date and Tranche B Commitment Termination Date) or the Maturity Date of the Term Loans, shall be made without the consent of each Bank; (c) which would extend the due date for, or reduce the amount of, any payment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan), shall be made without the consent of the holder of the Note evidencing such Loan; or (d) which would affect adversely the interests, rights or obligations of the Agent QUA the Agent, shall be made without consent of the Agent. No failure or delay on the part of the Agent, the Collateral Trustee, any Bank, or the holder of any Note in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Agent, the Collateral Trustee, any Bank, or the holder of any Note under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. 10.2. NOTICES. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by telex or by facsimile and addressed or delivered to it at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by telex or facsimile, shall be deemed given when transmitted (answerback confirmed in the case of telexes). 10.3. COSTS AND EXPENSES. The Borrower agrees to pay all expenses of the Agent and the Collateral Trustee for the negotiation, preparation, execution, and delivery of this Agreement and each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements, or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required (including the reasonable fees and expenses of special counsel for the Agent and special counsel for the Collateral Trustee from time to time incurred in connection therewith), whether or not the transactions contemplated hereby are consummated, and to pay all expenses of the Agent and the Collateral Trustee (including reasonable fees and expenses of counsel to the Agent and counsel for the Collateral Trustee) incurred in connection with the preparation and review of the form of any Instrument relevant to this Agreement or any other Loan Document and the consideration of legal questions relevant hereto and thereto or to any restructuring or "work-out" of any Liabilities. The Borrower also agrees to reimburse each Bank upon demand for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses) incurred by such Bank in enforcing the obligations of the Borrower or any Subsidiary Guarantor under this Agreement or any other Loan Document. 10.4. INDEMNIFICATION. In consideration of the execution and delivery of this Agreement by each Bank and the extension of the Commitments, the Borrower hereby indemnifies, exonerates and holds the Agent, the Collateral Trustee and each Bank and each of its officers, directors, employees, and agents (the "BANK PARTIES") free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses actually incurred in connection therewith (irrespective of whether such Bank Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the Bank Parties or any of them as a result of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan; (b) any violation of any Environmental Law in connection with the existence, or exercise by any of the Bank Parties, of any rights under this Agreement or any Loan Document; 45 51 (c) the indemnification and other obligations undertaken by the Banks in the Master Vessel Trust Agreement; (d) the entering into and performance of this Agreement and any other Loan Document by any of the Bank Parties (including any action brought by or on behalf of the Borrower as the result of any determination by the Required Banks pursuant to Section 5.2.2 to not fund any Borrowing); or (e) any investigation, litigation, or proceeding related to any acquisition or proposed acquisition by the Borrower or any Subsidiary of all or any portion of the stock or all or substantially all the assets of any Person, whether or not the Agent or such Bank is party thereto, except for any such Indemnified Liabilities arising for the account of a particular Bank Party by reason of the relevant Bank Party's breach of this Agreement or of any Loan Document or gross negligence or wilful misconduct, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 10.5. SURVIVAL. The obligations of the Borrower under Sections 2.4, 4.4, 4.6, 10.3, and 10.4, and the obligations of the Banks under Section 9.1, shall in each case survive any termination of this Agreement. The representations and warranties made by the Borrower in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document. 10.6. SEVERABILITY. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. 10.7. HEADINGS. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such Loan Document or any provisions hereof or thereof. 10.8. COUNTERPARTS, EFFECTIVENESS, ETC. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by the Borrower and the Agent and be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective (the "RESTATEMENT EFFECTIVE DATE") when counterparts hereof executed on behalf of the Borrower and each Bank (or notice thereof satisfactory to the Agent) shall have been received by the Agent and notice thereof shall have been given by the Agent to the Borrower and each Bank. At the time this Agreement becomes effective on the Restatement Effective Date, the Original Loan Agreement shall be considered amended and restated in its entirety by this Agreement. As contemplated by Articles IX and X of this Agreement, the Agent is hereby instructed to instruct the Collateral Trustee to enter into the Amendments to Ship Mortgages contemplated by Section 5.1.8 hereof, and the Agent hereby so instructs the Collateral Trustee. The Collateral Trustee shall be furnished with a copy of this Agreement and the Collateral Trustee shall treat this Agreement as its instructions pursuant to Section 4.02 of the Master Vessel Trust Agreement to enter into the Amendments to Ship Mortgages contemplated by this Agreement, in the forms provided to the Collateral Trustee by Jones, Day, Reavis & Pogue, special counsel for the Agent. On the Restatement Effective Date, the Subsidiary Guaranty executed and delivered pursuant to the Original Loan Agreement shall automatically terminate and the Subsidiaries of the Borrower party thereto shall automatically be released from all obligations thereunder. 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO. THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES 46 52 HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, that: (a) the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of all Banks; and (b) the rights of sale, assignment, and transfer of the Banks are subject to Section 10.11. 10.11. SALE AND TRANSFERS, ETC., OF LOANS AND NOTES; PARTICIPATIONS IN LOANS AND NOTES. Each Bank shall have the right at any time, upon written notice to the Borrower and the Agent, and with the prior consent of the Agent, to sell, assign, transfer, or negotiate all or any part of its Commitments, Loans, Notes, and rights under other Loan Documents to either one or more Affiliates which are commercial banking institutions of one or more Banks. Each Bank shall have the right at any time, with the prior consent of both the Borrower (which shall not be unreasonably withheld) and the Agent, to sell, assign, transfer, or negotiate all or any part of its Commitments, Loans, or Notes to any other commercial bank or other financial institution. In the case of any such sale, assignment, transfer, or negotiation of all or part of its Commitments, Loans, Notes, and rights under other Loan Documents, the assignee, transferee, or recipient shall have, to the extent of such sale, assignment, transfer, or negotiation, the same rights, benefits, and obligations as a Bank hereunder, including the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Required Banks, and the obligation to make Loans pursuant to Section 2.1; PROVIDED, HOWEVER, that (a) no Bank shall, as between the Borrower and such Bank, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer, or negotiation of, or granting of any participation in, all or any part of its Commitments, Loans, or Notes, unless the sale, assignment, transfer, or negotiation was made with the consent of the Agent and the Borrower; and (b) the Agent and each Bank shall be entitled to continue to deal solely and directly with the assignor Bank in connection with the interests so assigned until written notice of such assignment, together with the addresses and related information with respect to the assignee shall have been given to the Agent and each Bank by the assignor Bank and the assignee. The Borrower hereby acknowledges and agrees that any such disposition described in this Section will give rise to a direct obligation of the Borrower to the buyer, assignee, transferee, or participant, as the case may be, and such Person shall, for purposes of Sections 2.4, 3.7, 3.8, 3.10, 4.4, 4.5 and 4.6, be considered a Bank and may rely on, and possess all rights under, any opinions, certificates, or other Instruments delivered under or in connection with this Agreement or any other Loan Document; PROVIDED, HOWEVER, that, except in the case of a sale, assignment, or transfer by any Bank of all its Commitments, Loans, Notes, and other rights pursuant to this Section, the Borrower shall only be required to deliver information and data required pursuant to this Agreement to the Bank selling, assigning, transferring, or granting a participation in (in whole or in part) its Commitments, Loans, Notes, and other rights. 10.12. OTHER TRANSACTIONS. Nothing contained herein shall preclude the Agent or any other Bank from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person. [The balance of this page is intentionally blank.] 47 53 10.13. WAIVER OF JURY TRIAL. THE AGENT, THE BANKS, AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH BANKS, OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH BANKS ENTERING INTO THIS AGREEMENT. 10.14. DISPOSITION OF MARGIN STOCK. The provisions of this Agreement are not intended to limit or restrict in any manner or to any extent the right of the Borrower or any of its Subsidiaries to hold, pledge or otherwise encumber, sell or otherwise dispose of or deal with any margin stock (as such term is used in Section 6.7) or any interest in margin stock now or hereafter owned by the Borrower or any of its Subsidiaries. Each of the provisions of this Agreement shall be construed in a manner consistent with this intention. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. OGLEBAY NORTON COMPANY By: ------------------------- Title: Treasurer Address: 1100 Superior Avenue Cleveland, Ohio 44114 Telex No.: 980697 FAX No.: (216) 861-2863 Attention: Treasurer SOCIETY NATIONAL BANK, AS AGENT By: ------------------------- Title: Vice President Address: Society Center 127 Public Square Cleveland, Ohio 44114-1306 Telex No.: 212525 FAX No.: (216) 689-4981 Attention: (for notices): William Kysela (for payments): Marianne T. Miel 48 54
Total Revolving Credit SOCIETY NATIONAL BANK Commitment Amount: Tranche A: $6,756,750 Tranche B: $4,054,050 By: ----------------------------- Title: Vice President Percentage: 27.027% Additional Term Loan Domestic Society Center Commitment Amount: $2,364,862.50 Office : 127 Public Square Cleveland, Ohio 44114-1306 Maximum Amount of Term Loans Outstanding: $13,513,500 Telex No.: 212525 FAX No.: (216) 689-4981 Attention: (for notices): William Kysela (for payments): Marianne T. Miel LIBOR Office: Society Center 127 Public Square Cleveland, Ohio 44114-1306 Telex No.: 212525 FAX No.: (216) 689-4981 Attention: (for notices): William Kysela (for payments): Marianne T. Miel
49 55
Total Revolving Credit THE BANK OF NOVA SCOTIA Commitment Amount: By: -------------------- Tranche A: $6,081,000 Title: Tranche B: $3,648,600 ----------------- Domestic Atlanta Agency Percentage: 24.324% Office: Suite 2700 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: F. C. Ashby Maximum Amount of Telephone: (404) 877-1500 Term Loans Fax No.: (404) 888-8998 Outstanding: $12,162,000 Additional Term Loan Commitment Amount: $2,128,350 Address for Communications: Chicago Representative Office: 181 West Madison Avenue Suite 3700 Chicago, Illinois 60602 Telex No.: 00254275 FAX No.: (312) 201-4108 Attention: (for notices): Keith J. Niebrugge (for payments): Relationship Manager or Mark Naumann LIBOR Office: Atlanta Agency Suite 2700 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: F. C. Ashby Telephone: (404) 877-1500 Fax No.: (404) 888-8998 Address for Communications: Chicago Representative Office: 181 West Madison Avenue Suite 3700 Chicago, Illinois 60602 Telex No.: 00254275 FAX No.: (312) 201-4108 Attention: Keith J. Niebrugge Relationship Manager or Mark Naumann
50 56
Total Revolving Credit NBD BANK, N.A. Commitment Amount: By: ------------------------- Tranche A: $6,081,000 Title: Vice President Tranche B: $3,648,600 Domestic Office: 611 Woodward Percentage: 24.324% Detroit, Michigan 48226 Telex No.: 4320060 Additional Term Loan FAX No.: (313) 225-1671 Commitment Amount: $2,128,350 Attention: (for notices): Frederick J. Crawford Second Vice President Maximum Amount of Term Loans Outstanding: $12,162,000 (for payments): John Lakanen Jo Trudell LIBOR Office: 611 Woodward Detroit, Michigan 48226 Telex No.: 4320060 FAX No.: (313) 225-1671 Attention: Jo Trudell
51 57
COMERICA BANK Total Revolving Credit (Successor by merger to Manufacturers Commitment Amount: National Bank of Detroit) Tranche A: $3,378,500 Tranche B: $2,027,100 By: ----------------------- Title: Vice President Percentage: 13.514% Additional Term Loan Commitment Amount: $1,182,475 Maximum Amount Domestic Office: of Term Loans One Detroit Center Outstanding: $6,757,000 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 FAX No.: (313) 222-3330 Attention: (for notices): Ian Hogan (for payments): Vice President or Beverly Jones LIBOR Office: One Detroit Center 500 Woodward Avenue, MC 3279 Detroit, Michigan 48226 FAX No.: (313) 222-3330 Attention: Ian Hogan Vice President or Beverly Jones
52 58
Total Revolving Credit THE HUNTINGTON NATIONAL BANK Commitment Amount: By: --------------------------- Tranche A: $2,702,750 Title: Senior Vice President Tranche B: $1,621,650 Percentage: 10.811% Additional Term Loan Commitment Amount: $945,962.50 Maximum Amount Domestic of Term Loans Office: 917 Euclid Avenue Outstanding: $5,405,500 Cleveland, Ohio 44115 FAX No. (216) 344-6082 Attention: (for notices): Christine C. Gencer (for payments): Christine C. Gencer LIBOR Office: 917 Euclid Avenue Cleveland, Ohio 44115 FAX No. (216) 344-6082 Attention: Christine C. Gencer
53 59 EXHIBIT A-1 AMENDED AND RESTATED TRANCHE A REVOLVING CREDIT NOTE $_____________________ December 29, 1994 FOR VALUE RECEIVED, the undersigned, OGLEBAY NORTON COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of ________________ (the "BANK") on the Tranche A Commitment Termination Date specified in the Loan Agreement referred to below the principal sum of ________ DOLLARS AND NO CENTS ($__________) or, if less, the principal amount of all Tranche A Revolving Credit Loans made by the Bank to the Borrower from time to time pursuant to that certain Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, hereafter from time to time made thereto, the "LOAN AGREEMENT"), between the Borrower and the Bank as one of the Banks thereto and SOCIETY NATIONAL BANK (the "AGENT"), as agent for the Banks, as such Tranche A Revolving Credit Loans are entered by the holder hereof in the appropriate column of the grid (the "GRID") attached to this Note. All payments on account of the principal hereof shall also be endorsed by the holder hereof on the Grid. Failure to record any such amounts on the Grid shall not limit or otherwise affect the obligations of the Borrower to make payments of principal or interest on this Note when due. The unpaid principal amount of this Note from time to time outstanding shall bear interest payable as provided in Section 3.4, Section 3.5 and Section 3.6 of the Loan Agreement. All payments of principal of and interest on this Note shall be payable in lawful currency of the United States of America at the offices of the Agent at Society Center, 127 Public Square, Cleveland, Ohio 44114 in immediately available funds. This Note has been issued in replacement for a Note originally issued in December 1990 pursuant to the Loan Agreement as originally executed and delivered as of December 1, 1990. This Note is one of the Tranche A Revolving Credit Notes referred to in, and evidences indebtedness incurred under, the Loan Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments of principal of this Note and on which the indebtedness evidenced hereby may be declared to be immediately due and payable. OGLEBAY NORTON COMPANY By: ----------------------- Title: Treasurer 60 GRID A Tranche A Revolving Credit Loan made by the Bank to Oglebay Norton Company described in the Loan Agreement, referred to in the within Note, and payments of principal of such Loan.
PORTION OF PRINCIPAL BALANCE MAINTAINED Date Amount of Loan Amount of Outstanding Base Rate LIBOR CD Rate Loan Applicable Notation Principal Principal Loan Rate Loan Fixed Rate Made By Payment Balance Interest Period
61 EXHIBIT A-2 AMENDED AND RESTATED TRANCHE B REVOLVING CREDIT NOTE $__________________________ December 29, 1994 FOR VALUE RECEIVED, the undersigned, OGLEBAY NORTON COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of _________________ (the "BANK") on the Tranche B Commitment Termination Date specified in the Loan Agreement referred to below the principal sum of __________ DOLLARS AND NO CENTS ($____________) or, if less, the principal amount of all Tranche B time pursuant to that certain Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, hereafter from time to time made thereto, the "LOAN AGREEMENT"), between the Borrower and the Bank as one of the Banks thereto and SOCIETY NATIONAL BANK (the "AGENT"), as agent for the Banks, as such Tranche B Revolving Credit Loans are entered by the holder hereof in the appropriate column of the grid (the "GRID") attached to this Note. All payments on account of the principal hereof shall also be endorsed by the holder hereof on the Grid. Failure to record any such amounts on the Grid shall not limit or otherwise affect the obligations of the Borrower to make payments of principal or interest on this Note when due. The unpaid principal amount of this Note from time to time outstanding shall bear interest payable as provided in Section 3.4, Section 3.5 and Section 3.6 of the Loan Agreement. All payments of principal of and interest on this Note shall be payable in lawful currency of the United States of America at the offices of the Agent at Society Center, 127 Public Square, Cleveland, Ohio 44114 in immediately available funds. This Note has been issued in replacement for a Note originally issued in December 1990 pursuant to the Loan Agreement as originally executed and delivered as of December 1, 1990. This Note is one of the Tranche B Revolving Credit Notes referred to in, and evidences indebtedness incurred under, the Loan Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments of principal of this Note and on which the indebtedness evidenced hereby may be declared to be immediately due and payable. OGLEBAY NORTON COMPANY By: ----------------------- Title: Treasurer 62 GRID A Tranche B Revolving Credit Loan made by the Bank to Oglebay Norton Company described in the Loan Agreement, referred to in the within Note, and payments of principal of such Loan.
PORTION OF PRINCIPAL BALANCE MAINTAINED Date Amount of Loan Amount of Outstanding Base Rate LIBOR CD Rate Loan Applicable Notation Principal Principal Loan Rate Loan Fixed Rate Made By Payment Balance Interest Period
63 EXHIBIT A-3 AMENDED AND RESTATED TERM LOAN NOTE $_________________ December 29, 1994 FOR VALUE RECEIVED, the undersigned, OGLEBAY NORTON COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of _________________ (the "BANK") the principal sum of _________________________ DOLLARS AND NO CENTS ($________________), in installments on the dates and in the amounts provided in Section 3.3 of the Loan Agreement referred to below, with the last such installment payable on December 31, 2001. This Note is issued pursuant to that certain Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, hereafter from time to time made thereto, the "LOAN AGREEMENT"), between the Borrower and the Bank as one of the Banks thereto and SOCIETY NATIONAL BANK (the "AGENT"), as agent for the Banks, and evidences a Term Loan which shall be entered by the holder hereof in the appropriate column of the grid (the "GRID") attached to this Note. All payments on account of the principal hereof shall also be endorsed by the holder hereof on the Grid. Failure to record any such amounts on the Grid shall not limit or otherwise affect the obligations of the Borrower to make payments of principal or interest on this Note when due. The unpaid principal amount of this Note from time to time outstanding shall bear interest payable as provided in Section 3.4, Section 3.5 and Section 3.6 of the Loan Agreement. All payments of principal of and interest on this Note shall be payable in lawful currency of the United States of America at the offices of the Agent at Society Center, 127 Public Square, Cleveland, Ohio 44114 in immediately available funds. This Note has been issued in replacement for a Note originally issued in December 1990 pursuant to the Loan Agreement as originally executed and delivered as of December 1, 1990. This Note is one of the Term Loan Notes referred to in, and evidences indebtedness incurred under, the Loan Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments of principal of this Note and on which the indebtedness evidenced hereby may be declared to be immediately due and payable. OGLEBAY NORTON COMPANY By: -------------------------- Title: Treasurer 64 GRID A Term Loan made by the Bank to Oglebay Norton Company described in the Loan Agreement, referred to in the within Note, and payments of principal of such Loan.
PORTION OF PRINCIPAL BALANCE MAINTAINED Date Amount of Loan Amount of Outstanding Base Rate LIBOR CD Rate Loan Applicable Notation Principal Principal Loan Rate Loan Fixed Rate Made By Payment Balance Interest Period
65 EXHIBIT B LOAN REQUEST Society National Bank (the "AGENT") Society Center 127 Public Square Cleveland, Ohio 44114 Attention: William J. Kysela Vice President Re: Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, thereafter from time to time made thereto, the "LOAN AGREEMENT"), between Oglebay Norton Company, a Delaware corporation (the "BORROWER"), the Banks parties thereto AND THE AGENT. Gentlemen/Ladies: The Borrower hereby requests that [a] [Tranche A] [Tranche B] [Revolving Credit Loan] [Additional Term Loans] be made to the Borrower in the principal amount of $__________ on _____________, 19__. The Borrower hereby also requests that such [Borrowing] [Additional Term Loans] be made as [ ] a CD Rate Loan in the amount of $__________ having an Interest Period of ____ days, [____] a LIBO Rate Loan in the amount of $___________ having an Interest Period of _____ months or [____] a Base Rate Loan in the amount of $_______. The Borrower hereby certifies and warrants that: (a) the representations and warranties set forth in Article VI of the Loan Agreement were true and correct as of the date as of which made, and on the date of the [Borrowing] [Additional Term Loans] requested hereby (and after giving effect to the incurrence thereof), such representations and warranties (except as permitted by the exceptions to Section 5.2.1 thereof) will be true and correct as if then made, and no Default will have occurred and be continuing; and (b) no litigation, arbitration or governmental proceeding or investigation is pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary or affecting their respective businesses or operations which was not disclosed by the Borrower pursuant to Section 6.6, or prior to the last previous Revolving Credit Loan pursuant to Section 7.1.6 of the Loan Agreement, and no development not so disclosed shall have occurred in any litigation, arbitration or governmental investigation or proceeding so disclosed, which, in either event, if adversely determined, might have a Materially Adverse Effect. The Borrower agrees that if prior to the time of the making of the Loans requested hereby any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Agent. Except to the extent, if any, that prior to the time of the making of the Loan requested hereby the Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed to be certified at the date of such Loan as if then made. IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed and delivered by its duly Authorized Officer this __________ day of ________, 19___. 66 OGLEBAY NORTON COMPANY By: ------------------------ Title: -------------------- 67 EXHIBIT C LOAN CONTINUATION/CONVERSION NOTICE Society National Bank (the "AGENT") Society Center 127 Public Square Cleveland, Ohio 44114 Attention: William J. Kysela Vice President Re: Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, thereafter from time to time made thereto, the "LOAN AGREEMENT"), between Oglebay Norton Company, a Delaware corporation (the "BORROWER"), the Banks parties thereto AND THE AGENT Gentlemen/Ladies: The Borrower hereby requests that on __________, 19__, a [Tranche A Revolving Credit] [Tranche B Revolving Credit] [Term] Loan in an outstanding principal amount of $______________, (1) which is presently being maintained as [ ] a Base Rate Loan, [ ] a CD Rate Loan, or [ ] a LIBO Rate Loan (2) be [ ] converted into, or [ ] continued as (3) [ ] a CD Rate Loan having an Interest Period of [ ] 30 days in the amount of $ , ---------- [ ] 60 days in the amount of $ , ---------- [ ] 90 days in the amount of $ , ---------- [ ] 180 days in the amount of $ , ---------- [ ] 180 days in the amount of $ , ---------- 68 [ ] a LIBO Rate Loan having an Interest Period of [ ] 1 month in the amount of $ , ---------- [ ] 2 months in the amount of $ , ---------- [ ] 3 months in the amount of $ , ---------- [ ] 6 months in the amount of $ , ---------- [ ] a Base Rate Loan. In the event that the Loan is to be converted into, or continued as, a Fixed Rate Loan, the Borrower hereby: (a) certifies and warrants that no Default has occurred and is continuing; and (b) agrees that if prior to the time of such continuation or conversion any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Agent. Except to the extent, if any, that prior to the time of the continuation or conversion requested hereby the Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed to be certified at the date of such continuation or conversion as if then made. IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed and delivered by its Authorized Officer this _________ day of __________, 19__. OGLEBAY NORTON COMPANY By: --------------------- Title: ------------------- 2 69 EXHIBIT D COMPLIANCE CERTIFICATE Society National Bank (the "AGENT") Society Center 127 Public Square Cleveland, Ohio 44114-1306 Attention: William J. Kysela Vice President Re: Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (together with all amendments, if any, thereafter from time to time made thereto, the "LOAN AGREEMENT"), between Oglebay Norton Company, a Delaware corporation (the "BORROWER"), the Banks parties thereto and the Agent Gentlemen/Ladies: The Borrower hereby certifies and warrants that as of _________ 19__ (the "COMPUTATION DATE"): (a) the Borrower's Current Assets [exceeded] its Current Liabilities, on a consolidated basis, by $____________, as computed on Attachment 1 hereto, and the ratio of the Borrower's Current Assets to its Current Liabilities was ____ to 1.00, which [complies] [does not comply] with the requirements of clause (a) of Section 7.2.3 of the Loan Agreement which requires that the Borrower maintain a ratio of Current Assets to Current Liabilities of at least 1.20 to 1.00; (b) the Borrower's Debt to Total Capital Ratio, on a consolidated basis, was approximately (and in any event not more than) ___ to 1.00 as computed on Attachment 2 hereto, which [complies] [does not comply] with the requirements of clause (b) of Section 7.2.3 of the Loan Agreement which requires a maximum of .60 to 1.00 as of the Computation Date; (c) the Borrower's Debt Service Coverage Ratio, on a consolidated basis, was approximately (and in any event not less than) ___ to 1.00, as computed on Attachment 4 hereto, which [complies] [does not comply] with the requirements of clause (e) of Section 7.2.3 of the Loan Agreement which requires a minimum of 1.50 to 1.00; (d) the Borrower's Tangible Net Worth, on a consolidated basis, was approximately (and in any event not less than) $_______, as computed on Attachment 3 hereto, which [complies) [does not comply] with the requirements of clause (d) of Section 7.2.3 of the Loan Agreement which requires a minimum of $57,000,000, PLUS [50% of Net Income for Fiscal Year 1994 (which was $___________), Fiscal Year 1995 (which was $__________), etc.___________]; (f) except as set forth in Attachment 5 hereto, no Default had occurred and was continuing. 70 IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed and delivered by its Authorized Officer this ____ day of __________, 19__. OGLEBAY NORTON COMPANY By: ____________________________ Title:______________________ 2 71 ATTACHMENT 1 to __/__/__ Compliance Certificate EXCESS OF CURRENT ASSETS OVER CURRENT LIABILITIES
1. Current Assets: All assets of the Borrower and its Consolidated Subsidiaries classified on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at the Computation Date as current assets, in accordance with generally accepted accounting principles............. $______ 2. Intangible Assets: All licenses, franchises, patents, patent applications, trademarks, program rights, goodwill and research and development expense or like intangibles shown as current assets on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at the Computation Date....... $_______ 3. The excess of Item 1 over Item 2..................... $_______ 4. Current Liabilities: All liabilities of the Borrower and its Consolidated Subsidiaries classified on the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at the Computation Date as current liabilities, including the then outstanding principal amount of the Notes due and to become due within 12 months after the Computation Date, in accordance with generally accepted accounting principles............................... $______ 5. Excess of Current Assets Over Current Liabilities: The excess of Item 3 over Item 4....... $______ 6. Ratio of Item 3 to Item 4 ............................... ____ to 1.00
72 ATTACHMENT 2 to __/__/__ Compliance Certificate DEBT TO TOTAL CAPITAL RATIO
1. Consolidated Indebtedness: All Indebtedness of the Borrower and its Consolidated Subsidiaries (excluding intercompany obligations) as of the Computation Date described in clauses (a) through (d) of the definition of the term "Indebtedness"; and all Indebtedness of Persons other than the Borrower and its Consolidated Subsidiaries of the nature described in clauses (a) and (b) of the definition of the term "Indebtedness" as to which the Borrower or a Consolidated Subsidiary has issued a Guaranty.................... $______ 2. Net Worth: The sum of capital stock, additional paid-in capital, unrealized gains or losses, and retained earnings (minus accumulated deficits) of the Borrower and its Consolidated Subsidiaries, all as shown on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared all as of the Computation Date.................................... $______ 3. Total Capital: The sum of Item 1 and 2.............................................. $______ 4. Debt to Total Capital Ratio: The ratio of Item 1 to Item 3.............................................. ___to 1.00
73 ATTACHMENT 3 to __/__/__ Compliance Certificate MINIMUM TANGIBLE NET WORTH REQUIREMENT
1. Net Worth: The sum of capital stock, additional paid-in capital, unrealized gains or losses, and retained earnings (minus accumulated deficits) of the Borrower and its Consolidated Subsidiaries, all as shown on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared all as of the Computation Date.................................... $______ 2. To the extent reflected as an asset in such consolidated balance sheet as of the Computation Date, Intangible Assets.............................................. $______ 3. Tangible Net Worth: The excess of Item 1 over Item 2.............................................. $______ 4. Minimum Tangible Net Worth: The sum of $57,000,000 increased by 50% of the Net Income of the Borrower and its Consolidated Subsidiaries for the following Fiscal Years: FYE 12/31/94 $______ FYE 12/31/95 $______ etc. Total..................................................... $_______
74 ATTACHMENT 4 to __/__/__Compliance Certificate DEBT SERVICE COVERAGE RATIO
1. Net Income (as defined in the Loan Agreement) of the Borrower and its Consolidated Subsidiaries for the most recently completed four Fiscal Quarters prior to the Computation Date........................ $______ 2. The sum of income tax expense, depreciation expense, and amortization expense of the Borrower and its Consolidated Subsidiaries for the most recently completed four Fiscal Quarters prior to the Computation Date..................................... $______ 3. Interest Expense (as defined in the Loan Agreement) of the Borrower and its Consolidated Subsidiaries for the most recently completed four Fiscal Quarters prior to the Computation Date.................................... $______ 4. Interest Expense (as defined in the Loan Agreement) for the most recently completed four Fiscal Quarters prior to the Computation Date of all Persons which are not Consolidated Subsidiaries in respect of Indebtedness as to which the Borrower or a Consolidated Subsidiary has issued a Guaranty............................... $______ 5. EBITDA: The sum of Items 1, 2, 3 and 4.............. $______ 6. Regularly scheduled principal payments of the Borrower and its Consolidated Subsidiaries for the most recently completed four Fiscal Quarters prior to the Computation Date in respect of all Indebtedness of the nature described in clauses (a) and (b) of the definition of the term "Indebtedness" (and all Indebtedness of Persons other than the Borrower and its Consolidated Subsidiaries of the nature described in such clauses (a) and (b) with respect to which the Borrower or any
75
Consolidated Subsidiary has issued a Guaranty)................................... $______ 7. Debt Service Requirements: The sum of Items 3, 4 and 6 .................................... $______ 8. Debt Service Coverage Ratio: The ratio of Item 5 to Item 7.................................. ____ to 1.00
2 76 ATTACHMENT 5 to __/__/__ Compliance Certificate [Describe Defaults, if any, continuing on the Computation Date; if no Defaults were so continuing, indicate "None".] 77 EXHIBIT E Item 1 (Article V Section 5.1.5) INDEBTEDNESS TO BE PAID Discharge of Indebtedness under Current Revolving Credit Agreement, dated July 11, 1988, between Borrower and The Bank of Nova Scotia and various other commercial banking institutions named therein. Item 2 (Article VI Section 6.2) MATERIAL CONTRACTUAL OBLIGATIONS - None - Item 3 (Article VI Section 6.5) LAW, GOVERNMENTAL, REGULATION COURT DECREE OR ORDER - None - 78 Item 4 (Article VI Section 6.6) LITIGATION 1) State of West Virginia, on behalf of the Environmental Task Force of the State of West Virginia, ex rel. vs. Bethlehem Mines Corporation, Bethlehem Steel Corporation, Shonk Land Company, Ltd. and Oglebay Norton Company. This action was filed in the Circuit Court of Boone County, West Virginia on March 12, 1981. The State of West Virginia brought this action for injury and damages caused by a coal refuse pile allegedly created by the defendants which is polluting the waters of White Oak Creek and Big Coal River. The State seeks $1,000,000 in damages in addition to recovery of clean-up costs. 2) The Borrower, along with Oglebay Norton Taconite Company, Eveleth Taconite Company and Eveleth Expansion Company, were sued in United States District Court for the District of Minnesota, by Lois Jenson, Patricia Kosmach and Kathleen O'Brien Anderson, on their own behalf and on behalf of a class of female employees and applicants of Eveleth Mines, to obtain injunctive relief and recover damages under Title VII of the Civil Rights Act of 1964 and the Minnesota Human Rights Act. Plaintiffs alleged nine counts which were tried to the court in 1993. The Court dismissed seven (7) of the nine (9) counts in May, 1993. Proceedings continue on the two remaining counts. The claims of the class members will be tried before a United States Magistrate beginning January 17, 1995. Neither the outcome nor any potential loss from these claims 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, if any. 3) The Borrower 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 silicosis. Plaintiffs prayers for damages range from amounts in excess of $10,000 to $20,000 (the statutory minimums for jurisdiction by the courts) to millions of dollars in compensatory and/or punitive damages. 4) The Borrower is the party to several disputes among the partners and stockholders of Eveleth. Among them are the following: (i) A demand for arbitration made by the Borrower to resolve the treatment of in-process inventories. (ii) A demand for arbitration made by the Borrower to resolve the allocation and funding of liability for post-retirement benefits of employees at Eveleth Mines. (iii) A demand for arbitration to resolve the allocation of costs and legal expenses incurred in the "Jenson" litigation. (iv) A demand for arbitration made by Virginia Horn challenging the authority of the Borrower on behalf of Eveleth Mines to have entered into operating leases for two 190 ton trucks. (v) A demand for arbitration made by Virginia Horn challenging the authority of the Borrower on behalf of Eveleth Mines to have entered into the 1993 Electric Service Agreement for electric service to the crusher at the Thunderbird North Mine. None of these arbitrations are active at the moment. The parties are not actively pursuing the claims; no arbitrators have been picked and no hearing dates selected. 2 79 In addition to these arbitrations, Virginia Horn has notified the Borrower that it disputes the Borrower's actions, taken on behalf of Eveleth Mines, to enter into Stockpiling Agreements with the State of Minnesota and a Dumplands Agreement with USX; to enter into a six month 1994 Electric Service Agreement; to allocate Excess Capacity from the production at Eveleth Mines for the year 1994; and to allocate expenditures for Eveleth Mines in connection with the 1994 budget. None of these matters has become the subject of arbitration or litigation, and the parties are not currently pursuing the claims. Item 5 (Article VI Section 6.9) CERTAIN CONTRACTUAL OBLIGATIONS OR ORGANIC DOCUMENTS The Borrower and certain of its subsidiaries are parties to contracts which under certain events could have materially adverse effect upon the Borrower. Those contracts are: 1. Various contractual arrangements involving the operations and funding of mining operations in Eveleth Mines (see Item 13). 2. See also Item 10 and 11. Item 6 (Article VI Section 6.11) ERISA - REPORTABLE EVENTS The Borrower has taken steps to terminate the Toledo Overseas Terminal Pension Plan. This is a trusteed plan, and all assets will be distributed to plan participants once approval is granted by the Internal Revenue Service. Approval is expected by mid-1995. Item 7 OGLEBAY NORTON COMPANY AND ASSOCIATED COMPANIES WHOLLY OWNED SUBSIDIARIES: Canadian Ferro Hot Metal Specialties Limited 3 80 Oglebay Norton Industrial Sands, Inc. Oglebay Norton Refractories & Minerals, Inc. ASSOCIATED COMPANIES: Eveleth Expansion Company Eveleth Taconite Company Oglebay Norton Taconite Company ONCO Eveleth Company OTHER SUBSIDIARIES: Columbia Transportation Company [Dormant] Laxare, Inc. National Perlite Products Company ON Coast Petroleum Company ONCO Technology, Inc. [Dormant] ONCO WVA, Inc. [Dormant] Saginaw Mining Company SUBSIDIARIES IN PROCESS OF DISSOLUTION: Oglebay Norton Sales Company TBF, Inc. 4 81 Item 8 (Article VI Section 6.14) MATERIAL PATENTS & TRADE MARKS - None - Item 9 (Article VI Section 7.1.5) INSURANCE - None - Item 10 and 11 (Article VII Section 7.2.2(b)) ONGOING INDEBTEDNESS & SECURITY INTERESTS The "Columbia Star" a 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, which is secured by a First Mortgage in favor of the U.S. Government and including a Security Agreement between Oglebay Norton Company and the United States of America (dated November 13, 1980) M/V Columbia Star, and other Title XI documents related to the financing and refinancing of the M/V Columbia Star, as amended from time to time. Title XI Reserve Fund and Financial Agreement between Oglebay Norton Company and The United States of America (dated November 13, 1980) as amended from time to time. Capital Construction Fund Agreement between Oglebay Norton Company and the United States of America (dated November 13, 1980) as amended from time to time. Sublease and Bareboat Subcharter - M/V William R. Roesch (dated August 20, 1975) and related Title XI documents, as amended from time to time. Lease and Bareboat Charter - M/V Paul Thayer (dated August 20, 1975), Assignment and Assumption Agreement 902, dated December 31, 1992, and related Title XI documents, as amended from time to time. 5 82 Substitution and Assignment Agreement - M/V Wolverine (dated October 15, 1974), whereby the Kinsman Marine Transit Company assigned to Oglebay Norton Company all of its rights, interests, duties and obligations under the Lease and Bareboat Charter relative to the M/V Wolverine (dated February 15, 1974) and other Title XI documents, as modified by the Substitution and Assignment Agreement, as amended from time to time. UCC financing statements have been filed granting security interests in personal property, proceeds, and replacements securing payment of the purchase price of such personal property. Pringle Transit Company was merged into the Borrower during 1994 and as such obligations of Pringle Transit Company have been assumed by the Borrower. Item 12 (Article VII Section 7.2.5) TAKE OR PAY CONTRACTS See Item 13 Electric Service Agreement between Eveleth Mines, Oglebay Norton Company, Manager and Minnesota Power & Light Company dated May 25, 1979, including Amendments dated December 25, 1987, May 24, 1988, March 25, 1989, March 29, 1990, October 30, 1990, July 12, 1991 and April 26, 1994. The parties are currently in negotiations for an amendment to this agreement which would affect the term, pricing and other terms and conditions. Alternatively, a replacement agreement may be negotiated and executed. Item 13 (Article VII Section 7.2.8) TRANSACTIONS WITH AFFILIATES Eveleth Mines, a taconite mining operation located at Eveleth, Minnesota, consists of two operating entities: Eveleth Taconite Company, a Minnesota corporation ("Taconite Company"), and Eveleth Expansion Company, a Minnesota general partnership ("Expansion Company"). The Borrower owns a 15% interest in Taconite Company and a wholly owned subsidiary of the Borrower, ONCO Eveleth Company, holds a 20.5% interest in Expansion Company. The combined operations of the Eveleth Mines companies represent a cost-sharing arrangement in accordance with agreements for the life of the mines that govern the combined operations. These agreements contemplate that Eveleth 6 83 Mines will operate at full production capability and require the respective participants to provide advances to Taconite Company or Expansion Company for substantially all capital and fixed operating costs incurred, in proportion to their ownership. The Borrower has entered into long-term sales contracts to sell a portion of its production capacity of Taconite Company and Expansion Company. The Borrower is manager of Eveleth Mines and provides employment service to Eveleth Mines through a wholly owned subsidiary. Effective January 1, 1991, the Participants in Eveleth Mines revised their operating agreements to (a) give each of the owners the discretion to determine the amount of ore to be produced for its account and (b) provide for the allocation of fixed costs based on ownership and variable costs based on production. These revisions expire on December 31, 1996. Item 14 (Article VII Section 7.2.10) NEGATIVE PLEDGES Title XI Reserve Fund and Financial Agreement. Partnership operating agreement dated January 2, 1974, among Eveleth Expansion Company, Dofasco Eveleth Corporation, ONCO Eveleth Company and Virginia Horn Taconite Company (in its own right and as a successor in interest to Dofasco Eveleth Corporation). Stockholders Agreement dated April 17, 1964 among Eveleth Taconite Company, Ford Motor Company, and Oglebay Norton Company. 7 84 EXHIBIT F-1 December , 1994 To each of the Banks parties to the Loan Agreement hereinafter referred to and to Society National Bank as Agent for the Banks and to Bank One, Columbus, NA as Trustee for the Banks Re: AMENDED AND RESTATED LOAN AGREEMENT, ORIGINALLY DATED AS OF DECEMBER 1, 1990, AND AMENDED AND RESTATED AS OF DECEMBER 29, 1994 Ladies and Gentlemen: We have acted as counsel to Oglebay Norton Company, a Delaware corporation (the "COMPANY"), and to each of the Subsidiary Guarantors (as hereafter defined) in connection with the negotiation, execution and delivery of the following agreements and documents: (a) Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (the "LOAN AGREEMENT"), by and among the Company, the banks parties thereto (collectively, the "BANKS") and Society National Bank, as agent for the Banks (in such capacity, the "AGENT"); (b) Fifteen separate promissory notes (the "NOTES"), each dated December , 1994, issued by the Company pursuant to the Loan Agreement, with three of each of such notes payable to the order of each Bank, respectively; (c) Amended and Restated Subsidiary Guaranty, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (the "SUBSIDIARY GUARANTY") executed by Oglebay Norton Industrial Sands, Inc. and Oglebay Norton Refractories & Minerals, Inc. (the "SUBSIDIARY GUARANTORS") in favor of the Banks; (d) The four Ship Mortgages, dated December 20, 1990, and the two amendments to each of the Ship Mortgages, dated as of April 8, 1993, and as of December 29, 1994 (collectively, the "SHIP MORTGAGES") executed by the Company in favor of Bank One, Columbus, NA, as trustee; and (e) The Vessel Sale Agreement, dated as of , 1990 (the "VESSEL SALE AGREEMENT"), by and between the Company and Bethlehem Steel Corporation. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms in the Loan Agreement. We are familiar with the corporate proceedings taken by the Company and each Subsidiary Guarantor in connection with the foregoing agreements and documents and the transactions contemplated thereby. In addition, we have examined such corporate records, certificates and other documents and such questions of law as we have considered necessary or appropriate for the basis of the opinions hereinafter expressed. As to certain factual matters, we have relied, where we 85 deemed appropriate, upon information contained in a certificate (a copy of which has been delivered to the Banks) of officers of the Company. In making the examination of all documents and agreements in connection with the opinions expressed herein, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. The opinions expressed in paragraph 5 and paragraph 6 below are qualified to the extent that the enforceability of the terms and provisions of the documents and instruments referred to in said paragraphs may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles which, for example, may limit the right to obtain the remedy of specific performance of executory covenants. Based upon, and subject to, the foregoing, we are of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where its ownership or leasing of real estate, ownership of substantial assets other than real estate, conduct of substantial business, or location of employees require it to be so qualified and where the failure so to qualify would have a materially adverse effect on the business or operations of the Company. 2. Each Subsidiary Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of the state of its respective incorporation. Each Subsidiary Guarantor is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where its ownership or leasing of real estate, ownership of substantial assets other than real estate, conduct of substantial business, or location of employees require it to be so qualified and where the failure so to qualify would have a materially adverse effect on the business or operations of such Subsidiary Guarantor. 3. The Company has full corporate power and authority to own and operate its properties and assets, carry on its business as currently conducted, and enter into and perform its obligations under the Vessel Sale Agreement and the Loan Agreement. 4. Each Subsidiary Guarantor has full corporate power and authority to own and operate its properties and assets and carry on its business as currently conducted. Each Subsidiary Guarantor has full corporate power and authority to enter into and perform its obligations under the Subsidiary Guaranty. 5. The execution and delivery of the Vessel Sale Agreement, the Loan Agreement, the Ship Mortgages and the Notes, and the performance by the Company of its obligations thereunder, have been duly authorized by all necessary corporate action on the part of the Company, and all of said documents and instruments have been duly executed and delivered on behalf of the Company and the Vessel Sale Agreement, the Loan Agreement and the Notes each constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms. 6. The execution and delivery of the Subsidiary Guaranty, and the performance by each Subsidiary Guarantor of its obligations thereunder, have been duly authorized by all necessary corporate action on the part of each Subsidiary Guarantor and constitute valid and binding obligations of each Subsidiary Guarantor, enforceable in accordance with their respective terms. 7. There is no provision in the articles of incorporation or the by-laws of the Company, nor any provision in any indenture, mortgage, contract or agreement known to us after due inquiry to which the Company is a party or by which it or its properties may be bound, nor any law, statute, rule or regulation (other than any law, statute, rule or regulation relating to maritime or admiralty matters, as to which matters you are receiving the separate opinion of Thompson & Mitchell), nor any writ, order or decision known to us after due inquiry of any court or governmental instrumentality binding on the Company which would be contravened by the execution and delivery of the Vessel Sale Agreement, the Loan Agreement, the Ship 2 86 Mortgages or the Notes, nor do any of the foregoing prohibit performance by the Company of any term, provision, condition, covenant or any other obligation of the Company contained therein. 8. There is no provision in the articles of incorporation or the by-laws of any Subsidiary Guarantor, nor any provision in any indenture, mortgage, contract or agreement known to us after due inquiry to which any Subsidiary Guarantor is a party or by which it or its properties may be bound, nor any law, statute, rule or regulation, nor any writ, order or decision known to us after due inquiry of any court or governmental instrumentality binding on any Subsidiary Guarantor which would be contravened by the execution and delivery of the Subsidiary Guaranty, nor do any of the foregoing prohibit performance by any Subsidiary Guarantor of any term, provision, condition, covenant or any other obligation of any Subsidiary Guarantor contained therein. 9. Except as described in the Company's financial statements referred to in Section 6.4 of the Loan Agreement or in the Disclosure Schedule, to the best of our knowledge after due inquiry, there are no actions, suits or proceedings pending or threatened against or affecting the Company or any Subsidiary Guarantor before any court or arbitrator or by or before any administrative agency or governmental authority, which, if adversely determined, would have a materially adverse effect on the financial condition or business of the Company and the Consolidated Subsidiaries taken as a whole. 10. Neither the making nor the performance of the Vessel Sale Agreement, the Loan Agreement, the Ship Mortgages or the Notes or the Subsidiary Guaranty requires the consent or approval of any governmental instrumentality under any law, statute, rule or regulation (other than any law, statute, rule or regulation relating to maritime or admiralty matters, as to which you are receiving the separate opinion of Thompson & Mitchell) or under any indenture, mortgage, contract or agreement known to us, after due inquiry. 11. The Company is not a "holding company", a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 12. The Company is not an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 13. The Company is not engaged in the business of extending credit for the purpose of buying or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and, to the best of our knowledge after due inquiry, the making of Loans under the Loan Agreement for the purposes stated in the preamble to the Loan Agreement will not violate Regulation U. We are licensed to practice law only in the State of Ohio and, accordingly, the foregoing opinions are limited solely to the laws of the State of Ohio and applicable Federal law. This opinion letter is being furnished to the Agent, Bank One, Columbus, NA, as trustee, and the Banks for their use and the use of their respective counsel. We understand and agree that Thompson & Mitchell will rely upon the matters contained in paragraph 5 above for purposes of rendering their opinion to you pursuant to the Loan Agreement. No other use or distribution of this opinion may be made without our prior written consent. Very truly yours, 3 87 EXHIBIT F-2 December , 1994 To each of the Banks parties to the Trust Agreement hereinafter referred to and to Society National Bank as Agent for the Banks and to Bank One, Columbus, NA, as Trustee for the Banks Re: OGLEBAY NORTON COMPANY Ladies and Gentlemen: We have acted as maritime counsel to Oglebay Norton Company, a Delaware corporation (the "COMPANY"), in connection with the negotiation, execution and delivery of the four First Preferred Ship Mortgages dated December 20, 1990, and amended by amendments to each thereof dated as of April 8, 1993 and as of December 29, 1994 (collectively, the "SHIP MORTGAGES"), by the Company to Bank One, Columbus, NA, Trustee ("MORTGAGEE") in its capacity as trustee under a Master Trust Agreement dated as of December 1, 1990 (the "TRUST AGREEMENT"), for the benefit of the banks named therein (the "BANKS"). The Ship Mortgages grant a first preferred mortgage in favor of Mortgagee on the following vessels (the "VESSELS"): FRED R. WHITE, JR., OGLEBAY NORTON, BUCKEYE and ARMCO. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms in the Ship Mortgages. We are familiar with the corporate proceedings taken by the Company in connection with the Ship Mortgages and the transactions contemplated thereby. In addition, we have examined such corporate records, certificates and other documents and such questions of law as we have considered necessary or appropriate for the basis of the opinions hereinafter expressed. As to certain factual matters, we have relied, where we deemed appropriate, upon information contained in certificates or affidavits (copies of which have been delivered to the Banks) of officers of the Company. In making the examination of all documents and agreements in connection with the opinions expressed herein, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. With respect to the opinion expressed in paragraph 4 below, we have relied upon the opinion of Thompson, Hine and Flory, which is being delivered simultaneously to you, with respect to the due authorization, execution and delivery of the Ship Mortgages, and further our opinion is qualified to the extent that the enforceability of the terms and provisions of the documents and instruments referred to in paragraph 4 may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles which may limit the right to obtain the remedy of specific performance of executory covenants. Based upon, and subject to, the foregoing, we are of the opinion that: 88 1. The Company is a citizen of the United States within the meaning of Section 2 of the Shipping Act of 1916, as amended. 2. Each of the Vessels is duly and lawfully registered and documented in the name of the Company under the laws and flag of the United States, and no other action is necessary or advisable to establish and perfect the Company's title to and interest in such Vessel as against any third party in any applicable jurisdiction in the United States. The certificate of documentation of each Vessel is endorsed with a Great Lakes endorsement pursuant to 46 U.S.C. ss. 12107, and each Vessel is qualified under the laws of the United States to be employed in the coastwise trade. 3. The Company lawfully owns and is lawfully possessed of each of the Vessels, free from any security interest, lien, charge or encumbrance whatsoever or any commitment to make any Vessel available for charter or sale or use by any government authority other than the liens granted by the Ship Mortgages and Permitted Liens. With respect to security interests, liens, charges or encumbrances of record, we have relied upon the United States Coast Guard Certificate of Ownership for the Vessels, and with respect to all other security interests, liens, charges or encumbrances and the absence of any commitment to make the Vessels available for sale, charter or use by any governmental authority, we have relied upon the certificate of the Company. 4. The execution and delivery of the Ship Mortgages, and the performance by the Company of its obligations thereunder, have been duly authorized by all necessary corporate action on the part of the Company, and all of such documents and instruments have been duly executed and delivered on behalf of the Company and constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms. 5. There is no United States maritime or admiralty law, statute, rule or regulation, which would be contravened by the execution and delivery of the Ship Mortgages, nor do any of the foregoing prohibit performance by the Company of any term, provision, condition, covenant or any other obligation of the Company contained in any of the Ship Mortgages. 6. Neither the making nor the performance of the Ship Mortgages on the part of the Company requires the consent or approval of any governmental instrumentality under any United States maritime or admiralty law, statute, rule or regulation, other than any such consent or approval as has been obtained and is in full force and effect. 7. The Ship Mortgages are in proper form for filing and recording and have been duly filed with and recorded by the United States Coast Guard, and each of the Ship Mortgages constitutes a first "PREFERRED MORTGAGE" on the Vessel covered by such Ship Mortgage under Chapter 313 of 46 U.S.C., having the effect and with the priority provided in such Chapter; and no other filing or periodic refiling or recording or periodic re-recording of the Ship Mortgages, or any other act with respect to the Ship Mortgages, is necessary under existing United States maritime or admiralty law to continue the respective liens of the Ship Mortgages. 8. The Mortgagee has obtained the approval of the United States Secretary of Transportation to act as an "APPROVED TRUSTEE" pursuant to 46 U.S.C. ss. 31328 and to act as a trustee for the benefit of the Banks under the Trust Agreement to hold the security interests granted by the Company in the Vessels pursuant to the terms of the Ship Mortgages. This opinion letter is being furnished to the Banks, Society National Bank, as agent for the Banks, and to the Mortgagee, for their use and the use of their respective counsel. No other use or distribution of this opinion may be made without our prior written consent. Very truly yours, 2 89 EXHIBIT G-1 ================================================================================ AMENDED AND RESTATED SUBSIDIARY GUARANTY FROM OGLEBAY NORTON INDUSTRIAL SANDS, INC. AND OGLEBAY NORTON REFRACTORIES & MINERALS, INC. TO SOCIETY NATIONAL BANK, INDIVIDUALLY AND AS AGENT AND THE BANK OF NOVA SCOTIA NBD BANK, N.A. COMERICA BANK [SUCCESSOR BY MERGER TO MANUFACTURERS NATIONAL BANK OF DETROIT] THE HUNTINGTON NATIONAL BANK ================================================================================ 90 AMENDED AND RESTATED SUBSIDIARY GUARANTY FOR VALUE RECEIVED, and in consideration of any loan or other financial accommodation heretofore or hereafter at any time made or granted to OGLEBAY NORTON COMPANY, a Delaware corporation (herein called the "DEBTOR") by SOCIETY NATIONAL BANK, individually (herein, in such capacity, together with its successors and assigns, called "SOCIETY") and as Agent (herein, in such capacity together with its successors and assigns, called the "AGENT") under the Loan Agreement referred to below, THE BANK OF NOVA SCOTIA, NBD BANK, N.A., COMERICA BANK [SUCCESSOR BY MERGER TO MANUFACTURERS NATIONAL BANK OF DETROIT] or THE HUNTINGTON NATIONAL BANK (herein, together with Society and their respective successors and assigns, collectively called the "BANKS" and individually called a "BANK"), each of the undersigned, hereby jointly and severally unconditionally guarantees the full and prompt payment when due, whether by acceleration or otherwise, and at all times thereafter, of all monetary obligations of the Debtor to any Bank or the Agent, howsoever created, arising or evidenced, whether direct or indirect, primary or secondary, absolute or contingent, joint or several, or now or hereafter existing or due or to become due (all such monetary obligations being hereinafter collectively called the "LIABILITIES"), under that certain Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (herein, as the same may be amended from time to time, called the "LOAN AGREEMENT"), between the Debtor, the Banks and the Agent, and each of the undersigned further jointly and severally agrees to pay all expenses (including attorneys' fees and legal expenses) paid or incurred by the Agent or any of the Banks in endeavoring to collect the Liabilities, or any part thereof, and in enforcing this guaranty. The right of recovery against each of the undersigned under this guaranty shall not, however, exceed at any time the amount by which the Maximum Amount (as hereinafter defined) of such undersigned calculated at that time exceeds the aggregate of all amounts, if any, collected before that time by or on behalf of the Agent or the Banks from such undersigned under this guaranty, plus interest on such amount, accruing after demand upon such undersigned for payment hereunder, at the Base Rate (as defined in the Loan Agreement) plus 2-3/8% per annum and plus all expenses of enforcing this guaranty. The "MAXIMUM AMOUNT" for any of the undersigned as of a particular time means the greater of (a) the aggregate of all amounts advanced, from whatever source, to such undersigned by the Debtor on or before such time, or (b) 95 percent of the amount by which (i) the fair saleable value of the property of such undersigned exceeds (ii) the total liabilities of such undersigned (including, without limitation, contingent liabilities other than liabilities of such undersigned under this guaranty) as calculated on the date hereof or, if such excess is greater, as calculated after the date hereof but before such time. Each of the undersigned agrees that, in the event of the dissolution or insolvency of the Debtor or such undersigned, or the inability or failure of the Debtor or such undersigned to pay debts as they become due, or an assignment by the Debtor or such undersigned for the benefit of creditors, or the commencement of any case or proceeding in respect of the Debtor or such undersigned under any bankruptcy, insolvency or similar laws, and if such event shall occur at a time when any of the Liabilities may not then be due and payable, such undersigned will pay to each Bank forthwith the full amount which would be payable hereunder by such undersigned if all Liabilities were then due and payable. To secure all obligations of each of the undersigned hereunder, each Bank shall have a lien upon and security interest in (and may, without demand or notice of any kind, at any time and from time to time when any amount shall be due and payable by such undersigned hereunder, appropriate and apply toward the payment of such amount, in such order of application as such Bank may elect) any and all balances, credits, deposits (general or special, time or demand, provisional or final), accounts or moneys of or in the name of such undersigned now or hereafter with such Bank and any and all property of every kind or description of or in the name of such undersigned now or hereafter, for any reason or purpose whatsoever, in the possession or control of, or in transit to, such Bank or any agent or bailee for such Bank. This guaranty shall in all respects be a continuing, absolute and unconditional guaranty, and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of any of the undersigned or that at any time or from time to time all Liabilities may have been paid in full), until all Liabilities (including any extensions or renewals of any thereof) and 91 all interest thereon and all expenses (including attorneys' fees and legal expenses) paid or incurred by the Agent and the Banks in endeavoring to collect the Liabilities and in enforcing this guaranty shall have been finally paid in full; PROVIDED, HOWEVER, that this guaranty shall terminate as to any undersigned upon its ceasing to be a Subsidiary (as defined in the Loan Agreement) of the Debtor in a manner that is permitted by the Loan Agreement. Each of the undersigned further agrees that, if at any time all or any part of any payment theretofore applied by the Agent or any Bank to any of the Liabilities is or must be rescinded or returned by the Agent or such Bank for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Debtor), such Liabilities shall, for the purposes of this guaranty, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by the Agent or such Bank, and this guaranty shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by the Agent or such Bank had not been made. Each Bank and the Agent may, from time to time, at its sole discretion and without notice to the undersigned (or any of them), take any or all of the following actions without impairing the obligation of the undersigned under this guaranty: (a) retain or obtain a lien upon or a security interest in any property to secure any of the Liabilities or any obligation hereunder, (b) retain or obtain the primary or secondary obligation of any obligor or obligors, in addition to the undersigned, with respect to any of the Liabilities, or any other liabilities or obligations, (c) extend or renew for one or more periods (whether or not longer than the original period), alter or exchange any of the Liabilities, or release or compromise any obligation of any of the undersigned hereunder or any obligation of any nature of any other obligor with respect to any of the Liabilities, (d) release or fail to perfect its lien upon or security interest in, or impair, surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Liabilities or any obligation hereunder, or extend or renew for one or more periods (whether or not longer than the original period) or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such property, and (e) resort to the undersigned (or any of them) for payment of any of the Liabilities, whether or not such Bank or the Agent (i) shall have resorted to any property securing any of the Liabilities or any obligation hereunder, or (ii) shall have proceeded against any other of the undersigned or any other obligor primarily or secondarily obligated with respect to any of the Liabilities (all of the actions referred to in preceding clauses (i) and (ii) being hereby expressly waived by each of the undersigned). Any amounts received by the Agent or any of the Banks from whatever source on account of the Liabilities may be applied by the Agent or any such Bank, toward the payment of such of the Liabilities, and in such order of application, as the Agent or any of the Banks may from time to time elect. Until such time as the Agent and the Banks shall have received payment of the full amount of all Liabilities and of all obligations of each of the undersigned hereunder, no payment made by or for the account of the undersigned (or any of them) pursuant to this guaranty shall entitle any of the undersigned by subrogation or otherwise to any payment by the Debtor or from or out of any property of the Debtor and none of the undersigned shall exercise any right or remedy against the Debtor or any property of the Debtor by reason of any performance by such undersigned of this guaranty. Each of the undersigned hereby expressly waives: (a) notice of the acceptance by the Agent and the Banks of this guaranty, (b) notice of the existence or creation or non-payment of all or any of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, and (d) all diligence in collection or protection of or realization upon the Liabilities or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing. The creation or existence, with or without notice to any of the undersigned, from time to time, of Liabilities in excess of the amount to which the right of recovery under this guaranty is limited shall not in any way affect or impair the rights of the Agent or any of the Banks or the obligation of any of the undersigned under this guaranty. The Agent or any of the Banks may, from time to time, without notice to the undersigned (or any of them), assign or transfer any or all of the Liabilities or any interest therein; and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, such Liabilities shall be and remain Liabilities for the purposes of this guaranty, and each and every immediate and successive assignee or transferee of any of the Liabilities or of any interest therein shall, to the extent of the interest of such assignee or transferee in the Liabilities, be entitled to the benefits of this guaranty to the 2 92 same extent as if such assignee or transferee were the Agent or a Bank, as the case may be; PROVIDED, HOWEVER, that, unless the Agent or any Bank, as the case may be, shall otherwise consent in writing, the Agent or such Bank, as the case may be, shall have an unimpaired right, prior and superior to that of any such assignee or transferee, to enforce this guaranty, for the benefit of the Agent or such Bank, as the case may be, as to those of the Liabilities which the Agent or such Bank, as the case may be, has not assigned or transferred. No delay on the part of the Agent or any Bank in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent or any Bank of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this guaranty be binding upon the Agent or any Bank except as expressly set forth in a writing duly signed and delivered on behalf of the Agent or such Bank, as the case may be. No action of the Agent or any Bank permitted hereunder shall in any way affect or impair the rights of the Agent or such Bank or the obligations of any of the undersigned under this guaranty. For the purposes of this guaranty, Liabilities shall include all obligations of the Debtor to the Agent and the Banks under the Loan Agreement, notwithstanding any right or power of the Debtor or anyone else to assert any claim or defense as to the invalidity or unenforceability of any such obligation, and no such claim or defense shall affect or impair the obligations of the undersigned hereunder. The obligations of each of the undersigned under this guaranty shall be absolute and unconditional irrespective of any circumstance whatsoever which might constitute a legal or equitable discharge or defense of the undersigned (or any of them). Each of the undersigned hereby acknowledges that there are no conditions to the effectiveness of this guaranty. Each of the undersigned hereby warrants and represents to the Agent and the Banks that such undersigned now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Debtor. The Agent and the Banks shall not have any duty or responsibility to provide the undersigned (or any of them) with any credit or other information concerning the affairs, financial condition or business of the Debtor which may come into the Agent's or any Bank's possession. Each of the undersigned hereby further warrants and represents to the Agent and the Banks that (a) the execution and delivery of this guaranty, and the performance by each of the undersigned of its obligations hereunder, are within the corporate right, power, authority and capacity of each of the undersigned and have been duly authorized by all necessary corporate action on the part of each of the undersigned, and (b) this guaranty has been duly executed and delivered on behalf of each of the undersigned and is the legal, valid and binding obligation of each of the undersigned, enforceable in accordance with its terms, the making and performance of which do not and will not contravene or conflict with the charter or by-laws of any of the undersigned or violate or constitute a default under any law, any presently existing requirement or restriction imposed by judicial, arbitral or any governmental instrumentality or any agreement, instrument or indenture by which any of the undersigned is bound. This guaranty shall be binding upon each of the undersigned, and upon the successors and assigns of each of the undersigned; and to the extent that the Debtor or any of the undersigned is either a partnership or a corporation, all references herein to the Debtor and to such of the undersigned, respectively, shall be deemed to include any successor or successors, whether immediate or remote, to such partnership or corporation. The term "undersigned" as used herein shall mean all parties executing this guaranty and each of them, and all such parties shall, subject to the limitation on right of recovery in the first paragraph hereto, be jointly and severally obligated hereunder. This guaranty amends and restates in its entirety a guaranty dated as of December 1, 1990 originally executed and delivered in connection with the Loan Agreement, as originally executed as of December 1, 1990. Certain guarantors named in the original guaranty are no longer liable as guarantors of the Liabilities. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OHIO. Wherever possible each provision of this guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this guaranty. 3 93 EACH OF THE UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. Each of the undersigned agrees that any judicial proceedings brought against such undersigned with respect to this guaranty may be brought in any state or federal court of competent jurisdiction in the State of Ohio and by the execution and delivery of this guaranty, each of the undersigned accepts the nonexclusive jurisdiction of the aforesaid courts. Service of process may be made by any means authorized by federal law or the law of Ohio. A copy of any such process so served shall be mailed by registered mail to each of the undersigned at its address set forth opposite its name on the signature page hereto or at such other address as may be designated by such undersigned in a notice to the Agent and the Banks. Nothing herein shall limit the right of the Agent or any Bank to bring proceedings against any of the undersigned in the courts of any other jurisdiction. SIGNED AND DELIVERED as of this 29th day of December, 1994.
OGLEBAY NORTON INDUSTRIAL SANDS, INC. Address: 1100 Superior Avenue By: ------------------------------------ Cleveland, Ohio 44114 Title: --------------------------- OGLEBAY NORTON REFRACTORIES & MINERALS, INC. Address: 1100 Superior Avenue By: ------------------------------------ Cleveland, Ohio 44114 Title: ---------------------------
4 94 EXHIBIT G-2 SECOND AMENDMENT TO FIRST PREFERRED SHIP MORTGAGE THIS SECOND AMENDMENT TO FIRST PREFERRED SHIP MORTGAGE dated as of December 29, 1994 (this "AMENDMENT"), made by OGLEBAY NORTON COMPANY, a Delaware corporation, with its address at The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 (the "MORTGAGOR"), and BANK ONE, COLUMBUS, NA, as Trustee pursuant to a Master Vessel Trust Agreement dated as of December 1, 1990 for the benefit of the banks named therein, with its address at 100 East Broad Street, Columbus, Ohio 43271-0181 (the "MORTGAGEE"): WITNESSETH: WHEREAS, the Mortgagor is the sole owner of one hundred percent (100%) of the Great Lakes self-unloading ore carrier named _________________________ (O.N. _______) which Vessel is duly documented under and pursuant to the laws of the United States of America, having its home port at the Port of Philadelphia, Pennsylvania (as further described in the Granting Clause of the Original Mortgage referred to below, wherein called the "VESSEL"); and WHEREAS, the Mortgagor entered into a First Preferred Ship Mortgage (the "ORIGINAL MORTGAGE"), dated December 20, 1990, in favor of the Mortgagee, creating a "preferred mortgage" on the Vessel under Chapter 313 of 46 U.S.C.; WHEREAS, the Original Mortgage was recorded at the United States Coast Guard-Philadelphia, Pennsylvania at __ p.m. on December 20, 1990, in Book __ at page ___; and WHEREAS, the Original Mortgage was amended by an Amendment to First Preferred Ship Mortgage (the "FIRST AMENDMENT"), dated as of April 8, 1993, which Amendment was recorded at the United States Coast Guard-Philadelphia, Pennsylvania at __ [p.m.][a.m.] on ___________________, 1993, in Book __ at page ___; and WHEREAS, the Mortgagor and the Mortgagee desire to amend the Original Mortgage, as heretofore amended by the First Amendment, to reflect certain amendments to the Loan Agreement referred to therein; and WHEREAS, the execution and delivery of this Amendment has been duly authorized by the Mortgagor, all conditions and requirements necessary to make this Amendment a valid and binding agreement of the Mortgagor have been complied with; NOW, THEREFORE, the Mortgagor and the Mortgagee agree as follows: 1. DEFINITIONS. Unless otherwise defined herein, terms which are defined in the definitions of which are incorporated by reference in the Original Mortgage are used herein as so defined. 2. INCORPORATION OF AMENDMENT AND RESTATEMENT OF LOAN AGREEMENT. The Loan Agreement has been amended and restated in its entirety by an Amended and Restated Loan Agreement, originally dated as of December 1, 1990, and amended and restated as of December 29, 1994 (the "AMENDED AND RESTATED LOAN AGREEMENT"), a copy of which is attached hereto as Exhibit A and made a part of the Original Mortgage for all purposes. All references in the Original Mortgage to the Loan Agreement shall be deemed to refer to the Amended and Restated Loan Agreement, and any amendments, supplements thereto or restatements thereof entered into after the date hereof. 3. CONFIRMATION OF AMOUNT OF SECURED INDEBTEDNESS. For the purpose of 46 U.S.C. Section 31321(b)(3), the amount of the direct or contingent obligations that are or may be secured by the Original Mortgage, as heretofore amended and as amended hereby, excluding interest, expenses and fees, is Ninety Million and no/100 ths Dollars ($90,000,000.00), 95 and interest and performance of mortgage covenants. The date of maturity is extended from December 31, 1998 to December 31, 2001, and the discharge amount is the same as the total amount. 4. RATIFICATIONS. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Original Mortgage, as heretofore amended, and except as expressly modified and superseded by this Amendment, the terms and provisions of the Original Mortgage, as heretofore amended, are ratified and confirmed and shall continue in full force and effect. 5. HEADINGS. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. 6. ENTIRE AGREEMENT. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof. 7. COUNTERPARTS. This Amendment may be executed by the parties hereto separately in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instruments. [The balance of this page is intentionally blank.] 2 96 IN WITNESS WHEREOF, this Amendment has been duly executed by the Mortgagor and the Mortgagee as of the date first above written. OGLEBAY NORTON COMPANY, AS THE MORTGAGOR BY: ______________________________ MICHAEL BIEHL, TREASURER ATTEST: __________________________ ASSISTANT SECRETARY BANK ONE, COLUMBUS, NA, AS TRUSTEE, AS THE MORTGAGEE BY: ______________________________ NAME: ________________________ TITLE:_________________________ 3 97 STATE OF OHIO ) ) SS: COUNTY OF CUYAHOGA ) BEFORE ME, the undersigned authority, on this day personally appeared Michael Biehl, and David G. Slezak, known to me to be the persons whose names are subscribed to the foregoing instrument, and who acknowledged to me that they are the Treasurer and an Assistant Secretary, respectively, of Oglebay Norton Company a Delaware corporation; and that they executed the foregoing instrument for the purposes and consideration therein expressed and in the capacity therein stated. Given under my hand and seal of office this ____ day of December, 1994. --------------------------------------- Notary Public My commission expires: ___________ 4 98 STATE OF OHIO ) ) SS: COUNTY OF FRANKLIN ) BEFORE ME, the undersigned authority, on this day personally appeared _____________________________, known to me to be the person whose name is subscribed to the foregoing instrument, and who acknowledged to me that he or she is the ________________________, of Bank One, Columbus, NA, a national banking association; and that he or she executed the foregoing instrument for the purposes and consideration therein expressed and in the capacity therein stated. Given under my hand and seal of office this ____ day of December, 1994. --------------------------------------- Notary Public My commission expires: ___________ 5 99 EXHIBIT A COPY OF AMENDED AND RESTATED LOAN AGREEMENT EX-10.P.1 15 EXHIBIT 10.P.1 1 Exhibit 10(p)(1) OGLEBAY NORTON COMPANY Borrower And THE BANKS NAMED HEREIN Banks And SOCIETY NATIONAL BANK Agent --------------------- AMENDMENT NO. 1 dated as of August 29, 1995 to AMENDED AND RESTATED LOAN AGREEMENT --------------------- 2 AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT (this "AMENDMENT"), dated as of August 29, 1995, among OGLEBAY NORTON COMPANY, a Delaware corporation (herein, together with its successors and assigns, the "BORROWER"), the banks listed on the signature pages hereof (the "BANKS"), and SOCIETY NATIONAL BANK, a national banking association ("SOCIETY"), as agent (the "AGENT") for the Banks under the Loan Agreement (hereafter defined), as amended hereby: PRELIMINARY STATEMENTS (1) The Borrower, the Banks and the Agent entered into the Amended and Restated Loan Agreement, orginially dated as of December 1, 1990, and amended and restated as of December 29, 1994 (as so amended and restated and in effect on the effective date of this Amendment, the "LOAN AGREEMENT"; with the terms defined therein, or the definitions of which are incorporated therein, being used herein as so defined). (2) The Borrower has indicated to the Banks that a case under the federal Bankruptcy Code, Title 11 of the United States Code (11 U.S.C. Section 101 ET SEQ.) may be commenced involving an 80% owned Subsidiary of the Borrower, namely Laxare Inc., a West Virginia corporation (herein, together with its successors and assigns, "LAXARE"), and the Borrower has requested the Agent and the Banks to amend certain of the terms and provisions of the Loan Agreement to, among other things, modify or eliminate the application thereof to the acts and circumstances involving Laxaire. (3) The Banks and the Agent are willing to enter into this Amendment in order to accomodate such request, all as more fully set forth below. NOW, THEREFORE, the parties hereby agree as follows: 1. DEFINITIONS. Section 1.1 of the Loan Agreement is hereby amended to add the following definition in the appropriate alpabetical order: "LAXARE" means Laxaire, Inc., a West Virginia corporation, and its successors and assigns. 2. DISCLOSURE OF CERTAIN LITIGATION AND PROCEEDINGS. Without admitting that any litigation or proceeding described below might, if adversely determined, have a Material Adverse Effect, the Borrower hereby discloses the following pursuant to section 7.1.6 of the Loan Agreement: (i) the possibility that Laxare might be the subject of a case commenced under the federal Bankruptcy Code, Title 11 of the United States Code (11 U.S.C. section 101 ET SEQ.); and (ii) the possibility of an adverse decision in the proceedings before the Circuit Court of Kanawha, West Virginia, involving litigation by certain coal lessors against Laxare and others relative to mining activities and royalty payments for periods commencing as early as 1968. 3. INVESTMENTS; BUSINESS ACTIVITIES. 3.1. INVESTMENTS. Section 7.2.1(a) of the Loan Agreement is hereby amended by adding the following at the end thereof: 3 Notwithstanding the foregoing, the Borrower will not, and will not permit any Subsidiary to, make any Investment in Laxare at any time after August 1, 1995, except that after such date the Borrower or any Subsidiary may make Investments in Laxare, not in excess of $500,000 in the aggregate. 3.2. BUSINESS ACTIVITIES. Section 7.2.1(b) is hereby amended by adding the following at the end thereof in place of the period: ;PROVIDED, that nothing in this sentence shall apply to the operation by Laxare of its business or to Laxare engaging in any type of business. 4. LIENS. Section 7.2.2 of the Loan Agreement is hereby amended to add after the phrase "any Subsidiary" in the first line thereof and prior to the words "to, create, incur, assume" the following: "(other than Laxare, so long as it is a Subsidiary of the Borrower)". 5. CONSOLIDATION, MERGER, ETC. Section 7.2.6 of the Loan Agreement is hereby amended by adding at the end thereof the following: Notwithstanding the foregoing, the Borrower will not permit Laxare to merge with or into the Borrower or any other Subsidiary of the Borrower. 6. CERTAIN OTHER RESTRICTIONS. Each of the following sections of the Loan Agreement, namely section 7.2.8 [Transactions with Affiliates], 7.2.9 [Sale or Discount of Receivables], and 7.2.10 [Negative Pledges] is amended to add at the end thereof the following: The foregoing covenant shall not apply to any such actions solely by or solely involving Laxare, so long as it is a Subsidiary of the Borrower. 7. CERTAIN EVENTS OF DEFAULT INVOLVING LAXARE. 7.1. BANKRUPTCY, INSOLVENCY, ETC. Section 8.1.4 [Bankruptcy, Insolvency, etc.] of the Loan Agreement is hereby amended by adding at the end thereof the following: Solely for purposes of this section 8.1.4, Laxare shall not be considered a Subsidiary of the Borrower. 7.2. JUDGMENTS. Section 8.1.9 [Judgments] of the Loan Agreement is hereby amended by adding at the end thereof the following: No judgment rendered against Laxare and not rendered against the Borrower or any other Subsidiary shall be considered for purposes of this section 8.1.9. 8. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that: (i) the Borrower has delivered to the Agent and each Bank prior to the execution of this Amendment true, correct and complete copies of the consolidated financial statements of the Borrower and its consolidated subsidiaries for the fiscal year ended December 31, 1994 and for the six months ended June 30, 1995, such consolidated financial have been prepared in accordance with generally accepted accounting principles, consistently applied (except as noted therein), and fairly present the consolidated financial condition of the Borrower and its consolidated subsidiaries at such dates and the consolidated results of their operations and cash flows for the periods then ended; (ii) this Amendment has been duly authorized by all necessary corporate action on the part of the Borrower, has been duly executed and delivered by a duly authorized officer or officers of the Borrower, and constitutes the valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms; (iii) the representations and warranties of the Borrower contained in the Loan Agreement, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof; (iv) no condition or event has occurred or exists which constitutes or which, after notice or lapse of time or both, 2 4 would constitute an Event of Default under the Loan Agreement, as amended hereby; and (v) the Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby. 9. RATIFICATIONS. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. 10. BINDING EFFECT. This Amendment shall become effective if and when, (i) this Amendment shall have been executed by the Borrower and the Agent, and the Consent appended hereto shall have been executed by the Subsidiaries named therein, (ii) the Agent shall have been notified by the Required Banks that such Banks have executed this Amendment, and (iii) the Agent shall have notified the Borrower and each Bank in writing that the conditions specified in the foregoing clauses (i) and (ii) have been satisfied; and thereafter this Amendment shall be binding upon and inure to the benefit of the Borrower, the Agent and each Bank and their respective permitted successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Banks. 11. MISCELLANEOUS. 11.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Agent or any Bank or any subsequent Advance shall affect the representations and warranties or the right of the Agent or any Bank to rely upon them. 11.2. REFERENCE TO LOAN AGREEMENT. The Loan Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference therein to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby. 11.3. EXPENSES. As provided in the Loan Agreement, the Borrower agrees to pay on demand all costs and expenses incurred by the Agent in connection with the preparation, negotiation, and execution of this Amendment, including without limitation the costs and fees of the Agent's special legal counsel, regardless of whether this Amendment becomes effective in accordance with section 10 hereof, and all costs and expenses incurred by the Agent or any Bank in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby. 11.4. SEVERABILITY. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 11.5. APPLICABLE LAW. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. 11.6. COUNTERPARTS. This Amendment may be executed by the parties hereto separately in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement. 11.7. HEADINGS. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. 11.8. ENTIRE AGREEMENT. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and 3 5 understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. OGLEBAY NORTON COMPANY BY: ________________________________ TITLE:____________________________ SOCIETY NATIONAL BANK, INDIVIDUALLY AND AS AGENT BY: ________________________________ VICE PRESIDENT [BALANCE OF SIGNATURES CONTINUED ON FOLLOWING PAGE.] 4 6 THE BANK OF NOVA SCOTIA BY: ________________________________ VICE PRESIDENT NBD BANK (SUCCESSOR TO NBD BANK, N.A.) BY: ________________________________ TITLE:____________________________ COMERICA BANK BY: ________________________________ TITLE:____________________________ THE HUNTINGTON NATIONAL BANK BY:________________________________ TITLE:____________________________ 5 7 CONSENT OF GUARANTORS FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in order to induce the Required Banks to enter into the foregoing Amendment, each of the undersigned hereby (i) acknowledges receipt of the foregoing Amendment, and (ii) without limiting the intent or effect of any of the terms or provisions of the Amended and Restated Subsidiary Guaranty to which the undersigned are a party, consents to all of the terms and provisions of the foregoing Amendment. IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered this instrument as of August 29, 1995. OGLEBAY NORTON INDUSTRIAL SANDS, INC. BY: _______________________________________ VICE PRESIDENT OGLEBAY NORTON REFRACTORIES & MINERALS, INC. BY: _______________________________________ VICE PRESIDENT EX-10.P.2 16 EXHIBIT 10.P.2 1 Exhibit 10(p)(2) OGLEBAY NORTON COMPANY as Borrower And THE BANKS NAMED HEREIN as Banks And KEYBANK NATIONAL ASSOCIATION as Agent --------------------- AMENDMENT NO. 2 dated as of March 1, 1997 to AMENDED AND RESTATED LOAN AGREEMENT --------------------- 2 AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT (this "AMENDMENT"), dated as of March 1, 1997, among OGLEBAY NORTON COMPANY, a Delaware corporation (herein, together with its successors and assigns, the "BORROWER"), the banks listed on the signature pages hereof (the "BANKS"), and KEYBANK NATIONAL ASSOCIATION, a national banking association ("KEYBANK") which is the successor by merger to Society National Bank, as agent (the "AGENT") for the Banks under the Loan Agreement (hereafter defined), as amended hereby: PRELIMINARY STATEMENTS: (1) The Borrower, the Banks and the Agent entered into the Amended and Restated Loan Agreement, orginially dated as of December 1, 1990, and amended and restated as of December 29, 1994, and as further amended by Amendment No. 1 thereto, dated as of August 29, 1995 (as so amended and restated and further amended and in effect on the effective date of this Amendment, the "LOAN AGREEMENT"; with the terms defined therein, or the definitions of which are incorporated therein, being used herein as so defined). (2) The Borrower has indicated to the Banks that one of its Subsidiaries proposes to enter into a lease with Cleveland-Cuyahoga County Port Authority and that the Borrower proposes to guaranty the obligations of such Subsidiary under such lease. (3) The Borrower has requested the Agent and the Banks to amend certain of the terms and provisions of the Loan Agreement in order to permit the Borrower to guaranty such obligations. (4) The Banks and the Agent are willing to enter into this Amendment in order to accomodate such request, all as more fully set forth below. NOW, THEREFORE, the parties hereby agree as follows: 2. AMENDMENTS. 2.1. INVESTMENTS AND ACQUISITIONS. The word "and" at the end of clause (vii) of Section 7.2.1(a) of the Loan Agreement, and all provisions of Section 7.2.1(a) which follow such word, are hereby deleted and replaced with the following: (viii) any Guaranty by the Borrower of lease and related obligations of a Subsidiary under a lease and operating agreement with Cleveland-Cuyahoga County Port Authority covering the property commonly known as the C&P Docks, located in Cleveland, Ohio, and any related improvements and related property; PROVIDED that the base rent payable thereunder (exclusive of any rent based on tonnage or other usage) does not exceed $750,000 in any period of 12 consecutive months, (ix) any Guaranty of principal, interest and other payments and obligations in respect of up to $6,500,000 aggregate original principal amount of Cleveland-Cuyahoga County Port Authority Port Development Revenue Bonds, Series 1997-1 (C&P Docks Project), issued in connection with the lease arrangement referred to in the preceding clause (viii), including any Bonds issued in connection with any refinancing thereof not involving an increase in the aggregate principal 3 amount thereof (exclusive of any portion of such increase intended to cover refinancing costs and expenses), and (x) any other Guaranty which is not prohibited by Section 7.2.5 and which does not involve any violation of Section 7.2.3. Notwithstanding the foregoing, the Borrower will not, and will not permit any Subsidiary to, make any Investment in Laxare at any time after August 1, 1995, except that after such date the Borrower or any Subsidiary may make Investments in Laxare, not in excess of $500,000 in the aggregate. 2.2. LEASE OBLIGATIONS. Section 7.2.14 of the Loan Agreement is hereby amended by adding the following at the end thereof: For purposes of this Section 7.2.14, rental obligations which are based on usage (such as tonnage) or a percentage of revenues derived from the operation of the leased property, shall be excluded from any such computations. 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that: (i) this Amendment has been duly authorized by all necessary corporate action on the part of the Borrower, has been duly executed and delivered by a duly authorized officer or officers of the Borrower, and constitutes the valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms; (ii) the representations and warranties of the Borrower contained in the Loan Agreement, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof; (iii) no condition or event has occurred or exists which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default under the Loan Agreement, as amended hereby; and (iv) the Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby. 4. RATIFICATIONS. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. 5. BINDING EFFECT. This Amendment shall become effective if and when, (i) this Amendment shall have been executed by the Borrower and the Agent, and the Consent appended hereto shall have been executed by the Subsidiaries named therein, (ii) the Agent shall have been notified by the Required Banks that such Banks have executed this Amendment, and (iii) the Agent shall have notified the Borrower and each Bank in writing that the conditions specified in the foregoing clauses (i) and (ii) have been satisfied; and thereafter this Amendment shall be binding upon and inure to the benefit of the Borrower, the Agent and each Bank and their respective permitted successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Banks. 6. MISCELLANEOUS. 6.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Agent or any Bank or any subsequent Advance shall affect the representations and warranties or the right of the Agent or any Bank to rely upon them. 6.2. REFERENCE TO LOAN AGREEMENT. The Loan Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference therein to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby. 2 4 6.3. EXPENSES. As provided in the Loan Agreement, the Borrower agrees to pay on demand all costs and expenses incurred by the Agent in connection with the preparation, negotiation, and execution of this Amendment, including without limitation the costs and fees of the Agent's special legal counsel, regardless of whether this Amendment becomes effective in accordance with section 4 hereof, and all costs and expenses incurred by the Agent or any Bank in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby. 6.4. SEVERABILITY. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 6.5. APPLICABLE LAW. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio. 6.6. COUNTERPARTS. This Amendment may be executed by the parties hereto separately in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement. 6.7. HEADINGS. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. 6.8. ENTIRE AGREEMENT. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto relating to the subject matter hereof. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. OGLEBAY NORTON COMPANY BY: ________________________________________ TREASURER AND DIRECTOR OF FINANCE KEYBANK NATIONAL ASSOCIATION (SUCCESSOR TO SOCIETY NATIONAL BANK), INDIVIDUALLY AND AS AGENT BY: ________________________________________ VICE PRESIDENT 3 5 [Balance of signatures continued on following page.] 4 6 THE BANK OF NOVA SCOTIA BY: ________________________________________ VICE PRESIDENT NBD BANK (SUCCESSOR TO NBD BANK, N.A.) BY: ________________________________________ VICE PRESIDENT COMERICA BANK BY: ________________________________________ VICE PRESIDENT THE HUNTINGTON NATIONAL BANK BY:________________________________________ VICE PRESIDENT 5 7 CONSENT OF GUARANTORS FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in order to induce the Required Banks to enter into the foregoing Amendment, each of the undersigned hereby (i) acknowledges receipt of the foregoing Amendment, and (ii) without limiting the intent or effect of any of the terms or provisions of the Amended and Restated Subsidiary Guaranty to which the undersigned are a party, consents to all of the terms and provisions of the foregoing Amendment. IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered this instrument as of March 1, 1997. OGLEBAY NORTON INDUSTRIAL SANDS, INC. BY: _______________________________________ VICE PRESIDENT OGLEBAY NORTON ENGINEERED MATERIALS, INC. BY: _______________________________________ VICE PRESIDENT EX-10.Q 17 EXHIBIT 10.Q 1 Exhibit 10(q) Oglebay Norton Company Annual Incentive Plan (Plan Description) Beginning with the year ended December 31, 1994, in addition to annual salary, executive officers, including the Chief Executive Officer, were eligible to receive cash bonuses under the Company's Annual Incentive Plan (the "Incentive Plan"). The Incentive Plan was adopted by the Committee in February 1994 and was effective for the year that began on January 1, 1994. The Incentive Plan is designed to directly link executive officer compensation with both corporate and individual performance. Under the Incentive Plan, the Committee establishes corporate, business unit and individual performance measures, such as income from operations or return on assets or achievement of specified corporate or business unit strategic objectives, for the coming year. The Committee also establishes specific performance goals applicable to each such measure. The amount of the incentive award under the Incentive Plan, if any, to a participant, including the Chief Executive Officer, is based on the participant's target award level, the weightings assigned to each corporate, business unit and individual performance measure applicable to the participant and achievement of those goals. Target awards are determined with reference to the participant's base salary. The target award for the Chief Executive Officer is 50% of base salary; for senior executive and other officers, 15 to 35% of base salary, certain managers, 15% of base salary and other employees, 8% of base salary. Actual awards may range from 0% to 150% of target awards, depending on the extent to which performance goals are met or exceeded. If threshold performance goals are not achieved, no award may be made under the Incentive Plan. Notwithstanding the amount of any incentive award otherwise payable under the Incentive Plan, the Committee may increase or decrease the amount of the award to an executive officer by a maximum of 25%. For corporate participants, the corporate performance measure accounted for 75% of the 1996 award and the individual performance, business unit performance and individual performance accounted for 35%, 50% and 15% respectively, of the 1996 award. EX-21 18 EXHIBIT 21 1 Exhibit 21 SUBSIDIARIES OF OGLEBAY NORTON COMPANY Jurisdiction Subsidiaries of Incorporation ------------ ---------------- Canadian Ferro Hot Metal Specialties Limited Ontario Laxare, Inc. West Virginia Oglebay Norton Engineered Materials, Inc. Ohio Oglebay Norton Industrial Sands, Inc. California Oglebay Norton Terminals, Inc. Ohio ONCO Eveleth Company Minnesota ON Coast Petroleum Company Texas ONCO WVA, Inc. West Virginia Saginaw Mining Company Ohio EX-23 19 EXHIBIT 23 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 14, 1997, with respect to the consolidated financial statements of Oglebay Norton Company included in this Annual Report (Form 10-K) for the year ended December 31, 1996: Registration Statement Number 33-58819 on Form S-8 dated April 26, 1995 pertaining to the Oglebay Norton Company Director Stock Plan; Registration Statement Number 33-37974 on Form S-8 dated November 23, 1990, pertaining to the Oglebay Norton Company Incentive Savings Plan and Trust; Registration Statement Number 33-37975 on Form S-8 dated November 23, 1990, pertaining to the Oglebay 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 Oglebay Norton Company Incentive Savings Plan and Trust; Registration Statement Number 33-29046 on Form S-8 dated June 9, 1989, pertaining to the Oglebay Norton Company Employee Stock Ownership Plan and Trust; Registration Statement Number 33-21006 on Form S-8 dated April 21, 1988, pertaining to the Oglebay Norton Company Employee Stock Ownership Plan and Trust. ERNST & YOUNG LLP Cleveland, Ohio March 27, 1997 EX-27 20 EXHIBIT 27
5 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 21,850,282 898,475 27,909,834 512,000 5,339,547 60,863,331 301,272,226 157,473,072 236,213,408 33,499,932 28,664,675 3,626,666 0 0 102,822,333 236,213,408 74,482,769 160,661,047 131,861,130 148,736,242 2,011,072 0 3,148,733 12,709,309 1,653,000 11,056,309 4,500,676 0 0 15,556,985 6.38 6.38
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