<PAGE> 1
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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, 1997 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 (IRS 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
------------ ---------------
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]
The aggregate market value of voting stock held by non-affiliates of the
Registrant at March 10, 1998 (calculated by excluding the total number of shares
reported under Item 12 hereof) was $130,956,384.
Shares of Common Stock with associated Rights to Purchase Preferred Stock
outstanding at March 10, 1998: 4,766,258
---------
Portions of the following document are incorporated by reference: Registration
Statement on Form S-4, dated March 3, 1998, as amended, containing Registrant's
proxy statement otherwise required to be filed pursuant to Regulation 14A in
connection with Registrant's 1998 Annual Meeting of Stockholders.
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PART I
ITEM 1. BUSINESS
--------
A. GENERAL - INDUSTRY SEGMENTS
---------------------------
Oglebay Norton Company (the "Registrant" or the "Company"),
whose predecessors date back to 1854, was incorporated in Delaware in 1931. Its
wholly-owned subsidiaries are engaged in the transportation and mining and sale
of industrial minerals. The principal offices of the Company are located at 1100
Superior Avenue - 20th Floor, Cleveland, Ohio 44114-2598.
The information regarding the amounts of consolidated net
sales and operating revenues, consolidated income from operations and
consolidated identifiable assets for the three years ended December 31, 1997,
attributable to each of the Company's industry segments, Marine Transportation
and Industrial Sands, appears in Note L of the Consolidated Financial Statement
on pages F-21 through F-24 of this Annual Report on Form 10-K.
In December 1997, the Company determined to exit the
metallurgical treatment and refractory products businesses that comprised its
Engineered Materials segment. That segment produced revenues of $30,883,000 and
a net loss of $842,000 for the year ended December 31, 1997. The metallurgical
treatments business of the Engineered Materials segment is now classified as a
discontinued operation and is expected to be divested in 1998. The hot top
refractory portion of the Engineered Materials business was sold on December 31,
1997. See Note B of the Notes to Consolidated Financial Statements on page F-9
for disclosure of financial data with respect to these discontinued operations.
B. PRINCIPAL PRODUCTS AND SERVICES
-------------------------------
1. MARINE TRANSPORTATION
---------------------
The Company operates a fleet of twelve 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 Company's vessels are
designed to unload cargo without shoreside assistance.
The Company owns eleven of the vessels it operates and one is
leased as described below. The vessels' cargo capacities range in size from
13,500 gross tons to 60,000 gross tons. The newest vessel was commissioned in
1981 and the oldest in 1925. The relatively long life of the Company'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 F of the Notes to Consolidated Financial Statements on page
F-12 for disclosure of financial
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data with respect to these bonds. The vessel M/V Earl W. Oglebay is leased under
a bareboat charter agreement that expires in November 1998 and provides for an
option to purchase the vessel at its fair market value upon completion of the
charter term. The Company is presently engaged in discussions with the owner of
that vessel concerning the status of the Company's interest in the vessel upon
the charter's November 1998 termination.
The Company'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 that cause the actual number of days of operation to
vary each year. In 1997, the number of vessel operating days was 3,405 as
compared to 3,336 operating days in 1996. The increase in the number of vessel
operating days in 1997 as compared to 1996 was the result of unusually good
weather. The increased number of operating days, along with lower fuel costs,
positively impacted operating revenues and costs. In both 1997 and 1996, the
Company operated twelve vessels during each season. The increased number of
operating days permitted the Company's fleet to set an all-time tonnage record
by carrying 23.8 million tons in 1997, compared to 22.1 million tons in 1996.
The Company competes with three other similar-sized U.S. flag Great Lakes
commercial fleets, American Steamship Company, Interlake Steamship Company and
U.S.S. Great Lakes Fleet, Inc., and certain steel companies that operate smaller
captive fleets. The Company's fleet consumes substantial amounts of petroleum
fuel products that presently are in adequate supply.
The Company's wholly-owned subsidiary, Oglebay Norton
Terminals, Inc., operates a bulk material dock facility in Cleveland, Ohio under
a 10-year agreement with the Cleveland-Cuyahoga County Port Authority expiring
in March 2007 (with an option to extend for an additional 10 years). The dock
facility receives cargo from Great Lakes vessels, stores it as needed and
transfers cargo for further shipment via rail or water transportation. While the
dock handled only iron ore cargoes during 1997, it can also be utilized for the
transshipment of in-bound and out-bound cargoes of other dry-bulk commodities
such as coal, sand, limestone, magnetic concentrate ore, salt, cement and coke.
The Company's subsidiary commenced operation of the dock facility on April 1,
1997, and moved approximately 1.3 million tons of cargo in 1997. As is the case
with the Great Lakes vessels that call upon the dock facility, its operations
are typically seasonal, commencing in late March and continuing until early
January. However, the location of the dock facility permits its use during the
off-season for transshipment of dry bulk cargoes from the dock to points on the
adjoining Cuyahoga River in Cleveland, Ohio, weather conditions permitting.
2. INDUSTRIAL SANDS
----------------
Oglebay Norton Industrial Sands, Inc., a wholly-owned
subsidiary of the Company, mines and processes industrial sands for the glass,
ceramic, recreational, foundry, filtration and oil well service industries.
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The following is a list of the plants of Oglebay Norton
Industrial Sands, Inc.:
<TABLE>
<CAPTION>
Current Minimum
Plant Name and Capacity Years of
Location (1) Markets Served (tons in 000s) Reserves (2)
------------ -------------- ------------- ------------
<S> <C> <C> <C>
Orange County Construction, Specialty and 550 14.2
San Juan Capistrano, Recreational Sands
CA
Riverside Pulverized Sand 30 N/A
Riverside, CA
Glass Rock Glass, Foundry and Ceramic Sands 500 17.6
Glenford, OH
Millwood Glass, Foundry and Ceramic Sands 280 25.4
Howard, OH
Brady Fracture, Filter, Abrasives, 1,200 71.2
Brady and Voca, TX Industrial, and Pulverized Sands
Bakersfield Specialty Sands 20 N/A
Bakersfield, CA
Kurtz Sports Turf Sports, Recreational and Landscaping 100(3) N/A
Glenford and
Howard, OH
Colorado Silica Sand Filtration, Fracture, Environmental, 100 6.0
Colorado Springs, CO Industrial, Landscape and Recreational
Brady, TX
</TABLE>
(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. Reserves for the Colorado Silica Sand operation are held
under leases with expiration dates ranging from September 1998 through 2004.
Colorado Silica Sand, Inc., a wholly-owned subsidiary of Oglebay Norton
Industrial Sands, Inc., owns the real estate on which its Colorado Springs,
Colorado plant is situated.
(2) Based on full production at current rated annual capacity. The Riverside,
Bakersfield and Kurtz Sports Turf operations do not own or lease reserves
but acquire feedstocks from other sources, including other Company-operated
facilities.
(3) The Kurtz Sports Turf business involves the custom blending of sand and
organic materials at customer sites. As such, its annual capacity is
affected by a number of variables including weather, product mix and travel
times between customer sites.
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
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segment's product lines. The Company's silica sand operations produced
approximately 1,770,000 tons and 1,537,000 tons of sand in 1997 and 1996,
respectively. The processed sand sold by the Company's Industrial Sands segment
primarily move by truck and rail to consumers.
The Kurtz Sports Turf operation, which was acquired by the
Company on May 22, 1997, produces specialty mixtures of sand and organic
materials that are used in various sports-related and other applications,
including golf courses, playgrounds, parks and sports fields. Kurtz Sports Turf
utilizes specialized mobile blending and delivery units for both on- and
off-site creation and delivery of the finished product. The annual capacities of
the blending units will vary due to customer demand, travel distance of the
mobile units between projects and weather. A portion of the sand utilized by the
Company's Kurtz Sports Turf operation is supplied by its Millwood and Glass Rock
mines. There are several sufficient raw material sources for the Company's Kurtz
Sports Turf operations.
The Colorado Silica operations, which were acquired on March
9, 1998, consist of processing facilities in Colorado Springs, Colorado and
Brady, Texas. The Colorado Springs facility acquires feedstock sand under lease
agreements with landowners who must have the sand removed in order to develop
their properties. The high demand for developed land in the Colorado Springs
area provides the Company with ample feedstocks for the Colorado Silica
operation. If development were to cease, the Company believes there are other
sources of sand feedstocks readily available. The Brady, Texas facility of
Colorado Silica is a rescreening operation that produces specialty sizes of
sand. Feedstocks for Colorado Silica's Brady, Texas operation come primarily
from the Company's other Brady and Voca, Texas mines.
The Company is the fourth largest industrial sand producer in
the United States with Unimin Corp., U.S. Silica Co., and Fairmont Minerals
Ltd., its chief competitors. The Company expects to continue its pursuit of
acquisitions in this industry segment.
C. COMPETITION
-----------
The Company experiences intense competition in all of its
business segments from both foreign and domestic companies in supplying products
and services or offering alternative modes of transportation. The availability
and cost of rail, truck and marine transportation are important factors in the
ability of the Company's Industrial Sands segment to compete in the market
place. Vessel and rail rates are important factors in the ability of the
Company's Great Lakes fleet to compete with other independent and captive
fleets, railroads and other providers of surface transportation. The Company
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 Company is subject to various environmental laws and
regulations imposed by federal, state and local governments. The Company cannot
reasonably estimate future costs related to compliance with these laws and
regulations. However, costs incurred to comply with environmental regulations
historically have not been
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outside the ordinary course of business. Although it is possible that the
Company's future operating results could be affected by future costs of
environmental compliance, management believes that such costs will not have a
material adverse effect on the Company's consolidated financial position. The
Company is unable to predict the effects of future environmental laws and
regulations upon its business.
E. PRINCIPAL CUSTOMERS
-------------------
More than 10% of the Company's 1997 net sales and operating
revenues were attributable to each of AK Steel Corporation, Detroit Edison
Company and LTV Steel Company, Inc. Long-term vessel transportation contracts
were the primary sources of revenues from each of the principal customers.
F. EMPLOYEES
---------
At December 31, 1997, the Company and its subsidiaries
employed 908 persons.
ITEM 2. PROPERTIES
----------
The Company's principal operating properties are described in
response to Item 1. The Company'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 Company's subsidiary, Laxare, Inc. ("Laxare"), is a
defendant in a civil action (the "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 activities 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"). In an order issued October
31, 1996, the Bankruptcy Court remanded the Action back to the State Court and
lifted its automatic stay of proceedings regarding Laxare, provided that any
award of damages by the State Court must be asserted as claims in the Bankruptcy
Court. The order also granted Laxare's motion to assume four leases that are
property of the Bankruptcy Estate, and permitted Laxare to sublease them to a
third party.
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Following remand, the State Court issued a partial summary
judgment order finding that a trespass by Laxare and Cannelton did occur. Laxare
and Cannelton appealed the State Court's order to the West Virginia Supreme
Court. The parties subsequently agreed to settle the Action, which was approved
by the Bankruptcy Court on March 18, 1998. The settlement did not have a
material adverse effect on the Company's financial position.
(2) The Company; its then wholly-owned subsidiary, Oglebay
Norton Taconite Company; Eveleth Taconite Company; Eveleth Expansion Company;
and the United Steel Workers of America, Local 6860, were named defendants in a
class action complaint filed on August 16, 1988, in United States District
Court, Fifth District of Minnesota, by Lois E. Jenson and Patricia S. Kosmach,
alleging both sexual harassment and sexual discrimination under federal and
state laws. On November 22, 1988, Kathleen O'Brien Anderson, a former employee
of Eveleth Mines, filed a Notice of Charge of Discrimination with the Equal
Employment Opportunity Commission, alleging sexual harassment and sexual
discrimination. Ms. Anderson was issued a Notice of Right to Sue by that
Commission, which was later consolidated with the August 1988 Federal Court
proceeding. The proceedings were certified as a class action and tried in
December 1992 and February 1993. On May 14, 1993, the Court issued its decision,
dismissing seven out of the Plaintiff's nine claims. However, the Court found
against the Company and Oglebay Norton Taconite Company on the remaining two
claims of discrimination in the promotion of hourly employees to step-up foremen
and the other sexual harassment based upon a hostile work environment. The Court
also dismissed Eveleth Taconite Company and Eveleth Expansion Company as
defendants.
Court proceedings continued to determine damages to the named
plaintiffs and 16 other class members. On November 22, 1996, the Court awarded
plaintiffs and the State of Minnesota a total of $214,500 in damages and civil
penalties, and requested briefs on the issue of the amount of attorneys fees and
expenses to be awarded class counsel. Plaintiffs appealed the award of damages
and in December 1997, the United States Eighth Circuit Court of Appeals reversed
the award of damages and remanded the case for retrial on the issue of damages.
The Company intends to appeal the matter to the U.S. Supreme Court. If the
appeal is unsuccessful, the matter will proceed for retrial on the issue of
damages. The Company does not believe that a decision in favor of plaintiffs
would have a material adverse effect upon its financial position.
(3) The Company and certain of its subsidiaries are involved
in various other claims and 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 Company currently believes that these claims and proceedings are
unlikely to have a material adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matter was submitted to a vote of the Company's security
holders, through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.
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EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------
(Included pursuant to Instruction 3 to paragraph (b) of Item 401 of
Regulation S- K)
The executive officers of the Company as of March 10, 1998,
unless otherwise indicated, were as follows:
<TABLE>
<CAPTION>
Name Executive Officer Age
---- ----------------- ---
<S> <C> <C>
R. Thomas Green, Jr. Chairman of the Board of Directors, since April 1, 1992, and President and 60
Chief Executive Officer, from April 1, 1992 to December 31, 1997, of the
Company.
John N. Lauer President and Chief Executive Officer and Director of the Company since 59
January 1, 1998; retired private investor, 1994 to December 1997; President
and Chief Operating Officer, The BF Goodrich Company, chemical and aerospace
company, 1990 to 1994.
Jeffrey S. Gray Vice President - Corporate Development and Legal Affairs of the Company, 41
since March 17, 1997; Partner, 1995 to 1997, Associate, 1987 to 1994, Ulmer
& Berne LLP, law firm.
Mark P. Juszli Vice President - Industrial Sands, since 1995, General Manager - Industrial 46
Sands, 1994 to 1995, of the Company; Senior Vice President - Ohio Region,
American Aggregates Corp., Dayton, Ohio, producer of construction
aggregates, 1993 to 1994; President, Western Rock Products, Inc.,
Albuquerque, New Mexico, producer of railroad ballast, 1992 to 1993.
David H. Kelsey Vice President and Chief Financial Officer of the Company, since February 46
23, 1998; Executive Vice President & Chief Financial Officer, Host
Communications, Inc., sports marketing and management firm, 1994 to 1997;
Senior Vice President & Director, GE Capital Equity Funding Group, growth
capital provider, 1992 to 1994; Senior Vice President & Portfolio Manager,
GE Capital Corporate Finance Group, provider of senior and mezzanine
financing, from 1988 to 1992.
Stuart H. Theis Vice President - Marine Transportation, since 1994, Assistant to the 55
President, 1992 to 1993, of the Company.
Timothy J. Vice President - Engineered Materials, since 1997, Vice President - 42
Wojciechowski Refractories & Minerals, 1995 to 1997, of the
</TABLE>
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<TABLE>
<S> <C>
Company; President and Chief Executive Officer, Concast Standard, Inc.,
supplier of continuous cast equipment to the steel industry, 1994 to
1995; Director of Marketing, North American Refractories Company,
supplier to the steel industry, 1992 to 1994.
Paul V. Gorman, Jr. Assistant Vice President - Human Resources, since 1997, Director of Human 51
Resources, 1993 to 1997, Director, Industrial Relations, 1987 to 1993, of
the Company.
</TABLE>
Except as noted above, all executive officers of the Company
have served in the capacities indicated, respectively, during the past five
years. With the exception of R. Thomas Green, Jr., who has agreed with the
Company to remain as Chairman of the Board through the Company's 1998 Annual
Meeting of Stockholders, all executive officers serve at the pleasure of the
Board of Directors, with no fixed term of office.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
----------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
The Company's common stock is traded on the NASDAQ National
Market. The Company had 451 stockholders of record at December 31, 1997 and 473
at December 31, 1996. There were no sales of unregistered equity securities by
the Company during 1997. The following is a summary of the market range and
dividends for each quarterly period in 1997 and 1996 for the Company's common
stock, adjusted for a two-for-one stock split in October 1997.
<TABLE>
<CAPTION>
Market Range
Quarterly --------------------
Period High Low Dividends
------ ---- --- ---------
<S> <C> <C> <C>
1997 4th $41-1/4 $29-5/8 $ .20
3rd 29-7/8 21-3/4 .20
2nd 22-3/8 19-5/8 .175
1st 22-1/2 20-1/2 .175
1996 4th $22-3/8 $21-1/8 $ .175
3rd 22-7/8 20-15/16 .175
2nd 23-5/8 19-3/8 .15
1st 20-1/2 18-5/8 .15
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA
-----------------------
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(Dollars and Shares in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
OPERATIONS
Net sales and operating revenues $145,185 $129,697
Income from continuing operations 18,356 11,039
Discontinued operations (2,104) 4,518
Net income 16,252 15,557
PER SHARE DATA
Income (loss) per common share - basic:
Continuing operations $ 3.84 $ 2.26
Discontinued operations (.44) .93
Net income 3.40 3.19
Income (loss) per common share - assuming dilution:
Continuing operations 3.81 2.26
Discontinued operations (.44) .92
Net income 3.37 3.18
Dividends .75 .65
Market price 41.00 21.88
Book value 24.77 22.01
Shares of common stock outstanding 4,752 4,835
Average shares of common stock outstanding 4,785 4,876
Average shares of common stock - assuming dilution 4,816 4,891
FINANCIAL CONDITION
Capital expenditures $ 24,554 $ 5,573
Working capital 38,756 28,561
Total assets 263,452 234,696
Capitalization:
Current portion of long-term debt 8,723 8,476
Long-term debt 36,942 28,665
Stockholders' equity 117,716 106,449
</TABLE>
In 1997, the Company's Engineered Materials business segment was
classified as a discontinued operation. In 1996, the Company sold its interest
in Eveleth Mines and certain mining equipment, completing its exit from the iron
ore business. Prior years have been adjusted for discontinued operations and to
reflect a two-for-one split of the Company's common stock in October 1997.
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------------
<S> <C> <C> <C>
Net sales and operating revenues $126,373 $118,509 $109,677
Income from continuing operations 10,624 9,558 2,823
Discontinued operations 4,737 5,333 4,439
Net income 15,361 14,891 7,262
PER SHARE DATA
Income (loss) per common share - basic:
Continuing operations $ 2.15 $ 1.92 $ .56
Discontinued operations .95 1.07 .88
Net income 3.10 2.99 1.44
Income (loss) per common share - assuming dilution:
Continuing operations 2.15 1.92 .56
Discontinued operations .95 1.07 .88
Net income 3.10 2.99 1.44
Dividends .60 .50 .40
Market price 18.63 15.25 11.25
Book value 19.52 17.07 13.95
Shares of common stock outstanding 4,932 4,966 5,008
Average shares of common stock outstanding 4,948 4,982 5,023
Average shares of common stock - assuming dilution 4,948 4,982 5,023
FINANCIAL CONDITION
Capital expenditures $ 5,968 $ 6,411 $ 1,719
Working capital 24,780 21,387 22,329
Total assets 247,220 259,177 258,111
Capitalization:
Current portion of long-term debt 8,476 8,476 11,190
Long-term debt 43,641 57,118 69,344
Stockholders' equity 96,265 84,753 69,873
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations may contain statements concerning certain trends and other
forward-looking information, within the meaning of the federal securities laws.
Such forward-looking statements are subject to uncertainties and factors
relating to the Company's operations and business environment, all of which are
difficult to predict and many of which are beyond the control of the Company.
The Company believes that the following factors, among others, could affect its
future performance and cause actual results to differ materially from those
expressed or implied by forward-looking statements made by or on behalf of the
Company: (1) unfavorable weather conditions; (2) fluctuations in oil prices; (3)
changes in the demand for the Company's products or services due to changes in
technology; (4) vessel service availability; (5) change in United States
cabotage laws; (6) labor unrest; (7) the loss or bankruptcy of major customers;
and (8) year 2000 software conversion failures of vendors, suppliers and
customers.
FINANCIAL CONDITION
The Company's operating activities provided cash of $23,690,000 in
1997; an increase of 17% compared with $20,166,000 in 1996. Cash from operations
was 9% less in 1997 compared with $25,940,000 generated in 1995. The Company's
income from operations was $24,465,000 in 1997 compared with $11,653,000 in 1996
and $12,973,000 in 1995. The Company's Marine Transportation and Industrial
Sands businesses both had record years in 1997. After two years of harsh weather
conditions, Marine Transportation's fleet benefited from milder weather in 1997
and set new Company records for tonnage carried on the Great Lakes. Industrial
Sands had its best performance ever with an increased share of robust oil and
gas markets and a strong construction market in the Southwest during 1997.
Changes in accounts receivable, accounts payable and inventories added net cash
from operations of $3,341,000 in 1997 compared with $947,000 and $5,913,000
generated by these working capital accounts in 1996 and 1995, respectively. Net
cash from operations for 1997, 1996 and 1995 are comparable if these working
capital changes were excluded in each year. Operating results of the Company's
business segments are discussed in more detail under "RESULTS OF OPERATIONS".
Capital expenditures from continuing operations amounted to $24,554,000
in 1997 compared with $5,573,000 and $5,968,000 in 1996 and 1995, respectively.
Expenditures in 1997 included $17,000,000 for the acquisition of two
self-unloading vessels. The Company operated these vessels on the Great Lakes,
under a charter agreement, as a part of its Marine Transportation fleet for over
20 years. Vessel inspection costs of $2,260,000 and $2,037,000 are included in
capital expenditures in 1997 and 1995, respectively. No vessel inspections were
required in 1996. Capital expenditures in 1997 and 1996 included increases of
$1,748,000 and $2,180,000, respectively, for new mineral reserves, equipment and
improvements at the California, Texas and Ohio operations of Industrial Sands.
Capital expenditures for 1998, excluding business acquisitions, are currently
expected to approximate $8,000,000.
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<PAGE> 14
In 1997, the Company purchased the assets of two industrial sand
operations for $3,400,000 in cash and notes payable. These operations screen
sand to make specialty grades and sizes and supply certain blended sand and
organic mixes for end users, such as golf courses, playgrounds, parks and sports
fields. Operating results for these businesses have been included in the
Company's Industrial Sands business segment since acquisition, and are not
material to the consolidated operations of the Company.
In December 1997, the Company decided to divest the assets of its
Engineered Materials business. Hot top operations were sold in December, and the
sale of its remaining metallurgical treatment operations is anticipated in 1998.
The net loss upon disposition of these discontinued operations is estimated to
be $1,263,000. In December 1996, the Company sold its interest in Eveleth Mines
and certain mining equipment for $5,000,000, completing its exit from the iron
ore business. The sale of this discontinued operation resulted in a net gain of
$570,000. Discontinued operations are further described in Note B to the
consolidated financial statements.
In 1997, the Company sold its interest in certain coal reserves for
$6,000,000 in cash, resulting in a pretax gain of $5,212,000. In 1996, the
Company sold an inactive business and current marketable securities resulting in
pretax gains totaling $2,701,000. In 1995, the Company sold two vessels no
longer in service, current marketable securities and undeveloped clay properties
resulting in pretax gains totaling $4,474,000. Total proceeds from the sale of
assets from continuing operations were $8,192,000 in 1997, $5,543,000 in 1996
and $6,538,000 in 1995.
In 1997, the Company entered into a $17,000,000 fixed rate term loan to
finance the acquisition of two Marine Transportation vessels. The Company
borrowed $15,000,000 on its revolving credit facility for a one-month period in
1997 to provide interim financing for the vessels acquired, but did not utilize
the facility in 1996 or 1995. At the end of 1996 and 1995 the Company elected to
pay $6,500,000 and $5,000,000, respectively, on its variable rate term loan, in
addition to annual required long-term debt payments. Long-term debt is further
described in Note F to the consolidated financial statements.
In March 1998, the Company renegotiated its revolving credit agreement
with certain banks. The new agreement, expected to be completed by the end of
April 1998, will enable the Company to borrow up to $100,000,000 for
acquisitions, working capital requirements and other general needs. The
Company's current revolving credit facility permits it to borrow up to
$40,000,000, of which only $15,000,000 is available for acquisitions.
Anticipated cash flows from operations and current financial resources are
expected to meet the Company's needs during 1998. Financing alternatives are
continuously reviewed to determine their practicality and ability to provide
sufficient funding for the Company on a timely basis at the least possible cost.
The Company declared a two-for-one split of its common stock, paid in
the form of a 100% stock dividend in October 1997. All per share amounts have
been retroactively restated for the stock split. The Company declared and paid
dividends on a quarterly basis totaling $.75 per share in 1997, $.65 per share
in 1996 and $.60 per share in 1995.
14
<PAGE> 15
Dividends paid were $3,584,000 in 1997 compared with $3,162,000 and $2,968,000
in 1996 and 1995, respectively. In the third quarter of 1996 and 1997, the
Company's Board of Directors approved a 2 1/2 cent increase in the quarterly
dividend to $.175 and $.20 per share of common stock, respectively. The Company
purchased, and placed in treasury, 87,990 shares of its common stock for
$1,970,000 in 1997, 99,558 shares for $2,068,000 in 1996 and 36,500 shares for
$615,000 in 1995.
RESULTS OF OPERATIONS
The consolidated financial statements of the Company have been
reclassified to report separately the operating results of continuing and
discontinued operations.
Net sales and operating revenues of $145,185,000 in 1997 were 12%
greater than the 1996 level of $129,697,000 and 15% above net sales and
operating revenues of $126,373,000 in 1995. Income from operations of
$24,465,000 in 1997 more than doubled compared with $11,653,000 in 1996, and
almost doubled compared with the 1995 level of $12,973,000. Income from
continuing operations was $18,356,000 ($3.84 per share) in 1997, compared with
$11,039,000 ($2.26 per share) in 1996 and $10,624,000 ($2.15 per share) in 1995.
In 1997, net income was $16,252,000 ($3.40 per share) compared with net income
of $15,557,000 ($3.19 per share) in 1996 and $15,361,000 ($3.10 per share) in
1995.
In 1997, income from continuing operations includes the effect of
pretax gains totaling $5,548,000, primarily from the sale of certain coal
reserves. In 1996, income from continuing operations includes the effect of
$3,150,000 in pretax gains, principally from the sale of an inactive business
and current marketable securities, and the effects of a $1,824,000 state tax
refund and related interest income of $576,000. Income from continuing
operations in 1995 includes the effect of $4,641,000 in pretax gains, primarily
from the sale of inactive vessels, current marketable securities and undeveloped
clay properties. Income from continuing operations, excluding gains on the sale
of assets and, in 1996, the effects of the tax refund, approximated $14,694,000
($3.07 per share) in 1997, compared with $7,376,000 ($1.51 per share) in 1996
and $7,561,000 ($1.53 per share) in 1995.
At the beginning of the year, the Company increased the estimated
useful lives and salvage values for certain vessels in its Marine Transportation
fleet. The effect of these changes reduced depreciation by $3,178,000 and
increased net income by $2,097,000 ($.44 per share) in 1997. At the end of the
year, the Company reevaluated assumptions used in determining postretirement
pension and health care benefits. The weighted-average discount rates were
adjusted from 7.5% to 7.25% to better reflect market rates. In 1998, the health
care cost trend rate will decline by 1/2% and the ultimate trend rate will
decrease by 1/4% for all retirees. The changes in benefit plan assumptions did
not affect 1997 net income and will not have a significant effect on net income
in 1998.
15
<PAGE> 16
In 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share", Statement No. 130, "Reporting
Comprehensive Income", and Statement No. 131, "Disclosure about Segments of an
Enterprise and Related Information". The Company adopted Statement No. 128 at
the end of 1997 and has applied it retroactively to all periods presented, as
required. The Company must adopt Statement No. 130 in the first quarter of 1998
and does not expect that comprehensive income will differ materially from net
income. Statement No. 131 must be adopted by the end of 1998; however, the
Company believes that most of its disclosures already comply with the new
Statement. These new Statements are further described in Note A to the
consolidated financial statements.
The Company recognizes the need to ensure that its operations will not
be adversely affected by year 2000 software failures. Computer system failures
due to processing errors potentially arising from calculations using a year 2000
date are a known risk. Appropriate measures are necessary to ensure that systems
and applications will recognize and process the year 2000 and beyond. The
Company has identified, evaluated and begun implementation of changes to
computer systems and applications necessary to achieve year 2000 conversion with
no effect on its customers or disruption to its operations. Communications have
begun with major customers, and suppliers, financial institutions and others
with which the Company does business to determine the extent to which the
Company may be vulnerable to other companies failures to remediate their own
year 2000 issues. However, there can be no guarantee that the systems of other
companies will be timely converted and would not have an adverse effect on the
Company. The Company's major computer systems and applications are already year
2000 compliant. The Company believes that all other systems and applications
that it presently utilizes will be year 2000 compliant by the end of 1998; and
the cost of conversion will not have a material impact on the Company's
consolidated results of operations or financial condition.
The operating results of the Company's business segments for 1997, 1996
and 1995 are discussed below. It is the policy of the Company to allocate a
portion of corporate general and administrative expenses to its business
segments. Corporate general and administrative expenses previously allocated to
discontinued operations were reallocated to the remaining business segments for
all years discussed.
MARINE TRANSPORTATION
Operating revenues of $95,701,000 in 1997 exceeded, by more than 11%,
operating revenues of $86,178,000 and $85,657,000 in 1996 and 1995,
respectively. Income from operations of $19,312,000 in 1997, more than doubled
compared with income from operations of $7,860,000 in 1996 and increased 63%
compared with income from operations of $11,845,000 in 1995. Income before taxes
was $16,877,000 in 1997 compared with $5,386,000 and $10,628,000 in 1996 and
1995, respectively. In 1995, the Company sold two inactive vessels resulting in
pretax gains totaling $2,324,000. Interest expense declined to $2,318,000 in
1997, compared with $2,409,000 in 1996 and
16
<PAGE> 17
$3,422,000 in 1995, due to an overall decline in the Company's long-term debt
through the middle of 1997.
The Company's Great Lakes vessel fleet hauled a record 23,846,000 tons
in 1997. This is an 8% increase over 1996 tonnage of 22,103,000 and an 11%
increase over 1995 tonnage of 21,486,000. In addition to setting a new fleet
tonnage record, the M/V Columbia Star set a record for the Head-of-Lakes coal
trade by hauling 70,903 net tons of low-sulfur coal in one shipment from
Superior, Wisconsin to St. Clair, Michigan. Strong customer demand and favorable
operating conditions increased operating revenues in 1997. Improved dispatch and
the weather conditions experienced on the Great Lakes resulted in a 2% increase
in operating days with a corresponding 28% reduction in delay days when compared
with 1996. Continuing strong customer demand for cargo on the Great Lakes
allowed the Company to operate twelve vessels throughout the 1997 sailing
season. Also, the high water levels experienced on the Great Lakes and rivers in
1997 enabled the fleet to carry more tonnage per trip resulting in more
efficient operations. Vessel operating days were 3,405 in 1997 compared with
3,336 and 3,469 in 1996 and 1995, respectively. Iron ore, coal and limestone
shipments increased 14%, 5% and 4%, respectively, compared with 1996. Favorable
fuel rates also contributed to the improved operating results in 1997.
Heavy ice conditions at the start of the 1996 sailing season caused
substantial delays, minor damage and, in general, hampered operations. It was
not until the middle of the second quarter of 1996 that the fleet began to
operate in a normal fashion. The Company operated twelve vessels throughout the
1995 sailing season until adverse weather conditions restricted operations at
the end of the year. High winds and unusually heavy ice at the end of the 1995
sailing season caused considerable delays and negatively impacted operations. In
1995, northern limestone quarries closed earlier than usual due to the harsh
weather. There were 55% more delay days during the 1995 sailing season, compared
with the 1997 sailing season, on the same approximate number of operating days.
As a result, 1995 iron ore, coal and limestone shipments were lower by 4%, 13%
and 19%, respectively, compared with 1997.
In April 1997, material-handling operations began at the Cleveland Bulk
Terminal and contributed modestly to the operating revenues and income from
operations of the segment. The Terminal, located in the Cleveland, Ohio harbor,
is a bulk commodity dock for the transfer of commodities such as iron ore
pellets, coal and limestone. In 1997, the Terminal accepted 1,494,000 tons of
iron ore pellets, of which 1,331,000 tons were loaded onto railroad cars for
delivery to customers. While the Terminal handled only iron ore shipments in
1997, plans are to expand its operations to include truck access and vessel
loading, and diversification of the commodities handled to include salt,
limestone and coal.
As a result of increased operating activities, the segment's 1997
selling, general and administrative expenses, prior to the allocation of
corporate expenses, increased by 27% and 18%, compared with 1996 and 1995,
respectively. These expenses were 3% of segment operating revenues in 1997, 1996
and 1995.
17
<PAGE> 18
Capital expenditures were $20,234,000, $925,000 and $3,125,000 in 1997,
1996 and 1995, respectively. In 1997, two self-unloading vessels, which operated
as part of the segment's fleet for over 20 years were purchased, for a total
combined price of $17,000,000. Included in expenditures for 1997 and 1995 are
$2,260,000 and $2,037,000, respectively, for required vessel inspections. No
vessel inspections were required in 1996. Three of the Company's vessels require
inspection prior to sailing in 1998 for a total estimated cost of $2,400,000.
Depreciation and amortization expense was $5,654,000, $8,671,000 and $8,695,000
in 1997, 1996 and 1995, respectively. The decrease in depreciation and
amortization in 1997 compared with 1996 and 1995 is the result of an increase in
estimated useful lives and salvage values for certain vessels in the fleet. The
effect of these changes reduced depreciation by $3,178,000 in 1997.
INDUSTRIAL SANDS
Net sales of $49,484,000 in 1997 increased by 16% compared with
$42,583,000 in 1996. Net sales in 1997 were 22% greater than the 1995 level of
$40,552,000. Income from operations of $9,970,000 in 1997 improved 17%, compared
with $8,520,000 in 1996. Income from operations was $6,655,000 in 1995. Income
before taxes in 1997 was $9,817,000, compared with $8,239,000 in 1996 and
$6,288,000 in 1995. Interest expense of $350,000 for 1997 was comparable to 1996
and 33% lower than 1995 interest expense. Interest expense on notes payable
associated with the acquisition of assets and related businesses in 1997 offset
reductions in interest expense due to an overall decline in the Company's
long-term debt through the middle of 1997.
Net sales and income from operations in 1997 set new records. The
improvements were a direct result of strong demand, particularly in the oil and
gas well service industry and the construction industry in the Southwest. Record
shipments totaling 1,770,000 tons in 1997 exceeded 1996 shipments by 16% and
1995 shipments by 13%. The segment's Brady, Texas operations experienced record
tonnage, with shipments increasing 23% and 26% compared with 1996 and 1995,
respectively. Tonnage at the segment's Orange County, California operations also
experienced record levels, as 1997 shipments exceeded 1996 and 1995 shipments by
21% and 27%, respectively. The 1997 additions of the Kurtz Sports Turf
operations in Ohio and operations in Bakersfield, California also contributed to
the record tonnage levels. The segment's income from operations was 20% of net
sales in 1997 and 1996, an improvement of 4% over 1995. Selling prices for 1997
improved an average of 2% compared with 1996 and 1995, while operating costs per
ton remained steady through the three year period.
The segment's selling, general and administrative expenses for 1997,
prior to the allocation of corporate expenses, increased by 12% and 9%, compared
with 1996 and 1995, respectively. These expenses were 7% of the segment's sales
in 1997 and 8% in 1996 and 1995.
Capital expenditures were $4,108,000 in 1997 compared with $4,540,000
in 1996 and $2,360,000 in 1995. The increase in capital expenditures in 1996
compared with
18
<PAGE> 19
1995 relates to the acquisition of additional mineral reserves,
plant enhancements and equipment in 1996. Depreciation and amortization expense
was $3,150,000 in 1997 compared with $2,444,000 in 1996 and $2,567,000 in 1995.
Depreciation expense increased during 1997 compared with 1996 and 1995 as a
result of increased capital expenditure activity during 1997 and 1996.
19
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The response to this Item is submitted in a separate section of this
Annual Report on Form 10-K.
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 Company"), 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 Company's Registration Statement
on Form S-4, dated March 3, 1998, as amended, filed in connection with the
Company's 1998 Annual Meeting of Stockholders. 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 Company."
PART IV
ITEM 14. EXHIBITS. FINANCIAL STATEMENT SCHEDULES AND RFPORTS ON FORM 8-K
--------------------------------------------------------------
(a)(l) 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.
(a)(2) AND (d) FINANCIAL STATEMENT SCHEDULES: No consolidated financial
statement schedules are presented because the schedules are not required,
because the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the information
required is included in the financial statements and related notes.
(a)(3) AND (c) EXHIBIT INDEX: The response to this portion of
Item 14 is submitted in a separate section of this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K: None.
20
<PAGE> 21
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Annual Report to be
signed on its behalf by the undersigned thereunto duly authorized.
OGLEBAY NORTON COMPANY
/s/ David H. Kelsey
------------------------------------
Vice President and Chief Financial Officer
March 25, 1998
21
<PAGE> 22
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 25, 1998.
<TABLE>
<S> <C>
/s/ John N. Lauer President and Chief Executive
- ---------------------------------------- Officer and Director;
John N. Lauer Principal Executive Officer
/s/ David H. Kelsey Vice President and Chief Financial
- ---------------------------------------- Officer; Principal Financial
David H. Kelsey 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. Barlett
- ----------------------------------------
James T. Bartlett Director
/s/ Albert C. Bersticker
- ----------------------------------------
Albert C. Bersticker Director
/s/ R. Thomas Green, Jr.
- ----------------------------------------- Chairman of the Board and
R. Thomas Green, Jr. Director
/s/ Ralph D. Ketchum
- ----------------------------------------
Ralph D. Ketchum Director
/s/ William G. Pryor
- ----------------------------------------
William G. Pryor Director
/s/ John D. Weil
- ----------------------------------------
John D. Weil Director
</TABLE>
22
<PAGE> 23
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (a)(3) AND (c)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS
EXHIBIT INDEX
EXHIBITS
YEAR ENDED DECEMBER 31, 1997
OGLEBAY NORTON COMPANY
CLEVELAND, OHIO
23
<PAGE> 24
FORM 10-K
ITEM 8, ITEM 14(a)(1)
LIST OF FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
The following consolidated financial statements of Oglebay Norton Company
and its Subsidiaries are included in Item 8:
Report of Independent Auditors
Consolidated Statement of Operations - Years Ended December 31, 1997,
1996 and 1995
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statement of Cash Flows - Years Ended December 31, 1997,
1996 and 1995
Consolidated Statement of Stockholders' Equity - Years Ended December
31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements - December 31, 1997, 1996
and 1995
24
<PAGE> 25
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, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Oglebay
Norton Company and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
February 12, 1998
F-1
<PAGE> 26
CONSOLIDATED STATEMENT OF OPERATIONS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C>
NET SALES AND OPERATING REVENUES $ 145,184,849 $ 129,697,228 126,373,159
COSTS AND EXPENSES
Cost of goods sold and operating expenses 98,421,276 94,395,629 88,519,736
Depreciation and amortization 8,946,878 11,259,284 11,403,425
General, administrative and selling expenses 13,352,068 12,388,863 13,477,143
------------- ------------- -------------
120,720,222 118,043,776 113,400,304
------------- ------------- -------------
INCOME FROM OPERATIONS 24,464,627 11,653,452 12,972,855
Gain on sale of assets 5,548,036 3,150,434 4,640,713
Interest, dividends and other income 2,693,101 2,790,859 2,281,405
Interest expense (2,834,445) (3,003,639) (4,147,057)
Other expense (4,295,342) (2,011,072) (2,491,488)
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 25,575,977 12,580,034 13,256,428
INCOME TAXES
Current 6,967,000 1,387,000 2,477,000
Deferred 253,000 154,000 155,000
------------- ------------- -------------
7,220,000 1,541,000 2,632,000
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS 18,355,977 11,039,034 10,624,428
Discontinued operations:
(Loss) income from operations (841,727) 3,947,518 4,736,562
(Loss) gain from disposals (1,262,700) 570,433
------------- ------------- -------------
(Loss) income from discontinued operations (2,104,427) 4,517,951 4,736,562
------------- ------------- -------------
NET INCOME $ 16,251,550 $ 15,556,985 $ 15,360,990
============= ============= =============
PER SHARE AMOUNTS:
Income (loss) per common share - basic:
Continuing operations $ 3.84 $ 2.26 $ 2.15
Discontinued operations (.44) .93 .95
------------- ------------- -------------
NET INCOME PER SHARE $ 3.40 $ 3.19 $ 3.10
============= ============= =============
Income (loss) per common share - assuming dilution:
Continuing operations $ 3.81 $ 2.26 $ 2.15
Discontinued operations (.44) .92 .95
------------- ------------- -------------
NET INCOME PER SHARE - ASSUMING DILUTION $ 3.37 $ 3.18 $ 3.10
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE> 27
CONSOLIDATED BALANCE SHEET
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
ASSETS 1997 1996
---------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 29,885,922 $ 21,850,282
Marketable securities -0- 898,475
Accounts receivable, less reserve for
doubtful accounts of $723,000 in
1997 and $512,000 in 1996 22,292,432 24,428,115
Inventories
Raw materials and finished products 1,210,940 550,027
Operating supplies 3,382,764 3,534,003
------------ ------------
4,593,704 4,084,030
Deferred income taxes 3,050,091 3,214,573
Prepaid insurance and other expenses 1,300,715 1,504,947
Discontinued operations 15,571,082 4,562,590
------------ ------------
TOTAL CURRENT ASSETS 76,693,946 60,543,012
PROPERTIES AND EQUIPMENT
Marine Transportation 241,044,884 220,811,102
Industrial Sands 59,531,668 57,220,602
Other 4,382,014 7,050,095
------------ ------------
304,958,566 285,081,799
Less allowances for depreciation
and amortization 154,022,177 148,950,726
------------ ------------
150,936,389 136,131,073
DISCONTINUED OPERATIONS -0- 9,097,902
PREPAID PENSION COSTS AND OTHER ASSETS 35,821,995 28,923,567
------------ ------------
TOTAL ASSETS $263,452,330 $234,695,554
============ ============
</TABLE>
F-3
<PAGE> 28
<TABLE>
<CAPTION>
December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 8,722,545 $ 8,476,450
Accounts payable 6,875,498 5,485,181
Payrolls and other accrued compensation 7,547,241 6,915,055
Accrued expenses 12,514,672 9,485,216
Income taxes 2,277,749 1,620,176
------------- -------------
TOTAL CURRENT LIABILITIES 37,937,705 31,982,078
LONG-TERM DEBT, less current portion 36,942,130 28,664,675
POSTRETIREMENT BENEFITS OBLIGATION 24,341,252 24,675,900
OTHER LONG-TERM LIABILITIES 25,404,891 20,272,081
DEFERRED INCOME TAXES 21,109,949 22,651,821
STOCKHOLDERS' EQUITY
Preferred stock, without par value - authorized
5,000,000 shares; none issued -0- -0-
Common stock, par value $1.00 per share - authorized
10,000,000 shares; issued 7,253,332 shares 7,253,332 7,253,332
Additional capital 6,288,822 5,849,177
Unrealized gains -0- 410,447
Retained earnings 138,628,719 125,960,692
------------- -------------
152,170,873 139,473,648
Treasury stock, at cost - 2,501,152 and
2,417,958 shares at respective dates (33,739,795) (31,833,524)
Unallocated Employee Stock Ownership
Plan shares (714,675) (1,191,125)
------------- -------------
117,716,403 106,448,999
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 263,452,330 $ 234,695,554
============= =============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 29
CONSOLIDATED STATEMENT OF CASH FLOWS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996 1995
---------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 16,251,550 $ 15,556,985 $ 15,360,990
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,946,878 11,259,284 11,403,425
Deferred income taxes (1,166,000) 806,000 (90,000)
Gain on sale of assets (5,548,037) (3,150,434) (4,681,213)
Loss (gain) from disposals of
discontinued operations 1,262,700 (570,433) -0-
Prepaid pension costs and other assets (4,204,687) (3,125,094) (2,450,918)
Decrease (increase) in accounts receivable 2,671,391 (945,050) 4,488,027
Decrease (increase) in inventories (697,639) 142,466 692,000
Increase in accounts payable 1,367,172 1,750,056 732,484
Other operating activities 4,051,961 3,442,976 (1,756,870)
Operating activities of discontinued
operations - net 754,820 (5,000,521) 2,241,683
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,690,109 20,166,235 25,939,608
INVESTING ACTIVITIES
Capital expenditures (24,554,382) (5,573,238) (5,968,234)
Acquisition of businesses (1,600,000) -0- -0-
Proceeds from sale of assets 8,191,884 10,543,361 6,538,009
Investing activities of discontinued operations - net (662,014) (5,739,689) (4,009,399)
------------ ------------ ------------
NET CASH USED FOR INVESTING ACTIVITIES (18,624,512) (769,566) (3,439,624)
FINANCING ACTIVITIES
Payments on long-term debt (8,476,450) (14,976,450) (13,476,450)
Additional long-term debt 17,000,000 -0- -0-
Payments of dividends (3,583,523) (3,162,341) (2,968,426)
Purchases of treasury stock (1,969,984) (2,068,032) (615,091)
Financing activities of discontinued operations - net -0- -0- (500,000)
------------ ------------ ------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES 2,970,043 (20,206,823) (17,559,967)
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents 8,035,640 (810,154) 4,940,017
Cash and cash equivalents, January 1 21,850,282 22,660,436 17,720,419
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 29,885,922 $ 21,850,282 $ 22,660,436
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 30
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
UNALLOCATED
COMMON EMPLOYEE STOCK TOTAL
COMMON ADDITIONAL UNREALIZED RETAINED STOCK IN OWNERSHIP STOCKHOLDERS'
STOCK CAPITAL GAINS EARNINGS TREASURY PLAN SHARES EQUITY
----- ------- ----- -------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1995 $3,626,666 $9,035,841 $2,278,273 $101,173,484 $(29,217,318) $(2,144,025) $ 84,752,921
Net income 15,360,990 15,360,990
Dividends, $.60 per share (2,968,426) (2,968,426)
Change in unrealized gains (809,797) (809,797)
Tax benefit of unallocated
shares in ESOP 35,360 35,360
Stock plans 7,410 25,590 33,000
Purchases of treasury stock (615,091) (615,091)
Allocated ESOP shares 476,450 476,450
---------- ---------- ---------- ------------ ------------ ----------- ------------
Balance,
December 31, 1995 3,626,666 9,078,611 1,468,476 113,566,048 (29,806,819) (1,667,575) 96,265,407
Net income 15,556,985 15,556,985
Dividends, $.65 per share (3,162,341) (3,162,341)
Change in unrealized gains (1,058,029) (1,058,029)
Tax benefit of unallocated
shares in ESOP 57,460 57,460
Stock plans 339,772 41,327 381,099
Purchases of treasury stock (2,068,032) (2,068,032)
Allocated ESOP shares 476,450 476,450
---------- ---------- ---------- ------------ ------------ ----------- ------------
Balance,
December 31, 1996 3,626,666 9,475,843 410,447 125,960,692 (31,833,524) (1,191,125) 106,448,999
Net income 16,251,550 16,251,550
Dividends, $.75 per share (3,583,523) (3,583,523)
Change in unrealized gains (410,447) (410,447)
Tax benefit of unallocated
shares in ESOP 68,250 68,250
Stock plans 371,395 63,713 435,108
Two-for-one stock split 3,626,666 (3,626,666) -0-
Purchases of treasury stock (1,969,984) (1,969,984)
Allocated ESOP shares 476,450 476,450
---------- ---------- ---------- ------------ ------------ ----------- ------------
Balance
December 31, 1997 $7,253,332 $6,288,822 $ -0- $138,628,719 $(33,739,795) $ (714,675) $117,716,403
========== ========== ========== ============ ============ =========== ============
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
December 31, 1997, 1996 and 1995
NOTE A - ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. Intercompany
transactions and accounts have been eliminated upon consolidation.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less at the date of purchase to be cash equivalents.
Cash equivalents are stated at cost which approximates market value.
INVENTORIES: Inventories are stated at the lower of average cost (first-in,
first-out method) or market.
MARKETABLE SECURITIES: Available-for-sale securities are carried at fair value,
based on quoted market prices. Realized gains and losses on the sale of such
securities are based on average cost. The Company realized gains on the sale of
available-for-sale securities of $656,000 (proceeds of $933,000) in 1997,
$2,076,000 (proceeds of $3,130,000) in 1996 and $1,630,000 (proceeds of
$2,621,000) in 1995. The fair value of current available-for-sale securities was
$898,000 (including unrealized gains of $621,000) at December 31, 1996.
PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost. The
Company provides depreciation on the straight-line method over the assets
estimated useful lives that range from 2 to 60 years. Effective January 1, 1997,
the Company extended the estimated useful lives and increased the estimated
salvage values for certain vessels in its Marine Transportation fleet. The
effect of these changes in estimate reduced depreciation by $3,178,000 and
increased net income by $2,097,000 ($.44 per share) for the year ended December
31, 1997.
IMPAIRMENT OF LONG-LIVED ASSETS: The Company assesses the recoverability of its
long-lived assets by determining whether the amortization of the remaining
balance of an asset over its remaining useful life can be recovered through
undiscounted future operating cash flows. If impairment exists, the carrying
amount of the related asset is reduced.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the Company's consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates and assumptions.
F-7
<PAGE> 32
NOTE A - ACCOUNTING POLICIES (CONTINUED)
NEW FINANCIAL ACCOUNTING STANDARDS: In June 1997, Statement of Financial
Accounting Standard (SFAS) No. 130 "Reporting Comprehensive Income" was issued.
SFAS No. 130 establishes new standards for reporting comprehensive income and
its components. The Company must adopt SFAS No. 130 in the first quarter of
1998. The Company expects that comprehensive income will not differ materially
from net income.
In June 1997, SFAS No. 131 "Disclosure about Segments of an Enterprise and
Related Information" was issued. SFAS No. 131 changes the standards for
reporting financial results by operating segments and related products and
services, geographic areas, and major customers. The Company must adopt the
standard by the end of 1998.
REVENUE RECOGNITION: Sales are generally recognized when products are shipped to
customers. Operating revenues are recognized as services are provided to
customers over the Great Lakes sailing season.
RECLASSIFICATIONS: Certain amounts in prior years have been reclassified to
conform with the 1997 consolidated financial statement presentation.
F-8
<PAGE> 33
NOTE B - DISCONTINUED OPERATIONS
In December 1997, the Company decided to divest the assets of its Engineered
Materials business segment. Hot top operations were sold in December and the
sale of its metallurgical treatment operations is expected to occur during 1998.
The loss upon disposition of these operations is estimated to be $1,263,000 (net
of an income tax benefit of $807,000). The results of these discontinued
operations were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $ 30,883 $ 30,964 $ 36,779
Cost of goods sold 27,180 24,443 29,893
Depreciation and amortization 1,691 1,793 2,029
Selling, general and administrative
expenses 3,279 3,379 3,457
Loss on sale and shutdown of facilities -0- 1,078 613
-------- -------- --------
(Loss) income from operations (1,267) 271 787
Interest, other income (expense) - net (76) (142) (212)
-------- -------- --------
(Loss) income before income taxes (1,343) 129 575
Income tax (benefit) expense (501) 111 249
-------- -------- --------
(Loss) income from discontinued
operations $ (842) $ 18 $ 326
======== ======== ========
</TABLE>
In December 1996, the Company sold its interest in Eveleth Mines and certain
mining equipment for $5,000,000, completing its exit from the iron ore business.
The sale of these discontinued operations resulted in a gain of $570,000 (net of
an income tax benefit of $744,000). The results of discontinued iron ore
operations were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net sales $ 26,766 $ 26,281
Cost of sales 28,468 27,627
-------- --------
Gross margin (1,702) (1,346)
Credit through reduction of
impairment obligations 3,208 3,500
-------- --------
Adjusted Gross Margin 1,506 2,154
Royalties and management fees - net 4,332 4,527
-------- --------
Income before income taxes 5,838 6,681
Income tax expense 1,908 2,270
-------- --------
Income from discontinued operations $ 3,930 $ 4,411
======== ========
</TABLE>
The consolidated financial statements of the Company have been reclassified to
report separately the operating results, net assets and net liabilities of these
discontinued operations. Current assets of the Engineered Materials discontinued
operations at December 31, 1997 include primarily inventories, accounts
receivable and net fixed assets.
F-9
<PAGE> 34
NOTE C - ACQUISITIONS AND DISPOSITIONS
In 1997, the Company purchased, for $3,400,000 in cash and notes payable, the
assets of two sand operations. These operations screen sand to make specialty
grades and sizes and supply certain blended sand and organic mixes for end
users, such as golf courses, playgrounds, parks and sports fields. Operating
results for these businesses have been included within the Industrial Sands
business segment since acquisition, and are not material. Additionally, two, 630
foot long, self-unloading vessels, the M/V Wolverine and the M/V David Z. Norton
were purchased for $17,000,000. These vessels have been operated on the Great
Lakes under charter, as part of the Company's Marine Transportation fleet for
over 20 years.
In November 1997, the Company sold its interest in certain coal reserves for
$6,000,000 in cash. The sale resulted in a $5,212,000 pretax gain. In 1996, the
Company sold its National Perlite Products business, which had been inactive,
resulting in a pretax gain of $625,000. In 1995, the Company sold two Marine
Transportation vessels no longer in service and undeveloped clay properties in
Tennessee resulting in pretax gains of $2,324,000 and $520,000, respectively.
NOTE D - NET INCOME PER SHARE
The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share", at the end of 1997 retroactive to prior periods. The
calculation of net income per share - basic and net income per share - assuming
dilution follows (in thousands except per share data):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net income per share - basic:
Net income $16,252 $15,557 $15,361
Average number of shares
outstanding 4,785 4,876 4,948
======= ======= =======
Net income per share $ 3.40 $ 3.19 $ 3.10
======= ======= =======
Net income per share - assuming dilution:
Net income $16,252 $15,557 $15,361
Average number of shares
outstanding 4,785 4,876 4,948
Dilutive effect of stock plans 31 15 -0-
------- ------- -------
Adjusted average number of shares
outstanding 4,816 4,891 4,948
======= ======= =======
Net income per share - assuming
dilution $ 3.37 $ 3.18 $ 3.10
======= ======= =======
</TABLE>
All per share amounts have been retroactively restated to reflect a two-for-one
stock split in October 1997.
F-10
<PAGE> 35
NOTE E - INCOME TAXES
Total income taxes from continuing operations differs from the tax computed by
applying the U.S. federal corporate income tax statutory rate as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Income from continuing operations before taxes $ 25,576 $ 12,580 $ 13,256
======== ======== ========
Income taxes at statutory rate $ 8,952 $ 4,277 $ 4,507
Tax differences due to:
Percentage depletion (1,271) (1,344) (1,584)
State income taxes 312 (991) 53
Officers' life insurance (410) (76) (77)
Other (363) (325) (267)
-------- -------- --------
Total income taxes $ 7,220 $ 1,541 $ 2,632
======== ======== ========
</TABLE>
The Company received income tax refunds of $2,479,000, and $32,000 during 1996
and 1995, respectively. Included in 1996 was a $1,824,000 state income tax
refund for prior tax years, which favorably impacted 1996 state income tax
expense. The Company made income tax payments of $6,161,000, $1,962,000, and
$6,270,000 during 1997, 1996 and 1995, respectively.
F-11
<PAGE> 36
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):
<TABLE>
<CAPTION>
December 31
1997 1996
-----------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation $29,267 $34,319
Pension benefits 8,949 6,507
Other 2,619 2,268
------- -------
Total deferred tax liabilities 40,835 43,094
Deferred tax assets:
Postretirement benefits 9,865 10,590
Coal Act liability 5,285 4,731
Other 7,625 8,336
------- -------
Total deferred tax assets 22,775 23,657
------- -------
Net deferred tax liabilities $18,060 $19,437
======= =======
</TABLE>
NOTE F - LONG-TERM DEBT
Long-term debt is as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
-----------------
<S> <C> <C>
Title XI Ship Financing Bonds $ 8,700 $11,200
Term Loan - variable rate 19,250 24,750
Term Loan - fixed rate 17,000 -0-
Guaranteed ESOP Loans 715 1,191
------- -------
45,665 37,141
Less current portion 8,723 8,476
------- -------
$36,942 $28,665
======= =======
</TABLE>
F-12
<PAGE> 37
NOTE F - 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 1997 and the Company does not anticipate any such actions will be
required in the future.
Under a bank loan agreement, the Company is required to make semiannual payments
on the Term Loan of $2,750,000, excluding interest, through June 30, 2001. The
Company has a $40,000,000 Revolving Credit facility available under the loan
agreement, of which $15,000,000 is only available for acquisitions. The variable
interest rate (6.53% at December 31, 1997) on borrowings under the agreement
fluctuates based upon the Company's ratios of funded debt to total capital and
interest coverage. The Revolving Credit facility terminates on December 31,
1998, subject to annual renewals through 2001. At December 31, 1997 and 1996 the
Company had $40,000,000 of borrowings available under the Revolving Credit
facility.
In 1997, the Company entered into a $17,000,000 fixed rate (7.32%) Term Loan
with a bank to finance the acquisition of two Marine Transportation vessels,
which had previously been under charter agreements. The Company is required to
make semiannual payments on the Term Loan of $750,000, including interest,
through July 14, 2002; $1,350,000 payable semiannually, including interest,
through January 14, 2007 and a final payment of $7,805,000, including interest,
on July 14, 2007. The loan is secured by mortgages on the two vessels acquired.
The Company's debt agreements contain various covenants with the most
restrictive covenant requiring the Company to maintain specified levels of
tangible net worth during each year. The Company's tangible net worth was
$111,584,000 at December 31, 1997, compared to a minimum specified level of
$88,376,000.
Long-term debt maturities are $8,723,000 in 1998, $8,499,000 in 1999, $8,278,000
in 2000, $4,252,000 in 2001, $325,000 in 2002 and $15,589,000 thereafter. The
Title XI Ship Financing Bonds and the Term Loans are secured by first preferred
ship mortgages on seven of the Company's vessels with a net book value of
$113,186,000. The fair value of long-term debt approximates the total liability
recorded at December 31, 1997. The Company made interest payments of $2,353,000,
$3,117,000 and $4,399,000 during 1997, 1996, 1995, respectively.
F-13
<PAGE> 38
NOTE G - STOCKHOLDERS' EQUITY
On August 27, 1997, the Company declared a two-for-one split of its common stock
in the form of a 100% stock dividend to stockholders of record as of October 10,
1997. This stock split has been recorded by a transfer, within stockholders'
equity, of $3,626,000 from additional capital to common stock for all periods
presented, representing $1.00 par value for each additional share issued. All
per share amounts have been retroactively restated for the stock split.
The Company's preferred stock is issuable in series and the Board of Directors
is authorized to fix the number of shares and designate the terms of each issue.
In 1987, under a Stockholder Rights Plan, as amended, the Company's Board of
Directors declared a dividend consisting of one Right for each outstanding share
of the Company's common stock. Upon certain "change in control" events, the
Rights entitle the holder to purchase one one-hundredth of a share of the
Company's Series C $10.00 preferred stock for $130 or one share of the Company's
common stock for $2.50, depending on the "change in control" circumstances. The
Stockholder Rights Plan, which expires December 18, 2006, should not interfere
with any merger or other business combination approved by the Board of
Directors, because the Board, at its option, may redeem the Rights at a
redemption price of $.05 per Right.
NOTE H - COMPANY STOCK PLAN
The Company's Long-Term Incentive Plan (the "Plan"), adopted in 1996, allows
selected officers and key employees the opportunity to defer a portion of any
bonus received under the Company's Annual Incentive Plan. In addition, the Plan
permits grants of stock options, stock appreciation rights, restricted stock and
performance awards. The number of common shares authorized for awards is
200,000. At the end of 1997, there were 115,778 shares available for grant under
the Plan.
The Company will make an annual matching contribution of at least 50% plus a
potential discretionary award of up to an additional 50% with respect to annual
incentive awards deferred by participants under the Plan. The deferred awards
are converted to "share units" based on the fair market value of the Company's
common stock on the date the bonuses would have otherwise been paid. Dividends
are allocated to the participant's account on a similar "share unit" basis, for
both the deferred amount and the Company match. Deferred awards (and related
dividends) are fully vested at all times. Matching contributions become fully
vested on the fifth anniversary of the initial deferral date, provided the
participant has been in continuous service for the entire five-year period.
Prior to the fifth anniversary of a particular allocation, the matching
contribution may become fully vested upon the occurrence of certain events,
including early retirement or disability. All distributions under the Plan will
be in common stock of the Company. Included in Additional Capital at December
31, 1997 is $655,000 of obligations under the Plan, representing 31,549 "share
units". At December 31, 1996 $318,000 was included in Additional Capital for
obligations under the Plan, representing 16,242 "share units". Compensation
expense under the deferred plan was $568,000 in 1997 and $387,000 in 1996.
F-14
<PAGE> 39
NOTE H - COMPANY STOCK PLAN (CONTINUED)
In October 1997, 48,700 common stock options were granted under the Plan, all of
which were outstanding as of December 31, 1997, at an option price of $30 5/8
per share. These options vest ratably over a four year period and expire 10
years from the date of grant. The Company has elected to account for stock based
compensation in accordance with the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APBO No. 25), and
related interpretations. No expense has been recognized, because, under APBO No.
25, the exercise price of the stock options equals the market price of the
underlying stock on the date of grant. No other options were issued by the
Company prior to 1997.
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation" (SFAS No.
123). Pro forma information regarding net income and net income per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. Under this method, the estimated fair value of the options is
amortized to expense over the options' vesting period. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions: risk-free interest rate
of 6.0%; dividend yield of 2.6%; volatility factors of the expected market price
of the Company's common shares of .22; and a weighted-average expected life of
the options of 5 years. Had the fair value method been used to account for these
stock options the effect would have been a $.01 reduction in net income per
share with no corresponding effect on net income per share - assuming dilution.
Since changes in the subjective input assumptions can materially affect the fair
value estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
There have been no stock appreciation rights, restricted stock or performance
awards granted under the Plan.
NOTE I - CEO AND DIRECTORS COMPENSATION
In connection with an Employment Agreement (the "Agreement") the Company has
agreed to provide its President and Chief Executive Officer ("CEO") with a
restricted common stock award and stock option grant, in lieu of compensation.
F-15
<PAGE> 40
NOTE I - CEO AND DIRECTORS COMPENSATION (CONTINUED)
On January 19, 1998, upon the CEO's completion of a $1,000,000 personal
investment in the Company's common stock ("Personal Investment Shares"), the
Company issued 25,744 shares of common stock equal to the number of shares of
the Company's common stock he acquired. Of the total shares issued, 5,148 became
immediately vested and non-forfeitable. The remaining shares are restricted and
become vested and non-forfeitable, ratably, on January 1, 1999, 2000, 2001 and
2003, subject to the effects of termination of employment, as defined by the
Agreement. The non-vested and forfeitable shares are subject to the restrictions
that the CEO remain employed by the Company and that he continue to hold all of
his Personal Investment Shares. If, on any date before January 1, 2003 the CEO
sells or otherwise disposes of any of his Personal Investment Shares, he will
forfeit any and all restricted shares that have not become fully vested and
non-forfeitable before that date. The CEO is entitled to all voting rights and
any dividends on the restricted shares. Total compensation expense of $965,000,
computed based on the closing market price at the date of issuance, will be
recognized over the vesting period beginning in January 1998.
Effective December 17, 1997, the Company granted the CEO, subject to stockholder
approval, an option to acquire an amount which represents 8% of the issued and
outstanding common stock of the Company as of January 1, 1998, or 380,174
shares, at an exercise price of $38 per share. Unless accelerated under the
termination provisions of the Agreement, the option becomes exercisable in whole
or in part on January 1, 2001 and, subject to employment conditions imposed by
the Agreement, expires June 30, 2005. Compensation expense, if any, will be
recognized based on what amount, if any, the closing market price of the
Company's common stock exceeds the exercise price on the date the option is
approved by the stockholders.
Effective February 1, 1998, the Company established a Director Fee Deferral Plan
(the "Directors Plan"), which, subject to stockholder approval, allows
non-employee directors of the Company the option of deferring all or part of
their fees in the form of "share units" or "deferred cash". Any fees deferred as
"share units" will be matched at 25% by the Company in the form of additional
"share units". If approved by the stockholders, 100,000 shares of the Company's
common stock will be authorized for distribution under the Directors Plan.
NOTE J - POSTRETIREMENT BENEFITS
The Company has a number of noncontributory defined benefit pension plans
covering certain employees. The plans provide benefits based on the
participant's years of service and compensation or stated amounts for each year
of service. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding required by applicable regulations.
F-16
<PAGE> 41
NOTE J - POSTRETIREMENT BENEFITS (CONTINUED)
A summary of the components of the net periodic pension credit for defined
benefit plans from continuing operations follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,309 $ 1,303 $ 1,131
Interest cost on projected
benefit obligation 4,354 4,332 4,202
Actual return on plan assets (17,534) (9,464) (16,227)
Net amortization and deferral 9,098 1,926 9,565
-------- -------- --------
Net pension credit $ (2,773) $ (1,903) $ (1,329)
======== ======== ========
</TABLE>
Assumptions used in accounting for the Company's defined benefit pension plans
were:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.25% 7.5% 7.5%
Rate of increase in compensation levels 4% 4% 4%
Expected long-term rate of return on assets 9% 9% 9%
</TABLE>
F-17
<PAGE> 42
NOTE J - 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):
<TABLE>
<CAPTION>
December 31
1997 1996
----------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ (54,694) $ (53,178)
========= =========
Accumulated benefit
obligation $ (57,616) $ (56,112)
========= =========
Projected benefit
obligation $ (62,149) $ (60,886)
Plan assets at fair value 102,934 89,373
--------- ---------
Plan assets in excess of
projected benefit obligation 40,785 28,487
Unrecognized net gain (17,885) (9,287)
Unrecognized prior service cost 2,213 2,543
Unrecognized initial net assets (2,962) (3,672)
--------- ---------
Prepaid pension costs recognized $ 22,151 $ 18,071
========= =========
</TABLE>
Plan assets consist primarily of debt and equity securities.
The Company maintains defined contribution plans for certain employees and,
except for the ESOP, contributes to these plans based on percentages of employee
contributions. The expense for these plans was $1,039,000, $934,000, and
$880,000 for 1997, 1996 and 1995, respectively.
The Company also pays into certain defined benefit multi-employer plans under
various union agreements which provide pension and other benefits for various
classes of employees. Payments are based upon negotiated contract rates and
related expenses totaled $1,688,000, $1,915,000 and $1,879,000 for 1997, 1996
and 1995, respectively.
In addition to pension benefits, the Company provides health care and life
insurance for certain retired employees. Substantially all of the Company's
employees are eligible for these benefits when they reach normal retirement age.
The Company's policy is to fund these postretirement benefit costs principally
on a cash basis as claims are incurred.
F-18
<PAGE> 43
NOTE J - POSTRETIREMENT BENEFITS (CONTINUED)
Components of the Company's net periodic postretirement benefits cost from
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------
<S> <C> <C> <C>
Service cost $ 379 $ 368 $ 404
Interest cost 1,069 1,059 1,273
Actual return on plan assets (3) (1) -0-
Net amortization (598) (745) (579)
------- ------- -------
Net periodic postretirement
benefits cost $ 847 $ 681 $ 1,098
======= ======= =======
</TABLE>
Assumptions used in the accounting for the Company's postretirement health care
and life insurance benefits were:
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.25% 7.5% 7.5%
Expected long-term rate of return on assets 6% 6% 6%
</TABLE>
Components of the Company's postretirement benefits obligation from continuing
operations are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1997 1996
--------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Retired participants $(10,475) $(10,104)
Other fully eligible participants (1,196) (1,329)
Other ineligible participants (3,305) (3,290)
-------- --------
Accumulated postretirement benefits obligation (14,976) (14,723)
Plan assets at fair value 103 75
-------- --------
Accumulated postretirement benefits obligation
in excess of plan assets (14,873) (14,648)
Unrecognized prior service credit (1,543) (1,735)
Unrecognized net gain (7,925) (8,293)
-------- --------
Postretirement benefits obligation recognized $(24,341) $(24,676)
======== ========
</TABLE>
F-19
<PAGE> 44
NOTE J - POSTRETIREMENT BENEFITS (CONTINUED)
The weighted-average annual assumed rate of increase in the health care cost
trend-rate for 1998 is 5.75% (6.25% in 1997) for retirees age 65 and over and
8.25% (8.75% in 1997) for retirees under age 65, and both are assumed to
decrease to 5.00% by 2000 and 2005, respectively (5.25% in 1997) and remain at
that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. Increasing the assumed health care
cost trend rate by 1% in each year would increase the accumulated postretirement
benefits obligation as of December 31, 1997 by approximately $1,797,000 and the
aggregate service and interest cost components of the net periodic
postretirement benefits cost for 1997 by approximately $221,000.
The Coal Industry Retiree Health Benefit Act requires companies that previously
mined coal to assume certain health care benefit obligations for retired coal
miners and their dependents. Components of the Company's net periodic
postretirement benefits cost under the Coal Act, are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Interest cost $ 974 $ 936 $ 1,033
Actuarial net (gain) loss (121) 122 (82)
------- ------- -------
Net periodic postretirement
benefits cost $ 853 $ 1,058 $ 951
======= ======= =======
</TABLE>
The Company's accumulated postretirement benefits obligation was $13,551,000 and
$13,914,000 at December 31, 1997 and 1996, respectively, of which $12,435,000
and $12,732,000 in 1997 and 1996, respectively, is included in other long-term
liabilities.
The weighted-average discount rate used in accounting for postretirement
benefits under the Coal Act was 7% at December 31, 1997, 1996 and 1995.
The weighted-average annual assumed rate of increase in the health care cost
trend-rate for 1998 and 1997 is 6%. The health care cost trend rate assumption
has a significant effect on the amounts reported. Increasing the assumed health
care cost trend rate by 1% in each year would increase the accumulated
postretirement benefits obligation at December 31, 1997 by approximately
$1,651,000 and the interest cost component of the net periodic postretirement
benefit cost by approximately $119,000.
F-20
<PAGE> 45
NOTE K- COMMITMENTS AND CONTINGENCIES
The Company leases various buildings and equipment in addition to a vessel
charter in its Marine Transportation fleet. In general, these operating leases
are renewable or contain purchase options. The purchase price or renewal lease
payment is based on the fair market value of the asset at the date of purchase
or renewal. Rental expense was $3,718,000, $4,767,000 and $5,082,000 in 1997,
1996 and 1995, respectively.
Future minimum payments at December 31, 1997, under noncancelable operating
leases, are $2,667,000 in 1998, $1,564,000 in 1999, $1,433,000 in 2000,
$1,232,000 in 2001, $1,237,000 in 2002 and $1,521,000 thereafter.
The Company is subject to various environmental laws and regulations imposed by
federal, state and local governments. Also, in the normal course of business,
the Company is involved in various pending or threatened legal actions. The
Company cannot reasonably estimate future costs, if any, related to these
matters. However, costs incurred to comply with environmental regulations and to
settle litigation have not been significant in 1997 and prior years. Although it
is possible that the Company's future operating results could be affected by
future costs of environmental compliance or litigation, it is management's
belief that such costs will not have a material adverse effect on the Company's
consolidated financial position.
NOTE L - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS
The Company provides Great Lakes marine transportation and material handling,
and the mining and marketing of industrial sands. The Company's headquarters are
in Cleveland, Ohio. Its operations are currently organized into two business
units.
OGLEBAY NORTON MARINE TRANSPORTATION
Marine Transportation operates a highly efficient fleet of twelve
self-unloading vessels. Vessels in the fleet range in size from the 618
foot, 13,500 (G.T.), M/V Joseph Frantz to the 1,000 foot, 61,000 (G.T.),
M/V Oglebay Norton. In 1997, this fleet transported 23.8 million tons of
dry bulk commodities. Material handling operations began in April 1997 at
the Cleveland Bulk Terminal under a lease with the Cleveland-Cuyahoga
County Port Authority. This Terminal is a bulk commodity dock used for the
transfer of commodities such as iron ore pellets, coal and limestone for
delivery to customers.
F-21
<PAGE> 46
NOTE L - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS (CONTINUED)
OGLEBAY NORTON INDUSTRIAL SANDS
Industrial Sands provides silica and a variety of sand products to a wide
range of markets. Facilities in Brady, Texas and Bakersfield, California
provide special "frac" sands to the oil and gas well service 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. The Millwood and Glass Rock, Ohio
plants also provide specialty sand blends for golf course and other
recreational facilities. A facility in Colorado Springs, Colorado produces
high-quality silica sands for the environmental, filtration, industrial,
landscape, recreational and oil and gas well service markets.
Accounts receivable of $11,083,000 at December 31, 1997 are due from companies
in the steel and utilities industries. Credit is extended based on an evaluation
of a customer's financial condition, and generally collateral is not required.
Credit losses within these industries have not been significant for the three
years in the period ended December 31, 1997. Marine Transportation's operating
revenues from two major steel producers and one utility company exceeded 10% of
consolidated net sales and operating revenues and are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Customer:
- ---------
A $18,773 $14,008 $17,041
B 18,589 15,787 19,280
C 18,245 17,315 15,790
-------- ------- -------
$55,607 $47,110 $52,111
======== ======= =======
</TABLE>
F-22
<PAGE> 47
NOTE L - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS (CONTINUED)
(In Thousands)
<TABLE>
<CAPTION>
Marine
Transportation(1)
-----------------
<S> <C>
1997
Identifiable assets $ 143,554
Depreciation and amortization expense 5,654
Capital expenditures 20,234
Net sales and operating revenues $ 95,701
Income from operations(4) $ 19,312
Gain on sale of assets
Interest expense (2,318)
Interest, dividends and other income (expense) - net (117)
---------
Income from continuing operations before income taxes $ 16,877
=========
1996
Identifiable assets $ 130,125
Depreciation and amortization expense 8,671
Capital expenditures 925
Net sales and operating revenues $ 86,178
Income from operations(4) $ 7,860
Gain on sale of assets
Interest expense (2,409)
Interest, dividends and other income (expense) - net (65)
---------
Income from continuing operations before income taxes $ 5,386
=========
1995
Identifiable assets $ 132,455
Depreciation and amortization expense 8,695
Capital expenditures 3,125
Net sales and operating revenues $ 85,657
Income from operations(4) $ 11,845
Gain on sale of assets 2,325
Interest expense (3,422)
Interest, dividends and other income (expense) - net (120)
---------
Income from continuing operations before income taxes $ 10,628
=========
<FN>
(1) Segment data has been reclassified for discontinued
operations.
(2) Consists primarily of cash and cash equivalents,
marketable securities, prepaid pension costs and
net assets of discontinued operations of
$15,571,000, $13,661,000 and $17,666,000 for 1997,
1996 and 1995, respectively.
</TABLE>
F-23
<PAGE> 48
NOTE L - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS (CONTINUED)
<TABLE>
<CAPTION>
Industrial Total Corporate
Sands(1) Segments and Other(1) Consolidated
-------- -------- ------------ ------------
<S> <C> <C> <C>
$40,928 $ 184,482 $ 78,970 (2) $ 263,452
3,150 8,804 143 8,947
4,108 24,342 212 24,554
$49,484 $ 145,185 $ 145,185
$ 9,970 $ 29,282 $ (4,817)(3) $ 24,465
197 197 5,351 5,548
(350) (2,668) (166) (2,834)
(117) (1,486) (1,603)
- ------- --------- -------- ---------
$ 9,817 $ 26,694 $ (1,118) $ 25,576
======= ========= ========= =========
$36,120 $ 166,245 $ 68,451 (2) $ 234,696
2,444 11,115 144 11,259
4,540 5,465 108 5,573
$42,583 $ 128,761 $ 936 $ 129,697
$ 8,520 $ 16,380 $ (4,727)(3) $ 11,653
75 75 3,075 3,150
(356) (2,765) (239) (3,004)
(65) 846 781
- ------- --------- -------- ---------
$ 8,239 $ 13,625 $ (1,045) $ 12,580
======= ========= ========= =========
$33,964 $ 166,419 $ 80,801 (2) $ 247,220
2,567 11,262 141 11,403
2,360 5,485 483 5,968
$40,552 $ 126,209 $ 164 $ 126,373
$ 6,655 $ 18,500 $ (5,527)(3) $ 12,973
157 2,482 2,159 4,641
(524) (3,946) (201) (4,147)
(120) (91) (211)
- ------- --------- -------- ---------
$ 6,288 $ 16,916 $ (3,660) $ 13,256
======= ========= ========= =========
<FN>
(3) Includes other operations, net of certain corporate expenses.
(4) Business segments include the reallocation of corporate general and
administrative expenses previously allocated to discontinued
operations.
</TABLE>
F-24
<PAGE> 49
NOTE M - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited quarterly results of operations for the years ended December 31, 1997
and 1996 are summarized as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Quarter Ended
Dec. 31 Sept. 30 June 30 Mar. 31
------- ------- ------- -------
<S> <C> <C> <C> <C>
1997
Net sales and operating revenues $43,222 $45,602 $43,576 $12,785
Gross profit 9,165 13,571 10,839 4,242
Income from continuing
operations 5,989 6,431 5,184 752
Net income 3,814 6,476 5,109 853
Per common share - basic:
Continuing operations 1.26 1.35 1.09 .16
Net income .80 1.36 1.07 .18
Per common share - assuming dilution:
Continuing operations 1.25 1.34 1.08 .16
Net income .80 1.35 1.06 .18
1996
Net sales and operating revenues $39,537 $42,097 $37,238 $10,825
Gross profit 6,968 9,537 4,963 2,575
Income (loss) from continuing
operations 3,814 5,212 1,188 825
Net income 5,257 6,061 2,261 1,978
Per common share - basic and diluted:
Continuing operations .79 1.08 .25 .17
Net income 1.09 1.25 .47 .40
</TABLE>
Amounts reported in prior quarters have been reclassified for discontinued
operations. The sum of per share amounts for the four quarters of 1997 and 1996
do not equal the annual per share amounts as a result of treasury stock
purchases by the Company. All per share amounts have been retroactively restated
to reflect a two-for-one stock split in October 1997.
F-25
<PAGE> 50
NOTE M - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)
Effective January 1, 1997, the Company increased the estimated useful lives and
salvage values of certain vessels in its Marine Transportation fleet. The
changes in estimate increased 1997 net income over the fleet's sailing season as
follows: $737,000 ($.155 per share) in the second quarter; $745,000 ($.155 per
share) in the third quarter; and $615,000 ($.13 per share) in the fourth
quarter. Net income for the fourth quarter of 1997 also increased $3,388,000
($.71 per share) related to the sale of certain coal reserves. Fourth quarter
1997 net income includes a $1,052,700 ($.22 per share) charge related to
supplemental retirement benefits to its former President and Chief Executive
Officer.
Net income for the first quarter of 1996 increased $1,314,000 ($.27 per share)
related to the sale of marketable securities and other assets, including the
sale of the Company's National Perlite Products Company. First quarter net
income for 1996 also included interest income of $576,000 ($.11 per share)
related to a $1,824,000 state tax refund received during the quarter. As a
result of the state tax refund, the Company's 1996 annual effective income tax
rate was reduced.
F-26
<PAGE> 51
Item 14(a)3
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEC
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
3 (i) Restated Certificate of Incorporation Incorporated by reference in Exhibit 3(a) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1993
(ii) By-laws Filed herewith as Exhibit 3(ii) at sequential
page I-5
4 (a) The Company is a party to instruments, copies
of which will be furnished to the Securities and
Exchange Commission upon request, defining the
rights of holders of its long-term debt identified
in Note F to the Consolidated Financial Statements.
(b) Form of Rights Agreement (including first and Incorporated by reference in Exhibit 4(b) in
second amendments) the Company's Annual Report on Form 10-K for
the year ended December 31, 1993
(c) Form of Third Amendment to Rights Agreement, Incorporated by reference in Exhibit 4(c) to
dated as of August 31, 1994, between Company and Amendment No. 3 to Form 8-A/A, filed on
the Rights Agent September 26, 1994
(d) Form of Fourth Amendment of Rights Agreement, Incorporated by reference in Exhibit 4(d) to
dated as of January 21, 1997, between Company and Form 8-A/A, filed on January 21, 1997
the Rights Agent
10 (a) Form of Supplemental Pension Agreements with Incorporated by reference in Exhibit 10(a) in
selected former officers* the Company's Annual Report on Form 10-K for
the year ended December 31, 1993
(b) Agreement with Brent D. Baird Incorporated by reference in Exhibit 10(b) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1993
(c) Trust Agreement for Oglebay Norton Company Incorporated by reference in Exhibit 10(c) in
Incentive Savings Plan and Trust (January 1, 1991 the Company's Annual Report on Form 10-K for
Restatement)* the year ended December 31, 1993
(d)(1) Form of Change-in-Control Agreements with Incorporated by reference in Exhibit 10(d)(2)
one Executive Officer* in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994
(d)(2) Form of Change-in-Control Agreements with Incorporated by reference in Exhibit 10(d)(3)
five Executive Officers and three key employees* in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996
</TABLE>
I-1
<PAGE> 52
<TABLE>
<S> <C> <C>
(e) Agreement with John D. Weil Incorporated by reference in Exhibit 10(f) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1993
(f) Oglebay Norton Company Long-Term Incentive Incorporated by reference in Exhibit 10(h) in
Plan* the Company's Annual Report on Form 10-K for
the year ended December 31, 1995
(f)(1) Form of Oglebay Norton Company Long-Term Filed herewith as Exhibit 10(f)(1) at
Incentive Plan stock option prospectus supplement, sequential page I-25
dated October 29, 1997, between the Company and 10
Executive Officers and 11 key employees*
(g) Amended and Restated Director Stock Plan* Incorporated by reference in Exhibit 10(i)(1)
in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997
(h) Supplemental Savings and Stock Ownership Plan* Incorporated by reference in Exhibit 10(j) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(h)(1) First Amendment to Oglebay Norton Company Incorporated by reference in Exhibit 10(j)(1)
Supplemental Savings and Stock Ownership Plan* in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996
(h)(2) Second Amendment to Oglebay Norton Company Incorporated by reference in Exhibit 10(j)(2)
Supplemental Savings and Stock Ownership Plan* in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996
(h)(3) Third Amendment to Oglebay Norton Company Filed herewith as Exhibit 10(h)(3) at
Supplemental Savings and Stock Ownership Plan* sequential page I-30.
(i) Irrevocable Trust Agreement I* Incorporated by reference in Exhibit 10(k) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(j) Irrevocable Trust Agreement II* Incorporated by reference in Exhibit 10(l) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(j)(1) Revised and Restated Schedules A, B and C Filed herewith as Exhibit 10(j)(i) at sequential
to Irrevocable Trust Agreement II, dated as of page I-31.
September 19, 1997 *
(k) Executive Life Insurance Program I (Form of Incorporated by reference in Exhibit 10(m) in
letter agreement along with Schedules A for each the Company's Annual Report on Form 10-K for
current plan participant)* the year ended December 31, 1996
</TABLE>
I-2
<PAGE> 53
<TABLE>
<S> <C> <C>
(l) Executive Life Insurance Program II (Program Incorporated by reference in Exhibit 10(n) in
description)* the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(m) Oglebay Norton Company Excess and TRA Incorporated by reference in Exhibit 10(o) in
Supplemental Benefit Retirement Plan (January 1, the Company's Annual Report on Form 10-K for
1991 Restatement)* the year ended December 31, 1996
(m)(1) First Amendment to Oglebay Norton Company Incorporated by reference in Exhibit
Excess and TRA Supplemental Benefit Retirement Plan 10(o)(1)) in the Company's Annual Report on
(January 1, 1991 Restatement), dated as of December Form 10-K for the year ended December 31, 1996
15, 1994*
(m)(2) Second Amendment to Oglebay Norton Company Filed herewith as Exhibit 10(m)(2) at
Excess and TRA Supplemental Benefit Retirement sequential page I-34
Plan (January 1, 1991 Restatement), dated as of
December 17, 1997*
(n) Amended and Restated Loan Agreement, between Incorporated by reference in Exhibit 10(p) in
the Company and the Various Commercial Banking the Company's Annual Report on Form 10-K for
Institutions named therein, dated as of December the year ended December 31, 1996
29, 1994
(n)(1) Amendment No. 1 to Amended and Restated Incorporated by reference in Exhibit 10(p)(1)
Loan Agreement, dated as of August 29, 1995 in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996
(n)(2) Amendment No. 2 to Amended and Restated Incorporated by reference in Exhibit 10(p)(2)
Loan Agreement, dated as of March 1, 1997 in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996
(n)(3) Amendment No. 3 to Amended and Restated Filed herewith as Exhibit 10(n)(3) at
Loan Agreement, dated as of June 3, 1997 sequential page I-36
(o) Annual Incentive Plan (plan description)* Incorporated by reference in Exhibit 10(q) in
the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(p) Separation Agreement between the Company and Filed herewith as Exhibit 10(p) at sequential
R. Thomas Green, Jr., dated as of December 17, 1997* page I-42
(q) Letter Agreement between Company and R. Thomas Filed herewith as Exhibit 10(q) at sequential
Green, Jr. regarding deferral of 1997 Annual page I-46
Incentive Award, dated December 17, 1997*
(r) Employment Agreement between Company and John Filed herewith as Exhibit 10(r) at sequential
N. Lauer, dated December 17, 1997* page I-47
</TABLE>
I-3
<PAGE> 54
<TABLE>
<S> <C> <C>
(s) Supplemental Letter between Company and John Filed herewith as Exhibit 10(s) at sequential
N. Lauer, dated December 17, 1997* page I-58
(t) Oglebay Norton Company Performance Option Filed herewith as Exhibit 10(t) at sequential
Agreement between the Company and John N. Lauer, page I-59
dated as of December 17, 1997*
(u) Oglebay Norton Company Special Supplemental Filed herewith as Exhibit 10(u) at sequential
Retirement Plan, dated as of December 17, 1997* page I-63
(v) Oglebay Norton Company Director Fee Deferral Filed herewith as Exhibit 10(v) at sequential
Plan, dated as of February 1, 1998* page I-66
(w) Oglebay Norton Company Pour-Over Trust,
dated as of December 17, 1997* Filed herewith as Exhibit 10(w) at sequential
page I-70
21 Subsidiaries of Company Filed herewith as Exhibit 21 at sequential
page I-84
23 Consent of Independent Auditors Filed herewith as Exhibit 23 at sequential
page I-85
27 (a) Financial Data Schedule for the year Filed herewith as Exhibit 27(1) at
ended December 31, 1997 sequential page 1-86
(b) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(2) at
ended March 31, 1997 (Restated) sequential page 1-87
(c) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(3) at
ended June 30, 1997 (Restated) sequential page I-88
(d) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(4) at
ended September 30, 1997 (Restated) sequential page 1-89
(e) Financial Data Schedule for the year Filed herewith as Exhibit 27(5) at
ended December 31, 1996 (Restated) sequential page 1-90
(f) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(6) at
ended March 31, 1996 (Restated) sequential page 1-91
(g) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(7) at
ended June 30, 1996 (Restated) sequential page 1-92
(h) Financial Data Schedule for the quarter Filed herewith as Exhibit 27(8) at
ended September 30, 1996 (Restated) sequential page 1-93
(i) Financial Data Schedule for the year Filed herewith as Exhibit 27(9) at
ended December 31, 1995 (Restated) sequential page 1-94
<FN>
* Indicates management contracts or compensatory plans or arrangements in which
one or more directors or executive officers of the Company may be participants.
</TABLE>
I-4
<PAGE> 1
Exhibit 3(ii)
BY-LAWS
OF
OGLEBAY NORTON COMPANY
As of January 28, 1998
I-5
<PAGE> 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
I-6
<PAGE> 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 ......................... 7
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 .............................................. .. 8
EXECUTIVE VICE PRESIDENTS
26. Executive Vice Presidents .............................. .. 8
I-7
<PAGE> 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 ......... .. 10
I-8
<PAGE> 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 ..................................... 12
FISCAL YEAR
42. Fiscal year ............................................. 12
I-9
<PAGE> 6
Section Page
Number Subject Number
- -------------------------------------------------------------------------------
DIVIDENDS
43. Dividends ............................................... 12
DIRECTORS' ANNUAL STATEMENT
44. Directors' annual statement ............................. 12
NOTICES
45. Notices ................................................. 13
AMENDMENTS
48. Amendments .............................................. 15
I-10
<PAGE> 7
BY-LAWS
OF
OGLEBAY NORTON COMPANY
(Revised as of January 28, 1998)
OFFICES
1. The principal office shall be in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the resident agent in charge
thereof is The Corporation Trust Company.
The corporation shall also have an office in the City of Cleveland, Ohio,
and it may also have such other offices at such other places, either
within or without the State of Delaware, as the Board of Directors may
from time to time designate or the business of the corporation may
require.
The books of the corporation, other than the duplicate stock ledger,
which shall at all times be kept at the principal office of the
corporation in Delaware, shall be kept at such one or more of the offices
of the corporation or at such other place or places, either within or
without the State of Delaware, as the directors may from time to time
determine.
SEAL
2. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware". Said seal may be
used by causing it, or a facsimile thereof, to be impressed or affixed or
reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. The annual meeting of the stockholders shall be held in the office of the
corporation in the City of Cleveland, Ohio. All other meetings of the
stockholders may be held at such place within or without the State of
Delaware as shall be designated in the call for such meeting.
4. The annual meeting of the stockholders shall be held on the last
Wednesday in April in each year at such time and place as shall be
designated in the call for such meeting and at such meeting the
stockholders shall elect, by ballot, a Board of Directors and
I-11
<PAGE> 8
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 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.
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<PAGE> 9
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.
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<PAGE> 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.
MEETINGS OF THE BOARD
15. Regular meetings of the Board shall be held on the last Wednesday of
January, April, July, September, 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
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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 as
called by either the Chairman of that Committee or the Secretary of the
Company, at such place or places as they may from time to time determine.
The Executive Committee shall have and may exercise all of the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation permissible under Section 141(c)(2) of the
Delaware General Corporation Law, as it may be amended from time to time,
when the Board is not in session, subject to any specific resolutions of
the Board of Directors. Unless otherwise ordered by the Board of
Directors, the Executive Committee may prescribe its own rules for
calling and holding meetings and for its own procedures and may act at a
meeting by a majority of its members or without a meeting by written
consent of all of its members. The Executive Committee shall cause the
Secretary to keep full and complete records of all meetings and actions,
which shall be open to inspection by
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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 200 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 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
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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 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.
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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.
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.
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<PAGE> 15
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.
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
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<PAGE> 16
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.
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.
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REGISTERED STOCKHOLDERS
40. The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and, accordingly,
shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided
by the laws of Delaware.
INSPECTION OF BOOKS
41. The directors shall determine, from time to time, whether and if allowed,
when and under what conditions and regulations, the accounts and books of
the corporation (except such as may by statute be specifically open to
inspection), or any of them, shall be open to the inspection of the
stockholders, and the stockholders' rights in this respect are and shall
be restricted and limited accordingly.
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.
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<PAGE> 18
NOTICES
45. Expect as provided in Sections 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 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
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stock of the corporation entitled to vote at the meeting and intends to
appear in person or by proxy at the meeting to make the proposal, (iii) a
description of all arrangements or understandings between the 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
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
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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 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.
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<PAGE> 1
Exhibit 10(f)(1)
OGLEBAY NORTON COMPANY
LONG-TERM INCENTIVE PLAN
-------------------------
Prospectus Supplement
This Stock Option Agreement constitutes part of the Prospectus covering
securities registered under the Securities Act of 1933, as amended, and issuable
pursuant to the above-named plan of the Company.
-------------------------
THE SECURITIES OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS, OR OTHER OBLIGATIONS
OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN AS CONTAINED HEREIN, IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES COVERED
HEREBY SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
-------------------------
The date of this Prospectus Supplement is October 29, 1997
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<PAGE> 2
Dear _____:
Under the terms of the Oglebay Norton Company Long-Term Incentive Plan
("the Plan"), the Committee for the Plan has granted to you as of October 29,
1997 an Option to purchase an aggregate of _______ shares of common stock of
Oglebay Norton Company (the "Company"), having a par value of $1.00 per share
(the "Common Stock"), at an option price of $30 5/8 per share, upon the terms
and conditions set forth in the Plan and in this Agreement. Except as discussed
below under "Share Adjustments", the exercise price of an Option is not subject
to adjustment.
The Plan provides that shares of the Company's Common Stock issued upon
exercise of Options may be either authorized but unissued Common Stock of the
Company or treasury shares. A copy of the full Plan is available for your
review through the Corporate Secretary's office. All correspondence to the
Committee should be directed to Oglebay Norton Company, 1100 Superior Avenue,
Cleveland, Ohio 44114, Attention: Paul V. Gorman, Jr., Assistant Vice President
- -- Human Resources (telephone 216-861-2872).
Section 1. General Information
The shares of the Company's Common Stock covered by this Prospectus are
issuable pursuant to Options granted under the Plan.
A summary of the material provisions of the Plan and the Options granted
thereunder is set forth below, but this summary is qualified in its entirety by
reference to the full text of the Plan, a copy of which is available for
inspection at the principal office of the Company or will be mailed to any
participant within 30 days after written request therefor.
Section 2. Purposes of the Plan
The Plan provides for the granting of Options to purchase shares of the
Company's Common Stock to certain key employees of the Company. The Options
granted under the Plan and described herein are not intended to be treated as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
The purpose of the Plan is to promote the interests of the stockholders
by furthering the long-term performance of the Company and to enable the Company
to be competitive in encouraging key employees who perform services of special
importance to the management, operation and the development of the business of
the Company or its subsidiaries, to remain in its service, to attract others to
it, and to provide such employees an additional incentive to contribute to the
prosperity of the Company and its stockholders.
Section 3. Eligibility
Key employees of the Company and its subsidiaries, including officers,
whether or not Directors, are eligible to participate in the Plan. Directors who
are not regular employees are not eligible to participate in the Plan.
Participation in the Plan will be limited to those key employees of the Company
selected by the Committee.
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<PAGE> 3
Nothing contained in the Plan or in any document related to the Plan
shall confer upon any optionee any right to continue in the employ of the
Company or any subsidiary of the Company or limit the Company or any subsidiary
of the Company to terminate the optionee's employment at any time and for any
reason.
Section 4. Exercise of Option
The Option shall be exercisable on or before the expiration date of
October 29, 2007 as to the percentage of shares indicated on the following
dates:
Percent of Shares
Purchasable
-----------
Prior to October 29, 1998 None
On October 29, 1998 to October 28, 1999 25%
On October 29, 1999 to October 28, 2000 50%
On October 29, 2000 to October 28, 2001 75%
On or after October 29, 2001 100%
less the number of shares, if any, previously purchased under the Option.
The Option may be exercised as to all or any of the shares that can then
be purchased by submitting a letter to the Secretary of the Company stating the
number of shares you are electing to purchase at that time, and enclosing your
payment of the option price in full, either (a) in cash (including checks, bank
drafts, or money orders), (b) by delivering common stock of the Company owned of
record by you or by sale of shares acquired in the exercise of the option, or
(c) by a combination of (a) and (b). As soon as practicable after payment of the
option price, a certificate or certificates representing the purchased shares
will be issued.
Pursuant to the terms of the Plan, the Committee may, upon notice of
exercise, elect to cash out all or part of the portion of the Option to be
exercised and pay you an amount equal to the excess of the fair market value of
the Company's shares over the option price (the "Spread Value"). The payment of
the Spread Value may be made, at the Committee's discretion, in cash or shares
of the Company's common stock.
Section 5. Non-Assignability
The Option is personal to you and is not transferable except as otherwise
provided in Section 8.
Section 6. Retirement
If your employment with the Company or a subsidiary company terminates
during the term of the Option by reason of your retirement from active
employment pursuant to which you are entitled to receive a normal, early, or
shutdown retirement pension under the Oglebay Norton Company Pension Plan for
Salaried Employees, the Option shall become immediately exercisable in full and
may be exercised at any time within two years of date of retirement, but in no
event beyond the term of the Option, and thereafter the Option shall terminate.
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<PAGE> 4
Section 7. Disability
If your employment with the Company or a subsidiary company terminates
during the term of the Option by reason of a disability covered under the
Oglebay Norton Company Long-Term Disability Insurance Plan, the Option shall
become immediately exercisable in full, and may be exercised at any time within
one year of your termination of employment, but in no event beyond the term of
the Option, and thereafter the Option shall terminate.
Section 8. Death
In the event of your death during the term of the Option, the Option
shall become immediately exercisable in full and may be exercised by your
executor or administrator at any time within one year of the date of your death,
but in no event beyond the term of the Option, and thereafter the Option shall
terminate.
Section 9. Other Termination
If your employment with the Company or a subsidiary company terminates
during the term of the Option for any reason other than death, retirement, or
disability referred to in Sections 6, 7, and 8, the Option shall thereupon
terminate, unless you are involuntarily terminated by the Company without Cause,
as defined in the Plan. In the case of your involuntary termination of
employment without Cause, the Option shall be limited to the number of shares as
to which it could have been exercised pursuant to Section 4 at the time your
employment ends and shall terminate as to the remaining shares. The Option may
then be exercised as to the limited number of shares at any time within ninety
days of your involuntary termination of employment without Cause, but in no
event beyond the term of the Option, and thereafter the Option shall terminate.
Section 10. Share Adjustments
The number and kind of shares subject to the Option and, if appropriate,
the purchase price per share, shall be adjusted appropriately in the event of
any stock split, stock dividend, combination of shares, merger, consolidation,
reorganization, or other change in the nature of the shares of the Company as
determined by the Board of Directors or the Committee.
Section 11. Notices
All notices hereunder to the Company shall be delivered personally or
mailed to its corporate offices, attention: Secretary, at its headquarters
location, 1100 Superior Avenue, Cleveland, Ohio 44114, and all notices hereunder
to you shall be delivered personally or mailed to you. Such addresses may be
changed at any time by advance notice of such change to the Company or to you,
as the case may be.
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<PAGE> 5
This Option Letter, when accepted by you, will constitute an Agreement
between you and the Company as of October 29, 1997, which shall bind and inure
to the benefit of our respective executors, administrators, successors and
assigns.
Very truly yours,
OGLEBAY NORTON COMPANY
By /s/ R. Thomas Green, Jr.
---------------------------
R. Thomas Green, Jr.
Chairman of the Board,
President, and Chief
Executive Officer
On behalf of the Committee
ACCEPTED
- ----------------------------
11/19/97 (Date)
- ------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 29, 1997.
I-29
<PAGE> 1
Exhibit 10(h)(3)
THIRD 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, as amended on two
subsequent occasions (the "Plan"); and
WHEREAS, it is desired further to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective November 1, 1996,
in the respects hereinafter set forth.
1. Section 1 of Article I of the Plan is hereby amended to provide
as follows:
7. An "Employee" shall mean any Participant in the ISP or in the
ESOP, or both, whose benefits under either such Plan are limited by
operation of the Code provisions referred to in paragraph (b)(i)(B) or
paragraph (b)(ii)(B) of Section 2 of Article II of the Plan.
2. Paragraph (b)(i)(B) of Section 2 of Article II of the Plan is hereby
amended to provide as follows:
(B) any annual dollar amount limitation set forth in the Code and,
accordingly, specified in the ISP limiting Compensation covered by
the ISP,
3. Paragraph (b)(ii)(B) of Section 2 of Article II of the Plan is hereby
amended to provide as follows:
(B) any annual dollar amount limitation set forth in the Code and,
accordingly, specified in the ESOP limiting Compensation, as
defined in Section 1.8 of the ESOP, covered by the ESOP.
* * *
Executed at Cleveland, Ohio, this 17th day of December, 1997.
OGLEBAY NORTON COMPANY
By /s/ R. Thomas Green, Jr.
----------------------------------
Title: Chairman, President and
Chief Executive Officer
And
----------------------------------
Title:
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<PAGE> 1
Exhibit 10(j)(1)
Revised and Restated
Schedule A
(as revised September 19, 1997)
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. 1991 Executive Life Program.
4. Employment Agreements and the amendments thereto, if any (intended to
become effective upon a change in control) with M. F. Biehl, P. V. Gorman,
Jr., J. S. Gray, M. P. Juszli, R. J. Kessler, D. G. Slezak, S. H. Theis,
and T. J. Wojciechowski.
5. Employment Agreement with R. Thomas Green, Jr. entered into as of June 28,
1995.
6. 1996 Executive Life Plan
I-31
<PAGE> 2
Revised and Restated
Schedule B
(revised as of September 19, 1997)
PARTICIPANTS
------------
R. D. Thompson
F. A. Castle
R. T. Green, Jr.
R. J. Kessler
J. L. Selis
A. F. Bradfish
M. A. Hyre
D. A. Kuhn
H. Chisholm
H. W. Ruf
J. J. Dwyer
S. H. Theis
D. G. Slezak
T. J. Wojciechowski
M. F. Biehl
P. V. Gorman, Jr.
M. P. Juszli
J. S. Gray
I-32
<PAGE> 3
Revised and Restated
Schedule C
(revised as of September 19, 1997)
BENEFITS
--------
1. With respect to the Excess Benefit Retirement Plan, adopted November 16,
1977: All benefits.
2. With respect to the Supplemental Savings and Stock Ownership Plan, adopted
May 31, 1989: All benefits.
3. With respect to the 1991 Executive Life Program: All benefits.
4. With respect to the Employment Agreement with R. T. Green, Jr., and the
Employment Agreements (intended to become effective upon a change in
control) with M.F. Biehl, P. V. Gorman, Jr., J. S. Gray, M. P. Juszli, R.
J. Kessler, D. G. Slezak, S. H. Theis, and T. J. Wojciechowski: All amounts
payable by the Company to or with respect to a Participant after the
termination of the Participant's employment with the Company.
5. With respect to the 1996 Executive Life Program: All benefits.
I-33
<PAGE> 1
Exhibit 10(m)(2)
SECOND 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 made effective as of January
1, 1991, as amended on one occasion (the "Plan"); and
WHEREAS, it is desired further to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective upon
execution hereof, in the respects hereinafter set forth.
1. Section 1 of Article VIII is amended to provide as follows:
1. ELIGIBILITY. An Employee who retires from 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. The Plan is hereby amended by the addition of a
new Article IX to provide as follows:
ARTICLE IX
----------
SPECIAL CONTINGENT SUPPLEMENT
-----------------------------
1. ELIGIBILITY. Each Employee who has in effect a written
employment agreement with the Company with provisions designed to
become effective upon a change in control shall be eligible for a
Special Contingent Supplemental Benefit ("SCSB"), provided that on the
date any change in control occurs under the terms of such employment
agreement the Employee has (i) completed 30
I-34
<PAGE> 2
years of service with the Company or (ii) completed 15 years of service
with the Company and attained the age of 55.
2. AMOUNT AND PAYMENT. The SCSB shall be payable to the
eligible Employee for each month after the date of his retirement or
other termination of employment following a change in control entitling
him to benefits under an employment agreement described in Section 1 of
Article IX and during his lifetime in which the Company (including any
of its successors) fails to provide such Employee with coverage under a
program of medical benefit coverage substantially the same as that in
effect with respect to retired employees of the Company or its
successors immediately prior to the change in control. The amount of
each monthly SCSB benefit payment shall be $750.
* * *
Executed at Cleveland, Ohio this 17th day of
December, 1997.
OGLEBAY NORTON COMPANY
By /s/ Richard J. Kessler
_________________________________
Title: Vice President - Finance
and Planning
And /s/ David G. Slezak
________________________________
Title: Secretary and Director of
Legal Affairs
I-35
<PAGE> 1
Exhibit 10(n)(3)
===============================================================================
OGLEBAY NORTON COMPANY
as Borrower
And
THE BANKS NAMED HEREIN
as Banks
And
KEYBANK NATIONAL ASSOCIATION
as Agent
--------------------------------
AMENDMENT NO.3
dated as of
June 3, 1997
to
AMENDED AND RESTATED
LOAN AGREEMENT
--------------------------------
===============================================================================
I-36
<PAGE> 2
AMENDMENT NO.3
TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT NO.3 TO AMENDED AND RESTATED LOAN AGREEMENT, dated as of
June 3,1997 ("this Amendment"), 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, originally 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 and Amendment No.2 thereto, dated as of
March 1, 1997 (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 (i) the Borrower
proposes to purchase (directly or through or one or more of its Subsidiaries)
the beneficial interests in certain trusts which own two ships which are
currently leased by the Borrower, namely WOLVERINE and DAVID Z. NORTON, for
aggregate consideration of approximately $9.5 million and $7.5 million,
respectively, consisting of cash and assumption of obligations in respect of
approximately $3.6 million principal amount of Title XI U.S. Government
Guaranteed Bonds, the payment of which is secured by mortgages on said vessels,
and (ii) the Borrower may finance such ships by means of secured loans or a
lease financing arrangement (whether in the form of a "true" lease or a
"synthetic" lease), and that if any such financing is effected by a Subsidiary
of the Borrower, that the Borrower may guarantee such financing.
(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 effect such transactions.
(4) The Banks and the Agent are willing to enter into this Amendment in
order to accommodate such request, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. AMENDMENTS.
1.1. INVESTMENTS AND ACQUISITIONS. Clause (v) of Section 7.2.1(a) of the
Loan Agreement is amended to delete references to Eveleth Taconite Company
(which has been sold) and to include reference to the acquisition of interests
in two ships, so that such clause reads in its entirety as follows:
(iv) additional Investments of approximately $17,000,000,
exclusive of fees and expenses associated therewith, related to the
acquisition of two ships (WOLVERINE and DAVID Z. NORTON), or beneficial
interests therein;
1.2. LIENS. For the avoidance of doubt, (i) the security interests on
the two ships acquired in 1997 (WOLVERINE and DAVID Z. NORTON) which are in
existence on the date of acquisition and secure obligations in the aggregate
principal amount of approximately $3.6 million, shall be considered permitted by
I-37
<PAGE> 3
clause (c) of Section 7.2.2 of the Loan Agreement; and (ii) any security
interests on such vessels which are created within 180 days following the date
of acquisition thereof in connection with the refinancing of such existing
obligations, shall likewise be considered permitted by clause (c) of Section
7.2.2 of the Loan Agreement if such security interests secure obligations with a
principal (or equivalent) amount not in excess of 100% of the full cost of
acquisition of such vessels.
1.3. FIXED OR CAPITAL ASSETS. Section 7.2.4 of the Loan Agreement is
amended by adding the following at the end thereof:
Notwithstanding the foregoing, in the case of the Fiscal Year ended
December 31, 1997, the Maximum Capital Expenditures shall be increased by
the Capital Expenditures made to acquire interests in two ships
(WOLVERINE and DAVID Z. NORTON).
2. 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.
3. 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.
4. 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.
5. MISCELLANEOUS.
5.1. 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.
5.2. 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.
5.3. 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
I-38
<PAGE> 4
incurred by the Agent or any Bank in connection with the enforcement or
preservation of any rights under the Loan Agreement, as amended hereby.
5.4. 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
confirmed to the provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.6. 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.
5.7. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.8. 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: /s/ Richard J. Kessler
--------------------------------
Vice President-Finance & Planning
KEYBANK NATIONAL ASSOCIATION
(successor to Society National Bank),
individually and as Agent
By: /s/ Frank J. Jancar
--------------------------------
Vice President
[BALANCE OF SIGNATURES CONTINUED ON FOLLOWING PAGE.]
I-39
<PAGE> 5
THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. Ashby
---------------------------
Vice President - Senior Manager Loan Operations
NBD BANK (successor to NBD Bank, N.A.)
By: /s/ signature illegible
---------------------------
Vice President
COMERICA BANK
By: /s/ Jeffrey Judge
---------------------------
Assistant Vice President
THE HUNTINGTON NATIONAL BANK
By: /s/ Dave Emutto
----------------------------
Portfolio Manager
I-40
<PAGE> 6
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 June 3, 1997.
OGLEBAY NORTON INDUSTRIAL SANDS, INC.
By: /s/ M. P. Juszli
----------------------------------------
Vice President
OGLEBAY NORTON ENGINEERED MATERIALS, INC.
By: /s/ Timothy J. Wojciechowski
----------------------------------------
Vice President
I-41
<PAGE> 1
Exhibit 10(p)
SEPARATION AGREEMENT
--------------------
THIS SEPARATION AGREEMENT is entered into this 17th day of December,
1997, by and between Oglebay Norton Company, a Delaware Corporation (the
"Company"), and R. Thomas Green, Jr. ("Employee")
WITNESSETH:
WHEREAS, R. Thomas Green, Jr. has for many years enjoyed an employment
relationship with the Company which has continued without interruption to the
present; and
WHEREAS, the parties mutually desire to enter into a comprehensive
agreement to settle and satisfy all claims as related to the termination of said
employment relationship;
NOW, THEREFORE, in consideration of the promises and covenants contained
herein, the parties agree as follows:
1. EMPLOYMENT TERMINATION. The parties hereby acknowledge and agree that
the employment relationship between the Company and Employee will be terminated
as of June 30, 1999.
A. Effective as of January 1,1998, Employee will step down as
President and Chief Executive Officer of the Company.
Employee will retain his position as Chairman of the Board
until the time of the 1998 Annual Meeting. Employee will
maintain his
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<PAGE> 2
Board seat until the completion of his term in April of
1999. Re-election to the Board will be at the discretion
of the Nominating Committee and the shareholders.
B. The Company agrees to pay Employee a bonus for 1997 to
equal not less than $225,000.00.
C. Employee will continue to be employed by the Company in the
capacity of a consultant until June 30, 1999. During such
period the Company agrees to pay compensation for such
services at a rate not less than his current base rate
including a bonus of not less than the target amount as set
forth in the bonus plan, or four hundred sixty-five
thousand dollars ($465,000.00) per year whichever is
greater. The Company shall further provide all other
benefits as are provided to full-time salaried employees
of the Company.
2. LIFE INSURANCE. The Company further agrees to pay all premiums on
Employee's seven hundred and twenty thousand dollar ($720,000.00)
Executive Life Insurance Policy until such time as the policy is
paid in full.
3. RETIREMENT BENEFITS. Commencing July 1, 1999, the Company agrees
to provide Employee with retirement benefits in accordance with
the retirement plan in existence at that time.
4. RETIREMENT PLANNING FEES. The Company shall pay up to $5,000.00
for any and all retirement planning consultation deemed necessary
by Employee prior
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<PAGE> 3
to his retirement on June 30, 1999. In addition to the payment and
reimbursement of expenses for such consultation, the Company shall
pay to Employee an additional amount sufficient to pay all
federal, state and local taxes incurred by Employee as a result of
(a) the payment of the expense or receipt of the reimbursement and
(b) the receipt of the additional payment.
5. OFFICE SPACE. The Company further agrees to provide employee with
a furnished office and necessary support services, including
personal computer, telephone, fax, copying and secretarial
services until June 30, 2004. Said office will be located off the
company premises at a place of Employee's preference.
6. CLUB MEMBERSHIPS. Membership dues and assessments for the Union
Club will be paid by the Company through June 30, 2002. Membership
dues and assessments for the Pepper Pike Club and the 50 Club
shall be paid by the Company for as long as Employee desires to
maintain his membership.
7. ENTIRE AGREEMENT. This Separation Agreement contains the entire
agreement between the parties and the terms hereof are contractual
and not mere recitals. All prior agreements between the parties
relating to employee's employment are hereby terminated. No
modification or amendment of this Agreement shall be valid or
binding unless contained in a written instrument and signed by the
parties hereto.
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<PAGE> 4
8. GOVERNING LAW. This Agreement shall be construed under the laws of
the State of Ohio and shall in all respects be interpreted,
enforced and governed under the law of said State.
OGLEBAY NORTON COMPANY
By: /s/ John D. Weil
---------------------------------
John D. Weil
Director
By: /s/ Ralph D. Ketchum
---------------------------------
Ralph D. Ketchum
Director
DATE: 12/17/97
---------------------------------
/s/ R. Thomas Green, Jr.
-------------------------------------
R. Thomas Green, Jr.
DATE: Dec. 17, 1997
---------------------------------
I-45
<PAGE> 1
Exhibit 10(q)
OGLEBAY NORTON COMPANY
1100 SUPERIOR AVENUE CLEVELAND, OHIO 44114-2598
[LOGO - ON]
216-861-3300
December 17, 1997
R. Thomas Green, Jr.
Chairman, President and Chief Executive Officer
Dear Mr. Green:
During December, 1996, you elected to defer all or a portion of your Annual
Incentive Award for 1997 under the terms of the Oglebay Norton Company Long-Term
Incentive Plan (the "LTIP"). Pursuant to that deferral election, it was expected
that share units (based on the fair market value of the Company's common
shares) would be credited to your existing account under the LTIP on or about
February 15, 1998, along with share units representing the Company's Matching
Contribution.
Earlier this year, however, you were granted the maximum number of options
permitted under the LTIP for 1997. As a result, you and the C&O Committee have
now agreed that a dollar amount equal in value to the share units that would
otherwise have been credited to you under the LTIP as a result of your election
(including the Company's Matching Contribution) shall be credited to a
supplemental account maintained for you on the books of the Company (to be known
as the "Supplemental Long Term Plan for Mr. Green"), to which account shall be
credited earnings each year at the annual rate earned by the American Balanced
Fund under the Company's Incentive Savings Plan (or such other similar fund as
the C&O Committee may specify, if the American Balanced Fund ceases to be
available). The supplemental account will be subject to the same vesting and
distribution provisions as are detailed in the LTIP, except that settlement of
your account will be in the form of cash.
If the foregoing accurately reflects your agreement relating to your deferral
election under the LTIP for 1997, please so indicate by signing and returning
to me the enclosed copy of this letter.
Very truly yours,
/s/ John D. Weil,
John D. Weil,
Chairman, Compensation &
Organization Committee;
Oglebay Norton Company
So agreed /s/ R. Thomas Green, Jr. Date: Dec. 17, 1997
-------------------------- ----------------------
R. Thomas Green, Jr.
cc: Mr. Paul V. Gorman, Jr.
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<PAGE> 1
Exhibit 10(r)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made at Cleveland,
Ohio, this 17th day of December, 1997, between OGLEBAY NORTON COMPANY, a
Delaware corporation ("Oglebay"), and JOHN LAUER ("Lauer").
The Board of Directors of Oglebay, recognizing the depth and quality of
Lauer's operational and mergers and acquisition experience and the success he
has achieved in integrating related businesses and maximizing synergies and
efficiencies, has named Lauer as President and Chief Executive Officer and as a
member of the Board of Directors, effective January 1, 1998, and has determined
to nominate Lauer for the post of Chairman of the Board of Directors for
election by the shareholders of Oglebay at its annual meeting of shareholders
scheduled for April 29, 1998. Lauer will become an employee of Oglebay
immediately upon the execution of this Agreement with such duties during the
remainder of the month of December 1997 as he and the Board of Directors may
agree upon. (Certain capitalized terms not otherwise defined in this Agreement
have the meanings ascribed to them in Section 14, at the end of this Agreement.)
Oglebay and Lauer, each intending to be legally bound, agree as
follows:
1. Employment, Term. Oglebay hereby engages and employs Lauer as its
President and Chief Executive Officer to render such services in the
administration and operation of its affairs as are appropriate to those offices
and may be specified from time to time by the Board of Directors for a term of
approximately five years commencing on January 1, 1998 and continuing through
January 2, 2003, all subject to and in accordance with the terms and conditions
set forth below in this Agreement. In addition, Oglebay hereby employs Lauer
effective as of the date of execution of this Agreement to perform such services
during the remainder of the month of December 1997 as he and the Board of
Directors may agree.
2. Services. Lauer will devote all of his business time and efforts to
the service of Oglebay, except for (a) usual vacation periods and reasonable
periods of illness, (b) services as an officer and director of any Subsidiary of
Oglebay, and (c) services as a director or trustee of other corporations or
organizations that are not in competition with Oglebay or any Subsidiary, except
that Lauer shall obtain the prior approval of Oglebay's Compensation
Subcommittee before accepting any new position (i.e., a position not held by
Lauer as of the date of execution of this Agreement) as director or trustee of
any for profit entity (whether the entity is in corporate or other form).
Nothing in this Agreement shall preclude Lauer from devoting reasonable periods
of time to charitable and community activities or the management of his
investment assets provided these activities do not materially interfere with the
performance by Lauer of his duties hereunder.
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<PAGE> 2
3. Chairman, President, and Chief Executive Officer; Board of Directors
Membership. Unless otherwise mutually agreed by Lauer and the Board of
Directors, commencing January 1, 1998 and thereafter throughout the period of
his employment under this Agreement, Lauer shall hold the offices of President
and Chief Executive Officer of Oglebay and shall be a member of the Board of
Directors. The Board of Directors shall nominate Lauer to become Chairman of the
Board of Directors for election by the shareholders of Oglebay at its annual
meeting of shareholders scheduled for April 29, 1998 (the "1998 Annual Meeting")
and, unless otherwise mutually agreed by Lauer and the Board of Directors, at
each subsequent annual meeting of shareholders so long as Lauer is employed by
Oglebay pursuant to this Agreement.
4. Compensation. Oglebay will not pay any salary to Lauer but, as
compensation for all services to be rendered by Lauer to Oglebay under this
Agreement, including services as an officer, director, or member of any
committee of Oglebay or of any Subsidiary, or any other services specified by
the Board of Directors, will provide to Lauer (a) the Restricted Stock Award
described in Section 4.1, (b) the Stock Option described in Section 4.2, (c) the
Cash Bonus described in Section 4.3, and (d) the benefits described in Section
4.4.
4.1 Restricted Stock Award. Lauer has advised Oglebay that he intends
to acquire a sufficient number of shares of Oglebay's Common Stock ("Shares"),
either directly or through a Lauer Family Vehicle, so that his total investment
in Shares will be at least $1,000,000 by June 30, 1998. (For all purposes of
this Section 4.1, Shares acquired, held, and/or disposed of by a Lauer Family
Vehicle will be treated as acquired, held, and/or disposed of, respectively, by
Lauer directly.) Lauer shall notify the Compensation Subcommittee promptly after
his total investment in Shares has reached $1,000,000. The date on which Lauer
so notifies the Compensation Subcommittee is referred to in this Agreement as
the "Investment Notice Date." Oglebay will grant to Lauer, within five days of
the Investment Notice Date (but not before January 2, 1998), that number of
Shares (the "Base Number") that is equal to the number of Shares acquired by
Lauer on or before June 30, 1998 (or such later date, if any, upon which Lauer
and the Compensation Subcommittee may agree) in exchange for the first
$1,000,000 invested by Lauer in Shares. Lauer shall timely file with the
Internal Revenue Service an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986 (the "83(b) Election") electing to take into income the
value of the Restricted Shares as of the date the Restricted Shares are granted
to him. The Shares acquired by Lauer through the Investment Notice Date, up to
the Base Number of such Shares, are referred to in this Agreement as the
"Personal Investment Shares." The Shares granted to Lauer by Oglebay pursuant to
this Section 4.1 (the "Restricted Shares") will be subject to the following
restrictions:
(a) Unless accelerated as provided in Section 6.2: (i) 20% of the Base
Number of Restricted Shares will be fully vested and nonforfeitable as
of the date of the grant; and (ii) on January 1 of each of 1999, 2000,
2001, and 2003 (i.e., on each of the first, second, third, and fifth
anniversaries of January 1, 1998), provided that through each such
date, respectively, (x) Lauer continues in the employ of Oglebay and
(y) Lauer continues to hold all of the Personal Investment Shares,
Lauer's rights to an additional 20% of the Base Number of Restricted
Shares will become fully vested and nonforfeitable. As a
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<PAGE> 3
condition to the lapse of the restrictions as specified above, Lauer
will be required to provide to Oglebay means to satisfy Oglebay's
withholding obligation with respect to the income recognized by Lauer
in connection with the Restricted Shares upon the making of a Section
83(b) election, either by paying cash to Oglebay or by surrendering to
Oglebay a sufficient number of Restricted Shares to satisfy the
withholding requirement.
(b) If, on any date before January 1, 2003, Lauer sells or otherwise
disposes of any of the Personal Investment Shares, Lauer will thereupon
forfeit any and all Restricted Shares that have not become fully vested
and nonforfeitable before that date.
So long as the Restricted Shares are held by Lauer subject to restrictions,
Lauer will be entitled to exercise all voting rights appurtenant to the
Restricted Shares and to retain any and all dividends paid on the Restricted
Shares.
4.2 Stock Option. Effective December 17, 1997, the Compensation
Subcommittee will grant to Lauer, subject to shareholder approval (which will be
sought at the 1998 Annual Meeting), an option to acquire that number of Shares
that is equal to the total number of Shares outstanding as of January 1, 1998
multiplied by .08 (the "Performance Option"). The exercise price for each Share
under the Performance Option will be an amount equal to $38.00 per Share (that
price being equal to the closing per Share sales price for December 16, 1997 as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") National Market plus $6.00 per Share). Unless accelerated as
provided in Section 6.1 of this Agreement, the Performance Option will first
become exercisable on January 1, 2001 and will be exercisable by Lauer
thereafter, in whole or in part and from time to time, while Lauer is employed
by Oglebay and, if Lauer remains in the employ of Oglebay through January 1,
2003, thereafter through June 30, 2005. The award instrument setting forth the
full terms of the Performance Option will contain provisions for the
satisfaction of income tax withholding requirements by withholding of Shares or
otherwise.
4.3 Annual Bonus. Unless otherwise determined pursuant to the last
sentence of this Section 4.3, by not later than February 28 of each calendar
year during Lauer's employment under this Agreement, the Compensation
Subcommittee will adopt an incentive plan for Lauer for that calendar year. Each
such plan will entitle Lauer to a cash bonus, payable not later than March 15 of
the immediately following year, ranging in value from $0 to $200,000, depending
upon the extent to which Oglebay and Lauer achieve such goals during that
calendar year as the Compensation Subcommittee may choose to set forth in the
incentive plan for that year. The Compensation Subcommittee may, in its
discretion, develop an alternative annual incentive compensation plan for Lauer
that would provide similar potential value to him but in the form of Shares or
an interest in Shares rather than in cash.
4.4 Benefits. Lauer will be entitled to such periods of vacation and
sick leave allowance each year as are determined by Oglebay's vacation and sick
leave policy for executive officers as in effect on the date of execution of
this Agreement or as may be increased form time to time thereafter. Neither
vacation nor sick leave allowance will be accumulated from year to year.
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<PAGE> 4
Oglebay will also provide Lauer with such perquisites as it has customarily
provided to its top executives. Lauer will be a participant in Oglebay's
qualified Pension Plan for Salaried Employees (the "Qualified Plan," pursuant to
which any bonuses paid by Oglebay to Lauer will be treated, up to applicable
limits, as covered compensation). In addition, Oglebay will provide Lauer with
an excess or supplemental retirement benefit plan or plans, in such form as may
be determined at the discretion of the Compensation Subcommittee, that will
provide to Lauer retirement benefits that, when added to any benefits to him
under the Qualified Plan, equal the benefits Lauer would have been entitled to
under the Qualified Plan if (a) in addition to any bonuses received by Lauer,
there had been included in Lauer's covered compensation, throughout the period
of his employment, salary earned by Lauer at the rate of $350,000 per year, and
(b) there were no limits on the amount of covered compensation that could be
taken into account in determining the benefit payable to Lauer under the
Qualified Plan.
5. Termination.
5.1 At End of Term. Unless Oglebay and Lauer earlier mutually agree to
extend the term of Lauer's employment under this Agreement, that term will
terminate on January 2, 2003. Beginning not later than six months before the
scheduled end of the term of Lauer's employment hereunder, Oglebay and Lauer
will discuss with each other whether the term of Lauer's employment hereunder
should be extended and, if so, for what period and on what terms and conditions.
5.2 Death or Disability. Lauer's employment hereunder will terminate
immediately upon Lauer's death. Oglebay may terminate Lauer's employment
hereunder immediately upon giving notice of termination if Lauer is disabled, by
reason of physical or mental impairment, to such an extent that he is unable to
substantially perform his duties under this Agreement for 90 or more days out of
any period of 360 consecutive days.
5.3 For "Cause." Oglebay may terminate Lauer's employment hereunder for
"Cause" at any time if :
(a) Lauer commits a felony;
(b) Lauer commits an act or series of acts of dishonesty in the course
of his employment that are materially inimical to the best interests of
Oglebay or a Subsidiary as determined by the vote of a majority of the
members of the Board of Directors (excluding Lauer);
(c) Lauer continues to violate his obligation under Section 7 not to
engage in Competitive Activities after the Board of Directors has
advised him in writing to cease those activities; or
(d) Other than for disability, Lauer abandons and consistently fails to
attempt to perform his duties and responsibilities hereunder for 30
consecutive days after written notice from the Board of Directors that
it is considering termination based on this Section 5.3(d).
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<PAGE> 5
5.4 By Oglebay Without Cause. Oglebay may terminate Lauer's employment
hereunder without Cause at any time by action of a majority vote of the entire
Board of Directors.
5.5 By Lauer Following Constructive Termination at Any Time. Lauer may
terminate his employment hereunder "on grounds of Constructive Termination"
(and, if Lauer elects to terminate his employment in such circumstances, he will
be deemed to have been "Constructively Terminated") if, at any time:
(a) Lauer is subject to Demotion or Removal;
(b) Oglebay requests Lauer's resignation at a time when Oglebay does
not have grounds to terminate Lauer's employment for Cause; or
(c) Lauer's principal place of employment for Oglebay is relocated
outside of the Cleveland metropolitan area or Lauer is otherwise
required by Oglebay to relocate outside the Cleveland metropolitan
area.
5.6 By Lauer Following a Change of Control. Lauer may terminate his
employment hereunder by notice to the Board of Directors given at any time that
is at least 10 and not more than 90 days after the occurrence of a Change of
Control.
6. Effect of Termination.
6.1 Termination Without Cause, etc., Constructive Termination, or
Termination by Lauer after a Change of Control. If Lauer's employment is
terminated by Oglebay for any reason other than Cause, disability, or death or
Lauer is Constructively Terminated or Lauer terminates his employment by notice
to the Board of Directors within 90 days of the occurrence of a Change of
Control:
(a) Any and all remaining restrictions on the Restricted Shares will
lapse immediately before the Termination Date and Lauer's rights to all
Restricted Shares will thereupon become fully vested and
nonforfeitable.
(b) The Performance Option, if not already exercisable, will become
immediately exercisable and will remain exercisable through January 2,
2004.
(c) Oglebay will pay Lauer a bonus for the calendar year in which the
Termination Date occurs equal to $200,000 times multiplied by a
fraction, the numerator of which is 12 minus the number of full months
in the calendar year occurring after the Termination Date and the
denominator of which is 12.
6.2 Termination by Death or Disability. If Lauer's employment with
Oglebay is terminated by his death or by Oglebay on account of Lauer's
disability:
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(a) Any Restricted Shares that were not otherwise, at the Termination
Date, fully vested and nonforfeitable, will be subject to acceleration
to the following extent:
(i) If the Termination Date falls in 1998 or 1999, an
aggregate of 50% of the Restricted Shares (including any that
had previously vested) will be fully vested and nonforfeitable
and the remaining 50% of the Restricted Shares will be
forfeited as of the Termination Date.
(ii) If the Termination Date falls in 2000, an aggregate of
70% of the Restricted Shares (including any that had
previously vested) will be fully vested and nonforfeitable and
the remaining 30% of the Restricted Shares will be forfeited
as of the Termination Date.
(iii) If the Termination Date falls in 2001, an aggregate of
85% of the Restricted Shares (including any that had
previously vested) will be fully vested and nonforfeitable and
the remaining 15% of the Restricted Shares will be forfeited
as of the Termination Date.
(iv) If the Termination Date falls after 2001, all of the
Restricted Shares (including any that had previously vested)
will be fully vested and nonforfeitable.
(b) If the Termination Date occurs before January 1, 2001, the
Performance Option will be terminated as of the Termination Date. If
the Termination Date occurs after December 31, 2000, the Performance
Option, to the extent not previously exercised, will remain exercisable
for a period of one year after the Termination Date.
(c) Oglebay will pay Lauer such bonus for the calendar year in which
the Termination Date occurs as may be provided for in the incentive
plan adopted by the Compensation Subcommittee for Lauer for that
calendar year.
6.3 Termination for Cause or Voluntarily by Lauer. If Lauer's
employment is terminated by Oglebay for Cause or by Lauer other than as a result
of a Constructive Termination:
(a) Any Restricted Shares that were not, at the Termination Date, fully
vested and nonforfeitable, will be forfeited as of the Termination
Date.
(b) The Performance Option will be terminated as of the Termination
Date.
(c) Oglebay will not pay Lauer any bonus for the calendar year in which
the Termination Date occurs.
7. Limitations on Competition. Lauer shall not engage in any
Competitive Activity during the period commencing with the date of execution of
this Agreement and ending on the second anniversary of the Termination Date. In
addition to other remedies provided by law or
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equity, upon a breach by Lauer of any prohibition on Competitive Activity
contained in this Section 7, Oglebay shall be entitled to have a court of
competent jurisdiction enter an injunction against Lauer restraining him from
any further breach of any such prohibition.
8. Indemnification. Oglebay shall indemnify Lauer, to the full extent
permitted or authorized by the Delaware General Corporation Law as it may from
time to time be amended, if Lauer is made or threatened to be made a party to
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, by reason of the fact that
Lauer is or was a director, officer, or employee of Oglebay or any Subsidiary,
or is or was serving at the request of Oglebay or any Subsidiary as a director,
trustee, officer, or employee of a corporation, partnership, joint venture,
trust, or other enterprise. The indemnification provided by this Section 8 shall
not be deemed exclusive of any other rights to which Lauer may be entitled under
the articles of incorporation or the regulations of Oglebay or of any
Subsidiary, or any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in Lauer's official capacity and as to action in
another capacity while holding such office, and shall continue as to Lauer after
Lauer has ceased to be a director, trustee, officer, or employee and shall inure
to the benefit of the heirs, executors, and administrators of Lauer.
9. Reimbursement of Certain Expenses.
9.1 Oglebay shall pay, as incurred, all expenses, including the
reasonable fees of counsel engaged by Lauer, of defending any action brought to
have this Agreement declared invalid or unenforceable.
9.2 Oglebay shall pay, as incurred, all expenses, including the
reasonable fees of counsel engaged by Lauer, of prosecuting any action to compel
Oglebay to comply with the terms of this Agreement upon receipt from Lauer of an
undertaking to repay Oglebay for such expenses if, and only if, it is ultimately
determined by a court of competent jurisdiction that Lauer had no reasonable
grounds for bringing that action (which determination need not be made simply
because Lauer fails to succeed in the action).
9.3 Expenses (including attorney's fees) incurred by Lauer in defending
any action, suit, or proceeding commenced or threatened against Lauer for any
action or failure to act as an employee, officer, or director of Oglebay or any
Subsidiary shall be paid by Oglebay, as they are incurred, in advance of final
disposition of the action, suit, or proceeding upon receipt of an undertaking by
or on behalf of Lauer in which he agrees to reasonably cooperate with Oglebay or
the Subsidiary, as the case may be, concerning the action, suit, or proceeding,
and (a) if the action, suit, or proceeding is commenced or threatened against
Lauer for any action or failure to act as a director, to repay the amount if it
is proved by clear and convincing evidence in a court of competent jurisdiction
that his action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to Oglebay or a Subsidiary or with reckless
disregard for the best interests of Oglebay or a Subsidiary or (b) if the
action, suit, or proceeding is commenced or threatened against Lauer for any
action or failure to act as an officer or employee, to repay the amount if it is
ultimately determined that he is not entitled to be indemnified. The obligation
of
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Oglebay to advance expenses provided for in this Section 9.3 shall not be deemed
exclusive of any other rights to which Lauer may be entitled under the articles
of incorporation or the regulations of Oglebay or of any Subsidiary, or any
agreement, vote of shareholders or disinterested directors, or otherwise.
10. Survival of Obligations. Except as is otherwise expressly provided
in this Agreement, the respective obligations of Oglebay and Lauer hereunder
shall survive any termination of Lauer's employment under this Agreement.
11. Merger or Transfer of Assets of Oglebay. Oglebay will not
consolidate with or merge into any other corporation, or transfer all or
substantially all of its assets to another corporation, unless such other
corporation shall assume this Agreement in a signed writing and deliver a copy
thereof to Lauer. Upon such assumption the successor corporation shall become
obligated to perform the obligations of Oglebay under this Agreement, and the
term "Oglebay" as used in this Agreement shall be deemed to refer to such
successor corporation.
12. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered in person (to the Secretary of Oglebay in the case of notices to
Oglebay and to Lauer in the case of notices to Lauer) or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to Oglebay:
Oglebay Norton Company
1100 Superior Avenue - 20th Floor
Cleveland, Ohio 44114-2598
Attention: Secretary
If to Lauer:
Mr. John Lauer
18501 North Park Boulevard
Shaker Heights, Ohio 44118-4939
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a writing signed by Lauer and Oglebay. No waiver by either party hereto at
any time of any breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or at any prior or subsequent time. No agreement or representation, oral or
otherwise, express or implied, with respect to the subject matter hereof has
been made by either party which is not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio.
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14. Definitions.
14.1 Affiliate. The term "Affiliate" has the meaning given to it in
Rule 12b-2 under the Securities Exchange Act of 1934.
14.2 Beneficial Owner. The term "Beneficial Owner" has the meaning
given to it in Rule 13d-3 under the Securities Exchange Act of 1934.
14.3 Board of Directors. The term "Board of Directors," when used other
than with specific reference to another entity, shall mean the Board of
Directors of Oglebay.
14.4 Compensation Subcommittee. The term "Compensation Subcommittee"
shall mean the subcommittee of the Board of Directors that is authorized by the
Board of Directors to establish and administer the Performance Option referred
to in this Agreement. The Compensation Subcommittee shall be made up solely of
individuals who qualify as "outside directors" within the meaning of Section
1.162-27(e)(3) of the Treasury Regulations promulgated under Section 162(m) of
the Internal Revenue Code.
14.5 Competitive Activity. Lauer shall be deemed to have engaged in
"Competitive Activity" if he engages, directly or indirectly, without the
consent of Oglebay, in any business or business activity in which Oglebay or any
of its Subsidiaries engages, provided that Lauer will not be deemed to be
engaged in Competitive Activity with respect to a publicly held corporation
merely by virtue of his ownership, directly or indirectly, of less than 1% of
the outstanding stock of that corporation.
14.6 Change of Control. A "Change of Control" shall be deemed to have
occurred, subject to the last two sentences of this Section 14.6, if at any time
or from time to time after the date of this Agreement:
(a) Any person (other than Oglebay, any of its subsidiaries, any
employee benefit plan or employee stock ownership plan of Oglebay, or
any person organized, appointed, or established by Oglebay for or
pursuant to the terms of any such plan), along or together with any of
its Affiliates, becomes the Beneficial Owner of 20% or more of the
Common Shares then outstanding; any person is declared to be an
"Adverse Person" (i.e.: a person whose interests are adverse to those
of Oglebay) by the Board of Directors; or any person commences or
publicly announces an intention to commence a tender offer or exchange
offer the consummation of which would result in the Person becoming the
Beneficial Owner of 20% or more of the Common Shares then outstanding.
(b) At any time during a period of 24 consecutive months, individuals
who were directors at the beginning of the 24-month period no longer
constitute a majority of the members of the Board of Directors, unless
the election, or the nomination for election by Oglebay's shareholders,
of each director who was not a director at the beginning of the period
is approved by at least a majority of the directors (i) who are in
office at the time of the
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<PAGE> 10
election or nomination and (ii) were directors at the beginning of the
period (the "Continuing Directors").
(c) A record date is established for determining shareholders entitled
to vote upon (i) a merger or consolidation of Oglebay with another
corporation in which Oglebay is not the surviving or continuing
corporation or in which all or part of the outstanding Common Shares
are to be converted into or exchanged for cash, securities, or other
property, (ii) a sale or other disposition of all or substantially all
of the assets of Oglebay, or (iii) the dissolution of Oglebay.
If an event described in clause (b) of this Section 14.6 occurs, the occurrence
of that event shall constitute an irrevocable Change of Control. On the other
hand, if an event described in any of clauses (a) or (c) of this Section 14.6
occurs, the Board of Directors, by vote of two-thirds of all of the Directors
then in office who are not employees of Oglebay, acting in good faith, may
determine, either prior to the event or subsequently, that the event should not
be treated as a Change of Control for purposes of this Agreement, except that
any such determination may not be made after Lauer's employment with Oglebay is
terminated (a) by Lauer more than 10 days but not more than 90 days after the
occurrence of the relevant event, (b) by Lauer by reason of a Constructive
Termination, or (c) by Oglebay other than for Cause or as a result of Lauer's
disability or death. If the Board of Directors, acting in accordance with the
immediately preceding sentence, determines that an event should not be treated
as a Change of Control for purposes of this Agreement, then, unless otherwise
provided by action of the Board of Directors, from and after the date of that
determination, that event shall be treated as not having occurred for purposes
of this Agreement.
14.7 Demotion or Removal. Lauer shall be deemed to have been subjected
to "Demotion or Removal" if (a) without Lauer's express written consent, Oglebay
removes Lauer from any of the offices of Chairman of the Board of Directors
(after Lauer has been elected to that office), President, or Chief Executive
Officer of Oglebay, or (b) Oglebay becomes a subsidiary of another corporation
or similar entity and Lauer does not hold the posts of Chairman of the Board of
Directors, President, and Chief Executive Officer of that other corporation or
similar entity (except the fact that Lauer does not hold one or more of such
posts in these circumstances will not constitute a Demotion or Removal if Lauer
has, by his express written consent, agreed that his not holding those posts
should not constitute a Demotion or Removal).
14.8 Lauer Family Vehicle. The term "Lauer Family Vehicle" shall mean
any limited liability corporation, partnership, trust, or similar entity that
meets the following two requirements:
(a) all of the beneficial interests in the entity belong to one or more
of Lauer, his wife, his descendants, and/or spouses of descendants, and
(b) So long as Lauer is alive and competent, he controls the voting
rights appurtenant to any and all Shares held by the entity.
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14.9 Subsidiary. The term "Subsidiary," as of any time, means any
corporation, partnership, or other entity a majority of the voting control of
which is directly or indirectly owned or controlled at that time by Oglebay.
14.10 Termination Date. The term "Termination Date" means the date on
which Lauer's employment with Oglebay and its Subsidiaries terminates.
IN WITNESS WHEREOF, Oglebay and Lauer have executed this Agreement,
Oglebay by the duly authorized Chairman of the Compensation and Organization
Committee of its Board of Directors, as of the date first written above.
OGLEBAY NORTON COMPANY
By /s/ John D. Weil
---------------------------------------
John D. Weil, Chairman, Compensation
and Organization Committee
/s/ John Lauer
----------------------------------------
JOHN LAUER
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Exhibit 10(s)
John D. Well
President
Clayton Management Company
200 N. Broad Street, Suite 825
St. Louis, MO 63102-2753
John Lauer
1850 North Park Boulevard
Shaker Heights, Ohio 44118-4939
December 17, 1997
Dear John:
I am pleased to advise you, on behalf of the Compensation Subcommittee of the
Board of Directors of Oglebay Norton Company and on behalf of the entire Board,
that the proposed Employment Agreement you and I have been discussing has been
unanimously approved, both by the Subcommittee and by the entire Board. Welcome
aboard!
The Directors reacted favorable to the somewhat unusual compensation package
that is central to the Employment Agreement. They appreciated the fact that your
reward will be very directly related to increases in shareholder value over time
and they recognize that, if that value increases dramatically, the total value
of the compensation to you under the Employment Agreement will be
proportionately dramatic. As you and I have discussed, the compensation package
contained in the Employment Agreement is intended to provide all of your
compensation during your anticipated tenure with the Company. The Directors
asked me to confirm, by this letter, that you share my understanding on this
point. I would appreciate it if you would indicate that you do share that
understanding by signing the extra copy of this letter on the line provided.
John, all of us on the Board are delighted that you will be leading the Company
in the years ahead. I have enjoyed the process we have just been through and I
look forward to working with you in the future.
Sincerely,
John D. Weil
/s/ John D. Weil
- ---------------------------------------------
I share your understanding with regard to the
compensation package in the Employment
Agreement.
/s/ John Lauer
- ----------------------------------------------
John Lauer
December 17, 1997
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Exhibit 10(t)
OGLEBAY NORTON COMPANY
PERFORMANCE OPTION AGREEMENT
This Agreement between OGLEBAY NORTON COMPANY ("Oglebay") and JOHN
LAUER ("Lauer") memorializes the grant made on December 17, 1997 by Oglebay's
Compensation Subcommittee to Lauer of a nonqualified stock option as
contemplated by the Employment Agreement entered into between Oglebay and Lauer
on that same date (the "Employment Agreement"). Capitalized terms used in this
Agreement and not otherwise defined have the meanings assigned to them in the
Employment Agreement.
1. Grant of Option. The Compensation Subcommittee hereby grants to
Lauer, as of December 17, 1997, an option (the "Performance Option") to purchase
all or any number of an aggregate of 380,174 shares of Oglebay Common Stock,
$1.00 par value ("Shares"), at an exercise price of $38.00 per Share (the
"Exercise Price"). (The Exercise Price is equal to the closing per Share sales
price for December 16, 1997 as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") National Market plus
$6.00 per Share.) The Performance Option shall be a nonqualified stock option
and shall not be treated as an incentive stock option. The Performance Option is
granted subject to approval of Oglebay's shareholders, which approval will be
sought at Oglebay's 1998 Annual Meeting of Shareholders.
2. Term of Option. Unless earlier terminated pursuant to any of
Sections 6.1, 6.2, or 6.3, the Performance Option shall terminate at the close
of business on, and shall not be exercisable at any time after, June 30, 2005.
3. Full Vesting if Lauer Remains in Employ of Oglebay through January
2, 2003. If Lauer remains in the employ of Oglebay through January 2, 2003, the
Performance Option, to the extent not previously exercised by Lauer, shall
remain exercisable thereafter through June 30, 2005.
4. Exercise of Option.
4.1 First Exercise Date. Unless accelerated as provided in Section 6.1,
the Performance Option will first become exercisable on January 1, 2001.
4.2 Exercise in Whole or in Part. Once exercisable, the Performance
Option may be exercised by Lauer in whole or in part (but not for any fractional
Shares) and from time to time until the expiration or termination of the
Performance Option.
4.3 Method of Exercise. The Performance Option will be exercisable by
delivery of (a) the Exercise Price (payable in accordance with Section 4.4), and
(b) a written notice to Oglebay identifying this Agreement and specifying the
number of Shares as to which the Performance Option is being exercised. Upon any
exercise of the Performance Option, Lauer shall provide Oglebay the means to
satisfy Oglebay's withholding obligation in accordance with
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Section 5. Oglebay shall deliver to Lauer certificates representing the
Performance Option Shares as soon as administratively feasible following any
exercise made in conformance with all of the terms of this Agreement.
4.4 Payment for Shares. Upon exercise of the Performance Option, Lauer
shall pay the Exercise Price in cash or in such other form of consideration as
the Compensation Subcommittee may determine to be acceptable, including, without
limitation, (a) by delivery by Lauer (with the written notice of election to
exercise) of irrevocable instructions to a broker registered under the
Securities Exchange Act of 1934, as amended, to promptly deliver to Oglebay the
amount of sale or loan proceeds to pay the Exercise Price, (b) in Shares
(including through an attestation procedure) surrendered to Oglebay, (c) by the
surrender of all or part of the Performance Option, or (d) by a combination of
the foregoing methods, as and to the extent permitted by the Compensation
Subcommittee. Shares surrendered in connection with the exercise of the
Performance Option shall be valued at their Fair Market Value on the date of
exercise. Except as otherwise determined by the Compensation Subcommittee, the
term "Fair Market Value" with respect to Shares means the closing sales price of
Shares as reported on NASDAQ National Market on the date for which the
determination of fair market value is made or, if there are no sales of Shares
on that date, then on the next preceding date on which there were any sales of
Shares. If the Shares cease to be traded on the NASDAQ National Market, the
"Fair Market Value" of Shares shall be determined in such similar manner as may
be prescribed by the Compensation Subcommittee.
5. Withholding of Taxes. The Compensation Subcommittee may, in its
discretion, permit or require Lauer to satisfy, in whole or in part, any
applicable federal, state, and local withholding tax obligation that may arise
in connection with the acquisition of Shares pursuant to the Performance Option,
by such means as the Compensation Subcommittee may determine including, without
limitation, by having Oglebay hold back some portion of the Shares that would
otherwise be delivered pursuant to the Performance Option or by delivering to
Oglebay an amount equal to the withholding tax obligation arising with respect
to such acquisition in (a) cash, (b) Shares, or (c) such combination of cash and
Shares as the Compensation Subcommittee may determine. The Fair Market Value of
the Shares to be so held back by Oglebay or delivered by Lauer shall be
determined as of the date on which the obligation to withhold first arose.
Oglebay may apply the provisions of this Section 5 based upon generally
applicable withholding rates and without regard to any statutory minimum rate
applicable to special payments.
6. Effect of Termination of Lauer's Employment before January 2, 2003.
The provisions of this Section 6 shall apply only if the date on which Lauer's
employment with Oglebay terminates (the "Termination Date") occurs before
January 2, 2003.
6.1 Termination Without Cause, etc., Constructive Termination, or
Termination by Lauer after a Change of Control. If, before January 2, 2003,
Lauer's employment is terminated by Oglebay for any reason other than Cause,
disability, or death or Lauer is Constructively Terminated or Lauer terminates
his employment by notice to the Board of Directors within 90 days of the
occurrence of a Change of Control, the Performance Option, (a) to the extent not
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already exercisable, will become immediately exercisable, (b) will remain
exercisable through January 2, 2004, and (c) will be terminated at the close of
business on January 2, 2004.
6.2 Termination by Death or Disability. If, before January 2, 2003,
Lauer's employment with Oglebay is terminated by his death or by Oglebay on
account of Lauer's disability:
(a) if the Termination Date occurs before January 1, 2001, the
Performance Option will be terminated as of the Termination Date; and
(b) if the Termination Date occurs after December 31, 2000, the
Performance Option, to the extent not previously exercised, will remain
exercisable for a period of one year after the Termination Date and
will be terminated at the close of business on the first anniversary of
the Termination Date.
6.3 Termination for Cause or Voluntarily by Lauer. If, before January
2, 2003, Lauer's employment is terminated by Oglebay for Cause or by Lauer other
than as a result of a Constructive Termination, the Performance Option will be
terminated as of the Termination Date.
7. Transferability. The Performance Option may not be transferred by
Lauer other than by will or by the laws of descent and distribution. During
Lauer's lifetime, only Lauer himself (or, in the case of his incapacity, his
attorney in fact or legal guardian) may exercise the Performance Option.
8. Adjustment Upon Changes in Shares. In the event of any stock
dividend, stock split, or share combination of the Shares or any
reclassification, recapitalization, merger, consolidation, other form of
business combination, liquidation, or dissolution involving Oglebay or any
spin-off or other distribution to shareholders of Oglebay (other than normal
cash dividends), the Compensation Subcommittee shall adjust the number and kind
of shares subject to, the price per share under, and the terms and conditions of
the Performance Option to the extent necessary and in such manner that the
benefits to Lauer under the Performance Option shall be maintained substantially
as before the occurrence of that event. Any adjustment so made by the
Compensation Subcommittee shall be conclusive and binding for all purposes of
this Agreement as of such date as the Compensation Subcommittee may determine.
8. Administration. The Compensation Subcommittee shall have the
authority to make all determinations necessary for the administration of this
Agreement. The construction and interpretation by the Compensation Subcommittee
of any provision of this Agreement and any determination made by the
Compensation Subcommittee pursuant to any provision hereof shall be final and
conclusive. No member or alternate member of the Committee shall be liable for
any action or determination made in good faith. The Compensation Subcommittee
may authorize any one or more members of the Compensation Subcommittee or any
officer of Oglebay to execute and deliver documents on behalf of the
Compensation Subcommittee and the Compensation Subcommittee may delegate to one
or more employees, agents, or officers of
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Oglebay, or to one or more third party consultants, accountants, lawyers, or
other advisors, such ministerial duties related to the operation of the
Agreement as it may deem appropriate.
9. Miscellaneous. Nothing contained in this Agreement shall be
understood as conferring on Lauer any right to continue as an employee of
Oglebay or any affiliate. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio. This Agreement shall inure to the
benefit of and be binding upon its parties and their respective heirs,
executors, administrators, successors, and assigns, but the Performance Option
shall not be transferable by Lauer other than as provided in Section 7.
IN WITNESS WHEREOF, Oglebay has caused this Agreement to be executed on
its behalf by its duly authorized Chairman of the Compensation Subcommittee, and
Lauer has hereunto set his hand, all as of the day and year first written above.
OGLEBAY NORTON COMPANY
By /s/ John D. Weil
---------------------------------------
John D. Weil, Chairman, Compensation
Subcommittee
/s/ John Lauer
----------------------------------------
JOHN LAUER
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<PAGE> 1
Exhibit 10(u)
OGLEBAY NORTON COMPANY
SPECIAL SUPPLEMENTAL RETIREMENT PLAN
OGLEBAY NORTON COMPANY ("Oglebay") hereby adopts this Special
Supplemental Retirement Plan for the benefit of JOHN N. LAUER ("Lauer") as
contemplated by the Employment Agreement entered into between Oglebay and Lauer
on December 17, 1997 (the "Employment Agreement"). Capitalized terms used in
this plan (the "Special Plan") and not otherwise defined have the meanings
assigned to them in the Oglebay Norton Company Pension Plan for Salaried
Employees (the "Salaried Plan").
Lauer's compensation under the Employment Agreement includes an annual
bonus but does not include any salary component. This Plan is designed to
provide to Lauer aggregate retirement benefits, taking into account (a) benefits
under the Salaried Plan, (b) benefits under the Oglebay Norton Company Excess
and TRA Supplemental Benefit Retirement Plan (the "Excess Plan"), and (c)
benefits under the Special Plan, that are equal to the aggregate retirement
benefits to which Lauer would have been entitled under the Salaried Plan and the
Excess Plan if, in addition to receiving any and all bonuses that may be paid to
him by Oglebay, Lauer had also received from Oglebay, throughout the term of his
employment with Oglebay, salary payments at the rate of $350,000 per annum.
(Lauer does not receive vacation pay under the Employment Agreement and,
accordingly, no benefit that is based on vacation pay is provided for under the
Special Plan.)
1. Eligibility. Lauer will be eligible for a monthly special retirement
benefit under the Special Plan if he retires, dies, or otherwise terminates his
employment with Oglebay under conditions that make him, his beneficiary, or his
Contingent Annuitant eligible for a benefit under the Salaried Plan.
2. Amount and Payment. The monthly special retirement benefit payable
to Lauer, his beneficiary, or his Contingent Annuitant will be in such amount as
is required, when added to the sum of (a) the monthly benefit payable (before
the reduction applicable to any optional method of payment) to Lauer, his
beneficiary, or his Contingent Annuitant under the Salaried Plan plus (b) the
monthly excess retirement benefit payable to Lauer, his beneficiary, or his
Contingent Annuitant under the Excess Plan, to produce an aggregate monthly
benefit equal to the aggregate monthly benefit that would have been payable
(before the reduction applicable to any optional method of payment) to Lauer,
his beneficiary, or his Contingent Annuitant under the Salaried Plan and the
Excess Plan if, in addition to receiving any and all bonuses that may be paid to
him by Oglebay, Lauer had also received from Oglebay, throughout the term of his
employment with Oglebay, salary payments at the rate of $350,000 per annum. All
payments under the Special Plan shall be made by Oglebay from its general
assets. The terms of payment of the special retirement benefit will be identical
to those specified in the Salaried Plan for the type of payment Lauer, his
beneficiary, or his Contingent Annuitant receives under the Salaried Plan.
3. Optional Methods of Payment. If one of the optional methods of
payment, whether automatic or selected by Lauer, is applicable to the benefit
payable to Lauer, his beneficiary, or
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his Contingent Annuitant under the Salaried Plan, then payment of any special
retirement benefit under the Special Plan will be made in accordance with such
option, subject, however, to the approval of the Compensation and Organization
Committee of the Board of Directors of Oglebay. The amount of the special
retirement benefit payable to Lauer, his beneficiary, or his Contingent
Annuitant shall be reduced to reflect any such optional method of payment. In
making the determination and reductions provided for in this Section 3, Oglebay
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.
4. Nonalienation of Retirement Rights or Benefits. None of Lauer, his
beneficiary, or his Contingent Annuitant shall encumber or dispose of the right
to receive any payments under the Special Plan. Payments under the Special Plan
and the rights thereto are expressly declared to be nonassignable and
nontransferable. If Lauer, his beneficiary, or his Contingent Annuitant (each a
"Payee") attempts to assign, transfer, alienate, or encumber the 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 the Payee, and also during any period during which the Payee is
incapable in the judgment of Oglebay of attending to his or her financial
affairs, any payment that Oglebay is required to make under the Special Plan may
be made, in the sole and absolute discretion of Oglebay, either directly to the
Payee or to any other person for the use or benefit of the Payee or that of his
or her dependents, if any, including any person furnishing goods or services to
or for the use or benefit of the Payee or the use or benefit of his or her
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
Oglebay with respect thereto, and Oglebay shall have no responsibility for the
proper application thereof.
5. Lauer's Interest Unfunded. All benefits payable under the Special
Plan are payable solely from Oglebay's general assets. The obligation of Oglebay
under the Special Plan to provide Lauer, his beneficiary, or his Contingent
Annuitant a benefit is solely the unfunded, unsecured promise of Oglebay to make
payments as provided herein. No person shall have any interest in, or lien or
prior claim upon, any property of Oglebay with respect to such benefits greater
than that of a general creditor of Oglebay.
6. No Competition. All rights to a special retirement benefit under the
Special Plan will be terminated, or, if payment thereof has begun, all further
payments will be discontinued and forfeited if Lauer, at any time after the
commencement of his employment with Oglebay (a) wrongfully discloses any secret
process or trade secret of Oglebay or any of its subsidiaries or related
companies or businesses, or (b) 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 Oglebay's
Board of Directors reasonably determines to be competitive with Oglebay or any
of its subsidiaries or related companies or businesses to a degree materially
contrary to Oglebay's best interest, provided that no such determination shall
be made by Oglebay's Board of Directors after the tenth anniversary of the date
on which Lauer's employment with Oglebay is terminated (whether by retirement,
death, or otherwise).
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7. Amendment. The Special Plan may be amended from time to time by
action of the Compensation and Organization Committee of the Oglebay's Board of
Directors, except that no amendment that would reduce or otherwise impair the
benefit of the Special Plan to Lauer may be made without his consent.
8. Governing Law. The provisions of the Special Plan shall be governed
by and construed in accordance with the laws of the State of Ohio.
Executed as of the 17th day of December, 1997.
OGLEBAY NORTON COMPANY
/s/ Richard J. Kessler
By____________________________________
Richard J. Kessler
Vice President - Finance & Planning
/s/ Paul V. Gorman, Jr.
By____________________________________
Paul V. Gorman, Jr.
Assistant Vice President - Human Resources
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Exhibit 10(v)
OGLEBAY NORTON COMPANY
DIRECTOR FEE DEFERRAL PLAN
ARTICLE I
ESTABLISHMENT OF PLAN, PURPOSE, SHARES AUTHORIZED
SECTION 1.1 - ESTABLISHMENT OF PLAN. This Oglebay Norton Company
Director Fee Deferral Plan (the "Plan") is established effective as of February
1, 1998, subject to approval by its Stockholders at its 1998 Annual Meeting of
Stockholders.
SECTION 1.2 - PURPOSE. The Plan is intended to attract and retain
qualified individuals to serve as Directors of the Company by offering them the
opportunity to defer some or all of the Fees earned by them for services as a
Director of the Company.
SECTION 1.3 - SHARES AUTHORIZED. The aggregate number of shares of
Common Stock of the Company that may be issued and distributed under the Plan
shall be 100,000 shares, subject to adjustment as provided in Section 7.5, which
may be authorized and unissued shares, treasury shares, or shares acquired on
the open market specifically for distribution under the Plan, as the Board of
Directors may from time to time determine.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms, when used with initial capital
letters, shall have the meanings as set forth below:
"Account" means the bookkeeping account established by the Company for a
Participant who elects to defer any portion of his Fees pursuant to the Plan.
"Board" means the Board of Directors of the Company.
"Committee" means the Committee authorized by the Board to administer the Plan.
"Common Stock" or "Stock" means common stock, one dollar ($1.00) par value per
share, of the Company.
"Company" means Oglebay Norton Company, a corporation organized under the laws
of the State of Delaware, or any successor organization.
"Deferred Cash" means Deferred Fees that are credited with interest based on the
Prime Rate in accordance with Section 4.5.
"Deferred Compensation Election" means a written election delivered to the
Company pursuant to which a Participant elects to defer Fees under the Plan.
"Deferred Fees" means any portion of Fees deferred pursuant to the Plan.
"Designated Beneficiary" means one or more beneficiaries designated by the
Participant in accordance with Section 7.2.
"Fair Market Value," with respect to a share of Stock as of any given day, means
the last reported closing price for a share of Stock on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") for that day or, if
there was no sale of Stock so reported for that day, on the most recently
preceding day on which there was such a sale. If the Stock is not listed or
admitted to trading on NASDAQ on any given day, the Fair Market Value on that
day will be as determined by the Committee.
"Fees" means any and all compensation payable, but for an election made under
the Plan, to a Participant in the form of cash for services as a Director of the
Company.
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"Matching Contributions" means the additional Share Units credited by the
Company to the Account of a Participant who (i) elects to defer a portion of his
Fees in the form of Share Units, or (ii) elects to defer a portion of dividend
equivalents attributable to Share Units as provided in Section 4.03.
"Participant" means a Director who is or hereafter becomes eligible to
participate in the Plan and does participate by electing, in the manner
specified herein, to defer Fees pursuant to the Plan.
"Prime Rate" means the Prime Rate as reported in The Wall Street Journal in
effect as of the date of each Annual Meeting of Stockholders.
"Share Units" means Deferred Fees that are converted into share units in
accordance with Section 4.3.
"Termination of Service" means an individual's termination of service as a
Director for any reason whatsoever.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
SECTION 3.1 - ELIGIBILITY AND PARTICIPATION. Any Director of the Company
who is not employed by the Company shall be eligible to participate under the
Plan and will become a Participant upon submission to the Company of a properly
completed and executed Deferred Compensation Election.
Section 3.2 - DEFERRAL OPTIONS. For the period beginning February 1,
1998 and ending December 31, 1998, and each calendar year thereafter, a
Participant may elect to defer the receipt of all or part of his or her Fees (in
ten-percent increments) in the form of Share Units or Deferred Cash. Once a
Participant has made an effective election, he may not thereafter change that
election or change any allocation between Share Units or Deferred Cash with
respect to such calendar year.
SECTION 3.3 - ELECTION DEADLINE. To be in effect, a Participant's
election must be completed, signed and filed with the Secretary of the Company
on or before such date as is necessary to defer inclusion of the Fees in the
Director's gross income for Federal income tax purposes.
ARTICLE IV
DEFERRED FEES
SECTION 4.1 - CREDITING OF DEFERRED FEES. Deferred Fees shall be
credited to the Participant's Account on the dates the Fees would have been paid
to the Participant if there had been no valid deferral election.
SECTION 4.2 - DEFERRAL PERIODS. Payment of the amount of Fees allocated
to Share Units or Deferred Cash will be deferred to Termination of Service. Such
Fees shall be credited to the Participant on the date such amounts would have
been paid to him if there had been no valid deferral election.
SECTION 4.3 - SHARE UNITS. Fees deferred in the form of Share Units
shall be converted into that number of Share Units equal to the amount of the
Fees being deferred divided by the Fair Market Value of one share of Stock on
the date the Fees are credited to the Participant's Account. On each Company
Stock dividend payment date, dividend equivalents equal to the actual Company
Stock dividends shall either, based upon the written election of the
Participant, (i) be credited to the Share Units in the Participant's Account,
and shall in turn be converted into Share Units based upon the Fair Market Value
of the Stock on that date, or (ii) be paid to the Participant in cash.
SECTION 4.4 - MATCHING CONTRIBUTION. The Company shall credit to the
Participant's Account in the form of additional Share Units (a) at the time the
Fees are credited to the Account a Matching Contribution equal to twenty-five
percent (25%) of the Deferred Fees credited in the form of Share Units, and (b)
at each Company Stock dividend payment date, to the extent the Participant has
elected to defer dividend equivalents in Share Units, a Matching Contribution
equal to twenty-five percent (25%) of the dividends deferred by the Participant
on that date.
SECTION 4.5 - DEFERRED CASH. Fees deferred as Deferred Cash shall be
credited with interest at the Prime Rate, compounded annually effective as of
the end of each calendar year, until distributed.
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ARTICLE V
DISTRIBUTIONS
SECTION 5.1 - TIMING. Following a Participant's Termination of Service,
all Share Units and Deferred Cash in the Participant's Account shall be
distributed in the manner described in Section 5.2. Such distributions shall be
made or commence as soon as administratively feasible following the event that
entitles the Participant to a distribution.
SECTION 5.2 - FORM OF DISTRIBUTION. Any Share Units standing to the
Participant's credit shall be converted to the same number of common shares of
Stock for distribution to the Participant in a single distribution, except that
any fractional Share Units shall be paid in cash. Any Deferred Fees credited to
the Participant's Account in the form of Deferred Cash shall be automatically
distributed in three substantially equal annual installments of principal in the
form of cash, with interest continuing to accrue on the undistributed balance in
the Participant's Account.
ARTICLE VI
ADMINISTRATION, AMENDMENT AND TERMINATION
SECTION 6.1 - ADMINISTRATION. The Plan shall be administered by the
Committee.
SECTION 6.2 - AUTHORITY OF THE COMMITTEE. The Committee shall have the
authority to:
(a) interpret the terms and provisions of the Plan and any
deferral made hereunder (and any agreements relating thereto), and
otherwise settle all claims and disputes arising under the Plan;
(b) delegate responsibility and authority for the operation and
administration of the Plan, appoint employees and officers of the
Company to act on its behalf, and employ persons to assist in fulfilling
its responsibilities under the Plan; and
(c) adopt, alter and repeal such administrative rules,
guidelines, and practices governing the Plan as it shall, from time to
time, deem advisable, and otherwise supervise the administration of the
Plan.
All decisions made by the Committee pursuant to the provisions of the Plan shall
be final and binding on all persons, including the Company and Participants.
SECTION 6.3 - AMENDMENTS AND TERMINATION. The Board may amend, alter, or
discontinue the Plan at any time and from time to time, but no amendment,
termination, or discontinuation shall be made that would impair the rights of a
Participant with respect to any outstanding deferral under the Plan without the
Participant's consent, or that, without the approval of the Company's
stockholders, would (a) except as expressly provided in this Plan, increase the
total number of shares reserved for the purpose of the Plan; or (b) otherwise
cause the Plan to fail to satisfy the requirements of any applicable securities
or tax law or the applicable rules and regulations promulgated under NASDAQ.
SECTION 6.4 - UNFUNDED STATUS OF PLAN. The Plan is intended to
constitute an "unfunded" plan for deferral of compensation. Payments shall be
made from the general funds of the Company, and the Company shall not be
required to establish or maintain any special or separate fund, to purchase or
acquire life insurance on a Participant's life, or otherwise to segregate assets
to assure that such payments shall be made, and neither a Participant nor
Designated Beneficiary shall have any interest in any particular assets of the
Company by reason of its obligations hereunder. With respect to any payments not
yet made to a Participant by the Company, nothing contained herein shall give
any such Participant any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to deferrals
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1 - NON-ALIENATION OF BENEFITS. Subject to any federal statue
to the contrary, no right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
any right or benefit under the Plan shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefits. If a Participant
or a Designated Beneficiary (if entitled to benefits under the Plan) shall
become bankrupt, or attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge any right hereunder, then such right or benefit shall, in
the discretion of the Committee, cease and terminate, and in such event, the
Company may hold or apply the same or any part thereof for the benefit of the
Participant, Designated Beneficiary, or his spouse, children, or other
dependents, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
SECTION 7.2 - DESIGNATION OF BENEFICIARY. A Participant may designate
one or more Designated Beneficiaries on a form prescribed by the Committee, to
whom payments otherwise due to or for the benefit of the Participant hereunder
shall be made in the event of his death prior to the commencement or completion
of benefit payments hereunder. In the event no such written designation is made
by a Participant or if no Designated Beneficiary shall be in existence at the
time of the Participant's death or if each Designated Beneficiary predeceases
the Participant, the estate of the Participant shall be his Designated
Beneficiary.
SECTION 7.3 - NO EMPLOYMENT AGREEMENT. The Plan shall not be deemed to
constitute a contract of employment between the Company and a Participant.
Neither shall the execution of the Plan nor any action taken by the Company
pursuant to the Plan be held or construed to confer on a Participant any legal
right to be continued as Director of the Company or in any other capacity with
the Company whatsoever; nor shall any provision herein restrict the right of any
Participant to resign as a Director.
SECTION 7.4 - BINDING EFFECT. Obligations incurred by the Company
pursuant to the Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns, and the Participant or his Designated
Beneficiary.
SECTION 7.5 - ENTIRE PLAN. This document and any amendments hereto
contain all the terms and provisions of the Plan and shall constitute the entire
Plan, any other alleged terms or provisions being of no effect.
SECTION 7.5 - ADJUSTMENT UPON CHANGE IN COMMON STOCK. In the event of
any stock dividend, stock split, or share combination with respect to the Common
Stock or any reclassification, recapitalization, merger, consolidation, other
form of business combination, liquidation, or dissolution involving the Company
or any spin-off or other distribution to stockholders of the Company (other than
normal cash dividends), (a) the Committee shall make appropriate adjustments to
the maximum number of shares of Common Stock that may be issued under the Plan,
and (b) the Committee shall adjust the number and such other aspects of the
Share Units then outstanding as may be necessary and in such manner that the
benefits of Participants under all then outstanding Share Units shall be
maintained substantially as before the occurrence of such event. Any adjustment
so made by the Committee shall be conclusive and binding for all purposes of the
Plan as of such date as the Committee may determine.
ARTICLE VIII
CONSTRUCTION
SECTION 8.1 - GOVERNING LAW. The Plan shall be construed and governed in
accordance with the laws of the State of Ohio.
SECTION 8.2 - GENDER. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary.
* * *
EXECUTED at Cleveland, Ohio, effective as of the date
described herein.
OGLEBAY NORTON COMPANY
By /s/ Richard J. Kessler
------------------------------------------
Richard J. Kessler
Vice President - Finance & Planning
By /s/ Paul V. Gorman, Jr.
------------------------------------------
Paul V. Gorman, Jr.
Assistant Vice President - Human Resources
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Exhibit 10(w)
OGLEBAY NORTON COMPANY
POUR-OVER RABBI TRUST
THIS TRUST AGREEMENT, made as of the ____ day of December,
1997, is between Oglebay Norton Company, a Delaware corporation ("Oglebay"), and
Bank One, Cleveland, NA (the "Trustee").
WHEREAS, Oglebay is obligated to provide certain supplemental
pension benefits to certain of its employees and to provide benefits pursuant to
certain other deferred compensation and executive compensation arrangements,
including agreements with certain of its executives under which those executives
may become entitled to payments and benefits after a change in control of
Oglebay;
WHEREAS, the parties hereto have entered into Irrevocable
Trust Agreement I, dated August 16, 1989 ("Trust I") and Irrevocable Trust
Agreement II, dated August 16, 1989 ("Trust II") for the purpose of providing
additional assurance to covered employees that benefits under the plans and
agreements referred to in Trust I and Trust II will be paid when due;
WHEREAS, Oglebay desires to establish a trust (the "Trust")
and to contribute to the Trust assets that shall be held therein and that shall
be subject to the claims of the creditors of Oglebay in the event that Oglebay
becomes Insolvent (as defined in Section 5.1 below), until transferred to Trust
I and/or Trust II, distributed as provided herein, or returned to Oglebay; and
WHEREAS, it is the intention of the parties that the Trust
shall constitute an unfunded arrangement for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended;
NOW, THEREFORE, Oglebay and the Trustee do hereby establish
the Trust and agree that the Trust shall be comprised, held, and disposed of as
follows:
Article 1. Establishment of Trust
1.1 Oglebay hereby deposits with the Trustee in trust $100,
which shall become the principal of the Trust to be held, administered, and
disposed of by the Trustee as provided in this Trust Agreement.
1.2 The Trust hereby established may be revoked by Oglebay at
any time before the occurrence of the first to occur of (a) a Funding Event (as
defined in Section 14.6) and (b) a Change of Control (as defined in Section
14.3). If any Funding Event occurs, the Trust hereby established may not be
revoked by Oglebay until both that particular Funding Event and any other
Funding Event that may have also occurred have been "terminated" (as defined in
Section 14.7) and the Trust then may be revoked by Oglebay if and only if no
Change of Control has then occurred. Upon the occurrence of a Change of Control,
the Trust hereby established shall become irrevocable.
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1.3 The Trust is intended to be a grantor trust, of which Oglebay
is the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code, and shall be construed accordingly.
1.4 The principal of the Trust and any earnings thereon shall be
held separate and apart from other funds of Oglebay and shall be used
exclusively for the uses and purposes herein set forth. No employee of Oglebay
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under any Covered Plan or under this
Trust Agreement shall be mere unsecured contractual rights against Oglebay. Any
assets held by the Trust will be subject to the claims of general creditors of
Oglebay under federal and state law in the event Oglebay becomes Insolvent.
Article 2. Additional Funding
2.1 Oglebay, in its sole discretion, may at any time, or from time
to time, make or cause to be made, directly or indirectly, additional deposits
of cash or other property in trust with the Trustee to augment the principal to
be held, administered, and disposed of by the Trustee as provided in this Trust
Agreement.
2.2 If a Funding Event occurs, Oglebay shall, as soon as
practicable and in no event later than the day before the occurrence of any
Change of Control related to that Funding Event, contribute to the Trust an
amount equal to the excess, if any, of the Full Funding Amount (as defined in
Section 14.5) over the sum of the value of the assets in the Trust excluding
LTIP Shares (the "Current Trust Asset Value"), the value of assets held in Trust
I (the "Trust I Asset Value") and the value of the assets held in Trust II (the
"Trust II Asset Value") immediately prior to the contribution.
2.3 If a Funding Event occurs, Oglebay shall, as soon as
practicable and in no event later than the day before the occurrence of any
Change in Control related to that Funding Event, contribute to the Trust a
sufficient number of common shares of Oglebay such that the number of common
shares of Oglebay then held by the Trust shall be equal to the number of share
units then credited to the accounts of participants under Article IV of the
LTIP. Moreover, until such time as both that particular Funding Event and any
other Funding Event that may have also occurred have been terminated or, if
earlier, the date the Trust terminates as contemplated by Section 13.4, Oglebay
shall contribute to the Trust additional common shares of Oglebay equal in
number to any additional share units from time to time credited to the accounts
of participants representing annual incentive award deferrals and company
matching contributions with respect to those deferrals, such additional
contributions to be made simultaneously with the crediting of the additional
share units.
2.4 Any contribution made under this Article 2 shall be subject to
withdrawal by Oglebay only as provided in Article 3, dealing with discretionary
withdrawals.
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Article 3. Discretionary Withdrawals
3.1 Oglebay, in its sole discretion, at any time before the
occurrence of the first to occur of a Funding Event or a Change of Control, may
withdraw assets from the Trust provided that no such withdrawal shall reduce the
Current Trust Asset Value, immediately after the withdrawal, to an amount below
$100.
3.2 Oglebay shall not be entitled to make any discretionary
withdrawal of assets from the Trust, after any Funding Event has occurred, until
both that particular Funding Event and any other Funding Event that may have
also occurred have been terminated and Oglebay may then make such a
discretionary withdrawal only if no Change of Control has then occurred. No
discretionary withdrawal under this Section 3.2 shall reduce the Current Trust
Asset Value, immediately after the withdrawal, to an amount below $100.
3.3 After a Change of Control has occurred, Oglebay may not
make any discretionary withdrawal from the Trust.
Article 4. Transfers of Trust Assets and Disposition of LTIP
Shares.
Upon the occurrence of a Change in Control, all assets of the Trust
other than LTIP Shares shall be immediately transferred to Trust I and Trust II
in the amounts and proportions determined in accordance with Exhibit A. The
Trustee shall from time to time distribute LTIP Shares in accordance with the
provisions of the LTIP. After there has been a Change of Control, Oglebay shall
have no right or power to direct the Trustee to return to Oglebay any of the
Trust assets.
Article 5. Trustee Responsibility when Oglebay Is Insolvent.
5.1 Oglebay shall be considered "Insolvent" for purposes of this
Trust Agreement if (a) it is unable to pay its debts as they become due, or (b)
it is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code. In determining whether Oglebay is Insolvent for purposes of
this Trust Agreement, the Trustee may engage the service of legal, accounting,
financial and other advisors, which may be advisors to Oglebay, to assist it in
the determination. Oglebay agrees to cooperate fully with any reasonable inquiry
of the Trustee or such advisors in making the determination of Oglebay's
Insolvency. During the determination of Oglebay's Insolvency, the Trustee may,
in its discretion, suspend any transfer or distribution of assets. To the extent
that the Trustee engages the services of an advisor, the Trustee may rely,
without further inquiry, on the written determination of that advisor as to the
solvency or Insolvency of Oglebay. All costs reasonably incurred by the Trustee
in making the determination of Oglebay's Insolvency shall be reimbursed to the
Trustee by Oglebay, and if not so reimbursed, shall be chargeable against the
Trust.
5.2 At all times during the continuance of the Trust, the principal
and income of the Trust shall be subject to claims of general creditors of
Oglebay under federal and state law as set forth below.
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(a) The Board of Directors and the Chief Executive Officer of
Oglebay shall have the duty to inform the Trustee in writing of Oglebay's
Insolvency. If a person claiming to be a creditor of Oglebay alleges in
writing to the Trustee that Oglebay has become Insolvent, the Trustee
shall determine whether Oglebay is Insolvent and, pending such
determination, the Trustee shall not transfer any Trust assets to any
other party.
(b) Unless the Trustee has actual knowledge of Oglebay's
Insolvency, or has received notice from Oglebay or a person claiming to
be a creditor alleging that Oglebay is Insolvent, the Trustee shall have
no duty to inquire whether Oglebay is Insolvent. The Trustee may in all
events rely on such evidence concerning Oglebay's solvency as may be
furnished to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning Oglebay's solvency.
(c) If at any time the Trustee has determined that Oglebay is
Insolvent, the Trustee shall hold the assets of the Trust for the benefit
of the general creditors of Oglebay. Nothing in this Trust Agreement
shall in any way diminish any rights of Participants or persons having an
interest under the LTIP to pursue their rights as general creditors of
Oglebay.
(d) The Trustee shall make transfers or distributions in accordance
with Section 4 of this Trust Agreement only after the Trustee has
determined that Oglebay is not Insolvent (or is not any longer
Insolvent).
Article 6. Payments to Oglebay.
Except as provided in Article 3, Oglebay shall not have any right
or power to direct the Trustee to return to Oglebay or to divert to others any
of the Trust assets before all payments that may become payable to any and all
Participants under the Covered Plans (as defined in Section 14.4) have been made
to Participants. At such point in time as no further payments are payable or may
become payable in the future to or with respect to any Participant under any
Covered Plan, the remaining assets of the Trust other than LTIP Shares shall be
paid to Oglebay.
Article 7. Investment Authority.
7.1 The Trustee shall invest and reinvest the trust property,
including any income accumulated and added to principal, only in (a) annuity or
life insurance contracts that either have been contributed to the trust property
by Oglebay or are issued by one or more insurance companies that are rated at
least A++ by Best Life Insurance Reports; (b) interest-bearing deposit accounts
or certificates issued or offered by any one or more Federal Deposit Insurance
Corporation insured financial institutions having in each case a high credit
rating and a capital and surplus of at least $1,000,000,000 in the aggregate;
(c) 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; (d)
readily marketable debt securities listed on a United States national securities
exchange (other than securities of Oglebay) that are rated at least "investment
grade" by one or more nationally
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recognized rating agencies; (e) shares or other units of participation in any
mutual fund, investment trust, or common trust fund maintained by the Trustee,
which are invested exclusively or predominantly in assets described in the
foregoing clauses (a) through (d) of this Section 7.1; or (f) securities
(including stock or rights to acquire stock) or obligations issued by Oglebay,
but only for purposes of holding common shares contributed to the Trust by
Oglebay pursuant to Section 2.3 and reinvesting any dividends paid with respect
to those shares or investing in a de minimis amount held in common investment
vehicles in which the Trustee invests. All rights associated with assets of the
Trust shall be exercised by the Trustee or the person designated by the Trustee.
During any period that the Trust is not revocable, Oglebay shall have the right
at any time, and from time to time in its sole discretion, to substitute assets
of equal fair market value for any securities or obligations issued by Oglebay
held by the Trust. This right is exercisable by Oglebay in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
The Trustee shall not be liable to any Participant or any person having an
interest under the LTIP for any insufficiency of the trust property to discharge
all benefits due the same under the Covered Plans or the LTIP; rather, the
liability for all such benefits shall be and remain the primary and ultimate
responsibility of Oglebay.
7.2 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.
7.3 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.
7.4 Oglebay may maintain in force all life insurance policies held
in the Trust by paying premiums and other charges due thereon. If any such
premiums or other charges are not paid directly by Oglebay, the Trustee shall,
subject to the Trustee's obligation, as set forth in Section 4, to transfer
Trust assets to Trust I and Trust II, to the extent it has cash or its
equivalent readily available for the payment of premiums due or policy loans
and/or dividends are available for such purpose, pay premiums due with such cash
or its equivalent or policy loans and/or dividends, as the Trustee may deem
best; but 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 (excluding, however, LTIP Shares)
held by it in the Trust to generate the necessary cash or, if no such other
assets are available, the Trustee may surrender one or more of the life
insurance policies in order to generate cash with which to pay premiums on one
or more of the other life insurance policies. The Trustee shall have no
liability to Oglebay 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.
7.5 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
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ownership relating to the policy, except that the Trustee shall have no power to
name a beneficiary of the policy other than the Trust or, as set forth in
Section 4, Trust I or Trust II, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor Trustee
or, as set forth in Section 4, to the Trustee for Trust I or Trust II, or to
loan to any person the proceeds of any borrowing against such policy.
7.6 The Trustee shall have the power to acquire additional life
insurance coverage on Participants through application for new life insurance.
Prior to a Change in Control, the Trustee shall acquire any additional life
insurance from the agent or agents designated by Oglebay. After a Change in
Control, the Trustee may acquire any additional life insurance from any agent or
agents that it, in its sole discretion, deems appropriate.
Article 8. Accounting by Trustee.
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Oglebay and the Trustee. All such accounts, books, and records shall be open to
inspection and audit at all reasonable times by Oglebay. Within 60 days
following the close of each calendar year and within 60 days after the removal
or resignation of the Trustee, the Trustee shall deliver to Oglebay 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 removal or
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, 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 removal or resignation, as the
case may be.
Article 9. Calculations of Current Trust Asset Value and
Aggregate Plan Liability.
9.1 Any determination of the Current Trust Asset Value, the Trust I
Asset Value, or the Trust II Asset Value that is to be made before the
occurrence of any Change of Control shall be made by Oglebay. After the
occurrence of a Change of Control, all determinations of the Current Trust Asset
Value shall be made by the Trustee and may be based on the determination of one
or more qualified independent appraisers, consultants, or other experts retained
by the Trustee for that purpose.
9.2 Any determination of the Aggregate Plan Liability that is to be
made before the occurrence of any Change of Control shall be made by Oglebay.
After the occurrence of a Change of Control, all determinations of the Aggregate
Plan Liability (as defined in Section 14.2) shall be made by the Trustee and may
be based on the determination of one or more qualified independent actuaries,
consultants, or other experts retained by the Trustee for that purpose. All such
determinations shall be based on the terms of the Covered Plans and the
actuarial assumptions and methodology set forth in Exhibit B.
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9.3 Oglebay shall pay all costs incurred in determining from time
to time the Current Trust Asset Value, the Trust I Asset Value, the Trust II
Asset Value, and/or the Aggregate Plan Liability. If not so paid, these costs
shall be paid from the Trust. Oglebay shall reimburse the Trust within 30 days
after receipt of a bill from the Trustee for any such costs paid out of the
Trust.
Article 10. Responsibility of Trustee.
10.1 The Trustee shall act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request, or approval that is contemplated by, and in conformity
with, the terms of the Trust and is given in writing by Oglebay prior to the
occurrence of any Change of Control. In the event of a dispute between Oglebay
and any other party, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
10.2 If the Trustee undertakes or defends any litigation arising in
connection with the Trust, Oglebay agrees to indemnify the Trustee against the
Trustee's costs, expenses, and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If such costs, expenses, and liabilities are not paid by Oglebay
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
Oglebay shall reimburse the Trust within 30 days after receipt of a bill from
the Trustee for any such costs, expenses, and liabilities paid out of the Trust.
10.3 The Trustee may consult with legal counsel (who may also be
counsel for the Trustee generally) with respect to any of its duties or
obligations hereunder.
10.4 The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants, or other professionals to assist it
in performing any of its duties or obligations hereunder, including, without
limitation, to assist it in enforcing against Oglebay any of the obligations of
Oglebay under this Trust Agreement.
10.5 The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly provided otherwise
herein.
10.6 Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any power
that could give the Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
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Article 11. Compensation and Expenses of Trustee.
The Trustee shall be entitled to receive reasonable compensation
for its services in accordance with its published fee schedule as in effect from
time to time. The Trustee shall be entitled to receive its reasonable expenses
incurred with respect to the administration of the Trust, including fees
incurred by the Trustee pursuant to Sections 10.3 and 10.4 of this Trust
Agreement. Such compensation and expenses shall be payable by Oglebay. If not so
paid, the fees and expenses shall be paid from the Trust. Oglebay shall
reimburse the Trust within 30 days after receipt of a bill from the Trustee for
any such fees or expenses paid out of the Trust.
Article 12. Tenure and Succession of Trustee.
12.1 Oglebay may remove any trustee from time to time serving under
this Trust Agreement at any time upon giving 60 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
Oglebay, except that: (a) Oglebay shall not have any power to remove the Trustee
at any time after a Change of Control, and (b) no such removal or resignation
shall become effective until the acceptance of the trust by a successor trustee
designated in accordance with Section 12.2.
12.2 If Bank One, Cleveland, NA, or any successor to it designated
in accordance with this Section 12.2, for any reason shall decline, cease, or
otherwise fail to serve as trustee, the vacancy in the trusteeship shall be
filled by such bank or trust company, wherever located, having a capital and
surplus of at least $25,000,000 in the aggregate, as shall be designated by
Oglebay (if the designation is made prior to the occurrence of any Change of
Control) or by the resigning Trustee (if the designation is made after the
occurrence of any Change of Control).
12.3 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, discretion, and duties of such
predecessor trustee. No successor trustee shall be required to furnish bond.
12.4 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.
Article 13. Amendment or Termination.
13.1 Except as provided in the second sentence of this Section
13.1, at any time before the occurrence of the first Change of Control to occur
after the execution of this Agreement, Oglebay, in its sole discretion, may
amend this Trust Agreement (including the exhibits hereto) in any manner and may
terminate this Trust Agreement. If at any particular
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point in time (a) one or more Funding Events have occurred, (b) one or more of
those Funding Events has not yet been terminated, and (c) no Change of Control
has occurred, then Oglebay may not, at that particular time, terminate this
Trust Agreement and may amend this Trust Agreement only if and to the extent
permitted by Section 13.2 below.
13.2 Whenever (a) one or more Funding Events have occurred, (b) one
or more of those Funding Events has not yet been terminated, and (c) no Change
of Control has occurred, Oglebay may not terminate this Trust Agreement but may
add one or more additional plans or agreements to the class of Covered Plans and
may amend this Trust Agreement (including the exhibits hereto), provided that
(x) Oglebay determines, in the exercise of its reasonable discretion, that the
amendment is in the best interests of the Participants, taken as a group, (y) no
such amendment shall remove any plan or agreement from the class of Covered
Plans unless the plan has been terminated and there are no further obligations
due or to become due thereunder to any Participant, and (z) no such amendment
shall have the effect of adding circumstances under which a Funding Event shall
be deemed to have terminated, affect the determination of the Aggregate Plan
Liability or the Full Funding amount so as to reduce these amounts, or in any
manner permit the withdrawal or diversion of assets from the Trust.
13.3 After a Change of Control has occurred, this Trust Agreement
(including the exhibits hereto) may not be amended or terminated.
13.4 Unless earlier revoked pursuant to Section 1.2, the Trust
shall not terminate until the date on which all assets of the Trust have been
transferred to Trust I and Trust II or otherwise distributed in accordance with
Article 4.
Article 14. Certain Definitions.
Certain capitalized terms not defined elsewhere in this Trust Agreement are
defined in Article 14 below.
14.1 From and after the occurrence of the first Change of Control
to occur after the execution of this Trust Agreement, the term "Accounting Firm"
shall mean the independent auditors of Oglebay for the fiscal year preceding the
first year in which there occurred either (a) that Change of Control or (b) any
Funding Event that had not terminated before the occurrence of that Change of
Control and such firm's successor or successors; provided, however, if such firm
is unable or unwilling to serve and perform in the capacity contemplated by this
Trust Agreement, those members of the Board of Directors of Oglebay (as
constituted immediately before the Change of Control) who are not and have never
been employees of Oglebay shall select another national accounting firm of
recognized standing to serve and perform in that capacity under this Trust
Agreement, except that such other accounting firm shall not be the then
independent auditors for Oglebay or any of its affiliates (as defined in Rule
12b-2 promulgated under the 1934 Act).
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14.2 The term "Aggregate Plan Liability" as at any time shall mean
the maximum amount of payments that have not yet been paid but could become
payable in the future under the Covered Plans, determined as provided in Section
9.2.
14.3 A "Change of Control" shall be deemed to occur if and when
there occurs any of the circumstances set forth in any of clauses (a) through
(d) of this Section 14.3.
A. Any Person or group commences a tender offer for more than
50% of the outstanding shares that is not recommended by the
Board of Directors of Oglebay and one of the following
occurs:
(i) More than 50% of the outstanding shares are acquired.
(ii) While the tender offer remains open, Oglebay is sold or
agrees to be sold, whether by sale of assets, sale of
stock, merger, or otherwise.
B. Any Person or group solicits proxies for the election of
individuals who are not nominated or approved by the Board of
Directors of Oglebay and either:
(i) the solicitation results in the election of directors
that constitute a majority of any class of directors or
a majority of the full Board, or
(ii) the solicitation results in the election of two or more
directors, but less than a majority of any class of
directors or a majority of the full Board, and while at
least two of those directors remain in office Oglebay
is sold or agrees to be sold.
C. Any Person or group becomes the beneficial owner of 50% or
more of the outstanding shares without prior Board approval.
D. Any Person or group becomes the beneficial owner of 15% or
more of the outstanding shares without prior Board approval
and, while the Person or group continues to own 15% or more
of the outstanding shares, Oglebay is sold or agrees to be
sold.
14.4 The term "Covered Plan" means any one of the plans and
agreements identified under the terms of Trust I or Trust II, as the same may be
amended from time to time.
14.5 The term "Full Funding Amount" as of any point in time shall
mean an amount equal to 125% of the Aggregate Plan Liability as of that point in
time.
14.6 A "Funding Event" shall be deemed to occur if and when there
occurs any of the circumstances set forth in any of the following clauses (a)
through (c):
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A. Any Person or group commences a tender offer for more than
50% of the outstanding shares that is not recommended by the
Board of Directors of Oglebay.
B. Any Person or group solicits proxies for the election of two
or more directors not nominated or approved by the Board of
Directors of Oglebay.
C. Any Person or group becomes the beneficial owner of 15% or
more of the outstanding shares without prior Board approval.
14.7 A Funding Event shall be deemed to have "terminated:"
A. If funding of the Trust was required by reason of an
unsolicited tender offer or exchange offer, either:
(i) the tender offer or exchange offer is withdrawn or
terminated without the acquisition of 15% or more of
the outstanding shares, or
(ii) if the Person or group acquires 15% or more, but less
than a majority, of the outstanding shares, the Person
or group subsequently disposes of enough shares so that
beneficial ownership falls below 15%.
B. If funding of the Trust was required by reason of a
solicitation of proxies for the election of directors,
either:
(i) the solicitation results in the election of less than
two directors, or
(ii) the solicitation results in the election of more than
two directors, but less than a majority of any class of
directors or a majority of the full Board, and enough
of those directors leave office so that fewer than two
remain as directors.
C. If funding of the Trust was required by reason of the
acquisition of beneficial ownership of 15% or more, but less
than a majority, of the outstanding shares without prior
Board approval, if the percentage of shares beneficially
owned by the Person or group subsequently falls below 15%.
14.8 The term "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended.
14.9 The term "LTIP" shall mean the Oglebay Norton Company
Long-Term Incentive Plan, as from time to time in effect.
14.10 The term "LTIP Shares" shall mean those common shares of
Oglebay contributed to the Trust pursuant to Section 2.3 with reference to share
units under the LTIP.
I-80
<PAGE> 12
14.11 The term "Person" shall mean a "person" as used in Section
13(d) and Section 14(d)(2) of the 1934 Act.
14.12 The term "Participant" shall mean a person who is a
participant in or party to any of the Covered Plans.
14.13 The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
15. Miscellaneous
15.1 Any action to be taken by Oglebay hereunder shall be by action
of the Chief Executive Officer or any Vice President of Oglebay, except that the
actions described in Sections 1.2, 12.1, 13.1, and 13.2 may be taken only by the
Board of Directors of Oglebay.
15.2 Any provision of this Trust Agreement prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
15.3 This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, Oglebay and the Trustee have executed this
Trust Agreement as of the date first above written.
Bank One, Cleveland, NA Oglebay Norton Company
By /s/ Joe J. Ring, Jr. By /s/ R. Thomas Green, Jr.
- ---------------------------------- -----------------------------
Chairman, President and Chief
The "Trustee" Executive Officer
I-81
<PAGE> 13
EXHIBIT A
Determination of Amount
and Proportion of
Assets to Be Transferred
1. The contribution amount described in Section 2.2 shall be
determined and contributed, as of a date determined in accordance with the
requirements of Section 2.2 (the "Contribution Date").
2. In determining the amount to be contributed as described in
Section 2.2 on the Contribution Date, Oglebay shall also determine the
percentage of Aggregate Plan Liability attributable to Covered Plans referred to
in Trust I (the "Trust I Percentage") and the percentage of Aggregate Plan
Liability attributable to Covered Plans referred to in Trust II (the "Trust II
Percentage") as of the Contribution Date.
3. The amount to be transferred to Trust I shall be an amount
equal to the Full Funding Amount as of the Contribution Date, but adjusted as of
the date assets are to be transferred as required by Article 4 (the "Transfer
Date") to reflect any increase or decrease in the Current Trust Asset Value
occurring after the Contribution Date and prior to the Transfer Date, multiplied
by the Trust I Percentage, and then reduced by the Trust I Asset Value as of the
Contribution Date.
4. The amount to be transferred to Trust II shall be an amount
equal to the Full Funding Amount as of the Contribution Date, but adjusted as of
the date assets are to be transferred as required by Article 4 (the "Transfer
Date") to reflect any increase or decrease in the Current Trust Asset Value
occurring after the Contribution Date and prior to the Transfer Date, multiplied
by the Trust II Percentage, and then reduced by the Trust II Asset Value as of
the Contribution Date.
I-82
<PAGE> 14
EXHIBIT B
Assumptions and Methodology for
Determining Aggregate Plan Liability
1. The liability for benefits under each Covered Plan will be
calculated using two different assumptions as to when Participants terminate
service:
(a) As of the date of the first Change of Control occurring
after the execution of this Trust Agreement.
(b) Thirty months after the first Change of Control occurring
after the execution of this Trust Agreement, assuming future
compensation continues at current levels, and future deferrals
under deferred compensation plans continue pursuant to prior
elections.
The liability for accrued benefits under each Covered Plan will be the greater
of the liabilities calculated in accordance with (a) and (b) above.
2. Calculations will be based upon the most valuable optional form
of payment available to the Participant.
3. The liability for benefits under deferred compensation or other
defined contribution Covered Plans shall be equal to the deferral or other
account balances (vested and unvested) of Participants as of the applicable
date, plus projected deferrals expected to be made within 30 months after the
applicable date pursuant to prior elections. Account balances of Participants
under a Plan shall be calculated based on crediting the highest rate of interest
which may become payable to Participants under the Plan.
4. The liability for benefits under other Covered Plans shall be
equal to the present value of accrued benefits (vested and unvested) of
Participants as of the relevant dates under 1(a) or (b) above.
5. No mortality is assumed prior to the commencement of benefits.
Future mortality is assumed to occur in accordance with the 1983 Group Annuity
Table Unisex Rates after the commencement of benefits.
6. The present value of amounts shall be determined using a
discount rate equal to the then current Pension Benefit Guaranty Corporation
immediate annuity rate for a nonmultiemployer plan.
7. In determining the dollar cost of providing any benefit that is
to be provided in stock or the value of which is dependent upon the value of
common shares of Oglebay, the dollar cost shall of providing those benefits
shall be determined using a value for common shares of Oglebay equal to 140% of
the highest closing price for common shares of Oglebay at any time within the
six month period ending on the determination date.
8. Where left undefined above, calculations will be performed in
accordance with generally accepted actuarial principles.
I-83
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF OGLEBAY NORTON COMPANY
--------------------------------------
State of Incorporation
Name of Subsidiary or Organization
------------------ ---------------
Canadian Ferro Hot Metal Specialties Limited Ontario, Canada
Colorado Silica Sand, Inc. Colorado
Laxare, Inc. West Virginia
Oglebay Norton Engineered Materials, Inc. Ohio
Oglebay Norton Industrial Minerals, Inc. Ohio
Oglebay Norton Industrial Sands, Inc. California
Oglebay Norton Investment Company Ohio
Oglebay Norton Limestone Company Michigan
Oglebay Norton Terminals, Inc. Ohio
d/b/a Cleveland Bulk Terminals
ON Coast Petroleum Company Texas
ONCO Eveleth Company Minnesota
ONCO Holding Company Ohio
ONCO WVA, Inc. West Virginia
ONTEX, Inc. Delaware
Saginaw Mining Company Ohio
Texas Mining, LP Delaware
I-84
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements of our report dated February 12, 1998, 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, 1997:
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 33-29046 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.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
March 24, 1998
I-85
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