10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010 Commission file number 001-12515

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OM GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	52-1736882 (I.R.S. Employer Identification No.)
127 Public Square, 1500 Key Tower, Cleveland, Ohio (Address of principal executive offices)	44114-1221 (Zip Code)

216-781-0083

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No x

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o

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 the 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.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of Act).  Yes o     No x

The aggregate market value of Common Stock, par value $.01 per share, held by nonaffiliates (based upon the closing sale price on the NYSE) on June 30, 2010 was approximately $723.7 million.

As of January 31, 2011 there were 30,878,171 shares of Common Stock, par value $.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s Proxy Statement for the 2011 Annual Meeting of Stockholders are incorporated by reference in Part III.

OM Group, Inc.

TABLE OF CONTENTS

PART I
Item 1.	Business	2
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 8.	Financial Statements and Supplementary Data	55
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	107
Item 9A.	Controls and Procedures	107
Item 9B.	Other Information	107
PART III
Item 10.	Directors and Executive Officers of the Registrant and Corporate Governance	108
Item 11.	Executive Compensation	108
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	108
Item 13.	Certain Relationships and Related Transactions, Director Independence	109
Item 14.	Principal Accountant Fees and Services	109
PART IV
Item 15.	Exhibits and Financial Statement Schedules	110
	Signatures	113
EX-3.2
EX-10.7
EX-10.12
EX-10.13
EX-10.14
EX-10.19
EX-10.20
EX-10.33
EX-21
EX-23
EX-24
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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PART I

Item 1.   Business

General

OM Group, Inc. (the “Company”) is a global solutions provider of specialty chemicals, advanced materials, electrochemical energy storage, and technologies crucial to enabling its customers to meet increasingly stringent market and application requirements. The Company believes it is the world’s largest refiner of cobalt and producer of cobalt-based specialty products.

The Company is executing a strategy to grow through continued product innovation, as well as tactical and strategic acquisitions. The strategy is part of a transformational process to leverage the Company’s core strengths in developing and producing value-added specialty products for dynamic markets while reducing the impact of metal price volatility on financial results. The strategy is designed to allow the Company to deliver sustainable and profitable volume growth in order to drive consistent financial performance and enhance the Company’s ability to continue to build long-term shareholder value.

Segments

The Company is organized into three operating segments: Advanced Materials, Specialty Chemicals and Battery Technologies. Financial information and further discussion of these segments and geographic areas, including external sales and long-lived assets, are contained in Note 19 to the accompanying consolidated financial statements of this Annual Report on Form 10-K.

Advanced Materials segment

The Advanced Materials segment consists of inorganics, a joint venture that operates a smelter in the Democratic Republic of Congo (the “DRC”) and metal resale. The Advanced Materials segment manufactures inorganic products using unrefined cobalt and other metals and serves the battery materials, powder metallurgy, ceramics and chemical end markets by providing products with functional characteristics critical to the success of our customers. These products improve the electrical conduction of rechargeable batteries used in portable electronic devices such as cellular phones, video cameras, portable computers and power tools as well as various types of electric vehicles. In other applications, these products strengthen and add durability to diamond and machine cutting tools and drilling equipment used in manufacturing, construction, oil and gas drilling, and quarrying. The smelter joint venture, Groupement pour le Traitement du Terril de Lubumbashi Limited (“GTL”), is owned by the Company (55%); Groupe George Forrest (25%); and La Générale des Carrières et des Mines (“Gécamines”) (20%). The GTL smelter is a primary source of the Company’s cobalt raw material feed. GTL is consolidated in the Company’s financial statements because the Company has a controlling interest in the joint venture.

Specialty Chemicals segment

The Specialty Chemicals segment is comprised of Electronic Chemicals, Advanced Organics, Ultra Pure Chemicals (“UPC”) and Photomasks.

Electronic Chemicals:  Electronic Chemicals develops and manufactures products for the printed circuit board, memory disk, general metal finishing, and photovoltaic markets. Chemicals developed and manufactured for the printed circuit board market include oxide treatments, electroplating additives, etching technology and electroless copper processes used in the manufacturing of printed circuit boards widely used in computers, communications, military/aerospace, automotive, industrial and consumer electronics applications. Chemicals developed and manufactured for the memory disk market include electroless nickel solutions and preplate chemistries for the manufacture of hard drive memory disks used in memory and data storage applications. Memory disk applications include computer hard drives, digital video recorders, MP3 players, digital cameras and business and enterprise servers. Chemicals developed and manufactured for the photovoltaic industry focus on proprietary chemistries and processes used to manufacture solar cells.

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Advanced Organics:  Advanced Organics offers products for the coating and inks, chemical and tire markets. Products for the coatings and inks market promote drying and other performance characteristics. Within the chemical markets, the products accelerate the curing of polyester resins found in reinforced fiberglass. In the tire market, the products promote the adhesion of metal to rubber. During 2009, the Company commenced a restructuring plan to better align the cost structure and asset base of its European carboxylate business to industry conditions resulting from weak customer demand, commoditization of products and overcapacity in that market. The restructuring plan included exiting the Manchester, England manufacturing facility and workforce reductions at the Belleville, Ontario, Canada; Kokkola, Finland; Franklin, Pennsylvania and Westlake, Ohio locations. The majority of position eliminations were completed by mid-2010. The restructuring plan does not involve the discontinuation of any material product lines or other functions.

Ultra Pure Chemicals:  UPC develops, manufactures and distributes a wide range of ultra-pure chemicals used in the manufacture of electronic and computer components such as semiconductors, silicon chips, wafers and liquid crystal displays. These products include chemicals used to remove controlled portions of silicon and metal; cleaning solutions; photoresist strippers, which control the application of certain light-sensitive chemicals; edge bead removers, which aid in the uniform application of other chemicals; and solvents. UPC also develops and manufactures a broad range of chemicals used in the manufacturing of photomasks and provides a range of analytical, logistical and development support services to the semiconductor industry. These include Total Chemicals Management, under which the Company manages clients’ entire electronic process chemicals operations, including coordination of logistics services, development of application-specific chemicals, analysis and control of customers’ chemical distribution systems and quality audit and control of all inbound chemicals.

Photomasks:  Photomasks manufactures photo-imaging masks (high-purity quartz or glass plates containing precision, microscopic images of integrated circuits) and reticles for the semiconductor, optoelectronics, microelectronics and micro electro mechanical systems industries under the Compugraphics brand name. Photomasks are a key enabling technology to the semiconductor and integrated circuit industries and perform a function similar to that of a negative in conventional photography.

Battery Technologies segment

The Battery Technologies segment, which consists of the EaglePicher Technologies business acquired on January 29, 2010, provides advanced batteries, battery materials, battery management systems, battery-related research and energetic devices for the defense, aerospace and medical markets. In the defense market, Battery Technologies develops battery products for missile launch vehicles, missiles, guided bombs and other weapons systems. It also provides primary (non-rechargeable) and secondary (rechargeable) batteries, battery management systems, battery chargers, and energetic devices for diverse defense applications such as unmanned vehicles, sub-munitions, mines, sonabuoys, and fuzes. In the aerospace market, Battery Technologies designs, manufactures and qualifies primary and secondary batteries for satellites, aircraft, packaging of cells and other special applications. In the medical market, Battery Technologies designs, manufactures and qualifies miniature batteries to power implantable medical devices. Battery Technologies has a 45% interest in Diehl & EaglePicher GmbH (“D&EP”)which manufactures thermal batteries for military applications and customized battery packs for the defense, electronics and communication industries. The investment in D&EP is accounted for under the equity method.

Products

The Company is a diversified global developer, producer and marketer of value-added specialty chemicals, advanced materials, and electrochemical energy storage. The Company believes it is the world’s largest producer of cobalt-based specialty products. The Company’s businesses produce a variety of value-added specialty chemicals, advanced materials and electrochemical energy storage devices. The Company’s products leverage the Company’s production capabilities and bring value to its customers through superior

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product performance. Typically, these products represent a small portion of the customer’s total cost of manufacturing or processing, but are critical to the customer’s product performance. The products frequently are essential components in chemical and industrial processes where they facilitate a chemical or physical reaction and/or enhance the physical properties of end-products. The Company’s products are sold in various forms such as solutions, crystals, cathodes, powders, quartz or glass plates, and battery systems.

Advanced Materials segment

The Advanced Materials segment consists of inorganics, a joint venture that operates a smelter in the DRC and metal resale. The powders and specialty chemicals that this business produces are used in a variety of industries, including rechargeable battery, construction equipment and cutting tools, catalyst, and ceramics and pigments. Products in this segment, grouped by end market, are:

Powder Metallurgy — S-Series Cobalt Powders, T-Series Cobalt Powders, R-Series Cobalt Powders, Granulated Cobalt Powders, Recycling, Coarse Grade Powders

Battery Materials:

Precursors — Battery Grade Cobalt Oxides, Standard Grade Nickel Hydroxide, Mixed Metal Hydroxides

Raw Materials — Fine Cobalt Powder, Cobalt Hydroxide, Battery Grade Cobalt Powders, Cobalt Sulfate, Nickel Sulfate, Recycling

Chemical — Cobalt Acetate, Cobalt Carbonate, Cobalt Hydroxide, Cobalt Nitrate, Cobalt Oxide, Cobalt Sulfate, Coarse Grade Powders, Germanium Dioxide, Nickel Carbonate, Nickel Sulfate, Recycling

Pigments and Ceramics:

Ceramic Pigments — Cobalt Carbonate, Cobalt Oxides, Cobalt Sulfate, Nickel Carbonate

Plastic Pigments — Cobalt Oxides, Cobalt Hydroxide, Nickel Hydroxide

Glass Pigments — Cobalt Oxides

Specialty Chemicals segment

The Specialty Chemicals segment is comprised of Electronic Chemicals, Advanced Organics, UPC and Photomasks.

•  Electronic Chemicals:  This unit works with electroless nickel, precious metals and related products used in the production of printed circuit board assemblies, memory disks, general metal finishing and photovoltaics. Products/processes in Electronic Chemicals, grouped by end market, are:

Printed Circuit Board Chemistry — Graphite-based SHADOW^® Direct Metalization, Electroless Copper, E-PREP Desmear Chemistries, CO-BRA BOND^® Innerlayer Bonding chemistries, Lead — free solderable finishes including Organic Solderability Preservatives (OSP), Electroless Nickel-Immersion Gold (ENIG), Immersion Silver, specialty cleaners and etchants for copper, acid copper and acid tin electroplating additives, SolStrip for solar cells, Base Metal Processes, Electronic Grade Base Metal Concentrates, Electronic Grade Methane Sulfonate Concentrates, Lead Free Plating Processes, Pre-Plate and Post-Plate Processes, Tin-Lead Alloy Plating Processes

Memory Disk — Electroless Nickel Products, Pre-treatment Products

General Metal Finishing — Auxiliary Chemicals, Electroless Nickel Processes, Nickel/Gold Strippers and Other Products, Polishing Chemicals, Zincate and Post Treatment Chemistries

Photovoltaics — Cleaners, Plating Processes, Metal Etchants

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•  Advanced Organics:  Metal-based specialty chemicals from this business are used to meet the critical needs of a range of industries, including coatings and inks, tire, catalyst, and lubricant and fuel additives. Advanced Organics products, grouped by end market, include:

Coatings & Inks — Additives for Paints, Driers for Paints and Printing Inks

Tire — Rubber Adhesion Promoters

Chemicals — Composite and other Catalysts

Additives — Fuel Oil Additives, Lubricant and Grease Additives

•  Ultra Pure Chemicals:  The UPC business develops, manufactures and distributes a wide range of ultra-pure chemicals used in the manufacture of electronic and computer components such as semiconductors, silicon chips, wafers, and liquid crystal displays. UPC products and services, grouped by application, include:

Cleaner — Acetone, Ammonia Solution, Hydrochloric Acid, Hydrogen Peroxide

Etchant — Chrome Etchant, Hydrofluoric Acid, Mixed Acid, Nitric Acid, Phosphoric Acid

Photolithography — Isopropyl Alcohol, Butyl Acetate, Nanostrip, Nitric Fuming, Photoresist Stripper

Services — Analytical Services, Chemicals Management, Logistics Services, Total Chemical Management.

•  Photomasks:  The Photomasks business manufactures photo-imaging masks (high-purity quartz or glass plates containing precision, microscopic images of integrated circuits) and reticles for the semiconductor, optoelectronics and microelectronics industries under the Compugraphics brand name. Photomasks are a key component of the semiconductor and integrated circuit value chains and perform a function similar to that of a negative in conventional photography.

Battery Technologies segment

The Battery Technologies segment is comprised of Defense, Aerospace and Medical.

•  Defense:  The defense business develops battery products for missile launch vehicles, missiles, guided bombs and other weapons systems. It also provides primary (non-rechargeable) and secondary (rechargeable) batteries, battery management systems, battery chargers, and energetic devices for diverse defense applications such as unmanned vehicles, sub-munitions, mines, sonabuoys, and fuzes. Defense products, grouped by application, include:

Missiles:  Primary batteries for launch, guidance systems, detonation, flight termination for missiles, bombs and torpedoes

Launchers:  Primary batteries for launch and guidance systems for launchers and launch vehicles

Portable Power:  Primary and secondary batteries for soldiers

Pyrotechnic Devices:  Igniters, fuses, actuators for switches and relays, arming devices, quick acting valves, gas generators, safety devices

Battery Packaging:  Assembly of cells, development of battery management systems to meet energy requirements, physical size requirements and environmental parameters

Other:  Primary and secondary batteries for unmanned underwater vehicles and unmanned ground vehicles

•  Aerospace:  The aerospace business designs, manufactures and qualifies primary and secondary batteries for satellites, aircraft, packaging of cells and other special applications. Aerospace products, grouped by application, include:

Satellites:  Batteries for satellite and other space applications.

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Aircraft:  Batteries and Battery Management Systems for military and commercial aircraft

Electronics:  Battery chargers, battery analyzers, battery management systems

Battery Packaging:  Assembly of cells, development of battery management systems to meet energy requirements, physical size requirements and environmental parameters

Other:  Reserve batteries for unique missile applications, such as exoatmospheric defense systems, single-use lithium electrochemistries, primarily for special operations missions

•  Medical:  The medical business designs, manufactures and qualifies miniature batteries to power implantable medical devices. The medical product line includes primary and secondary battery solutions for cardiac rhythm management (pacing, ICD), monitoring, and neuromodulation.

Raw Materials

The Company uses a variety of raw materials purchased from a broad supplier base. Multiple suppliers are generally available for each of these materials; however, some raw materials are sourced from a single supplier. Temporary shortages of raw materials may occasionally occur and cause temporary price increases. Historically, these shortages have not resulted in unavailability of raw materials. The Company attempts to mitigate increases in raw material prices by passing through such increases to its customers in the prices of its products and, when possible, by entering into sales contracts that contain variable pricing that adjusts based on changes in the price of certain raw materials. The Company also uses certain raw materials that must be qualified before being used in production. For these raw materials, changes in suppliers may result in disruption of production, forward purchasing of contract requirements or re-qualification expenses.

Advanced Materials segment

The primary raw material used by the Advanced Materials segment is unrefined cobalt. Unrefined cobalt is obtained from three basic sources: primary cobalt mining, as a by-product of another metal (typically copper or nickel), and from recycled material. Cobalt raw materials include ore, concentrate, slag, scrap and metallic feed. The availability of unrefined cobalt is dependent on global market conditions, cobalt prices and the prices of copper and nickel. Also, political and civil instability in supplier countries, variability in supply and worldwide demand, including demand in developing countries such as China, have affected and will likely continue to affect the supply and market price of raw materials. The Company attempts to mitigate changes in availability of raw materials by maintaining adequate inventory levels and long-term supply relationships with a variety of suppliers. The GTL smelter in the DRC is a primary source for the Company’s cobalt raw material feed. After smelting in the DRC, cobalt/copper white alloy is sent to the Company’s refinery in Kokkola, Finland.

The cost of the Company’s raw materials fluctuates due to changes in the cobalt reference price, actual or perceived changes in supply and demand of raw materials, and changes in availability from suppliers. The Company attempts to mitigate increases in raw material prices by passing through such increases to its customers in the prices of its products and by entering into sales contracts that contain variable pricing that adjusts based on changes in the price of cobalt. During periods of rapidly changing metal prices, however, there may be price lags that can impact the short-term profitability and cash flow from operations of the Company both positively and negatively. Fluctuations in the price of cobalt have historically been significant and the Company believes that cobalt price fluctuations are likely to continue in the future. Declines in the selling prices of the Company’s finished goods, which can result from decreases in the reference price of cobalt or other factors, can result in the Company’s inventory carrying value being written down to a lower market value.

In 2007, the Company entered into five-year supply agreements with Norilsk Nickel for up to 2,500 metric tons per year of cobalt metal, up to 2,500 metric tons per year of crude in the form of cobalt hydroxide concentrate, up to 1,500 metric tons per year of cobalt in the form of crude cobalt sulfate and up to 5,000 metric tons per year of copper in the form of copper cake. The Norilsk agreements strengthen the Company’s supply chain and secure a consistent source of raw materials, providing the Company with a stable supply of cobalt metal.

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Complementary geography and operations shorten the supply chain and allow the Company to leverage its cobalt-based refining and chemicals expertise with Norilsk’s cobalt mining and processing capabilities. The Company’s supply of cobalt is principally sourced from the DRC (primarily GTL), Russia and Finland.

A graph of the end of the month reference price of low grade cobalt (as published in Metal Bulletin magazine) per pound for 2005 through 2010 is as follows:

Specialty Chemicals segment

The Specialty Chemicals segment uses a variety of raw materials purchased from a broad supplier base. The principal raw materials utilized by the Specialty Chemicals segment include cobalt, nickel sulphate crystals, sodium hypophosphite, ethylhexoic and neodecanoic acids and various other acids. Certain nickel-based raw materials used in the Company’s Electronic Chemicals business are obtained from Norilsk Nickel under the five-year supply agreements discussed above.

Battery Technologies segment

The Battery Technologies segment uses a variety of raw materials purchased from a broad supplier base. The principal raw materials utilized by the Battery Technologies segment include custom machined parts, glass to metal seals, electronic components, precious metals including silver and platinum, specialty chemicals and powders.

Competition

The Company encounters a variety of competitors in each of its product lines, but believes no single company competes with the Company across all of its existing product lines. Competition in the markets in which the Company participates is based primarily on product quality, supply reliability, price, service and technical support capabilities. These markets have historically been competitive and this environment is expected to continue.

The Company’s principal competitors by business are as follows:

•  Advanced Materials:  Sherritt International Corporation; Umicore S.A.; Eurotungstene Poudres S.A.S.; and The Shepherd Chemical Company

•  Specialty Chemicals

•  Advanced Organics:  Byk-Chemie; Ciba Inc. (a subsidiary of BASF Group); Dainippon Ink and Chemicals, Incorporated; Dura Chemicals Inc.; Elementis plc; Shepherd Chemical Company; Taekwang Industrial Co., Ltd; and Troy Corporation

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•  Electronic Chemicals:  Atotech (a subsidiary of Total S.A.); Cookson Group plc; MacDermid Incorporated; Rohm & Haas Company (a subsidiary of Dow Chemical Company.); and Uyemura International, Inc.

•  UPC:  BASF Group; Honeywell International Inc.; Kanto Chemical Co., Inc.; KMG Chemicals, Inc.; Mitsubishi Chemical Corp.; and Sumitomo Corporation

•  Photomasks:  Dai Nippon Printing (DNP); Photronics, Inc.; Toppan Photomasks, Inc. (a wholly-owned subsidiary of Toppan Printing Co., Ltd.)

•  Battery Technologies:  Biotronic; Bren-Tronics, Inc.; Ener1, Inc.; Enersys, Inc.; The Enser Corp.; Greatbatch; Litronic, GmbH; Quallion LLC; Saft Groupe S.A.; Sorin; Ultralife Corp.; and Yardney Technical Products, Inc.;

Customers

The Company’s business serves over 3,700 customers. During 2010, approximately 43% of the Company’s net sales were to customers in Asia, 31% to customers in Europe and 26% to customers in the Americas. In the Advanced Materials segment, sales to Nichia Chemical Corporation represented approximately 14%, 16% and 22% of consolidated net sales in 2010, 2009 and 2008, respectively. The loss of this customer could have a material adverse effect on the Company’s business, results of operations or financial position. Sales to the top three customers in the Battery Technologies segment represented approximately 50% of Battery Technologies’ net sales in 2010. The loss of one or more of these customers could have a material adverse effect on Battery Technologies’ business, results of operations or financial position.

While customer demand for the Company’s products is generally non-seasonal, supply/demand and price perception dynamics of key raw materials do periodically cause customers to either accelerate or delay purchases of the Company’s products, generating short-term results that may not be indicative of longer-term trends. Historically, Advanced Materials revenues during July and August have been lower than other months due to the summer holiday season in Europe. Furthermore, the Company historically has used the summer season to perform its annual maintenance shut-down at its refinery in Finland.

The Company generally has written sales agreements with its customers. In some cases, these arrangements are in the form of a written contract containing provisions applicable to the sales, including the terms of the sales arrangement. In other cases, sales are made pursuant to a written purchase order that is issued in connection with a sale and contains terms and conditions applicable to the sale.

Government Contracts

The Company, through its Battery Technologies segment, acts as a prime contractor or subcontractor for numerous U.S. Government programs. The primary Battery Technologies customers include aerospace and defense prime contractors and Tier I and Tier II suppliers, such as Boeing, Lockheed Martin and Raytheon. U.S. Government customers include the U.S. Department of Defense; National Aeronautic and Space Administration (“NASA”), the National Oceanic Atmospheric Administration (“NOAA”), the Jet Propulsion Laboratories (“JPL”) and the Department of Energy (“DOE”).

The Company’s contracts with the U.S. Government or its contractors have standard termination provisions. In addition, the U.S. Government retains the right to terminate contracts at its convenience; however, if contracts are terminated in this manner, the Company is entitled to reimbursement for allowable costs and profits on authorized work performed through the date of termination. U.S. Government contracts are also subject to reduction or modification in the event of changes in government requirements or budgetary constraints.

U.S. Government programs generally are implemented by the award of individual contracts and subcontracts. For certain programs, the U.S. Congress (“Congress”) appropriates funds on a fiscal year basis even though a program may extend over several fiscal years. Consequently, programs are often only partially funded initially and additional funds are committed only as Congress makes further appropriations. If sufficient appropriations for such programs are not available, contracts and subcontracts under a program may be subject to termination for convenience or adjustment.

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U.S. Government contracts generally are subject to the Federal Acquisition Regulation, which sets forth policies, procedures and requirements for the acquisition of goods and services by the U.S. Government. These regulations impose a broad range of requirements, many of which are unique to government contracting, including various procurement, import and export, security, contract pricing and cost, contract termination and adjustment, and audit requirements. Failure to comply with these regulations and requirements could result in reductions to the value of contracts, contract modifications or termination, and the assessment of penalties and fines, which may lead to suspension or debarment, for cause, from government contracting or subcontracting for a period of time. In addition, government contractors are also subject to routine audits and investigations by U.S. Government agencies such as the Defense Contract Audit Agency (“DCAA”). DCAA reviews a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards. The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. For a discussion of certain risks associated with noncompliance with U.S. Government contract regulations and requirements, see Item 1A “Risk Factors” of this Form 10-K.

Backlog

The Battery Technologies segment tracks backlog in order to assess its current business development effectiveness and to assist in forecasting future business needs and financial performance. Backlog is equal to the value of unfulfilled orders for which funding is contractually obligated by the customer and for which revenue has not been recognized. Backlog is converted into sales as work is performed or deliveries are made. At December 31, 2010, backlog of $35.1 million (or 26%) is not expected to be converted into sales during the next twelve months.

The following table sets forth backlog in the Battery Technologies segment as of:

(In millions)	December 31, 2010
Defense	$	88.7
Aerospace		40.2
Medical		6.0
	$	134.9

Orders in the Advanced Materials and Specialty Chemicals segments are generally filled on a current basis, and order backlog is not material to those segments.

Foreign Currency

The Company has manufacturing and other facilities in North America, Europe, Africa and Asia-Pacific, and markets its products worldwide. Although a significant portion of the Company’s raw material purchases and product sales are based on the U.S. dollar, sales at certain locations, prices of certain raw materials, non-U.S. operating expenses and income taxes are denominated in local currencies. As such, the Company’s results of operations are subject to the variability that arises from exchange rate movements. In addition, fluctuations in exchange rates may affect product demand and profitability in U.S. dollars of products provided by the Company in foreign markets in cases where payments for its products are made in local currency. Accordingly, fluctuations in currency prices affect the Company’s operating results. The primary currencies for which the Company has foreign currency rate exposure are the European Union Euro, Taiwanese Dollar, Malaysian Ringgit, Singapore Dollar, British Pound Sterling, Japanese Yen, Congolese Franc, Chinese Renminbi and the Canadian Dollar.

Research and Development

The Company’s research and new product development program is an integral part of its business. Research and development focuses on adapting proprietary technologies to develop new products and working with customers to meet their specific requirements including joint development arrangements with customers that

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involve innovative products. New products include new chemical formulations and electro-chemistry cells, metal-containing compounds, core technologies for battery development and concentrations of various components and product forms. Research and development expenses were approximately $11.8 million in 2010, $9.2 million in 2009 and $10.8 million in 2008.

The Company’s research staff conducts research and development in laboratories located in:

Americas	Europe	Asia-Pacific
Joplin, Missouri	Riddings, England	Kuching, Malaysia
South Plainfield, New Jersey	Kokkola, Finland	Singapore
Maple Plain, Minnesota	Saint Fromond, France	Chung-Li, Taiwan
Westlake, Ohio	Lagenfeld, Germany
Plano, Texas
Vancouver, British Columbia

Patents and Other Intellectual Property

The Company holds patents registered in the United States and foreign countries relating to the manufacturing, processing and use of metal-organic and metal-based compounds, battery electrochemistry, battery applications and power system electrical/electronics. In addition, the Company holds patents relating to the design and manufacture of certain batteries and energetic devices. Certain of these patents cover proprietary technology for base metal refining, metal and metal oxide powders, catalysts, metal-organic compounds and inorganic salts. In addition to patents, the Company also possesses other intellectual property, including trademarks, tradenames, know-how, developed technology and trade secrets. Although the Company believes these intellectual property rights are important in the operations of its specific businesses, it does not consider any single patent, trademark, tradename, know-how, developed technology, trade secret or any group of patents, trademarks, tradenames, know-how, developed technology or trade secrets to be material to its business as a whole.

Environmental Matters

The Company is subject to a wide variety of environmental laws and regulations in the United States and in foreign countries as a result of its operations and use of certain substances that are, or have been, used, produced or discharged by its plants. In addition, soil and/or groundwater contamination presently exists and may in the future be discovered at levels that require remediation under environmental laws at properties now or previously owned, operated or used by the Company. At December 31, 2010 and 2009, the Company had environmental reserves of $1.5 million and $2.8 million, respectively, related to remediation and decommissioning at the Company’s closed manufacturing sites in Newark, New Jersey and Vasset, France. In addition, at December 31, 2010, the Company has recorded a $1.3 million environmental liability associated with a site located in Joplin, Missouri. The $1.3 million liability related to the Joplin, Missouri site was a liability acquired with the EaglePicher Technologies acquisition. The Company continually evaluates the adequacy of its reserves and adjusts the reserves when determined to be appropriate.

Ongoing environmental compliance costs, which are expensed as incurred, were approximately $11.1 million in 2010 and $10.9 million in 2009 and included costs relating to product stewardship; waste water analysis, treatment, and disposal; hazardous and non-hazardous solid waste analysis and disposal; air emissions control; sustainability programs and related staff costs. The Company anticipates that it will continue to incur compliance costs at moderately increasing levels for the foreseeable future as environmental laws and regulations are becoming increasingly stringent. This includes the European Union’s Registration, Evaluation and Authorization of Chemicals (“REACH”) legislation, which has established a requirement to register and evaluate chemicals manufactured in, or imported to, the European Union. REACH-related activities and studies require additional testing, documentation and risk assessments for the chemical industry and affect a broad range of substances manufactured and sold by the Company.

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The Company also incurred capital expenditures of approximately $1.2 million and $0.5 million in 2010 and 2009, respectively, in connection with ongoing environmental compliance. The Company anticipates that capital expenditure levels for these purposes will be approximately $1.9 million in 2011, as it continues to modify certain processes to ensure they continue to comply with environmental regulation and undertakes new pollution prevention and waste reduction projects.

Due to the ongoing development of facts and remedial options and due to the possibility of unanticipated regulatory developments, the amount and timing of future environmental expenditures could vary significantly. Although it is difficult to quantify the potential impact of compliance with or liability under environmental protection laws, based on presently available information, the Company believes that its ultimate aggregate cost of environmental remediation as well as liability under environmental protection laws will not materially adversely effect its financial condition or results of operations.

Employees

At December 31, 2010, the Company had 2,806 full-time employees, with 1,157 located in North America, 691 located in Europe, 563 located in Asia-Pacific and 395 located in Africa. The employees located in Africa are employed by GTL, the smelter joint venture. Employees at the Company’s facility in Kokkola, Finland are members of several national workers’ unions under various union agreements. Employees in the DRC are members of various trade unions. The union agreements have a term of three years expiring in May 2011. The Company expects to enter into new agreements covering those employees upon expiration of the current agreements. Other European employees are represented by either a labor union or a statutory works council arrangement. The Company believes that relations with its employees are good.

Approximately 200 Battery Technologies employees are represented by the United Steelworkers union. Following the expiration of the collective bargaining agreement in May 2008, Battery Technologies unilaterally implemented its “last, best, and final offer”, and the Company and the union are currently operating under the implemented terms and conditions of that offer.

SEC Reports

The Company makes available free of charge through its website (www.omgi.com) its reports on Forms 10-K, 10-Q and 8-K as soon as reasonably practicable after the reports are electronically filed with the Securities and Exchange Commission. A copy of any of these documents is available in print free of charge to any stockholder who requests a copy, by writing to OM Group, Inc., 127 Public Square, 1500 Key Tower, Cleveland, Ohio 44114-1221 USA, Attention: Troy Dewar, Director of Investor Relations.

Item 1A.   Risk Factors

Our business faces significant risks. These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial. Our business, financial condition and results of operations could be materially adversely affected by any of these risks. These risks should be read in conjunction with the other information in this Annual Report on Form 10-K.

EXTENDED BUSINESS INTERRUPTION AT OUR FACILITIES COULD HAVE AN ADVERSE IMPACT ON OPERATING RESULTS.

Our results of operations are dependent in large part upon our ability to produce and deliver products promptly upon receipt of orders and to provide prompt and efficient service to our customers. Any disruption of our day-to-day operations could have a material adverse effect on our business, customer relations and profitability. Our Kokkola, Finland facility is the primary refining and production facility for our Advanced Materials products. The GTL smelter in the DRC is a primary source for our cobalt raw material feed. These facilities are critical to our business, and a fire, flood, earthquake or other disaster or condition that damaged or destroyed any of these facilities could disable them. Any such damage to, or other condition significantly interfering with the operation of these facilities, such as an interruption of our supply lines, would have a material adverse effect on our business, financial condition and results of operations. Our insurance coverage

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may not be adequate to fully cover these potential risks. In addition, our insurance coverage may become more restrictive and/or increasingly costly, and there can be no assurance that we will be able to maintain insurance coverage in the future at an acceptable cost or at all.

WE ARE AT RISK AS A RESULT OF CURRENT CIRCUMSTANCES AND DEVELOPMENTS REGARDING THE DRC.

A substantial amount of our supply of cobalt is sourced from the DRC, a nation that has historically experienced outbreaks of political instability, changes in national and local leadership and financial crisis. The global economic and financial market crisis along with the recent decline in metal prices has impacted the financial condition of the DRC. These factors heighten the risk of changes in the national and local policy towards investors, which, in turn, could result in modification of concessions or contracts, imposition of new and/or retroactive taxes and assessment of penalties, denial of permits or permit renewals or expropriation of assets. GTL has experienced an increase in claims by DRC national and local government agencies for additional taxes and customs duties and we cannot predict whether GTL will receive additional claims in the future. Furthermore, if additional claims are received, we cannot predict whether such additional claims will be successful, or, if successful, whether such claims would have a material adverse effect on our business, financial condition or results of operations.

Private equity groups or hedge funds have purchased distressed debt of the DRC and have taken legal actions to attempt to collect this debt from the DRC or state-owned entities such as Gécamines, which is one of our joint venture partners in GTL. If successful, these efforts and any similar efforts in the future could further damage the financial condition and undermine the stability of the DRC or its state-owned entities and potentially threaten our supply of unrefined cobalt. If that were to occur, such actions could have a material adverse effect on our business, financial condition or results of operations.

WE ARE AT RISK FROM UNCERTAINTIES IN THE SUPPLY OF UNREFINED COBALT, WHICH IS OUR PRIMARY RAW MATERIAL.

There are a limited number of supply sources for unrefined cobalt. Production problems or political or civil instability in supplier countries, primarily the DRC, Finland and Russia, have from time to time affected and may in the future affect the market price and supply of unrefined cobalt.

In particular, political and civil instability and unexpected adverse changes in laws or regulatory requirements, including with respect to export duties and quotas, may affect the availability of raw materials from the DRC. If a substantial interruption should occur in the supply of unrefined cobalt from the DRC or elsewhere, we may not be able to obtain as much unrefined cobalt from other sources as would be necessary to satisfy our requirements at prices comparable to our current arrangements and our results of operations could be adversely impacted.

WE ARE AT RISK FROM FLUCTUATIONS IN THE PRICE OF COBALT AND OTHER RAW MATERIALS.

Unrefined cobalt is the principal raw material we use in manufacturing Advanced Materials products, and the cost of cobalt fluctuates due to changes in the reference price caused by actual or perceived changes in supply and demand, and changes in availability from suppliers. Fluctuations in the price of cobalt have been significant in the past and we believe price fluctuations are likely to occur in the future. Our ability to pass increases in raw material costs through to our customers by increasing the selling prices of our products is an important factor in our business. We cannot guarantee that we will be able to maintain an appropriate differential at all times.

We may be required under U.S. GAAP accounting rules to write down the carrying value of our inventory when cobalt and other raw material prices decrease. Declines in the selling prices of our finished products, which can result from decreases in the reference price of cobalt or other factors, can result in the Company’s inventory carrying value being written down to a lower market value, resulting in a charge against inventory that could have a material adverse effect on our business, financial condition or results of operations.

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WE INTEND TO CONTINUE TO SEEK ADDITIONAL ACQUISITIONS, BUT WE MAY NOT BE ABLE TO IDENTIFY OR COMPLETE TRANSACTIONS, WHICH COULD ADVERSELY AFFECT OUR STRATEGY.

Our strategy anticipates growth through future acquisitions. However, our ability to identify and consummate any future acquisitions on terms that are favorable to us may be limited by the number of attractive acquisition targets, internal demands on our resources and our ability to obtain financing. Our success in integrating newly acquired businesses will depend upon our ability to retain key personnel, avoid diversion of management’s attention from operational matters, and integrate general and administrative services and key information processing systems. In addition, future acquisitions could result in the incurrence of additional debt, costs and contingent liabilities. Integration of acquired operations may take longer, or be more costly or disruptive to our business, than originally anticipated, and it is also possible that expected synergies from future acquisitions may not materialize. We also may incur costs and divert management attention with regard to potential acquisitions that are never consummated.

There may be liabilities of the acquired companies that we fail to or are unable to discover during the due diligence investigation and for which we, as a successor owner, may be responsible. Indemnities and warranties obtained from the seller may not fully cover the liabilities due to limitations in scope, amount or duration, financial limitations of the indemnitor or warrantor or other reasons.

WE ARE SUBJECT TO RISKS ARISING FROM UNCERTAINTY IN WORLDWIDE ECONOMIC CONDITIONS.

The recent global economic downturn caused, among other things, a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and lower business spending, all of which had a negative effect on our business, results of operations, financial condition and liquidity during 2009. Many of our customers, distributors and suppliers were negatively affected by the current economic downturn, which in turn negatively impacted us. There currently is uncertainty regarding global economic conditions and the existence and rate of any economic recovery. This uncertainty may have an adverse effect on the general level of economic activity in industries and markets in which we and our customers operate, which may in turn have a negative effect on us. While we saw signs of an economic recovery in a number of markets in 2010, certain markets such as parts of Europe continue to experience weakened or uncertain economic conditions. Some of our customers, distributors and suppliers may be negatively impacted by these conditions which could lead to reduced demand for our products, reduced gross margins, and increased payment delays or defaults. The strength or duration of recovery in the remaining markets remains uncertain. If this uncertainty continues or if economic conditions deteriorate, our business, results of operations, financial condition and liquidity could be materially adversely affected. We are limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn in light of certain fixed costs associated with our operations.

DETERIORATION OF THE GLOBAL ECONOMY COULD RESULT IN FUTURE GOODWILL OR INTANGIBLE ASSET IMPAIRMENTS.

Deterioration in the global economy also may impact the valuation of certain long-lived or intangible assets that are subject to impairment testing, potentially resulting in impairment charges that may be material to our financial condition or results of operations. As of December 31, 2010, we have $306.9 million of goodwill and $153.4 million of intangible assets recorded on our balance sheet. We perform impairment tests of our goodwill and indefinite-lived intangible assets annually and more often if indicators of impairment exist.

We use a number of estimates and assumptions in calculating the estimated fair values of assets in our impairment testing, including future operating cash flow assumptions, future growth rates, future cobalt price assumptions and the weighted average cost of capital.

Factors that could trigger an impairment test outside of the required annual review include the following:

•  significant underperformance relative to projected operating results;

•  significant changes in estimates of future cash flows from operations;

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•  significant changes in discount rates used in our impairment testing;

•  market capitalization deterioration; or

•  significant negative industry or economic trends.

Changes in our assumptions and estimates, or weakness or deterioration in the economy, could materially affect the goodwill and intangible asset impairment tests. If any of these factors deteriorate, we may be required to recognize goodwill and/or intangible asset impairment charges that may be material to our financial condition or results of operations.

THE LEVEL OF RETURNS ON PENSION PLAN ASSETS AND CHANGES IN THE ACTUARIAL ASSUMPTIONS USED COULD AFFECT OUR OPERATING RESULTS AND CASH FLOWS IN FUTURE PERIODS.

Our operating results may be positively or negatively impacted by the amount of expense we record for our defined benefit pension plans. U.S. GAAP requires that we calculate pension expense using actuarial valuations, which are dependent upon our various assumptions; including estimates of expected long-term rate of return on plan assets, discount rates for future payment obligations, and the expected rate of increase in future compensation levels. Our pension expense and funding requirements also may be affected by our actual return on plan assets, and by legislation and other government regulatory actions. Changes in returns on pension plan assets and actuarial assumptions could lead to variability in operating results and could have a material adverse effect on our financial condition, liquidity or results of operations.

WE DO BUSINESS WITH THE UNITED STATES GOVERNMENT AND AS A RESULT ARE SUBJECT TO CERTAIN GOVERNMENT REGULATIONS.

U.S. Government contracts are subject to specific regulations. For example, we must comply with the Federal Acquisition Regulation (“FAR”), the Truth in Negotiations Act, the Cost Accounting Standards (“CAS”), the Service Contract Act and Department of Defense security regulations. We must also comply with various other government regulations and requirements as well as various statutes related to employment practices, environmental protection, recordkeeping and accounting. These laws impact how we transact business with our governmental clients and, in some instances, impose significant costs on our business operations. If we fail to comply with any of these regulations, requirements or statutes, our existing government contracts could be terminated, and we could be temporarily suspended or even debarred from government contracting or subcontracting.

We also run the risk of the impact of government audits, investigations and proceedings. For example, government agencies such as the U.S. Defense Contract Audit Agency (the “DCAA”) routinely review and audit government contractors. The U.S. Government, including the DCAA, audits and reviews our performance on contracts, pricing practices, cost structure and compliance with applicable laws, regulations and standards. The DCAA reviews a contractor’s internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems, and the contractor’s compliance with such policies. Any costs found to be improperly allocated to a specific contract will not be reimbursed, while such costs already reimbursed must be refunded. Despite the fact that we take precautions to prevent and deter fraud, misconduct or other non-compliance, we face the risk that our employees, partners or subcontractors may engage in such activities. If any of these agencies determine that a rule or regulation has been violated, a variety of penalties can be imposed, including criminal and civil penalties, all of which would harm our reputation with the government or even debar us from future government activities. The DCAA has the authority to review how we have accounted for cost under the FAR and CAS, and if they believe that we have engaged in inappropriate accounting or other activities, payments to us may be disallowed.

If one or more of our government contracts are terminated for any reason including for convenience, if we are suspended or debarred from government contract work, or if payment of our cost is disallowed, we could suffer

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a significant reduction in expected revenue and could have a material adverse effect on our financial condition or results of operations.

CONTRACTS WITH THE U.S. GOVERNMENT ARE SUBJECT TO UNCERTAIN LEVELS OF FUNDING, MODIFICATION DUE TO CHANGES IN CUSTOMER PRIORITIES AND POTENTIAL TERMINATION.

The funding of U.S. Government programs is subject to congressional budget authorization and appropriation processes. For certain programs, Congress appropriates funds on a fiscal year basis even though a program may extend over several fiscal years. Consequently, programs are often only partially funded initially and additional funds are committed only as Congress makes further appropriations. We cannot predict the extent to which total funding and/or funding for individual programs will be included, increased or reduced as part of the 2011 and subsequent budgets ultimately approved by Congress or included in the scope of separate supplemental appropriations. In addition to changes in funding priorities, other factors such as U.S. economic circumstances, economic plans adopted by the U.S. Government, and pressures on the federal budget could also adversely affect the total funding and/or funding for individual programs. In the event that appropriations for one or more of our or our customers’ programs becomes unavailable, or is reduced or delayed, our contract or subcontract under such program may be terminated or adjusted by the U.S. Government, which could have a material adverse effect on our future sales under such program.

We also cannot predict the impact of potential changes in priorities due to military transformation and planning and/or the nature of war-related activity on existing, follow-on or replacement programs. A shift of government priorities to programs in which we do not participate and/or reductions in funding for or the termination of programs in which we do participate, unless offset by other programs and opportunities, could have a material adverse effect on our results or bid prospects from this portion of our Battery Technologies business.

In addition, the U.S. Government generally has the ability to terminate contracts, in whole or in part, without prior notice, for convenience or for default based on performance. In the event of termination for the government’s convenience, contractors are entitled to reimbursement for allowable costs and profits on authorized work performed through the date of termination. Termination resulting from our default can expose us to liability and have a material adverse effect on our ability to compete for contracts.

CHANGES IN EFFECTIVE TAX RATES OR ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR INCOME TAX RETURNS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION OR OPERATING RESULTS.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating our worldwide provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. For example, our effective tax rates could be adversely affected by:

•  earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates;

•  changes in the valuation of our deferred tax assets and liabilities;

•  the timing and amount of earnings of foreign subsidiaries that we repatriate to the United States; or

•  changes in the relevant tax, accounting and other laws, regulations, principles and interpretations.

We are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income tax against us. The final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation could have a material adverse effect on our financial condition or results of operations in the period or periods for which that determination is made.

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THE MAJORITY OF OUR OPERATIONS ARE OUTSIDE THE UNITED STATES, WHICH SUBJECTS US TO RISKS THAT MAY ADVERSELY AFFECT OUR OPERATING RESULTS.

Our business is subject to risks related to the differing legal and regulatory requirements and the social, political and economic conditions of many jurisdictions. In addition to risks associated with fluctuations in foreign exchange rates, risks inherent in international operations include the following:

•  potential supply disruptions as a result of political instability, civil unrest or labor difficulties in countries in which we have operations, especially the DRC and surrounding countries;

•  agreements may be difficult to enforce, may be subject to government renegotiation, and receivables difficult to collect through a foreign country’s legal system;

•  customers in certain regions may have longer payment cycles;

•  foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade, investment or repatriation of monies, including currency exchange controls;

•  unexpected adverse changes in foreign laws or regulatory requirements may occur, including with respect to labor, taxation, royalties, divestment, imports, exports, trade regulations, currency and environmental matters; and

•  having to submit to the jurisdiction of a foreign court or arbitration panel or having to enforce the judgment of a foreign court or arbitration panel against a sovereign nation within its own territory.

Our overall success as a global business depends, in part, upon our ability to succeed in differing legal, regulatory, economic, social and political conditions. We cannot assure you that we will implement policies and strategies that will be effective in each location where we do business. Furthermore, we cannot be sure that one or more of the foregoing factors will not have a material adverse effect on our business, financial condition or results of operations.

We engage in business in certain countries where the risk of public sector corruption and bribery is high. We have implemented policies and procedures and conducted employee training to assure that our operations are in compliance with anti-bribery laws. If our compliance actions fail, a violation of anti-bribery laws could result in serious penalties, including criminal and civil sanctions. Such sanctions could have a material adverse effect on our business as a whole.

THE MAJORITY OF OUR CASH IS GENERATED AND HELD OUTSIDE THE UNITED STATES. THE FAILURE TO MAINTAIN A LEVEL OF CASH SUFFICIENT TO ADDRESS OUR CASH REQUIREMENTS IN THE UNITED STATES COULD AFFECT OUR FINANCIAL CONDITION AND CASH FLOWS IN FUTURE PERIODS.

As of December 31, 2010, 87% of our cash and cash equivalents were held outside the United States. If a substantial amount of cash were required in the United States for debt repayment, capital expenditures or other special initiatives including future acquisitions, we may be required to repatriate funds to the United States or otherwise finance the desired activity. If funds are repatriated to the United States, they could be subject to additional taxation, which could have a material adverse effect on our financial condition and liquidity.

WE MAINTAIN CASH BALANCES IN U.S. AND FOREIGN FINANCIAL INSTITUTIONS WHICH COULD ADVERSELY AFFECT OUR LIQUIDITY.

While we monitor the financial institutions with which we maintain accounts, we may not be able to recover our funds in the event that a financial institution fails. As a result, this could adversely affect our ability to fund normal operations or capital expenditures.

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WE ARE EXPOSED TO FLUCTUATIONS IN FOREIGN EXCHANGE RATES, WHICH MAY ADVERSELY AFFECT OUR OPERATING RESULTS.

In addition to the United States, we have manufacturing and other facilities in Africa, Canada, Europe and Asia-Pacific. Although a significant portion of our raw material purchases and product sales are transacted in U.S. dollars, liabilities for non-U.S. operating expenses and income taxes are denominated in local currencies. Many of our foreign operating subsidiaries use the local currency as their functional currency. These include, among others, the European Union Euro, Taiwanese Dollar, Singapore Dollar, Malaysian Ringgit, British Pound Sterling, Japanese Yen, Chinese Renminbi and the Canadian Dollar. In these circumstances, the financial condition and results of operations of our foreign operating subsidiaries are reported in the relevant functional currency and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our consolidated financial statements. Changes in exchange rates between these foreign currencies and the U.S. dollar may adversely affect the recorded levels of our assets and liabilities because foreign assets and liabilities, as well as results of operations, that are translated into U.S. dollars for presentation in our financial statements could result in exchange losses. In addition to currency translation risks, we incur currency transaction risk whenever we enter into either a purchase or sales transaction using a currency other than the functional currency of the transacting entity.

WE ARE SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION AND MAY INCUR UNANTICIPATED COSTS OR LIABILITIES ARISING OUT OF ENVIRONMENTAL MATTERS.

We are subject to stringent laws and regulations relating to the storage, handling, disposal, emission and discharge of materials into the environment, and we have expended, and may be required to expend in the future, substantial funds for compliance with such laws and regulations. In addition, we may from time to time be subjected to claims for personal injury, property damages or natural resource damages made by third parties or regulators. Our annual environmental compliance costs were $11.1 million in 2010. In addition, we made capital expenditures of approximately $1.2 million in 2010 in connection with environmental compliance.

As of December 31, 2010, we had reserves of $2.8 million for environmental liabilities. However, given the many uncertainties involved in assessing liability for environmental claims, our current reserves may prove to be insufficient. In addition, our current reserves are based only on known sites and the known contamination on those sites. It is possible that additional remediation sites will be identified in the future or that unknown contamination at previously identified sites will be discovered. This could require us to make additional expenditures for environmental remediation or could result in exposure to claims in the future.

CHANGES IN ENVIRONMENTAL, HEALTH AND SAFETY REGULATORY REQUIREMENTS COULD AFFECT SALES OF OUR PRODUCTS.

New or revised governmental regulations relating to health, safety and the environment may affect demand for our products. For example, the European Union’s REACH legislation, which has established a new system to register and evaluate chemicals manufactured in, or imported to, the European Union and requires additional testing, documentation and risk assessments for the chemical industry, could affect our ability to sell certain products. Such new or revised regulations may result in heightened concerns about the chemicals involved and in additional requirements being placed on the production, handling, or labeling of the chemicals and may increase the cost of producing them and/or limit the use of such chemicals or products containing such chemicals, which could lead to a decrease in demand. As a result of these regulations, customers may avoid purchasing some products in favor of perceived “greener,” less hazardous or less costly alternatives which could adversely affect sales of our products. Additional new regulations may require us to incur significant additional compliance costs.

WE MAY NOT BE ABLE TO RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGES IN OUR INDUSTRY OR IN OUR CUSTOMERS’ PRODUCTS.

Our future business success will depend in part upon our ability to maintain and enhance our technological capabilities, develop and market products and applications that meet changing customer needs and

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successfully anticipate or respond to technological changes on a cost-effective and timely basis. Our inability to anticipate, respond to or utilize changing technologies could have a material adverse effect on our business, financial condition or results of operations. Moreover, technological and other changes in our customers’ products or processes may render some of our products unnecessary, which would reduce the demand for those products. In addition, technical advances by competitors may lead to production of less expensive or more effective products, which could have a material adverse effect on our business, financial condition or results of operations.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS, WHICH MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS.

We rely on U.S. and foreign patents and trade secrets to protect our intellectual property. We attempt to protect and restrict access to our trade secrets and proprietary information, but it may be possible for a third party to obtain our information and develop similar technologies.

If a competitor infringes upon our patent or other intellectual property rights, enforcing those rights could be difficult, expensive and time-consuming, making the outcome uncertain. Even if we are successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be costly and could divert management’s attention.

BECAUSE WE DEPEND ON SEVERAL LARGE CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES, OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED BY ANY DISRUPTION OF OUR RELATIONSHIP WITH THESE CUSTOMERS OR ANY MATERIAL ADVERSE CHANGE IN THEIR BUSINESSES.

We depend on several large customers for a significant portion of our business. Sales to Nichia Chemical Corporation represented approximately 14% of consolidated net sales in 2010. Sales to the top three customers in the Battery Technologies segment represented approximately 50% of Battery Technologies’ net sales in 2010. Any disruption in our relationships with our major customers, including any adverse modification of our agreements with them or their unwillingness or inability to perform their obligations under the agreements, could materially affect our business, financial condition or results of operations. In addition, any material adverse change in the financial condition of any of our major customers could have similar adverse effects.

WE OPERATE IN VERY COMPETITIVE INDUSTRIES, WHICH COULD ADVERSELY AFFECT OUR PROFITABILITY.

We have many competitors. Some of our principal competitors have greater financial and other resources and greater brand recognition than we have. Accordingly, these competitors may be better able to withstand changes in conditions within the industries in which we operate and may have significantly greater operating and financial flexibility than we do. As a result of the competitive environment in the markets in which we operate, we currently face and will continue to face pressure on the sales prices of our products from competitors and large customers. With these pricing pressures, we may experience future reductions in the profit margins on our sales, or may be unable to pass on future raw material price or operating cost increases to our customers, which also would reduce profit margins. As we have few long-term commitments from our customers, this competitive environment could give rise to a sudden loss of business.

INDUSTRY CONSOLIDATION BY COMPETITORS MAY LEAD TO INCREASED COMPETITION AND MAY HARM OUR OPERATING RESULTS.

There has been a trend toward consolidation in our industries. We believe that industry consolidation among our peers may result in stronger competitors with greater financial and other resources that are better able to compete for customers. This could lead to more variability in operating results and could have a material adverse effect on our business, financial condition or results of operations.

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FAILURE TO RETAIN AND RECRUIT KEY PERSONNEL WOULD HARM OUR ABILITY TO MEET KEY OBJECTIVES.

Our key personnel are critical to the management and direction of our businesses. Our future success depends, in large part, on our ability to retain key personnel and other capable management personnel. It is particularly important that we maintain our senior management group that is responsible for implementing our strategic transformation. If we were not able to attract and retain talented personnel and replace key personnel should the need arise, the inability could make it difficult to meet key objectives and disrupt the operations of our businesses.

OUR STOCK PRICE MAY CONTINUE TO BE VOLATILE.

Historically, our common stock has experienced substantial price volatility, particularly as a result of changes in metal prices, primarily unrefined cobalt, which is our primary raw material in the Advanced Materials segment. In addition, the stock market has experienced and continues to experience significant price and volume volatility that has often been unrelated to our operating performance. These broad market fluctuations may adversely affect the market price of our common stock.

THE INSURANCE THAT WE MAINTAIN MAY NOT FULLY COVER ALL POTENTIAL EXPOSURES.

We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental remediation. We are potentially at risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.

Item 1B.   Unresolved Staff Comments

The Company has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of its 2010 fiscal year and that remain unresolved.

Item 2.   Properties

The Company believes that its plants and facilities, which are of varying ages and of different construction types, have been satisfactorily maintained, are suitable for the Company’s operations and generally provide sufficient capacity to meet the Company’s production requirements. The depreciation lives of fixed assets associated with leases do not exceed the lives of the leases.

The Company’s Kokkola, Finland production facility is situated on property owned by Boliden Kokkola Oy. The Company and Boliden Kokkola Oy share certain physical facilities, services and utilities under agreements with varying expiration dates.

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Information regarding the Company’s primary offices, research and product development, and manufacturing and refining facilities, is set forth below:

	Facility		Approximate
Location	Function*	Segment	Square Feet		Leased/Owned
Africa:
Lubumbashi, DRC	M	Advanced Materials		116,000	joint venture (55% owned)
North America:
Cleveland, Ohio	A	Corporate		24,500	Leased
Westlake, Ohio	A, R	Specialty Chemicals		35,200	Owned
Belleville, Ontario	M	Specialty Chemicals		38,000	Owned
Franklin, Pennsylvania	M	Specialty Chemicals		331,500	Owned
South Plainfield, New Jersey	A, R	Specialty Chemicals		18,400	Leased
Los Gatos, California	M, A	Specialty Chemicals		24,912	Leased
Fremont, California	M, A	Specialty Chemicals		16,000	Leased
Maple Plain, Minnesota	M, A, R	Specialty Chemicals		65,000	Owned
Joplin, Missouri (various locations)	M, A, R	Battery Technologies		352,382	Owned
Joplin, Missouri	M	Battery Technologies		32,600	Leased
Pittsburg, Kansas	M	Battery Technologies		30,000	Leased
Vancouver, British Columbia	M, A, R	Battery Technologies		60,882	Leased
Plano, Texas	M, R	Battery Technologies		19,780	Leased
Seneca, Missouri	M	Battery Technologies		53,383	Owned
Asia-Pacific:
Kuching, Malaysia	M, A, R,	Specialty Chemicals		55,000	Land-Leased Building - Owned
Tokyo, Japan	A	Advanced Materials		2,300	Leased
Chung-Li, Taiwan	M, A, R	Specialty Chemicals		88,000	Leased
Suzhou, China	M, A	Specialty Chemicals		85,530	Owned
Wuzhong, Suzhou, China	M, A	Specialty Chemicals		30,000	Leased
Shenzen, China	A, W	Specialty Chemicals		25,000	Leased
Singapore (various locations)	M, A, R, W	Specialty Chemicals		164,856	Leased
Europe:
Kokkola, Finland	M, A, R	Advanced Materials		470,000	Land-Leased Building - Owned
Glenrothes, Scotland	M, A	Specialty Chemicals		80,000	Owned
Riddings, England	M, A, R	Specialty Chemicals		30,000	Leased
Saint Cheron, France	W	Specialty Chemicals		42,030	Owned
Saint Fromond, France	M, A, R	Specialty Chemicals		99,207	Owned
Rousset Cedex, France	A, W	Specialty Chemicals		14,400	Leased
Castres, France	M, A	Specialty Chemicals		43,000	Owned
Lagenfeld, Germany	A, R	Specialty Chemicals		47,430	Leased

* M — Manufacturing/refining; A — Administrative; R — Research and Development; W — Warehouse

Item 3.   Legal Proceedings

The Company is a party to various legal and administrative proceedings incidental to its business. The Company believes that disposition of all suits and claims related to its ordinary course of business should not in the aggregate have a material adverse effect on the Company’s financial position or results of operations.

Item 4.   Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of the Company’s 2010 fiscal year.

Executive Officers of the Registrant

The information under this item is being furnished pursuant to General Instruction G of Form 10-K.

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There is set forth below the name, age, positions and offices held by each of the Company’s executive officers, as well as their business experience during the past five years. Dates indicate when the individual was named to or held the indicated position.

Joseph Scaminace — 57

•  Chairman and Chief Executive Officer (August 2005)

Kenneth Haber — 60

•  Chief Financial Officer (March 2006)

•  Interim Chief Financial Officer (November 2005 — March 2006)

Valerie Gentile Sachs — 55

•  Vice President, General Counsel and Secretary (September 2005)

Stephen D. Dunmead — 47

•  Vice President and General Manager, Specialties (January 2006)

•  Vice President and General Manager, Cobalt Group (August 2003 — January 2006)

Gregory J. Griffith — 55

•  Vice President, Strategic Planning, Development and Investor Relations (February 2007)

•  Vice President, Corporate Affairs and Investor Relations (October 2005 — February 2007)

Michael V. Johnson — 59

•  Vice President, Human Resources (November 2010)

•  Senior Vice President, Human Resources, FXI Foamex Innovations (January 2008 — October 2010)

•  Human Resources Consultant (September 2006 — January 2008)

•  Vice President, Human Resources, Sanofi-Aventis (February 2004 — March 2006)

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PART II

Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock is traded on the New York Stock Exchange under the symbol “OMG”. As of December 31, 2010, the number of record holders of the Company’s common stock was 1,068.

The high and low market prices for the Company’s common stock for each quarter during the past two years are presented in the table below:

	2010						2009
	Sales Price				Cash		Sales Price				Cash
	High		Low		Dividend		High		Low		Dividend
First quarter	$	36.50	$	29.83	$	—	$	24.38	$	13.90	$	—
Second quarter	$	39.06	$	23.72	$	—	$	30.10	$	18.94	$	—
Third quarter	$	30.91	$	21.97	$	—	$	35.97	$	25.24	$	—
Fourth quarter	$	39.92	$	29.50	$	—	$	34.44	$	26.41	$	—

The Company intends to continue to retain earnings for use in the operation and expansion of the business and therefore does not anticipate paying cash dividends in 2011.

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Item 6.  Selected Financial Data

	Year Ended December 31,
	2010		2009			2008		2007		2006
(In millions, except per share data)
Income Statement Data:
Net sales	$	1,196.6	$	871.7		$	1,736.8	$	1,021.5	$	660.1
Amounts attributable to OM Group, Inc. common stockholders:
Income (loss) from continuing operations before cumulative effect of change in accounting principle, net of tax	$	82.6	$	(19.4	)	$	134.9	$	111.5	$	23.6
Income from discontinued operations, net of tax		0.8		1.5			0.1		135.4		192.2
Cumulative effect of change in accounting principle, net of tax		—		—			—		—		0.3
Net income (loss)	$	83.4	$	(17.9	)	$	135.0	$	246.9	$	216.1
Net income (loss) per common share attribuable to OM Group, Inc. common stockholders — basic:
Continuing operations	$	2.72	$	(0.64	)	$	4.48	$	3.73	$	0.80
Discontinued operations		0.02		0.05			—		4.52		6.55
Cumulative effect of change in accounting principle		—		—			—		—		0.01
Net income (loss)	$	2.74	$	(0.59	)	$	4.48	$	8.25	$	7.36
Net income (loss) per common share attribuable to
OM Group, Inc. common shareholders — assuming dilution:
Continuing operations	$	2.70	$	(0.64	)	$	4.45	$	3.68	$	0.80
Discontinued operations		0.03		0.05			—		4.47		6.50
Cumulative effect of a change in accounting principle		—		—			—		—		0.01
Net income (loss)	$	2.73	$	(0.59	)	$	4.45	$	8.15	$	7.31
Dividends declared and paid per common share	$	—	$	—		$	—	$	—	$	—
Balance Sheet Data:
Total assets	$	1,772.7	$	1,444.1		$	1,434.4	$	1,469.2	$	1,618.2
Long-term debt, excluding current portion(a)	$	90.0	$	—		$	26.1	$	1.1	$	1.2

(a) Amount in 2006 excludes the $400.0 million of outstanding Notes. On February 2, 2007, the Company notified its noteholders that it had called for redemption all $400.0 million of its outstanding Notes. The Notes were classified as a current liability at December 31, 2006.

Results for 2010 include a $2.1 million pre-tax restructuring charge.

Results for 2009 include a $37.5 million pre-tax goodwill impairment charge, a $12.7 million pre-tax restructuring charge and a $4.7 million pre-tax gain on termination of the retiree medical plan.

Results for 2008 include a $27.7 million pre-tax adjustment to reduce the carrying value of certain inventory to market value, an $8.8 million pre-tax goodwill impairment charge and a $46.6 million tax benefit related to an election to take foreign tax credits on prior year U.S. tax returns.

Results for 2007 include a pretax and after-tax gain on the sale of the Nickel business of $77.0 million and $72.3 million, respectively. In addition, 2007 results also include a $21.7 million pre-tax charge related to the redemption of the Notes and income tax expense of $45.7 million related to repatriation of cash from overseas primarily as a result of the redemption of the Notes in March 2007.

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Results for 2006 include a $12.2 million pre-tax gain related to the sale of common shares of Weda Bay Minerals, Inc. Results for 2006 also include a $3.2 million pre-tax charge for the settlement of litigation related to the former chief executive officer’s termination. Income tax expense for 2006 includes $14.1 million to provide additional U.S. income taxes on $384.1 million of undistributed earnings of consolidated foreign subsidiaries in connection with the Company’s planned redemption of the Notes in March 2007.

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 should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Annual Report.

General

The Company is a global solutions provider of specialty chemicals, advanced materials, electrochemical energy storage, and technologies crucial to enabling its customers to meet increasingly stringent market and application requirements. The Company believes it is the world’s largest refiner of cobalt and producer of cobalt-based specialty products.

The Company is executing a strategy to grow through continued product innovation, as well as tactical and strategic acquisitions. The strategy is part of a transformational process to leverage the Company’s core strengths in developing and producing value-added specialty products for dynamic markets while reducing the impact of metal price volatility on financial results. The strategy is designed to allow the Company to deliver sustainable and profitable volume growth in order to drive consistent financial performance and enhance the Company’s ability to continue to build long-term shareholder value.

On January 29, 2010, the Company completed the acquisition of EaglePicher Technologies, LLC from EaglePicher Corporation for approximately $172 million in cash. Based in Joplin, Missouri, EaglePicher Technologies is a leader in portable power solutions and energy storage technologies serving aerospace, defense and medical markets, and is developing technologies in advanced power storage to serve alternative energy storage markets. EaglePicher Technologies product offerings can be grouped into two broad categories: (i) proprietary battery products and (ii) complementary battery support products that consist of energetic devices, chargers, battery management systems and distributed products. In fiscal year 2009, EaglePicher Technologies recorded revenues of approximately $125 million, of which 60 percent came from its defense business, 33 percent from its aerospace business and the remainder from its medical business. EaglePicher Technologies is operated and reported within a new segment called Battery Technologies. The results of operations of EaglePicher Technologies have been included in the results of the Company from the date of acquisition.

Segments

As a result of the EaglePicher Technologies acquisition, the Company is now organized into three operating segments: Advanced Materials, Specialty Chemicals and Battery Technologies. The Advanced Materials segment consists of Inorganics, a joint venture that operates a smelter in the Democratic Republic of Congo (“DRC”) and metal resale. The Specialty Chemicals segment is comprised of Electronic Chemicals, Advanced Organics, Ultra Pure Chemicals (“UPC”) and Photomasks. The Battery Technologies segment is comprised of the EaglePicher Technologies business.

The Advanced Materials segment manufactures inorganic products using unrefined cobalt and other metals and serves the battery materials, powder metallurgy, ceramics and chemical end markets by providing products with functional characteristics critical to the success of the Company’s customers. These products improve the electrical conduction of rechargeable batteries used in portable electronic devices such as cellular phones, video cameras, portable computers and power tools as well as various types of electric vehicles. The smelter joint venture (Groupement pour le Traitement du Terril de Lubumbashi Limited (“GTL”)) is

24

consolidated in the Company’s financial statements because the Company has a controlling interest in the joint venture. The GTL smelter is a primary source of the Company’s cobalt raw material feed.

The Specialty Chemicals segment consists of the following:

Electronic Chemicals:  Electronic Chemicals develops and manufactures products for the printed circuit board, memory disk, general metal finishing, electronic packaging and finishing, and photovoltaic markets.

Advanced Organics:  Advanced Organics offers products for the coating and inks, chemical and tire markets. Products for the coatings and inks market promote drying and other performance characteristics.

Ultra Pure Chemicals:  UPC develops, manufactures and distributes a wide range of ultra-pure chemicals used in the manufacture of electronic and computer components such as semiconductors, silicon chips, wafers and liquid crystal displays.

Photomasks:  Photomasks manufactures photo-imaging masks (high-purity quartz or glass plates containing precision, microscopic images of integrated circuits) and reticles for the semiconductor, optoelectronics, microelectronics and micro electro mechanical systems industries under the Compugraphics brand name.

The Battery Technologies segment, which consists of the EaglePicher Technologies business acquired on January 29, 2010, provides advanced batteries, battery materials, battery management systems, battery-related research and energetic devices for the defense, aerospace and medical markets.

Key Market Factors Affecting Advanced Materials Operations

The Company’s business is critically connected to both the availability and price of raw materials. The primary raw material used by the Advanced Materials segment is unrefined cobalt. Unrefined cobalt is obtained from three basic sources: primary cobalt mining, as a by-product of another metal (typically copper or nickel), and from recycled material. Cobalt raw materials include ore, concentrate, slag, scrap and metallic feed. The availability of unrefined cobalt is dependent on global market conditions, cobalt prices and the prices of copper and nickel. Also, political and civil instability in supplier countries, variability in supply and worldwide demand, including demand in developing countries such as China, have affected and will likely continue to affect the supply and market price of raw materials. The Company attempts to mitigate changes in availability of raw materials by maintaining adequate inventory levels and long-term supply relationships with a variety of suppliers. The GTL smelter in the DRC is a primary source for the Company’s cobalt raw material feed. After smelting in the DRC, cobalt/copper white alloy is sent to the Company’s refinery in Kokkola, Finland.

The cost of the Company’s raw materials fluctuates due to changes in the cobalt reference price, actual or perceived changes in supply and demand of raw materials, and changes in availability from suppliers. The Company attempts to mitigate increases in raw material prices by passing through such increases to its customers in the prices of its products and by entering into sales contracts that contain variable pricing that adjusts based on changes in the price of cobalt. During periods of rapidly changing metal prices, however, there may be price lags that can impact the short-term profitability and cash flow from operations of the Company both positively and negatively. Fluctuations in the price of cobalt have historically been significant and the Company believes that cobalt price fluctuations are likely to continue in the future. Fluctuations in the price of copper can also impact the short-term profitability and cash flow from operations of the Company both positively and negatively. Declines in the selling prices of the Company’s finished goods, which can result from decreases in the reference price of cobalt or other factors, can result in the Company’s inventory carrying value being written down to a lower market value.

Executive Overview

The Company’s Advanced Materials and Specialty Chemicals segments both achieved significantly improved year-over-year results. An increase in end — market demand resulted in increased sales and product volumes, which together with higher metal prices led to improved operating results during 2010 compared to 2009. The

25

Company completed the acquisition of EaglePicher Technologies on January 29, 2010. Battery Technologies contributed $113.9 million and $5.1 million to the Company’s net sales and operating profit, respectively, during 2010.

The Advanced Materials segment benefitted from an increase in the average cobalt reference price and favorable product mix in 2010 compared to 2009. Demand for fine powders in powder metallurgy applications strengthened significantly from 2009, partially due to customer restocking within the supply chain. These favorable items were partially offset by decreased sales of battery materials, primarily in China.

The Specialty Chemicals segment experienced an increase in operating profit in 2010 compared with 2009, even after excluding the 2009 goodwill impairment and restructuring charges, largely as the result of increased volume due to stronger end-market demand and favorable product mix. During 2009, the Company determined that a portion of Specialty Chemicals goodwill was impaired, resulting in net impairment charges of $37.5 million. Restructuring charges related to the Advanced Organics business were $2.1 million and $12.7 million in 2010 and 2009, respectively.

Battery Technologies operating profit was $3.1 million in both the third and fourth quarter of 2010 compared to $0.4 million in the second quarter of 2010. This increase in operating profit was primarily due to timing of deliveries in Defense and Aerospace and $1.6 million of charges in the second quarter of 2010 related to purchase price accounting for acquired inventories and deferred revenue that did not recur in the third or fourth quarters of 2010.

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Consolidated Operating Results for 2010, 2009 and 2008

Set forth below is a summary of the Statements of Consolidated Operations for the years ended December 31,

	2010				2009				2008
(thousands of dollars & percent of net sales)
Net sales	$	1,196,646			$	871,669			$	1,736,849
Cost of products sold (excluding restructuring charges)		910,094				693,832				1,384,301
Restructuring charges		1,864				12,054				—
Gross profit		284,688		23.8%		165,783		19.0%		352,548		20.3%
Selling, general and administrative expenses		161,806		13.5%		133,302		15.3%		166,126		9.6%
Goodwill impairment, net		—				37,504				8,800
Restructuring charges		236				654				—
Gain on termination of retiree medical plan		—				(4,693	)			—
Operating profit (loss)		122,646		10.2%		(984	)	-0.1%		177,622		10.2%
Other expense, net		(15,331	)			(74	)			(5,334	)
Income tax expense		(29,656	)			(20,899	)			(16,076	)
Income (loss) from continuing operations, net of tax		77,659				(21,957	)			156,212
Income from discontinued operations, net of tax		726				1,496				92
Consolidated net income (loss)		78,385				(20,461	)			156,304
Net (income) loss attributable to noncontrolling interest		4,989				2,604				(21,301	)
Net income (loss) attributable to OM Group, Inc. common stockholders	$	83,374			$	(17,857	)		$	135,003
Earnings per common share — basic:
Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders	$	2.72			$	(0.64	)		$	4.48
Income from discontinued operations attributable to OM Group, Inc. common stockholders		0.02				0.05				—
Net income (loss) attributable to OM Group, Inc. common stockholders	$	2.74			$	(0.59	)		$	4.48
Earnings per common share — assuming dilution:
Income (loss) from continuing operations attributable to OM Group, Inc. common stockholders	$	2.70			$	(0.64	)		$	4.45
Income from discontinued operations attributable to OM Group, Inc. common stockholders		0.03				0.05				—
Net income (loss) attributable to OM Group, Inc. common stockholders	$	2.73			$	(0.59	)		$	4.45
Weighted average shares outstanding
Basic		30,433				30,244				30,124
Assuming dilution		30,565				30,244				30,358
Amounts attributable to OM Group, Inc. common stockholders:
Income (loss) from continuing operations, net of tax	$	82,648			$	(19,353	)		$	134,911
Income from discontinued operations, net of tax		726				1,496				92
Net income (loss)	$	83,374			$	(17,857	)		$	135,003

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2010 Compared with 2009

The following table identifies, by segment, the components of change in net sales in 2010 compared with 2009:

(In millions)
2009 Net Sales	$	871.7
Increase in 2010 from:
Advanced Materials		148.2
Specialty Chemicals		60.9
Battery Technologies		113.9
Intersegment items		1.9
2010 Net Sales	$	1,196.6

Net sales increased $324.9 million, or 37.3%, primarily due to increased volume, the increase in the cobalt reference price and the EaglePicher Technologies acquisition. Increased end-market demand drove higher volume in Specialty Chemicals ($50.2 million). Advanced Materials achieved increased cobalt volume ($30.7 million). The improvement in demand was partially due to customer re-stocking within the supply chain in certain end markets. The average cobalt reference price increased from $15.90 in 2009 to $18.74 in 2010, which together with favorable product mix, resulted in higher product selling prices ($68.7 million) in Advanced Materials. Advanced Materials also benefited from an increase in cobalt metal resale ($35.5 million) primarily due to the increase in the average cobalt reference price and increased volume. Advanced Materials copper by-product sales also were higher ($13.3 million) due to the higher average copper price in 2010 compared with 2009, partially offset by lower volume. Favorable selling prices and mix positively affected Specialty Chemicals in 2010 compared to 2009 ($12.3 million). Battery Technologies net sales were $113.9 million in 2010. Excluding Battery Technologies, net sales increased $211.0 million, or 24.2%, in 2010 compared with 2009.

During 2009, the Company commenced a restructuring plan of the Company’s Advanced Organics business within the Specialty Chemicals segment to better align the cost structure and asset base of its European carboxylate business to industry conditions resulting from weak customer demand, commoditization of products and overcapacity in that market. The restructuring included exiting the Manchester, England manufacturing facility and disposing of the fixed assets located in the Manchester facility, as well as smaller workforce reductions at other facilities. The majority of position eliminations were completed by mid-2010. The restructuring plan does not involve the discontinuation of any material product lines or other functions for the Advanced Organics business as a whole. Decommissioning and demolition of the Manchester, England facility began during the third quarter of 2010 and is expected to be completed during the first half of 2011. The Company recorded restructuring charges of $2.1 million and $12.7 million in 2010 and 2009, respectively.

Gross profit increased to $284.7 million in 2010, compared with $165.8 million in 2009. The largest factor affecting the $118.9 million increase in gross profit was the increase in the average cobalt reference price that resulted in higher Advanced Materials selling prices, which together with favorable product mix increased gross profit by $48.7 million in 2010 compared with 2009. Also impacting the Advanced Materials segment gross profit was increased cobalt volume ($19.3 million) in 2010 compared to 2009. These improvements to gross profit in the Advanced Materials segment were partially offset by a $22.1 million increase in manufacturing and distribution expenses due to the increase in cobalt volume and costs associated with the maintenance shutdown of the GTL smelter. In the Specialty Chemicals segment, gross profit was affected by increased volume ($27.9 million) and favorable pricing/mix ($11.4 million) and a $3.4 million decrease in manufacturing and distribution expenses. Decreased manufacturing and distribution expenses in the Advanced Organics business due to the restructuring were partially offset by increased manufacturing and distribution expenses in the other Specialty Chemicals businesses due to increased volume. Battery Technologies contributed $18.1 million of gross profit in 2010, after a $3.2 million charge related to purchase accounting adjustments that will not recur, as discussed below. The increase in gross profit as a percentage of

28

net sales (23.8% in 2010 versus 19.0% in 2009) was primarily due to the positive factors discussed above and the decrease in restructuring charges in 2010 compared to 2009.

Inventory acquired as part of the EaglePicher Technologies acquisition was initially recorded at fair value, which involves stepping up the value of acquired finished goods and work-in-process from historical cost of the acquired company to its expected sales value less costs to complete and sell the inventory. As this inventory was sold in the ordinary course of business, the inventory step-up was charged to cost of products sold, which reduced gross profit by $2.4 million in 2010. During 2010, the Company also recorded a $0.8 million reduction in revenue related to amortization of the adjustment to fair value deferred revenue on the acquired balance sheet. The step-up to fair value of inventory acquired and the adjustment to fair value deferred revenue have been fully amortized as of December 31, 2010 and will not recur in the future.

Selling, general and administrative expenses (“SG&A”) increased to $161.8 million in 2010 compared with $133.3 million in 2009. The increase was primarily due to $13.1 million of Battery Technologies SG&A expenses, increased employee incentive compensation expense related to the anticipated payouts under the 2010 annual bonus program, a $2.0 million charge in 2010 due to an other-than-temporary decline in the fair value of a cost method investment and $0.9 million in transaction costs associated with the EaglePicher Technologies acquisition. The decrease in SG&A as a percentage of net sales (13.5% in 2010 versus 15.3% in 2009) was due to SG&A expenses being spread over higher net sales.

In 2009, the Company recorded a non-cash charge totaling $37.5 million in the Specialty Chemicals segment for the impairment of goodwill related to the Advanced Organics, UPC and Photomasks businesses.

The Company recognized a $4.7 million gain in 2009 on the termination of its retiree medical plan. As a result of the termination, the accumulated postretirement benefit obligation has been eliminated. The gain is included as a reduction of Corporate expenses.

The following table identifies, by segment, the components of change in operating profit (loss) for 2010 compared with 2009:

(In millions)
2009 Operating Loss	$	(1.0	)
Increase (decrease) in 2010 from:
Advanced Materials		42.3
Specialty Chemicals		86.5
Battery Technologies		5.1
Corporate		(10.3	)
Intersegment items		—
2010 Operating Profit	$	122.6

The change in operating profit (loss) for 2010 as compared to 2009 was due to the factors discussed above and Battery Technologies operating profit, which includes purchase accounting adjustments of $3.2 million discussed above and $3.2 million of amortization of acquired intangibles.

The following table summarizes the components of Other expense, net:

	Year Ended December 31,
	2010			2009			Change
(In thousands)
Interest expense	$	(5,255	)	$	(689	)	$	(4,566	)
Interest income		908			928			(20	)
Foreign exchange gain (loss)		(10,679	)		(21	)		(10,658	)
Other expense, net		(305	)		(292	)		(13	)
	$	(15,331	)	$	(74	)	$	(15,257	)

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The increase in interest expense is due to the increase in the average amount outstanding under the Revolver during 2010 compared with 2009. The increase in foreign exchange loss is primarily related to the revaluation of non-functional currency cash balances at foreign sites due to changes in exchange rates (primarily the Euro, Malaysian Ringgit and Taiwanese Dollar).

The change in income (loss) from continuing operations before income tax expense for 2010 compared with 2009 was due to the factors discussed above, primarily the affect of the increase in the cobalt reference price, favorable product mix and increased sales volume.

The Company recorded income tax expense of $29.7 million on income from continuing operations before income tax expense of $107.3 million for 2010, resulting in an effective income tax rate of 27.6%. The Company recorded net discrete tax items netting to expense of $5.4 million. This amount included $10.1 million of discrete tax expense related to the GTL joint venture, of which the Company’s share is 55%, or $5.6 million. The GTL items are primarily comprised of an $11.5 million charge to reserve a portion of GTL’s prepaid income tax balance, and a benefit of $2.6 million primarily related to a return to provision adjustment. Without discrete items, the effective income tax rate for 2010 would have been 22.6%. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland) and a tax holiday in Malaysia. This was partially offset by losses in certain jurisdictions with no corresponding tax benefit (including the U.S.). During 2009, the Company recorded discrete tax expense items totaling $10.2 million, which included $9.2 million related to GTL of which the Company’s 55% share was $5.1 million. Also in 2009, the Company recorded goodwill and intangible asset impairment charges totaling $39.1 million, which are not deductible for tax purposes. Adjusting the pretax loss for the impairment charges and excluding discrete items, the Company’s effective income tax rate would have been 28.2% for 2009. This effective tax rate is lower than the U.S. statutory rate due primarily to income earned in foreign tax jurisdictions with lower statutory tax rates than the U.S. (primarily Finland) and a tax holiday in Malaysia, offset by income earned in foreign tax jurisdictions with higher statutory rates than the US, principally the DRC.

Income from discontinued operations in 2010 of $0.7 million was primarily due to a $1.6 million tax benefit related to a prior period error, partially offset by a $1.2 million increase in a tax contingency accrual. Income from discontinued operations of $1.5 million in 2009 was primarily due to the reversal of a $2.0 million tax contingency accrual. Both periods were also impacted by translation adjustments of retained liabilities of businesses sold denominated in a foreign currency.

Net (income) loss attributable to the noncontrolling interest relates to GTL. Since the joint venture is consolidated, the noncontrolling interest is part of total income from continuing operations. Net (income) loss attributable to the noncontrolling interest removes the income (loss) not attributable to OM Group, Inc. Net loss attributable to the noncontrolling interest was $5.0 million in 2010 compared with $2.6 million in 2009. The change was primarily due to the discrete tax items at GTL discussed above and costs associated with the maintenance shutdown of the GTL smelter ($5.7 million), partially offset by the favorable impact of increased deliveries in 2010 compared with 2009 due to timing of arrivals of cobalt raw material to the Kokkola refinery from the DRC smelter.

Income (loss) from continuing operations attributable to OM Group, Inc. was income of $82.6 million, or $2.70 per diluted share, in 2010 compared with a loss of $19.4 million, or $0.64 per diluted share in 2009, due primarily to the aforementioned factors.

Net income (loss) attributable to OM Group, Inc. was income of $83.4 million, $2.73 per diluted share, in 2010, compared with a loss of $17.9 million, or $0.59 per diluted share, in 2009, due primarily to the aforementioned factors.

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2009 Compared with 2008

The following table identifies, by segment, the components of change in net sales in 2009 compared with 2008:

(In millions)
2008 Net Sales	$	1,736.8
Decrease in 2009 from:
Advanced Materials		(720.0	)
Specialty Chemicals		(144.9	)
Intersegment items		(0.2	)
2009 Net Sales	$	871.7

Net sales decreased $865.1 million, or 50%, primarily due to a $398.7 million decrease from lower product selling prices in the Advanced Materials segment, which resulted from a decrease in the average cobalt reference price in 2009 compared with 2008, and a $169.0 million decrease from the resale of cobalt metal. The weak economy drove decreases in volume in both Advanced Materials ($122.0 million) and Specialty Chemicals ($107.8 million) as a result of weak end-market demand and customer de-stocking. Advanced Materials copper by-product sales also were lower ($28.6 million) due to the lower average copper price and decreased volume in 2009 compared with 2008. Unfavorable selling prices and sales mix ($24.1 million) and currency impact ($14.3 million) also negatively impacted net sales in Specialty Chemicals.

During 2009, the Company announced and began to implement a restructuring plan of the carboxylate portion of its Advanced Organics business to better align the cost structure to industry conditions resulting from weak customer demand and overcapacity. The Company recorded charges totaling $12.7 million in 2009 in connection with the restructuring during that period.

Gross profit decreased to $165.8 million in 2009, compared with $352.5 million in 2008. The largest factor affecting the $186.7 million decrease in gross profit was the change in the average cobalt reference price during 2008 and 2009. The average cobalt reference price rose from $40.00 at the beginning of 2008 to near $50.00 by the end of the first quarter and averaged $45.93 and $32.54 per pound in the second and third quarters of 2008, respectively, before dropping to an average of $20.81 per pound in the fourth quarter of 2008. The average reference price of cobalt was $13.37, $14.44, $17.30 and $18.35 in the first, second, third and fourth quarters of 2009, respectively. As a result, 2008 benefited from higher product selling prices due to the high average reference price for cobalt during the first half of 2008 and the favorable effect of a rising cobalt price environment during that period, which resulted in the sale at higher selling prices of products manufactured using lower cost cobalt raw materials. This set of circumstances did not exist during 2009, which included a lower and more stable price environment. The impact of the changing reference price reduced gross profit by $156.9 million in 2009 compared with 2008. As a result of the rapid and significant decline in the cobalt reference price during the second half of 2008, and in particular in the fourth quarter, 2008 results include a $27.7 million charge ($20.7 in Advanced Materials and $7.0 million in Specialty Chemicals) to reduce the carrying value of certain inventories to market value. Also impacting the Advanced Materials segment gross profit was decreased volume ($51.9 million) and a decrease in profit associated with copper by-product sales ($7.2 million). Advanced Materials was favorably impacted by a $23.7 million reduction in manufacturing and distribution expenses due primarily to reduced volume and the Company’s profit enhancement initiatives that included reductions in discretionary spending, headcount reductions, and decreased employee incentive compensation; and lower process-based material costs ($15.2 million). In the Specialty Chemicals segment, decreased volume and restructuring charges reduced gross profit by $36.8 million and $12.0 million, respectively. Specialty Chemicals was favorably impacted by a $12.6 million reduction in manufacturing and distribution expenses due primarily to the reduced volume and the Company’s profit enhancement initiatives described above. The decrease in gross profit as a percentage of net sales (19.0% in 2009 versus 20.3% in 2008) was primarily due to the favorable effect of higher cobalt selling prices in 2008 partially offset by the $27.7 million inventory adjustment, as compared with the conditions that existed

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during 2009, which included the $12.0 million restructuring charge and fixed expenses spread over lower sales revenues.

SG&A decreased to $133.3 million in 2009 compared with $166.1 million in 2008. The decline in SG&A was primarily attributable to overall reduced spending due to reduced volume and the Company’s profit enhancement initiatives, including headcount reductions and decreased employee incentive compensation. The increase in SG&A as a percentage of net sales (15.3% in 2009 versus 9.6% in 2008) was due to SG&A expenses being spread over lower net sales.

In 2009, the Company recorded a non-cash charge totaling $37.5 million in the Specialty Chemicals segment for the impairment of goodwill related to the Advanced Organics, UPC and Photomasks businesses.

The Company recognized a $4.7 million gain in 2009 on the termination of its retiree medical plan. As a result of the termination, the accumulated postretirement benefit obligation has been eliminated. The gain is included as a reduction of Corporate expenses.

The change in operating profit (loss) for 2009 compared with 2008 was due to the factors discussed above, primarily changes in cobalt price, reduced volumes and goodwill impairment charges, partially offset by cost reductions. The following table identifies, by segment, the components of change in operating profit (loss) for 2009 compared with 2008:

(In millions)
2008 Operating Profit	$	177.6
Increase (decrease) in 2009 from:
Advanced Materials		(150.2	)
Specialty Chemicals		(38.2	)
Corporate		10.2
Intersegment items		(0.4	)
2009 Operating Loss	$	(1.0	)

Other income (expense), net for 2009 was expense of $0.1 million compared with expense of $5.3 million in 2008. The following table summarizes the components of Other income (expense), net:

	Year Ended December 31,
	2009			2008			Change
(In thousands)
Interest expense	$	(689	)	$	(1,597	)	$	908
Interest income		928			1,920			(992	)
Foreign exchange gain (loss)		(21	)		(3,744	)		3,723
Other expense, net		(292	)		(1,913	)		1,621
	$	(74	)	$	(5,334	)	$	5,260

The change in income (loss) from continuing operations before income tax expense for 2009 compared with 2008 was due to the factors discussed above, primarily the impact of the decline in the cobalt reference price, the negative impact on demand caused by the deterioration of the global economy, the goodwill and intangible asset impairment charges and the restructuring charge.

Income tax expense in 2009 was $20.9 million on pre-tax loss of $1.1 million, resulting in a negative tax rate, compared to income tax expense in 2008 of $16.1 million on pre-tax income of $172.3 million, or 9.3%. During 2009, the Company recorded discrete tax expense items totaling $10.2 million, which included $9.2 million related to GTL in the DRC, (of which the Company’s share is 55%). Also in 2009, the Company recorded goodwill and intangible asset impairment charges totaling $39.1 million, which are not deductible for tax purposes. Adjusting the pretax loss for the impairment charges and excluding the discrete items, the Company’s effective income tax rate would have been 28.2% for 2009. This effective tax rate is lower than

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the U.S. statutory rate due primarily to income earned in foreign tax jurisdictions with lower statutory tax rates than the U.S. (primarily Finland) and a tax holiday in Malaysia, offset by income earned in foreign tax jurisdictions with higher statutory rates than the US, principally the DRC. During 2008, the Company completed an analysis of foreign tax credit positions and recorded a $46.6 million tax benefit related to an election to take foreign tax credits on prior year U.S. tax returns. Excluding the tax benefit related to the foreign tax credits, the Company’s effective income tax rate would have been 36.4% for 2008. In 2008, the effective tax rate, excluding the foreign tax credit noted above, was higher than the U.S. statutory rate due to several factors: the non-deductible goodwill impairment charge, the cost of repatriating foreign earnings and the ability to recognize tax benefits for only a portion of U.S. losses.

Income from discontinued operations in 2009 of $1.5 million was primarily due to the reversal of a $2.0 million tax contingency accrual partially offset by translation adjustments of retained liabilities of businesses sold denominated in a foreign currency.

Net (income) loss attributable to noncontrolling interest relates to the Company’s 55%-owned smelter joint venture in the DRC. Since the joint venture is consolidated, the noncontrolling interest is included in income from continuing operations. Net loss attributable to noncontrolling interest of $2.6 million in 2009 compared with net income attributable to noncontrolling interest of $21.3 million in 2008. The change was due to the unfavorable impact of lower cobalt prices, decreased deliveries and increased tax expense in 2009 compared with 2008.

Income (loss) from continuing operations attributable to OM Group, Inc. was a loss of $19.4 million, or $0.64 per diluted share in 2009, compared with income of $134.9 million, or $4.45 per diluted share in 2008, due primarily to the aforementioned factors.

Net income (loss) attributable to OM Group, Inc. was a loss of $17.9 million, or $0.59 per diluted share, in 2009, compared with income of $135.0 million, or $4.45 per diluted share, in 2008. The decrease was due primarily to the aforementioned factors.

Segment Results and Corporate Expenses

Advanced Materials

For the year ended December 31,

	2010		2009		2008
(Millions of dollars)
Net sales	$	620.6	$	472.4	$	1,192.4
Operating profit	$	95.6	$	53.3	$	203.5

The following table reflects the volumes in the Advanced Materials segment:

	2010		2009		2008
Volumes (metric tons)
Product sales volume*		14,246		13,517		15,679
Other sales volume (cobalt metal resale and by-product sales)		11,186		13,556		15,771
Cobalt refining volume		9,413		8,962		9,639

* Excludes cobalt metal resale and by-product sales.

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The following table summarizes the percentage of sales dollars by end market for the year ended December 31,

	2010			2009			2008
Battery Materials		42	%		49	%		46	%
Chemical		13	%		14	%		12	%
Powder Metallurgy		14	%		7	%		11	%
Ceramics		5	%		4	%		4	%
Other*		26	%		26	%		27	%

* Other includes cobalt metal resale and copper by-product sales.

The following table summarizes the percentage of sales dollars by region for the year ended December 31,

	2010			2009			2008
Americas		13	%		9	%		9	%
Asia		47	%		55	%		49	%
Europe		40	%		36	%		42	%

The following table summarizes the average quarterly reference price per pound of low grade cobalt (as published in Metal Bulletin magazine):

	2010		2009		2008
First Quarter	$	20.11	$	13.37	$	46.19
Second Quarter	$	19.36	$	14.44	$	45.93
Third Quarter	$	18.10	$	17.30	$	32.54
Fourth Quarter	$	17.41	$	18.35	$	20.81
Full Year	$	18.74	$	15.90	$	36.58

The following table summarizes the average quarterly London Metal Exchange (“LME”) price per pound of copper:

	2010		2009		2008
First Quarter	$	3.29	$	1.56	$	3.52
Second Quarter	$	3.18	$	2.12	$	3.83
Third Quarter	$	3.28	$	2.65	$	3.49
Fourth Quarter	$	3.91	$	3.01	$	1.80
Full Year	$	3.42	$	2.34	$	3.16

2010 Compared with 2009

Net Sales

The following table identifies the components of change in net sales:

(In millions)
2009 Net Sales	$	472.4
Increase (decrease) in 2010 from:
Selling price/mix		68.7
Cobalt volume		30.7
Cobalt metal resale		35.5
Copper by-product (price and volume)		13.3
2010 Net Sales	$	620.6

The increase in net sales in 2010 was due primarily to increased product selling prices which resulted from an increase in the average cobalt reference price from 2009 to 2010, favorable product mix and increased volume.

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Favorable product mix was primarily the result of increased demand, primarily in the powder metallurgy market. Increased demand for fine powders in powder metallurgy applications due in part to customer restocking within the supply chain was partially offset by decreased sales of battery materials, primarily in China. The shift in product mix and increased cobalt volume resulted in higher net sales dollars and operating profit as discussed below. Cobalt metal resale was also positively affected by the increase in the cobalt price and increased volume. The increase in copper by-product sales in 2010 was due to the higher average copper price in 2010 compared with 2009, partially offset by decreased volume. The decrease in copper volume in 2010 compared to 2009 was primarily due to changes in the mix of feed.

Operating Profit

The following table identifies the components of change in operating profit:

(In millions)
2009 Operating Profit	$	53.3
Increase (decrease) in 2010 from:
Price (including cobalt metal resale)		48.7
Cobalt volume (including cobalt metal resale)		19.3
Process-based material cost		(2.7	)
Copper by-product (price and volume)		(0.5	)
Manufacturing and distribution expenses		(22.1	)
Foreign currency		3.2
Other by-product (price and volume)		0.7
SG&A expenses		(6.5	)
Other		2.2
2010 Operating Profit	$	95.6

The increase in operating profit in 2010 compared with 2009 periods was primarily due to favorable cobalt price basis as 2010 benefited from higher product selling prices due to the higher average reference price for cobalt during 2010 and higher cobalt volume. These items were partially offset by increased manufacturing and distribution expenses. The increase in manufacturing and distribution expenses in 2010 was due to $5.7 million of expense associated with the maintenance shut-down of the GTL smelter and the increase in cobalt volume. The decrease in operating profit associated with copper by-product sales was due to decreased volume primarily due to changes in the mix of feed partially offset by favorable copper price. SG&A expenses include a $2.0 million charge in 2010 due to an other-than-temporary decline in the fair value of a cost method investment.

2009 Compared with 2008

Net Sales

The following table identifies the components of change in net sales:

(In millions)
2008 Net Sales	$	1,192.4
Decrease in 2009 from:
Selling price		(398.7	)
Cobalt metal resale		(169.0	)
Volume		(122.0	)
Copper (price and volume)		(28.6	)
Other		(1.7	)
2009 Net Sales	$	472.4

The net sales decrease in 2009 was due primarily to decreased product selling prices that resulted from a decrease in the average cobalt reference price. Cobalt metal resale was also negatively impacted by the

35

decrease in the cobalt price. Weak worldwide economic conditions drove decreases in volume, which impacted all end markets including cobalt metal resale. Copper by-product sales were lower due to the lower average copper price and decreased volume in 2009 compared with 2008.

Operating Profit

The following table identifies the components of change in operating profit:

(In millions)
2008 Operating Profit	$	203.5
2008 Lower of cost or market inventory charge		20.7
2008 Loss on cobalt forward purchase contract		2.7
Increase (decrease) in 2009 from:
Price (including cobalt metal resale)		(156.9	)
Volume (including cobalt metal resale)		(51.9	)
Copper by-product (price and volume)		(7.2	)
Other by-product (price and volume)		(5.7	)
Process-based material costs		15.2
Foreign currency		5.3
Reductions in manufacturing and distribution expenses		23.7
Reductions in SG&A expenses		8.0
Other		(4.1	)
2009 Operating Profit	$	53.3

The decrease in operating profit in 2009 compared to 2008 was primarily due to unfavorable cobalt pricing as 2008 benefited from higher product selling prices due to the high average reference price for cobalt during 2008 and the favorable effect of a rising cobalt price environment during the first half of 2008, which resulted in the sale at higher selling prices of products manufactured using lower cost cobalt raw materials. This set of circumstances did not exist during 2009, which included a lower and more stable price environment. Operating profit was also impacted by decreased volume as the deterioration of the global economy resulted in weak demand in all end markets. However, on a sequential basis, operating profit increased from $11.4 million in the first half of 2009 to $41.9 million in the second half of 2009, due to increased demand across all end markets and the favorable effect of a rising cobalt price environment. The decrease in profit associated with copper by-product sales in 2009 compared to 2008 was due to both lower price and decreased volume associated with differences in raw material mix. These items were partially offset by decreased manufacturing and distribution and SG&A expenses, lower process-based material costs and a favorable currency impact. Manufacturing and distribution and SG&A expenses decreased primarily due to overall reduced spending in response to the weak global economic conditions including reductions in discretionary spending, headcount reductions, and decreased employee incentive compensation. The favorable currency impact was primarily the result of the stronger U.S. Dollar against the Euro in 2009 compared to 2008.

Specialty Chemicals Segment

For the year ended December 31,

	2010		2009			2008
(Millions of dollars)
Net sales	$	462.7	$	401.8		$	546.7
Operating profit (loss)	$	59.6	$	(27.0	)	$	11.2

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The following table summarizes the percentage of sales dollars by end market for the year ended December 31,

	2010			2009			2008
Semiconductor		27	%		27	%		24	%
Coatings		15	%		18	%		18	%
Tire		10	%		11	%		14	%
Printed Circuit Boards		20	%		20	%		17	%
Memory Disk		11	%		10	%		10	%
Chemical		9	%		9	%		11	%
General Metal Finishing		3	%		2	%		2	%
Other		5	%		3	%		4	%

The following table summarizes the percentage of sales dollars by region for the year ended December 31,

	2010			2009			2008
Americas		26	%		28	%		29	%
Asia		47	%		44	%		39	%
Europe		27	%		28	%		32	%

The following table reflects the volumes in the Specialty Chemicals segment for the year ended December 31,

	2010		2009		2008
Volumes
Advanced Organics sales volume — metric tons		22,002		21,787		28,956
Electronic Chemicals sales volume — gallons (thousands)		11,081		8,994		11,270
Ultra Pure Chemicals sales volume — gallons (thousands)		5,973		4,564		5,152
Photomasks — number of masks		30,632		27,065		27,834

2010 Compared with 2009

Net Sales

The following table identifies the components of change in net sales:

(In millions)
2009 Net Sales	$	401.8
Increase (decrease) in 2010 from:
Volume		50.2
Selling price/mix		12.3
Foreign currency		(2.8	)
Other		1.2
2010 Net Sales	$	462.7

The $60.9 million increase in net sales in 2010 compared to 2009 was primarily due to increased volume and favorable selling price/mix. 2009 was unfavorably impacted by decreased volumes across all end markets due to customers’ inventory de-stocking, primarily during the first half of 2009, and weak customer demand as a result of the global economic conditions.

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Operating Profit (Loss)

The following table identifies the components of change in operating profit (loss):

(In millions)
2009 Operating Loss	$	(27.0	)
2009 Goodwill impairment, net		37.5
2009 Intangible asset impairment, net		1.6
2009 Restructuring charge		12.7
Increase (decrease) in 2010 from:
Volume		27.9
Price/Mix		11.4
Manufacturing and distribution expenses		3.4
Selling, general and administrative expenses		(6.2	)
2010 Restructuring charge		(2.1	)
Foreign currency		(0.8	)
Other		1.2
2010 Operating Profit	$	59.6

The operating profit increase in 2010 compared to 2009 was primarily due to the 2009 charges for the impairment of goodwill, the 2009 restructuring charge, increased sales volume and favorable product pricing/mix in 2010 and favorable manufacturing and distribution expenses. Favorable manufacturing and distribution expenses in the Advanced Organics business due to the restructuring were partially offset by increased manufacturing and distribution expenses in the other Specialty Chemicals businesses due to increased volume. These favorable items were partially offset by increased SG&A expenses and the 2010 restructuring charge. The increase in SG&A was primarily attributable to overall increased spending due to increased volume and increased employee incentive compensation in 2010.

2009 Compared with 2008

Net Sales

The following table identifies the components of change in net sales:

(In millions)
2008 Net Sales	$	546.7
Increase (decrease) in 2009 from:
Volume		(107.8	)
Selling price/mix		(24.1	)
Foreign currency		(14.3	)
Other		1.3
2009 Net Sales	$	401.8

The $144.9 million decrease in net sales in 2009 compared to 2008 was primarily due to decreased volume. Volumes were down across all end markets due to customers’ inventory de-stocking, primarily during the first half of 2009, and weak demand as a result of the global economic conditions. Unfavorable selling prices, sales mix and the stronger U.S. dollar also negatively impacted net sales.

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Operating Profit

The following table identifies the components of change in operating profit (loss):

(In millions)
2008 Operating Profit	$	11.2
2008 Goodwill impairment		8.8
2008 Intangible asset impairment charge		0.2
2008 Lower of cost or market inventory charge		7.0
Increase (decrease) in 2009 from:
Volume		(36.8	)
Price/Mix		0.7
Reductions in manufacturing and distribution expenses		12.6
Reductions in selling, general and administrative expenses		17.6
Foreign currency		4.4
Other		(0.9	)
2009 Goodwill impairment, net		(37.5	)
2009 Intangible asset impairment charges		(1.6	)
2009 Restructuring charges		(12.7	)
2009 Operating Loss	$	(27.0	)

The $38.2 million decrease in operating profit (loss) in 2009 compared to 2008 included non-cash charges for the impairment of goodwill related to the UPC, Photomasks and Advanced Organics businesses and non-cash intangible asset impairment charges ($1.6 million in 2009 compared to $0.2 million in 2008). See Note 6 to the Consolidated Financial Statements in this Form 10-K for further discussion of the goodwill and intangible asset impairment charges. In addition, the Company recorded restructuring charges totaling $12.7 million in 2009. See Note 7 to the Consolidated Financial Statements in this Form 10-K for further discussion of the restructuring charge. The decrease in sales volume that drove the decrease in net sales discussed above also impacted operating loss in 2009. These unfavorable items were significantly offset by decreased manufacturing and distribution and SG&A expenses as a result of a reduction in discretionary spending, headcount reductions, and decreased employee incentive compensation.

Battery Technologies

	Year Ended			Three Months Ended
	December 31,			December 31,		September 30,			June 30,			March 31,
	2010			2010		2010			2010			2010
(Millions of dollars)
Net sales	$	113.9	(a)	$	31.2	$	35.7		$	28.4		$	18.6	(a)
Operating profit	$	5.1	(a)	$	3.1	$	3.1	(b)	$	0.4	(b)	$	(1.5	)(a)(b)

(a)	Includes activity since the acquisition of EaglePicher Technologies on January 29, 2010.
(b)	Includes purchase accounting adjustments which reduced operating profit by $1.5 million, $1.6 million and $0.1 million in the first second and third quarters of 2010, respectively, for acquired inventories and deferred revenue. These charges will not recur in the future.

The Battery Technologies segment tracks backlog in order to assess its current business development effectiveness and to assist in forecasting future business needs and financial performance. Backlog is equal to the value of unfulfilled orders for which funding is contractually obligated by the customer and for which revenue has not been recognized. Backlog is converted into sales as work is performed or deliveries are made. At December 31, 2010, backlog of $35.1 million (or 26%) is not expected to be converted into sales during the next twelve months.

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The following table sets forth backlog in the Battery Technologies segment as of:

	December 31,		September 30,		June 30,		March 31,
	2010		2010		2010		2010
(In millions)
Defense	$	88.7	$	72.0	$	74.9	$	79.8
Aerospace		40.2		42.5		41.4		43.3
Medical		6.0		6.1		7.4		6.9
	$	134.9	$	120.6	$	123.7	$	130.0

Net backlog increased at December 31, 2010 compared to September 30, 2010 primarily due to orders in excess of deliveries in Defense, partially offset by deliveries in excess of orders in Aerospace and Medical. The decrease in Aerospace backlog is partially due to the delay of certain government programs.

The following table summarizes the percentage of sales dollars by end market for the Battery Technologies segment:

	Year Ended December 31,
	2010			2009		2008
Defense		55	%		n/a		n/a
Aerospace		39	%		n/a		n/a
Medical		6	%		n/a		n/a

Net Sales

Battery Technologies net sales of $113.9 million for 2010 represents the net sales results of the EaglePicher Technologies business following the acquisition that was completed on January 29, 2010. On a sequential basis, Battery Technology net sales decreased $4.5 million, or 12.6%, in the fourth quarter of 2010 compared to the third quarter of 2010, primarily due to timing of deliveries in Aerospace.

Operating Profit

Battery Technologies operating profit for 2010 represents the results of the EaglePicher Technologies business following the acquisition on January 29, 2010. Included in the $5.1 million operating profit is a $2.4 million charge related to the step-up to fair value of inventory acquired as of January 29, 2010 and sold in the ordinary course of business, a $0.8 million reduction in revenue related to the amortization of the adjustment to fair value deferred revenue and $3.2 million of amortization of acquired intangibles. The step-up to fair value of inventory acquired and the adjustment to fair value deferred revenue have been fully amortized as of December 31, 2010 and will not recur in the future.

Corporate Expenses

Corporate expenses consist of corporate overhead supporting the Advanced Materials, Specialty Chemicals and Battery Technologies segments but not specifically allocated to an operating segment, including certain legal, finance, human resources and strategic development activities, as well as all share-based compensation.

2010 Compared with 2009

Corporate expenses were $37.6 million in 2010 compared with $27.3 million in 2009. Corporate expenses in 2010 include increased employee incentive compensation expense primarily due to anticipated payouts under the 2010 annual incentive plan. There were no payouts under the 2009 annual incentive plan. Also, 2009 includes a $4.7 million gain on the termination of the Company’s retiree medical plan.

2009 Compared with 2008

Corporate expenses were $27.3 million in 2009 compared with $37.5 million in 2008. Corporate expense in 2009 is net of a $4.7 million gain for the termination of the Company’s retiree medical plan. Also contributing to the $10.2 million decrease in corporate expenses from 2008 is a decrease in employee incentive and share-

40

based compensation expense in 2009 compared with 2008. This decrease was primarily due to a significant reduction in anticipated annual incentive compensation (including no payout under the 2009 annual incentive plan), a reduction in the number of time-based restricted shares outstanding, and a reduction in expense related to performance-based incentive compensation as the probability of achievement/vesting decreased. These items were partially offset by $1.3 million in transaction costs related to the acquisition of EaglePicher Technologies that were expensed in 2009.

Liquidity and Capital Resources

Cash Flow Summary

The Company’s cash flows from operating, investing and financing activities for 2010, 2009 and 2008, as reflected in the Statements of Consolidated Cash Flows, are summarized and discussed in the following tables (in millions) and related narrative:

	2010			2009			change
Net cash provided by (used for):
Operating activities	$	126.6		$	165.5		$	(38.9	)
Investing activities		(199.8	)		(30.5	)		(169.3	)
Financing activities		120.3			(26.7	)		147.0
Discontinued operations-net cash used for operating activities		(0.1	)		(0.4	)		0.3
Effect of exchange rate changes on cash		(1.8	)		2.7			(4.5	)
Net change in cash and cash equivalents	$	45.2		$	110.6		$	(65.4	)

Net cash provided by operating activities was $126.6 million in 2010 compared with net cash provided by operations of $165.5 million in 2009. The 2010 amount was primarily due to $77.7 million of income from continuing operations plus the following factors:

•  depreciation and amortization expense of $54.1 million;

•  an $11.5 million non-cash charge to establish an allowance against GTL’s prepaid tax asset; and

•  a $10.7 million non-cash foreign exchange loss.

These items were partially offset by a $40.3 million reduction in net working capital (defined as inventory plus accounts receivable less accounts payable) reflecting a decrease in inventories and accounts payable and an increase in accounts receivable. In 2009, net cash provided by operations of $165.5 million was primarily due to the $22.0 million loss from continuing operations in 2009, the change in net working capital (defined as inventory plus accounts receivable less accounts payable) which contributed positive cash flows of $73.6 million in 2009, depreciation and amortization expense of $53.8 million, and the $37.5 million non-cash goodwill impairment charge.

Net cash used for investing activities was $199.8 million in 2010 compared with net cash used for investing activities of $30.5 million in 2009. The amount in 2010 includes $172.0 million for the EaglePicher Technologies acquisition.

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Net cash provided by financing activities was $120.3 million in 2010 compared with net cash used for financing activities of $26.7 million in 2009. 2010 includes net borrowings under the Company’s Revolver of $120.0 million to fund the EaglePicher Technologies acquisition. 2009 includes repayment of debt of $26.1 million.

	2009			2008			change
Net cash provided by (used for):
Operating activities	$	165.5		$	172.1		$	(6.6	)
Investing activities		(30.5	)		(17.9	)		(12.6	)
Financing activities		(26.7	)		(6.7	)		(20.0	)
Discontinued operations-net cash used for operating activities		(0.4	)		—			(0.4	)
Effect of exchange rate changes on cash		2.7			(2.9	)		5.6
Net change in cash and cash equivalents	$	110.6		$	144.6		$	(34.0	)

The decrease in net cash flows from operating activities was primarily due to the $22.0 million loss from continuing operations in 2009 compared to $156.2 million of income from continuing operations in 2008, partially offset by the following factors:

•  the change in net working capital (defined as inventory plus accounts receivable less accounts payable) which contributed positive cash flows of $73.6 million in 2009 compared to $0.9 million in 2008;

•  the impact of the $56.8 million change in refundable, prepaid and accrued income taxes. The 2008 refundable, prepaid and accrued income taxes included the impact of the tax benefit related to the recording of the tax benefit related to an election to take foreign tax credits on prior year U.S. tax returns of $46.6 million, which is expected to be received in 2010; and

•  a $33.6 million change in cash flows associated with advances to suppliers.

Net cash used for investing activities is due primarily to capital expenditures of $25.7 million and $30.7 million in the 2009 and 2008 period, respectively. Net cash used for investing activities in the 2008 period also includes proceeds from settlement of cobalt forward purchase contracts ($10.7 million); proceeds from loans to consolidated joint venture partners ($10.3 million); and cash payments made in 2008 for professional fees incurred in connection with the REM and Borchers acquisitions.

Cash used for financing activities in 2009 is primarily repayment of all of the Company’s outstanding debt of $26.1 million. Cash used for financing activities in 2008 included $24.5 million net borrowings under the revolving credit agreement, partially offset by a $26.2 million distribution to the DRC smelter joint venture partners.

Financial Condition

Cash and cash equivalents were $400.6 million at December 31, 2010, compared to $355.4 million at December 31, 2009. The increase in cash of $45.2 million was the net impact of $126.6 million provided by operating activities, $199.8 million used for investing activities, and $120.3 million provided by financing activities, offset by a $1.8 million decrease in cash due to unfavorable changes in exchange rates. Expected uses of cash include working capital needs, planned capital expenditures and future acquisitions.

Cash balances are held in numerous locations throughout the world. As of December 31, 2010, 87% of the Company’s cash and cash equivalents were held outside the United States. Most of the amounts held outside the U.S. could be repatriated to the U.S. but, under current law, would be subject to U.S. income taxes, less applicable foreign tax credits. The Company’s intent is to retain such cash balances outside of the U.S. and to meet U.S. liquidity needs through cash generated from operations in the U.S., external borrowings, or both.

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Debt and Other Financing Activities

On March 8, 2010, the Company entered into a new $250.0 million secured revolving credit facility (the “Revolver”). The Revolver replaced the Company’s prior revolving credit facility that was scheduled to expire in December 2010. The Revolver includes an “accordion” feature under which the Company may increase the Revolver’s availability by $75.0 million to a maximum of $325.0 million, subject to certain customary conditions and the agreement of current or new lenders to accept a portion of the increased commitment. To date, the Company has not sought to borrow under the accordion feature. Obligations under the Revolver are guaranteed by the Company’s present and future subsidiaries (other than immaterial subsidiaries, joint ventures and certain foreign subsidiaries) and are secured by a lien on substantially all of the personal property assets of the Company and subsidiary guarantors, except that the lien on the shares of first-tier foreign subsidiaries is limited to 65% of such shares.

The Revolver requires the Company to maintain a minimum consolidated interest coverage ratio of no less than 3.50 to 1.00 and a maximum consolidated leverage ratio of not more than 2.50 to 1.00. At December 31, 2010, the Company’s interest coverage ratio was 24.36 to 1.00 and its leverage ratio was .71 to 1.00. Both of the financial covenants are tested quarterly for each trailing four-consecutive-quarter period. Other covenants in the Revolver limit consolidated capital expenditures to $50.0 million per year and also limit the Company’s ability to incur additional indebtedness, make investments, merge with another corporation, dispose of assets and pay dividends. As of December 31, 2010, the Company was in compliance with all of the covenants under the Revolver.

The Company has the option to specify that interest be calculated based either on a London interbank offered rate (“LIBOR”) or on a variable base rate, plus, in each case, a calculated applicable margin. The applicable margins range from 1.25% to 2.00% for base rate loans and 2.25% to 3.00% for LIBOR loans. The Revolver also requires the payment of a fee of 0.375% to 0.5% per annum on the unused commitment and a fee on the undrawn amount of letters of credit at a rate equal to the applicable margin for LIBOR loans. The applicable margins and unused commitment fees are subject to adjustment quarterly based upon the leverage ratio. The Revolver provides for interest-only payments during its term, with all unpaid principal due at maturity on March 8, 2013. Outstanding borrowing under the Revolver totaled $120.0 million at December 31, 2010. There were no amounts outstanding under the prior credit facility at December 31, 2009.

During 2008, the Company’s Finnish subsidiary, OMG Kokkola Chemicals Oy (“OMG Kokkola”), entered into a € 25 million credit facility agreement (the “Credit Facility”). Under the Credit Facility, subject to the lender’s discretion, OMG Kokkola can draw short-term loans, ranging from one to nine months in duration, in U.S. dollars at LIBOR plus a margin of 0.55%. The Credit Facility has an indefinite term, and either party can immediately terminate the Credit Facility after providing notice to the other party. The Company agreed to unconditionally guarantee all of the obligations of OMG Kokkola under the Credit Facility. There were no borrowings outstanding under the Credit Facility at December 31, 2010 or 2009.

The Company believes that cash flow from operations, together with its strong cash position and the availability of funds to the Company under the Revolver and to OMG Kokkola under the Credit Facility, will be sufficient to meet working capital needs and planned capital expenditures during the next twelve months.

Capital Expenditures

Capital expenditures in 2010 were $26.4 million, which were related primarily to ongoing projects to maintain current operating levels and were funded through cash flows from operations. The Company expects to incur capital spending of approximately $40 million to $50 million in 2011 primarily for projects to expand capacity; to maintain and improve throughput; for compliance with environmental, health and safety regulations; and for other fixed asset additions at existing facilities. The Company expects to fund 2011 capital expenditures through cash generated from operations and cash on hand at December 31, 2010.

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Pension Plans

As a result of the EaglePicher Technologies acquisition, the Company assumed the EaglePicher Technologies defined benefit pension obligations, made up of two frozen defined benefit pension plans and two active partially-funded defined benefit pension plans. The Company also has a funded, non-contributory, defined benefit pension plan for certain retired employees in the United States related to the Company’s divested SCM Metal Products, Inc. business and an unfunded obligation to its former chief executive officer in settlement of an unfunded supplemental executive retirement plan (“SERP”). Certain non-U.S. employees are covered under other defined benefit plans.

The Statements of Consolidated Operations include defined benefit pension expense of $3.1 million, $1.3 million and $0.9 million in 2010, 2009 and 2008, respectively. At December 31, 2010, the Company’s projected benefit obligation exceeded the fair value of plan assets by $63.4 million. The Company expects to contribute $7.6 million and $0.1 million to its U.S. and non-U.S. pension plans, respectively, in 2011. Expected contributions are dependent on many variables, including the variability of the market value of the assets as compared to the benefit obligation and other market or regulatory conditions. Accordingly, actual funding may differ significantly from current estimates. Calculations of the amount of defined benefit pension expense and obligations depend on the assumptions used in the actuarial valuations. See Critical Accounting Policies below for further discussion of the Company’s assumptions related to its pension plans.

Contractual Obligations

The Company has entered into contracts with various third parties in the normal course of business that will require future payments. The following table summarizes the Company’s contractual cash obligations and their expected maturities at December 31, 2010 (in thousands).

	Payments due by period
	2011		2012		2013		2014		2015		Thereafter		Total
Purchase and other obligations(1)	$	294,788	$	45,961	$	1,414	$	1,167	$	908	$	887	$	345,125
Revolving credit facility		30,000		—		90,000		—		—		—		120,000
Interest payments on revolving
credit facility		3,800		3,455		612		—		—		—		7,867
Capital lease obligations (principal
and interest)		757		620		510		394		378		1,932		4,591
Operating lease obligations		6,219		4,708		2,283		1,844		1,815		9,534		26,403
Total	$	335,564	$	54,744	$	94,819	$	3,405	$	3,101	$	12,353	$	503,986

(1) For 2011 through 2015, purchase obligations include raw material contractual obligations reflecting estimated future payments based on committed tons of material per the applicable contract multiplied by the reference price of each metal. The price used in the computation is the average daily price for the last week of December 2010 for each respective metal. Commitments made under these contracts represent future purchases in line with expected usage.

Interest payments are calculated based upon the Company’s anticipated payment schedule using December 31, 2010 interest rates adjusted for the related interest rate swap agreements.

Pension funding can vary significantly each year due to changes in the market value of plan assets, legislation and the Company’s funding decisions to contribute any excess above the minimum legislative funding requirements. As a result, pension funding has not been included in the table above. The Company expects to contribute $7.6 million and $0.1 million related to its U.S. and non-U.S. pension plans, respectively, in 2011. Pension benefit payments are made from assets of the pension plan. The Company also has an unfunded obligation to its former chief executive officer in settlement of an unfunded supplemental executive retirement plan, for which the Company expects to make annual benefit payments of approximately $0.7 million.

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At December 31, 2010, the liability for uncertain tax positions includes $4.7 million for which it is reasonably possible that the uncertainty will be resolved within the next twelve months. However, the decrease would not result in any cash payments as the Company would be able to utilize available foreign tax credits. The Company is not able to reasonably estimate the period in which cash outflows related to the remaining $16.6 million of uncertain tax positions could occur. See Note 12 to the Consolidated Financial Statements for further discussion of the Company’s uncertain tax positions.

Off Balance Sheet Arrangements

The Company has not entered into any off balance sheet financing arrangements, other than operating leases, which are disclosed in the contractual obligations table above and in Note 18 to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company’s management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements. In preparing these financial statements, management has made their best estimates and judgments of certain amounts included in the financial statements related to the critical accounting policies described below. The application of these critical accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of the Company’s results of operations to similar businesses.

Revenue Recognition — Revenues are recognized when the revenue is realized or realizable, and has been earned, in accordance with the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements.” The majority of the Company’s sales are related to sales of product. Revenue for product sales is recognized when persuasive evidence of an arrangement exists, unaffiliated customers take title and assume risk of loss, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Revenue recognition generally occurs upon shipment of product or usage of consignment inventory. Freight costs and any directly related associated costs of transporting finished product to customers are recorded as Cost of products sold.

The Battery Technologies segment uses the percentage of completion method to recognize the majority of its revenue. The majority of defense contracts use units-of-delivery while the majority of aerospace contracts use the cost-to-cost method as the basis to measure progress toward completing the contract. Under the cost-to-cost method, revenue is recognized based on the ratio of cost incurred compared to managements’ estimate of total costs expected to be incurred under the contract. The percentage of completion method requires the use of estimates of costs to complete long-term contracts. The estimation of these costs requires substantial judgment on the part of management due to the duration of the contracts as well as the technical nature of the products involved. Contract revenues and cost estimates are reviewed periodically and adjustments are reflected in the accounting period such amounts are determined. Contract revenues and cost estimates are recognized based upon estimates of progress towards completion on a contract-by-contract basis. Changes in cost estimates are recognized in the period of change and reflect the cumulative change from inception of the contract. For example, an increase in the estimated profit booking rate will result in an increase in revenue and operating profit and reflect the inception-to-date effect of the change. Significant contracts are reviewed at least quarterly. Billings in excess of amounts earned are deferred. Anticipated losses on contracts are recorded in full in the period in which the loss becomes evident.

Inventories — The Company’s inventories are stated at the lower of cost or market and valued using the first-in, first-out (“FIFO”) method. Inventory accounted for under the percentage-of-completion method is included in work-in-process inventory and represents accumulated contract costs less the portion of such costs allocated to delivered units. The costs attributed to units delivered are based on the estimated average cost of

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all units expected to be produced on a contract-by-contract basis. The Company evaluates the need for an LCM adjustment to inventories based on the end-of-the-reporting period selling prices of its finished products. In periods of declines in the selling prices of the Company’s finished products, which can result from decreases in the reference price of cobalt or other factors, inventory carrying values may exceed the amount the Company could realize on sale, resulting in a lower of cost or market charge.

For cobalt metal re-sale inventory and inventory for which sales prices are highly correlated to cobalt prices (primarily in the Advanced Materials segment), volatile cobalt prices can have a significant impact on the LCM calculation. Fluctuations in the price of cobalt have been significant in the past and may be significant in the future. When evaluating whether such cobalt-based inventory is stated at the lower of cost or market, the Company generally considers cobalt reference prices at the end of the period. However, to the extent cobalt prices increase subsequent to the balance sheet date but before issuance of the financial statements, the Company considers these price movements in its LCM evaluation and determination of net realizable value (“NRV”). To the extent such price increases have an impact on the NRV of the Company’s inventory as of the balance sheet date, the Company will use the higher prices in its calculation so as not to recognize a loss when an actual loss will not be realized.

Notes Receivable from Joint Venture Partner — The Company has a 55% interest in GTL. The remaining 45% interest is owned by two partners at 25% and 20%, respectively. The GTL smelter is a primary source of the Company’s cobalt raw material feed. GTL is consolidated in the Company’s financial statements because the Company has a controlling interest in the joint venture.

In years prior to 2008, the Company refinanced the capital contribution for the 25% minority shareholder. At December 31, 2010 and 2009, the notes receivable (the “Notes”) from this partner were $13.9 million, net of a $5.2 million valuation allowance. The interest rate on the Notes is based on LIBOR (0.99% at December 31, 2010) and resets annually in January. The repayment date for the Notes is December 31, 2011, which may be extended at the Company’s option. Under the terms of the Notes, a portion (80%) of the partner’s share of any dividends from the joint venture and any other cash flow distributions (“secondary considerations”) paid by the joint venture, if any, first serve to reduce the balance of the Notes before any amounts are remitted to the joint venture partner. The Notes are secured by 80% of the partner’s interest in the joint venture. The Company currently anticipates that repayment of the Notes, net of the reserve, will be made from the partner’s share of dividends and returns of capital from the joint venture. Due to the uncertainty of collection of the Notes, the Company continues to record a full allowance against unpaid interest receivable under the Notes.

To evaluate the collectability of the Notes, the Company estimates the future cash flows of the joint venture, as repayment of the Notes is dependent on future dividends and return of capital from the joint venture. These estimates are based on management’s judgment and are consistent with the Company’s current budget and long-range plans, including cobalt price assumptions, anticipated changes in market conditions and planned capital expenditures, among other considerations. Although the Company believes the assumptions, judgments and estimates used in the evaluation of the collectability of the Notes are reasonable and appropriate, different assumptions, judgments and estimates could materially affect the evaluation of the collectability of the Notes and the Company’s results of operations and financial position.

GTL Prepaid Taxes — The Company has a 55% interest in GTL. The remaining 45% interest is owned by two partners at 25% and 20%. The GTL smelter is a primary source of the Company’s cobalt raw material feed. GTL is consolidated in the Company’s financial statements because the Company has a controlling interest in the joint venture.

At December 31, 2010 and 2009, GTL has a net prepaid tax asset of $2.0 million and $10.3 million, respectively. The balance at December 31, 2010 is net of a valuation allowance of $11.9 million. During 2010, certain companies doing business in the DRC, including GTL, received notification from the DRC tax authorities that requests to utilize tax overpayments to offset more than 20% of current taxes payable would not be granted. Based on past precedent set by the DRC tax authorities, GTL had previously estimated it would be able to utilize its prepaid tax asset to offset more than 20% of its future tax obligations. A key factor in the Company’s

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analysis for realization of the prepaid tax asset includes the contractual term of the current smelter feed supply agreement. Additional feed options exist that could potentially extend the recoverability period of the prepaid tax asset. The Company will re-evaluate the allowance in the future for changes in estimates, including changes in feed supply arrangements, which would indicate a change in the realizability of the prepaid tax asset. Although the Company believes the assumptions, judgments and estimates used in the evaluation of the recoverability of the GTL prepaid tax asset are reasonable and appropriate, different assumptions, judgments and estimates could materially affect the evaluation of the collectability of the recoverability of the GTL prepaid tax asset and the Company’s results of operations and financial position.

Goodwill — The Company had goodwill of $306.9 million and $234.2 million at December 31, 2010 and 2009, respectively. The Company is required to test goodwill for impairment annually and more often if indicators of impairment exist. The goodwill impairment test is a two-step process. During the first step, the Company estimates the fair value of the reporting unit and compares that amount to the carrying value of that reporting unit. The Company’s reporting units are Advanced Materials, Electronic Chemicals, Advanced Organics, UPC, Photomasks, Defense, Aerospace and Medical.

The Company conducts its annual goodwill impairment test as of October 1. The results of the testing as of October 1, 2010 confirmed the fair value of each of the reporting units exceeded its carrying value and therefore no impairment loss was required to be recognized. The Company recorded non-cash charges of $37.5 million and $8.8 million in 2009 and 2008, respectively, in the Specialty Chemicals segment for the impairment of goodwill related to the Advanced Organics (2008), and UPC and Photomasks (2009).

To test goodwill for impairment, the Company is required to estimate the fair value of each of its reporting units. Since quoted market prices in an active market are not available for the Company’s reporting units, the Company has developed a model to estimate the fair value of the reporting units utilizing a discounted cash flow valuation technique (“DCF model”). The Company selected the DCF model as it believes it is comparable to what would be used by market participants to estimate its fair value. The impairment test incorporates the Company’s estimates of future cash flows, future growth rates, terminal value amounts, allocations of certain assets, liabilities and cash flows among reporting units, and the applicable weighted-average cost of capital (the “WACC”) used to discount those estimated cash flows. These estimates are based on management’s judgment.

The estimates and projections used in the estimate of fair value are consistent with the Company’s current budget and long-range plans, including anticipated changes in market conditions, industry trends, growth rates, and planned capital expenditures, among other considerations. The terminal value estimates the value of the ongoing cash flows after the discrete forecast period using a nominal long-term growth rate of 3.5 percent based on long-term inflation projections. The WACC is derived using a Capital Asset Pricing Model (“CAPM”). The risk-free rate in the CAPM is based on 20-year U.S. Treasury Bonds, the beta is determined based on an analysis of comparable public companies, the market risk premium is derived from historical risk premiums and the size premium is based on the size of the Company. The risk-free rate was adjusted for the risks associated with the operations of the reporting units. As a proxy for the cost of debt, the Company uses the Baa borrowing rate, an estimated effective tax rate, and applies an estimated debt to total invested capital ratio using market participant assumptions to arrive at an after-tax cost of debt. The estimates and judgments that most significantly affect the fair value calculation are future operating cash flow assumptions and the WACC used in the DCF model. The WACC’s used in the goodwill testing at October 1, 2010 ranged from 10.25% to 13.56%, with an average of 11.84%. The Company believes the assumptions used in its impairment testing were consistent with the risk inherent in the business models of the reporting units at the time the impairment tests were performed. Although the Company believes the assumptions, judgments and estimates used are reasonable and appropriate, different assumptions, judgments and estimates could materially affect the goodwill test and, potentially, the Company’s results of operations and financial position.

In order to evaluate the sensitivity of the fair value calculations on the goodwill impairment testing, the Company applied a hypothetical 5% decrease to the estimated fair value and determined the estimated fair

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value exceeded the carrying value for the Advanced Materials, Electronic Chemicals, UPC, Photomasks, Defense and Medical reporting units. For the Aerospace reporting unit, the Company applied a hypothetical 5% decrease to the estimated fair value and determined that the carrying value exceeded its estimated fair value by $0.6 million. The Company separately applied a hypothetical increase of 100 basis points to the WACC and determined the estimated fair value exceeded the carrying value for the Advanced Materials, Electronic Chemicals, UPC and Photomasks reporting units. For the Defense, Aerospace and Medical reporting units, the Company applied a hypothetical increase of 100 basis points to the WACC and determined the carrying values exceeded estimated fair values by $8.8 million, $5.4 million and $0.8 million, respectively. If step-one goodwill impairment tests performed in future periods indicate the carrying value of any reporting unit exceeds its estimated fair value, the Company would need to complete a step-two analysis to determine the amount, if any, of the goodwill impairment, based on the implied fair values determined in the step-two analysis.

Other Intangible Assets — Intangible assets consist of (i) definite-lived assets subject to amortization and (ii) indefinite-lived intangible assets not subject to amortization. At December 31, 2010, the Company had definite-lived intangible assets of $124.8 million and indefinite-lived intangible assets of $28.6 million. Definite-lived intangible assets consist principally of customer relationships, know-how, developed technology and capitalized software and are being amortized using the straight-line method. Indefinite-lived intangible assets consist of trade names. The Company evaluates the carrying value of definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The definite-lived intangible asset would be considered impaired if the future net undiscounted cash flows generated by the asset are less than its carrying value. The Company evaluates the carrying value of indefinite-lived intangible assets for impairment annually as of October 1 and between annual evaluations if changes in circumstances or the occurrence of certain events indicate potential impairment. If the carrying value of an indefinite-lived intangible asset exceeds its estimated fair value, an impairment loss is recognized.

The results of the testing of the indefinite-lived trade names as of October 1, 2010 confirmed the fair value of each intangible asset exceeded its carrying value and therefore no impairment loss was required to be recognized. The Company recorded non-cash charges of $1.6 million in 2009 in the Specialty Chemicals segment for the impairment of indefinite-lived trade names due to downward revisions in estimates of future revenue and cash flows. The Company utilizes a “relief from royalty” methodology in estimating fair values for indefinite-lived trade names. The methodology estimates the fair value of each trade name by determining the present value of the royalty payments that are avoided as a result of owning the trade name and includes judgmental assumptions about sales growth that are consistent with the assumptions used to determine the fair value of reporting units in the Company’s goodwill testing. Although the Company believes the assumptions, judgments and estimates used are reasonable and appropriate, different assumptions, judgments and estimates could materially affect the intangible asset impairment test and, potentially, the Company’s results of operations and financial position if additional impairment charges were required to be recorded.

Long-Lived Assets — Long-lived assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company generally invests in long-lived assets to produce new products, or increase production capacity or capability. Because market conditions may change, future cash flows may be difficult to forecast. Furthermore, the assets and related businesses may be in different stages of development. If the Company determined that the future undiscounted cash flows from these investments were not expected to exceed the carrying value of the investments, the Company would record an impairment charge. However, determining future cash flows is subject to estimates and different estimates could yield different results. Additionally, other changes in the estimates and assumptions, including the discount rate and expected long-term growth rate, which drive the valuation techniques employed to estimate the future cash flows of the these investments, could change and, therefore, impact the analysis of impairment in the future.

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Pension Plans — As a result of the EaglePicher Technologies acquisition, the Company assumed the EaglePicher Technologies defined benefit pension obligations, made up of two frozen defined benefit pension plans and two active defined benefit pension plans. The Company also has a funded, non-contributory, defined benefit pension plan for certain retired employees in the United States related to the Company’s divested SCM Metal Products, Inc. business. Pension benefits are paid to plan participants directly from pension plan assets. In addition, the Company has an unfunded obligation to its former chief executive officer in settlement of an unfunded supplemental executive retirement plan (“SERP”). Certain non-U.S. employees are covered under other defined benefit plans. These non-U.S. plans are not material to the Company.

Calculations of the amount of defined benefit pension expense and obligations depend on the assumptions used in the actuarial valuations. The primary assumptions are as follows:

Discount Rate — The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future. The basis for the selection of the discount rate for each plan is determined by matching the timing of the payment of the expected obligations under the defined benefit plans against the corresponding yield of high-quality corporate bonds of equivalent maturities.

Expected Return on Plan Assets — The expected long-term rate of return on defined benefit plan assets reflects management’s expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations. The Company has established the expected long-term rate of return assumption for plan assets by considering historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans. The historical rates of return for each of the asset classes used by the Company to determine its estimated rate of return assumption were based upon the rates of return earned by investments in the equivalent benchmark market indices for each of the asset classes. The Company estimates the future return on plan assets based on prior performance and future expectations for the types of investments held by the plans as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the net defined benefit pension expense.

Rate of Compensation Increase — For the active plans, the Company projects annual employee pay increases, which are used to project pension benefits at retirement.

Changes in key economic indicators can result in changes in the assumptions used by the Company. While the Company believes that the assumptions used in calculating its defined benefit pension expense and obligations are appropriate, differences in actual experience or changes in the assumptions may affect the Company’s results of operations or financial position.

The Company used a weighted average discount rate of 5.29% and 5.12% for the two active and two frozen EaglePicher Technologies plans, respectively, in computing the amount of the defined benefit pension obligations to be recorded at December 31, 2010, which represents a decrease of 38 and 52 basis points in the discount rates for the two active and two frozen plans, respectively, from the rate used to calculate the net defined benefit pension obligation assumed as of the EaglePicher Technologies acquisition date. A further 25 basis point reduction in the discount rate used for the plans would have increased the net obligation related to the four EaglePicher Technologies plans by $5.3 million from the amount recorded in the financial statements at December 31, 2010.

The defined benefit pension plan assets consist primarily of publicly traded stocks and government and corporate bonds. There is no guarantee the actual return on the plans’ assets will equal the expected long-term rate of return on plan assets or that the plans will not incur investment losses. For 2010, the expected long-term rate of return assumptions applicable to assets held in the four EaglePicher Technologies plans were estimated at 8.25% and 6.00% for the two active and two frozen plans, respectively, which is 0.00 and 0.75, respectively, lower than the rates used to determine the net defined benefit pension obligation assumed as of the EaglePicher Technologies acquisition. These expected rates of return reflect the asset allocation of the plans and the expected long-term returns on equity and debt investments included in plan assets. If the expected

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long-term rates of return on plan assets in the four EaglePicher Technologies plans were reduced by 0.5%, pension expense for 2010 would have increased $0.6 million.

Income Taxes — Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns. Deferred income taxes are not provided for undistributed earnings of foreign consolidated subsidiaries, to the extent such earnings are determined to be reinvested for an indefinite period of time. Deferred income taxes are provided on income from foreign subsidiaries which have not been reinvested abroad permanently, as upon remittance to the United States, such earnings are taxable.

The Company has significant operations outside the United States, where most of its pre-tax earnings are derived, and in jurisdictions where the statutory tax rate is different than in the United States statutory tax rate. The Company’s tax assets, liabilities, and tax expense are supported by historical earnings and losses and the Company’s best estimates and assumptions of its global cash requirements, planned dividend repatriations, and expectations of future earnings. When the Company determines, based on all available evidence, that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is established.

The Company is subject to income taxes in both the United States and numerous foreign jurisdictions and is subject to audits within these jurisdictions. As a result, in the ordinary course of business there is inherent uncertainty in quantifying income tax positions. The Company assesses its income tax positions and records accruals for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. These accruals are adjusted, if necessary, upon the completion of tax audits or changes in tax law or administrative practice.

Since significant judgment is required to assess the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns, the ultimate resolution of these events could result in adjustments to the Company’s financial statements and such adjustments could be material. The Company believes the current assumptions, judgments and other considerations used to estimate the current year accrued and deferred tax positions are appropriate. However, if the actual outcome of future tax consequences differs from these estimates and assumptions due to changes or future events, the resulting change to the provision for income taxes could have a material impact on the Company’s results of operations and financial position.

Share-Based Compensation — The computation of the expense associated with share-based compensation requires the use of a valuation model. The Company currently uses a Black-Scholes option pricing model to calculate the fair value of its stock options. The Black-Scholes model requires the use of subjective assumptions, including estimating the length of time employees will retain their vested stock options before exercising (the “expected term”) and the volatility of the Company’s common stock price over the expected term. Expected stock price volatility is based on historical volatility of the Company’s stock price. Changes in these assumptions may result in a material change to the fair value calculation of share-based awards.

The fair value of time-based and performance-based restricted stock grants is calculated based upon the market value of an unrestricted share of the Company’s common stock at the date of grant. The performance-based restricted stock vests solely upon the Company’s achievement of specific measurable criteria over a three-year performance period. A recipient of performance-based restricted stock may earn a total award ranging from 0% to 100% of the initial grant. No payout will occur unless the Company equals or exceeds certain threshold performance objectives. The amount of compensation expense recognized is based upon current performance projections for the three-year period and the percentage of the requisite service that has been rendered.

50

The Company estimates forfeitures for its stock options, restricted stock awards and restricted stock unit awards based on historical forfeiture experience. The fair value of share-based compensation awards less estimated forfeitures is amortized over the vesting period.

Valuation of EaglePicher Technologies Acquisition — The acquisition of EaglePicher Technologies requires the allocation of the purchase price to the tangible assets and liabilities and identifiable intangible assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on historical experience and information obtained from management of the acquired company. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted-average cost of capital. These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition may have been allocated to the acquired assets differently from the current allocation. Although the Company believes the assumptions, judgments and estimates used are reasonable and appropriate, different assumptions, judgments and estimates could materially affect the value ascribed to an acquired asset and, potentially, the Company’s results of operations and financial position if impairment charges were required to be recorded.

Recently Issued Accounting Standards

Accounting Guidance adopted in 2010:

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance related to fair value measurements and disclosures, which were effective for interim and annual fiscal periods beginning after December 15, 2009, except for disclosures about certain Level 3 activity which will not become effective until interim and annual periods beginning after December 15, 2010. This guidance requires companies to disclose transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers as well as activity in Level 3 fair value measurements. The new standard also requires a more detailed level of disaggregation of the assets and liabilities being measured as well as increased disclosures regarding inputs and valuation techniques of the fair value measurements. See Note 11 to the Consolidated Financial Statements in this Form 10-K for the required disclosure.

In June 2009, the FASB issued guidance on “Consolidation of Variable Interest Entities” to require an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing reassessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. The Company adopted this guidance on January 1, 2010 and such adoption did not have any effect on the Company’s results of operations or financial position.

Accounting Guidance Not Yet Adopted

In July 2010, the FASB issued guidance regarding disclosures about the credit quality of financing receivables and the allowance for credit losses. The guidance will require disaggregated information about the credit quality of financing receivables and the allowance for credit losses based on portfolio segment and class, as well as disclosure of credit quality indicators, past due information, and modifications of financing receivables. The disclosures as of the end of a reporting period were effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. When effective, the Company will comply with the disclosure provisions of this guidance.

In March 2010, the FASB issued guidance that recognizes the milestone method as an acceptable revenue recognition method for substantive milestones in research or development arrangements. This guidance sets forth requirements for an entity to recognize consideration that is contingent upon achievement of a substantive milestone as revenue in the period in which the milestone is achieved. In addition, this guidance requires disclosure of certain information with respect to arrangements that contain milestones. This guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The

51

Company has not determined the effect, if any, the adoption of this guidance will have on its results of operations or financial position.

In October 2009, the FASB issued guidance on multiple-deliverable revenue arrangements that addresses the unit of accounting for arrangements involving multiple deliverables. This guidance is effective for annual periods beginning after June 15, 2010. The guidance also addresses how arrangement consideration should be allocated to separate units of accounting, when applicable, and expands the disclosure requirements for multiple-deliverable arrangements. The Company has not determined the effect, if any, the adoption of this guidance will have on its results of operations or financial position.

Effects of Foreign Currency

The Company has manufacturing and other facilities in North America, Europe, Africa and Asia-Pacific, and markets its products worldwide. Although a significant portion of the Company’s raw material purchases and product sales are based on the U.S. dollar, sales at certain locations, prices of certain raw materials, non-U.S. operating expenses and income taxes are denominated in local currencies. As such, the Company’s results of operations are subject to the variability that arises from exchange rate movements. In addition, fluctuations in exchange rates may affect product demand and profitability in U.S. dollars of products provided by the Company in foreign markets in cases where payments for its products are made in local currency. Accordingly, fluctuations in currency prices affect the Company’s operating results. The primary currencies for which the Company has foreign currency rate exposure are the European Union Euro, Taiwanese Dollar, Malaysian Ringgit, Singapore Dollar, British Pound Sterling, Japanese Yen, Congolese Franc, Chinese Renminbi and the Canadian Dollar.

From time to time, the Company has entered into foreign currency forward contracts to mitigate the variability in cash flows due to changes in the Euro/U.S. dollar exchange rate.

Environmental Matters

The Company is subject to a wide variety of environmental laws and regulations in the United States and in foreign countries as a result of its operations and use of certain substances that are, or have been, used, produced or discharged by its plants. In addition, soil and/or groundwater contamination presently exists and may in the future be discovered at levels that require remediation under environmental laws at properties now or previously owned, operated or used by the Company.

The European Union’s REACH legislation established requirement to register and evaluate chemicals manufactured in, or imported to, the European Union and requires additional testing, documentation and risk assessments for the chemical industry. Due to the ongoing development and understanding of facts and remedial options and due to the possibility of unanticipated regulatory developments, the amount and timing of future environmental expenditures could vary significantly. Although it is difficult to quantify the potential impact of compliance with or liability under environmental protection laws, based on presently available information, the Company believes that its ultimate aggregate cost of environmental remediation as well as liability under environmental protection laws will not result in a material adverse effect upon its financial condition or results of operations.

See Item I of this Annual Report on Form 10-K for further discussion of these matters.

Cautionary Statement for “Safe Harbor” Purposes under the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. This report contains statements that the Company believes may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are not historical facts and generally can be identified by use of statements that include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee” or other words or phrases of similar import. Similarly, statements that describe the Company’s objectives, plans or goals also are

52

forward-looking statements. These forward-looking statements are subject to risks and uncertainties that are difficult to predict, may be beyond the Company’s control and could cause actual results to differ materially from those currently anticipated. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Significant factors affecting these expectations are set forth under Item 1A — Risk Factors in this Annual Report on Form 10-K.

Item 7A.   Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk

The Company, as a result of its global operating and financing activities, is exposed to changes in commodity prices, interest rates and foreign currency exchange rates which may adversely affect its results of operations and financial position. In seeking to minimize the risks and/or costs associated with such activities, the Company manages exposures to changes in commodity prices, interest rates and foreign currency exchange rates through its regular operating and financing activities, which include the use of derivative instruments.

Commodity Price Risk

The primary raw material used by the Advanced Materials segment is unrefined cobalt. Unrefined cobalt is obtained from three basic sources: primary cobalt mining, as a by-product of another metal (typically copper or nickel), and from recycled material. Cobalt raw materials include ore, concentrate, slag, scrap and metallic feed. The availability of unrefined cobalt is dependent on global market conditions, cobalt prices and the prices of copper and nickel. Also, political and civil instability in supplier countries, variability in supply and worldwide demand, including demand in developing countries such as China, have affected and will likely continue to affect the supply and market price of raw materials. The Company attempts to mitigate changes in availability of raw materials by maintaining adequate inventory levels and long-term supply relationships with a variety of suppliers.

The cost of the Company’s raw materials fluctuates due to changes in the cobalt reference price, actual or perceived changes in supply and demand of raw materials, and changes in availability from suppliers. The Company attempts to mitigate increases in raw material prices by passing through such increases to its customers in the prices of its products and by entering into sales contracts that contain variable pricing that adjusts based on changes in the price of cobalt. During periods of rapidly changing metal prices, however, there may be price lags that can impact the short-term profitability and cash flow from operations of the Company both positively and negatively. Fluctuations in the price of cobalt have historically been significant and the Company believes that cobalt price fluctuations are likely to continue in the future. Declines in the selling prices of the Company’s finished goods, which can result from decreases in the reference price of cobalt or other factors, can result in the Company’s inventory carrying value being written down to a lower market value.

The Company enters into derivative instruments and hedging activities to manage commodity price risk. The Company, from time to time, employs derivative instruments in connection with certain purchases and sales of inventory in order to establish a fixed margin and mitigate the risk of price volatility. Some customers request fixed pricing and the Company may use a derivative to mitigate price risk. The Company makes or receives payments based on the difference between a fixed price (as specified in each individual contract) and the market price of the commodity being hedged. These payments will offset the change in prices of the underlying sales or purchases and effectively fix the price of the hedged commodity at the contracted rate for the contracted volume. While this hedging may limit the Company’s ability to participate in gains from favorable commodity price fluctuations, it eliminates the risk of loss from adverse commodity price fluctuations.

Interest Rate Risk

The Company is exposed to interest rate risk primarily through its borrowing activities. If needed, the Company predominantly utilizes U.S. dollar-denominated borrowings to fund its working capital, acquisition and investment needs. There is an inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements (see Note 9 to the consolidated financial statements contained in Item 8 of this Annual Report).

53

From time to time, the Company enters into derivative instruments and hedging activities to manage, where possible and economically efficient, interest rate risk related to borrowings. The Company uses interest rate swap agreements to partially reduce risks related to floating rate financing agreements that are subject to changes in the market rate of interest. Terms of the interest rate swap agreements require the Company to receive a variable interest rate and pay a fixed interest rate. The Company’s interest rate swap agreements and its variable rate financings are predominately based upon the three-month LIBOR. The Company had interest rate swaps with notional values that totaled $60.0 million at December 31, 2010. The outstanding contracts as of December 31, 2010 had maturities ranging up to 17 months. The Company had no outstanding interest rate derivatives at December 31, 2009.

Credit Risk

By using derivative instruments to hedge exposures to changes in commodity prices and interest rates, the Company exposes itself to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and the Company does not possess credit risk. To mitigate credit risk, it is the Company’s policy to execute such instruments with creditworthy banks and not enter into derivative instruments for speculative purposes. There were no counterparty defaults during the years ended December 31, 2010, 2009 and 2008.

Market Risk

By using derivative instruments to hedge exposures to changes in commodity prices and interest rates, the Company exposes itself to market risk. Market risk is the change in value of a derivative instrument that results from a change in commodity prices or interest rates. The market risk associated with commodity prices and interests is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Foreign Currency Exchange Rate Risk

In addition to the United States, the Company has manufacturing and other facilities in Africa, Canada, Europe and Asia-Pacific, and markets its products worldwide. Although a significant portion of the Company’s raw material purchases and product sales are based on the U.S. dollar, prices of certain raw materials, non-U.S. operating expenses and income taxes are denominated in local currencies. As such, the results of operations are subject to the variability that arises from exchange rate movements (particularly the Euro). In addition, fluctuations in exchange rates may affect product demand and profitability in U.S. dollars of products provided by the Company in foreign markets in cases where payments for its products are made in local currency. Accordingly, fluctuations in currency prices affect the Company’s operating results. The primary currencies for which the Company has foreign currency rate exposure are the European Union Euro, Taiwanese Dollar, Malaysian Ringgit, Singapore Dollar, British Pound Sterling, Japanese Yen, Congolese Franc, Chinese Renminbi and the Canadian Dollar.

The functional currency for the Company’s Finnish operating subsidiary is the U.S. dollar since a majority of its purchases and sales are denominated in U.S. dollars. Accordingly, foreign currency exchange gains and losses related to transactions of this subsidiary denominated in other currencies (principally the Euro) are included in the Statements of Consolidated Operations. While a majority of the subsidiary’s raw material purchases are in U.S. dollars, it also has some Euro-denominated expenses. Beginning in 2009, the Company entered into foreign currency forward contracts to mitigate a portion of the earnings volatility in those Euro-denominated cash flows due to changes in the Euro/U.S. dollar exchange rate. The Company had Euro forward contracts with notional values that totaled 1.5 million Euros at December 31, 2009. The Company had no Euro forward contracts at December 31, 2010. The Company designated these derivatives as cash flow hedges of its forecasted foreign currency denominated expense.

54

Item 8.   Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of OM Group, Inc.

We have audited the accompanying consolidated balance sheets of OM Group, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the related statements of consolidated operations, comprehensive income (loss), total equity, and cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement schedule listed in the index at Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of OM Group, Inc. and Subsidiaries at December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), OM Group Inc.’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2011 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Cleveland, Ohio

February 24, 2011

55

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of OM Group, Inc.

We have audited OM Group Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). OM Group, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing on page 107. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, OM Group, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of OM Group, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the related statements of consolidated operations, comprehensive income (loss), total equity, and cash flows for each of the three years in the period ended December 31, 2010 and our report dated February 24, 2011 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Cleveland, Ohio

February 24, 2011

56

OM Group, Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31,			December 31,
	2010			2009
(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	400,597		$	355,383
Restricted cash on deposit		68,096			—
Accounts receivable, less allowance of $5,187 in 2010 and $6,884 in 2009		155,465			123,641
Inventories		293,625			287,096
Refundable and prepaid income taxes		40,740			44,474
Other current assets		44,602			32,394
Total current assets		1,003,125			842,988
Property, plant and equipment, net		256,098			227,115
Goodwill		306,888			234,189
Intangible assets		153,390			79,229
Notes receivable from joint venture partner, less allowance of $5,200 in 2010 and 2009		13,915			13,915
Other non-current assets		39,292			46,700
Total assets	$	1,772,708		$	1,444,136
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	30,000		$	—
Accounts payable		105,900			139,173
Liability related to joint venture partner injunction		68,096			—
Accrued income taxes		8,321			7,522
Accrued employee costs		37,932			18,168
Deferred revenue		9,417			36
Other current liabilities		24,658			24,063
Total current liabilities		284,324			188,962
Long-term debt		90,000			—
Deferred income taxes		23,499			27,453
Uncertain tax positions		14,796			15,733
Pension liabilities		58,107			15,799
Other non-current liabilities		25,364			20,057
Stockholders’ equity:
Preferred stock, $.01 par value:
Authorized 2,000,000 shares, no shares issued or outstanding		—			—
Common stock, $.01 par value:
Authorized 90,000,000 shares; 30,725,792 shares issued in 2010 and 30,435,569 shares issued in 2009		307			304
Capital in excess of par value		578,948			569,487
Retained earnings		667,882			584,508
Treasury stock (202,556 shares in 2010 and 166,672 shares in 2009, at cost)		(7,234	)		(6,025	)
Accumulated other comprehensive income (loss)		(3,119	)		(16,969	)
Total OM Group, Inc. stockholders’ equity		1,236,784			1,131,305
Noncontrolling interests		39,834			44,827
Total equity		1,276,618			1,176,132
Total liabilities and equity	$	1,772,708		$	1,444,136

See accompanying notes to consolidated financial statements.

57

OM Group, Inc. and Subsidiaries

Statements of Consolidated Operations

	Year Ended December 31
	2010			2009			2008
(In thousands, except per share data)
Net sales	$	1,196,646		$	871,669		$	1,736,849
Cost of products sold (excluding restructuring charges)		910,094			693,832			1,384,301
Restructuring charges		1,864			12,054			—
Gross profit		284,688			165,783			352,548
Selling, general and administrative expenses		161,806			133,302			166,126
Goodwill impairment, net		—			37,504			8,800
Restructuring charges		236			654			—
Gain on termination of retiree medical plan		—			(4,693	)		—
Operating profit (loss)		122,646			(984	)		177,622
Other income (expense):
Interest expense		(5,255	)		(689	)		(1,597	)
Interest income		908			928			1,920
Foreign exchange gain (loss)		(10,679	)		(21	)		(3,744	)
Other, net		(305	)		(292	)		(1,913	)
		(15,331	)		(74	)		(5,334	)
Income (loss) from continuing operations before income tax expense		107,315			(1,058	)		172,288
Income tax expense		(29,656	)		(20,899	)		(16,076	)
Income (loss) from continuing operations, net of tax		77,659			(21,957	)		156,212
Income from discontinued operations, net of tax		726			1,496			92
Consolidated net income (loss)		78,385			(20,461	)		156,304
Net (income) loss attributable to noncontrolling interests		4,989			2,604			(21,301	)
Net income (loss) attributable to OM Group, Inc. common stockholders	$	83,374		$	(17,857	)	$	135,003
Earnings per common share — basic:
Income (loss) from continuing operations attributable to OM Group, Inc.
common stockholders	$	2.72		$	(0.64	)	$	4.48
Income from discontinued operations attributable to OM Group, Inc.
common stockholders		0.02			0.05			—
Net income (loss) attributable to OM Group, Inc. common
stockholders	$	2.74		$	(0.59	)	$	4.48
Earnings per common share — assuming dilution:
Income (loss) from continuing operations attributable to OM Group, Inc.
common stockholders	$	2.70		$	(0.64	)	$	4.45
Income from discontinued operations attributable to OM Group, Inc.
common stockholders		0.03			0.05			—
Net income (loss) attributable to OM Group, Inc. common
stockholders	$	2.73		$	(0.59	)	$	4.45
Weighted average shares outstanding
Basic		30,433			30,244			30,124
Assuming dilution		30,565			30,244			30,358
Amounts attributable to OM Group, Inc. common stockholders:
Income (loss) from continuing operations, net of tax	$	82,648		$	(19,353	)	$	134,911
Income from discontinued operations, net of tax		726			1,496			92
Net income (loss)	$	83,374		$	(17,857	)	$	135,003

See accompanying notes to consolidated financial statements.

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OM Group, Inc. and Subsidiaries

Statements of Consolidated Comprehensive Income (Loss)

	Year Ended December 31
	2010			2009			2008
(In thousands)
Consolidated net income (loss)	$	78,385		$	(20,461	)	$	156,304
Foreign currency translation adjustments		17,031			12,741			(36,109	)
Reclassification of hedging activities into earnings, net of tax		2,315			615			—
Unrealized loss on cash flow hedges, net of tax		(2,732	)		(591	)		—
Pension and post-retirement obligation		(2,764	)		386			(1,539	)
Reversal of accumulated unrecognized gain on retiree medical plan		—			(137	)		—
Net change in accumulated other comprehensive income (loss)		13,850			13,014			(37,648	)
Comprehensive income (loss)		92,235			(7,447	)		118,656
Comprehensive (income) loss attributable to noncontrolling interests		4,993			2,602			(21,299	)
Comprehensive income (loss) attributable to OM Group, Inc.	$	97,228		$	(4,845	)	$	97,357

See accompanying notes to consolidated financial statements.

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OM Group, Inc. and Subsidiaries

Statements of Consolidated Cash Flows

	Year Ended December 31
	2010			2009			2008
(In thousands)
Operating activities
Consolidated net income (loss)	$	78,385		$	(20,461	)	$	156,304
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
Income from discontinued operations		(726	)		(1,496	)		(92	)
Depreciation and amortization		54,097			53,765			56,116
Share-based compensation expense		5,342			6,026			7,621
Excess tax benefit on exercise/vesting of share awards		—			—			(28	)
Foreign exchange loss		10,679			21			3,744
Gain on cobalt forward purchase contracts		—			—			(4,002	)
Interest income receivable from joint venture partner		—			—			3,776
Deferred income tax provision (benefit)		(5,131	)		(7,471	)		(894	)
Lower of cost or market inventory charge		—			—			27,728
Goodwill impairment charges, net		—			37,504			8,800
Restructuring charge		2,100			12,708			—
Allowance on GTL prepaid tax asset		11,465			—			—
Impairment of cost-method investment		2,000			—			—
Gain on termination of retiree medical plan		—			(4,693	)		—
Other non-cash items		779			801			4,536
Changes in operating assets and liabilities, excluding the effect of business acquisitions
Accounts receivable		(21,668	)		6,739			48,641
Inventories		20,931			17,142			76,985
Advances to suppliers		(7,136	)		21,507			(12,131	)
Accounts payable		(39,558	)		49,703			(124,712	)
Refundable, prepaid and accrued income taxes		1,763			(7,675	)		(64,455	)
Other, net		13,309			1,326			(15,813	)
Net cash provided by operating activities		126,631			165,446			172,124
Investing activities
Expenditures for property, plant and equipment		(26,430	)		(25,686	)		(30,712	)
Proceeds from settlement of cobalt forward purchase contracts		—			—			10,736
Proceeds from loans to consolidated joint venture partner		—			—			10,264
Acquisitions		(171,979	)		—			(5,799	)
Other, net		(1,418	)		(4,797	)		(2,423	)
Net cash provided by (used for) investing activities		(199,827	)		(30,483	)		(17,934	)
Financing activities
Payments of long-term debt and revolving line of credit		(125,000	)		(26,141	)		(45,513	)
Proceeds from the revolving line of credit		245,000			—			70,000
Debt issuance costs		(2,596	)		—			—
Payment of loan from consolidated joint venture partner		—			—			(2,657	)
Payment related to surrendered shares		(1,209	)		(535	)		(3,251	)
Distribution to joint venture partners		—			—			(26,184	)
Proceeds from exercise of stock options		4,122			11			874
Excess tax benefit on exercise of share awards		—			—			28
Net cash provided by (used for) financing activities		120,317			(26,665	)		(6,703	)
Effect of exchange rate changes on cash		(1,854	)		2,697			(2,889	)
Cash and cash equivalents
Increase (decrease) from continuing operations		45,267			110,995			144,598
Discontinued operations — net cash used for operating activities		(53	)		(397	)		—
Balance at the beginning of the year		355,383			244,785			100,187
Balance at the end of the year	$	400,597		$	355,383		$	244,785

See accompanying notes to consolidated financial statements

60

OM Group, Inc. and Subsidiaries

Statements of Consolidated Total Equity

	Year Ended December 31
	2010			2009			2008
(In thousands)
Common Stock — Shares Outstanding, net of Treasury Shares
Beginning balance		30,269			30,181			30,061
Shares issued under share-based compensation plans		254			88			120
		30,523			30,269			30,181
Common Stock — Dollars
Beginning balance	$	304		$	303		$	301
Shares issued under share-based compensation plans		3			1			2
		307			304			303
Capital in Excess of Par Value
Beginning balance		569,487			563,454			554,933
Shares issued under share-based compensation plans		4,119			10			872
(Tax deficiency) excess tax benefit on the exercise/vesting of share awards		—			(3	)		28
Share-based compensation — employees		5,082			5,756			7,279
Share-based compensation — non-employee directors		260			270			342
		578,948			569,487			563,454
Retained Earnings
Beginning balance, as originally reported		584,508			602,365			467,726
Adoption of measurement date provision guidance for pension
and postretirement benefit plans		—			—			(171	)
Adoption of split dollar life insurance guidance		—			—			(193	)
Beginning balance, as adjusted		584,508			602,365			467,362
Net income (loss) attributable to OM Group, Inc.		83,374			(17,857	)		135,003
		667,882			584,508			602,365
Treasury Stock
Beginning balance		(6,025	)		(5,490	)		(2,239	)
Reacquired shares		(1,209	)		(535	)		(3,251	)
		(7,234	)		(6,025	)		(5,490	)
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(16,969	)		(29,983	)		7,665
Foreign currency translation		17,031			12,741			(36,109	)
Reclassification of hedging activities into earnings, net of tax benefit of $814 in 2010 and $216 in 2009		2,315			615			—
Unrealized loss on cash flow hedges, net of tax benefit of $822 in 2010 and $208 in 2009		(2,732	)		(591	)		—
Pension and post-retirement obligation		(2,764	)		386			(1,599	)
Reversal of accumulated unrecognized gain on retiree medical plan		—			(137	)		—
Change in measurement date for pension and post-retirement obligations		—			—			60
		(3,119	)		(16,969	)		(29,983	)
Total OM Group Inc. Stockholders’ Equity		1,236,784			1,131,305			1,130,649
Noncontrolling interests
Beginning balance		44,827			47,429			52,314
Net income (loss) attributable to the noncontrolling interest		(4,989	)		(2,604	)		21,301
Distributions to joint venture partners		—			—			(26,184	)
Foreign currency translation		(4	)		2			(2	)
		39,834			44,827			47,429
Total Equity	$	1,276,618		$	1,176,132		$	1,178,078

See accompanying notes to consolidated financial statements

61

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries

(In thousands, except as noted and share and per share amounts)

Note 1 — Significant Accounting Policies

Principles of Consolidation — The consolidated financial statements include the accounts of OM Group, Inc. (the “Company”) and its consolidated subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company has a 55% interest in a joint venture (“GTL”) that has a smelter in the Democratic Republic of Congo (the “DRC”). The joint venture is consolidated because the Company has a controlling interest in the joint venture. Noncontrolling interest is recorded for the remaining 45% interest.

The equity method of accounting is applied to non-consolidated entities in which the Company can exercise significant influence over the entity with respect to its operations and major decisions. At December 31, 2010, the Company held a 45% interest in Diehl & EaglePicher GmbH (“D&EP”), which manufactures thermal batteries for military applications and customized battery packs for the defense, electronics and communication industries. D&EP is accounted for under the equity method. The carrying amount of the investment ($5.0 million at December 31, 2010) is included in Other non-current assets in the Consolidated Balance Sheets and the Company’s share of D&EP earnings are included in Other, net in the Consolidated Statements of Operations.

On January 29, 2010, the Company completed the acquisition of EaglePicher Technologies, LLC. The financial position, results of operations and cash flows of EaglePicher Technologies are included in the Consolidated Financial Statements from the date of acquisition.

Unless otherwise indicated, all disclosures and amounts in the Notes to Consolidated Financial Statements relate to the Company’s continuing operations.

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from these estimates.

Cash Equivalents — All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

Restricted Cash on Deposit — In 2009, GTL was served in Jersey, Channel Islands, with an injunction for $108.3 million. In November 2010, the Royal Court of Jersey (the “Court”) released its Final Judgment in favor of the plaintiff. One of the terms of the injunction prohibits GTL from making payments to La Générale des Carrières et des Mines (“Gécamines”) (a partner in GTL), including amounts payable for raw material purchases under the Long Term Slag Sales Agreement. In December 2010, GTL appealed the decision of the Court. As a result of the legal appeal filed by GTL, the Company was required to deposit amounts payable to one of its joint venture partners’ with the Court. As of December 31, 2010, $68.1 million has been deposited with the Court and is recorded on the Consolidated Balance Sheet as Restricted cash on deposit. See Note 17 for further disclosure related to the injunction and legal appeal.

Revenue Recognition — For revenue not recognized under the percentage of completion method of accounting, the Company recognizes revenue when persuasive evidence of an arrangement exists, unaffiliated customers take title and assume risk of loss, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. Revenue recognition generally occurs upon shipment of product or usage of inventory consigned to customers.

The Battery Technologies segment uses the percentage of completion method to recognize the majority of its revenue. The majority of defense contracts use units-of-delivery while the majority of aerospace contracts use the cost-to-cost method as the basis to measure progress toward completing the contract. Under the units-of delivery method, revenues are recognized based on the contract price of units delivered. Under the

62

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

cost-to-cost method, revenue is recognized based on the ratio of cost incurred compared to managements’ estimate of total costs expected to be incurred under the contract. The percentage of completion method requires the use of estimates of costs to complete long-term contracts. The estimation of these costs requires substantial judgment on the part of management due to the duration of the contracts as well as the technical nature of the products involved. Contract revenues and cost estimates are reviewed periodically and adjustments are reflected in the accounting period such amounts are determined. Contract revenues and cost estimates are recognized based upon estimates of progress towards completion on a contract-by-contract basis. Changes in cost estimates are recognized in the period of change and reflect the cumulative change from inception of the contract. These adjustments have historically not been material. For example, an increase in the estimated profit booking rate will result in an increase in revenue and operating profit and reflect the inception-to-date effect of the change. Significant contracts are reviewed at least quarterly. Billings in excess of amounts earned are deferred. Anticipated losses on contracts are recorded in full in the period in which the loss becomes evident.

The Company collects and remits taxes assessed by different governmental authorities that are both imposed on and concurrent with revenue producing transactions between the Company and its customers. These taxes may include sales, use and value-added taxes. The Company reports the collection of these taxes on a net basis (excluded from revenues).

All amounts in a sales transaction billed to a customer related to shipping and handling are reported as revenues.

Cost of Products Sold — Cost of products sold is comprised of raw material costs, direct production, maintenance and utility costs, depreciation, other overhead costs and shipping and handling costs.

Restructuring — The Company accounts for contractual terminations in accordance with the “Compensation — Nonretirement Postemployment Benefits” topic of the Accounting Standards Codification (“ASC”), which requires recording an accrual when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. The Company accounts for one-time termination benefits, contract terminations, asset write-offs, and/or costs to terminate lease obligations in accordance with the “Exit or Disposal Cost Obligations” topic of the ASC, which addresses financial accounting and reporting for costs associated with restructuring activities. The Company establishes a liability for a cost associated with an exit or disposal activity, including one-time termination benefits, lease termination obligations and other related costs, when the liability is incurred rather than at the date the Company commits to an exit plan. Lease termination costs include remaining payments due under existing lease agreements after the cease-use date and any lease cancellation fees. The Company reassesses the expected cost to complete the exit or disposal activities at the end of each reporting period and adjusts the remaining estimated liabilities, if necessary.

Allowance for Doubtful Accounts — The Company has recorded an allowance for doubtful accounts to reduce accounts receivable to their estimated net realizable value. The allowance is based upon an analysis of historical bad debts, a review of the aging of accounts receivable and the current creditworthiness of customers. Accounts are written off against the allowance when it becomes evident that collections will not occur. Bad debt expense is included in selling, general and administrative expenses and amounted to income of $0.5 million in 2010 due to recoveries of previously reserved amounts and expense of $0.3 million and $4.3 million in 2009 and 2008, respectively. Trade credit is generally extended on a short-term basis; thus accounts receivable do not bear interest.

Inventories — Inventories are stated at the lower of cost or market and valued using the first-in, first-out (“FIFO”) method. Inventory costs include raw materials, labor and manufacturing overhead. Inventory accounted for under the percentage-of-completion method is included in work-in-process inventory and represents accumulated contract costs less the portion of such costs allocated to delivered units. The costs

63

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

attributed to units delivered are based on the estimated average cost of all units expected to be produced on a contract-by-contract basis.

The cost of the Company’s raw materials fluctuates due to actual or perceived changes in supply and demand of raw materials, changes in cobalt market prices and changes in availability from suppliers. Changes in the cobalt price can have a significant impact on inventory valuation. The Company evaluates the need for a lower of cost or market (“LCM”) adjustment to inventories based on the end-of-the-reporting period selling prices of its finished products. Declines in the selling prices of the Company’s finished goods, which can result from decreases in the reference price of cobalt or other factors, can result in the Company’s inventory carrying value being written down to a lower market value.

Receivables from Joint Venture Partners and Noncontrolling Interests — The Company has a 55% interest in a joint venture that has a smelter in the DRC. The remaining 45% interest is owned by two partners at 25% and 20%, respectively.

In years prior to 2008, the Company refinanced the capital contribution for the 25% minority shareholder in its joint venture in the DRC. At December 31, 2010 and 2009, the notes receivable from this partner were $13.9 million, net of a $5.2 million valuation allowance. The interest rate is based on LIBOR (0.99% at December 31, 2010) and resets annually in January. The repayment date for the notes receivable is December 31, 2011, which may be extended at the Company’s option. Due to the uncertainty of collection, the Company continues to record a full allowance against unpaid interest receivable under the notes receivable.

Under the terms of the note receivable, a portion (80%) of the partner’s share of any dividends from the joint venture and any other cash flow distributions (“secondary considerations”) paid by the joint venture, if any, first serve to reduce the Company’s receivables before any amounts are remitted to the joint venture partner. The note receivable is secured by 80% of the partner’s interest in the joint venture.

The Company currently anticipates that repayment of the receivables, net of the reserve, will be made from the partner’s share of dividends and returns of capital from the joint venture.

Property, Plant and Equipment — Property, plant and equipment is recorded at historical cost less accumulated depreciation. Depreciation of plant and equipment, including assets recorded under capital leases, is provided by the straight-line method over the useful lives of 5 to 25 years for land improvements, 5 to 40 years for buildings and improvements, 5 to 15 years for machinery and equipment (with the majority in the range of 5 to 10 years), 5 to 10 years for furniture and fixtures and 3 to 5 years for vehicles and computers and related equipment. Leasehold improvements are depreciated over the shorter of the estimated useful life or the term of the lease.

The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The related asset retirement costs are capitalized as a part of the carrying amount of the long-lived asset and amortized over the asset’s useful life.

Internal Use Software — The Company capitalizes costs associated with the development and installation of internal use software in accordance with Financial Accounting Standards Board (“FASB”) ASC Subtopic 350-40, “Intangibles — Goodwill and Other: Internal Use Software.” Accordingly, internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software.

Long-lived Assets other than Goodwill — Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Events or circumstances that would result in an impairment review primarily include operating losses, a significant change in the use of an asset, or the planned disposal or sale of the asset. The asset would be considered impaired when the future net

64

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

undiscounted cash flows generated by the asset are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its estimated fair value.

Goodwill and Intangible Assets — In accordance with the “Intangibles — Goodwill and Other” topic of the ASC, the Company evaluates the carrying value of goodwill and indefinite-lived intangible assets for impairment annually as of October 1 and between annual evaluations if changes in circumstances or the occurrence of certain events indicate potential impairment. If the carrying value of goodwill or an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized.

Intangible assets consist of (i) definite-lived assets subject to amortization and (ii) indefinite-lived intangible assets not subject to amortization. Definite-lived intangible assets consist principally of customer relationships, developed technology, know-how, capitalized software and license agreements and are being amortized using the straight-line method. Indefinite-lived intangible assets consist of trade names.

Retained Liabilities of Businesses Sold — Retained liabilities of businesses sold include obligations of the Company related to its former Precious Metals Group (“PMG”), which was sold in 2003. Under terms of the sale agreement, the Company will reimburse the buyer of this business for certain items that become due and payable by the buyer subsequent to the sale date. Such items are principally comprised of taxes payable related to periods during which the Company owned PMG. As of December 31, 2010, the net liability was $7.5 million, of which $2.9 million was included in Other current liabilities and $8.1 million was included in Other non-current liabilities and corresponding receivables of $3.5 million, related to indemnifications of the liabilities, were recorded in Other non-current assets. The liability at December 31, 2009 was $6.8 million, of which $2.9 million was included in Other current liabilities and $5.4 million was included in Other non-current liabilities and corresponding receivables of $1.5 million, related to indemnifications of the liabilities, were recorded in Other non-current assets.

Research and Development — Research and development costs are charged to expense when incurred, are included in selling, general and administrative expenses and amounted to $11.8 million, $9.2 million and $10.8 million in 2010, 2009 and 2008, respectively.

Repairs and Maintenance — The Company expenses repairs and maintenance costs, including periodic maintenance shutdowns at its manufacturing facilities, when incurred.

Accounting for Leases — Lease expense is recorded on a straight-line basis. The noncancellable lease term used to calculate the amount of the straight-line expense is generally determined to be the initial lease term, including any optional renewal terms that are reasonably assured. Certain leases include step rent provisions and escalation clauses, which are recognized on a straight-line basis over the lease term. Lease payments that depend on an existing index or rate are included in our minimum lease payments. They are taken into account in computing our minimum lease payments and the minimum lease payments are recognized on a straight-line basis over the minimum lease term.

Income Taxes — Deferred income taxes are provided to recognize the effect of temporary differences between financial and tax reporting. Deferred income taxes are not provided for undistributed earnings of foreign consolidated subsidiaries, to the extent such earnings are determined to be reinvested for an indefinite period of time.

Foreign Currency Translation — The functional currency for the Company’s Finnish subsidiary and related DRC operations is the U.S. dollar since a majority of their purchases and sales are denominated in U.S. dollars. Accordingly, foreign currency exchange gains and losses related to assets, liabilities and transactions denominated in other currencies (principally the Euro) are included in the Statements of Consolidated Operations.

65

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The functional currency for the Company’s other operating subsidiaries outside of the United States is the applicable local currency. For those operations, financial statements are translated into U.S. dollars at year-end exchange rates as to assets and liabilities and weighted average exchange rates as to revenues and expenses. The resulting translation adjustments are recorded as a component of Accumulated other comprehensive income (loss) in stockholders’ equity.

Derivative Instruments — The Company enters into derivative instruments and hedging activities to manage, where possible and economically efficient, commodity price risk, foreign currency exchange rate risk and interest rate risk related to borrowings. It is the Company’s policy to execute such instruments with creditworthy banks and not enter into derivative instruments for speculative purposes. All derivatives are reflected at their fair value and recorded in other current assets and other current liabilities as of December 31, 2010 and 2009. The accounting for the fair value of a derivative depends upon whether it has been designated as a hedge and on the type of hedging relationship. To qualify for designation in a hedging relationship, specific criteria must be met and appropriate documentation prepared. Changes in the fair values of derivatives not designated in a hedging relationship are recognized in earnings.

The Company, from time to time, employs derivative instruments in connection with purchases and sales of inventory in order to establish a fixed margin and mitigate the risk of price volatility. Some customers request fixed pricing and the Company may use a derivative to mitigate price risk. While this hedging may limit the Company’s ability to participate in gains from favorable commodity price fluctuations, it eliminates the risk of loss from adverse commodity price fluctuations.

Periodically, the Company enters into certain derivative instruments designated as cash flow hedges. For these hedges, the effective portion of the gain or loss from the financial instrument is initially reported as a component of Accumulated other comprehensive income (loss) in stockholders’ equity and subsequently reclassified into earnings in the same line as the hedged item in the same period or periods during which the hedged item affects earnings.

Note 2 — Recently Issued Accounting Guidance

Accounting Guidance adopted in 2010:

In July 2010, the FASB issued guidance regarding disclosures about the credit quality of financing receivables and the allowance for credit losses. The guidance required disaggregated information about the credit quality of financing receivables and the allowance for credit losses based on portfolio segment and class, as well as disclosure of credit quality indicators, past due information, and modifications of financing receivables. The Company adopted the guidance for disclosures as of the end of a reporting period for the fourth quarter of 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. When effective, the Company will comply with the disclosure provisions of this guidance about activity that occurs during a reporting period.

In January 2010, the FASB issued guidance related to fair value measurements and disclosures, which are effective for interim and annual fiscal periods beginning after December 15, 2009, except for disclosures about certain Level 3 activity which will not become effective until interim and annual periods beginning after December 15, 2010. This guidance requires companies to disclose transfers in and out of Level 1 and Level 2 fair value measurements, the reasons for the transfers, and activity in Level 3 fair value measurements. The new standard also requires a more detailed level of disaggregation of the assets and liabilities being measured as well as increased disclosures regarding inputs and valuation techniques of the fair value measurements. See Note 11 for disclosures related to the new guidance.

In June 2009, the FASB issued guidance on “Consolidation of Variable Interest Entities” to require an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing reassessment and eliminates the quantitative approach previously required

66

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

for determining whether an entity is the primary beneficiary. The Company adopted this guidance on January 1, 2010 and such adoption did not have any effect on the Company’s results of operations or financial position.

Accounting Guidance Not Yet Adopted

In March 2010, the FASB issued guidance that recognizes the milestone method as an acceptable revenue recognition method for substantive milestones in research or development arrangements. This guidance sets forth requirements for an entity to recognize consideration that is contingent upon achievement of a substantive milestone as revenue in the period in which the milestone is achieved. In addition, this guidance requires disclosure of certain information with respect to arrangements that contain milestones. This guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The Company has not determined the effect, if any, the adoption of this guidance will have on its results of operations or financial position.

In October 2009, the FASB issued guidance on multiple-deliverable revenue arrangements that addresses the unit of accounting for arrangements involving multiple deliverables. This guidance is effective for annual periods beginning after June 15, 2010. The guidance also addresses how arrangement consideration should be allocated to separate units of accounting, when applicable, and expands the disclosure requirements for multiple-deliverable arrangements. The Company has not determined the effect, if any, the adoption of this guidance will have on its results of operations or financial position.

Note 3 — Inventories

Inventories consist of the following as of December 31,

	2010		2009
Raw materials and supplies	$	134,655	$	150,113
Work-in-process		41,909		15,952
Finished goods		117,061		121,031
	$	293,625	$	287,096

Note 4 — Property, Plant and Equipment, net

Property, plant and equipment, net consists of the following as of December 31,

	2010		2009
Land and improvements	$	18,516	$	12,839
Buildings and improvements		158,453		142,472
Machinery and equipment		490,929		446,282
Furniture and fixtures		15,524		12,361
Property, plant and equipment, at cost		683,422		613,954
Less accumulated depreciation		427,324		386,839
	$	256,098	$	227,115

Total depreciation expense on property, plant and equipment was $40.8 million in 2010, $43.2 million in 2009 and $45.6 million in 2008.

Note 5 — Acquisition

On January 29, 2010, the Company completed the acquisition of EaglePicher Technologies LLC from EaglePicher Corporation for approximately $172 million in cash. Based in Joplin, Missouri, EaglePicher Technologies is a leader in portable power solutions and energy storage technologies serving aerospace,

67

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

defense and medical markets, and is developing technologies in advanced power storage to serve alternative energy storage markets. EaglePicher Technologies product offerings can be grouped into two broad categories: (i) proprietary battery products and (ii) complementary battery support products that consist of energetic devices, chargers, battery management systems and distributed products. In fiscal year 2009, EaglePicher Technologies recorded revenues of approximately $125 million, of which approximately 60 percent came from its defense business, approximately 33 percent from its aerospace business, and the remainder from its medical business. The acquisition of EaglePicher Technologies furthers the Company’s growth strategy and expands its presence in the battery market. The financial position, results of operations and cash flows of EaglePicher Technologies are included in the Consolidated Financial Statements from the date of acquisition. EaglePicher Technologies is operated and reported within a new segment called Battery Technologies. Net sales and operating profit for Battery Technologies were $113.9 million and $5.1 million, respectively, for 2010.

The purchase price has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The purchase price exceeded the fair value of the net assets acquired, resulting in $65.1 million of goodwill, of which $18.6 million is deductible for tax purposes. The excess purchase price over net assets acquired primarily reflects the Company’s view that this acquisition will add broad technical expertise in battery applications, which will be critical to the Company’s growth in battery materials and technologies.

The following represents the final allocation of the purchase price:

Accounts Receivable	$	12,144
Inventories		27,459
Other current assets		1,936
Property, plant and equipment		44,460
Other assets		5,276
Customer relationships		40,700
Know-how		18,600
Developed technology		3,100
Tradename		20,700
Goodwill		65,112
Total assets acquired		239,487
Net pension obligations		42,902
Other liabilities, primarily accounts payable and other accrued liabilities		24,606
Total liabilities assumed		67,508
	$	171,979

Customer relationships represent the estimated fair value of relationships with customers acquired in connection with the acquisition. Know-how and developed technology represent a combination of processes, patents and trade secrets developed through years of experience in development and manufacturing of EaglePicher Technologies products. Acquired know-how primarily includes its proprietary processes, technical knowledge and manufacturing capabilities/processes in the Defense and Aerospace business units, which the Company considers trade secrets that allow it to achieve a competitive advantage in the marketplace. EaglePicher has a reputation of successfully converting technology into products, and the Company utilizes EaglePicher’s concept-to-market capabilities to produce its products, including products not otherwise covered by patents but rather resulting from the application of its trade secrets. Tradename represents the EaglePicher name that the Company will continue to use. In total, the weighted-average amortization period

68

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

for acquired intangible assets is 18 years. The weighted-average amortization periods for customer relationships, know-how and developed technology acquired are 18 years, 20 years and 15 years, respectively. The tradename is an indefinite-lived asset that will be tested for impairment at least annually.

Included in other liabilities is a $1.3 million environmental liability associated with a site located in Joplin, Missouri. See Note 17 for further disclosure related to environmental liabilities.

In connection with the EaglePicher Technologies acquisition, the Company incurred a total of $3.5 million in acquisition-related costs, of which $2.2 million was recognized in 2010 and $1.3 million was recognized in 2009. Acquisition-related costs are included in Selling, general and administrative expenses in the Statement of Consolidated Operations. A significant portion of these expenses were related to investment banking and due diligence fees.

Note 6 — Goodwill and Other Intangible Assets

Goodwill is tested for impairment on an annual basis and more often if indicators of impairment exist. The goodwill impairment test is a two-step process. During the first step, the Company estimates the fair value of the reporting unit (including goodwill) and compares that amount to the carrying value of that reporting unit. If the estimated fair value of the reporting unit is less than its carrying value, the “Intangibles — Goodwill and Other” topic of the ASC requires a second step to determine the implied fair value of goodwill of the reporting unit, and a comparison of that amount to the carrying value of the goodwill of the reporting unit. This second step includes valuing all of the tangible and intangible assets and liabilities of the reporting unit as if they had been acquired in a business combination on the testing date.

The Company’s reporting units are Advanced Materials, Electronic Chemicals, Advanced Organics, Ultra Pure Chemicals (“UPC”), Photomasks, Defense, Aerospace and Medical. The Company is organized into three segments: Advanced Materials, Specialty Chemicals and Battery Technologies. The Specialty Chemicals segment is comprised of Electronic Chemicals, Advanced Organics, UPC and Photomasks. The Battery Technologies segment is comprised of Defense, Aerospace and Medical. The EaglePicher Technologies acquisition purchase price has been allocated to the assets acquired and liabilities assumed for each Battery Technologies reporting unit based upon their estimated fair values at the date of acquisition. Goodwill is the excess of the purchase price over the fair value of the net assets acquired.

To test goodwill for impairment, the Company is required to estimate the fair value of each of its reporting units. Since quoted market prices in an active market are not available for the Company’s reporting units, the Company uses other valuation techniques. The Company has developed a model to estimate the fair value of the reporting units utilizing a discounted cash flow valuation technique (“DCF model”). The Company selected the DCF model as it believes it is comparable to what would be used by market participants to estimate its fair value. The DCF model incorporates the Company’s estimates of future cash flows; future growth rates; terminal value amounts; allocations of certain assets, liabilities and cash flows among reporting units; and the applicable weighted-average cost of capital (the “WACC”) used to discount those estimated cash flows. These estimates are based on management’s judgment. The estimates and projections used in the estimate of fair value are consistent with the Company’s forecast and long-range plans.

The Company conducts its annual goodwill impairment test as of October 1. The results of testing as of October 1, 2010 confirmed that the estimated fair value of each of the reporting units exceeded its carrying value and therefore no impairment loss was required to be recognized. In 2009 and 2008, the Company recorded non-cash charges of $37.5 million and $8.8 million, respectively, in the Specialty Chemicals segment for the impairment of goodwill related to the Advanced Organics, UPC and Photomasks reporting units.

69

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The change in the carrying amount of goodwill is as follows:

	Advanced		Specialty			Battery
	Materials		Chemicals			Technologies		Consolidated
Balance at January 1, 2009	$	103,326	$	165,351		$	—	$	268,677
2008 goodwill impairment charge adjustment		—		4,139			—		4,139
Goodwill impairment charge		—		(41,643	)		—		(41,643	)
Foreign currency translation adjustments		—		3,016			—		3,016
Balance at December 31, 2009		103,326		130,863			—		234,189
EaglePicher Technologies acquisition		—		—			65,112		65,112
Foreign currency translation adjustments		—		7,348			239		7,587
Balance at December 31, 2010	$	103,326	$	138,211		$	65,351	$	306,888

The carrying amount of goodwill and accumulated goodwill impairment charges by reporting unit is as follows:

	December 31, 2010				December 31, 2009
			Accumulated				Accumulated
			Goodwill				Goodwill
	Carrying		Impairment		Carrying		Impairment
	Amount		Charges		Amount		Charges
Advanced Materials	$	103,326	$	—	$	103,326	$	—
Advanced Organics		—		6,768		—		6,768
Electronic Chemicals		121,580		—		114,991		—
Ultra Pure Chemicals		14,531		20,459		12,828		20,459
Photomasks		2,100		19,077		3,044		19,077
Defense		26,451		—		—		—
Aerospace		23,650		—		—		—
Medical		15,250		—		—		—
	$	306,888	$	46,304	$	234,189	$	46,304

Intangible assets consist of (i) definite-lived assets subject to amortization and (ii) indefinite-lived intangible assets not subject to amortization. All intangible assets subject to amortization are amortized on a straight-line basis over the estimated useful lives.

70

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

A summary of intangible assets follows:

						Foreign
			Accumulated			Currency			Accumulated			Net Carrying
	Original Value		Amortization			Translation			Impairment			Value
Intangible assets not subject to amortization:
Tradenames	$	29,098	$	—		$	399		$	(867	)	$	28,630
Intangible assets subject to amortization:
Customer relationships		108,423		(23,765	)		3,517			—			88,175
Developed technology		15,469		(2,562	)		686			—			13,593
Know-how		18,600		(853	)		—			—			17,747
Capitalized software		14,205		(10,487	)		(76	)		(179	)		3,463
License agreements		3,514		(978	)		(117	)		(883	)		1,536
Other intangibles		926		(329	)		(351	)		—			246
		161,137		(38,974	)		3,659			(1,062	)		124,760
Balance at December 31, 2010	$	190,235	$	(38,974	)	$	4,058		$	(1,929	)	$	153,390
Intangible assets not subject to amortization:
Tradenames	$	8,398	$	—		$	239		$	(867	)	$	7,770
Intangible assets subject to amortization:
Customer relationships		67,723		(15,767	)		1,362			—			53,318
Developed technology		12,369		(1,577	)		153			—			10,945
Capitalized software		12,788		(7,665	)		(70	)		(179	)		4,874
License agreements		3,370		(482	)		(46	)		(883	)		1,959
Other intangibles		918		(220	)		(335	)		—			363
		97,168		(25,711	)		1,064			(1,062	)		71,459
Balance at December 31, 2009	$	105,566	$	(25,711	)	$	1,303		$	(1,929	)	$	79,229

The weighted average amortization period is as follows (in years):

Customer relationships	14
Developed Technology	16
Know-how	20
Capitalized software	3
License agreements	5

Indefinite-lived intangible assets are tested annually for impairment and between annual evaluations if changes in circumstances or the occurrence of certain events indicate potential impairment. The results of the testing of the indefinite-lived trade names as of October 1, 2010 confirmed the fair value of each intangible asset exceeded its carrying value and therefore no impairment loss was required to be recognized. During 2009, the Company determined that a license agreement in the UPC reporting unit and certain indefinite-lived trade names in its Photomasks and UPC reporting units were impaired due to downward revisions in estimates of future revenue and cash flows. As a result, selling, general and administrative expenses for 2009 includes an impairment charge of $0.9 million for the license agreement and $0.7 million related to the indefinite-lived trade names. In performing its annual intangible asset impairment testing as of October 1, 2008, the Company determined that certain indefinite-lived trade names in its Photomasks reporting unit were impaired due to

71

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

downward revisions in estimates of future revenue. As a result, selling, general and administrative expenses for 2008 include an impairment charge of $0.2 million related to the indefinite-lived trade names.

Amortization expense related to intangible assets, including capitalized software, for the years ended December 31, 2010, 2009 and 2008 was $13.3 million, $10.5 million and $10.5 million, respectively. The increase in amortization expense in 2010 was due to the amortization of intangible assets associated with the acquisition of EaglePicher Technologies in 2010.

Internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software beginning with the project’s completion. Amortization of capitalized software was $2.8 million, $3.4 million and $3.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Estimated annual pretax amortization expense for intangible assets is as follows (in millions):

2011	$	11.7
2012	$	11.3
2013	$	11.0
2014	$	10.2
2015	$	10.1

Note 7 — Restructuring

During 2009, the Company commenced a restructuring plan for its Advanced Organics business within the Specialty Chemicals segment to better align the cost structure and asset base of its European carboxylate business to industry conditions resulting from weak customer demand, commoditization of products and overcapacity in that market. The restructuring plan included exiting the Manchester, England manufacturing facility and workforce reductions at the Company’s Belleville, Ontario, Canada; Kokkola, Finland; Franklin, Pennsylvania and Westlake, Ohio locations. The restructuring plan included the elimination of 100 employee positions, including two in Westlake, five in Belleville, six in Franklin, 15 in Kokkola and 72 in Manchester. The majority of position eliminations were completed by mid-2010. The restructuring plan does not involve the discontinuation of any material product lines or other functions.

72

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

During 2010 and 2009, the Company recorded restructuring charges of $2.1 million and $12.7 million, respectively, in the Statement of Consolidated Operations. The Company has incurred and expects to incur the following restructuring charges:

			Total		Charges (Reversals)
	Total		Charges Incurred		Incurred in the			Additional Charges
	Charges Expected		Year Ended		Year Ended			Expected to
	to be Incurred		December 31, 2009		December 31, 2010			be Incurred
Cash charges
Workforce reductions	$	6,296	$	4,967	$	1,258		$	71
Decommissioning, demolition and lease termination charges		1,446		25		1,213			208
		7,742		4,992		2,471			279
Non-cash charges
Fixed asset impairment		5,536		5,536		—			—
Inventory impairment/other charges (reversals)		1,809		2,180		(371	)		—
		7,345		7,716		(371	)		—
Total charges	$	15,087	$	12,708	$	2,100		$	279

Decommissioning and demolition of the Manchester, England facility began during the third quarter of 2010 and is expected to be completed during the first half of 2011. Cash charges were for severance, decommissioning and demolition costs, lease termination costs and other exit costs. The Company expects to continue to incur costs for severance, decommissioning and demolition, lease termination and other exit costs through June 30, 2011. Such costs will be expensed as incurred.

The following table presents the activity and accrued liability balance related to the restructuring program:

	Workforce
	Reductions			Other Charges			Total
Balance at December 31, 2008	$	—		$	—		$	—
Charges		4,967			7,741			12,708
Foreign currency translation adjustment		(68	)		—			(68	)
Non-cash charges		—			(7,716	)		(7,716	)
Cash payments		(40	)		—			(40	)
Balance at December 31, 2009		4,859			25			4,884
Charges		1,258			1,213			2,471
Foreign currency translation adjustment		(209	)		(11	)		(220	)
Cash payments		(5,507	)		(1,221	)		(6,728	)
Balance at December 31, 2010	$	401		$	6		$	407

The restructuring accrual represents future cash payments and is recorded on the Consolidated Balance Sheet and is included in Other current liabilities.

73

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Note 8 — Discontinued Operations

Income from discontinued operations is related to the Company’s former copper powders business, SCM Metal Products, Inc. (“SCM”), and PMG, which were both sold in 2003. Income from discontinued operations consisted of the following for the years ended December 31:

	2010			2009		2008
Income (loss) from discontinued operations before income taxes	$	(909	)	$	1,981	$	92
Income tax (benefit) expense		(1,635	)		485		—
Income from discontinued operations, net of tax	$	726		$	1,496	$	92

Income from discontinued operations in 2010 includes a $1.6 million tax benefit related to a prior period error, partially offset by a $1.2 million increase in a contingency accrual. Income from discontinued operations in 2009 includes the reversal of a $2.0 million tax contingency accrual related to PMG. 2010, 2009 and 2008 were also impacted by translation adjustments of retained liabilities of businesses sold denominated in a foreign currency.

Note 9 — Debt

On March 8, 2010, the Company entered into a new $250.0 million secured revolving credit facility (the “Revolver”). The Revolver replaced the Company’s prior revolving credit facility that was scheduled to expire in December 2010. The Revolver includes an “accordion” feature under which the Company may increase the Revolver’s availability by $75.0 million to a maximum of $325.0 million, subject to certain customary conditions and the agreement of current or new lenders to accept a portion of the increased commitment. To date, the Company has not sought to borrow under the accordion feature. Obligations under the Revolver are guaranteed by the Company’s present and future subsidiaries (other than immaterial subsidiaries, joint ventures and certain foreign subsidiaries) and are secured by a lien on substantially all of the personal property assets of the Company and subsidiary guarantors, except that the lien on the shares of first-tier foreign subsidiaries is limited to 65% of such shares.

The Revolver requires the Company to maintain a minimum consolidated interest coverage ratio of no less than 3.50 to 1.00 and a maximum consolidated leverage ratio of not more than 2.50 to 1.00. At December 31, 2010, the Company’s interest coverage ratio was 24.36 to 1.00 and its leverage ratio was .71 to 1.00. Both of the financial covenants are tested quarterly for each trailing four-consecutive-quarter period. Other covenants in the Revolver limit consolidated capital expenditures to $50.0 million per year and also limit the Company’s ability to incur additional indebtedness, make investments, merge with another corporation, dispose of assets and pay dividends. As of December 31, 2010, the Company was in compliance with all of the covenants under the Revolver.

The Company has the option to specify that interest be calculated based either on a London interbank offered rate (“LIBOR”) or on a variable base rate, plus, in each case, a calculated applicable margin. The applicable margins range from 1.25% to 2.00% for base rate loans and 2.25% to 3.00% for LIBOR loans. The Revolver also requires the payment of a fee of 0.375% to 0.5% per annum on the unused commitment and a fee on the undrawn amount of letters of credit at a rate equal to the applicable margin for LIBOR loans. The applicable margins and unused commitment fees are subject to adjustment quarterly based upon the leverage ratio. The Revolver provides for interest-only payments during its term, with all unpaid principal due at maturity on March 8, 2013. Outstanding borrowings under the Revolver totaled $120.0 million at December 31, 2010. There were no amounts outstanding under the prior credit facility at December 31, 2009. At December 31, 2010, the weighted average interest rate for the outstanding borrowings under the Revolver was 2.78%, and the weighted average interest rate for the outstanding borrowings under the Revolver together with the related interest rate swap agreements was 3.17%.

74

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company incurred fees and expenses of $2.6 million related to the Revolver. These fees and expenses were deferred and are being amortized to interest expense over the three-year term of the Revolver.

During 2008, the Company’s Finnish subsidiary, OMG Kokkola Chemicals Oy (“OMG Kokkola”), entered into a €25 million credit facility agreement (the “Credit Facility”). Under the Credit Facility, subject to the lender’s discretion, OMG Kokkola can draw short-term loans, ranging from one to nine months in duration, in U.S. dollars at LIBOR plus a margin of 0.55%. The Credit Facility has an indefinite term, and either party can immediately terminate the Credit Facility after providing notice to the other party. The Company agreed to unconditionally guarantee all of the obligations of OMG Kokkola under the Credit Facility. There were no borrowings outstanding under the Credit Facility at December 31, 2010 or 2009.

Interest paid on long-term debt was $2.9 million, $0.4 million and $1.0 million for 2010, 2009 and 2008, respectively. Interest expense has not been allocated to discontinued operations. No interest was capitalized in 2010, 2009 or 2008.

Note 10 — Derivative Instruments

The Company enters into derivative instruments and hedging activities to manage, where possible and economically efficient, commodity price risk, foreign currency exchange rate risk and interest rate risk related to borrowings. It is the Company’s policy to execute such instruments with creditworthy counterparties and not enter into derivative instruments for speculative purposes. All derivatives are reflected on the balance sheet at fair value and recorded in other current assets and other current liabilities in the Consolidated Balance Sheets. The accounting for the fair value of a derivative depends upon whether it has been designated as a hedge and on the type of hedging relationship. Changes in the fair value of derivative instruments are recognized immediately in earnings, unless the derivative is designated as a hedge and qualifies for hedge accounting. Under hedge accounting, recognition of derivative gains and losses can be matched in the same period with that of the hedged exposure and thereby minimize earnings volatility. To qualify for designation in a hedging relationship, specific criteria must be met and appropriate documentation prepared.

For a fair value hedge, the change in fair value of the hedging instrument and the change in fair value of the hedged item attributable to the risk being hedged are both recognized currently in earnings. For a cash flow hedge, the effective portion of the change in fair value of a hedging instrument is initially recognized in Accumulated other comprehensive income (loss) (“AOCI(L)”) in stockholders’ equity and subsequently reclassified to earnings when the hedged item affects income. The ineffective portion of the change in fair value of a cash flow hedge is recognized immediately in earnings.

Commodity Price Risk

The Company enters into derivative instruments and hedging activities to manage commodity price risk. The Company, from time to time, employs derivative instruments in connection with certain purchases and sales of inventory in order to establish a fixed margin and mitigate the risk of price volatility. Some customers request fixed pricing and the Company may use a derivative to mitigate price risk. The Company makes or receives payments based on the difference between a fixed price (as specified in each individual contract) and the market price of the commodity being hedged. These payments will offset the change in prices of the underlying sales or purchases and effectively fix the price of the hedged commodity at the contracted rate for the contracted volume. While this hedging may limit the Company’s ability to participate in gains from favorable commodity price fluctuations, it eliminates the risk of loss from adverse commodity price fluctuations.

Derivative instruments employed by the Company to manage commodity price risk include cash flow and fair value hedges as well as some contracts that are not designated as accounting hedges.

75

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Cash Flow Hedges

From time to time, the Company enters into copper forward sales contracts that are designated as cash flow hedges. At December 31, 2009, the notional quantity of open copper forward sales contracts designated as cash flow hedges in accordance with the “Derivatives and Hedging” topic of the ASC was 1.3 million pounds. The Company had no copper forward sales contracts designated as cash flow hedges at December 31, 2010. No hedge ineffectiveness was recorded in income in the years ended December 31, 2010, 2009 or 2008 for these hedges.

Fair Value Hedges

From time to time, the Company enters into certain cobalt forward purchase contracts designated as fair value hedges. The Company had no cobalt forward purchase contracts designated as fair value hedges at December 31, 2010 or 2009.

Other Forward Contracts

During 2007, the Company entered into cobalt forward purchase contracts to establish a fixed margin and mitigate the risk of price volatility related to the sales during the second quarter of 2008 of cobalt-containing finished products that were priced based on a formula that included a fixed cobalt price component. These forward purchase contracts were not designated as hedging instruments under the “Derivatives and Hedging” topic of the ASC. Accordingly, these contracts were adjusted to fair value as of the end of each reporting period, with the gain or loss recorded in Cost of products sold. The Company had no forward contracts at December 31, 2010 or 2009.

Foreign Currency Exchange Rate Risk

The functional currency for the Company’s Finnish operating subsidiary is the U.S. dollar since a majority of its purchases and sales are denominated in U.S. dollars. Accordingly, foreign currency exchange gains and losses related to transactions of this subsidiary denominated in other currencies (principally the Euro) are included in earnings. While a majority of the subsidiary’s raw material purchases are in U.S. dollars, it also has some Euro-denominated expenses. Beginning in 2009, the Company entered into foreign currency forward contracts to mitigate a portion of the earnings volatility in those Euro-denominated cash flows due to changes in the Euro/U.S. dollar exchange rate. The Company had Euro forward contracts with notional values that totaled 1.5 million Euros at December 31, 2009. The Company had no Euro forward contracts at December 31, 2010. The Company designated these derivatives as cash flow hedges of its forecasted Euro-denominated expenses. No hedge ineffectiveness was recorded in income in the years ended December 31, 2010, 2009 or 2008 for these hedges.

Interest Rate Risk

The Company is exposed to interest rate risk primarily through its borrowing activities. If needed, the Company predominantly utilizes U.S. dollar-denominated borrowings to fund its working capital, acquisition and investment needs. There is an inherent rollover risk for borrowings as they mature and are renewed at current market rates. From time to time, the Company enters into derivative instruments and hedging activities to manage, where possible and economically efficient, interest rate risk related to borrowings. The Company uses interest rate swap agreements to partially reduce risks related to floating rate financing agreements that are subject to changes in the market rate of interest. Terms of the interest rate swap agreements require the Company to receive a variable interest rate and pay a fixed interest rate. The Company’s interest rate swap agreements and its variable rate financings are predominately based upon the three-month LIBOR. The Company had interest rate swaps with notional values that totaled $60.0 million at December 31, 2010. The outstanding contracts as of December 31, 2010 had maturities ranging up to 17 months. As of December 31, 2010, AOCI(L) included a cumulative loss of $0.4 million related to these contracts, of which $0.3 million is

76

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

expected to be reclassified to earnings within the next twelve months. The Company had no outstanding interest rate derivatives at December 31, 2009. No hedge ineffectiveness was recorded in income in 2010, 2009 or 2008 for these hedges.

The following table summarizes the fair value of derivative instruments recorded in the Consolidated Balance Sheets:

	Derivatives Designated as Hedging Instruments
	Derivative Assets
	December 31, 2010				December 31, 2009
	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Euro forward contracts		Other current assets	$	—		Other current assets	$	258
Total			$	—			$	258

	Derivative Liabilities
	December 31, 2010					December 31, 2009
						Balance Sheet
	Balance Sheet Location		Fair Value			Location		Fair Value
Commodity contracts		Other current liabilities	$	—			Other current liabilities	$	(226	)
Interest rate swap agreements		Other current liabilities		(393	)		n/a		—
Total			$	(393	)			$	(226	)

	Derivatives Not Designated as Hedging Instruments
	Derivative Liabilities
	December 31, 2010					December 31, 2009
	Balance Sheet Location		Fair Value			Balance Sheet Location		Fair Value
Commodity contracts		Other current liabilities	$	(378	)		Other current liabilities	$	—
Total			$	(378	)			$	—

The following table summarizes the effect of derivative instruments as recorded in the Statement of Consolidated Operations:

	Derivatives in Fair Value Hedging Relationships
	Location of Gain (Loss)		Amount of Gain (Loss) on Derivative Recognized in Income for the Year
	on Derivative		Ended December 31,
	Recognized in Income		2010		2009		2008
Commodity contracts		Cost of products sold	$	—	$	227	$	(6,753	)

			Location of Gain (Loss)
	Hedged Items in Fair		on Related Hedged		Amount of Gain (Loss) on Related Hedged Item
	Value Hedging		Item Recognized in		Recognized in Income for the Year Ended December 31,
	Relationships		Income		2010		2009			2008
Commodity contracts		Firm commitment		Cost of products sold	$	—	$	(227	)	$	6,753

77

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain (Loss) on Derivative Recognized in AOCI(L)
	(Effective Portion) for the
	Year Ended December 31,
	2010			2009			2008
Euro forward contracts	$	—		$	1,252		$	—
Commodity contracts		—			(1,843	)		624
Interest rate swap agreements		(393	)		—			—
Total	$	(393	)	$	(591	)	$	624

	Location of Gain
	(Loss) Reclassified		Amount of Gain (Loss) Reclassified from
	from AOCI(L) into		AOCI(L) into Income (Effective Portion)
	Income (Effective		for the Year Ended
	Portion)		2010			2009			2008
Euro forward contracts		Cost of products sold	$	(2,094	)	$	1,061		$	—
Commodity contracts		Net sales		(221	)		(1,676	)		624
Total			$	(2,315	)	$	(615	)	$	624

	Derivatives Not Designated as Hedging Instruments
	Location of Gain (Loss)	Amount of Gain (Loss) Recognized in Income on Derivative for the
	Recognized in	Year Ended December 31,
	Income on Derivative	2010			2009		2008
Commodity contracts	Net sales	$	(378	)	$	—	$	—
Commodity contracts	Cost of products sold		—			—		4,002
Total		$	(378	)	$	—	$	4,002

Note 11 — Fair Value Disclosures

The following table shows the Company’s assets and liabilities accounted for at fair value on a recurring basis:

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in
				Active Markets for		Significant Other			Significant
				Identical Assets		Observable Inputs			Unobservable Inputs
Description	December 31, 2010			(Level 1)		(Level 2)			(Level 3)
Liabilities:
Commodity contracts	$	(378	)	$	—	$	(378	)	$	—
Interest rate swap agreements		(393	)		—		(393	)		—
Total	$	(771	)	$	—	$	(771	)	$	—

See Note 13 for fair value disclosure related to pension assets.

The Company uses significant other observable inputs to value commodity contracts and interest rate swap agreements; therefore, they are classified within Level 2 of the valuation hierarchy. The fair value for these contracts is determined based on copper prices and interest rates, respectively. There were no transfers into or out of Levels 1, 2 or 3 in 2010.

78

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Cobalt forward purchase contracts are classified as Level 3, as their valuation is based on the expected future cash flows discounted to present value. Future cash flows are estimated using a theoretical forward price as quoted forward prices are not available. The following table provides a reconciliation of derivatives measured at fair value on a recurring basis which used Level 3 inputs:

	Fair Value
	Measurements
	Using
	Significant
	Unobservable
	Inputs
	(Level 3)
	Derivatives
January 1, 2009	$	(57	)
Realized gains (losses) included in earnings		227
Purchases, issuances, and settlements		(170	)
Transfers in and/or out of Level 3		—
December 31, 2009	$	—

Non-recurring fair value measurements

In September 2009, the Company announced a restructuring plan related to its Advanced Organics business. See Note 7. As a result, the Company reviewed its long-lived assets associated with the Manchester, England facility for impairment and recorded a $5.7 million impairment charge. The fair value measurements were calculated using significant unobservable inputs (combination of the cost and market approach).

In accordance with the provisions of the “Intangibles — Goodwill and Other” topic of the ASC, goodwill of the UPC reporting unit was written down to its implied fair value of $28.3 million after completing step two in 2009. The resulting $4.1 million adjustment to the estimated goodwill impairment charge of $8.8 million recorded in 2008 was included in earnings of 2009. During 2009, the Company recorded an additional $15.8 million goodwill impairment charge related to the UPC reporting unit to write down goodwill with a carrying value of $28.5 million to its implied fair value of $12.7 million. In addition, the Company recorded an impairment charge of $19.1 million related to the Photomasks reporting unit to write down goodwill with a carrying value of $22.3 million to its implied fair value of $3.2 million. Goodwill related to the Advanced Organics reporting unit with a carrying amount of $6.8 million was written down to its implied fair value of $0, resulting in an impairment charge of $6.8 million in 2009. The Company utilizes a discounted cash flow analysis to estimate the fair value of the reporting units utilizing unobservable inputs. The fair value measurement of the reporting unit under the step-one analysis and the step-two analysis in their entirety are classified as Level 3 inputs.

During 2009 the Company also wrote down to fair value indefinite-lived trade name intangible assets in its Photomasks and Electronic Chemicals reporting units and a license agreement in its UPC reporting unit due to downward revisions in estimates of future revenue and cash flows. The impaired indefinite-lived trade name intangible assets were determined to have an estimated fair value of $4.0 million resulting in a charge of $0.7 million, and the license agreement was determined to have no value resulting in a charge of $0.9 million. Both charges were included in earnings for 2009. The Company utilizes a “relief from royalty” methodology in estimating fair values for indefinite-lived trade names. The methodology estimates the fair value of each trade name by determining the present value of the royalty payments that are avoided as a result of owning the trade name and includes judgmental assumptions about sales growth that are consistent with the assumptions used to determine the fair value of reporting units in the Company’s goodwill testing. The fair value measurements were calculated using unobservable inputs, classified as Level 3, requiring significant management judgment due to the absence of quoted market prices or observable inputs for assets of a similar nature.

79

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company also holds financial instruments consisting of cash, accounts receivable, and accounts payable. The carrying amounts of cash, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The carrying value of the Company’s Revolver approximates fair value due to the variable interest rate terms. Derivative instruments are recorded at fair value as indicated in Note 10.

Cost method investments are evaluated for impairment quarterly. During 2010, the Company recorded a charge of $2.0 million in Selling, general and administrative expenses due to an other-than-temporary decline in the fair value of a cost method investment. This impairment charge was recognized in the Advanced Materials segment. As of December 31, 2009, the estimated fair value of this investment approximated the Company’s carrying value in the investment ($2.0 million). The decline in value was determined to be other other-than-temporary due to the Company’s reassessment of the fair value of the investment due, in part, to the investee’s inability to obtain permanent financing, which required the investee to delay and scale back its development plans. The Company determined that the fair value of the investment was zero based on Level 3 inputs. Level 3 inputs were used to determine the fair value of the investment as the investment was in a privately held entity without quoted market prices. To determine the fair value of the investments, the Company used earnings and cash flow forecasts of the entity.

Accounts receivable potentially subjects the Company to a concentration of credit risk. The Company maintains significant accounts receivable balances with several large customers. At December 31, 2010 the accounts receivable balance from our largest customer represented 6% of the Company’s net accounts receivable. Generally, the Company does not obtain security from its customers in support of accounts receivable.

Sales to Nichia Chemical Corporation represented approximately 14%, 16% and 22% of net sales in 2010, 2009 and 2008, respectively. No other customer individually represented more than 10% of net sales for any period presented. The loss of this customer could have a material adverse effect on the Company’s business, results of operations or financial position. Sales to the top three customers in the Battery Technologies segment represented approximately 50% of Battery Technologies’ net sales in 2010. The loss of one or more of these customers could have a material adverse effect on Battery Technologies’ business, results of operations or financial position.

Note 12 — Income Taxes

Income (loss) from continuing operations before income tax expense consists of the following:

	Year Ended December 31
	2010			2009			2008
United States	$	(21,370	)	$	(43,099	)	$	(41,813	)
Outside the United States		128,685			42,041			214,101
	$	107,315		$	(1,058	)	$	172,288

80

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Income tax expense is summarized as follows:

	Year Ended December 31
	2010			2009			2008
Current tax provision (benefit):
United States:
Federal	$	321		$	7,122		$	(44,927	)
State and local		376			144			167
Outside the United States		34,090			21,104			61,730
Total current		34,787			28,370			16,970
Deferred tax provision (benefit):
United States		542			(6,949	)		5,437
Outside the United States		(5,673	)		(522	)		(6,331	)
Total deferred		(5,131	)		(7,471	)		(894	)
	$	29,656		$	20,899		$	16,076

A reconciliation of income taxes computed using the United States statutory rate to income taxes computed using the Company’s effective income tax rate is as follows:

	Year Ended December 31
	2010			2009			2008
Income (loss) from continuing operations before income tax expense	$	107,315		$	(1,058	)	$	172,288
Income taxes at the United States statutory rate (35)%		37,560			(370	)		60,301
Increase (decrease) in taxes resulting from:
Effective tax rate differential on income outside of the United States		(25,447	)		5,260			(17,673	)
Repatriation of foreign earnings		5,564			2,537			10,284
Goodwill impairment		—			11,853			2,200
Malaysian tax holiday		(4,545	)		(3,946	)		(4,962	)
Valuation allowance (reversal)		(1,967	)		1,025			6,419
Liability for uncertain tax positions		1,936			8,160			2,317
Foreign tax credits on amended prior year tax returns		—			(5,985	)		(46,636	)
Allowance on GTL prepaid tax asset		11,465			—			—
Other, net		5,090			2,365			3,826
Income tax expense	$	29,656		$	20,899		$	16,076
Effective income tax rate		27.6	%		(a	)		9.3	%

(a) not meaningful

During 2010, the Company recorded discrete tax items related to continuing operations netting to expense of $5.4 million. Included in this amount is $10.1 million of discrete tax expense related to the GTL joint venture, of which the Company’s share is 55%, or $5.6 million. The GTL items are primarily comprised of an $11.5 million charge to reserve a portion of GTL’s prepaid income tax balance, and a benefit of $2.6 million primarily related to a return to provision adjustment. In 2010, certain companies doing business in the DRC, including GTL, received notification from the DRC tax authorities that requests to utilize tax overpayments to offset more than 20% of 2010 taxes payable would not be granted. Based on past precedent set by the DRC tax authorities, GTL had previously estimated it would be able to utilize its prepaid tax asset to offset more than 20% of its future tax

81

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

obligations. Given these changes, the Company updated its estimation of the realizability of GTL’s prepaid tax asset in the DRC and recorded an allowance of $11.5 million against the prepaid tax asset in 2010. Excluding the discrete items, the effective income tax rate for 2010 would have been 22.6%. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland) and a tax holiday in Malaysia. This was partially offset by losses in certain jurisdictions with no corresponding tax benefit (including the U.S.). During 2009, the Company recorded discrete tax expense items totaling $10.2 million, which included $9.2 million related to GTL, of which the Company’s share is 55%, or $5.1 million. Also in 2009, the Company recorded goodwill and intangible asset impairment charges totaling $39.1 million, which are not deductible for tax purposes. Adjusting the pretax loss for the impairment charges and excluding the special tax items, the Company’s effective income tax rate would have been 28.2% for 2009. This effective tax rate is lower than the U.S. statutory rate due primarily to income earned in foreign tax jurisdictions with lower statutory tax rates than the U.S. (primarily Finland) and a tax holiday in Malaysia, offset by income earned in foreign tax jurisdictions with higher statutory rates than the US, principally the DRC.

During 2009, the Company updated its analysis of foreign tax credit positions and recorded a $5.8 million tax benefit related to an election to take foreign tax credits on prior year U.S. tax returns. As originally filed, such returns claimed these amounts as deductions rather than foreign tax credits because the Company was in a net operating loss carryforward position in the U.S. during those years. However, due to income taxes paid in the U.S. in connection with the 2009 repatriation of foreign earnings, the Company is able to utilize these foreign tax credits previously taken as deductions. The benefit related to the foreign tax credits was $0.19 per diluted share in 2009. During 2008, the Company completed an analysis of foreign tax credit positions and recorded a $46.6 million tax benefit related to an election to take foreign tax credits on prior year U.S. tax returns. As originally filed, such returns claimed these amounts as deductions rather than foreign tax credits because the Company was in a net operating loss carryforward position in the U.S. during those years. However, due to income taxes paid in the U.S. in connection with the 2007 repatriation of foreign earnings, the Company is able to utilize these foreign tax credits previously taken as deductions. The benefit related to the foreign tax credits was $1.54 per diluted share in 2008. The $46.6 million tax benefit is net of a valuation allowance of $1.5 million on deferred tax assets because it is more likely than not that those deferred tax assets will not be realized as a result of the Company’s election to claim the foreign tax credits. Excluding the tax benefit related to the foreign tax credits, the Company’s effective income tax rate would have been 36.4% for 2008.

As discussed above, during 2008 and 2009, the Company recorded tax benefits related to its election to take foreign tax credits on prior year U.S. tax returns. As of December 31, 2010, the Company has a receivable of $37.9 million (included in Refundable and prepaid income taxes on the Consolidated Balance Sheets) related to amending its U.S. tax returns. The Company expects to receive this refund in 2011.

The Company intends to repatriate only future earnings and therefore has not provided additional United States income taxes on approximately $204.8 million of undistributed earnings of consolidated foreign subsidiaries. Such earnings could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. The Company’s intent is for such earnings to be permanently reinvested by the foreign subsidiaries. It is not practicable to estimate the amount of unrecognized withholding taxes and tax liability on such earnings.

In connection with an investment incentive arrangement, the Company has a “tax holiday” from income taxes in Malaysia. This arrangement, which expires on December 31, 2011, reduced income tax expense by $4.5 million, $3.9 million and $5.0 million for 2010, 2009 and 2008, respectively. The benefit of the tax holiday on net income per diluted share was approximately $0.15, $0.13, and $0.16 in 2010, 2009 and 2008, respectively.

82

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company has a subsidiary in the Netherlands which is a closed CV and under Dutch law is not subject to tax in the Netherlands. The Company’s tax ruling confirming its favorable tax status expired on December 31, 2010. The Company has requested, and expects to receive, a renewal of the ruling confirming its tax status under Dutch law.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. The Internal Revenue Service is currently examining the Company’s 2007 U.S. federal income tax return. This examination is expected to be completed in 2011.

Income tax payments were $26.5 million, $23.9 million and $77.4 million in 2010, 2009 and 2008, respectively.

Significant components of the Company’s deferred income taxes are as follows:

	December 31
	2010			2009
Employee benefit accruals	$	24,246		$	10,339
Foreign operating loss carryforwards		12,413			2,823
Foreign tax credit carryforwards		10,567			8,257
State operating loss carryforwards		6,702			7,711
Operating accruals		17,796			15,411
Investment credit carryforwards		2,195			—
Valuation allowance		(50,329	)		(24,141	)
Deferred tax assets		23,590			20,400
Depreciation and amortization		(33,853	)		(31,732	)
Earnings repatriation		(969	)		(1,578	)
Other		(951	)		(625	)
Deferred tax liabilities		(35,773	)		(33,935	)
Net deferred tax liabilities	$	(12,183	)	$	(13,535	)

Deferred income taxes are recorded in the Consolidated Balance Sheets in the following accounts:

	December 31
	2010			2009
Other current assets	$	8,208		$	6,519
Other non-current assets		4,000			8,077
Other current liabilities		(892	)		(678	)
Deferred income taxes — non-current liabilities		(23,499	)		(27,453	)
	$	(12,183	)	$	(13,535	)

The Company has a U.S. net deferred tax asset of $0.4 million which is expected to be recovered based on temporary differences that will reverse in 2011-2012. At December 31, 2010 and 2009, the Company has U.S state net operating loss carryforwards representing a potential future tax benefit of $6.7 million and $7.7 million. These carryforwards expire at various dates from 2011 through 2030. The Company has recorded a full valuation allowance against the U.S state net operating loss carryforwards. The Company has foreign net operating loss carryforwards of $38.4 million, representing a potential future tax benefit of $12.4 million in various jurisdictions, some of which expire in 2012 through 2030, and some of which have no expiration. The Company has established a $7.4 million valuation allowance against the foreign net operating loss

83

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

carryforwards as the Company believes that the majority of these assets will not be realized. The remaining $5.0 million foreign operating loss carryforward, which relates to GTL, is expected to be realized based on current projections of future taxable income. The Company has foreign investment tax credit carryforwards of $2.2 million which expire in 2028. The Company has recorded a valuation allowance against the foreign investment tax credit carryforwards as the Company believes that these assets will not be realized. For the year ended December 31, 2010, the Company’s valuation allowance increased primarily due to establishing valuation allowances against the net deferred tax assets associated with the EaglePicher Technologies acquisition.

A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:

Balance at January 1, 2009	$	6,355
Additions for tax positions related to the current year		2,519
Additions for tax positions of prior years		9,812
Reductions for tax positions of prior years		(1,520	)
Reductions for lapses of statute of limitations		(618	)
Foreign currency translation		96
Balance at December 31, 2009		16,644
Additions for tax positions related to the current year		3,714
Additions for tax positions of prior years		2,958
Reductions for tax positions of prior years		(1,819	)
Reductions for lapses of statute of limitations		(278	)
Foreign currency translation		107
Balance at December 31, 2010	$	21,326

If recognized, all uncertain tax positions would affect the effective tax rate. However, $8.5 million of the uncertain tax positions relate to foreign tax credit carryforwards, which if recognized would be offset by an adjustment to the valuation allowance. At December 31, 2010, there are no uncertain tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The increase in uncertain tax positions in 2010 results primarily from intercompany transactions including transfer pricing matters and a tax refund on an intercompany dividend. The decrease in uncertain tax positions in 2010 results primarily from audit activities and a change in recognition related to an intercompany loan. The increase in uncertain tax positions in 2009 results primarily from transfer pricing matters. At December 31, 2010, the liability for uncertain tax positions includes $4.7 million for which it is reasonably possible that the uncertain tax position will decrease within the next twelve months. These uncertain tax positions primarily relate to transfer pricing and may decrease upon completion of examination by taxing authorities.

The Company recognizes interest accrued related to uncertain tax positions and penalties as a component of income tax expense. During 2010, 2009 and 2008, the Company recognized a $0.1 million benefit, $0.5 million expense and $0.1 million expense related to interest and penalties, respectively. At December 31, 2010 and 2009, the Company had $0.8 million and $0.9 million accrued for interest and penalties.

Note 13 — Pension and Other Post-Retirement Benefit Plans

The Company has defined contribution plans covering substantially all eligible U.S. employees. Contributions are directed by the employee into various investment options. These defined contribution plans do not have any direct ownership of the Company’s common stock. Under these plans, the Company matches participants’ contributions based on plan provisions. Certain plans provide for a discretionary Company contribution based on employee compensation. From July 2009 through December 2009, the Company suspended the

84

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

discretionary employer contributions to its defined contribution retirement plans. The Company maintains additional defined contribution plans in certain locations outside the United States. Aggregate defined contribution plan expenses were $5.7 million, $4.4 million and $3.8 million in 2010, 2009 and 2008, respectively.

As a result of the EaglePicher Technologies acquisition, the Company assumed certain pension obligations and an unfunded life insurance plan. The EaglePicher Technologies pension plans consist of four non-contributory defined benefit pension plans. The Technologies Salaried Plan is a defined benefit, cash balance plan that covers EaglePicher Technologies salaried employees hired prior to January 1, 2007. The Technologies Hourly Plan is a defined benefit plan that covers EaglePicher Technologies non-union hourly employees hired prior to January 1, 2007 and union hourly employees hired prior to May 3, 2008. The Company also assumed the liabilities of two frozen defined benefit pension plans. Pension benefits are paid to plan participants directly from pension plan assets. The liability associated with the life insurance plan was $0.6 million at December 31, 2010 and is included in Other non-current liabilities in the Consolidated Balance Sheet.

In addition to the pension liabilities assumed as a result of the EaglePicher Technologies acquisition, the Company has a non-contributory, defined benefit pension plan for certain retired employees in the United States related to the Company’s divested SCM business. Pension benefits are paid to plan participants directly from pension plan assets. Certain non-U.S. employees are covered under other defined benefit plans. These non-U.S. plans are not material to the Company.

The Company also has an obligation to its former chief executive officer in settlement of an unfunded supplemental executive retirement plan (“SERP”). Payments under the SERP are made directly from the Company.

During 2008, to comply with the requirements of U.S. GAAP to measure plan assets and benefit obligations as of the date of its statement of financial position, the Company changed the measurement date of its pension and postretirement benefit plans from October 31 to December 31. As a result, an adjustment to beginning retained earnings of $0.2 million was recorded in 2008 and is reflected in the Statement of Consolidated Stockholders’ Equity.

85

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The following table sets forth the changes in the benefit obligation and the plan assets during the year and reconciles the funded status of the defined benefit plans with the amounts recognized in the Consolidated Balance Sheets at December 31:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	2010			2009			2010			2009
Change in benefit obligation
Projected benefit obligation at beginning of year	$	(24,061	)	$	(23,670	)	$	(2,813	)	$	(2,086	)
EaglePicher Technologies acquisition		(182,670	)		—			—			—
Service cost		(913	)		—			(228	)		(173	)
Interest cost		(11,078	)		(1,307	)		(129	)		(122	)
Actuarial gain		(8,976	)		(893	)		(405	)		(365	)
Benefits paid		11,832			1,137			57			71
Plan amendments		—			—			—			(89	)
Transfers out of the plan		—			—			—			32
Foreign currency exchange rate changes		—			—			185			(81	)
SERP payments related to former CEO		672			672			—			—
Projected benefit obligation at end of year		(215,194	)		(24,061	)		(3,333	)		(2,813	)
Change in plan assets
Fair value of plan assets at beginning of year		10,013			8,845			309			293
EaglePicher Technologies acquisition		139,768			—			—			—
Actual return on plan assets		15,865			2,076			3			7
Employer contributions		5,633			229			57			71
Foreign currency exchange rate changes		—			—			(20	)		9
Benefits paid		(11,832	)		(1,137	)		(57	)		(71	)
Fair value of plan assets at end of year		159,447			10,013			292			309
Funded status — plan assets less than benefit obligations		(55,747	)		(14,048	)		(3,041	)		(2,504	)
Recognized in accumulated other comprehensive income:
Net actuarial (gain) loss		13,895			11,528			571			177
Amounts not yet recognized as a component of net postretirement benefit cost	$	13,895		$	11,528		$	571		$	177
Amounts recorded in the balance sheet consist of:
Accrued benefit liability — current	$	(681	)	$	(704	)	$	—		$	(49	)
Accrued benefit liability — long-term		(55,066	)		(13,344	)		(3,041	)		(2,455	)
Accumulated other comprehensive loss		13,895			11,528			571			177
Net amount recognized	$	(41,852	)	$	(2,520	)	$	(2,470	)	$	(2,327	)
Accumulated benefit obligation at end of year	$	(198,736	)	$	(24,061	)	$	(2,859	)	$	(2,579	)

86

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Set forth below is a detail of the net periodic pension and other post-retirement benefit expense for the defined benefit plans for the years ended December 31:

	Pension Benefits
	U.S. Plans
	2010			2009			2008
Service cost	$	913		$	—		$	—
Interest cost		11,078			1,307			1,295
Amortization of unrecognized net loss		364			390			273
Expected return on plan assets		(9,621	)		(711	)		(857	)
Net periodic benefit cost		2,734			986			711
Net (gain) loss arising during the year		2,731			(473	)		3,966
Net (gain) loss recognized during the year		(363	)		(390	)		(273	)
Change in measurement date		—			—			(46	)
Total recognized in other comprehensive income		2,368			(863	)		3,647
Total recognized in net periodic benefit cost and other comprehensive income	$	5,102		$	123		$	4,358

	Pension Benefits
	Non-U.S. Plans
	2010			2009			2008
Service cost	$	228		$	173		$	130
Interest cost		129			122			120
Amortization of unrecognized net loss		3			(7	)		—
Amortization of prior service credit		5			—			—
Expected return on plan assets		(9	)		(10	)		(17	)
Net periodic benefit cost		356			278			233
Net (gain) loss arising during the year		411			375			(325	)
Net (gain) loss recognized during the year		(3	)		7			—
Amortization of prior service credit		(5	)		89			—
Exchange rate gain (loss)		(9	)		6			17
Total recognized in other comprehensive income		394			477			(308	)
Total recognized in net periodic benefit cost and other comprehensive income	$	750		$	755		$	(75	)

Future pension benefit payments expected to be paid are as follows:

	Pension
Expected benefit payments	U.S. Plans		Non-U.S. Plans
2011	$	13,961	$	118
2012	$	14,099	$	82
2013	$	14,117	$	114
2014	$	14,156	$	71
2015	$	14,251	$	101
2016-2020	$	73,052	$	764

87

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company expects to contribute $7.6 million and $0.1 million related to its U.S. and non-U.S. pension plans, respectively, in 2011. Expected contributions are dependent on many variables, including the variability of the market value of the assets as compared to the obligation and other market or regulatory conditions. Accordingly, actual funding may differ significantly from current estimates.

The amounts in Accumulated other comprehensive income (loss) that are expected to be recognized as components of net periodic benefit cost during 2011 are as follows:

	U.S. Plans		Non-U.S. Plans		Total
Net actuarial loss	$	386	$	10	$	396
Prior service cost		—		5		5
Total	$	386	$	15	$	401

The following weighted-average assumptions were used to determine the Company’s pension benefit obligations for the year ended December 31:

	2010	2009
U.S. Plans
Discount rate — EPT Active Plans	5.29%	n/a
Discount rate — EPT Inactive Plans	5.12%	n/a
Discount rate — SCM Plans	5.12%	5.50%
Expected return on pension plan assets — EPT Active Plans	8.25%	n/a
Expected return on pension plan assets — EPT Inactive Plans	6.00%	n/a
Expected return on pension plan assets — SCM Plans	6.75%	7.50%
Rate of increases in compensation	3.50%	n/a
Non U.S. Plans
Discount rate	4.33%	5.07%
Rate of increases in compensation	2.75% – 3.00%	2.00% – 3.00%

The following weighted-average assumptions were used to determine the Company’s net periodic pension benefit costs for the year ended December 31:

	2010	2009
U.S. Plans
Discount rate — EPT Active Plans	5.67%	n/a
Discount rate — EPT Inactive Plans	5.64%	n/a
Discount rate — SCM Plans	5.50%	5.50%
Expected return on pension plan assets — EPT Active Plans	8.25%	n/a
Expected return on pension plan assets — EPT Inactive Plans	6.75%	n/a
Expected return on pension plan assets — SCM Plans	7.50%	7.00%
Non U.S. Plans
Discount rate	5.10%	5.25% – 6.25%
Expected return on pension plan assets	5.78%	5.0% – 6.0%

The Company’s investment objective for defined benefit plan assets is to meet the plan’s benefit obligations, without undue exposure to risk. The investment strategy focuses on asset class diversification, liquidity to meet benefit payments and an appropriate balance of long-term investment return and risk. The Investment Committee oversees the investment allocation process, which includes the selection and evaluation of the investment manager, the determination of investment objectives and risk guidelines, and the monitoring of actual investment performance. In determining the expected long-term rate of return on defined benefit

88

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

pension plan assets, management considers the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans, the nature of investments and an expectation of future investment strategies.

The Company utilizes the services of independent third-party investment managers to oversee the management of U.S. pension plan assets. The investment managers are allowed to exercise investment discretion, subject to limitations established by the Company.

EaglePicher Technologies defined benefit pension obligations consist of four pension plans, comprised of two frozen plans and two active plans. The EaglePicher Technologies plan assets are managed as two “pools” in recognition of the differences in the obligations of the active and frozen plans. Below are the Company’s actual and established target allocations for the EaglePicher Technologies Pension Plans, representing 92% of U.S. pension plan assets:

	Active Plans						Frozen Plans
	Actual			Target			Actual			Target
	Allocation			Allocation			Allocation			Allocation
U.S. equity securities		36	%		35	%		12	%		12	%
International equity securities		30	%		30	%		8	%		8	%
Fixed income		22	%		25	%		69	%		70	%
High yield		0	%		0	%		2	%		2	%
TIPS		5	%		5	%		5	%		6	%
Global REITS		5	%		5	%		3	%		3	%
Cash		2	%		0	%		1	%		0	%
Total assets		100	%		100	%		100	%		100	%

Active Plans:  Domestic equity securities are invested broadly in U.S. companies in various industries using the Wilshire 5000 Index as the asset class benchmark. International equity securities are invested broadly in non-U.S. companies in various industries using the MSCI ACWI ex-U.S. Index as the asset class benchmark. Long-term Core Fixed Income (“Fixed income”) consists of broad investment grade fixed income bonds using the Barclays Capital Long Government/Credit Index as the asset class benchmark. U.S. Treasury Inflation Protected Fixed Income (“TIPS”) invests in the U.S. Treasury inflation protected securities market using the Barclays U.S. TIPS Index as the asset class benchmark. Real estate investments are invested in the broad global real estate securities market with the FTSE EPRA/NAREIT Developed RE Index (or other comparable index) as the asset class benchmark.

Frozen Plans:  Domestic equity securities are invested broadly in U.S. companies in various industries using the Wilshire 5000 Index as the asset class benchmark. International equity securities are invested broadly in non-U.S. companies in various industries using the MSCI ACWI ex-U.S. Index as the asset class benchmark. Fixed income consists of long-credit fixed income bonds using the Barclays Capital Long Credit Index as the asset class benchmark. High Yield Fixed Income (“High yield”) invests in broad U.S. non-investment grade fixed income bonds using the Merrill Lynch U.S. High Yield Master II Index as the asset class benchmark. TIPS invests in the U.S. Treasury inflation protected securities market using the Barclays U.S. TIPS Index as the asset class benchmark. Real estate investments are invested in the broad global real estate securities market with the FTSE EPRA/NAREIT Developed RE Index (or other comparable index) as the asset class benchmark.

89

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company’s asset allocations by asset category for the SCM and non-U.S. plans are as follows:

	December 31, 2010			December 31, 2009
	Actual Allocation			Actual Allocation
Equity securities		30	%		28	%
Corporate bonds		24	%		29	%
Government bonds		12	%		12	%
Other fixed income		30	%		18	%
Foreign assets		2	%		8	%
Cash		2	%		5	%
Total assets		100	%		100	%

Equity securities are invested broadly in U.S. companies in various industries. Foreign assets consist of equity securities of non-U.S. companies in various industries as well as foreign mutual funds.

The fair value measurements of defined benefit pension plan assets by category at December 31, 2010 are as follows:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	December 31,		for Identical		Observable		Unobservable
Category	2010		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Equity securities — US	$	30,129,328	$	28,216,377	$	1,912,951	$	—
Equity securities — Non US		19,429,820		2,158,884		17,270,936		—
Fixed income:
Bonds		79,554,209		—		79,554,209		—
Other fixed income		12,015,718		—		12,015,718		—
High yield		2,516,644		2,516,644		—		—
TIPS		7,328,537		5,750,499		1,578,038		—
Global REITS		5,064,677		5,064,677		—		—
Foreign assets		226,990		—		226,990		—
Insurance contracts		64,881		—		64,881		—
Cash and cash equivalents		3,408,311		—		3,408,311		—
Total	$	159,739,115	$	43,707,081	$	116,032,034	$	—

The defined benefit pension plans do not have any direct ownership of the Company’s common stock.

In June 2009, the Company announced a plan to terminate its unfunded postretirement medical and life insurance plan. As a result of such action, benefits available to eligible employees and retirees ceased on August 31, 2009. The Company recognized a $4.7 million gain on the termination in 2009. The $4.7 million gain, which is included in Corporate for segment reporting, is net of reversal of unrecognized actuarial gain of $0.1 million.

90

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Set forth below is a detail of the net periodic other post-retirement benefit expense for the years ended December 31:

	Other Post-retirement Benefits U.S. Plans
	2010		2009			2008
Service cost	$	—	$	25		$	112
Interest cost		—		162			324
Gain on termination of plan		—		(4,693	)		—
Net amortization		—		—			86
Net periodic benefit cost		—		(4,506	)		522
Net (gain) loss arising during the year		—		—			(1,700	)
Net (gain) loss recognized during the year		—		137			(46	)
Amortization of prior service credit		—		—			(40	)
Change in measurement date		—		—			(14	)
Total recognized in other comprehensive income		—		137			(1,800	)
Total recognized in net periodic benefit cost and other comprehensive income	$	—	$	(4,369	)	$	(1,278	)

The following table sets forth the changes in the other post-retirement benefit obligation:

	Other Post-retirement Benefits
	U.S. Plans
	2010		2009
Change in benefit obligation
Projected benefit obligation at beginning of year	$	—	$	(4,506	)
Service cost		—		(25	)
Interest cost		—		(162	)
Termination of plan		—		4,693
Benefits paid		—		—
Projected benefit obligation at end of year	$	—	$	—

91

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Note 14 — Accumulated Other Comprehensive Income (Loss)

				Unrealized
				Gains and						Accumulated
	Foreign			Losses on Cash			Pension and			Other
	Currency			Flow Hedging			Post-Retirement			Comprehensive
	Translation			Derivatives			Obligation			Income (Loss)
Balance at January 1, 2008		18,080			—			(10,415	)		7,665
Change in measurement date		—			—			60			60
Current period credit (charge)		(36,109	)		—			(1,599	)		(37,708	)
Balance at December 31, 2008		(18,029	)		—			(11,954	)		(29,983	)
Reversal of accumulated unrecognized gain on retiree medical plan		—			—			(137	)		(137	)
Reclassification adjustments		—			615			—			615
Current period credit (charge)		12,741			(591	)		386			12,536
Balance at December 31, 2009		(5,288	)		24			(11,705	)		(16,969	)
Reclassification adjustments		—			2,315			—			2,315
Current period credit (charge)		17,031			(2,732	)		(2,764	)		11,535
Balance at December 31, 2010	$	11,743		$	(393	)	$	(14,469	)	$	(3,119	)

Note 15 — Earnings Per Share

The following table sets forth the computation of basic and dilutive income (loss) per common share from continuing operations attributable to OM Group, Inc. common stockholders for the years ended December 31:

	2010		2009			2008
	(in thousands, except per share amounts)
Income (loss) from continuing operations attributable to
OM Group, Inc. common stockholders	$	82,648	$	(19,353	)	$	134,911
Weighted average shares outstanding — basic		30,433		30,244			30,124
Dilutive effect of stock options and restricted stock		132		—			234
Weighted average shares outstanding — assuming dilution		30,565		30,244			30,358
Earnings per common share:
Income (loss) from continuing operations attributable to
OM Group, Inc. common stockholders — basic	$	2.72	$	(0.64	)	$	4.48
Income (loss) from continuing operations attributable to
OM Group, Inc. common stockholders — assuming dilution	$	2.70	$	(0.64	)	$	4.45

92

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The following table sets forth the computation of basic and diluted net income (loss) per common share attributable to OM Group, Inc. common stockholders for the years ended December 31:

	2010		2009			2008
	(in thousands, except per share amounts)
Net income (loss) attributable to OM Group, Inc. common stockholders	$	83,374	$	(17,857	)	$	135,003
Weighted average shares outstanding — basic		30,433		30,244			30,124
Dilutive effect of stock options and restricted stock		132		—			234
Weighted average shares outstanding — assuming dilution		30,565		30,244			30,358
Earnings per common share:
Net income (loss) attributable to OM Group, Inc. common stockholders — basic	$	2.74	$	(0.59	)	$	4.48
Net income (loss) attributable to OM Group, Inc. common stockholders — assuming dilution	$	2.73	$	(0.59	)	$	4.45

The Company uses the treasury stock method to calculate the effect of outstanding share-based compensation awards, which requires the Company to compute total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award, (b) the amount of unearned share-based compensation costs attributed to future services and (c) the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the award. Shares under share-based compensation awards for which the total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share.

In the year ended December 31, 2010, stock options to purchase 0.2 million shares of common stock were excluded from the calculation of dilutive earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would have been anti dilutive. As the Company had a loss from continuing operations for the year ended December 31, 2009, the effect of including dilutive securities in the earnings per share calculation would have been antidilutive. Accordingly, all shares under share-based compensation awards were excluded from the calculation of loss from continuing operations attributable to OM Group, Inc. common stockholders assuming dilution and net loss attributable to OM Group, Inc. common stockholders assuming dilution for the year ended December 31, 2009. For the year ended December 31, 2008, share-based compensation awards for 0.3 million shares were excluded from the diluted earnings per share calculation because they were antidilutive.

Note 16 — Share-Based Compensation

On May 8, 2007, the stockholders of the Company approved the 2007 Incentive Compensation Plan (the “2007 Plan”). The 2007 Plan superseded and replaced the 1998 Long-Term Incentive Compensation Plan (the “1998 Plan”) and the 2002 Stock Incentive Plan (the “2002 Plan”). The 1998 Plan and 2002 Plan terminated upon stockholder approval of the 2007 Plan, such that no further grants may be made under either the 1998 Plan or the 2002 Plan. The terminations did not affect awards already outstanding under the 1998 Plan or the 2002 Plan, which consist of options and restricted stock awards. All options outstanding under each of the 1998 Plan and the 2002 Plan have ten-year terms and have an exercise price of not less than the per share fair market value, measured by the average of the high and low price of the Company’s common stock on the NYSE, on the date of grant.

93

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Under the 2007 Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards and phantom stock and restricted stock unit awards to selected employees and non-employee directors. The 2007 Plan also provides for the issuance of common stock to non-employee directors as all or part of their annual compensation for serving as directors, as may be determined by the board of directors. The total number of shares of common stock available for awards under the 2007 Plan (including any annual stock issuances made to non-employee directors) is 3,000,000. The 2007 Plan provides that no more than 1,500,000 shares of common stock may be the subject of awards that are not stock options or stock appreciation rights. In addition, no more than 250,000 shares of common stock may be awarded to any one person in any calendar year, whether in the form of stock options, restricted stock or another form of award. The 2007 Plan provides that all options granted must have an exercise price of not less than the per share fair market value on the date of grant and that no option may have a term of more than ten years. The Company satisfies stock option exercises and restricted stock awards through the issuance of authorized but unissued shares or treasury shares.

The Statements of Consolidated Operations include share-based compensation expense for option grants, restricted stock and restricted stock unit awards granted to employees as a component of Selling, general and administrative expenses of $5.4 million, $5.8 million and $7.3 million in 2010, 2009 and 2008, respectively. No tax benefit was realized during 2010, 2009 or 2008 as a result of the valuation allowance against the deferred tax assets.

At December 31, 2010, there was $5.9 million of unrecognized compensation expense related to nonvested share-based awards. That cost is expected to be recognized as follows: $3.4 million in 2011, $2.3 million in 2012 and $0.2 million in 2013 as a component of Selling, general and administrative expenses. Unearned compensation expense is recognized over the vesting period for the particular grant. Total unrecognized compensation cost will be adjusted for future changes in actual and estimated forfeitures and fluctuations in the fair value of restricted stock unit awards.

Beginning in 2007, non-employee directors of the Company are paid a portion of their annual retainer in unrestricted shares of common stock. For purposes of determining the number of shares of common stock to be issued, the 2007 Plan provides that shares are to be valued at the average of the high and low sale price of the Company’s common stock on the NYSE on the last trading date of the quarter. Pursuant to this plan, the Company issued 8,458 shares in 2010, 11,256 shares in 2009 and 7,316 shares in 2008 to non-employee directors.

Stock Options

Options granted generally vest in equal increments over a three-year period from the grant date. Upon any change in control of the Company, as defined in the applicable plan, or upon death, disability or retirement, the stock options become 100% vested and exercisable. The Company accounts for options that vest over more than one year as one award and recognizes expense related to those awards on a straight-line basis over the vesting period. During 2010, 2009 and 2008 the Company granted stock options to purchase 243,050, 188,003 and 168,175 shares of common stock, respectively. Included in the 2009 grants are stock options to purchase 7,703 shares of common stock with a vesting period of one year, which were granted to the Company’s Chief Executive Officer (“CEO”) in connection with payment of his 2008 high-performance bonus.

94

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The fair value of options was estimated at the date of grant using a Black-Scholes options pricing model with the following weighted-average assumptions:

	2010			2009			2008
Risk-free interest rate		2.7	%		2.1	%		2.6	%
Dividend yield		—			—			—
Volatility factor of Company common stock		0.58			0.59			0.47
Weighted-average expected option term (years)		6.0			6.0			6.0
Weighted-average grant-date fair value	$	17.24		$	11.23		$	27.72

The risk-free interest rate assumption is based upon the U.S. Treasury yield curve appropriate for the term of the options being valued. The dividend yield assumption is zero, as the Company intends to continue to retain earnings for use in the operations of the business and does not anticipate paying dividends in the foreseeable future. Expected volatilities are based on historical volatility of the Company’s common stock. The expected term of options granted is determined using the simplified method allowed by Staff Accounting Bulletin (“SAB”) No. 110 as historical data was not sufficient to provide a reasonable estimate. Under this approach, the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.

The following table sets forth the number of option shares and weighted-average grant-date fair value:

				Weighted-Average
				Fair Value at
	Shares			Grant Date
Non-vested at December 31, 2008		307,289		$	26.10
Granted during 2009		188,003		$	11.23
Vested during 2009		(135,446	)	$	24.45
Forfeited during 2009		(22,034	)	$	16.62
Non-vested at December 31, 2009		337,812		$	18.96
Granted during 2010		243,050		$	17.24
Vested during 2010		(171,544	)	$	21.10
Forfeited during 2010		(11,404	)	$	16.04
Non-vested at December 31, 2010		397,914		$	17.07

A summary of the Company’s stock option activity for 2010 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding at January 1, 2010		1,035,942		$	35.37
Granted		243,050			30.72
Exercised		(180,202	)		22.88
Expired unexercised		(15,932	)		49.80
Forfeited		(11,404	)		29.49
Outstanding at December 31, 2010		1,071,454		$	36.27		6.61	$	7,859
Vested or expected to vest at December 31, 2010		1,049,416		$	36.27		6.57	$	7,684
Exercisable at December 31, 2010		673,540		$	39.04		5.44	$	4,031

The fair value of options that vested during 2010, 2009 and 2008 was $3.6 million, $3.3 million and $3.3 million, respectively. The intrinsic value of options exercised during 2010, 2009 and 2008 was $2.2 million, $0 million

95

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

and $0.4 million, respectively. The intrinsic value of an option represents the amount by which the market value of the stock exceeds the exercise price of the option.

In connection with the exercise of stock options previously granted, the Company received cash payments of $4.1 million, $0 million and $0.9 million in 2010, 2009 and 2008, respectively. The Company does not settle stock options for cash.

Restricted Stock — Performance-Based Awards

During 2010, 2009 and 2008, the Company awarded 121,700, 87,250 and 60,200 shares, respectively, of performance-based restricted stock that vest subject to the Company’s financial performance. The number of shares of restricted stock that ultimately vest is based upon the Company’s achievement of specific measurable performance criteria. A recipient of performance-based restricted stock may earn a total award ranging from 0% to 100% of the initial grant, with target being 50% of the initial grant. The shares awarded during 2010 and 2009 will vest upon the satisfaction of established performance criteria based on average consolidated EBITDA Margin (defined as operating profit plus depreciation and amortization expense divided by revenue) measured against a predetermined peer group, and average return on net assets, calculated over respective three-year performance periods ending December 31, 2012 and December 31, 2011, respectively.

The performance period for the shares awarded during 2008 ended on December 31, 2010. Such shares vest based upon the level of satisfaction of established performance criteria based on the Company’s consolidated operating profit and average return on net assets, in each case over the three-year performance period ended December 31, 2010. The shares will vest upon the determination by the Compensation Committee that the performance objectives relating to the shares were satisfied and that the shares were earned. Based upon the level of satisfaction of the performance objectives, approximately 1,700 of the performance-based shares awarded in 2008 are expected to vest and be issued in the first quarter of 2011.

The performance period for 86,854 shares awarded during 2007 ended on December 31, 2009. A total of 80,600 of the shares awarded during 2007 were subject to vesting based upon the level of satisfaction of established performance criteria, based on the Company’s consolidated operating profit and average return on net assets, in each case over the three-year performance period ended December 31, 2009. Based upon the level of satisfaction of the performance objectives, as determined by the Compensation Committee in March 2010, 74,676 performance-based shares vested and were issued in the first quarter of 2010. Upon vesting, employees surrendered 26,651 shares of common stock to the Company to pay required minimum withholding taxes applicable to the vesting of restricted stock. The surrendered shares are held by the Company as treasury stock. The remaining 6,254 shares issued in 2007 did not vest as the Company did not meet an established earnings target during any one of the years in the three-year performance period ended December 31, 2009.

The performance period for the shares of restricted stock awarded during 2006 ended on December 31, 2008. During 2009, a total of 86,610 shares vested upon the determination by the Compensation Committee that the performance objectives relating to the shares were satisfied, and the shares were earned at the maximum (100%) level. Upon vesting, employees surrendered 24,654 shares of common stock to the Company to pay required minimum withholding taxes applicable to the vesting of restricted stock. The surrendered shares are held by the Company as treasury stock.

The value of the performance-based restricted stock awards was based upon the market price of an unrestricted share of the Company’s common stock at the date of grant. The Company recognizes expense related to performance-based restricted stock ratably over the requisite performance period based upon the number of shares that are anticipated to vest. The number of shares anticipated to vest is evaluated quarterly and compensation expense is adjusted accordingly. Upon any change in control of the Company, as defined in

96

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

the plan, or upon retirement, the shares become 100% vested at the target level. In the event of death or disability, a pro rata number of shares shall remain eligible for vesting at the end of the performance period.

A summary of the Company’s performance-based restricted stock awards for 2010 is as follows:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Non-vested at January 1, 2010		221,579		$	37.52
Granted		121,700			30.67
Vested		(74,676	)		41.43
Forfeited		(14,628	)		40.81
Non-vested at December 31, 2010		253,975		$	32.90
Expected to vest as of December 31, 2010		47,492

Restricted Stock Units — Performance-Based Awards

During 2010 and 2009, the Company awarded 19,850 and 22,480 performance-based restricted stock units, respectively, to employees outside the U.S. that vest subject to the Company’s financial performance for three-year performance periods ending on December 31, 2012 and December 31, 2011, respectively. These awards will be settled in cash based on the value of the Company’s common stock at the vesting date. Since the awards will be settled in cash, they are recorded as a liability award in accordance with the “Stock Compensation” topic of the ASC. Accordingly, the Company records these awards as a component of Other non-current liabilities on the Consolidated Balance Sheets. The fair value of the awards, which determines the measurement of the liability on the balance sheet, is remeasured at each reporting period until the award is settled. Fluctuations in the fair value of the liability awards are recorded as increases or decreases to compensation expense. Over the life of these awards, the cumulative amount of compensation expense recognized will match the actual cash paid. The number of restricted stock units that ultimately vest is based upon the Company’s achievement of the same performance criteria as the 2010 and 2009 performance-based restricted stock awards described above.

The Company recognizes expense related to performance-based restricted stock units ratably over the requisite performance period based upon the number of units that are anticipated to vest. The number of units anticipated to vest is evaluated quarterly and compensation expense is adjusted accordingly. Upon any change in control of the Company, as defined in the applicable plan, or upon retirement, the units become 100% vested at the target level. In the event of death or disability, a pro rata number of units remain eligible for vesting at the end of the performance period.

A summary of the Company’s performance-based restricted stock unit awards for 2010 is as follows:

	Units
Non-vested at January 1, 2010		19,380
Granted		19,850
Accelerated vesting due to retirement		(350	)
Forfeited		(350	)
Non-vested at December 31, 2010		38,530
Expected to vest at December 31, 2010		7,570

97

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Restricted Stock — Time-Based Awards

During 2010, 2009 and 2008, the Company awarded 63,100, 24,850 and 17,675 shares, respectively, of time-based restricted stock that vest three years from the date of grant, subject to the recipient remaining employed by the Company on that date. In addition, during 2009, the Company awarded 4,127 shares of time-based restricted stock with a vesting period of one year to its CEO in connection with payment of his 2008 high-performance bonus. The value of the restricted stock awarded in 2010, 2009 and 2008, based upon the market price of an unrestricted share of the Company’s common stock at the date of grant, was $1.9 million, $0.6 million and $1.0 million, respectively. Compensation expense is being recognized ratably over the vesting period. Upon any change in control of the Company, as defined in the plan, or upon retirement, the shares become 100% vested. A pro rata number of shares will vest in the event of death or disability prior to the stated vesting date.

A summary of the Company’s time-based restricted stock awards for 2010 is as follows:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Non-vested at January 1, 2010		65,662		$	40.25
Granted		63,100		$	30.67
Vested		(26,887	)	$	46.40
Forfeitures		(2,850	)	$	33.34
Non-vested at December 31, 2010		99,025		$	32.67
Expected to vest as of December 31, 2010		94,125

A total of 22,760 shares of time-based restricted stock awarded during 2007 vested during 2010. Upon vesting, employees surrendered 7,923 shares of common stock to the Company to pay required minimum withholding taxes applicable to the vesting of restricted stock. The surrendered shares are held by the Company as treasury stock. The 4,127 shares granted during 2009 to the Company’s chief executive officer, as discussed above, vested during 2010. Upon vesting, the Company’s chief executive officer surrendered 1,310 shares of common stock to the Company to pay required minimum withholding taxes applicable to the vesting of restricted stock.

A total of 19,750 shares of time-based restricted stock awarded during 2006 vested during 2009. During 2009, employees surrendered 5,690 shares of common stock to the Company upon vesting to pay required minimum withholding taxes applicable to the vesting of the restricted stock. The surrendered shares are held by the Company as treasury stock.

Restricted Stock Units — Time-Based Awards

During 2010 and 2009, the Company awarded 10,550 and 4,400 time-based restricted stock units, respectively, to employees outside the U.S. These awards will be settled in cash based on the value of the Company’s common stock at the vesting date. Since the awards will be settled in cash, they are recorded as a liability award in accordance with the “Stock Compensation” topic of the ASC. Accordingly, the Company records these awards as a component of Other non-current liabilities on the Consolidated Balance Sheets. The fair value of the awards, which determines the measurement of the liability on the balance sheet, is remeasured at each reporting period until the award is settled. Fluctuations in the fair value of the liability awards are recorded as increases or decreases to compensation expense. Over the life of these awards, the cumulative amount of compensation expense recognized will match the actual cash paid. The restricted share units vest three years from the date of grant, subject to the recipient remaining employed by the Company on that date. Upon any change in control of the Company, as defined in the applicable plan, or upon retirement, the units

98

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

become 100% vested. A pro rata number of units will vest in the event of death or disability prior to the stated vesting date.

A summary of the Company’s time-based restricted stock unit awards for 2010 is as follows:

	Units
Nonvested at January 1, 2010		3,500
Granted		10,550
Accelerated vesting due to retirement		(200	)
Forfeited		—
Nonvested at December 31, 2010		13,850
Expected to vest at December 31, 2010		12,245

Note 17 — Commitments and Contingencies

In October 2010, GTL was served in Jersey, Channel Islands, with an injunction obtained by Marange Investments (Proprietary) Limited (“Marange”), which restrains Gécamines (a partner in GTL) from removing any of its assets from the island of Jersey up to the amount of 14.5 million British Pounds, pending the resolution of proceedings brought by Marange against Gécamines in the Supreme Court of South Africa. In January 2011, Marange obtained a new order amending the injunction to include an additional claim for 5.0 million British Pounds. As a result, GTL has been enjoined from making payments to Gécamines under the Long Term Slag Sales Agreement between GTL and Gécamines up to the value of 19.5 million British Pounds.

In March 2009, GTL was served in Jersey, Channel Islands, with an injunction obtained by FG Hemisphere Associates LLC (“FG Hemisphere”), which was seeking to enforce two arbitration awards made in 2003 by an arbitral tribunal operating under the auspices of the International Court of Arbitration against the DRC and Société Nationale D’Electricité for $108.3 million (the “Arbitration Awards”). One of the terms of the injunction prohibits GTL from making payments to Gécamines, including amounts payable for raw material purchases under the Long Term Slag Sales Agreement. In November 2010, the Royal Court of Jersey (the “Court”) released its Final Judgment in favor of FG Hemisphere for the full amount of the Arbitration Awards. The Court rejected Gécamines’ argument that it was not an organ of the DRC and rejected GTL’s various arguments, including that the Court did not have jurisdiction to seize monies to be paid to Gécamines under the Long Term Slag Sales Agreement between GTL and Gécamines on the basis that such monies are not held in Jersey. In December 2010, GTL appealed the decision of the Court; as a condition of not paying FG Hemisphere such monies prior to appeal, the Court requires that all amounts owed by GTL to Gécamines (up to the amount of the Arbitration Awards), including monies payable under the Long Term Slag Sales Agreement, be deposited into the Court. As a result, as of December 31, 2010, $68.1 million has been deposited with the Court. Until the appeal is resolved, additional amounts due from GTL to Gécamines, up to the amount of the Arbitration Awards, will be deposited with the Court as they become due. While there can be no assurances with respect to the final outcome of either matter, the Company believes that, based on the information currently available to it, this matter will not have a material adverse effect upon its financial condition or results of operations.

The Company has potential contingent liabilities with respect to environmental matters related to its former PMG operations in Brazil. The Company has been informed by the purchaser of the PMG operations of environmental issues at three of the operating locations in Brazil. Environmental-cost sharing arrangements are in place between the original owner and operator of those PMG operations, the Company and the subsequent purchaser of the PMG operations. The Company has reviewed the limited information made available to it on the environmental conditions and is awaiting more detailed information from the purchaser of PMG. The Company cannot currently evaluate whether or not, or to what extent, it will be responsible for any remediation costs until more detailed information is received.

99

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Company is subject to a variety of environmental and pollution control laws and regulations in the jurisdictions in which it operates. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings involving environmental matters. A number of factors affect the cost of environmental remediation, including the determination of the extent of contamination, the length of time the remediation may require, the complexity of environmental regulations and the continuing improvements in remediation techniques. Taking these factors into consideration, the Company estimates the undiscounted costs of remediation, which will be incurred over several years, and accrues an amount consistent with the estimates of these costs when it is probable that a liability has been incurred. At December 31, 2010 and December 31, 2009, the Company has recorded environmental liabilities of $1.5 million and $2.8 million, respectively, related to remediation and decommissioning at the Company’s closed manufacturing sites in Newark, New Jersey and Vasset, France. In addition, at December 31, 2010, the Company has recorded a $1.3 million environmental liability associated with a site located in Joplin, Missouri. The $1.3 million liability related to the Joplin, Missouri site was a liability acquired with the EaglePicher Technologies acquisition. Although it is difficult to quantify the potential impact of compliance with, or liability under, environmental protection laws, the Company believes that any amount it may be required to pay in connection with environmental matters is not reasonably likely to exceed amounts accrued by an amount that would have a material adverse effect upon its financial condition, results of operations or cash flows.

From time to time, the Company is subject to various legal and regulatory proceedings, claims and assessments that arise in the normal course of business. The ultimate resolution of such proceedings, claims and assessments is inherently unpredictable and, as a result, the Company’s estimates of liability, if any, are subject to change and actual results may materially differ from the Company’s estimates. The Company’s estimate of any costs to be incurred as a result of these proceedings, claims and assessments are accrued when the liability is considered probable and the amount can be reasonably estimated. The Company believes the amount of any potential liability with respect to legal and regulatory proceedings, claims and assessments will not have a material adverse effect upon its financial condition, results of operations, or cash flows.

Note 18 — Lease Obligations

The Company rents office space, equipment, land and an airplane under long-term operating leases. The Company’s operating lease expense was $8.8 million in 2010, $7.4 million in 2009 and $7.8 million in 2008.

Future minimum payments under noncancellable operating leases at December 31, 2010 are as follows for the year ending December 31:

2011	$	6,219
2012		4,708
2013		2,283
2014		1,844
2015		1,815
2016 and thereafter		9,534
Total minimum lease payments	$	26,403

Note 19 — Reportable Segments and Geographic Information

As a result of the EaglePicher Technologies acquisition, the Company is now organized into three operating segments: Advanced Materials, Specialty Chemicals and Battery Technologies. Intersegment transactions are generally recognized based on current market prices and are eliminated in consolidation. Corporate is comprised of general and administrative expenses not allocated to the operating segments.

100

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The Advanced Materials segment consists of Inorganics, the DRC smelter joint venture and metal resale. The Advanced Materials segment manufactures inorganic products using unrefined cobalt and other metals and serves the battery materials, powder metallurgy, ceramic and chemical end markets.

The Specialty Chemicals segment is comprised of Electronic Chemicals, Advanced Organics, UPC and Photomasks. Electronic Chemicals develops and manufactures products for the printed circuit board, memory disk, general metal finishing and photovoltaic markets. Advanced Organics offers products for the coating and inks, chemical and tire markets. UPC develops, manufactures and distributes a wide range of ultra-pure chemicals used in the manufacture of electronic and computer components such as semiconductors, silicon chips, wafers and liquid crystal displays. Photomasks manufactures photo-imaging masks (high-purity quartz or glass plates containing precision, microscopic images of integrated circuits) and reticles for the semiconductor, optoelectronics, microelectronics and micro electro mechanical systems industries under the Compugraphics brand name.

The Battery Technologies segment, which consists of the EaglePicher Technologies business acquired on January 29, 2010, provides advanced batteries, battery materials, battery management systems, battery-related research and energetic devices for the defense, aerospace and medical markets. In the defense market, Battery Technologies develops battery products for missile launch vehicles, missiles, guided bombs and other weapons systems. It also provides primary (non-rechargeable) and secondary (non-rechargeable) batteries, battery management systems, battery chargers, and energetic devices for diverse defense applications such as unmanned vehicles, sub-munitions, mines, sonabuoys, and fuzes. In the aerospace market, Battery Technologies designs, manufactures and qualifies primary and secondary batteries for satellites, aircraft, packaging of cells and other special applications. In the medical market, Battery Technologies designs, builds and qualifies miniature batteries to power implantable medical devices.

The Company has manufacturing and other facilities in North America, Europe, Africa and Asia-Pacific, and the Company markets its products worldwide. Further, approximately 18% of the Company’s investment in property, plant and equipment is located in the DRC, where the Company operates a smelter through a 55%-owned joint venture.

There are a limited number of supply sources for cobalt. Production problems or political or civil instability in supplier countries, primarily the DRC, Finland and Russia, as well as increased demand in developing countries may affect the supply and market price of cobalt. In particular, political and civil instability in the DRC may affect the availability of raw materials from that country. Any raw material supply disruption from the DRC could have a material adverse effect on our business, financial condition or results of operations.

Sales to one customer in the Advanced Materials segment represented approximately 14%, 16% and 22% of consolidated net sales in 2010, 2009 and 2008, respectively. Sales to the top three customers in the Battery Technologies segment represented approximately 50% of Battery Technologies’ net sales in 2010.

The following table reflects the 2010, 2009 and 2008 sales within Specialty Chemicals:

	2010			2009			2008
Net Sales
Electronic chemicals	$	168,011		$	132,612		$	167,335
Advanced organics		174,251			163,216			258,441
Ultra Pure Chemicals		86,177			72,942			82,068
Photomasks		34,688			33,428			39,366
Eliminations		(384	)		(397	)		(535	)
	$	462,743		$	401,801		$	546,675

101

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The following table reflects the 2010 sales within Battery Technologies:

	2010
Net Sales
Defense	$	63,017
Aerospace		45,854
Medical		7,187
Eliminations		(2,117	)
	$	113,941

102

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

The following table reflects the results of the Company’s reportable segments:

	2010			2009			2008
Net Sales
Advanced Materials	$	620,638		$	472,412		$	1,192,423
Specialty Chemicals		462,743			401,801			546,675
Battery Technologies(c)		113,941			—			—
Intersegment items		(676	)		(2,544	)		(2,249	)
	$	1,196,646		$	871,669		$	1,736,849
Operating profit (loss)
Advanced Materials	$	95,633		$	53,301		$	203,545
Specialty Chemicals(a)		59,558			(26,981	)		11,168
Battery Technologies(c)		5,061			—			—
Corporate(b)		(37,606	)		(27,304	)		(37,540	)
Intersegment items		—			—			449
		122,646			(984	)		177,622
Interest expense		(5,255	)		(689	)		(1,597	)
Interest income		908			928			1,920
Foreign exchange gain (loss)		(10,679	)		(21	)		(3,744	)
Other expense, net		(305	)		(292	)		(1,913	)
		(15,331	)		(74	)		(5,334	)
Income (loss) from continuing operations before income taxes	$	107,315		$	(1,058	)	$	172,288
Expenditures for property, plant & equipment
Advanced Materials	$	11,328		$	18,996		$	21,783
Specialty Chemicals		8,920			6,690			8,929
Battery Technologies(c)		6,182			—			—
	$	26,430		$	25,686		$	30,712
Depreciation and amortization
Advanced Materials	$	20,587		$	26,303		$	26,331
Specialty Chemicals		23,048			26,508			28,727
Battery Technologies(c)		9,473			—			—
Corporate		989			954			1,058
	$	54,097		$	53,765		$	56,116
Total assets
Advanced Materials(e)	$	866,329		$	795,186
Specialty Chemicals		535,997			503,737
Battery Technologies(c)(d)		253,804			—
Corporate		116,578			145,213
	$	1,772,708		$	1,444,136

(a) Specialty Chemicals includes a $2.1 million restructuring charge in 2010 and a $37.5 million non-cash goodwill impairment charge and a $12.7 million restructuring charge in 2009.

103

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

(b)	Corporate includes $2.2 million of fees related to the EaglePicher Technologies acqusition in 2010 and a $4.7 million gain on the termination of the Company’s retiree medical plan and $1.3 million of fees related to the EaglePicher Technologies acquisition in 2009.
(c)	Includes activity since the acquisition of EaglePicher Technologies on January 29, 2010.
(d)	Includes a $5.0 million investment related to Battery Technologies 45% interest in Diehl & EaglePicher GmbH which is accounted for under the equity method.
(e)	Includes a $68.1 million deposit related to the Jersey Court injunction. See Note 17 for further discussion.

			Long-Lived
	Net Sales(a)		Assets(b)
Geographic Region Information
2010
Finland	$	354,889	$	86,019
United States		312,368		79,980
Japan		223,441		221
Other		305,948		44,529
Democratic Republic of Congo		—		45,349
	$	1,196,646	$	256,098
2009
Finland	$	260,361	$	89,610
United States		153,539		36,388
Japan		190,122		91
Other		267,647		48,774
Democratic Republic of Congo		—		52,252
	$	871,669	$	227,115
2008
Finland	$	581,260
United States		280,275
Japan		536,620
Other		338,694
Democratic Republic of Congo		—
	$	1,736,849

(a) Net sales attributed to the geographic area are based on the location of the manufacturing facility, except for Japan, which is a sales office.

(b) Long-lived assets consists of property, plant and equipment, net.

104

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

Note 20 — Quarterly Results of Operations (Unaudited)

	2010
	First		Second			Third		Fourth
	Quarter		Quarter			Quarter		Quarter		Full Year
Net sales	$	303,197	$	303,099		$	297,222	$	293,128	$	1,196,646
Gross profit	$	71,822	$	67,990		$	74,281	$	70,595	$	284,688
Amounts attributable to OM Group, Inc. common stockholders:
Income from continuing operations, net of tax	$	22,463	$	13,307		$	23,198	$	23,680	$	82,648
Income (loss) from discontinued operations, net of tax		137		(518	)		1,003		104	$	726
Net income	$	22,600	$	12,789		$	24,201	$	23,784	$	83,374
Net income (loss) per common share — basic
Continuing operations	$	0.74	$	0.44		$	0.76	$	0.78	$	2.72
Discontinued operations		0.01		(0.02	)		0.03		—		0.02
Net income	$	0.75	$	0.42		$	0.79	$	0.78	$	2.74
Net income (loss) per common share — assuming dilution
Continuing operations	$	0.74	$	0.43		$	0.76	$	0.77	$	2.70
Discontinued operations		—		(0.01	)		0.03		0.01		0.03
Net income	$	0.74	$	0.42		$	0.79	$	0.78	$	2.73

The first, second and third quarters of 2010 include restructuring charges related to the Company’s Advanced Organics business of $0.6 million, 0.4 million and $1.1 million, respectively.

The fourth quarter of 2010 includes a charge of $2.0 million due to an other-than-temporary decline in the fair value of a cost method investment.

The Company’s income tax expense for 2010 was $29.7 million, resulting in an effective tax rate of 27.6%. Through September 30, 2010, the Company’s year-to-date income tax expense was $31.8 million and the effective tax rate was 37.1%. The decrease in the full-year effective tax rate in the fourth quarter resulted in an income tax benefit of $2.1 million for the fourth quarter of 2010.

The Company’s share of discrete tax items (excluding noncontrolling interests) in 2010 totaled income (expense) of $2.8 million in the first quarter of 2010, ($5.2 million) in the second quarter of 2010, $0.3 million in the third quarter of 2010 and $1.5 million in the fourth quarter of 2010.

105

Notes to Consolidated Financial Statements
OM Group, Inc. and Subsidiaries — Continued

	2009
	First			Second			Third		Fourth
	Quarter			Quarter			Quarter		Quarter			Full Year
Net sales	$	191,706		$	203,352		$	235,239	$	241,372		$	871,669
Gross profit	$	26,615		$	34,434		$	42,679	$	62,055		$	165,783
Amounts attributable to OM Group, Inc. common stockholders:
Income (loss) from continuing operations, net of tax	$	(8,541	)	$	(35,006	)	$	9,579	$	14,615		$	(19,353	)
Income (loss) from discontinued operations, net of tax		264			(325	)		1,846		(289	)	$	1,496
Net income (loss)	$	(8,277	)	$	(35,331	)	$	11,425	$	14,326		$	(17,857	)
Net income (loss) per common share — basic
Continuing operations	$	(0.28	)	$	(1.16	)	$	0.32	$	0.48		$	(0.64	)
Discontinued operations		0.01			(0.01	)		0.06		(0.01	)		0.05
Net income (loss)	$	(0.27	)	$	(1.17	)	$	0.38	$	0.47		$	(0.59	)
Net income (loss) per common share — assuming dilution
Continuing operations	$	(0.28	)	$	(1.16	)	$	0.32	$	0.48		$	(0.64	)
Discontinued operations		0.01			(0.01	)		0.06		(0.01	)		0.05
Net income (loss)	$	(0.27	)	$	(1.17	)	$	0.38	$	0.47		$	(0.59	)

The first quarter of 2009 includes a $6.6 million adjustment to reduce the carrying value of certain inventory to market value and a non-cash net charge of $2.6 million for the impairment of goodwill.

The second quarter of 2009 includes a non-cash charge of $35.0 million for the impairment of goodwill, a non-cash charge of $1.2 million for the impairment of intangible assets and a $4.7 million gain on termination of the retiree medical plan.

The third quarter of 2009 includes an $11.9 million restructuring charge related to the Company’s Advanced Organics business.

The fourth quarter of 2009 includes an $0.8 million restructuring charge related to the Company’s Advanced Organics business.

The Company’s share of discrete tax items in 2009 totaled income (expense) of ($2.0 million) in the first quarter of 2009, ($1.3 million) in the second quarter of 2009, $1.7 million in the third quarter of 2009 and ($4.4 million) in the fourth quarter of 2009.

106

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There are no such changes or disagreements.

Item 9A.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management of the Company, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2010. As defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), disclosure controls and procedures are controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s disclosure controls and procedures include components of the Company’s internal control over financial reporting.

Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2010.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision of the Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework.” Based on that evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2010.

The Company’s independent registered public accounting firm, Ernst & Young LLP, audited the Company’s internal control over financial reporting and, based on that audit, issued an attestation report regarding the Company’s internal control over financial reporting, which is included in this Annual Report.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting, identified in connection with management’s evaluation of internal control over financial reporting, that occurred during the fourth quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.   Other Information

None.

107

PART III

Item 10.   Directors, Executive Officers of the Registrant and Corporate Governance

Information with respect to directors of the Company will be set forth under the heading “Proposal 1. Election of Directors” in the Company’s proxy statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with the 2011 Annual Meeting of Stockholders of the Company (the “2011 Proxy Statement”) and is incorporated herein by reference. For information with respect to the executive officers of the Company, see “Executive Officers of the Registrant” in Part I of this Form 10-K.

Information with respect to the Company’s audit committee, nominating and governance committee, compensation committee and the audit committee financial experts will be set forth in the 2011 Proxy Statement under the heading “Corporate Governance and Board Matters” and is incorporated herein by reference.

Information with respect to compliance with Section 16(a) of the Exchange Act will be set forth in the 2011 Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

The Company has adopted a Code of Conduct and Ethics that applies to all of its employees, including the principal executive officer, the principal financial officer and the principal accounting officer. The Code of Conduct and Ethics, the Company’s corporate governance principles and all committee charters are posted on the “Corporate Governance” portion of the Company’s website (www.omgi.com). A copy of any of these documents is available in print free of charge to any stockholder who requests a copy, by writing to OM Group, Inc., 127 Public Square, 1500 Key Tower, Cleveland, Ohio 44114-1221 USA, Attention: Troy Dewar, Director of Investor Relations.

On May 26, 2010, the Company filed the annual certification by its CEO that, as of the date of the certification, he was unaware of any violation by the Company of the corporate governance listing standards of the New York Stock Exchange.

Item 11.   Executive Compensation

Information with respect to executive and director compensation and compensation committee interlocks and insider participation, together with the report of the compensation committee regarding the compensation discussion and analysis will be set forth in the 2011 Proxy Statement under the headings “Executive Compensation,” “Corporate Governance and Board Matters — Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” and is incorporated herein by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information with respect to security ownership of certain beneficial owners and management will be set forth in the 2011 Proxy Statement under the heading “Security Ownership of Directors, Executive Officers and Certain Beneficial Owners — Beneficial Ownership” and is incorporated herein by reference.

108

Equity Compensation Plan Information

The following table sets forth information concerning common stock issuable pursuant to the Company’s equity compensation plans as of December 31, 2010.

					Number of securities
					remaining available for
					future issuance under
	Number of securities				equity compensation plans
	to be issued upon		Weighted-average		(excluding securities
	exercise of		exercise price of		issuable under
	outstanding options		outstanding options		outstanding options)
Equity Compensation Plans Approved by the Stockholders		982,520	$	36.50		1,991,421
Equity Compensation Plans Not Approved by the Stockholders(a)		88,934	$	33.67		—

(a) As an inducement to join the Company, on June 13, 2005, the Chief Executive Officer was granted options to purchase 88,934 shares of common stock that are not covered by the equity compensation plans approved by the Company’s stockholders. These options have an exercise price of $33.67 per share (the market price of Company stock on the grant date was $24.89) and became exercisable on May 31, 2008. The options have an expiration date of June 13, 2015.

Item 13.   Certain Relationships and Related Transactions, Director Independence

Information with respect to certain relationships and related transactions, as well as director independence, will be set forth in the 2011 Proxy Statement under the heading “Corporate Governance and Board Matters” and is incorporated herein by reference.

Item 14.   Principal Accountant Fees and Services

Information with respect to principal accounting fees and services will be set forth in the 2011 Proxy Statement under the heading “Description of Principal Accountant Fees and Services” and is incorporated herein by reference.

109

PART IV

Item 15.   Exhibits and Financial Statement Schedules

(1)  The following Consolidated Financial Statements of OM Group, Inc. are included in Part II, Item 8:

Consolidated Balance Sheets at December 31, 2010 and 2009

Statements of Consolidated Operations for the years ended December 31, 2010, 2009 and 2008

Statements of Consolidated Comprehensive Income for the years ended December 31, 2010, 2009 and 2008

Statements of Consolidated Cash Flows for the years ended December 31, 2010, 2009 and 2008

Statements of Consolidated Stockholders’ Equity for the years ended December 31, 2010, 2009 and 2008

Notes to Consolidated Financial Statements

(2)  Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2010, 2009 and 2008

All other schedules are omitted because they are not applicable or because the information required is included in the consolidated financial statements or the notes thereto.

(3)  Exhibits

The following exhibits are included in this Annual Report on Form 10-K:

(3) Articles of Incorporation and By-laws
3.1	Restated Certificate of Incorporation of OM Group, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed on November 6, 2008).
3.2	Amended and Restated Bylaws of OM Group, Inc.
(4) Instruments defining rights of security holders including indentures.
4.1	Form of Common Stock Certificate of the Company. ‡
(10) Material Contracts
10.1	Technology Agreement among Outokumpu Oy, Outokumpu Engineering Contractors Oy, Outokumpu Research Oy, Outokumpu Harjavalta Metals Oy and Kokkola Chemicals Oy dated March 24, 1993. ‡
*10.2	OM Group, Inc. Benefit Restoration Plan, effective January 1, 1995 (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-4 (No. 333-84128) filed on March 11, 2002).
*10.3	Trust under OM Group, Inc. Benefit Restoration Plan, effective January 1, 1995 (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-4 (No. 333-84128) filed on March 11, 2002).
*10.4	Amendment to OM Group, Inc., Benefit Restoration Plan (frozen Post-2004/Pre-2008 Terms).(incorporated by reference to Exhibit 10.4 of the Company’s Annual Report filed on Form 10-K on February 28, 2008).
10.5	Reserved
*10.6	OM Group, Inc. Bonus Program for Key Executives and Middle Management. ‡
+10.7	Joint Venture Agreement among OMG B.V., Groupe George Forrest S.A., La Generale Des Carrieres Et Des Mines and OM Group, Inc. to partially or totally process the slag located in the site of Lubumbashi, Democratic Republic of Congo.
10.8	Sale and purchase agreement dated as of December 23, 2009 by and among EaglePicher Corporation, as guarantor of the Seller, EaglePicher Technologies Holdings, LLC, as the Seller, EaglePicher Technologies, LLC, as the Company, OM Group, Inc., as limited guarantor of the Buyer, and OMG Energy Holdings, Inc., as the Buyer (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on February 25, 2010).

110

+10.9	Long Term Slag Sales Agreement between La Generale Des Carriers Et Des Mines and J.V. Groupement Pour Le Traitement Du Terril De Lubumbashi (filed as an Annex to Exhibit 10.7).
+10.10	Long Term Cobalt Alloy Sales Agreement between J.V. Groupement Pour Le Traitement Du Terril De Lubumbashi and OMG Kokkola Chemicals Oy (filed as an Annex to Exhibit 10.7).
+10.11	Tolling Agreement between Groupement Pour Le Traitement Du Terril De Lubumbashi and Societe De Traitement Due Terril De Lubumbashi (filed as an Annex to Exhibit 10.7).
*10.12	OM Group, Inc. 1998 Long-Term Incentive Compensation Plan.
*10.13	Separation Agreement by and between OM Group, Inc. and Thomas R. Miklich dated October 17, 2003.
*10.14	Form of Stock Option Agreement between OM Group, Inc. and Joseph M. Scaminace.
*10.15	Reserved
*10.16	Employment Agreement by and between OM Group, Inc. and Joseph M. Scaminace, dated May 15, 2008 (incorporated by reference to Exhibit 99 to the Company’s Current Report on Form 8-K filed on May 21, 2008).
*10.17	Form of Indemnification Agreement between OM Group, Inc. and its directors and certain officers (incorporated by reference to Exhibit 10 to the Company’s Current Report on Form 8-K filed on January 25, 2011).
10.18	Reserved
*10.19	Severance Agreement by and between OM Group, Inc. and Valerie Gentile Sachs dated November 7, 2005.
*10.20	Form of Non-Incentive Stock Option Agreement under the 1998 Long-Term Incentive Compensation Plan.
*10.21	OM Group, Inc. 2002 Stock Incentive Plan (incorporated by reference to Exhibit 99 to the Company’s Current Report on Form 8-K filed May 5, 2006).
10.22	Reserved
*10.23	Form of Stock Option Agreement (2010) under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010).
*10.24	Form of Restricted Stock Agreement (2010 time-based) under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010).
10.25	Reserved
*10.26	Form of Severance Agreement between OM Group, Inc. and certain executive officers (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 14, 2006).
*10.27	Form of Amended and Restated Change in Control Agreement between OM Group, Inc. and certain executive officers (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on November 14, 2006).
10.28	Form of Restricted Stock Agreement (2010 performance-based) under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010).
*10.29	Amended and Restated Change in Control Agreement dated as of November 13, 2006 between OM Group, Inc. and Joseph M. Scaminace (incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K filed on November 14, 2006).
*10.30	Amended and Restated Severance Agreement dated as of November 13, 2006 between OM Group, Inc. and Valerie Gentile Sachs (incorporated by reference to Exhibit 99.5 to the Company’s Current Report on Form 8-K filed on November 14, 2006).
10.31	OM Group, Inc. 2007 Incentive Compensation Plan, as amended (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010).

111

10.32	Stock Purchase Agreement Among OMG Kokkola Chemicals Holding (Two) BV, OMG Harjavalta Chemicals Holding BV, OMG Finland Oy, OM Group, Inc., Norilsk Nickel (Cyprus) Limited And OJSC MMC Norilsk Nickel (incorporated by reference to Exhibit 2 to the Company’s Current Report on Form 8-K filed on March 7, 2007).
*10.33	Form of Amended and Restated Change in Control Agreement between OM Group, Inc. and executive officers, as approved on November 16, 2010.
*10.34	Form of Stock Option Agreement under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 2, 2007).
*10.35	Form of Restricted Stock Agreement (time-based) under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 2, 2007).
*10.36	Form of Restricted Stock Agreement (performance-based) under the 2007 Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 2, 2007).
*10.37	OM Group, Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10 to the Company’s Current Report on Form 8-K filed May 21, 2008).
*10.38	Form of Amendment to Severance Agreement between OM Group, Inc. and certain executive officers (incorporated by reference to the Company’s Current Report on Form 8-K filed on December 19, 2008).
10.39	Amended and Restated Credit Agreement, dated as of March 8, 2010 among OM Group, as “Borrower;” certain of its subsidiaries, as “Guarantors;” PNC Bank, National Association, as “Administrative Agent;”; the “Lenders” party thereto; PNC Capital Markets LLC, Banc of America Securities LLC and Wells Fargo Bank, N.A., as “Joint Lead Arrangers;” and PNC Capital Markets LLC, as “Sole Bookrunner.” (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 11 2010).
21	List of Subsidiaries
23	Consent of Ernst & Young LLP
24	Powers of Attorney
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350
101.1	Instance Document
101.2	Schema Document
101.3	Calculation Linkbase Document
101.4	Labels Linkbase Document
101.5	Presentation Linkbase Document
101.6	Definition Linkbase Document

*	Indicates a management contract, executive compensation plan or arrangement.
+	Portions of Exhibit have been omitted and filed separately with the Securities and Exchange Commission in reliance on Rule 24b-2 and an Order from the Commission granting the Company’s request for confidential treatment dated June 26, 1998.
‡	These documents were filed as exhibits to the Company’s Form S-1 Registration Statement (Registration No. 33-60444) which became effective on October 12, 1993, and are incorporated herein by reference.

112

OM Group, Inc.
Schedule II — Valuation and Qualifying Accounts
Years Ended December 31, 2010, 2009 and 2008
(Dollars in Millions)

	Balance					Charged			Charged
	at					to			to						Balance at
	Beginning					Costs and			Other						End of
Classifications	of Year		Acquisitions			Expenses			Accounts			Deductions			Year
2010:
Allowance for doubtful accounts	$	6.9		0.5			(0.5	)(1)		0.4	(5)		(2.1	)(3)	$	5.2
Allowance for note receivable from joint venture partner		5.2		—			—			—			—			5.2
Environmental reserve		2.8		1.3			0.4	(2)		(0.1	)(5)		(1.6	)(4)		2.8
	$	14.9	$	1.8		$	(0.1	)	$	0.3		$	(3.7	)	$	13.2
2009:
Allowance for doubtful accounts	$	7.9		—			0.3	(1)		0.4	(5)		(1.7	)(3)	$	6.9
Allowance for note receivable from joint venture partner		5.2		—			—			—			—			5.2
Environmental reserve		3.4		—			0.2	(2)		0.1	(5)		(0.9	)(4)		2.8
	$	16.5	$	—		$	0.5		$	0.5		$	(2.6	)	$	14.9
2008:
Allowance for doubtful accounts	$	1.5		3.7	(6)		4.3	(1)		—			(1.6	)(3)	$	7.9
Allowance for note receivable from joint venture partner		5.2		—			—			—			—			5.2
Environmental reserve		4.9		—			0.4	(2)		(0.1	)(5)		(1.8	)(4)		3.4
	$	11.6	$	3.7		$	4.7		$	(0.1	)	$	(3.4	)	$	16.5

(1)	Provision for uncollectible accounts included in selling, general and administrative expenses.
(2)	Provision for environmental costs included in selling, general and administrative expenses.
(3)	Actual accounts written-off against the allowance.
(4)	Actual cash expenditures charged against the accrual.
(5)	Foreign currency translation adjustment.
(6)	Allowance for doubtful accounts related to the Rockwood acquisition were not included in the December 31, 2007 balance.

113

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on February 24, 2011.

OM GROUP, INC.

By:  /s/  Kenneth Haber

Kenneth Haber

Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below on February 24, 2011 by the following persons on behalf of the registrant and in the capacities indicated.

Signature	Title
/s/  Joseph Scaminace Joseph Scaminace	Chairman and Chief Executive Officer (Principal Executive Officer)
/s/  Kenneth Haber Kenneth Haber	Chief Financial Officer (Principal Financial Officer)
/s/  Robert T. Pierce Robert T. Pierce	Vice President and Corporate Controller (Principal Accounting Officer)
/s/  Richard W. Blackburn Richard W. Blackburn	Director
/s/  Steven J. Demetriou Steven J. Demetriou	Director
/s/  Katharine L. Plourde Katharine L. Plourde	Director
/s/  William J. Reidy William J. Reidy	Director
/s/  Gordon A. Ulsh Gordon A. Ulsh	Director
/s/  Kenneth Haber Kenneth Haber Attorney-in-Fact

114

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BY-LAWS

OF

OM GROUP, INC.

As Adopted by the Stockholders
October 7, 1993, and
Further Amended by the Directors
through February 8, 2011

AMENDED AND RESTATED

BY-LAWS

OF

OM GROUP, INC.

ARTICLE I

OFFICES

          The Corporation may have such office(s) at such place(s), both within and outside the State of Delaware, as the Board of Directors from time to time determines or as the business of the Corporation from time to time requires.

ARTICLE II
MEETINGS OF THE STOCKHOLDERS

     Section 1. Annual Meetings. Annual meetings of stockholders shall be held each year on such date and at such time and place (within or outside the State of Delaware), if any, as is designated from time to time by the Board of Directors or, in the absence of a designation by the Board of Directors, the Chairman of the Board, the President or the Secretary, and stated in the notice of the meeting. Notwithstanding the foregoing, the Board of Directors may, in its sole discretion, determine that meetings of stockholders shall not be held at any place, but may instead be held by means of remote communication, subject to such guidelines and procedures as the Board of Directors may adopt from time to time. The Board of Directors may postpone and reschedule any previously scheduled annual meeting of stockholders. At each annual meeting, the stockholders shall elect directors in accordance with Article III of these By-Laws and shall transact such other business as may properly be brought before the meeting in accordance with Article II, Section 5 of these By-Laws.

     Section 2. Special Meeting. Unless otherwise prescribed by law, the Corporation’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) or these By-Laws, special meetings of stockholders for any purpose or purposes may be called by the Chairman of the Board, if any, or by the President or Secretary upon the written request of a majority of the total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”). Requests for special meetings shall state the purpose or purposes of the proposed meeting. The Board of Directors may postpone and reschedule any previously scheduled special meeting of stockholders. At each special meeting, the stockholders shall transact such business as may properly be brought before the meeting in accordance with Article II, Section 5 of these By-Laws. Special meetings of the holders of the outstanding shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”), of the Corporation may be called in the manner and for the purposes provided in the resolution or resolutions providing for the issue of any series of Preferred Stock and the designation, relative powers, preferences and rights, and the qualifications, limitations or restrictions of such series adopted by the Board of Directors (a “Preferred Stock Designation”) pursuant to Article Fourth of the Certificate of Incorporation.

     Section 3. Notices of Annual and Special Meetings. Except as otherwise provided by law, the Certificate of Incorporation, any Preferred Stock Designation or these By-Laws, written notice of any annual or special meeting of stockholders shall state the place, if any, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, date and time thereof, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, and shall be given to each stockholder of record entitled to vote at such meeting not less than ten days nor more than 60 days prior to the date of the meeting.

     Section 4. List of Stockholders. At least ten days before every meeting of stockholders, the officer or transfer agent in charge of the stock transfer books of the Corporation shall prepare and make a complete alphabetical list of stockholders entitled to vote at such meeting, which list shows the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to examination by any stockholder for any purpose germane to the meeting for a period of at least ten days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to examination by any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

     Section 5. Presiding Officers; Order of Business.

          (a) The Chairman of the Board, if any, or such other officer of the Corporation designated by the Board of Directors, shall call meetings of stockholders to order and act as chairperson thereof. Unless otherwise determined by the Board of Directors prior to the meeting, the chairperson of a meeting of stockholders will also have the authority in his or her sole discretion to regulate the conduct of such meeting, including without limitation by imposing restrictions on the persons (other than stockholders of the Corporation or their duly appointed proxies) that may attend such meeting, by ascertaining whether any stockholder or any stockholder’s proxy may be excluded from such meeting based upon any determination by the chairperson of the meeting, in his or her sole discretion, that any such person has disrupted or is likely to disrupt the proceedings thereat, and by determining the circumstances in which any person may make a statement or ask questions at such meeting. The secretary of a meeting of stockholders shall be the Secretary of the Corporation, or, if the Secretary is not present, an Assistant Secretary, or, if an Assistant Secretary is not present, such person as may be chosen by the Board of Directors, or, if none, by such person who is chosen by the chairperson of such meeting.

          (b) The following order of business, unless otherwise ordered at the meeting by the chairperson thereof, shall be observed as far as practicable and consistent with the purposes of the meeting:

     (1) Call of the meeting to order.

     (2) Presentation of proof of mailing of notice of the meeting and, if the meeting is a special meeting, the call thereof.

     (3) Presentation of proxies.

     (4) Determination and announcement that a quorum is present.

     (5) Reading and approval (or waiver thereof) of the minutes of the previous meeting of stockholders.

     (6) Reports, if any, of officers.

     (7) Election of directors, if the meeting is an annual meeting or a meeting called for such purpose.

     (8) Consideration of the specific purpose or purposes for which the meeting has been called (other than the election of directors).

     (9) Transaction of such other business as is properly brought before the meeting.

     (10) Adjournment.

          (c) To be properly brought before an annual meeting, business shall be (i) specified in the notice of the annual meeting (or any supplement thereto) given by or at the direction of the Board of Directors in accordance with Article II, Section 3 of these By-Laws, (ii) otherwise properly brought before the annual meeting by the chairperson of the annual meeting or by or at the direction of a majority of the Whole Board, or (iii) otherwise properly requested to be brought before the annual meeting by a stockholder of the Corporation in accordance with Article II, Section 5(d) of these By-Laws.

          (d) For business to be properly requested to be brought before an annual meeting by a stockholder (i) the stockholder shall be a stockholder of record of the Corporation at the time of the giving of the notice for such annual meeting provided for in these By-Laws, (ii) the stockholder shall be entitled to vote at such annual meeting, (iii) the stockholder shall have given timely notice thereof in writing to the Secretary and (iv) if the stockholder, or the beneficial owner on whose behalf any business is brought before the annual meeting, has provided the Corporation with a Proposal Solicitation Notice (as defined below), such stockholder or beneficial owner shall have delivered a proxy statement and form of proxy to the holders of at least the percentage of shares of the Corporation entitled to vote that is required to approve such business that the stockholder proposes to bring before the annual meeting and included in such materials the Proposal Solicitation Notice. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the first anniversary of the

preceding year’s annual meeting, notice by the stockholder to be timely shall be so delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public disclosure of the date of such annual meeting is first made. In no event shall the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (A) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (B) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (C) the class and series and number of shares of capital stock of the Corporation that are owned beneficially and of record by the stockholder proposing such business and by the beneficial owner, if any, on whose behalf the proposal is made, (D) a description of all arrangements or understandings between or among such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, (E) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to the holders of at least the percentage of shares of the Corporation entitled to vote that is required to approve the proposal (an affirmative statement of such intent, a “Proposal Solicitation Notice”), and (F) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the annual meeting. Notwithstanding the foregoing provisions of this Article II, Section 5(d) of these By-Laws, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (the “Exchange Act”) with respect to the matters set forth in this Article II, Section 5(d) of these By-Laws. For purposes of this Article II, Section 5(d) of these By-Laws and Article III, Section 3 of these By-Laws, “public disclosure” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act or furnished by the Corporation to stockholders. Nothing in this Article II, Section 5(d) of these By-Laws will be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

          (e) At a special meeting of stockholders, only such business may be conducted or considered as is properly brought before the special meeting. To be properly brought before a special meeting, business shall be (i) specified in the notice of the special meeting (or any supplement thereto) given in accordance with these By-Laws or (ii) otherwise properly brought before the special meeting by the chairperson of the special meeting or by or at the direction of a majority of the Whole Board.

          (f) The determination of whether any business sought to be brought before any annual or special meeting of stockholders is properly brought before such meeting in accordance with Article II, Section 5 of these By-Laws will be made by the chairperson of such meeting. If the chairperson of such meeting determines that any business is not properly brought before such meeting, the chairperson will so declare to the meeting and any such business will not be conducted or considered.

     Section 6. Quorum; Adjournments.

          (a) Except as otherwise provided by law, the Certificate of Incorporation, any Preferred Stock Designation or these By-Laws, the holders of a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at any meeting of stockholders, present in person or by proxy, shall be necessary to and shall constitute a quorum for the transaction of business at such meeting of stockholders.

          (b) If a quorum is not present in person or by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice of the adjourned meeting if the time and place, if any, of the adjourned meeting and the means of remote communication, if any, by which stockholders may be deemed to be present in person or by proxy at such meeting, are announced at the meeting at which the adjournment is taken, until a quorum is present in person or by proxy.

          (c) Any business which might have been transacted at a meeting as originally called may be transacted at any meeting held after adjournment as provided in this Article II, Section 6 at which reconvened meeting a quorum is present in person or by proxy. Anything in Article II, Section 6(c) to the contrary notwithstanding, if an adjournment is for more than 30 days, or, if after an adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting stating the time and place, if any, of the adjourned meeting and the means of remote communication, if any, by which stockholders may be deemed to be present in person or by proxy at such meeting, shall be given to each stockholder of record entitled to vote thereat.

     Section 7. Voting.

          (a) At any meeting of stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy. Except as otherwise provided by law, the Certificate of Incorporation or any Preferred Stock Designation, each stockholder of record shall be entitled to one vote (on each matter submitted to a vote) for each share of capital stock registered in his, her or its name on the books of the Corporation as of the applicable record date for such vote.

          (b) All elections of directors shall be by written ballot unless otherwise provided in the Certificate of Incorporation or any Preferred Stock Designation. If authorized by the Board of Directors, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission; provided that any such electronic transmission shall either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.

          (c) Except as otherwise provided by law, the Certificate of Incorporation, Preferred Stock Designation, these By-Laws or the applicable standards of the New York Stock Exchange (the “NYSE”) or any other exchange or quotation service on which the Corporation’s shares are listed or quoted, all “uncontested” elections of directors (those elections in which the only nominees are those recommended by the Board of Directors or any committee of the Board of Directors) and all other matters that may properly be presented for a vote of stockholders shall be determined by a vote of the holders of a majority of the shares present in person or represented by proxy and voting on such “uncontested” elections and other matters. Except as otherwise provided in this Article II, Section 7(c), in any “contested” election of directors in which there is one or more nominees for a director position in addition to the nominee

recommended by the Board of Directors or any committee of the Board of Directors, the nominee receiving a plurality of votes cast (which shall be the greatest number of “for” votes) shall be elected as a director.

     Section 8. No Action by Written Consent. As provided in Article Ninth of the Certificate of Incorporation, no action which is required or permitted to be taken at any meeting of stockholders may be taken by written consent of stockholders in lieu of a meeting.

ARTICLE III

DIRECTORS

     Section 1. General Powers. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors, which may exercise all powers of the Corporation and perform or authorize the performance of all lawful acts and things which are not by law, the Certificate of Incorporation or these By-Laws directed or required to be exercised or performed by stockholders.

     Section 2. Number and Classification of Directors. Subject to the rights, if any, of any series of Preferred Stock then outstanding, (a) the number of directors of the Corporation shall be not less than three nor more than 15, as fixed from time to time by the Board of Directors (provided that no reduction in the number of directors shall of itself have the effect of shortening the term of any incumbent director), (b) the Directors (other than those who may be elected by the holders of any series of the Preferred Stock) shall be divided into three classes as nearly equal in number as the then total number of directors constituting the Whole Board permits, with the term of office of one class expiring each year; and (c) at each annual meeting of stockholders, the directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.

     Section 3. Nominations. (a) Subject to the rights of any holder of any series of Preferred Stock then outstanding, only persons who are nominated in accordance with this Article III, Section 3 shall be eligible for election as directors.

          (b) Nominations of persons for election as directors of the Corporation may be made only at an annual meeting of stockholders (i) by or at the direction of the Board of Directors or by any committee or person appointed by the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Article III, Section 3 and is entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article III, Section 3. Any nomination made pursuant to clause (i) of the preceding sentence shall be made pursuant to timely notice in proper written form to the Secretary of the Corporation.

          (c) To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely shall be so delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public disclosure of the date of such meeting is first made. In no event shall the public disclosure of an

adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.

          (d) To be in proper written form, such stockholder’s notice shall set forth or include (i) the name and address, as they appear on the Corporation’s books, of the stockholder giving the notice, and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) a representation that the stockholder giving the notice is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice; (iii) the class and number of shares of stock of the Corporation owned beneficially and of record by the stockholder giving the notice and by the beneficial owner, if any, on whose behalf the nomination is made; (iv) a description of all arrangements or understandings between or among any of (A) the stockholder giving the notice, (B) the beneficial owner on whose behalf the notice is given, (C) each nominee, and (D) any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder giving the notice; (v) such other information regarding each nominee proposed by the stockholder giving the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; (vi) the signed consent of each nominee to serve as a Director of the Corporation if so elected; (vii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares of the Corporation entitled to vote required to elect such nominee or nominees (an affirmative statement of such intent, a “Nomination Solicitation Notice”); and (viii) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in the notice. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director. The chairperson of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by this Article III, Section 3, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Article III, Section 3, a stockholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Article III, Section 3.

     Section 4. Removal of Directors. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors.

     Section 5. Vacancies. Subject to the rights of any holder of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause may be filled by a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director, and each director so chosen shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until his or her successor has been elected and qualified.

     Section 6. Place of Meetings. The Board of Directors may hold both regular and special meetings either within or outside the State of Delaware, at such place as the Board of Directors from time to time deems advisable.

     Section 7. Annual Organizational Meeting. The annual organizational meeting of the Board of Directors shall be held immediately following the annual meeting of stockholders, and no notice to the newly elected directors of such meeting shall be necessary for such meeting to be lawful, provided a quorum is present thereat.

     Section 8. Regular Meetings. Additional regular meetings of the Board of Directors may be held without notice, at such time and place as from time to time may be determined by the Board of Directors.

     Section 9. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Lead Director, the President or a majority of the Whole Board, upon one day’s notice to each director. Special meetings of the Board of Directors may be held at such time and place either within or without the State of Delaware as may be determined by the Board or specified in the notice of any such special meeting.

     Section 10. Quorum; Adjournments. A majority of the directors then in office shall constitute a quorum for the transaction of business at a meeting of the Board of Directors, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as may otherwise specifically be provided by law, the Certificate of Incorporation or these By-Laws. If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

     Section 11. Compensation. Directors shall be entitled to such compensation for their services as directors as from time to time may be fixed by the Board of Directors and in any event shall be entitled to reimbursement of all reasonable expenses incurred by them in attending directors’ meetings. Any director may waive compensation for any meeting.

     Section 12. Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission and the writing(s) or electronic transmission(s) are filed with the minutes of proceedings of the Board of Directors. Such filing will be in paper form if the minutes are maintained in paper form and will be in electronic form if the minutes are maintained in electronic form.

     Section 13. Participation in Meetings by Remote Communications. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting will constitute presence in person at the meeting.

ARTICLE IV

COMMITTEES

     Section 1. Executive Committee.

          (a) By resolution duly adopted by a majority of the Whole Board, the Board of Directors may designate two or more directors to constitute an Executive Committee. One of such directors shall be designated as Chairman of the Executive Committee. Each member of the Executive Committee shall continue as a member thereof until the expiration of his or her term as a director, or until his or her earlier resignation from the Executive Committee, in either case unless sooner removed as a member of the Executive Committee or as a director by any means authorized by these By-Laws.

          (b) The Executive Committee shall have and may exercise all of the right, powers and authority of the Board of Directors, except as expressly limited by applicable law.

          (c) The Executive Committee shall fix its own rules of procedure and shall meet at such times and at such place or places as may be provided by its rules. The Chairman of the Executive Committee, or, in the absence of a Chairman, a member of the Executive Committee chosen by a majority of the members present, shall preside at meetings of the Executive Committee, and another member thereof chosen by the Executive Committee shall act as Secretary. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the members thereof shall be required for any action of the Executive Committee. The Executive Committee shall keep minutes of its meetings and deliver such minutes to the Board of Directors.

     Section 2. Other Committees. The Board of Directors, by resolution duly adopted by a majority of the Whole Board, may appoint such other committee or committees as it shall deem advisable and with such limited authority as the Board of Directors shall from time to time determine and in accordance with applicable law.

     Section 3. Other Provisions Regarding Committees.

          (a) The Board of Directors shall have the power at any time to fill vacancies in, change the membership of, or discharge any committee.

          (b) Members of any committee shall be entitled to such compensation for services as such as from time to time may be fixed by the Board of Directors and in any event shall be entitled to reimbursement of all reasonable expenses incurred in attending committee meetings. Any member of a committee may waive compensation for any meeting.

          (c) Unless prohibited by law or the Certificate of Incorporation, the provisions of Article III, Section 12, (“Action by Written Consent”) and Section 13 (“Participation in Meetings by Remote Communications”) shall apply to all committees from time to time created by the Board of Directors.

ARTICLE V

OFFICERS

     Section 1. Positions. The officers of the Corporation shall be appointed by the Board of Directors and shall consist of a President and a Secretary. The Board of Directors also may choose a Chairman of the Board, one or more Vice Presidents, a Treasurer, one or more Assistant Secretaries and/or Assistant Treasurers and such other officers and/or agents as the Board from time to time deems necessary or appropriate. The Board of Directors may delegate to the President of the Corporation the authority to appoint any officer or agent of the Corporation and to fill a vacancy other than the Chairman of the Board, President, Secretary or Treasurer. The election or appointment of any officer of the Corporation in itself shall not create contract rights for any such officer. All officers of the Corporation shall exercise such powers and perform such duties as from time to time shall be determined by the Board of Directors. Unless otherwise provided in the Certificate of Incorporation, any number of offices may be held by the same person.

     Section 2. Term of Office; Removal. Each officer of the Corporation shall hold office at the pleasure of the Board and any officer may be removed, with or without cause, at any time by the affirmative vote of a majority of the directors then in office, provided that any officer appointed by the President pursuant to authority delegated to the President by the Board of Directors may be removed, with or without cause, at any time whenever the President in his or her absolute discretion shall consider that the best interests of the Corporation shall be served by such removal. Removal of an officer by the Board or by the President, as the case may be, shall not prejudice the contract rights, if any, of the person so removed. Vacancies (however caused) in any office may be filled for the unexpired portion of the term by the Board of Directors (or by the President in the case of a vacancy occurring in an office to which the President has been delegated the authority to make appointments).

     Section 3. Compensation. The salaries of all officers of the Corporation shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving a salary by reason of the fact that he also receives from the Corporation compensation in any other capacity.

     Section 4. Chairman of the Board. The Chairman of the Board, if any, shall be an officer of the Corporation and, subject to the direction of the Board of Directors, shall perform such executive, supervisory and management functions and duties as from time to time may be assigned to him or her by the Board. The Chairman of the Board may also serve as the chief executive officer of the Corporation if the independent members of the Board of Directors have elected a lead independent director.

     Section 5. President. The President shall be the chief executive officer of the Corporation and, subject to the direction of the Board of Directors, shall have general supervision of the business, affairs and property of the Corporation and general supervision over its other officers and agents. In general, the President shall perform all duties incident to the office of President of a stock corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. Unless otherwise prescribed by the Board of Directors, the President shall have full power and authority on behalf of the Corporation to attend, act and vote at any meeting of security holders of other corporations in which the Corporation may hold securities. At any such meeting the President shall possess and may

exercise any and all rights and powers incident to the ownership of such securities which the Corporation possesses and has the power to exercise. The Board of Directors from time to time may confer like powers upon any other person or persons.

     Section 6. Vice Presidents. In the absence or disability of the President, the Vice President, if any (or in the event there is more than one, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, in the order of their election), shall perform the duties and exercise the powers of the President. The Vice President(s) also generally shall assist the President and shall perform such other duties and have such other powers as from time to time may be prescribed by the Board of Directors.

     Section 7. Secretary. The Secretary shall attend all meetings of the Board of Directors and of stockholders and shall record all votes and the proceedings of all meetings. The Secretary also shall perform like duties for the Executive Committee or other committees, if required by any such committee. The Secretary shall give (or cause to be given) notice of all meetings of stockholders and all special meetings of the Board of Directors and shall perform such other duties as from time to time may be prescribed by the Board of Directors, the Chairman of the Board or the President. The Secretary shall have custody of the seal of the Corporation, shall have authority (as shall any Assistant Secretary) to affix the same to any instrument requiring it, and to attest the seal by his or her signature. The Board of Directors may give general authority to officers other than the Secretary or any Assistant Secretary to affix the seal of the Corporation and to attest the affixing thereof by his or her signature.

     Section 8. Assistant Secretary. The Assistant Secretary, if any (or in the event there is more than one, the Assistant Secretaries in the order designated by the Board of Directors, or in the absence of any designation, in the order of their election), in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. The Assistant Secretary or Secretaries shall perform such other duties and have such other powers as from time to time may be prescribed by the Board of Directors.

     Section 9. Treasurer. The Treasurer, if any, shall have the custody of the corporate funds, securities, other similar valuable effects, and evidences of indebtedness, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as from time to time may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation in such manner as may be ordered by the Board of Directors from time to time and shall render to the Chairman of the Board, the President and the Board of Directors, at regular meetings of the Board or whenever any of them may so require, an account of all transactions and of the financial condition of the Corporation.

     Section 10. Assistant Treasurer. The Assistant Treasurer, if any (or in the event there is more than one, the Assistant Treasurers in the order designated by the Board of Directors, or in the absence of any designation, in the order of their election), in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. The Assistant Treasurer(s) shall perform such other duties and have such other powers as from time to time may be prescribed by the Board of Directors.

ARTICLE VI

NOTICES

     Section 1. Form; Delivery. Any notice required or permitted to be given to any director, officer, stockholder or committee member shall be given in writing, either personally, by overnight courier or mail with postage prepaid, addressed to the recipient at his or her address as it appears in the records of the Corporation. Personally delivered notices shall be deemed to be given at the time they are delivered at the address of the named recipient as it appears in the records of the Corporation, and notices sent by overnight courier or mail shall be deemed to be given at the time they are deposited with such courier or in the United States mail, as applicable. Notice to directors may also be given by telephone, facsimile, electronic transmission or similar medium of communication or as otherwise may be permitted by these By-Laws.

     Section 2. Waiver; Effect of Attendance. Whenever any notice is required to be given by law, the Certificate of Incorporation or these By-Laws, a written waiver signed by the person entitled to such notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be the equivalent of the giving of such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that the meeting is not lawfully called or convened.

ARTICLE VII

INDEMNIFICATION AND EXCULPATION;
TRANSACTIONS BETWEEN AFFILIATED PERSONS

     Section 1. Indemnification and Exculpation. As provided in Article Seventh of the Certificate of Incorporation, the Corporation shall indemnify each of the individuals who may be indemnified to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as it may be amended from time to time (“Section 145”), (i) in each and every situation where the Corporation is obligated to make such indemnification pursuant to Section 145, and (ii) in each and every situation where, under Section 145, the Corporation is not obligated, but is permitted or empowered, to make such indemnification. The Corporation shall promptly make or cause to be made any determination which Section 145 requires.

     Section 2. Common or Interested Officers and Directors. (a) The officers and directors shall exercise their powers and duties in good faith and with a view to the best interests of the Corporation. No contract or other transaction between the Corporation and one or more of its officers or directors, or between the Corporation and any corporation, firm, association or other entity in which one or more of the officers or directors of the Corporation are officers or directors, or are pecuniarily or otherwise interested, shall be either void or voidable solely because of such common directorate, officership or interest, solely because such officers or directors are present at or participate in the meeting of the Board of Directors or any committee thereof which authorizes, approves or ratifies the contract or transaction, or solely because his, her or their votes are counted for such purpose, if (unless otherwise prohibited by law) any of the conditions specified in the following paragraphs exist:

     (i) the material facts of the common directorate or interest or contract or transaction are disclosed or known to the Board of Directors or committee thereof and the Board or committee authorizes or ratifies such contract or transaction in good

faith by the affirmative vote of a majority of the disinterested directors, even though the number of such disinterested directors may be less than a quorum; or

     (ii) the material facts of the common directorate or interest or contract or transaction are disclosed or known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

     (iii) the contract or transaction is fair and commercially reasonable to the Corporation at the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders, as the case may be.

          (b) Common or interested directors may be counted in determining whether a quorum is present at any meeting of the Board of Directors or committee thereof which authorizes, approves or ratifies any contract or transaction, and may vote thereat to authorize any contract or transaction with like force and effect as if he, she or they were not such officers or directors of such other corporation or were not so interested.

ARTICLE VIII

STOCK CERTIFICATES

     Section 1. Form; Signatures. Subject to Article VIII, Section 6 of these By-Laws, the shares of capital stock of the Corporation shall be represented by certificates and each stockholder who has fully paid for any stock of the Corporation shall be entitled to receive a certificate representing such shares, which certificate shall be signed by the Chairman of the Board (if any) or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation. Signatures on the certificate may be facsimile, in the manner prescribed by law. Each certificate shall exhibit on its face the number and class (and series, if any) of the shares it represents. Each certificate also shall state upon its face the name of the person to whom it is issued and that the Corporation is organized under the laws of the State of Delaware. Each certificate may (but need not) be sealed with the seal of the Corporation or facsimile thereof. In the event any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate ceases to be such officer, transfer agent or registrar before the certificate is issued, the certificate nevertheless may be issued by the Corporation with the same effect as if such person were such officer at the date of issue of the certificate. All stock certificates representing shares of capital stock which are subject to restrictions on transfer or to other restrictions shall have imprinted thereon a notation of such restrictions.

     Section 2. Registration of Transfer. Subject to Article VIII, Section 6 of these By-Laws, upon surrender to the Corporation or to any transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation, or its transfer agent, shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon the Corporation’s books.

     Section 3. Registered Stockholders. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person who is registered on its books as the owner of shares of its capital stock to receive dividends or other distributions (to the extent otherwise distributable or distributed), to vote (in the case of voting stock) as such

owner, and to hold liable for calls and assessments a person who is registered on its books as the owner of shares of its capital stock. The Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person. The Corporation (or its transfer agent) shall not be required to send notices or dividends to a name or address other than the name or address of stockholders appearing on the stock ledger maintained by the Corporation (or by the transfer agent or registrar, if any), unless any such stockholder shall have notified the Corporation (or the transfer agent or registrar, if any), in writing, of another name or address at least ten days prior to the mailing of such notice or dividend.

     Section 4. Record Date. In order that the Corporation may determine the stockholders of record who are entitled (i) to notice of or to vote at any meeting of stockholders or any adjournment thereof, (ii) to receive payment of any dividend or other distribution, or allotment of any rights, or (iii) to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors, in advance, may fix a date as the record date for any such determination. Such date shall not be more than 60 days nor less than ten days before the date of such meeting, nor more than 60 days prior to the date of any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting taken pursuant to Article II, Section 6; provided, however, that the Board of Directors, in its discretion, may fix a new record date for the adjourned meeting.

     Section 5. Lost, Stolen or Destroyed Certificate. The Corporation may issue a new certificate in place of any certificate theretofore issued by the Corporation which is claimed to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Corporation may require as a condition precedent to issuance that the owner of such lost, stolen or destroyed certificate, or his or her legal representative, give the Corporation a bond in such sum, or other security in such form, as the Corporation may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate claimed to have been lost, stolen or destroyed.

     Section 6. Electronic Securities System. Notwithstanding the provisions of Article VIII, Sections 1 and 2, the Corporation may adopt a system of issuance, recordation and transfer of its shares by electronic or other means not involving any issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

ARTICLE IX

GENERAL PROVISIONS

     Section 1. Dividends. Subject to the provisions of applicable law and the Certificate of Incorporation, dividends upon the outstanding capital stock of the Corporation may be declared by the Board of Directors at any annual, regular or special meeting and may be paid in cash, in property or in shares of the Corporation’s capital stock.

     Section 2. Reserves. The Board of Directors, in its sole discretion, may fix a sum which may be set aside or reserved over and above the paid-in capital of the Corporation for working capital or as a reserve for any proper purpose, and from time to time may increase, diminish or vary such fund or funds.

     Section 3. Fiscal Year. The fiscal year of the Corporation shall begin January 1.

     Section 4. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware.”

     Section 5. Amendment of the By-Laws. As provided in Article Sixth of the Certificate of Incorporation, to the extent not prohibited by law, the Board of Directors shall have the power to make, alter and repeal these By-Laws, and to adopt new by-laws, in all cases by an affirmative vote of a majority of the Whole Board, provided that notice of the proposal to make, alter or repeal these By-Laws, or to adopt new by-laws, is included in the notice of the meeting of the Board of Directors at which such action takes place. These By-Laws may be amended or repealed at any meeting of stockholders called for that purpose by the affirmative vote of the holders of record of shares entitling them to exercise a majority of the voting power of the Corporation on such proposal; provided, however, that the provisions of Article II, Section 5 or 8, Article III, Sections 1, 2, 3, 4 or 5, Article VII and this Article IX, Section 5, may not be amended, modified, superseded or repealed, and no amendment to these By-Laws which is inconsistent therewith may be adopted, without the affirmative vote of the holders of record of shares entitling them to exercise at least 75% of the voting power of the Corporation on such proposal.

EX-10.7

                                                                   Exhibit 10.7


                             JOINT VENTURE AGREEMENT
                             -----------------------










BETWEEN


                    OMG B.V.



                    GROUPE GEORGE FORREST S.A.



AND



                     LA GENERALE DES CARRIERES ET DES MINES










THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES




I.      DEFINITIONS



II.     SPECIAL PROVISIONS

     1.      Formation of a Joint Venture
     2.      Representations, Warranties, Title to Assets
     3.      Capital Contributions and. Financing of the Project
     4.      Management
     5.      Preliminary Activities
     6.      Related Agreements
     7.      Liabilities and Commitments of the Parties
     8.      Term and Termination
     9.      Withdrawal Option
     10.     Buffer Stock
     11.     Additional Guarantees
     12.     Developments




III.    GENERAL PROVISIONS


     1.      Hierarchical Order of the Agreements
     2.      Amendments
     3.      Restrictions on Transfers
     4.      Arbitration and Applicable Laws
     5.      Confidentiality
     6.      Force Majeure
     7.      Notices
     8.      No Waiver
     9.      Severability and Headings
     10.     Sovereign Immunity
     11.     Appendices
     12.     Further Engagements
     13.     General Clauses
     14.     Authorizations and Entering into Force














The Present Agreement is concluded between:




1.OMG B.V. a company organized and existing under the laws of the Netherlands,
  having its registered office at ROTTERDAM, being a 100 per cent controlled
  subsidiary of OM Group Inc., a company organized and existing under the laws
  of the state of DELAWARE (USA) and having its registered office at 3800
  Terminal Tower, CLEVELAND 44113 OHIO (USA), which shall be together with its
  subsidiary jointly and severally responsible for the obligations of the
  subsidiary, OMG B.V. hereinafter referred to as OMG;


2.GROUPE GEORGE FORREST S.A., a company organized and existing under the laws
  of Luxembourg and having its registered office at 25 rue de la Chapelle,
  Luxembourg, hereinafter referred to as GGF; and


3.LA GENERALE DES CARRIERES ET DES MINES, a corporation organized and existing
  under the laws of the Democratic Republic of Congo and having its registered
  office at boulevard Kamanyola, P.O. Box 450, LUBUMBASHI, DEMOCRATIC REPUBLIC
  OF CONGO, hereinafter referred to as GECAMINES, or GCM.




Whereas the Parties have concluded a Frame Agreement signed in February 1996
where they have agreed on the general outlines of the establishment of a Joint
Venture to partially or totally process the slag in the site of LUBUMBASHI;

Whereas OMG, GGF and GECAMINES have initiated studies to determine the
economical and technical feasibility of a Cobalt Slag Processing Operation in
LUBUMBASHI, DEMOCRATIC REPUBLIC OF CONGO;

Whereas the Parties intend to invest in the Processing Plant if the feasibility
proves to be positive;




                                                                               4






Whereas for the purpose of carrying out the activities of the Project, the
Parties wish to form:

  (a) a Joint Venture Company under the laws of JERSEY in the form of a private
    limited liability company or in any other country and/or in such other form
    as agreed by the parties (the Joint Venture, hereinafter referred to as
    J.V.);


  (b) a Slag Processing Company in the form of a Private Company with Limited
    Responsibility (SPRL) existing under the laws of the DEMOCRATIC REPUBLIC OF
    CONGO, the shares of which shall be primarily owned by the J.V. (hereinafter
    referred to as Slag Processing Company of Lubumbashi or Processing Company
    or S.T.L.);





Whereas the Parties wish to formalize their Agreement as to the formation and
operation of a J.V. as well as to carry out activities such as feasibility
studies, building of the Plant, Processing of Slag, Purchase of Slag, Sales of
Processed Materials, transportation as well as management related to the
project;





NOW THEREFORE in consideration of the premises and of the Contracts and
Agreements contained in this Agreement, the Parties hereby agree as follows:




                                                                               5




I.      DEFINITIONS


The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified:


AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.

BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.

PURCHASER means the J.V. purchasing Slag in the Long Term Slag Sales Agreement.

COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.

YEAR means calendar year beginning on 1st of January and ending on 31st of
December.

UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.

CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.

TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.

LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.

LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.

DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.




                                                                               6




DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition

EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.

SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.

J.V. means a private limited liability company having its registered office in
JERSEY.

BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.

KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.

LMB means the LONDON METAL BULLETIN.

LME means the LONDON METAL EXCHANGE.

SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.

EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.

USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.

MONTH means calendar month.

PARTIES means the Parties to this Agreement.

QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.

WEIGHTS AND MEASURES
1 (metric) ton  =       2,204.6 pounds avoirdupois
1 dmt or ts     =       1 dry metric ton
1 wmt or th     =       1 wet metric ton




                                                                               7






TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.

PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.

PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant

SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.

SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, Ki, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).

PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.

PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.

COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.

BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.




                                                                               8






USD means the lawful currency of the UNITED STATES OF AMERICA.

PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.

SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.



II.     SPECIAL PROVISIONS



1.   FORMATION OF THE JOINT VENTURE
- -----------------------------------


1.1. The Parties hereby agree to promptly establish a Joint Venture Company in
  the form of a private limited liability company to be named GROUPEMENT DU
  TRAITEMENT DU TERRIL DE LUBUMBASHI (GTL) or such other name as agreed by the
  Parties.

  The By-laws of the J.V. shall be prepared and signed by the Parties in such
  time as unanimously agreed by them.

1.2  The primary goals of the J.V. are:

     i)   to establish a Processing Company, a subsidiary to the J.V., to be
          registered under the laws of the DEMOCRATIC REPUBLIC OF CONGO and to
          be named Societe de Traitement du Terril de LUBUMBASHI (S.T.L.).

     ii)  to conclude and ensure the best possible follow-up of Agreements such
          as:


          -       The Long Term Slag Sales Agreement
          -       The Long Term Cobalt Alloy Sales Agreement
          -       The Tolling Agreement (related to the processing of
                  the Slag by the Processing Company)

     iii) to conclude the Agreement of the Parties concerning the Capital
          contributions, the loans and other financing of the Project as well as
          optimizing and distributing the profits.

     iv)  to organize the management and follow-up of the Project.




2.      REPRESENTATIONS, WARRANTIES, TITLE TO ASSETS
- ----------------------------------------------------


2.1.    Capacity of the Parties

     Each of the Parties represents and warrants as follows:

     a) that it is a legal entity duly incorporated in its
        country of constitution,

  b) that it has the corporate capacity to enter into and perform this
    Agreement,

    that all corporate and other actions required to authorize the party to
    enter into and perform this Agreement have been taken;

  c) that the Party shall not breach any other agreement or contract by entering
    into or performing this Agreement; that this Agreement is valid and binding
    upon in accordance with its terms.





3. CAPITAL CONTRIBUTIONS AND FINANCING OF THE PROJECT
- -----------------------------------------------------

3.1. The pre-feasibility study undertaken by OMG has estimated that the total
     investment of the Project will be at about 115 USD million. The total
     amount shall be decided by the Parties after the completion of the
     feasibility studies.

     The total capital to be considered below shall therefore be in the order of
     USD 115 millions (or such other figure as determined by the Parties after
     the completion of the feasibility study), possibly further increased to
     obtain the working capital necessary to start the operations.

     To that effect, the J.V. shall issue ordinary shares in one or more calls
     for Parties to subscribe, such as described in article 3.2. below and the
     Parties shall undertake to subscribe such issued ordinary shares as
     described below in this article.

     i)   OMG undertakes to subscribe 51 per cent of any issued ordinary shares
          of the J.V.

     Additionally OMG undertakes to subscribe ** per cent of any ordinary
     shares of the J.V. Company issued prior to the end of 1999 (or such other
     date as agreed by the Parties) ** as further determined in article
     3.1.iii below and described in further details in the Option Agreement
     attached as Appendix 5 to this Agreement.

     ii)  GGF undertakes to subscribe 29 per cent of any issued ordinary shares
          of the J.V. Company.

     ** Confidential treatment has been requested with respect to certain
     information contained within this document. Confidential portions are
     omitted and filed separately with the Securities and Exchange Commission
     pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.



                                                                              11






  iii) GCM undertakes initially to subscribe one ordinary share of the J.V.
    Company.

    Additionally GCM undertakes to progressively purchase ** per cent minus
    one share of the total outstanding issued ordinary share capital of the J.V.
    Company from OMG ** from the date of the subscription till the date of
    the subscription till the date of purchase of such shares by GCM.

    For the payment of these purchases GCM ** in compensation for the first
    Slag sales under the Long Term Slag Sale Agreement.

    J.V. shall act as the paying agent for the purchase and sales of such
    shares **

    GCM will be paid for the supplied Slag by the J.V. only after the shares
    representing ** per cent of the total outstanding ordinary share capital
    of the J.V. Coin an have been fully purchased and paid up **.

3.2. The financing as described above shall take place in several separate
     installments and in such a manner as decided by the Parties or by the Board
     of Directors.

    The Parties shall contribute to any capital increase in proportion to their
    respective capital contribution obligations as mentioned in Article 3.1.
    above or in any other manner as agreed by the Parties.

    The preliminary expenses made by the Parties for the Project may be used by
    them as a capital contribution, such as specified in Article 5 below.

    If any Party (the defaulting party) were unable to participate in any of the
    basic capital contributions, duly decided by the Parties or the Board of
    Directors of the J.V. within the limits of the overall funding obligations
    of the Parties, the other Parties shall have the option to increase their
    respective share in the capital of the J.V in proportion to their
    shareholdings.




** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.






                                                                              12




3.3. The Parties agree Chat apart from the obligation to provide with the
     capital contributions mentioned in article 3.1. above, the Project is
     intended to be self-financing to the maximum extent possible.

     To the extent the revenues of the J.V. are insufficient to meet with all
     the obligations (including operation expenses and financial charges), the
     Parties shall then seek to obtain additional financing from an outside
     financing source to be primarily secured by the proceeds from the sales of
     the Treated Materials to KCO or by parent guarantees to be provided by the
     Parties in proportion to their respective contributions to the J.V.

3.4. Any additional capital increase or a parent loan, which go beyond the
     initial capital can only be requested if so decided by the General Meeting
     or the Board in accordance with the Articles of the J.V.

     In the event that a Party (or several Parties) is not able or willing to
     participate in any additional capital contribution, this shall not prevent
     the other Parties (or other Party) to increase their capital contributions
     and accordingly increase their capital share in the J.V.

     Failure by any Party to participate in a capital contribution increasing
     the capital beyond the total amount of capital as defined in art. 3.l.
     above, cannot be regarded as a default of the failing Party or Parties.

3.5. All the net revenues of the J.V., after payment of all operation costs and
     expenses, financial costs, taxes if any and contributions to any applicable
     reserve funds as may be required by the law, shall be paid out as
     distributions by the J.V. to the Parties in proportion to their capital
     participation.




                                                                              13






4.      MANAGEMENT
- ------------------


4.1. After the signing of this Agreement at the latest, the Parties shall
     establish a temporary Management Committee composed of 6 members and their
     respective alternates.

     Each Party shall nominate two representatives thereto.

     A Project Manager shall be appointed by OMG to supervise the implementation
     and technical execution of the project until the building of the Processing
     Plant has been completed.

4.2. The Project shall be administrated by this temporary Management Committee
     until the J.V. has been formally established and its Board of Directors has
     been elected and nominated.

     OMG shall nominate three representatives and 3 alternates to the Board of
     Directors, whereas GGF shall nominate 2 representatives and 2 alternates
     and GCM shall nominate 1 representative and 1 alternate.

     The Chairman of the Board shall be elected among the representative members
     of OMG.

     Two Vice-Presidents shall be elected. The first Vice- President position
     shall be devolved to the representative of GECAMINES and the second one
     shall be devolved to one of the GGF representatives.

4.3. The quorum of the Board of Directors is constituted by the presence of at
     least four directors. The decisions of the Board of Directors shall require
     the affirmative vote of at least four directors.

4.4. The quorum of the General Meeting is constituted upon the presence of
     representatives of the Parties possessing at least 66 per cent of the
     capital of the J.V.

     All decisions of the General Meeting shall require the affirmative vote of
     representatives of the Parties possessing at least 66 per cent of the
     shares in the J.V. save the decisions which are taken based on the special
     procedure envisaged in art 4.5. below where the affirmative vote of 50 per
     cent of the shares shall be sufficient.




                                                                              14






In any case the following matters In the General Meeting shall require the
affirmative vote of the representatives of the Parties possessing at least 66
per cent of the Capital of the J.V.

a)   the approval of the annual budget;
b)   the increase of the J.V. capital;
c)   An outside financing in excess of 5 percent of the amount of the capital;
d)   winding-up or liquidation of the J.V. Partnership;
e)   the final decision to commence the investment, construction and processing
     Operations as envisaged in Article 5.4. below;
f)   all decisions in relation to. the matters listed above shall also be
     subject to the specific majorities when they relate to the Processing
     Company and/or to the instructions to be given by the J.V. to the Board of
     Directors of the Processing Company.
g)   revision or amendment of any of the Agreements listed in Article 6.








4.5. The Parties agree that the management of the J.V. shall vest in the Board
     which may exercise all powers of and do all acts and things on behalf of
     the J.V., save such as are required by the local law to be exercised or
     done by the J.V. in the General Meeting. Nevertheless, in the event that
     the Board of Directors is unable to take a decision in a matter which is
     outside of the day to day management of the J.V. and which indecision may
     threaten to damage the development of the Project or the security of the
     manufacturing of the Slag or the deliveries of Treated Material, such
     matters shall be taken to the General Meeting, which shall have the
     exclusive right to decide upon those matters with an exceptional majority
     of 50 per cent. Before the date of such General Meeting, the Parties will
     use their best endeavors to decrease the discrepancies between their points
     of view.


4.6. The J.V. shall reimburse the Parties the travel and out of pocket expenses
     incurred by the Board of Directors or their representatives to attend the
     Board meetings.




                                                                              15




4.7. All programs and budgets shall be established on a calendar year basis,
     unless otherwise mutually agreed.

4.8. STL shall be managed by a Managing Board that shall appoint and elect the
     General Director.

     OMG shall nominate 3 representatives to the Managing Board, whereas GGF
     shall nominate 2 representatives and GCM shall nominate l representative.

     The Chairman of the Board shall be elected among the GGF representatives.

     Two Vice-Presidents shall be designated and nominated.

     The first position shall be devolved to the GECAMINES representative and
     the second position shall be devolved to one of the OMG representatives.


5.      PRELIMINARY ACTIVITIES
- ------------------------------


5.1. Before deciding on the commercial exploitation of the Slag deposit, such
     further investigations and studies (referred to as preliminary activities)
     are necessary to determine the feasibility of the investment, the
     construction and processing activities.



5.2. The costs and expenses incurred by the Parties prior to the setting up of
     the J.V. and approved by the Board of Directors (and by an independent
     auditor, if necessary) shall be considered as a contribution against the
     obligation of the Parties to provide with the capital contribution of the
     J.V. pursuant to Article 3.1. of this Agreement.


5.3. The technical and administrative services needed to carry out the
     preliminary activities shall as far as possible be rendered by the Parties
     or their affiliated companies on such terms and conditions considered
     reasonable and acceptable by the Board of Directors.


5.4. Upon completion of the preliminary activities and after the analysis of the
     cobalt contents of the Slag deposit in accordance with Article 3 of the
     Frame Agreement, the Parties shall take their final decision as to whether
     they begin to invest, construct and initiate the Processing operations.




                                                                              16







     That decision shall be taken no later than six months after the signing of
     this Agreement, provided OMG and/or GGF have not made use of the right to
     withdraw.


6.      RELATED AGREEMENTS
- --------------------------


6.1. Slag Supply


     A Long Term Slag Sales Agreement shall be concluded between GCM on the one
     hand, and the J.V. on the other hand, whereby the J.V. shall have the
     exclusive right to purchase the Slag located on the well known site of
     LUBUMBASHI on terms and conditions as set out in the Frame Agreement and in
     further details in the Long Term Slag Sales Agreement attached as Appendix
     2 to this Agreement.

     To ensure uninterrupted and unhindered continuity of Slag deliveries to the
     J.V. and to the Processing Company in accordance with the terms of the
     Frame Agreement and of the Long Term Slag Sales Agreement, GCM agrees as
     detailed in the above mentioned agreements, to accept that a Cobalt Alloy
     Buffer Stock be created by the J.V. in KOKKOLA FINLAND with a six month
     supply of KCO.

     The J.V. shall enter in the accounts and manage the fluctuations of that
     stock.


6.2. Cobalt Alloy Sales


     OMG undertakes that KCO shall undertake to purchase from the J.V. all or
     part of the Cobalt Alloy produced in the Processing Plant in accordance
     with the terms and conditions set up in the Long Term Cobalt Alloy Sales
     Agreement attached as Appendix 3 to this Agreement.


6.3. Management of STL


     The Board of Directors of the J.V. shall determine the by-laws of STL as
     well as the possible Management Agreement determining the management rules
     of STL in more detail.





                                                                              17









6.4. Construction of the Processing Plant

     GGF's affiliates, the SPRL Entreprises Generales MALTA FORREST (EGMF) for
     earth moving and civil works, and NEW BARON & LEVEQUE INTERNATIONAL S.A.
     (NBLI) for site supervision, building, commissioning as well as certain
     engineering activities related to steel structure, piping, electricity and
     instrumentation and certain procurement and follow-up activities, shall be
     designated as nominated subcontractors.

     These companies shall provide the J.V. with a cost plus fee bid.

     On the basis of that bid, the Board of Directors of the J.V. shall decide
     either to award the Contract to the EGMF and NBLI or to call for tenders to
     third parties. In the latter case the companies EGMF and NBLI shall have
     the right of first refusal.

     All the principles, terms and conditions for the above mentioned
     subcontracts are described separately in the Construct ion Agreement.



6.5. Transportation Services


     The J.V. shall appoint GEORGE FORREST INTERNATIONAL S.A. to organize:

     1.   the handling of the Slag and Processed Slag if required after
          completion of the feasibility study.

     2.   the transportation of Cobalt-bearing Alloy from the Processing Plant
          to the port of KOKKOLA in Finland, unloading excluded but the
          supervision and related transport insurance included.

     That company shall submit a bid to the J.V.

     On the basis of that bid, the Board of Directors of the J.V. shall decide
     either to appoint the company or to call for bids from third parties. In
     such case GFI S.A. shall have the right of first refusal.




                                                                              18







6.6. Tolling Agreement


     The Processing Company, STL, shall enter into a Tolling Agreement with the
     J.V. whereby the J.V. shall grant STL the right to process all of the Slag
     acquired by the J.V. from GCM on terms and conditions as set out in the
     Tolling Agreement attached as Appendix 4 to this Agreement.



7.   LIABILITIES AND COMMITMENTS OF THE PARTIES
- -----------------------------------------------

7.1. The Parties' liability for the J.V.'s debts and liabilities are limited to
     the capital invested in the J.V.. The J.V. shall be the owner of its assets
     and shall be the obligor in respect to its liabilities.

     The Parties shall not be liable for the debts or liabilities of the J.V.,
     except to the extent any such debts or liabilities shall have been
     expressly guaranteed by such Party.

7.2. In order to protect the environment in LUBUMBASHI and subject to the
     limitations set out above the Parties undertake to construct, operate and
     maintain their Processing Plant in the Democratic Republic of CONGO in an
     orderly way and corresponding to the rules for protecting the environment
     applicable in the European Union.





8.   TERM AND TERMINATION
- -------------------------

8.1. This Agreement shall remain in full force and effect for as long as:

     -       the J.V. shall hold any rights,
     -       the assets of the J.V. are not disposed of,
     -       a final settlement after liquidating the J.V. has not
             been made.

8.2. The Parties may at any time terminate this Agreement by mutual agreement in
     writing.

     In the case of termination by mutual agreement, the Parties shall agree as
     to the terms of the dissolution/liquidation of the J.v.




                                                                              19





8.3. The non-defaulting Parties of the J.v. shall be entitled to vote for the
     exclusion of a defaulting Party, if the exclusion is voted unanimously by
     the members representing the non-defaulting Parties after having heard the
     explanations from the defaulting Party in one of the following cases:

     - that Party would materially infringe one of the provisions of this
     Agreement or related agreements and would not have remedied such breach as
     required in Article 13.1 of the general provisions;

     - that Party would be in default of its obligation related to investment
     needs as defined in Article 3, providing the terms of Article 13.1. of the
     General Provisions have been first made use of.

     The non-defaulting Parties may, acting together, either choose to terminate
     this Agreement or to acquire all the shares of the defaulting Party and the
     defaulting party has the obligation to sell all its shares at a price
     defined in article 8.5. below, deducting the possible damages.

8.4. In addition to the terms and conditions of Article 8.3., the non-affected
     Parties shall be entitled to vote for the exclusion of any Party affected
     by the occurrence of the following cases:

          i) any Party becoming insolvent or having a temporary receiver
          appointed of its assets or an execution of distress or warrant of
          distress levied upon its assets, or if they have a consequence on the
          execution of this Agreement.


          ii) an order being made or a resolution being passed for winding-up or
          liquidation of any Party except that where any such event is only for
          the purposes of acquisition or amalgamation with another and the
          relevant company emerging is and agrees to be bound by the terms of
          this Agreement, providing an endorsement be made and that such an
          event shall not endanger the completion of operations to the
          satisfaction of the non-affected Parties.


          iii) the shares of the social capital of a Party have been acquired to
          an extent exceeding 26 percent of the social capital of that Party by
          a competitor of any of the other Parties.

                                                                              20







8.5. In the event of the exclusion of any Party due to Article 8.3 or 8.4 of the
     Special Provisions or to Article 13.1 of the General Provisions, as well as
     in the event of a voluntary withdrawal, the remaining Parties shall be
     entitled (but not obligated) to purchase all the shares, (but not less than
     all the shares) of the excluded or withdrawing Party. That purchase shall
     be in proportion to the shares already held, unless otherwise agreed by the
     non-defaulting Parties. The purchase price shall be set at the book value.
     The book value shall be calculated on the capital of the J.V. including the
     equity capital, retained earnings and reserves less any and all long and
     short term liabilities.

     In case any of the Parties would not agree upon the book value, the Parties
     shall appoint an independent internationally accepted auditing firm to make
     such a valuation. Such a valuation shall be binding to all Parties.

     Should the Parties not agree upon the auditing firm, the valuation shall be
     decided in an arbitration pursuant to Article 4 of the General Provisions
     of the Agreement.




9. WITHDRAWAL OPTION
- --------------------

It is absolutely essential for the Parties that the results from the preliminary
activities will give sufficient evidence that:

    i) the cobalt content of the Slag as to quantity and quality will be to the
     satisfaction of the Parties as defined in Articles 2 of the Long Term Slag
     Sales Agreement in the Appendix 2 hereto.


    ii) the commercial exploitation is viable to the satisfaction of the
     Parties, in accordance to the feasibility studies, construction and
     investment calculations related to the processing as well as the other
     activity plans to be completed in accordance with Article 5.1 above.




                                                                              21








     The Parties shall have a period of consideration of 6 months starting on
     the date of entering into force of this Agreement. Should the conditions
     defined in sub-articles i) and ii) not be fulfilled within the said period
     to the satisfaction of any of the Parties, that Party shall have the right
     to withdraw from this Agreement without any liability to pay any
     compensation or reimbursement of costs to other Parties or any
     reimbursement of its own expenses.



10. BUFFER STOCK
- ----------------

     The Long Term Slag and Cobalt Alloy Sales Agreements set out that the J.V.
     shall constitute and maintain a Cobalt Alloy Buffer Stock in KOKKOLA,
     FINLAND containing the equivalent of 6 months of delivery to KCO.

     The J.V. shall arrange for the accounts and manage the fluctuations of the
     Buffer Stock.



11. ADDITIONAL GUARANTEES
- -------------------------

     GECAMINES undertakes :

     (i)  to guarantee for the J.V. an unhindered access right to the Site,
          either by not alienating to a third party or assigning to the J.V. the
          ownership of the strip of land through which access to the Site is
          made and such as mutually agreed, as well as the exclusive rights to
          the Slag.

     (ii) to support the obtaining of guarantees from the Government of the
          Democratic Republic of Congo such as a guaranty for a favorable fiscal
          treatment, guarantees concerning the expatriation of the profits, the
          non-expatriation of the Plant and a guarantee that in the case
          GECAMINES would be privatized, all its obligations resulting from this
          Agreement, would remain in force.

     (iii) to support the obtaining of other authorizations, permissions, fiscal
          exemptions, export licenses, etc. on behalf of the Processing Company
          and/or the J.V.




                                                                              22








     (iv) to give all the necessary assistance to insure a continuous supply of
          electricity and water to the Plant.




12. DEVELOPMENTS
- ----------------


Given the possible developments in the processing technology in the coming years
and during the validity period of this Agreement, the Parties shall examine the
possibility to improve the quality of the production with the view to increase
its value added.



                                                                              23










III.    GENERAL PROVISIONS
- --------------------------



1.      HIERARCHICAL ORDER OF THE AGREEMENTS
- --------------------------------------------

     This Agreement is part of the Agreements concluded between the Parties.

     The aim of these Agreements is to set up the terms and conditions of the
     purchase of the Slag located at the Site, the setting up of the J.V. and of
     the Processing Company and selling the Cobalt-bearing Alloy to KCO for
     further processing.

     These Agreements are :

     (i)     JOINT VENTURE AGREEMENT
     (ii)    LONG TERM SLAG SALES AGREEMENT
     (iii)   LONG TERM COBALT ALLOY SALES AGREEMENT
     (iv)    TOLLING AGREEMENT

     Although each Agreement mentioned above can be interpreted independently
     and according to its own terms, it is to be noted that it is part of a
     larger contractual arrangement and that it has to be interpreted in light
     of the other Agreement.

     In the event of a conflict, the Agreements listed above shall be
     interpreted in the above order so that a prior Agreement shall always
     supersede a later one.

2.      AMENDMENTS
- ------------------

     Any amendments or additions to this Agreement shall be valid only if made
     in writing and signed by duly authorized representatives of the Parties
     hereto.

     Should an amendment or modification to this Agreement have an effect to the
     other Agreements, the Parties undertake to change or modify these other
     Agreements in order to avoid any conflicts between this Agreement and the
     other Agreements.



                                                                              24




3. RESTRICTIONS ON TRANSFERS
- ----------------------------

3.1. A Party shall not have the right to sell, assign, transfer, pledge or
     otherwise dispose of the shares it holds in the J.V. unless priorily
     consented in writing by all the other Parties.


3.2. The provisions of Article 3.1. shall not be applicable in the case of a
     transfer, sale or assignment of the shares by a Party to its affiliate
     company provided that the transfer, sale or assignment is total and is
     imposed by legitimate reorganization needs of the Party concerned.

     For the purposes of this Agreement, an affiliate company shall mean any
     company or entity which is a subsidiary or a parent of the transferor Party
     or which directly or indirectly controls or is controlled by the transferor
     Party.

3.3. Any transfer described or permitted in accordance with Articles 3.1 and 3.2
     shall be subject to the transferee giving its written undertaking to be
     bound by all the terms, conditions and undertakings of this Agreement and
     the relating Agreements.


3.4. Any transfer other than in accordance with Article 3.1. and 3.2. shall not
     be possible without the prior written consent of all Parties.



4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------

     In the event the Parties are unable to settle a dispute in connection with
     this Agreement out of court, they agree the dispute shall be submitted to
     the French section of the tribunals of Brussels which shall give a verdict
     pursuant to the Belgian laws.




                                                                              25




5. CONFIDENTIALITY
- ------------------

5.1. Unless otherwise provided in this Article, all reports, records, data or
     any other information of any kind whatsoever developed or acquired by any
     Party in connection with the activities of the J.V. and/or the Processing
     Company in the DEMOCRATIC REPUBLIC OF CONGO controlled by the J.V., shall
     be treated as confidential and no Party shall reveal or otherwise disclose
     such confidential information to third parties without the prior consent of
     the other Parties.

     The above restrictions shall not apply to the disclosure of confidential
     information to any affiliate companies or any private or public financing
     institutions, any contractors or subcontractors, employees or consultants
     of the Parties or of the J.V. or the Processing Company or to any third
     party to which a Party envisage the transfer, the sale, assignment,
     encumbrance or other disposition of all of its participation in the J.V. in
     accordance to the terms of the Article 3 above.

     However, this shall only be applicable provided the confidential
     information shall only be disclosed to third parties having a legitimate
     need for this information and the persons or company to whom such
     disclosure is made shall first undertake in writing to protect the
     confidential nature of such information, to the same extent as the Parties
     are obligated under this Article.

     In addition, the above restrictions shall not apply to any Government or
     governmental Department or Agency which has the right to require the
     disclosure of such confidential information.

     These restrictions shall also not apply to such confidential information
     which comes into the Public Domain, except the fault from any Party.

     This confidentiality obligation shall survive for a period of 5 years
     commencing at the termination/dissolution of this Agreement.

     The above mentioned restrictions are not valid for information retained by
     GECAMINES related to the Site.




                                                                              26








6. FORCE MAJEURE
- ----------------

6.1. The obligations of any Party shall be suspended to the extent that the
     performance of its obligations is prevented or delayed, in whole or in part
     by :

     accidental act, bad weather, floods, slides, mine disasters or major
     accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
     demonstrations, riots, sabotage, laws, rules or regulations of agency or
     governmental bodies or any other event beyond such Party's reasonable
     control.

     The obligations shall also be suspended in the event of governmental
     actions or inactions, restraints of governmental or other competent
     authorities, inability to obtain or unavoidable delay in obtaining
     necessary materials, facilities and equipment in the open market,
     suspension or refusal of access to the deposit Slag Site, interruption or
     unavoidable delay in communication or transportation, or any other cause,
     whether similar or not to those specifically listed, which shall be beyond
     the reasonable control of the Party.

6.2. In the event of such occurrences, the Party affected shall give written
     notice to the other Parties as soon as possible after the occurrence of the
     event causing the delay or prevention, setting out full particulars and
     estimating the duration of the delay or prevention.

     The Party affected shall use all possible diligence to remedy the situation
     causing the delay as quickly as possible.

     The requirement that any such delay shall be remedied with all possible
     diligence shall not require a Party to settle strikes, lock out or other
     labor conflicts contrary to its wishes and this type of difficulty shall be
     handled within the discretion of the Party concerned.

     In the event the situation of force majeure would remain enforce for more
     than 6 months, the Parties shall meet to analyze the situation en envisage
     the termination of this Agreement.


7. NOTICES
- ----------

7.1. All notices required under this Agreement shall be in writing and directed
     to the respective Parties at the following addresses :

     If to OMG :

          OMG EUROPE GMBH
          Mr Kari MUURAISKANGAS
          Morsenbraicherweg 200
          D - 40470 DUSSELDORF
          GERMANY
          Tel : 00.49.211.96.18.80
          Fax : 00.49.211.61.46.29

     If to GGF :

          c/o G.F.I. S.A.
          Managing Director
          Parc Industriel
          B - 4400 IVOZ-RAMET
          BELGIUM
          Tel :   00.32.4.338.91.79
          Fax :   00.32.4.338.91.86

     If to GECAMINES :

          Mr General Director
          Boulevard du Souverain 30
          1000 BRUSSELS
          BELGIUM
          Tel : 00.32.2.676.89.98
          Fax : 00.32.2.676.80.41
          Fax Technical Direction : 00.32.2.676.80.48


Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.

The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.

Any Party may, at any time, change the address to which notices or
communications shall be given by written notice to the other Parties.



8. NO WAIVER
- ------------

     The failure of a Party at any time to require the performance of any
     provision of this Agreement shall not affect its right to execute that
     provision and a waiver by such Party upon a breach thereof shall not be
     interpreted as a waiver by such Party of any later non execution of such
     provision or as a waiver by such Party of any other provision of this
     Agreement.


9. SEVERABILITY AND HEADINGS
- ----------------------------

9.1. If any provision of this Agreement or its related Appendices should be null
     and void, such a nullity shall not invalidate all the other provisions in
     this Agreement or related Appendices. The Parties of this Agreement shall
     endeavor to negotiate so as to replace any null and void provision as well
     as any other affected provision.

9.2. The headings in this Agreement are considered for convenience only and
     shall not have any effect or limit in interpreting the provisions of this
     Agreement.






10.  SOVEREIGN IMMUNITY
- -----------------------

     To the extent that a Party may be entitled to claim in any jurisdiction in
     which legal proceedings may at any time be commenced with respect to this
     Agreement, for itself or its activities, properties or assets any immunity
     either :


- - from jurisdiction of any court or arbitration
- - from attachment prior to judgment, from execution of a judgment or set-off
- - from any other legal process, and to the extent where such immunity could be
  granted by that jurisdiction,




                         LONG TERM SLAG SALES AGREEMENT






BETWEEN:




               GECAMINES


AND:


               J. V. GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE
               LUBUMBASHI




                                                                               2



THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL THE ELEMENTS
HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE RESPECTIVE ARTICLES




I       DEFINITIONS


II      SPECIAL PROVISIONS

        1       SCOPE
        2       QUALITY AND QUANTITY
        3       DELIVERY AND TITLE
        4       PRICING
        5       QUOTATIONAL PERIOD
        6       BUFFER STOCK
        7       PAYMENT
        8       INVOICING CURRENCY AND PAYMENT PROCEDURES
        9       WEIGHING, SAMPLING AND ANALYZING
        10      TERM AND TERMINATION OF THE AGREEMENT
        11      TAXES AND OTHER CHARGES AND FEES
        12      HARDSHIP
        13      LIABILITIES
        14      COVENANTS



III     GENERAL DISPOSALS


        1       HIERARCHICAL ORDER OF THE AGREEMENTS
        2       AMENDMENTS
        3       RESTRICTIONS ON TRANSFERS
        4       ARBITRATION AND APPLICABLE LAWS
        5       CONFIDENTIALITY
        6       FORCE MAJEURE
        7       NOTICES
        8       NO WAIVER
        9       SEVERABILITY AND HEADINGS
        10      SOVEREIGN IMMUNITY
        11      APPENDICES
        12      FURTHER ENGAGEMENTS
        13      GENERAL CLAUSES
        14      ENTERING INTO FORCE




                                                                               3






The Present Agreement is concluded between:



LA GENERALE DES CARRIERES ET DES MINES, a public company organized and existing
under the laws of the Democratic Republic of Congo, having its registered office
at Boulevard Kamanyola, B.P. 450, Lubumbashi (Democratic Republic of Congo)
(hereinafter referred to as the SUPPLIER or GECAMINES, or GCM)

on the one hand;


AND


J. V. GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI,
having its registered office at JERSEY, (hereinafter referred
to as the PURCHASER or GTL)

on the other hand;


WHEREAS the SUPPLIER is the owner of Slag produced in its water-jacket ovens in
Lubumbashi, the Democratic Republic of Congo, and containing among others
cobalt;


WHEREAS the PURCHASER intends to form a subsidiary company (hereinafter referred
to as the Processing Company) in the Democratic Republic of Congo to establish a
Plant in Lubumbashi for the main purpose of processing all or part of the Slag
existing in the Site. The enriched product obtained after processing is
hereafter referred to as Cobalt Alloy;


WHEREAS the SUPPLIER, in its position as the owner of the Slag on the Site, is
willing to sell the Slag on a long term basis as and when this Agreement shall
become effective and according to the terms and conditions set out hereafter;


WHEREAS the Parties estimated in May 1995 that the total quantity of Slag
located in the Site was approximately 13 million tons, out of which at least
some 4 million dry tons were estimated to correspond to the specifications of
the Frame Agreement signed on the 14th of February 1996 and therefore suitable
for processing;



NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:



                                                                               4




I.      DEFINITIONS


The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified :



AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.

BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.

PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.

COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.

YEAR means calendar year beginning on 1st of January and ending on 31st of
December.

UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.

CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.

TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.

LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and, the latter undertakes to buy
Cobalt Alloy from the J.V.

LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.




                                                                              5







DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.

DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition

EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.

SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.

J.V. means a private limited liability company having its registered
office in JERSEY .

BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.

KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.

LMB means the LONDON METAL BULLETIN.

LME means the LONDON METAL EXCHANGE.

SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.

EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.

USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.

MONTH means calendar month.

PARTIES means the Parties to this Agreement.




                                                                               6





QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.

WEIGHTS AND MEASURES
1 (metric) ton  =       2,204.6 pounds avoirdupois
1 dmt or ts     =       1 dry metric ton
1 wmt or th     =       1 wet metric ton

TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.

PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.

PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant

SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.

SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, K1, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).

PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.

PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.

COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.



                                                                               7








BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.

USD means the lawful currency of the UNITED STATES OF AMERICA.

PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.

SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.



                                                                               8







                             II. SPECIAL PROVISIONS
                             ----------------------

1.      SCOPE
        -----

The Parties agree that, according to this Agreement, the Slag located in the
Site corresponding to the specifications set out in article 2 hereafter shall be
reserved and intended to the usage of the PURCHASER and of the Processing
Company, in accordance with the terms and conditions set out in this Agreement .

Hence, subject to the terms and conditions of this Agreement:


(i) the SUPPLIER undertakes to sell the Slag available in the Site and
corresponding to the quantities and specifications set out in Article 2
hereafter to the PURCHASER.

(ii) the PURCHASER undertakes to buy the Slag available in the Site and
corresponding to the quantities and specifications set out in Article 2
hereafter from the SUPPLIER.

The SUPPLIER agrees not to sell the Slag available in the Site and corresponding
to the quantities and specifications set out in Article 2 below, to any other
buyer than the PURCHASER during the validity period of this Agreement and except
with prior written consent of the PURCHASER.

In support of the right to take the Slag in the Site, the SUPPLIER hereby
irrevocably and unconditionally guarantees to the PURCHASER and the Processing
Company a free and unhindered access to the Site during the validity period of
this Agreement.

In order to safeguard the effectiveness of this access, the SUPPLIER agrees
either not to alienate to a third party or to transfer to the J.V. the use of
the strip of land through which access to the Site is made and such as mutually
agreed.



                                                                               9








2.      QUALITY AND QUANTITY
        ---------------------

2.1. The Slag shall be delivered EXW the Site.


2.2. Information on the quality and quantity of the Slag is based at this stage
on information given by the SUPPLIER. This Agreement covers the tonnages of the
Slag in stock zones I, J, K1, K2 and TAS-GL (a map of the stock zones is
attached as Appendix 1 forming an integral part of this Agreement) :


This represents at least 4 million dry tons of Slag having the following average
analysis (and is attached as Appendix 2 and forming an integral part of this
Agreement) :

          -Co: 1.85%
          -Cu: 1.39%
          -Zn: 7.49%

The quantity of Slag mentioned in Appendix 2 should be sufficient for the
production of Cobalt Alloy containing 5,000 tons of Cobalt per year for a period
of 15 years.


2.3. Should the total tonnage of Slag corresponding to the minimal
specifications be higher than the total quantities indicated above, the
PURCHASER shall have the right of first refusal to buy the excess of the Slag at
terms and conditions to be set out.

In case GECAMINES wants to utilize other part of the stock than what is defined
in Article 2.2, the PURCHASER shall have the right of pre-emption to use it
within 3 months after the written notice addressed by GECAMINES to the
PURCHASER.

The purchase conditions on all or part of that part of the stock shall be
negotiated in the event the pre-emption right is used.




                                                                              10






2.4. The SUPPLIER has delivered a preliminary map indicating the cobalt contents
of the different zones of the Site. Such map is only preliminary, and shall not
have any value of evidence with regard to the cobalt content of the Slag in the
different zones of the Site.

The PURCHASER shall have the right to take samples in order to analyze the
cobalt content of the Slag. Should an essential part of the Slag have a cobalt
content below the allowed average content, and the J.V. find that the project is
not economically viable, according to the feasibility studies, the J.V. shall
have the right at its full and independent discretion, to terminate this
Agreement by means of a written notice delivered to the SUPPLIER at the latest 6
months after entering into force of this Agreement.


2.5. The SUPPLIER undertakes to sell to the PURCHASER the quantity of Slag
needed to produce the Cobalt Alloy as determined annually by the PURCHASER. That
annual production shall be realized according to the agreed processing
conditions and shall not be superior to 5,000 tons of cobalt contained in the
Cobalt Alloy without the approval of the SUPPLIER.

Nevertheless, the Slag sale shall not be less than what is needed to produce
4,000 tons of cobalt contained in the Cobalt Alloy.


2.6. The PURCHASER shall, either on its own initiative or at the request of
GECAMINES or KCO, organize at least once a year a meeting of these 3 parties in
order to analyze the market conditions and coordinate the commercial policies.


2.7. The PURCHASER shall include in the Long Term Cobalt Alloy Sales Agreement
to be signed with KCO that:

- - KCO shall not receive more than 5,000 tons of cobalt per year, with a minimum
guaranteed supply of 4,000 tons of cobalt contained in the Cobalt Alloy,
according to this Agreement.

- - In case the PURCHASER, after the building up of the Buffer Stock containing
2,500 tons of Cobalt, produces through the Processing company more than 4,000
tons per year, the quantity exceeding 4,000 tons shall be offered at the KCO
market conditions, that shall have the right of first refusal.



                                                                              11







2.8. The annual quantity of 5,000 tons of Cobalt mentioned above does not
include the quantity comprised in the Buffer Stock and can possibly be revised
after negotiation among the Parties, depending among others on the Processing
capacities in the Democratic Republic of Congo and/or in Finland as well as on
the Cobalt market situation.



3.      DELIVERY AND TITLES
        -------------------

The quantities specified in Article 2 above shall be delivered EXW Site.

All risk of loss, damage and destruction with regard to each delivery of Slag
shall pass from the SUPPLIER to the PURCHASER along with its title as and when
the delivered Slag has been loaded at the Site by the Processing Company.



4.     PRICING
       -------

4.1.    PAYABLE METALS

The PURCHASER shall pay to the SUPPLIER only for the Cobalt and Copper contained
in the Slag excluding all other materials.

The Cobalt and Copper prices shall be determined separately.

The Slag payment shall be based on the weighing and analyzing of the Slag
carried out at the Processing plant according to a procedure to be determined by
the Parties according to Article 9.

Zinc and lead in form of oxides as well as Processed Slag shall be returned free
of charge to GECAMINES that shall become the owner of them and shall remove them
at its own expense as quickly as possible.

                                                                              12





4.2. PRICE REFERENCES


The base price for Cobalt applicable for this Agreement ** a combination
of ** of 99.3 cobalt (low) and ** of 99,8 cobalt (low) as published by
LMB over the Quotational period.


The Parties agree to meet to determine a new base price in case the reference
99.3 and/or 99.8 would disappear or would not be representative any more.

The base price for copper is ** over the Quotational Period.





4.3. BASIS PRICE FORMULA


The price to be paid for the Cobalt contents in the Slag shall be as follows,
where P is the prevailing Cobalt price :

(i)  In the event that the price of Cobalt (P) is more than or equal to **
     USD/lb:

     Payable cobalt percentage = **

     The percentage of Cobalt payable may, however, not exceed ** of the
     reference price.

(ii) In the event that the price of Cobalt (P) is lower than ** USD/lb, the
     Parties shall meet to renegotiate the pricing formula **.


The price formulas under (i) and (ii) above are the minimum. The Parties agree
to meet within six months after the beginning of the processing for a possible
review of the price formulas, taking into account the following elements : total
investment expenditure, financing costs, electricity costs, tax treatment, yield
of the processing and quality of the Cobalt Alloy.

The Parties agree that as and when OMG GGF have been fully reimbursed and repaid
the capital invested in the Project including the interests accrued and the
financial charges, the above pricing formula be modified, **.

** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.










                                                                            13


4.4. PRICE FOR COPPER


The PURCHASER shall pay to the SUPPLIER for copper in the Slag ** of the base
price defined in Article 4.2.



5. QUOTATIONAL PERIOD
   ------------------

The Quotational Period for Cobalt and Copper is the month following the delivery
month of Cobalt Alloy at Kokkola, Finland.



6. BUFFER STOCK
   ------------

6.1. ESTABLISHMENT AND QUANTITY


To safeguard that KCO shall get an uninterrupted and sufficient feedstock of
Cobalt Alloy to the KOKKOLA Plants, GECAMINES allows the PURCHASER to build up a
Buffer Stock of Cobalt Alloy in KOKKOLA besides the Commercial Stock to back up
for any supply interruption.

Therefore GECAMINES agrees to sell to the J.V. and the J.V. agrees to purchase
the quantity of Slag necessary for building up the Buffer Stock. The total
cobalt quantity contained in the Buffer Stock shall be 2,500 tons.

The monthly amount of Cobalt Alloy exceeding the monthly agreed tonnage taken
into usage by KCO shall be used for building up the Buffer Stock until the
quantity of 2,500 tons of Cobalt contents has been reached.

In the event that the cobalt content in the Buffer Stock decreases during the
term of this Agreement, either as a result of an interruption of deliveries or
insufficient deliveries, the excess quantity above the agreed monthly supply
shall be used for rebuilding the Buffer Stock until the minimum cobalt content
of 2,500 tons has been reached again.



** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.



                                                                              14






Nevertheless, the Parties agree that the total amount of Cobalt contained in the
Buffer Stock, i.e. 2.500 tons, be reduced by 400 tons per year from the year
2006 so that the quantity of Cobalt be reduced to 2.100 tons at the end of the
year 2006, and so on, provided, however, that the J.V. has entirely reimbursed
and repaid OMG and GGF in form of dividends or other distributions the total
value of the investment in the Project including all interest and financial
charges. In case not, the reduction of the Buffer Stock shall be postponed
accordingly.

In the event of an interruption of supplies during the reduction periods
hereinabove referred and as a result the level of the Buffer Stock falls short
of the above formula, then the annual reduction shall be postponed until the
minimum level of the Buffer Stock has first been met as follows :

End 2006 : 2.100 tons of Cobalt
End 2007 : 1.700 tons of Cobalt
End 2008 : 1.300 tons of Cobalt
End 2009 : 900 tons of Cobalt
End 2010 : 500 tons of Cobalt
End 2011 : 100 tons of Cobalt
End 2012 : Liquidation of the Buffer Stock.

As regard to any other situation than those mentioned hereinabove, the Parties
will meet to find a joint understanding.



6.2. MANAGEMENT OF THE BUFFER STOCK


KCO shall be responsible towards the J.V. for the management and the risks of
the Buffer Stock, and shall bear all costs linked to it. KCO shall permit the
SUPPLIER and the PURCHASER to check all records containing the necessary
information as to the status and consumption of the Buffer Stock.

The transfer of title related to the Cobalt Alloy of the Buffer Stock shall
pass from the J.V. to KCO as taken into usage.



                                                                              15









6.3. PAYMENT FOR THE SLAG TAKEN OUT FOR BUILDING-UP OF THE BUFFER STOCK


The regulations as set out in this article are not prejudicing the above
article 6.1, al. 6 and following.

The PURCHASER shall pay for the Slag only after KCO has taken Cobalt Alloy into
usage. The payments shall be made as set out in Art. 6.2 of the Long Term
Cobalt Alloy Sales Agreement.

If GECAMINES so wish and if the PURCHASER is able to find a bank to finance such
a transaction, the PURCHASER may use the Buffer Stock as a collateral for a bank
loan to be used as an advance payment for the Slag to GECAMINES. The loan costs
including interest and charges are at the expense of GECAMINES. The total amount
of such loans including estimated interests related to such loans and bank
charges shall not, however, exceed at any time the value of the Slag used for
the building of the Buffer Stock, as estimated by the PURCHASER and approved by
the bank. The advance payment, bank charges and interests shall be deducted from
the price to be paid by the J.V. to GECAMINES as and when KCO takes into usage
Cobalt Alloy from the Buffer Stock.

KCO shall always have the right, and at its full discretion, to prepay the Slag
corresponding to the cobalt tonnage of the Buffer Stock.


7. PAYMENT
   -------


The payments by the PURCHASER to the SUPPLIER for the Cobalt and Copper in the
Slag are based on the delivery of the Slag to the PURCHASER.

The payments by the PURCHASER shall be made within thirty calendar days from end
of each Quotational Period.



                                                                              16









8. INVOICING CURRENCY AND PAYMENT PROCEDURES
   -----------------------------------------

8.1 USD


All bills and payments shall be in USD.



8.2 METHOD OF PAYMENT


Payments by the PURCHASER to the SUPPLIER shall be made by bank transfer to the
SUPPLIER's account.



9. WEIGHING, SAMPLING AND ANALYZING
   --------------------------------

The PURCHASER and the SUPPLIER shall confer and, before dispatch of the first
consignment, shall adopt and record mutually acceptable methods of weighing,
sampling and analyzing. Such methods shall be accurate and reliable. They shall
be appropriate and, based on internationally recognized industrial standards
provide efficient and practical ways of determining accurate weights, obtaining
representative samples, and producing accurate analyses of Slag supplies.



10. TERM AND TERMINATION OF THE AGREEMENT
    -------------------------------------

10.1. This Agreement shall remain in force for a period of 20 years after its
      effective entering into force.


10.2. The Parties may at any time terminate this Agreement by mutual agreement
      in writing.

     In the case of termination by mutual agreement, the Parties shall agree as
     to the terms of the dissolution.




                                                                              17






10.3. It is expressly agreed between the Parties that should any of the
following events take place, this Agreement shall not terminate nor the rights
of the PURCHASER to purchase the Slag as stipulated in this Agreement:

(i) Should GECAMINES go into bankruptcy,

(ii) Should GECAMINES become insolvent,

(iii) Should GECAMINES have a receiver appointed of its assets,

(iv) Should an order being made or a resolution being passed for winding-up or
liquidate GECAMINES,

(v) Should any other similar event take place as regard to GECAMINES.


10.4. If deemed necessary by the PURCHASER that the SUPPLIER shall take some
special measures to guarantee that the Slag (or what is left from it) can be
used on a continuous basis by the Processing Company, the Parties shall meet to
envisage the necessary safeguard measures. These possible measures shall prior
to their execution be submitted to the agreement of the Parties in order to
comply with the terms and conditions of this Agreement and the related
agreements.


10.5. This Agreement may also be terminated with no damages by the J.V. if:

(i)  the samples clearly indicate that the cobalt contents falls short of the
     average of 1,85%; or

(ii) it is clear that the Plant cannot operate in a profitable way on a long
     term basis; or

(iii)the taxation system in The Democratic Republic of Congo as applicable to
     the Processing Company and the Plant abruptly changes in a manner
     prejudicing the economic performance of the Processing Company and the
     profitability of the Plant.

     Such a termination shall be effectuated by a written notice from the
     PURCHASER to the SUPPLIER indicating the date of such termination.




                                                                            18







11. TAXES AND OTHER CHARGES AND FEES
    --------------------------------

Any taxes, State fees or other charges on the Slag shall be for the account of
the SUPPLIER, with the exception of the C.C.A.

The PURCHASER shall for the benefit of the Project and of the Processing Company
and the Plant apply for and take benefit of all possible tax reliefs under tax
and investment laws of the Democratic Republic of Congo such as, but not limited
to, tax incentives, lower tax rates, relief of export and import duties and
C.C.A. as well as exemption from withholding taxes for interest and dividend
payments.

In case of any adversary changes in the tax regime with respect to the Cobalt
Alloy and/or with the operation of the Plant or the Processing Company, the
Parties agree to meet.

 12. HARDSHIP
     --------

If at any moment unanticipated events by the Parties will fundamentally alter
the balance of this Agreement, resulting in an excessive burden to one of the
parties in fulfilling its contractual obligations vis-a-vis the other Party,
this aggrieved Party may proceed as follows:

- - The aggrieved party may request a review of this Agreement within a reasonable
delay after it has got the knowledge of the said change in circumstances and its
effects on the economy of this Agreement.

- - The request shall mention the reasons causing such review.

- - The Parties shall confer within thirty calendar days of receipt of the notice
in view to revise this Agreement on an equitable basis to avoid the excessive
burdens for any  of the Parties.

A request to review does not have any suspension effects as to the execution of
this Agreement.


                                                                              19
13. LIABILITIES
    -----------

In the event of a breach to this Agreement, each Party shall be liable for all
direct damage as well as cost, charges and expenses caused through that breach,
which shall be compensated in full.

However, any loss or damage which is an indirect or consequential result of the
nonfulfillment of obligations under or in connection with this Agreement are
excluded unless resulting from a willful or intentional act from the defaulting
Party.

All direct damages and claims can only be set off or deducted from the agreed
price if and when the disagreement has been finally settled or solved
otherwise.

 14. COVENANTS
     ---------

The SUPPLIER shall covenant:


(i)  to guarantee an unhindered access right to the Site either by not
     alienating to a third party or by transferring to the J.V. the use of the
     strip of land through which access to Site is made as mutually agreed, as
     well as the exclusive rights to use the slag.


(ii) to support the obtaining from the Government of the Democratic Republic of
     Congo of a favorable tax treatment.


(iii) to provide its full support in order to obtain all other necessary
     approvals, permissions, tax exemptions and export licenses, etc. for the
     Processing Company and/or the PURCHASER;




                                                                              20







III. GENERAL DISPOSALS
     -----------------


1. HIERARCHICAL ORDER OF THE AGREEMENTS
   -------------------------------------

This Agreement is part of a number of Agreements concluded between the Parties.

The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site, the setting up of the J.V. and of the
Processing Company and selling the Cobalt bearing Alloy to KCO for further
processing.

These Agreements are:

     (i) Joint Venture Agreement
     (ii) Long Term Slag Sales Agreement
     (iii) Long Term Cobalt Alloy Sales Agreement
     (iv) Tolling Agreement.


Although each Agreement mentioned above can be interpreted independently and
according to its terms, it is to be noted that it is part of a larger
contractual arrangement and that it has to be interpreted in light of the other
Agreements.

In the event of a conflict, the Agreements listed above shall be interpreted in
the above order so that a prior Agreement shall always supersede a later one.



2. AMENDMENTS
   ----------


Any amendments and additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.



                                                                              21






Should an amendment or modification to this Agreement have an effect on the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between the various Agreements.




3. RESTRICTIONS ON TRANSFERS
   -------------------------

3.1. A Party shall not have the right to sell, assign, transfer, mortgage,
     pledge, charge or otherwise deal with the rights and obligations it holds
     in this Agreement.


3.2. The provisions of Article 3.1 shall not be applicable in case of a
     transfer, sale or assignment of participation by a Party to an affiliate
     company provided that the transfer, sale or assignment is total and imposed
     by legitimate reorganisation needs of the Party concerned.

     For the purposes of this Agreement, an affiliate company shall mean any
     company or entity which is a subsidiary or a parent of the transferor Party
     or which directly or indirectly controls or is controlled by the transferor
     Party.


3.3. Any transfer beyond the terms and conditions of Article 3.1. and 3.2 shall
     not be possible without the prior written consent by all the Parties.


3.4. Any transfer described or permitted in accordance with Articles 3.1 and 3.2
     shall be subject to the transferee giving its written undertaking to be
     bound by all the terms, conditions and undertakings of this Agreement and
     the relating Agreements.





                                                                              22
4.      ARBITRATION AND APPLICABLE LAWS
        -------------------------------

In the event the Parties are unable to settle a dispute in connection with this
Agreement out of court, they agree the dispute shall be submitted to the French
section of the tribunals of Brussels which shall give a verdict pursuant
to the Belgian laws.

5.      CONFIDENTIALITY
        ---------------

5.1. Unless otherwise provided in this Article, all reports, records, data or
     any other information of any kind whatsoever developed or acquired by any
     Party in connection with the activities of the J.V. and/or the Processing
     Company in the Democratic Republic of Congo controlled by the J.V., shall
     be treated as confidential and no Party shall reveal or otherwise disclose
     such confidential information to third parties without the prior consent of
     the other Parties.

     The above restrictions shall not apply to the disclosure of confidential
     information to any affiliate companies or any private or public financing
     institutions, any contractors or subcontractors, employees or consultants
     of the Parties or of the J.V. or the Processing Company or to any third
     party to which a Party envisage the transfer, the sale, assignment,
     encumbrance or other disposition of all of its participation in the J.V. in
     accordance to the terms of the Article 3 above.

     However, this shall only be applicable provided the confidential
     information shall only be disclosed to third parties having a legitimate
     need for this information and the persons or company to whom such
     disclosure is made shall first undertake in writing to protect the
     confidential nature of such information, to the same extent as the Parties
     are obligated under this Article.

     In addition, the above restrictions shall not apply to any Government or
     governmental Department or Agency which has the right to require disclosure
     of such confidential information.

     These restrictions shall also not apply to such confidential information
     which comes into the Public Domain, except the fault from any Party.




                                                                              23




     This confidentiality obligation shall survive for a period of 5 years
     commencing at the termination/dissolution of this Agreement.

     The above mentioned restrictions are not valid for information retained
     by GECAMINES related to the Site.

6.      FORCE MAJEURE
        -------------

6.1. The obligations of any Party shall be suspended to the extent that the
     performance of its obligations is prevented or delayed, in whole or in part
     by:

     - accidental act, bad weather, floods, slides, mine disasters or major
     accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
     demonstrations, riots, sabotage, laws, rules or regulations of agency or
     governmental bodies.

     The obligations shall also be suspended in the event of governmental
     actions or inactions, restraints of governmental or other competent
     authorities, inability to obtain or unavoidable delay in obtaining
     necessary materials, facilities and equipment in the open market,
     suspension or refusal of access to the deposit Slag Site, interruption or
     unavoidable delay in communication or transportation, or any other cause,
     whether similar or not to those specifically listed, which shall be beyond
     the reasonable control of the Party.


6.2. In the event of such occurrences, the Party affected shall give written
     notice to the other Parties as soon as possible after the occurrence of the
     event causing the delay or prevention, setting out full particulars and
     estimating the duration of the delay or prevention.

     The Party affected shall use all possible diligence to remedy the situation
     causing the delay as quickly as possible.

     The requirement that any such delay shall be remedied with all possible
     diligence shall not require a Party to settle strikes, lock out or other
     labor conflicts contrary to its wishes and this type of difficulty shall be
     handled within the discretion of the Party concerned.




                                                                              24







     In the event the situation of force majeure would remain enforce for more
     than 6 months, the Parties shall meet to analyze the situation en envisage
     the termination of this Agreement.

7.      NOTICES
        -------

7.1. All notices required under this Agreement shall be in writing and directed
     to the respective Parties at the following addresses:






If to GECAMINES:         Mr Umba Kyamitala
                         General Director
                         Boulevard du Souverain 30
                         B-1000 BRUSSELS
                         BELGIUM
                         Tel. 00.32-2-676  89 98
                         Fax. 00.32-2-676  80 41
                         Fax Technical Direction:
                              00.32-2-676  80 48


If to J.V.:







Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.

The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.




                     LONG TERM COBALT ALLOY SALES AGREEMENT
                     --------------------------------------











BETWEEN
- -------




                   THE J.V. GROUPEMENT POUR LE TRAITEMENT DU
                   TERRIL DE LUBUMBASHI




AND
- ---

                            OMG KOKKOLA CHEMICALS OY







THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES




I.      DEFINITIONS

II.     SPECIAL PROVISIONS

1.      Scope and Quantity
2.      Specifications of the Cobalt Alloy
3.      Duration
4.      Buffer Stock
5.      Delivery and Title
6.      Payment
7.      Weighing, Sampling and Analysis
8.      Invoicing Currencies and Payment Procedures
9.      Hardship
10.     Liabilities




III.    GENERAL DISPOSALS

1.      Hierarchical Order of the Agreements
2.      Amendment
3.      Restrictions on Transfers
4.      Arbitration and Applicable Laws
5.      Confidentiality
6.      Force Majeure
7.      Notices
8.      No Waiver
9.      Severability and Headings
10.     Sovereign Immunity
11.     Further Engagements
12.     General Clauses
13.     Entering into Force



                                                                               3






The Present Agreement is concluded between :




SELLER :


J . V. "GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI",
having its registered office in Jersey on the one hand; and




BUYER :


OMG KOKKOLA CHEMICALS OY, having its registered office at P.O. Box 286,
FIN-67101 KOKKOLA, Finland (hereinafter referred to as the BUYER or KCO) on the
other hand.






Whereas the SELLER intends to invest in a Plant to be located in Lubumbashi, the
Democratic Republic of Congo, for the exclusive purpose of processing Slag
presently available in the Site in the Democratic Republic of Congo to be
processed into Cobalt Alloy which will be sold to the BUYER, and


Whereas the Parties wish to enter into this Agreement whereby the SELLER
undertakes to sell Cobalt Alloy, and the BUYER undertakes to buy Cobalt Alloy
according to the terms and conditions herein set forth.










THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS :



                                                                               4
I.      DEFINITIONS


The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified :




AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.

BUYER means OMG KOKKOLA CHEMICALS Oy (KCO), a subsidiary of the OMG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.

PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.

COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.

YEAR means calendar year beginning on 1st of January and ending on 31st of
December.

UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.

CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.

TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.

LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.

LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.

DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner
of the Site Slag according to the terms of the ex-site delivery clause.



                                                                               5









DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990 edition

EXW means "ex works delivery" clause as defined in INCOTERMs, 1990 edition.

SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.

J.V. means a private limited liability company having its registered office
in JERSEY.

BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.

KCO means OMG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.

LMB means the LONDON METAL BULLETIN.

LME means the LONDON METAL EXCHANGE.

SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.

EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.

USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.

MONTH means calendar month.

PARTIES means the Parties to this Agreement.

QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.



                                                                               6







WEIGHTS AND MEASURES
1 (metric) ton  =       2,204.6 pounds avoirdupois
1 dmt or ts    =        1 dry metric ton
1 wmt or th     =       1 wet metric ton

TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.

PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.

PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant

SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.

SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, Kl, K2 and
TAS G-L having an average cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).

PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.

PROCESSING COMPANY means the Company to be set up by the J.V. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.

COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.

BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Oy.



                                                                               7







USD means the lawful currency of the UNITED STATES OF AMERICA.

PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.

SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy
Sales Agreement.

                                                                               8


                             II. SPECIAL PROVISIONS
                                 ------------------
1. SCOPE AND QUANTITY
- ---------------------



The SELLER undertakes to sell and deliver to the BUYER and the BUYER undertakes
to buy from the SELLER a minimum annual of 4,000 tons of cobalt and a maximum
annual 5,000 tons of Cobalt contained for the exclusive usage of the Buyer.

The annual quantity of 5,000 tons of Cobalt mentioned above does not include the
quantity contained in the Buffer Stock and could possibly be reviewed after
negotiation between the Parties, depending among others on the Slag
availability, the processing capacity in the Democratic Republic of Congo and/or
in Finland as well as on the Cobalt market situation.

The annual quantity to be delivered shall be agreed by the Parties in the annual
plans to be concluded and agreed three months prior to the beginning of each
year.

In case the SELLER produces through the Processing Company more than 4,000 tons
per year, after the building up of the Buffer Stock, the quantity exceeding
4,000 tons shall be offered in priority to the BUYER at market conditions, and
the latter shall have the right of first refusal.

The J.V. can only sell to other users that tonnage of Cobalt which exceeds 4,000
tons.

2. SPECIFICATIONS OF THE COBALT ALLOY
- --------------------------------------

The Cobalt Alloy to be delivered to KOKKOLA, Finland shall have the following
specifications on a dry basis:
**

** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.




                                                                               9

3. DURATION
- -----------

This Agreement is concluded for a period of 20 years.

This Agreement shall automatically be prolonged in so far that at the end of the
year 2016 there is still Slag with an average Cobalt content of 1,85% and
capable of being provided on economic viable terms and provided that the Long
Term Slag Sales Agreement shall be prolonged for an equivalent period of time.

This Agreement shall automatically be terminated:

(i)    in case there shall no more be Slag available corresponding to the
       minimal required quantities and qualities,

(ii)   in case of liquidation of the J.V. with no successor,

(iii) in case the BUYER disappears with no successor. Should any of the above
      mentioned event take place, no damages or interests shall be paid
      whatsoever.


4. BUFFER STOCK
- ---------------


4.1.    ESTABLISHMENT AND QUANTITY

To guarantee to the SELLER and BUYER an uninterrupted and sufficient feedstock
of Cobalt Alloy to the KOKKOIA Plants, GECAMINES allows the SELLER and the BUYER
to build up a Buffer Stock of Cobalt Alloy in KOKKOLA, in addition to the
commercial stock to alleviate the problem caused by possible disturbances in the
deliveries.

For that reason GECAMINES undertakes to sell to the J.V. and
the J.V. undertakes to buy from GECAMINES the quantity of Slag
necessary for building up the Buffer Stock. The Cobalt
contained in the Buffer Stock shall be 2,500 tons.

The monthly amount of cobalt contained in the Cobalt Alloy exceeding the agreed
monthly tonnage taken into usage by KCO shall be used for building up the Buffer
Stock until the 2,500 tons of Cobalt Contained in the Cobalt Alloy have been
reached.




                                                                              10

In the event that the cobalt content in the Buffer Stock decreases during the
validity period of this Agreement, because of interruption or slowing down of
the deliveries the excess quantity above the agreed monthly supply shall be used
for rebuilding the Buffer Stock until the cobalt content of 2,500 tons has been
reached again.

Nevertheless, the Parties agree that the total amount of cobalt contained in the
Buffer Stock, i.e. 2.500 tons, may be reduced by 400 tons per year from the year
2006 so that the quantity of cobalt contents will be reduced to 2.100 tons at
the end of the year 2006, and so on, provided, however, that 0MG and GGF have
been entirely reimbursed and repaid by the J.v. in form of dividends or other
distributions the total value of their investments in the Projects including all
the interests accrued and financial charges. In case not, the reduction of the
Buffer Stock shall be postponed accordingly.


If during the reduction period hereinabove referred there will be disturbances
in the deliveries and as a result the Buffer Stock level falls short of the
above formula, then the annual reductions shall be postponed until the minimum
level of the Buffer Stock has first been met.

End 2006 : 2.100 tons of cobalt
End 2007 : 1.700 tons of cobalt
End 2008 : 1.300 tons of cobalt
End 2009 :   900 tons of cobalt
End 2010 :   500 tons of cobalt
End 2011 :   100 tons of cobalt
End 2012 : Liquidation of the Buffer Stock.

With regard to any situation other than what is regulated hereinabove, the
Parties will meet to find a joint understanding.



4.2.    MANAGEMENT OF THE COBALT ALLOY BUFFER STOCK


KCO shall be responsible towards the J.V. for the management of the Buffer
Stock, the risks, and shall bear all costs linked to it. KCO shall permit
GECAMINES and the SELLER to check all records containing the necessary
information as to the status and consumption of the Buffer Stock.

The transfer of title related to the Cobalt Alloy of the Buffer Stock shall pass
from the J.V.. to KCO as taken into usage.




                                                                              11

4.3.    PAYMENT FOR THE SLAG TAKEN OUT FOR BUILDING UP OF THE
        BUFFER STOCK

KCO shall pay for the Cobalt Alloy delivered to build up the Buffer Stock as
follows :

(i) KCO shall pay the J.V. for the tolling and transportation costs from the
Democratic Republic of Congo to KOKKOIA at the end of the month following the
delivery at KOKKOLA. These costs shall be agreed upon in the annual budget.

(ii) The balance of the Cobalt and Copper price contained in the Alloy shall be
payable as and when taken into usage from the Buffer Stock.

KCO is aware that the J.V. shall have the right to use the
Buffer Stock as a security for a loan provided that the J.V.
is able to borrow money to pay GECAMINES for the Slag (as
further described in art. 4.3 and 6.3 of the Long Term Slag
Sales Agreement).

The quantity of Cobalt and Copper contained in the Alloy and taken out from the
Buffer Stock shall be priced in the same way as normal lots of Cobalt Alloy
taken into usage by KCO.


5. DELIVERY AND TITLES
- ----------------------

The SELLER shall deliver the Cobalt Alloy, except the Buffer Stock, DDU KOKKOLA
Finland, packed in drums, in bags or otherwise, as agreed in due course between
the SELLER and the BUYER.

GECAMINES, the SELLER and the BUYER shall agree before the end of each calendar
year on the quantity of Cobalt Alloy to be delivered to KCO for the following
year. The delivery shall be made monthly in approximately even supplies.

The transfer of titles and risks shall pass from the SELLER to the BUYER DDU
KOKKOLA.


                                                                              12

6. PRICING


6.1.    PRICE DETERMINATION


The BUYER shall pay to the SELLER only for the Cobalt and Cop- per contents of
each direct shipment or taken out from the Buffer Stock. The price of Cobalt and
Copper shall be determined separately for each Used Lot of Cobalt Alloy as
follows:


(a) Cobalt Price Formula


    The reference price of Cobalt to be applicable in the Agreement shall be
    ** the combination of ** of the 99.3 (low) Cobalt base price and ** of
    the Cobalt 99,8 (low) base price both as published by LMB during the
    Quotational Period.

    The Parties shall agree to meet to determine a new base price in case the
    99,3 or 99,8 references disappear or are no more representative.

    The price for the Cobalt contained shall be ** of the base price
    established as a combination of ** of 99,3 (low) and ** of 99,8 (low).


    If the cobalt contents in the Cobalt Alloy exceed ** for a period of at
    least ** consecutive months, the Parties will meet to raise the **
    ceiling referred to in the above paragraph.

    In the event that the Cobalt is taken into usage from the Buffer Stock, the
    processing and transport costs already paid by the BUYER earlier shall be
    deducted from the above mentioned cobalt price formula.


b) Copper Price Formula

    The Copper base price shall be the ** over the Quotational Period.

    The price paid for the Copper contained shall be ** of the base price.



     ** Confidential treatment has been requested with respect to certain
     information contained within this document. Confidential portions are
     omitted and filed separately with the Securities and Exchange Commission
     pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.




                                                                              13

6.2. QUOTATIONAL PERIOD


In case of direct delivery, the Cobalt and Copper Quotational Period is the
month following the month of the delivery of Cobalt Alloy to KOKKOLA, FINLAND.

In case of taken into Usage from the Suffer Stock, the Cobalt and Copper
Quotational Period is the month following the month of the Taken into Usage.



6.3. PAYMENT


    The payment by the BUYER to the SELLER for each delivery, except for the
    deliveries to the Buffer Stock, shall be made as follows:

    The payments by the BUYER shall be made within twenty calendar days from the
    end of each Quotational Period.

    The price payable for all Lots delivered to KCO during any one month shall
    be calculated based on the relevant average cobalt and copper contents of
    each shipment and on the weight as determined by KCO.

    The BUYER shall notify the SELLER no later than ten days after the end of
    the Quotational Period applicable to the supplied Lots the following:

     (i) weight of supplied Lots during the preceding month

    (ii) the average Cobalt and Copper contents of the supplied Lots and

    (iii) the price payable for the supplied Lots taking into account the
     applicable reference price set out in Article 5 above.

    In case the averages of the final analysis of Cobalt and Copper contents are
    not available at the time of payment, the BUYER shall make a preliminary
    payment based on weights and analysis preliminary determined.

    When the final analysis is available, such payment shall be adjusted to
    reflect the final weights and analysis by crediting or debiting the
    difference in the next payment to be made by the BUYER to the SELLER.







                                                                              14


6.4.    TAXES AND DUTIES


Any and all taxes, customs duties, Government charges or other duties paid or
levied on the Cobalt Alloy in Finland shall be paid by the BUYER. All taxes,
customs duties, Government char- ties or other duties on Cobalt Alloy outside of
Finland shall be paid by the SELLER.




7. WEIGHING, SAMPLING AND ANALYSIS
- ----------------------------------

The BUYER, the SELLER and GECAMINES shall confer and before the first dispatch
shall adopt and record mutually agreed methods of weighing, sampling and
analyzing. Such methods shall be accurate and reliable. They shall be
appropriate and, based on internationally recognized and industrial standards,
provide efficient economic and practical ways of determining accurate weights,
obtaining representative samples, and producing accurate analyses of Cobalt
Alloy.




8. INVOICING CURRENCIES AND PAYMENT PROCEDURES
- -----------------------------------------------



8.1. USD

    All bills and payments shall be in USD.



8.2. METHOD OF PAYMENT

    Payments by the BUYER to the SELLER shall be made by bank transfer to the
    SELLER's account.




                                                                              15
9. HARDSHIP
- -----------

    If at any moment unanticipated events by the Parties fundamentally alter the
    balance of this Agreement, resulting in an excessive burden to one of the
    parties in fulfilling its contractual obligations vis-a-vis the other Party,
    this aggrieved Party may proceed as follows:

      - The aggrieved Party may request a review of this Agreement within three
        months after it has got the knowledge of the said change in
        circumstances and its effects on the economy of this Agreement.

      - The request shall mention the reasons causing such review.


      - The Parties shall confer within thirty calendar days of receipt of the
        notice in view to revise this Agreement on an equitable basis to avoid
        the excessive burdens for any of the Parties.

    The request to review does not have any suspension effects as to the
    execution of this Agreement.



10. LIABILITIES
- ----------------

In the event of a breach to this Agreement, each Party shall be liable for all
direct damage as well as costs, charges and expenses resulting from that breach.

These damages shall be compensated in full.

However, any loss or damage which is an indirect or consequential result of the
nonfulfillment of obligations under or in connection of this Agreement is
excluded unless resulting from a willful or intentional act from the defaulting
Party.

All direct damages and claims can only be set off or deducted from the agreed
price as and when the disagreement thereof between the Parties has been finally
settled or solved otherwise.





                                                                              16


                             III. GENERAL DISPOSALS
                                  -----------------


1. HIERARCHICAL ORDER OF THE AGREEMENTS
   ------------------------------------

This Agreement is part of the Agreements concluded between the Parties.

The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site , the setting up of the J.V. and of the
Processing Company and selling the Cobalt-bearing Alloy to KCO for further
processing.

These Agreements are:

(i)     JOINT VENTURE AGREEMENT
(ii)    LONG TERM SLAG SALES AGREEMENT
(iii)   LONG TERM COBALT ALLOY SALES AGREEMENT
(iv)    TOLLING AGREEMENT


Although each Agreement mentioned above can be interpreted independently and
according to its own terms, it is to be noted that it is part of a larger
contractual arrangement and that it has to be interpreted in light of the other
Agreement.

In the event of a conflict between the listed Agreements, they shall be
interpreted in the above order so that a prior Agreement shall always supersede
a later one.




2. AMENDMENTS
   ----------

Any amendments or additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.


                                                                           17


Should an amendment or modification to this Agreement have an effect on the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between this Agreements and the other
Agreements.


3. RESTRICTIONS ON TRANSFERS
- ----------------------------

3.1. A Party shall not have the right to sell, assign, transfer, mortgage,
     pledge, charge or otherwise deal with the rights and obligations it holds
     in this Agreement.


3.2. The provisions of Article 3.1. shall not be applicable in the case of a
     transfer, sale or assignment of participation by a Party to an affiliate
     company provided that the transfer, sale or assignment is total and is
     imposed by legitimate reorganization needs of the Party concerned.

     For the purposes of this Agreement, an Affiliate Company shall mean any
     company or entity which is a subsidiary or a parent of the transferor Party
     or which directly or indirectly controls or is controlled by the transferor
     Party.


3.3. Any transfer beyond the terms and conditions of Article 3.1. or 3.2. shall
     not be possible without the prior written consent of all the Parties.



3.4. Any transfer described or permitted in accordance with Articles 3.2 and 3.3
     shall be subject to the transferee giving its written undertaking to be
     bound by all the terms, conditions and undertakings of this Agreement and
     relating Agreements.



4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------

     In the event the Parties are unable to settle a dispute in connection with
     this Agreement out of court, they agree the dispute shall be submitted to
     the French section of the tribunals of Brussels which shall give a verdict
     pursuant to the Belgian laws.



                                                                        18


5. CONFIDENTIALITY
- ------------------

5.1. Unless otherwise provided in this Article, all reports, records, data or
     any other information of any kind whatsoever developed or acquired by any
     Party in connection with the activities of the J.V. and/or the Processing
     Company in the DEMOCRATIC REPUBLIC OF CONGO controlled by the J.V., shall
     be treated as confidential and no Party shall reveal or otherwise disclose
     such confidential information to third parties without the prior consent of
     the other Parties.

     The above restrictions shall not apply to the disclosure of confidential
     information to any affiliate companies or any private or public financing
     institutions, any contractors or subcontractors, employees or consultants
     of the Parties or of the J.V. or the Processing Company or to any third
     party to which a Party envisage the transfer, the sale, assignment,
     encumbrance or other disposition of all of its participation in the J.V. in
     accordance with the terms of the Article 3 above.

     However, this shall only be applicable provided the confidential
     information shall only be disclosed to third parties having a legitimate
     need for this information and the persons or company to whom such
     disclosure is made shall first undertake in writing to protect the
     confidential nature of such information, to the same extent as the Parties
     are obligated under this Article.

     In addition, the above restrictions shall not apply to any Government or
     governmental Department or Agency which has the right to require the
     disclosure of such confidential information.

     These restrictions shall also not apply to such confidential information
     which comes into the Public Domain, except the fault from any Party.

     This confidentiality obligation shall survive for a period of 5 years
     commencing at the termination/dissolution of this Agreement.

     The above mentioned restrictions are not valid for information retained by
     GECAMINES related to the Site.



                                                                              19


6.      FORCE MAJEURE
- ----------------------

6.1. The obligations of any Party shall be suspended to the extent that the
     performance of its obligations is prevented or delayed, in whole or in part
     by:

     - accidental act, bad weather, floods, slides, mine disasters or major
     accidents, cave-ins, strikes, lock-out, labor disputes, labor shortage,
     demonstrations riots, sabotage, laws, rules or regulations of agency or
     governmental bodies.

     The obligations shall also be suspended in the event of governmental
     actions or inactions, restraints of governmental or other competent
     authorities, inability to obtain or unavoidable delay in obtaining
     necessary materials, facilities and equipment in the open market,
     suspension or refusal of access to the deposit Slag Site, interruption or
     unavoidable delay in communication or transportation, or any other cause,
     whether similar or not to those specifically listed, which shall be beyond
     the reasonable control of the Party.


6.2. In the event of such occurrences, the affected Party shall give written
     notice to the other Party as soon as possible after the occurrence of the
     event causing the delay or prevention, setting out full particulars and
     estimating the duration of the delay or prevention.

     The Party affected shall use all possible diligence to remedy the situation
     causing the delay as quickly as possible.

     The requirement that any such delay shall be remedied with all possible
     diligence shall not require a Party to settle strikes, lock out or other
     labor conflicts contrary to its wishes and this type of difficulty shall be
     handled within the discretion of the Party concerned.

     In the event the situation of force majeure would remain enforce for more
     than 6 months, the Parties shall meet to analyze the situation en envisage
     the termination of this Agreement.




                                                                              20

7.      NOTICES
- ----------------


7.1. All notices required under this Agreement shall be in writing and directed
     to the respective Parties at the following addresses:



    -If to J.V.






    -If to KCO

          OMG EUROPE GMBH
          Mr Kari MUURAISKANGAS
          Morsenbraicherweg 200
          D - 40470 DUSSELDORF
          GERMANY
          Tel: 00.49.211.96.18.80
          Fax: 00.49.211.61.46.29




Any notice shall be deemed to have been given to any Party if personally
delivered to a designated officer of the Party to whom the notice is addressed,
or if sent by registered mail, postage prepaid, with return receipt, and
properly addressed as set forth herein, or if sent by fax or telex to an
authorized representative with evidence of transmission receipt.

The notice shall be effective as of the moment of personal delivery, or in the
case of mailing, as of the date shown on the return receipt, or in the case of
fax or telex, as of the date faxed or telexed.

A Party may, at any time, change the address to which notices or communications
shall be given by written notice to the other Party.





                                                                              21

8.      NO WAIVER
- -----------------

The failure of a Party at any time to require the performance of any provision
of this Agreement shall not affect its right to execute that provision and a
waiver by such Party upon a breach thereof shall not be interpreted as a waiver
by such Party of any later non execution of such provision or as a waiver by
such Party of any other provision of this Agreement.


9.  SEVERABILITY AND HEADINGS
- -----------------------------

9.1. If any provision of this Agreement or its related Appendices should be null
     and void, such a nullity shall not invalidate all the other provisions in
     this Agreement or related Appendices. The Parties of this Agreement shall
     endeavor to negotiate so as to replace any null and void provision as well
     as any other affected provision.


9.2. The headings in this Agreement are considered for convenience only and
     shall not have any effect or limit in interpreting the provisions of this
     Agreement.


10.     SOVEREIGN IMMUNITY
- --------------------------

To the extent that a Party may be entitled to claim in any jurisdiction in which
legal proceedings may at any time be commenced with respect to this Agreement,
for itself or its activities, properties or assets any immunity either:

     -from jurisdiction of any court or arbitration

     -from attachment prior to judgment, from execution of a judgment or set-off



                                                                              22

   - from any other legal process, and to the extent where such immunity could
     be granted by that jurisdiction, the Parties hereby irrevocably agree not
     to claim and hereby waive such immunity in respect of suit, jurisdiction of
     any court, attachment prior to judgment, set-off, execution of a judgment
     and from other legal process, as well as any immunity whatsoever.

11. FURTHER ENGAGEMENTS
- -----------------------

11.1. The Parties respectively agree to execute and deliver such further
     instruments, papers and documents and to take the necessary measures that
     may reasonably be necessary or as may reasonably be requested for the
     purpose of carrying out the provisions of this Agreement.


11.2. This Agreement shall be binding upon to the benefit of the Parties hereto
     and their respective duly authorized representatives, providing they have
     agreed to be bound.

12.     GENERAL CLAUSES
- ------------------------

12.1. A Party shall be entitled to terminate this Agreement in the event of a
     material breach of any provision by the other Party.

     However, the termination can only occur in the event it has not been
     remedied within thirty days from the date of a written notice to the
     defaulting Party.

     A material breach shall be considered one which endangers the successful
     completion of operations and the general equilibrium of this Agreement.

12.2. The responsibilities and liabilities of the Parties. according to this
     Agreement shall survive after the expiry or termination.


                                                                             23


     The expiry or termination of the Agreement or liabilities arising under
     this Agreement shall not affect the Parties' obligations expressly stated
     in this Agreement to survive, or expressly contemplated in the event of
     such expiry or termination.

13.    ENTERING INTO FORCE
- --------------------------

This Agreement shall become effective when it has been signed by the duly
authorized representatives of the Parties and provided that the Joint Venture
Agreement has become effective.


In witness whereof the Parties have signed this Agreement drafted in French and
translated into English (French version being binding) in two original copies,
one for each party, by their duly authorized representatives.




Place, date


For J.V.





For OMG-KCO.



                               TOLLING AGREEMENT







                                     between




            GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI


                                      and


                 SOCIETE DE TRAITEMENT DU TERRIL DE LUBUMBASHI



                                                                               2





THE PRESENT AGREEMENT IS ESTABLISHED IN ITS ENTIRETY BY ALL
THE ELEMENTS HEREINAFTER SPECIFIED AND AS REFERRED TO IN THE
RESPECTIVE ARTICLES





I.     DEFINITIONS


II.     SPECIAL PROVISIONS

          1.   Appointment
          2.   Conditions Precedent
          3.   Period of Agreement
          4.   Processing and Quality Control
          5.   Basis of Operations
          6.   Liability
          7.   Price and Payment
          8.   Legal Requirements
          9.   Representations, Warranties and Covenants
          10.  Breach



III.    GENERAL PROVISIONS


        1.     Hierarchical Order of the Agreements
        2.     Amendment
        3.     Restrictions on Transfers
        4.     Arbitration and Applicable Laws
        5.     confidentiality
        6.     Force Majeure
        7.     Notices
        8.     No Waiver
        9.     Severability and Headings
        10.    Sovereign Immunity
        11.    Further Engagements
        12.    General Clauses
        13.    Entering into Force



                                                                               3






This Agreement is concluded between




GROUPEMENT POUR LE TRAITEMENT DU TERRIL DE LUBUMBASHI (hereinafter referred to
as GTL) organized and existing under the laws of JERSEY, having its registered
office in Jersey;


and SOCIETE DE TRAITEMENT DU TERRIL DE LUBUMBASHI (hereinafter referred to as
STL S.P.R.L.) _a Private Company with Limited Responsibility organized and
existing under the laws of the Democratic Republic of Congo, having its
registered office at Lubumbashi.




WITNESSETH THAT


Whereas OM GROUP Inc., GROUPE GEORGE FORREST S.A. and La GENERALE DES CARRIERES
ET DES MINES have established the J.V. which again established STL for the
purpose of building and operating plant mentioned hereinafter;

Whereas STL shall operate a Processing Plant in the Democratic Republic of Congo
for the purpose of processing Slag into Cobalt Alloy;

Whereas GECAMINES has concluded a Long Term Slag Sales
Agreement with the J.V.;

Whereas the J.V. has concluded a Long Term Cobalt Alloy Sales Agreement with 0MG
KOKKOLA CHEMICALS OY , whereby the J.V. shall sell agreed quantities of Cobalt
Alloy on a long term basis to 0MG KOKKOLA CHEMICALS OY;

Whereas GTL wishes to enter into a Tolling Agreement with STL and appoint STL to
process the Slag on its behalf in the Democratic Republic of Congo and STL has
agreed to accept such appointment;

Now therefore in consideration of the premises and of the
covenants and agreements contained in this Agreement, the
Parties hereby agree as follows:


                                                                               4

I.      DEFINITIONS


The terms defined hereinafter shall for all purposes of this Agreement and
related Contracts have the meanings hereinafter specified, unless otherwise
specified:

AGREEMENT means this document signed by the Parties and its appendices forming
an integral part of the present Agreement as well as its possible amendments.

BUYER means OMG KOKKOLA CHEMICALS Oy (KCO) , a subsidiary of the 0MG Group,
buying Cobalt Alloy in the Long Term Cobalt Alloy Sales Agreement.

PURCHASER means the J.V. purchasing Slag in the Long Term Slag
Sales Agreement.

COBALT BEARING ALLOY or TREATED MATERIAL means the main end product of the
Processing Company (sometimes also called "Cobalt Alloy") containing cobalt and
copper.

YEAR means calendar year beginning on 1st of January and ending on 31st of
December.

UMPIRE means a person appointed by mutual agreement of the J.V. and the Buyer or
GECAMINES in accordance with the Long Term Slag Sales Agreement or Long Term
Cobalt Alloy Sales Agreement.

CIF means "cost, insurance and freight" as defined in INCOTERMS, 1990 edition.

TOLLING AGREEMENT means the Agreement concluded between the J.V. and the
Processing Company for the purpose of processing Slag into Cobalt bearing Alloy.

LONG TERM COBALT ALLOY SALES AGREEMENT means the Agreement whereby the J.V.
undertakes to sell Cobalt Alloy to the Buyer and the latter undertakes to buy
Cobalt Alloy from the J.V.

LONG TERM SLAG SALES AGREEMENT means the Agreement whereby GECAMINES undertakes
to sell Slag to the J.V. and the latter undertakes to buy Slag from GECAMINES.

DATE OF DELIVERY means the date on which the J.V. takes and becomes the owner of
the Site Slag according to the terms of the ex-site delivery clause.

DDU means "delivery duty unpaid" as defined in INCOTERMS, 1990
edition





                                                                               5

EXW means "ex works delivery" clause as defined in INCOTERMS, 1990 edition.

SUPPLIER means the GENERALE DES CARRIERES ET DES MINES supplying Slag in the
Long Term Slag Sales Agreement.

J.V. means a private limited liability company having its registered office in
JERSEY.

BUSINESS DAY means a day which is not a Saturday, a Sunday or a public holiday
in Finland, The Netherlands or the Democratic Republic of Congo.

KCO means 0MG KOKKOLA CHEMICALS Oy, a subsidiary of the OMG Group located in
KOKKOLA, REPUBLIC OF FINLAND and established under the laws of the REPUBLIC OF
FINLAND.

LMB means the LONDON METAL BULLETIN.

LME means the LONDON METAL EXCHANGE.

SUPPLY LOT means a part of each delivered supply of Cobalt Alloy containing
approximately 100 tons of Cobalt Alloy as divided by the BUYER in KOKKOLA for
weighing, sampling, analysis and moisture content determination.

EXPEDITION LOT means the tonnage of one container of Cobalt Alloy dispatch from
the Processing Plant.

USED LOTS means the Lot or Lots of Cobalt Alloy taken into usage by the BUYER
for a period of one month.

MONTH means calendar month.

PARTIES means the Parties to this Agreement.

QUOTATIONAL PERIOD means the Period defined in Article 5 of the Long Term Slag
Sales Agreement or in Article 6.2 in the Long Term Cobalt Alloy Sales Agreement.

WEIGHTS AND MEASURES

1 (metric) ton  =       2,204.6 pounds avoirdupois
1 dint or ts    =       1 dry metric ton
1 wmt or th     =       1 wet metric ton

TAKEN INTO USAGE means the taking of the Cobalt Alloy either directly from the
ordinary commercial raw material Stock or alternatively from the Buffer Stock as
a complement of the KOKKOLA Processing Plant.

                                                                               6

PROJECT means the conception and building of a Processing Plant in LUBUMBASHI
for the purpose of exploiting the Slag Site of LUBUMBASHI as well as the proper
operation of the Processing Plant, the trading operations including related
operations and the distribution of the profits.

PROCESSED SLAG means the Slag resulting from the operations in the Processing
Plant

SLAG means cobalt bearing slag located in the Site in THE DEMOCRATIC REPUBLIC OF
CONGO and to be used as feeding stock in the Processing plant.

SITE or SLAG SITE means the area in the Democratic Republic of Congo where the
Slag is located and available to be delivered to the J.V. pursuant to this
Agreement (called Terril de LUBUMBASHI, originating from the residues of the
WATER JACKET ovens of GECAMINES and namely including the zones I, J, K1, K2 and
TAS G-L having an average Cobalt content of 1,85% as described in further detail
in appendix 1 of the Frame Agreement attached as Appendix 1 to this Agreement).

PROCESSED SLAG SITE means the area in the Democratic Republic of Congo where the
processed slag will be stocked.

PROCESSING COMPANY means the Company to be set up by the J.v. in the Democratic
Republic of Congo in the form of a SPRL for the purposes of operating the
Processing Plant.

COMMERCIAL STOCK means the ordinary stock of Cobalt Alloy enabling the regular
supply of OMG-KCO plant taking into account the periodicity of maritime
arrivals.

BUFFER STOCK means the Cobalt Alloy Stock to be established at OMG in KOKKOLA,
FINLAND in accordance with article 10 of the J.V. Agreement and to be kept
separate from the Ordinary Commercial Cobalt Alloy Stock of OMG KOKKOLA
Chemicals Qy.

USD means the lawful currency of the UNITED STATES OF AMERICA.

PROCESSING PLANT means the Plant to be located in LUBUMBASHI in the DEMOCRATIC
REPUBLIC OF CONGO. The Plant shall be operated by the Processing Company for the
purpose of processing Slag into Cobalt bearing Alloy.

SELLER means the J.V. selling Cobalt Alloy in the Long Term Cobalt Alloy Sales
Agreement.


                                                                               7

II.     SPECIAL PROVISIONS

1. APPOINTMENT
- --------------
GTL hereby grants to STL the right to process all of the Slag to be purchased by
GTL from time to time from GECAMINES and STL accepts such appointment.

STL undertakes to exclusively process the Slag for GTL and shall not process the
Slag for any third party without the consent of GTL. GTL shall not unreasonably
withhold such an agreement.

STL, in performing its functions and activities under this Agreement, shall be
considered as an independent contractor and not an agent of GTL. STL shall not
be entitled to represent or hold itself out as representing the J.V.

2. CONDITIONS PRECEDENT
- -----------------------

This Agreement is subject to the fulfillment of the following conditions
precedent;

     (i)   that any governmental approvals which may be required for or prior to
           the implementation of this Agreement, are duly obtained;

     (ii)  that the Long Term Slag Supply Agreement has been duly signed and
           concluded between GTL and GECAMINES;

     (iii) that the Long Term Cobalt Alloy Sales Agreement has been duly signed
           and concluded between GTL and KCO.

3. PERIOD OF AGREEMENT
- ----------------------

This Agreement shall be in force for a period of 20 years and shall take effect
commencing at its conclusion.




                                                                               8

4. PROCESSING AND QUALITY CONTROL
- ---------------------------------

The Slag to be processed by STL will be available EXW Site according to the
instructions given GTL. The Slag shall meet following specifications:

Co:     1,85%
Cu:     1,39%
Zn:     7,49

The Cobalt Alloy to be produced shall meet following specifications:

                 **





GTL shall be entitled through their employees, representatives or other
appointees to have access to and to inspect the Plant of STL for the purposes of
checking that the Cobalt Alloy meet the above mentioned specifications.

Should the Cobalt Alloy fail to meet the required specifications with the
result, that the transportation of the Treated Material to KOKKOLA, FINLAND is
not economically feasible, then all costs, direct or indirect, relating to such
failure shall be borne by STL.

5. BASIS OF OPERATION
- ---------------------

Ownership to the Slag and to the Cobalt Alloy shall at all times remain with
GTL.

Zinc and lead in form of Oxides as well as Processed Slag shall be returned free
of charge to GECAMINES who shall become their owner. GECAMINES shall remove them
at its own expense as quickly as possible.

STL shall take care of the transportation of the Slag from the Site to the Plant
as well as the transportation of the Processed Slag from the Plant to the place
designated by GTL.

STL shall bear all risks linked to the Slag when loaded for the transportation
at the Site.

The risk linked to the Cobalt Alloy shall pass from STL to GTL at its delivery
to GTL, packed in bags (or otherwise if so agreed), EXW the Plant.



** Confidential treatment has been requested with respect to certain information
contained within this document. Confidential portions are omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities and Exchange Act of 1934.



                                                                             9


6. LIABILITY
- ------------

STL shall be responsible for all damage resulting from a failure or omission
occurring during operations for which it is responsible.

STL shall indemnify the J.V. and KCO against all requests for indemnification or
other requests from third parties.

In order to protect the environment and subject to the limitations set out
above, the Parties undertake to build, operate and maintain the Processing Plant
in the Democratic Republic of Congo in an orderly way and corresponding to the
rules for protecting the environment applicable in the European Union.

7. PRICE AND PAYMENT
- --------------------

As consideration for the processing of the Slag into Cobalt Alloy (and all
related services), GTL shall pay to STL a tolling fee based on **.

The payment procedure shall be determined later, **.

GTL and STL shall meet ** to discuss of the adjustment of the agreed
price.

8. LEGAL REQUIREMENTS
- ---------------------

STL shall obtain and maintain in force all permits and consents required in the
Democratic Republic of Congo in connection with the Processing of Slag and its
transportation to the Plant.

Such authorizations shall remain valid as long as the above mentioned services
are performed by STL, which shall at all times operate in conformity with the
authorizations, licenses, permits and national legislation of the Democratic
Republic of Congo.


     ** Confidential treatment has been requested with respect to certain
     information contained within this document. Confidential portions are
     omitted and filed separately with the Securities and Exchange Commission
     pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934.




                                                                              10

9. REPRESENTATIONS, WARRANTIES AND COVENANTS
- --------------------------------------------

STL will arrange for and obtain and maintain in force all permits and consents
required or to be obtained in connection with the processing and transportation
of the Slag and/or the exportation of the Cobalt Alloy as contemplated in this
Agreement in the Democratic Republic of Congo.

STL will possess the business, professional and technical expertise to handle,
process and safely and lawfully dispose of the Slag and Cobalt Alloy and process
waste respectively in the Democratic Republic of Congo.

STL will maintain the equipment, the Plant and human resources required to
perform its obligations under this Agreement.

STL is duly licensed and authorized by all relevant authorities in the
Democratic Republic of Congo to handle Slag, Treated Material and process waste.
STL shall, at all times while services hereunder are being performed, continue
to remain so licensed and authorized, and STL shall at all times operate in
conformity with the requirements of all applicable permits, licenses,
authorizations and national legislation of the Democratic Republic of Congo.

10. BREACH
- ----------

Should either Party fail to observe any of the provisions or perform any of the
terms or conditions of this Agreement, or be placed under judicial management or
be wound up, whether compulsorily or voluntarily, and/or fail to remedy such
breach or failure within a period of 90 days of notice to it, then without
prejudice to any other rights which might thereupon be available to it, the
other Party shall have the right to proceed against the defaulting Party for the
recovery of incurred damages.




                                                                              11

III. GENERAL PROVISIONS

1. HIERARCHICAL ORDER OF THE AGREEMENTS
- ---------------------------------------

This Agreement is part of the Agreements concluded between the Parties and other
parties.

The aim of these Agreements is to set up the terms and conditions of the
purchase of the Slag located at the Site, the setting up of the J.V. and of the
Processing Company and selling the Cobalt-bearing Alloy to KCO for further
processing.

These Agreements are:

          (i)   JOINT VENTURE AGREEMENT
          (ii)  LONG TERM SLAG SALES AGREEMENT
          (iii) LONG TERM COBALT ALLOY SALES AGREEMENT
          (iv)  TOLLING AGREEMENT

Although each Agreement mentioned above shall be interpreted independently and
according to its own terms, it is to be noted that it is part of a larger
contractual arrangement and each Agreement shall be interpreted in light of the
other Agreements.

In case of a conflict this Agreement and the listed Agreements shall be
interpreted in the above order so that a prior Agreement shall always supersede
a later one.

2. AMENDMENTS
- -------------

Any amendments or additions to this Agreement shall be valid only if made in
writing and signed by duly authorized representatives of the Parties hereto.

Should an amendment or modification to this Agreement have an effect to the
other Agreements, the Parties undertake to change or modify these other
Agreements in order to avoid any conflicts between this Agreement and the other
Agreements.




                                                                              12




3. RESTRICTIONS ON TRANSFERS
- ----------------------------

A Party shall not have the right to sell, assign, transfer, mortgage, pledge,
charge or otherwise deal with its rights and obligations as defined in this
Agreement.

4. ARBITRATION AND APPLICABLE LAWS
- ----------------------------------

In the event the Parties are unable to settle a dispute in connection with this
Agreement out of court, they agree upon that the dispute shall be submitted to
the French section of the tribunals of Brussels which shall give a verdict
pursuant to the Belgian laws.

5. CONFIDENTIALITY
- ------------------

5.1. Unless otherwise provided in this Article, all reports, records, data or
     any other information of any kind whatsoever developed or acquired by
     any Party in connection with the activities of the J.V. and/or the
     Processing Company in the Democratic Republic of Congo controlled by the
     J.V. shall be treated as confidential and no Party shall reveal or
     otherwise disclose such confidential information to third parties without
     the prior written consent of the other Parties.

     The above restrictions shall not apply to the disclosure of confidential
     information to any affiliate companies or any private or public financing
     institutions, any contractors or subcontractors, employees or consultants
     of the Parties or of the J.V. or the Processing Company or to any third
     party to which a Party envisage the transfer, the sale, assignment,
     encumbrance or other disposition of all of its participation in the J.V. in
     accordance with the terms of Article 3 above.

     However, this shall only be applicable provided that the confidential
     information shall only be disclosed to third parties having a legitimate
     need for this information and the persons or company to whom such
     disclosure is made shall first undertake in writing to protect the
     confidential nature of such information, to the same extent as the Parties
     are obligated under this Article.

     In addition, the above restrictions shall not apply to any Government or
     Governmental Department or Agency which has the right to require the
     disclosure of such confidential information.





                                                                              13




     These restrictions shall also not apply to such confidential information
     which comes into the Public Domain, except the fault from any Party.

     This confidentiality obligation shall survive for a period of 5 years
     commencing at the termination/dissolution of this Agreement.

     The above mentioned restrictions are not valid for information retained by
     GECAMINES related to the Site.

6. FORCE MAJEURE
- ----------------

6.1. The obligations of any Party shall be suspended to the extent that the
     performance of its obligations is prevented or delayed, in whole or in
     part by:

     accidental act, bad weather, floods, slides, mine disasters or major
     accidents, cave-ins, strikes, lockout, labor disputes, labor shortage,
     demonstrations, riots, sabotage, laws, rules or regulations of agency
     or governmental bodies.

     The obligations shall also be suspended in the event of governmental
     actions or inactions, restraints of governmental or other competent
     authorities, inability to obtain or unavoidable delay in obtaining
     necessary materials, facilities and equipment in the open market,
     suspension or refusal of access to the deposit slag site, interruption or
     unavoidable delay in communication or transportation, or any other cause,
     whether similar or not to those specifically listed, which shall be beyond
     the reasonable control of the Party.

6.2. In the event of such occurrences, the Party affected shall give written
     notice to the other Parties as soon as possible after the occurrence of
     the event causing the delay or prevention, setting out full particulars
     and estimating the duration of the delay or prevention.

     The Party affected shall use all possible diligence to remedy the situation
     causing the delay as quickly as possible.

     The requirement that any such delay shall be remedied with all possible
     diligence shall not require a Party to settle strikes, lock out or other
     labor conflicts contrary to its wishes and this type of difficulty shall be
     handled within the discretion of the Party concerned.

     In the event the situation of force majeure would remain enforce for more
     than 6 months, the Parties shall meet to analyze the situation en envisage
     the termination of this Agreement.



                                                                              14

7. NOTICES
- ----------

     All notices required under this Agreement shall be in writing and directed
     to the respective Parties at the following addresses:

     - If to GTL

     - If to STL

     Any notice shall be deemed to have been given to any Party if personally
     delivered to a designated officer of the Party to whom the notice is
     addressed, or if sent by registered mail, postage prepaid, with return
     receipt, and properly addressed as Bet forth herein, or if sent by fax or
     telex to the above mentioned address with evidence of transmission
     receipt.


     The notice shall be effective as of the moment of personal delivery, or in
     the case of mailing, as of the date shown on the return receipt, or in the
     case of fax or telex, as of the date faxed or telexed.

     Any Party may, at any time, change the address to which notices or
     communications shall be given by written notice to the other Parties.

8. NO WAIVER
- ------------

The failure of a Party at any time to require the performance of any provision
of this Agreement shall not affect its right to execute that provision and a
waiver by such Party upon a breach thereof shall not be interpreted as a waiver
by such Party of any later non execution of such provision or as a waiver by
such Party of any other provision of this Agreement.



                                                                              15


9. SEVERABILITY AND HEADINGS
- ----------------------------

9.1. If any provision of this Agreement or its related Appendices
     should be null and void, such a nullity shall not invalidate all the other
     provisions in this Agreement or related Appendices. The Parties of
     this Agreement shall endeavor to negotiate so as to replace any null
     and void provision as well as any other affected provision.

9.2. The headings in this Agreement are considered for convenience only and
     shall not have any effect or limit in interpreting the provisions of this
     Agreement.



10. SOVEREIGN IMMUNITY
- ----------------------

     To the extent that a Party may be entitled to claim in any jurisdiction in
     which legal proceedings may at any time be commenced with respect to this
     Agreement, for itself or its activities, properties or assets any immunity
     either:

     -    from jurisdiction of any court or arbitration from attachment prior
          to judgment, from execution of a judgment or set-off,

     -    from any other legal process, and to the extent where such immunity
          could be granted by that jurisdiction, the Parties hereby irrevocably
          agree not to claim and hereby waive such immunity in respect of suit,
          jurisdiction of any court, attachment prior to judgment,
          set-off, execution of a judgment and from other legal process, as
          well as any immunity whatsoever.



11.   FURTHER ENGAGEMENTS
- -------------------------

11.1. The Parties respectively agree to execute and deliver such further
      instruments, papers and documents and to take the necessary measures that
      may reasonably be necessary or as may reasonably be requested for the
      purpose of carrying out the provisions of this Agreement.

11.2. This Agreement shall be binding upon to the benefit of the Parties hereto
      and their respective duly authorized representatives, providing they have
      agreed to be bound.





                                                                              16



12. GENERAL CLAUSES
- -------------------

12.1. Any Party shall be entitled to terminate this Agreement in the event of a
      material breach of any provision by any other Party.

      However, the termination can only occur in the event it has not been
      remedied within thirty days from the date of a written notice to the
      defaulting Party or Parties.

      A material breach shall be considered one which endangers the successful
      completion of operations and the general equilibrium of this Agreement.


12.2. The responsibilities and liabilities of the Parties according to this
      Agreement shall survive after the expiry or termination.

      The expiry or termination of the Agreement or liabilities arising under
      this Agreement shall not affect the Parties obligations expressly stated
      in this Agreement to survive, or expressly contemplated in the event of
      such expiry or termination.


13. ENTERING INTO FORCE
- -----------------------

This Agreement shall become effective when it has been signed by the duly
authorized representatives of the Parties and provided that the Joint Venture
Agreement has become effective.


IN WITNESS WHEREOF the Parties have signed this Agreement written in French,
along with an English translation, the French text being the authentic text, in
2 original copies, one for each party, by their duly authorized representatives.




Signed at ... on the .. day of .... 1997

EX-10.12

                                                                   Exhibit 10.12

                                 OM GROUP, INC.

                   1998 LONG-TERM INCENTIVE COMPENSATION PLAN

1.  PURPOSE

     The purpose of the Plan is to advance the long-term interests of OM Group,
Inc. by (i) motivating executive personnel by means of long-term incentive
compensation, (ii) furthering the identity of interests of participants with
those of the shareholders of the Corporation through the ownership and
performance of the Common Stock of the Corporation, and (iii) permitting the
Corporation to attract and retain directors and executive personnel upon whose
judgment the successful conduct of the business of the Corporation largely
depends. Toward this objective, the Committee may grant stock options, stock
appreciation rights, restricted stock awards, phantom stock and/or performance
shares to Key Employees of the Corporation and its Subsidiaries, and shall grant
stock options to non-employee directors of the Corporation, on the terms and
subject to the conditions set forth in the Plan.

2.  DEFINITIONS

     2.1 "Administrative Policies" means the administrative policies and
procedures adopted and amended from time to time by the Committee to administer
the Plan.

     2.2 "Award" means any form of stock option, stock appreciation right,
restricted stock award, phantom stock or performance share granted under the
Plan, whether singly, in combination, or in tandem, to a Participant by the
Committee pursuant to such terms, conditions, restrictions and limitations, if
any, as the Committee may establish by the Award Agreement or otherwise.

     2.3 "Award Agreement" means a written agreement with respect to an Award
between the Corporation and a Participant establishing the terms, conditions,
restrictions and limitations applicable to an Award. To the extent an Award
Agreement is inconsistent with the terms of the Plan, the Plan shall govern the
rights of the Participant thereunder.

     2.4 "Board" means the Board of Directors of the Corporation.

     2.5 "Change In Control" means a change in control of the Corporation of a
nature that would be required to be reported (assuming such event has not been
"previously reported") in response to Item 6(e) of schedule 14A of Regulation
14A promulgated under the Exchange Act; provided that, without limitation, a
Change In Control shall be deemed to have occurred at such time after January 1,
1992 as (i) any "person" within the meaning of Section 14(d) of the Exchange
Act, becomes the beneficial owner, directly or indirectly, of securities of the
Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election by the Corporation's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.

     2.6 "Change in Control Price" means the higher of (i) the mean of the high
and low trading prices for the Corporation's Common Stock on the Stock Exchange
on the date of determination of the Change in Control or (ii) the highest price
per share actually paid for the Common Stock in connection with the Change in
Control of the Corporation.

     2.7 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

     2.8 "Committee" means the Compensation Committee of the Board, or such
other committee designated by the Board, authorized to administer the Plan under
Section 3 hereof.

     2.9 "Common Stock" means Common Stock, par value $.01, of the Corporation.

                                        1


     2.10 "Corporation" means OM Group, Inc.

     2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     2.12 "Key Employee" means an employee of the Corporation or a Subsidiary
who holds a position of responsibility in a managerial, administrative or
professional capacity, and whose performance, as determined by the Committee in
the exercise of its sole and absolute discretion, can have a significant effect
on the growth, profitability and success of the Corporation.

     2.13 "Participant" means any individual to whom an Award has been granted
by the Committee under this Plan.

     2.14 "Plan" means the OM Group, Inc. 1998 Omnibus Long-Term Compensation
Plan.

     2.15 "Stock Exchange" means the New York Stock Exchange or, if the Common
Stock is no longer traded on the New York Stock Exchange, such other market
price reporting system on which the Common Stock is traded or quoted designated
by the Committee after it determines that such other exchange is both reliable
and reasonably accessible.

     2.16 "Subsidiary" means a corporation or other business entity in which the
Corporation directly or indirectly has an ownership interest of fifty-one
percent or more.

3.  ADMINISTRATION

     The Plan shall be administered under the supervision of the Committee
composed of not less than two directors each of whom shall be deemed to be "a
Non-Employee Director" under Rule 16b-3 of the Exchange Act or any subsequent
rule or act.

     Members of the Committee shall serve at the pleasure of the Board of
Directors, and may resign by written notice filed with the Chief Executive
Officer or the Secretary of the Corporation. A vacancy in the membership of the
Committee shall be filled by the appointment of a successor member by the Board
of Directors. Until such vacancy is filled, the remaining members shall
constitute a quorum and the action at any meeting of a majority of the entire
Committee, or an action unanimously approved in writing, shall constitute action
of the Committee. Subject to the express provisions of this Plan, the Committee
shall have conclusive authority to construe and interpret the Plan, any Award
Agreement entered into hereunder and to establish, amend and rescind
Administrative Policies for the administration of this Plan and shall have such
additional authority as the Board of Directors may from time to time determine
to be necessary or desirable.

     In addition, in order to enable Key Employees who are foreign nationals or
employed outside the United States, or both, to receive Awards under the Plan,
the Committee may adopt such amendments, Administrative Policies, subplans and
the like as are necessary or advisable, in the opinion of the Committee, to
effectuate the purposes of the Plan.

4.  ELIGIBILITY

     Any Key Employee is eligible to become a Participant in the Plan.

5.  SHARES AVAILABLE

     (a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the adjustments
provided for in Sections 17 and 18 hereof, the maximum number of shares of
Common Stock available for grant of Awards under the Plan during any calendar
year shall be equal to the sum of:

          (i) One and one-half percent of the total number of issued and
     outstanding shares of Common Stock of the Corporation as of the December
     31st of the immediately preceding calendar year (the "1 1/2 Limit");

          (ii) Any unused portion of the 1 1/2% Limit from prior calendar years
     during the term of the Plan; and

                                        2


          (iii) Any shares of Common Stock related to Awards which terminated
     during prior calendar years during the term of the Plan by expiration,
     forfeiture, cancellation or otherwise without the issuance of such shares
     or cash in lieu thereof;

     Notwithstanding the foregoing, (I) not more than two million shares of
Common Stock shall be available for the award of incentive stock options under
the Plan; (II) at no time shall the number of shares deemed to be available for
grant in any calendar year exceed two percent of the total number of issued and
outstanding shares of Common Stock of the Corporation; and (III) at no time
shall the number of shares available for grant in any calendar year to any one
person exceed two hundred thousand.

     (b) For purposes of calculating the number of shares of Common Stock deemed
to be granted hereunder during any calendar year, each Award, whether
denominated in stock options, stock appreciation rights, restricted stock or
phantom stock, shall be deemed to be a grant of a number of shares of Common
Stock equal to the number of shares represented by the stock options, shares of
restricted stock, performance shares, shares of phantom stock or stock
appreciation rights set forth in the Award, provided, however, in the case of
any Award as to which the exercise of one right nullifies the exercisability of
another (including, by way of illustration the grant of a stock option with
Tandem SARs (as hereinafter defined)), the number of shares deemed to have been
granted shall be the maximum number of shares (and/or cash equivalents) that
could have been acquired upon the maximum exercise or settlement of the Award.

     (c) For purposes of calculating the number of shares available for regrant
in any year, the portion of any Award that has been settled by the payment of
cash or the issuance of shares of Common Stock, or a combination thereof, shall
not be available for re-grant under the Plan, irrespective of the value of the
settlement or the method of its payment. The settlement of an Award shall not be
deemed to be the grant of an Award hereunder.

6.  TERM

     The Plan shall become effective as of January 1, 1998, subject to approval
of the Plan by the Corporation's stockholders at the 1998 annual meeting. No
Awards shall be exercisable or payable before approval of the Plan has been
obtained from the Corporation's stockholders.

7.  PARTICIPATION

     The Committee shall select, from time to time, Participants from those Key
Employees who, in the opinion of the Committee, can further the Plan's purposes
and the Committee shall determine the type or types of Awards to be made to the
Participant. The terms, conditions and restrictions of each Award shall be set
forth in an Award Agreement.

8.  STOCK OPTIONS

     (a) Grants.  Awards may be granted in the form of stock options. Stock
options may be incentive stock options within the meaning of Section 422 of the
Code or non-statutory stock options (i.e., stock options which are not incentive
stock options), or a combination of both, or any particular type of tax
advantage option authorized by the Code from time to time.

     (b) Terms and Conditions of Options.  An option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Committee; provided, however, that no stock option shall be exercisable more
than ten years after the date of grant thereof. The option exercise price shall
be established by the Committee, but such price shall not be less than the per
share fair market value of the Common Stock, as determined by the Committee, on
the date of the stock option's grant subject to adjustment as provided in
Sections 17 or 18 hereof.

     (c) Restrictions Relating to Incentive Stock Options.  Stock options issued
in the form of incentive stock options shall, in addition to being subject to
all applicable terms, conditions, restrictions and/or limitations established by
the Committee, comply with Section 422 of the Code. Incentive Stock Options
shall be granted

                                        3


only to full time employees of the Corporation and its subsidiaries within the
meaning of Section 425 of the Code. The aggregate fair market value (determined
as of the date the option is granted) of shares with respect to which incentive
stock options are exercisable for the first time by an individual during any
calendar year (under this Plan or any other plan of the Corporation or any
Subsidiary which provides for the granting of incentive stock options) may not
exceed $100,000 or such other number as may be applicable under the Code from
time to time. Any incentive stock option that is granted to any employee who is,
at the time the option is granted, deemed for purposes of Section 422 of the
Code, or any successor provision, to own shares of the Corporation possessing
more than ten percent of the total combined voting power of all classes of
shares of the Corporation or of a parent or subsidiary of the Corporation, shall
have an option exercise price that is at least one hundred ten percent of the
fair market value of the shares at the date of grant and shall not be
exercisable after the expiration of five years from the date it is granted.

     (d) Additional Tents and Conditions.  The Committee may, by way of the
Award Agreement or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, on any stock option Award, provided
they are not inconsistent with the Plan.

     (e) Payment.  Upon exercise, a participant may pay the option exercise
price of a stock option in cash or shares of Common Stock, Stock Appreciation
Rights or a combination of the foregoing, or such other consideration as the
Committee may deem appropriate. The Committee shall establish appropriate
methods for accepting Common Stock and may impose such conditions as it deems
appropriate on the use of such Common Stock to exercise a stock option.

9.  STOCK APPRECIATION RIGHTS

     (a) Grants.  Awards may be granted in the form of stock appreciation rights
("SARs"). SARs shall entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common Stock from
the price stated in the Award Agreement to the market value of the Common Stock
on the date of exercise or surrender. An SAR may be granted in tandem with all
or a portion of a related stock option under the Plan ("Tandem SARs"), or may be
granted separately ("Freestanding SARs"). A Tandem SAR may be granted either at
the time of the grant of the related stock option or at any time thereafter
during the term of the stock option. An SAR may be exercised no sooner than six
months after it is granted. In the case of SARs granted in tandem with stock
options granted prior to the grant of such SARs, the appreciation in value shall
be appreciation from the option exercise price of such related stock option to
the market value of the Common Stock on the date of exercise.

     (b) Terms and Conditions of Tandem SARs.  Subject to limitations contained
in the preceding paragraph, a Tandem SAR shall be exercisable to the extent, and
only to the extent, that the related stock option is exercisable. Upon exercise
of a Tandem SAR as to some or all of the shares covered by an Award, the related
stock option shall be cancelled automatically to the extent of the number of
SARs exercised, and such shares shall not thereafter be eligible for grant under
Section 5 hereof.

     (c) Terms and Conditions of Freestanding SARs.  Freestanding SARs shall be
exercisable in whole or in such installments and at such times as may be
determined by the Committee. The base price of a Freestanding SAR shall also be
determined by the Committee; provided, however, that such price shall not be
less that the fair market value of the Common Stock, as determined by the
Committee, on the date of the award of the Freestanding SAR.

     (d) Deemed Exercise.  The Committee may provide that an SAR shall be deemed
to be exercised at the close of business on the scheduled expiration date of
such SAR, if at such time the SAR by its terms is otherwise exercisable and, if
so exercised, would result in a payment to the participant.

     (e) Additional Terms and Conditions.  The Committee may, consistent with
the Plan, by way of the Award Agreement or otherwise, determine such other
terms, conditions, restrictions and/or limitations, if any, on any SAR Award,
including but not limited to determining the manner in which payment of the
appreciation in value shall be made.
                                        4


10.  RESTRICTED STOCK AWARDS

     (a) Grants.  Awards may be granted in the form of Restricted Stock Awards.
Restricted Stock Awards shall be awarded in such numbers and at such times as
the Committee shall determine.

     (b) Award Restrictions.  Restricted Stock Awards shall be subject to such
terms, conditions, restrictions, or limitations as the Committee deems
appropriate including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Corporation. The
Committee may modify, or accelerate the termination of, the restrictions
applicable to a Restricted Stock Award under such circumstances as it deems
appropriate.

     (c) Rights as Shareholders.  During the period in which any restricted
shares of Common Stock are subject to the restrictions imposed under the
preceding paragraph, the Committee may, in its discretion, grant to the
Participant to whom such restricted shares have been awarded all or any of the
rights of a shareholder with respect to such shares, including, by way of
illustration but not by way of limitation, the right to vote such shares and to
receive dividends.

     (d) Evidence of Award.  Any Restricted Stock Award granted under the Plan
may be evidenced in such manner as the Committee deems appropriate, including,
without limitation, book-entry registration or issuance of a stock certificate
or certificates.

11.  PHANTOM STOCK

     (a) Grants.  Awards may be granted in the form of Phantom Stock Awards.
Phantom Stock Awards shall entitle the Participant to receive the market value
or the appreciation in value of an equivalent number of shares of Common Stock
on a settlement date determined by the Committee.

     (b) Additional Terms and Conditions.  The Committee may, consistent with
the plan, by way of Award Agreement or otherwise, determine such other terms,
conditions, restrictions or limitations, if any, on any Award of Phantom Stock.

12.  PAYMENT OF AWARDS

     Except as otherwise provided herein, Award Agreements may provide that, at
the discretion of the Committee, payment of Awards may be made in cash, Common
Stock, a combination of cash and Common Stock, or any other form of property as
the Committee shall determine. Further, the terms of Award Agreements may
provide for payment of Awards in the form of a lump sum or installments, as
determined by the Committee.

13.  DIVIDENDS AND DIVIDEND EQUIVALENTS

     If an Award is granted in the form of a Restricted Stock Award, Phantom
Stock Award or a Freestanding SAR, the Committee may choose, at the time of the
grant of the Award, to include as part of such Award an entitlement to receive
dividends or dividend equivalents, subject to such terms, conditions,
restrictions or limitations, if any, as the Committee may establish. Dividends
and dividend equivalents shall be paid in such form and manner and at such time
as the Committee shall determine. All dividends or dividend equivalents which
are not paid currently may, at the Committee's discretion, accrue interest or be
reinvested into additional shares of Common Stock.

14.  TERMINATION OF EMPLOYMENT

     The Committee shall adopt Administrative Policies determining the
entitlement of Participants who cease to be employed by either the Corporation
or Subsidiary whether because of death, disability, resignation, termination or
retirement pursuant to an established retirement plan or policy of the
Corporation or of its applicable Subsidiary.

                                        5


15.  ASSIGNMENT AND TRANSFER

     Unless the Committee otherwise determines, the rights and interests of a
Participant under the Plan may not be assigned, encumbered or transferred
except, in the event of the death of a Participant, by will or the laws of
descent and distribution.

16.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     In the event of any change in the outstanding shares of Common Stock by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares merger, consolidation or any change in the
corporate structure or shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
shares issuable pursuant to then outstanding Awards shall be appropriately
adjusted by the Committee whose determination shall be final.

17.  EXTRAORDINARY DISTRIBUTIONS AND PRO-RATA REPURCHASES

     In the event the Corporation shall at any time when an Award is outstanding
make an Extraordinary Distribution (as hereinafter defined) in respect of Common
Stock or effect a Pro- Rata Repurchase of Common Stock (as hereinafter defined),
the Committee shall consider the economic impact of the Extraordinary
Distribution or Pro-Rata Repurchase on Participants and make such adjustments as
it deems equitable under the circumstances. The determination of the Committee
shall, subject to revision by the Board of Directors, be final and binding upon
all Participants.

     (a) As used herein, the term "Extraordinary Distribution" means any
dividend or other distribution of

          (x) cash, where the aggregate amount of such cash dividend or
     distribution together with the amount of all cash dividends and
     distributions made during the preceding twelve months, when combined with
     the aggregate amount of all Pro-Rata Repurchases (for this purpose,
     including only that portion of the aggregate purchase price of such
     Pro-Rata Repurchases which is in excess of the Fair Market Value of the
     Common Stock repurchased during such twelve month period), exceeds ten
     percent (10%) of the aggregate Fair Market Value of all shares of Common
     Stock outstanding on the record date for determining the shareholders
     entitled to receive such Extraordinary Distribution or

          (y) any shares of capital stock of the Corporation (other than shares
     of Common Stock), other securities of the Corporation, evidences of
     indebtedness of the Corporation or any other person or any other property
     (including shares of any Subsidiary of the Corporation), or any combination
     thereof.

     (b) As used herein "Pro-Rata Repurchase" means any purchase of shares of
Common Stock by the Corporation or any Subsidiary thereof, pursuant to any
tender offer or exchange offer subject to Section 13(e) of the Exchange Act or
any successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares of the Corporation or any Subsidiary thereof made in open market
transactions shall be deemed a Pro-Rata Repurchase.

18.  WITHHOLDING TAXES

     The Corporation or the applicable Subsidiary shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable Administrative Policies it establishes, the
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Corporation shares of Common Stock having a fair market value, as determined by
the Committee, equal to the amount of such required withholding taxes.

19.  NONCOMPETITION PROVISION

     Unless the Award Agreement specifies otherwise, a Participant shall forfeit
all unexercised unearned Awards if (i) in the opinion of the Committee, the
Participant, without the written consent of the Corporation,

                                        6


engages directly or indirectly in any manner or capacity as principal, agent,
partner, officer, director, employee, or otherwise, in any business or activity
competitive with the business conducted by the Corporation or any Subsidiary; or
(ii) the Participant performs any act or engages in any activity which in the
opinion of the Committee is detrimental to the best interests of the
Corporation.

20.  REGULATORY APPROVALS AND LISTINGS

     Notwithstanding anything contained in this Plan to the contrary, the
Corporation shall have no obligation to issue or deliver certificates of Common
Stock evidencing Restricted Stock Awards or any other Award payable in Common
Stock prior to (a) the obtaining of any approval from any governmental agency
which the Corporation shall, in its sole discretion, determine to be necessary
or advisable, (b) the admission of such shares to listing on the Stock Exchange,
and (c) the completion of any registration or other qualification of said shares
under any state or federal law or ruling of any governmental body which the
Corporation shall, in its sole discretion, determine to be necessary or
advisable.

21.  NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS

     Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Corporation or any Subsidiary. The Corporation or,
in the case of employment with a Subsidiary, the Subsidiary, reserves the right
to terminate the employment of any Key Employee at any time. The adoption of
this Plan shall not be deemed to give any Key Employee or any other individual
any right to be selected as a Participant, to be granted any Awards hereunder or
if granted an Award in any year, to receive Awards in any subsequent year.

22.  AMENDMENT

     The Committee may suspend or terminate the Plan at any time. In addition,
the Committee may, from time to time, amend the Plan in any manner, but may not
without shareholder approval adopt any amendment which would (a) materially
increase the benefits accruing to Participants under the Plan, (b) materially
increase the number of shares of Common Stock which may be issued under the Plan
(except as specified in Section 17), or (c) materially modify the requirements
as to eligibility for participation in the Plan.

23.  GOVERNING LAW

     The Plan shall be governed by and construed in accordance with the laws of
the State of Ohio, except as preempted by applicable Federal law.

24.  CHANGE IN CONTROL

     (a) Stock Options.  In the event of a Change in Control options not
otherwise exercisable at the time of a Change in Control shall become fully
exercisable upon such Change in Control.

     (b) Stock Appreciation Rights.  In the event of a Change in Control, Tandem
SARs not otherwise exercisable upon a Change In Control shall become exercisable
to the extent that the related Stock Option is exercisable. Freestanding SARs
not otherwise exercisable upon a Change In Control shall also become fully
exercisable upon such Change In Control.

          (i) The Corporation shall make payment to Participants with respect to
     SARs in cash in an amount equal to the appreciation in the value of the SAR
     from the base price specified in the Award Agreement to the Change In
     Control Price;

          (ii) Such cash payments to Participants shall be due and payable, and
     shall be paid by the Corporation, immediately upon the occurrence of such
     Change In Control; and

          (iii) After the payment provided for in (ii) above, Participants shall
     have no further rights under SARs outstanding at the time of such Change In
     Control.

     (c) Restricted Stock Awards.  In the event of a Change In Control, all
restrictions previously established with respect to Restricted Stock Awards will
conclusively be deemed to have been satisfied. Participants shall be entitled to
have issued to them the shares of Common Stock described in the applicable
                                        7


Award Agreements, free and clear of any restriction or restrictive legend,
except that if upon the advice of counsel to the Corporation, shares of Common
Stock cannot lawfully be issued without restriction, then the Corporation shall
make payment to Participants in cash in an amount equal to the Change In Control
Price of the Common Stock that otherwise would have been issued.

          (i) Such cash payments to Participants shall be due and payable, and
     shall be paid by the Corporation, immediately upon the occurrence of such
     Change In Control; and

          (ii) After the payment provided for in (i) above, Participants shall
     have no further rights under Restricted Stock Awards outstanding at the
     time of such Change In Control of the Corporation.

     (d) Phantom Stock.  In the event of a Change In Control,

          (i) all restrictions and conditions, if any, previously established
     with respect to Phantom Stock Awards will conclusively be deemed to have
     been satisfied and fulfilled Participants shall be entitled to receive
     Common Stock in satisfaction of their rights under Phantom Stock Awards in
     accordance with the amounts otherwise payable by the Corporation pursuant
     to the Award Agreement;

          (ii) Such Common Stock shall be issued to Participants by the
     Corporation immediately upon the occurrence of such Change In Control; and

          (iii) After the payment provided for in (ii) above, the Participants
     shall have no further rights under Phantom Stock Awards outstanding at the
     time of such change of control of the Corporation.

     (e) Directors' Stock Options.  Directors' Stock Options not otherwise
exercisable at the time of a Change In Control shall become fully exercisable
upon such Change In Control; provided, however, that options shall not become
exercisable under this provision prior to the expiration of six months from the
date of grant.

          (i) The Corporation shall make payment to Directors with respect to
     Options in cash in an amount equal to the appreciation in the value of the
     Option from the option exercise price specified in the Award Agreement to
     the Change In Control Price;

          (ii) Such cash payments to Directors shall be due and payable, and
     shall be paid by the Corporation, immediately upon the occurrence of such
     Change In Control; and

          (iii) After the payment provided for in (i) above, Participants shall
     have no further rights under Options outstanding at the time of such Change
     In Control.

     (f) Miscellaneous.  Upon a Change In Control, no action shall be taken
which would adversely affect the rights of any Participant or the operation of
the Plan with respect to any Award to which the Participant may have become
entitled hereunder on or prior to the date of he Change In Control or to which
he may become entitled as a result of such Change In Control.

25.  NO RIGHT, TITLE, OR INTEREST IN CORPORATION ASSETS

     No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock certificate in
his name except, in the case of Restricted Stock wards, to the extent such
rights are granted to the Participant under Section 10(c) hereof. To the extent
any person acquires a right to receive payments from the Corporation under this
Plan, such rights shall be no greater than the rights of an unsecured creditor
of the Corporation.

26.  PAYMENT BY SUBSIDIARIES

     Settlement of Awards to employees of Subsidiaries shall be made by and at
the expense of such Subsidiary. Except as prohibited by law, if any portion of
an Award is to be settled in shares of Common Stock, the Corporation shall sell
and transfer to the Subsidiary, and the Subsidiary shall purchase, the number of
shares necessary to settle such portion of the Award.

                                        8

Form of Non-Incentive Stock Option Agreement



                                 OM GROUP, INC.

                   1998 LONG-TERM INCENTIVE COMPENSATION PLAN
                             PARTICIPATION AGREEMENT


         THIS AGREEMENT, dated as of ____________ by and between OM GROUP, INC.
(the "Company"), and ______________ (the "Participant"), a Key Employee of the
Company, is to evidence the Non-Incentive Stock Option granted to the
Participant on _____________. Capitalized terms used herein and not otherwise
defined have the meaning ascribed to them in the 1998 Long-Term Incentive
Compensation Plan as adopted by the shareholders on May 5, 1998 (the "Plan").

                                   WITNESSETH

         That the parties hereto have agreed and do hereby agree as follows:

         Section 1. The Company hereby grants to the Participant the option of
purchasing the number of shares of Common Stock of the Company at the option
exercise price and subject to the terms and conditions hereinafter set forth.

         Section 2.  The aggregate number of shares of Common Stock purchasable
is ___________.

         Section 3.  The option exercise price is $________ per share.

         Section 4. Except as otherwise provided in Sections 5, 6, 7, 8 and 9
hereof, the option rights granted hereunder become exercisable in three (3)
equal installments on _____________ of each of the years _____, _____ and _____.

         Section 5. The option granted hereby shall become exercisable as to all
of the shares it covers upon the occurrence of any Change in Control of the
Company as defined in the Plan, provided, however, that no option shall become
exercisable prior to the expiration of six months from the date of grant.

         Section 6. To the extent not otherwise exercisable at the date of the
retirement of the Participant, the option shall become fully exercisable upon
such retirement, and the Participant may exercise the option rights set forth
herein at any time within three (3) years following such retirement (but within
the option period specified in Section 11).

         Section 7. If the Participant shall die while still employed by the
Company, the option shall become fully exercisable to the extent not otherwise
exercisable, and the person entitled by Will or the applicable laws of descent
and distribution may exercise the option rights at anytime within one (1) year
subsequent to Participant's death (but within the option period specified in
Section 11.





         Section 8. if the Participant shall die while retired from the Company,
the option shall become fully exercisable to the extent not otherwise
exercisable, and the person entitled by Will or applicable laws of descent and
distribution may exercise the option rights at anytime within one (1) year
subsequent to Participant's death (but within the option period set forth in
Section 11).

         Section 9. If the Participant's employment with the Company is
terminated due to the permanent and total disability of the Participant, the
option shall become fully exercisable to the extent not otherwise exercisable,
and the Participant may exercise the option rights at any time within the one
(1) year period following the date the Participant's employment is terminated
(but within the option period set forth in Section 11).

         Section 10. If the Participant's employment with the Company shall
terminate for any reason other than retirement, permanent and total disability,
or death, the Participant may exercise the option rights at any time within the
three-month period following such termination of employment (but within the
option period specified in Section 11) to the extent he was entitled to exercise
the same immediately prior to such termination of employment, provided, however,
that if there has been a Change in Control of the Company, and if the
Participant's employment with the Company shall have terminated after such
Change in Control and prior to the end of the six months from the date of grant
of the option granted hereby, then the option granted hereby may be exercised in
whole or in part at any time within the three-month period commencing six months
from the date of grant of the option granted hereby.

         Section 11. Notwithstanding any other provisions hereof, this option
shall not be exercisable after _________________.

         Section 12. This option is not transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and is
exercisable, during the lifetime of the Participant, only by him, his guardian
or legal representative. Upon any attempt to transfer, assign, pledge,
hypothecate, or otherwise dispose of such option or rights contrary to the
provisions of this Agreement, or upon the levy of any attachment or similar
process upon such option or rights, such option and rights shall immediately
become null and void.

         Section 13. If the Participant's exercise of this option is prevented
by the terms of subsections (a), (b) or (c) of Section 16 and the Participant's
option terminates pursuant to Section 6, 8 or 9 hereof, then the Participant
may, notwithstanding the provisions of Section 6, 8 or 9, but within the period
set forth in Section 11, exercise such option to the extent it would have been
exercisable immediately prior to its termination but for the operation of
Section 16 at any time within thirty (30) days after such Participant is
notified by the Company that such exercise is no longer prevented by Section 16
hereof.

         Section 14. In the event that at any time prior to the expiration of
this option each of the outstanding shares of Common Stock of the Company
(except shares held by dissenting stockholders) shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then for all purposes of this option there shall be substituted
for each share of Common Stock purchasable hereunder the number and kind of
shares of stock or other securities into which each such share of Common Stock
of the Company shall be so changed, or for which each such share

                                      -2-



shall be so exchanged, and the shares or securities so substituted for each such
share of Common Stock shall be subject to purchase at an equivalent option price
and subject to the terms and conditions hereof.

         In the event that the Company shall issue a stock dividend in Common
Stock with respect to the Common Stock of the Company, the number of shares then
purchasable hereunder shall be adjusted by adding to each such share the number
of shares which would have been distributed as a stock dividend thereon had such
share been outstanding on the record date for payment of the stock dividend, and
each such share together with said additional shares shall be purchasable at the
option price, as above provided.

         In the event that there shall be any other change in the number or kind
of outstanding shares of Common Stock or other securities of the Company, or of
any shares of stock or other securities into which such shares of Common Stock
shall have been changed or for which they shall have been exchanged, or the
Company shall make an Extraordinary Distribution or a Prorata Repurchase, then
the Compensation Committee shall make such adjustment in the number or kind of
shares of stock or other securities covered by this option and in the number or
kind of shares of stock or other securities subject to purchase at the option
price, as above provided, and/or such adjustment in the option exercise price to
reflect the effect of such Extraordinary Distribution or Prorata Repurchase as
the Compensation Committee, in its sole discretion may determine is equitably
required by such change, and such adjustment so made shall be effective and
binding for all purposes of this option.

         Anything to the contrary herein contained notwithstanding, the
Participant shall not be entitled to purchase a fraction of a share under this
option.

         Section 15. If the Company shall liquidate or dissolve, or shall be a
party to a merger or consolidation with respect to which the Company shall not
be the surviving corporation, the Company shall give written notice thereof to
the Participant at least thirty days prior thereto. The Participant shall have
the right within said thirty-day period (but within the period specified in
Section 11) to exercise this option to the extent such Participant was entitled
to exercise the option on the date of the notice, provided, however, that if the
Participant is employed by the Company on the date of the notice, then
notwithstanding the provisions of Section 4 hereof, the Participant shall have
the right to exercise the option in full to the extent not previously exercised.
To the extent that this option shall not have been exercised on or prior to the
effective date of such liquidation, dissolution, merger or consolidation, then
notwithstanding the provisions of Sections 6, 7, 8 or 9 hereof, it shall
terminate on said date, unless it is assumed by another corporation within the
meaning of Section 425(a) of the Internal Revenue Code of 1986, as amended.

         Section 16. Subject to the terms and conditions hereof, the option may
be exercised by delivering to the Secretary of the Company at the Company's
principal place of business a written notice, signed by the person entitled to
exercise the option, of the election to exercise the option and stating the
number of shares to be purchased. Such notice shall, as an essential part
hereof, be accompanied by the payment of the full option exercise price of the
shares then to be purchased. Payment of the full option exercise price may be
made, at the election of the Participant, in (a) cash, (b) Common Stock of the
Company, or (c) any combination of the foregoing. Shares of Common Stock used in
payment of the purchase price shall be valued at

                                      -3-


their closing price on the NYSE Stock Market on the trading day immediately
preceding the date of exercise. Upon the proper exercise of this option, the
Company shall issue in the name of the person exercising the option, and deliver
to him, a certificate or certificates for the shares purchased, provided that if
any applicable law or regulation requires the Company to take any action with
respect to the shares specified in such notice before the issuance thereof, the
date of delivery of such shares shall be extended for the period necessary to
take such action. The Participant agrees that as holder of the option he shall
have no rights as a stockholder or otherwise in respect of any of the option
shares until the option is effectively exercised as herein provided. The
Participant agrees to pay in cash, within the time period specified by the
Company, the amount (if any) required to be withheld for federal, state or local
tax purposes on account of the exercise of the option or to make such
arrangements to satisfy such withholding requirements as the Company deems
appropriate.

         Section 17. This option shall not be exercisable if such exercise would
violate:

         (a)     Any applicable state securities law;

         (b)     Any applicable registration or other requirements under the
                 Securities Act of 1933, as amended, the Securities Exchange Act
                 of 1934, as amended, or applicable listing requirements of any
                 stock exchange; or

         (c)     Any applicable legal requirement of any other governmental
                 authority.

         The Company agrees to make reasonable efforts to comply with the
foregoing laws and requirements so as to permit the exercise of this option.
Furthermore, if a Registration Statement with respect to the shares to be issued
upon the exercise of this option is not in effect or if counsel for the Company
deems it necessary or desirable in order to avoid possible violation of the
Securities Act of 1933, as amended (the "Act"), the Company may require, as a
condition to its issuance and delivery of certificates for the shares, the
delivery to the Company of a commitment in writing by the person exercising the
option that at the time of such exercise it is his intention to acquire such
shares for his own account for investment only and not with a view to, or for
resale in connection with, the distribution thereof; that such person
understands the shares may be "restricted securities" as defined in Rule 144 of
the Securities and Exchange Commission; and that any resale, transfer or other
disposition of said shares will be accomplished only in compliance with Rule
144, the Act, or the other rules and regulations thereunder. The Company may
place on the certificates evidencing such shares an appropriate legend
reflecting the aforesaid commitment and the Company may refuse to permit
transfer of such certificates until it has been furnished evidence satisfactory
to it that no violation of the Act or the Rules and Regulations thereunder would
be involved in such transfer.

         Section 18. This Agreement is subject to the terms of the Plan. If
there is any inconsistency between this Agreement and the Plan, the Plan shall
govern. References herein to the Company shall include all Subsidiaries of the
Company.

                                      -4-




         IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate as of the day and year first above written.


                                                   OM GROUP, INC.

By:                                         By:
   ----------------------------                ------------------------------

Title:                                      Title:
      -------------------------                   ---------------------------
                                      -5-

EX-10.13

                                                                   EXHIBIT 10.13

                                                                  EXECUTION COPY

                              SEPARATION AGREEMENT

      This Separation Agreement (the "Agreement") is entered into this 17th day
of October, 2003 between OM Group, Inc. ("OMG") and Thomas R. Miklich
("Executive").

                                    RECITALS

A.    OMG and Executive entered into an Employment Agreement dated May 1, 2002,
      as amended on December 1, 2002 and July 31, 2003 (the "Employment
      Agreement"), regarding the employment of Executive by OMG as its Chief
      Financial Officer.

B.    OMG and Executive desire to terminate the employment of Executive with
      OMG.

C.    OMG and Executive desire to provide for the orderly and efficient
      transition of the financial management of OMG from Executive to the
      successor principal financial officer of OMG.

D.    OMG and Executive wish to set forth the severance payments and benefits to
      which Executive will be entitled in connection with the termination of his
      employment with OMG.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, OMG and Executive hereby agree as hereinafter set forth:

1.    TERMINATION OF EMPLOYMENT. The employment of Executive with OMG will
terminate as of the earlier of (X) April 30, 2004, (Y) the date that a new Chief
Financial Officer (or other principal financial officer) of OMG commences
employment, and (Z) the date that OMG terminates Executive's employment with OMG
as provided in the immediately following sentence (the "Termination Date"). At
any time prior to April 30, 2004, OMG will have the right to terminate
Executive's employment for any reason or no reason upon written notice to
Executive and Executive will also have the right to resign for any reason or no
reason upon written notice to OMG.

2.    CONFIDENTIALITY. Except to the extent required by law or otherwise in
order to enforce the terms of this Agreement, OMG and Executive will keep the
terms and conditions of this Agreement confidential. Executive will not discuss
the terms and conditions of this Agreement or reveal them to any person other
than his spouse, attorneys, accountants and tax advisors, except as otherwise
required by law or by order of a court. To the extent that Executive discusses
or reveals the terms or conditions of this Agreement to any of the
aforementioned persons or entities, he will instruct such persons or entities
that the terms and conditions of this Agreement are confidential, and he will
obtain their agreement to keep such information



confidential. OMG and Executive acknowledge and agree that it may be necessary
for OMG to disclose the terms and conditions of this Agreement to certain
executive officers and members of the Board of Directors. To the extent the
terms and conditions of this Agreement are revealed to such individuals, OMG
will advise them that such terms and conditions are confidential and should not
be discussed with or revealed to any other person except on a need-to-know
basis.

3.    PAYMENTS AND BENEFITS DURING TRANSITION PERIOD.

      (a)   During the period from the Effective Date (as defined in Section 17
            (g)) until the Termination Date (the "Transition Period"):

            (i)   Executive will continue to receive an annual base salary of
                  $475,000, payable in accordance with normal OMG payroll
                  practices;

            (ii)  Executive will continue to have use of the leased 2003 Jaguar
                  VDP automobile currently provided to him pursuant to the terms
                  of the OMG Company Car Program in effect from time to time.

            (iii) Executive and his dependents will continue to receive the
                  healthcare, life insurance, disability insurance, and
                  nonqualified retirement benefits to which Executive was
                  entitled, or was accruing, on the date of this Agreement that
                  are maintained by OMG for its executive officers on the same
                  terms as such officers participate; and

            (iv)  OMG will continue to pay the monthly dues and any capital
                  assessments with respect to Executive's membership in the
                  clubs identified on Schedule A.

            Such payments will reflect required local, state and federal tax
            withholding and any applicable deductions for welfare benefits. It
            is expressly understood that the provisions of Section 3(a)(iii)
            will not prohibit OMG from changing or terminating its group
            healthcare, life insurance or disability insurance plans or any of
            its nonqualified retirement benefits in any respect in the future.

      (b)   Promptly following the Effective Date of this Agreement, OMG will
            cause the appraised value of Executive's primary residence located
            at 7786 Valley View Road, Hudson, Ohio, 44236 to be determined in
            accordance with the appraisal procedures described under the
            subheading captioned "The Appraisal Process" of the "THE GUARANTEED
            HOME SALE PROGRAM" section of the OMG Homeowner Relocation Program
            (the "Relocation Program"). A copy of the Relocation Program is
            attached hereto as Schedule B. Within twenty (20) business days
            after being notified of the Guaranteed Home Sale Offer (as such term
            is defined in the Relocation Program), Executive will notify OMG in
            writing whether he elects to participate in the Relocation Program's
            guaranteed home sale program (the "Guaranteed Home Sale Program") in
            accordance with the terms and conditions describe in Section 3(b)(i)
            below.

                                       2



            (i)   If Executive elects to participate in the Guaranteed Home Sale
                  Program, OMG will, or will cause Primacy Relocation (the
                  administrator of the Relocation Program) to, guarantee the
                  purchase of Executive's primary residence located at 7786
                  Valley View Road, Hudson, Ohio, 44236, in accordance with, and
                  subject to, the appraisal, offer and purchase conditions and
                  procedures described under the following subheadings of the
                  "THE GUARANTEED HOME SALE PROGRAM" section of the Relocation
                  Program: "The Appraisal Process", "Inspections", "The
                  Guaranteed Home Sale Offer", "Amended Sale", "Closing the
                  Guaranteed Home Sale or Amended Sale", and "When a Sale Falls
                  Through". OMG's sole obligation under this Section 3(b)(i)
                  will be to purchase, or to cause Primacy Relocation to
                  purchase, Executive's primary residence in accordance the
                  conditions and procedures described in the portions of the
                  Relocation Program identified in the immediately preceding
                  sentence, except that the purchase of the primary residence
                  pursuant to the Guaranteed Home Sale Offer will close on, and
                  Executive may retain possession of such residence until, May
                  31, 2004 irrespective of the date of acceptance by Executive
                  of the Guaranteed Home Sale Offer provided that Executive has
                  accepted the Guaranteed Home Sale Offer within the 90-day
                  period described in the section of the Relocation Program
                  captioned "THE GUARANTEED HOME SALE PROGRAM". Executive will
                  not be bound by or entitled to receive any other rights or
                  benefits under the Relocation Program, including, without
                  limitation, the rights and benefits described under the
                  subsections of the Relocation Program captioned "Examples of
                  Exclusions", "Listing of the Home", and "Equity Funding" and
                  the rights and benefits described under the "THE GUARANTEED
                  HOME SALE PROGRAM" section of the Relocation Program requiring
                  OMG to pay real estate commissions and closing costs, to
                  reimburse Executive for any tax liabilities associated with
                  the sale of his primary residence and to otherwise ensure that
                  Executive does not incur any taxable income when the sale of
                  Executive's primary residence is accomplished through the
                  Guaranteed Home Sale Program. OMG's obligation to guarantee
                  the purchase of Executive's primary residence in accordance
                  with this Section 3(b)(i) will terminate upon the earlier of
                  (X) Executive's determination not to sell his primary
                  residence after electing to have the purchase of his primary
                  residence guaranteed in accordance with this Section 3(b), and
                  (Z) the expiration of the 90-day Guaranteed Home Sale Offer
                  period as described under the section of the Relocation
                  Program captioned "THE GUARANTEED HOME SALE PROGRAM". If
                  Executive has elected to participate in the Guaranteed Home
                  Sale Program as described herein, Executive will not be
                  eligible to receive an annual bonus with respect to fiscal
                  2003 regardless of whether, among other things, (x) other
                  executive officers of OMG receive an annual bonus for such
                  year or (y) the Termination Date occurs after December 31,
                  2003.

            (ii)  If Executive elects not to participate in the Guaranteed Home
                  Sale Program, and, in the event that OMG pays its Chief
                  Executive Officer and

                                       3



                  Chairman of the Board a bonus with respect to fiscal 2003,
                  Executive will be entitled to receive a cash bonus equal to
                  fifty percent (50%) of his base salary. Any such bonus payment
                  will reflect required local, state and federal tax withholding
                  and any applicable deductions for welfare benefits.

4.    SEPARATION PAYMENTS; VACATION. Following the Termination Date, OMG will
pay Executive the following amounts:

      (a)   Pay for accrued but unused 2003 vacation days or if the Termination
            Date is on or after January 1, 2004, accrued but unused 2004
            vacation days;

      (b)   Separation pay at the annual rate of $475,000, payable until the
            third anniversary of the Termination Date (the three-year period
            following the Termination Date is hereinafter referred to as the
            "Severance Period"); and

      (c)   OMG will pay Executive a bonus in an amount equal to $356,250
            annually on each of the first, second and third anniversary dates of
            the Termination Date.

      Such payments will reflect required local, state and federal tax
withholding and any applicable deductions for welfare benefits and will be
payable in accordance with normal OMG payroll practices.

5.    EQUITY AWARDS. Executive was previously awarded options to purchase 21,000
shares of the common stock of OMG (the "Options"). Vesting of the Options will
cease at the Termination Date and all of the Options, regardless of whether they
are then vested, will terminate on the Termination Date and will no longer be
exercisable.

6.    GROUP HEALTHCARE AND LIFE INSURANCE BENEFITS FOLLOWING TERMINATION DATE.

      (a)   On and after the Termination Date, Executive and his dependents will
            participate in the group healthcare plan (including medical, dental,
            vision and prescription drug programs) maintained by OMG for its
            executive officers on the same terms as such officers participate;
            provided, however, that such healthcare plan participation will
            terminate upon the earlier of the third anniversary of the
            Termination Date and the date that Executive is eligible to obtain
            coverage under the healthcare plan of any subsequent employer of
            Executive. If, at the end of the Severance Period, Executive remains
            a participate in such OMG group healthcare plan for a period of
            eighteen (18) months following the end of the Severance Period,
            Executive and his dependents will be eligible for continued
            healthcare benefits under OMG's healthcare plan, at Executive's cost
            and expense, in accordance with the Consolidated Omnibus Budget
            Reconciliation Act of 1985 (COBRA). It is expressly understood that
            the provisions of this Section 6(a) will not prohibit OMG from
            changing or terminating its group healthcare plan in any respect in
            the future.

      (b)   OMG will continue to pay the premiums due under the $1,400,000 life
            insurance policy #16141915 owned by Executive that was issued by
            Northwestern Mutual

                                       4



            from the Termination Date until the earlier of Executive's death and
            the date on which dividends paid under such policy are sufficient to
            pay any such premiums due thereunder. Executive will be responsible
            for the payment of any taxes due under applicable local, state and
            federal tax laws with respect to any premiums paid by OMG with
            respect to such insurance policy.

      (c)   During the Severance Period, OMG will continue to provide Executive
            with an additional $1,400,000 of life insurance coverage at OMG's
            cost and expense under policy #16152880, a policy issued through
            Northwestern Mutual that is currently owned by a grantor trust
            established by OMG with National City Bank as trustee, of which
            $1,400,000 has been endorsed to Executive to allow Executive to
            designate a personal beneficiary. Executive will be responsible for
            the payment of any taxes due under applicable local, state and
            federal tax laws with respect to any income imputed to Executive
            with respect to the insurance endorsed to Executive as contemplated
            hereby.

7.    SERP BENEFITS.

      (a)   Commencing as of January of the first calendar year beginning after
            the last day of the Severance Period, Executive will be eligible to
            receive a retirement benefit in the form of a single life annuity in
            an annual amount equal to the annual benefit that Executive would
            have been eligible to receive under the supplemental executive
            retirement plan (in effect as of February 1, 2000) of his immediate
            prior employer (the "SERP"), including any applicable Offsets (as
            defined in the SERP), if: (a) he had remained employed and covered
            by the SERP until April 30, 2007, and (b) his Earnings (as defined
            under the SERP) with such prior employer had increased at the rate
            of five percent per annum; provided, however, that such amount will
            be reduced by (X) the percentage specified under the SERP if
            Executive receives such retirement benefit prior to his attainment
            of age 62 and (Y) the actuarial equivalent of any amounts that
            Executive is entitled to receive that are (i) attributable to OMG
            Contributions (as defined in the OMG Profit-Sharing and Retirement
            Savings Plan (the "Profit-Sharing Plan") or any successor thereto)
            made to the Profit-Sharing Plan or (ii) payable under the Benefit
            Restoration Plan or any other supplemental pension or severance
            plan, program or arrangement maintained by OMG.

      (b)   OMG acknowledges that any amounts payable pursuant to this Agreement
            are not offsets for purposes of the calculations of the SERP
            benefits pursuant to this provision. Actuarial equivalency for such
            purposes will be the applicable mortality rate and applicable
            interest rate defined in Section 417(e)(3)(A)(ii) of the Internal
            Revenue Code of 1986, as amended. It is expressly understood that in
            the event OMG establishes a supplemental executive retirement plan
            in the future, Executive will not be entitled to receive the benefit
            under such newly established plan even if such benefit is greater
            than the benefit provided above.

      (c)   Schedule C attached hereto sets forth illustrative examples of the
            single life annuity payments that would be payable to Executive
            pursuant to this Section 7.

                                       5



8.    AUTOMOBILE. During the Severance Period, Executive will have the use of
the leased 2003 Jaguar VDP automobile currently provided to him under the OMG
Company Car Program. OMG will pay the operating and maintenance costs associated
with such automobile during the Severance Period pursuant to the terms of the
OMG Company Car Program in effect. On or before the third anniversary of the
Termination Date, Executive will have the option to purchase such automobile
pursuant to the terms of the lease agreement applicable to the sale of such
automobile on the date that Executive exercises and effects such option.

9.    RELEASE. In order to receive any payments or benefits under this Agreement
following the Termination Date, Executive must execute a release in the form
attached hereto as Exhibit A (the "Release") on or prior to the Termination
Date.

10.   COOPERATION DURING TRANSITION PERIOD. During the Transition Period:

      (a)   Executive will continue to serve as Chief Financial Officer of OMG
            and have such powers and responsibilities normally and customarily
            associated with a chief financial officer in a company of similar
            size and operating in a similar industry, including such other
            functions and duties as may be assigned by the Chairman and Chief
            Executive Officer of OMG and the Board of Directors of OMG.
            Executive will undertake to perform all his responsibilities and
            exercise his powers on a full-time basis and in good faith and will
            not engage in any business activity that interferes with the
            performance of his duties hereunder. Executive will travel as
            necessary in connection with the performance of his duties
            hereunder; however, Executive will perform his duties and
            responsibilities primarily in the Cleveland, Ohio metropolitan area.
            Executive will continue to report to the Chairman and Chief
            Executive Officer of OMG and the Board of Directors of OMG. For the
            avoidance of doubt, unless determined otherwise by the Chairman and
            Chief Executive Officer of OMG or the Board of Directors of OMG,
            Executive's continued responsibilities as the Chief Financial
            Officer and principal financial officer of OMG under this Section
            10(a) include, among other things, signing such reports and
            registration statements filed by OMG with the Securities and
            Exchange Commission under the Securities Act of 1933, as amended,
            and/or the Securities Exchange Act of 1934, as amended, and signing
            the certifications required to be furnished to the Securities and
            Exchange Commission pursuant to Rule 13a-14 and/or Rule 15d-14 of
            the Securities Exchange Act of 1934, as amended, and pursuant to 18
            U.S.C. 1350.

      (b)   Executive will use his reasonable best efforts to cooperate with OMG
            in, and will take such actions as OMG may reasonably request of
            Executive from time to time in connection with, (i) identifying his
            replacement as the Chief Financial Officer and principal financial
            officer of OMG, and (ii) coordinating the efficient transition of
            the financial management of OMG to such replacement.

                                       6



11.   COOPERATION AND NON-DISPARAGEMENT DURING TRANSITION PERIOD AND FOLLOWING
      TERMINATION DATE.

      (a)   During the Transition Period and at all times thereafter:

            (i)   Executive will not make any public statement regarding his
                  termination of employment with OMG without the prior written
                  approval of OMG and will use his reasonable best efforts to
                  cooperate with OMG, and will take such actions as OMG may
                  reasonably request of Executive from time to time, in
                  connection with the disclosure to the public of Executive's
                  amicable termination of employment with OMG and such other
                  investor relations aspects of Executive's separation from OMG,
                  including, but not limited to, presenting the mutual
                  understanding that Executive's termination of employment with
                  OMG was not precipitated by, and does not otherwise involve, a
                  disagreement or other dispute between OMG and Executive;

            (ii)  Executive will not disparage OMG or any of its products,
                  services, and business practices, or its current or former
                  owners;

            (iii) OMG will not disparage Executive; and

            (iv)  Executive will not cooperate, aid or assist any person in
                  preparing claims against OMG, unless required to do so by law.

      (b)   Executive acknowledges that OMG, its officers, directors,
            subsidiaries and/or representatives are presently involved in
            various litigation matters, including, but not limited to,
            stockholder derivative lawsuits (collectively, "Pending
            Litigation"). Executive will use his reasonable best efforts to
            cooperate with OMG and its representatives, and will take such
            actions as OMG or its representatives may reasonably request of
            Executive from time to time, in connection with the Pending
            Litigation and such other litigation (regardless of whether
            Executive is a party to such litigation), investigation, audit, or
            other regulatory or administrative proceeding that may arise and
            that relate to or involve matters arising while Executive was
            employed by OMG, relate to Executive's area of responsibility at
            OMG, or that arise out of events upon which, or that include claims
            related to, the Pending Litigation. Such cooperation will include,
            without limitation, supplying thorough and accurate information for
            OMG's investigation, defense or prosecution of such litigation,
            testifying truthfully in any such litigation, and otherwise
            consulting truthfully and accurately with OMG on such matters
            (collectively, "Litigation Related Services"). OMG will reimburse
            Executive for the reasonable out-of-pocket costs and expenses
            incurred by Executive in connection with providing Litigation
            Related Services.

12.   OUTPLACEMENT SERVICES. OMG will provide Executive with outplacement
services from such service as is mutually acceptable to OMG and Executive to
assist Executive in developing his resume and to counsel him with respect to a
job search for new employment. Such services

                                       7



must commence within ninety (90) days of the Termination Date and will terminate
on the first anniversary date of the commencement of such services.

13.   CONSULTATION. For a period of two years following the Termination Date,
Executive will be available from time to time upon the reasonable request of OMG
to provide financial consulting services to OMG at mutually agreeable times
during regular business hours regarding matters that are relevant to OMG,
including, but not limited to, matters pending on the Termination Date. OMG
acknowledges that this provision does not preclude Executive from accepting
other full-time employment and OMG will use its best efforts to schedule
consulting services that would not conflict with any new employment.

14.   COVENANTS.

      (a)   Notwithstanding any provision of this Agreement or the Release,
            Executive hereby reaffirms the commitments he made to OMG in Section
            5 of the Employment Agreement and acknowledges and agrees the rights
            and obligations of Executive under Section 5 of the Employment
            Agreement will remain in full force and effect and will not be
            affected by this Agreement or the Release. Executive and OMG agree
            that references to the term of the Employment Agreement in Section 5
            of the Employment Agreement will be deemed to refer to the period
            from the Effective Date until the third anniversary of the
            Termination Date.

      (b)   On or prior to the Termination Date, Executive will return all
            property of OMG and its affiliates in his possession, including, but
            not limited to, keys, credit cards, computer, computer software and
            any Confidential Information and any copies thereof. As used herein,
            the term "Confidential Information" will mean any information
            regarding OMG and/or its affiliates that is not generally made
            publicly available by OMG or its affiliates, including but not
            limited to any specification or other technical information,
            processing information, financial information, customer information,
            and general business information in any form, including electronic
            or optical data storage and retrieval mechanisms, whether or not
            marked or designated as "Confidential", "Proprietary" or the like,
            and regardless of whether any such information is protected by any
            applicable law.

15.   REPRESENTATIONS OF EXECUTIVE. Executive acknowledges that in his capacity
as the principal financial officer of OMG, Executive has from time to time made
certain certifications in OMG's periodic reports filed with the Securities and
Exchange Commission. Executive represents and warrants that such certifications
were true and correct at the time such certifications were made and, to
Executive's knowledge, would be true and correct if made as of the date hereof.
Executive further represents and warrants that to his knowledge, OMG's financial
statements, and other financial information, included in OMG's filings with the
Securities and Exchange Commission made while Executive was the principal
financial officer of OMG, fairly present in all material respects the financial
condition, results of operations and cash flows of OMG as of, and for, the
periods covered by such financial information. Executive represents and warrants
that, to his knowledge, as of the date hereof neither OMG nor any of its
subsidiaries is required to restate any of its historical financial statements.

                                       8



16.   TERMINATION, BREACH AND REPAYMENT OF BENEFITS.

      (a)   Notwithstanding anything in this Agreement to the contrary, in the
            event that during the Transition Period (which, as described in
            Sections 1 and 3, will not extend beyond April 30, 2004), (i)
            Executive violates the terms of this Agreement, (ii) OMG terminates
            Executive's employment for "Cause", as such term is defined in the
            Employment Agreement, or (iii) Executive resigns, Executive will no
            longer be eligible for payments or benefits under this Agreement,
            Executive's Options will terminate immediately, and OMG's only
            obligation to Executive will be to (x) pay Executive his earned but
            unpaid base salary, if any, up to the date Executive's employment
            terminates and (y) to make such payments and provide such benefits
            under any employee benefit plan, program or policy in which
            Executive was a participant as are explicitly required to be paid to
            Executive by the terms of any such benefit plan, program or policy
            following the date on which Executive's employment terminates.

      (b)   Notwithstanding anything in this Agreement to the contrary, in the
            event that following the Termination Date Executive revokes the
            General Release or violates the terms of this Agreement, Executive
            will repay OMG immediately any payments that he received under this
            Agreement during the period following the Termination Date and he
            will no longer be eligible for payments or benefits under this
            Agreement.

17.   ACKNOWLEDGMENTS. Executive acknowledges and agrees that:

      (a)   The only payments, benefits and other consideration for Executive
            entering into this Agreement are described in this Agreement.

      (b)   In exchange for executing this Agreement, Executive is being
            provided consideration for which he would not otherwise be entitled.

      (c)   No other representations, promises or agreements of any kind have
            been made by any person or entity to induce Executive to execute
            this Agreement.

      (d)   Executive has been given at least 21 days to consider the effect of
            this Agreement, including the Release set forth on Exhibit A, prior
            to executing this Agreement.

      (e)   Executive has been encouraged and advised by OMG to discuss the
            terms of this Agreement and the effect of signing this Agreement
            with the legal counselor of his choice.

      (f)   Executive is satisfied that he understands this Agreement and that
            he intends to be bound by it.

      (g)   Executive understands that this Agreement may be revoked by him
            during the 7-day period beginning immediately after executing this
            Agreement by giving written notice of revocation to OMG; that this
            Agreement will not be effective or enforceable until such 7-day
            period has expired; and that if he revokes this

                                       9



            Agreement within such 7-day period, this Agreement will be
            ineffective and of no legal force. If no revocation has been
            received by the end of such 7-day period, Executive understands and
            agrees that the "Effective Date" of this Agreement will be the
            eighth day after Executive executes this Agreement.

      (h)   Executive agrees that, notwithstanding anything to the contrary in
            this Agreement, no part of this Agreement will be effective or
            enforceable and no payment hereunder will be made until after the
            Effective Date.

18.   NOTICES. All notices, requests, demands and other communications that are
required or may be given under this Agreement will be in writing and will be
deemed to have been duly given if delivered personally or mailed, first class
mail, postage prepaid, return receipt requested, or by any other express
delivery technique calling for receipted delivery, as follows:

            NOTICES TO EXECUTIVE:

                     Thomas R. Miklich
                     7786 Valley View Road
                     Hudson, Ohio 44236

            NOTICES TO OMG:

                     OM Group, Inc.
                     127 Public Square
                     1500 Key Tower
                     Cleveland, Ohio 44114-1221
                     Attention: James P. Mooney

            WITH A COPY TO:

                     Gordon S. Kaiser, Esq.
                     Squire, Sanders & Dempsey LLP
                     4900 Key Tower
                     127 Public Square
                     Cleveland, Ohio 44114

or such other address or to the attention of such other person as the recipient
has specified by prior written notice to the sending party. Any notice under
this Agreement will be deemed to have been given when so delivered or mailed.

19.   SEVERABILITY. Executive agrees that if any provision of this Agreement is
adjudicated to be invalid or unenforceable, or if compliance with any provision
of this Agreement is restrained pending a final determination as to its
legality, such deletion or restraint will apply only to the operation of the
provision or provisions deemed invalid, unenforceable, or restrained, and to the
extent any provision of this Agreement is deemed invalid, unenforceable, or
restrained, the remaining provisions will be valid and enforceable to the
fullest extent possible.

                                       10



20.   BREACH. Executive agrees that in the event of any breach or threatened
breach of this Agreement by him, OMG will be entitled to specific performance
and injunctive relief (i.e. a court order) as a remedy for any such breach or
threatened breach hereof without necessity of posting bond or other security,
the requirement for which is expressly waived. Such remedy will not be deemed to
be the exclusive remedy for any breach of this Agreement, but will be in
addition to all other remedies available to OMG at law or in equity.

21.   ENTIRE AGREEMENT. This Agreement, the Release and the Employment Agreement
embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way; provided however, OMG and Executive agree that except as
otherwise expressly provided herein, the provisions of the Employment Agreement
relating to employment of Executive by OMG, including, but not limited to, the
termination and compensation of Executive, will be superseded by this Agreement.
Notwithstanding the foregoing, nothing in this Agreement is intended to reduce,
augment or otherwise modify Executive's rights to be indemnified by OMG under
OMG's existing policies and procedures relating to indemnification of its
executive officers and the Indemnification Agreement entered into between OMG
and Executive dated November 15, 2002.

22.   COUNTERPARTS. This Agreement may be executed on separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.

23.   BINDING NATURE. Executive agrees that this Agreement will also be binding
upon his spouse, dependents, children, heirs, successors and assigns and their
legal representatives under this Agreement and will inure to the benefit of, and
will release, OMG and its successors and assigns.

24.   GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Ohio.

25.   AMENDMENTS. Any provision of this Agreement may be amended only with the
prior written consent of Executive and OMG.

26.   NO WAIVER. No failure by either party at any time to give notice of any
breach by the other of, or to require compliance with, any condition or
provision of this Agreement will be deemed a waiver of any provisions or
conditions of this Agreement.

27.   ATTORNEY FEES. OMG will reimburse Executive in an amount not to exceed
$5,000 for legal fees reasonably incurred by him in the negotiation and
preparation of this Agreement.

                                       11



      Executed this 17th day of October, 2003.

EXECUTIVE                               OM GROUP, INC.

By:_____________________________        By:___________________________________
   Thomas R. Miklich                       James P. Mooney
                                           Title: Chairman and Chief Executive
                                                  Officer

                                       12

EX-10.14

                                                                 EXHIBIT 10.14

Form of Non-Incentive Stock Option Agreement for Joseph Scaminace



                                 OM GROUP, INC.

                   1998 LONG-TERM INCENTIVE COMPENSATION PLAN
                             STOCK OPTION AGREEMENT


         THIS STOCK OPTION AGREEMENT is entered into this ___ day of August,
2005 but effective as of June 13, 2005 (being the date this option is granted)
by and between OM GROUP, INC. (the "Company"), and Joseph M. Scaminace (the
"Participant"), a Key Employee of the Company or a subsidiary of the Company, is
to evidence the non-incentive stock option granted to the Participant as
described herein. Capitalized terms used herein and not otherwise defined have
the meaning ascribed to them in the 1998 Long-Term Incentive Compensation Plan
of the Company, as adopted by the shareholders on May 5, 1998, and as it may be
amended (the "Plan").

                                   WITNESSETH

         That the parties hereto agree as follows:

         Section 1. The Company hereby grants to the Participant the option of
purchasing the number of shares of Common Stock of the Company at the option
exercise price and subject to the terms and conditions hereinafter set forth.

         Section 2. The aggregate number of shares of Common Stock purchasable
is ___________.

         Section 3.  The option exercise price is $________ per share.

         Section 4. Except as otherwise provided in Sections 5, 6, 7, 8, 9, 10
and 12, the option rights granted hereunder shall become exercisable on
____________.

         Section 5. This option shall become exercisable as to all of the shares
it covers upon the occurrence of any Change in Control of the Company (as
defined in the Plan) occurring within the option period specified in Section 11;
provided that this option shall not be exercisable prior to the expiration of
six months from the date of grant.

         Section 6. To the extent not otherwise exercisable at the date of the
retirement of the Participant in accordance with a retirement plan or policy of
the Company or any subsidiary, this option shall become fully exercisable upon
such retirement, and the Participant may exercise the option rights set forth
herein at any time within three years following such retirement (but only within
the option period specified in Section 11).

         Section 7. If the Participant shall die while still employed by the
Company or any subsidiary, this option shall become fully exercisable to the
extent not otherwise exercisable, and the person entitled by will or the
applicable laws of descent and distribution may exercise the



option rights set forth herein at any time within one year following the
Participant's death (but only within the option period specified in Section 11).

         Section 8. If the Participant ceases to be employed by the Company or a
subsidiary due to the permanent and total disability of the Participant, this
option shall become fully exercisable to the extent not otherwise exercisable,
and the Participant may exercise the option rights set forth herein at any time
within the one-year period following the date of the Participant's cessation of
employment (but only within the option period set forth in Section 11).

         Section 9. If the Participant shall die following the cessation of
employment with the Company or a subsidiary but within the periods provided for
in Sections 6 or 8, this option shall become fully exercisable to the extent not
otherwise exercisable, and the person entitled by will or applicable laws of
descent and distribution may exercise the option rights set forth herein at any
time within one year following the Participant's death (but only within the
option period set forth in Section 11).

         Section 10. If the Participant ceases to be employed by the Company or
a subsidiary for any reason other than retirement, permanent and total
disability, or death, the Participant may exercise the option rights set forth
herein at any time within the three-month period following such cessation of
employment (but only within the option period specified in Section 11) to the
extent the Participant was entitled to exercise the same immediately prior to
such cessation of employment; provided, however, if there has been a Change in
Control of the Company and the Participant's employment with the Company shall
have terminated after such Change in Control and prior to six months from the
date of grant of this option, then this option may be exercised in whole or in
part at any time within the three-month period commencing six months from the
date of grant of this option.

         Section 11. Notwithstanding any other provisions hereof, this option
shall not be exercisable after _________________.

         Section 12. Notwithstanding any other provisions hereof, if the
Participant's employment with the Company or a subsidiary is terminated on
account of a violation of the Company's Code of Conduct and Ethics, this option
shall be forfeited upon such termination to the full extent not exercised at the
time of such termination.

         Section 13. This option is not transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and is
exercisable, during the lifetime of the Participant, only by the Participant or
the Participant's guardian or legal representative. Upon any attempt to
transfer, assign, pledge, hypothecate, or otherwise dispose of this option or
the related option rights contrary to the provisions of this Agreement, or upon
the levy of any attachment or similar process upon such option or rights, such
option and rights shall immediately become null and void.

         Section 14. If the Participant's exercise of this option is prevented
by the terms of subsections (a), (b) or (c) of Section 18 and the Participant's
option terminates pursuant to Section 6, 8 or 9, then the Participant may,
notwithstanding the provisions of Section 6, 8 or 9 but only within the period
set forth in Section 11, exercise such option to the extent it would have been
exercisable immediately prior to its termination but for the operation of
Section 18 at


                                     - 2 -


any time within 30 days after such Participant is notified by the Company that
such exercise is no longer prevented by Section 18.

         Section 15. In the event that at any time prior to the expiration of
this option each of the outstanding shares of Common Stock of the Company
(except shares held by dissenting stockholders) shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then for all purposes of this option there shall be substituted
for each share of Common Stock purchasable hereunder the number and kind of
shares of stock or other securities into which each such share of Common Stock
of the Company shall be so changed, or for which each such share shall be so
exchanged, and the shares or securities so substituted for each such share of
Common Stock shall be subject to purchase at an appropriately adjusted option
exercise price and subject to the terms and conditions hereof.

         In the event that the Company shall issue a stock dividend in Common
Stock with respect to the Common Stock of the Company, the number of shares then
purchasable hereunder shall be adjusted by adding to each such share the number
of shares which would have been distributed as a stock dividend thereon had such
share been outstanding on the record date for payment of the stock dividend, and
each such share together with said additional shares shall be purchasable at the
option exercise price as above provided and as may be appropriately adjusted.

         In the event that there shall be any other change in the number or kind
of outstanding shares of Common Stock or other securities of the Company, or of
any shares of stock or other securities into which such shares of Common Stock
shall have been changed or for which they shall have been exchanged, or the
Company shall make an Extraordinary Distribution or a Prorata Repurchase, then
the Compensation Committee shall make such adjustment in the number or kind of
shares of stock or other securities covered by this option and in the number or
kind of shares of stock or other securities subject to purchase at the option
exercise price as above provided and with any such adjustment in the option
exercise price to reflect the effect of such Extraordinary Distribution or
Prorata Repurchase as the Compensation Committee, in its sole discretion may
determine is equitably required by such change, and such adjustment so made
shall be effective and binding for all purposes of this option.

         Anything to the contrary herein contained notwithstanding, the
Participant shall not be entitled to purchase a fraction of a share under this
option.

         Section 16. If the Company shall liquidate or dissolve, or shall be a
party to a merger or consolidation with respect to which the Company shall not
be the surviving corporation, the Company shall give written notice thereof to
the Participant at least 30 days prior thereto. The Participant shall have the
right within said 30-day period (but only within the period specified in Section
11) to exercise this option to the extent such Participant was entitled to
exercise the option on the date of the notice; provided, however, that if the
Participant is employed by the Company on the date of the notice, then
notwithstanding the provisions of Section 4, the Participant shall have the
right to exercise this option in full to the extent not previously exercised. To
the extent that this option shall not have been exercised on or prior to the
effective date of such liquidation, dissolution, merger or consolidation, then
notwithstanding any other



                                     - 3 -


provisions hereof, it shall terminate on said date, unless it is assumed by
another corporation within the meaning of Section 425(a) of the Internal
Revenue Code of 1986, as amended.

         Section 17. Subject to the terms and conditions hereof, this option may
be exercised in whole or in part by delivering to the Company at its principal
place of business a written notice, signed by the person entitled to exercise
the option, of the election to exercise the option and stating the number of
shares to be purchased. Such notice shall, as an essential part thereof, be
accompanied by the payment of the full option exercise price of the shares then
to be purchased, except as provided below. Payment of the full option exercise
price may be made, at the election of the Participant, in (a) cash, (b) Common
Stock of the Company, or (c) any combination of cash or Common Stock of the
Company; provided, however, that the Participant may not use Common Stock of the
Company in payment of the purchase price unless such Common Stock has been held
by the Participant for at least six months. A Participant using Common Stock of
the Company to pay the purchase price of shares being purchased may do so either
by actual delivery of share certificates for such Common Stock or by attesting
as to the ownership of such Common Stock. Shares of Common Stock used in payment
of the purchase price shall be valued at their closing price on the New York
Stock Exchange on the trading day immediately preceding the date of exercise.
The Participant may elect to pay the purchase price upon the exercise of this
option by authorizing a third party to sell all the shares (or a sufficient
portion of the shares) acquired upon the exercise of the option and to remit to
the Company a sufficient portion of the sale proceeds to pay the entire purchase
price and any tax withholding resulting from such exercise. Upon the proper
exercise of this option, the Company shall issue in the name of the person
exercising the option, and deliver to such person, a certificate or certificates
for the shares purchased, provided that if any applicable law or regulation
requires the Company to take any action with respect to the shares specified in
such notice before the issuance thereof, the date of delivery of such shares
shall be extended for the period necessary to take such action. The Participant
agrees that as holder of this option, the Participant shall have no rights as a
stockholder or otherwise in respect of any of the option shares until the option
is effectively exercised as herein provided. The Participant agrees to pay in
cash, within the time period specified by the Company, the amount (if any)
required to be withheld for federal, state and local tax purposes on account of
the exercise of the option or to make such arrangements to satisfy such
withholding requirements as the Company deems appropriate.

         Section 18. This option shall not be exercisable if such exercise would
violate:

         (a)     Any applicable state securities law;

         (b)     Any applicable registration or other requirements under the
                 Securities Act of 1933, as amended (the "Act"), the Securities
                 Exchange Act of 1934, as amended, or applicable listing
                 requirements of any stock exchange; or

         (c)     Any applicable legal requirement of any other governmental
                 authority.

         The Company agrees to make reasonable efforts to comply with the
foregoing laws and requirements so as to permit the exercise of this option.
Furthermore, if a registration statement with respect to the shares to be issued
upon the exercise of this option is not in effect or if counsel for the Company
deems it necessary or desirable in order to avoid possible violation of the Act,
the Company may require, as a condition to its issuance and delivery of
certificates for the shares, the delivery to the Company of a commitment in
writing by the person exercising the



                                     - 4 -


option that at the time of such exercise it is such person's intention to
acquire such shares for such person's own account for investment only and not
with a view to, or for resale in connection with, the distribution thereof; that
such person understands the shares may be "restricted securities" as defined in
Rule 144 of the Securities and Exchange Commission; and that any resale,
transfer or other disposition of said shares will be accomplished only in
compliance with Rule 144, the Act, or the other rules and regulations
thereunder. The Company may place on the certificates evidencing such shares an
appropriate legend reflecting the aforesaid commitment and the Company may
refuse to permit transfer of such certificates until it has been furnished
evidence satisfactory to it that no violation of the Act or the rules and
regulations thereunder would be involved in such transfer.

         Section 19. This Agreement is subject to the terms of the Plan. If
there is any inconsistency between this Agreement and the Plan, the Plan shall
govern.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate as of the day and year first above written.


"PARTICIPANT"                                   OM GROUP, INC.

By:                                             By:
   -------------------------------                 -----------------------------

Title:                                          Title:
      ----------------------------                    --------------------------



                                     - 5 -

EX-10.19

Exhibit 10.19

SEVERANCE AGREEMENT

     THIS SEVERANCE AGREEMENT (“Agreement”) is entered into as of the 7^th day of November, 2005, by and between OM Group, Inc., a Delaware corporation (the “Company”) and Valerie Gentile Sachs, an executive officer of the Company (the “Executive”).

     WHEREAS, the Company wishes to assure itself of the continuity of the Executive’s services; and

     WHEREAS, the Company and the Executive accordingly desire to enter into this Agreement on the terms and conditions set forth below;

     NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, it is hereby agreed by and between the parties as follows:

     1.       Term of Agreement. The “Term” of this Agreement shall commence on the date hereof and end on the third (3rd) anniversary of the date hereof; provided, however, that the Compensation Committee of the Board of Directors may extend the Term in one year increments. Notwithstanding the foregoing, this Agreement shall terminate automatically in the event that any payment is made pursuant to Sections 5(c)-(g) of the Change in Control Agreement between the Executive and the Company dated October 11, 2005.

     2.       Termination. (a) For purposes of this Agreement, “Termination” shall mean: (i) termination of the employment of the Executive by the Company during the Term, for any reason other than death, Disability (as defined below), or Cause (as described below), (ii) the assignment of any duties inconsistent with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive or (iii) a material change in the Executive’s reporting structure, including such change as would result from the resignation or termination of Joseph M. Scaminace as Chief Executive Officer of the Company. Resignation by the Executive for any other reason shall not be treated as a “Termination” under this Agreement.

     (b)       For purposes of this Agreement, “Disability” shall mean that the Executive is physically or mentally incapacitated for a period of one hundred eighty (180) consecutive days such that the Executive cannot substantially perform the Executive’s duties of employment with the Company on a full-time basis.

     (c)       For purposes of this Agreement, “Cause” shall mean (i) commission of a felony by the Executive (other than felonious operation of a motor vehicle), (ii) fraud, embezzlement or misappropriation of funds, in each case involving or against the Company or any of its subsidiaries or affiliates, (iii) an act or series of acts of dishonesty in the course of employment that are materially inimical to the best interests of the Company or a subsidiary and, if the act or acts are capable of being cured, the Executive fails to cure or take all reasonable steps to cure

within 30 days of notice from the Company to the Executive, and (iv) other than for Disability, the Executive abandons and consistently fails to attempt to perform her duties and responsibilities for 30 consecutive days after the Company has advised her in writing of that failure.

     3.       Termination date and notice. Any notice of Termination of the Executive’s employment by the Company or the Executive for any reason under Section 2 above shall be upon no less than fifteen (15) days’ advance written notice (“Notice of Termination”). The date of termination shall be the date specified by the Company or the Executive in the Notice of Termination (“Date of Termination”). Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if personally delivered or sent by registered or certified mail or by prepaid overnight courier to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, to the attention of the Secretary of the Company, at its principal executive offices.

     4.       Severance benefits. In the event of a Termination described in Section 2 above, the Company shall pay to the Executive as severance pay, in a lump sum, the following amounts:

(a)	the Executive’s full base salary earned through the Termination Date at the rate in effect prior to the date Notice of Termination is given, to the extent not theretofore paid;
(b)	an amount equal to Executive’s annual base salary in effect prior to the date Notice of Termination is given;
(c)	the Executive’s bonus for the previously completed fiscal year of the Company, to the extent not theretofore paid; and
(d)	the Executive’s target bonus (i.e. based on achievement of performance goals at the 100% level) for the fiscal year in which the Notice of Termination was given.

     The payments described in this Section 4 shall be payable on or before the tenth (10^th) day following the Termination Date pursuant to the Company’s normal payroll practices, provided that the Executive executes a general release, which shall be in a form mutually satisfactory to the Company and Executive and which shall include provisions that are customary for a general release, including (i) provisions addressing the Executive’s release of the Company from any future liability or suit, (ii) provisions addressing nonsolicitation of other Company Executives and confidentiality, (iii) a six-month noncompete agreement pursuant to which Executive shall agree not to acquire any financial or beneficial interest in, be employed by, or own, manage, operate or control any entity (A) which is primarily engaged in any type of business in which either the Company or its subsidiaries have been actively engaged, and (B) for which the Executive has primary responsibility to act as general counsel immediately prior to the Termination Date, (iv) provisions addressing nondisparagement of the Company and its officers, directors, employees and agents; provided that the Company shall make a reciprocal

-2-

commitment not to disparage the Executive, and (v) the waiver of continued participation in any employee benefit or welfare plans.

     5.       Withholding. All payments to the Executive under this Agreement will be subject to all applicable withholding of state and federal taxes.

     6.       Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this Agreement; and no amounts payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. Nothing in this Section 6 shall limit the Executive’s rights or powers to dispose of the Executive’s property by Last Will and Testament or limit any rights or powers which the Executive’s executor or administrator would otherwise have. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, designees, devisees and legatees. If the Executive should die while any amount is still payable to the Executive hereunder had the Executive continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to the Executive’s designated beneficiary or beneficiaries (pursuant to a written beneficiary designation signed, dated, and delivered to the Company prior to the Executive’s death), or if there are no beneficiaries, to the Executive’s estate.

     7.       Amendment. This Agreement may be amended or canceled by mutual agreement of the parties in writing without the consent of any other person, and so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.

     8.       Successors. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company.

     9.       Employment Status. Nothing herein shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the Executive by the Company for any fixed period of time. The Executive’s employment with the Company is terminable at will by the Company or the Executive, and each shall have the right to terminate the Executive’s employment with the Company at any time, with or without Cause, subject to (i) the notice provisions of this Agreement, and (ii) the Company’s obligation to provide severance benefits if and as required by Section 4.

     10.       Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

     11.       Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original but all of which together shall constitute one and the same document.

-3-

     IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the day and year first above written.

COMPANY:

OM GROUP, INC.

By:

Title:

EXECUTIVE:

Valerie Gentile Sachs

-4-

EX-10.20

Exhibit 10.20

Form of Non-Incentive Stock Option Agreement

OM GROUP, INC.

1998 LONG-TERM INCENTIVE COMPENSATION PLAN
STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT, dated as of                      (being the date this option is granted) by and between OM GROUP, INC. (the “Company”), and                      (the “Participant”), a Key Employee of the Company or a subsidiary of the Company, is to evidence the non-incentive stock option granted to the Participant as described herein. Capitalized terms used herein and not otherwise defined have the meaning ascribed to them in the 1998 Long-Term Incentive Compensation Plan of the Company, as adopted by the shareholders on May 5, 1998, and as it may be amended (the “Plan”).

WITNESSETH

     That the parties hereto agree as follows:

     Section 1. The Company hereby grants to the Participant the option of purchasing the number of shares of Common Stock of the Company at the option exercise price and subject to the terms and conditions hereinafter set forth.

     Section 2. The aggregate number of shares of Common Stock purchasable is                     .

     Section 3. The option exercise price is $                     per share.

     Section 4. Except as otherwise provided in Sections 5, 6, 7, 8, 9, 10 and 12, the option rights granted hereunder shall become exercisable in three equal installments on the first, second and third annual anniversaries of the date of this option grant as set forth above.

     Section 5. This option shall become exercisable as to all of the shares it covers upon the occurrence of any Change in Control of the Company (as defined in the Plan) occurring within the option period specified in Section 11; provided that this option shall not be exercisable prior to the expiration of six months from the date of grant.

     Section 6. To the extent not otherwise exercisable at the date of the retirement of the Participant in accordance with a retirement plan or policy of the Company or any subsidiary, this option shall become fully exercisable upon such retirement, and the Participant may exercise the option rights set forth herein at any time within three years following such retirement (but only within the option period specified in Section 11).

     Section 7. If the Participant shall die while still employed by the Company or any subsidiary, this option shall become fully exercisable to the extent not otherwise exercisable, and the person entitled by will or the applicable laws of descent and distribution may exercise the

option rights set forth herein at any time within one year following the Participant’s death (but only within the option period specified in Section 11).

     Section 8. If the Participant ceases to be employed by the Company or a subsidiary due to the permanent and total disability of the Participant, this option shall become fully exercisable to the extent not otherwise exercisable, and the Participant may exercise the option rights set forth herein at any time within the one-year period following the date of the Participant’s cessation of employment (but only within the option period set forth in Section 11).

     Section 9. If the Participant shall die following the cessation of employment with the Company or a subsidiary but within the periods provided for in Sections 6 or 8, this option shall become fully exercisable to the extent not otherwise exercisable, and the person entitled by will or applicable laws of descent and distribution may exercise the option rights set forth herein at any time within one year following the Participant’s death (but only within the option period set forth in Section 11).

     Section 10. If the Participant ceases to be employed by the Company or a subsidiary for any reason other than retirement, permanent and total disability, or death, the Participant may exercise the option rights set forth herein at any time within the three-month period following such cessation of employment (but only within the option period specified in Section 11) to the extent the Participant was entitled to exercise the same immediately prior to such cessation of employment; provided, however, if there has been a Change in Control of the Company and the Participant’s employment with the Company shall have terminated after such Change in Control and prior to six months from the date of grant of this option, then this option may be exercised in whole or in part at any time within the three-month period commencing six months from the date of grant of this option.

     Section 11. Notwithstanding any other provisions hereof, this option shall not be exercisable after                                         .

     Section 12. Notwithstanding any other provisions hereof, if the Participant’s employment with the Company or a subsidiary is terminated on account of a violation of the Company’s Code of Conduct and Ethics, this option shall be forfeited upon such termination to the full extent not exercised at the time of such termination.

     Section 13. This option is not transferable by the Participant otherwise than by will or by the laws of descent and distribution, and is exercisable, during the lifetime of the Participant, only by the Participant or the Participant’s guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of this option or the related option rights contrary to the provisions of this Agreement, or upon the levy of any attachment or similar process upon such option or rights, such option and rights shall immediately become null and void.

     Section 14. If the Participant’s exercise of this option is prevented by the terms of subsections (a), (b) or (c) of Section 18 and the Participant’s option terminates pursuant to Section 6, 8 or 9, then the Participant may, notwithstanding the provisions of Section 6, 8 or 9 but only within the period set forth in Section 11, exercise such option to the extent it would have been exercisable immediately prior to its termination but for the operation of Section 18 at

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any time within 30 days after such Participant is notified by the Company that such exercise is no longer prevented by Section 18.

     Section 15. In the event that at any time prior to the expiration of this option each of the outstanding shares of Common Stock of the Company (except shares held by dissenting stockholders) shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then for all purposes of this option there shall be substituted for each share of Common Stock purchasable hereunder the number and kind of shares of stock or other securities into which each such share of Common Stock of the Company shall be so changed, or for which each such share shall be so exchanged, and the shares or securities so substituted for each such share of Common Stock shall be subject to purchase at an appropriately adjusted option exercise price and subject to the terms and conditions hereof.

     In the event that the Company shall issue a stock dividend in Common Stock with respect to the Common Stock of the Company, the number of shares then purchasable hereunder shall be adjusted by adding to each such share the number of shares which would have been distributed as a stock dividend thereon had such share been outstanding on the record date for payment of the stock dividend, and each such share together with said additional shares shall be purchasable at the option exercise price as above provided and as may be appropriately adjusted.

     In the event that there shall be any other change in the number or kind of outstanding shares of Common Stock or other securities of the Company, or of any shares of stock or other securities into which such shares of Common Stock shall have been changed or for which they shall have been exchanged, or the Company shall make an Extraordinary Distribution or a Prorata Repurchase, then the Compensation Committee shall make such adjustment in the number or kind of shares of stock or other securities covered by this option and in the number or kind of shares of stock or other securities subject to purchase at the option exercise price as above provided and with any such adjustment in the option exercise price to reflect the effect of such Extraordinary Distribution or Prorata Repurchase as the Compensation Committee, in its sole discretion may determine is equitably required by such change, and such adjustment so made shall be effective and binding for all purposes of this option.

     Anything to the contrary herein contained notwithstanding, the Participant shall not be entitled to purchase a fraction of a share under this option.

     Section 16. If the Company shall liquidate or dissolve, or shall be a party to a merger or consolidation with respect to which the Company shall not be the surviving corporation, the Company shall give written notice thereof to the Participant at least 30 days prior thereto. The Participant shall have the right within said 30-day period (but only within the period specified in Section 11) to exercise this option to the extent such Participant was entitled to exercise the option on the date of the notice; provided, however, that if the Participant is employed by the Company on the date of the notice, then notwithstanding the provisions of Section 4, the Participant shall have the right to exercise this option in full to the extent not previously exercised. To the extent that this option shall not have been exercised on or prior to the effective date of such liquidation, dissolution, merger or consolidation, then notwithstanding any other provisions hereof, it shall terminate on said date, unless it is assumed by another corporation

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within the meaning of Section 425(a) of the Internal Revenue Code of 1986, as amended.

     Section 17. Subject to the terms and conditions hereof, this option may be exercised in whole or in part by delivering to the Company at its principal place of business a written notice, signed by the person entitled to exercise the option, of the election to exercise the option and stating the number of shares to be purchased. Such notice shall, as an essential part thereof, be accompanied by the payment of the full option exercise price of the shares then to be purchased, except as provided below. Payment of the full option exercise price may be made, at the election of the Participant, in (a) cash, (b) Common Stock of the Company, or (c) any combination of cash or Common Stock of the Company; provided, however, that the Participant may not use Common Stock of the Company in payment of the purchase price unless such Common Stock has been held by the Participant for at least six months. A Participant using Common Stock of the Company to pay the purchase price of shares being purchased may do so either by actual delivery of share certificates for such Common Stock or by attesting as to the ownership of such Common Stock. Shares of Common Stock used in payment of the purchase price shall be valued at their closing price on the New York Stock Exchange on the trading day immediately preceding the date of exercise. The Participant may elect to pay the purchase price upon the exercise of this option by authorizing a third party to sell all the shares (or a sufficient portion of the shares) acquired upon the exercise of the option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire purchase price and any tax withholding resulting from such exercise. Upon the proper exercise of this option, the Company shall issue in the name of the person exercising the option, and deliver to such person, a certificate or certificates for the shares purchased, provided that if any applicable law or regulation requires the Company to take any action with respect to the shares specified in such notice before the issuance thereof, the date of delivery of such shares shall be extended for the period necessary to take such action. The Participant agrees that as holder of this option, the Participant shall have no rights as a stockholder or otherwise in respect of any of the option shares until the option is effectively exercised as herein provided. The Participant agrees to pay in cash, within the time period specified by the Company, the amount (if any) required to be withheld for federal, state and local tax purposes on account of the exercise of the option or to make such arrangements to satisfy such withholding requirements as the Company deems appropriate.

     Section 18. This option shall not be exercisable if such exercise would violate:

(a)	Any applicable state securities law;
(b)	Any applicable registration or other requirements under the Securities Act of 1933, as amended (the “Act”), the Securities Exchange Act of 1934, as amended, or applicable listing requirements of any stock exchange; or
(c)	Any applicable legal requirement of any other governmental authority.

     The Company agrees to make reasonable efforts to comply with the foregoing laws and requirements so as to permit the exercise of this option. Furthermore, if a registration statement with respect to the shares to be issued upon the exercise of this option is not in effect or if counsel for the Company deems it necessary or desirable in order to avoid possible violation of the Act, the Company may require, as a condition to its issuance and delivery of certificates for the shares, the delivery to the Company of a commitment in writing by the person exercising the option that at the time of such exercise it is such person’s intention to acquire such shares for

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such person’s own account for investment only and not with a view to, or for resale in connection with, the distribution thereof; that such person understands the shares may be “restricted securities” as defined in Rule 144 of the Securities and Exchange Commission; and that any resale, transfer or other disposition of said shares will be accomplished only in compliance with Rule 144, the Act, or the other rules and regulations thereunder. The Company may place on the certificates evidencing such shares an appropriate legend reflecting the aforesaid commitment and the Company may refuse to permit transfer of such certificates until it has been furnished evidence satisfactory to it that no violation of the Act or the rules and regulations thereunder would be involved in such transfer.

     Section 19. This Agreement is subject to the terms of the Plan. If there is any inconsistency between this Agreement and the Plan, the Plan shall govern.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate as of the day and year first above written.

“PARTICIPANT”	OM GROUP, INC.
By:	By:
Title:	Title:

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EX-10.33

Exhibit 10.33

AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT

     This Amended and Restated Change in Control Agreement (this “Agreement”), dated as of ________________ __, 20__, is made by and between OM Group, Inc., a Delaware corporation (the “Company”), and ____________________ (the “Executive”).

     WHEREAS, the Company considers it essential to the best interest of the Company and its stockholders that its management be encouraged to remain with the Company and to continue to devote its full attention to the Company’s business;

     WHEREAS, the Company recognizes that the possibility of a change in control may occur and that the uncertainty arising as a result of a potential change in control may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

     WHEREAS, the Company’s Board of Directors (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of a potential Change in Control; and

     WHEREAS, the Executive has advised the Company that, in consideration of, among other things, the Company’s entering into this Agreement with the Executive, it is Executive’s present intention to remain in the employ of the Company unless and until a Change in Control occurs; and

     WHEREAS, the Company and the Executive desire for this Amended and Restated Change in Control Agreement to amend and supersede the Change in Control Agreement, dated June 8, 2005, between the Company and the Executive (the “Prior Agreement”) and any other Change in Control Agreements entered into prior to the date hereof;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

     1. Definitions.

          (a) “Additional Compensation” has the meaning set forth in Section 5(d).

          (b) “Affiliate” means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person or entity specified.

          (c) “Agreement” has the meaning set forth in the Preamble.

          (d) “Base Compensation” has the meaning set forth in Section 5(d).

          (e) “Board” has the meaning set forth in the recitals.

          (f) “Business Combination” has the meaning set forth in Section 1(h).

          (g) “Cause” means (i) the willful and continued failure by the Executive to perform his/her duties with the Company or one of its Affiliates (other than for Death, Disability or Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board that specifically identifies the manner in which the Board believes the Executive has failed to perform his/her duties, or (ii) illegal conduct or gross misconduct by the Executive involving moral turpitude that is materially and demonstrably injurious to the Company. For purposes of clause (ii) of the preceding sentence, no act or failure to act shall constitute “cause” unless it is done, or omitted to be done, in bad faith or without Executive’s reasonable belief that such action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given Executive pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be undertaken in good faith and in the best interests of the Company;

          (h) “Change in Control” means the occurrence of any of the following: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 33% or more of the then outstanding Voting Shares; provided, however, that the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; or (4) any acquisition by any Person pursuant to a transaction that complies with clauses (A), (B) and (C) of Section 1(h)(iii) below; or (ii) individuals who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual was a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Voting Shares immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) in

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substantially the same proportions relative to each other as their ownership immediately prior to such Business Combination of the Voting Shares, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board providing for such Business Combination; or (iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

          (i) “COBRA Period” has the meaning set forth in Section 6(a).

          (j) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          (k) “Company” means OM Group, Inc., a Delaware corporation, and any successor to its business and/or assets which executes and delivers the agreement provided for in Section 12 of this Agreement or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (l) “Company Shares” has the meaning set forth in Section 5(e).

          (m) “Disability” has the meaning set forth in Section 4(c).

          (n) “Effective Date” has the meaning set forth in Section 3(b).

          (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (p) “Excise Tax” has the meaning set forth in Section 10(a).

          (q) “Executive” has the meaning set forth in the Preamble.

          (r) “Firm” has the meaning set forth in Section 10(b).

          (s) “Good Reason” means: (i) the assignment of any duties inconsistent with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to continue to provide Executive with an annual base salary, employee benefits and an opportunity to earn incentive and bonus compensation equal or greater to that which was provided to the Executive by the Company immediately prior to the Effective Date, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after the receipt of notice thereof given by the Executive; (iii) the

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Company’s requiring the Executive to be based at or generally work from a primary business location more than 50 miles from the location that the Executive was based at or generally worked from prior to the Effective Date or the Company’s requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; or (iv) any failure by the Company to comply with and satisfy Section 12 of this Agreement.

          (t) “Incumbent Board” has the meaning set forth in Section 1(h).

          (u) “Notice of Termination” has the meaning set forth in Section 4.

          (v) “OMG Related Persons” has the meaning set forth in Section 9(c).

          (w) “Options” has the meaning set forth in Section 5(e).

          (x) “Person” has the meaning set forth in Section 1(h).

          (y) “Prior Agreement” has the meaning set forth in the recitals.

          (z) “Release” has the meaning set forth in Section 5.

          (aa) “Retirement” has the meaning set forth in Section 4(b).

          (bb) “Separation from Service” shall mean a separation from service as such term is defined for purposes of Section 409A of the Code.

          (cc) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns 50% or more of the outstanding securities entitled to vote generally in the election of directors of the entity.

          (dd) “Term” means the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

          (ee) “Termination Date” has the meaning set forth in Section 4.

          (ff) “Voting Shares” means at any time, the then-outstanding securities entitled to vote generally in the election of directors of the Company.

          (gg) “Without Cause” means termination of the Executive’s employment for reasons other than for Death, Retirement, Disability or Cause.

     2. Term. The Term of this Agreement shall commence on the date first written above and shall continue in effect through December 31, 20__; provided, however, that commencing on January 1, 20__ and each January 1 thereafter, the Term shall be automatically extended for one (1) additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given written notice to the other party electing not to extend the Term; and provided further, that if a Change in Control shall have occurred during the Term, the Term shall expire on the last day of the twelfth (12^th) month following the month in

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which such Change in Control occurred. Notwithstanding any other provision hereof, the Term shall expire upon (a) any termination of the Executive’s employment prior to a Change in Control, so long as such termination is not done in anticipation of or in connection with a Change in Control, and (b) the Executive’s death or resignation prior to a Change of Control.

     3. Change in Control.

          (a) No benefits shall be payable hereunder unless a Change in Control occurs, and, during the Term, the Executive’s employment with the Company is terminated either by the Executive for Good Reason or by the Company Without Cause. This Agreement is not intended to apply to termination of the Executive’s employment by reason of death, Disability or Retirement.

          (b) The first date upon which a Change in Control as defined above takes place shall be known as the “Effective Date.” Notwithstanding anything in this Agreement to the contrary, if a Change in Control occurs and if the Executive’s employment with the Company is terminated by the Company prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by the Executive that such termination (i) was at the request of a third party who had taken steps reasonably calculated to effect a Change in Control or (ii) was by the Company and arose with or in anticipation of a Change in Control, then for all purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company Without Cause under Section 4(f) of this Agreement and the “Effective Date” shall mean the date immediately prior to the Termination Date (as defined in Section 4 hereof).

     4. Termination of Employment. The Executive’s employment with the Company shall or may be terminated, as the case may be, for any of the following reasons:

          (a) termination of the Executive’s employment due to the Executive’s death;

          (b) termination of the Executive’s employment by the Executive at or after the attainment of age sixty-five (65) or pursuant to a duly adopted retirement policy of the Company (“Retirement”);

          (c) termination of the Executive’s employment either by the Executive or by the Company after the Executive is physically or mentally incapacitated for a period of one hundred eighty (180) consecutive days such that the Executive cannot substantially perform the Executive’s duties of employment with the Company on a full-time basis (“Disability”);

          (d) the Company may terminate the Executive’s employment at any time for Cause;

          (e) the Executive may terminate his employment for Good Reason; and

          (f) the Company may terminate Executive’s employment at any time Without Cause.

Except in the case of Retirement or death or as otherwise provided in Section 3(b) hereof, termination of the Executive’s employment shall be effective only as of the earliest date

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(hereinafter referred to as the “Termination Date”) specified by either the Executive or the Company in a written notice of termination (“Notice of Termination”) delivered to the other party hereto. Notwithstanding any provision herein to the contrary, if at any time prior to a Change in Control, the Executive receives notice from the Company that the Executive shall be placed in an income continuation status (i.e., where the Company agrees to (i) continue to pay the Executive’s then existing salary or a modified level of salary continuation and/or all or some of the Executive’s then existing employee benefits and (ii) relieve the Executive of the Executive’s obligation to render services to the Company), the Executive’s employment, for the purpose of this Agreement only, shall be deemed terminated as of the date of such notice and no benefits shall be payable to the Executive hereunder.

     5. Severance Pay. If a Change in Control occurs, and, during the Term, Executive’s employment with the Company is terminated either by the Executive for Good Reason or by the Company Without Cause, then in addition to all other benefits that the Executive has earned prior to such termination or to which Executive is otherwise entitled, the Company shall pay to the Executive as severance pay, in a lump sum, the following amounts:

          (a) the Executive’s full base salary earned through the Termination Date at the rate in effect prior to the date Notice of Termination is given, to the extent not theretofore paid;

          (b) the Executive’s bonus for the previously completed fiscal year of the Company, to the extent not theretofore paid;

          (c) the Executive’s target bonus (i.e. based on achievement of performance goals at the 100% level) for the fiscal year in which the Notice of Termination was given, pro rated to reflect the number of days the Executive was employed with the Company during such fiscal year;

          (d) an amount equal to the product of (i) the sum of (x) the higher of the Executive’s annual base salary in effect immediately prior to the Effective Date, or Executive’s annual base salary at the highest rate in effect at any time since any Change in Control and (y) the amount of any Additional Compensation (hereinafter defined) (the sum of such annual base salary and Additional Compensation shall be referred to as Executive’s “Base Compensation”) and (ii) the number two (2). The term “Additional Compensation” means the quotient of (i) the sum of (x) the Executive’s annual (measured by a fiscal year) total incentive compensation, commissions, and bonuses declared and/or received for each of the last three full fiscal years immediately preceding the Effective Date, plus any amounts earned or properly allocable to any of the last three fiscal years immediately preceding the Effective Date that were deferred under any non-qualified deferred compensation program of the Company, and (y) any elective contributions that are made by or on behalf of the Executive under any plan maintained by the Company that are not includible in gross income under Section 125 or 402(e)(3) of the Internal Revenue Code of 1986, as amended from time to time, but excluding moving or educational reimbursement expenses, amounts realized from the exercise of any stock options, sale of restricted stock, and imputed income attributable to any fringe benefit, divided by (ii) three; provided, however, that in the event the Executive was employed by the Company for a period of time less than three full fiscal years immediately preceding the Effective Date, the foregoing

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provisions shall be adjusted to cause Executive’s Additional Compensation to be determined based upon the average of such payments and benefits for the number of full fiscal years immediately preceding the Effective Date in which the Executive was employed by the Company; provided further that in the event the Executive was employed by the Company for a period of time less than one full fiscal year, the foregoing provisions shall be adjusted to cause Executive’s Additional Compensation to be determined based upon the projected target annual payments and benefits that would be provided to the Executive immediately preceding the Effective Date.

          (e) in lieu of shares of common stock of the Company, par value $0.01 per share (“Company Shares”) issuable upon exercise of options (“Options”), if any, granted to the Executive under any Company stock option plan (which Options shall be deemed canceled upon the making of the payment herein referred to), the Executive shall receive an amount in cash equal to the aggregate spread between the exercise prices of all such Options that are outstanding and held by the Executive (whether or not then fully vested or exercisable and taking into account only options as to which the exercise price is less than the higher of (i) or (ii) as set forth below) and the higher of (i) the mean of the high and low trading prices of Company Shares on the New York Stock Exchange on the Termination Date or (ii) the highest price per Company Share actually paid in connection with any Change in Control;

          (f) all unvested shares of restricted stock of the Company, if any, granted to the Executive under any Company equity compensation plan, shall immediately vest and shall be redeemed by the Company for an amount in cash equal to the higher of (i) the mean of the high and low trading prices of Company Shares on the New York Stock Exchange on the Termination Date or (ii) the highest price per Company Share actually paid in connection with any Change in Control;

          (g) an amount of cash equal to any unvested portion of the Executive’s interest in any of the Company’s nonqualified retirement plans or tax-qualified pension plans as of the Termination Date.

The Executive will be required to deliver a written instrument in form and substance reasonably satisfactory to the Company releasing the Company and its Affiliates from any and all claims or causes of action of any kind arising from or relating to the Executive’s employment with the Company (a “Release”) before receiving payments hereunder. The payments described in this Section 5 shall be payable on or before the fifth (5^th) day following the expiration of any revocation period relating to such Release, provided that no payments will be made to Executive until such time as Executive has incurred a Separation from Service with the Company. Notwithstanding anything to the contrary contained in this Section 5, if any payment to the Executive, the payment date of which is determined by reference to the Executive’s termination of employment, would constitute a “deferral of compensation” under Section 409A of the Code and the Executive is a “specified employee” (as such phrase is defined in Section 409A of the Code), the Executive (or the Executive’s beneficiary) will receive payment of the amounts described in this Section 5 upon the earlier of (i) six (6) months following the Executive’s Separation from Service with the Company or (ii) the Executive’s death. The payments described in Sections 5(c)-(g) shall be in lieu of all other severance agreements or arrangements otherwise due to the Executive under any other agreement, plan, arrangement or understanding

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between the Company and the Executive.

     6. Other Benefit Plans. If a Change in Control occurs and, during the Term, Executive’s employment with the Company is terminated either by the Executive for Good Reason or by the Company Without Cause, then:

          (a) For a period of eighteen (18) months following the Termination Date (the “COBRA Period”), the Company will arrange to provide the Executive, at no cost to the Executive, with health benefits substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if greater, immediately prior to the reduction, termination, or denial described in Section 1(s)(ii)), except that the level of such benefit to be provided to the Executive may be reduced in the event of a corresponding reduction generally applicable to all recipients of or participants in such benefits. The COBRA Period shall be considered to be the period during which the Executive shall be eligible for continuation coverage under Section 4980B of the Code, and the Company shall reimburse the Executive for the amount of the premiums for such continuation coverage; provided, however, that without otherwise limiting the purposes or effect of Section 8, the benefits otherwise receivable by the Executive pursuant to this Section 6(a) will be reduced to the extent comparable benefits are actually received by the Executive from another employer during the COBRA Period following the Executive’s Termination Date, and any such benefits actually received by the Executive shall be reported by the Executive to the Company. If and to the extent that any benefit described in this Section 6(a) is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or any Subsidiary, as the case may be, then the Company will itself pay or provide for the payment to the Executive, his dependents and beneficiaries, of such benefits. Notwithstanding the foregoing, if the Company determines that the provision of benefits under this Section 6(a) is likely to result in negative tax consequences to the Executive, the Company will use its reasonable best efforts to make other arrangements to provide a substantially similar benefit to the Executive that does not have such negative tax consequences, which may include (i) making a lump sum payment at the earliest time permitted under Section 409A of the Code, in an amount equal to the Company’s reasonable determination of the present value of any such benefits that, if provided, would result in negative tax consequences to the Executive and/or (ii) providing such benefit through insurance coverage on the Executive’s behalf.

          (b) The Executive will also be entitled to (i) a lump sum payment in an amount equal to the present value of the cost of health coverage for an additional six months, provided that if the payment described in this Section 6(b)(i) is subject to tax, the Company will pay to the Executive an additional amount such that after payment by the Executive of all taxes so imposed on such benefits and on such payments, the Executive retains an amount equal to such taxes and (ii) an additional lump sum payment equal to the product of the lump sum payment set forth in Section 5(d) above multiplied by [.15], which payment is intended to cover the cost of continuing, for an additional two years, disability coverage and the other benefit plans, programs and arrangements that the Executive is entitled to participate in during his or her employment with the Company. The payments provided for in this Section 6(b) will only be made to Executive in the event and at the time that Executive incurs a Separation from Service with the Company.

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          (c) For a period of twenty-four (24) months following the Termination Date, the Company will arrange to provide the Executive with term life insurance benefits substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date (or, if greater, immediately prior to the reduction, termination, or denial described in Section 1(s)(ii)), except that the level of such benefit to be provided to the Executive may be reduced in the event of a corresponding reduction generally applicable to all recipients of or participants in such benefits. Without otherwise limiting the purposes or effect of Section 8, benefits otherwise receivable by the Executive pursuant to this Section 6(c) will be reduced to the extent comparable benefits are actually received by the Executive from another employer during the Continuation Period following the Executive’s Termination Date, and any such benefits actually received by the Executive shall be reported by the Executive to the Company.

     7. Outplacement Services. If a Change in Control occurs, and, during the Term, the Executive’s employment with the Company is terminated either by the Executive for Good Reason or by the Company Without Cause, the Company shall provide the Executive reasonable outplacement services for a period of up to one year of a nature customarily provided at the Executive’s executive officer level.

     8. No Mitigation Required. The Executive shall not be required to mitigate the amount of any payment or benefit provided for in Section 5 or 6 by seeking other employment or otherwise. Notwithstanding the foregoing, benefits otherwise receivable under Section 6 of this Agreement shall be reduced to the extent that and for any period during which the Executive is eligible to receive substantially similar benefits from another employer.

     9. Restrictive Covenants of the Executive.

          (a) Noncompetition. If a Change in Control occurs, and, during the Term, Executive’s employment with the Company is terminated either by the Executive for Good Reason or by the Company Without Cause, and the Executive is receiving payments from the Company pursuant to this Agreement, then for a period of one (1) year from the Termination Date, the Executive agrees not to, without the written consent of the Company, either directly or indirectly, engage in, make any investment in, advise or consult with, assist or render any services to any person or entity in competition with the business of the Company or its subsidiaries. Notwithstanding the foregoing, the Executive may own less than one (1) percent of the combined voting power of all issued and outstanding voting securities of any publicly-held corporation whose stock is traded on a major stock exchange or quoted on NASDAQ.

          (b) Confidential Information. Executive hereby agrees that the Executive shall not at any time (whether employed by the Company or not), either directly or indirectly, disclose or make known to any person or entity or use any confidential information, trade secret, or proprietary information that the Executive acquired during the course of the Executive’s employment with the Company that has not become public knowledge (other than by the Executive’s actions in violation of this Agreement). Executive further agrees that upon the termination of the Executive’s employment with the Company, or at any time upon the request of the Company, Executive shall deliver to the Company any and all literature, documents, correspondence, and other materials and records furnished to the Executive by the Company during the course of the Executive’s employment with the Company. In no event shall an

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asserted violation of the provisions of this Section 9(b) constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

          (c) Non-Disparagement. The Executive agrees that during his employment and at all times thereafter, he will not, unless compelled by a court or governmental agency, make, or cause to be made, any statement, observation or opinion, or communicate any information (whether oral or written) regarding the Company, or its Affiliates, together with their respective directors, partners, officers or employees (such entities, collectively, the “OMG Related Persons”), which disparages the reputation or business of the Company or the OMG Related Persons; provided, however, that such restriction shall not apply to statements, observations, opinions or communications made in good faith in the fulfillment of the Executive’s duties with the Company; and provided further, that such restriction shall cease to apply and shall be of no further force and effect from and after the occurrence of a Change of Control.

     10. Additional Payments.

          (a) Notwithstanding anything in this Agreement to the contrary, in the event it is determined (in the manner provided herein) that any payment or distribution to or for Executive’s benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement or similar right would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any successor provision thereto), Executive shall have the choice either to (i) surrender any payment (or portion thereof) or benefit provided hereunder in an amount or amounts sufficient to ensure that Executive does not receive any “excess parachute payments” as such term is defined in Section 280G of the Code or (ii) receive all payments and benefits provided hereunder and, in such case, Executive will be responsible for paying the Excise Tax (which Excise Tax shall be paid through the Company’s withholding of such tax from the payments or benefits provided to Executive pursuant to the terms of this Agreement or otherwise).

          (b) All determinations required to be made under this Section 10, (including whether an Excise Tax is payable by the Executive and the amount of such Excise Tax) shall be made by a nationally-recognized legal or accounting firm (the “Firm”) mutually agreeable to both the Executive and the Company. The Firm will submit its determination and detailed supporting calculations to both Executive and the Company within fifteen (15) calendar days after the Termination Date, if applicable, or such earlier time or times as may be requested by the Executive or the Company. If the Firm determines that no Excise Tax is payable by the Executive, it shall, at the same time as it makes such determination, furnish the Executive and Company with an opinion that both Executive and Company have substantial authority not to report any Excise Tax on any income or employment tax return.

          (c) The Executive and the Company shall each provide the Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Firm, and otherwise cooperate with the Firm in connection with the preparation and issuance of the determination contemplated by Section 10(b) hereof.

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          (d) The fees and expenses of the Firm for its services in connection with the determinations and calculations contemplated by Section 10(b) hereof shall be borne by the Company. If such fees and expenses are initially paid by the Executive, the Company shall reimburse the Executive the full amount of such fees and expenses within five business days after receipt from the Executive of a statement therefor and reasonable evidence of the Executive’s payment thereof.

     11. Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company reasonably determines to be required pursuant to any law or government regulation, order or ruling.

     12. Successors, Binding Agreement. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if the Company had terminated the Executive’s employment Without Cause after a Change in Control occurring at the time of succession, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Termination Date. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devises, legates, or other designee or, if there be no such designee, to the Executive’s estate.

     13. 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 or mailed by (i) United States registered mail, return receipt requested, postage prepaid, or (ii) reputable overnight courier service (i.e. Federal Express), in each case, addressed to the respective address set forth in this Section 13 or to 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:

To the Company:	OM Group, Inc.
	1500 Key Tower
	127 Public Square
	Cleveland, OH 44114
	Attn: General Counsel
To the Executive:	_____________________
	_____________________
	_____________________

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     14. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by the Executive and such officer as may be specifically designated by the Board; provided, that the Company shall have the right to terminate its obligations to the Executive under this Agreement by written notice given to the Executive at any time prior to a Change in Control, so long as such termination is not done in anticipation of or in connection with a Change in Control. No waiver by either party hereto at any time of any breach by the other party hereto 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 or at any prior or subsequent time. This Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject matter hereof and, except to the extent a specific compensation program provides for benefits upon a change in control relative to that program, which provisions shall remain in effect, no agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. Without limiting the generality of the foregoing, this Agreement supersedes and replaces in its entirety any prior agreement relating to the subject matter hereof, including, without limitation, the Prior Agreement.

     15. Validity. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

     16. Counterparts. This Agreement may be executed in one or more counterparts, any of which may be executed and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument.

     17. Jurisdiction, Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. In the event of any dispute or controversy arising under or in connection with this Agreement Executive and the Company hereby irrevocably consent to the jurisdiction of the Common Pleas Court of the State of Ohio (Cuyahoga County) or the United States District Court for the Northern District of Ohio.

     18. Legal Fees and Expenses.

          (a) It is the intent of the Company that the Executive not be required to incur the legal expenses associated with (i) the interpretation of any provision in, or obtaining of any right or benefit under, this Agreement or (ii) the enforcement of his rights under this Agreement by litigation or other legal action, because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, the Company irrevocably authorizes the Executive from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Executive in connection with the interpretation or enforcement of this Agreement, including the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the

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Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel. The Company shall pay or cause to be paid and shall be solely responsible for any and all attorneys’ and related fees and expenses incurred by the Executive under this Section 18, but only if, and to the extent and at the earliest date(s) that, such actions are determined to be permitted without violating Section 409A of the Code.

          (b) Without limiting the obligations of the Company pursuant to Section 18(a), in the event a Change in Control occurs, the performance of the Company’s obligations under Sections 5, 6 and 7 and this Section 18 will be secured by amounts deposited or to be deposited in trust pursuant to certain trust agreements to which the Company will be a party providing that the benefits to be paid pursuant to Sections 5,6 and 7 and the fees and expenses of counsel selected from time to time by the Executive pursuant to Section 18(a) will be paid, or reimbursed to the Executive if paid by the Executive, either in accordance with the terms of such trust agreements, or, if not so provided, on a regular, periodic basis upon presentation by the Executive to the trustee of a statement or statements prepared by such counsel in accordance with its customary practices. Any failure by the Company to satisfy any of its obligations under this Section 18(b) will not limit the rights of the Executive hereunder. Subject to the foregoing, the Executive will have the status of a general unsecured creditor of the Company and will have no right to, or security interest in, any assets of the Company or any Subsidiary.

     19. Section 409A of the Code. To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A of the Code. To the extent any provision in this Agreement is or will be in violation of Section 409A of the Code, the Agreement shall be amended in such manner as the parties may agree such that the Agreement is or remains in compliance with Section 409A and the intent of the parties is maintained to the maximum extent possible. In particular, to the extent that the Executive becomes entitled to a payment or benefit under this Agreement that would constitute a “deferral of compensation” under Section 409A of the Code and the date that the payment would be made or benefit provided does not constitute a permitted distribution date under Section 409A(a)(2) of the Code, then notwithstanding anything to the contrary in this Agreement, such payment or benefit will be made or provided, to the extent necessary to comply with the provisions of Section 409A of the Code, to the Executive on the earlier of (a) the Executive’s Separation from Service with the Company; provided, however, that if the Executive is a “specified employee” (within the meaning of Section 409A), the Executive’s date of payment shall be the date that is six months after the date of the Executive’s Separation from Service with the Company, or (b) the Executive’s death. Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

OM GROUP, INC
By:
	Name:
	Title:

ACCEPTED AND AGREED TO AS OF THIS __ DAY OF _______________, 20__

__________________________________________
Executive

EX-21

Exhibit 21

NAME OF SUBSIDIARY	JURISDICTION OF ORGANIZATION
Compugraphics International Limited	United Kingdom
Compugraphics USA Inc.	Delaware
Cyantek Corporation	Delaware
Diehl & EaglePicher GmbH	Germany
EaglePicher Energy Products, ULC	Canada
EaglePicher Medical Power, LLC	Delaware
EaglePicher Technologies, LLC	Delaware
EPEP Holding Co., LLC	Delaware
Groupement Pour Le Traitement Du terril De Lubumbashi (55%)	Jersey, Channel Islands
Harko CV	Netherlands
Key Professional Services Ltd.	Gibraltar
O.M.G. Chemicals (S) Pte. Ltd	Singapore
OM Group (Suzhou) Electronic Chemicals Co. Ltd.	China
OM Group Ultra Pure Chemicals Limited	United Kingdom
OM Group Ultra Pure Chemicals Pte. Ltd.	Singapore
OM Group Ultra Pure Chemicals SAS	France
OM Group Ultra Pure Chemicals Sdn Bhd	Malaysia
OMG (Asia) Electronic Chemicals Co., Ltd.	Taiwan
OMG (Shanghai) Trading Co., Ltd.	China
OMG (Suzhou) Electronic Chemicals Co., Ltd.	China
OMG Americas, Inc.	Ohio
OMG Belleville Limited	Canada
OMG Borchers GmbH	Germany
OMG Borchers SAS	France
OMG Electronic Chemicals (M) Sdn Bhd	Malaysia
OMG Electronic Chemicals Pte. Ltd.	Singapore
OMG Electronic Chemicals, LLC	Delaware
OMG Energy Holdings, Inc.	Delaware
OMG Europe GmbH	Germany
OMG Finland Oy	Finland
OMG Harjavalta Chemicals Holding BV	Netherlands
OMG Harko Holdings, LLC	Delaware
OMG Japan, Inc.	Japan
OMG Kokkola Chemicals Holding (Two) BV	Netherlands
OMG Kokkola Chemicals Oy	Finland
OMG UK Limited	United Kingdom
Societe Congolaise Pour le Traitement du Terril de Lubumbashi (49%), SPRL	Democratic Republic of Congo

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements of our reports dated February 24, 2011, with respect to the consolidated financial statements and schedule of OM Group, Inc. and Subsidiaries, and the effectiveness of internal control over financial reporting of OM Group, Inc. and Subsidiaries included in this Annual Report (Form 10-K) for the year ended December 31, 2010:

Registration
Statement	Description	Filing Date
333-07531	OM Group, Inc. Non-Employee Directors’ Equity Compensation Plan—Form S-8 Registration Statement—250,000 Shares	July 3, 1996
333-47230	OM Group, Inc. 1998 Long-Term Incentive Compensation Plan—Form S-8 Registration Statement—2,000,000 Shares	October 3, 2000
333-65852	OM Group, Inc. 1998 Long-Term Incentive Compensation Plan—Form S-8 Registration Statement—2,000,000 Shares	July 25, 2001
333-141033	OM Group, Inc. 2002 Stock Incentive Plan and Inducement Stock Option Grant to Joseph M. Scaminace—Form S-8 Registration Statement—1,488,934 Shares	March 2, 2007
333-145238	OM Group, Inc. 2007 Incentive Compensation Plan—Form S-8 Registration Statement —3,000,000 Shares	August 8, 2007

/s/ Ernst & Young LLP

Cleveland, Ohio
February 24, 2011

EX-24

Exhibit 24

POWER OF ATTORNEY

     The undersigned director of OM Group, Inc. (the “Company”), a Delaware corporation, which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010, hereby constitutes and appoints JOSEPH M. SCAMINACE and KENNETH HABER, with full power of substitution and resubstitution, as attorney to sign for the undersigned and in his or her name, place and stead, as director of said Company, said Annual Report and any and all amendments and exhibits thereto, and any and all applications and documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as the undersigned could do if personally present, hereby approving the acts of said attorney and any such substitute.

     IN WITNESS WHEREOF, this Power of Attorney has been signed this 8 day of February, 2011.

/s/ Richard W. Blackburn  

Richard W. Blackburn 

POWER OF ATTORNEY

     The undersigned director of OM Group, Inc. (the “Company”), a Delaware corporation, which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010, hereby constitutes and appoints JOSEPH M. SCAMINACE and KENNETH HABER, with full power of substitution and resubstitution, as attorney to sign for the undersigned and in his or her name, place and stead, as director of said Company, said Annual Report and any and all amendments and exhibits thereto, and any and all applications and documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as the undersigned could do if personally present, hereby approving the acts of said attorney and any such substitute.

     IN WITNESS WHEREOF, this Power of Attorney has been signed this 16 day of February, 2011.

/s/ Gordon A. Ulsh  

Gordon A. Ulsh 

POWER OF ATTORNEY

     The undersigned director of OM Group, Inc. (the “Company”), a Delaware corporation, which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010, hereby constitutes and appoints JOSEPH M. SCAMINACE and KENNETH HABER, with full power of substitution and resubstitution, as attorney to sign for the undersigned and in his or her name, place and stead, as director of said Company, said Annual Report and any and all amendments and exhibits thereto, and any and all applications and documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as the undersigned could do if personally present, hereby approving the acts of said attorney and any such substitute.

     IN WITNESS WHEREOF, this Power of Attorney has been signed this 8 day of February, 2011.

/s/ Steven J. Demetriou  

Steven J. Demetriou 

POWER OF ATTORNEY

     The undersigned director of OM Group, Inc. (the “Company”), a Delaware corporation, which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010, hereby constitutes and appoints JOSEPH M. SCAMINACE and KENNETH HABER, with full power of substitution and resubstitution, as attorney to sign for the undersigned and in his or her name, place and stead, as director of said Company, said Annual Report and any and all amendments and exhibits thereto, and any and all applications and documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as the undersigned could do if personally present, hereby approving the acts of said attorney and any such substitute.

     IN WITNESS WHEREOF, this Power of Attorney has been signed this 8 day of February, 2011.

/s/ Katharine L. Plourde  

Katharine L. Plourde 

POWER OF ATTORNEY

     The undersigned director of OM Group, Inc. (the “Company”), a Delaware corporation, which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010, hereby constitutes and appoints JOSEPH M. SCAMINACE and KENNETH HABER, with full power of substitution and resubstitution, as attorney to sign for the undersigned and in his or her name, place and stead, as director of said Company, said Annual Report and any and all amendments and exhibits thereto, and any and all applications and documents to be filed with the Securities and Exchange Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as the undersigned could do if personally present, hereby approving the acts of said attorney and any such substitute.

     IN WITNESS WHEREOF, this Power of Attorney has been signed this 8 day of February, 2011.

/s/ William J. Reidy  

William J. Reidy 

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joseph Scaminace, certify that:

1.	I have reviewed this report on Form 10-K of OM Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2011

/s/  Joseph Scaminace

Joseph Scaminace

Chairman of the Board and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kenneth Haber, certify that:

1.	I have reviewed this report on Form 10-K of OM Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2011

/s/  Kenneth Haber

Kenneth Haber

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SEC. 1350, AS ADOPTED PURSUANT TO
SEC. 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing with the Securities and Exchange Commission of the Annual Report on Form 10-K of OM Group, Inc. (the “Company”) for the year ended December 31, 2010 (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 24, 2011

/s/  Joseph Scaminace

Joseph Scaminace

Chairman of the Board and

Chief Executive Officer

/s/  Kenneth Haber

Kenneth Haber
Chief Financial Officer