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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<TABLE>
<CAPTION>
FORM 10-K
(Mark one)
<S> <C>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
</TABLE>
For the transition period from ___________ to _________
Commission File Number: 0-15661
AMCOL INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 36-0724340
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
One North Arlington, 1500 West Shure Drive, Suite 500
Arlington Heights, Illinois 60004-7803
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (847) 394-8730
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
$.01 par value Common Stock
(Title of Class)
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 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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]
The aggregate market value of the $.01 par value Common Stock, held by
non-affiliates of the registrant on March 15, 1996, based upon the closing sale
price on that date as reported in The Wall Street Journal was approximately
$275,821,000.
Registrant had 19,177,407 shares of $.01 par value Common Stock,
outstanding as of March 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be dated on or about April 8, 1996, are
incorporated by reference into Part III hereof.
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<PAGE>
PART I
Item 1. Business
INTRODUCTION
AMCOL International Corporation was originally incorporated in South Dakota
in 1924 as the Bentonite Mining & Manufacturing Co. Its name was changed to
American Colloid Company in 1927, and in 1959, the Company was reincorporated in
Delaware. In 1995, its name was changed to AMCOL International Corporation.
Except as otherwise noted, or indicated by context, the term "Company" refers to
AMCOL International Corporation and its subsidiaries.
The Company may be generally divided into three principal categories of
operations; minerals, absorbent polymers and environmental. The Company also
operates a transportation business primarily for delivery of its own products.
In general, the Company's products are used for their liquid-absorption
properties. The Company is a leading producer of bentonite products, which have
a variety of applications, including use as a bonding agent to form sand molds
for metal castings, as a cat litter, as a moisture barrier in commercial
construction and landfills, and in a variety of other industrial, commercial and
agricultural applications. The Company also manufactures absorbent polymers,
predominantly superabsorbent polymers, for use in disposable baby diapers and
other personal care items, such as adult incontinence and feminine hygiene
products.
The following table sets forth the percentage contributions to net sales of
the Company attributable to its mineral, absorbent polymer, environmental and
transportation segments for the last five calendar years.
<TABLE>
<CAPTION>
Percentage of Sales
-------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Minerals ............................... 44.5% 58.2% 59.3% 63.3% 66.4%
Absorbent polymers ...................... 34.7 22.1 23.6 17.1 12.9
Environmental ........................... 14.5 11.6 9.2 10.4 11.3
Transportation........................... 6.3 8.1 7.9 9.2 9.4
------ ------ ------ ------ ------
100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ======
</TABLE>
Net revenues, operating profit and identifiable assets attributable to each
of the Company's business segments are set forth in Note 2 of the Company's
Notes to Consolidated Financial Statements included elsewhere herein, which Note
is incorporated herein by reference.
MINERALS
The Company's mineral business is principally conducted through American
Colloid Company in the United States and Volclay Limited in the United Kingdom.
Commercially produced bentonite is a type of montmorillonite clay found in
beds ranging in thickness from two to ten feet under overburden of up to 120
feet. There are two basic types of bentonite, each having different chemical and
physical properties. These are commonly known as sodium (western) bentonite and
calcium (southern) bentonite. A third type of clay, a less pure variety of
calcium montmorillonite called fuller's earth, is used as a form of cat litter
and as a carrier for agri-chemicals in addition to other minor applications.
The Company's principal bentonite products are marketed under various
internationally registered trade names, including VOLCLAY and PANTHER CREEK.
The Company's cat litter is sold under various trade names and private labels.
<PAGE>
Principal Markets and Products
Durable Goods
Metalcasting. In the formation of sand molds for metal castings, sand is
bonded with bentonite and various other additives to yield the desired casting
form and surface finish. The Company produces blended mineral binders containing
sodium and calcium bentonites, sold under the trade name ADDITROL. In
addition, several high-performance specialty products are sold to foundries and
companies that service foundries.
Iron Ore Pelletizing. The Company is a major supplier of sodium bentonite
for use as a pelletizing aid in the production of taconite pellets in North
America.
Well Drilling. Sodium bentonite and leonardite are ingredients of drilling
mud, which allow rock cuttings to be suspended and brought to the surface in oil
and gas well drilling. Drilling mud lubricates the drilling bit and coats the
underground formations to prevent hole collapse and drill bit seizing. The
Company's primary trademark for this application is PREMIUM GEL.
Other Industrial. The Company is a supplier of fuller's earth products for
use as an oil and grease absorbent in industrial applications. It also produces
bentonite and bentonite blends for the construction industry, which are used as
a plasticizing agent in cement, plaster and bricks, and as an emulsifier in
asphalt.
Consumable Goods
Cat Litter. The Company produces two types of cat litter products, a
fuller's earth-based (traditional) product and a sodium bentonite-based
scoopable (clumping) litter. The Company's scoopable products' clump-forming
capability traps urine, allowing for easy removal of the odor-producing elements
from the litter box. Scoopable litter has grown to 42% of the U.S. grocery
market for cat litter in 1995 from 0.4% in 1989. Both types of products are sold
primarily to private label grocery and mass merchandisers, though the Company
also sells its own brands to the grocery, pet store and mass markets. The
Company's products are marketed under various trade names.
Fine Chemicals. Purified grades of sodium bentonite are marketed to the
pharmaceutical and cosmetics industries. Small amounts of purified bentonite act
as a binding agent for pharmaceutical tablets, and bentonite's expansion quality
also aids in tablet disintegration. Bentonite also acts as a suspension agent
and thickener in lotions and has a variety of other specialized uses as a flow
control additive. Calcium bentonite is used as a catalyst or as a clarifying
agent for edible oils, fats, dimer acids and petroleum products.
Agricultural. Sodium bentonite, calcium bentonite and fuller's earth are
sold as pelletizing aids in livestock feed and as anticaking agents for feeds
during storage or in transit. Fuller's earth and sodium bentonite are used as
carriers for agri-chemicals. Fuller's earth is also used as a drying agent in
blending liquid and dry fertilizers prior to application.
Sales and Distribution
In 1995, the top two customers accounted for approximately 9% of the
Company's mineral sales, and the top five customers accounted for approximately
16% of such sales. Products are sold domestically and internationally to
approximately 3,700 customers.
The Company has established industry-specialized sales groups staffed with
technically-oriented salespersons serving each of the Company's major markets.
Certain groups have networks of distributors and representatives, including
companies that warehouse at strategic locations.
Most of its customers in the metalcasting industry are served on a direct
basis by teams of Company sales, technical and manufacturing personnel. The
Company also provides training courses and laboratory testing for customers who
use the Company's products in the metalcasting process.
<PAGE>
Sales to the oil well drilling industry are primarily made directly to oil
well drilling mud service companies, both under the Company's tradename and
under private label. Because bentonite is a major component of drilling muds,
two service companies have captive bentonite operations. The Company's potential
market is, therefore, generally limited to those oil well service organizations
which are not vertically integrated, or do not have long-term supply
arrangements with other producers.
Sales to the cat litter market are made on a direct basis and through
industry brokers. All sales to the iron ore pelletizing industry are made
directly to the end user. Sales to the Company's remaining markets are made
primarily through independent distributors and representatives.
Competition
Bentonite. The Company is one of the largest producers of bentonite
products in the United States. There are at least four other major domestic
producers of sodium bentonite and at least one other major domestic producer of
calcium bentonite. Two of the domestic producers are companies primarily in
other lines of business and have substantially greater financial resources than
the Company. There also is substantial global competition. The Company's
bentonite processing plants in the United Kingdom and Australia compete with a
total of six U.K. and Australian processors. Competition in both the Company's
domestic and international markets is essentially a matter of product quality,
price, delivery, service and technical support, and it historically has been
very vigorous.
Fuller's Earth. There are approximately ten major competitors in the United
States, some of which are larger and have substantially greater financial
resources than the Company. Price, service, product quality and geographical
proximity to the market are the principal methods of competition in the
Company's markets for fuller's earth.
Seasonality
Although business activities in certain of the industries in which the
Company's mineral products are sold (such as well drilling) are subject to
factors such as weather conditions, the Company does not consider its mineral
business as a whole to be seasonal.
ENVIRONMENTAL
Principal Products and Markets
Through its wholly owned subsidiary, Colloid Environmental Technologies
Company (CETCO), the Company sells sodium bentonite, products containing sodium
bentonite and various other products and equipment for use in environmental and
construction applications.
CETCO sells bentonite, and its geosynthetic clay liner products under the
BENTOMAT and CLAYMAX trade names, for lining and capping landfills and for
containment in tank farms, leach pads, waste stabilization lagoons and
decorative ponds.
The Company's VOLCLAY Waterproofing System is sold to the non-residential
construction industry. This line includes a product sold under the registered
trade name VOLCLAY PANELS consisting of biodegradable cardboard panels filled
with sodium bentonite installed to prevent leakage through underground
foundation walls. A waterproofing liner product with the trade name VOLTEX, a
joint sealant product with the trade name WATERSTOP-RX and a waterproofing
membrane for concrete split slabs and plaza areas sold under the trade name
VOLCLAY SWELLTITE, round out the principal components of the product line.
CETCO sells elastomeric urethane coatings for use in vehicular traffic
decks, roofs, balconies and pedestrian walkways. The products, sold under the
trade name ACCOGUARD, are among the more environmentally friendly primers and
coatings available to the construction industry.
CETCO's drilling products are used to install monitoring wells and water
wells, rehabilitate existing water wells and seal abandoned exploration drill
holes. VOLCLAY GROUT, BENTOGROUT and VOLCLAY Tablets are among the trade
names for products used in these applications.
<PAGE>
Bentonite-based flocculents and customized equipment are used to remove
emulsified oils and heavy metals from wastewater. Bentonite-based products are
formulated to solidify liquid waste for proper disposal in landfills. These
products are sold primarily under the SYSTEM-AC, RM10 and SORBOND trade
names.
CETCO also specializes in providing absorption equipment and services to
the environmental remediation industry, water treatment systems employing
dissolved air flotation technology and activated carbon purification systems for
the beverage and municipal water treatment industries. Its operations include a
fully equipped engineering and fabrication facility for producing pressure
vessels used in filtration applications. In addition, a network of regional
service centers provides services and distribution to support markets such as
remediation of petroleum-contaminated groundwater. The Company acquired a carbon
regeneration facility during 1995, allowing for the regeneration and reuse of
spent carbon obtained from its service centers.
Competition
CETCO has four principal competitors in the geosynthetic clay liner market.
The construction and wastewater treatment product lines are niche businesses
which compete primarily with alternative technologies. The service center
remediation business has three major competitors, one of which is substantially
larger and with greater resources. The groundwater monitoring, well drilling and
sealants products compete with the Company's traditional rivals in the sodium
bentonite business. Competition is based on product quality, service, price,
technical support and availability of product. Historically, the competition has
been very vigorous.
Sales and Distribution
In 1995, no customer accounted for more than 5% of environmental sales.
CETCO products are sold domestically and internationally. CETCO sells most of
its products through independent distributors and commissioned representatives.
Contract remediation work is done on a direct basis working with consulting
engineers engaged by the customers.
CETCO employs technically oriented marketing personnel to support its
network of distributors and representatives. In the service center business,
salespersons develop business in the regional markets to supplement contract
remediation work performed for national accounts.
Seasonality
Much of the business in the environmental sector is impacted by weather and
soil conditions. Many of the products cannot be applied in harsh weather
conditions and, as such, sales and profits tend to be stronger April through
October. As a result, the Company considers this segment to be seasonal.
Research and Development
The minerals and environmental segments share research and laboratory
facilities. Both CETCO and the U.K. minerals operation have independent research
capabilities. Technological developments are shared between the companies,
subject to license agreements where appropriate.
Mineral Reserves
Both the mineral and environmental segments have sodium bentonite reserves
and processing plants. The discussion of mineral reserves which follows applies
to both units.
<PAGE>
MINERALS/ENVIRONMENTAL COMMON OPERATIONAL FUNCTIONS
Mineral Reserves
The Company has reserves of sodium and calcium bentonite at various
locations in Wyoming, South Dakota, Montana, Nevada and Alabama, and reserves of
fuller's earth in Tennessee and Illinois. At 1995 consumption rates, based on
internal estimates, the Company believes that its proven reserves of
commercially usable sodium bentonite will be adequate for approximately 30 years
(although reserves for certain specialty uses differ significantly from this
30-year period) and that its proven reserves of calcium bentonite and fuller's
earth will be adequate for approximately 20 years and in excess of 40 years,
respectively. While the Company, based upon its experience, believes that its
reserve estimates are reasonable and its title and mining rights to its reserves
are valid, the Company has not obtained any independent verification of such
reserve estimates or such title or mining rights. The Company owns or controls
the properties on which its reserves are located through long-term leases,
royalty agreements and patented and unpatented mining claims. A majority of the
Company's bentonite reserves are owned. All of the properties on which the
Company's reserves are located are either physically accessible for the purposes
of mining and hauling, or the cost of obtaining physical access would not be
material.
Of the total reserves, approximately 20% are located on unpatented mining
claims owned or leased by the Company, on which the Company has the right to
undertake regular mining activity. To retain possessory rights, a fee of $100
per year for each unpatented mining claim is required. The validity of title to
unpatented mining claims is dependent upon numerous factual matters. The Company
believes that the unpatented mining claims which it owns have been located in
compliance with all applicable federal, state and local mining laws, rules and
regulations. The Company is not aware of any material conflicts with other
parties concerning its claims. From time to time, members of Congress as well as
members of the executive branch of the federal government have proposed
amendments to existing federal mining laws. The various amendments would have
had a prospective effect on mining operations on federal lands and include,
among other things, the imposition of royalty fees on the mining of unpatented
claims, the elimination or restructuring of the patent system and an increase in
fees for the maintenance of unpatented claims. To the extent that future
proposals may result in the imposition of royalty fees on unpatented lands, the
mining of the Company's unpatented claims may become uneconomic, and royalty
rates for privately leased lands may be affected. The Company cannot predict the
form that any amendments might ultimately take or whether or when any such
amendments might be adopted.
The Company's fuller's earth reserves are both owned and leased. The loss
of any of the leased reserves could materially decrease the Company's reserves
of fuller's earth, but it is believed that alternative economical reserves could
be developed.
The Company maintains a continuous program of exploration for additional
reserves and attempts to acquire reserves sufficient to replenish its
consumption each year, but it cannot assure that additional reserves will
continue to become available.
The Company oversees all of its mining operations, including its
exploration activity and the obtaining of necessary state and federal mining
permits.
The following table shows a summary of minerals sold by the Company for the
last five years in short tons:
<TABLE>
<CAPTION>
Tons of Minerals Sold (1)
-------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Sodium Bentonite:
Belle Fourche, SD ............................... 133 203 147 124 96
Upton, WY ....................................... 434 424 351 334 344
Colony, WY ...................................... 809 791 701 776 695
Lovell, WY ...................................... 268 299 273 103 85
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Tons of Minerals Sold (1)
-------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C>
Calcium Bentonite:
Aberdeen, MS .................................... 63 70 61 62 43
Sandy Ridge, AL ................................. 170 174 167 155 142
Fuller's Earth:
Mounds, IL ...................................... 203 242 239 225 211
Paris, TN (2) ................................... 54 52 17 -- --
Leonardite:
Gascoyne, ND .................................... 19 17 15 13 20
<FN>
(1) May include minerals of a different type not mined at this location.
(2) Acquired in 1992 and commenced operations in 1993.
</FN>
</TABLE>
The Company estimates that available supplies of other materials utilized
in its mineral business are sufficient to meet its production requirements for
the foreseeable future.
Mining and Processing
Bentonite. Bentonite is surface mined, generally with large earthmoving
scrapers, and then loaded into trucks and off-highway haul wagons for movement
to the processing plants. The mining and hauling of the Company's clay is done
both by the Company and by independent contractors. Each of the Company's
processing plants generally maintain stock piles of unprocessed clay of
approximately four to eight months' production requirements.
At the processing plants, bentonite is dried, crushed and sent through
grinding mills, where it is sized into shipping form, then chemically modified
where needed and transferred to silos for automatic bagging or shipment in bulk.
Virtually all production is shipped as processed, rather than stored for
inventory.
Fuller's Earth. Fuller's earth is also surface mined using a combination of
scrapers, dozers and loaders. Crude clay is then loaded into dump trucks and
hauled to the processing plant where it is dried or calcined, crushed and
screened. Inventories of unprocessed clay generally are no more than a two-week
supply. Mining is thus performed on a year-round basis.
Product Development and Patents
The Company works actively with customers in each of its major markets in
order to develop commercial applications of specialized grades of bentonite, and
it maintains a bentonite research center and laboratory testing facility
adjacent to its corporate headquarters as well as one in the United Kingdom When
a need for a product which will accomplish a particular goal is perceived, the
Company will work to develop the product, research its marketability and study
the feasibility of its production. The Company will also continue its practice
of co-developing products with customers or others as new needs arise. The
Company's development efforts emphasize markets with which it is familiar and
products for which it believes there is a viable market.
The Company holds a number of U.S. and international patents covering the
use of bentonite and products containing bentonite. The Company follows the
practice of obtaining patents on new developments whenever feasible. The
Company, however, does not consider that any one or more of such patents is
material to its Minerals and Environmental businesses as a whole.
Regulation and Environmental
The Company believes it is in material compliance with applicable
regulations now in effect with respect to surface mining. Since reclamation of
exhausted mining sites has been a regular part of the Company's surface mining
operations for the past 27 years, maintaining compliance with current
regulations has not had a material effect on its mining costs. The costs of
reclamation are reflected in the prices of the bentonite sold.
<PAGE>
The grinding and handling of dried clay is part of the production process,
and, because it generates dust, the Company's mineral processing plants are
subject to applicable clean air standards (including Title V of the Clean Air
Act). All of the Company's plants are equipped with dust collection systems. The
Company has not had and does not presently anticipate any significant problems
in connection with its dust emission, though it expects ongoing expenditures for
the maintenance of its dust collection systems and required annual fees.
The Company's mineral operations are also subject to other federal, state,
local and foreign laws and regulations relating to the environment and to health
and safety matters. Certain of these laws and regulations provide for the
imposition of substantial penalties for non-compliance. While the costs of
compliance with, and penalties imposed under, these laws and regulations have
not had a material adverse effect on the Company, future events, such as changes
in, or modified interpretations of, existing laws and regulations or enforcement
policies or further investigation or evaluation of potential health hazards of
certain products, may give rise to additional compliance and other costs that
could have a material adverse effect on the Company.
ABSORBENT POLYMERS
Since the early 1970s, the Company has utilized a technique called modified
bulk polymerization ("MBP") to manufacture water soluble polymers for the oil
well drilling industry. This technique has been modified to produce
superabsorbent polymers ("SAP"), a category of polymers known for its
extremely high water absorbency. Chemdal Corporation was formed in 1986 to
manufacture and market absorbent polymers, with primary emphasis on SAP. To
date, the Company's sales of SAP have been almost exclusively for use as an
absorbent in personal care products, primarily disposable baby diapers. The
Company produces SAP at its U.S. facility with an annual capacity of 70,000
tons, and at its U.K. facility through Chemdal Limited, with an annual capacity
of 40,000 tons.
Demand for the Company's products in the United States has grown
significantly in recent years as the amount of SAP used in new diaper designs
has increased. SAP is more absorbent than the fluff pulp used in traditional
disposable diapers. The use of SAP in diapers allows for a thinner diaper that
occupies less shelf space in stores and less landfill space. SAP also helps to
hold moisture inside the diaper, thereby causing less irritation to the wearer's
skin and reducing leakage. Based upon the Company's expectations regarding
consumer and retail preferences, the Company believes that SAP will continue to
be used in new diaper designs. While no assurance can be given that markets in
developing countries will follow the trends of developed countries, the Company
also believes that disposable diapers containing increasing amounts of SAP will
gain more acceptance in developing countries as per capita incomes in those
countries rise.
Principal Products and Markets
The Company's SAP is primarily marketed under the trade names ARIDALLAE and
ASAPAE. To date, the Company's customers have been primarily private label and
national brand diaper manufacturers. The Company believes that this segment of
the diaper market has grown faster than the brand name segment, which currently
accounts for the majority of that market. During 1995, the Company began selling
to manufacturers of brand name personal care products and is seeking to increase
its sales to that segment of the market.
Sales and Distribution
The Company sells SAP to the personal care market in the United States on a
direct basis and, in other countries, both on a direct basis and through
distributors. The Company expects to rely increasingly on a direct sales
approach in the personal care market. The Company's direct sales efforts employ
a team approach that includes both technical and marketing representatives. In
1995, the top two customers accounted for approximately 45% of the Company's
polymer sales, and the top five customers accounted for approximately 58% of
such sales.
<PAGE>
Research and Development
The Company continually seeks to improve the performance of its absorbent
polymers. It also intends to pursue additional applications for its absorbent
polymers in other markets either directly, or indirectly through marketing or
distribution arrangements. Polymers also have applications in water treatment
and in cosmetics, and acrylic-based polymers can be used in the newer, more
concentrated detergents which use smaller packaging.
The Company owns several patents relating to its MBP process developed in
the 1970s, and to modifications of its MBP process developed in the 1980s which
relate to its SAP manufacturing process. The patents on the MBP process have
begun to expire. The patents relating to the SAP modifications thereto expire at
various times commencing in 2002.
The Company follows the practice of obtaining patents on new developments
whenever reasonably practicable. The Company also relies on unpatented know-how,
trade secrets and improvements in connection with its SAP manufacturing process.
There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques, or otherwise
gain access to or disclose the Company's trade secrets, or that the Company can
meaningfully protect its rights to its unpatented trade secrets.
Raw Materials
The process used by the Company to produce SAP primarily uses acrylic acid
and, to a lesser extent, potassium and sodium alkalies and catalysts. The
Company's polymer operations are supplied by three major producers of acrylic
acid. The Company has been able to obtain adequate supplies of acrylic acid to
meet its production requirements to date.
The Company knows of four acrylic acid suppliers in the United States,
three in Europe and four in the Far East. The Company is aware that at least
five of these suppliers manufacture SAP and, therefore, compete with the Company
in this market.
Potassium and sodium alkalies are available on a commercial basis worldwide
with no meaningful limitations on availability. Catalysts are available from a
small number of high-technology chemical manufacturers; however, the Company
does not anticipate any difficulties in obtaining catalysts.
Competition
The Company believes that there are approximately five polymer
manufacturers and several importers that compete with its U.S. operation,
several of which have substantially greater resources than the Company. The
Company's U.K. operation competes with a total of approximately seven producers
and several importers. Only one producer has substantially more production
capacity and several producers have greater resources than the Company. Further,
several of these competitors are vertically integrated and produce acrylic acid,
the primary cost component of SAP. The competition in both the Company's
domestic and international markets is primarily a matter of product quality and
price, and it historically has been very vigorous. The Company believes that its
polymer manufacturing process has enabled it to add polymer production capacity
at a lower capital investment cost than that required by other processes
currently in widespread commercial use.
Regulation and Environmental
The Company's production process for SAP consumes virtually all chemicals
and other raw materials used in the process. Virtually all materials which are
not consumed by the end product are recycled through the process. The Company's
polymer plants, therefore, generate a minimal amount of chemical waste.
<PAGE>
The handling of dried polymer is part of the production process, and,
because this generates dust, the Company's polymer plants must meet clean air
standards. The Company's polymer plants are equipped with dust collection
systems, and the Company believes that it is in material compliance with
applicable state and federal clean air regulations. The Company's absorbent
polymer business is subject to other federal, state, local and foreign laws and
regulations relating to the environment and to health and safety matters.
Certain of these laws and regulations provide for the imposition of substantial
penalties for non-compliance. While the costs of compliance with, and penalties
imposed under, these laws and regulations have not had a material adverse effect
on the Company, future events, such as changes in, or modified interpretations
of, existing laws and regulations or enforcement policies or further
investigation or evaluation of potential health hazards of certain products, may
give rise to additional compliance and other costs that could have a material
adverse effect on the Company.
TRANSPORTATION
The Company operates a long-haul trucking business and a freight brokerage
business primarily for delivery of its own products in package and bulk form
throughout the continental United States. Through its transportation operations,
the Company is better able to control costs, maintain delivery schedules and
assure equipment availability. The long-haul trucking subsidiary performs
transportation services on outbound movements from the Company's production
plants and attempts to haul third parties' products on return trips whenever
possible. In 1995, approximately 74% of the revenues of this segment involved
the Company's products.
FOREIGN OPERATIONS AND EXPORT SALES
Approximately 35% of the Company's 1995 net sales were to customers in
approximately 60 countries other than the United States. To enhance its overseas
market penetration, the Company maintains a mineral processing plant in the
United Kingdom A processing plant, 60% owned by the Company, operates in
Australia, as well as a blending plant in Canada. Through a joint venture, the
Company also has the capability to process minerals in Mexico. Chartered vessels
deliver large quantities of the Company's bulk, dried sodium bentonite to the
plants in the United Kingdom and Australia, where it is processed and mixed with
other clays and distributed throughout Europe and Australia. The Company's U.S.
bentonite is also shipped in bulk to Japan. The Company also maintains a
worldwide network of independent dealers, distributors and representatives.
The Company produces absorbent polymers at its U.S. and U.K. plants, and
serves markets in Western Europe, South America, Asia and the Middle East.
The Company's international operations are subject to the usual risks of
doing business abroad, such as currency devaluations, restrictions on the
transfer of funds and import and export duties. The Company, to date, has not
been materially affected by any of these risks.
See Note 2 of the Company's Notes to Consolidated Financial Statements
included elsewhere herein, which Note is incorporated by reference for sales
attributed to foreign operations and export sales from the United States.
EMPLOYEES
As of December 31, 1995, the Company employed 1,375 persons, 241 of whom
were employed overseas. At December 31, 1995, there were approximately 751, 289,
261 and 24 persons employed in the Company's minerals, absorbent polymers,
environmental and transportation segments, respectively, along with 50 corporate
employees. Operating plants are adequately staffed, and no significant labor
shortages are presently foreseen. Approximately 187 of the Company's employees
in the United States and approximately 33 of the Company's employees in the
United Kingdom are represented by six labor unions, which have entered into
separate collective bargaining agreements with the Company. Employee relations
are considered good.
<PAGE>
Item 2. Properties
The Company and its subsidiaries operate the following principal plants,
mines and other facilities, all of which are owned, except as noted:
<TABLE>
<CAPTION>
Location Principal Function
MINERALS
<S> <C>
Belle Fourche, SD.................. Mine and process sodium bentonite
Colony, WY (two plants)............ Mine and process sodium bentonite
Upton, WY ......................... Mine and process sodium bentonite
Mounds, IL......................... Mine and process fuller's earth
Paris, TN.......................... Mine and process fuller's earth
Rock Springs, NV................... Mine and process calcium bentonite and diatomaceous earth
Gascoyne, ND....................... Mine and process leonardite
Aberdeen, MS....................... Process calcium bentonite
Letohatchee, AL.................... Package and load calcium bentonite
Sandy Ridge, AL.................... Mine and process calcium bentonite; blend ADDITROLAE
Columbus, OH (1)................... Blend ADDITROLAE; process chromite sand
Granite City, IL (1)............... Package cat litter; process chromite sand
Waterloo, IA....................... Blend ADDITROLAE
Albion, MI (1)..................... Blend ADDITROLAE
York, PA........................... Blend ADDITROLAE; package cat litter
Chattanooga, TN.................... Blend ADDITROLAE
Neenah, WI......................... Blend ADDITROLAE
Toronto, Ontario, Canada........... Blend ADDITROLAE
Geelong, Victoria, Australia (1)... Process bentonite; blend ADDITROLAE
Birkenhead, Merseyside, U.K. (2)... Process bentonite and chromite sand; blend ADDITROLAE;
research laboratory
ENVIRONMENTAL
Lovell, WY......................... Mine and process sodium bentonite
Villa Rica, GA .................... Manufacture BentomatAEgeosynthetic clay liner
Sulphur, LA ....................... Manufacture environmental equipment
Fairmount, GA (1).................. Manufacture ClaymaxAEgeosynthetic clay liner
Morgantown, WV (1)................. Reactivate spent carbon for Regeneration Technologies, Inc.
Salt Lake City, UT (1)............. Sales and engineering for CETCO
Various service centers (1)........ Distribution and service facilities for CETCO recycling services
ABSORBENT POLYMERS
Aberdeen, MS....................... Manufacture absorbent polymers
Birkenhead, Merseyside, U.K. ...... Manufacture absorbent polymers; research laboratory and
headquarters for Chemdal Limited
Palatine, IL (1)................... Chemdal Corporation headquarters; research laboratory
TRANSPORTATION
Scottsbluff, NE.................... Transportation headquarters and terminal
CORPORATE
Arlington Heights, IL (1) ......... Corporate headquarters; CETCO headquarters;
Nanocor, Inc. headquarters; research laboratory
<FN>
(1) Leased.
(2) Certain offices & facilities are leased.
</FN>
</TABLE>
<PAGE>
Item 3. Legal Proceedings
The Company is party to a number of lawsuits arising in the normal course
of its business. The Company does not believe that any pending litigation will
have a material adverse effect on its consolidated financial position.
The Company's processing operations require permits from various
governmental authorities. From time to time, the Company has been contacted by
government agencies with respect to required permits or compliance with existing
permits, while the Company has been notified of certain situations of
non-compliance, management does not expect the fines, if any, to be significant.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of Registrant
<TABLE>
<CAPTION>
Name Age Principal Occupation for Last Five Years
---- --- ----------------------------------------
<S> <C> <C>
John Hughes 53 President and Chief Executive Officer since 1985; a Director since 1984.
Peter L. Maul 46 Vice President since 1993; prior thereto Vice President of Marketing at
Chemstar, Inc. 1986-1992; prior thereto, Vice President at American Colloid
Company.
Roger P. Palmer 59 Senior Vice President since 1994 and President of Colloid Environmental
Technologies Company since August 1994; prior thereto, Vice President since
1990 and Vice President and General Manager of Colloid Environmental
Technologies Company since 1991; prior thereto, Group Sales Manager of the
Building Materials Group.
Clarence O. Redman 53 Secretary of the Company since 1982; a Director since 1989 and Partner and
Chief Executive Officer, Keck, Mahin & Cate (law firm).*
Paul G. Shelton 46 Senior Vice President - Chief Financial Officer since 1994 and President of
AMCOL International's transportation units since May 1994; prior thereto,
Vice President - Chief Financial Officer since 1984; a Director since 1988.
Robert C. Steele 43 Senior Vice President since 1994 and President of American Colloid Company
since May, 1994; prior thereto, Vice President since 1986.
Lawrence E. Washow 43 Senior Vice President since 1994 and President of Chemdal International
Corporation since September 1992; prior thereto, Vice President of the
Company and Vice President and General Manager of Chemdal Corporation since
1986.
- ------------------
<FN>
* Keck, Mahin & Cate has been retained as counsel to the Company.
</FN>
</TABLE>
All officers of the Company are elected annually by the Board of Directors
for a term expiring at the annual meeting of directors following their election
or when their respective successors are elected and shall have qualified. All
directors are elected by the stockholders for a three-year term or until their
respective successors are elected and shall have qualified.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Common Stock is traded on The Nasdaq Stock Market under the symbol
ACOL. The following table sets forth, for the periods indicated, the high and
low sale prices of the Common Stock, as reported by The Nasdaq Stock Market, and
cash dividends declared per share. Prices and cash dividends have been adjusted
to reflect three-for-two and two-for-one stock dividends paid in January 1993
and June 1993, respectively.
<TABLE>
<CAPTION>
Cash
Dividends
Stock Price Declared
----------------------- Per
High Low Share
---- ----- ---------
<S> <C> <C> <C>
Fiscal Year Ended December 31, 1995:
1st Quarter ........................................ $14.63 $11.87 $ .0600
2nd Quarter ........................................ 16.25 12.75 .0600
3rd Quarter ........................................ 18.25 15.25 .0700
4th Quarter ........................................ 17.37 14.13 .0700
Fiscal Year Ended December 31, 1994:
1st Quarter ........................................ 25.25 13.50 .0600
2nd Quarter ........................................ 16.25 10.50 .0600
3rd Quarter ........................................ 16.00 12.00 .0600
4th Quarter ........................................ 17.75 13.75 .0600
Fiscal Year Ended December 31, 1993:
1st Quarter ........................................ 12.75 9.13 .0500
2nd Quarter ........................................ 15.63 11.25 .0500
3rd Quarter ........................................ 28.50 13.25 .0500
4th Quarter ........................................ 33.00 19.25 .0500
<FN>
- --------------------
As of February 21, 1996, there were 2,304 holders of record of the Common
Stock, excluding shares held in street name.
</FN>
</TABLE>
The Company has paid cash dividends every year for over 58 years. The
Company intends to continue to pay cash dividends on its Common Stock, but the
payment of dividends and the amount and timing of such dividends will depend on
the Company's earnings, capital requirements, financial condition and other
factors deemed relevant by the Company's Board of Directors.
<PAGE>
Item 6. Selected Financial Data
The following is selected financial data for the Company and its
subsidiaries for the five years ended December 31, 1995. Per share amounts have
been adjusted to reflect a two-for-one stock split and a three-for-two stock
split effected in the nature of stock dividends in June 1993 and January 1993,
respectively. All per share calculations are fully diluted, based on weighted
average number of common and common equivalent shares outstanding during the
year.
SUMMARY OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
PER SHARE 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shareholders' Equity $ 7.90 $ 7.34 $ 7.38 $ 3.48 $ 3.42
Net Income .90 .78 .76 .52 .26
Dividends .26 .24 .20 .16 .15
Shares Outstanding 19,679,480 19,486,520 17,223,854 16,480,644 15,898,944
INCOME DATA
Sales $ 347,688 $ 265,443 $ 219,151 $ 182,669 $ 148,790
Gross Profit 76,562 59,487 49,843 42,454 32,409
Operating Profit 32,397 23,991 21,312 16,510 9,531
Net Interest Expense (6,727) (2,332) (3,036) (3,484) (4,363)
Net Other Income (Expense) 1,217 544 474 (325) 246
Pretax Income 26,887 22,203 18,750 12,701 5,414
Income Taxes 9,082 6,828 5,567 4,105 1,207
Net Income 17,771 15,283 13,120 8,506 4,152
BALANCE SHEET
Current Assets (2) $ 126,337 $ 108,691 $ 95,870 $ 63,072 $ 64,660
Net Property, Plant
& Equipment 175,211 141,420 83,233 61,231 62,245
Total Assets (2) 322,366 263,899 184,029 129,646 132,441
Current Liabilities 35,882 36,617 27,401 21,092 21,534
Long-term Debt 117,016 71,458 16,689 38,312 43,792
Shareholders' Equity (2) 155,494 143,073 127,132 57,338 54,316
RATIO ANALYSIS
Pretax Margin 7.73% 8.36% 8.56% 6.95% 3.64%
Effective Tax Rate 33.78 30.75 29.69 32.32 22.29
Net Margin 5.11 5.76 5.99 4.66 2.79
Return On Ending Assets 5.51 5.79 7.13 6.56 3.13
Return On Ending Equity 11.43 10.68 10.32 14.83 7.64
OPERATING DATA
Operating Margins (1):
Minerals 10.19% 12.72% 9.47% 12.12%
Absorbent Polymers 14.00 13.58 19.97 11.77
Environmental 10.52 5.79 13.85 13.96
Transportation 4.88 4.74 4.02 3.96
Total Operating Margin 9.32 9.04 9.72 9.04
<FN>
- -------------------------
(1) The Company did not restate the segment information prior to 1992.
(2) Restated 1991 through 1994 for change in inventory method.
</FN>
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Financial Condition
At December 31, 1995, the Company had outstanding debt of $121.1 million
(including both long- and short-term debt) and cash and cash equivalents of $1.9
million, compared with $75.0 million in debt and $10.4 million in cash and cash
equivalents at December 31, 1994. The long-term debt represented 42.9% of total
capitalization at December 31, 1995, compared with 33.3% at December 31, 1994.
The Company had a current ratio of 3.52 to 1 on December 31, 1995, with
approximately $90.5 million in working capital, compared with 2.97 to 1 and
$72.1 million, respectively, at December 31, 1994. The $18.4 million increase
(25.5%) in working capital resulted from sales growth of 31.0%, and included
increases in accounts receivable of $15.8 million (30.2%), inventories of $6.9
million (17.1%) and prepaid expenses of $3.1 million offset by an $8.5 million
reduction in cash balances. Prepaid expenses include approximately $2.0 million
in income taxes, which will be applied toward 1996 estimated tax payments. The
cash balances were lower, as proceeds of the October 1994 private debt placement
were invested in capital expenditures.
On September 25, 1995, the Company increased its revolving credit
facility from $50 million to $100 million and extended its term from October
1997 to October 2000. The Company had $43.2 million in unused, committed credit
lines at December 31, 1995.
The Company currently anticipates capital expenditures of approximately $40
million for 1996. Capacity expansion of the U.K. polymer operation and a
modification of existing U.S. polymer capacity are anticipated; however, no
acquisitions are included in the estimate.
The current indicated annual dividend rate is $.28 per share. If the
rate remains constant and the Board of Directors continues to declare dividends,
the dividend payments will be approximately $5.4 million in 1996, compared with
approximately $5.0 million in 1995.
Management believes that the Company has adequate resources to fund the
capital expenditures discussed above, the dividend payments and anticipated
increases in working capital requirements through its existing, committed credit
lines, cash balances and operating cash flow. In addition to the capital
expenditures which have been authorized by the Board of Directors, management
continues to explore growth opportunities in the environmental and minerals
markets, as well as further capacity expansion in the polymer segment.
Results of Operations for the Three Years Ended December 31, 1995
Net sales increased by $82.2 million, or 31.0% , from 1994 to 1995, and by
$46.3 million, or 21.1%, from 1993 to 1994. Operating profits increased by $8.4
million, or 35.0%, from 1994 to 1995, and by $2.7 million, or 12.6%, from 1993
to 1994. A review of sales, gross profit, general, selling and administrative
expenses, and operating profit by segment follows:
Minerals
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
---------------- --------------- ------------------ ----------------- -----------------
$ % $ %
----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....... $154,840 100.0% $154,490 100.0% $129,879 100.0% 350 0.2% $24,611 18.9%
Cost of sales... 122,264 79.0% 121,213 78.5% 104,921 80.8%
------- ------ ------- ----- --------- -----
Gross profit. 32,576 21.0% 33,277 21.5% 24,958 19.2% (701) -2.1% 8,319 33.3%
General, selling and
administrative expenses 16,801 10.9% 13,632 8.8% 12,653 9.7% 3,169 23.2% 979 7.7%
------ ----- ------ ----- ------ ----
Operating profit 15,775 10.1% 19,645 12.7% 12,305 9.5% (3,870) -19.7% 7,340 59.7%
</TABLE>
<PAGE>
Sales increased in the durable goods and consumables sectors from 1993
to 1994, both domestically and overseas, as a result of an improved economy,
higher U.K. sales volume, $2.3 million higher royalty income and a full year of
sales to the agricultural carrier market. Sales decreased domestically during
1995 as royalties declined by approximately $3.8 million, as anticipated, and
the principal customer for clay carrier products switched to a local, non-clay
alternative at mid-year. Construction and environmental products contributed to
the U.K. operation's sales growth, as did favorable translation exchange rates.
Gross profit margins for 1995 declined from those of 1994 by
approximately 2.3%, compared with a 12.0% improvement from 1993 to 1994. The
1993 to 1994 gross profit margin improvement was primarily related to the
increased royalties, whereas the decline in gross profit margin from 1994 to
1995 was not as severe as would have been anticipated with the royalty decline,
largely due to price increases in certain markets.
General, selling and administrative expenses for 1995 increased by $3.2
million, or 23.2%, over 1994, which were 7.7% higher than the 1993 level. Higher
costs for research and development, and management information systems
contributed to the higher general, selling and administrative expense increase.
A more precise division of expenses shared between minerals and corporate was
accomplished during 1995 than for 1994, causing a higher percentage increase.
The lower royalty level experienced in 1995 is anticipated to continue,
as many of the agreements have been converted to fully paid licenses. Cat litter
volume continues to grow. The cat litter facilities added during 1995, however,
have yet to be fully utilized. This temporary overcapacity, plus lower business
volumes which were experienced in other markets during the last months of 1995,
are likely to depress operating margins in the near-term.
Absorbent Polymers
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
---------------- --------------- ------------------ ----------------- -----------------
$ % $ %
----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....... $120,762 100.0% $58,591 100.0% $51,820 100.0% 62,171 106.1% $6,771 13.1%
Cost of sales... 94,924 78.6% 43,325 73.9% 36,127 69.7%
------ ----- ------ ----- ------- -----
Gross profit. 25,838 21.4% 15,266 26.1% 15,693 30.3% 10,572 69.3% (427) -2.7%
General, selling and
administrative expenses 8,936 7.4% 7,307 12.5% 5,347 10.3% 1,629 22.3% 1,960 36.7%
------ ----- ------ ----- ------ -----
Operating profit 16,902 14.0% 7,959 13.6% 10,346 20.0% 8,943 112.4% (2,387) -23.1%
</TABLE>
Sales of absorbent polymers for 1995 increased by 106.1% over 1994
levels on a unit sales volume increase of 116.1%. This compares to a 13.1% sales
increase from 1993 to 1994 on a unit volume increase of 15.9%. The unit volume
increase in 1995 was largely attributable to the growth in European market
share.
Gross profit margins declined 13.9% from 1993 to 1994 as capacity
expanded from 30,000 metric tons to 80,000 metric tons. Unit sales volume
increased only 16%. Gross margins declined a further 18.0% in 1995 as the cost
of raw materials, principally acrylic acid, increased, and unit selling prices
declined.
The general, selling and administrative expense increase from 1993 to
1994 was directed to the marketing and administrative infrastructure to
accommodate the growth which occurred from 1994 to 1995.
Despite lower unit selling prices and higher raw material costs, the
operating profit margin improved by 2.9% from 1994 to 1995 because of the
increase in volume.
<PAGE>
The Company aggressively expanded its capacity from 1993 to 1995 to
produce absorbent polymers. The Company began the three-year period with
worldwide capacity of 20,000 metric tons, and ended with 110,000 metric tons.
The Company's production capability is presently among the largest in the world.
The expansions were undertaken ahead of the industry demand curve. Fourth
quarter 1995 capacity utilization was approximately 56%, thus allowing for
greater output as demand increases. Depreciation on the most recent U.S.
expansion of 30,000 metric tons will be calculated on the units-of-production
basis until the third quarter of 1996. All other depreciation is calculated
using the straight-line method.
Management anticipates lower average unit selling prices as larger
volume customers are expected to account for a greater proportion of the sales.
The average cost of acrylic acid is expected to be lower in 1996 than in 1995,
however it is unknown whether the combination of lower acrylic costs and greater
plant throughput will offset the expected price decline. Management does not
anticipate a return of operating profit margins to the 20% level experienced
during 1993.
Environmental
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
---------------- --------------- ------------------ ----------------- -----------------
$ % $ %
----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....... $50,420 100.0% $30,726 100.0% $20,108 100.0% 19,694 64.1% $10,618 52.8%
Cost of sales... 34,964 69.3% 22,397 72.9% 12,937 64.3%
------- ------ ------- ------ ------- -----
Gross profit. 15,456 30.7% 8,329 27.1% 7,171 35.7% 7,127 85.6% 1,158 16.1%
General, selling and
administrative expenses 10,151 20.1% 6,549 21.3% 4,387 21.8% 3,602 55.0% 2,162 49.3%
------ ----- ----- ----- ----- -----
Operating profit 5,305 10.6% 1,780 5.8% 2,784 13.9% 3,525 198.0% (1,004) -36.1%
</TABLE>
Approximately 50% of the sales increase from 1994 to 1995 was
attributable to acquisitions. A further 14% of the growth came from increased
sales in international markets. Approximately 85% of the sales growth from 1993
to 1994 came from the combination of acquisitions and increased sales of
BentomatAE environmental liner products.
Gross profit margins in 1995 improved by 13.3%. Inventory charges and
changes in distribution during 1994 accounted for the difference between 1994
and 1995. Increased sales of lower margin products and the non-recurring charges
accounted for the 24.1% gross margin decline from 1993 to 1994.
General, selling and administrative expenses increased from 1993 to
1994, primarily as a result of increased staff associated with the acquisitions
and increased staffing in marketing, including the establishment of an
international marketing department. The 1995 increase reflected further
expansion of the international marketing group and additional staff associated
with the Claymax acquisition.
Transportation
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
---------------- --------------- ------------------ ----------------- -----------------
$ % $ %
----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....... $21,666 100.0% $21,636 100.0% $17,344 100.0% 30 0.1% $4,292 24.7%
Cost of sales... 18,974 87.6% 19,021 87.9% 15,323 88.3%
------- ----- ------- ------ ------- ------
Gross profit. 2,692 12.4% 2,615 12.1% 2,021 11.7% 77 2.9% 594 29.4%
General, selling and
administrative expenses 1,635 7.5% 1,590 7.3% 1,324 7.6% 45 2.8% 266 20.1%
------ ----- ------ ------ ------ ------
Operating profit 1,057 4.9% 1,025 4.8% 697 4.1% 32 3.1% 328 47.1%
</TABLE>
<PAGE>
Increased brokerage of cat litter and environmental shipments fueled
the growth in transportation revenues from 1993 to 1994. The conversion of
shipments of bentonite used in the manufacturing of liner products from truck to
rail offset the further revenue gains made in the shipment of cat litter
products during 1995. Gross profit margins have benefitted from the high volume
levels, as well as greater truck availability during the three-year period.
Corporate
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
---------------- --------------- ------------------ ----------------- -----------------
$ % $ %
----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
General, selling and
administrative expenses $ 6,642 $ 6,418 $ 4,820 224 3.5% 1,598 33.2%
------ ------ -------
Operating loss.. (6,642) (6,418) (4,820)
</TABLE>
Corporate costs include management information systems, human
resources, investor relations and corporate communications, finance, purchasing,
research costs for new markets and corporate governance costs.
During 1994, the Company installed a new management information system
and significantly increased research and development activities. These
expenditures continued into 1995. The 1995 expenses reflected a more precise
split of the costs previously shared by minerals and corporate.
The Company is actively engaged in research and development efforts to
create new applications for its reserves of bentonite. The Company has formed a
wholly-owned subsidiary, Nanocor, Inc., to capitalize on its research and
development progress in bentonite-based nanocomposites. When incorporated into
plastics, bentonite-based nanocomposites can produce material with significantly
improved properties that encompass a variety of commercial applications.
Nanocor's technologies are still in the developmental stage, but management
feels that these products have the potential to become a significant part of the
Company's future growth.
An incremental increase in research and development costs of
approximately $2 million is expected for 1996 as Nanocor, Inc. expands its
product development efforts. All costs associated with Nanocor, Inc. will be
carried in corporate for 1996.
Net interest expense
Net interest expense increased by $4.4 million from 1994 to 1995 as a
result of higher borrowing levels primarily associated with capital expenditures
and acquisitions. Net interest expense for 1994 was $.7 million lower than in
1993 as a result of higher levels of capitalized interest.
Other income (expense)
Other income for 1995 included investment grants of approximately $.5
million and a $.6 million gain related to the cancellation of an interest rate
swap, compared with $.5 million of investment grants in 1994 and $.5 million in
recovered defense costs in 1993.
Income taxes
The income tax rate for 1995 was 33.8% compared with 30.8% in 1994 and
29.7% in 1993. The estimated effective tax rate for 1996 is 36%.
<PAGE>
Earnings Per Share
Earnings per share were calculated using the weighted average number of
shares, including common stock equivalents, outstanding during the year. Stock
options issued to key employees and directors are considered common stock
equivalents. The 1993 weighted average shares outstanding were approximately
17.2 million shares compared with approximately 19.5 million shares and 19.7
million shares in 1994 and 1995, respectively. An equity offering of 3.5 million
shares was completed in October 1993, accounting for most of the difference in
the shares outstanding between the periods.
Item 8. Financial Statements and Supplementary Data
See the Index to Financial Statements and Financial Statement Schedules
on Page F-1. Such Financial Statements and Schedules are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The table below lists the names and ages of all directors and nominees of
the Company, and all positions each person holds with the Company.
Board of Directors of the Registrant
Arthur Brown, 55, (2)
Chairman,President and Chief Executive Officer of Hecla Mining Company. Director
since 1990.
Robert E. Driscoll, III, 57, (2, 5)
Former Dean and Professor of Law, University of South Dakota. Director since
1985.
Raymond A. Foos, 67, (2, 3)
Former Chairman of the Board, President and Chief Executive Officer of Brush
Wellman, Inc. (manufacturer of beryllium and specialty materials). Director
since 1981.
John Hughes, 53, (1)
President and Chief Executive Officer, AMCOL International Corporation. Director
since 1984.
Robert C. Humphrey, 77, (1, 3, 4)
Retired Chairman of the Board, NBD Bank Evanston, N.A. Director since 1977,
except for a three-month period in 1989.
Jay D. Proops, 54, (1, 3)
Private investor and former Vice Chairman and co-founder of The Vigoro
Corporation. Director since June 1995.
C. Eugene Ray, 63, (1, 2, 3, 4)
Chairman of the Board since 1988. Former Executive Vice President - Finance of
Signode Industries, Inc. (manufacturer of industrial strapping products).
Director since 1981.
<PAGE>
Clarence O. Redman, 53, (1, 5)
Partner and Chief Executive Officer of the law firm of Keck, Mahin & Cate.
Secretary of the Company since 1982. Director since 1989.
Paul G. Shelton, 46, (1)
Senior Vice President - Chief Financial Officer, AMCOL International
Corporation. Director since 1988.
Dale E. Stahl, 48, (1, 3)
President and Chief Operating Officer of Gaylord Container Corporation. Director
since June 1995.
Paul C. Weaver, 33, (1, 2)
Senior Corporate Account Manager for Nielsen Marketing Research. Director since
May 1995.
(1) Member of Executive Committee of the Board of Directors
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of Nominating Committee
(5) Member of Option Committee
Additional information regarding the directors of the Company is included
under the caption "Election of Directors", "Information Concerning Members of
the Board" and "Compliance with Section 16(a) of the Securities Exchange Act."
in the Company's proxy statement to be dated on or about April 8, 1996, and is
incorporated herein by reference. Information regarding executive officers of
the Company is included under a separate caption in Part I hereof, and is
incorporated herein by reference, in accordance with General Instruction G(3) to
Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. Executive Compensation
Information regarding the above is included under the caption "Compensation
and Other Transactions with Management" in the Company's proxy statement to be
dated on or about April 8, 1996, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding the above is included under the caption "Security
Ownership" in the Company's proxy statement to be dated on or about April 8,
1996, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding the above is included under the caption "Compensation
and Other Transactions with Management" in the Company's proxy statement to be
dated on or about April 8, 1996, and is incorporated herein by reference.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. See Index to Financial Statements and
2. Financial Statement Schedules on Page F-1.
Such Financial Statements and Schedules
are incorporated herein by reference.
3. See Index to Exhibits immediately following
the signature page.
(b) None.
(c) See Index to Exhibits immediately following
the signature page.
(d) See Index to Financial Statements and Financial
Statement Schedules on Page F-1.
<PAGE>
Item 14(a) Index to Financial Statements and Financial Statement Schedules
<TABLE>
<CAPTION>
Page
<S> <C> <C>
(1) Financial Statements:
Independent Auditors' Report...................................................................... F-2
Consolidated Balance Sheets, December 31, 1995 and 1994........................................... F-3
Consolidated Statements of Operations,
Years ended December 31, 1995, 1994, and 1993................................................. F-4
Consolidated Statements of Stockholders' Equity,
Years ended December 31, 1995, 1994, and 1993................................................. F-5
Consolidated Statements of Cash Flows,
Years ended December 31, 1995, 1994, and 1993................................................. F-6
Notes to Consolidated Financial Statements........................................................ F-7
(2) Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts.................................................. F-21
</TABLE>
All other schedules called for under Regulation S-X are not submitted
because they are not applicable or not required or because the required
information is not material or is included in the financial statements or notes
thereto.
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
AMCOL International Corporation:
We have audited the consolidated financial statements of AMCOL
International Corporation and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of AMCOL
International Corporation and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 8, 1996
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
ASSETS
December 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................................. $ 1,888 $ 10,389
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,601 and $1,336.................... 65,267 49,144
Other............................................................................... 1,162 1,764
Inventories........................................................................... 47,205 40,302
Advance mining........................................................................ 2,678 2,363
Prepaid expenses...................................................................... 5,355 2,213
Current deferred tax asset............................................................ 2,782 2,516
-------- ----------
Total current assets............................................................... 126,337 108,691
------- ---------
Property, plant, equipment, and mineral rights and reserves:
Land and mineral rights and reserves.................................................. 12,626 12,438
Depreciable assets.................................................................... 263,904 213,094
------- ---------
276,530 225,532
Less accumulated depreciation......................................................... 101,319 84,112
------- -----------
175,211 141,420
Other assets:
Goodwill, less accumulated amortization of $1,937 and $1,424.......................... 14,109 7,895
Other intangible assets, less accumulated amortization of $6,464 and $5,351........... 6,709 5,893
----------- ----------
20,818 13,788
----------- ----------
$ 322,366 $ 263,899
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations........................................... $ 3,875 $ 3,334
Current capital lease obligations..................................................... 194 173
Accounts payable...................................................................... 18,777 19,373
Accrued income taxes.................................................................. __ 807
Accrued liabilities................................................................... 13,036 12,930
---------- ----------
Total current liabilities........................................................... 35,882 36,617
---------- ----------
Long-term obligations:
Long-term debt........................................................................ 116,517 70,756
Long-term capital lease obligations................................................... 499 702
---------- ---------
117,016 71,458
---------- ---------
Deferred income tax liabilities.......................................................... 6,819 5,474
Estimated accrued reclamation............................................................ 4,826 4,839
Other liabilities........................................................................ 1,898 2,041
---------- ----------
13,543 12,354
Minority interest in subsidiary.......................................................... 431 397
---------- ----------
Stockholders' equity:
Common stock, par value $.01 per share. Authorized 50,000,000 shares, issued
21,343,864 shares.................................................................. 213 213
Additional paid-in capital............................................................ 74,967 74,279
Retained earnings..................................................................... 86,703 73,911
Cumulative translation adjustments.................................................... (2,351) (1,865)
---------- ---------
159,532 146,538
Less:
Treasury stock (2,209,653 shares in 1995 and 2,329,522 shares in 1994)................
(4,038) (3,465)
155,494 143,073
$ 322,366 $ 263,899
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Net sales...................................................................... $347,688 $265,443 $ 219,151
Cost of sales.................................................................. 271,126 205,956 169,308
--------- -------- ---------
Gross profit.............................................................. 76,562 59,487 49,843
General, selling and administrative expenses................................... 44,165 35,496 28,531
--------- --------- ----------
Operating profit.......................................................... 32,397 23,991 21,312
--------- --------- ----------
Other income (expense):
Interest expense, net....................................................... (6,727) (2,332) (3,036)
Other, net.................................................................. 1,217 544 474
---------- --------- ---------
(5,510) (1,788) (2,562)
------------ ---------- ---------
Income before income taxes and minority interest in net income of subsidiary
26,887 22,203 18,750
Income taxes................................................................... 9,082 6,828 5,567
--------- --------- ---------
Income before minority interest in net income of subsidiary.............. 17,805 15,375 13,183
Minority interest in net income of subsidiary..................................
(34) (92) (63)
--------- -------- --------
Net income................................................................ $ 17,771 $ 15,283 $ 13,120
========= ======== ========
Earnings per share............................................................. $ .90 $ .78 $ .76
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Common Stock
--------------------
Number Additional Cumulative
of Paid-in Retained Translation Treasury Loan to
Shares Amount Capital Earnings Adjustment Stock Officer Total
---------- ------ ----------- --------- ------------ -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1992. 18,843,864 $ 9,422 $ 1,487 $53,446 $(2,782) $(4,090) $(144) $ 57,339
Net income........... -- -- -- 13,120 -- -- -- 13,120
Cash dividends ($.20
per share)........ -- -- -- (3,323) -- -- -- (3,323)
Repayment of loan to -- -- -- -- -- -- 144 144
officer...........
Cumulative foreign
exchange -- -- -- -- (537) -- -- (537)
translation
adjustment........
Amended par value of
common shares
from $1.00 per
share to $0.01 -- (9,328) 9,328 -- -- -- -- --
per share.........
Two-for-one stock -- 94 -- (94) -- -- -- --
split.............
Purchase of 380
treasury shares... -- -- -- -- -- (3) -- (3)
Sale of 385,438
treasury shares... -- -- 1,051 -- -- 509 -- 1,560
Sale of 2,500,000
common shares..... 2,500,000 25 58,808 -- -- -- 58,833
--------- --- ------- ------- ------- ------- ------- - -------
Balance at
December 31, 1993. 21,343,864 213 70,674 63,149 (3,319) (3,584) -- 127,133
Net income........... -- -- -- 15,283 -- -- -- 15,283
Cash dividends ($.24
per share)........ -- -- -- (4,521) -- -- -- (4,521)
Cumulative foreign
exchange -- -- -- -- 1,454 -- -- 1,454
translation
adjustment........
Purchase of 33,956
treasury shares... -- -- -- -- -- (443) -- (443)
Sale of 420,142
treasury shares... -- -- 3,605 -- -- 562 -- 4,167
--------- -------- --------- -------- --------- --------- ------- --------
Balance at
December 31, 1994. 21,343,864 213 74,279 73,911 (1,865) (3,465) -- 143,073
Net income.......... -- -- -- 17,771 -- -- -- 17,771
Cash dividends ($.26
per share)........ -- -- -- (4,979) -- -- -- (4,979)
Cumulative foreign
exchange -- -- -- -- (486) -- (486)
translation
adjustment........
Purchase of 58,000
treasury shares... -- -- -- -- -- (838) -- (838)
Sale of 177,869
treasury shares -- -- 688 -- -- 265 -- 953
------- ------- ------- ------- -------- -------- ----- --------
Balance at
December 31, 1995. 21,343,864 $ 213 $74,967 $86,703 $(2,351) $(4,038) $ -- $ 15,283
========== ========= ======= ======= ======== ======== ===== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income............................................................. $ 17,771 $15,283 $13,120
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion, and amortization............................ 21,289 14,442 10,584
Increase (decrease) in allowance for doubtful accounts............... 265 (500) 574
Increase (decrease) in deferred income taxes......................... 1,345 (651) (38)
Increase (decrease) in estimated accrued reclamation................. (13) 7 129
Increase (decrease) in other noncurrent liabilities.................. (32) 623 (52)
(Gain) loss on sale of depreciable assets............................ (254) (356) (89)
Minority interest in net income of subsidiary........................ 34 93 63
(Increase) decrease in current assets:
Accounts receivable................................................ (15,786) (11,289) (7,581)
Inventories........................................................ (6,903) (10,662) (8,618)
Advance mining..................................................... (315) (325) (60)
Prepaid expenses................................................... (3,142) 238 142
Current deferred tax asset......................................... (266) (396) (205)
Increase (decrease) in current liabilities:
Accounts payable................................................... (596) 8,345 3,216
Accrued income taxes............................................... (807) (1,482) 307
Accrued liabilities................................................ 105 2,133 2,999
-------- -------- --------
Net cash provided by operating activities........................ 12,695 15,503 14,491
------ ------- --------
Cash flow from investing activities:
Proceeds from sale of depreciable assets............................... 775 690 170
Acquisition of land, mineral reserves, and depreciable assets.......... (62,782) (80,958) (33,320)
(Increase) decrease in other assets.................................... (313) 29 831
---------- ---------- ---------
Net cash used in investing activities............................. (62,320) (80,239) (32,319)
-------- -------- -------
Cash flow from financing activities:
Proceeds from issuance of debt......................................... 109,984 77,715 30
Principal payments of debt and capital lease obligation................ (63,864) (22,725) (21,866)
Proceeds from common stock issuance.................................... -- -- 58,833
Proceeds from sale of treasury stock................................... 953 4,167 1,560
Dividends paid......................................................... (4,979) (4,521) (3,323)
Other.................................................................. (837) (499) (71)
--------- --------- ---------
Net cash provided by (used in) financing activities................. 41,257 54,137 35,163
------- -------- --------
Cumulative translation adjustment......................................... (133) 486 (285)
--------- --------- --------
Net increase (decrease) in cash and cash equivalents...................... (8,501) (10,113) 17,050
Cash at beginning of year................................................. 10,389 20,502 3,452
------- -------- --------
Cash and cash equivalents at end of year.................................. $ 1,888 $10,389 $20,502
========= ======= =======
Supplemental Disclosures of Cash Flows Information:
Actual cash paid for:
Interest............................................................... $ 7,791 $ 3,636 $ 3,399
========= ======== ========
Income taxes........................................................... $ 10,066 $ 9,143 $ 4,246
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies
Company Operations
AMCOL International Corporation (the Company) may be divided into three
principal categories of operations; minerals, absorbent polymers and
environmental. The Company also operates a transportation business primarily for
delivery of its own products. The Company's revenues are derived 44% from the
minerals operation, 35% from absorbent polymers, 15% from environmental and 6%
from transportation operations. The Company's sales were approximately 65%
domestic and 35% overseas.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its foreign and domestic subsidiaries. All subsidiaries are wholly-owned
except for one of the Australian subsidiaries, which is 60% owned by the
Company, and a 49% interest in a Mexican subsidiary, which is accounted for at
cost. All material intercompany balances and transactions, including profits on
inventories, have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Translation of Foreign Currencies
The accounts and transactions of subsidiaries located outside of the United
States are translated into U.S. dollars at rates of exchange in accordance with
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation." The assets and liabilities of these subsidiaries are translated at
the rate of exchange at the balance sheet date. The statements of operations are
translated at the weighted average monthly rate. Foreign exchange translation
adjustments are accumulated as a separate component of stockholders' equity
while realized exchange gains or losses are included in income.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) or moving average methods. During 1995, in
order to better match revenues and expenses, the Company adopted the FIFO method
for certain inventories that had previously used the last-in, last-out (LIFO)
method for determining cost. The Company has applied this change in method
retroactively to January 1, 1991, which resulted in an increase in retained
earnings of $1,753. The effect on the statement of operations was immaterial.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies (Continued)
Property, Plant, Equipment, and Mineral Rights and Reserves
Property, plant, equipment, and mineral rights and reserves are carried at
cost. Depreciation is computed using the straight-line method for substantially
all of the assets. Certain other assets, primarily field equipment are
depreciated on the units-of-production method. Mineral rights and reserves are
depleted using the units-of-production method.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired. Goodwill is being amortized on the straight-line method
over periods of 15 to 40 years. Other intangibles, including trademarks and
noncompete agreements, are amortized on the straight-line method over periods of
up to ten years.
Income Taxes
The Company and its U.S. subsidiaries file a consolidated tax return.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to be in effect for the year in which those temporary differences are
expected to be recovered or settled.
Exploration Costs and Advance Mining
Exploration costs are expensed as incurred. Costs incurred in removing
overburden and mining bentonite are capitalized as advance mining costs until
the bentonite from such mining area is transported to the plant site, at which
point the costs are included in crude bentonite stockpile inventory.
Research and Development
Research and development costs, included in general, selling and
administrative expenses, were approximately $4,801, $2,353, and $1,764 for the
years ended December 31, 1995, 1994, and 1993.
Earnings Per Share
Earnings per share are computed by dividing net income by the weighted
average of common shares outstanding after consideration of the dilutive effect
of stock options outstanding at the end of each period. The weighted average
number of common and common equivalent shares outstanding was 19,679,480 for
1995, 19,486,520 for 1994, and 17,223,854 for 1993.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies (Continued)
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly-liquid investments with original maturities of three months or less as
cash equivalents.
Reclassification
Certain items in the 1994 and 1993 consolidated financial statements have
been reclassified to comply with the consolidated financial statements
presentation for 1995.
(2) Business Segment and Geographic Area Information
The Company operates in three major industry segments--minerals, absorbent
polymers and environmental, and also operates a transportation business. The
minerals segment mines, processes, and distributes clays and products with
similar applications to various industrial and consumer markets. The absorbent
polymers segment produces and distributes superabsorbent polymers primarily for
use in consumer markets. The environmental segment processes and distributes
clays and products with similar applications for use as a moisture barrier in
commercial construction, landfill liners and in a variety of other industrial
and commercial applications. The transportation segment includes a long haul
trucking business and a freight brokerage business which provide services to
both the Company's plants and outside customers.
Intersegment sales are insignificant. Operating profit is defined as sales
and other income directly related to a segment's operations, less operating
expenses, which do not include interest costs.
Identifiable assets by segments are those assets used in the Company's
operations in that segment. Corporate assets are primarily cash and cash
equivalents, corporate leasehold improvements and miscellaneous equipment.
Export sales included in the United States were approximately $28,691,
$17,430, and $12,206 for the years ended December 31, 1995, 1994, and 1993. One
customer accounted for approximately 11% of sales in 1995.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(2) Business Segment and Geographic Area Information (Continued)
The following summaries set forth certain financial information by business
segment and geographic area for the years ended December 31, 1995, 1994, and
1993.
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Business Segment:
Revenues:
Minerals......................................................... $154,840 $154,490 $129,879
Absorbent polymers............................................... 120,762 58,591 51,820
Environmental.................................................... 50,420 30,726 20,108
Transportation................................................... 21,666 21,636 17,344
-------- -------- --------
Total $347,688 $265,443 $219,151
======== ======== ========
Operating profit:
Minerals......................................................... $ 15,775 $ 19,645 $ 12,305
Absorbent polymers............................................... 16,902 7,959 10,346
Environmental.................................................... 5,305 1,780 2,784
Transportation................................................... 1,057 1,025 697
Corporate........................................................ (6,642) (6,418) (4,820)
--------- --------- ---------
Total $ 32,397 $ 23,991 $ 21,312
========= ========= =========
Identifiable assets:
Minerals......................................................... $134,250 $128,788 $105,561
Absorbent polymers............................................... 126,392 95,121 44,021
Environmental.................................................... 50,264 28,570 11,937
Transportation................................................... 1,235 1,242 1,311
Corporate........................................................ 10,225 10,178 21,199
-------- -------- --------
Total $322,366 $263,899 $184,029
======== ======== ========
Depreciation, depletion, and amortization:
Minerals......................................................... $ 10,748 $ 9,506 $ 8,236
Absorbent polymers............................................... 7,176 3,476 1,940
Environmental.................................................... 2,432 906 229
Transportation................................................... 35 30 25
Corporate........................................................ 898 524 154
--------- --------- ---------
Total $ 21,289 $ 14,442 $ 10,584
========= ========= =========
Capital expenditures:
Minerals......................................................... $ 20,021 $ 23,979 $ 14,808
Absorbent polymers............................................... 24,178 44,606 15,465
Environmental.................................................... 16,775 10,373 1,074
Transportation................................................... 61 66 18
Corporate........................................................ 1,747 1,934 1,955
--------- --------- ---------
Total $ 62,782 $ 80,958 $ 33,320
========= ========= =========
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(2) Business Segment and Geographic Area Information (Continued)
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Geographic area:
Sales to unaffiliated customers from:
North America.................................................... $255,920 $226,483 $188,598
Europe........................................................... 89,842 37,154 28,974
Australia........................................................ 1,926 1,806 1,579
-------- -------- --------
Total $347,688 $265,443 $219,151
======== ======== ========
Sales or transfers between geographic areas:
North America.................................................... $ 5,416 $ 4,086 $ 1,962
Europe........................................................... 86 103 --
Australia........................................................ -- -- --
-------- -------- --------
Total $ 5,502 $ 4,189 $ 1,962
======== ======== ========
Operating profit from:
North America.................................................... $ 23,047 $ 22,639 $ 19,059
Europe........................................................... 9,471 972 2,055
Australia........................................................ 109 360 261
Adjustments and eliminations..................................... (230) 20 (63)
-------- -------- --------
Total $ 32,397 $ 23,991 $ 21,312
======== ======== ========
Identifiable assets in:
North America.................................................... $246,242 $199,175 $154,176
Europe........................................................... 73,175 65,886 30,412
Australia........................................................ 2,314 1,582 1,276
Adjustments and eliminations..................................... 635 (2,744) (1,835)
-------- -------- --------
Total $322,366 $263,899 $184,029
======== ======== ========
</TABLE>
(3) Inventories
Inventories consisted of:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Crude stockpile inventories..................................................... $ 10,284 $ 9,388
In-process inventories.......................................................... 19,421 15,386
Other raw material, container, and supplies inventories......................... 17,500 15,528
-------- --------
$ 47,205 $ 40,302
======== ========
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(4) Property, Plant, Equipment, and Mineral Rights and Reserves
Property, plant, equipment, and mineral rights and reserves consisted of
the following:
<TABLE>
<CAPTION>
December 31 Depreciation/
---------------------- Amortization-
1995 1994 Annual Rates
--------- --------- -------------
<S> <C> <C> <C>
Mineral rights and reserves...................................... $ 10,084 $ 10,358
Other land....................................................... 2,542 2,080
Buildings and improvements....................................... 48,969 40,773 2.2% to 20.0%
Machinery and equipment.......................................... 214,935 172,321 5.0% to 33.3%
------- --------
$276,530 $225,532
======== ========
</TABLE>
Depreciation and depletion were charged to income as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Depreciation expense.................................................. $ 19,209 $ 13,045 $ 9,086
Depletion expense..................................................... 587 588 515
-------- -------- -------
$ 19,796 $ 13,633 $ 9,601
======== ======== =======
</TABLE>
(5) Income Taxes
The components of the provision for domestic and foreign income tax expense
for the years ended December 31, 1995, 1994 and 1993 consist of:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes and minority interest in net income of
subsidiary:
Domestic................................................................. $22,796 $21,810 $17,051
Foreign.................................................................. 4,091 393 1,699
------- -------- -------
$26,887 $22,203 $18,750
======= ======= =======
Provision for income taxes:
Domestic Federal
Current................................................................ $ 5,283 $ 5,416 $ 4,037
Deferred............................................................... 390 (370) (34)
Domestic State
Current................................................................ 1,358 1,548 788
Deferred............................................................... 43 (38) (62)
Foreign
Current................................................................ 1,362 911 985
Deferred............................................................... 646 (639) (147)
-------- -------- --------
$ 9,082 $ 6,828 $ 5,567
======== ======== ========
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(5) Income Taxes (Continued)
The components of the deferred tax assets and liabilities as of December
31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, due to allowance for doubtful accounts........................... $ 620 $ 434
Inventories, due to additional costs inventoried for tax purposes pursuant to the Tax
Reform Act of 1986 and reserve for obsolete inventories............................ 848 1,044
Other................................................................................. 7,210 6,018
-------- --------
Total deferred tax assets........................................................... 8,678 7,496
-------- --------
Deferred tax liabilities:
Plant and equipment, due to differences in depreciation............................... (9,379) (6,942)
Land and mineral reserves, due to differences in depletion............................ (2,385) (2,389)
Inventories, due to change in accounting method....................................... (915) (1,098)
Other................................................................................. (36) (25)
---------- ----------
Total deferred tax liabilities...................................................... (12,715) (10,454)
---------- ----------
Net deferred tax liability.......................................................... $ (4,037) $ (2,958)
========== ==========
</TABLE>
The following analysis reconciles the statutory Federal income tax rate to
the effective tax rates:
<TABLE>
<CAPTION>
1995 1994 1993
----------------------- ------------------------- ----------------------
Percent of Percent of Percent of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Domestic and foreign taxes on income at
United States statutory rate.............. $9,410 35.0% $7,771 35.0% $6,563 35.0%
Increase (decrease) in taxes resulting from:
Percentage depletion...................... (840) (3.1) (781) (3.5) (690) (3.7)
State taxes............................... 1,358 5.0 1,510 6.8 726 3.9
Other..................................... (846) (3.1) (1,672) (7.5) (1,032) (5.5)
------- ------ ------ ------ ------ ------
$9,082 33.8% $6,828 30.8% $5,567 29.7%
====== ====== ====== ====== ====== ======
</TABLE>
(6) Long-term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1994
--------- ----------
<S> <C> <C>
Short-term debt supported by revolving credit agreement................................ $ 57,618 $ 7,982
Term note, at 9.68% (Series D)......................................................... 11,420 14,280
Term note, at 7.36% (Series A)......................................................... 25,000 25,000
Term note, at 7.83% (Series B)......................................................... 10,000 10,000
Term note, at 8.10% (Series C)......................................................... 15,000 15,000
Industrial Revenue Bond, at 68% of prime............................................... 1,050 1,283
Other notes payable, at 0% to 10%...................................................... 304 545
-------- ---------
120,392 74,090
Less current portion................................................................... 3,875 3,334
-------- ---------
$ 116,517 $ 70,756
========= =========
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(6) Long-term Debt (Continued)
The Company has a committed $100,000 revolving credit agreement which
matures October 31, 2000, with an option to extend for three one-year periods.
As of December 31, 1995, there was $43,167 available in unused lines of credit.
The revolving credit note is a multi-currency agreement which allows the Company
to borrow at various interest rates including, but not limited to, prime and an
adjusted LIBOR rate plus .375% to .75% depending upon debt to capitalization
ratios and the amount of the credit line used.
The Industrial Revenue Bond outstanding at December 31, 1995, is payable in
equal semi-annual installments of $117 until the year 2000. The Aberdeen,
Mississippi, bentonite operations of the Company are pledged as collateral. The
carrying value of the pledged assets at December 31, 1995 was $1,956.
Maturities of long-term debt at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 Thereafter
------- ------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Short-term debt supported by
revolving credit agreement......... $ 699 $ -- $ -- $ -- $56,919 $ --
Term note, at 9.68% (Series D)........ 2,860 2,860 2,860 2,840 -- --
Term note, at 7.36% (Series A)........ -- 4,000 9,500 11,500 -- --
Term note, at 7.83% (Series B)........ -- -- -- -- -- 10,000
Term note, at 8.10% (Series C)........ -- -- -- -- -- 15,000
Industrial Revenue Bond, at 68% of
prime.............................. 233 233 233 233 118
Other notes payable, at 0% to 10%..... 83 86 40 45 50
------ -------- ---------- ---------- ---------- -------
$3,875 $7,179 $12,633 $14,618 $57,087 $25,000
====== ====== ======= ======= ======= =======
</TABLE>
The estimated fair value of the term notes above at December 31, 1995, was
$65,364 based on discounting future cash payments at current market interest
rates for loans with similar terms and maturities.
All loan agreements include covenants which require the maintenance of
specific minimum amounts of working capital, tangible net worth and financial
ratios and limit additional borrowings and guarantees. The Company is not
required to maintain a compensating balance.
(7) Financial Instruments
The Company uses financial instruments, principally swaps, forward
contracts and options, in its management of foreign currency and interest rate
exposures. These contracts hedge transactions and balances for periods
consistent with its committed exposures.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(7) Financial Instruments (Continued)
Realized and unrealized foreign exchange gains and losses are recognized
and offset against foreign exchange gains or losses on the underlying exposures.
The interest differential paid or received on swap agreements is recognized as
an adjustment to interest. The Company had $25,000 interest rate swap in place
at December 31, 1994. During June 1995, the swap was cancelled for a gain of
$632. The gain was recorded as other income.
At December 31, 1995, the Company had $3,825 of forward exchange contracts
outstanding. The fair value of these contracts and the Company's other financial
instruments (except for term notes - see note (6)) approximates their carrying
value.
(8) Leases
The Company leases certain railroad cars, trailers, computer software,
office equipment, and office and plant facilities. Total rent expense under
operating lease agreements was approximately $2,283, $1,920, and $1,721 in 1995,
1994, and 1993, respectively. Rent expense on railroad cars is offset by mileage
earnings paid by the railroads of approximately $115, $124, and $137 in 1995,
1994, and 1993, respectively.
Railroad cars and computer software under capital leases are included in
machinery and equipment as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1995 1994
------ -------
<S> <C> <C>
Railroad cars and computer software........................................ $1,768 $1,768
Less accumulated amortization........................................... 1,291 1,139
------- -------
$ 477 $ 629
======= =======
</TABLE>
The following is a schedule of future minimum lease payments for the
capital leases and for operating leases (with initial terms in excess of one
year) as of December 31, 1995:
<TABLE>
<CAPTION>
Operating Leases
-----------------------------------
Capital
Leases Domestic Foreign Total
------ --------- ------- --------
<S> <C> <C> <C> <C>
Year ending December 31:
1996...................................................... $ 237 $ 3,710 $ 141 $ 3,851
1997...................................................... 237 2,310 112 2,422
1998...................................................... 171 1,872 69 1,941
1999...................................................... 114 1,652 40 1,692
2000...................................................... 0 937 27 964
Thereafter................................................ 0 774 50 824
-------- --------- ------- --------
Total minimum lease payments................................. 759 $ 11,255 $ 439 $11,694
======== ====== =======
Less amount representing interest............................ 66
-------
Present value of net minimum lease payments.................. $ 693
======
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(9) Employee Benefit Plans
The Company has noncontributory pension plans covering substantially all of
its domestic employees. The Company's funding policy is to contribute annually
the maximum amount calculated using the actuarially determined entry age normal
method that can be deducted for federal income tax purposes. Contributions are
intended to provide not only for benefits attributed to services to date, but
also for those expected to be earned in the future. The plan is fully funded for
tax purposes.
Pension cost in 1995, 1994, and 1993 was comprised of:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost................................................................ $ 980 $ 996 $ 746
Interest cost............................................................... 1,094 964 834
Actual return on plan assets................................................ (1,988) 1,354 (995)
Net amortization and deferral............................................... 482 (2,863) (134)
------- ------- -------
Net periodic pension cost................................................... $ 568 $ 451 $ 451
======== ======== ========
</TABLE>
The following table summarizes the funded status and amounts recognized in
the Company's balance sheet at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations-accumulated benefit obligation,
including vested benefits of $10,716 in 1995 and $8,835 in 1994................... $ 11,469 $ 9,522
======== =========
Projected benefit obligation......................................................... $(15,966) $(13,942)
Plan assets at fair value............................................................ 16,690 15,321
--------- ---------
Projected benefit obligation less than plan assets................................... 720 1,379
Unrecognized net (gain) loss......................................................... (1,101) (1,049)
Unrecognized net obligation at January 1, 1986, being amortized over a period from
19-21 years....................................................................... (1,319) (1,457)
--------- ---------
Pension liability included in accrued liabilities.................................... $ (1,696) $ (1,127)
========= ========
</TABLE>
The Company's pension benefit plan was valued as of October 1, 1995 and
1994, respectively. Approximately 94% of the plan assets are invested in common
stocks, corporate bonds and notes, and guaranteed income contracts purchased
from insurance companies. The remainder of the plan assets are invested in cash
and a real estate trust.
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% in 1995 and 8.0% in
1994, while the rate of increase in future compensation levels was 5.5% in 1995
and 6.0% in 1994. The expected long-term rate of return on plan assets was 9.0%
in 1995 and 9.0% in 1994.
The Company also has a savings plan for its domestic personnel. The Company
has contributed an amount equal to an employee's contribution up to a maximum of
4% of the employee's annual earnings. Company contributions are made using
Company stock purchased on the open market. Company contributions under the
savings plan were $985 in 1995, $963 in 1994, and $854 in 1993.
The foreign pension plans, not subject to ERISA, are funded using
individual annuity contracts and therefore, are not included in the information
noted above.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(10) Stockholders' Equity
On August 23, 1993, the Board of Directors authorized up to 2,500,000
shares of common stock, $.01 par value per share, to be offered and sold
pursuant to a public offering. The public offering was completed on October 27,
1993. The par value for these additional shares was increased by $25 and
additional paid-in capital was increased by $58,808, the total of which
represents the net proceeds from the sale of 2,500,000 shares of common stock.
On May 10, 1993, the stockholders of AMCOL International Corporation
approved an amendment to the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of common stock of the Company from 12
million to 50 million. The stockholders also approved an amendment to change the
par value of the common stock from $1.00 per share to $0.01 per share.
Additional paid-in capital was increased and common stock reduced by $9,328 for
the change in the par value of the common stock.
On May 10, 1993, the Board of Directors declared a two-for-one stock split
effected in the nature of a stock dividend to stockholders of record on June 8,
1993, which was paid June 23, 1993. The par value of these additional shares was
capitalized by a transfer of $94 from retained earnings to common stock.
All current and prior-year common share and per share disclosures have been
restated to reflect the stock dividends.
(11) Stock Option Plans
1983 Incentive Stock Option Plan
The Company reserved 1,800,000 shares of its common stock for issuance of
incentive stock options to its officers and key employees. Options awarded under
this plan, which entitle the optionee to one share of common stock, may be
exercised at a price equal to the fair market value at the time of grant.
Options awarded under the plan vest 40% after two years and continue to vest at
the rate of 20% per year for each year thereafter, until they are fully vested.
Options are exercisable as they vest and expire ten years after the date of
grant, except in the event of termination, retirement or death of the optionee
or a change in control of the Company.
This plan expired during 1993, though options which were granted prior to
its expiration continue to be valid until the individual option grants expire.
<TABLE>
<CAPTION>
Option price
1995 1994 1993 per share
-------- -------- --------- ---------------
<S> <C> <C> <C> <C>
Options outstanding at January 1...................... 873,971 990,667 1,123,076 $2.00 to $11.75
Granted ............................................. 0 0 254,540
$11.75
Exercised............................................. (171,869) (113,756) (363,840) $2.00 to $11.75
Cancelled............................................. (7,334) (2,940) (23,109) $2.92 to $11.75
------ ------ -------
Options outstanding at December 31.................... 694,768 873,971 990,667 $2.92 to $11.75
======= ======= =======
Options exercisable at December 31.................... 471,536 471,225 374,876
======= ======= =======
Shares available for future grant at December 31...... 0 0 0
======= ======= =======
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(11) Stock Option Plans (Continued)
1993 Stock Plan
The Company reserved 840,000 shares of its common stock for issuance to its
officers and key employees in the form of incentive stock options, nonqualified
stock options, restricted stock, stock appreciation rights and phantom stock.
Different terms and conditions apply to each form of award made under the plan.
To date, only incentive stock options have been awarded. Options awarded under
this plan, which entitle the optionee to one share of common stock, may be
exercised at a price equal to the fair market value at the time of grant.
Options awarded under the plan generally vest 40% after two years and continue
to vest at the rate of 20% per year for each year thereafter, until they are
fully vested, unless a different vesting schedule is established by the Option
Committee of the Board of Directors on the date of grant. Options are
exercisable as they vest and expire ten years after the date of grant, except in
the event of termination, retirement or death of the optionee or a change in
control of the Company.
<TABLE>
<CAPTION>
Option price
1995 1994 1993 per Share
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Options outstanding at January 1...................... 198,975 84,150 0 $17.75 to $20.50
Granted............................................... 134,450 117,045 84,150 $12.38 to $20.50
Exercised............................................. 0 0 0 $0.00
Cancelled............................................. (11,635) (2,220) 0 $12.38 to $17.75
-------- ------- -------
Options outstanding at December 31.................... 321,790 198,975 84,150 $12.38 to $20.50
======= ======= =======
Options exercisable at December 31.................... 0 0 0
======= ======= =======
Shares available for future grant at December 31...... 518,210 641,025 755,850
======= ======= =======
</TABLE>
1987 Nonqualified Stock Option Plan
The Company reserved 340,000 shares of its common stock for issuance of
nonqualified stock options to outside officers and directors, as well as key
employees. The stock options are exercisable at a price per share which may be
no less than the fair market value at the time of grant according to the vesting
provisions of the plan. Options awarded under the plan generally vest 40% after
two years and continue to vest at the rate of 20% per year for each year
thereafter, until fully vested. Options are exercisable as they vest and expire
ten years after the date of grant, except in the event of termination,
retirement or death of the optionee or a change in control of the Company.
<TABLE>
<CAPTION>
Option price
1995 1994 1993 per Share
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Options outstanding at January 1...................... 140,656 144,400 162,000 $ 2.92 to $17.25
Granted............................................... 17,000 2,256 4,000 $13.25 to $17.75
Exercised............................................. (6,000) (6,000) (21,600) $ 2.92
Cancelled............................................. (800) 0 0 $13.25
------- ------- -------
Options outstanding at December 31.................... 150,856 140,656 144,400 $ 2.92 to $17.75
======= ======= =======
Options exercisable at December 31.................... 137,544 123,284 116,240
======= ======= =======
Shares available for future grant at December 31...... 136,744 153,744 156,000
======= ======= =======
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts)
(12) Accrued Liabilities
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Estimated accrued severance taxes.................................................... $ 1,048 $ 1,410
Accrued employee benefits............................................................ 1,837 1,246
Accrued vacation pay................................................................. 1,438 1,172
Accrued dividends.................................................................... 1,344 1,140
Accrued bonus........................................................................ 781 575
Accrued commissions.................................................................. 578 1,125
Other................................................................................ 6,010 6,262
--------- ---------
$ 13,036 $ 12,930
========= =========
</TABLE>
(13) Quarterly Results (Unaudited)
Unaudited summarized results for each quarter in 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1995 Quarter
--------------------------------------------
First Second Third Fourth
------- ------- ------- -------
<S> <C> <C> <C> <C>
Minerals..................................................... $39,097 $39,015 $38,203 $38,525
Absorbent Polymers........................................... 26,480 28,768 31,286 34,228
Environmental................................................ 7,925 10,609 17,790 14,096
Transportation............................................... 5,248 5,268 5,699 5,451
------- ------- ------- -------
Net Sales................................................. $78,750 $83,660 $92,978 $92,300
======= ======= ======= =======
Minerals..................................................... $ 8,027 $9,221 $ 7,624 $7,704
Absorbent Polymers........................................... 6,178 6,023 6,263 7,374
Environmental................................................ 2,528 3,552 4,996 4,380
Transportation............................................... 643 633 719 697
------- ------- ------- -------
Gross Profit.............................................. $17,376 $19,429 $19,602 $20,155
======= ======= ======= =======
Minerals..................................................... $ 3,791 $ 4,588 $ 4,145 $ 3,251
Absorbent Polymers........................................... 4,084 3,700 3,869 5,249
Environmental................................................ 9 966 2,706 1,624
Transportation............................................... 256 263 315 223
Corporate.................................................... (1,582) (1,739) (1,406) (1,915)
-------- -------- -------- --------
Operating Profit.......................................... $ 6,558 $ 7,778 $ 9,629 $ 8,432
======== ======== ======== ========
Net Income................................................... $ 3,631 $ 4,688 $ 4,917 $ 4,535
======== ======== ======== ========
Earnings per common and common equivalent share:............. $ 0.19 $ 0.24 $ 0.25 $ 0.23
======== ======== ======== ========
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts
(13) Quarterly Results (Unaudited) (Continued)
<TABLE>
<CAPTION>
1994 Quarter
--------------------------------------------
First Second Third Fourth
------- ------- ------- -------
<S> <C> <C> <C> <C>
Minerals..................................................... $ 37,020 $37,756 $ 38,217 $41,497
Absorbent Polymers........................................... 12,205 14,137 16,084 16,165
Environmental................................................ 3,942 6,997 11,016 8,771
Transportation............................................... 4,679 5,122 5,658 6,177
------- ------ -------- -------
Net Sales................................................. $ 57,846 $64,012 $ 70,975 $72,610
======= ====== ======== =======
Minerals..................................................... $ 6,882 $7,549 $ 7,854 $10,992
Absorbent Polymers........................................... 3,160 3,444 4,502 4,160
Environmental................................................ 1,288 1,584 3,441 2,016
Transportation............................................... 587 665 698 665
------- ------ -------- -------
Gross Profit.............................................. $11,917 $13,242 $ 16,495 $17,833
======= ====== ======== =======
Minerals..................................................... $ 3,593 $ 3,962 $ 4,335 $ 7,755
Absorbent Polymers........................................... 1,507 1,697 2,469 2,286
Environmental................................................ 159 205 1,570 (154)
Transportation............................................... 222 268 304 231
------- ------ -------- -------
Operating Profit.......................................... $ 4,053 $ 4,688 $ 6,912 $ 8,338
======= ====== ======== =======
Net Income................................................... $ 2,490 $ 3,353 $ 4,238 $ 5,202
======= ====== ======== =======
Earnings per common and common equivalent share:............. $ 0.13 $ 0.17 $ 0.22 $ 0.26
======= ====== ======== =======
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
(Dollars in thousands)
<TABLE>
<CAPTION>
Additions
-----------------------
Charged to
Balance at Charged to other Other charges Balance at
beginning of costs and account add (deduct) end of
Year Description year expenses describe describe year
- ------ --------------------------------- ------------- ---------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1995 Allowance for doubtful accounts $1,336 $769 $-- $ (504)(1) $1,601
====== ==== === ======= ======
1994 Allowance for doubtful accounts $1,836 $978 $-- $(1,478)(1)(2) $1,336
====== ==== === ======= ======
1993 Allowance for doubtful accounts $1,262 $703 $-- $ (129)(1) $1,836
====== ==== === ======= ======
- -----------
<FN>
(1) Bad debts written off.
(2) During 1994 the Company acquired Aquatec and Hydron which included allowance for doubtful accounts of $60
and $15 respectively.
</FN>
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 28, 1996
AMCOL INTERNATIONAL CORPORATION
By: /s/ John Hughes
---------------------------------
John Hughes
President; Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ John Hughes March 28, 1996
- ----------------------------------------
John Hughes
President; Chief Executive Officer
and Director
/s/ Paul G. Shelton March 28, 1996
- ----------------------------------------
Paul G. Shelton
Senior Vice President - Chief Financial
Officer; Treasurer and Director
/s/ C. Eugene Ray March 28, 1996
- ----------------------------------------
C. Eugene Ray
Director; Chairman of the Board
/s/ Jay D. Proops March 28, 1996
- ----------------------------------------
Jay D. Proops
Director
/s/ Robert C. Humphrey March 28, 1996
- ----------------------------------------
Robert C. Humphrey
Director
/s/ Robert E. Driscoll, III March 28, 1996
- ----------------------------------------
Robert E. Driscoll, III
Director
/s/ Raymond A. Foos March 28, 1996
- ----------------------------------------
Raymond A. Foos
Director
<PAGE>
/s/ Clarence O. Redman March 28, 1996
- ----------------------------------------
Clarence O. Redman
Director
/s/ Arthur Brown March 28, 1996
- ----------------------------------------
Arthur Brown
Director
/s/ Dale E. Stahl March 28, 1996
- ----------------------------------------
Dale E. Stahl
Director
/s/ Paul C. Weaver March 28, 1996
- ----------------------------------------
Paul C. Weaver
Director
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
3.1 Restated Certificate of Incorporation of the Company (5)
3.2 Bylaws of the Company (1), as amended
4 Article Fourth of the Company's Restated Certificate of Incorporation
(5)
10.1 AMCOL International Corporation 1983 Incentive Stock Option Plan (1); as
amended (3)*
10.4 Executive Medical Reimbursement Plan (1)*
10.5 Lease Agreement for office space dated September 29, 1986, between the
Company and American National Bank and Trust Company of Chicago (1) as
amended (8)
10.6 AMCOL International Corporation 1987 Non-Qualified Stock Option Plan
(2); as amended (6)*
10.7 Change in Control Agreement dated April 1, 1994, by and between
Registrant and John Hughes (6)*
10.8 Change in Control Agreement dated April 1, 1994, by and between
Registrant and Paul G. Shelton (6)*
10.9 Change in Control Agreement dated February 7, 1996, by and between
Registrant and Robert C. Steele
10.10 Change in Control Agreement dated February 7, 1996, by and between
Registrant and Lawrence E. Washow
10.11 Change in Control Agreement dated February 7, 1996, by and between
Registrant and Roger P. Palmer
10.12 Change in Control Agreement dated January 24, 1994, by and between
Registrant and Peter L. Maul (6)*
10.13 AMCOL International Corporation Dividend Reinvestment and Stock Purchase
Plan (4); as amended (6)*
10.14 AMCOL International Corporation 1993 Stock Plan (6)*, as amended
10.15 Credit Agreement by and among AMCOL International Corporation and Harris
Trust and Savings Bank, individually and as agent, NBD Bank, LaSalle
National Bank and the Northern Trust Company dated October 4, 1994, (7);
as amended, First Amendment to Credit Agreement dated September 25, 1996
(9)
10.16 Note Agreement dated October 1, 1994, between AMCOL International
Corporation and Principal Mutual Life Insurance Company (7)
18 Letter regarding change in accounting principles
21 Subsidiary of the Company
23 Consent of Independent Public Accountants
27 Financial Data Schedule
- ----------------
<FN>
(1) Exhibit is incorporated by reference to the Registrant's Form 10 filed
with the Securities and Exchange Commission on July 27, 1987.
(2) Exhibit is incorporated by reference to the Registrant's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1988.
(3) Exhibit is incorporated by reference to the Registrant's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1989.
(4) Exhibit is incorporated by reference to the Registrant's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1992.
(5) Exhibit is incorporated by reference to the Registrant's Form S-3 filed
with the Securities and Exchange Commission on September 15, 1993.
(6) Exhibit is incorporated by reference to the Registrant's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1993.
(7) Exhibit is incorporated by reference to the Registrant's Form 10-Q
filed with the Securities and Exchange Commission for the quarter ended
September 30, 1994.
(8) Exhibit is incorporated by reference to the Registrant's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1994.
(9) Exhibit is incorporated by reference to the Registrant's Form 10-Q
filed with the Securities and Exchange Commission for the quarter ended
September 30, 1995.
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Annual Report on Form 10-K pursuant to Item
14(c) of Form 10-K.
</FN>
</TABLE>
Amended Provisions of AMCOL International Corporation's
Restated Certificate of Incorporation
FIRST. The name of the corporation is AMCOL International Corporation.
FOURTEENTH.
Section 1. The number of directors which shall constitute the whole Board
of Directors shall be determined from time to time by resolution adopted by a
majority of the entire Board of Directors. No decrease in the number of
directors shall shorten the term of any incumbent director.
Section 2. The Board of Directors shall be classified, with respect to the
time for which they severally hold office, into three (3) classes, as nearly
equal in number as possible. At the annual meeting of stockholders in 1995, the
three classes of directors shall be elected to serve terms expiring in 1996,
1997 and 1998, respectively, and at each annual meeting of stockholders
thereafter, the successors of the class of directors whose term is expiring at
such meeting shall be elected to hold office for a term expiring at the annual
meeting of the stockholders to be held in the third year following their
election, with each such director in each case to hold office until his or her
successor is elected and qualified.
Section 3. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, and the directors so
chosen shall hold office for a term expiring at the next election of the class
for which such director was appointed and until his or her successor is elected
and qualified.
Section 4. Any director may be removed from office at any time, but only
for cause and only upon the affirmative vote of the holders of at least 66-2/3%
of the voting power of the then outstanding shares of the capital stock of the
corporation.
Section 5. Notwithstanding any provision in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
66-2/3% of the voting power of the then outstanding shares of the capital stock
of the corporation shall be required to repeal, amend, modify or adopt any
provision inconsistent with the provisions of this Article Fourteenth.
AMCOL INTERNATIONAL CORPORATION
BY-LAWS
ARTICLE I
OFFICES
Section 1. Principal Offices. The principal office shall be in
the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The corporation may also have offices
at such other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
whatever purpose shall be held at such place, either within or without the
State of Delaware, and at such time as may be fixed from time to time by the
Board of Directors.
Section 2. Annual Meetings. Annual meetings of stockholders
shall be held on such date and at such time and place as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting.
Section 3. Notice of Annual Meeting. Written notice of the
annual meeting shall be given to each stockholder entitled to vote thereat
not fewer than ten days or more than sixty days before the date fixed for the
meeting.
Section 4. Special Meetings of Stockholders. Special meetings
of the stockholders, for any purpose or purposes, unless otherwise prescribed
by statute or by the certificate of incorporation, may be called by the Board
of Directors or by the Chairman of the Board, and shall be called by the
Chairman or the Chief Executive Officer at the request in writing of a
majority of the Board of Directors, or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Section 5. Notice of Special Meetings. Written notice of a
special meeting of stockholders, stating the time, place and object thereof,
shall be given to each stockholder entitled to vote thereat, not fewer than
ten or more than sixty days before the date fixed for the meeting.
Section 6. Business which may be Transacted. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
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Section 7. Notice of Stockholder Business and Nominations.
(A) Annual Meeting of Stockholders. (1) Nominations of
persons for election to the Board of Directors of the Corporation and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this By-Law, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this By-Law.
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (c) of
paragraph (A)(1) of this By-Law, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 60th day nor earlier than the close of business on the 90th
day prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of annual meeting is more
than 30 days before or more than 60 days after such anniversary date, notice
by the stockholder to be timely must be so delivered not earlier than the
close of business on the 90th day prior to such annual meeting and not later
than the close of business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made by the Corporation. In no event shall the
public announcement of an adjournment of an annual meeting commence a new
time period for the giving of a stockholder's notice as described above.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or
is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and rule
14a-11 thereunder (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected);
(b) as to any other business that the stockholder proposes to bring before
the meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this By-Law to the contrary, in the event that the number
of directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of the preceding
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year's annual meeting, a stockholder's notice required by this By-Law shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary
at the principal executive offices of the Corporation not later than the
close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business
shall be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at
a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (a) by or at the direction of
the Board of Directors or (b) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by any
stockholder of the Corporation who is a stockholder of record at the time of
giving of notice provided for in this By-law, who shall be entitled to vote
at the meeting and who complies with the notice procedures set forth in this
By-Law. In the event the Corporation calls a special meeting of stockholders
for the purpose of electing one or more directors to the Board of Directors,
any such stockholder may nominate a person or persons (as the case may be),
for election to such position(s) as specified in the Corporation's notice of
meeting, if the stockholder's notice required by paragraph (A)(2) of this
By-Law shall be delivered to the Secretary at the principal executive offices
of the Corporation not earlier than the close of business on the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected
at such meeting. In no event shall the public announcement of an adjournment
of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(C) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this By-Law shall be eligible to
serve as directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this By-Law. Except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this
By-Law and, if any proposed nomination or business is not in compliance with
this By-Law, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this By-Law, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
By-Law, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed to
<PAGE>
affect any rights (i) of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act or (ii) of the holders of any series of Preferred Stock to elect
directors under specified circumstances.
Section 8. Inspectors of Elections: Opening and Closing the
Polls. The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve
the Corporation in other capacities, including, without limitation, as
officers, employees, agents or representatives, to act at the meetings of
stockholders and make a written report thereof. One or more persons may be
designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act or is able to
act at a meeting of stockholders, the Chairman of the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall have the duties prescribed
by law.
The Chairman of the meeting shall fix and announce at the meeting
the date and time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting.
Section 9. Record Date for Action by Written Consent. In order
that the Corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolutions fixing the record date is adopted by the Board of Directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Any
stockholder of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the Board of Directors within 10 days of
the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in Delaware, its principal
place of business or to any officer of agent of the Corporation having
custody of the book in which proceedings of meeting of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
Section 10. Inspectors of Written Consent. In the event of the
delivery, in the manner provided by Section 9, to the Corporation of the
requisite written consent or consents to take corporate action and/or any
related revocation or revocations, the Corporation shall engage nationally
<PAGE>
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the consents and
revocations. For the purpose of permitting the inspectors to perform such
review, no action by written consent without a meeting shall be effective
until such date as the independent inspectors certify to the Corporation that
the consents delivered to the Corporation in accordance with Section 9
represent at least the minimum number of votes that would be necessary to
take the corporate action. Nothing contained in this paragraph shall in any
way be construed to suggest or imply that the Board of Directors or any
stockholder shall not be entitled to contest the validity of any consent or
revocation thereof, whether before or after such certification by the
independent inspectors, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).
Section 11. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute, the certificate of incorporation or these by-laws. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might
have been transacted at the meeting as originally noticed. If the
adjournment is for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 12. Powers of the Stockholders. When a quorum is
present at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is one upon
which by express provision of the statutes, the certificate of incorporation
or these by-laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Election
of directors at all meetings of the Stockholders at which directors are
elected shall be by ballot, and, subject to the rights of the holders of any
class or series of preferred stock to elect directors under specified
circumstances, a plurality of the votes cast thereat shall elect directors.
Section 13. Voting Rights of Stockholders. Each stockholder
shall at every meeting of the stockholders be entitled to one vote in person
or by proxy for each share of the capital stock having voting power held by
such stockholder, but no proxy shall be voted on after three years from its
date, unless the proxy provides for a longer period, and except where the
transfer books of the corporation have been closed or a date has been fixed
as a record date for the determination of its stockholders entitled to vote,
no share of stock shall be voted on at any election for directors which has
been transferred on the books of the corporation within twenty days next
preceding such election of directors.
Section 14. List of Stockholders. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least ten days
<PAGE>
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at said meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within
the city, town or village where the meeting is to be held and which place
shall be specified in the notice of the meeting or, if not specified, at the
place where said meeting is to be held, and the list shall be produced and
kept at the time and place of meeting during the whole time thereof, and
subject to the inspection of any stockholder who may be present.
Section 15. Action by Unanimous Written Consent of Stockholders
Instead of by Meeting. Unless otherwise provided in the Certificate of
Incorporation, whenever the vote of stockholders at a meeting is required or
permitted to be taken in connection with any corporate action by any
provisions of the statutes, the certificate of incorporation or these
by-laws, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitles to vote thereon were present. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 16. Manner of Sending Notice and Effective Date.
Notices to stockholders shall be sent by mail addressed to them at their
respective addresses appearing on the books of the corporation. Notice shall
be deemed to be given at the time the same shall be mailed.
Section 17. Proxy. At any meeting of the stockholders, every
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. Any copy,
facsimile telecommunication or other reliable reproduction of the writing or
transmission created pursuant to this paragraph may be substituted or used in
lieu of the original writing or transmission for any and all purposes for
which the original writing or transmission could be used; provided that, such
copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. All voting,
excepting where otherwise required by law, the Certificate of Incorporation
or the Board of Directors may be a voice vote.
Section 18. Chairman of meeting. The Chairman of the Board of
Directors shall preside at all meetings of the stockholders. In the absence
or inability to act of the chairman, the chief executive officer, the
president, an executive vice president or a vice president (in that order)
shall preside, and in their absence or inability to act another person
designated by one of them shall preside. The secretary of the Corporation
shall act as secretary of each meeting of the stockholders. In the event of
his absence or inability to act, the chairman of the meeting shall appoint a
person who need not be a stockholder to act as secretary of the meeting.
Section 19. Conduct of meetings. Meetings of the stockholders
shall be conducted in a fair manner but need not be governed by any
prescribed rules of order. The presiding officer's rulings on procedural
<PAGE>
matters shall be final. The presiding officer is authorized to impose
reasonable time limits on the remarks of individual stockholders and may take
such steps as such officer may deem necessary or appropriate to assure that
the business of the meeting is conducted in a fair, orderly and prompt manner.
ARTICLE III
DIRECTORS
Section 1. Numbers and Manner of Election. The number of
directors which shall constitute the whole Board shall be a minimum of five
(5) and a maximum of fifteen (15). The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his or her
successor is elected and qualified. Directors need not be stockholders. No
decrease in the number of Directors shall shorten the term of any incumbent
director.
Section 2. Permissible Filling of Vacancies by Board. Vacancies
and newly created directorships resulting from any increase in the number of
directors may be filled by a majority of the directors then in office,
although less than a quorum, and the directors so chosen shall hold office
for a term expiring at the next election of the class for which such director
was elected and until his or her successor is duly elected and shall qualify.
Section 3. Powers of the Board. The business of the corporation
shall be managed by its Board of Directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed
or required to be exercised or done by the stockholders.
Section 4. Compensation of Directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Section 5. Honorary Directors. The Board of Directors may, from
time to time, appoint such honorary directors as it shall deem appropriate.
Honorary directors shall be entitled to attend meetings of the Board but
shall have no power to vote and shall not be deemed to be members of the
Board of Directors for quorum and other purposes under these by-laws or
otherwise. Honorary directors shall receive no compensation but shall be
reimbursed for their reasonable travel and living expenses incurred in
attending meetings held more than fifty miles from their place of residence.
Appointments shall be for a term designated by the Board of Directors subject
to the right of the Board of Directors to terminate the appointment at any
time in its sole discretion.
Section 6. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the number of Directors may designate two
or more Directors to constitute an Executive Committee, which Committee, to
the extent provided in such resolution, shall have and exercise all of the
<PAGE>
authority of the Board of Directors in the management of the corporation
between meetings of the Board of Directors, except as otherwise required by
law. Vacancies in the membership of the Committee may be filled by the Board
of Directors at a regular or special meeting of the Board of Directors. The
Executive Committee shall keep regular minutes of its proceedings and report
the same to the Board when required.
Section 7. Other Committees. The Board of Directors by
resolution adopted by a majority of a number of Directors may designate two
or more Directors to constitute an additional Committee or Committees, which
Committee or Committees, to the extent provided in such resolution, shall
make recommendations to the Board of Directors as to all matters within the
scope of their respective Committee. Vacancies in the membership of a
Committee may be filled by the Board of Directors at a regular or special
meeting of the Board of Directors. Such Committee or Committees shall keep
regular minutes of its proceedings and report the same to the Board when
required.
Section 8. General. Any such committee, to the extent provided
in the resolution of the Board of Directors, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in subsection
(a) of Section 151 of the General Corporation Law of the State of Delaware,
fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of
shares of any series of stock or authorize the increase or decrease of the
number of shares of any series), and if the resolution which designates the
committee or a supplemental resolution of the Board of Directors shall so
provide, such committee shall have the power and authority to adopt an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all the Corporation's
property and assets, recommending to the stockholders a dissolution, removing
or indemnifying directors or amending these by-laws; and, unless a resolution
of the Board of Directors so provided, no such committee shall have the power
or authority to declare a dividend, to authorize the issuance of stock or to
adopt a certificate of ownership or merger pursuant to Section 253 of the
General Corporation Law of the State of Delaware.
Section 9. Meetings. Each committee shall keep regular minutes
of its meetings and shall file such minutes and all written consents executed
by its members with the secretary of the Corporation. Each committee may
determine the procedural rules for meeting and conducting its business and
shall act in accordance therewith, except as otherwise provided herein or
required by law. Adequate provision shall be made for notice to members of
all meetings; a majority of the members shall constitute a quorum unless the
committee shall consist of one or two members, in which event one member
shall constitute a quorum; and all matters shall be determined by a majority
vote of the members present. Action may be taken by any committee without a
meeting if all members thereof consent thereto in writing, and the writing or
<PAGE>
writings are filed with the minutes of the proceedings of such committee.
Members of any committee of the Board of Directors may participate in any
meeting of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating may hear
each other, and participation in a meeting by such means shall constitute
presence in person at such meeting.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place of Meetings. The Board of Directors of the
corporation may hold meetings, both regular and special either within or
without the State of Delaware.
Section 2. Annual Meetings. The annual meeting of the Board of
Directors shall be held, at such time and place, as shall be fixed by order
of the Chairman of the Board of the corporation. At such meeting the
directors shall elect officers of the corporation to serve until the next
annual meeting of the Board and until their respective successors are elected
and qualified, and any other business may be transacted at this meeting which
falls within the scope of the powers of the Board. The annual meeting of the
Board of Directors shall be a regular meeting. Ten days notice of the annual
meeting shall be sent to each director by mail.
Section 3. Other Regular Meetings. The Board of Directors may
by resolution, which it may from time to time alter or rescind at its
discretion, establish other regular meetings, to be held at such times and
places and upon such notice (or without notice) as it shall determine.
Section 4. Special Meetings. Special meetings of the Board may
be called by resolution of the Board at a prior meeting, or by the Chairman
of the Board or Chief Executive Officer, on three days notice to each
director personally, or sent by mail or by telegram or facsimile; special
meetings shall be called by the Chairman of the Board or the secretary on
like notice, on request of three directors, provided that such request shall
state what matters the signers wish to have considered at the meeting. At
all special meetings of the Board, if the notice states that any matters
properly presented will be considered, the directors may take any action
within the scope of their powers, and it shall not be necessary that any
matters which are to be considered be specified in the notice unless required
by statute, by the certificate of incorporation, or elsewhere by these
by-laws.
Section 5. Manner of Giving Notice to Directors and Effective
Date. In the case of all notices of meetings of the Board of Directors,
other than those given personally, the same shall be sent to the directors at
their respective addresses appearing on the books of the corporation at least
seventy-two hours in advance of the meeting. Notice sent by mail shall be
deemed to be given at the time when the same shall be mailed, and if sent by
wire, at the time the telegram is delivered to the telegraph company and if
sent by facsimile when transmitted.
Section 6. Waiver of Notice. Whenever any notice is required to
be given under the provisions of the statutes or of the certificate of
incorporation or of these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein shall be deemed equivalent thereto.
<PAGE>
Section 7. Quorum. At all meetings of the Board a majority of
the directors then in office (but not less than three directors), shall
constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If
a quorum shall not be present at any meeting of the Board, the directors
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
Section 8. Action by Unanimous Written Consent of Directors
Instead of by Meeting. 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 or any committee designated by the
Board of Directors may be taken without a meeting, if a written consent
thereto is signed by all members of the Board or such committee, and such
written consent is filed with the minutes of proceedings of the Board or such
committee.
Section 9. Telephonic meetings. Members of the Board of
Directors may participate in any meeting by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation by such means shall
constitute presence in person at such meeting.
ARTICLE V
OFFICERS
Section 1. Specified Officers. The officers of the corporation
shall be a Chairman of the Board, a Chief Executive Officer, a Chief
Operating Officer, a President, one or more Executive Vice Presidents, such
number of other Vice Presidents as the Board shall from time to time
determine, a Chief Financial Officer, a Secretary, a Treasurer, such number
of Assistant Secretaries and Assistant Treasurers as the Board shall from
time to time determine and such other officers as the Board shall from time
to time determine. One person may hold and perform the duties of any lawful
number of said offices. The same person may not execute any document or
instrument on behalf of the corporation in more than one capacity. Failure
to elect any specified officer in any year shall not be deemed to be an
amendment to these by-laws, but shall be a conclusive presumption that the
office was deliberately left vacant.
Section 2. Election. All officers of the corporation shall be
elected by the Board of Directors. The Board at its annual meeting shall
elect a Chairman of the Board of Directors and a Chief Executive Officer from
among the directors, and shall elect the other officers specified in Section
1 hereof, none of whom need be members of the Board; provided that vacancies
occurring in any of said offices between annual meetings of the Board or any
additional offices created between such annual meetings, may be filled by the
Board at any meeting held between such annual meetings.
<PAGE>
Section 3. Removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors then in office. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with
the Corporation, but the election of an officer or agent shall not of itself
create any contractual rights. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for the
unexpired portion of the term by the Board of Directors.
Section 4. Term of Office. The officers of the corporation
shall hold office either until the annual meeting of the Board following
their election or until their respective successors are elected and qualify,
or for a lesser term as may be specified by the Board of Directors, subject
to the power of removal specified in Section 4 hereto.
Section 5. Chairman of the Board of Directors. The Chairman of
the Board of Directors shall preside at all meetings of the stockholders and
the Board of Directors of the corporation. The Chairman of the Board shall
designate another director to preside in his absence. In the event of the
absence of the Chairman of the Board without the designation of a director to
preside, the Chief Executive Officer shall preside. The Chairman may sign
and execute in the name of the corporation all authorized contracts, bonds,
mortgages, or other authorized corporate obligations or instruments, and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 6. Chief Executive Officer. The Chief Executive Officer
shall have general charge, control, direction and supervision over the
business and affairs of the corporation, subject to the control and direction
of the Board of Directors and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 7. The President. The President shall have such duties
and exercise such powers as the Board of Directors may from time to time
prescribe under the direction of the Chief Executive Officer and subject to
the control of the Board of Directors. He may sign and execute in the name
of the corporation all authorized contracts, bonds, mortgages or other
authorized corporate obligations or instruments, and may with the Secretary
or an Assistant Secretary sign all certificates of the capital stock of the
corporation.
Section 8. Chief Operating Officer. The Chief Operating Officer
shall have general charge, control, direction and supervision over the
day-to-day operations of the corporation, under the direction of the Chief
Executive Officer, subject to the control of the Board of Directors and shall
perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 9. Chief Financial Officer. The Chief Financial Officer
shall be responsible for the financial affairs of the corporation, under the
direction of the Chief Executive Officer and subject to the control of the
Board of Directors and shall render to the Chief Executive Officer and the
Board of Directors at its regular meetings, or when the Board of Directors so
requires, an account of the financial condition of the corporation. He shall
also perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
<PAGE>
Section 10. Executive Vice President. The Executive Vice
President (or, if there shall be more than one, the Executive Vice Presidents
in the order designated by the Board of Directors, or in the absence of any
designation, then in order of their election) shall, in the absence or
disability of the President, perform the duties and exercise the powers of
the President and shall perform such other duties and have such other powers
as the Chief Executive Officer or the Board of Directors may from time to
time prescribe.
Section 11. Vice Presidents. The Vice Presidents in the order
of their election unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Chief Executive Officer, the
President, the Chief Operating Officer, or any Executive Vice Presidents,
perform the duties and exercise the powers of the President, and shall
perform such other duties and have such other powers as the Chief Executive
Officer or the Board of Directors may from time to time prescribe.
Section 12. The Secretary. The Secretary shall when practicable
attend all meetings of the Board of Directors and all meetings of the
stockholders, and record all the proceedings of the meetings of the
corporation and of the Board of Directors in a book to be kept for that
purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and notice of all meetings of the Board of Directors, where
required by the by-laws or by resolution or order of the Board. He shall
perform such other duties as may be prescribed by the Board of Directors or
the Chief Executive Officer of the corporation. He shall keep in safe
custody the seal of the corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it and, when so
affixed, it shall be attested by his signature or by the signature of an
assistant secretary.
Section 13. The Assistant Secretary. The Assistant Secretary,
or if there be more than one, the Assistant Secretaries in the order of their
election, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary, and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 14. The Treasurer.
(a) The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall cause to be
deposited all monies and other valuable effects in the name and to the credit
of the corporation in such depositories as may be designated by the Board of
Directors.
(b) He shall disburse or cause to be disbursed, the funds of
the corporation as may be ordered by the Board of Directors by general
resolution or otherwise, taking proper vouchers for such disbursements, and
shall render to the Chief Executive Officer and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account
of all his transactions as Treasurer.
<PAGE>
(c) If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind, in his possession or under his control,
belonging to the corporation.
Section 15. The Assistant Treasurers. The Assistant Treasurer,
or if there shall be more than one, the Assistant Treasurers in the order of
their election unless otherwise determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 16. Other officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
Section 17. Duties of officers. Powers of attorney, proxies,
waivers of notice of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, Chief Executive
Officer, President or any Vice President and any such officer may in the name
of and on behalf of the Corporation, take all such action as any such officer
may deem advisable to vote in person or by proxy at a meeting of security
holders of any corporation in which the Corporation may own securities and at
any such meeting shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present. The Board of
Directors may be resolution, from time to time confer like powers upon any
other person or persons.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Stock Certificates. Every holder of stock in a
corporation shall be entitled to have a certificate signed by, or in the name
of the corporation, by the Chairman of the Board of Directors, the Chief
Executive Officer or the President or an Executive Vice President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of such corporation certifying the number of shares
owned by him in such corporation. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
<PAGE>
Section 2. Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or
his legal representative, to advertise the same in such manner as it shall
require, and/or to give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 3. Transfer of Stock. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for shares duly
endorsed, or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its book.
Section 4. Fixing of Record Date. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
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
may fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to 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; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 5. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered on its books
as the owner of shares, and not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof except as
otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
<PAGE>
Section 2. Reserves. Before payment of any dividend there may
be set aside out of any funds of the corporation available for dividends,
such sum or sums as the directors from time to time in their absolute
discretion think proper as a reserve or reserves to meet contingencies or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive
to the interest of the corporation, and the directors may modify or abolish
any such reserve in the manner in which it was created.
Section 3. Banking Accounts. The Board of Directors may from
time to time by resolution establish banking accounts with such banks, trust
companies or other financial institutions wheresoever located, as it shall
see fit, and may in its sole discretion disestablish any of such banking
accounts or amend the resolutions establishing and governing the same.
Section 4. Checks, etc. All checks and demands for money and
notes of the corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate either in the resolutions pertaining to its banking accounts or
otherwise.
Section 5. Fiscal Year. The fiscal year of the corporation
shall coincide with the calendar year.
Section 6. Seal. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization, and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
These by-laws or any part thereof may be altered, amended or
repealed at any regular or special meeting of the stockholders or of the
Board of Directors, if such proposed alteration, amendment or repeal or the
substance thereof, be set forth in the notice of such meeting, together with
notice that the same will be proposed for adoption.
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify those persons specified in
Article TWELFTH of the Corporation's certificate of incorporation, as amended
from time to time, to the extent, in the manner, and subject to compliance
with the applicable standards of conduct, provided by said Article TWELFTH.
AMCOL INTERNATIONAL CORPORATION
1993 STOCK PLAN
(As Amended and Restated
as of May 9, 1995)
1. Preamble
American Colloid Company, now known as AMCOL International
Corporation, previously established the American Colloid Company 1993 Stock
Plan. The following is an amendment and restatement of the Plan. The Plan is
established as a means whereby the Company may, through awards of (i) incentive
stock options ("ISOs") within the meaning of Section 422 of the Code, (ii) stock
appreciation rights ("SARs"), (iii) nonqualified stock options ("NSOs"), (iv)
restricted stock ("Restricted Stock"), and (v) phantom stock ("Phantom Stock"):
(a) provide key employees who have substantial responsibility for the
direction and management of the Company with additional incentive to promote the
success of the Company's business;
(b) encourage such employees to remain in the employ of the Company;
and
(c) enable such employees to acquire proprietary interests in the
Company.
The provisions of this Plan do not apply to or affect any option,
stock, stock appreciation right, restricted stock or phantom stock heretofore or
hereafter granted under any other stock plan of the Company, and all such
options, stock, stock appreciation right, restricted stock or phantom stock
continue to be governed by and subject to the applicable provisions of the plan
under which they were granted.
2. Definitions
2.01 "Award" means the grant of Options, SARs, Phantom Stock and/or
Restricted Stock to a Participant.
2.02 "Award Date" means the date upon which an Option, SAR, Restricted
Stock or Phantom Stock is awarded to a Participant under the Plan.
2.03 "Board" or "Board of Directors" means the board of directors of the
Company.
2.04 "Code" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
2.05 "Committee" means two or more individuals selected by the Board of
Directors. Each member of the Committee shall not have at any time within one
year prior thereto, or at any time during such member's term of service on the
Committee, received or been eligible to receive any stock options, stock
appreciation rights, phantom stock or allocations of any equity securities under
the Plan or any other plan maintained by the Company or any of its affiliates,
except as permitted pursuant to the provisions of Rule 16b-3(c)(2)(i) of the
Securities and Exchange Commission or any successor rule thereof. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board of Directors.
<PAGE>
2.06 "Common Stock" means the common stock of the Company, par value $.01
per share.
2.07 "Company" means AMCOL International Corporation, a Delaware
corporation, and any successor thereto.
2.08 "Exchange Act" shall mean the Securities Exchange Act of 1934, as it
exists now or from time to time may hereafter be amended.
2.09 "Fair Market Value" means the closing sale price for Common Stock as
of the close of business on that day (as reported by the NASDAQ System).
2.10 "ISO" means incentive stock options within the meaning of Section 422
of the Code.
2.11 "NSO" means nonqualified stock options, which are not intended to
qualify under Section 422 of the Code.
2.12 "Option" means the right of a Participant, whether granted as an ISO
or an NSO, to purchase a specified number of shares of Common Stock, subject to
the terms and conditions of the Plan.
2.13 "Option Price" means the price per share of Common Stock at which an
Option may be exercised.
2.14 "Participant" means an individual to whom an Award has been granted
under the Plan.
2.15 "Phantom Stock" means hypothetical shares of Common Stock issued as
phantom stock under the Plan.
2.16 "Plan" means the AMCOL International Corporation 1993 Stock Plan, as
set forth herein and from time to time amended.
2.17 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to this Plan and subject to the restrictions contained in Section 9 of
the Plan.
2.18 "SAR" means a stock appreciation right issued pursuant to Section 8
of the Plan.
2.19 Rules of Construction
2.19.1 Governing Law. The construction and operation of this Plan are
governed by the laws of the State of Illinois.
2.19.2 Undefined Terms. Unless the context requires another meaning, any
term not specifically defined in this Plan is used in the sense given to it by
the Code.
2.19.3 Headings. All headings in this Plan are for reference only and are
not to be utilized in construing the Plan.
2.19.4 Conformity with Section 422. The ISOs issued under this Plan are
intended to qualify as incentive stock options described in Section 422 of the
Code and all provisions of the Plan relating to the ISOs shall beconstrued in
conformity with this intention. The NSOs issued under this Plan are not intended
to qualify as incentive stock options described in Section 422 of the Code and
all provisions of the Plan relating to the NSOs shall be construed in conformity
with this intention.
<PAGE>
2.19.5 Gender. Unless clearly inappropriate, all nouns of whatever gender
refer indifferently to persons or objects of any gender.
2.19.6 Singular and Plural. Unless clearly inappropriate, singular terms
refer also to the plural and vice versa.
2.19.7 Severability. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions are to continue in
full force and effect and to be construed and enforced as if the illegal or
invalid provision did not exist, unless the continuance of the Plan in such
circumstances is not consistent with its purposes.
3. Stock Subject to the Plan
Except as otherwise provided in Section 13, the aggregate number of shares
of Common Stock that may be issued under Options or as Restricted Stock through
this Plan may not exceed Four Hundred and Twenty Thousand (420,000) shares.
Reserved shares may be either authorized but unissued shares or treasury shares,
in the Board's discretion. If any Awards of Options and Restricted Stock
hereunder shall terminate or expire, as to any number of shares, new Options,
and Restricted Stock may thereafter be awarded with respect to such shares.
4. Administration
The Plan is administered by the Committee. In addition to any other powers
set forth in this Plan, the Committee has the following powers:
(a) to construe and interpret the Plan;
(b) to establish, amend and rescind appropriate rules and
regulations relating to the Plan;
(c) subject to the express provisions of the Plan, to select the
individuals who will receive Awards, the times when they will
receive them, the number of Options, Restricted Stock, Phantom
Stock and/or SARs to be subject to each Award, the vesting
schedule and the Option Price, payment terms, payment method,
and expiration date applicable to each Award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter
relating to the Plan or to any Awards;
(e) generally, to administer the Plan, and to take all such steps
and make all such determinations in connection with the Plan
and the Awards granted thereunder as it may deem necessary or
advisable;
(f) to determine the form in which payment of a SAR or a Phantom
Stock Award granted hereunder will be made (i.e., cash, Common
Stock or a combination thereof) or to approve a Participant's
election to receive cash in whole or in part in settlement of
the SAR or Phantom Stock Award; and
<PAGE>
(g) to determine the form in which tax withholding under Section
16 of this Plan will be made (i.e., cash, Common Stock or a
combination thereof).
5. Eligible Employees
Subject to the provisions of the Plan, the Committee shall from time to
time select those key employees of the Company and any subsidiary or affiliate
of the Company who shall be designated as Participants and the number, if any,
of ISOs, SARs, Restricted Stock, Phantom Stock and NSOs, or any combination
thereof, to be awarded to each such Participant; provided, however, that no
ISOs, or SARs granted with respect to ISOs, shall be awarded under the Plan
after the expiration of the period of ten years from the date this Plan is
adopted by the Board.
6. Terms and Conditions of Incentive Stock Options
Each ISO agreement, in such form as is approved by the Committee, shall be
subject to the following express terms and conditions and to such other terms
and conditions, not inconsistent with the Plan, as the Committee may deem
appropriate:
(a) Option Period. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited under the
provisions of Section 12;
(ii) ten years (or five years as specified in paragraph
(d) below) from the Award Date;
(iii) three (3) months after the Participant's termination
of employment with the Company and its parent and subsidiaries for any reason
other than death;
(iv) twelve (12) months after the Participant's death; or
(v) any other date (within the limits of the Code)
specified by the Committee when the ISO is granted.
(b) Option Price. Subject to the provisions of paragraph (d) below,
the Option Price shall be determined by the Committee at the time an ISO is
granted, and shall not be less than the Fair Market Value of the Common Stock on
the Award Date.
(c) Other Option Provisions. The form of ISO authorized by the Plan
may contain such other provisions as the Committee may, from time to time,
determine; provided, however, that such other provisions may not be inconsistent
with any requirements imposed on incentive stock options under Code Section 422
and related Treasury regulations.
<PAGE>
(d) Awards to Certain Stockholders. Notwithstanding paragraphs (a)
and (b) above, if an ISO is granted to a Participant who, immediately before the
grant of the ISO, owns stock representing more than 10 percent of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations, the exercise period specified in the option agreement
for which the ISO thereunder is granted shall not exceed five years from the
Award Date, and the Option Price shall be at least 110 percent of the Fair
Market Value (as of the Award Date) of the stock subject to the ISO.
7. Terms and Conditions of Nonqualified Stock Options
Each NSO agreement, in such form as is approved by the Committee, shall be
subject to the following express terms and conditions and to such other terms
and conditions, not inconsistent with the Plan, as the Committee may deem
appropriate:
(a) Option Period. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the
provisions of Section 12;
(ii) three (3) months after the Participant's termination
of employment with the Company and its parent and subsidiaries for any reason
other than death;
(iii) twelve (12) months after the Participant's death; or
(iv) any other date specified by the Committee when the
NSO is granted.
(b) Option Price. At the time granted, the Board of Directors will
fix the Option Price, which will be no less than eighty-five percent (85%) of
the Fair Market Value of the shares subject to the NSO on the Award Date.
(c) Other Option Provisions. The form of NSO authorized by the Plan
may contain such other provisions as the Committee may from time to time
determine.
<PAGE>
8. Terms and Conditions of Stock Appreciation Rights
The Committee may, in its discretion, grant an SAR to any Participant
under the Plan. Each SAR shall be evidenced by an agreement between the Company
and the Participant, and may relate to and be associated with all or any part of
a specific ISO or NSO. An SAR shall entitle the Participant to whom it is
granted the right, so long as such SAR is exercisable and subject to such
limitations as the Committee shall have imposed, to surrender any then
exercisable portion of his SAR and, if applicable, the related ISO or NSO, in
whole or in part, and receive from the Company in exchange, without any payment
of cash (except for applicable employee withholding taxes), that number of
shares of Common Stock having an aggregate Fair Market Value on the date of
surrender equal to the product of (i) the excess of the Fair Market Value of a
share of Common Stock on the date of surrender over the Fair Market Value of the
Common Stock on the date the SARs were issued, or, if the SARs are related to an
ISO or an NSO, the per share Option Price under such ISO or NSO on the Award
Date, and (ii) the number of shares of Common Stock subject to such SAR, and, if
applicable, the related ISO or NSO or portion thereof which is surrendered.
An SAR granted in conjunction with an ISO or NSO shall terminate on the
same date as the related ISO or NSO and shall be exercisable only if the Fair
Market Value of a share of Common Stock exceeds the Option Price for the related
ISO or NSO, and then shall be exercisable to the extent, and only to the extent,
that the related ISO or NSO is exercisable. The Committee may at the time of
granting any SAR add such additional conditions and limitations to the SAR as it
shall deem advisable, including, but not limited to, limitations on the period
or periods within which the SAR shall be exercisable and the maximum amount of
appreciation to be recognized with regard to such SAR. If a Participant is
subject to Section 16(a) and Section 16(b) of the Exchange Act, the Committee
may at any time add such additional conditions and limitations to such SAR
which, in its discretion, the Committee deems necessary or desirable to comply
with such Section 16(a) or Section 16(b) and the rules and regulations issued
thereunder, or to obtain any exemption therefrom. Any ISO or NSO or portion
thereof which is surrendered with an SAR shall no longer be exercisable. The
Committee, in its sole discretion, may allow the Company to settle all or part
of the Company's obligation arising out of the exercise of an SAR by the payment
of cash equal to the aggregate Fair Market Value of the shares of Common Stock
which the Company would otherwise be obligated to deliver.
9. Terms and Conditions of Restricted Stock Awards
All shares of Common Stock awarded to Participants under the Plan as
Restricted Stock shall be subject to the following express terms and conditions
and to such other terms and conditions, not inconsistent with the Plan, as the
Committee shall deem appropriate:
(a) Restricted Period. Shares of Restricted Stock awarded to
Participants may not be sold, assigned, transferred, pledged or otherwise
encumbered before they vest. Subject to the provisions of paragraphs (b) and (d)
below and any other restrictions imposed by law, any shares of Restricted Stock
that vest will be transferred, subject only to the restrictions set forth in
Section 20, to the Participant or, in the event of his death, to the beneficiary
or beneficiaries designated by writing filed by the Participant with the
Committee for such purpose or, if none, to his estate. Delivery of shares in
accordance with the preceding sentence shall be made within the thirty-day
period after they vest.
<PAGE>
(b) Forfeitures. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested prior to the
date that his employment with the Company is terminated for any reason.
(c) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be registered
in the name of the Participant and deposited with the Company. Each such
certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in the AMCOL International
Corporation 1993 Stock Plan and an Agreement entered into between the registered
owner and AMCOL International Corporation. Copies of such Plan and Agreement are
on file at the principal office of AMCOL International Corporation."
(d) Stockholder Rights. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to his
shares of Restricted Stock including, but not limited to, the right to vote and
to receive dividends on such shares.
10. Terms and Conditions of Phantom Stock
The Committee may, in its discretion, award Phantom Stock to any
Participant under the Plan. Each Award of Phantom Stock shall be evidenced by an
agreement between the Company and the Participant. An Award of Phantom Stock
shall entitle the Participant to whom it is awarded the right to elect, so long
as such Phantom Stock is vested and subject to such limitations as the Committee
shall have imposed, to surrender any then vested portion of the Phantom Stock,
in whole or in part, and receive from the Company in exchange for the Fair
Market Value of the Common Stock to which the surrendered Phantom Stock relates,
payable either in cash or in shares of Common Stock as the Committee may
determine. The Committee may at the time of awarding any Phantom Stock add such
additional conditions and limitations to the Phantom Stock as it shall deem
advisable, including, but not limited to, limitations on the period or periods
within which the Phantom Stock may be surrendered, and the maximum amount of
appreciation to be recognized with regard to such Phantom Stock.
11. Manner of Exercise of Options
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the Committee,
stating the number of shares with respect to which he intends to exercise the
Option. The Company will issue the shares with respect to which the Option is
exercised upon payment in full of the Option Price. The Committee may permit the
Option Price to be paid in cash or shares of Common Stock held by the
Participant having an aggregate Fair Market Value, as determined on the date of
delivery, equal to the Option Price. The Committee may also permit the Option
Price to be paid by any other method permitted by law, including by delivery to
the Committee from the Participant of an election directing the Company to
withhold the number of shares of Common Stock from the Common Stock otherwise
due upon exercise of the Option having an aggregate Fair Market Value on that
date equal to the Option Price. If a Participant pays the Option Price with
shares of Common Stock which were received by the Participant upon exercise of
one or more ISOs, and such Common Stock has not been held by the Participant for
at least the greater of:
(a) two years from the date the ISOs were granted or
(b) one year after the transfer of the shares of Common Stock to the
Participant, the use of the shares shall constitute a disqualifying disposition
and the ISO underlying the shares used to pay the Option Price shall no longer
satisfy all of the requirements of Code Section 422.
<PAGE>
12. Vesting
A Participant may not exercise an Option or surrender Phantom Stock or an
SAR until it has become vested. Similarly, no share of Restricted Stock may be
sold, transferred, reassigned, pledged or otherwise encumbered or disposed of
until it is vested. The portion of an Award of Options, SARs, Restricted Stock
and/or Phantom Stock that is vested depends upon the period that has elapsed
since the Award Date. The following schedule applies to any Award of Options,
SARs, Restricted Stock and Phantom Stock under this Plan unless the Committee
establishes a different vesting schedule on the Award Date:
Number of Years Since Award Date Vested Percentage
Fewer than two........................................ None
Two but fewer than three ............................. 40%
Three but fewer than four............................. 60%
Four but fewer than five.............................. 80%
Five or more.......................................... 100%
Notwithstanding anything herein to the contrary, however, all Awards will
become vested and exercisable upon the effective date of a "change in control"
and will remain exercisable during the thirty (30) days following the effective
date of the change in control. As used in this paragraph, the term "change in
control" means the change in the legal or beneficial ownership of fifty-one
percent (51%) of the outstanding shares of Common Stock of the Company within a
six-month period, other than by death or operation of law, or the sale of ninety
percent (90%) or more of the assets of the Company.
Regardless of the period elapsed since the Award Date, a Participant's
Awards become fully vested if his employment with the Company and its parent and
subsidiaries terminates for any of the following reasons:
(a) retirement on or after his sixty-fifth (65th) birthday;
(b) retirement on or after his fifty-fifth (55th) birthday with
consent of the Company;
(c) retirement at any age on account of total and permanent
disability as determined by the Company; or
(d) death.
If a Participant terminates employment with the Company for any reason, he
forfeits any Awards that are not yet vested. A transfer from the Company to a
subsidiary or affiliate, or vice versa, is not a termination of employment for
purposes of this Plan.
<PAGE>
13. Adjustments to Reflect Changes in Capital Structure
If there is any change in the corporate structure or shares of the
Company, the Committee may make any adjustments necessary to prevent accretion,
or to protect against dilution, in the number and kind of shares authorized by
the Plan and, with respect to outstanding Awards, in the number and kind of
shares covered thereby and in the applicable Option Price. For the purpose of
this Section 13, a change in the corporate structure or shares of the Company
includes, without limitation, any change resulting from a recapitalization,
stock split, stock dividend, consolidation, rights offering, separation,
reorganization, or liquidation and any transaction in which shares of Common
Stock are changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or another corporation.
14. Nontransferability of Awards
Awards under the Plan are not transferable, voluntarily or involuntarily,
other than by will or by the laws of descent and distribution. During a
Participant's lifetime, his Options may be exercised only by him.
15. Rights as Stockholder
No Common Stock may be delivered upon the exercise of any Option until
full payment has been made. A Participant has no rights whatsoever as a
stockholder with respect to any shares covered by an Option until the date of
the issuance of a stock certificate for the shares.
16. Withholding Tax
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan any taxes
required by law to be withheld because of such payments.
17. No Right to Employment
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or its parent or subsidiaries, or any
right or claim to any benefit under the Plan, unless the right or claim has
specifically accrued under the Plan.
18. Amendment of the Plan
The Board of Directors may from time to time amend or revise the terms of
this Plan in whole or in part and may, without limitation, adopt any amendment
deemed necessary; provided, however, that (a) no change in any Award previously
granted to a Participant may be made that would impair the rights of the
Participant without the Participant's consent, (b) no amendment may extend the
period in which a Participant may exercise an ISO beyond the period set forth in
Section 6(a)(ii), and (c) the Board of Directors may not, without approval by
the holders of a majority of the shares of the Company present at a stockholders
meeting, (i) change the aggregate number of shares that may be granted pursuant
to Options and Restricted Stock granted under the Plan (except in accordance
with the provisions of Section 13), (ii) change the class of eligible employees
who may receive Awards under the Plan, (iii) adopt any amendment affecting the
Option Price at which Options may be granted, or (iv) materially increase
benefits accruing to Participants under the Plan.
<PAGE>
19. Stockholder Approval
Operation of the Plan shall be subject to approval by the stockholders of
the Company within twelve months before or after the date the Plan is adopted by
the Board of Directors in accordance with Rule 16b-3(b) of the Exchange Act. If
such stockholder approval is obtained at a duly held stockholders' meeting, it
may be obtained by the affirmative vote of the holders of a majority of the
shares of the Company present at the meeting or represented and entitled to vote
thereon. If and in the event that the Company registers any class of any equity
security pursuant to Section 12 of the Exchange Act, the approval of such
stockholders of the Company shall be solicited substantially in accordance with
Section 14(a) of the Exchange Act and the rules and regulations promulgated
thereunder, or (2) solicited after the Company has furnished in writing to the
holders entitled to vote substantially the same information concerning the Plan
as that which would be required by the rules and regulations in effect under
Section 14(e) of the Exchange Act at the time such information is furnished.
If such stockholder approval is obtained by written consent, it must be
obtained by the unanimous written consent of all stockholders of the Company.
20. Conditions Upon Issuance of Shares
An Option shall not be exercisable, a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and Restricted Stock shall not be
awarded until such time as the Plan has been approved by the stockholders of the
Company and unless the award of Restricted Stock, exercise of such Option and
the issuance and delivery of such share pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the share of
Common Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the share of Common Stock is being purchased only for investment
and without any present intention to sell or distribute such share if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
21. Effective Date and Termination of Plan
21.01 Effective Date. This Plan is effective as of the later of the date
of its adoption by the Board of Directors, or the date it is approved by the
stockholders of the Company, pursuant to Section 19.
21.02 Termination of the Plan. The Board of Directors may terminate the
Plan at any time with respect to any shares that are not then subject to Options
or Restricted Stock. Termination of the Plan will not affect the rights and
obligations of any Participant with respect to Awards before termination.
EXHIBIT 10.9
AGREEMENT
WHEREAS, AMCOL International Corporation (the "Company") considers it
essential and in the best interests of the Company and its shareholders to
foster the continued employment of its key management personnel;
WHEREAS, Robert C. Steele ("Employee") is considered a key management
employee, currently serving as Senior Vice-President of the Company; and
WHEREAS, the Company desires to assure the future continuity of Employee's
services in the event of any actual or threatened "Change in Control" (as
defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement. This Agreement shall be effective and binding
immediately upon its execution. However, except as specifically provided herein,
this Agreement shall not alter materially Employee's duties and obligations to
the Company and the remuneration and benefits which Employee may reasonably
expect to receive from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided that the Employee is
an employee of the Company immediately prior to a Change in Control, the Company
shall employ Employee, and Employee shall accept such employment, effective upon
such Change in Control for a period of twenty-four (24) months after said Change
in Control subject to the terms and conditions stated herein.
3. Duties After Change in Control. Employee agrees that during the term of
his employment with the Company after a Change in Control, he shall perform the
duties described in Section 12 below and such other duties for the Company and
its subsidiaries consistent with his experience and training as the Board of
Directors of the Company (the "Board") or the Board's representatives shall
determine from time to time, which duties shall be at least substantially equal
in status, dignity and character to his duties at the date hereof. He shall also
have the title of Senior Vice-President. Employee further agrees to devote his
entire working time and attention to the business of the Company and its
subsidiaries and use his best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to a Change in Control
the Company agrees to pay Employee compensation for his services in an amount,
and to provide him with life insurance, disability, health and other benefits,
as set by the Company from time to time. For the purpose of this Section,
compensation does not include any bonus or other incentive compensation plan or
stock purchase plan, which may vary from year to year at the discretion of the
Company.
<PAGE>
5. Termination of Employment Prior to a Change of Control. Employee shall
be entitled to terminate his employment prior to a Change in Control at any time
upon sixty (60) days' prior written notice. The Company, shall be able to
terminate Employee's employment at any time prior to a Change in Control with or
without cause upon sixty (60) days' prior written notice (or the payment of
salary in lieu thereof). This Section shall not be construed to reduce any
accrued benefits payable in connection with any termination of Employee's
employment prior to a Change in Control. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or Employee
to have Employee remain in the employment of the Company prior to a Change in
Control.
6. Termination of Employment On or After Change in Control. (a) For
purposes of this Agreement the term "Change in Control" means the change in the
legal or beneficial ownership of fifty-one percent (51%) of the shares of the
Company's common stock within a six-month period other than by death or
operation of law, or the sale of ninety percent (90%) or more of the Company's
assets within a six-month period.
(b) Employee's employment on and after a Change in Control may be
terminated with just cause by the Company at any time upon not less than ten
(10) days' prior written notice. Prior to termination for just cause on and
after a Change in Control, the Board of Directors shall by majority vote have
declared that Employee's termination is for just cause specifically stating the
basis for such determination. In the event such a termination occurs, the
provisions of Sections 9(a) and 12 below shall apply.
Employee's employment may be terminated on or after a Change in
Control without just cause pursuant to the constructive termination procedures
described in the next paragraph or by the Company giving Employee not less than
thirty (30) days' prior written notice. In the event Employee's employment is
terminated pursuant to the preceding sentence:
(i) the provisions of Section 9(b) below shall apply; and
(ii) although Employee's employment term shall be deemed terminated at
the end of such notice period (or, in the case of a constructive termination
described in the next paragraph, as of the date Employee notifies the Company of
such termination), such termination shall in no way affect the term of this
Agreement or Employee's duties and obligations under Section 12 below.
<PAGE>
For purposes of this Section 6(b), Employee shall be considered as
having been terminated by the Company on or after a Change in Control for other
than just cause provided that he has notified the Company of any of the
following within ten (10) days of the occurrence thereof:
(i) the assignment to Employee of any duties of substantially lesser
status, dignity and character than the duties as a Vice President of the Company
immediately prior to the effective date of the Change in Control;
(ii) a post-Change in Control reduction by the Company in Employee's
annual base salary or bonus or incentive plan (as in effect immediately prior to
the effective date of the Change in Control);
(iii) relocation of Employee's office to a location which is more than
35 miles from the location in which Employee principally works for the Company
immediately prior to the effective date of the Change in Control; the relocation
of the appropriate principal executive office of the Company or the Company's
operating division or subsidiary for which Employee performed the majority of
his services for the Company during the year prior to the effective date of the
Change in Control to a location which is more than 35 miles from the location of
such office immediately prior to such date; or his being required by the Company
in order to perform duties of substantially equal status, dignity and character
to those duties he performed immediately prior to the effective date of the
Change in Control to travel on the Company's business to a substantially greater
extent than is consistent with his business travel obligations as of such date;
or
(iv) the failure of the Company to continue to provide Employee with
benefits substantially equivalent to those enjoyed by him under any of the
Company's life insurance, medical, health and accident or disability plans in
which he was participating immediately prior to the effective date of the Change
in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him immediately prior to effective date of the Change
in Control, or the failure of the Company to provide him with at least the
number of paid vacation days to which he is entitled on the basis of years of
service under the Company's normal vacation policy in effect immediately prior
to the effective date of the Change in Control.
(c) In the event Employee's employment is terminated on or after a
Change in Control in any manner not described in Section 6(b) above:
<PAGE>
(i) the provisions of Section 9(b) shall not apply and Employee shall
instead receive the sums and benefits described in Section 9(a); and
(ii) such termination shall in no way affect the term of this
Agreement or Employee's duties or obligations under Section 12 below.
(d) Any termination of employment of Employee following the
commencement of any discussions by a shareholder or group of shareholders owning
legally or beneficially more than 20% of the common stock or an officially
designated representative of the Board of Directors with a third party that
results within 180 days in a Change in Control shall (unless such termination is
for cause or wholly unrelated to such discussions) be deemed to be a termination
of Employee on and after a Change in Control for purposes of this Agreement.
7. Notice of Termination. Any termination by the Company or assertion of
termination by Employee shall be communicated by written notice of termination
to the other party at the following address:
AMCOL International Corporation Mr. Robert C. Steele
One North Arlington Senior Vice President
1500 West Shure Drive AMCOL International Corporation
Arlington Heights, IL 60004 One North Arlington
Attn: Chairman of the Board 1500 West Shure Drive
Arlington Heights, IL 60004
8. Disability. If as a result of Employee's incapacity due to physical or
mental illness, he shall have been absent from his duties with the Company for
one hundred eighty (180) days within any twelve-(12)- consecutive-month period
and within thirty (30) days after written notice of the Company's intention to
terminate his employment is given, Employee shall not have returned to the
performance of his duties with the Company substantially on a full-time basis,
the Company may terminate his employment for disability. This shall not
constitute a termination for the purposes of obtaining benefits pursuant to
Section 9.
9. Benefits Upon Termination And Leave Of Employment On or After Change in
the Control.
(a) If Employee is terminated for just cause on or after a Change in
Control, he shall only receive the accrued sums and benefits payable to him
through the date he is terminated; the provisions of Section 9(b) below shall
not be applicable in such case and Employee shall not receive (or shall cease
receiving) the payments and benefits described in Section 9(b).
<PAGE>
(b) Subject to Employee's compliance with the provisions of Section
12(a) below, if Employee is terminated during the twenty-four (24) month period
beginning on and continuing after a Change in Control other than for just cause
(either at the discretion of the Company's management or constructively by the
operation of Section 6), he shall receive the following payments and benefits in
lieu of any other sums or benefits otherwise payable to him by the Company:
(i) all then accrued pay, benefits, executive compensation and fringe
benefits, including (but not limited to) pro rata bonus and incentive plan
earnings;
(ii) medical, health and disability benefits which are substantially
similar to the benefits the Company is providing him as of the date his
employment is terminated for a period of twenty-four (24) months thereafter; and
(iii) one dollar less than two times his base period compensation.
The foregoing payments and benefits shall be deemed compensation payable
for the duties to be performed by Employee pursuant to Section 12 below. For
purposes of this Agreement, (A) Employee's "base period compensation" is the
average annual "compensation" (as defined below) which was includable in his
gross income for his base period (i.e., his most recent five taxable years
ending before the date of the Change in Control); and (B) if Employee's base
period includes a short taxable year or less than all of a taxable year,
compensation for such short or incomplete taxable year shall be annualized
before determining his average annual compensation for the base period. (In
annualizing compensation, the frequency with which payments are expected to be
made over an annual period shall be taken into account. Thus, any amount of
compensation for such a short or incomplete taxable year that represents a
payment that would not be made more than once per year shall not be annualized).
The sum payable to Employee pursuant to Section 9(b)(iii) shall in any and all
cases be reduced by any compensation which Employee receives, excluding stock
option or other stock incentive bonus plan compensation from the date of the
Change in Control until the termination date. For purposes of Section 9(iii) and
the definitions pertaining to said Section, Employee's "compensation" is the
compensation which was payable to him by the Company or a related entity
determined without regard to the following Sections of the Internal Revenue Code
of 1986, as amended (the "Code"): 125 (cafeteria plans), 402(a)(8) (cash or
deferred arrangements), 402(h)(1)(B) (elective contributions to simplified
employee pensions), and, in the case of employer contributions made pursuant to
a salary reduction agreement, 403(b) (tax sheltered annuities).
Except for the benefits described in Section 9(b)(ii) above, the sums due
pursuant to this Section 9(b) shall be paid in up to two (2) annual installments
commencing thirty (30) days after the sums become due. All sums due shall be
subject to appropriate withholding and statutory requirements. Employee shall
<PAGE>
not be required to mitigate the amount of any payment provided for in this
Section 9(b) by seeking other employment or otherwise. Notwithstanding anything
stated in this Section 9(b) to the contrary, however, the amount of any payment
or benefit provided for in this Section 9(b) shall be reduced by no more than
50% by any compensation earned by Employee as a result of employment by another
employer and the Company shall not be required to provide medical, health and/or
disability benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with any new employer.
Notwithstanding anything stated in this Agreement to the contrary, if the
amounts which are payable and the benefits which are provided to Employee under
this Agreement, either alone or together with other payments which Employee has
a right to receive from the Company or any of its affiliates, would constitute a
"parachute payment" (as defined in Code Section 280G), such amounts and benefits
shall be reduced, as necessary, to the largest amount as will result in no
portion of said amounts and benefits being either not deductible as a result of
Code Section 280G or subject to the excise tax imposed by Code Section 4999. The
determination of any reduction in said amounts and benefits pursuant to the
foregoing proviso shall be made by the Company in good faith, and such
determination shall be conclusive and binding on Employee. The amounts provided
to Employee under this Agreement in connection with a Change in Control, if any,
shall be deemed allocated to such amounts and/or benefits to be paid and/or
provided as the Company's Board of Directors in its sole discretion shall
determine.
10. Special Situations. The parties recognize that under certain
circumstances a Change in Control may occur under conditions which make it
inappropriate for Employee to receive the termination benefits or protection set
forth in this Agreement. Therefore, in the event that a Change in Control occurs
for any one of the following reasons, the provisions of Sections 2, 6 and 9
shall not apply:
(a) the purchase of more than fifty percent (50%) of the stock of the
Company by an employee stock ownership plan or similar employee benefit plan of
which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the stock or ninety
percent (90%) of the assets of the Company by a group of individuals or entities
including Employee as a member or participant, including but not limited to
those transactions commonly known as a leveraged or other forms of management
buy- outs.
11. Disputes. Any dispute arising under this Agreement (except Section 12)
shall be promptly submitted to arbitration under the Rules of the American
Arbitration Association. An arbitrator is to be mutually agreed upon by the
parties or upon failure of agreement, designated by the American Arbitration
Association.
<PAGE>
12. Non-Competition, Non-Solicitation, and Confidentiality.
(a) In consideration of this Agreement and other good and valuable
consideration, Employee agrees that for so long as he is employed by the Company
and for twenty-four (24) months thereafter he shall not own manage, operate,
control, be employed by or otherwise engage in any competitive business.
Employee's agreement pursuant to the preceding sentence shall be in addition to
any other agreement or legal obligation he may have with or to the Company. For
purposes of the preceding sentence, a "competitive business" is any business
engaged in the production, refinement or sale of Bentonite and/or any business
conducted by the Company, its affiliates or any subsidiaries thereof as of the
date Employee's employment is terminated. A business which is conducted by the
Company, its affiliates or any subsidiaries which is subsequently sold by the
Company is not a competitive business as of the date such business is sold. An
"affiliate" of the Company is any company which either controls, is controlled
by or is under common control with the Company. The phrase "any business
conducted by the Company, its affiliates or any subsidiaries thereof" includes
not only current businesses but also any new products, product lines or use of
processes under development, consideration or investigation on the date
Employee's employment with the Company is terminated.
Employee also agrees that during the twenty-four (24) month period
described in the first sentence of this Section 12(a) he will not directly or
indirectly, on behalf of himself or any other person or entity, make a
solicitation or conduct business, with any customer or potential customer of the
Company with which he had contact while employed by the Company, its affiliates
and/or any subsidiaries thereof, with respect to any products or services which
are competitive with any business conducted by the Company, its affiliates or
any subsidiaries thereof. For purposes of the preceding sentence, a "customer"
is any person or entity that has purchased goods or services from the Company,
its affiliates or any subsidiaries thereof within the twenty-four (24) month
period ending on the date Employee's employment is terminated. A "potential
customer" is any person or entity that the Company, its affiliates or any
subsidiaries solicited for business within twelve (12) months prior to the date
Employee's employment with the Company is terminated.
The Company and Employee recognize that his responsibilities have included
sales and marketing of bentonite clay products to the construction and
environmental markets, domestically and internationally, and establishing
contacts and business relationships on behalf of the Company. Employee's
contacts on behalf of the Company represent a substantial asset of the Company
which are entitled to protection. In recognition of this situation, the
covenants set forth in this Section 12 shall apply to competitive businesses and
solicitation in the United States and Canada and those countries in Europe, Asia
and Latin America in which the Company, its affiliates and/or the subsidiaries
thereof have conducted $100,000 or more of business during the twelve-month
period ending on the date Employee's employment with the Company terminated.
<PAGE>
Before and forever after his termination or resignation, Employee shall
keep confidential and refrain from utilizing or disseminating any confidential,
proprietary or trade secret information of the Company for any purpose other
than furthering the business interests of the Company.
(b) During Employee's employment hereunder and during two (2) years
following his resignation or the termination of his employment hereunder for any
reason, Employee will not induce or attempt to influence any present or future
employee of the Company, its affiliates or any subsidiaries thereof to leave its
employ.
13. Other Agreements. Except to the extent expressly set forth herein, this
Agreement shall not modify or lessen any benefit or compensation to which
Employee is entitled under any agreement between Employee and the Company or
under any plan maintained by the Company in which he participates or
participated. Benefits or compensation shall be payable thereunder, if at all,
according to the terms of the applicable plan(s) or agreement(s). The terms of
this Agreement shall supersede any existing agreement between Employee and the
Company executed prior to the date hereof to the extent any such Agreement is
inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will 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) 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.
This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
15. Injunction. The remedy at law for any breach of Section 12 will be
inadequate and the Company, its affiliates and any subsidiaries thereof would
suffer continuing and irreparable injury to their business as a direct result of
any such breach. Accordingly, notwithstanding anything stated herein, if
Employee shall breach or fail to perform any term, condition or duty contained
in Section 12 hereof, then, in such event, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain the specific performance thereof by
Employee or to seek a temporary restraining order or injunctive relief, without
any requirement to show actual damages or post bond, to restrict Employee from
violating the provisions of Section 12; however, nothing herein shall be
construed to prevent the Company seeking such other remedy in the courts, in
case of any breach of this Agreement by Employee, as the Company may elect or
invoke. If court proceedings are instituted by the Company to enforce Section 12
hereof, and the Company is the prevailing party, the Company shall receive, in
addition to any damages awarded, reasonable attorneys' fees, court costs and
ancillary expenses.
<PAGE>
16. Miscellaneous. This Agreement may not be modified or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by
Employee and such officers of the Company as may be specifically designated by
its Board for that purpose. Except for any failure to give the ten (10) day
notice described in Section 6(b) above, the failure of either party to this
Agreement to object to any breach by the other party or the non-breaching
party's conduct or conduct forbearance shall not constitute a waiver of that
party's rights to enforce this Agreement. 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 any subsequent breach by such other party or any
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time. 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 expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Illinois.
17. Severability. The parties hereto intend this Agreement to be enforced
to the maximum extent permitted by law. In the event any provision of this
Agreement is deemed to be invalid or unenforceable by any court of competent
jurisdiction, such provisions shall be deemed to be restricted in scope or
otherwise modified to the extent necessary to render the same valid and
enforceable. In the event the provisions of Section 12 cannot be modified or
restricted so as to be valid and enforceable, then the same as well as the
Company's obligation to make any payment or transfer any benefit to Employee in
connection with any termination of Employee's employment shall be deemed excised
from this Agreement, and this Agreement shall be construed and enforced as if
such provisions had originally been incorporated herein as so restricted or
modified or as if such provisions had not originally been contained herein, as
the case may be. The invalidity or unenforceability of any provision 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.
18. Survival. The obligations of the parties under this Agreement shall
survive the term of this Agreement.
19. Term of Agreement. The term of this Agreement shall commence on
February 7, 1996 and end on February 6, 1999. Provided, however, that in the
event Employee's employment is terminated while this Agreement is in force, this
Agreement shall terminate when the Company has made all payments to Employee
required by Section 9 hereof and Employee has complied with the duties and
obligations described in Section 12 hereof (all of which duties and obligations
shall specifically survive the termination of the Employee's employment). To the
<PAGE>
extent necessary for the Company's enforcement of the provisions of Section 12
above (but only for such purpose), Employee's employment term shall be deemed to
continue through the end of the Agreement term.to continue through the end of
the Agreement term.
Date: February 7, 1996.
Employee AMCOL International Corporation
/S/ Robert C. Steele By: /S/ John Hughes
- ------------------------------- -----------------------------------
Robert C. Steele On Behalf of the Board of Directors
Its: President
-----------------------------------
Attest:
/s/ Clarence O. Redman
-----------------------------------
Its Secretary
EXHIBIT 10.10
AGREEMENT
WHEREAS, AMCOL International Corporation (the "Company") considers it
essential and in the best interests of the Company and its shareholders to
foster the continued employment of its key management personnel;
WHEREAS, Lawrence E. Washow ("Employee") is considered a key management
employee, currently serving as Senior Vice President of the Company; and
WHEREAS, the Company desires to assure the future continuity of Employee's
services in the event of any actual or threatened "Change in Control" (as
defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement. This Agreement shall be effective and binding
immediately upon its execution. However, except as specifically provided herein,
this Agreement shall not alter materially Employee's duties and obligations to
the Company and the remuneration and benefits which Employee may reasonably
expect to receive from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided that the Employee is
an employee of the Company immediately prior to a Change in Control, the Company
shall employ Employee, and Employee shall accept such employment, effective upon
such Change in Control for a period of twenty-four (24) months after said Change
in Control subject to the terms and conditions stated herein.
3. Duties After Change in Control. Employee agrees that during the term of
his employment with the Company after a Change in Control, he shall perform the
duties described in Section 12 below and such other duties for the Company and
its subsidiaries consistent with his experience and training as the Board of
Directors of the Company (the "Board") or the Board's representatives shall
determine from time to time, which duties shall be at least substantially equal
in status, dignity and character to his duties at the date hereof. He shall also
have the title of Senior Vice-President. Employee further agrees to devote his
entire working time and attention to the business of the Company and its
subsidiaries and use his best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to a Change in Control
the Company agrees to pay Employee compensation for his services in an amount,
and to provide him with life insurance, disability, health and other benefits,
as set by the Company from time to time. For the purpose of this Section,
compensation does not include any bonus or other incentive compensation plan or
stock purchase plan, which may vary from year to year at the discretion of the
Company.
<PAGE>
5. Termination of Employment Prior to a Change of Control. Employee shall
be entitled to terminate his employment prior to a Change in Control at any time
upon sixty (60) days' prior written notice. The Company, shall be able to
terminate Employee's employment at any time prior to a Change in Control with or
without cause upon sixty (60) days' prior written notice (or the payment of
salary in lieu thereof). This Section shall not be construed to reduce any
accrued benefits payable in connection with any termination of Employee's
employment prior to a Change in Control. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or Employee
to have Employee remain in the employment of the Company prior to a Change in
Control.
6. Termination of Employment On or After Change in Control. (a) For
purposes of this Agreement the term "Change in Control" means the change in the
legal or beneficial ownership of fifty-one percent (51%) of the shares of the
Company's common stock within a six-month period other than by death or
operation of law, or the sale of ninety percent (90%) or more of the Company's
assets within a six-month period.
(b) Employee's employment on and after a Change in Control may be
terminated with just cause by the Company at any time upon not less than ten
(10) days' prior written notice. Prior to termination for just cause on and
after a Change in Control, the Board of Directors shall by majority vote have
declared that Employee's termination is for just cause specifically stating the
basis for such determination. In the event such a termination occurs, the
provisions of Sections 9(a) and 12 below shall apply.
Employee's employment may be terminated on or after a Change in
Control without just cause pursuant to the constructive termination procedures
described in the next paragraph or by the Company giving Employee not less than
thirty (30) days' prior written notice. In the event Employee's employment is
terminated pursuant to the preceding sentence:
(i) the provisions of Section 9(b) below shall apply; and
(ii) although Employee's employment term shall be deemed terminated at
the end of such notice period (or, in the case of a constructive termination
described in the next paragraph, as of the date Employee notifies the Company of
such termination), such termination shall in no way affect the term of this
Agreement or Employee's duties and obligations under Section 12 below.
<PAGE>
For purposes of this Section 6(b), Employee shall be considered as
having been terminated by the Company on or after a Change in Control for other
than just cause provided that he has notified the Company of any of the
following within ten (10) days of the occurrence thereof:
(i) the assignment to Employee of any duties of substantially lesser
status, dignity and character than the duties as a Vice President of the Company
immediately prior to the effective date of the Change in Control;
(ii) a post-Change in Control reduction by the Company in Employee's
annual base salary or bonus or incentive plan (as in effect immediately prior to
the effective date of the Change in Control);
(iii) relocation of Employee's office to a location which is more than
35 miles from the location in which Employee principally works for the Company
immediately prior to the effective date of the Change in Control; the relocation
of the appropriate principal executive office of the Company or the Company's
operating division or subsidiary for which Employee performed the majority of
his services for the Company during the year prior to the effective date of the
Change in Control to a location which is more than 35 miles from the location of
such office immediately prior to such date; or his being required by the Company
in order to perform duties of substantially equal status, dignity and character
to those duties he performed immediately prior to the effective date of the
Change in Control to travel on the Company's business to a substantially greater
extent than is consistent with his business travel obligations as of such date;
or
(iv) the failure of the Company to continue to provide Employee with
benefits substantially equivalent to those enjoyed by him under any of the
Company's life insurance, medical, health and accident or disability plans in
which he was participating immediately prior to the effective date of the Change
in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him immediately prior to effective date of the Change
in Control, or the failure of the Company to provide him with at least the
number of paid vacation days to which he is entitled on the basis of years of
service under the Company's normal vacation policy in effect immediately prior
to the effective date of the Change in Control.
(c) In the event Employee's employment is terminated on or after a
Change in Control in any manner not described in Section 6(b) above:
<PAGE>
(i) the provisions of Section 9(b) shall not apply and Employee shall
instead receive the sums and benefits described in Section 9(a); and
(ii) such termination shall in no way affect the term of this
Agreement or Employee's duties or obligations under Section 12 below.
(d) Any termination of employment of Employee following the
commencement of any discussions by a shareholder or group of shareholders owning
legally or beneficially more than 20% of the common stock or an officially
designated representative of the Board of Directors with a third party that
results within 180 days in a Change in Control shall (unless such termination is
for cause or wholly unrelated to such discussions) be deemed to be a termination
of Employee on and after a Change in Control for purposes of this Agreement.
7. Notice of Termination. Any termination by the Company or assertion of
termination by Employee shall be communicated by written notice of termination
to the other party at the following address:
AMCOL International Corporation Mr. Lawrence E. Washow
One North Arlington Senior Vice President
1500 West Shure Drive AMCOL International Corporation
Arlington Heights, IL 60004 One North Arlington
Attn: Chairman of the Board 1500 West Shure Drive
Arlington Heights, IL 60004
8. Disability. If as a result of Employee's incapacity due to physical or
mental illness, he shall have been absent from his duties with the Company for
one hundred eighty (180) days within any twelve-(12)- consecutive-month period
and within thirty (30) days after written notice of the Company's intention to
terminate his employment is given, Employee shall not have returned to the
performance of his duties with the Company substantially on a full-time basis,
the Company may terminate his employment for disability. This shall not
constitute a termination for the purposes of obtaining benefits pursuant to
Section 9.
9. Benefits Upon Termination And Leave Of Employment On or After Change in
the Control.
(a) If Employee is terminated for just cause on or after a Change in
Control, he shall only receive the accrued sums and benefits payable to him
through the date he is terminated; the provisions of Section 9(b) below shall
not be applicable in such case and Employee shall not receive (or shall cease
receiving) the payments and benefits described in Section 9(b).
<PAGE>
(b) Subject to Employee's compliance with the provisions of Section
12(a) below, if Employee is terminated during the twenty-four (24) month period
beginning on and continuing after a Change in Control other than for just cause
(either at the discretion of the Company's management or constructively by the
operation of Section 6), he shall receive the following payments and benefits in
lieu of any other sums or benefits otherwise payable to him by the Company:
(i) all then accrued pay, benefits, executive compensation and fringe
benefits, including (but not limited to) pro rata bonus and incentive plan
earnings;
(ii) medical, health and disability benefits which are substantially
similar to the benefits the Company is providing him as of the date his
employment is terminated for a period of twenty-four (24) months thereafter; and
(iii) one dollar less than two times his base period compensation.
The foregoing payments and benefits shall be deemed compensation payable
for the duties to be performed by Employee pursuant to Section 12 below. For
purposes of this Agreement, (A) Employee's "base period compensation" is the
average annual "compensation" (as defined below) which was includable in his
gross income for his base period (i.e., his most recent five taxable years
ending before the date of the Change in Control); and (B) if Employee's base
period includes a short taxable year or less than all of a taxable year,
compensation for such short or incomplete taxable year shall be annualized
before determining his average annual compensation for the base period. (In
annualizing compensation, the frequency with which payments are expected to be
made over an annual period shall be taken into account. Thus, any amount of
compensation for such a short or incomplete taxable year that represents a
payment that would not be made more than once per year shall not be annualized).
The sum payable to Employee pursuant to Section 9(b)(iii) shall in any and all
cases be reduced by any compensation which Employee receives, excluding stock
option or other stock incentive bonus plan compensation from the date of the
Change in Control until the termination date. For purposes of Section 9(iii) and
the definitions pertaining to said Section, Employee's "compensation" is the
compensation which was payable to him by the Company or a related entity
determined without regard to the following Sections of the Internal Revenue Code
of 1986, as amended (the "Code"): 125 (cafeteria plans), 402(a)(8) (cash or
deferred arrangements), 402(h)(1)(B) (elective contributions to simplified
employee pensions), and, in the case of employer contributions made pursuant to
a salary reduction agreement, 403(b) (tax sheltered annuities).
Except for the benefits described in Section 9(b)(ii) above, the sums due
pursuant to this Section 9(b) shall be paid in up to two (2) annual installments
commencing thirty (30) days after the sums become due. All sums due shall be
subject to appropriate withholding and statutory requirements. Employee shall
<PAGE>
not be required to mitigate the amount of any payment provided for in this
Section 9(b) by seeking other employment or otherwise. Notwithstanding anything
stated in this Section 9(b) to the contrary, however, the amount of any payment
or benefit provided for in this Section 9(b) shall be reduced by no more than
50% by any compensation earned by Employee as a result of employment by another
employer and the Company shall not be required to provide medical, health and/or
disability benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with any new employer.
Notwithstanding anything stated in this Agreement to the contrary, if the
amounts which are payable and the benefits which are provided to Employee under
this Agreement, either alone or together with other payments which Employee has
a right to receive from the Company or any of its affiliates, would constitute a
"parachute payment" (as defined in Code Section 280G), such amounts and benefits
shall be reduced, as necessary, to the largest amount as will result in no
portion of said amounts and benefits being either not deductible as a result of
Code Section 280G or subject to the excise tax imposed by Code Section 4999. The
determination of any reduction in said amounts and benefits pursuant to the
foregoing proviso shall be made by the Company in good faith, and such
determination shall be conclusive and binding on Employee. The amounts provided
to Employee under this Agreement in connection with a Change in Control, if any,
shall be deemed allocated to such amounts and/or benefits to be paid and/or
provided as the Company's Board of Directors in its sole discretion shall
determine.
10. Special Situations. The parties recognize that under certain
circumstances a Change in Control may occur under conditions which make it
inappropriate for Employee to receive the termination benefits or protection set
forth in this Agreement. Therefore, in the event that a Change in Control occurs
for any one of the following reasons, the provisions of Sections 2, 6 and 9
shall not apply:
(a) the purchase of more than fifty percent (50%) of the stock of the
Company by an employee stock ownership plan or similar employee benefit plan of
which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the stock or ninety
percent (90%) of the assets of the Company by a group of individuals or entities
including Employee as a member or participant, including but not limited to
those transactions commonly known as a leveraged or other forms of management
buy- outs.
11. Disputes. Any dispute arising under this Agreement (except Section 12)
shall be promptly submitted to arbitration under the Rules of the American
Arbitration Association. An arbitrator is to be mutually agreed upon by the
parties or upon failure of agreement, designated by the American Arbitration
Association.
<PAGE>
12. Non-Competition, Non-Solicitation, and Confidentiality.
(a) In consideration of this Agreement and other good and valuable
consideration, Employee agrees that for so long as he is employed by the Company
and for twenty-four (24) months thereafter he shall not own manage, operate,
control, be employed by or otherwise engage in any competitive business.
Employee's agreement pursuant to the preceding sentence shall be in addition to
any other agreement or legal obligation he may have with or to the Company. For
purposes of the preceding sentence, a "competitive business" is any business
engaged in the production, refinement or sale of Bentonite and/or any business
conducted by the Company, its affiliates or any subsidiaries thereof as of the
date Employee's employment is terminated. A business which is conducted by the
Company, its affiliates or any subsidiaries which is subsequently sold by the
Company is not a competitive business as of the date such business is sold. An
"affiliate" of the Company is any company which either controls, is controlled
by or is under common control with the Company. The phrase "any business
conducted by the Company, its affiliates or any subsidiaries thereof" includes
not only current businesses but also any new products, product lines or use of
processes under development, consideration or investigation on the date
Employee's employment with the Company is terminated.
Employee also agrees that during the twenty-four (24) month period
described in the first sentence of this Section 12(a) he will not directly or
indirectly, on behalf of himself or any other person or entity, make a
solicitation or conduct business, with any customer or potential customer of the
Company with which he had contact while employed by the Company, its affiliates
and/or any subsidiaries thereof, with respect to any products or services which
are competitive with any business conducted by the Company, its affiliates or
any subsidiaries thereof. For purposes of the preceding sentence, a "customer"
is any person or entity that has purchased goods or services from the Company,
its affiliates or any subsidiaries thereof within the twenty-four (24) month
period ending on the date Employee's employment is terminated. A "potential
customer" is any person or entity that the Company, its affiliates or any
subsidiaries solicited for business within twelve (12) months prior to the date
Employee's employment with the Company is terminated.
The Company and Employee recognize that his responsibilities have included
sales and marketing of bentonite clay products to the construction and
environmental markets, domestically and internationally, and establishing
contacts and business relationships on behalf of the Company. Employee's
contacts on behalf of the Company represent a substantial asset of the Company
which are entitled to protection. In recognition of this situation, the
covenants set forth in this Section 12 shall apply to competitive businesses and
solicitation in the United States and Canada and those countries in Europe, Asia
and Latin America in which the Company, its affiliates and/or the subsidiaries
thereof have conducted $100,000 or more of business during the twelve-month
period ending on the date Employee's employment with the Company terminated.
<PAGE>
Before and forever after his termination or resignation, Employee shall
keep confidential and refrain from utilizing or disseminating any confidential,
proprietary or trade secret information of the Company for any purpose other
than furthering the business interests of the Company.
(b) During Employee's employment hereunder and during two (2) years
following his resignation or the termination of his employment hereunder for any
reason, Employee will not induce or attempt to influence any present or future
employee of the Company, its affiliates or any subsidiaries thereof to leave its
employ.
13. Other Agreements. Except to the extent expressly set forth herein, this
Agreement shall not modify or lessen any benefit or compensation to which
Employee is entitled under any agreement between Employee and the Company or
under any plan maintained by the Company in which he participates or
participated. Benefits or compensation shall be payable thereunder, if at all,
according to the terms of the applicable plan(s) or agreement(s). The terms of
this Agreement shall supersede any existing agreement between Employee and the
Company executed prior to the date hereof to the extent any such Agreement is
inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will 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) 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.
This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
15. Injunction. The remedy at law for any breach of Section 12 will be
inadequate and the Company, its affiliates and any subsidiaries thereof would
suffer continuing and irreparable injury to their business as a direct result of
any such breach. Accordingly, notwithstanding anything stated herein, if
Employee shall breach or fail to perform any term, condition or duty contained
in Section 12 hereof, then, in such event, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain the specific performance thereof by
Employee or to seek a temporary restraining order or injunctive relief, without
any requirement to show actual damages or post bond, to restrict Employee from
violating the provisions of Section 12; however, nothing herein shall be
construed to prevent the Company seeking such other remedy in the courts, in
case of any breach of this Agreement by Employee, as the Company may elect or
invoke. If court proceedings are instituted by the Company to enforce Section 12
hereof, and the Company is the prevailing party, the Company shall receive, in
addition to any damages awarded, reasonable attorneys' fees, court costs and
ancillary expenses.
<PAGE>
16. Miscellaneous. This Agreement may not be modified or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by
Employee and such officers of the Company as may be specifically designated by
its Board for that purpose. Except for any failure to give the ten (10) day
notice described in Section 6(b) above, the failure of either party to this
Agreement to object to any breach by the other party or the non-breaching
party's conduct or conduct forbearance shall not constitute a waiver of that
party's rights to enforce this Agreement. 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 any subsequent breach by such other party or any
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time. 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 expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Illinois.
17. Severability. The parties hereto intend this Agreement to be enforced
to the maximum extent permitted by law. In the event any provision of this
Agreement is deemed to be invalid or unenforceable by any court of competent
jurisdiction, such provisions shall be deemed to be restricted in scope or
otherwise modified to the extent necessary to render the same valid and
enforceable. In the event the provisions of Section 12 cannot be modified or
restricted so as to be valid and enforceable, then the same as well as the
Company's obligation to make any payment or transfer any benefit to Employee in
connection with any termination of Employee's employment shall be deemed excised
from this Agreement, and this Agreement shall be construed and enforced as if
such provisions had originally been incorporated herein as so restricted or
modified or as if such provisions had not originally been contained herein, as
the case may be. The invalidity or unenforceability of any provision 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.
18. Survival. The obligations of the parties under this Agreement shall
survive the term of this Agreement.
19. Term of Agreement. The term of this Agreement shall commence on
February 7, 1996 and end on February 6, 1999. Provided, however, that in the
event Employee's employment is terminated while this Agreement is in force, this
Agreement shall terminate when the Company has made all payments to Employee
required by Section 9 hereof and Employee has complied with the duties and
obligations described in Section 12 hereof (all of which duties and obligations
shall specifically survive the termination of the Employee's employment). To the
<PAGE>
extent necessary for the Company's enforcement of the provisions of Section 12
above (but only for such purpose), Employee's employment term shall be deemed to
continue through the end of the Agreement term.to continue through the end of
the Agreement term.
Date: February 7, 1996.
Employee AMCOL International Corporation
/S/ Lawrence E. Washow By: /S/ John Hughes
- ------------------------------- -----------------------------------
Lawrence E. Washow On Behalf of the Board of Directors
Its: President
-----------------------------------
Attest:
/s/ Clarence O. Redman
-----------------------------------
Its Secretary
EXHIBIT 10.11
AGREEMENT
WHEREAS, AMCOL International Corporation (the "Company") considers it
essential and in the best interests of the Company and its shareholders to
foster the continued employment of its key management personnel;
WHEREAS, Roger P. Palmer ("Employee") is considered a key management
employee, currently serving as Senior Vice-President of the Company; and
WHEREAS, the Company desires to assure the future continuity of Employee's
services in the event of any actual or threatened "Change in Control" (as
defined in Section 6 below) of the Company.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Effect of Agreement. This Agreement shall be effective and binding
immediately upon its execution. However, except as specifically provided herein,
this Agreement shall not alter materially Employee's duties and obligations to
the Company and the remuneration and benefits which Employee may reasonably
expect to receive from the Company in the absence of a Change in Control.
2. Employment On and After Change in Control. Provided that the Employee is
an employee of the Company immediately prior to a Change in Control, the Company
shall employ Employee, and Employee shall accept such employment, effective upon
such Change in Control for a period of twenty-four (24) months after said Change
in Control subject to the terms and conditions stated herein.
3. Duties After Change in Control. Employee agrees that during the term of
his employment with the Company after a Change in Control, he shall perform the
duties described in Section 12 below and such other duties for the Company and
its subsidiaries consistent with his experience and training as the Board of
Directors of the Company (the "Board") or the Board's representatives shall
determine from time to time, which duties shall be at least substantially equal
in status, dignity and character to his duties at the date hereof. He shall also
have the title of Senior Vice-President. Employee further agrees to devote his
entire working time and attention to the business of the Company and its
subsidiaries and use his best efforts to promote such business.
4. Compensation Prior to a Change in Control. Prior to a Change in Control
the Company agrees to pay Employee compensation for his services in an amount,
and to provide him with life insurance, disability, health and other benefits,
as set by the Company from time to time. For the purpose of this Section,
compensation does not include any bonus or other incentive compensation plan or
stock purchase plan, which may vary from year to year at the discretion of the
Company.
<PAGE>
5. Termination of Employment Prior to a Change of Control. Employee shall
be entitled to terminate his employment prior to a Change in Control at any time
upon sixty (60) days' prior written notice. The Company, shall be able to
terminate Employee's employment at any time prior to a Change in Control with or
without cause upon sixty (60) days' prior written notice (or the payment of
salary in lieu thereof). This Section shall not be construed to reduce any
accrued benefits payable in connection with any termination of Employee's
employment prior to a Change in Control. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or Employee
to have Employee remain in the employment of the Company prior to a Change in
Control.
6. Termination of Employment On or After Change in Control. (a) For
purposes of this Agreement the term "Change in Control" means the change in the
legal or beneficial ownership of fifty-one percent (51%) of the shares of the
Company's common stock within a six-month period other than by death or
operation of law, or the sale of ninety percent (90%) or more of the Company's
assets within a six-month period.
(b) Employee's employment on and after a Change in Control may be
terminated with just cause by the Company at any time upon not less than ten
(10) days' prior written notice. Prior to termination for just cause on and
after a Change in Control, the Board of Directors shall by majority vote have
declared that Employee's termination is for just cause specifically stating the
basis for such determination. In the event such a termination occurs, the
provisions of Sections 9(a) and 12 below shall apply.
Employee's employment may be terminated on or after a Change in
Control without just cause pursuant to the constructive termination procedures
described in the next paragraph or by the Company giving Employee not less than
thirty (30) days' prior written notice. In the event Employee's employment is
terminated pursuant to the preceding sentence:
(i) the provisions of Section 9(b) below shall apply; and
(ii) although Employee's employment term shall be deemed terminated at
the end of such notice period (or, in the case of a constructive termination
described in the next paragraph, as of the date Employee notifies the Company of
such termination), such termination shall in no way affect the term of this
Agreement or Employee's duties and obligations under Section 12 below.
<PAGE>
For purposes of this Section 6(b), Employee shall be considered as
having been terminated by the Company on or after a Change in Control for other
than just cause provided that he has notified the Company of any of the
following within ten (10) days of the occurrence thereof:
(i) the assignment to Employee of any duties of substantially lesser
status, dignity and character than the duties as a Vice President of the Company
immediately prior to the effective date of the Change in Control;
(ii) a post-Change in Control reduction by the Company in Employee's
annual base salary or bonus or incentive plan (as in effect immediately prior to
the effective date of the Change in Control);
(iii) relocation of Employee's office to a location which is more than
35 miles from the location in which Employee principally works for the Company
immediately prior to the effective date of the Change in Control; the relocation
of the appropriate principal executive office of the Company or the Company's
operating division or subsidiary for which Employee performed the majority of
his services for the Company during the year prior to the effective date of the
Change in Control to a location which is more than 35 miles from the location of
such office immediately prior to such date; or his being required by the Company
in order to perform duties of substantially equal status, dignity and character
to those duties he performed immediately prior to the effective date of the
Change in Control to travel on the Company's business to a substantially greater
extent than is consistent with his business travel obligations as of such date;
or
(iv) the failure of the Company to continue to provide Employee with
benefits substantially equivalent to those enjoyed by him under any of the
Company's life insurance, medical, health and accident or disability plans in
which he was participating immediately prior to the effective date of the Change
in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him immediately prior to effective date of the Change
in Control, or the failure of the Company to provide him with at least the
number of paid vacation days to which he is entitled on the basis of years of
service under the Company's normal vacation policy in effect immediately prior
to the effective date of the Change in Control.
(c) In the event Employee's employment is terminated on or after a
Change in Control in any manner not described in Section 6(b) above:
<PAGE>
(i) the provisions of Section 9(b) shall not apply and Employee shall
instead receive the sums and benefits described in Section 9(a); and
(ii) such termination shall in no way affect the term of this
Agreement or Employee's duties or obligations under Section 12 below.
(d) Any termination of employment of Employee following the
commencement of any discussions by a shareholder or group of shareholders owning
legally or beneficially more than 20% of the common stock or an officially
designated representative of the Board of Directors with a third party that
results within 180 days in a Change in Control shall (unless such termination is
for cause or wholly unrelated to such discussions) be deemed to be a termination
of Employee on and after a Change in Control for purposes of this Agreement.
7. Notice of Termination. Any termination by the Company or assertion of
termination by Employee shall be communicated by written notice of termination
to the other party at the following address:
AMCOL International Corporation Mr. Roger P. Palmer
One North Arlington Senior Vice President
1500 West Shure Drive AMCOL International Corporation
Arlington Heights, IL 60004 One North Arlington
Attn: Chairman of the Board 1500 West Shure Drive
Arlington Heights, IL 60004
8. Disability. If as a result of Employee's incapacity due to physical or
mental illness, he shall have been absent from his duties with the Company for
one hundred eighty (180) days within any twelve-(12)- consecutive-month period
and within thirty (30) days after written notice of the Company's intention to
terminate his employment is given, Employee shall not have returned to the
performance of his duties with the Company substantially on a full-time basis,
the Company may terminate his employment for disability. This shall not
constitute a termination for the purposes of obtaining benefits pursuant to
Section 9.
9. Benefits Upon Termination And Leave Of Employment On or After Change in
the Control.
(a) If Employee is terminated for just cause on or after a Change in
Control, he shall only receive the accrued sums and benefits payable to him
through the date he is terminated; the provisions of Section 9(b) below shall
not be applicable in such case and Employee shall not receive (or shall cease
receiving) the payments and benefits described in Section 9(b).
<PAGE>
(b) Subject to Employee's compliance with the provisions of Section
12(a) below, if Employee is terminated during the twenty-four (24) month period
beginning on and continuing after a Change in Control other than for just cause
(either at the discretion of the Company's management or constructively by the
operation of Section 6), he shall receive the following payments and benefits in
lieu of any other sums or benefits otherwise payable to him by the Company:
(i) all then accrued pay, benefits, executive compensation and fringe
benefits, including (but not limited to) pro rata bonus and incentive plan
earnings;
(ii) medical, health and disability benefits which are substantially
similar to the benefits the Company is providing him as of the date his
employment is terminated for a period of twenty-four (24) months thereafter; and
(iii) one dollar less than two times his base period compensation.
The foregoing payments and benefits shall be deemed compensation payable
for the duties to be performed by Employee pursuant to Section 12 below. For
purposes of this Agreement, (A) Employee's "base period compensation" is the
average annual "compensation" (as defined below) which was includable in his
gross income for his base period (i.e., his most recent five taxable years
ending before the date of the Change in Control); and (B) if Employee's base
period includes a short taxable year or less than all of a taxable year,
compensation for such short or incomplete taxable year shall be annualized
before determining his average annual compensation for the base period. (In
annualizing compensation, the frequency with which payments are expected to be
made over an annual period shall be taken into account. Thus, any amount of
compensation for such a short or incomplete taxable year that represents a
payment that would not be made more than once per year shall not be annualized).
The sum payable to Employee pursuant to Section 9(b)(iii) shall in any and all
cases be reduced by any compensation which Employee receives, excluding stock
option or other stock incentive bonus plan compensation from the date of the
Change in Control until the termination date. For purposes of Section 9(iii) and
the definitions pertaining to said Section, Employee's "compensation" is the
compensation which was payable to him by the Company or a related entity
determined without regard to the following Sections of the Internal Revenue Code
of 1986, as amended (the "Code"): 125 (cafeteria plans), 402(a)(8) (cash or
deferred arrangements), 402(h)(1)(B) (elective contributions to simplified
employee pensions), and, in the case of employer contributions made pursuant to
a salary reduction agreement, 403(b) (tax sheltered annuities).
Except for the benefits described in Section 9(b)(ii) above, the sums due
pursuant to this Section 9(b) shall be paid in up to two (2) annual installments
commencing thirty (30) days after the sums become due. All sums due shall be
subject to appropriate withholding and statutory requirements. Employee shall
<PAGE>
not be required to mitigate the amount of any payment provided for in this
Section 9(b) by seeking other employment or otherwise. Notwithstanding anything
stated in this Section 9(b) to the contrary, however, the amount of any payment
or benefit provided for in this Section 9(b) shall be reduced by no more than
50% by any compensation earned by Employee as a result of employment by another
employer and the Company shall not be required to provide medical, health and/or
disability benefits to the extent such benefits would duplicate benefits
received by Employee in connection with his employment with any new employer.
Notwithstanding anything stated in this Agreement to the contrary, if the
amounts which are payable and the benefits which are provided to Employee under
this Agreement, either alone or together with other payments which Employee has
a right to receive from the Company or any of its affiliates, would constitute a
"parachute payment" (as defined in Code Section 280G), such amounts and benefits
shall be reduced, as necessary, to the largest amount as will result in no
portion of said amounts and benefits being either not deductible as a result of
Code Section 280G or subject to the excise tax imposed by Code Section 4999. The
determination of any reduction in said amounts and benefits pursuant to the
foregoing proviso shall be made by the Company in good faith, and such
determination shall be conclusive and binding on Employee. The amounts provided
to Employee under this Agreement in connection with a Change in Control, if any,
shall be deemed allocated to such amounts and/or benefits to be paid and/or
provided as the Company's Board of Directors in its sole discretion shall
determine.
10. Special Situations. The parties recognize that under certain
circumstances a Change in Control may occur under conditions which make it
inappropriate for Employee to receive the termination benefits or protection set
forth in this Agreement. Therefore, in the event that a Change in Control occurs
for any one of the following reasons, the provisions of Sections 2, 6 and 9
shall not apply:
(a) the purchase of more than fifty percent (50%) of the stock of the
Company by an employee stock ownership plan or similar employee benefit plan of
which Employee is a participant; or
(b) the purchase of more than fifty percent (50%) of the stock or ninety
percent (90%) of the assets of the Company by a group of individuals or entities
including Employee as a member or participant, including but not limited to
those transactions commonly known as a leveraged or other forms of management
buy- outs.
11. Disputes. Any dispute arising under this Agreement (except Section 12)
shall be promptly submitted to arbitration under the Rules of the American
Arbitration Association. An arbitrator is to be mutually agreed upon by the
parties or upon failure of agreement, designated by the American Arbitration
Association.
<PAGE>
12. Non-Competition, Non-Solicitation, and Confidentiality.
(a) In consideration of this Agreement and other good and valuable
consideration, Employee agrees that for so long as he is employed by the Company
and for twenty-four (24) months thereafter he shall not own manage, operate,
control, be employed by or otherwise engage in any competitive business.
Employee's agreement pursuant to the preceding sentence shall be in addition to
any other agreement or legal obligation he may have with or to the Company. For
purposes of the preceding sentence, a "competitive business" is any business
engaged in the production, refinement or sale of Bentonite and/or any business
conducted by the Company, its affiliates or any subsidiaries thereof as of the
date Employee's employment is terminated. A business which is conducted by the
Company, its affiliates or any subsidiaries which is subsequently sold by the
Company is not a competitive business as of the date such business is sold. An
"affiliate" of the Company is any company which either controls, is controlled
by or is under common control with the Company. The phrase "any business
conducted by the Company, its affiliates or any subsidiaries thereof" includes
not only current businesses but also any new products, product lines or use of
processes under development, consideration or investigation on the date
Employee's employment with the Company is terminated.
Employee also agrees that during the twenty-four (24) month period
described in the first sentence of this Section 12(a) he will not directly or
indirectly, on behalf of himself or any other person or entity, make a
solicitation or conduct business, with any customer or potential customer of the
Company with which he had contact while employed by the Company, its affiliates
and/or any subsidiaries thereof, with respect to any products or services which
are competitive with any business conducted by the Company, its affiliates or
any subsidiaries thereof. For purposes of the preceding sentence, a "customer"
is any person or entity that has purchased goods or services from the Company,
its affiliates or any subsidiaries thereof within the twenty-four (24) month
period ending on the date Employee's employment is terminated. A "potential
customer" is any person or entity that the Company, its affiliates or any
subsidiaries solicited for business within twelve (12) months prior to the date
Employee's employment with the Company is terminated.
The Company and Employee recognize that his responsibilities have included
sales and marketing of bentonite clay products to the construction and
environmental markets, domestically and internationally, and establishing
contacts and business relationships on behalf of the Company. Employee's
contacts on behalf of the Company represent a substantial asset of the Company
which are entitled to protection. In recognition of this situation, the
covenants set forth in this Section 12 shall apply to competitive businesses and
solicitation in the United States and Canada and those countries in Europe, Asia
and Latin America in which the Company, its affiliates and/or the subsidiaries
thereof have conducted $100,000 or more of business during the twelve-month
period ending on the date Employee's employment with the Company terminated.
<PAGE>
Before and forever after his termination or resignation, Employee shall
keep confidential and refrain from utilizing or disseminating any confidential,
proprietary or trade secret information of the Company for any purpose other
than furthering the business interests of the Company.
(b) During Employee's employment hereunder and during two (2) years
following his resignation or the termination of his employment hereunder for any
reason, Employee will not induce or attempt to influence any present or future
employee of the Company, its affiliates or any subsidiaries thereof to leave its
employ.
13. Other Agreements. Except to the extent expressly set forth herein, this
Agreement shall not modify or lessen any benefit or compensation to which
Employee is entitled under any agreement between Employee and the Company or
under any plan maintained by the Company in which he participates or
participated. Benefits or compensation shall be payable thereunder, if at all,
according to the terms of the applicable plan(s) or agreement(s). The terms of
this Agreement shall supersede any existing agreement between Employee and the
Company executed prior to the date hereof to the extent any such Agreement is
inconsistent with the terms hereof.
14. Successors; Binding Agreement. The Company will 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) 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.
This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
15. Injunction. The remedy at law for any breach of Section 12 will be
inadequate and the Company, its affiliates and any subsidiaries thereof would
suffer continuing and irreparable injury to their business as a direct result of
any such breach. Accordingly, notwithstanding anything stated herein, if
Employee shall breach or fail to perform any term, condition or duty contained
in Section 12 hereof, then, in such event, the Company shall be entitled to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain the specific performance thereof by
Employee or to seek a temporary restraining order or injunctive relief, without
any requirement to show actual damages or post bond, to restrict Employee from
violating the provisions of Section 12; however, nothing herein shall be
construed to prevent the Company seeking such other remedy in the courts, in
case of any breach of this Agreement by Employee, as the Company may elect or
invoke. If court proceedings are instituted by the Company to enforce Section 12
hereof, and the Company is the prevailing party, the Company shall receive, in
addition to any damages awarded, reasonable attorneys' fees, court costs and
ancillary expenses.
<PAGE>
16. Miscellaneous. This Agreement may not be modified or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by
Employee and such officers of the Company as may be specifically designated by
its Board for that purpose. Except for any failure to give the ten (10) day
notice described in Section 6(b) above, the failure of either party to this
Agreement to object to any breach by the other party or the non-breaching
party's conduct or conduct forbearance shall not constitute a waiver of that
party's rights to enforce this Agreement. 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 any subsequent breach by such other party or any
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time. 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 expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Illinois.
17. Severability. The parties hereto intend this Agreement to be enforced
to the maximum extent permitted by law. In the event any provision of this
Agreement is deemed to be invalid or unenforceable by any court of competent
jurisdiction, such provisions shall be deemed to be restricted in scope or
otherwise modified to the extent necessary to render the same valid and
enforceable. In the event the provisions of Section 12 cannot be modified or
restricted so as to be valid and enforceable, then the same as well as the
Company's obligation to make any payment or transfer any benefit to Employee in
connection with any termination of Employee's employment shall be deemed excised
from this Agreement, and this Agreement shall be construed and enforced as if
such provisions had originally been incorporated herein as so restricted or
modified or as if such provisions had not originally been contained herein, as
the case may be. The invalidity or unenforceability of any provision 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.
18. Survival. The obligations of the parties under this Agreement shall
survive the term of this Agreement.
19. Term of Agreement. The term of this Agreement shall commence on
February 7, 1996 and end on February 6, 1999. Provided, however, that in the
event Employee's employment is terminated while this Agreement is in force, this
Agreement shall terminate when the Company has made all payments to Employee
required by Section 9 hereof and Employee has complied with the duties and
obligations described in Section 12 hereof (all of which duties and obligations
shall specifically survive the termination of the Employee's employment). To the
<PAGE>
extent necessary for the Company's enforcement of the provisions of Section 12
above (but only for such purpose), Employee's employment term shall be deemed to
continue through the end of the Agreement term.to continue through the end of
the Agreement term.
Date: February 7, 1996.
Employee AMCOL International Corporation
/S/ Roger P. Palmer By: /S/ John Hughes
- ------------------------------- -----------------------------------
Roger P. Palmer On Behalf of the Board of Directors
Its: President
-----------------------------------
Attest:
/s/ Clarence O. Redman
-----------------------------------
Its Secretary
EXHIBIT 18
March 8, 1996
AMCOL International Corporation
One North Arlington
1500 West Shure Drive
Arlington Heights, Illinois 60004-7803
Gentlemen:
We have audited the consolidated balance sheets of AMCOL International
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows, and the
financial statement schedule, for each of the years in the three-year period
ended December 31, 1995, and have reported thereon under date of March 8, 1996.
The aforementioned consolidated financial statements and financial statement
schedule and our report thereon are included in the Company's annual report on
Form 10-K for the year ended December 31, 1995. As stated in Note 1 to those
financial statements, the Company changed its method of accounting for certain
inventories from the last-in first-out (LIFO) method to the first-in first-out
(FIFO) method, and states that the newly adopted accounting principle is
preferable in the circumstances because it better matches revenue and expenses.
In accordance with your request, we have reviewed and discussed with company
officials the circumstances and business judgment and planning upon which the
decision to make this change in the method of accounting was based.
With regard to the aforementioned accounting change, authoritative criteria have
not been established for evaluating the preferability of one acceptable method
of accounting over another acceptable method. However, for purposes of AMCOL
International Corporation's compliance with the requirements of the Securities
and Exchange Commission, we are furnishing this letter.
Based on our review and discussion, with reliance on management's business
judgment and planning, we concur that the newly adopted method of accounting is
preferable in the Company's circumstances.
Very truly yours,
/s/ KPMG Peat Marwick LLP
EXHIBIT 21
AMCOL INTERNATIONAL CORPORATION
SUBSIDIARY LISTING
<TABLE>
<CAPTION>
Company Name Country State Ownership %
- ------------------------------------------ -------------------- ----- -----------
<S> <C> <C> <C>
AMCOL International Corporation USA DE Parent
ACC-Chem Limited Cyprus 100
ACC-Colloid Technology Limited Cyprus 100
ACP Export, Inc. U.S. Virgin Islands 100
American Coloid Company USA DE 100
American Colloid Company Ltd. Canada Ontario 100
Ameri-Co Carriers, Inc. USA NE 100
CETCO (Europe) Limited England 100
Chemdal Corporation USA DE 100
Chemdal International Corporation USA DE 100
Chemdal Limited England 100
Chemdal Pty., Ltd. Australia 100
Colloid Environmental Technologies Company (CETCO) USA DE 100
Colloid Abwassertechnik GmbH Germany 100
Colloid Australia Pty., Ltd. Australia 100
Foundry Supplies Limited England 100
Montana Minerals Development Company USA 100
Nanocor, Inc. USA DE 100
Nanocor, Ltd. England 100
Nationwide Freight Service, Inc. USA NE 100
Regeneration Technologies, Inc. USA DE 100
Superior Absorbents, Inc. (Formerly Colloid-Piepho, Inc.) USA DE 100
Volclay de Mexico, S.A. de C.V. Mexico 49
Volclay Limited England 100
Volclay Standard Pty., Ltd. Australia 60
</TABLE>
EXHIBIT 23
Consent of KPMG Peat Marwick LLP
The Board of Directors
AMCOL International
We consent to incorporation by reference in the registration statements Nos.
33-34109, 33-55540, and 33-73350 on Form S-8 of AMCOL International Corporation
of our report dated March 8, 1996, relating to the consolidated balance sheets
of AMCOL International Corporation and subsidiaries as of December 31, 1995 and
1994, and the related schedule for each of the years in the three-year period
ended December 31, 1995, which report appeas in the December 31, 1995 annual
report on Form 10-K of AMCOL International Corporation
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
March 22, 1996
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<NAME> AMCOL INTERNATIONAL CORPORATION
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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0
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